January 21, 1998
Dear Shareholder:
I am writing to ask you for your vote on important questions that affect your
investment in one or more of the Capital Value Funds (the "Funds"). While you
are, of course, welcome to join us at the Funds' Special Shareholder Meeting,
most shareholders cast their vote by filling out and signing the enclosed proxy
card.
As you may be aware, Investors Management Group, which provides investment
services to the Funds, has signed a definitive agreement to be acquired by
AMCORE Financial, Inc., of Rockford, Illinois. This transaction will not result
in any material change to your Funds' advisory services or the high quality
shareholder services that you have come to expect over the years.
As required by the Investment Company Act of 1940, the transaction will result
in the automatic termination of the agreement under which Investors Management
Group ("IMG") provides sub-advisory services to the Funds. This transaction thus
requires the approval by the holders of shares of each Fund of a new
sub-advisory agreement--which will be substantially identical to the agreement
currently in effect.
As part of our continuing effort to maximize the benefits to shareholders of
investing in the Funds, the Board of Directors of your Funds has recently
reviewed and unanimously endorsed a proposal for the reorganization of the
Funds, which they have determined to be in the best interest of the
shareholders. This proposal calls for acquisition of Capital Value Fund Equity
Portfolio by Vintage Equity Fund, Capital Value Fund Total Return Portfolio by
Vintage Balanced Fund and Capital Value Fund Fixed Income Portfolio by Vintage
Bond Fund. Each of the Vintage Funds will have similar investment objectives and
investment policies as the Fund it will acquire, and will be managed by IMG.
As a result of this transaction, you will become a shareholder of Vintage Equity
Fund, Vintage Balanced Fund or Vintage Bond Fund depending on which shares you
own. The aggregate net asset value of your shares of the Funds will be equal to
the aggregate net asset value of the shares that you will receive as a result of
the reorganization. No sales charge will be imposed in the transaction and Fund
shareholders will not bear any of the costs associated with the reorganization.
Investors Management Group will serve as investment advisor to the Vintage Funds
so consistency of portfolio management will be maintained following the
transaction, and additional investment management expertise will be gained from
AMCORE Financial, Inc.
The Directors of the Funds recommend that the shareholders approve the
reorganization. The Directors believe the transaction would benefit the Funds
and their shareholders by reorganizing the Funds into a larger family of funds
with significantly greater assets and enhancing their capacity to attract and
retain investors. In making their determination, the Directors reviewed several
factors, including the qualifications and capabilities of the service providers
of the Vintage Funds. If, as expected, the distributor of the Vintage Funds is
able to distribute Vintage Fund shares successfully, growth in assets would make
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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 Directors' recommendation. We urge you to review
carefully the Proxy Statement/Prospectus, fill out your proxy card, and return
it to us. A self-addressed, postage-paid envelope has been enclosed for your
convenience. It is very important that you vote and that your voting
instructions be received no later than February 12, 1998.
NOTE: You may receive more than one proxy package if you hold shares in more
than one account in a Fund, or if you hold shares in more than one Fund. You
must return ALL proxy cards you receive. We have provided postage-paid return
envelopes for each. If you have any questions, please call Investors Management
Group at (515) 244-5426 or 1-800-798-1819.
Sincerely,
David W. Miles, President
Capital Value Fund, Inc.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 13, 1998
TO THE SHAREHOLDERS OF CAPITAL VALUE FUND, INC.
You are cordially invited to attend the Special Meeting of Shareholders of
Capital Value Fund, Inc., a registered investment company, which will be held at
2203 Grand Avenue, Des Moines, Iowa 50312-5338, on February 13, 1998, at 10:00
a.m., for the following purposes:
1. To consider and vote on a proposed Agreement and Plan of Reorganization
(the "Plan") providing for (a) the transfer of all the assets of
Capital Value Equity Portfolio, Fixed Income Portfolio and Total Return
Portfolio to IMG Mutual Funds, Inc., in exchange for shares of Vintage
Equity Fund, Vintage Balanced Fund and Vintage Bond Fund; (b) the
assumption by the Vintage Funds of all of the liabilities of the
respective Capital Value Funds; and (c) the distribution of the Vintage
shares to the shareholders of the Capital Value Funds in complete
liquidation of Capital Value Fund, Inc.
2. To consider and vote on a proposed Sub-Advisory Agreement with
Investors Management Group ("IMG") to be in effect after the proposed
acquisition of IMG by AMCORE Financial, Inc.
3. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on Wednesday, December
31, 1997, as the record date for determination of shareholders entitled to
notice of, and to vote at, the Special Shareholders Meeting. As of the record
date, there were 3,642,661.467 shares of Capital Value Fund, Inc. outstanding
and eligible to vote at the Special Shareholders Meeting. A list of such
shareholders will be maintained at the offices of Investors Management Group at
2203 Grand Avenue, Des Moines, Iowa 50312-5338, during the ten day period
preceding the Special Shareholders Meeting. Please read the Proxy
Statement/Prospectus carefully before telling us, through your proxy card, how
you wish your shares to be voted. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF EACH OF THE PROPOSALS.
WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED. No postage is required. Prompt return of your proxy card
will be appreciated. Your vote is important no matter how many shares you own.
Des Moines, Iowa BY ORDER OF THE BOARDS OF DIRECTORS
January 21, 1998
Ruth Prochaska, Secretary
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PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF THE ASSETS OF
CAPITAL VALUE FUND, INC.
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
BY AND IN EXCHANGE FOR SHARES OF
VINTAGE EQUITY FUND
VINTAGE BALANCED FUND
VINTAGE BOND FUND
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
This Proxy Statement/Prospectus is being furnished to shareholders of the
Capital Value Funds (`CVF") in connection with the solicitation by the Board of
Directors of proxies to be used at the Special Meeting of Shareholders of CVF to
be held at 2203 Grand Avenue, Des Moines, Iowa 50312-5338 at 10:00 a.m. on
February 13, 1998, and any adjournments thereof. CVF is currently a diversified
registered open-end investment company. Shareholders of record as of the close
of business on December 31, 1997 are entitled to vote at the Special Meeting. It
is expected that this Proxy Statement/Prospectus will be mailed to shareholders
of CVF on or about January 21, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization in which
all of the assets and liabilities of CVF will be acquired by the Vintage Equity
Fund, Vintage Balanced Fund and Vintage Bond Fund, (the "Vintage Funds"), in
exchange for shares of Vintage Funds. The shares of Vintage Funds thereby
received will then be distributed to shareholders of CVF and CVF will be
dissolved. As a result of the proposed reorganization, each shareholder of CVF
will receive that number of full and fractional shares of the corresponding
series of shares of Vintage Funds having a net asset value equal to the net
asset value of such shareholder's shares of CVF held as of the date of the
proposed reorganization.
The investment objectives, policies and restrictions of the Vintage Funds are
similar to those of the corresponding portfolios of CVF. For a comparison of the
investment objectives, policies and restrictions of CVF and Vintage Funds, see
"Proposal 1: Agreement and Plan of Reorganization--Investment Objectives,
Policies and Restrictions." Investors Management Group ("IMG") serves as the
investment advisor for Vintage Funds, as well as sub-advisor to CVF.
This Proxy Statement/Prospectus also relates to the proposal to continue the
Sub- Advisory Agreement between IMG and CVF after a change of ownership of IMG.
See "Proposal 2: Approval of Sub-Advisory Agreement."
This Proxy Statement/Prospectus, which should be retained for future reference,
sets forth concisely the information about Vintage Funds that a prospective
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investor should know before investing. This document will give you the
information you need to vote on the proposed reorganization and the other
matters described herein. Much of the information is required under rules of the
Securities and Exchange Commission and some of it is technical in nature. If
there is anything you do not understand, please contact us at our toll-free
number, 1-800-798-1819. Shareholders should return proxies and any
correspondence to Investors Management Group, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338.
The following documents have been filed with the Securities and Exchange
Commission and are incorporated into this Proxy Statement/Prospectus by
reference: (i) a Statement of Additional Information dated the date hereof and
relating to this Proxy Statement/Prospectus; (ii) the Prospectuses and
Statements of Additional Information of the Vintage Funds, dated August 27, 1997
and January 14, 1998 and the IMG Bond Fund, the predecessor of Vintage Bond
Fund, dated August 27, 1997; and (iii) the Prospectus and Statement of
Additional Information of CVF, dated July 29, 1997. Copies of the referenced
documents are available upon request and without charge by calling
1-800-798-1819.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATOR, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES OF THE 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 16, 1998.
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SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the Directors of Capital Value Fund, Inc.
("CVF") for use at the Special Meeting of Shareholders of CVF to be held on
February 13, 1998 (and if adjourned, at any adjourned meeting) for the purposes
stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE ON THESE
PROPOSALS?
The Directors recommend that you vote
1. For the proposed transaction in which assets of CVF would be
transferred to the Vintage Funds in exchange for shares of
corresponding Vintage Funds with an equal net asset value.
2. For the new Sub-Advisory Agreement to be effective upon
the completion of the proposed acquisition of Investors
Management Group ("IMG") by AMCORE Financial, Inc. of
Rockford, Illinois.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on December 31, 1997,
are entitled to be present and vote at the meeting or any adjourned meeting.
Each of the three CVF portfolios will vote separately on the two proposals, and
each proposal must be approved by all three portfolios to be adopted. On
December 31, 1997, there were outstanding 1,489,846.510 shares of CVF Equity
Portfolio, 1,130,535.817 shares of CVF Total Return Portfolio and 1,022,279.140
shares of CVF Fixed Income Portfolio. The Notice of Special Meeting, combined
Proxy Statement/Prospectus and the enclosed form of proxy are being mailed to
shareholders of record on or about January 21, 1998.
Each share is entitled to one vote, with fractional shares voting
proportionately. Shares represented by duly executed proxies will be voted in
accordance with shareholder's instructions. Any shareholder giving a proxy has
the power to revoke it by mail (addressed to the CVF Secretary at the principal
offices of CVF, 2203 Grand Avenue, Des Moines, Iowa 50312-5338) or in person at
the meeting, by executing a superseding proxy, or by submitting a notice of
revocation to CVF. If you sign the proxy, but don't fill in a vote, your shares
will be voted in accordance with the Directors' recommendations. If any other
business is brought before the meeting, your shares will be voted at the
Directors' discretion.
WHAT IS BEING PROPOSED?
First, the Directors of CVF are recommending that shareholders approve
the reorganization (the "Reorganization") of all classes of shares of the CVF
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Equity Portfolio, CVF Total Return Portfolio and the CVF Fixed Income Portfolio
into the Vintage Equity Fund, Vintage Balanced Fund and Vintage Bond Fund,
respectively. An Agreement and Plan of Reorganization provides for the transfer
of all of the assets and liabilities of CVF to the Vintage Funds, in exchange
for shares of the Vintage Funds. The completion of these transactions, followed
by the distribution of Vintage Funds shares to CVF shareholders, will result in
the combination of the Funds' assets and liabilities, with the shareholders of
CVF becoming shareholders of the Vintage Funds, followed by the dissolution of
CVF. Upon completion of the Reorganization:
Shareholders of CVF will be Shareholders of the Vintage Funds
and will own shares of a Vintage Fund which will have similar
investment objectives, policies and restrictions and purchase
and redemption procedures as the corresponding CVF Portfolio.
There should be no federal income tax consequences to former
Shareholders of CVF, resulting from the Reorganization.
Second, the Directors of CVF are recommending that shareholders approve
continuation of the Sub-Advisory Agreement with IMG after a change of ownership
of IMG. This particular Agreement would only continue until such time as the
Reorganization becomes effective, after which an Investment Advisory Agreement
between IMG and the Vintage Funds would become effective and Wellmark Capital
Value, Inc. would cease to be the investment advisor.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series of proposed
transactions in which:
IMG will be acquired by AMCORE Financial, Inc.; and
Vintage Funds, CVF and certain other funds advised by IMG
will be combined with the existing AMCORE Vintage Funds to
form a mutual fund family of 10 funds with aggregate net
assets of approximately $910 million.
There can be no assurance that all aspects of the proposed series of
transactions will be completed, as several transactions are subject to
shareholder votes. However, completion of the Reorganization is subject to
completion of the other related transactions. ALL EXPENSES RELATED TO THIS PROXY
STATEMENT/PROSPECTUS AND THE REORGANIZATION WILL BE BORNE BY IMG.
RISK FACTORS
Management of the Vintage Funds believes that an investment in the
Vintage Funds does not involve unusual or significant risks compared to an
investment in CVF. Both Vintage Equity and CVF Equity, as well as Vintage
Balanced and CVF Total Return, are subject to the risks of price fluctuation
inherent in equity investments. Vintage Balanced and CVF Total Return, as well
as Vintage Bond and CVF Fixed Income, are subject to yield and price
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fluctuations inherent in the ownership of debt securities. For more detailed
information concerning the investment practices, including possible risks, of
the Vintage Funds and CVF, see "Proposal 1: Agreement and Plan of
Reorganization--Investment Objectives, Policies and Practices," the Vintage
Funds Prospectus dated January 14, 1998 and the CVF Prospectus dated July 29,
1997.
PROPOSAL 1: AGREEMENT AND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Directors of CVF unanimously approved the proposed
Agreement and Plan of Reorganization (the "Plan") providing for the acquisition
of all of the assets of CVF by the Vintage Funds in exchange for shares of the
Vintage Funds and the assumption by the Vintage Funds of the liabilities of CVF
(the "Reorganization"). The proposed transaction would occur on or about
February 18, 1998 (the "Closing Date"). The value of the acquired assets of CVF
will be determined as of 3:00 p.m. Central Time on the business day immediately
prior to the Closing Date. The aggregate net asset value of the shares of
Vintage Equity Fund, Vintage Balanced Fund and Vintage Bond Fund issued in
exchange, will equal the aggregate net asset value of the shares of CVF Equity
Portfolio ("CVF Equity"), CVF Total Return Portfolio ("CVF Total Return") and
CVF Fixed Income Portfolio ("CVF Fixed Income") (collectively, the "CVF
Portfolios"), respectively, then outstanding. In connection with the proposed
Reorganization, shares of the Vintage Funds will be distributed to shareholders
of CVF, and CVF will be dissolved. As a result of the proposed Reorganization,
each shareholder of CVF will cease to be a shareholder of CVF and will receive
that number of full and fractional shares of Vintage Equity, Vintage Balanced
and Vintage Bond, respectively, and having a net asset value equal to the net
asset value of, such shareholder's corresponding shares of CVF. The foregoing is
only a summary and is qualified in its entirety by reference to the Plan, a copy
of which is Exhibit A hereto.
If the Reorganization becomes effective, Wellmark Capital Value, Inc.,
the present investment advisor to CVF, will not be an investment advisor to the
Vintage Funds. IMG will provide investment advisory services to the Vintage
Funds through an Investment Advisory Agreement.
Because all shares of CVF and the Vintage Funds are in uncertificated
book-entry form, the exchange of shares will take place automatically on the
Exchange Date. It will not be necessary for shareholders to submit transmittal
forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
Former shareholders of CVF will enjoy all the same services and
privileges as other shareholders of Vintage Funds, including the opportunity to
exchange into portfolios with a wide variety of investment objectives and
policies. Purchase and redemption procedures for Vintage Funds are substantially
identical to those of CVF.
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INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Vintage Equity, Vintage Balanced and Vintage Bond, respectively, have
similar investment objectives, policies and restrictions as CVF Equity, CVF
Total Return and CVF Fixed Income. Thus, the risks of investing in Vintage Funds
should also be substantially similar. All of the principal differences between
the Vintage Funds and the CVF Portfolios are set forth below:
CVF EQUITY AND VINTAGE EQUITY. The investment objectives of CVF Equity
and Vintage Equity are very similar. The investment objective of CVF Equity is
"to seek capital appreciation in a manner consistent with the preservation of
capital." The investment objective of Vintage Equity is "long-term capital
appreciation." While CVF Equity has an objective of preserving capital, thereby
indicating a conservative investment approach, IMG believes this will not result
in a material change in investment strategy as CVF Equity has not been, and
Vintage Equity will not be, managed aggressively.
Both funds invest primarily in equity securities, including foreign
securities. Under normal market conditions, CVF Equity invests at least 65% of
its assets in equity securities. Under normal market conditions, Vintage Equity
invests at least 75% of its assets in equity securities. Both funds may also use
call options on equity securities, and futures contracts and related options for
bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Vintage Equity does employ a somewhat different portfolio management
style than CVF Equity. Vintage Equity invests primarily in equity securities of
mainly large capitalization companies with strong earnings potential and will
strive for high over-all return while minimizing risk through the selection of a
majority of quality dividend paying equity securities. CVF Equity invests
primarily in equity securities but without a specific intent to purchase large
capitalization companies. CVF Equity also emphasizes identifying companies that
exhibit strong or improving business fundamentals and below-average relative
valuations. An emphasis on strong earnings potential by Vintage Equity can be
expected to lead to different security selections over time than CVF Equity's
emphasis on below-average valuations.
The investment restrictions of Vintage Equity are substantially similar
to the investment restrictions of CVF Equity, with the exception that Vintage
Equity has no explicit limit on the proportion of net assets which may be
invested in futures contracts or related options. In practice, however, neither
fund has used futures contracts or options and Vintage Equity does not intend to
at the present time.
CVF TOTAL RETURN AND VINTAGE BALANCED. The investment objectives of CVF
Total Return and Vintage Balanced are very similar. The investment objective of
CVF Total Return is "a high total return from capital appreciation and current
income, consistent with the preservation of capital." The investment objective
of Vintage Balanced is "long-term growth of capital and income."
Both funds invest in a diversified portfolio of equity securities and
fixed income securities, with the investment manager allocating holdings to best
take advantage of various market conditions. Under normal market conditions, CVF
Total Return invests 35% to 65% of its assets in equity securities and 35% to
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65% in fixed income securities. Under normal market conditions, Vintage Balanced
invests at least 25% of its assets in fixed income securities and the remainder
in equity securities. With respect to fixed income securities, CVF Total Return
invests primarily in fixed income securities rated at least "A" or better, or
similar quality if not rated but will also invest in fixed income securities
with a quality of "BB." Vintage Balanced invests in fixed income securities
rated at least "BB" or better, or of similar quality if not rated. Both funds
may also use call options on equity securities and futures contracts and related
options for bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Vintage Balanced does employ a somewhat different equity management
style than CVF Total Return. Vintage Balanced invests primarily in equity
securities of mainly large capitalization companies with strong earnings
potential and will strive for high over-all return while minimizing risk through
the selection of a majority of quality dividend paying equity securities. CVF
Total Return invests primarily in equity securities but without a specific
intent to purchase large capitalization companies. CVF Total Return also
emphasizes identifying companies that exhibit strong or improving business
fundamentals and below-average relative valuations. An emphasis on strong
earnings potential by Vintage Balanced can be expected to lead to different
security selections over time than CVF Total Return's emphasis on below-average
valuations.
The investment restrictions of Vintage Balanced are substantially
similar to the investment restrictions of CVF Total Return, with the exception
that Vintage Balanced has no explicit limit on the proportion of net assets
which may be invested in futures contracts or related options. In practice,
however, neither fund has used futures contracts or options.
CVF FIXED INCOME AND VINTAGE BOND. The investment objectives of CVF
Fixed Income and Vintage Bond are very similar. The investment objective of CVF
Fixed Income is "to provide as high a level of income as is consistent with
preservation of capital and prudent investment risk." The investment objective
of Vintage Bond is "to seek total return consistent with the production of
current income and the preservation of capital."
Both funds invest in a diversified portfolio of fixed income
securities. Under normal market conditions, CVF Fixed Income invests at least
65% of its assets in fixed income securities rated at least "A" or better, or of
similar quality if not rated, but will also invest up to 25% in below-investment
grade securities (commonly known as "junk bonds"). CVF Fixed Income's present
policy is to limit investments to fixed income securities rated at least "BB" or
better, or of similar quality if not rated. Vintage Bond's policies are
identical. Both funds may also use futures contracts and related options for
bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Because both funds have similar investment objectives and policies and
are managed by IMG, they employ the same fixed income management style. The
investment restrictions of Vintage Bond are substantially similar to the
investment restrictions of CVF Fixed Income.
For a detailed description of the investment objectives, policies and
restrictions of the Vintage Funds and the CVF Funds, see the Vintage Funds
Prospectus dated January 14, 1998, and the CVF Prospectus dated July 29, 1997,
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all of which are delivered herewith. Vintage Bond was formerly known as IMG Bond
Fund and is so referred to in the IMG Funds August 27, 1997 Prospectus.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Directors of CVF,
including all of the Directors who are not "interested persons" as defined by
the Investment Company Act of 1940 (the "Disinterested Directors"), have
unanimously concluded that the Reorganization will be in the best interests of
the shareholders of CVF, and that the interests of the existing shareholders of
CVF will not be diluted as a result of the transactions contemplated by the
Plan. The Board of Directors therefore has submitted the Plan for approval by
the shareholders at the Special Meeting of Shareholders to be held on February
13, 1998. Approval of the Plan requires the vote of a majority of the
outstanding voting securities of each CVF Portfolio.
The Directors of CVF have approved the Plan because they believe it
will benefit shareholders through the expected greater ability of Vintage Funds
to attract and retain investors. In determining whether to recommend the
approval of the proposed Reorganization to the shareholders, the Directors
considered a number of factors, including, but not limited to: (i) the fact that
IMG will continue to manage the investments of 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 IMG in the areas of marketing, investment and shareholder services;
(iii) the expenses and advisory fees applicable to CVF before the Reorganization
and the estimated expense ratios of Vintage Funds after the Reorganization; (iv)
the terms and conditions of the Plan and whether the proposed Reorganization
will result in dilution of CVF shareholder interests; (v) the economies of scale
realized through the combination of the funds, including the addition of assets
from the acquisition by Vintage Funds of seven existing funds (the "AMCORE
Funds"); (vi) the costs estimated to be incurred to complete the proposed
Reorganization; and (vii) the future growth prospects of Vintage Funds.
In this regard, the Directors of CVF reviewed information provided by
IMG relating to the anticipated impact to the shareholders of CVF as a result of
the proposed Reorganization. The Directors noted that while Vintage Equity and
Vintage Balanced have no assets or shareholders, and there were not any
demonstrated economies, the Directors considered the probability that the
elimination of duplicative operations and the increase in the asset levels of
Vintage Funds after the proposed Reorganization will result in the following
potential benefits for shareholders of CVF, although there can, of course, be no
assurances in this regard:
(1) ACHIEVEMENT OF ECONOMIES OF SCALE AND REDUCED PER SHARE
EXPENSES. Combining the net assets of CVF with the assets of
Vintage Funds, including the AMCORE Funds, will lead to
reduced total operating expenses for shareholders of CVF on a
per share basis, by allowing fixed and relatively fixed costs,
such as accounting, legal and printing expenses, to be spread
over a larger asset base.
(2) ELIMINATION OF SEPARATE OPERATIONS. Consolidating CVF and
Vintage Funds will eliminate the duplication of services and
expenses that currently exists as a result of their separate
operations and will promote more efficient operations on a
more cost-effective basis.
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The Directors of CVF also considered the distribution capabilities of
BISYS Fund Services, Inc., which will become the Distributor of the shares of
Vintage Funds. If BISYS Fund Services, Inc. is able to distribute Vintage Funds
shares successfully, growth in assets will make possible the realization of
economies of scale and attendant savings in costs to Vintage Funds and their
shareholders. Of course, achievement of these goals cannot be assured.
The Board of Directors of CVF also considered certain possible
disadvantages of the proposed Reorganization. Shareholders of CVF Equity and CVF
Total Return holding Initial Shares should lower their current operating
expenses but will give up the opportunity to convert to Select Shares which have
even lower operating expenses. Holders of CVF Equity and CVF Total Return Select
Shares will experience an increase in operating expenses. Vintage Funds has
instituted a Distribution Plan for the Vintage Funds which allows for the
payment of a Rule 12b-1 fee of up to 0.25%, and, as to Vintage Bond, a
Shareholder Services Plan which allows for the payment of an additional fee of
up to 0.25%. None of such fees will be charged initially, and shareholders will
be given 30 days' advance notice of the institution of any such fee, but
shareholders will not have the right to approve such fees.
Prior to approving the Plan, the Directors of CVF were advised by
Wellmark Capital Value, Inc. that it will receive a fee of $75,000 from IMG for
assisting in various transactions and activities relative to consummation of the
Reorganization, such as transferring assets and shareholder records, filing
final tax returns and preparing other documents related to the dissolution of
CVF. IMG advised the Directors of CVF that it believes payment of such a fee is
a common practice and that the amount of the fee is reasonable under the
circumstances.
EXPENSE SUMMARY
The purpose of the following tables is to inform investors of the
various costs and expenses they will bear, directly or indirectly, as
shareholders of Vintage Funds and to compare those costs and expenses with the
costs and expenses borne by shareholders of CVF during the past fiscal year.
PRESENT HOLDERS OF BOTH INITIAL AND SELECT SHARES OF CVF EQUITY WILL RECEIVE T
SHARES OF VINTAGE EQUITY IN THE REORGANIZATION. PRESENT HOLDERS OF BOTH INITIAL
AND SELECT SHARES OF CVF TOTAL RETURN AND CVF FIXED INCOME WILL RECEIVE ONLY THE
SINGLE CLASS OF SHARES CURRENTLY OFFERED FOR VINTAGE BALANCED AND VINTAGE BOND,
RESPECTIVELY.
CVF EQUITY AND VINTAGE EQUITY
SHAREHOLDER TRANSACTION EXPENSES
CVF CVF VINTAGE
EQUITY EQUITY EQUITY
INITIAL SELECT T SHARES
------- ------ --------
Maximum Sales Charge Imposed on Purchases None None None
Maximum Sales Charge on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None None None
Maximum Contingent Deferred Sales Charge(CDSC) 4.0% None None
(As a percent of original purchase price)
10
<PAGE>
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
CVF CVF VINTAGE
EQUITY EQUITY EQUITY
INITIAL SELECT T SHARES
------- ------ --------
Management Fees 0.53% 0.53% 0.75%
12b-1 Fees1 0.50% 0.00% 0.00%
Other Expenses
Shareholder Servicing Fees2 0.25% 0.25% 0.00%
Other Expenses 0.30% 0.30% 0.39%
Total Other Expenses 0.55% 0.55% 0.39%
----- ----- -----
Total Fund Operating Expenses after Waivers3 1.58% 1.08% 1.14%
1Pursuant to the Vintage Funds' Rule 12b-1 Plan, the maximum 12b-1 Distribution
Fees for Vintage Equity is 0.25%. Currently, however, it is intended that no
such amounts will be paid under the Plan by any of the Vintage Funds.
Shareholders will be given at least 30 days' notice prior to the payment of any
fees under the Plans.
2Pursuant to the Vintage Funds' Shareholder Servicing Plans, the maximum
Shareholder Servicing Fee is 0.25%. Currently, however, it is intended that no
such amounts will be paid under the Plans by any of the Vintage Funds, except as
to Vintage Equity S Shares, which will not be issued in the Reorganization.
Shareholders will be given at least 30 days' notice prior to the payment of any
fees under the Plans.
3Absent the reduction of distribution fees and services fees, "Total Operating
Expenses" as a percentage of average daily net assets would be 1.64% for Vintage
Equity T Shares and S Shares. No fee waivers have been in effect for CVF.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each
Fund, assuming (1) a (hypothetical) five percent annual return and (2)
redemption at the end of each time period). Only CVF Equity Initial Shares incur
a CDSC at redemption which declines to zero after six years.
1 Year 3 Years 5 Years 10 Years
CVF Equity Initial Shares $56 $84 $114 $174
CVF Equity Select Shares $11 $34 $ 60 $132
Vintage Equity T Shares $12 $36 $ 63 $139
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of each period.
1 Year 3 Years 5 Years 10 Years1
CVF Equity Initial Shares $16 $50 $86 $174
CVF Equity Select Shares $11 $34 $60 $132
Vintage Equity T Shares $12 $36 $63 $139
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<PAGE>
2Eight years after purchase, Initial Shares will be automatically converted into
Select Shares. This example assumes conversion of Initial Shares at the end of
year eight. As a result, years nine and ten reflect Select Share expenses. The
conversion will constitute a tax-free exchange for federal income tax purposes.
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions on their
customers.
CVF TOTAL RETURN AND VINTAGE BALANCED; CVF FIXED INCOME AND VINTAGE BOND
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CVF TOTAL RETURN VINTAGE CVF FIXED INCOME VINTAGE
INITIAL SELECT BALANCED INITIAL SELECT BOND
_____________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases None None None None None None
Maximum Sales Charge on Reinvested Dividends None None None None None None
Exchange Fee None None None None None None
Redemption Fee None None None None None None
Maximum Contingent Deferred Sales Charge(CDSC) 4.0% None None 4.0% None None
(As a percent of original purchase price)
</TABLE>
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
CVF TOTAL RETURN VINTAGE CVF FIXED INCOME VINTAGE
INITIAL SELECT BALANCED INITIAL SELECT BOND
_____________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.53% 0.53% 0.75% 0.53% 0.53% 0.55%
12b-1 Distribution Fees1 0.50% 0.00% 0.00% 0.50% 0.00% 0.00%
Shareholder Servicing Fees2 0.25% 0.25% 0.00% 0.25% 0.25% 0.00%
Other Expenses 0.30% 0.30% 0.61% 0.25% 0.25% 0.42%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses after Waivers3 1.58% 1.08% 1.36% 1.53% 1.03% 0.97%
</TABLE>
3Pursuant to the Vintage Funds' Rule 12b-1 Plan, the maximum 12b-1 Distribution
Fees for Vintage Balanced and Vintage Bond are 0.25%. Currently, however, it is
intended that no such amounts will be paid under the Plan by any of such Funds.
Shareholders will be given at least 30 days' notice prior to the payment of any
fees under the Plans.
2Pursuant to the Vintage Funds' Shareholder Servicing Plans, the maximum
Shareholder Servicing Fee is 0.25%. Currently, however, it is intended that no
such amounts will be paid under the Plans by any of such Funds, except as to
Vintage Equity S Shares, which will not be issued in the Reorganization.
Shareholders will be given at least 30 days' notice prior to the payment of any
fees under the Plans.
3Absent the reduction of distribution fees and services fees, "Total Operating
Expenses" as a percentage of average daily net assets would be 1.86% for Vintage
Balanced and 1.47% for Vintage Bond. No fee waivers have been in effect for CVF.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
12
<PAGE>
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). Only Initial Shares of CVF Total
Return and CVF Fixed Income incur a CDSC at redemption which declines to zero
after six years.
1 Year 3 Years 5 Years 10 Years
CVF Total Return Initial Shares $56 $84 $114 $174
CVF Total Return Select Shares $11 $34 $ 60 $132
Vintage Balanced $14 $43 $ 74 $164
CVF Fixed Income Initial Shares $56 $82 $111 $169
CVF Fixed Income Select Shares $11 $33 $ 57 $126
Vintage Bond $10 $31 $ 54 $119
An investor would pay the following expenses on the same $1,000 investment in
CVF Total Return and CVF Fixed Income assuming no redemption at the end of each
period.
1 Year 3 Years 5 Years 10 Years1
CVF Total Return Initial Shares $16 $50 $86 $174
CVF Total Return Select Shares $11 $34 $60 $132
Vintage Balanced $14 $43 $74 $164
CVF Fixed Income Initial Shares $16 $48 $83 $169
CVF Fixed Income Select Shares $11 $33 $57 $126
Vintage Bond $10 $31 $54 $119
4Eight years after purchase, Initial Shares will be automatically converted into
Select Shares. This example assumes conversion of Initial Shares at the end of
year eight. As a result, years nine and ten reflect Select Share expenses. The
conversion will constitute a tax-free exchange for federal income tax purposes.
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions or their
customers.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
CVF shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of CVF shares for shares of Vintage Funds. Likewise,
neither CVF nor Vintage Funds should recognize any gain or loss for federal
income tax purposes through the exchange of CVF assets and liabilities for
shares of Vintage Funds.
13
<PAGE>
Consummation of the Reorganization is subject to the condition that
Vintage Funds and CVF receive an opinion from Cline, Williams, Wright, Johnson &
Oldfather (which opinion has now been received) to the effect that for federal
income tax purposes: (i) the transfer of all of the assets and liabilities of
CVF (the "Acquired Funds") to Vintage Funds in exchange for shares of Vintage
Funds and the distribution to shareholders of the Acquired Funds of the shares
of 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 Vintage Funds on the
distribution of shares of 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 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
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
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 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 Vintage Funds and CVF have conformed their operations to the
requirements of Subchapter M of the Code and, as a result, do not bear any
corporate level federal or state income tax.
SHARES AND SHAREHOLDER RIGHTS
IMG Mutual Funds, Inc. is a Maryland corporation organized on November
16, 1994. The Vintage Funds were created on October 30, 1997, to acquire the
assets and continue the business of the AMCORE Vintage Funds and to acquire the
three similar CVF Portfolios. Each share of a Vintage Fund represents an equal
proportionate interest in it and is entitled to such dividends and distributions
out of the income earned on the assets belonging to it as are declared at the
discretion of the Directors. CVF is also a Maryland corporation and,
accordingly, the characteristics of its shares and rights of its shareholders
are substantially similar to Vintage Funds.
The Charter of Vintage Funds permits it, by resolution of its Board of
Directors, to create new series of common stock relating to new investment
portfolios or to subdivide existing series of Shares into subseries or classes.
Classes could be utilized to create differing expense and fee structures for
14
<PAGE>
investors in the same Vintage Fund. Differences could exist, for example, in the
sales load, Rule 12b-1 fees or service plan fees applicable to different classes
of Shares offered by a particular Vintage Fund. Such an arrangement could enable
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 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 are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held. Shares of each
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 Vintage
Fund will vote together as a single class on matters relating to the Fund's
investment advisory agreement, investment objective and fundamental policies.
Shares of Vintage Funds have non-cumulative voting rights and,
accordingly, the holders of more than 50 percent of Vintage Funds outstanding
shares (irrespective of class) may elect all of the Directors. Shares have no
preemptive rights and only such conversion and exchange rights as the Board may
grant in its discretion, pursuant to the Charter of 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.
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 CVF has operated without regular annual shareholder meetings.
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. 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.
For a detailed description of the characteristics of the shares of CVF
and the rights of its shareholders, see "Organization and Shares of the Funds"
in the July 29, 1997 CVF Prospectus.
15
<PAGE>
CAPITALIZATION
The following tables 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
Assets Outstanding Per Share
As of November 30, 1997:
CVF Equity $ 17.347 1.262 $13.75
Core Stock (1) $ 13.140 1.027 $12.79
AMCORE Equity (1) $391.213 18.883 $20.72
Vintage Equity $ - 0 - - 0 - $ 0.00
Pro Forma Combined $421.700 20.355 $20.72
As of September 30, 1997:
CVF Total Return $ 10.923 0.965 $11.31
AMCORE Balanced (1) $ 44.746 3.188 $14.04
Vintage Balanced $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 55.669 3.966 $14.04
As of October 31, 1997:
CVF Fixed Income $ 10.016 0.984 $10.18
IMG Bond $ 6.374 0.627 $10.17
Vintage Bond $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 16.390 1.612 $10.17
(1) Fund proposed to be acquired in a related transaction; completion of the
Reorganization described herein is contingent upon the acquisition of AMCORE
Equity and AMCORE Balanced being completed.
The foregoing tables assume that all relevant reorganization transactions
occurred on the respective "as of" dates shown above and that nominal capital
was invested in each 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 Vintage Equity, Vintage Balanced
and Vintage Bond, see the accompanying Vintage Funds Prospectuses dated January
14, 1998. For the convenience of CVF shareholders, cross-references to such
Prospectuses are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. No information on per-share income
and capital changes is included in the Vintage Equity and Vintage Balanced
January 14, 1998 Prospectus because Vintage Equity and Vintage Balanced have not
yet commenced substantive operations. Such information is included for Vintage
16
<PAGE>
Bond (formerly IMG Bond Fund) under "Financial Highlights" in the Prospectus for
the IMG Bond Fund, the predecessor of Vintage Bond, dated August 27, 1997. For a
discussion of the Vintage Funds' expenses, see "Proposal 1: Agreement and Plan
of Reorganization--Expense Summary" above and "Expense Summary" in the Vintage
Funds Prospectuses.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the Vintage Funds'
investment objectives and policies, see "Investment Objectives, Policies and
Restrictions" in the Vintage Funds Prospectuses.
DIRECTORS AND OFFICERS. Overall responsibility for management of Vintage Funds
rests with the Board of Directors who are elected by the shareholders of Vintage
Funds. There are currently five Directors, two of whom are "interested persons"
of Vintage Funds within the meaning of that term under the 1940 Act. The
Directors, in turn, elect the officers of Vintage Funds to supervise actively
its day-to-day operations.
The names of the Directors and officers of 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 Vintage Funds
Prospectuses.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as the
Vintage Funds distributor, the services performed by it and its fees, see
"Management and Fees" in the Vintage Funds Prospectuses.
17
<PAGE>
SHARES. For a discussion of voting rights of shares of Vintage Funds, see
"Organization and Shares of the Funds" in the Vintage Funds Prospectuses.
REDEMPTION OF SHARES. For a discussion concerning redemption of shares of
Vintage Funds, see "Purchasing Shares" and "Redeeming Shares" in the Vintage
Funds Prospectuses.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS. For a discussion of the Vintage Funds'
policies with respect to dividends and distributions, see "Distributions and
Taxes" in the Vintage Funds Prospectuses.
EXCHANGE PRIVILEGES. For a discussion of a Vintage Fund shareholder's right to
exchange shares for shares of another IMG managed fund, see "Purchasing Shares -
Exchange Privilege" in the Vintage Funds Prospectuses.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which
Vintage Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to Vintage Funds or other
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 Vintage Equity and Vintage Balanced, which have
not yet commenced operations, but is incorporated by reference as to Vintage
Bond from the IMG Funds Statement of Additional Information, dated August 27,
1997, relating to IMG Bond Fund, the predecessor of Vintage Bond.
CAPITAL VALUE FUND, INC.
GENERAL. Capital Value Fund, Inc. ("CVF") is also a Maryland corporation which
operates as an open-end diversified management investment company. For a general
discussion of CVF, see the accompanying CVF Prospectus dated July 29, 1997. For
the convenience of shareholders, certain cross-references to such Prospectus are
set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. The CVF Prospectus contains
information on per share income and capital changes, under the heading
"Financial Highlights." For a discussion of CVF's expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Expense
Summary" in the CVF Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of CVF's investment
objectives and policies, see "Investment Objective, Policies and Restrictions"
in the CVF Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of CVF rests with
its Board of Directors, who are elected by the shareholders. The Directors elect
the officers to supervise actively the day-to-day operations.
The names of the Directors and officers, their addresses, and principal
occupations during the past five years are as follows:
18
<PAGE>
William C. Knapp, II President, AmerUs Properties, Inc.
Director
*Richard C. Anderson CFO & Treasurer, Wellmark, Inc. d/b/a Wellmark
Director Blue Cross and Blue Shield of Iowa
Thomas K. Koehn President, The Waldinger Corporation
Director
Marvin J. Walter President, Dayton Road Development
Director Corporation/W & G Marketing Company, Inc.
*David W. Miles Senior Managing Director, Investors Management
President-Director Group and IMG Financial Services, Inc.
*Carole E. Sours Director, Employee Benefit Services, Wellmark,
Vice President Inc., d/b/a Wellmark Blue Cross and Blue Shield
Treasurer of Iowa
*Ruth L. Prochaska Controller/Compliance Officer, Investors
Secretary Management Group and IMG Financial Services, Inc.
*An interested person as defined in the Investment Company Act of 1940.
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of IMG and Wellmark
Capital Value, Inc., the services performed by them and their fees, see
"Management and Fees" in the CVF Prospectus.
DISTRIBUTOR. For a discussion of IMG Financial Services, Inc.'s activities as
distributor, see "Management and Fees" in the Acquired Funds Prospectus.
SHARES. For a discussion of the significant attributes of CVF shares, see
"Organization and Shares of the Funds" in CVF Prospectus.
REDEMPTION OR REPURCHASE OF SHARES. For a discussion concerning redemption or
repurchase of shares of CVF, see "Redeeming Shares" in CVF Prospectus.
DIVIDENDS AND DISTRIBUTIONS. For a discussion of CVF policies with respect to
dividends and distributions, see "Distributions and Taxes" in CVF Prospectus.
EXCHANGE PRIVILEGES. For a discussion of a CVF shareholder's right to exchange
shares of a CVF Portfolio, see "Shareholder Services" in the CVF Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which CVF
is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to CVF may be addressed by
writing to IMG Financial Services, Inc., 2203 Grand Avenue, Des Moines, Iowa
50312-5338, or calling toll-free 800-798-1819.
19
<PAGE>
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management's discussion of the
performance of CVF is found in the annual report of CVF, which is incorporated
by reference into the Statement of Additional Information relating to the July
29, 1997 Prospectus of CVF.
PROPOSAL 2: APPROVAL OF SUB-ADVISORY AGREEMENT
The sole purpose of this Proposal is to permit shareholders of CVF to
consider the New Agreement (herein described) to take effect following the
consummation of the transactions contemplated by an Agreement and Plan of
Reorganization by and among AMCORE Financial, Inc., IMG Acquisition, Inc.,
Investors Management Group, David W. Miles and Mark A. McClurg, dated September
30, 1997 (the "Acquisition Agreement"). Pursuant to the Acquisition Agreement,
Investors Management Group will become a wholly owned subsidiary of AMCORE
Financial Inc. This Proposal will be adopted if approved by the lesser of (a)
more than 50% of the outstanding shares of each such Fund or (b) 66 2/3% of the
shares of each CVF Fund voting at a meeting at which a majority of such shares
are represented in person or by proxy.
THE INVESTMENT ADVISOR AND SUB-ADVISOR
Wellmark Capital Value, Inc. has served as the investment advisor, and
Investors Management Group has served as sub-advisor, to the CVF Funds since
they commenced operations. Investors Management Group is a federally registered
investment advisor organized in 1982. Since then, its principal business has
been providing continuous investment management to pension and profit sharing
plans, insurance companies, public agencies, banks, endowments and charitable
institutions, mutual funds, individuals and others. As of November 30, 1997,
Investors Management Group had approximately $1.6 billion in equity, fixed
income and money market assets under management.
Investors Management Group is also the investment advisor of Vintage
Funds, Iowa Schools Joint Investment Trust, Iowa Public Agency Investment Trust,
Liquid Assets Fund, Inc., Municipal Assets Fund, Inc., and engages in certain
other activities unrelated to investment companies. David W. Miles is President,
Treasurer and Director and Mark A. McClurg is Vice President, Secretary and
Director of Investors Management Group. Each directly owns 50% of the
outstanding Class A voting securities of Investors Management Group and the IMG
ESOP owns 100% of the outstanding ESOP voting securities. David W. Miles owns an
additional 13% of the total outstanding voting securities beneficially through
the ESOP, and Mark A. McClurg beneficially owns an additional 5% of the total
outstanding voting securities. Mr. Miles and Mr. McClurg intend to devote
substantially all their time to the operation of Investors Management Group.
Their address is 2203 Grand Avenue, Des Moines, Iowa 50312-5338.
THE ACQUISITION
Pursuant to the Acquisition Agreement, Investors Management Group will
become a wholly owned subsidiary of AMCORE Financial, Inc. (the "Acquisition").
Investors Management Group will be the surviving organization and will continue
to be headquartered in the historic Crawford Mansion located in Des Moines,
Iowa. AMCORE Financial, Inc. is a publicly traded northern Illinois financial
services holding company with assets exceeding $3.5 billion. AMCORE Financial,
Inc. presently owns an investment advisory firm called AMCORE Capital
Management, which is primarily known for its equity management. AMCORE Capital
20
<PAGE>
Management is the advisor to the nationally recognized AMCORE Vintage Mutual
Funds, a family of seven funds investing in stocks and bonds to meet various
investor objectives. AMCORE Capital Management intends to merge operations and
to operate as Investors Management Group after the Acquisition.
Under the terms of the Acquisition Agreement, each of Investors
Management Group's ESOP shares will be converted into the right to receive
2.0038 shares of AMCORE Financial, Inc. common stock and each of Investors
Management Group's Class A common shares will be converted into (i) the right to
receive 0.9808 shares of AMCORE Financial, Inc. common stock and (ii) the
contingent right to receive additional AMCORE shares based on certain
performance benchmarks in 1998, 1999 and 2000, with the shares issued in 1999,
2000 and 2001. The Acquisition is expected to be consummated on or about
February 1, 1998, and is subject to certain closing conditions, including
certain regulatory approvals and the approval of shareholders of Investors
Management Group.
Investors Management Group does not anticipate any reduction in the
quality of services now provided to the funds it serves. As a condition of the
Acquisition, certain officers of Investors Management Group have agreed to enter
into employment agreements with AMCORE Financial, Inc., which are intended to
assure that the services of such officers are available to Investors Management
Group (and thus to CVF) after the Acquisition.
As a result of the Acquisition, Mr. Miles will become Chief Operating
Officer and Mr. McClurg will become Managing Director for Client Development for
AMCORE Investment Group, N.A., a trust subsidiary owned by AMCORE Financial,
Inc., in addition to retaining their responsibilities with Investors Management
Group. Jay Evans, presently Chief Investment Officer of AMCORE Capital
Management, Inc., will assume that role at Investors Management Group.
THE SUB-ADVISORY AGREEMENT
The Directors of CVF are proposing that shareholders approve a new sub-
advisory agreement (the "New Agreement") between the Funds and Investors
Management Group to be effective upon consummation of the Acquisition. In
anticipation of the Acquisition, a majority of the Directors (including a
majority of the "Disinterested Directors") approved the New Agreement on October
28, 1997. The shareholders of CVF are being asked to approve the New Agreement.
THE CURRENT SUB-ADVISORY AGREEMENT. The existing Sub-advisory Agreement
(the "Current Agreement") was last approved by a majority of the Disinterested
Directors, voting in person at a meeting called for that purpose on September
24, 1997. The Current Agreement provides that the Sub-Advisor will supply
investment research and portfolio management, including adequate personnel to
market and supervise continuously the investment programs of the CVF Funds, the
administration of the investment programs and the composition of the portfolios.
The Current Agreement provides that the Sub-advisor shall not be liable
for any error of judgment or of law, or for any loss suffered by CVF in
connection with any matters to which the Current Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
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part of the sub-advisor in the performance of its obligations and duties, or by
reason of its reckless disregard of obligations or duties under the Current
Agreement. The Current Agreement may be terminated at any time by either party
without the payment of any penalty upon ninety (90) days written notice, and
automatically terminates in the event of its assignment.
For the fiscal year ended March 31, 1997, CVF Equity, CVF Total Return
and CVF Fixed Income paid $98,482, $79,180, and $40,739, respectively, for
services provided, under the Current Agreement.
CVF pays all other expenses incurred in its operation including, but
not limited to, direct charges relating to the purchase and sale of its
portfolio securities, interest charges, fees and expenses of legal counsel and
independent auditors, taxes and governmental fees, expenses of regular and
special meetings of the Directors, fees and disbursements of custodians,
insurance premiums, indemnification and other expenses not expressly provided
for in the Current Agreement and any extraordinary expenses of a nonrecurring
nature.
THE NEW SUB-ADVISORY AGREEMENT. The Board of Directors approved the
proposed New Agreement between the Funds and Investors Management Group on
October 28, 1997. The form of the proposed New Agreement is substantially
identical to the Current Agreement. There are no material differences between
the Current Agreement and the New Agreement.
The sub-advisory fee as a percent of net assets payable by the Funds
will be the same under the New Agreement as under the Current Agreement, that is
0.43 percent of the average daily net assets. If the sub-advisory fee under the
New Agreement had been in effect for the Fund's most recently completed fiscal
year, contractual fees payable to the Sub-advisor by the Funds would have been
identical to those payable under the Current Agreement.
In connection with approving the New Agreement, the Directors held a
meeting on October 28, 1997. At this meeting, the Directors considered the
possible effects of the Acquisition on CVF and Investors Management Group and
its ability to provide investment advisory services with respect to CVF. In
evaluating the New Agreement, the Directors took into account that the Current
Agreement and the New Agreement, including the terms relating to the services to
be provided thereunder by the Sub-advisor and the fees and expenses payable by
the Funds are identical. The Directors considered the skills and capabilities of
the Sub-advisor and the representation that no material change was planned in
the current management or facilities of the Sub-advisor as a result of the
Acquisition. The Directors considered the continued employment of members of
senior management of the Sub-advisor pursuant to future employment contracts to
be important to help assure the continuity of the personnel primarily
responsible for maintaining the quality of investment advisory and other
services for CVF. The Directors considered the possible benefits the Sub-advisor
may receive as a result of the Acquisition.
The Directors, including a majority of the Disinterested Directors,
concluded that if the Acquisition occurs, entry by CVF into the New Agreement
would be in the best interest of CVF and the shareholders of the Funds. The
Board of Directors unanimously approved the New Agreement and recommended such
agreement for approval by the shareholders. The New Agreement will take effect
upon the later to occur of (i) obtaining of shareholder approval or (ii) closing
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of the Acquisition. The New Agreement will continue in effect until December 31,
1999, and thereafter for successive annual periods as long as such continuance
is approved in accordance with the 1940 Act. In the event that shareholders of
CVF do not approve the New Agreement and the Acquisition is consummated, the
Board of Directors would be forced to seek investment sub-advisory services from
another advisory organization. In the event the Acquisition is not consummated,
the Sub-advisor would continue to serve pursuant to the terms of the Current
Agreement.
In the event that the Reorganization described in Proposal 1 above is
consummated, the New Agreement would be superseded by an investment advisory
agreement between Investors Management Group and IMG Mutual Funds, Inc. Wellmark
Capital Value, Inc. would not provide investment advisory services to IMG Mutual
Funds, Inc.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Directors of CVF for
use at the Special Meeting of Shareholders to be held on February 13, 1998 (the
"Meeting"). It is expected that the solicitation of proxies by the Board of
Directors will be primarily by mail. CVF's officers may also solicit proxies by
telephone facsimile transmission or personal interview.
The following table gives the total number of shares of CVF outstanding
at the close of business on December 31, 1997, the record date for the meeting.
CVF Equity ............................... 1,489,846.510
CVF Total Return ......................... 1,130,535.817
CVF Fixed Income ......................... 1,022,279.140
Each shareholder of record on the record date is entitled to one vote
for each share owned and a fractional vote for each fractional share owned on
each matter presented for shareholder vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares presented thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. If no specification is
made, the proxy will be voted FOR all enumerated proposals. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to the Funds, c/o Secretary, 2203 Grand Avenue, Des Moines, Iowa
50312-5338, a written notice of revocation or a subsequently executed proxy or
by attending the meeting and electing to vote in person.
SHAREHOLDER AND BOARD APPROVAL
The Agreement and Plan of Reorganization will not become effective
unless approved by a majority of outstanding shares of each CVF Portfolio. The
New Agreement must be approved by each CVF Portfolio by a "majority" vote, as
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defined in the 1940 Act and described in Proposal 2 above. Under Maryland law,
abstentions do not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. Broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be deemed to be abstentions. An abstention
will have the same effect as casting a vote against the Reorganization.
The vote of the shareholders of 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 CVF
beneficially owned, individually and as a group, less than 1% of the shares of
CVF. As of the record date, Wellmark Community Insurance, Inc., Wellmark, Inc.,
and IASD Health Services Corporation Savings and Investment Plan directly or
indirectly owned approximately 270,746.962 shares (18.2%), 532,142.790 shares
(35.7%), and 568,121.981 shares (38.1%), respectively, of the outstanding shares
of CVF Equity; 63,645.663 shares (5.6%), 637,912.321 shares (56.4%) and
387,367.376 shares (34.3%), respectively, of CVF Total Return; and 76,553.148
shares (7.5%), 799,698.698 shares (78.2%) and 117,814.711 shares (11.5%),
respectively, of the outstanding shares of CVF Fixed Income. No other person or
persons is believed to own of record or beneficially 5% or more of the
outstanding shares of either CVF or a CVF Fund as of December 31, 1997.
QUORUM
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve a
particular proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
in favor of such adjournments, and will vote those proxies required to be voted
AGAINST such proposal against any adjournment. Under the Charter of CVF, a
quorum is constituted by the presence in person or by proxy of the holders of 33
1/3% of the aggregate outstanding shares of the Portfolios entitled to vote at
the Meeting. If a proxy is properly executed and returned and is marked with an
abstention, the shares represented thereby will be considered to be present at
the Meeting for the purpose of determining the existence of a quorum for the
transaction of business.
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION
This combined Proxy Statement/Prospectus and the related Statement of
Additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which IMG Mutual
Funds, Inc., Capital Value Fund, Inc., respectively, have filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933 and
the 1940 Act to which reference is hereby made. The SEC file number for the CVF
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Prospectus and the related Statement of Additional Information which are
incorporated by reference herein is Registration No. 33-54202. The SEC file
number for the Vintage Funds Prospectuses and related Statements of Additional
Information which are incorporated by reference herein is Registration No.
33-81998.
IMG Mutual Funds, Inc. and Capital Value Fund, Inc. are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, and in accordance therewith, file reports and other information with the
SEC. Proxy material, reports, proxy and information statements, registration
statements and other information can be inspected and copied at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such filings may also be available at the following SEC
regional offices: Northwestern Atrium, 500 West Madison Street, Suite 1400,
Chicago, IL 60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and
73 Tremont Street, Suite 600, Boston, MA 02108-3912. Copies of such materials
can also be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549, at
prescribed rates.
OTHER BUSINESS
The Fund's Board of Directors knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
the intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares in the
Reorganization will be passed upon for IMG Mutual Funds, Inc. by Ober, Kaler,
Grimes & Shriver, 120 E. Baltimore Street, Baltimore, Maryland 21202. Certain
tax matters will be passed upon for Capital Value Fund, Inc. by Cline, Williams,
Wright, Johnson & Oldfather, 1900 First Bank Building, 233 South 13th Street,
Lincoln, Nebraska 68508. Cline, Williams, Wright, Johnson & Oldfather acts as
legal counsel to IMG Mutual Funds, Inc., Investors Management Group, and other
funds and entities managed by Investors Management Group.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this combined Proxy Statement/Prospectus or by
telephoning 800-795-1819.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT made as of the 30th day of October 1997, is made by and
among IMG Mutual Funds, Inc., a Maryland corporation ("IMG Funds"), Capital
Value Fund, Inc., a Maryland Corporation ("CVF"), Wellmark Capital Value, Inc.,
an Iowa corporation ("WCV") and Investors Management Group, Ltd. an Iowa
corporation ("IMG").
WITNESSETH:
WHEREAS the Board of Directors of IMG Funds, and the Board of Directors
of CVF, each an open-end management investment company, deem it advisable that
IMG Funds acquire all of the assets of CVF in exchange for the assumption by IMG
Funds of all of the liabilities of CVF and shares issued by IMG Funds which are
thereafter to be distributed by CVF pro rata to its shareholders in complete
liquidation and termination of CVF and in exchange for all of CVF's outstanding
shares with the intent that the transactions described herein shall qualify as a
tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue Code
of 1986;
NOW THEREFORE, in consideration of the mutual promises herein
contained, each of the parties hereto represents and warrants to, and agrees
with each of the other parties as follows:
1. IMG Funds hereby represents, warrants and covenants to the parties
that:
(a) IMG Funds is a corporation with transferable shares duly organized
and validly existing under the laws of Maryland and has full power to own its
properties and assets and to carry on its business as such business is now being
conducted.
(b) IMG Funds' statement of assets and liabilities as of April 30,
1997, and the related statements of operations and changes in net assets for the
fiscal year ended April 30, 1997, all as audited by KPMG Peat Marwick LLP, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis. Such statement of assets and liabilities fairly
presents the financial position and net assets of IMG Funds as of such date and
such statements of operations and changes in net assets fairly present the
results of its operations for the period covered thereby;
(c) There are no claims, actions, suits or proceedings pending or, to
its knowledge, threatened against or affecting IMG Funds or its properties or
business or its right to issue and sell shares, or which would prevent or hinder
consummation of the transactions contemplated hereby, and it is not charged with
or, to IMG Funds' knowledge, threatened with any charge or investigation of, any
violation of any provision of any federal, state or local law or any
administrative ruling or regulation relating to any aspect of its business or
the issuance or sale of its shares;
(d) IMG Funds is not a party to or subject to any judgment or decree or
order entered in any suit or proceeding brought by any governmental agency or by
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any other person enjoining it in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any property or the
conduct of business by it or the issuance or sale of its shares in any area;
(e) IMG Funds has filed all tax returns required to be filed, has no
liability for any unpaid taxes and has made a proper election to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986 (the "Code") for each of its taxable years. IMG Funds has not committed any
action or failed to perform any necessary action that would render invalid its
election to be treated as a regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this Agreement on
behalf of IMG Funds does not, and the consummation of the transactions
contemplated hereby will not violate, or conflict with any provision of IMG
Funds' Charter or By-Laws, or any provision of, or result in the acceleration of
any obligation under, any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which it is party or by which it or any
of its assets is bound, or violate or conflict with any other material
contractual or statutory restriction of any kind or character to which it is
subject;
(g) This Agreement has been duly authorized, executed, and delivered by
IMG Funds and constitutes a valid and binding agreement of IMG Funds and all
governmental and other approvals required for IMG Funds to carry out the
transactions contemplated hereunder have been or on or prior to the Closing Date
(as herein defined) will have been obtained. IMG Funds will comply with all
applicable laws and regulations in carrying out the transactions contemplated
hereunder, including, without limitation, Section 15(f) of the Investment
Company Act of 1940, as amended (the "1940 Act");
(h) IMG Funds is registered under the 1940 Act as an open-end,
diversified management investment company. IMG Funds is currently in compliance
with the 1940 Act and the rules of the Securities and Exchange Commission
promulgated thereunder.
(i) On the Closing Date, IMG Funds will own its assets free and clear
of all liens, claims, charges, options and encumbrances;
(j) On or before the Closing Date, IMG Funds will have created and
registered shares of two new series to be designated the "Vintage Equity Fund"
series of IMG Funds (or some other name) and the "Vintage Balanced Fund" series
of IMG Funds (or some other name), and shares of the Vintage Equity Fund series
will represent interests in a portfolio of securities managed under investment
objectives, policies and restrictions substantially identical to the Class A or
Initial Shares Class and the Class B or Select Shares Class of the Equity
Portfolio series of CVF, and shares of the Vintage Balanced Fund series will
represent interests in a portfolio of securities managed under investment
objectives, policies and restrictions substantially identical to the Class A or
Initial Shares Class and the Class B or Select Shares Class of the Total Return
Portfolio series of CVF. The Vintage Equity Fund series and the Vintage Balanced
Fund series, together with the IMG Bond Fund series of IMG Funds (which shall
change it's name to the "Vintage Bond Fund" series of IMG Funds, are
collectively referred to herein as the "Vintage Clone Funds" series).
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(k) On the Closing Date the shares of the Vintage Clone Funds to be
delivered to CVF hereunder shall have been registered under the Securities Act
of 1933, as amended (the "1933 Act") and duly authorized, and, when issued and
delivered pursuant to this Agreement, will be validly issued, fully paid and
nonassessable; and IMG Funds will comply with all applicable laws in connection
with the issuance of such shares and shall not be subject to a stop-order of the
Securities and Exchange Commission in connection therewith; and
(l) On the Closing Date, the shares of the Vintage Clone Funds to be
delivered to CVF hereunder shall have been registered with the appropriate
securities administrator or agency of each state under whose securities law such
registration is required.
2. Except to the extent that IMG or IMG Funds has knowledge, has
received notice or should (because of any legal or contractual duty performed by
IMG on behalf of or for CVF) know of any facts, circumstances or events to the
contrary or inconsistent with the following representations and warranties. CVF
hereby represents, warrants and covenants to IMG Funds that:
(a) CVF is a corporation with transferable shares duly organized and
validly existing under the laws of Maryland and has full power to own its
properties and assets and to carry on its business as such business is now being
conducted. The outstanding shares of CVF stock are currently divided into three
classes, each representing a separate investment portfolio, namely, the Equity
Portfolio, Fixed Income Portfolio and Total Return Portfolio.
(b) The statement of assets and liabilities as of March 31, 1997, and
the related statements of operations and changes in net assets for the fiscal
year ended March 31, 1997 of each CVF Portfolio, all as audited by KPMG Peat
Marwick LLP, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis. Such statement of assets and
liabilities fairly presents the financial position and net assets as of such
date and such statements of operations and changes in net assets fairly present
the results of its operations for the period covered thereby;
(c) There are no claims, actions, suits or proceedings pending or, to
its knowledge, threatened against or affecting CVF or its properties or business
or its right to issue and sell shares, or which would prevent or hinder
consummation of the transactions contemplated hereby, and it is not charged with
or, to CVF's knowledge, threatened with any charge or investigation of, any
violation of any provision of any federal, state or local law or any
administrative ruling or regulation relating to any aspect of its business or
the issuance or sale of its shares;
(d) CVF is not a party to or subject to any judgment or decree or order
entered in any suit or proceeding brought by any governmental agency or by any
other person enjoining it in respect of, or the effect of which is to prohibit,
any business practice or the acquisition of any property or the conduct of
business by it or the issuance or sale of its shares in any area;
(e) CVF has filed all tax returns required to be filed, has no
liability for any unpaid taxes and has made a proper election to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986 (the "Code") for each of its taxable years. CVF has not committed any
action or failed to perform any necessary action that would render invalid its
election to be treated as a regulated investment company for any of its taxable
years;
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(f) The authorization, execution and delivery of this Agreement on
behalf of CVF does not, and the consummation of the transactions contemplated
hereby will not violate, or conflict with any provision of CVF's 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
CVF and constitutes a valid and binding agreement of CVF and all governmental
and other approvals required for CVF to carry out the transactions contemplated
hereunder have been or on or prior to the Closing Date (as herein defined) will
have been obtained;
(h) On the Closing Date, CVF and each CVF Portfolio will own its assets
free and clear of all liens, claims, charges, options and encumbrances and,
except for the various agreements listed in Part C of CVF's current Form N-1A
Registration Statement under the 1933 Act and 1940 Act, there will be no
material contracts or agreements (other than this Agreement) outstanding to
which CVF is a party or to which it is subject;
(i) On the Closing Date, CVF will have full right, power and authority
to sell, assign and deliver the assets to be sold, assigned, transferred and
delivered to IMG Funds hereunder, and upon delivery and payment for such assets,
IMG Funds will acquire good and marketable title thereto free and clear of all
liens, claims, charges, options and encumbrances;
(j) CVF will declare to shareholders of record of each CVF Portfolio on
or prior to the Closing Date a dividend or dividends which, together with all
previous such dividends, shall have the effect of distributing to the
shareholders all of the investment company taxable income of each CVF Portfolio
(computed without regard to any deduction for dividends paid) and all of the net
realized capital gains, if any, as of the Closing Date; and
(k) CVF will, from time to time, as and when requested by IMG Funds,
execute and deliver or cause to be executed and delivered, all such assignments
and other instruments, and will take and cause to be taken such further action,
as IMG Funds may deem necessary or desirable in order to vest in and confirm to
IMG Funds, title to and possession of all the assets of CVF to be sold,
assigned, transferred and delivered hereunder and otherwise to carry out the
intent and purpose of this Agreement.
3. Based on the respective representations and warranties, subject to
the terms and conditions contained herein, CVF agrees to transfer to IMG Funds
and IMG Funds agrees to acquire from CVF, all the assets of CVF on the Closing
Date and to assume from CVF all of the liabilities of CVF in exchange for the
issuance of the number and class of shares of Vintage Clone Funds provided in
Section 4 which will be subsequently distributed pro rata to the shareholders of
CVF in complete liquidation and termination of CVF and in exchange for all of
CVF's outstanding shares as provided in Section 6. CVF shall not issue, sell or
transfer any of its shares after the Closing Date, and only redemption requests
received by CVF in proper form prior to the Closing Date shall be fulfilled by
CVF. Redemption requests received by CVF thereafter shall be treated as requests
for redemption of those shares of Vintage Clone Funds allocable to the
shareholder in question as provided in Section 6 of this Agreement.
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4. On the Closing Date, IMG Funds will issue to CVF 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
Equity Fund series, 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
CVF that are allocable to the Class A or Initial Shares Class and the Class B or
Select Share Class of the Equity Portfolio series of CVF;
(b) IMG Funds will issue that number of Class B shares of the Vintage
Balanced Fund series, 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
CVF that are allocable to the Class A or Initial Shares Class and the Class B or
Select Shares Class of the Total Return Portfolio series of CVF;
(c) IMG Funds will issue that number of Class A Shares of the Vintage
Bond Fund series, 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 CVF
that are allocable to the Class A or Initial Shares Class and the Class B or
Select Shares Class of the Fixed Income Portfolio series of CVF.
The aggregate value of the net assets of CVF allocable to the various
classes and series of CVF, and the net asset value of the various classes of the
Vintage Clone Funds shall be determined in accordance with the then current
prospectuses for IMG Funds as of 3:00 p.m. on the business day immediately
preceding the Closing Date.
5. The closing of the transaction contemplated in this Agreement (the
"Closing") shall be held at the offices of IMG, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338 (or at such other place as the parties hereto may agree) at 3:00
p.m. Central Standard Time on December 31, 1997, or on such earlier or later
date as the parties hereto may mutually agree. The date on which the Closing is
to be held as provided in this Agreement shall be known as the "Closing Date".
In the event that on the Closing Date (a) the New York Stock Exchange
is closed for other than customary week-end and holiday closings or (b) trading
on said Exchange is restricted or (c) as emergency exists as a result of which
it is not reasonably practicable for either the Vintage Clone Funds or the CVF
Portfolios to fairly determine the value of their respective assets, the Closing
Date shall be postponed until the first business day after the day on which
trading shall have been fully resumed.
6. As soon as practicable after the Closing Date, CVF shall (a)
distribute on a pro rata basis (i) to the shareholders of record of CVF Equity
Portfolio at the close of business on the Closing Date the shares of the Vintage
Equity Fund received by CVF at the Closing; (ii) to the shareholders of record
of CVF Total Return Portfolio at the close of business on the Closing Date the
shares of Vintage Balanced Fund received by CVF at the Closing; and (iii) to the
shareholders of record of CVF Fixed Income Portfolio at the close of business on
the Closing Date the shares of Vintage Bond Fund received by CVF at the Closing;
and (b) be liquidated and dissolved in accordance with applicable law and its
Articles of Incorporation.
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For purposes of the distribution of shares of the Vintage Clone Funds
to shareholders of the CVF Portfolios, IMG Funds shall credit on the books of
each Vintage Clone Fund an appropriate number of shares of such Vintage Clone
Fund to the account of each shareholder of the corresponding CVF Portfolio whose
shares are (a) not represented by certificates upon the distribution of such
Vintage Clone Fund shares and (b) represented by certificates, only upon
surrender of such certificates. No certificates will be issued for shares of the
Vintage Clone Funds. After the Closing Date and until surrendered, each
outstanding certificate which, prior to the Closing Date, represented shares of
a CVF Portfolio, shall be deemed for all purposes of IMG Funds' 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 CVF Portfolio as provided above.
7. Subsequent to the execution of this Agreement and prior to the
Closing Date, CVF shall deliver to IMG Funds a list setting forth the assets to
be assigned, delivered and transferred by each CVF Portfolio to IMG Funds,
including the securities then owned by each such CVF Portfolio and the
respective federal income tax basis (on an identified cost basis) thereof, and
the liabilities to be assumed by IMG Funds pursuant to this Agreement.
8. All of CVF's portfolio securities shall be delivered by CVF's
custodian on the Closing Date to IMG Funds or its custodian, either endorsed in
proper form for transfer in such condition as to constitute good delivery
thereof in accordance with the practice of brokers or, if such securities are
held in a securities depository within the meaning of Rule 17f-4 under the 1940
Act, transferred to an account in the name of IMG Funds or its custodian with
said depository. All cash to be delivered pursuant to this Agreement shall be
wire transferred from CVF's account at its custodian to IMG Funds' account at
its custodian. If on the Closing Date CVF is unable to make good delivery
pursuant to this Section 8 to IMG Funds' custodian of any of CVF's portfolio
securities because such securities have not yet been delivered to CVF's
custodian by its broker or by the transfer agent for such securities, then the
delivery requirement of this Section 8 with respect to such securities shall be
waived, and CVF shall deliver to IMG Funds' custodian on or by said Closing Date
with respect to said undelivered securities executed copies of an agreement of
assignment in a form satisfactory to IMG Funds, and a due bill or due bills in
form and substance satisfactory to the custodian, together with such other
documents including brokers' confirmations, as may be reasonably required by IMG
Funds.
9. The obligations of IMG Funds under this Agreement shall be subject
to receipt by IMG Funds on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of Directors of CVF
and the shareholders of each CVF Portfolio authorizing the execution of this
Agreement by CVF and the transactions contemplated hereunder, certified by the
Secretary or Assistant Secretary of CVF;
(b) A certificate of the Secretary or Assistant Secretary of CVF as to
the signatures and incumbency of its officers who executed this Agreement on
behalf of CVF and any other documents delivered in connection with the
transactions contemplated thereby on behalf of CVF;
(c) A certificate of an appropriate officer of CVF as to the
fulfillment of all agreements and conditions on its part to be fulfilled
hereunder at or prior to the Closing Date and to the effect that the
representations and warranties of CVF are true and correct in all material
respects at and as of the Closing Date as if made at and as of such date; and
31
<PAGE>
(d) Such other documents, including an opinion of counsel, as IMG Funds
may reasonably request to show fulfillment of the purposes and conditions of
this Agreement.
10. The obligations of CVF under this Agreement shall be subject to
receipt by CVF on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of Directors of IMG
Funds authorizing the execution of this Agreement and the transactions
contemplated hereunder, certified by the Secretary or Assistant Secretary of IMG
Funds;
(b) A certificate of the Secretary or Assistant Secretary of IMG Funds
as to the signatures and incumbency of its officers who executed this Agreement
on behalf of IMG Funds and any other documents delivered in connection with the
transactions contemplated thereby on behalf of IMG Funds;
(c) A certificate of an appropriate officer of IMG Funds as to the
fulfillment of all agreements and conditions on its part to be fulfilled
hereunder at or prior to the Closing Date and to the effect that the
representations and warranties of IMG Funds are true and correct in all material
respects at and as of the Closing Date as if made at and as of such date; and
(d) Such other documents, including an opinion of counsel, as CVF may
reasonably request to show fulfillment of the purposes and conditions of this
Agreement.
11. The obligations of the parties under this Agreement shall be
subject to:
(a) Any required approval, at a meeting duly called for the purpose, of
the holders of the outstanding shares of each CVF Portfolio, of this Agreement
and the transactions contemplated hereunder.
(b) Approval by the shareholders of each of the Existing Vintage Funds
of the acquisition of the assets thereof by the corresponding Vintage Clone
Fund.
(c) The right to abandon and terminate this Agreement, if either CVF or
IMG Funds believes that the consummation of the transactions contemplated
hereunder would not be in the best interests of its shareholders.
12. Except as expressly provided otherwise in this Agreement, IMG will
pay or cause to be paid all out-of-pocket fees and expenses incurred by CVF or
IMG Funds in connection with the transactions contemplated under this Agreement,
including, but not limited to, accountants' fees, legal fees, registration fees,
filing fees, printing expenses, transfer taxes (if any) and the fees of banks,
custodians and transfer agents. This obligation shall survive the termination or
expiration of this Agreement regardless of the consummation of the transactions
contemplated hereunder. WCV shall not be responsible for any fees, costs,
expense associated with the transaction contemplated herein.
13. This Agreement may be amended by an instrument executed by the duly
authorized officers of CVF, WCV, IMG and IMG Funds at anytime, except that after
approval by the shareholders of CVF no amendment may be made with respect to the
32
<PAGE>
Agreement which in the opinion of the Board of Directors of CVF materially
adversely affects the interests of the shareholders of CVF. At any time CVF, IMG
Funds or WCV may by written instrument signed by it (i) waive any inaccuracies
in the representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
14. In addition to the right to terminate this Agreement described in
Section 11, this Agreement may be terminated and the plan described in the
Agreement abandoned at any time prior to the Closing Date, whether before or
after action thereon by the shareholders of CVF, and notwithstanding favorable
action by such shareholders, by mutual consent of the Board of Directors of IMG
Funds and the Board of Directors of CVF. This Agreement may also be terminated
by action of the Board of Directors of IMG Funds or the Board of Directors of
CVF, if:
(a) The plan described in the Agreement shall not have become effective
by April 1, 1998 (hereinafter called the "Final Date") unless such Final Date
shall have been changed by mutual agreement; or
(b) Either CVF or IMG Funds shall, at the Final Date, have failed to
comply with any of its agreements contained herein; or
(c) Prior to the Final Date any one or more of the conditions to the
obligations of IMG Funds or CVF contained in this Agreement shall not be
fulfilled to the reasonable satisfaction of IMG Funds and its counsel or CVF and
its counsel or it shall become evident to IMG Funds or CVF that any of such
conditions are incapable of being fulfilled.
15. This Agreement shall bind and inure to the benefit of the parties
hereto and is not intended to confer upon any other person any rights or
remedies hereunder.
16. The parties hereto represent and warrant that they have not
employed any broker, finder or intermediary in connection with this transaction
who might be entitled to a finder's fee or other similar fee or commission.
17. All prior or contemporaneous agreements and representations are
hereby merged into this Agreement, which constitutes the entire contract between
the parties hereto.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of Iowa.
19. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more of the counterparts has been signed by all parties hereto.
20. CVF shall indemnify, defend and hold harmless IMG Funds, its
officers, directors, employees and agents against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses incurred
in defending claims or liabilities, whether or not resulting in any liability to
the IMG Funds, its officers, directors, employees or agents, arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
33
<PAGE>
prospectus or registration statement for CVF, as filed with the Securities and
Exchange Commission or any state, or any amendment or supplement thereto, or any
application prepared by or on behalf of CVF and filed with any state regulatory
agency in order to register or qualify shares of CVF under the securities laws
thereof, or in any information provided by CVF included in any registration
statement filed by IMG Funds with the Securities and Exchange Commission or any
state or any amendment or supplement thereto; or which shall arise out of or be
based upon any omission or alleged omission to state therein a material fact
required to be stated in any such prospectus, registration statement or
application necessary to make the statements therein not misleading; provided
however, that CVF shall not be required to indemnify or hold harmless IMG Funds
from any liability hereunder arising from any such alleged untrue statement,
omission or other act, caused by, prepared by, or committed by IMG on CVF's
behalf or for which IMG is legally or contractually responsible. This indemnity
provision shall survive the termination of this Agreement.
21. IMG Funds shall indemnify, defend and hold harmless CVF, its
officers, trustees, employees and agents against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses incurred
in defending claims or liabilities, whether or not resulting in any liability to
CVF, its officers, trustees, employees or agents, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus or registration statement for IMG Funds, as filed with the Securities
and Exchange Commission or any state, or any amendment or supplement thereto, or
any application prepared by or on behalf of IMG Funds and filed with any state
regulatory agency in order to register or qualify shares of IMG Funds under the
securities laws thereof; or which shall arise out of or be based upon any
omission or alleged omission to state therein a material fact required to be
stated in any such prospectus, registration statement or application necessary
to make the statements therein not misleading; provided, however, IMG Funds
shall not be required to indemnify CVF, its officers, directors, employees and
agents against any loss, claim, demand, liability or expense arising out of any
information provided by CVF included in any registration statement filed by IMG
Funds with the Securities and Exchange Commission or any state, or any amendment
or supplement thereto.
This indemnity provision shall survive the termination of this Agreement.
22. The execution of this Agreement has been authorized by the Board of
Directors of IMG Funds and by the Board of Directors of CVF.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested by their officers thereunto duly authorized, as of the
date first written above.
IMG MUTUAL FUNDS, INC.
Attest
By: _______________________ By: _______________________________
Title: _____________________ Title: ____________________________
CAPITAL VALUE FUNDS, INC.
Attest
By: _______________________ By: _______________________________
Title: _____________________ Title: ____________________________
WELLMARK CAPITAL VALUE, INC.
Attest
By: _______________________ By: _______________________________
Title: _____________________ Title: ____________________________
INVESTORS MANAGEMENT GROUP
Attest
By: _______________________ By: _______________________________
Title: _____________________ Title: ____________________________
35
<PAGE>
TABLE OF CONTENTS
PAGE
SYNOPSIS............................................................. 4
RISK FACTORS......................................................... 5
PROPOSAL 1: AGREEMENT AND PLAN OF
REORGANIZATION....................................................... 6
IMG MUTUAL FUNDS, INC................................................ 16
CAPITAL VALUE FUND, INC.............................................. 18
PROPOSAL 2: APPROVAL OF INVESTMENT
ADVISORY AGREEMENT................................................... 20
INFORMATION RELATING TO VOTING MATTERS............................... 23
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.................................................. 24
OTHER BUSINESS....................................................... 25
LEGAL MATTERS........................................................ 25
SHAREHOLDER INQUIRIES................................................ 25
EXHIBIT A--AGREEMENT AND
PLAN OF REORGANIZATION............................................... 26
36
<PAGE>
IMG MUTUAL FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
GENERAL INFORMATION.
This Statement of Additional Information contains or incorporates
information which may be of interest to investors but which is not included in
the combined Proxy Statement/Prospectus (the "Prospectus") of IMG Mutual Funds,
Inc. dated January 16, 1998, relating to the transfer of assets from portfolios
of Capital Value Fund, Inc. (the "Acquired Funds)" to corresponding portfolios
of Vintage Funds. The Statement of Additional Information for CVF dated July 29,
1997, the Statement of Additional Information for IMG Mutual Funds, Inc. dated
August 27, 1997, and the Statement of Additional Information for Vintage Funds
dated January 16, 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 Vintage Fund Prospectuses may be obtained, without charge, by writing IMG
Mutual Funds, Inc., 2203 Grand Avenue, Des Moines, Iowa 50312-5338 or by calling
800-298-1819.
The date of this Statement of Additional Information is January 16, 1998.
1
<PAGE>
UNAUDITED COMBINING FINANCIAL STATEMENTS
ACQUISITION OF THE ASSETS OF CAPITAL VALUE FUND, INC.
BY AND IN EXCHANGE FOR IMG MUTUAL FUNDS, INC.
The accompanying unaudited pro forma combining statement of assets and
liabilities, including the schedule of investments in securities, and the
combining statement of operations reflect the accounts of the Capital Value
Fund, Inc.-Fixed Income Portfolio and IMG Bond Fund as of and for the
twelve-month period ended October 31, 1997. These reports have been derived from
the accounting records of the funds used in calculating net asset value for the
twelve-month period ended October 31, 1997. The accompanying unaudited pro forma
combining statement of assets and liabilities, including the schedule of
investments in securities, and the combining statement of operations reflect the
accounts of the Capital Value Fund, Inc.-Total Return Portfolio and the AMCORE
Balanced Fund as of and for the twelve-month period ended September 30, 1997.
These reports have been derived from the accounting records of the funds used in
calculating net asset value for the twelve-month period ended September 30,
1997. In addition, the pro forma combining statements of operations have been
prepared based upon the proposed fee and expense structure of the respective
funds. The statements do not reflect the effects of proposed changes to
investment objectives and policies of the Funds.
The pro forma combining statements give effect to the proposed Plan and
Agreement of Reorganization pursuant to which the assets and liabilities of the
Capital Value Funds would be exchanged for shares of the IMG Mutual Funds, Inc.
2
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
IMG BOND CVF FIXED PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investment in Securities at Value
(Cost $6,521,101, and $9,790,671 respectively) 6,673,102 9,945,438 0 16,618,540
Dividends and Interest Receivable 104,905 129,290 0 234,195
Capital Shares 0 800 0 800
Other Assets 1,255 0 0 1,255
--------------------------------------------------------
TOTAL ASSETS 6,779,262 10,075,528 0 16,854,790
LIABILITIES:
Income Distribution Payable 0 49,850 0 49,850
Investment Securities Purchased 400,000 0 0 400,000
Capital Shares Redeemed 0 0 0 0
Accrued Operating Expenses & Other Liabilities 4,841 9,673 0 14,514
--------------------------------------------------------
TOTAL LIABILITIES 404,841 59,523 0 464,364
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 6,374,421 10,016,005 0 16,390,426
========================================================
ANALYSIS OF NET ASSETS
Excess of amounts received from issuance of shares over
amounts paid on redemption of shares 6,155,671 9,754,718 0 15,910,389
Undistributed net realized gain 31,217 105,486 0 136,703
Unrealized appreciation 152,001 154,767 0 306,768
Undistributed net investment income 35,532 1,034 0 36,566
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 6,374,421 10,016,005 0 16,390,426
========================================================
Net Asset Value, offering price and redemption price $10.170 $10.176 $10.170
========================================================
Shares outstanding, $.001 par value* 626,810 984,248 0 1,611,704
========================================================
*Shares outstanding reflect rounding to the nearest whole
share.
</TABLE>
3
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE-MONTH PERIOD ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
IMG BOND CVF FIXED PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INCOME:
Investment Income 521,197 647,799 0 1,168,996
--------------------------------------------------------
TOTAL INCOME 521,197 647,799 0 1,168,996
EXPENSES:
Sub-Advisory Fees 0 37,542 (37,542) 0
Advisory Fees 22,194 12,074 57,909 92,177
Administration Fee 9,128 23,404 (32,532) 0
Distribution Fee 5,190 4,747 (9,937) 0
Fund Accounting/Custody Fee 7,398 9,361 (8,356) 8,403
Transfer Agent Fee 3,699 4,681 0 8,380
Other Expenses 7,398 9,361 (9,775) 6,984
--------------------------------------------------------
TOTAL EXPENSES 55,007 101,170 (40,234) 115,943
========================================================
NET INVESTMENT INCOME 466,190 546,629 40,234 1,053,053
========================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments 48,289 108,016 0 156,305
Net Change in Unrealized Appreciation 60,498 198,049 0 258,547
--------------------------------------------------------
NET GAIN ON INVESTMENTS 108,787 306,065 0 414,852
========================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 574,977 852,694 40,234 1,467,905
========================================================
</TABLE>
4
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMCORE
CVF TOTAL BALANCED PRO FORMA PRO FORMA
RETURN FUND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
ASSETS:
Investment in Securities at Value
(Cost $10,151,804, and $36,517,181 respectively) 11,188,610 44,947,563 0 56,136,173
Dividends and Interest Receivable 68,134 247,475 0 315,609
Investment Securities Sold 4,136 35,552 0 39,688
Capital Shares 440 8,588 0 9,028
Other Assets 0 9,482 0 9,482
--------------------------------------------------------
TOTAL ASSETS 11,261,320 45,248,660 0 56,509,980
LIABILITIES:
Income Distribution Payable 95,738 0 0 95,738
Investment Securities Purchased 225,272 390,700 0 615,972
Payable to Broker for securities sold short (Cost $35,552) 0 38,850 0 38,850
Capital Shares Redeemed 0 15,573 0 15,573
Accrued Operating Expenses & Other Liabilities 17,602 57,975 0 75,577
--------------------------------------------------------
TOTAL LIABILITIES 338,612 503,098 0 841,710
========================================================
NET ASSETS 10,922,708 44,745,562 0 55,668,270
========================================================
ANALYSIS OF NET ASSETS
Excess of amounts received from issuance of shares over
amounts paid on redemption of shares 8,646,431 35,995,705 0 44,642,136
Undistributed net realized gain 1,237,184 7,049 0 1,244,233
Unrealized appreciation 1,036,806 8,427,084 0 9,463,890
Undistributed net investment income 2,287 315,724 0 318,011
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 10,922,708 44,745,562 0 55,668,270
========================================================
Net Asset Value, offering price and redemption price $11.316 $14.037 $14.037
========================================================
Shares outstanding, $.001 par value* 965,283 3,187,703 3,965,844
========================================================
</TABLE>
*Shares outstanding reflect rounding to the nearest whole share.
5
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMCORE
CVF TOTAL BALANCED PRO FORMA PRO FORMA
RETURN FUND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INCOME:
Interest Income 551,968 300,950 0 852,918
Dividend Income 164,436 584,197 0 748,633
--------------------------------------------------------
TOTAL INCOME 716,404 885,147 0 1,601,551
EXPENSES:
Sub-Advisory Fees 54,294 0 (54,294) 0
Advisory Fees 16,718 230,265 83,771 330,754
Administration Fee 33,496 61,404 (94,900) 0
Distribution Fee 5,719 0 (5,719) 0
Fund Accounting/Custody Fee 20,098 83,408 (2,655) 100,851
Transfer Agent Fee 6,699 27,796 0 34,495
Other Expenses 13,398 39,453 (1,368) 51,483
--------------------------------------------------------
TOTAL EXPENSES 150,422 442,326 (75,165) 517,583
========================================================
NET INVESTMENT INCOME 565,982 442,821 75,165 1,083,968
========================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments 1,439,974 303,922 0 1,743,896
Net Change in Unrealized Appreciation 86,478 6,324,300 0 6,410,778
--------------------------------------------------------
NET GAIN ON INVESTMENTS 1,526,452 6,628,222 0 8,154,674
========================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 2,092,434 7,071,043 75,165 9,238,642
========================================================
</TABLE>
6
<PAGE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION
The accompanying unaudited pro forma combining statement of assets and
liabilities, including the schedule of investments in securities, and
the combining statement of operations reflect the accounts of the
Capital Value Fund, Inc.-Fixed Income Portfolio and IMG Bond Fund as of
and for the twelve-month period ended October 31, 1997. These reports
have been derived from the accounting records of the funds used in
calculating net asset value for the twelve-month period ended October
31, 1997. The accompanying unaudited pro forma combining statement of
assets and liabilities, including the schedule of investments in
securities, and the combining statement of operations reflect the
accounts of the Capital Value Fund, Inc.-Total Return Portfolio and the
AMCORE Balanced Fund as of and for the twelve-month period ended
September 30, 1997. These reports have been derived from the accounting
records of the funds used in calculating net asset value for the
twelve-month period ended September 30, 1997. In addition, the pro
forma combining statements of operations have been prepared based upon
the proposed fee and expense structure of the respective funds. The
statements do not reflect the effects of proposed changes to investment
objectives and policies of the Funds.
The pro forma combining statements give effect to the proposed Plan and
Agreement of Reorganization pursuant to which the assets and
liabilities of the Capital Value Fund, Inc. would be exchanged for
shares of the IMG Mutual Funds, Inc. The historical cost of the
investments in securities would be carried forward to the IMG Mutual
Funds, Inc. as the reorganization will be accounted for as a tax-free
exchange.
2. CAPITAL SHARES
The pro forma combining statement of assets and liabilities assumes the
issuance of 984,894 shares of Vintage Bond Fund, a series of IMG Mutual
Funds, Inc., to shareholders of Capital Value Fund, Inc.-Fixed Income
Portfolio as if the reorganization had taken place on October 31, 1997;
and the issuance of 778,141 shares of Vintage Balanced Fund, a series
of IMG Mutual Funds, Inc., to shareholders of Capital Value Fund
Inc.-Total Return Portfolio as if the reorganization had taken place on
September 30, 1997 and is based on the net asset value of IMG Mutual
Funds on that date.
3. PRO FORMA ADJUSTMENTS
(A) INVESTMENT MANAGEMENT FEE - The investment
management fee has been adjusted to reflect the fee structure
of IMG Mutual Funds, Inc. The investment management agreement
of IMG Mutual Funds, Inc. provides for a management fee at a
per annum rate of 0.55% of average daily net assets for the
Vintage Bond Fund and 0.75% of average daily net assets for
the Vintage Balanced Fund. Capital Value Fund, Inc. pays a per
annum rate of 0.10% of average daily net assets to the advisor
and 0.43% of average daily net assets to the sub-advisor.
7
<PAGE>
(B) DISTRIBUTION FEE - The distribution fee has been
adjusted to reflect the 12b-1 fee structure of IMG Mutual Funds, Inc.
Pursuant to distribution plans adopted in accordance with Rule 12b-1 of
the Investment Company Act of 1940, reimbursement to the distributor
may not exceed 0.25% and 0.50% per annum of the average daily net
assets of IMG Mutual Funds, Inc. and Capital Value Fund, Inc.
respectively.
(C) OTHER FEES AND EXPENSES - The pro forma adjustments
to custodian, accounting and transfer agent fees, reports to
shareholders, Directors fees, audit and legal fees, and other expenses
reflects the savings due to a decrease in certain expenses duplicated
between the Funds.
4. INVESTMENT OBJECTIVES AND POLICIES
These statements do not reflect the effects of proposed differing
investment objectives and policies of the Funds.
8
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
COMBINED CVF FIXED
# OF SHARES/ IMG BOND INCOME PRO FORMA
DESCRIPTION PAR VALUE FUND FUND COMBINED
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES (24.33%)
GOVERNMENT AGENCIES (2.46%)
FNMA Medium-Term Note. 6.59%, 05/24/01 270,000 20,011 253,845 273,856
Government Export Trust, 4.85%, 11/01/97 62,500 62,746 0 62,746
-------------------------------------
82,757 253,845 336,602
U.S. TREASURY BONDS (8.42%)
U.S. T-Bond, 7.25%, 05/15/16 725,000 250,933 542,625 793,558
U.S. T-Bond, 8.125%, 05/15/21 500,000 0 358,218 358,218
-------------------------------------
250,933 900,843 1,151,776
U.S. TREASURY NOTES (13.45%)
U.S. T-Note, 6.25%, 02/15/03 200,000 0 201,937 201,937
U.S. T-Note, 5.125%, 12/31/98 100,000 99,474 0 99,474
U.S. T-Note, 6.875%, 03/31/00 450,000 0 460,265 460,265
U.S. T-Note, 6.375%, 08/15/02 550,000 0 558,201 558,201
U.S. T-Note, 5.00%, 02/15/99 350,000 0 346,469 346,469
U.S. T-Note, 5.75%, 10/31/00 175,000 0 174,064 174,064
-------------------------------------
99,474 1,740,936 1,840,410
-------------------------------------
Total Government Securities (Cost $3,264,194) 433,164 2,895,624 3,328,788
CORPORATE BONDS (27.97%)
Analog Devices, 6.63%, 03/01/00 465,000 210,000 225,155 435,155
Citizens Utility Co., 6.80%, 08/15/26 75,000 77,063 0 77,063
Dayton Hudson, 10.00%, 12/01/00 75,000 82,687 0 82,687
GMAC, 8.88%, 06/01/10 555,000 243,438 416,938 660,376
Hubco, Inc., 7.75% 01/15/04 290,000 134,550 164,200 298,750
Hydro-Quebec, 8.25%, 01/15/27 75,000 85,688 0 85,688
Lehman Brothers, 8.05%, 01/15/19 385,000 179,231 234,432 413,663
Manitoba, 7.75%, 07/17/16 498,000 204,045 340,200 544,245
Naples, City of, Italy, 7.52%, 07/15/06 450,000 234,522 231,662 466,184
Nova Scotia, 8.25%, 11/15/19 440,000 216,681 291,975 508,656
WMX Tech., 6.65%, 05/15/05 250,000 253,750 0 253,750
-------------------------------------
Total Corporate Bonds (Cost $3,699,205) 1,921,655 1,904,562 3,826,217
TAXABLE MUNICIPAL BONDS (28.04%)
Baltimore, MD, 7.40%, 10/15/05 100,000 0 105,000 105,000
Berry Creek Met Dist, CO, 6.85%, 12/01/02 450,000 229,713 218,350 448,063
Cottonwood County, MN, 7.30%, 02/01/00 245,000 127,967 121,800 249,767
Fulton, MO Import Taxable, 7.60%, 07/01/11 125,000 131,875 0 131,875
Iowa Lakes Community College, 7.60%, 06/01/05 70,000 72,100 0 72,100
Iowa Lakes Community College, 7.70%, 06/01/04 175,000 0 182,764 182,764
Kirkwood Community College, 7.65%, 06/01/01 100,000 0 103,844 103,844
Manteca, CA Financial Authority, 6.63%, 09/15/99 155,000 156,550 0 156,550
Mounds View, MN, 6.00%, 02/01/05 100,000 0 95,875 95,875
New Orleans, LA Hsg. Dev., 8.00%, 12/01/03 155,000 159,069 0 159,069
Oregon Department of Transportation, 9.00%, 06/15/00 183,714 68,345 122,449 190,794
Port Benton, WA G.O., 7.00%, 12/01/01 210,000 0 214,200 214,200
Portland, OR Multifamily Housing, 7.63%, 12/01/01 400,000 174,125 223,031 397,156
Prairie Du Chien, WI, Redevelopment Authority, 7.60%, 04/01/05 90,000 93,375 0 93,375
Prairie Du Chien, WI, Redevelopment Authority, 7.625%, 04/01/06 100,000 102,875 0 102,875
San Antonio, TX Cert Oblig Taxable, 6.65%, 08/01/09 350,000 0 341,579 341,579
St. Paul, MN Port. Authority, 6.65%, 09/01/99 315,000 151,688 166,444 318,132
Texas St. G.O. Taxable, 8.70%, 12/01/09 125,000 56,938 85,125 142,063
Washington State Housing Antioch University, 7.55%, 01/01/03 320,000 171,394 159,963 331,357
-------------------------------------
Total Municipal Bonds (Cost $3,748,547) 1,696,014 2,140,424 3,836,438
9
<PAGE>
MORTGAGE-BACKED SECURITIES (36.35%)
COLLATERALIZED MORTGAGE OBLIGATIONS (15.38%)
Countrywide Funding Corp. 1994-9 A2, 6.50%, 05/25/24 240,712 0 238,137 238,137
Chase Mtge. Finance Corp., 5.75%, 04/25/09 61,172 60,739 0 60,739
FHLMC 1424 Class PE, 6.10%, 03/15/17 250,000 0 249,296 249,296
FHLMC Series 1561 Class TA, Zero Coupon, 9.24%, 08/15/08 215,000 0 122,400 122,400
FHLMC Ser. L, Cl. 5, 7.90%, 05/01/01 13,097 13,481 0 13,481
FHLMC 1504 B, 7.00%, 12/15/22 100,000 98,312 0 98,312
FHLMC 91 Series 188 Class F, 7.50%, 05/15/20 43,228 11,254 31,912 43,166
FNMA G92-60 C, 7.00%, 02/25/21 150,000 152,216 0 152,216
FNMA G93-9 D, 6.00%, 04/25/13 94,872 94,550 0 94,550
FNMA Series 1991-37 Class E, 8.50%, 04/25/05 56,552 50,538 6,539 57,077
FNMA 1991-174 K, 7.00%, 04/25/06 60,000 60,506 0 60,506
FNMA 1991-91A, Zero Coupon, 7.73%, 07/25/98 47,718 0 46,173 46,173
FNMA 1992-212, 5.50%, 11/25/99 85,200 0 84,717 84,717
GE Cap. Mtge. Serv. 1994-1 A1, 5.70%, 01/25/24 99,547 0 98,996 98,996
Green Tree, 5.20%, 10/15/18 12,356 12,352 0 12,352
Residential Funding Mtg. Sec I, Series 1993-S7, Class A6, 7.15%, 35,653 35,757 0 35,757
02/25/08
Resolution Trust Corp. Series 1992-17 Class A1, Variable Rate, 19,149 19,147 0 19,147
8.87%,12/25/20
Housing Securities, Inc. 1993-C C3, Zero Coupon, 9.06%, 05/25/08 189,835 48,244 94,528 142,772
Housing Securities, Inc. 1993-E E-14, Zero Coupon, 10.33%, 09/25/08 232,784 42,427 129,795 172,222
Prudential Home Mtge. Securities, 1992-6 Class A3, 7.00%, 04/25/99 6,125 0 6,117 6,117
Salomon Mortgage Sec. VII, Zero Coupon, 10.61%, 02/25/25 372,080 180,146 78,461 258,607
Standard Credit Card Master Tr., 1995-6 A, 6.75%, 06/07/00 37,000 37,200 0 37,200
-------------------------------------
916,869 1,187,071 2,103,940
FNMA MORTGAGE-BACKED POOLS (1.47%)
FNMA #251286, 7.00%, 11/01/27 200,000 200,562 0 200,562
FHLMC MORTGAGE-BACKED POOLS (0.80%)
FHLMC #C00126, 8.50%, 06/01/22 105,216 16,843 92,721 109,564
GNMA MORTGAGE-BACKED POOLS (18.70%)
GNMA #315929, 9.00%, 06/15/22 175,022 30,871 155,618 186,489
GNMA #341681, 8.50%, 01/15/23 269,532 51,809 229,540 281,349
GNMA #354189, 7.50%, 05/15/23 338,770 45,106 299,453 344,559
GNMA #359600, 7.50%, 07/15/23 87,267 89,156 0 89,156
GNMA #376218, 7.50%, 08/15/25 526,617 244,540 292,212 536,752
GNMA #385300, 8.00%, 10/15/24 446,900 193,093 269,247 462,340
GNMA #410049, 8.00%, 07/15/25 441,131 202,805 253,640 456,445
GNMA #412334, 7.00%, 10/15/27 200,000 201,062 0 201,062
-------------------------------------
1,058,442 1,499,710 2,558,152
-------------------------------------
Total Mortgage-Backed Securities (Cost $4,946,054) 2,192,716 2,779,502 4,972,218
CASH EQUIVALENTS (4.79%)
COMMERCIAL PAPER (4.78%)
Emerson Electric Commercial Paper, 11/03/97 100,000 99,969 0 99,969
Merrill Lynch Commercial Paper, 11/03/97 554,000 328,896 225,000 553,896
-------------------------------------
428,865 225,000 653,865
MONEY MARKET MUTUAL FUNDS (0.01%)
Norwest Cash Investment Fund 1,014 688 326 1,014
-------------------------------------
Total Cash Equivalents (Cost $654,879) 429,553 225,326 654,879
-------------------------------------
TOTAL INVESTMENTS IN SECURITIES (121.48%) (Cost $16,311,772) 6,673,102 9,945,438 16,618,540
Other Assets and Liabilities, Net (-21.48%) (298,681) 70,567 (228,114)
=====================================
NET ASSETS 100.00% 6,374,421 10,016,005 16,390,426
=====================================
</TABLE>
10
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PRO FORMA
COMBINED CVF TOTAL AMCORE
# OF SHARES/ RETURN BALANCED PRO FORMA
DESCRIPTION PAR VALUE FUND FUND COMBINED
<S> <C>
COMMON STOCK (64.69%)
AEROSPACE/DEFENSE (0.62%)
Sundstrand Corp. 8,500 0 489,813 489,813
AUTOMOTIVE PARTS & EQUIPMENT (0.70%)
Lear Corp. 7,500 0 369,375 369,375
UTILITIES (0.46%)
Ameritech Corp. 1,800 119,700 0 119,700
Bell Atlantic Corp. 1,536 123,552 0 123,552
---------------------------------------
243,252 0 243,252
FINANCIAL (8.33%)
Aegon N.V. 1,346 107,259 0 107,259
Ambac, Inc. 4,600 187,163 0 187,163
American International Group 600 61,913 0 61,913
BankAmerica Corp. 6,000 0 439,875 439,875
Banc One Corp. 1,740 97,114 0 97,114
Chubb Corp. 2,900 206,081 0 206,081
Fannie Mae 10,000 0 470,000 470,000
First Data Corp. 11,000 0 413,187 413,187
First Union Corp. 13,000 0 650,812 650,812
Freddie Mac 2,400 84,600 0 84,600
Green Tree Financial Corp. 9,500 0 446,500 446,500
Key Corporation 3,000 190,875 0 190,875
Nations Bank Corp. 7,400 86,625 371,250 457,875
Providian Financial Corp. 3,100 123,031 0 123,031
Travelers Group, Inc. 7,000 0 477,750 477,750
---------------------------------------
1,144,661 3,269,374 4,414,035
INSURANCE (3.20%)
Allstate Corp. 5,500 0 442,063 442,063
American International Group, Inc. 3,675 0 379,214 379,214
MGIC Investment Corp. 7,000 0 401,187 401,187
SunAmerica, Inc. 12,000 0 470,250 470,250
---------------------------------------
0 1,692,714 1,692,714
CONSUMER STAPLES (11.20%)
Abbott Laboratories 3,600 230,174 0 230,174
Albertson's, Inc. 5,300 184,838 0 184,838
American Home Products 1,200 87,600 0 87,600
Anheuser-Busch 1,500 67,688 0 67,688
Baxter International, Inc. 5,000 0 261,250 261,250
Becton Dickinson & Co. 1,200 57,450 0 57,450
Bristol-Meyers Squibb Co. 6,400 115,850 413,750 529,600
Colgate-Palmolive Co. 5,000 0 348,438 348,438
ConAgra, Inc. 1,200 79,200 0 79,200
CUC International, Inc. 13,500 0 418,500 418,500
Gillette Co. 6,500 69,050 491,981 561,031
Health Care & Retirement Corp. 3,000 0 111,563 111,563
Johnson & Johnson 1,400 80,675 0 80,675
Lincoln Holdings, Inc. 5,500 0 277,406 277,406
MedPartners, Inc. 13,500 0 289,406 289,406
Merck & Co., Inc. 900 89,944 0 89,944
Newell Company 18,400 236,000 500,000 736,000
Pepsico, Inc. 13,300 52,731 486,750 539,481
Proctor & Gamble Co. 6,000 55,250 359,125 414,375
Sara Lee Corp. 2,600 133,900 0 133,900
Schering-Plough Corp. 1,200 61,800 0 61,800
Shared Medical Systems, Corp. 3,200 0 169,200 169,200
11
<PAGE>
United Healthcare Corp. 4,000 0 200,000 200,000
---------------------------------------
1,602,150 4,327,369 5,929,519
CONSUMER SERVICES (0.67%)
Walt Disney Co. 3,800 64,500 241,875 306,375
McDonald's Corp. 1,000 47,625 0 47,625
---------------------------------------
112,125 241,875 354,000
CONSUMER CYCLICAL (1.94%)
Brunswick Corp. 1,500 52,874 0 52,874
Corning, Inc. 8,400 66,150 330,750 396,900
Genuine Parts Co. 6,300 194,119 0 194,119
Goodyear Tire & Rubber Co. 3,100 213,125 0 213,125
Home Depot, Inc. 1,500 78,188 0 78,188
Sears, Roebuck & Co. 1,600 91,100 0 91,100
---------------------------------------
695,556 330,750 1,026,306
TECHNOLOGY (9.73%)
Adaptec, Inc. 7,900 42,074 327,250 369,324
Ascend Communications, Inc. 750 24,281 0 24,281
Avnet, Inc. 3,000 0 190,688 190,688
Compaq Computer Corp. 13,000 0 971,750 971,750
Computer Associates International, Inc. 8,500 0 610,406 610,406
Cisco Systems, Inc. 6,500 0 474,906 474,906
Hewlett-Packard Co. 6,000 0 417,375 417,375
Honeywell, Inc. 1,200 80,625 0 80,625
Intel Corp. 8,400 110,775 664,650 775,425
Microsoft Corp. 3,200 79,388 344,013 423,401
Minnesota Mining & Manufacturing. Co. 750 69,375 0 69,375
Motorola, Inc. 700 50,313 0 50,313
Oracle Corporation 6,150 60,122 163,969 224,091
Parametric Technology Corp. 7,500 44,125 286,812 330,937
Pitney Bowes, Inc. 1,100 91,506 0 91,506
TRW, Inc. 900 49,388 0 49,388
---------------------------------------
701,972 4,451,819 5,153,791
CAPITAL GOODS (5.47%)
Diebold Inc. 8,500 0 402,688 402,688
Elan Corp. PLC 5,500 0 275,344 275,344
Emerson Electric Co. 8,600 92,200 403,375 495,575
General Electric Co. 8,400 163,350 408,375 571,725
Grainger (W.W.), Inc. 1,000 89,000 0 89,000
Illinois Tool Works 1,700 85,000 0 85,000
Medtronic, Inc. 12,000 0 564,000 564,000
United Technologies Corp. 5,100 89,100 324,000 413,100
---------------------------------------
518,650 2,377,782 2,896,432
ENERGY (0.58%)
Atlantic Richfield Co. 700 59,806 0 59,806
Chevron Corp. 700 58,231 0 58,231
Exxon Corp. 1,900 121,719 0 121,719
Schlumberger, Ltd. 800 67,350 0 67,350
---------------------------------------
307,106 0 307,106
BASIC INDUSTRIES (5.33%)
Air Products & Chemicals 5,500 0 456,156 456,156
Allied-Signal, Inc. 13,600 93,500 484,500 578,000
Avery Dennison Corp. 8,800 112,000 240,000 352,000
Dupont (EI) De Nemours 800 49,250 0 49,250
Hercules Inc. 5,700 0 283,575 283,575
Kimberly-Clark Corp. 10,300 112,555 391,500 504,055
Monsanto Co. 10,500 0 409,500 409,500
Sherwin Williams Co. 3,800 111,863 0 111,863
Sigma-Aldrich 2,400 79,050 0 79,050
---------------------------------------
558,218 2,265,231 2,823,449
PRINTING & PUBLISHING (1.22%)
Gannett, Inc. 4,000 0 431,750 431,750
Tribune Co. 4,000 0 213,250 213,250
---------------------------------------
0 645,000 645,000
12
<PAGE>
OIL & GAS EXPLORATION, PRODUCTION & SERVICES (3.32%)
Ensco International 10,000 0 394,375 394,375
Mobil Corp. 5,000 0 370,000 370,000
Schlumberger Ltd. 7,000 0 589,313 589,313
Tidewater, Inc. 55,000 0 325,875 325,875
Unocal Corp. 1,800 0 77,850 77,850
---------------------------------------
0 1,757,413 1,757,413
PHARMACEUTICALS (3.86%)
Agouron Pharmaceuticals, Inc. 5,000 0 240,625 240,625
Amgen, Inc. 3,500 0 167,781 167,781
Lilly (Eli) & Co. 3,500 0 421,531 421,531
Pfizer, Inc. 9,000 0 540,563 540,563
Warner Lambert Co. 5,000 0 674,688 674,688
---------------------------------------
0 2,045,188 2,045,188
RETAIL STORES/CATALOG (0.39%)
Viking Office Products, Inc. 9,500 0 206,625 206,625
RETAIL--GENERAL MERCHANDISE (1.81%)
Federated Department Stores, Inc. 9,000 0 388,125 388,125
Kohl's Corp. 8,000 0 568,000 568,000
---------------------------------------
0 956,125 956,125
RETAIL SPECIALTY STORES (1.44%)
Lowe's Cos., Inc. 9,000 0 349,875 349,875
Walgreen Co. 16,200 0 415,125 415,125
---------------------------------------
0 765,000 765,000
TELECOMMUNICATIONS (2.07%)
AirTouch Communications, Inc. 9,500 0 336,656 336,656
Ameritech Corp. 3,500 0 232,750 232,750
GTE Corp. 7,500 0 340,312 340,312
SBC Communications, Inc. 3,000 0 184,125 184,125
---------------------------------------
0 1,093,843 1,093,843
TELECOMMUNICATIONS--SERVICES & EQUIPMENT (1.08%)
Lucent Technologies 7,000 0 569,625 569,625
WATER TREATMENT SYSTEMS (0.24%)
US Filter Corp. 3,000 0 129,187 129,187
WHOLESALE DISTRIBUTION-- PHARMACEUTICALS (0.74%)
Cardinal Health, Inc. 5,500 0 390,500 390,500
---------------------------------------
Total Common Stocks (Cost $33,362,733) 5,883,690 28,374,608 34,258,298
U.S. GOVERNMENT SECURITIES (24.80%)
GOVERNMENT AGENCIES (3.78%)
Federal Home Loan Bank, 5.44%, 10/01/97 2,000,000 0 2,000,000 2,000,000
U.S. TREASURY BONDS (0.25%)
U.S. T-Bond, 8.88%, 02/15/19 105,000 133,795 0 133,795
U.S. TREASURY NOTES (20.77%)
U.S. T-Note, 6.00%, 11/30/97 500,000 0 500,470 500,470
U.S. T-Note, 6.00%, 05/31/98 1,500,000 0 1,504,215 1,504,215
U.S. T-Note, 6.38%, 07/15/99 1,000,000 0 1,009,370 1,009,370
U.S. T-Note, 6.38%, 01/15/00 1,000,000 0 1,011,250 1,011,250
U.S. T-Note, 6.25%, 05/31/00 1,000,000 0 1,009,060 1,009,060
U.S. T-Note, 6.63%, 04/30/02 1,500,000 0 1,535,865 1,535,865
U.S. T-Note, 6.25%, 02/15/03 1,500,000 0 1,514,295 1,514,295
U.S. T-Note, 5.88%, 11/15/05 1,750,000 0 1,717,730 1,717,730
U.S. T-Note, 5.63%, 02/15/06 500,000 0 482,185 482,185
U.S. T-Note, 6.63%, 05/15/07 500,000 0 516,405 516,405
U.S. T-Note, 5.625%, 11/30/98 200,000 199,790 0 199,790
---------------------------------------
199,790 10,800,845 11,000,635
---------------------------------------
Total Government Securities (Cost $13,113,789) 333,585 12,800,845 13,134,430
13
<PAGE>
CORPORATE BONDS (6.05%)
AT&T Corp., 7.00%, 5/15/05 250,000 0 257,163 257,163
Bear Asset Trust Securities. 6.69%, 6/15/03 1,000,000 0 1,002,812 1,002,812
Cummins Engine, 6.75%, 2/15/27 500,000 0 505,365 505,365
GMAC, 6.50%, 12/5/05 250,000 0 246,148 246,148
Hubco, Inc., 7.75% 01/15/04 210,000 215,513 0 215,513
Hydro-Quebec, 8.25%, 01/15/27 250,000 278,750 0 278,750
Lehman Brothers, 8.05%, 01/15/19 250,000 266,400 0 266,400
Manitoba, 7.75%, 07/17/16 242,000 261,360 0 261,360
Nova Scotia, 8.25%, 11/15/19 150,000 171,750 0 171,750
---------------------------------------
Total Corporate Bonds (Cost $3,158,876) 1,193,773 2,011,488 3,205,261
TAXABLE MUNICIPAL BONDS (2.37%)
Berry Creek Met Dist, CO, 6.85%, 12/01/02 205,000 203,719 0 203,719
Fulton, MO Import Taxable, 7.60%, 07/01/11 195,000 204,506 0 204,506
New Orleans, LA Hsg. Dev., 8.00%, 12/01/03 200,000 204,500 0 204,500
Northwest Nazarene College, ID, 6.75%, 11/01/99 155,000 156,356 0 156,356
Oregon Department of Transportation, 9.00%, 06/15/00 177,723 122,449 0 122,449
Portland, OR Multifamily Housing, 7.63%, 12/01/01 250,000 247,813 0 247,813
Texas St. G.O. Taxable, 8.70%, 12/01/09 100,000 113,500 0 113,500
---------------------------------------
Total Municipal Bonds (Cost $1,210,846) 1,252,843 0 1,252,843
MORTGAGE-BACKED SECURITIES (3.27%)
Collateralized Mortgage Obligations (1.79%)
Chase Mtge. Finance Corp., 5.75%, 04/25/09 114,050 112,830 0 112,830
Collateralized Mtge. SEC Corp., 7.00%, 09/20/21 175,000 171,859 0 171,859
FHLMC 91 Series 188 Class F, 7.50%, 05/15/20 28,812 28,781 0 28,781
FNMA Series 1991-8 E, 7.50%, 06/25/17 15,425 15,373 0 15,373
Green Tree Acceptance 1987B Class A, 9.55%, 05/15/07 117,233 118,772 0 118,772
Housing Securities, Inc. 1992-F F11, Zero Coupon, 9.06%, 11/25/07 141,827 105,966 0 105,966
Housing Securities, Inc. 1993-E E-14, Zero Coupon, 10.33%, 09/25/08 186,859 137,582 0 137,582
Residential Funding Mtg. Sec I, Series 1993-S7, Class A6, 7.15%, 73,563 73,840 0 73,840
02/25/08
Resolution Trust Corp. Series 1992-17 Class A1, Variable Rate, 25,780 25,824 0 25,824
8.87%,12/25/20
Salomon Mortgage Sec. VII, Zero Coupon, 10.61%, 02/25/25 227,064 156,922 0 156,922
---------------------------------------
947,749 0 947,749
FHLMC Mortgage-Backed Pools (0.07%)
FHLMC #A00851, 8.50%, 12/01/19 37,390 38,910 0 38,910
GNMA Mortgage-Backed Pools (1.41%)
GNMA #305975, 9.00%, 07/15/21 130,021 137,916 0 137,916
GNMA #318184, 8.50%, 11/15/21 56,448 58,839 0 58,839
GNMA #359600, 7.50%, 07/15/23 85,475 86,864 0 86,864
GNMA #376218, 7.50%, 08/15/25 237,225 241,191 0 241,191
GNMA #385300, 8.00%, 10/15/24 118,471 122,385 0 122,385
GNMA #410049, 8.00%, 07/15/25 96,934 100,142 0 100,142
---------------------------------------
747,337 0 747,337
---------------------------------------
Total Mortgage-Backed Securities (Cost $1,701,778) 1,733,996 0 1,733,996
CASH EQUIVALENTS (4.82%)
REPURCHASE AGREEMENTS (1.46%)
J.P. Morgan, 5.95%, 10/01/97 206,738 206,738 0 206,738
SBC Warburg, 6.15%, 10/01/97 566,500 566,500 0 566,500
---------------------------------------
773,238 0 773,238
MONEY MARKET MUTUAL FUNDS (3.36%)
Norwest Cash Investment Fund, 5.37% 17,485 17,485 0 17,485
AMCORE Vintage U.S. Gov't Obligation Fund 1,760,622 0 1,760,622 1,760,622
---------------------------------------
17,485 1,760,622 1,778,107
---------------------------------------
Total Cash Equivalents (Cost $2,551,345) 790,723 1,760,622 2,551,345
---------------------------------------
TOTAL INVESTMENTS IN SECURITIES (106.00%) (Cost $46,668,985) 11,188,610 44,947,563 56,136,173
Other Assets and Liabilities, Net (-6.00%) (265,902) (202,000) (467,903)
=======================================
NET ASSETS 100.00% 10,922,708 44,745,563 55,668,270
=======================================
</TABLE>
14
<PAGE>
TABLE OF CONTENTS
Page
----
General Information ..................................... 1
Pro Forma Financial Statements........................... 2
15
<PAGE>
CAPITAL VALUE FUND, INC.
EQUITY PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc., on February 13, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
<PAGE>
1. Approval of the Agreement and Plan of Reorganization by and
between Capital Value Fund, Inc. (the "Fund") and Vintage
Funds providing for the transfer of all of the assets of the
Fund to Vintage Funds in exchange for shares of Vintage Funds
and the assumption by Vintage Funds of all of the liabilities
of the Fund, followed by the dissolution and liquidation of
the Fund and the distribution of shares of Vintage Funds to
the shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund
and Investors Management Group, Ltd. ("IMG") following a
change of ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
Co-owner sign here
Dated: ____________________, 1998.
<PAGE>
CAPITAL VALUE FUND, INC.
TOTAL RETURN PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc., on February 13, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
<PAGE>
1. Approval of the Agreement and Plan of Reorganization by and
between Capital Value Fund, Inc. (the "Fund") and Vintage
Funds providing for the transfer of all of the assets of the
Fund to Vintage Funds in exchange for shares of Vintage Funds
and the assumption by Vintage Funds of all of the liabilities
of the Fund, followed by the dissolution and liquidation of
the Fund and the distribution of shares of Vintage Funds to
the shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund
and Investors Management Group, Ltd. ("IMG") following a
change of ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
Co-owner sign here
Dated: ____________________, 1998.
<PAGE>
CAPITAL VALUE FUND, INC.
FIXED INCOME PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc., on February 13, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
<PAGE>
1. Approval of the Agreement and Plan of Reorganization by and
between Capital Value Fund, Inc. (the "Fund") and Vintage
Funds providing for the transfer of all of the assets of the
Fund to Vintage Funds in exchange for shares of Vintage Funds
and the assumption by Vintage Funds of all of the liabilities
of the Fund, followed by the dissolution and liquidation of
the Fund and the distribution of shares of Vintage Funds to
the shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund
and Investors Management Group, Ltd. ("IMG") following a
change of ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
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Shareholder sign here
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Co-owner sign here
Dated: ____________________, 1998.
