As filed with the Securities and Exchange Commission on
January 12, 1998
Registration No. 33-42149
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. _1__
POST-EFFECTIVE AMENDMENT NO. ___
(Check appropriate box or boxes)
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IMG MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
(Address of Principal Executive Offices)
(515) 244-5426
(Area Code and Telephone Number)
MARK A. McCLURG, PRESIDENT
IMG Mutual Funds, Inc.
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Name and Address of Agent for Service)
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Copies of all communications to:
John C. Miles, Esq.
Cline, Williams, Wright, Johnson & Oldfather
1900 First Bank Building, 233 So. 13th Street
Lincoln, NE 68508
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Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
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
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Part A
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Item 1. Beginning of Registration Outside front cover
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
Item 3. Fee Table, Synopsis Information Synopsis; Risk Factors;
and Risk Factors Proposal 1: Agreement and
Plan of Reorganization
Item 4. Information About the Transaction Outside Front Cover;
Synopsis; Proposal 1:
Agreement and Plan of
Reorganization
Item 5. Information About the Registrant IMG Mutual Funds, Inc.
Item 6. Information About the Company AMCORE Vintage Funds
Being Acquired
Item 7. Voting Information Outside Front Cover;
Synopsis; Information
Relating to
Voting Matters
Item 8. Interest of Certain Persons and Not Applicable
Experts
Item 9. Additional Information Required Not Applicable
For Re-offering by Persons Deemed
To be Underwriters
<PAGE>
Statement of Additional
Part B Information Caption
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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 14, 1998
Dear Shareholder:
I am writing to ask you for your vote on important questions that affect your
investment in one or more of the AMCORE Vintage Funds (the "Funds"). While you
are, of course, welcome to join us at the Funds' Special Shareholder Meeting,
most shareholders cast their vote by filling out and signing the enclosed proxy
card.
As you may be aware, AMCORE Financial, Inc., the parent company of the Funds'
investment adviser has signed a definitive agreement to acquire Investors
Management Group, Ltd., ("IMG"), an investment advisory organization with
approximately $1.6 billion under management. AMCORE Capital Management and IMG
will combine their resources with a view to enhancing the resources available to
the clients of both firms.
As part of its continuing effort to assure high quality services to shareholders
of the Funds, AMCORE has recommended, and the Board of Trustees of your Funds
has recently reviewed and unanimously endorsed, a proposal for the
reorganization of the Funds. This proposal calls for the reorganization of the
Funds as series of a Massachusetts business trust to series of a Maryland
corporation The "new" Vintage Funds will have substantially similar investment
objectives and investment policies as the "current" Funds.
In a related series of transactions, some of the new Vintage Funds will acquire
some of the smaller funds currently managed by IMG and other funds will be
brought together to create an even larger fund family. The aggregate net asset
value of the shares of the new Funds you will receive will be equal to the
aggregate net asset value of shares you currently own. No sales charges will be
imposed in the transaction and the Funds and their shareholders will not bear
any of the costs associated with the reorganization.
The Board of Trustees of the Funds believe the reorganization is in the best
interests of Funds shareholders, and recommend that shareholders approve the
reorganization. The Funds' Trustees believe the transaction would benefit the
Funds and their shareholders by increasing certain of the Funds' assets
initially and enhancing their capacity to attract and retain investors. In
making their determination, the Trustees reviewed several factors, including the
qualifications and capabilities of the service providers of the new Funds. If,
as expected, the Funds' distributor is able to distribute new Fund shares
successfully, growth in assets would make possible the realization of economies
of scale and attendant savings in costs to the Funds and their shareholders. Of
course, achievement of these goals cannot be assured.
Detailed information about the proposed transaction and the reasons for it is
contained in the enclosed combined Proxy Statement/Prospectus. The enclosed
proxy card is, in essence, a ballot. It tells us how to vote on your behalf on
important issues relating to your Fund. If you complete and sign the proxy,
we'll vote it exactly as you tell us. If you simply sign the proxy card, we'll
vote it according to the Trustees' recommendation. We urge you to review
carefully the Proxy Statement/Prospectus, fill out your proxy card, and return
it to us. A self-addressed, postage-paid envelope has been enclosed for your
convenience. It is very important that you vote and that your voting
instructions be received no later than February 2, 1998.
NOTE: You may receive more than one proxy package if you hold shares in more
than one account in a Fund, or if you hold shares in more than one Fund. You
must return ALL proxy cards you receive. We have provided postage-paid return
envelopes for each. If you have any questions, please call 815-961-7119 or
outside Illinois 800-521-5150 (press #1).
Sincerely,
Walter B. Grimm, Chairman
The Coventry Group
<PAGE>
The Coventry Group
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 3, 1998
TO THE SHAREHOLDERS OF AMCORE VINTAGE FUNDS:
You are cordially invited to attend the Special Meeting of Shareholders of
AMCORE Vintage Funds, which will be held at 3435 Stelzer Road, Columbus, Ohio
43219 on February 3, 1998, at 10:00 a.m., for the following purposes:
1. To consider and vote on a proposed Agreement and Plan of
Reorganization (the "Plan") providing for (a) the transfer of all the assets of
AMCORE Vintage Funds in exchange for shares of the New Vintage Funds; (b) the
assumption by the New Vintage Funds of all of the liabilities of AMCORE Vintage
Funds; and (c) the distribution of New Vintage Funds shares to the shareholders
of AMCORE Vintage Funds in complete liquidation of AMCORE Vintage Funds.
2. To act upon such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Trustees has fixed the close of business on Thursday, January 8,
1998, as the record date for determination of shareholders entitled to notice
of, and to vote at, the Special Shareholders Meeting. As of the record date,
there were 201,591,373.094 shares of AMCORE Vintage Funds, outstanding and
eligible to vote at the Special Shareholders Meeting. Please read the Proxy
Statement/Prospectus carefully before telling us, through your proxy card, how
you wish your shares to be voted. The Board of Trustees unanimously recommends a
vote in favor of the proposal.
WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED. No postage is required. Prompt return of your proxy card
will be appreciated. Your vote is important no matter how many shares you own.
Columbus, Ohio BY ORDER OF THE BOARD OF TRUSTEES
January 14, 1998
George L. Stevens, Secretary
<PAGE>
PROXY STATEMENT/PROSPECTUS
RELATING TO THE REORGANIZATION OF
AMCORE VINTAGE FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE 800-438-6375
IN EXCHANGE FOR SHARES OF
NEW VINTAGE FUNDS
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
This Proxy Statement/Prospectus is being furnished to shareholders of AMCORE
Vintage Funds ("AV Funds" or "Current Vintage Funds"), in connection with the
solicitation by its Board of Trustees of proxies to be used at the Special
Meeting of Shareholders of the AV Funds to be held at 3435 Stelzer Road,
Columbus, Ohio 43219 at 10:00 a.m. on February 3, 1998, and any adjournments
thereof. AV Funds are currently diversified registered open-end investment
companies. Shareholders of record as of the close of business on January 8, 1998
are entitled to vote at the Special Meeting. It is expected that this Proxy
Statement/Prospectus will be mailed to shareholders of AV Funds on or about
January 14, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization in which
all of the assets and liabilities of AV Funds will be acquired by the new
Vintage Funds series of IMG Mutual Funds, Inc., ("New Vintage Funds") in
exchange for shares of New Vintage Funds. The shares of New Vintage Funds
thereby received will then be distributed to shareholders of the Current Vintage
Funds and the Current Vintage Funds will be liquidated. As a result of the
proposed reorganization, each shareholder of the Current Vintage Funds will
receive that number of full and fractional shares of the corresponding series of
shares of the New Vintage Funds having a net asset value equal to the net asset
value of such shareholder's shares of the Current Vintage Funds held as of the
date of the proposed reorganization.
IMG Mutual Funds, Inc., is a diversified registered open-end investment company
which issues its shares in separate portfolios or series, each with its own
investment objectives and policies. The investment objectives, policies and
restrictions of the seven portfolios of New Vintage Funds participating in the
proposed reorganization are similar to those of the corresponding portfolios of
AV Funds. For a comparison of the investment objectives, policies and
restrictions of AV Funds and New Vintage Funds, see "Proposal 1: Agreement and
Plan of Reorganization--Investment Objectives, Policies and Restrictions."
Investors Management Group, Ltd., ("IMG") serves as the investment advisor for
the New Vintage Funds. IMG is being acquired by AMCORE Financial, Inc., the
parent of AMCORE Capital Management, Inc., investment adviser to AV Funds.
<PAGE>
This Proxy Statement/Prospectus, which should be retained for future reference,
sets forth concisely the information about the New Vintage Funds that a
prospective investor should know before investing. This document will give you
the information you need to vote on the proposed reorganization described
herein. Much of the information is required under rules of the Securities and
Exchange Commission and some of it is technical in nature. If there is anything
you do not understand, please contact us at our toll-free number,
1-800-798-1819. Shareholders should return proxies and any correspondence to
3435 Stelzer Road, Columbus, Ohio 43219.
The following documents have been filed with the Securities and Exchange
Commission and are incorporated into this Proxy Statement/Prospectus by
reference: (i) a Statement of Additional Information dated the date hereof and
relating to this Proxy Statement/Prospectus; (ii) the Prospectus and Statement
of Additional Information of the New Vintage Funds dated January 14, 1998; and
(iii) the Prospectus and Statement of Additional Information of AV Funds, dated
July 31, 1997. Copies of the referenced documents are available upon request and
without charge by calling 1-800-798-1819.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATOR, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES OF THE NEW VINTAGE FUNDS 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 14, 1998.
<PAGE>
SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the Board of Trustees of AMCORE
Vintage Funds for use at the Special Meeting of Shareholders to be held on
February 3, 1998 (and if adjourned, at any adjourned meeting) for the purpose
stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THE PROPOSAL?
Your Funds' Trustees recommend that you vote for the proposed
reorganization.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on January 8, 1998, are
entitled to be present and vote at the meeting or any adjourned meeting. Each of
the seven AV Funds will vote separately on the proposal, and the proposal must
be approved by all seven portfolios to be adopted. The Notice of Special
Meeting, combined Proxy Statement/Prospectus and the enclosed form of proxy are
being mailed to shareholders of record on or about January 14, 1998.
Each share is entitled to one vote, with fractional shares voting
proportionately. Shares represented by duly executed proxies will be voted in
accordance with shareholder's instructions. Any shareholder giving a proxy has
the power to revoke it by mail (addressed to AV Funds' Secretary at the
principal offices of AV Funds, 3435 Stelzer Road, Columbus, Ohio 43219) or in
person at the meeting, by executing a superseding proxy, or by submitting a
notice of revocation. If you sign the proxy, but don't fill in a vote, your
shares will be voted in accordance with the Trustees' recommendations. If any
other business is brought before the meeting, your shares will be voted at the
Trustees' discretion.
WHAT IS BEING PROPOSED?
The Trustees of AV Funds are recommending that shareholders approve the
reorganization (the "Reorganization") of AV Funds into corresponding portfolios
of New Vintage Funds. An Agreement and Plan of Reorganization provides for the
transfer of all of the assets and liabilities of AV Funds to New Vintage Funds,
in exchange for shares of New Vintage Funds. The completion of these
transactions, followed by the distribution of New Vintage Funds shares to AV
Funds shareholders, will result in shareholders of AV Funds becoming
shareholders of New Vintage Funds, followed by the dissolution of AV Funds. Upon
completion of the Reorganization:
Shareholders of AV Funds will be Shareholders of New Vintage
Funds and will own shares of a New Vintage Funds Portfolio
which will have substantially similar investment objectives,
policies and restrictions and purchase and redemption
procedures as the corresponding AV Funds Portfolio they
currently own.
There should be no federal income tax consequences to you as
a Shareholder of the Current Vintage Funds, resulting from the
Reorganization and your receipt of the New Vintage Funds
shares.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series
of proposed transactions in which:
IMG, the advisor to New Vintage Funds, will be acquired by
AMCORE Financial, Inc., the parent of the investment adviser
to AV Funds; and
New Vintage Funds, AV Funds and certain other funds advised
by IMG will be combined to form a mutual fund family of 10
funds with aggregate net assets of approximately $910 million.
There can be no assurance that all aspects of the proposed series of
transactions will be completed, as several transactions are subject to
shareholder votes. However, completion of the Reorganization is subject to
completion of the other related transactions. ALL EXPENSES RELATED TO THIS PROXY
STATEMENT/PROSPECTUS AND THE REORGANIZATION WILL BE BORNE BY IMG AND AMCORE
FINANCIAL, INC.
RISK FACTORS
Management of New Vintage Funds believes that an investment in New
Vintage Funds does not involve unusual or significant risks compared to an
investment in AV Funds. For more detailed information concerning the investment
practices, including possible risks, of New Vintage Funds and AV Funds, see
"Proposal 1: Agreement and Plan of Reorganization--Investment Objectives,
Policies and Practices," the New Vintage Funds Prospectus dated January 14, 1998
and the AV Funds Prospectus dated July 31, 1997.
As Current Vintage Funds shareholders you should particularly note the
discussions of New Vintage Funds' fixed income investment policies. In general,
these policies permit somewhat longer average portfolio maturities and permit
some investment in lower quality debt securities. Longer average portfolio
maturity can result in greater price fluctuation than shorter maturities. Lower
quality can result in higher risk of loss of principal.
PROPOSAL 1: AGREEMENT AND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Trustees of the AV Funds unanimously approved the proposed
Agreement and Plan of Reorganization (the "Plan") providing for the
reorganization (the "Reorganization"). The proposed reorganization would occur
on or about February 5, 1998 (the "Closing Date"). The value of the assets of AV
Funds 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 New Vintage Funds issued in exchange, will equal the aggregate net
asset value of the shares of Current Vintage Funds as set forth below.
Current Vintage Funds New Vintage Funds
U.S. Government Obligations
Fund ("AVF Government") Government Assets Fund ("New Government")
Fixed Income Fund
("AVF Income") Income Fund ("New Income")
Intermediate Tax-Free Fund
("AVF Tax-Free") Municipal Bond Fund ("New Municipal")
Equity Fund ("AVF Equity") Equity Fund ("New Equity")
Balanced Fund ("AVF Balanced") Balanced Fund ("New Balanced")
Aggressive Growth Fund ("AVF
Aggressive Growth") Aggressive Growth Fund ("New Aggressive Growth")
Fixed Total Return Fund ("AVF
Total Return") Limited Term Bond Fund ("New Limited")
In connection with the proposed Reorganization, shares of New Vintage Funds will
be distributed to shareholders of AV Funds, and AV Funds will be terminated. As
a result of the proposed Reorganization, each shareholder of AV Funds will cease
to be a shareholder of AV Funds and will receive that number of full and
fractional shares of the corresponding New Vintage Funds having a net asset
value equal to the net asset value of, such shareholder's corresponding shares
of AV Funds. Present holders of shares of AVF Government will receive "T Shares"
of New Government in the Reorganization. Present holders of shares of AVF Equity
whose shares are held in a fiduciary account for which AMCORE Investment Group
exercises investment discretion (a "fiduciary account") will receive "T Shares"
of New Equity. All other shareholders of AVF Equity will receive "S Shares" of
New Equity. The foregoing is only a summary and is qualified in its entirety by
reference to the Plan, a copy of which is Exhibit A hereto.
If the Reorganization becomes effective, AMCORE Capital Management,
Inc., the present investment adviser to AV Funds, will not be an investment
adviser to the New Vintage Funds. IMG will provide investment advisory services
to the New Vintage Funds through an Investment Advisory Agreement with New
Vintage Funds.
Because all shares of AV Funds and New Vintage Funds are in
uncertificated book-entry form, the exchange of shares will take place
automatically on the Closing Date. It will not be necessary for shareholders to
submit transmittal forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
Current Vintage Funds shareholders will enjoy all the same services and
privileges as other shareholders of New Vintage Funds, including the opportunity
to exchange into portfolios with a wide variety of investment objectives and
policies. Purchase and redemption procedures for New Vintage Funds are
substantially similar to those of AV Funds.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives, policies and restrictions of the New Vintage
Funds are substantially similar to those of the corresponding Current Vintage
Funds. The following paragraphs summarize all of the material differences
between the respective New Vintage Funds and the corresponding Current Vintage
Funds.
NEW GOVERNMENT AND AVF GOVERNMENT. The investment objectives, policies
and restrictions of these two portfolios are identical. The investment objective
is to seek current income consistent with maintaining liquidity and stability of
principal.
NEW INCOME AND AVF INCOME. The investment objective of AVF Income is to
seek total return consistent with the production of current income and the
preservation of capital. The investment objective of New Income will be to seek
current income, consistent with the preservation of capital. This change is
being made as part of a plan to emphasize current income (i.e., yield) in the
management of this IMG Portfolio. The effect of this difference may result in a
lower overall return as capital gains will not be emphasized. New Income will
maintain a dollar-weighted average portfolio maturity of four to ten years,
compared to the AVF Income's average portfolio maturity of four to six years.
The average portfolio maturity of New Income is being extended to improve yield.
While yield may improve, a longer average portfolio maturity may also subject
New Income to greater interest rate risk resulting in greater volatility in the
net asset value of the shares.
The investment policies of New Income also eliminate the present AVF
Income restriction that 75% of assets will be invested in securities with stated
or remaining maturities of 15 years or less. This maximum maturity restriction
has been eliminated to allow more flexibility in the purchase of individual
fixed income securities, but may subject New Income to a greater interet rate
risk.
Minimum credit quality restrictions will be changed in three ways.
First, New Income will allow investment in fixed income securities rated within
the five highest categories at the time of purchase by a nationally recognized
statistical rating organization (an "NRSRO") or, if unrated, found by IMG to be
of comparable quality. AVF Income limits investments to the four highest
categories. Fixed income securities in the fifth highest rating (i.e., "Ba" or
"BB"), are considered to be below Investment Grade. Bonds so rated are judged to
have speculative elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded. However, IMG believes that its fixed income
managers have experience conducting credit analysis on and managing investments
in "Ba" quality credits through their work for various insurance companies.
Second, New Income will invest no less than 65%, of the value of its total
assets in fixed income securities rated within the three highest rating
categories at the time of purchase by an NRSRO or, if unrated, found by the IMG
to be of comparable quality. AVF Income is not so limited. Third, in light of
the risks inherent in investing in below-Investment Grade fixed income
securities, New Income will limit its investments in "Ba" and "BB" securities to
a maximum of 25%.
NEW MUNICIPAL AND AVF TAX-FREE. The investment objectives of these
portfolios are identical, namely, to seek current income, consistent with
preservation of capital, that is exempt from federal income taxes.
Three changes will be made in the investment policies. First, New
Municipal will maintain a dollar-weighted average portfolio maturity of four to
ten years, compared to the AVF Tax-Free's average portfolio maturity of five to
nine years. Second, New Municipal will invest in municipal bonds rated within
the five highest categories by an NRSRO rather than the three highest categories
as is the case for AVF Tax-Free. Fixed Income securities in the fifth highest
rating (i.e., "Ba" or "BB"), are considered to be below Investment Grade. Bonds
so rated are judged to have speculative elements; their future cannot be
considered as well-assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded. However, IMG
believes that its fixed income managers have experience conducting credit
analysis on and managing investments in "Ba" quality credits through their work
for various insurance companies. Third, in light of the risks inherent in
investing in below-Investment Grade fixed income securities, New Municipal will
limit its investments in "Ba" and "BB" securities to a maximum of 25%. These
changes are being made to give the portfolio managers more flexibility in the
selection of tax exempt securities with the goal of improving total return over
time.
NEW EQUITY AND AVF EQUITY. The investment objectives, policies and
restrictions of these portfolios are identical. The investment objective is
long-term capital appreciation.
NEW BALANCED AND AVF BALANCED. The investment objective of these
portfolios are identical, namely, to seek long-term growth of capital and
Income.
The investment policies of AVF Balanced require that as to fixed income
securities 75% will be invested in securities with stated or remaining
maturities of 15 years or less. That maximum maturity restriction has been
eliminated from New Balanced to allow more flexibility in the purchase of
individual fixed income securities, and to make New Balanced consistent with New
Income (discussed above). The average maturity of the fixed income portion of
AVF Balanced is also being extended, from its present three to seven years, to
four to ten years for New Balanced. The New Balanced Funds' ability to invest in
securities with maturities longer than 15 years and a stated average maturity of
four to ten years subject the New Balanced Fund to greater interest rate risk
than the AVF Balanced Fund, thereby potentially creating greater volatility in
the net asset value.
The minimum credit quality of the fixed income securities will be
changed in two ways. First, New Balanced will allow investment in fixed income
securities rated within the five highest categories at the time of purchase by
an NRSRO or, if unrated, found by IMG to be of comparable quality. AVF Balanced
limits investments to the four highest categories. Fixed income securities in
the fifth highest rating (i.e., "Ba" or "BB"), are considered to be below
Investment Grade. Bonds so rated are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded.
However, IMG believes that its fixed income managers have experience conducting
credit analysis on and managing investments in "Ba" quality credits through
their work for various insurance companies. Second, in light of the risk
inherent in investing in below-Investment Grade fixed income securities, New
Balanced will limit its investments in these securities to a maximum of 25%.
NEW AGGRESSIVE GROWTH AND AVF GROWTH. The investment objectives,
policies and restrictions of these portfolios are identical. The investment
objectives is long-term capital growth.
NEW LIMITED AND AVF TOTAL RETURN. The investment objective of AVF Total
Return is to seek long term total return. The investment objective of New
Limited will be to seek total return from a portfolio of limited term fixed
income securities. It is anticipated that New Limited will continue to be
managed for total return, but will change its investment policies to
significantly limit its average maturity. New Limited expects to maintain a
dollar-weighted average portfolio maturity of one to four years, compared to the
AVF Total Return's dollar-weighted average portfolio maturity of three to seven
years. The average portfolio maturity of New Limited is being shortened because
effective with the Reorganization shareholders will have the opportunity to
invest in the "Vintage Bond Fund" which will be the new name of the existing IMG
Bond Fund. By comparison, the Vintage Bond Fund's investment objective will be
to seek total return consistent with the production of current income and the
preservation of capital. The average portfolio maturity of the Vintage Bond Fund
will be four to ten years.
The investment policies of New Limited also eliminate the present
restriction that 75% will be invested in securities with stated or remaining
maturities of 15 years or less. This maximum maturity restriction has been
eliminated to allow more flexibility in the purchase of individual fixed income
securities. This results in potentially subjecting New Limited to greater
interest rate risk than the current AVF Total Return Fund. Minimum credit
quality restrictions will be changed in two ways. First, New Limited will allow
investment in fixed income securities rated within the five highest categories
at time of purchase by an NRSRO or, if unrated, found by IMG to be of comparable
quality. AVF Total Return limits investments to the four highest categories.
Fixed income securities in the fifth highest rating (i.e., "Ba" or "BB"), are
considered to be below Investment Grade. Bonds so rated are judged to have
speculative elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded. However, IMG believes that its fixed income
managers have experience conducting credit analysis on and managing investments
in "Ba" quality credits through their work for various insurance companies.
Second, in light of the risks inherent in investing in below-Investment Grade
fixed income securities, New Limited Term will limit its investments in these
securities to a maximum of 25%.
For a detailed description of the investment objectives, policies and
restrictions of the New Vintage Funds and the Current Vintage Funds, see the New
Vintage Funds Prospectus dated January 14, 1998, and the AVF Prospectus dated
July 31, 1997, all of which are delivered herewith.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Trustees of AV Funds,
including all of the Trustees who are not "interested persons" as defined by the
Investment Company Act of 1940 (the "Disinterested Trustees"), have unanimously
concluded that the Reorganization will be in the best interests of the
shareholders of AV Funds, and that the interests of the existing shareholders of
AV Funds will not be diluted as a result of the transactions contemplated by the
Plan. The Board of Trustees therefore has submitted the Plan for approval by the
shareholders at the Special Meeting of Shareholders to be held on February 3,
1998. Approval of the Plan requires the vote of a majority of the outstanding
voting securities of each AV Funds Portfolio.
The Trustees of AV Funds have approved the Plan because they believe
that, overall, it will benefit shareholders. In determining whether to recommend
the approval of the proposed Reorganization to the shareholders, the Trustees
considered a number of factors, including, but not limited to: (i) the fact that
IMG will manage the investments of New Vintage Funds and will have access to
additional investment personnel when IMG is acquired by AMCORE Financial, Inc.;
(ii) the capabilities and resources of the other service providers of the New
Vintage Funds in the areas of marketing, investment and shareholder services;
(iii) the expenses and advisory fees applicable to AV Funds before the
Reorganization and the estimated expense ratios and fees of New Vintage Funds
after the Reorganization; (iv) the terms and conditions of the Plan and whether
the proposed Reorganization will result in dilution of AV Funds shareholder
interests; (v) the anticipated economies of scale which may be realized
(although not presently determined) through the combination of the funds,
including the addition of assets from the acquisition by New Vintage Funds of
other existing funds; (vi) the assumption by IMG and AMCORE Financial, Inc., of
the costs estimated to be incurred to complete the proposed Reorganization;
(vii) the investment objectives and policies of New Vintage Funds; and (viii)
the future growth prospects of New Vintage Funds.
In this regard, the Trustees of AV Funds reviewed information provided
by IMG relating to the anticipated impact to the shareholders of AV Funds as a
result of the proposed Reorganization. The Trustees considered the probability
that the elimination of duplicative operations and the increase in the asset
levels of New Vintage Funds after the proposed Reorganization will result in the
following potential benefits for shareholders of AV Funds, 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 AV Funds with the assets of
New Vintage Funds, and other funds being
acquired by New Vintage Funds, generally
should lead to reduced total operating
expenses for shareholders of AV Funds 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 AV Funds and New Vintage Funds
should eliminate any duplication of services
and expenses that currently exists as a
result of their separate operations and will
promote more efficient operations on a more
cost-effective basis in the future.
The Trustees of AV Funds also considered the distribution capabilities
of BISYS Fund Services, Inc., which will become the Distributor of the shares of
New Vintage Funds. If BISYS Fund Services, Inc. is able to distribute New
Vintage Funds shares successfully, growth in assets will make possible the
realization of additional economies of scale and attendant savings in costs to
New Vintage Funds and its shareholders. Of course, achievement of these goals
cannot be assured.
The Board of Trustees of AV Funds also considered certain possible
disadvantages of the proposed Reorganization. Although fiduciary account holders
of AVF Equity shares should realize a decrease in annual operating expenses from
1.33% to 1.14%, retail and custodial shareholders will experience an increase in
annual operating expenses from 1.33% to 1.39%, see "Expense Summary" hereafter.
Possible changes in interest rate risk, price volatility and credit risk,
discussed above under "Investment Objectives, Policies and Restrictions," were
also considered, along with the possibility that when the Current Vintage Funds
are combined with the New Vintage Funds, certain existing portfolios of New
Vintage Funds and certain other portfolios, some portfolios may experience net
redemptions as shareholders adjust their investments in light of the portfolios
available in the New Vintage Funds family.
EXPENSE SUMMARY
The purpose of the following tables is to inform investors of the
various costs and expenses they will bear, directly or indirectly, as
shareholders of New Vintage Funds, and to compare those costs and expenses with
the costs and expenses borne by shareholders of AV Funds during the past fiscal
year. Present holders of shares of AVF Government will receive "T Shares" of New
Government in the Reorganization. Present holders of shares of AVF Equity whose
shares are held in a fiduciary account will receive "T Shares" of New Equity.
All other shareholders of AVF Equity will receive "S Shares" of New Equity.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
New AVF New AVF New AVF
Government Government Income Income Municipal Tax-Free
T Shares S Shares
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Estimated Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.40% 0.40% 0.40% 0.60% 0.60% 0.60% 0.60%
12b-1 Fees 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 2 0.37% 0.62% 0.36% 0.41% 0.60% 0.49% 0.68%
- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses
After Waivers 3 0.77% 1.02% 0.76% 1.01% 1.20% 1.09% 1.28%
</TABLE>
<TABLE>
<CAPTION>
New AVF New AVF New AVF New AVF
Equity Equity Balanced Balanced Growth Growth Limited Total Return
T Shares S Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Estimated Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.75% 0.75% 0.75% 0.75% 0.75% 0.95% 0.95% 0.60% 0.60%
12b-1 Fees 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 2 0.39% 0.64% 0.58% 0.61% 0.80% 0.49% 0.68% 0.46% 0.65%
- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating Expenses
After Waivers 3 1.14% 1.39% 1.33% 1.36% 1.55% 1.44% 1.63% 1.06% 1.40%
</TABLE>
1 The New Vintage Funds have adopted a Distribution and Shareholder Service Plan
(the "Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets of such Fund ("distribution fees"). Currently,
however, it is intended that no such amounts will be paid under the Plan by any
of the Funds. Shareholders will be given at least 30 days' notice prior to the
payment of any fees under the Plan and no payments will be made for a period of
at least one year following completion of the proposed Reorganization. 2 The New
Vintage Funds have adopted an Administrative Services Plan (the "Services Plan")
pursuant to which a Fund is authorized to pay banks and other financial
institutions which agree to provide certain ministerial, recordkeeping and/or
administrative support services for their customers or account holders a
periodic amount calculated at an annual rate not to exceed 0.25% of the average
daily net assets of such Fund ("services fees"). Currently only S Shares of New
Government and S Shares of New Equity pay service fees. The New Vintage Funds
are not paying any services fees under the Services Plan for the other Funds;
however, the Board of Directors may elect to pay such fees at any time without
further notice to shareholders following one year after completion of the
proposed Reorganization.. 3 Absent the reduction of distribution fees and
services fees, "Total Fund Operating Expenses" as a percentage of average daily
net assets would be 1.02% for New Government-T Shares, 1.27% for New
Government-S Shares, and 1.01% for AVF Government; 1.51% for New Income and
1.45% for AVF Income; 1.59% for New Municipal and 1.53% for AVF Tax-Free; 1.64%
for New Equity-T Shares, 1.64% for New Equity-S Shares and 1.58% for AVF Equity;
1.86% for New Balanced and 1.80% for AVF Balanced; 1.94% for New Aggressive
Growth and 1.88% for AVF Growth; and 1.56% for New Limited and 1.65% for AVF
Total Return.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Administrative Servicing
Fees and/or absorb certain expenses for a Fund. Long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers. Wire transfers may
be used to transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
New Government-T Shares $8 $25 $43 $95
New Government-S Shares $10 $32 $56 $125
AVF Government $9 $24 $42 $94
New Income $10 $32 $56 $124
AVF Income $12 $38 $66 $145
New Municipal $11 $35 $60 $133
AVF Tax-Free $13 $41 $70 $155
New Equity-T Shares $12 $36 $63 $139
New Equity-S Shares $14 $44 $76 $167
AVF Equity $14 $42 $73 $160
New Balanced $14 $43 $74 $164
AVF Balanced $16 $49 $84 $185
New Aggressive Growth $15 $46 $79 $172
AVF Aggressive Growth $17 $51 $80 $193
New Limited $11 $34 $58 $129
AVF Total Return $14 $44 $77 $168
The purpose of the above table is to assist a potential purchaser of a Fund's
Shares in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. THE FOREGOING SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. The above Example is based
on the expense information included in the previous Expense Summary. The Expense
Summary and Examples do not reflect any charges that may be imposed by financial
institutions on their customers.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
AV Funds shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of AV Funds shares for shares of New Vintage Funds.
Likewise, neither AV Funds nor New Vintage Funds should recognize any gain or
loss for federal income tax purposes through the exchange of AV Funds assets and
liabilities for shares of New Vintage Funds.
Consummation of the Reorganization is subject to the condition that New
Vintage Funds and Coventry receive an opinion from Cline, Williams, Wright,
Johnson & Oldfather (which opinion has now been received) to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of AV Funds (the "Acquired Funds") to New Vintage Funds in exchange
for shares of New Vintage Funds and the distribution to shareholders of the
Acquired Funds of the shares of New Vintage Funds so received, as described in
the Plan, will constitute a reorganization within the meaning of Section
368(a)(1)(C) or Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be recognized by the Acquired Funds as
a result of such transactions; (iii) in accordance with Section 354(a)(1) of the
Code, no gain or loss will be recognized by the shareholders of the Acquired
Funds or New Vintage Funds on the distribution of shares of New Vintage Funds to
shareholders of the Acquired Funds in exchange for shares of the Acquired Funds;
(iv) in accordance with Section 358(a)(1) of the Code, the basis of New Vintage
Funds shares received by a shareholder of an Acquired Fund will be the same as
the basis of the shareholder's shares immediately before the time when the
Reorganization becomes effective;; (v) in accordance with Section 362(b) of the
Code, the basis to New Vintage Funds of the assets of the Acquired Funds
received pursuant to such transactions will be the same as the basis of the
assets in the hands of the Acquired Funds immediately before such transactions;
(vi) in accordance with Section 1223(1) of the Code, a shareholder's holding
period for shares of New Vintage Funds will be determined by including the
period for which the shareholder held the shares of the Acquired Fund exchanged
therefor, provided such shares of the Acquired Fund were held as a capital
asset; and (vii) in accordance with Section 1223(2) of the Code, the holding
period for New Vintage Funds with respect to the assets received in the
Reorganization will include the period for which such assets were held by the
Acquired Funds.
No party to the Reorganization has sought a tax ruling from the
Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the
IRS and does not preclude the IRS from adopting a contrary position.
Shareholders should consult their own advisers concerning the potential tax
consequences to them, including state and local income tax consequences.
Both New Vintage Funds and AV Funds 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 New Vintage Funds were created on October 30, 1997, as separate
series of IMG Mutual Funds, Inc., to acquire the assets and continue the
business of the corresponding current Vintage Funds offered by Coventry, a
Massachusetts business trust. Each share of a New Vintage Funds Portfolio
represents an equal proportionate interest in it and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
it as are declared at the discretion of the Directors.
The Charter of IMG Mutual Funds, Inc., 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 New Vintage Funds. 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 New Vintage Fund. Such an
arrangement could enable New Vintage Funds to tailor its marketing efforts to a
broader segment of the investing public with a goal of attracting additional
investments. Reference is made to the New Vintage Funds Prospectus dated January
14, 1998, for a detailed description of the classes of shares now offered under
the heading "Organization and Shares of the Funds."
Shareholders of New Vintage Funds are entitled to one vote for each
full share held and proportionate fractional votes for fractional shares held.
Shares of each New Vintage Fund will vote together and not by class unless
otherwise required by law or permitted by the Board of Directors. All
shareholders of each New Vintage Fund will vote together as a class on matters
relating to that Portfolio's investment advisory agreement, investment objective
and fundamental policies.
Shares of New Vintage Funds have non-cumulative voting rights and,
accordingly, the holders of more than 50 percent of New Vintage Funds and other
series of the IMG Mutual Funds, Inc., outstanding shares (irrespective of class)
may elect all of the Directors. Shares have no preemptive rights and only such
conversion and exchange rights as the Board may grant in its discretion,
pursuant to the Charter of New Vintage Funds. When issued for payments as
described in the Prospectus, shares will be fully paid and nonassessable. All
shares are held in uncertificated form and will be evidenced by the appropriate
notation on the books of the transfer agent.
New Vintage Funds may operate without an annual meeting of shareholders
under specified circumstances if an annual meeting is not required by the 1940
Act, just as AV Funds has operated without regular annual shareholder meetings.
New Vintage Funds has adopted the appropriate provisions in its Bylaws and may,
in its discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. New Vintage Funds has also
adopted provisions in its Bylaws for the removal of Directors by the
shareholders. Shareholders may receive assistance in communicating with other
shareholders as provided in Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of
electing Directors unless and until such time as less than a majority of the
Directors holding office has been elected by shareholders, at which time the
Directors then in office will call a shareholders' meeting for the election of
Directors. Shareholders may remove a Director by the affirmative vote of a
majority of the outstanding voting shares. In addition, the Directors are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Director or for any other purpose when requested
in writing to do so by the shareholders of record of not less than 10 percent of
the outstanding voting securities.
Although Coventry is organized as a Massachusetts business trust, there
are no significant differences in the rights of AV Funds shareholders and New
Vintage Funds shareholders. For a detailed description of the characteristics of
the shares of Coventry and the rights of AV Funds shareholders, see "General
Information-Description of the Group and its Shares" in the July 31, 1997 AV
Funds Prospectus.
CAPITALIZATION
The following table shows the capitalization of the respective Funds
and the pro forma capitalization of these Funds when all related reorganization
transactions are completed:
(In millions, except net asset value per share)
Net Asset
Total Net Shares Value
(As of November 30, 1997 Assets Outstanding Per Share
unles otherwise indicated)
New Government $ - 0 - - 0 - $ 0.00
AVF Government $143.967 143.937 $ 1.00
Pro Forma Combined $143.967 143.937 $ 1.00
New Income $ - 0 - - 0 - $ 0.00
AVF Income $101.912 10.190 $ 10.00
Pro Forma Combined $101.912 10.190 $ 10.00
New Municipal $ - 0 - - 0 - $ 0.00
AVF Tax-Free $ 46.884 4.448 $ 10.54
Pro Forma Combined $ 46.884 4.448 $ 10.54
New Aggressive Growth $ - 0 - - 0 - $ 0.00
AVF Aggressive Growth $ 83.002 5.381 $ 15.43
Pro Forma Combined $ 83.002 5.381 $ 15.43
New Limited $ - 0 - - 0 - $ 0.00
AVF Total Return $ 41.396 4.124 $ 10.04
Pro Forma Combined $ 41.396 4.124 $ 10.04
New Equity $ - 0 - - 0 - $ 0.00
IMG Core Stock (1) $ 13.140 1.027 $ 12.79
CVF Equity (1) $ 17.347 1.262 $ 13.75
AVF Equity $391.213 18.883 $ 20.72
Pro Forma Combined $421.700 20.355 $ 20.72
(As of September 30, 1997)
New Balanced $ - 0 - - 0 - $ 0.00
CVF Total Return (1) $ 10.923 0.965 $ 11.31
AVF Balanced $ 44.746 3.188 $ 14.04
Pro Forma Combined $ 55.669 3.966 $ 14.04
(1) Fund proposed to be acquired in a related transaction; however completion of
the Reorganization described herein is not contingent upon such transaction
being completed.
The foregoing tables assume that all relevant reorganization
transactions occurred on the respective "as of" dates shown above and that
nominal initial capital was invested in each New Vintage Fund immediately prior
thereto.
IMG MUTUAL FUNDS, INC.
GENERAL. IMG Mutual Funds, Inc. ("IMG Funds") is a Maryland corporation
organized in November 1994, and operates as an open-end diversified management
investment company. For a general discussion of the New Vintage Funds, see the
accompanying New Vintage Funds Prospectus dated January 14, 1998. For the
convenience of AV Funds shareholders, cross-references to such Prospectuses are
set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. No information on per-share income
and capital changes is included in the New Vintage Funds January 14, 1998
Prospectus because the New Vintage Funds have not yet commenced substantive
operations. For a discussion of New Vintage Funds' expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Expense
Summary" in the New Vintage Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the New Vintage Funds'
investment objectives and policies, see "Investment Objectives, Policies and
Restrictions" in the New Vintage Funds Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of New Vintage
Funds rests with the Board of Directors who are elected by the shareholders of
New Vintage Funds. There are currently six Directors, two of whom are
"interested persons" of New Vintage Funds within the meaning of that term under
the 1940 Act. The Directors, in turn, elect the officers of New Vintage Funds to
supervise actively its day-to-day operations.
The names of the Directors and officers of New Vintage Funds, their
addresses, and principal occupations during the past five years are as follows:
* David W. Miles President, Treasurer and Senior Managing Director,
Director Investors Management Group
* Mark A. McClurg Vice President, Secretary and Senior Managing Director,
President and Director Investors Management Group
Johnny Danos President, Danos, Inc., a personal investment company,
Director 1994-present; Audit Partner, KPMG Peat Marwick,
1963-1994
Debra Johnson Vice President and CFO, Business Publications
Director Corporation/Iowa Title Company, a publishing and
abstracting service company
Edward J. Stanek CEO, Iowa Lottery, a government-operated lottery
Director
* Ruth L. Prochaska Controller/Compliance Officer, Investors Management
Secretary Group
- ------------------
* Denotes "interested persons," as defined in the 1940 Act, of IMG
Funds and the Advisor.
INVESTMENT ADVISER AND ADMINISTRATOR. For a discussion of IMG and the services
performed by it and its fees, see "Management and Fees" in the New Vintage Funds
Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as the
New Vintage Funds distributor, the services performed by it and its fees, see
"Management and Fees" in the New Vintage Funds Prospectus.
SHARES. For a discussion of voting rights of shares of New Vintage Funds, see
"Organization and Shares of the Funds" in the New Vintage Funds Prospectus.
REDEMPTION OF SHARES. For a discussion concerning redemption of shares of New
Vintage Funds, see "Purchasing Shares" and "Redeeming Shares" in the New Vintage
Funds Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS. For a discussion of the New Vintage
Funds' policies with respect to dividends and distributions, see "Distributions
and Taxes" in the New Vintage Funds Prospectus.
EXCHANGE PRIVILEGES. For a discussion of a New Vintage Fund shareholder's right
to exchange shares for shares of another New Vintage Fund, see "Purchasing
Shares - Exchange Privilege" in the New Vintage Funds Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which New
Vintage Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to the New Vintage 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 the New Vintage Funds, which have not yet
commenced operations.
AMCORE VINTAGE FUNDS
GENERAL. The AMCORE Vintage Funds ("AV Funds") are a group of investment
portfolios offered by the Coventry Group, ("Coventry"), a Massachusetts business
trust. For a general discussion of AV Funds, see the accompanying AV Funds
Prospectus dated July 31, 1997. For the convenience of shareholders, certain
cross-references to such Prospectus are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. The AV Funds Prospectus contains
information on per share income and capital changes, under the heading
"Financial Highlights." For a discussion of AV Funds' expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Fee Table" in
the AV Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of AV Funds' investment
objectives and policies, see "Investment Objectives, Policies and Risk Factors
of the Funds" in the AV Funds Prospectus.
TRUSTEES AND OFFICERS. Overall responsibility for management of AV Funds rests
with its Board of Trustees, who are elected by the shareholders. The Trustees
elect the officers to supervise actively the day-to-day operations.
The names of the Trustees and officers, their addresses, and principal
occupations during the past five years are as follows:
<TABLE>
<CAPTION>
Positions(s) Held Principal Occupation
Name, Address and Age With Coventry During Past 5 Years
- --------------------- ----------------- -------------------
<S> <C> <C>
* Walter B. Grimm Chairman, President From June 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund Services,
Columbus, Ohio 43219 from 1987 to June 1992,
Age: 51 President of Leigh Investments
(Investment firm).
Maurice G. Stark Trustee Retired. Until December 31, 1994,
505 King Avenue Vice President-Finance and
Columbus, Ohio 43201 Treasurer, Battelle Memorial
Age: 61 Institute (scientific research and
development service corporation).
Michael M. VanBuskirk Trustee From June 1991 to present,
37 West Broad Street Executive Vice President of The
Suite 1001 Ohio Bankers' Association (trade
Columbus, Ohio 43215 association); from September 1987
Age: 49 to June 1991, Vice President -
Communications, TRW Information
Systems Group (electronic and
space engineering).
Chalmers P. Wylie Trustee From April 1993 to present;
754 Stonewood Court Counsel, Kegler Brown Hill &
Columbus, Ohio 43235 Ritter; from January 1993 to present,
Age: 76 Adjunct Professor, Ohio State
University; from January 1967 to
January 1993, member of the United
States House of Representatives
for the 15th District of
Ohio.
* Nancy E. Converse Trustee From July 1990 to January 1998,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 47
J. David Huber Vice President From June, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 50
Thresa Dewar Treasurer From March 1997 to present,
3435 Stelzer Road employee of BISYS Fund Services,
Columbus, Ohio 43219 from September 1994 to March
Age: 47 1997 Independent Consultant; from
April 1975 to September 1994,
employee of Federated Investors,
Inc.
George L. Stevens Secretary From September 1996 to present,
3435 Stelzer Road employee of BISYS Fund Services,
Columbus, Ohio 43219 from September 1995 to September
Age: 45 1996, Independent Consultant, from
September 1989 to September
1995, Senior Vice President,
AM South Bank, N.A.
</TABLE>
- --------------------
*Mr. Grimm and Ms. Converse are each considered to be an "interested person" of
Coventry as defined in the 1940 Act.
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of AMCORE Capital
Management, Inc., BISYS Fund Services, Inc., and the services performed by them
and their fees, see "Management of the Group" in the AV Funds Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as
distributor, see "Management of the Group" in the AV Funds Prospectus.
SHARES. For a discussion of the significant attributes of AV Funds shares, see
"General Information - Description of the Group and its Shares" in the AV Funds
Prospectus.
REDEMPTION OR REPURCHASE OF SHARES. For a discussion concerning redemption or
repurchase of shares of AV Funds, see "How to Purchase and Redeem Shares" in the
AV Funds Prospectus.
DIVIDENDS AND DISTRIBUTIONS. For a discussion of AV Funds policies with respect
to dividends and distributions, see "Dividends and Taxes" in the AV Funds
Prospectus.
EXCHANGE PRIVILEGES. For a discussion of an AV Fund shareholder's right to
exchange shares of another AV Fund, see "How to Purchase and Redeem Shares" in
the AV Funds Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which AV
Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to AV Funds may be
addressed by writing to AV Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or
calling toll-free 800-438-6375.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management's discussion of the
performance of AV Funds is found in the annual report of AV Funds, which is
incorporated by reference into the Statement of Additional Information relating
to the July 31, 1997 Prospectus of AV Funds.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Trustees of AV Funds
for use at the Special Meeting of Shareholders to be held on February 3, 1998
(the "Meeting"). It is expected that the solicitation of proxies by the Board of
Trustees will be primarily by mail. AV Funds' officers may also solicit proxies
by telephone facsimile transmission or personal interview.
The following table gives the total number of shares of AVF outstanding
at the close of business on January 8, 1998, the record date for the meeting.
AVF Government ............................... 153,056,182.210
AVF Income ................................... 10,260,657.981
AVF Equity ................................... 20,430,520.699
AVF Tax-Free.................................. 4,455,014.171
AVF Balanced.................................. 3,642,842.281
AVF Total Return ............................. 4,071,591.352
AVF Growth.................................... 5,674,560.400
Each shareholder of record on the record date is entitled to one vote
for each share owned and a fractional vote for each fractional share owned on
each matter presented for shareholder vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares presented thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. If no specification is
made, the proxy will be voted FOR the enumerated proposal. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to AV Funds, c/o Secretary, 3435 Stelzer Road, Columbus, Ohio 43219,
a written notice of revocation or a subsequently executed proxy or by attending
the meeting and electing to vote in person.
SHAREHOLDER AND BOARD APPROVAL
The Agreement and Plan of Reorganization will not become effective
unless approved by a majority of outstanding shares of each Current Vintage
Fund. Broker "non-votes" (i.e., proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be deemed to be
abstentions. An abstention will have the same effect as casting a vote against
the Reorganization.
The vote of the shareholders of New Vintage Funds is not being
solicited in connection with the approval of the Plan since their approval or
consent is not necessary for the completion of the Reorganization.
As of the Record Date, all of the officers and Directors of AV Funds
beneficially owned, individually and as a group, less than 1% of the shares of
AV Funds. As of the record date, the following persons directly or indirectly
owned the 5% or more of the outstanding shares of the AV Funds:
AV Government Fund
Name # of Shares % Ownership
Swebak & Company 104,161,630.360 68.05
Corelink Financial, Inc. 8,745,520.430 5.71
AV Equity Fund
Name # of Shares % Ownership
Firwood 5,626,683.902 27.54
Swebak & Company 7,571,300.449 37.06
Corelink Financial, Inc. 4,041,004.191 19.78
AV Income Fund
Name # of Shares % Ownership
Firwood 964,931.153 9.40
Swebak & Company 8,851,026.753 86.26
AV Tax-Free Fund
Name # of Shares % Ownership
Firwood 278,318.823 6.25
Swebak & Company 3,719,974.190 83.50
AV Balanced Fund
Name # of Shares % Ownership
Firwood 554,938.441 15.23
Corelink Financial, Inc. 1,774,405.917 48.71
Community Financial Ins. Corp 258,521.480 7.10
AV Total Return Fund
Name # of Shares % Ownership
Swebak & Company 349,390.606 8.58
Firwood 2,398,139.108 58.90
Corelink Financial, Inc. 1,212,125.612 29.77
AV Aggressive Growth Fund
Name # of Shares % Ownership
Swebak & Company 2,911,449.702 51.31
Firwood 1,115,852.088 19.66
Corelink Financial, Inc. 862,516,848 15.20
No other person or persons is believed to own of record or beneficially
5% or more of the outstanding shares of either AV Funds or an AV Fund as of
January 8, 1998
QUORUM
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve a
particular proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
in favor of such adjournments, and will vote those proxies required to be voted
AGAINST such proposal against any adjournment. Under the Declaration of Trust of
Coventry, a quorum is constituted by the presence in person or by proxy of the
holders of 50% of the aggregate outstanding shares of the Portfolios entitled to
vote at the Meeting. If a proxy is properly executed and returned and is marked
with an abstention, the shares represented thereby will be considered to be
present at the Meeting for the purpose of determining the existence of a quorum
for the transaction of business.
INFORMATION FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION
This combined Proxy Statement/Prospectus and the related Statement of
Additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which IMG Mutual
Funds, Inc., and the Coventry Group, respectively, have filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933 and
the 1940 Act to which reference is hereby made. The SEC file number for the AV
Funds Prospectus and the related Statement of Additional Information which are
incorporated by reference herein is Registration No. 33-44964. The SEC file
number for the New Vintage Funds Prospectus and related Statement of Additional
Information which are incorporated by reference herein is Registration No.
33-81998.
The Current Vintage Funds and the New Vintage Funds are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, and in accordance therewith, file reports and other information with the
SEC. Proxy material, reports, proxy and information statements, registration
statements and other information can be inspected and copied at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such filings may also be available at the following SEC
regional offices: Northwestern Atrium, 500 West Madison Street, Suite 1400,
Chicago, IL 60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and
73 Tremont Street, Suite 600, Boston, MA 02108-3912. Copies of such materials
can also be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549, at
prescribed rates.
OTHER BUSINESS
The Fund's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
the intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares in the
Reorganization will be passed upon for IMG Mutual Funds, Inc. by Ober, Kaler,
Grimes & Shriver, 120 E. Baltimore Street, Baltimore, Maryland 21202. Certain
tax matters will be passed upon by Cline, Williams, Wright, Johnson & Oldfather,
1900 First Bank Building, 233 South 13th Street, Lincoln, Nebraska 68508. Cline,
Williams, Wright, Johnson & Oldfather acts as legal counsel to IMG Mutual Funds,
Inc., Investors Management Group, and other funds and entities managed by
Investors Management Group.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this combined Proxy Statement/Prospectus or by
telephoning 800-438-6375.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT made as of the 12th day of November 1997, is made by and
between IMG Mutual Funds, Inc., a Maryland corporation ("IMG Funds") and The
Coventry Group, a Massachusetts business trust ("Coventry").
WITNESSETH:
WHEREAS, the Board of Directors of IMG Funds, and the Board of Trustees
of Coventry, each an open-end management investment company, deem it advisable
that IMG Funds acquire certain portfolios (the "Acquired Funds" hereinafter
identified) of Coventry in exchange for the assumption by IMG Funds of all of
the liabilities of the Acquired Funds and the issuance of shares of IMG Funds
which are thereafter to be distributed by Coventry in complete liquidation and
termination of the Acquired Funds and in exchange for all of the outstanding
shares of the Acquired Funds, with the intent that the transactions described
herein shall qualify as a tax-free reorganization under Section 368(a)(1)(C) of
the Internal Revenue Code of 1986 (the "Reorganization"); and
WHEREAS, the portfolios of Coventry to be acquired pursuant to this
Agreement are AMCORE Vintage U.S. Government Obligations Fund (the "Government
Fund"), AMCORE Vintage Fixed Income Fund (the "Income Fund"), AMCORE Vintage
Intermediate Tax-Free Fund (the "Tax-Free Fund"), AMCORE Vintage Equity Fund
(the "Equity Fund"), AMCORE Vintage Balanced Fund (the "Balanced Fund"), AMCORE
Vintage Aggressive Growth Fund (the "Growth Fund") and AMCORE Vintage Fixed
Total Return Fund (the "Total Return Fund"), each an "Acquired Fund" and,
collectively, the "Acquired Funds";
NOW THEREFORE, in consideration of the mutual promises herein
contained, each of the parties hereto represents and warrants to, and agrees
with the other party as follows:
1. IMG Funds hereby represents, warrants and covenants to Coventry
that:
(a) IMG Funds is a corporation with transferable shares
duly organized and validly existing under the laws of
Maryland, and has full power to own its properties
and assets and to carry on its business as such
business is now being conducted.
(b) IMG Funds' statement of assets and liabilities as of
April 30, 1997, and the related statements of
operations and changes in net assets for the fiscal
year ended April 30, 1997, all as audited by KPMG
Peat Marwick LLP, have been prepared in accordance
with generally accepted accounting principles applied
on a consistent basis. Such statement of assets and
liabilities fairly presents the financial position
and net assets of IMG Funds as of such date and such
statements of operations and changes in net assets
fairly present the results of its operations for the
period covered thereby;
(c) There are no claims, actions, suits or proceedings
pending or, to its knowledge, threatened against or
affecting IMG Funds or its properties or business or
its right to issue and sell shares, or which would
prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with or,
to IMG Funds' knowledge, threatened with any charge
or investigation of, any violation of any provision
of any federal, state or local law or any
administrative ruling or regulation relating to any
aspect of its business or the issuance or sale of its
shares;
(d) IMG Funds is not a party to or subject to any
judgment or decree or order entered in any suit or
proceeding brought by any governmental agency or by
any other person enjoining it in respect of, or the
effect of which is to prohibit, any business practice
or the acquisition of any property or the conduct of
business by it or the issuance or sale of its shares
in any area;
(e) IMG Funds has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has
made a proper election to be treated as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code") for each of its
taxable years. IMG Funds has not committed any action
or failed to perform any necessary action that would
render invalid its election to be treated as a
regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this
Agreement on behalf of IMG Funds does not, and the
consummation of the transactions contemplated hereby
will not violate, or conflict with any provision of
IMG Funds' Charter or By-Laws, or any provision of,
or result in the acceleration of any obligation
under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or
decree to which it is party or by which it or any of
its assets is bound, or violate or conflict with any
other material contractual or statutory restriction
of any kind or character to which it is subject;
(g) This Agreement has been duly authorized, executed,
and delivered by IMG Funds and constitutes a valid
and binding agreement of IMG Funds and all
governmental and other approvals required for IMG
Funds to carry out the transactions contemplated
hereunder have been or on or prior to the Closing
Date (as herein defined) will have been obtained. IMG
Funds will comply with all applicable laws and
regulations in carrying out the transactions
contemplated hereunder, including, without
limitation, the Investment Company Act of 1940, as
amended (the "1940 Act");
(h) IMG Funds is registered under the 1940 Act as an
open-end, diversified management investment company.
IMG Funds is currently in compliance with the 1940
Act and the rules of the Securities and Exchange
Commission (the "Commission") promulgated thereunder.
(i) On the Closing Date, IMG Funds will own its assets
free and clear of all liens, claims, charges, options
and encumbrances;
(j) On or before the Closing Date IMG Funds will have
created and registered shares of seven new series
(collectively, the "Vintage Clone Funds") each of
which series will be a portfolio of securities
managed under investment objectives, policies and
restrictions substantially similar to one of the
Acquired Funds, as more fully described below;
(k) On the Closing Date the shares of the Vintage Clone
Funds to be delivered to Coventry hereunder shall
have been registered under the Securities Act of
1933, as amended (the "1933 Act") and duly
authorized, and, when issued and delivered pursuant
to this Agreement, will be validly issued, fully paid
and nonassessable; and IMG Funds will comply with all
applicable laws in connection with the issuance of
such shares and shall not be subject to a stop-order
of the Commission in connection therewith; and
(l) On the Closing Date, the shares of the Vintage Clone
Funds to be delivered to Coventry hereunder shall
have been registered with the appropriate securities
administrator or agency of each state under whose
securities law such registration is required.
2. Coventry hereby represents, warrants and covenants to IMG Funds
that:
(a) Coventry is a business trust, with transferable
shares, duly organized and validly existing under the
laws of the State of Massachusetts, and has full
power to own its properties and assets and to carry
on its business as such business is now being
conducted.
(b) The statement of assets and liabilities as of March
31, 1997, and the related statements of operations
and changes in net assets for the fiscal year ended
March 31, 1997 of each Acquired Fund, all as audited
by Ernst & Young LLP, have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis. Each such
statement of assets and liabilities fairly presents
the financial position and net assets of such
Acquired Fund as of such date and such statements of
operations and changes in net assets fairly present
the results of its operations for the period covered
thereby. All books, records and accounts of the
Acquired Funds have been maintained in accordance
with applicable legal requirements and generally
accepted accounting principles applicable to
investment companies;
(c) There are no claims, actions, suits or proceedings
pending or, to its knowledge, threatened against or
affecting Coventry or its properties or business or
its right to issue and sell shares, or which would
prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with or,
to Coventry's knowledge, threatened with any charge
or investigation of, any violation of any provision
of any federal, state or local law or any
administrative ruling or regulation relating to any
aspect of its business or the issuance or sale of its
shares;
(d) Coventry is not a party to or subject to any judgment
or decree or order entered in any suit or proceeding
brought by any governmental agency or by any other
person enjoining it in respect of, or the effect of
which is to prohibit, any business practice or the
acquisition of any property or the conduct of
business by it or the issuance or sale of its shares
in any area;
(e) Coventry has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has
made a proper election to be treated as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code") for each of its
taxable years. Coventry has not committed any action
or failed to perform any necessary action that would
render invalid its election to be treated as a
regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this
Agreement on behalf of Coventry does not, and the
consummation of the transactions contemplated hereby,
subject to the approval of shareholders of the
Acquired Funds as referred to in paragraph 11, will
not violate, or conflict with any provision of
Coventry's Declaration of Trust or By-Laws, or any
provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease,
agreement, instrument, order, arbitration award,
judgment or decree to which it is a party or by which
it or any of its assets is bound, or violate or
conflict with any other material contractual or
statutory restriction of any kind or character to
which it is subject;
(g) This Agreement has been duly authorized, executed,
and delivered by Coventry and constitutes a valid and
binding agreement of Coventry and all governmental
and other approvals required for Coventry to carry
out the transactions contemplated hereunder have been
or on or prior to the Closing Date (as herein
defined) will have been obtained;
(h) On the Closing Date, Coventry and each Acquired Fund
will own its assets free and clear of all liens,
claims, charges, options and encumbrances and, except
for the various agreements listed in Part C of
Coventry's current Form N-1A Registration Statement
under the 1933 Act and 1940 Act, there will be no
material contracts or agreements (other than this
Agreement) outstanding to which Coventry is a party
or to which it is subject;
(i) On the Closing Date, subject to the approval of
shareholders of the Acquired Funds as referred to in
paragraph 11, Coventry will have full right, power
and authority to sell, assign and deliver the assets
to be sold, assigned, transferred and delivered to
IMG Funds hereunder, and upon delivery and payment
for such assets, IMG Funds will acquire good and
marketable title thereto free and clear of all liens,
claims, charges, options and encumbrances;
(j) Coventry will declare to shareholders of record of
each Acquired Fund immediately prior to the Closing
Date a dividend or dividends which, together with all
previous such dividends, shall have the effect of
distributing to the shareholders all of the
investment company taxable income of each Acquired
Fund (computed without regard to any deduction for
dividends paid) and all of the net realized capital
gains, if any, through the close of business on the
business day immediately preceding the Closing Date;
and
(k) Coventry will, from time to time, as and when
requested by IMG Funds, execute and deliver or cause
to be executed and delivered, all such assignments
and other instruments, and will take and cause to be
taken such further action, as IMG Funds may deem
necessary or desirable in order to vest in and
confirm to IMG Funds, title to and possession of all
the assets of Coventry to be sold, assigned,
transferred and delivered hereunder and otherwise to
carry out the intent and purpose of this Agreement.
3. Based on the respective representations and warranties,
subject to the terms and conditions contained herein, Coventry agrees to
transfer to IMG Funds and IMG Funds agrees to acquire from Coventry, all the
assets of the Acquired Funds on the Closing Date and to assume from Coventry all
of the liabilities of the Acquired Funds in exchange for the issuance of the
number and class of shares of Vintage Clone Funds provided in Section 4 which
will be subsequently distributed pro rata to the shareholders of the Acquired
Funds in complete liquidation and termination of the Acquired Funds and in
exchange for all of the outstanding shares of the Acquired Funds, as provided in
Section 6. Coventry shall not issue, sell or transfer any of its shares after
the Closing Date, and only redemption requests received by Coventry in proper
form prior to the Closing Date shall be fulfilled by Coventry. Redemption
requests received by Coventry thereafter shall be treated as requests for
redemption of those shares of Vintage Clone Funds allocable to the shareholder
in question as provided in Section 6 of this Agreement.
4. On the Closing Date, IMG Funds will issue to Coventry that
number of full and fractional shares of the Vintage Clone Funds as follows:
(a) IMG Funds will issue that number of Class A shares of the
Vintage Government Assets Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Government Fund of
Coventry;
(b) IMG Funds will issue that number of Class B shares of the
Vintage Income Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the Income Fund of Coventry;
(c) IMG Funds will issue that number of Class B shares of the
Vintage Municipal Bond Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Tax-Free Fund of
Coventry;
(d) IMG Funds will issue that number of Class A shares of the
Vintage Equity Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the shares of the Equity Fund
of Coventry held in fiduciary accounts of such portfolio;
(e) IMG Funds will issue that number of Class B shares of the
Vintage Equity Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the shares of the Equity Fund
of Coventry held in non-fiduciary accounts of such portfolio;
(f) IMG Funds will issue that number of Class B shares of the
Vintage Balanced Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate net asset value of Coventry that
are allocable to the Balanced Fund of Coventry;
(g) IMG Funds will issue that number of Class B shares of the
Vintage Aggressive Growth Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate net asset value of
Coventry that are allocable to the Growth Fund of Coventry;
and
(h) IMG Funds will issue that number of Class B shares of the
Vintage Limited Term Bond Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Total Return Fund of
Coventry.
The aggregate value of the net assets of each Acquired Fund
and each Vintage Clone Fund shall be determined in accordance
with the then current Prospectus of IMG Funds as of 3:00 p.m.
Central Standard Time on the business day immediately
preceding the Closing Date, unless the parties agree to
determine such values as of another date (the "Valuation
Date").
5. The closing of the transaction contemplated in this Agreement
(the "Closing") shall be held at the offices of IMG, 2203 Grand Avenue, Des
Moines, Iowa 50312-5338 (or at such other place as the parties hereto may agree)
at 3:00 p.m. Central Standard Time on February 5, 1998, or on such earlier or
later date as the parties hereto may mutually agree. The date on which the
Closing is to be held as provided in this Agreement shall be known as the
"Closing Date".
In the event that on the proposed Valuation Date or Closing
Date (a) the New York Stock Exchange is closed for other than customary week-end
and holiday closings or (b) trading on said Exchange is restricted or (c) an
emergency exists as a result of which it is not reasonably practicable for
either the Vintage Clone Funds or the Acquired Funds to fairly determine the
value of their respective assets, the Closing shall be postponed until the first
business day after the day on which trading shall have been fully resumed.
6. As soon as practicable after the Closing Date, Coventry shall
(a) distribute on a pro rata basis to each shareholder of record of the Acquired
Funds at the close of business on the Valuation Date the shares of the
appropriate Vintage Clone Fund received by Coventry at the Closing in exchange
for each such shareholder's shares of an Acquired Fund and (b) liquidate and
dissolve the Acquired Funds in accordance with applicable law and its
Declaration of Trust.
For purposes of the distribution of shares of the Vintage
Clone Funds to shareholders of the Acquired Funds, IMG Funds shall credit on the
books of each Vintage Clone Fund an appropriate number of shares of such Vintage
Clone Fund to the account of each shareholder of the corresponding Acquired
Fund. No certificates will be issued for shares of the Vintage Clone Funds.
After the Closing Date and until surrendered, each outstanding certificate
which, prior to the Closing Date, represented shares of an Acquired Fund, shall
be deemed for all purposes of IMG Funds' Charter and By-Laws to evidence the
appropriate number of shares of the corresponding Vintage Clone Fund to be
credited on the books of IMG Funds in respect of such shares of such Acquired
Fund as provided above.
7. Subsequent to the execution of this Agreement and prior to the
Closing Date, Coventry shall deliver to IMG Funds a list setting forth the
assets to be assigned, delivered and transferred by each Acquired Fund to IMG
Funds, including the securities then owned by each such Acquired Fund and the
respective federal income tax basis (on an identified cost basis) thereof, and
the liabilities to be assumed by IMG Funds pursuant to this Agreement.
8. All portfolio securities of each Acquired Fund shall be
delivered by Coventry's custodian on the Closing Date to IMG Funds or its
custodian, either endorsed in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the practice of brokers or,
if such securities are held in a securities depository within the meaning of
Rule 17f-4 under the 1940 Act, transferred to an account in the name of IMG
Funds or its custodian with said depository. All cash to be delivered pursuant
to this Agreement shall be wire transferred from Coventry's account at its
custodian to IMG Funds' account at its custodian. If on the Closing Date
Coventry is unable to make good delivery pursuant to this Section 8 to IMG
Funds' custodian of any of Coventry's portfolio securities because such
securities have not yet been delivered to Coventry's custodian by its broker or
by the transfer agent for such securities, then the delivery requirement of this
Section 8 with respect to such securities shall be waived, and Coventry shall
deliver to IMG Funds' custodian on or by said Closing Date with respect to said
undelivered securities executed copies of an agreement of assignment in a form
satisfactory to IMG Funds, and a due bill or due bills in form and substance
satisfactory to the custodian, together with such other documents including
brokers' confirmations, as may be reasonably required by IMG Funds.
9. The obligations of IMG Funds under this Agreement shall be
subject to receipt by IMG Funds on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of
Trustees of Coventry and the shareholders of each
Acquired Fund authorizing the execution and
performance of this Agreement by Coventry and the
transactions contemplated hereunder, certified by the
Secretary or Assistant Secretary of Coventry;
(b) A certificate of the Secretary or Assistant Secretary
of Coventry as to the signatures and incumbency of
its officers who executed this Agreement on behalf of
Coventry and any other documents delivered in
connection with the transactions contemplated thereby
on behalf of Coventry;
(c) A certificate of an appropriate officer of Coventry
as to the fulfillment of all agreements and
conditions on its part to be fulfilled hereunder at
or prior to the Closing Date and to the effect that
the representations and warranties of Coventry are
true and correct in all material respects at and as
of the Closing Date as if made at and as of such
date;
(d) Such other documents as IMG Funds may reasonably
request to show fulfillment of the purposes and
conditions of this Agreement; and
(e) An opinion of Dechert Price & Rhoads in form
reasonably satisfactory to IMG Funds and dated as of
the Closing Date of the Reorganization, substantially
to the effect that (i) Coventry is a Massachusetts
business trust duly established and validly existing
under the laws of the State of Massachusetts; (ii)
the shares of the Acquired Funds to be delivered to
IMG Funds as provided by this Agreement are duly
authorized and are validly issued, fully paid and
non-assessable; (iii) this Agreement has been duly
authorized, executed and delivered by Coventry, and
represents a legal, valid and binding contract
enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency,
reorganization, moratorium or other similar laws of
general application relating to or affecting
creditors' rights generally and to the application of
general principles of equity; and (iv) the execution
and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this
Agreement will not, violate the Declaration of Trust
or Bylaws of Coventry or any material contract known
to such counsel to which Coventry is a party or by
which it is bound.
10. The obligations of Coventry under this Agreement shall be
subject to receipt by Coventry on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of
Directors of IMG Funds authorizing the execution and
performance of this Agreement and the transactions
contemplated hereunder, certified by the Secretary or
Assistant Secretary of IMG Funds;
(b) A certificate of the Secretary or Assistant Secretary
of IMG Funds as to the signatures and incumbency of
its officers who executed this Agreement on behalf of
IMG Funds and any other documents delivered in
connection with the transactions contemplated thereby
on behalf of IMG Funds;
(c) A certificate of an appropriate officer of IMG Funds
as to the fulfillment of all agreements and
conditions on its part to be fulfilled hereunder at
or prior to the Closing Date and to the effect that
the representations and warranties of IMG Funds are
true and correct in all material respects at and as
of the Closing Date as if made at and as of such
date;
(d) Such other documents as Coventry may reasonably
request to show fulfillment of the purposes and
conditions of this Agreement;
(e) An opinion of Cline, Williams, Wright, Johnson &
Oldfather in form reasonably satisfactory to Coventry
and dated as of the Closing Date of the
Reorganization, substantially to the effect that (i)
IMG Funds is a Maryland corporation duly established
and validly existing under the laws of the State of
Maryland; (ii) the shares of the Vintage Clone Funds
to be delivered to Coventry as provided for by this
Agreement are duly authorized and upon delivery will
be validly issued, fully paid and non-assessable by
IMG Funds; (iii) this Agreement has been duly
authorized, executed and delivered by IMG Funds, and
represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency,
reorganization, moratorium or other similar laws of
general application relating to or affecting
creditors' rights generally and to the application of
general principles of equity; (iv) the execution and
delivery of this Agreement did not, and the
consummation of the transactions contemplated by this
Agreement will not, violate the Charter or By-Laws of
IMG Funds or any material contract known to such
counsel to which IMG Funds is a party or by which it
is bound and (v) no consent, approval, authorization
or order of any court or governmental authority is
required for the consummation by IMG Funds of the
transactions contemplated by this Agreement, except
such as have been obtained under the 1933 Act, the
1934 Act, the 1940 Act, the rules and regulations
under those Acts and such as may be required by state
securities laws or such as may be required subsequent
to the Closing of the Reorganization.
(f) An opinion of Cline, Williams, Wright, Johnson &
Oldfather addressed to IMG Funds and Coventry in form
reasonably satisfactory to them, and dated as of the
Closing Date of the Reorganization, substantially to
the effect that, for federal income tax purposes (i)
the transfer by each Acquired Fund of all of its
assets to the corresponding Vintage Clone Fund in
exchange for shares of the corresponding Vintage
Clone Fund, and the distribution of such shares to
the shareholders of the Acquired Fund, as provided in
this Agreement, will constitute a reorganization
within the meaning of Section 368(a)(1)(C) of the
Code; (ii) no income, gain or loss will be recognized
by the Acquired Funds as a result of such
transactions; (iii) no income, gain or loss will be
recognized by the Vintage Clone Funds as a result of
such transactions; (iv) no income, gain or loss will
be recognized by the shareholders of the Acquired
Funds on the distribution to them by the Acquired
Funds of shares of the corresponding Vintage Clone
Funds in exchange for their shares of the Acquired
Funds (but shareholders of an Acquired Fund subject
to taxation will recognize income upon receipt of any
net investment income or net capital gains of such
Vintage Clone Fund which are distributed by such
Acquired Fund prior to the Closing Date of the
Reorganization); (v) the tax basis of the Vintage
Clone Fund shares received by each shareholder of an
Acquired Fund will be the same as the tax basis of
the shareholder's Acquired Fund shares exchanged
therefor; (vi) the tax basis of the Acquired Fund
assets received by each Vintage Clone Fund will be
the same as the basis of such Fund's assets in the
hands of the corresponding Acquired Fund immediately
prior to the transactions; (vii) a shareholder's
holding period for Vintage Clone Fund shares will be
determined by including the period for which the
shareholder held the shares of the Acquired Fund
exchanged therefor, provided that the shareholder
held such shares for the Vintage Clone Fund as a
capital asset at the Closing of the Reorganization;
(viii) the holding period of each Vintage Clone Fund
with respect to the Acquired Fund assets will include
the period for which such Fund's assets were held by
the corresponding Acquired Fund provided that the
Acquired Fund held such assets as capital assets; and
(ix) each Vintage Clone Fund will succeed to and take
into account the earnings and profits, or deficit in
earnings and profits, of the corresponding Acquired
Fund as of the Closing of the Reorganization.
11. The obligations of the parties under this Agreement shall be
subject to:
(a) Any required approval, at a meeting duly called for
the purpose, of the holders of the outstanding shares
of each Acquired Fund, of this Agreement and the
transactions contemplated hereunder.
(b) The right to abandon and terminate this Agreement, if
either Coventry or IMG Funds believes that the
consummation of the transactions contemplated
hereunder would not be in the best interests of its
shareholders.
12. IMG Funds will pay its own and Coventry's out-of-pocket fees
and expenses incurred in connection with the transactions contemplated under
this Agreement, including, but not limited to, accountants' fees, legal fees,
registration fees, filing fees, printing expenses, transfer taxes (if any) and
the fees of banks, custodians and transfer agents.
13. This Agreement may be amended by an instrument executed by the
duly authorized officers of Coventry and IMG Funds at any time, except that
after approval by the shareholders of the Acquired Funds, no amendment may be
made with respect to the Agreement which, in the opinion of the Board of
Trustees of Coventry, materially adversely affects the interests of the
shareholders of Coventry. At any time Coventry or IMG Funds may by written
instrument signed by it (i) waive any inaccuracies in the representations and
warranties made to it contained herein and (ii) waive compliance with any of the
covenants or conditions made for its benefit contained herein.
14. In addition to the right to terminate this Agreement described
in paragraph 11, this Agreement may be terminated and the plan described in the
Agreement abandoned at any time prior to the Closing Date, whether before or
after action thereon by the shareholders of the Acquired Funds and
notwithstanding favorable action by such shareholders, by mutual consent of the
Board of Directors of IMG Funds and the Board of Trustees of Coventry. This
Agreement may also be terminated by action of the Board of Directors of IMG
Funds or the Board of Trustees of Coventry, if:
(a) The plan described in this Agreement shall not have
become effective by April 1, 1998 (hereinafter called
the "Final Date") unless such Final Date shall have
been changed by mutual agreement; or
(b) Either Coventry or IMG Funds shall, at the Final
Date, have failed to comply with any of its
agreements contained herein; or
(c) Prior to the Final Date any one or more of the
conditions to the obligations of IMG Funds or
Coventry contained in this Agreement shall not be
fulfilled to the reasonable satisfaction of IMG Funds
and its counsel or Coventry and its counsel or it
shall become evident to IMG Funds or Coventry that
any of such conditions are incapable of being
fulfilled.
15. This Agreement shall bind and inure to the benefit of the
parties hereto and is not intended to confer upon any other person any rights or
remedies hereunder.
16. The parties hereto represent and warrant that they have not
employed any broker, finder or intermediary in connection with this transaction
who might be entitled to a finder's fee or other similar fee or commission.
17. All prior or contemporaneous agreements and representations
are hereby merged into this Agreement, which constitutes the entire contract
between the parties hereto.
18 This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa.
19. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts has been signed by all parties
hereto.
20. Coventry shall indemnify, defend and hold harmless IMG Funds,
its officers, directors, employees and agents against all losses, claims,
demands, liabilities and expenses, including reasonable legal and other expenses
incurred in defending claims or liabilities, whether or not resulting in any
liability to IMG Funds, its officers, directors, employees or agents, arising
out of or based on (i) any breach by Coventry of any of its representations,
warranties, covenants or agreements set forth in this Agreement, or (ii) any
untrue statement or alleged untrue statement of a material fact provided by
Coventry and contained in any proxy statement for Coventry, as filed with the
Commission or any amendment or supplement thereto, or any notification prepared
by or on behalf of Coventry and filed with any state regulatory agency, or in
any information provided by Coventry included in any proxy statement or
registration statement filed by IMG Funds with the Securities and Exchange
Commission or any amendment or supplement thereto; or which shall arise out of
or be based upon any omission or alleged omission to state therein a material
fact required to be stated in any such proxy statement, registration statement
or application necessary to make the statements therein not misleading. This
indemnity provision shall survive the termination of this Agreement.
21. IMG Funds shall indemnify, defend and hold harmless Coventry,
its officers, trustees, employees and agents against all losses, claims,
demands, liabilities and expenses, including reasonable legal and other expenses
incurred in defending claims or liabilities, whether or not resulting in any
liability to Coventry, its officers, trustees, employees or agents, arising out
of or based on (i) any breach by IMG Funds of any of its representations,
warranties, covenants or agreements set forth in this Agreement, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement on Form N-1A or Form N-14 for IMG Funds, as filed with
the Securities and Exchange Commission or any amendment or supplement thereto,
or any notification prepared by or on behalf of IMG Funds and submitted to any
state regulatory agency regarding the sale of shares of IMG Funds under the
securities laws thereof; or which shall arise out of or be based upon any
omission or alleged omission to state therein a material fact required to be
stated in any such registration statement or application necessary to make the
statements therein not misleading; provided, however, IMG Funds shall not be
required to indemnify Coventry, its officers, directors, employees and agents
against any loss, claim, demand, liability or expense arising out of any
information provided by Coventry included in any registration statement filed by
IMG Funds with the Securities and Exchange Commission or any amendment or
supplement thereto. This indemnity provision shall survive the termination of
this Agreement.
22. The execution of this Agreement has been authorized by the
Board of Directors of IMG Funds and by the Board of Trustees of Coventry.
23. The Declaration of Trust for The Coventry Group a copy of
which, together with all amendments thereto, is on file in the Office of the
Secretary of the Commonwealth of Massachusetts, provides (i) that the name The
Coventry Group refers to the trustees under the Declaration of Trust
collectively as trustees and not as individuals or personally, (ii) that no
shareholder shall be subject to any personal liability whatsoever to any person
in connection with trust property or the acts, obligations or affairs of the
trust, and (iii) that no trustee, officer, employee or agent of the trust shall
be subject to any personal liability whatsoever to any person, other than to the
trust or its shareholders, in connection with trust property or the affairs of
the trust, save only that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties with respect to such person; and
all such persons shall look solely to the trust property for satisfaction of
claims of any nature arising in connection with the affairs of the trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and attested by their officers thereunto duly authorized, as of
the date first written above.
IMG MUTUAL FUNDS, INC.
Attest
By: _______________________ By: ________________________
Title: _____________________ Title: _______________________
THE COVENTRY GROUP
Attest
By: _______________________ By: ________________________
Title: _____________________ Title: _______________________
<PAGE>
TABLE OF CONTENTS
Page
----
SYNOPSIS..........................................................
RISK FACTORS......................................................
PROPOSAL 1: AGREEMENT AND PLAN OF
REORGANIZATION....................................................
IMG MUTUAL FUNDS, INC.............................................
AMCORE VINTAGE FUNDS..............................................
INFORMATION RELATING TO VOTING MATTERS............................
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION...............................................
OTHER BUSINESS....................................................
LEGAL MATTERS.....................................................
SHAREHOLDER INQUIRIES.............................................
EXHIBIT A--AGREEMENT AND
PLAN OF REORGANIZATION............................................
<PAGE>
THE COVENTRY GROUP
AMCORE VINTAGE FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 3, 1998
This Proxy is solicited on behalf of the Trustees of the Fund
The undersigned hereby appoints D' Ray Moore and Walter B. Grimm, and each of
them separately, proxies, with power of substitution, and hereby authorizes
them to represent and to vote, as designated below, at the Special Meeting
of Shareholders of AMCORE Vintage Funds on February 3, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares
of the Funds which the undersigned would be entitled to vote if personally
present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
DIRECTORS RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE:Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such; if a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number.
1. Approval of the Agreement and Plan of Reorganization for
AMCORE Vintage Funds providing for the transfer of all of the
assets of the AMCORE Vintage Funds to New Vintage Funds in
exchange for shares of New Vintage Funds and the assumption by
New Vintage Funds of all of the liabilities of AMCORE Vintage
Funds, followed by the dissolution and liquidation of AMCORE
Vintage Funds and the distribution of shares of New Vintage
Funds to the shareholders of AMCORE Vintage Funds.
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 New Vintage Funds, offered by IMG Mutual Funds, Inc., dated January 14,
1998, relating to the transfer of assets from the AMCORE Vintage Funds
("Current Vintage Funds") to corresponding portfolios of New Vintage Funds.
The Statement of Additional Information for the Current Vintage Funds dated
July 31, 1997 and the Statement of Additional Information for New Vintage
Funds dated January 14, 1998, have been filed with the Securities and
Exchange Commission and are incorporated herein by reference. This
Statement is not a Prospectus and is authorized for distribution only when
it accompanies or follows delivery of the Prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus. A
copy of the January 14, 1998 Prospectus may be obtained, without charge, by
writing AMCORE Vintage Funds, 3435 Stelzer Road, Columbus, Ohio 43219 or by
calling 1-800-438-6375.
The date of this Statement of Additional Information is January 14, 1998.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Pre-Effective Amendment to the
N-14 Registration Statement has been signed on behalf of the Registrant in the
City of Des Moines, State of Iowa, on the 12th day of January, 1998.
IMG MUTUAL FUNDS, INC.
By _/s/__Mark A. McClurg________________
Mark A. McClurg, President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment to the N-14 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 | January 12, 1998
David Lundquist |
|
_/s/__Debra Johnson_________ Director |
Debra Johnson |
|
_/s/__Edward Stanek_________ Director |
Edward Stanek |
__________________________|
<PAGE>
PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification by the Registrant is against public policy as expressed in
the Act and, therefore, may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Section 2-418 of the Maryland General Corporation Law permits the
Registrant to indemnify directors and officers. In addition, Section 2-405.1
sets forth the standard of care for directors and Section 2-405.2 allows the
Registrant to include in the Charter provisions further limiting the liability
of the directors and officers in certain circumstances. Article ELEVENTH of the
Articles of Incorporation included herewith as Exhibit 1(a) (the "Articles")
limits the liability of any director or officer of the Registrant arising out of
a breach of fiduciary duty, subject to the limits of the Investment Company Act
of 1940 (the "1940 Act"). Article TWELFTH of the Articles and Article VII of the
Bylaws, included herewith as Exhibit (2), makes mandatory the indemnification of
any person made or threatened to be made a party to any action by reason of the
facts that such person is or was a director, officer or employee, subject to the
limits otherwise imposed by law or by the 1940 Act.
In addition, Paragraph 7 of the Advisory Agreement included herewith as
Exhibit 5(b)(1), and Article III of the Distribution Agreement, included
herewith as Exhibit 6(a), provide that Investors Management Group ("IMG") and
IMG Financial Services, Inc. ("IFS"), shall not be liable to the Registrant for
any error, judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the management provided by IMG or for
any distribution services provided by IFS to the Registrant for the performance
of the duties under such agreements, except for willful misfeasance, bad faith
or gross negligence in the performance of their duties or by reason of reckless
disregard of their obligation and duties under such agreements. In addition,
Article IV of the Distribution Agreement and Paragraph 8 of the Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent Agreement, included
herewith as Exhibit 5(a)(f), further indemnify IFS and IMG against certain
liabilities arising out of the performance of such agreements.
<PAGE>
EXHIBITS
--------
Exhibit No. Description
----------- -----------
1.(a) Articles of Incorporation, incorporated by
reference to the Fund's N1-A Registration
Statement, filed December 14, 1994
(b) Articles Supplementary, incorporated by
reference to P.E. Amendment No. 9 to the
Fund's N-1A Registration Statement, filed
January 7, 1998
2. Bylaws, incorporated by reference to the
Fund's N1-A Registration Statement, filed
December 14, 1994
4. Form of Agreement and Plan of Reorganization
(included as Exhibit "A" to Proxy
Statement/Prospectus
5. Form of Investment Advisory Agreement
incorporated by reference to P.E. Amendment
No. 7 to the Fund's N1-A Registration
Statement filed November 7, 1997
6. Form of Distribution Agreement, incorporated
by reference to P.E. Amendment No. 7 to the
Fund's N1-A Registration Statement filed
November 7, 1997
8. Form of Custodial Agreement, incorporated by
reference to P.E. Amendment No. 7 to the
Fund's N1-A Registration Statement filed
November 7,1 997
10.(a) Distribution Plan incorporated by reference
to P.E. Amendment No. 7 to the Fund's N1-A
Registration Statement filed November 7, 1997
(b) Amended 18f3 Plan incorporated by reference
to Post-Effective Amendment No. 8 to the
Fund's N1-A Registration Statement filed
November 12, 1997
11. Opinion and Consent of Messrs. Ober, Kaler,
Grimes & Schriver
12. Tax opinion of Cline, Williams, Wright,
Johnson & Oldfather, incorporated by
reference to the Fund's N-14 Registration
filed December 12, 1997
14. Consents of KPMG Peat Marwick LLP,
incorporated by reference to the Fund's
N-14 Registration Statement filed
December 12, 1997
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>
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 Supplementary, incorporated by
referene to P.E. Amendment No. 9 to the Fund's
Registration Statement filed January 7, 1998..........
2. Bylaws, incorporated by reference to the Fund's
Registration Statement, filed December 14, 1994.......
4. Form of Agreement and Plan of Reorganization
(included as Exhibit "A" to Proxy Statement/
Prospectus............................................
5. Form of Investment Advisory Agreement, incorporated
by reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed November 7, 1997...
6. Form of Distribution Agreement, incorporated
by reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed
November 7, 1997......................................
8. Form of Custodial Agreement, incorporated by
reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed
November 7, 1997......................................
10. (a) Distribution Plan, incorporated by reference to
P.E. Amendment No. 7 to the Fund's N-1A Registration
Statement, filed November 7, 1997.....................
10. (b) Amended 18f3 Plan incorporated by reference to
P.E. Amendment No. 8 to the Fund's N-1A Registration
Statement, filed November 12, 1997....................
11. Opinion of Ober, Kaler, Grimes & Shriver..............
12. Tax Opinion of Cline, Williams, Wright,
Johnson & Oldfather, incorporated by referenece to
the Fund's N-14 Registration Statement filed
December 12, 1997.....................................
14. Consents of KPMG Peat Marwick LLPand Ernst & Young,
incorporated by reference to the Fund's N-14
Registration Statement filed December 12, 1997........
16. Power of Attorney.....................................
IMG MUTUAL FUNDS, INC.
EXHIBIT # 11
TO
PRE-EFFECTIVE AMENDMENT NO. 1
FORM N-14 REGISTRATION STATEMENT
<PAGE>
Ober, Kaler, Grimes & Shriver
Attorneys at Law
120 E. Baltimore Street
Baltimore, Maryland 21202-1643
410-685-1120 FAX 410-547-0699
January 9, 1998
IMG Mutual Funds, Inc.
720 Liberty Building
418 Sixth Avenue
Des Moines, IA 50309-2410
Ladies and Gentlemen:
We have acted as special Maryland counsel to IMG Mutual Funds, Inc.
("IMG"), a corporation organized under the laws of the State of Maryland on
November 16, 1994. IMG is authorized to issue One Hundred Billion
(100,000,000,000) shares of capital stock (each a "Share" and collectively, the
"Shares"), one-tenth of one cent ($0.001) par value per Share, Twenty Six
Billion Two Hundred Million (26,200,000,000) of which have been classified into
eleven series (each a "Series" and collectively, the "Series"). The designation
of the eleven Series, and the number of Shares of each Series, is as follows:
(1) IMG Core Stock Fund Series - Eight Hundred Million (800,000,000) Shares; (2)
IMG Bond Fund Series - Eight Hundred Million (800,000,000) Shares; (3) Liquid
Assets Fund Series - Five Billion (5,000,000,000) Shares; (4) Municipal Assets
Fund Series - Five Billion (5,000,000,000) Shares; (5) Vintage Government Assets
Fund Series - Five Billion (5,000,000,000) Shares; (6) Vintage Income Fund
Series - One Billion Six Hundred Million (1,600,000,000) Shares; (7) Vintage
Municipal Bond Fund Series - One Billion Six Hundred Million (1,600,000,000)
Shares; (8) Vintage Equity Fund Series - One Billion Six Hundred Million
(1,600,000,000) Shares; (9) Vintage Balanced Fund Series - One Billion Six
Hundred Million (1,600,000,000) Shares; (10) Vintage Aggressive Growth Fund
Series - One Billion Six Hundred Million (1,600,000,000) Shares; and (11)
Vintage Limited Term Bond Fund Series - One Billion Six Hundred Million
(1,600,000,000) Shares.
The Five Billion (5,000,000,000) Shares of the Vintage Government
Assets Fund Series are further classified into four classes of Shares (each a
"Class" and collectively, the "Classes"), designated as the Class A Shares, the
Class B Shares, the Class C Shares and the Class D Shares, respectively, with
each Class consisting of One Billion Two Hundred Fifty Million (1,250,000,000)
Shares.
The One Billion Six Hundred Million 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 are further classified
into two classes of Shares (each a "Class" and collectively, the "Classes"),
designated as the Class A Shares and the Class B Shares, respectively, with each
Class consisting of Eight Hundred Million (800,000,000) Shares.
IMG has filed a registration statement on Form N-14 (the "Registration
Statement") with the Securities and Exchange Commission, relating to, among
other things, the registration under the Securities Act of 1933, as amended (the
"Securities Act"), and the Investment Company Act of 1940, as amended (the
"Investment Company Act"), of the Shares of the Vintage Government Assets Fund
Series, the Vintage Equity Fund Series, the Vintage Income Fund Series, the
Vintage Municipal Bond Fund Series, the Vintage Balanced Fund Series, the
Vintage Aggressive Growth Fund Series and the Vintage Limited Term Bond Fund
Series which are expected to be issued pursuant to the Agreement and Plan of
Reorganization (the "Agreement and Plan of Reorganization") dated November 12,
1997, by and between IMG and The Coventry Group, a Massachusetts business trust
("Coventry").
Pursuant to the Agreement and Plan of Reorganization (i) Coventry will
transfer all or substantially all the assets of certain of its investment
portfolios to IMG in exchange for Class A Shares of each of the Vintage
Government Assets Fund Series and the Vintage Equity Fund Series, and Class B
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, and the assumption by IMG of certain of the liabilities of Coventry, and
(ii) such Class A Shares of each of the Vintage Government Assets Fund Series
and the Vintage Equity Fund Series, and Class B 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 will be distributed to
certain shareholders of Coventry in complete liquidation of certain investment
portfolios of Coventry.
In rendering the opinions set forth below, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of the
following documents:
(i) the Registration Statement, including all amendments thereto filed
to date, and a draft of Amendment No. 1 to the Registration Statement which you
are about to file with the Securities and Exchange Commission;
(ii) the Charter and Bylaws of IMG;
(iii) the Agreement and Plan of Reorganization;
(iv) a certificate of IMG regarding certain actions taken by IMG in
connection with the Agreement and Plan of Reorganization, and the authorization
of the issuance of Class A Shares of each of the Vintage Government Assets Fund
Series and the Vintage Equity Fund Series, and Class B 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 (the
"Certificate");
(v) a certificate of the Maryland State Department of Assessments and
Taxation dated December 23, 1997 to the effect that the IMG is duly incorporated
and existing under the laws of the State of Maryland and is in good standing and
duly authorized to transact business in the State of Maryland (the "Good
Standing Certificate"); and
(vi) such other documents and matters as we have deemed necessary and
appropriate to render this opinion, subject to the limitations, assumptions, and
qualifications contained herein.
As to any facts or questions of fact material to the opinions expressed
herein, we have relied exclusively upon the aforesaid documents and
certificates, and representations and declarations of the officers or other
representatives of IMG. We have made no independent investigation whatsoever as
to such factual matters.
In reaching the opinions set forth below, we have assumed, without
independent investigation or inquiry, that:
(a) there are no oral or written modifications of or amendments to the
Agreement and Plan of Reorganization, and there has been no wavier of any of the
provisions of the Agreement and Plan of Reorganization, by actions or conduct of
the parties or otherwise;
(b) all documents submitted to us as originals are authentic; all
documents submitted to us as certified or photostatic copies conform to the
original documents; all signatures on all documents submitted to us for
examination are genuine; and all documents and public records reviewed are
accurate and complete; and
(c) all representations, warranties, certifications and statements with
respect to matters of fact and other factual information (i) made or contained
in the Agreement and Plan of Reorganization or any other document reviewed by us
in connection with this opinion; (ii) made by public officers; or (iii) made by
officers or representatives of IMG, including certifications made in the
Certificate, are accurate, true, correct and complete in all material respects.
In addition, in reaching the opinions set forth below, we have assumed,
without independent investigation or inquiry (i) the legal existence of
Coventry; (ii) the due authorization of IMG and Coventry to enter into the
transactions contemplated by the Agreement and Plan of Reorganization; (iii) the
due execution and delivery of IMG and Coventry of the Agreement and Plan of
Reorganization; (iv) the legality, validity, binding effect and enforceability
as to each of IMG and Coventry of the Agreement and Plan of Reorganization; (v)
that each of IMG and Coventry have the legal right and power, corporate or
other, and authority under all applicable laws and regulations to execute,
deliver, and perform all of its obligations under the Agreement and Plan of
Reorganization; (vi) that all necessary approvals, filings and/or actions
required by applicable law in connection with the transactions contemplated by
the Agreement and Plan of Reorganization, other than actions required by the
Maryland General Corporation Law to authorize the issuance of the Shares of the
Vintage Government Assets Fund Series, the Vintage Equity Fund Series, the
Vintage Income Fund Series, the Vintage Municipal Bond Fund Series, the Vintage
Balanced Fund Series, the Vintage Aggressive Growth Fund Series and the Vintage
Limited Term Bond Fund Series which are to be issued pursuant to the Agreement
and Plan of Reorganization, have been or shall be taken at the time required by
applicable law for such approvals, filings and/or actions.
In reaching the opinions set forth below, we also have assumed, without
independent investigation or inquiry, that at no time prior to and including the
date when the Class A Shares of each of the Vintage Government Assets Fund
Series and the Vintage Equity Fund Series, and the Class B 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, are issued
pursuant to the Agreement and Plan of Reorganization will (i) IMG's Charter,
Bylaws or the existing corporate authorization to issue such Shares be amended,
repealed or revoked; (ii) the total number of the issued Shares of capital stock
of any Class of the Vintage Government Assets Fund Series exceed One Billion Two
Hundred Fifty Million (1,250,000,000) Shares, (iii) the total number of the
issued Shares of capital stock of any Class of the Vintage Income Fund Series,
Vintage Municipal Bond Fund Series, Vintage Equity Fund Series, Vintage Balanced
Fund Series, Vintage Aggressive Growth Fund Series or Vintage Limited Term Bond
Fund Series exceed Eight Hundred Million (800,000,000) Shares, or (iv) the net
asset value per Share of any Class of the Vintage Government Assets Fund Series,
Vintage Income Fund Series, Vintage Municipal Bond Fund Series, Vintage Equity
Fund Series, Vintage Balanced Fund Series, Vintage Aggressive Growth Fund Series
or Vintage Limited Term Bond Fund Series be less than one-tenth of one cent
($0.001) per Share. We further assume, without independent investigation or
inquiry, that at least one Class A Share of each of the Vintage Government
Assets Fund Series and the Vintage Equity Fund Series, and one Class B Share 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,
will be duly and validly issued and outstanding prior to the date when the Class
A Shares of each of the Vintage Government Assets Fund Series and the Vintage
Equity Fund Series, and the Class B 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, are issued pursuant to the Agreement
and Plan of Reorganization.
Based on our review of the foregoing and subject to the assumptions and
qualifications set forth herein, it is our opinion that, as of the date of this
letter:
1. If and when issued to Coventry pursuant to the terms of the
Agreement and Plan of Reorganization, the Class A Shares of each of the Vintage
Government Assets Fund Series and the Vintage Equity Fund Series, and the Class
B 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, will be duly and validly issued, fully paid and non-assessable.
In addition to the qualifications set forth above, the opinions set
forth herein are also subject to the following qualifications:
(i) We express no opinion as to compliance with the Securities Act, the
Investment Company Act or the securities laws of any state with respect to the
issuance of the Shares of any Class of the Vintage Government Assets Fund
Series, the Vintage Equity Fund Series, the Vintage Income Fund Series, the
Vintage Municipal Bond Fund Series, the Vintage Balanced Fund Series, the
Vintage Aggressive Growth Fund Series or the Vintage Limited Term Bond Fund
Series. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland as
currently in effect. We assume no obligation to supplement this opinion if any
applicable laws change after the date hereof, or if we become aware of any facts
that might change the opinions expressed herein after the date hereof.
We consent to your filing of this opinion letter with the Securities
and Exchange Commission (the "SEC") in connection with an amendment to the
Registration Statement which you are about to file pursuant to the Securities
Act.
Sincerely yours,
/s/ Ober, Kaler, Grimes & Shriver,
a Professional Corporation
<PAGE>
IMG MUTUAL FUNDS, INC.
EXHIBIT # 16
TO
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM N-14 REGISTRATION STATEMENT
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of IMG Mutual Funds, Inc.,
hereby severally constitute David W. Miles and Mark A McClurg, and each of them
as true and lawful attorneys with full power to sign for us and in our names, in
the capacities indicated below, the Form N-14 Registration Statement of IMG
Mutual Funds, Inc., to be filed with the Securities and Exchange Commission, and
any and all amendments thereto, hereby ratifying and confirming our signatures
as they may be signed by our said attorneys, or any of them, to any and all
amendments to said Registration Statement. Dated this 3rd day of November 1997.
Signature Title
/s/ David W. Miles Director
David W. Miles
/s/ Mark A. McClurg President, Principal Executive Officer,
Mark A. McClurg Principal Financial and Accounting Officer
and Director
/s/ Johnny Danos Director
Johnny Danos
/s/ Debra Johnson Director
Debra Johnson
/s/ Edward Stanek Director
Edward Stanek
