As filed with the Securities and Exchange Commission on
December 18, 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)
------------------------------
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
---------------------------
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 17, 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
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 Synopsis; Risk Factors;
Information and Proposal 1: Plan of
Risk Factors of Reorganization;
Proposal 3: Plan of
Reclassification
Item 4. Information About the Transaction Outside Front Cover;
Synopsis; Proposal 1:
Plan of Reorganization;
Proposal 3: Plan of
Reclassification
Item 5. Information About the Registrant IMG Mutual Funds, Inc.
Item 6. Information About the Company IMG Mutual Funds, Inc.
Being Acquired
Item 7. Voting Information Outside Front Cover; Synopsis;
Information Relating to
Voting Matters
Item 8. Interest of Certain Persons Proposal 2 and Proposal 4:
Approval of Advisory
Agreement
Item 9. Additional Information Required Not Applicable
For Re-offering by Persons Deemed
To be Underwriters
<PAGE>
Statement of Additional
Part B Information Caption
- ------ -------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Not Applicable
Item 12. Additional Information Cover Page
About Registrant
Item 13. Additional Information About Not Applicable
The Company Being Acquired
Item 14. Financial Statements Not Applicable
Part C
The information required in Part C is included therein under the appropriate
heading for the item.
<PAGE>
January __, 1998
Dear Shareholder:
I am writing to ask you for your vote on important questions that affect your
investment in the IMG Core Stock Fund and IMG Bond Fund (the "Funds") offered by
IMG Mutual Funds, Inc. (the "Company"). While you are, of course, welcome to
join us at the Funds' Special Shareholder Meeting, most shareholders cast their
vote by filling out and signing the enclosed proxy card.
As you may be aware, Investors Management Group, which provides investment
services to the Funds, has signed a definitive agreement to be acquired by
AMCORE Financial, Inc., of Rockford, Illinois. This transaction will not result
in any change to your Funds' advisory services or the high quality shareholder
services that you have come to expect over the years.
As required by the Investment Company Act of 1940, the transaction will result
in the automatic termination of the agreement under which Investors Management
Group provides advisory services to the Funds. This transaction thus requires
the approval by the holders of shares of each Fund of a new advisory
agreement--which will be substantially identical to the agreement currently in
effect.
As part of our continuing effort to maximize the benefits to shareholders of
investing in the Funds, the Board of Directors of your Funds has recently
reviewed and unanimously endorsed a proposal for the reorganization of the
Funds, which they have determined to be in the best interest of the
shareholders. The proposals call for the reorganization of the IMG Core Stock
Fund into a new fund named Vintage Equity Fund and the elimination of multiple
classes of shares offered by the IMG Bond Fund. The Vintage Equity Fund is being
established by the Company as a new series as part of a related series of
transactions involving the Company and resulting from the acquisition of
Investors Management Company by AMCORE Financial, Inc. In these transactions,
seven mutual funds managed by AMCORE generally referred to as the Vintage Funds
will be reorganized as separate series of the Company. The IMG Core Stock Fund
and the present AMCORE Vintage Equity Fund will be combined into the new Vintage
Equity Fund, which after the combination will have aggregate net assets of
approximately $408 million. Vintage Equity Fund will have similar investment
objectives and investment policies as the IMG Core Stock Fund.
The aggregate net asset value of shares of the Vintage Equity Fund that you
will receive as a result of the reorganization will be equal to the aggregate
net asset value of the IMG Core Stock Fund shares that you now own. As to the
IMG Bond Fund, a Plan of Reclassification will result in the elimination of its
multiple class structure. Shareholders holding any of the Fund's shares will
receive new shares of one class. No sales charge will be imposed in the
transaction and Fund shareholders will not bear any of the costs associated with
the reorganization. Investors Management Group currently serves as investment
advisor to IMG Mutual Funds, Inc., so consistency of portfolio management will
be maintained following the transaction.
The Directors of the Funds recommend that the shareholders approve the
reorganizations. The Directors believe the transactions would benefit the Funds
and their shareholders by increasing the IMG Core Stock Fund's assets initially
and enhancing both Funds' capacity to attract and retain investors. In making
their determination, the Directors reviewed several factors, including the
qualifications and capabilities of the service providers of IMG Mutual Funds,
Inc. If, as expected, the distributor of IMG Mutual Funds, Inc. is able to
distribute IMG Mutual Funds, Inc. shares successfully, growth in assets would
make possible the realization of economies of scale and attendant savings in
costs to IMG Mutual Funds, Inc. and its shareholders. Of course, achievement of
these goals cannot be assured.
In considering these transaction, we are also asking that you approve certain
amendments to the Company's Charter. These amendments will facilitate the
transactions and also are intended to bring the Company's Charter up to date.
Finally, as a result of the acquisition of Investors Management Group by AMCORE
Financial, Inc. and the proposed reorganizations, we are asking you to elect a
new Board of Directors to serve after the acquisition is consummated. The slate
of candidates expands the Board to seven members and eliminates any affiliation
of a Director with Investors Management Group or AMCORE Financial, Inc. We
believe we have identified excellent candidates who will serve the Company well
as we complete the reorganizations in 1998 and continue the operations of our
expanded fund family.
Detailed information about the proposed transactions and the reasons for them is
contained in the enclosed combined Proxy Statement/Prospectus. The enclosed
proxy card is, in essence, a ballot. It tells us how to vote on your behalf on
important issues relating to your Fund. If you complete and sign the proxy,
we'll vote it exactly as you tell us. If you simply sign the proxy card, we'll
vote it according to the Directors' recommendation. We urge you to review
carefully the Proxy Statement/Prospectus, fill out your proxy card, and return
it to us. A self-addressed, postage-paid envelope has been enclosed for your
convenience. It is very important that you vote and that your voting
instructions be received no later than January 29, 1998.
NOTE: You may receive more than one proxy package if you hold shares in more
than one account in a Fund, or if you hold shares in more than one Fund. You
must return ALL proxy cards you receive. We have provided postage-paid return
envelopes for each. If you have any questions, please call Investors Management
Group at (515) 244-5426 or 1-800-798-1819.
Sincerely,
Mark A. McClurg, President
IMG Mutual Funds, Inc.
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY __, 1998
TO THE SHAREHOLDERS OF IMG MUTUAL FUNDS, INC.
You are cordially invited to attend the Special Meeting of Shareholders of IMG
Mutual Funds, Inc., which will be held at 2203 Grand Avenue, Des Moines, Iowa
50312-5338, on January ___, 1998, at 10:00 a.m., for the following purposes:
FOR SHAREHOLDERS OF THE IMG CORE STOCK FUND
1. To consider and vote on a proposed Plan of Reorganization providing for
(a) the transfer of all the assets of IMG Core Stock Fund to Vintage
Equity Fund in exchange for shares of the Vintage Equity Fund; (b) the
assumption by the Vintage Equity Fund of all of the liabilities of IMG
Core Stock Fund; and (c) the distribution of shares of Vintage Equity
Fund to the shareholders of IMG Core Stock Fund in complete liquidation
of IMG Core Stock Fund.
2. To consider and vote upon a proposed new Advisory Agreement with
Investors Management Group, Ltd. ("IMG") to be in effect after the
proposed acquisition of IMG by AMCORE Financial, Inc.
FOR SHAREHOLDERS OF THE IMG BOND FUND
3. To consider and vote on a Plan of Reclassification providing for the
reclassification of the three classes of shares currently authorized
for the IMG Bond Fund into a single new class.
4. To consider and vote upon a proposed new Advisory Agreement with IMG to
be in effect after the proposed acquisition of IMG by AMCORE Financial,
Inc.
FOR ALL SHAREHOLDERS
5. To elect a new Board of Directors
6. To approve and Amended and Restated Charter which is necessary to
effectuate the reorganizations described herein and which provide
future flexibility in creating new classes and series of shares for new
mutual funds.
7. To act upon such other matters as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on Wednesday, December
31, 1997, 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 IMG Mutual Funds, Inc. outstanding and
eligible to vote at the Special Shareholders Meeting. A list of such
shareholders will be maintained at the offices of Investors Management Group at
2203 Grand Avenue, Des Moines, Iowa 50312-5338, during the ten day period
preceding the Special Shareholders Meeting. Please read the Proxy
Statement/Prospectus carefully before telling us, through your proxy card, how
you wish your shares to be voted. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF EACH OF THE PROPOSALS.
WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED. No postage is required. Prompt return of your proxy card
will be appreciated. Your vote is important no matter how many shares you own.
Des Moines, Iowa BY ORDER OF THE BOARDS OF DIRECTORS
January ___, 1998
Ruth Prochaska, Secretary
<PAGE>
PROXY STATEMENT/PROSPECTUS
IMG MUTUAL FUNDS, INC.
IMG CORE STOCK FUND
IMG BOND FUND
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
This Proxy Statement/Prospectus is being furnished to shareholders of IMG Mutual
Funds, Inc. (the "Company" or "IMG Funds") in connection with the solicitation
by the Board of Directors of proxies to be used at the Special Meeting of
Shareholders of the Company to be held at 2203 Grand Avenue, Des Moines, Iowa
50312-5338 at 10:00 a.m. on January ___, 1998, and any adjournments thereof.
Shareholders of record as of the close of business on December 31, 1997 are
entitled to vote at the Special Meeting. It is expected that this Proxy
Statement/Prospectus will be mailed to shareholders of the Company on or about
January ___, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization of IMG
Core Stock Fund ("CS Fund") and reclassification of shares of IMG Bond Fund
("Bond Fund"). As a result of the proposed CS Fund reorganization, each
shareholder of CS Fund will receive that number of full and fractional shares of
a new series of shares of the Company designated Vintage Equity Fund shares
having an initial net asset value equal to the net asset value of such
shareholder's shares of CS Fund held as of the date of the proposed
reorganization. As a result of the proposed reclassification of shares of the
Bond Fund, all outstanding shares of the three classes of shares of the Bond
Fund will be reclassified as shares of a new class, and each shareholder of the
Bond Fund will receive that number of full and fractional shares of the new
class having an initial net asset value equal to the net asset value of such
shareholder's shares of the Bond Fund held as of the date of the proposed
reorganization. In addition to considering the CS Fund reorganization and the
Bond Fund reclassification, the shareholders of the CS Fund and Bond Fund will
(i) consider and vote on a new advisory agreement for the CS Fund and Bond Fund
with Investors Management Group, Ltd. ("IMG"); (ii) elect a new Board of
Directors; and (iii) consider and vote on proposed Articles of Amendment and
Restatement to the Charter of Company.
The Company is a diversified registered open-end investment company that issues
its shares in separate portfolios or series, each with its own investment
objectives and policies. The investment objectives, policies and restrictions of
the new Vintage Equity Fund are virtually identical to those of the CS Fund. For
a comparison of the investment objectives, policies and restrictions of the CS
Fund and the Vintage Equity Fund, see "Proposal 5: Plan of
Reorganization--Investment Objectives, Policies and Restrictions."
IMG serves as the investment advisor for IMG Funds. The proposal to consider and
vote on a new Advisory Agreement is necessitated as a result of the anticipated
acquisition of IMG by AMCORE Financial, Inc. ("AMCORE"). The new Advisory
Agreement would be in effect on and after the date that the acquisition of IMG
by AMCORE (the "AMCORE/IMG Acquisition") is consummated. The election of a new
Board of Directors is also being proposed, in part because of certain rules
relating to the makeup of the Board of Directors of a mutual fund after the
acquisition of its investment adviser. An entire new Board of Directors has been
nominated for election, all of whom are unaffiliated with IMG or AMCORE and not
otherwise deemed "interested" persons of Company at the time the AMCORE/IMG
Acquisition is closed. Concurrently with the CS Fund Reorganization and the Bond
Fund Reclassification, the Company will also be engaged in reorganization
transactions with four other registered investment companies which will result
in the Company offering nine other funds, including the Vintage Equity Fund,
into which the CS Fund will be reorganized. The Articles of Amendment and
Restatement are being proposed to effectuate the CS Fund Reorganization, the
Bond Fund Reclassification and make other changes to facilitate the
establishment of the other funds and classes of shares in the Company.
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 CS Fund Reorganization and Bond Fund
Reclassification and the other matters described herein. Much of the information
is required under rules of the Securities and Exchange Commission and some of it
is technical in nature. If there is anything you do not understand, please
contact us at our toll-free number, 1-800-798-1819. Shareholders should return
proxies and any correspondence to IMG, 2203 Grand Avenue, Des Moines, Iowa
50312-5338.
The following documents have been filed with the Securities and Exchange
Commission and are incorporated into this Proxy Statement/Prospectus by
reference: (i) a Statement of Additional Information dated the date hereof and
relating to this Proxy Statement/Prospectus; (ii) the Prospectuses and
Statements of Additional Information of the IMG Funds, dated August 27, 1977 and
__________, 1998. 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 ___, 1998.
<PAGE>
SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the current Directors of IMG Mutual Funds,
Inc. (the "Company") for use at the Special Meeting of Shareholders of the
Company to be held on January ___, 1998 (and if adjourned, at any adjourned
meeting) for the purposes stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE ON THESE
PROPOSALS?
The Directors recommend that CS Fund shareholders vote:
FOR the approval of the CS Fund Plan of Reorganization.
FOR the approval of the new Advisory Agreement for the CS Fund.
The Directors recommend that Bond Fund shareholders vote:
FOR the approval of the Bond Fund Plan of Reclassification
FOR the approval of the new Advisory Agreement for the Bond Fund.
The Directors recommend that all shareholders vote:
FOR the election of all nominees identified herein to the Board of
Directors.
FOR the approval of the Articles of Amendment and Restatement.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on December 31, 1997,
are entitled to be present and vote at the meeting or any adjourned meeting. The
CS Fund shareholders will vote separately on Proposals 1 and 2. The Bond Fund
shareholders will vote separately on Proposals 3 and 4. All shareholders will
vote together on the other proposals. On December 31, 1997, there were
outstanding __________ shares of CS Fund and _______ shares of Bond Fund. 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
___, 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 the shareholder's instructions. Any shareholder giving a proxy
has the power to revoke it by mail (addressed to the Fund's Secretary at the
principal offices of the Fund, 2203 Grand Avenue, Des Moines, Iowa 50312-5338)
or in person at the meeting, by executing a superseding proxy, or by submitting
a notice of revocation to the Fund. If you sign the proxy, but don't fill in a
vote, your shares will be voted in accordance with the Directors'
recommendations. If any other business is brought before the meeting, your
shares will be voted at the Directors' discretion.
WHAT IS BEING PROPOSED?
THE CS FUND REORGANIZATION. The Directors of the Company are recommending that
shareholders approve a Plan of Reorganization of CS Fund into a new fund of the
Company family designated Vintage Equity Fund. The Plan of Reorganization
provides for the transfer of all of the assets and liabilities of CS Fund to
Vintage Equity Fund, in exchange for shares of Vintage Equity Fund. The
completion of these transactions, followed by the distribution of Vintage Equity
Fund shares to CS Fund shareholders, will result in the combination of these
Funds' assets and liabilities, with the shareholders of CS Fund becoming
shareholders of the Vintage Equity Fund, followed by the termination of the CS
Fund. Upon completion of the Reorganization:
Shareholders of CS Fund will be Shareholders of Vintage Equity Fund
which has similar investment objectives, policies and restrictions and
purchase and redemption procedures as CS Fund.
There should be no federal income tax consequences to former
Shareholders of CS Fund, resulting from the Reorganization.
THE NEW CS FUND ADVISORY AGREEMENT. The Board of Directors is recommending that
CS Fund shareholders approve a new Advisory Agreement with IMG. This approval is
being requested because of the anticipated acquisition of IMG by AMCORE
("AMCORE/IMG Acquisition"). The new Agreement would only be effective as to the
CS Fund from the date that the AMCORE/IMG Acquisition is consummated, until the
CS Fund is reorganized into the Vintage Equity Fund. No change in fees or
responsibilities under the new Advisory Agreement will occur.
THE BOND FUND PLAN OF RECLASSIFICATION. The Board of Directors is recommending
that the Bond Fund shareholders approve a Plan of Reclassification that will
reclassify all existing classes of Bond Fund Shares (Select Shares, Adviser
Shares and Institutional Shares) into a new untitled class of shares. The new
class of shares will not currently carry 12b-1 fees or shareholder servicing
fees and will be lower in total overall fees than the Adviser shares. Upon the
consummation of the reclassification all current holders of Bond Fund shares
will be shareholders of the new class. There should be no federal income tax
consequences to Bond Fund shareholders, resulting from the reclassification.
THE NEW BOND FUND ADVISORY AGREEMENT. The Board of Directors is recommending
that the Bond Fund shareholders approve a new Advisory Agreement with IMG. This
approval is being requested because of the anticipated acquisition of IMG by
AMCORE ("AMCORE/IMG Acquisition"). The new Agreement would only be effective as
to the Bond Fund from the date that the AMCORE/IMG Acquisition is consummated,
and will continue according to its terms after the reclassification is
consummated. Investment advisory fees under the new Agreement increase upon the
consummation of the reclassification. This increase from 0.30% to 0.55 %
annually is the result of the review and restatement of fees upon the
consummation of the AMCORE/IMG Acquisition. Total fees charged on the Bond Fund
upon the reclassification will actually go down as to shareholders of Adviser
shares. Additionally, the class will not initially bear 12b-1 fees or
shareholder servicing fees.
THE ELECTION OF NEW DIRECTORS AND THE ARTICLES OF AMENDMENT AND RESTATEMENT. The
Board of Directors is also recommending that all shareholders elect a new Board
of Directors and approve certain amendments to the Company's Charter. Upon the
acquisition of IMG by AMCORE, certain current Directors of Company that are
affiliated with IMG, will resign. In addition, other Directors have indicated
their intention of resigning. As a result, the Board of Directors has nominated
a slate of candidates to be elected to replace them and to expand the Board upon
the consummation of the AMCORE/IMG Acquisition. None of the nominees is
affiliated with IMG or AMCORE or is otherwise deemed an "interested" persons of
the Company.
Finally, as part of the CS Fund Reorganization, the Bond Fund
Reclassification, and the other reorganizations that will be occurring
concurrently, the Board of Directors is recommending that the Charter of the
Company be amended and restated to facilitate the transactions to bring them up
to date with current law and to provide greater flexibility in authorizing
additional series and classes of shares in the future with respect to the
Company's current funds and new funds which might be organized in the future.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series of proposed
transactions in which:
IMG will be acquired by AMCORE; and
The Company and certain other funds advised by IMG will be combined
with the existing AMCORE Vintage Funds to form a mutual fund family of
10 funds with aggregate net assets of approximately $910 million.
There can be no assurance that all aspects of the proposed series of
transactions will be completed, as several transactions are subject to
shareholder approval. However, completion of the Reorganization is subject to
completion of the other related transactions.
FOR THE SHAREHOLDERS OF THE CORE STOCK FUND ONLY
PROPOSAL 1: CS FUND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Directors has unanimously approved the proposed Plan of
Reorganization (the "Plan") providing for the reorganization of CS Fund into
Vintage Equity Fund in exchange for shares of Vintage Equity Fund and the
assumption by Vintage Equity Fund of the liabilities of CS Fund (the
"Reorganization"). The proposed transaction would occur on or about February 12,
1998 (the "Closing Date"). The value of the acquired assets of CS Fund 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 Vintage Equity
Fund issued in exchange, will equal the aggregate net asset value of the shares
of CS Fund then outstanding. In connection with the proposed Reorganization,
shares of Vintage Equity Fund will be distributed to shareholders of CS Fund,
and CS Fund will be terminated. As a result of the proposed Reorganization, each
shareholder of CS Fund will cease to be a shareholder of CS Fund and will
receive that number of full and fractional shares of Vintage Equity Fund, and
having a net asset value equal to the net asset value of, such shareholder's
corresponding shares of CS Fund. 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.
IMG , the current investment advisor to CS Fund, will provide
investment advisory services to Vintage Equity Fund.
Because all shares of CS Fund and Vintage Equity Fund are in
uncertificated book-entry form, the exchange of shares will take place
automatically on the Closing Date. If will not be necessary for shareholders to
submit transmittal forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
Former shareholders of CS Fund will enjoy all the same services and
privileges as other shareholders of the Company, including the opportunity to
exchange into portfolios with a wide variety of investment objectives and
policies. Purchase and redemption procedures for the Vintage Equity Fund are
substantially identical to those of the CS Fund, except those that relate to the
multiple class structure. CS Fund is presently offered in three classes of
shares with conversion rights. Vintage Equity Fund shares will be offered in two
classes as part of the Reorganization and presently contemplates offering only
two classes after the Reorganization.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Vintage Equity Fund has similar investment objectives, policies and
restrictions as CS Fund. Thus, the risks of investing in Vintage Equity Fund
should be substantially similar. The principal differences between Vintage
Equity Fund and CS Fund are set forth below:
The investment objectives of CS Fund and Vintage Equity Fund are
identical - "to seek capital appreciation"
Both funds invest primarily in equity securities, including foreign
securities. Under normal market conditions, CS Fund invests at least 65% of its
assets in equity securities. Under normal market conditions, Vintage Equity Fund
invests at least 75% of its assets in equity securities. Both funds may also use
call options on equity securities, and futures contracts and related options for
bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Vintage Equity Fund does employ a somewhat different portfolio
management style than CS Fund. Vintage Equity Fund invests primarily in equity
securities of mainly large capitalization companies with strong earnings
potential and strives for high over-all return while minimizing risk through the
selection of a majority of quality dividend paying equity securities. CS Fund
invests primarily in equity securities but without a specific intent to purchase
large capitalization companies. CS Fund also emphasizes identifying companies
that exhibit strong or improving business fundamentals and below-average
relative valuations. An emphasis on strong earnings potential by Vintage Equity
Fund can be expected to lead to different security selections over time than CS
Fund's emphasis on below-average valuations.
The investment restrictions of Vintage Equity Fund are substantially
similar to the investment restrictions of CS Fund, with the exception that
Vintage Equity Fund has no explicit limit on the proportion of net assets which
may be invested in futures contracts or related options. In practice, however,
neither fund has used futures contracts or options.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Directors, including all
of the Directors who are not "interested persons" as defined by the Investment
Company Act of 1940 (the "Disinterested Directors"), have unanimously concluded
that the Reorganization will be in the best interests of the shareholders of CS
Fund, and that the interests of the existing shareholders of CS Fund will not be
diluted as a result of the transactions contemplated by the Plan. The Board of
Directors therefore has submitted the Plan for approval by the shareholders at
the Special Meeting of Shareholders to be held on January ___, 1998. Approval of
the Plan requires the vote of a majority of the outstanding voting securities of
all classes of shares of the CS Fund.
The Directors have approved the Plan because in connection with the
various planned reorganizations for the Company, the Vintage Equity Fund would
be much larger than the CS Fund, there would not be a perceived need for two
similar equity funds within the Company's family of funds and they believe it
will benefit CS Fund shareholders by creating operating efficiencies through the
expected greater ability of IMG Funds to attract and retain investors in the
Vintage Equity Fund. In determining whether to recommend the approval of the
proposed Reorganization to the shareholders, the Directors considered a number
of factors, including, but not limited to: (i) the fact that IMG will continue
to manage the investments of the Vintage Equity Fund and will have access to
additional investment personnel when IMG is acquired by AMCORE; (ii) the
capabilities and resources of the other service providers of IMG in the areas of
marketing, investment and shareholder services; (iii) the expenses and advisory
fees applicable to CS Fund before the Reorganization and the estimated expense
ratios of the Company and the Vintage Equity Fund after the Reorganization; (iv)
the terms and conditions of the Plan and whether the proposed Reorganization
will result in dilution of CS Fund shareholder interests; (v) the economies of
scale realized through the combination of the funds, including the addition of
assets from the acquisition by the Company of the AMCORE Vintage Equity Fund;
(vi) the costs estimated to be incurred to complete the proposed Reorganization;
and (vii) the future growth prospects of the Company.
In this regard, the Directors reviewed information provided by IMG
relating to the anticipated impact to the shareholders of CS Fund as a result of
the proposed Reorganization. The Directors considered the probability that the
elimination of duplicative operations and the increase in the asset levels of
IMG Funds after the proposed Reorganization will result in the following
potential benefits for shareholders of CS Fund, 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 CS Fund with the assets
of Vintage Equity Fund, including the AMCORE Vintage Equity
Fund, will lead to reduced total operating expenses for
shareholders of CS Fund 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 CS Fund and
the Vintage Equity Fund will eliminate the duplication of
services and expenses that could exist as a result of their
separate operations and will promote more efficient operations
on a more cost-effective basis.
The Board of Directors also considered certain possible disadvantages
of the proposed Reorganization. Shareholders of CS Fund holding Adviser Shares,
who will receive S Shares of Vintage Equity, will see a small increase in their
current operating expenses from 1.38% to 1.39% and will give up the opportunity
to convert to Select Shares or Institutional Shares which have lower operating
expenses. Holders of CS Fund Select Shares, which will receive S Shares of
Vintage Equity, will experience an increase in operating expenses from current
annual operating expenses of 1.13% to 1.39%. Holders of CS Fund Institutional
Shares, which will receive T Shares of Vintage Equity, will experience an
increase in operating expenses from current annual operating expenses of 0.88%
to 1.14%. See "Expense Summary" hereafter.
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 Vintage Equity Fund and to compare those costs and expenses with
the costs and expenses borne by shareholders of CS Fund during the past fiscal
year. Present holders of CS Fund Institutional Shares will receive "T Shares" of
Vintage Equity. All other shareholders of CS Fund will receive S Shares of
Vintage Equity.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
VINTAGE EQUITY CS FUND
T SHARES S SHARES ADVISOR SELECT INSTITUTIONAL
----------------- ------------------------------
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases None None None None None
Maximum Sales Charge on Reinvested Dividends None None None None None
Exchange Fee None None None None None
Redemption Fee None None None None None
Maximum Contingent Deferred Sales Charge None None None None None
(As a percent of original purchase price)
</TABLE>
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
VINTAGE EQUITY CS FUND
T SHARES S SHARES ADVISOR SELECT INSTITUTIONAL
<S> <C> <C> <C> <C> <C>
Management Fees 0.75% 0.75% 0.50% 0.50% 0.50%
12b-1 Distribution Fees 1 0.00% 0.00% 0.40% 0.15% 0.00%
Shareholder Servicing Fees 2 0.00% 0.25% 0.25% 0.25% 0.15%
Other Expenses 0.39% 0.39% 0.23% 0.23% 0.23%
---- ---- ---- ---- ----
Total Fund Operating Expenses after Waivers 3 1.14% 1.39% 1.38% 1.13% 0.88%
</TABLE>
1 Pursuant to the Funds' Rule 12b-1 Plan, the maximum 12b-1 Distribution Fees
for Vintage Equity is 0.25%. Currently, however, it is intended that no such
amounts will be paid under the Plan. Shareholders will be given at least 30
days' notice prior to the payment of any fees under the Plan.
2 Pursuant to the Fund Shareholder Servicing Plan, the maximum Shareholder
Servicing Fee is 0.25%. Currently only S Shares pay service fees, however the
Company may elect to pay such fees on T Shares at any time without further
notice to shareholders.
3 Absent the reduction of distribution fees and services fees, "Total Operating
Expenses" as a percentage of average daily net assets would be 1.64% for both T
Shares and S Shares of Vintage Equity Fund.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in Vintage
Equity Fund, and the CS Fund assuming (1) a (hypothetical) five percent annual
return and (2) redemption at the end of each time period).
1 Year 3 Years 5 Years 10 Years
Vintage Equity Fund
T Shares $12 $36 $63 $139
S Shares $14 $44 $76 $167
CS Fund
Advisor Shares $14 $44 $76 $166
Select Shares $12 $36 $62 $137
Institutional Shares $9 $28 $49 $108
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions or their
customers.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
CS Fund shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of CS Fund shares for shares of Vintage Equity Fund.
Likewise, neither CS Fund nor Vintage Equity Fund should recognize any gain or
loss for federal income tax purposes through the exchange of CS Fund assets and
liabilities for shares of Vintage Equity Fund.
Consummation of the Reorganization is subject to the condition that
Company 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 CS Fund to
Vintage Equity Fund in exchange for shares of Vintage Equity Fund and the
distribution to shareholders of CS Fund the shares of Vintage Equity 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 CS Fund
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 CS Fund or
Vintage Equity Fund on the distribution of shares of Vintage Equity Fund to
shareholders of CS Fund in exchange for shares of CS Fund; (iv) in accordance
with Section 358(a)(1) of the Code, the basis of Vintage Equity Fund shares
received by a shareholder of CS 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 CS Fund received pursuant to such transactions will
be the same as the basis of the assets in the hands of the CS Fund immediately
before such transactions; (vi) in accordance with Section 1223(1) of the Code, a
shareholder's holding period for shares of Vintage Equity Fund will be
determined by including the period for which the shareholder held the shares of
the CS Fund exchanged therefor, provided such shares of the CS Fund were held as
a capital asset; and (vii) in accordance with Section 1223(2) of the Code, the
holding period for Vintage Equity Fund with respect to the assets received in
the Reorganization will include the period for which such assets were held by
the CS Fund.
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 Vintage Equity Fund and CS Fund have conformed their operations to
the requirements of Subchapter M of the Code and, as a result, do not bear any
corporate level federal or state income tax.
SHARES AND SHAREHOLDER RIGHTS
IMG Mutual Funds, Inc. is a Maryland corporation organized on November
16, 1994. The Vintage Equity Fund was created by the Company's Board of
Directors on November 3, 1997, to acquire the assets and continue the business
of the corresponding substantially identical investment portfolios of The
Coventry Group, a Massachusetts business trust, and to acquire the CS Fund and
one other small mutual fund. Like the CS Fund shares, each share of Vintage
Equity Fund represents an equal proportionate interest in it and is entitled to
such dividends and distributions out of the income earned on the assets
belonging to it as are declared at the discretion of the Directors.
The Charter of the Company 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 fund. Differences could exist, for example, in the sales
load, Rule 12b-1 fees or service plan fees applicable to different classes of
Shares offered by a particular fund. Such an arrangement could enable the
Company 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 Vintage Equity Fund Prospectus dated ______________, 1998, for a detailed
description of the classes of shares now offered under the heading "Organization
and Shares of the Funds."
Shareholders are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held. Shares of each series
of the Company will vote together and not by class unless otherwise required by
law or permitted by the Board of Directors. All shareholders will vote together
as a single class on matters relating to a fund's investment advisory agreement,
investment objective and fundamental policies.
Shares of the Company Funds have non-cumulative voting rights and,
accordingly, the holders of more than 50 percent of 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. 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.
The Company may operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required by the 1940 Act.
The Company 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. The Company 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.
CAPITALIZATION
The table on the next page shows the pro forma capitalization of the
combined CS Fund-Vintage Equity Fund and the pro forma capitalization of these
funds when all reorganizations are completed, based on information as of
November 30, 1997. Reference to CVF Equity Fund is to a separate series of the
Capital Value Fund, Inc., (another mutual fund family advised and administered
by IMG), that will be reorganized into the Vintage Equity Fund at the same time
that the CS Fund will be reorganized.
As of November 30, 1997
(In millions, except net asset value per share)
CS Fund CVF Equity AMCORE CS Fund-
Fund Funds CVF-AMCORE
Combined Funds Pro Forma
Equity Equity
- --------------------------------------------------------------------------------
Total Net Assets $17.347 $391.213 $408.560
Shares Outstanding 1.735 18.883 40.860
Net Asset Value
Per Share $10.00 $ 20.72 $ 10.00
The foregoing table assumes that all relevant reorganization transactions
occurred as if effected November 30, 1997, and that initial capital of 10 shares
at $10 per share was invested in Vintage Equity immediately prior thereto.
IMG MUTUAL FUNDS, INC.
GENERAL. IMG Mutual Funds, Inc. is a Maryland corporation organized in November
1994, and operates as an open-end diversified management investment company
offering its shares in series, each series referred to as a separately
identifiable fund (e.g. Core Stock Fund, Bond Fund, Vintage Equity Fund) For a
general discussion of Vintage Equity Fund, see the accompanying Vintage Equity
Fund Prospectus dated __________, 1998. For a general discussion of CS Fund, see
the accompanying IMG Funds Prospectus dated August 27, 1997. For the convenience
of CS Fund shareholders, cross-references to the Vintage Equity Fund Prospectus
are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. No information on per-share income
and capital changes is included in the Vintage Equity Fund Prospectus because
Vintage Equity has not yet commenced substantive operations. For a discussion of
the Vintage Equity Fund expenses, see "Proposal 1: Plan of
Reorganization--Expense Summary" above and "Expense Summary" in the Vintage
Equity Fund Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the Vintage Equity Fund
investment objectives and policies, see "Investment Objectives, Policies and
Restrictions" in the relevant IMG Funds Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of Vintage Equity
Fund rests with the Board of Directors who are elected by the shareholders of
the Company. There are currently six Directors, two of whom are "interested
persons" within the meaning of that term under the 1940 Act. The Directors, in
turn, elect the officers of Vintage Equity Fund to supervise actively its
day-to-day operations. Directors Miles and McClurg, both interested persons and
principals of IMG have submitted their resignations effective upon the date the
AMCORE/IMG Acquisition is consummated. The other directors have also indicated
their intention to resign. A new Board of Directors will serve after the closing
of the AMCORE/IMG Acquisition See Proposal 5.
The names of the current Directors and officers of the Company , 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, and IMG Financial
Services, Inc.
* Mark A. McClurg Vice President, Secretary and Senior Managing
President and Director Director, Investors Management Group, and
IMG Financial Services, Inc.
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
Director investment company, 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, and IMG Financial Services, Inc.
- ------------------
* Denotes "interested persons," as defined in the 1940 Act, of the Company
and the Advisor.
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of IMG and the services
performed by it for the CS Fund and Vintage Equity Fund and its fees, see
"Management and Fees" in the relevant Vintage Equity Fund Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as the
Vintage Equity Fund distributor, the services performed by it and its fees, see
"Management and Fees" in the Vintage Equity Fund Prospectus.
SHARES. For a discussion of voting rights of shares of the CS Fund and Vintage
Equity Fund, see "Organization and Shares of the Funds" in the relevant Vintage
Equity Fund Prospectus.
REDEMPTION OF SHARES. For a discussion concerning redemption of shares, see
"Purchasing Shares" and "Redeeming Shares" in the Vintage Equity Fund
Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS. For a discussion of the Vintage Equity
Fund' policies with respect to dividends and distributions, see "Distributions
and Taxes" in the Vintage Equity Fund Prospectus.
EXCHANGE PRIVILEGES. For a discussion of a Vintage Equity Fund shareholder's
right to exchange shares for shares of another IMG Fund, see "Purchasing Shares
- - Exchange Privilege" in the Vintage Equity Fund Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which
Vintage Equity Fund is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to the CS Fund and Vintage
Equity Fund or other IMG Funds may be addressed by writing to IMG, 2203 Grand
Avenue, Des Moines, Iowa 50312-5338, or by calling toll free 800-798-1819.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management discussion of fund
performance is not included for Vintage Equity Fund, because it has not yet
commenced operations. Management discussion of fund performance for the CS Fund
is included in the IMG Funds Annual Financial Report included in the IMG
Statement of Additional Information dated August 27, 1997.
PROPOSAL 2: APPROVAL OF NEW ADVISORY AGREEMENT
The sole purpose of this Proposal is to permit shareholders of CS Fund
to consider the New Agreement (herein described) to take effect following the
consummation of the transactions contemplated by an Agreement and Plan of
Reorganization by and among AMCORE Financial, Inc., IMG Acquisition, Inc.,
Investors Management Group, David W. Miles and Mark A. McClurg, dated September
30, 1997 (the "Acquisition Agreement"). Pursuant to the Acquisition Agreement,
Investors Management Group will become a wholly owned subsidiary of AMCORE
Financial Inc. This Proposal will be adopted if approved by the lesser of (a)
more than 50% of the outstanding shares of CS Fund or (b) 66 2/3% of the shares
of CS Fund voting at a meeting at which a majority of such shares are
represented in person or by proxy.
THE ADVISOR
IMG is a federally registered investment advisor organized in 1982.
Since then, its principal business has been providing continuous investment
management to pension and profit sharing plans, insurance companies, public
agencies, banks, endowments and charitable institutions, mutual funds,
individuals and others. As of November 30, 1997, IMG had approximately $1.6
billion in equity, fixed income and money market assets under management.
IMG is the investment advisor of IMG Mutual Funds, Inc., Iowa Schools
Joint Investment Trust, Iowa Public Agency Investment Trust, Liquid Assets Fund,
Inc., Municipal Assets Fund, Inc., and engages in certain other activities
unrelated to investment companies. David W. Miles is President, Treasurer and
Director and Mark A. McClurg is Vice President, Secretary and Director of
Investors Management Group. Each directly owns 50% of the outstanding Class A
voting securities of Investors Management Group and the IMG ESOP owns 100% of
the outstanding ESOP voting securities. David W. Miles owns an additional 13% of
the total outstanding voting securities beneficially through the ESOP, and Mark
A. McClurg beneficially owns an additional 5% of the total outstanding voting
securities. Mr. Miles and Mr. McClurg intend to devote substantially all their
time to the operation of Investors Management Group. Their address is 2203 Grand
Avenue, Des Moines, Iowa 50312-5338.
THE ACQUISITION
Pursuant to the Acquisition Agreement, IMG will become a wholly owned
subsidiary of AMCORE Financial, Inc. (the IMG/AMCORE Acquisition"). IMG will be
the surviving entity and will continue to be headquartered in the historic
Crawford Mansion in Des Moines, Iowa. AMCORE is a publicly traded northern
Illinois financial services holding company with assets exceeding $3.5 billion.
AMCORE presently owns an investment advisory firm called AMCORE Capital
Management, which is primarily known for its equity management. AMCORE Capital
Management is the advisor to the nationally recognized AMCORE Vintage Mutual
Funds. The AMCORE Vintage family of mutual funds consists of seven funds
investing in stocks and bonds to meet various investor objectives. AMCORE
Capital Management intends to merge operations with IMG after the AMCORE/IMG
Acquisition. The AMCORE Vintage family of mutual funds will also be reorganized
concurrently as part of IMG Funds.
Under the terms of the Acquisition Agreement, each of IMG's ESOP shares
will be converted into the right to receive 2.0038 shares of AMCORE Financial,
Inc. common stock and each of IMG's Class A common shares will be converted into
(i) the right to receive 0.9808 shares of AMCORE Financial, Inc. common stock
and (ii) the contingent right to receive additional AMCORE shares based on
certain performance benchmarks in 1998, 1999 and 2000, with the shares issued in
1999, 2000 and 2001. The Acquisition is expected to be consummated on or about
February 1, 1998, and is subject to certain closing conditions, including
certain regulatory approvals and the approval of shareholders of Investors
Management Group.
IMG does not anticipate any reduction in the quality of services now
provided to the funds it serves. As a condition of the Acquisition, certain
officers of IMG have agreed to enter into employment agreements with AMCORE
Financial, Inc., which are intended to assure that the services of such officers
are available to IMG (and thus to CS Fund) after the Acquisition.
As a result of the Acquisition, Mr. Miles will become Chief Operating
Officer and Mr. McClurg will become Managing Director for Client Development for
AMCORE Investment Group, N.A., a trust subsidiary owned by AMCORE Financial,
Inc., in addition to retaining their responsibilities with IMG. Jay Evans,
presently Chief Investment Officer of AMCORE Capital Management, Inc., will
assume that role at IMG.
THE ADVISORY AGREEMENT
The Directors are proposing that shareholders approve a new Advisory
Agreement (the "New Agreement") between the CS Fund and IMG to be effective upon
consummation of the Acquisition. In anticipation of the Acquisition, a majority
of the Directors (including a majority of the "Disinterested Directors")
approved the New Agreement on October 30, 1997. The shareholders of CS Fund are
being asked to approve the New Agreement.
THE ADVISORY AGREEMENT. The existing Advisory Agreement (the "Current
Agreement") was last approved by a majority of the Disinterested Directors,
voting in person at a meeting called for that purpose on June 5, 1997. The
Current Agreement provides that the Advisor will supply investment research and
portfolio management, including adequate personnel to market and supervise
continuously the investment programs of the CS Fund, the administration of the
investment programs and the composition of the portfolios.
The Current Agreement provides that the Advisor shall not be liable for
any error of judgment or of law, or for any loss suffered by CS Fund in
connection with any matters to which the Current Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its obligations and duties, or by
reason of its reckless disregard of obligations or duties under the Current
Agreement. The Current Agreement may be terminated at any time by either party
without the payment of any penalty upon ninety (90) days written notice, and
automatically terminates in the event of its assignment.
For the fiscal year ended April 30, 1997, CS Fund paid $69,054 for
services provided, under the Current Agreement.
CS Fund pays all other expenses incurred in its operation including,
but not limited to, direct charges relating to the purchase and sale of its
portfolio securities, interest charges, fees and expenses of legal counsel and
independent auditors, taxes and governmental fees, expenses of regular and
special meetings of the Directors, fees and disbursements of custodians,
insurance premiums, indemnification and other expenses not expressly provided
for in the Current Agreement and any extraordinary expenses of a nonrecurring
nature.
THE NEW ADVISORY AGREEMENT. The Board of Directors approved the
proposed New Agreement between the Funds and IMG on October 30, 1997. The form
of the proposed New Agreement is substantially identical to the Current
Agreement. There are no material differences between the Current Agreement and
the New Agreement.
The advisory fee as a percent of net assets payable by the CS Fund will
be the same under the New Agreement as under the Current Agreement, that is 0.50
percent of the average daily net assets. If the advisory fee under the New
Agreement had been in effect for the Fund's most recently completed fiscal year,
contractual fees payable to the Advisor by the Funds would have been identical
to those payable under the Current Agreement.
In connection with approving the New Agreement, the Directors held a
meeting on October 30, 1997. At this meeting, the Directors considered the
possible effects of the Acquisition on the Company, the CS Fund and IMG and its
ability to provide investment advisory services with respect to the Company and
the CS Fund. In evaluating the New Agreement, the Directors took into account
that the Current Agreement and the New Agreement, including the terms relating
to the services to be provided thereunder by the Advisor and the fees and
expenses payable by the Funds are identical. The Directors considered the skills
and capabilities of the Advisor and the representation that no material change
was planned in the current management or facilities of the Advisor as a result
of the Acquisition. The Directors considered the continued employment of members
of senior management of the Advisor pursuant to future employment contracts to
be important to help assure the continuity of the personnel primarily
responsible for maintaining the quality of investment advisory and other
services for CS Fund. The Directors considered the possible benefits the Advisor
may receive as a result of the Acquisition.
The Directors, including a majority of the Disinterested Directors,
concluded that if the Acquisition occurs, the New Agreement would be in the best
interest of the Company, the CS Fund and the shareholders of the CS Fund. The
Board of Directors unanimously approved the New Agreement and recommended such
agreement for approval by the shareholders. The New Agreement will take effect
upon the later to occur of (i) obtaining of shareholder approval or (ii) closing
of the Acquisition. The New Agreement will continue in effect until December 31,
1998, and thereafter for successive annual periods as long as such continuance
is approved in accordance with the 1940 Act. However, upon the CS Fund
Reorganization, the New Agreement will automatically terminate as to the CS
Fund. In the event that shareholders of the CS Fund do not approve the New
Agreement and the Acquisition is consummated, the Board of Directors would be
forced to seek investment advisory services from another advisory organization.
In the event the Acquisition is not consummated, the Advisor would continue to
serve pursuant to the terms of the Current Agreement.
FOR THE SHAREHOLDERS OF BOND FUND ONLY
PROPOSAL 3: PLAN OF RECLASSIFICATION
GENERAL INFORMATION
The Board of Directors has unanimously approved the proposed Plan of
Reclassification providing for the reclassification of all outstanding shares of
the Bond Fund into a new class of shares (attached hereto as Exhibit B) (the
"Reclassification"). As a result of the Reclassification any shareholder of any
present class of Bond Fund shares (currently Advisor shares, Select Shares and
Institutional Shares) will receive shares of a new unnamed class of Bond Fund
shares equal to the aggregate net asset value of the shares held by such
shareholder on the day the reclassification is effective. Because all shares of
the Bond Fund are in uncertificated book-entry form, the exchange of shares will
take place automatically on the Reclassification date. It will not be necessary
fro shareholders to submit transmittal forms or other documents. Adoption of the
Plan of Reclassification requires the vote of the lesser of (a) more than 50% of
the outstanding shares of the Bond Fund or (b) 66 2/3% of the shares of the Bond
Fund voting at a meeting at which a majority of such shares are represented in
person or by proxy.
SHAREHOLDER SERVICES AND PRIVILEGES
Bond Fund shareholders will have the same services and privileges as
shareholders of the IMG Funds as they enjoyed before, except that all conversion
rights to other classes (as is presently the case) will be eliminated. Purchase
and redemption procedures will remain unchanged, except again as they might
relate to a multiple class structure.
BACKGROUND AND REASONS FOR THE PROPOSED RECLASSIFICATION
For the reasons set forth below, the Board of Directors, including all
of the Directors who are not "interested persons" as defined by the Investment
Company Act of 1940 (the "Disinterested Directors"), have unanimously concluded
that the Reclassification will be in the best interests of the shareholders of
Bond Fund. The Board of Directors therefore has also submitted the Plan for
approval by the shareholders of the Bond Fund. Approval of the Plan requires the
vote of a majority of the outstanding voting securities of all classes of shares
of the Bond Fund.
In determining whether to recommend the approval of the proposed
Reclassification to the Bond Fund shareholders, the Directors considered a
number of factors, including, but not limited to: (i) the fact that in
connection with the various reorganizations planned for the IMG Funds, that the
marketing plan for the Bond Fund would no longer contemplate the need for three
classes of shares; (ii) that the class level expenses were related solely to
facilitating the Bond Fund shares and without the distribution system in place
to take advantage of the multiple class structure that growth in assets was
unlikely; (iii) the expenses and advisory fees applicable to the three classes
of shares before the Reorganization and the estimated expense ratios of the
Company after the Reclassification; (iv) the terms and conditions of the Plan;
(v) the economies of scale realized through the combination of the classes and
the resultant clearer marketing scheme would likely result in growth in assets;
(vi) the costs estimated to be incurred to complete the proposed
Reclassification; and (vii) the future growth prospects of the Company. In this
regard, the Directors reviewed information provided by IMG relating to the
anticipated impact to the shareholders of Bond Fund as a result of the proposed
Reclassification.
The Board of Directors also considered certain possible disadvantages
of the proposed Reorganization. Shareholders of Bond Fund holding Adviser Shares
should experience only a small increase in their current operating expenses but
will give up the opportunity to convert to Select Shares or Institutional Shares
which have lower operating expenses. Holders of Bond Fund Select and
Institutional Shares will experience an increase in operating expenses.
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 the Bond Fund as a result of the reclassification and to compare
those costs and expenses with the costs and expenses borne by shareholders of
the existing shares of the Bond Fund.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
NEW BOND EXISTING BOND FUND
FUND CLASS ADVISOR SELECT INSTITUTIONAL
---------- -------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases None None None None
Maximum Sales Charge on Reinvested Dividends None None None None
Exchange Fee None None None None
Redemption Fee None None None None
Maximum Contingent Deferred Sales Charge None None None None
(As a percent of original purchase price)
</TABLE>
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
NEW BOND EXISTING BOND FUND
FUND CLASS ADVISOR SELECT INSTITUTIONAL
---------- ------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.55% 0.30% 0.30% 0.30%
12b-1 Distribution Fees 1 0.00% 0.25% 0.15% 0.00%
Shareholder Servicing Fees 2 0.00% 0.25% 0.15% 0.10%
Other Expenses 0.42% 0.23% 0.23% 0.23%
Total Fund Operating Expenses after Waivers 3 0.97% 1.03% 0.83% 0.63%
</TABLE>
1 Pursuant to the Funds' Rule 12b-1 Plan, the maximum 12b-1 Distribution Fees
for Bond Fund is 0.25%. Currently, however, it is intended that no such amounts
will be paid under the Plan. Shareholders will be given at least 30 days' notice
prior to the payment of any fees under the Plan.
2 Pursuant to the Fund Shareholder Servicing Plans, the maximum Shareholder
Servicing Fee is 0.25%. Currently, however, it is intended that so such amounts
will be paid under the Plans, however, the Fund 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 Operating
Expenses" as a percentage of average daily net assets would be 1.47% for Bond
Fund.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in Bond
Fund various classes 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
Bond Fund
Advisor Shares $10 $32 $55 $122
Select Shares $ 8 $26 $46 $103
Institutional Shares $ 6 $20 $35 $ 79
New Class $10 $31 $54 $119
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions or their
customers.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reclassification will be tax-free, that is,
that the existing Bond Fund shareholders will not recognize any gain or loss for
federal income tax purposes on the reclassification of their existing Bond Fund
shares for shares of the new class of Bond Fund shares.
Consummation of the Reclassification is subject to the condition that
Company receive an opinion from Cline, Williams, Wright, Johnson & Oldfather
(which opinion has now been received) to the effect that for federal income tax
purposes the reclassification will not result in a taxable gain or loss to the
Bond Fund or any of its shareholders
IMG Funds has not 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.
The Bond Fund has conformed its operations to the requirements of
Subchapter M of the Code and, as a result, does not bear any corporate level
federal or state income tax.
SHARES AND SHAREHOLDER RIGHTS
See the description of shareholder rights under Proposal 1: Agreement
and Plan of Reorganization Shares and Shareholder Rights" for a description of
shares and shareholders rights generally applicable to all IMG Funds
shareholders. Reference is made to the Bond Fund Prospectus dated August 27,
1997, for a detailed description of the classes of shares now offered under the
heading "Organization and Shares of the Funds."
PROPOSAL 4: APPROVAL OF NEW ADVISORY AGREEMENT
The sole purpose of this Proposal is to permit shareholders of Bond
Fund to consider the New Agreement (herein described) to take effect following
the consummation of the transactions contemplated by the AMCORE/IMG Acquisition
Agreement. See the discussion of the AMCORE/IMG Acquisition under Proposal 2
above for a description of the reasons for seeking approval of the New Advisory
Agreement arising out of the AMCORE/IMG Acquisition and a description of IMG.
THE ADVISORY AGREEMENT
The Directors are proposing that shareholders approve a new Advisory
Agreement (the "New Agreement") for the Bond Fund with IMG to be effective upon
consummation of the Acquisition. In anticipation of the Acquisition, a majority
of the Directors (including a majority of the "Disinterested Directors")
approved the New Agreement on October 30, 1997. The shareholders of the Bond
Fund are being asked to approve the New Agreement.
THE ADVISORY AGREEMENT. The existing Advisory Agreement (the "Current
Agreement") was last approved by a majority of the Disinterested Directors,
voting in person at a meeting called for that purpose on June 5, 1997. The
Current Agreement provides that the Advisor will supply investment research and
portfolio management, including adequate personnel to market and supervise
continuously the investment programs of the Bond Fund, the administration of the
investment programs and the composition of the portfolio.
The Current Agreement provides that the Advisor shall not be liable for
any error of judgment or of law, or for any loss suffered by the Bond Fund in
connection with any matters to which the Current Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its obligations and duties, or by
reason of its reckless disregard of obligations or duties under the Current
Agreement. The Current Agreement may be terminated at any time by either party
without the payment of any penalty upon ninety (90) days written notice, and
automatically terminates in the event of its assignment.
For the fiscal year ended April 30, 1997, Bond Fund paid $23,868 for
services provided, under the Current Agreement.
The Bond Fund pays all other expenses incurred in its operation
including, but not limited to, direct charges relating to the purchase and sale
of its portfolio securities, interest charges, fees and expenses of legal
counsel and independent auditors, taxes and governmental fees, expenses of
regular and special meetings of the Directors, fees and disbursements of
custodians, insurance premiums, indemnification and other expenses not expressly
provided for in the Current Agreement and any extraordinary expenses of a
nonrecurring nature.
THE NEW ADVISORY AGREEMENT. The Board of Directors approved the
proposed New Agreement between the Funds and IMG on October 30, 1997. The form
of the proposed New Agreement is substantially identical to the Current
Agreement. There are no material differences between the Current Agreement and
the New Agreement, other than a different fee structure commencing on the date
that the reclassification is effective.
The advisory fee as a percent of net assets payable by Bond Fund will
be the same under the New Agreement as under the Current Agreement until the
reclassification is effective, that is 0.30 percent of the average daily net
assets until the reclassification is effective. After the reclassification is
effective the advisory fee payable will be increased to 0.55%. . If the advisory
fee under the New Agreement had been in effect for the Fund's most recently
completed fiscal year, contractual fees payable to the Advisor by the Funds
would have been $43,758, compared to $23,868.
In connection with approving the New Agreement, the Directors held a
meeting on October 30, 1997. At this meeting, the Directors considered the
possible effects of the Reclassification and the other various reorganizations
on the Company, the Bond Fund and IMG and its ability to provide investment
advisory services with respect to Company and the Bond Fund. In evaluating the
New Agreement, the Directors took into account that the Current Agreement and
the New Agreement, including the terms relating to the services to be provided
thereunder by the Advisor and the fees and expenses payable by the Funds are
identical. The Directors considered the skills and capabilities of the Advisor
and the representation that no material change was planned in the current
management or facilities of the Advisor as a result of the Acquisition. The
Directors considered the continued employment of members of senior management of
the Advisor pursuant to future employment contracts to be important to help
assure the continuity of the personnel primarily responsible for maintaining the
quality of investment advisory and other services for the Bond Fund. The
Directors considered the possible benefits the Advisor may receive as a result
of the Reclassification and the increase in the advisory fee.
The Directors, including a majority of the Disinterested Directors,
concluded that if the Acquisition occurs, the New Agreement would be in the best
interest of the Company and the shareholders of the Bond Fund. The Board of
Directors unanimously approved the New Agreement and recommended such agreement
for approval by the shareholders. The New Agreement will take effect upon the
later to occur of (i) obtaining of shareholder approval or (ii) closing of the
Acquisition. The New Agreement will continue in effect until December 31, 1998,
and thereafter for successive annual periods as long as such continuance is
approved in accordance with the 1940 Act. In the event that shareholders of Bond
Fund do not approve the New Agreement and the Acquisition is consummated, the
Board of Directors would be forced to seek investment advisory services from
another advisory organization. In the event the Acquisition is not consummated,
the Advisor would continue to serve pursuant to the terms of the Current
Agreement.
PROPOSAL 5: ELECTION OF THE BOARD OF DIRECTORS
In conjunction with the approval of the CS Fund Plan of Reorganization,
the Bond Fund Plan of Reclassification, and the reorganizations of the other IMG
acquired funds, and AMCORE Vintage Funds, the Board of Directors is recommending
the election of a new board of seven directors at the Special Shareholder
Meeting in order to better represent the various shareholders of the combined
funds. This recommendation is also being made in light of the provisions of
Section 15(f) of the Investment Company Act which requires that the Board of
Directors of the fund be comprised of at least 75% of persons who are not
interested persons of the fund, when there is a sale of the investment advisor
to a mutual fund. The nominating committee consisted of David Lundquist and
Edward Stanek. The newly elected Board of Directors will be effective on the
date of the closing of the AMCORE/IMG Acquisition. In the event that any nominee
is unable or declines to serve as a director at the time of the Special
Shareholder Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable or will decline to serve as a director.
The term of office of each person elected as a director will continue until the
next Annual Meeting of Shareholders or until his successor has been elected or
qualified.
Described below are the nominees, their addresses and principal
occupations held during the past five years. Each director who is deemed an
"interested person" of the Company, as defined by the Investment Company Act of
1940, is indicated by an asterisk (*).
Lu (Baggenstos) Farber Sole Proprietor, Tyler Associates, a strategic
Tacoma, WA 98407 planning, reengineering and organizational
change consulting firm, from 1996 to present;
Executive V.P. & Sr. Trust Executive, Key Trust
Company of the Northwest, from 1993 to 1996.
William J. Howard Attorney at Brassfield, Cowan & Howard from
802 Lundvall Avenue 1973 to present
Rockford, IL 61107
Steven Zumbach Attorney at Belin Lamson McCormick, Zumbach
2000 Financial Center Flynn from 1977 to present
Des Moines, IA 50309
Barbara P. Hazlehurst President, William R. Powers Advertising,
21277 N. Middleton Drive a Des Plaines, IL based advertising firm,
Kildeer, IL 60047 from 1983 to present
Edward J. Stanek Chief Executive, Iowa Lottery, a government
346 42nd Street operated lottery, from 1985 to present
Des Moines, IA 50312
Fred Lorber Consultant at B. F.& Q. , a manufacturer
5 SW 52nd Street of textiles, from 1996 to present, President
Des Moines, IA 50312 Lortex, Inc., from 1984 to 1996
John G. Taft President & CEO, Dougherty Summit Securities
1360 French Creek Drive LLC, from 1997 to present, President & CEO,
Wayzata, MN 55391 Voyageur Asset Management LLC, from 1991 to 1997
Debra L. Johnson, CPA Vice President & CFO, Business Publications
7211 Plum Drive Corporation and Iowa Title Company,
Des Moines, IA 50322 a publishing and abstracting service company,
from 1990 to present
PROPOSAL 6: APPROVAL OF ARTICLES OF AMENDMENT AND RESTATEMENT
In conjunction with the approval of the CS Fund Plan of Reorganization,
the Bond Fund Plan of Reclassification, and the reorganizations of the other IMG
acquired funds, and AMCORE Vintage Funds, the Board of Directors unanimously
approved Articles of Amendment and Restatement to the Charter of the Company.
The Articles of Amendment and Restatement are attached hereto as Exhibit C. The
amendments proposed in the Articles amend those provisions in Article Fourth of
the Charter relating to the number of authorized shares, the establishment of
separate series and classes, and the allocation of expenses, assets and
liabilities among the series and classes of shares. Additionally, the amendments
make conforming changes to other Articles clarifying the relationship of series
and classes of shares to voting rights of shareholders, net asset value, and
miscellaneous other provisions. The changes to Article Fourth were necessitated
to increase the authorized shares to a level sufficient to support the present
and future needs. Other changes were recommended to the Board of Directors upon
the advice of counsel to update the Articles to reflect current practices,
changes in the law and to make future changes to the series and class structure
more flexible and avoid the necessity of needless shareholder approval. THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE ADOPTION OF THE
ARTICLES OF AMENDMENT AND RESTATEMENT IN THE FORM INCLUDED HEREIN AS EXHIBIT C,
WITH SUCH CHANGES OR OTHER ADDITIONS AS THE BOARD OF DIRECTORS MAY SUBSEQUENTLY
APPROVE TO EFFECTUATE THE PURPOSES AND INTERESTS CONTEMPLATED AND DESCRIBED
HEREIN.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Directors of Company
for use at the Special Meeting of Shareholders to be held on January ___, 1998
(the "Meeting"). It is expected that the solicitation of proxies by the Board of
Directors will be primarily by mail. The Company's officers may also solicit
proxies by telephone facsimile transmission or personal interview.
The following table gives the total number of shares of Company
outstanding at the close of business on December 31, 1997, the record date for
the meeting.
CS Fund Advisor Shares....................
Select Shares......................
Institutional Shares............
Bond Fund Advisor Shares...................
Select Shares.....................
Institutional Shares...........
Each shareholder of record on the record date is entitled to one vote
for each share owned and a fractional vote for each fractional share owned on
each matter presented for shareholder vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares presented thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. If no specification is
made, the proxy will be voted FOR all enumerated proposals. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to the Funds, c/o Secretary, 2203 Grand Avenue, Des Moines, Iowa
50312-5338, a written notice of revocation or a subsequently executed proxy or
by attending the meeting and electing to vote in person.
SHAREHOLDER AND BOARD APPROVAL
The CS Fund Plan of Reorganization and the Bond Fund Plan of
Reclassification will not become effective unless approved by a majority of
shares of each fund. The New Agreement must be approved for each fund by a
"majority" vote, as defined in the 1940 Act and described in Proposal 2 above.
In the election of Directors, a majority vote of all shares represented in
person or by proxy at the meeting is required to elect a Director; cumulative
voting is not authorized. In the approval of the Articles of Amendment and
Restatement, a majority of shares of all funds is required. Under Maryland law,
abstentions do not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. Broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular 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
Reclassification and the Articles of Amendment and Restatement.
As of the Record Date, all of the officers and Directors beneficially owned,
individually and as a group, less than 1% of the shares of each of the CS Fund
and Bond Fund. No person owned of record or beneficially 5% or more of the
outstanding shares of either CS Fund or Bond Fund as of November 30, 1997,
except Blumenthal Revocable Trust, Robert G. Riley, Lou Hurwitz IRA, The Sargent
Group, Science Center of Iowa, Friends of Faith Retirement Village and J.
Douglas Reichardt.
QUORUM
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve a
particular proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
in favor of such adjournments, and will vote those proxies required to be voted
AGAINST such proposal against any adjournment. Under the Charter of Company, a
quorum is constituted by the presence in person or by proxy of the holders of 33
1/3% of the aggregate outstanding shares of the Portfolios entitled to vote at
the Meeting. If a proxy is properly executed and returned and is marked with an
abstention, the shares represented thereby will be considered to be present at
the Meeting for the purpose of determining the existence of a quorum for the
transaction of business.
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
This combined Proxy Statement/Prospectus and the related Statement of
Additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which IMG Mutual
Funds, Inc. has 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 Vintage Equity Fund Prospectuses and related
Statements of Additional Information which are incorporated by reference herein
is Registration No. 33-81998.
IMG Mutual Funds, Inc. is subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, and in accordance
therewith, files reports and other information with the SEC. Proxy material,
reports, proxy and information statements, registration statements and other
information can be inspected and copied at the public reference facilities of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
filings may also be available at the following SEC regional offices:
Northwestern Atrium, 500 West Madison Street, Suite 1400, Chicago, IL
60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and 73 Tremont
Street, Suite 600, Boston, MA 02108-3912. Copies of such materials can also be
obtained by mail from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C.
20549, at prescribed rates.
OTHER BUSINESS
The Fund's Board of Directors knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
the intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares in the
Reorganization will be passed upon for IMG Mutual Funds, Inc. by Ober, Kaler,
Grimes & Shriver, 120 E. Baltimore Street, Baltimore, Maryland 21202. Certain
tax matters will be passed upon for IMG Mutual Funds, Inc. by Cline, Williams,
Wright, Johnson & Oldfather, 1900 First Bank Building, 233 South 13th Street,
Lincoln, Nebraska 68508. Cline, Williams, Wright, Johnson & Oldfather acts as
legal counsel to IMG Mutual Funds, Inc., Investors Management Group, and other
funds and entities managed by Investors Management Group.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this combined Proxy Statement/Prospectus or by
telephoning 800-795-1819.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION made as of the 30th day of October 1997, is
made by and between IMG Core Stock Fund ("CSF") and Vintage Equity Fund
("Vintage Equity"), both portfolios of IMG Mutual Funds, Inc. ("IMG Funds").
WITNESSETH:
WHEREAS the Board of Directors of IMG Funds, an open-end management
investment company, deems it advisable that Vintage Equity acquire all of the
assets of CSF in exchange for the assumption by Vintage Equity of all of the
liabilities of CSF and shares issued by IMG Funds which are thereafter to be
distributed by CSF pro rata to its shareholders in complete liquidation and
termination of CSF and in exchange for all of CSF's outstanding shares with the
intent that the transactions described herein shall qualify as a tax-free
reorganization under Section 368(a)(1)(C) of the Internal Revenue Code of 1986;
NOW THEREFORE, in consideration of these premises, this Plan of
Reorganization is hereby adopted.
1. On the Closing Date hereinafter identified IMG Funds will issue to
CSF a number of full and fractional shares of Vintage Equity, taken at their net
asset value, having an aggregate net asset value equal to the value of the net
assets of CSF. The aggregate value of the net assets of CSF and Vintage Equity
shall be determined in accordance with the then current Prospectus of IMG Funds
as of 3:00 p.m. on the business day immediately preceding the Closing Date.
2. The closing of the transaction contemplated in this Plan (the
"Closing") shall be held at the offices of IMG, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338 (or at such other place as the parties hereto may agree) at 3:00
p.m. Central Standard Time on December 31, 1997, or on such earlier or later
date as the parties hereto may mutually agree. The date on which the Closing is
to be held as provided in this Agreement shall be known as the "Closing Date".
In the event that on the Closing Date (a) the New York Stock Exchange
is closed for other than customary week-end and holiday closings or (b) trading
on said Exchange is restricted or (c) as emergency exists as a result of which
it is not reasonably practicable for either Vintage Equity or CSF to fairly
determine the value of their respective assets, the Closing Date shall be
postponed until the first business day after the day on which trading shall have
been fully resumed.
3. As soon as practicable after the Closing Date, CSF shall (a)
distribute on a pro rata basis to the shareholders of record of CSF at the close
of business on the Closing Date the shares of Vintage Equity received by CSF at
the Closing; and (b) be liquidated in accordance with applicable law and its
Charter.
4. The obligations of the parties under this Plan shall be subject to:
(a) Any required approval, at a meeting duly called for the
purpose, of the holders of the outstanding shares of CSF of
this Agreement and the transactions contemplated hereunder.
(b) The right to abandon and terminate this Agreement, if IMG
Funds believes that the consummation of the transactions
contemplated hereunder would not be in the best interests of
the shareholders.
5. In addition to the right to terminate this Plan described in Section
4, this Plan 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 CSF, and notwithstanding favorable action by such
shareholders, by action of the Board of Directors of IMG Funds for any reason.
6. This Plan 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.
<PAGE>
IMG MUTUAL FUNDS, INC.
Plan of Reclassification
1. BASIC PURPOSE OF PLAN.
It is proposed to amend the Charter of IMG Mutual Funds, Inc. (the
"Fund") to change and reclassify all of the Class A, Class B and Class C shares
of the IMG Bond Fund series of the Fund's capital stock into Class D shares of
the IMG Bond Fund series of the Fund's capital stock, and to cancel the Class A,
Class B and Class C shares of the IMG Bond Fund series of the Fund's capital
stock. The affirmative votes of the holders of a majority of the outstanding
Class A, Class B and Class C shares, in person or by proxy, voting together as a
single class, is necessary to effect the proposal, and to amend the Charter
accordingly.
2. PRESENT CAPITALIZATION.
The total number of shares of capital stock which the Corporation
currently has authority to issue is 100,000,000,000 shares of common stock with
a par value of $.001 each ("Shares"), thereby having an aggregate par value of
$100,000,000. Of the 100,000,000,000 Shares, 26,200,000,000 Shares have been
classified into eleven series with 800,000,000 Shares have been classified as a
series designated as the IMG Bond Fund series The various series are sometimes
collectively referred to herein individually and collectively as a "Series".
Shares of each of the IMG Bond Fund Series are further divided into
four classes of Shares, designated as the Class A or "Investor" Shares, the
Class B or "Select" Shares, the Class C or "Institutional" Shares and the Class
D or "Advisor" Shares, respectively. Each such class of each of the IMG Core
Stock Fund Series and the IMG Bond Fund Series consists of 200,000,000 Shares.
3. REVISED CAPITALIZATION.
Under this Plan of Reclassification (the "Plan"), the Charter of the
Fund would be amended pursuant to Articles of Amendment, to provide, among other
things, for the change and reclassification of the Class A, Class B and Class C
shares of the IMG Bond Funds Series into Class D shares of the IMG Bond Fund
series, and the cancellation of the Class A, Class B and Class C shares of the
IMG Bond Fund series.
4. COMPARISON OF RIGHTS OF THE CLASS A, CLASS B AND CLASS C SHARES AND THE
CLASS D SHARES OF THE IMG BOND FUND SERIES.
A description of the differences between the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Class A, Class B
and Class C Shares of the IMG Bond Fund Series, as compared to the Class D
Shares of the IMG Bond Fund Series, is described in the Proxy Statement for the
Fund, a copy of which has been delivered and reviewed by the Board of Directors
of the Fund.
5. THE PLAN.
Pursuant to the Plan, all of the issued and outstanding shares of the
Class A, Class B and Class C Shares of the IMG Bond Fund Series shall
automatically be converted into Class D Shares of the IMG Bond Fund Series, as
follows:
a. All of the issued and outstanding Class A , Class B and Class C
Shares of the IMG Bond Fund Series shall automatically be converted into that
number of full and fractional shares of the Class D Shares of the IMG Bond Fund
Series having an aggregate net asset value equal to the aggregate value of the
net assets of the IMG Bond Fund Series that are allocable to the Class A, B and
C Shares respectively of the IMG Bond Fund Series.
The aggregate value of the net assets of IMG Bond Fund Series and the
various Classes thereof shall be determined in accordance with the then current
Prospectus of the Fund as of 3:00 p.m. on the business day immediately preceding
the Closing Date (as hereinafter defined).
In the event that on the Closing Date (a) the New York Stock Exchange
is closed for other than customary week-end and holiday closings or (b) trading
on said Exchange is restricted or (c) as emergency exists as a result of which
it is not reasonably practicable for the Fund to fairly determine the value of
the assets of the IMG Bond Fund Series, the Closing Date shall be postponed
until the first business day after the day on which trading shall have been
fully resumed.
It is the unanimous intent of the Board of Directors that the Plan
proposed herein will be tax-free by virtue of the Corporation's compliance with
the requirements of Section 368(a)(1) (E) (and all related Sections) of the
Internal Revenue Code of 1986, as amended, and all Treasury Department
regulations promulgated thereunder.
6. THE CONVERSION.
If the Class A, Class B and Class C shareholders of the IMG Bond Fund
Series approve the Plan, as of the Closing Date, the outstanding Class A, Class
B and Class C Shares of the IMG Bond Fund Series will be automatically converted
into Class D Shares of the IMG Bond Fund Series, as described in paragraph 5
above, and such Class A, Class B and Class C Shares shall be canceled. Upon such
conversion, the Class A, Class B and Class C shareholders shall be deemed to
own, as of the Closing Date, that number of full and fractional Class D Shares
of the IMG Bond Fund Series as may be allocated to such shareholders on a pro
rata basis, provided, however, that the Fund shall have the right to redeem any
fractions of shares by paying to the shareholder the amount of the fraction
multiplied by the net asset value of one Class D Share of the IMG Bond Fund
Series determined at the time and in accordance with paragraph 5 above.
The Board of Directors has determined that the conversion ratio set
forth in this Plan is proper and desirable, and that all Shares issued pursuant
to this Plan shall be fully-paid and non-assessable.
7. METHOD OF CARRYING OUT THE PLAN.
As soon as practicable after approval of the Plan by the Board of
Directors, the proper officers of the Fund shall take the actions necessary to
seek the approval of the holders of the Class A, Class B and Class C Shares of
the IMG Bond Fund Series of the Plan. Upon such approval, the proper officers of
the Fund will take the actions necessary to file Articles of Amendment with the
State Department of Assessments and Taxation of Maryland (the "SDAT") to
effectuate the Plan. The date on which the Articles of Amendment are accepted by
the SDAT shall be deemed the "Closing Date."
To the extent any shares of stock have been issued, each holder of a
certificate representing Class A, Class B or Class C Shares of the IMG Bond Fund
Series will be required to surrender the certificates, or execute affidavits
regarding the status of such certificates.
All appropriate book and tax accounting entries shall be made to
reflect this transaction.
8. TERMINATION.
The Plan may be terminated at any time prior to the Closing Date,
whether before or after action thereon by the shareholders of the Fund, and
notwithstanding favorable action by such shareholders, by action of the Board of
Directors of the Fund for any reason.
<PAGE>
EXHIBIT C
IMG MUTUAL FUNDS, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
IMG Mutual Funds, Inc., a Maryland corporation (which is hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST
The Corporation desires to amend and restate its Charter as currently
in effect pursuant to these Articles of Amendment and Restatement. These
Articles of Amendment and Restatement set forth every Charter provision
currently in effect.
SECOND
The Charter of the Corporation is hereby amended by striking in their
entirety Articles FIRST through TWELFTH, inclusive, and by substituting in lieu
thereof the following:
"FIRST: NAME. The name of the Corporation is
IMG MUTUAL FUNDS, INC.
"SECOND: PURPOSES AND POWERS. The purposes for which the Corporation is
formed and the business or objects to be carried on or promoted by it are to
engage in the business of an investment company, and in connection therewith, to
hold part or all of its funds in cash, to acquire by purchase, subscription,
contract, exchange or otherwise, and to own, hold for investment, resale or
otherwise, sell, assign, negotiate, exchange, transfer or otherwise dispose of,
or turn to account or realize upon, and generally to deal in and with, all forms
of stocks, bonds, debentures, notes, evidences of interest, evidences of
indebtedness, warrants, certificates of deposit, bankers' acceptances,
repurchase agreements, options on securities and other securities, commodity
futures contracts and options thereon, irrespective of their form, the name by
which they may be described, or the character or form of the entities by which
they are issued or created (hereinafter sometimes called "Securities"), and to
make payment therefor by any lawful means; to exercise any and all rights,
powers and privileges of individual ownership or interest in respect of any and
all such Securities, including the right to vote thereon and to consent and
otherwise act with respect thereto; to do any and all acts and things for the
preservation, protection, improvement and enhancement in value of any and all
such Securities; to acquire or become interested in any such Securities as
aforesaid, irrespective of whether or not such Securities be fully paid or
subject to further payments, and to make payments thereon as called for or in
advance of calls or otherwise; and, in general, to do any or all such other
things in connection with the objects and purposes of the Corporation
hereinbefore set forth, as are, in the opinion of the Board of Directors of the
Corporation, necessary, incidental, relative or conducive to the attainment of
such objects and purposes; and to do such acts and things; and to exercise any
and all such powers to the same extent authorized or permitted to a corporation
Under any laws that may be now or hereafter applicable or available to the
Corporation.
In addition, the Corporation may issue, sell, acquire through purchase,
exchange, or otherwise hold, dispose of, resell, transfer, reissue or cancel
shares of its capital stock in any manner and to the extent now and hereafter
permitted by the laws of Maryland and by this Charter.
The foregoing matters shall each be construed as purposes, objects and
powers, and none of such matters shall be in any wise limited by reference to,
or inference from, any other of such matters or any other Article of this
Charter, but shall be regarded as independent purposes, objects and powers and
the enumeration of specific purposes, objects and powers shall not be construed
to limit or restrict in any manner the meaning of general terms or the general
powers of the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude another,
although it be of like nature, not expressed.
Nothing herein contained shall be constituted as giving the Corporation
any rights, powers or privileges not permitted to it by law.
"THIRD: PRINCIPAL OFFICE. The post office address of the principal
office of the Corporation in this State is c/o Prentice Hall Corporation System,
Maryland, 1123 Eutaw Street, Baltimore, Maryland 21201. The resident agent of
the Corporation is Prentice Hall Corporation System, Maryland, the post office
address of which is 1123 Eutaw Street, Baltimore, Maryland 21201. Said resident
agent is a corporation of the State of Maryland.
"FOURTH: CAPITAL STOCK.
(a) The total number of shares of capital stock which the Corporation shall have
authority to issue is 100,000,000,000 shares of common stock with a par value of
$.001 each ("Shares"), thereby having an aggregate par value of $100,000,000. Of
the 100,000,000,000 Shares, 26,200,000,000 Shares shall be classified into
eleven series as follows: (i) 800,000,000 Shares shall be classified as a series
designated as the IMG Core Stock Fund series; (ii) 800,000,000 Shares shall be
classified as a series designated as the IMG Bond Fund series; (iii)
5,000,000,000 Shares shall be classified as a series designated as the Liquid
Assets Fund series; (iv) 5,000,000,000 Shares shall be classified as a series
designated as the Municipal Assets Fund series; (v) 5,000,000,000 Shares shall
be classified as a series designated as the Vintage Government Assets Fund
series; (vi) 1,600,000,000 Shares shall be classified as a series designated as
the Vintage Income Fund series; (vii) 1,600,000,000 Shares shall be classified
as a series designated as the Vintage Municipal Bond Fund series; (viii)
1,600,000,000 Shares shall be classified as a series designated as the Vintage
Equity Fund series; (ix) 1,600,000,000 Shares shall be classified as a series
designated as the Vintage Balanced Fund series; (x) 1,600,000,000 Shares shall
be classified as a series designated as the Vintage Aggressive Growth Fund
series; and (xi) 1,600,000,000 Shares shall be classified as a series designated
as the Vintage Limited Term Bond Fund series. Such series of common stock,
together with any further series of Shares created by the Board of Directors,
being referred to herein individually or collectively as a "Series".
Shares of each of the IMG Core Stock Fund Series and the IMG
Bond Fund Series shall be further divided into four classes of Shares,
designated as the Class A or "Investor" Shares, the Class B or "Select" Shares,
the Class C or "Institutional" Shares and the Class D or "Advisor" Shares,
respectively, or such other names as the Board of Directors may determine from
time to time as a convenient and proper method for identifying such Shares in a
Registration Statement filed with the Securities and Exchange Commission
covering the offer and sale of such Shares to the public. Each such class of
each of the IMG Core Stock Fund Series and the IMG Bond Fund Series shall
consist of 200,000,000 Shares, par value $0.001 per Share.
Shares of each of the Liquid Assets Fund Series, the Municipal
Assets Fund Series and the Vintage Government Assets Fund Series shall be
further divided into four classes of Shares, designated as the Class A Shares,
the Class B Shares, the Class C Shares and the Class D Shares, respectively, or
such other names as the Board of Directors may determine from time to time as a
convenient and proper method for identifying such Shares in a registration
statement filed with the Securities and Exchange Commission covering the offer
and sale of such Shares to the public. Each such class of each of the Liquid
Assets Fund Series, the Municipal Assets Fund Series and the Vintage Government
Assets Fund Series shall consist of 1,250,000,000 Shares, par value $0.001 per
Share.
Shares of each of the Vintage Income Fund Series, the Vintage
Municipal Bond Fund Series, the Vintage Equity Fund Series, the Vintage Balanced
Fund Series, the Vintage Aggressive Growth Fund Series and the Vintage Limited
Term Bond Fund Series shall be further divided into two classes of Shares,
designated as the Class A Shares and the Class B Shares, respectively, or such
other names as the Board of Directors may determine from time to time as a
convenient and proper method for identifying such Shares in a registration
statement filed with the Securities and Exchange Commission covering the offer
and sale of such Shares to the public. Each such class of each of the Vintage
Income Fund Series, the Vintage Municipal Bond Fund Series, the Vintage Equity
Fund Series, the Vintage Balanced Fund Series, the Vintage Aggressive Growth
Fund Series and the Vintage Limited Term Bond Fund Series shall consist of
800,000,000 Shares, par value $0.001 per Share.
Each of such classes of each such Series, together with any
further class or classes of any other Series, shall be referred to herein
individually as a "Class" and collectively as "Classes."
The Board of Directors of the Corporation shall have the power
and authority to further classify or reclassify any unissued Shares from time to
time by setting or changing the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of such unissued Shares. Upon the creation of any
further Series or Classes, the Board of Directors, shall, for purposes of
identification, also have the power and authority to designate a name for the
new Series or Class.
(b) A description of the relative preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualification and terms and conditions of redemption of all Series and Classes
of Shares is as follows, unless otherwise set forth in Articles Supplementary
filed with the Maryland State Department of Assessments and Taxation describing
any further Series, Class or Classes from time to time created by the Board of
Directors is as follows:
(i) ASSETS BELONGING TO A SERIES OR CLASS.
All consideration received by the Corporation for the issue or sale of Shares of
a particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series or Class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits and proceeds,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payment derived from any reinvestment of such proceeds,
in whatever form the same may be, together with any General Asset Items (as
hereinafter defined) allocated to that Series or Class as provided in the
following sentence, are herein referred to as "assets belonging to" that Series
or Class. In the event that there are any assets, income, earnings, profits or
proceeds thereof, funds or payments which are not readily identifiable as
belonging to any particular Series or Class (collectively "General Asset
Items"), the Board of Directors shall allocate such General Asset Items to and
among any one or more of the Series or Classes created from time to time in such
manner and on such basis as it, in its sole discretion, deems fair and
equitable; and any General Asset Items so allocated to a particular Series or
Class shall belong to that Series or Class. Each such allocation by the Board of
Directors shall be conclusive and binding upon the stockholders of all Series
and Classes for all purposes.
(ii) LIABILITIES BELONGING TO A SERIES OR CLASS.
The assets belonging to each Series or Class shall be charged with the
liabilities of the Corporation in respect of that Series or Class, and with all
expenses, costs, charges and reserves attributable to that Series or Class and
shall be so recorded upon the books of account of the Corporation. Such
liabilities, expenses, costs, charges and reserves, together with any General
Liability Items (as hereinafter defined) allocated to that Series or Class as
provided in the following sentence, are herein referred to as "liabilities
belonging to" that Series or Class. In the event that there are any general
liabilities, expenses, costs, charges or reserves of the Corporation which are
not readily identifiable as belonging to any particular Series or Class
(collectively "General Liability Items"), the Board of Directors shall allocate
and charge such General Liability Items to and among any one or more of the
Series or Classes created from time to time in such manner and on such basis as
the Board of Directors in its sole discretion deems fair and equitable; and any
General Liability Items so allocated and charged to a particular Series or Class
shall belong to that Series or Class. Each such allocation by the Board of
Directors shall be conclusive and binding upon the stockholders of all Series
and Classes for all purposes.
(iii) DIVIDENDS AND DISTRIBUTIONS. Unless otherwise
expressly provided hereunder, or hereafter in any Articles Supplementary
creating any additional Series or Class of Shares, the holders of each Series
and Class of Shares of the Corporation shall be entitled to dividends and
distributions in such amounts and at such times as may be determined by the
Board of Directors. Dividends and distributions paid with respect to the various
Series or Classes of Shares may vary among such Series and Classes. Expenses
related to distribution of, and other identified expenses as should be properly
allocated to, the Shares of a particular Series or Class, may be charged to and
borne solely by such Series or Class and the bearing of expenses solely by such
Series or Class may be appropriately reflected (in a manner determined by the
Board of Directors) and cause differences in the net asset value attributable
to, and the dividend, redemption and liquidation rights of, the Shares of such
Series or Class of capital stock.
Dividends and distributions may be paid in cash,
property or additional Shares of the same or another Series or Class, or a
combination thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have adopted which provides for the
election by stockholders of the form in which dividends or distributions are to
be paid. Any such dividend or distribution paid in Shares shall be paid at the
net asset value thereof.
(iv) VOTING RIGHTS. Unless otherwise expressly
provided for hereunder or hereafter in any Articles Supplementary creating any
additional Series or Class of Shares, on each matter submitted to a vote of
stockholders, each holder of a Share of the capital stock of the Corporation
shall be entitled to one vote for each Share outstanding and in such holder's
name on the books of the Corporation, irrespective to Series or Classes thereof,
and all Shares of all Series and Classes shall vote together as a single class;
provided, however, that (a) as to any matter with respect to which separate
votes of any Series or Class is required by the Investment Company Act of 1940,
as amended and as it may be further amended from time to time (the "Investment
Company Act"), or any rules, regulations or orders issued thereunder, or by the
Maryland General Corporation Law, as amended from time to time (the "MGCL"),
such requirement as to a separate vote of that Series or Class shall apply in
lieu of a general vote of all Series and Classes as described above; (b) in the
event that the separate vote requirements referred to in (a) above apply with
respect to one or more Series or Classes, then subject to paragraph (c) below,
the Shares of all other Series or Classes not entitled to a separate vote shall
vote together as a single class; and (c) as to any manner, which, in the
judgment of the Board of Directors (which shall be conclusive), does not affect
the interest of a particular Series or Class, such Series or Class shall not be
entitled to any vote and only the holders of Shares of one or more affected
Series and Classes shall be entitled to vote.
(v) LIQUIDATION. Unless otherwise expressly
provided for hereunder or hereafter in any Articles Supplementary creating any
additional Series or Class of Shares, in the event of any liquidation,
dissolution or winding up of the Corporation, or the liquidation of a particular
Series or Class, whether voluntary or involuntary, holders of Shares of capital
stock of the Corporation, or holders of Shares of the particular Series or
Class, shall be entitled, after payment or provision for payment of the debts
and the liabilities of the Corporation (as such liabilities may affect one or
more Series or Classes of Shares), or after payment or provision for payment of
the debts and the liabilities of the particular Series or Class, to share
ratably in the assets of the Series or Class in which they have investment. The
determination of the Board of Directors shall be conclusive as to the amount of
liabilities, including accrued expenses and reserves, as to the allocation of
liabilities and expenses to a given Series or Class, and as to whether the
general assets of the Corporation are allocable to any one or more Series or
Classes.
(vi) REDEMPTIONS AND REPURCHASES. Unless
otherwise expressly provided for hereunder or hereafter in any Articles
Supplementary creating any additional Series or Class of Shares, the Corporation
under the circumstances described below may redeem or repurchase Shares as
follows:
1. OBLIGATION OF THE CORPORATION TO
REDEEM SHARES. Each holder of Shares of any Series or Class shall be entitled at
his option to require the Corporation to redeem all or any part of the Shares of
that Series or Class owned by such holder, upon written or telegraphic request
to the Corporation or its designated agent, accompanied by such other evidence
of ownership as shall be specified by the Board of Directors, for the
proportionate interest per Share in the assets of the Corporation belonging to
that Series or Class, or the cash equivalent thereof (being the net asset value
per Share of that Series or Class determined as provided in Article SEVENTH
hereof, less such redemption fee or sales charge, if any, as may be established
by the Board of Directors from time to time in its discretion and in accordance
with the Investment Company Act or other applicable law), subject to and in
accordance with the provisions of paragraphs 4, 5 and 6 of this Article FOURTH
(b)(vi). Notwithstanding the foregoing, the Board of Directors may suspend the
right of stockholders of any Series or Class to require the Corporation to
redeem Shares held by them for such periods and to the extent permitted by, or
in accordance with, the Investment Company Act and any rule or regulation
thereunder.
2. RIGHT OF THE CORPORATION TO REDEEM
SHARES. In addition, the Board of Directors may, from time to time in its
discretion, authorize the Corporation to require the redemption of all or any
part of the outstanding Shares of any Series or Class, for the proportionate
interest per Share in the assets of the Corporation belonging to that Series or
Class, or the cash equivalent thereof (being the net asset value per Share of
that Series or Class determined as provided in Article SEVENTH hereof, less such
redemption fee or sales charge, if any, as may be established by the Board of
Directors from time to time in its sole discretion and in accordance with the
Investment Company Act or other applicable law), subject to and in accordance
with the provisions of paragraphs 4, 5 and 6 of this Article FOURTH (b)(vi),
upon the sending of written notice thereof to each stockholder whose Shares are
to be redeemed and upon terms and conditions as the Board of Directors shall
deem advisable.
3. RIGHT OF THE CORPORATION TO
REPURCHASE SHARES. In addition, the Board of Directors may, from time to time in
its discretion, authorize the officers of the Corporation to repurchase Shares
of any Series or Class, either directly or through an agent, subject to and in
accordance with the provisions of paragraphs 4, 5 and 6 of this Article FOURTH
(b)(vi). The terms and conditions of such repurchase and the price to be paid by
the Corporation upon any such repurchase shall be determined, in the discretion
of the Board of Directors in accordance with any provision of the Investment
Company Act or any rule or regulation thereunder.
4. The day as of which the net asset
value per Share of a particular Series or Class applicable to any redemption
pursuant to paragraphs 1 or 2 of this Article FOURTH (b)(vi) shall be computed
shall be such time as may be determined by or pursuant to the direction of the
Board of Directors (which time may differ from Series to Series and Class to
Class).
5. Payment of the redemption or
repurchase price by the Corporation or its designated agent shall be made in
cash within seven days after the time used for determination of the redemption
or repurchase price but in no event prior to delivery to the Corporation or its
designated agent of the certificate or certificates for the Shares so redeemed
or repurchased, or of such other evidence of ownership as shall be specified by
the Board of Directors; except that any payment may be made in whole or in part
in Securities or other assets of the Corporation belonging to that Series or
Class if, in the event of the closing of the New York Stock Exchange or the
happening of any event at any time prior to actual payment which makes the
liquidation of Securities in orderly fashion impracticable or impossible, the
Board of Directors shall determine that payment in cash would be prejudicial to
the best interests of the remaining stockholders of that Series or Class. In
making any such payment in whole or in part in Securities or other assets of the
Corporation belonging to that Series or Class, the Corporation shall, as nearly
as may be practicable, deliver Securities or other assets of a gross value
(determined in the manner provided in Article SEVENTH hereof) representing the
same proportionate interest in the Securities and other assets of the
Corporation belonging to that Series or Class as is represented by the Shares of
that Series or Class so to be paid for (less such redemption fee or sales
charge, if any, as may be established by the Board of Directors from time to
time in its discretion and in accordance with the Investment Company Act or
other applicable law). Delivery of the Securities included in any such payment
shall be made as promptly as any necessary transfer on the books of the several
corporations which Securities are to be delivered may be made.
6. The right of the holder of Shares
redeemed or repurchased by the Corporation as provided in this Article FOURTH
(b)(vi) to receive dividends thereon and all other rights of such holder with
respect to such Shares shall forthwith cease and terminate from and after the
time as of which the redemption or repurchase price of such Shares has been
determined (except the right of such holder to receive (a) the redemption or
repurchase price of such Shares from the Corporation or its designated agent, in
cash and/or Securities or other assets of the Corporation , and (b) any dividend
to which such holder had previously become entitled as the record holder of such
Shares on the record date for such dividend, and, with respect to Shares
otherwise entitled to vote, except the right of such holder to vote at a meeting
of stockholders with respect to such Shares owned of record by him on the record
date for such meeting).
7. Shares of any Series or Class
redeemed shall constitute authorized but unissued Shares, subject to
classification or reclassification.
(vii) CONVERSION OR EXCHANGE RIGHTS. Unless
otherwise expressly provided for hereunder or hereafter in any Articles
Supplementary creating any additional Series or Class of Shares, and subject to
compliance with the requirements of the Investment Company Act and other
applicable law, the holders of Shares of any Series or Class shall have the
right to convert or exchange said Shares into Shares of one or more other
Classes or Series in accordance with such requirements and procedures as may be
established by the Board of Directors.
(viii) CLASSES. Unless otherwise expressly
provided for hereunder or hereafter in any Articles Supplementary creating any
additional Class of Shares, each Class of each Series shall be identical in all
respects, except each Class of each Series may be issued and sold subject to
such different sales loads or charges, whether initial, deferred or contingent,
or any combination thereof, and to such expenses (including, without limitation,
distribution expenses under a Rule 12b-1 plan and administrative expenses under
an administrative or service agreement, plan or other arrangement, however
designated) as the Board of Directors may from time to time establish in
accordance with the Investment Company Act and other applicable law.
(c) No holder of Shares shall have preemptory rights or be
entitled as such, as a matter of right, to purchase or subscribe for any part of
any new or additional Shares of the Corporation.
All persons who shall acquire Shares shall acquire the same subject to
the provisions of this Charter.
(d) The Corporation may issue and sell fractions of Shares of
capital stock having pro rata all the rights of full Shares, including, without
limitation, the right to vote and to receive dividends or distributions, and
wherever the words "Share" or "Shares" are used in the Charter or By-Laws of the
Corporation, they shall be deemed to include fractions of Shares, where the
context does not clearly indicate that only full Shares are intended.
"FIFTH: DIRECTORS. The number of directors of the Corporation shall be
seven (7), which number may be increased or decreased pursuant to the Bylaws of
the Corporation, but shall never be less than three (3), unless the number of
stockholders is less than three (3), in which case the number of directors shall
not be less than the number of stockholders. The names of the directors
currently in office and who shall act until the next annual meeting of the
stockholders and until their successors are duly elected and qualified are:
__________, ____________ and _____________. Unless otherwise provided in the
By-Laws of the Corporation, the directors of the Corporation need not be
stockholders.
"SIXTH: PROVISIONS FOR DEFINING. LIMITING AND REGULATING THE POWERS OF
THE CORPORATION. DIRECTORS AND STOCKHOLDER.
(a) BOARD OF DIRECTORS. The Board of Directors shall have the
general management and control of the business and property of the Corporation,
and may exercise all the powers of the Corporation, except such as are by
statute or by the Charter or by the By-Laws conferred upon or reserved to the
stockholders. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is hereby empowered:
(i) To authorize the issuance and sale, from
time to time, of Shares of any Series or Class, whether now or hereafter
authorized, or securities convertible into Shares of any Series or Class,
whether now or hereafter authorized, whether for cash or property at not less
than the par value thereof, in the manner and to the extent now or hereafter
permitted by the laws of Maryland; provided, however, that the consideration per
Share to be received by the Corporation upon the sale of Shares of any Series or
Class shall not be less than the net asset value (determined as provided in
Article SEVENTH hereof) per Share of that Series or Class outstanding at the
time (determined by the Board of Directors) as of which the computation of such
net asset value shall be made, less such sales or other charge or fee, if any,
as may be established by the Board of Directors from time to time in its sole
discretion and in accordance with the Investment Company Act or other applicable
law.
(ii) To authorize the execution and performance
by the Corporation of an agreement or agreements, which may be exclusive
contracts, with any person, as distributor, providing for the distribution of
Shares of any Series or Class.
(iii) To authorize the execution and performance
by the Corporation of an agreement or agreements with any person providing for
the investment and other operations of the Corporation.
The Corporation may in its By-Laws confer powers on the Board
of Directors in addition to the powers expressly conferred by statute.
(b) QUORUM; ADJOURNMENT; MAJORITY VOTE. The presence in person
or by proxy of the holders of one-third of the Shares of all Series and Classes
issued and outstanding and entitled to vote thereat shall constitute a quorum
for the transaction of any business at all meetings of the stockholders except
as otherwise provided by law or in the Charter of the Corporation, and except
that where the holders of Shares of any Series or Class are entitled to a
separate vote as a class (a "Separate Class"), or where the holders of Shares of
two or more (but not all) Series or Classes are required to vote as a single
class (a "Combined Class"), the presence in person or by proxy of the holders of
one-third of the Shares of that Separate Class or Combined Class, as the case
may be, issued and outstanding and entitled to vote thereat, shall constitute a
quorum for such vote. If, however, a quorum with respect to all Series and
Classes, a Separate Class or a Combined Class, as the case may be, shall not be
present or represented at any meeting of the stockholders, the holders of a
majority of the Shares of all Series and Classes, such Separate Class or such
Combined Class, as the case may be, present in person or by proxy and entitled
to vote shall have power to adjourn the meeting from time to time as to all
Series and Classes, such Separate Class or such Combined Class, as the case may
be, without notice other than announcement at the meeting, until the requisite
number of Shares entitled to vote at such meeting shall be present. At such
adjourned meeting at which the requisite number of Shares entitled to vote
thereat shall be represented any business may be transacted which might have
been transacted at the meeting as originally notified. The absence from any
meeting of stockholders of the number of Shares in excess of one-third of the
Shares of all Series and Classes or of the affected Series or Class or Classes,
as the case may be, which may be required by the laws of the State of Maryland,
the Investment Company Act of 1940 or any other applicable law, or this Charter
for action upon any given matter shall not prevent action at such meeting upon
any other matter or matters which may properly come before the meeting, if there
shall be present thereat, in person or by proxy, holders of the number of Shares
required for action in respect of such other matter or matters. Notwithstanding
any provision of law requiring any action to be taken or authorized by the
holders of a greater proportion than a majority of the Shares of all Series and
Classes or of the Shares of a particular Series or Series or particular Class or
Classes, as the case may be, entitled to vote thereon, such action shall be
valid and effective if taken or authorized by the affirmative vote of the
holders of a majority of the Shares of all Series and Classes or such Series,
Class or Classes, as the case may be, outstanding and entitled to vote thereon.
(c) The Corporation reserves the right to adopt from time to
time any amendment to its Charter, as now or hereafter authorized by law,
including any amendment that alters the contract rights, as expressly set forth
in the Charter, of any outstanding capital stock.
"SEVENTH: DETERMINATION OF NET ASSET VALUE. For the purposes
referred to hereunder, the net asset value per Share of any Series or Class
shall be determined by or pursuant to the direction of the Board of Directors in
accordance with the following provisions:
(a) Net asset value per Share of a particular Series or Class
on any day shall be computed as follows:
The net asset value per Share of that Series or Class
shall be the quotient obtained by dividing the "net value of
the assets" of the Corporation belonging to that Series or
Class by the total number of Shares of that Series or Class at
the time deemed to be outstanding (including Shares sold
whether paid for and issued or not, and excluding Shares
redeemed or repurchased on the basis of previously determined
values, whether paid for and received or not).
The "net value of the assets" of the Corporation
belonging to a particular Series or Class shall be the "gross
value" of the assets belonging to that Series or Class after
deducting the amount of all incurred and accrued and unpaid
liabilities belonging to that Series or Class.
The "gross value" of the assets belonging to a
particular Series or Class shall be the amount of all cash and
receivables and the market value of all Securities and other
assets held by the Corporation and belonging to that Series or
Class at the time as of which the determination is made.
Securities held shall be valued at market value or, in the
absence of readily available market quotations, at fair value,
both as determined pursuant to methods approved by the Board
of Directors and in accordance with applicable statutes and
regulations.
(b) The Board of Directors may determine to maintain the net
asset value per Share of any Series or Class at a designated constant dollar
amount and in connection therewith may adopt procedures not inconsistent with
the Investment Company Act and the MGCL for the continuing declaration of income
attributable to that Series or Class as dividends and for the handling of any
losses attributable to that Series or Class. Such procedures may provide that in
the event of any loss, each stockholder shall be deemed to have contributed to
the capital of the Corporation attributable to that Series or Class the
stockholder's pro rata portion of the total number of Shares required to be
canceled in order to permit the net asset value per Share of that Series or
Class to be maintained, after reflecting such loss, at the designated constant
dollar amount. Each stockholder of the Corporation shall be deemed to have
agreed, by the stockholder's investment in any Series or Class with respect to
which the Board of Directors shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
(c) The Board of Directors is empowered, in its absolute
discretion, to establish other methods for determining such net asset value
whenever such other methods are deemed by it to be necessary or desirable and
are consistent with the provisions of the Investment Company Act and the rules
and regulations thereunder.
"EIGHTH: DETERMINATION BINDING. Any determination made by or pursuant
to the direction of the Board of Directors in good faith, and so far as
accounting matters involved are in accordance with accepted accounting practice,
as to the amount of the assets, obligations or liabilities of the Corporation
belonging to any Series or Class, as to the amount of the net income of the
Corporation belonging to any Series or Class for any period or amounts that are
any time legally available for the payment of dividends on Shares of any Series
or Class, as to the amount of any reserves or charges set up with respect to any
Series or Class and the property thereof, as to the time of or purpose for
creating any reserves or charges with respect to any Series or Class, as to the
use, alteration or cancellation of any reserves or charges with respect to any
Series or Class (whether or not any obligation or liability for which such
reserves or charges shall have been created or shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the price or closing bid or asked price of any Security owned or held by the
Corporation and belonging to any Series or Class, as to the market value of any
Security or fair value of any other asset owned by the Corporation and belonging
to any Series or Class, as to the number of Shares of any Series or Class
outstanding or deemed to be outstanding, as to the impracticability or
impossibility of liquidating Securities in orderly fashion, as to the extent to
which it is practicable to deliver the proportionate interest in the Securities
and other assets of the Corporation belonging to any Series or Class represented
by any Shares belonging to any Series or Class redeemed or repurchased in
payment for any such Shares, as to the method of payment for any such Shares
redeemed or repurchased, or as to any other matters relating to the issue, sale,
redemption, repurchase, and/or other acquisition or disposition of Shares of the
Corporation, shall be final and conclusive and shall be binding upon the
Corporation and all holders of Shares of all Series and Classes past, present
and future, and the Shares of all Series and Classes are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid. No provision of the Charter of the Corporation shall be
effective to (a) bind any person to waive compliance with any provision of the
Securities Act of 1933, as amended, or the Investment Company Act or any valid
rule, regulation or order of the Securities and Exchange Commission thereunder,
or (b) protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its stockholders in contravention of
the Securities Act of 1933, as amended, or the Investment Company Act.
"NINTH: LIABILITIES OF DIRECTOR OR OFFICER. A director or former
director or officer or former officers of the Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of a duty as a director or officer, except to the extent such
exemption from liability or limitation thereof is not permitted by law
(including the Investment Company Act of 1940).
No amendment, modification or repeal of this Article NINTH shall
adversely affect any right or protection of a director or former director or
officer or former officer that exists at the time of such amendment,
modification or repeal.
"TENTH: INDEMNIFICATION OF DIRECTORS. OFFICERS AND EMPLOYEES. The
Corporation shall indemnify to the fullest extent permitted by law (including
the MGCL and the Investment Company Act) any person made or threatened to be
made a party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that such person is or
was a director, officer or employee of the Corporation or serves or served at
the request of the Corporation any other enterprise as a director, officer or
employee. To the fullest extent permitted by law (including the MGCL and the
Investment Company Act), expenses incurred by any such person in defending any
such action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The rights provided to any person by this
Article shall be enforceable against the Corporation by such person who shall be
presumed to have relied upon it in serving or continuing to serve as a director,
officer or employee as provided above. No amendment of this Article TENTH shall
impair the rights of any person arising at any time with respect to an event
occurring prior to such amendment. For purposes of this Article TENTH, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust, employee benefit
plan or other entity; "service at the request of the Corporation" shall include
service as a director, officer or employee of the Corporation which imposes
duties on, or involves services by, such director, officer or employee with
respect to an employee benefit plan, its participants or beneficiaries; any
excise taxes assessed on a person with respect to any employee benefit plan
shall be deemed to be indemnificable expenses; and action by a person with
respect to any employee benefit plan which such person reasonably believes to be
in the interest of the participants and beneficiaries of such plan shall be
deemed to be action not opposed to the best interests of the Corporation."
THIRD
The Board of Directors of the Corporation, pursuant to and in
accordance with the Charter and Bylaws of the Corporation and the MGCL, duly
advised the foregoing amendment and restatement of the Charter of the
Corporation and the stockholders of the Corporation, pursuant to and in
accordance with the Charter and Bylaws of the Corporation and the MGCL, duly
approved the foregoing amendment and restatement of the Charter of the
Corporation.
IN WITNESS WHEREOF, IMG MUTUAL FUNDS, INC. has caused these Articles of
Amendment and Restatement to be signed and acknowledged in its name and on its
behalf by its President and attested to by its Secretary on this ______ day of
______, _____; and its President acknowledges that these Articles of Amendment
and Restatement are the act of IMG Mutual Funds, Inc., and he/she further
acknowledges that, as to all matters or facts set forth herein which are
required to be verified under oath, such matters and facts are true in all
material respects to the best of his/her knowledge, information and belief, and
that this statement is made under the penalties for perjury.
ATTEST: IMG MUTUAL FUNDS, INC.
______________________________ By: _________________________
, Secretary , President
<PAGE>
TABLE OF CONTENTS
PAGE
SYNOPSIS.....................................................
RISK FACTORS.................................................
PROPOSAL 1: CS FUND PLAN OF
REORGANIZATION...............................................
PROPOSAL 3: BOND FUND PLAN OF
RECLASSIFICATION.............................................
IMG MUTUAL FUNDS, INC........................................
PROPOSALS 2 AND 4: APPROVAL OF INVESTMENT
ADVISORY AGREEMENT...........................................
PROPOSAL 5: ELECTION OF DIRECTORS............................
PROPOSAL 6: ARTICLES OF AMENDMENT............................
INFORMATION RELATING TO VOTING MATTERS.......................
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION..........................................
OTHER BUSINESS...............................................
LEGAL MATTERS................................................
SHAREHOLDER INQUIRIES........................................
EXHIBIT A--PLAN OF REORGANIZATION............................
EXHIBIT B--PLAN OF RECLASSIFICATION..........................
EXHIBIT C--ARTICLES OF AMENDMENT.............................
<PAGE>
IMG MUTUAL FUNDS, INC.
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, JANUARY ___, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David Lundquist and David Miles, 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 IMG Mutual Funds, Inc. on January ___, 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 ALL PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE DIRECTORS
RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
FOR CORE STOCK FUND SHAREHOLDERS ONLY
1. Approval of the Plan of Reorganization
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the new Advisory Agreement between the Fund and Investors
Management Group, ("IMG") following a change of ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
FOR BOND FUND SHAREHOLDERS ONLY
3. Approval of the Plan of Reclassification
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Approval of the new Advisory Agreement between the Fund and Investors
Management Group, ("IMG") following a change of ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
FOR ALL SHAREHOLDERS
5. Election of Directors
Lu (Baggenstos) Farber, William J. Howard, Steven Zumbach, Barbara P.
Hazelhurst, Edward J. Stanek, Fred Lorber, John G. Taft, and Debra L.
Johnson
[ ] FOR all nominees listed
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
(To withhold authority to vote for any individual
nominee(s), write the name in the space provided
below.
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
6. Approval of the Articles of Amendment.
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 ___, 1998, relating to the reorganization of the Core Stock
Fund into the Vintage Equity Fund. The Statement of Additional Information for
IMG Mutual Funds, Inc. dated August 27, 1997, and the Statement of Additional
Information for IMG Mutual Funds, Inc. dated ____________, 1998 (which includes
information about the Vintage Equity Fund), have been filed with the Securities
and Exchange Commission and are incorporated herein by reference. This Statement
is not a Prospectus and is authorized for distribution only when it accompanies
or follows delivery of the Prospectus. This Statement of Additional Information
should be read in conjunction with the Prospectus. A copy of the ___________,
1998 Prospectus may be obtained, without charge, by writing IMG Mutual Funds,
Inc., 2203 Grand Avenue, Des Moines, Iowa 50312-5338 or by calling 800-298-1819.
The date of this Statement of Additional Information is January ___, 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 16th 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 16, 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.
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) Articles of Amendment and Restatement
(included as Exhibit "C" to Proxy Statement/Prospectus)
(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. (a) Form of Plan of Reorganization (included as
Exhibit "A" to Proxy Statement/Prospectus)
(b) Form of Plan of Reclassification (included as
Exhibit "B" 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, 1997
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 P.E.
Amendment No. 8 to the Fund's N1-A Registration
Statement filed November 7, 1997
11. Opinion and Consent of Messrs. Ober, Kaler, Grimes
& Schriver to be filed by amendment
12. (a) Tax opinion of Cline, Williams, Wright, Johnson
& Oldfather
12. (b) Tax opinion of Cline, Williams, Wright, Johnson
& Oldfather
14. Consents of KPMG Peat Marwick LLP
16. Power of Attorney
UNDERTAKINGS
(1) The undersigned Company agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Company agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) Prior to commencing the continuous public offering of shares of the
fund, Registrant hereby undertakes to fill a post-effective amendment to its
Form N-14 Registration Statement, using financial statements which need not be
certified, to reflect the consummation of the transactions described in the
Prospectus/Information Statement under the caption "Capitalization."
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
IMG Mutual Funds, Inc.
We consent to incorporation by reference in the registration statement on Form
N-14 of IMG Mutual Funds, Inc. of our report dated May 30, 1997, relating to the
financial statements and financial highlights for each of the portfolios within
IMG Mutual Funds, Inc. dated April 30, 1997, and references to our Firm under
the headings "FINANCIAL HIGHLIGHTS" and "SHAREHOLDER REPORTS AND MEETINGS" in
the IMG Mutual Funds, Inc. Prospectus dated August 27, 1997, and "REPORTS TO
SHAREHOLDERS" and "INDEPENDENT AUDITORS" in the IMG Mutual Funds, Inc. Statement
of Additional Information dated August 27, 1997. The above-mentioned financial
statements, Prospectus, and Statement of Additional Information are incorporated
by reference into the Proxy Statement/Prospectus and Statement of Additional
Information, which constitute part of this Registration Statement.
KPMG Peat Marwick LLP
Des Moines, Iowa
December 18, 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) Articles of Amendment and Restatement (included as
Exhibit C to Proxy Statement/Prospectus).....................
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. (a) Form of Plan of Reorganization (included as Exhibit
"A" to Proxy Statement/Prospectus)...........................
4. (b) Form of Plan of Reclassification (included as Exhibit
"B" 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. (a) Tax Opinion of Cline, Williams, Wright, Johnson & Oldfather..
12. (b) Tax Opinion of Cline, Williams, Wright, Johnson & Oldfather..
14. Consent of KPMG Peat Marwick LLP.............................
16. Power of Attorney............................................
IMG MUTUAL FUNDS, INC.
EXHIBIT # 12 (a)
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 18, 1997
IMG Mutual Funds, Inc.
2203 Grand Ave.
Des Moines, IA 50312-5338
RE: Plan of Reorganization for Combining the IMG Mutual Funds, Inc.
and the Core Stock Fund (the "Stock Fund"), (the Acquired
Portfolio") into the IMG Mutual Funds, Inc., and its Vintage
Equity Fund (the "Surviving Fund")
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
IMG Mutual Funds, Inc. ("IMG") is a Delaware corporation consisting of
multiple investment portfolios, including, the Acquired Portfolio identified
above (the "Transferor Fund") and the Surviving Fund identified above. The
Transferor Fund and the Surviving Fund are sometimes referred to herein
collectively as "Funds." IMG, 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
Fund be transferred to the Surviving Fund. As consideration for such transfer,
the Surviving Fund is issuing to the Transferor Fund a number of full and
fractional shares of common stock in the Surviving Fund equal to the net asset
value of the shares outstanding of the respective Transferor Fund at the
Effective Time of the Reorganization.
Immediately after the transfer, the Surviving Fund shares issued to the
Transferor Fund are to be distributed to the shareholders of the Transferor Fund
in liquidation of the Transferor Fund, and the Transferor Fund is to cease
operations. Each Transferor Fund shareholder is receiving shares of the
Surviving Fund in proportion to the shareholding in the Transferor Fund
immediately before the Reorganization. The outstanding shares of the Transferor
Fund are to be canceled, and the Transferor Fund is to be terminated.
ASSUMPTIONS
For purposes of this opinion, we have made several assumptions:
First, that each of the Funds is 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 Fund is 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 the 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 Fund have no plan or
intention to dispose of a number of shares of the Surviving Fund received by
them as a result of the transaction which would result in their owning in the
aggregate shares of the Surviving Fund having a fair market value that is less
than 50% of the fair market value of the Transferor Fund's shares outstanding
immediately before the transaction (including any Transferor Fund's shares
redeemed in anticipation of the transaction);
Fourth, that the Surviving Fund has no plan or intention to reacquire
any of its shares issued in the transaction, except for redemptions in the
ordinary course of business as a regulated investment company;
Fifth, that the Surviving Fund has no plan or intention to sell or
otherwise to dispose of any of the assets of the Transferor Fund acquired in the
transaction, except for dispositions made in the ordinary course of business;
Sixth, that the liabilities of the Transferor Fund assumed by the
Surviving Fund and the liabilities to which the transferred assets of the
Transferor Fund are subject were incurred by the Transferor Fund 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 Fund will continue
the historic business of the Transferor Fund or use a significant portion of the
Transferor Fund's historic business assets in a business;
Eighth, that there is no intercorporate indebtedness existing between
the Surviving Fund and the Transferor Fund that was issued, acquired or will be
settled at a discount;
Ninth, that the Surviving Fund does not own, directly or indirectly,
nor have they owned during the past five years, directly or indirectly, any
stock of the Transferor Fund;
Tenth, that the Transferor Fund is 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 Fund, on Form N-14 under
the Securities Act of 1933 (the "Registration Statement") has been or will be
duly authorized by the Surviving Fund.
The opinions set forth below are subject to the approval of the Plan by
the shareholders of the Transferor Fund, 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 Fund to the Surviving Fund in exchange for shares of the
Surviving Fund and distribution to shareholders of the Transferor Fund
of the shares the shares of the Surviving Fund 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 Fund 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 the Transferor Fund of shares of the
Surviving Fund 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 Fund shares received by a shareholder of the
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 Fund of the assets of the 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 Fund 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 Fund's holding period with respect to any asset acquired from
the Transferor Fund will include the period for which such asset was
held by such Transferor Fund; and
(ix) the Surviving Fund 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
IMG MUTUAL FUNDS, INC.
EXHIBIT # 12 (b)
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 18, 1997
IMG Mutual Funds, Inc.
2203 Grand Ave.
Des Moines, IA 50312-5338
RE: Plan of Reorganization and Reclassification for combining the
IMG Mutual Funds, Inc. ("IMG") Select Shares, Adviser Shares and
Institutional Shares of the IMG Bond Fund into a new, untitled
single class of shares of the IMG Bond Fund.
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 and Reclassification (the "Plan").
BACKGROUND
IMG Mutual Funds, Inc. ("IMG") is a Delaware corporation consisting of
multiple investment portfolios, including its Bond Fund ("Bond Fund"). The Bond
Fund 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 of the Select Shares, Adviser Shares and
Institutional Shares ("outstanding shares") of the Bond Fund be exchanged for a
new single class of shares of the Bond Fund that will not have a title. A number
of full and fractional new untitled Bond Fund shares equal to the net asset
value of the outstanding shares will be issued at the Effective Time of
Reorganization.
ASSUMPTIONS
For purposes of this opinion, we have made several assumptions:
First, that the Bond Fund is 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 shareholders of the Bond Fund have no plan or
intention to dispose of a number of shares of the Bond Fund received by them as
a result of the transaction which would result in their owning in the aggregate
shares of the Bond Fund having a fair market value that is less than 50% of the
fair market value of the Bond Fund's shares outstanding immediately before the
transaction (including any Bond Fund's shares redeemed in anticipation of the
transaction);
Third, that the Bond Fund has 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;
Fourth, that the Bond Fund has no plan or intention to sell or
otherwise to dispose of any of its assets except for dispositions made in the
ordinary course of business;
Fifth, that the transaction serves a business purpose or purposes of
the Funds and that following the transaction the Bond Fund will continue the
historic business of the Bond Fund or use a significant portion of the Bond
Fund's historic business assets in a business;
Sixth, that the Bond Fund is 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
Seventh, that the Plan substantially in the form included as an exhibit
to the registration statement of the Bond Fund, on Form N-14 under the
Securities Act of 1933 (the "Registration Statement") has been or will be duly
authorized by the Bond Fund.
The opinions set forth below are subject to the approval of the Plan by
the shareholders of the Bond Fund, 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 exchange of outstanding shares by Shareholders of
the Bond Fund for a single class of new untitled shares, as described
in the Plan will constitute a reorganization within the meaning of Code
Section 368(a)(1)(E).
(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 Bond 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 Bond Fund 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 the Bond Fund on
the distribution to them by a Bond Fund of new shares of the Bond Fund
in exchange for their shares of such Bond Fund (but shareholders of the
Bond Fund subject to taxation will recognize income upon receipt of any
net investment income or net capital gains of such Bond Fund which are
distributed to them by the Bond Fund prior to the closing date of its
Reorganization);
(v) in accordance with section 358(a)(1) of the Code, the
basis of the Bond Fund shares received by a shareholder of a Bond Fund
will be the same as the basis of the shareholder's Bond Fund shares
immediately before the transactions; and
(vi) in accordance with section 1223(1) of the Code, a
shareholder's holding period for Bond Fund shares will be determined by
including the period for which the shareholder held Bond Fund shares
exchanged therefor, provided that the shareholder held such Bond Fund
shares as a capital asset.
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
