As filed with the Securities and Exchange Commission on
December 12, 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 12, 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 AMCORE Vintage Funds
Being Acquired
Item 7. Voting Information Outside Front Cover;
Synopsis; Information
Relating to
Voting Matters
Item 8. Interest of Certain Persons and Not Applicable
Experts
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 12, 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 AMCORE Vintage 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, AMCORE Financial, Inc., the parent company of the Funds'
investment adviser has signed a definitive agreement to acquire Investors
Management Group, Ltd., ("IMG"), an investment advisory organization with
approximately $1.6 billion under management. AMCORE Capital Management and IMG
will combine their resources with a view to enhancing the resourses available to
the clients of both firms.
As part of its continuing effort to assure high quality services to shareholders
of the Funds, AMCORE has recommended, and the Board of Trustees of your Funds
has recently reviewed and unanimously endorsed, a proposal for the
reorganization of the Funds. This proposal calls for acquisition of the Funds'
assets by portfolios of IMG Mutual Funds, Inc., a family of mutual funds advised
by IMG. Each of the portfolios will have substantially 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
related series of transactions, IMG Mutual Funds, Inc. will acquire certain
existing funds managed by IMG to create an even larger fund family. 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.
The Trustees believe the reorganization is in the best interests of Fund
shareholders, and recommend that shareholders approve the reorganization. The
Trustees believe the transaction would benefit the Funds and their shareholders
by increasing certain of the Funds' assets initially and enhancing their
capacity to attract and retain investors. In making their determination, the
Trustees reviewed several factors, including the qualifications and capabilities
of the service providers of IMG Mutual Funds, Inc. If, as expected, the Funds'
distributor 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 Trustees' 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 February 2, 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
_______________________ at (___) ___________ or 800-__________.
Sincerely,
Walter B. Grimm, Chairman
The Coventry Group
<PAGE>
The Coventry Group
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 3, 1998
TO THE SHAREHOLDERS OF AMCORE VINTAGE FUNDS:
You are cordially invited to attend the Special Meeting of Shareholders of
AMCORE Vintage Funds, portfolios of The Coventry Group, a registered investment
company, which will be held at ______________________, ______________, ________,
on February 3, 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
AMCORE Vintage Funds, to IMG Mutual Funds, Inc., in exchange for shares of
portfolios of IMG Mutual Funds, Inc.; (b) the assumption by IMG Mutual Funds,
Inc., of all of the liabilities of AMCORE Vintage Funds; and (c) the
distribution of such shares of IMG Mutual Funds, Inc., to the shareholders of
AMCORE Vintage Funds in complete liquidation of AMCORE Vintage Funds.
2. To act upon such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Trustees has fixed the close of business on Friday, January 9,
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 AMCORE Vintage Funds, outstanding and eligible to
vote at 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 Trustees unanimously recommends a
vote in favor of the proposal.
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.
Columbus, Ohio BY ORDER OF THE BOARD OF TRUSTEES
January 12, 1998
George L. Stevens, Secretary
<PAGE>
PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF THE ASSETS OF
AMCORE VINTAGE FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE 800-438-6375
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 AMCORE
Vintage Funds ("AVF"), portfolio's of the Coventry Group ("Coventry"), in
connection with the solicitation by the Board of Trustees of proxies to be used
at the Special Meeting of Shareholders of AVF to be held at _________________,
__________, __________ at 10:00 a.m. on February 3, 1998, and any adjournments
thereof. AVF is currently a diversified registered open-end investment company.
Shareholders of record as of the close of business on January 9, 1998 are
entitled to vote at the Special Meeting. It is expected that this Proxy
Statement/Prospectus will be mailed to shareholders of AVF on or about January
12, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization in which
all of the assets and liabilities of AVF 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 AVF and AVF will be
liquidated. As a result of the proposed reorganization, each shareholder of AVF
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 AVF held as of the date of the proposed
reorganization.
IMG Funds is a diversified registered open-end investment company which issues
its shares in separate portfolios or series, each with its own investment
objectives and policies. The investment objectives, policies and restrictions of
the seven portfolios of IMG Funds participating in the proposed reorganization
are similar to those of the corresponding portfolios of AVF. For a comparison of
the investment objectives, policies and restrictions of AVF 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. IMG is being acquired by AMCORE Financial,
Inc., the parent of AMCORE Capital Management, Inc., investment adviser to AVF.
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 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 __________________.
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 Prospectus and Statement
of Additional Information of the IMG Funds dated __________, 1998; and (iii) the
Prospectus and Statement of Additional Information of AVF, dated July 31, 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 12, 1998.
<PAGE>
SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the Trustees of The Coventry Group for use at
the Special Meeting of Shareholders of AMCORE Vintage Funds ("AVF") to be held
on February 3, 1998 (and if adjourned, at any adjourned meeting) for the purpose
stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THE PROPOSAL?
The Trustees recommend that you vote FOR the proposed transaction in which
assets of AVF would be transferred to IMG Mutual Funds, Inc. ("IMG Funds"), in
exchange for shares of IMG Funds with an equal net asset value.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on January 9, 1998, are
entitled to be present and vote at the meeting or any adjourned meeting. Each of
the seven AVF Portfolios will vote separately on the proposal, and the proposal
must be approved by all seven portfolios to be adopted. 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 12, 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 Coventry's Secretary at the
principal offices of AVF, 3435 Stelzer Road, Columbus, Ohio 43219) or in person
at the meeting, by executing a superseding proxy, or by submitting a notice of
revocation to Coventry. If you sign the proxy, but don't fill in a vote, your
shares will be voted in accordance with the Trustees' recommendations. If any
other business is brought before the meeting, your shares will be voted at the
Trustees' discretion.
WHAT IS BEING PROPOSED?
The Trustees of AVF are recommending that shareholders approve the
reorganization (the "Reorganization") of AVF into portfolios of IMG Funds. An
Agreement and Plan of Reorganization provides for the transfer of all of the
assets and liabilities of AVF to IMG Funds, in exchange for shares of IMG Funds.
The completion of these transactions, followed by the distribution of IMG Funds
shares to AVF shareholders, will result in shareholders of AVF becoming
shareholders of IMG Funds, followed by the dissolution of AVF. Upon completion
of the Reorganization:
Former Shareholders of AVF will be Shareholders of IMG Funds and
will own shares of an IMG Funds Portfolio which will have
substantially similar investment objectives, policies and
restrictions and purchase and redemption procedures as the
corresponding AVF Portfolio.
There should be no federal income tax consequences to former
Shareholders of AVF, resulting from the Reorganization.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series of proposed
transactions in which:
IMG, the advisor to IMG Funds, will be acquired by AMCORE
Financial, Inc., the parent of the investment adviser to AVF; and
IMG Funds, AVF and certain other funds advised by IMG will be
combined 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 AVF. For
more detailed information concerning the investment practices, including
possible risks, of IMG Funds and AVF, see "Proposal 1: Agreement and Plan of
Reorganization--Investment Objectives, Policies and Practices," the IMG Funds
Prospectus dated ________, 1998 and the AVF Prospectus dated July 31, 1997.
AVF shareholders should particularly note the discussions of IMG Funds'
fixed income investment policies. In general, these policies permit somewhat
longer average portfolio maturities and permit some investment in lower quality
debt securities. Longer average portfolio maturity can result in greater price
fluctuation than shorter maturities. Lower quality can result in higher risk of
loss of principal.
PROPOSAL 1: AGREEMENT AND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Trustees of The Coventry Group ("Coventry") unanimously
approved the proposed Agreement and Plan of Reorganization (the "Plan")
providing for the acquisition of all of the assets of the AMCORE Vintage Funds,
portfolios of Coventry ("AVF") by IMG Mutual Funds, Inc. ("IMG Funds"), in
exchange for shares of IMG Funds and the assumption by IMG Funds of the
liabilities of AVF (the "Reorganization"). The proposed transaction would occur
on or about February 5, 1998 (the "Closing Date"). The value of the acquired
assets of AVF 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 Government Assets Fund ("IMG Government"), Vintage
Income Fund ("IMG Income"), Vintage Municipal Bond Fund ("IMG Municipal:),
Vintage Equity Fund ("IMG Equity"), Vintage Balanced Fund ("IMG Balanced"),
Vintage Aggressive Growth Fund ("IMG Growth") and Vintage Limited Term Bond Fund
("IMG Limited") (collectively, the "IMG Portfolios") issued in exchange, will
equal the aggregate net asset value of the shares of AVF's U.S. Government
Obligations Fund ("AVF Government"), Fixed Income Fund ("AVF Income"),
Intermediate Tax-Free Fund ("AVF Tax-Free"), Equity Fund ("AVF Equity"),
Balanced Fund ("AVF Balanced"), Aggressive Growth Fund ("AVF Growth") and Fixed
Total Return Fund ("AVF Total Return") (collectively, the "AVF Portfolios"),
respectively, then outstanding. In connection with the proposed Reorganization,
shares of IMG Funds will be distributed to shareholders of AVF, and AVF will be
terminated. As a result of the proposed Reorganization, each shareholder of AVF
will cease to be a shareholder of AVF and will receive that number of full and
fractional shares of the corresponding IMG Portfolio having a net asset value
equal to the net asset value of, such shareholder's corresponding shares of AVF.
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, AMCORE Capital Management,
Inc., the present investment adviser to AVF, will not be an investment adviser
to the IMG Funds. IMG will provide investment advisory services to the IMG Funds
through an Investment Advisory Agreement with IMG Funds.
Because all shares of AVF and IMG Funds are in uncertificated
book-entry form, the exchange of shares will take place automatically on the
Closing Date. It will not be necessary for shareholders to submit transmittal
forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
Former shareholders of AVF 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
similar to those of AVF.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives, policies and restrictions of the IMG
Portfolios are substantially similar to those of the corresponding AVF
Portfolios. The following paragraphs summarize the differences between the
respective IMG Portfolios and the corresponding AVF Portfolios.
IMG GOVERNMENT AND AVF GOVERNMENT. The investment objectives, policies
and restrictions of these two portfolios are identical. The investment objective
is to seek current income consistent with maintaining liquidity and stability of
principal.
IMG INCOME AND AVF INCOME. The investment objective of AVF Income is to
seek total return consistent with the production of current income and the
preservation of capital. The investment objective of IMG Income will be to seek
current income, consistent with the preservation of capital. This change is
being made as part of a plan to emphasize current income (i.e., yield) in the
management of this IMG Portfolio. IMG Income will maintain a dollar-weighted
average portfolio maturity of four to ten years, compared to the AVF Income's
average portfolio maturity of four to six years. The average portfolio maturity
of IMG Income is being extended to improve yield.
The investment policies of IMG Income also eliminate the present AVF
Income restriction that 75% of assets will be invested in securities with stated
or remaining maturities of 15 years or less. This maximum maturity restriction
has been eliminated to allow more flexibility in the purchase of individual
fixed income securities.
Minimum credit quality restrictions will be changed in three ways.
First, IMG Income will allow investment in fixed income securities rated within
the five highest categories at the time of purchase by a nationally recognized
statistical rating organization (an "NRSRO") or, if unrated, found by IMG to be
of comparable quality. AVF Income limits investments to the four highest
categories. Fixed income securities in the fifth highest rating (i.e., "Ba" or
"BB"), are considered to be below Investment Grade. Bonds so rated are judged to
have speculative elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded. However, IMG believes that its fixed income
managers have experience conducting credit analysis on and managing investments
in "Ba" quality credits through their work for various insurance companies.
Second, IMG Income will invest no less than 65%, of the value of its total
assets in fixed income securities rated within the three highest rating
categories at the time of purchase by an NRSRO or, if unrated, found by the IMG
to be of comparable quality. AVF Income is not so limited. Third, in light of
the risks inherent in investing in below-Investment Grade fixed income
securities, IMG Income will limit its investments in "Ba" and "BB" securities to
a maximum of 25%.
IMG MUNICIPAL AND AVF TAX-FREE. The investment objectives of these
portfolios are identical, namely, to seek current income, consistent with
preservation of capital, that is exempt from federal income taxes.
Three changes will be made in the investment policies. First, IMG
Municipal will maintain a dollar-weighted average portfolio maturity of four to
ten years, compared to the AVF Tax-Free's average portfolio maturity of five to
nine years. Second, IMG Municipal will invest in municipal bonds rated within
the five highest categories by an NRSRO rather than the three highest categories
as is the case for AVF Tax-Free. Fixed Income securities in the fifth highest
rating (i.e., "Ba" or "BB"), are considered to be below Investment Grade. Bonds
so rated are judged to have speculative elements; their future cannot be
considered as well-assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded. However, IMG
believes that its fixed income managers have experience conducting credit
analysis on and managing investments in "Ba" quality credits through their work
for various insurance companies. Third, in light of the risks inherent in
investing in below-Investment Grade fixed income securities, IMG Municipal will
limit its investments in "Ba" and "BB" securities to a maximum of 25%. These
changes are being made to give the portfolio managers more flexibility in the
selection of tax exempt securities with the goal of improving total return over
time.
IMG EQUITY AND AVF EQUITY. The investment objectives, policies and
restrictions of these portfolios are identical. The investment objective is
long-term capital appreciation.
IMG BALANCED AND AVF BALANCED. The investment objective of these
portfolios are identical, namely, to seek long-term growth of capital and
Income.
The investment policies of AVF Balanced require that as to fixed income
securities 75% will be invested in securities with stated or remaining
maturities of 15 years or less. That maximum maturity restriction has been
eliminated from IMG Balanced to allow more flexibility in the purchase of
individual fixed income securities, and to make IMG Balanced consistent with IMG
Income (discussed above). The average maturity of the fixed income portion of
AVF Balanced is also being extended, from its present three to seven years, to
four to ten years for IMG Balanced.
The minimum credit quality of the fixed income securities will be
changed in two ways. First, IMG Balanced will allow investment in fixed income
securities rated within the five highest categories at the time of purchase by
an NRSRO or, if unrated, found by IMG to be of comparable quality. AVF Balanced
limits investments to the four highest categories. Fixed income securities in
the fifth highest rating (i.e., "Ba" or "BB"), are considered to be below
Investment Grade. Bonds so rated are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded.
However, IMG believes that its fixed income managers have experience conducting
credit analysis on and managing investments in "Ba" quality credits through
their work for various insurance companies. Second, in light of the risk
inherent in investing in below-Investment Grade fixed income securities, IMG
Balanced will limit its investments in these securities to a maximum of 25%.
IMG GROWTH AND AVF GROWTH. The investment objectives, policies and
restrictions of these portfolios are identical. The investment objectives is
long-term capital growth.
IMG LIMITED AND AVF TOTAL RETURN. The investment objective of AVF Total
Return is to seek long term total return. The investment objective of IMG
Limited will be to seek total return from a portfolio of limited term fixed
income securities. It is anticipated that IMG Limited will continue to be
managed for total return, but will change its investment policies to
significantly limit its average maturity. IMG Limited expects to maintain a
dollar-weighted average portfolio maturity of one to four years, compared to the
AVF Total Return's dollar-weighted average portfolio maturity of three to seven
years. The average portfolio maturity of IMG Limited is being shortened because
effective with the Reorganization shareholders will have the opportunity to
invest in the "Vintage Bond Fund" which will be the new name of the existing IMG
Bond Fund. By comparison, the Vintage Bond Fund's investment objective will be
to seek total return consistent with the production of current income and the
preservation of capital. The average portfolio maturity of the Vintage Bond Fund
will be four to ten years.
The investment policies of IMG Limited also eliminate the present
restriction that 75% will be invested in securities with stated or remaining
maturities of 15 years or less. This maximum maturity restriction has been
eliminated to allow more flexibility in the purchase of individual fixed income
securities. Minimum credit quality restrictions will be changed in two ways.
First, IMG Limited will allow investment in fixed income securities rated within
the five highest categories at time of purchase by an NRSRO or, if unrated,
found by IMG to be of comparable quality. AVF Total Return limits investments to
the four highest categories. Fixed income securities in the fifth highest rating
(i.e., "Ba" or "BB"), are considered to be below Investment Grade. Bonds so
rated are judged to have speculative elements; their future cannot be considered
as well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded. However, IMG believes that its
fixed income managers have experience conducting credit analysis on and managing
investments in "Ba" quality credits through their work for various insurance
companies. Second, in light of the risks inherent in investing in
below-Investment Grade fixed income securities, IMG Limited Term will limit its
investments in these securities to a maximum of 25%.
For a detailed description of the investment objectives, policies and
restrictions of the IMG Portfolios and the AVF Portfolios, see the IMG Funds
Prospectus dated ___________, 1998, and the AVF Prospectus dated July 31, 1997,
all of which are delivered herewith.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Trustees of AVF,
including all of the Trustees who are not "interested persons" as defined by the
Investment Company Act of 1940 (the "Disinterested Trustees"), have unanimously
concluded that the Reorganization will be in the best interests of the
shareholders of AVF, and that the interests of the existing shareholders of AVF
will not be diluted as a result of the transactions contemplated by the Plan.
The Board of Trustees therefore has submitted the Plan for approval by the
shareholders at the Special Meeting of Shareholders to be held on February 3,
1998. Approval of the Plan requires the vote of a majority of the outstanding
voting securities of each AVF Portfolio.
The Trustees of AVF have approved the Plan because they believe that,
overall, it will benefit shareholders. In determining whether to recommend the
approval of the proposed Reorganization to the shareholders, the Trustees
considered a number of factors, including, but not limited to: (i) the fact that
IMG will 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 the IMG Funds in
the areas of marketing, investment and shareholder services; (iii) the expenses
and advisory fees applicable to AVF before the Reorganization and the estimated
expense ratios and fees of IMG Funds after the Reorganization; (iv) the terms
and conditions of the Plan and whether the proposed Reorganization will result
in dilution of AVF 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 other existing funds; (vi) the costs estimated to be
incurred to complete the proposed Reorganization; (vii) the investment
objectives and policies of the IMG Funds; and (viii) the future growth prospects
of IMG Funds.
In this regard, the Trustees of AVF reviewed information provided by
IMG relating to the anticipated impact to the shareholders of AVF as a result of
the proposed Reorganization. The Trustees 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 AVF, 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 AVF with the assets of
IMG Funds, and other funds being acquired by IMG Funds,
generally should lead to reduced total operating expenses
for shareholders of AVF 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 AVF 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 Trustees of AVF 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 additional
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 Trustees of AVF also considered certain possible
disadvantages of the proposed Reorganization. Although fiduciary holders of AVF
Equity shares should realize a decrease in annual operating expenses from 1.33%
to 1.14%, retail and custodial shareholders will experience an increase in
annual operating expenses from 1.33% to 1.39%, see "Expense Summary" hereafter.
Possible changes in price volatility and credit risk, discussed above under
"Investment Objectives, Policies and Restrictions," were also considered, along
with the possibility that when the AVF Portfolios are combined with the IMG
Portfolios, certain existing portfolios of IMG Funds and certain other
portfolios, some portfolios may experience net redemptions as shareholders
adjust their investments in light of the portfolios available in the IMG Funds
family.
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 AVF during the past fiscal year.
Present holders of shares of AVF Government will receive "T Shares" of IMG
Government in the Reorganization. Present holders of shares of AVF Equity whose
shares are held in a fiduciary account will receive "T Shares" of IMG Equity.
All other shareholders of AVF Equity will receive "S Shares" of IMG Equity.
IMG FUNDS
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
IMG IMG IMG IMG IMG IMG IMG
GOVERNMENT INCOME MUNICIPAL EQUITY BALANCED GROWTH LIMITED
T SHARES S SHARES T SHARES S SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
ESTIMATED ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees 0.40% 0.40% 0.60% 0.60% 0.75% 0.75% 0.75% 0.95% 0.60%
12b-1 Fees 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 2 0.37% 0.62% 0.41% 0.49% 0.39% 0.64% 0.61% 0.49% 0.46%
----- ----- ------ ------- ------ ----- ----- ----- -----
Total Fund Operating Expenses
After Waivers 3 0.77% 1.02% 1.01% 1.09% 1.14% 1.39% 1.36% 1.44% 1.06%
</TABLE>
1 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets of such Fund ("distribution fees"). 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 Plan.
2 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which a Fund is authorized to pay banks and other financial
institutions which agree to provide certain ministerial, recordkeeping and/or
administrative support services for their customers or account holders a
periodic amount calculated at an annual rate not to exceed 0.25% of the average
daily net assets of such Fund ("services fees"). Currently only S Shares of IMG
Government and S Shares of IMG Equity pay service fees. The Company is not
paying any services fees under the Services Plan for the other Funds; however,
it may elect to pay such fees at any time without further notice to
shareholders.
3 Absent the reduction of distribution fees and services fees, "Total Fund
Operating Expenses" as a percentage of average daily net assets would have been
1.02% for IMG Government-T Shares, 1.27% for IMG Government-S Shares, 1.51% for
IMG Income, 1.59% for IMG Municipal, 1.64% for IMG Equity-T Shares, 1.64% for
IMG Equity-S Shares, 1.86% for IMG Balanced, 1.94% for IMG Growth and 1.56% for
IMG Limited.
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 Administrative 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
------ ------- ------- --------
IMG Government-T Shares $8 $25 $43 $95
IMG Government-S Shares $10 $32 $56 $125
IMG Income $10 $32 $56 $124
IMG Municipal $11 $35 $60 $133
IMG Equity-T Shares $12 $36 $63 $139
IMG Equity-S Shares $14 $44 $76 $167
IMG Balanced $14 $43 $74 $164
IMG Growth $15 $46 $79 $172
IMG Limited $11 $34 $58 $129
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
included in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions on their
customers.
AMCORE VINTAGE FUNDS
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AVF AVF AVF AVF AVF AVF AVF
GOVERNMENT INCOME TAX-FREE EQUITY BALANCED GROWTH TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 1
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a percentage of
original purchase price or redemption
proceeds, as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
ESTIMATED ANNUAL FUND OPERATING EXPENSEs (as a percentage of average net assets)
Management Fees 0.40% 0.60% 0.60% 0.75% 0.75% 0.95% 0.60%
12b-1 Fees 2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 0.36% 0.60% 0.68% 0.58% 0.80% 0.68% 0.65%
------ ------ ------ ------ ------ ------ ------
Total Fund Operating Expenses
After Waivers 3 0.76% 1.20% 1.28% 1.33% 1.55% 1.63% 1.40%
------ ------ ------ ------ ------ ------ ------
</TABLE>
1 A Participating Organization or a Bank may charge a Customer's account fees
for automatic investment and other investment management services provided in
connection with investment in the Fund.
2 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets of such Fund ("distribution fees"). 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 Plan. As a result of expenses payable in
connection with the Plan, it is possible that long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers.
3 Absent the reduction of distribution fees and services fees, "Total Fund
Operating Expenses" as a percentage of average daily net assets would have been
1.01% for IMG Government, 1.45% for IMG Income, 1.53% for IMG Municipal, 1.58%
for IMG Equity, 1.80% for IMG Balanced, 1.88% for IMG Growth and 1.65% for IMG
Limited.
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
------ ------- ------- --------
AVF Government $9 $24 $42 $94
AVF Income $12 $38 $66 $145
AVF Tax-Free $13 $41 $70 $155
AVF Equity $14 $42 $73 $160
AVF Balanced $16 $49 $84 $185
AVF Growth $17 $51 $80 $193
AVF Total Return $14 $44 $77 $168
The purpose of the above table is to assist a potential purchaser of a Fund's
Shares in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. Such expenses do not include any fees
charged by AMCORE Investment Group N.A. or any of its affiliates to customer
accounts which may have invested in Shares of the Fund. See "MANAGEMENT OF THE
GROUP" and "GENERAL INFORMATION" in the Prospectus for a more complete
discussion of the Shareholder transaction expenses and annual operating expenses
for the Fund. THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
AVF shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of AVF shares for shares of IMG Funds. Likewise,
neither AVF nor IMG Funds should recognize any gain or loss for federal income
tax purposes through the exchange of AVF assets and liabilities for shares of
IMG Funds.
Consummation of the Reorganization is subject to the condition that IMG
Funds and Coventry 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
AVF (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 AVF 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 Funds is a Maryland corporation organized on November 16, 1994. The
IMG Portfolios were created on October 30, 1997, to acquire the assets and
continue the business of the corresponding substantially similar investment
portfolios of Coventry, a Massachusetts business trust. Each share of an IMG
Portfolio 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.
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 Portfolio. 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 Portfolio. 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 of IMG Funds are entitled to one vote for each full share
held and proportionate fractional votes for fractional shares held. Shares of
each IMG Portfolio will vote together and not by class unless otherwise required
by law or permitted by the Board of Directors. All shareholders of each IMG
Portfolio will vote together as a class on matters relating to that Portfolio'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 AVF 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.
Although Coventry is organized as a Massachusetts business trust, there
are no significant differences in the rights of AVF shareholders and IMG Funds
shareholders. For a detailed description of the characteristics of the shares of
Coventry and the rights of AVF shareholders, see "General
Information-Description of the Group and its Shares" in the July 31, 1997 AVF
Prospectus.
CAPITALIZATION
The capitalization of each IMG Portfolio immediately after consummation
of the Reorganization will be identical to the capitalization of each AVF
Portfolio immediately prior to the consummation of the organization.
For that reason, pro forma capitalization is omitted.
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 the IMG Portfolios, see the
accompanying IMG Funds Prospectus dated __________, 1998. For the convenience of
AVF 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 the IMG Portfolios have not yet commenced substantive operations. For a
discussion of IMG Funds' expenses, see "Proposal 1: Agreement and Plan of
Reorganization--Expense Summary" above and "Expense Summary" in the IMG Funds
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the IMG Portfolios'
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 Managings
President and Director 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
Portfolios, 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 the IMG Portfolios or
other IMG Funds portfolios 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 the IMG Portfolios, which have not yet commenced
operations.
AMCORE VINTAGE FUNDS
GENERAL. The Coventry Group ("Coventry") is a Massachusetts business trust which
operates as an open-end diversified management investment company. The AMCORE
Vintage Funds ("AVF") are a group of investment portfolios within Coventry. For
a general discussion of AVF, see the accompanying AVF Prospectus dated July 31,
1997. For the convenience of shareholders, certain cross-references to such
Prospectus are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. The AVF Prospectus contains
information on per share income and capital changes, under the heading
"Financial Highlights." For a discussion of AVF's expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Fee Table" in
the AVF Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of AVF's investment
objectives and policies, see "Investment Objectives, Policies and Risk Factors
of the Funds" in the AVF Prospectus.
TRUSTEES AND OFFICERS. Overall responsibility for management of AVF rests with
its Board of Trustees, who are elected by the shareholders. The Trustees elect
the officers to supervise actively the day-to-day operations.
The names of the Trustees and officers, their addresses, and principal
occupations during the past five years are as follows:
Positions(s) Held Principal Occupation
Name, Address and Age With Coventry During Past 5 Years
- --------------------- ------------------ --------------------
* Walter B. Grimm Chairman, President From June 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund
Columbus, Ohio 43219 Services, from 1987 to
Age: 51 June 1992, President of
Leigh Investments
(Investment firm).
Maurice G. Stark Trustee Retired. Until December 31,
505 King Avenue 1994, Vice President-
Columbus, Ohio 43201 Finance and Treasurer,
Age: 61 Battelle Memorial Institute
(scientific research and
development service
corporation).
Michael M. VanBuskirk Trustee From June 1991 to present,
37 West Broad Street Executive Vice President
Suite 1001 of The Ohio Bankers'
Columbus, Ohio 43215 Association (trade
Age: 49 association); from
September 1987 to June
1991, Vice President -
Communications, TRW
Information Systems Group
(electronic and space
engineering).
Chalmers P. Wylie Trustee From April 1993 to present;
754 Stonewood Court Counsel, Kegler Brown Hill
Columbus, Ohio 43235 & Ritter; from January 1993
Age: 76 to present, Adjunct
Professor, Ohio State
University; from January
1967 to January 1993,
member of the United States
House of Representatives
for the 15th District
of Ohio.
* Nancy E. Converse Trustee From July 1990 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services.
Age: 47
J. David Huber Vice President From June, 1987 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services.
Age: 50
Thresa Dewar Treasurer From March 1997 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services, from September
Age: 47 1994 to March 1997
Independent Consultant;
from April 1975 to
September 1994, employee of
Federated Investors, Inc.
George L. Stevens Secretary From September 1996 to
3435 Stelzer Road present, employee of BISYS
Columbus, Ohio 43219 Fund Services, from
Age: 45 Septemer 1995 to September
1996, Independent
Consultant, from September
1989 to September 1995,
Senior Vice President,
AMSouth Bank, N.A.
- --------------------
*Mr. Grimm and Ms. Converse are each considered to be an "interested person" of
Coventry as defined in the 1940 Act.
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of AMCORE Capital
Management, Inc., The Winsbury Company and the services performed by them and
their fees, see "Management of the Group" in the AVF Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as
distributor, see "Management of the Group" in the AVF Prospectus.
SHARES. For a discussion of the significant attributes of AVF shares, see
"General Information - Description of the Group and its Shares" in the AVF
Prospectus.
REDEMPTION OR REPURCHASE OF SHARES. For a discussion concerning redemption or
repurchase of shares of AVF, see "How to Purchase and Redeem Shares" in AVF
Prospectus.
DIVIDENDS AND DISTRIBUTIONS. For a discussion of AVF policies with respect to
dividends and distributions, see "Dividends and Taxes" in AVF Prospectus.
EXCHANGE PRIVILEGES. For a discussion of an AVF shareholder's right to exchange
shares of an AVF Portfolio, see "How to Purchase and Redeem Shares" in the AVF
Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which AVF
is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to AVF may be addressed by
writing to AVF at 3435 Stelzer Road, Columbus, Ohio 43219, or calling toll-free
800-438-6375.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management's discussion of the
performance of AVF is found in the annual report of AVF, which is incorporated
by reference into the Statement of Additional Information relating to the July
31, 1997 Prospectus of AVF.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Trustees of AVF for
use at the Special Meeting of Shareholders to be held on February 3, 1998 (the
"Meeting"). It is expected that the solicitation of proxies by the Board of
Trustees will be primarily by mail. AVF's officers may also solicit proxies by
telephone facsimile transmission or personal interview.
The following table gives the total number of shares of AVF outstanding
at the close of business on January 9, 1998, the record date for the meeting.
AVF Government...............................
AVF Income........................................
CVF Equity.........................................
AVF Tax-Free.......................................
AVF Balanced......................................
CVF Total Return ...............................
AVF Growth........................................
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 the enumerated proposal. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to Coventry, c/o Secretary, 3435 Stelzer Road, Columbus, Ohio 43219,
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 AVF Portfolio.
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 mater 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 Funds 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 AVF
beneficially owned, individually and as a group, less than 1% of the shares of
AVF. No person owned of record or beneficially 5% or more of the outstanding
shares of either AVF or an AVF fund as of November 30, 1997, except Swebak &
Company, Corelink Financial, Inc., and Firwood.
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 Declaration of Trust of
Coventry, a quorum is constituted by the presence in person or by proxy of the
holders of % 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., and the Coventry Group, 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 AVF
Prospectus and the related Statement of Additional Information which are
incorporated by reference herein is Registration No. 33-________. The SEC file
number for the IMG Funds Prospectus and related Statement of Additional
Information which are incorporated by reference herein is Registration No.
33-81998.
IMG Mutual Funds, Inc. and The Coventry Group 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 Trustees 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 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 800-438-6375.
* * *
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 ___ day of November 1997, is made by and
between IMG Mutual Funds, Inc., a Maryland corporation ("IMG Funds") and The
Coventry Group, a Massachusetts business trust ("Coventry").
WITNESSETH:
WHEREAS, the Board of Directors of IMG Funds, and the Board of Trustees
of Coventry, each an open-end management investment company, deem it advisable
that IMG Funds acquire certain portfolios (the "Acquired Funds") hereinafter
identified of Coventry in exchange for the assumption by IMG Funds of all of the
liabilities of the Acquired Funds and the issuance of shares of IMG Funds which
are thereafter to be distributed by Coventry in complete liquidation and
termination of the Acquired Funds and in exchange for all of the outstanding
shares of the Acquired Funds, 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 (the "Reorganization"); and
WHEREAS, the portfolios of Coventry to be acquired pursuant to this
Agreement are AMCORE Vintage U.S. Government Obligations Fund (the "Government
Fund"), AMCORE Vintage Fixed Income Fund (the "Income Fund"), AMCORE Vintage
Intermediate Tax-Free Fund (the "Tax-Free Fund"), AMCORE Vintage Equity Fund
(the "Equity Fund"), AMCORE Vintage Balanced Fund (the "Balanced Fund"), AMCORE
Vintage Aggressive Growth Fund (the "Growth Fund") and AMCORE Vintage Fixed
Total Return Fund (the "Total Return Fund"), each an "Acquired Fund" and,
collectively, the "Acquired Funds";
NOW THEREFORE, in consideration of the mutual promises herein
contained, each of the parties hereto represents and warrants to, and agrees
with the other party as follows:
1. IMG Funds hereby represents, warrants and covenants to Coventry
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, 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 (the "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 seven new series (collectively, the
"Vintage Clone Funds") each of which series will be a
portfolio of securities managed under investment objectives,
policies and restrictions substantially similar to one of
the Acquired Funds, as more fully described below;
(k) On the Closing Date the shares of the Vintage Clone Funds to
be delivered to Coventry 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 Commission in connection therewith; and
(l) On the Closing Date, the shares of the Vintage Clone Funds
to be delivered to Coventry hereunder shall have been
registered with the appropriate securities administrator or
agency of each state under whose securities law such
registration is required.
2. Coventry hereby represents, warrants and covenants to IMG Funds
that:
(a) Coventry is a business trust, with transferable shares, duly
organized and validly existing under the laws of the State
of Massachusetts, and has full power to own its properties
and assets and to carry on its business as such business is
now being conducted.
(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 Acquired Fund, all as audited by Ernst & Young LLP,
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis. Each
such statement of assets and liabilities fairly presents the
financial position and net assets of such Acquired Fund 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. All books, records and
accounts of the Acquired Funds have been maintained in
accordance with applicable legal requirements and generally
accepted accounting principles applicable to investment
companies;
(c) There are no claims, actions, suits or proceedings pending
or, to its knowledge, threatened against or affecting
Coventry 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 Coventry'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) Coventry 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) Coventry 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. Coventry 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 Coventry does not, and the consummation of the
transactions contemplated hereby, subject to the approval of
shareholders of the Acquired Funds as referred to in
paragraph 11, will not violate, or conflict with any
provision of Coventry's Declaration of Trust 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 a 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 Coventry and constitutes a valid and binding
agreement of Coventry and all governmental and other
approvals required for Coventry 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, Coventry and each Acquired Fund 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 Coventry'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 Coventry is a
party or to which it is subject;
(i) On the Closing Date, subject to the approval of shareholders
of the Acquired Funds as referred to in paragraph 11,
Coventry 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) Coventry will declare to shareholders of record of each
Acquired Fund immediately 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 Acquired Fund (computed without regard to any deduction
for dividends paid) and all of the net realized capital
gains, if any, through the close of business on the business
day immediately preceding the Closing Date; and
(k) Coventry 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 Coventry 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, Coventry
agrees to transfer to IMG Funds and IMG Funds agrees to
acquire from Coventry, all the assets of the Acquired Funds on
the Closing Date and to assume from Coventry all of the
liabilities of the Acquired Fund 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 the Acquired Funds in complete liquidation
and termination of the Acquired Funds and in exchange for all
of the outstanding shares of the Acquired Funds. Coventry
shall not issue, sell or transfer any of its shares after the
Closing Date, and only redemption requests received by
Coventry in proper form prior to the Closing Date shall be
fulfilled by Coventry. Redemption requests received by
Coventry 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 Coventry a number
of full and fractional shares of each Vintage Clone Fund,
taken at their then net asset value, having an aggregate net
asset value equal to the value of the net assets of the
corresponding Acquired Fund, that is, shares of Vintage
Government Assets Fund for assets of the Government Fund;
shares of Vintage Income Fund for assets of the Income Fund;
shares of Vintage Municipal Bond Fund for assets of the
Tax-Free Fund; shares of Vintage Equity Fund for assets of the
Equity Fund; shares of Vintage Balanced Fund for assets of the
Balanced Fund; shares of Vintage Aggressive Growth Fund for
assets of the Growth Fund; and shares of Vintage Limited Term
Bond Fund for assets of the Total Return Fund. The aggregate
value of the net assets of each Acquired Fund and each Vintage
Clone Fund shall be determined in accordance with the then
current Prospectus of IMG Funds as of 3:00 p.m. Central
Standard Time on the business day immediately preceding the
Closing Date, unless the parties agree to determine such
values as of another date (the "Valuation 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 February 5, 1998, 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 proposed Valuation Date or 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) an emergency exists as a result
of which it is not reasonably practicable for either the
Vintage Clone Funds or the Acquired Funds to fairly determine
the value of their respective assets, the Closing 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, Coventry shall
(a) distribute on a pro rata basis to each shareholder of
record of the Acquired Funds at the close of business on the
Valuation Date the shares of the appropriate Vintage Clone
Fund received by Coventry at the Closing in exchange for each
such shareholder's shares of an Acquired Fund and (b)
liquidate and dissolve the Acquired Funds in accordance with
applicable law and its Declaration of Trust.
For purposes of the distribution of shares of the Vintage
Clone Funds to shareholders of the Acquired Funds, 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 Acquired
Fund. 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 an Acquired Fund, shall be deemed for
all purposes of IMG Funds' Charter 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 Acquired Fund as provided above.
7. Subsequent to the execution of this Agreement and prior to the
Closing Date, Coventry shall deliver to IMG Funds a list
setting forth the assets to be assigned, delivered and
transferred by each Acquired Fund to IMG Funds, including the
securities then owned by each such Acquired Fund 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 portfolio securities of each Acquired Fund shall be
delivered by Coventry'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 Coventry's account at
its custodian to IMG Funds' account at its custodian. If on
the Closing Date Coventry is unable to make good delivery
pursuant to this Section 8 to IMG Funds' custodian of any of
Coventry's portfolio securities because such securities have
not yet been delivered to Coventry'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 Coventry 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 Trustees
of Coventry and the shareholders of each Acquired Fund
authorizing the execution and performance of this Agreement
by Coventry and the transactions contemplated hereunder,
certified by the Secretary or Assistant Secretary of
Coventry;
(b) A certificate of the Secretary or Assistant Secretary of
Coventry as to the signatures and incumbency of its officers
who executed this Agreement on behalf of Coventry and any
other documents delivered in connection with the
transactions contemplated thereby on behalf of Coventry;
(c) A certificate of an appropriate officer of Coventry 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
Coventry are true and correct in all material respects at
and as of the Closing Date as if made at and as of such
date;
(d) Such other documents as IMG Funds may reasonably request to
show fulfillment of the purposes and conditions of this
Agreement; and
(e) An opinion of Dechert Price & Rhoads in form reasonably
satisfactory to IMG Funds and dated as of the Closing Date
of the Reorganization, substantially to the effect that (i)
Coventry is a Massachusetts business trust duly established
and validly existing under the laws of the State of
Massachusetts; (ii) the shares of the Acquired Funds to be
delivered to IMG Funds as provided by this Agreement are
duly authorized and are validly issued, fully paid and
non-assessable; (iii) this Agreement has been duly
authorized, executed and delivered by Coventry, and
represents a legal, valid and binding contract enforceable
in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application relating to or affecting
creditors' rights generally and to the application of
general principles of equity; and (iv) the execution and
delivery of this Agreement did not, and the consummation of
the transactions contemplated by this Agreement will not,
violate the Declaration of Trust or Bylaws of Coventry or
any material contract known to such counsel to which
Coventry is a party or by which it is bound.
10. The obligations of Coventry under this Agreement shall be
subject to receipt by Coventry 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 and performance 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;
(d) Such other documents as Coventry may reasonably request to
show fulfillment of the purposes and conditions of this
Agreement;
(e) An opinion of Cline, Williams, Wright, Johnson & Oldfather
in form reasonably satisfactory to Coventry and dated as of
the Closing Date of the Reorganization, substantially to the
effect that (i) IMG Funds is a Maryland corporation duly
established and validly existing under the laws of the State
of Maryland; (ii) the shares of the Vintage Clone Funds to
be delivered to Coventry as provided for by this Agreement
are duly authorized and upon delivery will be validly
issued, fully paid and non-assessable by IMG Funds; (iii)
this Agreement has been duly authorized, executed and
delivered by IMG Funds, and represents a legal, valid and
binding contract, enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general
application relating to or affecting creditors' rights
generally and to the application of general principles of
equity; (iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the
Articles of Incorporation or By-Laws of IMG Funds or any
material contract known to such counsel to which IMG Funds
is a party or by which it is bound and (v) no consent,
approval, authorization or order of any court or
governmental authority is required for the consummation by
IMG Funds of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, the rules and regulations
under those Acts and such as may be required by state
securities laws or such as may be required subsequent to the
Closing of the Reorganization.
(f) An opinion of Cline, Williams, Wright, Johnson & Oldfather
addressed to IMG Funds and Coventry in form reasonably
satisfactory to them, and dated as of the Closing Date of
the Reorganization, substantially to the effect that, for
federal income tax purposes (i) the transfer by each
Acquired Fund of all of its assets to the corresponding
Vintage Clone Fund in exchange for shares of the
corresponding Vintage Clone Fund, and the distribution of
such shares to the shareholders of the Acquired Fund, as
provided in this Agreement, will constitute a reorganization
within the meaning of Section 368(a)(1)(C) of the Code; (ii)
no income, gain or loss will be recognized by the Acquired
Funds as a result of such transactions; (iii) no income,
gain or loss will be recognized by the Vintage Clone Funds
as a result of such transactions; (iv) no income, gain or
loss will be recognized by the Acquired Funds on the
distribution to them by the Acquired Funds of shares of the
corresponding Vintage Clone Funds in exchange for their
shares of the Acquired Funds (but shareholders of an
Acquired Fund subject to taxation will recognize income upon
receipt of any net investment income or net capital gains of
such Vintage Clone Fund which are distributed by such
Acquired Fund prior to the Closing Date of the
Reorganization); (v) the tax basis of the Vintage Clone Fund
shares received by each shareholder of an Acquired Fund will
be the same as the tax basis of the shareholder's Acquired
Fund shares exchanged therefor; (vi) the tax basis of the
Acquired Fund assets received by each Vintage Clone Fund
will be the same as the basis of such Fund assets in the
hands of the corresponding Acquired Fund immediately prior
to the transactions; (vii) a shareholder's holding period
for Vintage Clone Fund shares will be determined by
including the period for which the shareholder held the
shares of the Acquired Fund exchanged therefor, provided
that the shareholder held such shares for the Vintage Clone
Fund as a capital asset at the Closing of the
Reorganization; (viii) the holding period of each Vintage
Clone Fund with respect to the Acquired Fund Assets will
include the period for which such Fund assets were held by
the corresponding Acquired Fund provided that the Acquired
Fund held such assets as capital assets; and (ix) each
Vintage Clone Fund will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of
the corresponding Acquired Fund as of the Closing of the
Reorganization.
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
Acquired Fund, of this Agreement and the transactions
contemplated hereunder.
(b) The right to abandon and terminate this Agreement, if either
Coventry or IMG Funds believes that the consummation of the
transactions contemplated hereunder would not be in the best
interests of its shareholders.
12. IMG Funds will pay its own and Coventry's out-of-pocket fees
and expenses incurred 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.
13. This Agreement may be amended by an instrument executed by the
duly authorized officers of Coventry and IMG Funds at any
time, except that after approval by the shareholders of the
Acquired Funds, no amendment may be made with respect to the
Agreement which, in the opinion of the Board of Trustees of
Coventry, materially adversely affects the interests of the
shareholders of Coventry. At any time Coventry or IMG Funds
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 paragraph 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 the Acquired Funds and notwithstanding
favorable action by such shareholders, by mutual consent of
the Board of Directors of IMG Funds and the Board of Trustees
of Coventry. This Agreement may also be terminated by action
of the Board of Directors of IMG Funds or the Board of
Trustees of Coventry, 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 Coventry or IMG Funds shall, at the Final Date, have
failed to comply with any of its agreements; or
(c) Prior to the Final Date any one or more of the conditions to
the obligations of IMG Funds or Coventry contained in this
Agreement shall not be fulfilled to the reasonable
satisfaction of IMG Funds and its counsel or Coventry and
its counsel or it shall become evident to IMG Funds or
Coventry 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. Coventry 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 IMG Funds, its officers, directors, employees or
agents, arising out of or based on (i) any breach by Coventry
of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or (ii) any untrue
statement or alleged untrue statement of a material fact
provided by Coventry and contained in any proxy statement for
Coventry, as filed with the Commission or any amendment or
supplement thereto, or any notification prepared by or on
behalf of Coventry and filed with any state regulatory agency,
or in any information provided by Coventry included in any
proxy statement or registration statement filed by IMG Funds
with the Securities and Exchange Commission 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 proxy
statement, registration statement or application necessary to
make the statements therein not misleading. This indemnity
provision shall survive the termination of this Agreement.
21. IMG Funds shall indemnify, defend and hold harmless Coventry,
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 Coventry, its officers, trustees, employees or
agents, arising out of or based on (i) any breach by IMG Funds
of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or (ii) any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement on Form N-1A or Form
N-14 for IMG Funds, as filed with the Securities and Exchange
Commission or any amendment or supplement thereto, or any
notification prepared by or on behalf of IMG Funds and
submitted to any state regulatory agency regarding the sale of
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 registration statement or application
necessary to make the statements therein not misleading;
provided, however, IMG Funds shall not be required to
indemnify Coventry, its officers, directors, employees and
agents against any loss, claim, demand, liability or expense
arising out of any information provided by Coventry included
in any registration statement filed by IMG Funds with the
Securities and Exchange Commission 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 Trustees
of Coventry.
The Declaration of Trust for The Coventry Group a copy of
which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides (i) that the name The Coventry Group refers to the
trustees under the Declaration of Trust collectively as
trustees and not as individuals or personally, (ii) that no
shareholder shall be subject to any personal liability
whatsoever to any person in connection with trust property or
the acts, obligations or affairs of the trust, and (iii) that
no trustee, officer, employee or agent of the trust shall be
subject to any personal liability whatsoever to any person,
other than to the trust or its shareholders, in connection
with trust property or the affairs of the trust, save only
that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties with respect to
such person; and all such persons shall look solely to the
trust property for satisfaction of claims of any nature
arising in connection with the affairs of the trust.
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: _______________________
THE COVENTRY 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...........................................
AMCORE VINTAGE FUNDS............................................
CAPITAL VALUE FUND, INC.........................................
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>
THE COVENTRY GROUP
AMCORE VINTAGE ______________ FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 3, 1998
This Proxy is solicited on behalf of the Trustees of the Fund
The undersigned hereby appoints ___________, _________________, and
__________________, 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 AMCORE Vintage Fund on February
3, 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. 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 PROPOSAL 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 The Coventry Group and IMG Mutual Funds, Inc.
providing for the transfer of all of the assets of the AMCORE
Vintage Fund (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
[ ] [ ] [ ]
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 12, 1998, relating to the transfer of assets from portfolios of The
Coventry Group (the "AVF Portfolios") to corresponding portfolios of IMG Mutual
Funds, Inc. The Statement of Additional Information for the AVF Portfolios dated
July 31, 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 The Coventry Group, 3435 Stelzer Road,
Columbus, Ohio 43219 or by calling 1-800-438-6375.
The date of this Statement of Additional Information is January 12, 1998.
<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 12th 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 12, 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
We consent to the use of our report dated May 9, 1997, incorporated by reference
in the Statement of Additional Information included in Post-Effective Amendment
No. 31 to the Registration Statement (Form N-1A No. 33-44964) of the AMCORE
Vintage Mutual Funds, one of the series of portfolios constituting The Coventry
Group, that is incorporated by reference into the Statement of Additional
Information included in the Registration Statement (Form N-14) of IMG Mutual
Funds, Inc.
Ernst & Young LLP
Columbus, Ohio
December 12, 1997
<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 12, 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 12, 1997
IMG Mutual Funds, Inc.
2203 Grand Ave.
Des Moines, IA 50312-5338
The Coventry Group
3435 Stelzer Road
Columbus, OH 43219
RE: Plan of Reorganization for Combining The Coventry Group, the
AMCORE Vintage U.S. Government Obligation Fund (the
"Government Fund"), the AMCORE Vintage Fixed Income Fund (the
"Income Fund"), the AMCORE Vintage Intermediate Tax-Free Fund
(the "Tax-Free Fund"), the AMCORE Vintage Balanced Fund (the
"Balanced Fund"), the AMCORE Vintage Aggressive Growth Fund
(the "Growth Fund"), and the AMCORE Vintage Fixed Total Return
Fund (the "Total Return Fund") (the "Acquired Portfolios")
into the IMG Mutual Funds, Inc., and its Government Fund
Portfolio, Income Fund Portfolio, Tax-Free Fund Portfolio,
Equity Fund Portfolio, Balanced Fund Portfolio, Growth Fund
Portfolio, and Total Return 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
The Coventry Group ("CG") is a Massachusetts business trust 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." CG, 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
(but shareholders of an Acquired Fund subject to taxation will
recognize income upon receipt of any net investment income or net
capital gains of such Acquired Funds which are distributed to them by
such Acquired Fund prior to the closing date of its Reorganization);
(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; and
(ix) each of the Surviving Funds will succeed and take into
account the earnings and profits or deficits in earnings and profits of
the corresponding Acquired Fund as of the closing of the
Reorganization.
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
