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 AMCORE Vintage Funds (the "Funds"). While you
are, of course, welcome to join us at the Funds' Special Shareholder Meeting,
most shareholders cast their vote by filling out and signing the enclosed proxy
card.
As you may be aware, AMCORE Financial, Inc., the parent company of the Funds'
investment adviser has signed a definitive agreement to acquire Investors
Management Group, Ltd., ("IMG"), an investment advisory organization with
approximately $1.6 billion under management. AMCORE Capital Management and IMG
will combine their resources with a view to enhancing the resources available to
the clients of both firms.
As part of its continuing effort to assure high quality services to shareholders
of the Funds, AMCORE has recommended, and the Board of Trustees of your Funds
has recently reviewed and unanimously endorsed, a proposal for the
reorganization of the Funds. This proposal calls for the reorganization of the
Funds as series of a Massachusetts business trust to series of a Maryland
corporation. The "new" Vintage Funds will have substantially similar investment
objectives and investment policies as the "current" Funds. Please refer to
"Proposal 1-Agreement and Plan of Reorganization-General Information" in the
enclosed Proxy Statement/Prospectus for more details.
In a related series of transactions, some of the new Vintage Funds will acquire
some of the smaller funds currently managed by IMG and other funds will be
brought together to create an even larger fund family. The aggregate net asset
value of the shares of the new Funds you will receive will be equal to the
aggregate net asset value of shares you currently own. No sales charges will be
imposed in the transaction and the Funds and their shareholders will not bear
any of the costs associated with the reorganization.
The Board of Trustees of the Funds believe the reorganization is in the best
interests of Funds shareholders, and recommend that shareholders approve the
reorganization. The Funds' Trustees believe the transaction would benefit the
Funds and their shareholders by increasing certain of the Funds' assets
initially and enhancing their capacity to attract and retain investors. In
making their determination, the Trustees reviewed several factors, including the
qualifications and capabilities of the service providers of the new Funds. If,
as expected, the Funds' distributor is able to distribute new Fund shares
successfully, growth in assets would make possible the realization of economies
of scale and attendant savings in costs to the Funds and their shareholders. Of
course, achievement of these goals cannot be assured.
Detailed information about the proposed transaction and the reasons for it is
contained in the enclosed combined Proxy Statement/Prospectus. The enclosed
proxy card is, in essence, a ballot. It tells us how to vote on your behalf on
important issues relating to your Fund. If you complete and sign the proxy,
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we'll vote it exactly as you tell us. If you simply sign the proxy card, we'll
vote it according to the Trustees' recommendation. We urge you to review
carefully the Proxy Statement/Prospectus, fill out your proxy card, and return
it to us. A self-addressed, postage-paid envelope has been enclosed for your
convenience. It is very important that you vote and that your voting
instructions be received no later than February 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 815-961-7119 or
outside Illinois 800-521-5150 (press #1).
Sincerely,
Walter B. Grimm, Chairman
The Coventry Group
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The Coventry Group
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 13, 1998
TO THE SHAREHOLDERS OF AMCORE VINTAGE FUNDS:
You are cordially invited to attend the Special Meeting of Shareholders of
AMCORE Vintage Funds, which will be held at 3435 Stelzer Road, Columbus, Ohio
43219 on February 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
AMCORE Vintage Funds in exchange for shares of the New Vintage Funds as
described under "Proposal 1-Agreement and Plan of Reorganization" in the Proxy
Statement/Prospectus dated January 16, 1998; (b) the assumption by the New
Vintage Funds of all of the liabilities of AMCORE Vintage Funds; and (c) the
distribution of New Vintage Funds shares to the shareholders of AMCORE Vintage
Funds in complete liquidation of AMCORE Vintage Funds.
2. To act upon such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Trustees has fixed the close of business on Thursday, January 8,
1998, as the record date for determination of shareholders entitled to notice
of, and to vote at, the Special Shareholders Meeting. As of the record date,
there were 201,591,373.094 shares of AMCORE Vintage Funds, outstanding and
eligible to vote at the Special Shareholders Meeting. Please read the Proxy
Statement/Prospectus carefully before telling us, through your proxy card, how
you wish your shares to be voted. THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A
VOTE IN FAVOR OF THE PROPOSAL.
WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED. No postage is required. Prompt return of your proxy card
will be appreciated. Your vote is important no matter how many shares you own.
Columbus, Ohio BY ORDER OF THE BOARD OF TRUSTEES
January 21, 1998
George L. Stevens, Secretary
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TABLE OF CONTENTS
Page
----
SYNOPSIS............................................................. 3
RISK FACTORS......................................................... 4
PROPOSAL 1: AGREEMENT AND PLAN OF
REORGANIZATION....................................................... 4
IMG MUTUAL FUNDS, INC................................................ 16
AMCORE VINTAGE FUNDS................................................. 18
INFORMATION RELATING TO VOTING MATTERS............................... 20
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.................................................. 23
OTHER BUSINESS....................................................... 23
LEGAL MATTERS........................................................ 24
SHAREHOLDER INQUIRIES................................................ 24
EXHIBIT A--AGREEMENT AND
PLAN OF REORGANIZATION............................................... 25
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PROXY STATEMENT/PROSPECTUS
RELATING TO THE REORGANIZATION OF
AMCORE VINTAGE FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE 800-438-6375
IN EXCHANGE FOR SHARES OF
NEW VINTAGE FUNDS
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
This Proxy Statement/Prospectus is being furnished to shareholders of AMCORE
Vintage Funds ("AV Funds" or "Current Vintage Funds"), in connection with the
solicitation by its Board of Trustees of proxies to be used at the Special
Meeting of Shareholders of the AV Funds to be held at 3435 Stelzer Road,
Columbus, Ohio 43219 at 10:00 a.m. on February 13, 1998, and any adjournments
thereof. AV Funds are currently diversified registered open-end investment
companies. Shareholders of record as of the close of business on January 8, 1998
are entitled to vote at the Special Meeting. It is expected that this Proxy
Statement/Prospectus will be mailed to shareholders of AV Funds on or about
January 21, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization in which
all of the assets and liabilities of AV Funds will be acquired by the new
Vintage Funds series of IMG Mutual Funds, Inc., ("New Vintage Funds") in
exchange for shares of New Vintage Funds. The shares of New Vintage Funds
thereby received will then be distributed to shareholders of the AV Funds and
the AV Funds will be liquidated. As a result of the proposed reorganization,
each shareholder of the AV Funds will receive that number of full and fractional
shares of the corresponding series of shares of the New Vintage Funds having a
net asset value equal to the net asset value of such shareholder's shares of the
AV Funds held as of the date of the proposed reorganization.
IMG Mutual Funds, Inc., is a diversified registered open-end investment company
which issues its shares in separate portfolios or series, each with its own
investment objectives and policies. The investment objectives, policies and
restrictions of the seven portfolios of New Vintage Funds participating in the
proposed reorganization are similar to those of the corresponding portfolios of
AV Funds. For a comparison of the investment objectives, policies and
restrictions of AV Funds and New Vintage Funds, see "Proposal 1: Agreement and
Plan of Reorganization--Investment Objectives, Policies and Restrictions."
Investors Management Group, Ltd., ("IMG") serves as the investment advisor for
the New Vintage Funds. IMG is being acquired by AMCORE Financial, Inc., the
parent of AMCORE Capital Management, Inc., investment adviser to AV Funds.
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This Proxy Statement/Prospectus, which should be retained for future reference,
sets forth concisely the information about the New Vintage Funds that a
prospective investor should know before investing. This document will give you
the information you need to vote on the proposed reorganization described
herein. Much of the information is required under rules of the Securities and
Exchange Commission and some of it is technical in nature. If there is anything
you do not understand, please contact us at our toll-free number,
1-800-798-1819. Shareholders should return proxies and any correspondence to
3435 Stelzer Road, Columbus, Ohio 43219.
The following documents have been filed with the Securities and Exchange
Commission and are incorporated into this Proxy Statement/Prospectus by
reference: (i) a Statement of Additional Information dated the date hereof and
relating to this Proxy Statement/Prospectus; (ii) the Prospectus and Statement
of Additional Information of the New Vintage Funds dated January 14, 1998; and
(iii) the Prospectus and Statement of Additional Information of AV Funds, dated
July 31, 1997. Copies of the referenced documents are available upon request and
without charge by calling 1-800-798-1819.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATOR, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES OF THE NEW VINTAGE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
No person has been authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus and, if so given
or made, such information or representation must not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction in
which, or to any person to whom, it is unlawful to make such offer or
solicitation.
This Proxy Statement/Prospectus is dated January 16, 1998.
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SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the Board of Trustees of AMCORE
Vintage Funds for use at the Special Meeting of Shareholders to be held on
February 13, 1998 (and if adjourned, at any adjourned meeting) for the purpose
stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THE PROPOSAL?
Your Funds' Trustees recommend that you vote for the proposed
reorganization.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on January 8, 1998, are
entitled to be present and vote at the meeting or any adjourned meeting. Each of
the seven AV Funds will vote separately on the proposal, and the proposal must
be approved by all seven portfolios to be adopted. The Notice of Special
Meeting, combined Proxy Statement/Prospectus and the enclosed form of proxy are
being mailed to shareholders of record on or about January 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 AV Funds' Secretary at the
principal offices of AV Funds, 3435 Stelzer Road, Columbus, Ohio 43219) or in
person at the meeting, by executing a superseding proxy, or by submitting a
notice of revocation. If you sign the proxy, but don't fill in a vote, your
shares will be voted in accordance with the Trustees' recommendations. If any
other business is brought before the meeting, your shares will be voted at the
Trustees' discretion.
WHAT IS BEING PROPOSED?
The Trustees of AV Funds are recommending that shareholders approve the
reorganization (the "Reorganization") of AV Funds into corresponding portfolios
of New Vintage Funds. An Agreement and Plan of Reorganization provides for the
transfer of all of the assets and liabilities of AV Funds to New Vintage Funds,
in exchange for shares of New Vintage Funds. The completion of these
transactions, followed by the distribution of New Vintage Funds shares to AV
Funds shareholders, will result in shareholders of AV Funds becoming
shareholders of New Vintage Funds, followed by the dissolution of AV Funds. Upon
completion of the Reorganization:
* Shareholders of AV Funds will be Shareholders of New Vintage
Funds and will own shares of a New Vintage Funds Portfolio
which will have substantially similar investment objectives,
policies and restrictions and purchase and redemption
procedures as the corresponding AV Funds Portfolio they
currently own.
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* There should be no federal income tax consequences to you as a
Shareholder of the AV Funds, resulting from the Reorganization
and your receipt of the New Vintage Funds shares.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series of proposed
transactions in which:
* IMG, the advisor to New Vintage Funds, will be acquired by
AMCORE Financial, Inc., the parent of the investment adviser
to AV Funds; and
* New Vintage Funds, AV Funds and certain other funds advised by
IMG will be combined to form a mutual fund family of 10 funds
with aggregate net assets of approximately $910 million.
There can be no assurance that all aspects of the proposed series of
transactions will be completed, as several transactions are subject to
shareholder votes. However, completion of the Reorganization is subject to
completion of the other related transactions. ALL EXPENSES RELATED TO THIS PROXY
STATEMENT/PROSPECTUS AND THE REORGANIZATION WILL BE BORNE BY IMG AND AMCORE
FINANCIAL, INC.
RISK FACTORS
Management of New Vintage Funds believes that an investment in New
Vintage Funds does not involve unusual or significant risks compared to an
investment in AV Funds. For more detailed information concerning the investment
practices, including possible risks, of New Vintage Funds and AV Funds, see
"Proposal 1: Agreement and Plan of Reorganization--Investment Objectives,
Policies and Practices," the New Vintage Funds Prospectus dated January 14, 1998
and the AV Funds Prospectus dated July 31, 1997.
As AV Funds shareholders you should particularly note the discussions
of New Vintage Funds' fixed income investment policies. In general, these
policies permit somewhat longer average portfolio maturities and permit some
investment in lower quality debt securities. Longer average portfolio maturity
can result in greater price fluctuation than shorter maturities. Lower quality
can result in higher risk of loss of principal.
PROPOSAL 1: AGREEMENT AND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Trustees of the AV Funds unanimously approved the proposed
Agreement and Plan of Reorganization (the "Plan") providing for the
4
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reorganization (the "Reorganization"). If the Plan is approved, the proposed
reorganization would occur on or about February 14, 1998 (the "Closing Date").
The value of the assets of AV Funds will be determined as of 3:00 p.m. Central
Time on the business day immediately prior to the Closing Date. The aggregate
net asset value of the shares of New Vintage Funds issued in exchange, will
equal the aggregate net asset value of the shares of AV Funds as set forth
below.
AV Funds New Vintage Funds
U.S. Government Obligations Fund Government Assets Fund
("AVF Government") ("New Government")
Fixed Income Fund ("AVF Income") Income Fund ("New Income")
Intermediate Tax-Free Fund Municipal Bond Fund
("AVF Tax-Free") ("New Municipal")
Equity Fund ("AVF Equity") Equity Fund ("New Equity")
Balanced Fund ("AVF Balanced") Balanced Fund ("New Balanced")
Aggressive Growth Fund Aggressive Growth Fund
("AVF Aggressive Growth") ("New Aggressive Growth")
Fixed Total Return Fund Limited Term Bond Fund
("AVF Total Return") ("New Limited")
In connection with the proposed Reorganization, shares of New Vintage
Funds will be distributed to shareholders of AV Funds, and AV Funds will be
terminated. As a result of the proposed Reorganization, each shareholder of AV
Funds will cease to be a shareholder of AV Funds and will receive that number of
full and fractional shares of the corresponding New Vintage Funds having a net
asset value equal to the net asset value of, such shareholder's corresponding
shares of AV Funds. Present holders of shares of AVF Government will receive "T
Shares" of New Government in the Reorganization. Present holders of shares of
AVF Equity whose shares are held in a fiduciary account will receive "T Shares"
of New Equity. All other shareholders of AVF Equity will receive "S Shares" of
New Equity. The foregoing is only a summary and is qualified in its entirety by
reference to the Plan, a copy of which is Exhibit A hereto.
If the Reorganization becomes effective, AMCORE Capital Management,
Inc., the present investment adviser to AV Funds, will not be an investment
adviser to the New Vintage Funds. IMG will provide investment advisory services
to the New Vintage Funds through an Investment Advisory Agreement with New
Vintage Funds.
Because all shares of AV Funds and New Vintage Funds are in
uncertificated book-entry form, the exchange of shares will take place
automatically on the Closing Date. It will not be necessary for shareholders to
submit transmittal forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
AV Funds shareholders will enjoy all the same services and privileges
as other shareholders of New Vintage Funds, including the opportunity to
exchange into portfolios with a wide variety of investment objectives and
policies. Purchase and redemption procedures for New Vintage Funds are
substantially similar to those of AV Funds.
5
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INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives, policies and restrictions of the New Vintage
Funds are substantially similar to those of the corresponding AV Funds. The
following paragraphs summarize all of the material differences between the
respective New Vintage Funds and the corresponding AV Funds.
NEW GOVERNMENT AND AVF GOVERNMENT. The investment objectives, policies
and restrictions of these two portfolios are identical. The investment objective
is to seek current income consistent with maintaining liquidity and stability of
principal.
NEW INCOME AND AVF INCOME. The investment objective of AVF Income is to
seek total return consistent with the production of current income and the
preservation of capital. The investment objective of New Income will be to seek
current income, consistent with the preservation of capital. This change is
being made as part of a plan to emphasize current income (i.e., yield) in the
management of this IMG Portfolio. The effect of this difference may result in a
lower overall return as capital gains will not be emphasized. New Income will
maintain a dollar-weighted average portfolio maturity of four to ten years,
compared to the AVF Income's average portfolio maturity of four to six years.
The average portfolio maturity of New Income is being extended to improve yield.
While yield may improve, a longer average portfolio maturity may also subject
New Income to greater interest rate risk resulting in greater volatility in the
net asset value of the shares.
The investment policies of New Income also eliminate the present AVF
Income restriction that 75% of assets will be invested in securities with stated
or remaining maturities of 15 years or less. This maximum maturity restriction
has been eliminated to allow more flexibility in the purchase of individual
fixed income securities, but may subject New Income to a greater interet rate
risk.
Minimum credit quality restrictions will be changed in three ways.
First, New Income will allow investment in fixed income securities rated within
the five highest categories at the time of purchase by a nationally recognized
statistical rating organization (an "NRSRO") or, if unrated, found by IMG to be
of comparable quality. AVF Income limits investments to the four highest
categories. Fixed income securities in the fifth highest rating (i.e., "Ba" or
"BB"), are considered to be below Investment Grade. Bonds so rated are judged to
have speculative elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be very moderate and
thereby not well safeguarded. However, IMG believes that its fixed income
managers have experience conducting credit analysis on and managing investments
in "Ba" quality credits through their work for various insurance companies.
Second, New Income will invest no less than 65%, of the value of its total
assets in fixed income securities rated within the three highest rating
categories at the time of purchase by an NRSRO or, if unrated, found by the IMG
to be of comparable quality. AVF Income is not so limited. Third, in light of
the risks inherent in investing in below-Investment Grade fixed income
securities, New Income will limit its investments in "Ba" and "BB" securities to
a maximum of 25%.
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NEW MUNICIPAL AND AVF TAX-FREE. The investment objectives of these
portfolios are identical, namely, to seek current income, consistent with
preservation of capital, that is exempt from federal income taxes.
Three changes will be made in the investment policies. First, New
Municipal will maintain a dollar-weighted average portfolio maturity of four to
ten years, compared to the AVF Tax-Free's average portfolio maturity of five to
nine years. Second, New Municipal will invest in municipal bonds rated within
the five highest categories by an NRSRO rather than the three highest categories
as is the case for AVF Tax-Free. Fixed Income securities in the fifth highest
rating (i.e., "Ba" or "BB"), are considered to be below Investment Grade. Bonds
so rated are judged to have speculative elements; their future cannot be
considered as well-assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded. However, IMG
believes that its fixed income managers have experience conducting credit
analysis on and managing investments in "Ba" quality credits through their work
for various insurance companies. Third, in light of the risks inherent in
investing in below-Investment Grade fixed income securities, New Municipal will
limit its investments in "Ba" and "BB" securities to a maximum of 25%. These
changes are being made to give the portfolio managers more flexibility in the
selection of tax exempt securities with the goal of improving total return over
time.
NEW EQUITY AND AVF EQUITY. The investment objectives, policies and
restrictions of these portfolios are identical. The investment objective is
long-term capital appreciation.
NEW BALANCED AND AVF BALANCED. The investment objective of these
portfolios are identical, namely, to seek long-term growth of capital and
Income.
The investment policies of AVF Balanced require that as to fixed income
securities 75% will be invested in securities with stated or remaining
maturities of 15 years or less. That maximum maturity restriction has been
eliminated from New Balanced to allow more flexibility in the purchase of
individual fixed income securities, and to make New Balanced consistent with New
Income (discussed above). The average maturity of the fixed income portion of
AVF Balanced is also being extended, from its present three to seven years, to
four to ten years for New Balanced. The New Balanced Funds' ability to invest in
securities with maturities longer than 15 years and a stated average maturity of
four to ten years subject the New Balanced Fund to greater interest rate risk
than the AVF Balanced Fund, thereby potentially creating greater volatility in
the net asset value.
The minimum credit quality of the fixed income securities will be
changed in two ways. First, New Balanced will allow investment in fixed income
securities rated within the five highest categories at the time of purchase by
an NRSRO or, if unrated, found by IMG to be of comparable quality. AVF Balanced
limits investments to the four highest categories. Fixed income securities in
the fifth highest rating (i.e., "Ba" or "BB"), are considered to be below
Investment Grade. Bonds so rated are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
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and principal payments may be very moderate and thereby not well safeguarded.
However, IMG believes that its fixed income managers have experience conducting
credit analysis on and managing investments in "Ba" quality credits through
their work for various insurance companies. Second, in light of the risk
inherent in investing in below-Investment Grade fixed income securities, New
Balanced will limit its investments in these securities to a maximum of 25%.
NEW AGGRESSIVE GROWTH AND AVF GROWTh. The investment objectives,
policies and restrictions of these portfolios are identical. The investment
objectives is long-term capital growth.
NEW LIMITED AND AVF TOTAL RETURN. The investment objective of AVF Total
Return is to seek long term total return. The investment objective of New
Limited will be to seek total return from a portfolio of limited term fixed
income securities. It is anticipated that New Limited will continue to be
managed for total return, but will change its investment policies to
significantly limit its average maturity. New Limited expects to maintain a
dollar-weighted average portfolio maturity of one to four years, compared to the
AVF Total Return's dollar-weighted average portfolio maturity of three to seven
years. The average portfolio maturity of New Limited is being shortened because
effective with the Reorganization shareholders will have the opportunity to
invest in the "Vintage Bond Fund" which will be the new name of the existing IMG
Bond Fund. By comparison, the Vintage Bond Fund's investment objective will be
to seek total return consistent with the production of current income and the
preservation of capital. The average portfolio maturity of the Vintage Bond Fund
will be four to ten years.
The investment policies of New Limited also eliminate the present
restriction that 75% will be invested in securities with stated or remaining
maturities of 15 years or less. This maximum maturity restriction has been
eliminated to allow more flexibility in the purchase of individual fixed income
securities. This results in potentially subjecting New Limited to greater
interest rate risk than the current AVF Total Return Fund. Minimum credit
quality restrictions will be changed in two ways. First, New Limited will allow
investment in fixed income securities rated within the five highest categories
at time of purchase by an NRSRO or, if unrated, found by IMG to be of comparable
quality. AVF Total Return limits investments to the four highest categories.
Fixed income securities in the fifth highest rating (i.e., "Ba" or "BB"), are
considered to be below Investment Grade. Bonds so rated are judged to have
speculative elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded. However, IMG believes that its fixed income
managers have experience conducting credit analysis on and managing investments
in "Ba" quality credits through their work for various insurance companies.
Second, in light of the risks inherent in investing in below-Investment Grade
fixed income securities, New Limited Term will limit its investments in these
securities to a maximum of 25%.
For a detailed description of the investment objectives, policies and
restrictions of the New Vintage Funds and the AV Funds, see the New Vintage
Funds Prospectus dated January 14, 1998, and the AVF Prospectus dated July 31,
1997, all of which are delivered herewith.
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BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Trustees of AV Funds,
including all of the Trustees who are not "interested persons" as defined by the
Investment Company Act of 1940 (the "Disinterested Trustees"), have unanimously
concluded that the Reorganization will be in the best interests of the
shareholders of AV Funds, and that the interests of the existing shareholders of
AV Funds will not be diluted as a result of the transactions contemplated by the
Plan. The Board of Trustees therefore has submitted the Plan for approval by the
shareholders at the Special Meeting of Shareholders to be held on February 13,
1998. Approval of the Plan requires the vote of a majority of the outstanding
voting securities of each AV Funds Portfolio.
The Trustees of AV Funds have approved the Plan because they believe
that, overall, it will benefit shareholders. In determining whether to recommend
the approval of the proposed Reorganization to the shareholders, the Trustees
considered a number of factors, including, but not limited to: (i) the fact that
IMG will manage the investments of New Vintage Funds and will have access to
additional investment personnel when IMG is acquired by AMCORE Financial, Inc.;
(ii) the capabilities and resources of the other service providers of the New
Vintage Funds in the areas of marketing, investment and shareholder services;
(iii) the expenses and advisory fees applicable to AV Funds before the
Reorganization and the estimated expense ratios and fees of New Vintage Funds
after the Reorganization; (iv) the terms and conditions of the Plan and whether
the proposed Reorganization will result in dilution of AV Funds shareholder
interests; (v) the anticipated economies of scale which may be realized
(although not presently determined) through the combination of the funds,
including the addition of assets from the acquisition by New Vintage Funds of
other existing funds; (vi) the assumption by IMG and AMCORE Financial, Inc., of
the costs estimated to be incurred to complete the proposed Reorganization;
(vii) the investment objectives and policies of New Vintage Funds; and (viii)
the future growth prospects of New Vintage Funds.
In this regard, the Trustees of AV Funds reviewed information provided
by IMG relating to the anticipated impact to the shareholders of AV Funds as a
result of the proposed Reorganization. The Trustees considered the probability
that the elimination of duplicative operations and the increase in the asset
levels of New Vintage Funds after the proposed Reorganization will result in the
following potential benefits for shareholders of AV Funds, although there can,
of course, be no assurances in this regard:
(1) ACHIEVEMENT OF ECONOMIES OF SCALE AND REDUCED PER SHARE
EXPENSES. Combining the net assets of AV Funds with the assets
of New Vintage Funds, and other funds being acquired by New
Vintage Funds, generally should lead to reduced total
operating expenses for shareholders of AV Funds on a per share
basis, by allowing fixed and relatively fixed costs, such as
accounting, legal and printing expenses, to be spread over a
larger asset base.
(2) ELIMINATION OF SEPARATE OPERATIONS. Consolidating AV Funds and
New Vintage Funds should eliminate any duplication of services
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and expenses that currently exists as a result of their
separate operations and will promote more efficient operations
on a more cost-effective basis in the future.
The Trustees of AV Funds also considered the distribution capabilities
of BISYS Fund Services, Inc., which will become the Distributor of the shares of
New Vintage Funds. If BISYS Fund Services, Inc. is able to distribute New
Vintage Funds shares successfully, growth in assets will make possible the
realization of additional economies of scale and attendant savings in costs to
New Vintage Funds and its shareholders. Of course, achievement of these goals
cannot be assured.
The Board of Trustees of AV Funds also considered certain possible
disadvantages of the proposed Reorganization. Although fiduciary holders of AVF
Equity shares should realize a decrease in annual operating expenses from 1.33%
to 1.14%, retail and custodial shareholders will experience an increase in
annual operating expenses from 1.33% to 1.39%, see "Expense Summary" hereafter.
Possible changes in interest rate risk, price volatility and credit risk,
discussed above under "Investment Objectives, Policies and Restrictions," were
also considered, along with the possibility that when the AV Funds are combined
with the New Vintage Funds, certain existing portfolios of New Vintage Funds and
certain other portfolios, some portfolios may experience net redemptions as
shareholders adjust their investments in light of the portfolios available in
the New Vintage Funds family.
EXPENSE SUMMARY
The purpose of the following tables is to inform investors of the
various costs and expenses they will bear, directly or indirectly, as
shareholders of New Vintage Funds, and to compare those costs and expenses with
the costs and expenses borne by shareholders of AV Funds during the past fiscal
year. Present holders of shares of AVF Government will receive "T Shares" of New
Government in the Reorganization. Present holders of shares of AVF Equity whose
shares are held in a fiduciary account will receive "T Shares" of New Equity.
All other shareholders of AVF Equity will receive "S Shares" of New Equity.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AVF NEW AVF NEW AVF NEW
GOVERNMENT GOVERNMENT INCOME INCOME TAX-FREE MUNICIPAL
---------- ---------- ------ ------ -------- ---------
T SHARES
--------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
10
<PAGE>
ESTIMATED ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees 0.40% 0.40% 0.60% 0.60% 0.60% 0.60%
12b-1 Fees 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses
Shareholder Servicing Fees2 0.00% 0.00% 0.25% 0.00% 0.25% 0.00%
Administrative Fees 0.20% 0.21% 0.20% 0.26% 0.20% 0.26%
Other Expenses 0.16% 0.16% 0.15% 0.15% 0.23% 0.23%
Total Other Expenses 0.36% 0.37% 0.60% 0.41% 0.68% 0.49%
------ ----- ----- ----- ----- -----
Total Fund Operating Expenses
After Waivers 3 0.76% 0.77% 1.20% 1.01% 1.28% 1.09%
</TABLE>
<TABLE>
<CAPTION>
AVF NEW AVF NEW AVF NEW AVF NEW
EQUITY EQUITY BALANCED BALANCED GROWTH GROWTH TOTAL RETURN LIMITED
------ ------ -------- -------- ------ ------ ------------ -------
T SHARES S SHARES
-------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a
percentage of original purchase
price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Estimated Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.75% 0.75% 0.75% 0.75% 0.75% 0.95% 0.95% 0.60% 0.60%
12b-1 Fees 1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses
Shareholder Servicing Fees 2 0.25% 0.00% 0.25% 0.25% 0.00% 0.25% 0.00% 0.25% 0.00%
Administrative Fees 0.20% 0.26% 0.26% 0.20% 0.26% 0.20% 0.26% 0.20% 0.26%
Other Expenses 0.13% 0.13% 0.13% 0.35% 0.35% 0.23% 0.23% 0.20% 0.20%
Total Other Expenses 0.58% 0.39% 0.64% 0.80% 0.61% 0.68% 0.49% 0.65% 0.46%
------ ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating Expenses
After Waivers 3 1.33% 1.14% 1.39% 1.55% 1.36% 1.63% 1.44% 1.40% 1.06%
</TABLE>
1 The New Vintage Funds have adopted a Distribution and Shareholder Service Plan
(the "Plan") pursuant to which a Fund is authorized to pay or reimburse the
Distributor a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets of such Fund ("distribution fees"). Currently,
however, it is intended that no such amounts will be paid under the Plan by any
of the Funds. Shareholders will be given at least 30 days' notice prior to the
payment of any fees under the Plan and no payments will be made for a period of
at least one year following completion of the proposed Reorganization.
2 The New Vintage Funds have adopted an Administrative Services Plan (the
"Services Plan") pursuant to which a Fund is authorized to pay banks and other
financial institutions which agree to provide certain ministerial, recordkeeping
and/or administrative support services for their customers or account holders a
periodic amount calculated at an annual rate not to exceed 0.25% of the average
daily net assets of such Fund ("services fees"). Currently only S Shares of New
Government and S Shares of New Equity pay service fees. The New Vintage Funds
are not paying any services fees under the Services Plan for the other Funds;
however, the Board of Directors may elect to pay such fees at any time without
further notice to shareholders following one year after completion of the
proposed Reorganization.
3 Absent the reduction of distribution fees and services fees, "Total Fund
Operating Expenses" as a percentage of average daily net assets would be 1.02%
for New Government-T Shares and 1.01% for AVF Government; 1.51% for New Income
and 1.45% for AVF Income; 1.59% for New Municipal and 1.53% for AVF Tax-Free;
1.64% for New Equity-T Shares, 1.64% for New Equity-S Shares and 1.58% for AVF
Equity; 1.86% for New Balanced and 1.80% for AVF Balanced; 1.94% for New
Aggressive Growth and 1.88% for AVF Growth; and 1.56% for New Limited and 1.65%
for AVF Total Return.
11
<PAGE>
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Administrative Servicing
Fees and/or absorb certain expenses for a Fund. Long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers. Wire transfers may
be used to transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
AVF Government $9 $24 $42 $94
New Government-T Shares $8 $25 $43 $95
AVF Income $12 $38 $66 $145
New Income $10 $32 $56 $124
AVF Tax-Free $13 $41 $70 $155
New Municipal $11 $35 $60 $133
AVF Equity $14 $42 $73 $160
New Equity-T Shares $12 $36 $63 $139
New Equity-S Shares $14 $44 $76 $167
AVF Balanced $16 $49 $84 $185
New Balanced $14 $43 $74 $164
AVF Aggressive Growth $17 $51 $80 $193
New Aggressive Growth $15 $46 $79 $172
AVF Total Return $14 $44 $77 $168
New Limited $11 $34 $58 $129
The purpose of the above table is to assist a potential purchaser of a Fund's
Shares in understanding the various costs and expenses that an investor in a
Fund will bear directly or indirectly. THE FOREGOING SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN. The above Example is based
on the expense information included in the previous Expense Summary. The Expense
Summary and Examples do not reflect any charges that may be imposed by financial
institutions on their customers.
12
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
AV Funds shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of AV Funds shares for shares of New Vintage Funds.
Likewise, neither AV Funds nor New Vintage Funds should recognize any gain or
loss for federal income tax purposes through the exchange of AV Funds assets and
liabilities for shares of New Vintage Funds.
Consummation of the Reorganization is subject to the condition that New
Vintage Funds and Coventry receive an opinion from Cline, Williams, Wright,
Johnson & Oldfather (which opinion has now been received) to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of AV Funds (the "Acquired Funds") to New Vintage Funds in exchange
for shares of New Vintage Funds and the distribution to shareholders of the
Acquired Funds of the shares of New Vintage Funds so received, as described in
the Plan, will constitute a reorganization within the meaning of Section
368(a)(1)(C) or Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) in accordance with Sections 361(a), 361(c)(1) and
357(a) of the Code, no gain or loss will be recognized by the Acquired Funds as
a result of such transactions; (iii) in accordance with Section 354(a)(1) of the
Code, no gain or loss will be recognized by the shareholders of the Acquired
Funds or New Vintage Funds on the distribution of shares of New Vintage Funds to
shareholders of the Acquired Funds in exchange for shares of the Acquired Funds;
(iv) in accordance with Section 358(a)(1) of the Code, the basis of New Vintage
Funds shares received by a shareholder of an Acquired Fund will be the same as
the basis of the shareholder's shares immediately before the time when the
Reorganization becomes effective;; (v) in accordance with Section 362(b) of the
Code, the basis to New Vintage Funds of the assets of the Acquired Funds
received pursuant to such transactions will be the same as the basis of the
assets in the hands of the Acquired Funds immediately before such transactions;
(vi) in accordance with Section 1223(1) of the Code, a shareholder's holding
period for shares of New Vintage Funds will be determined by including the
period for which the shareholder held the shares of the Acquired Fund exchanged
therefor, provided such shares of the Acquired Fund were held as a capital
asset; and (vii) in accordance with Section 1223(2) of the Code, the holding
period for New Vintage Funds with respect to the assets received in the
Reorganization will include the period for which such assets were held by the
Acquired Funds.
No party to the Reorganization has sought a tax ruling from the
Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the
IRS and does not preclude the IRS from adopting a contrary position.
Shareholders should consult their own advisers concerning the potential tax
consequences to them, including state and local income tax consequences.
Both New Vintage Funds and AV Funds have conformed their operations to
the requirements of Subchapter M of the Code and, as a result, do not bear any
corporate level federal or state income tax.
13
<PAGE>
SHARES AND SHAREHOLDER RIGHTS
IMG Mutual Funds, Inc., is a Maryland corporation organized on November
16, 1994. The New Vintage Funds were created on October 30, 1997, as separate
series of IMG Mutual Funds, Inc., to acquire the assets and continue the
business of the corresponding current Vintage Funds offered by Coventry, a
Massachusetts business trust. Each share of a New Vintage Funds Portfolio
represents an equal proportionate interest in it and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
it as are declared at the discretion of the Directors.
The Charter of IMG Mutual Funds, Inc., permits it, by resolution of its
Board of Directors, to create new series of common stock relating to new
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same New Vintage Funds. Differences could exist,
for example, in the sales load, Rule 12b-1 fees or service plan fees applicable
to different classes of Shares offered by a particular New Vintage Fund. Such an
arrangement could enable New Vintage Funds to tailor its marketing efforts to a
broader segment of the investing public with a goal of attracting additional
investments. Reference is made to the New Vintage Funds Prospectus dated January
14, 1998, for a detailed description of the classes of shares now offered under
the heading "Organization and Shares of the Funds."
Shareholders of New Vintage Funds are entitled to one vote for each
full share held and proportionate fractional votes for fractional shares held.
Shares of each New Vintage Fund will vote together and not by class unless
otherwise required by law or permitted by the Board of Directors. All
shareholders of each New Vintage Fund will vote together as a class on matters
relating to that Portfolio's investment advisory agreement, investment objective
and fundamental policies.
Shares of New Vintage Funds have non-cumulative voting rights and,
accordingly, the holders of more than 50 percent of New Vintage Funds and other
series of the IMG Mutual Funds, Inc., outstanding shares (irrespective of class)
may elect all of the Directors. Shares have no preemptive rights and only such
conversion and exchange rights as the Board may grant in its discretion,
pursuant to the Charter of New Vintage Funds. When issued for payments as
described in the Prospectus, shares will be fully paid and nonassessable. All
shares are held in uncertificated form and will be evidenced by the appropriate
notation on the books of the transfer agent.
New Vintage Funds may operate without an annual meeting of shareholders
under specified circumstances if an annual meeting is not required by the 1940
Act, just as AV Funds has operated without regular annual shareholder meetings.
New Vintage Funds has adopted the appropriate provisions in its Bylaws and may,
in its discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. New Vintage Funds has also
adopted provisions in its Bylaws for the removal of Directors by the
shareholders. Shareholders may receive assistance in communicating with other
shareholders as provided in Section 16(c) of the 1940 Act.
14
<PAGE>
There normally will be no meetings of shareholders for the purpose of
electing Directors unless and until such time as less than a majority of the
Directors holding office has been elected by shareholders, at which time the
Directors then in office will call a shareholders' meeting for the election of
Directors. Shareholders may remove a Director by the affirmative vote of a
majority of the outstanding voting shares. In addition, the Directors are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Director or for any other purpose when requested
in writing to do so by the shareholders of record of not less than 10 percent of
the outstanding voting securities.
Although Coventry is organized as a Massachusetts business trust, there
are no significant differences in the rights of AV Funds shareholders and New
Vintage Funds shareholders. For a detailed description of the characteristics of
the shares of Coventry and the rights of AV Funds shareholders, see "General
Information-Description of the Group and its Shares" in the July 31, 1997 AV
Funds Prospectus.
CAPITALIZATION
The following table shows the capitalization of the respective Funds
and the pro forma capitalization of these Funds when all related reorganization
transactions are completed:
(In millions, except net asset value per share)
Net Asset
Total Net Shares Value
(As of November 30, 1997 unless Assets Outstanding Per Share
otherwise indicated) ------ ----------- ---------
AVF Government $143.967 143.937 $ 1.00
New Government $ - 0 - - 0 - $ 0.00
Pro Forma Combined $143.967 143.937 $ 1.00
AVF Income $101.912 10.190 $10.00
New Income $ - 0 - - 0 - $ 0.00
Pro Forma Combined $101.912 10.190 $10.00
AVF Tax-Free $ 46.884 4.448 $10.54
New Municipal $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 46.884 4.448 $10.54
AVF Aggressive Growth $ 83.002 5.381 $15.43
New Aggressive Growth $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 83.002 5.381 $15.43
15
<PAGE>
AVF Total Return $ 41.396 4.124 $10.04
New Limited $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 41.396 4.124 $10.04
AVF Equity $391.213 18.883 $20.72
IMG Core Stock (1) $ 13.140 1.027 $12.79
CVF Equity (1) $ 17.347 1.262 $13.75
New Equity $ - 0 - - 0 - $ 0.00
Pro Forma Combined $421.700 20.355 $20.72
(As of September 30, 1997)
AVF Balanced $ 44.746 3.188 $14.04
CVF Total Return (1) $ 10.923 0.965 $11.31
New Balanced $ - 0 - - 0 - $ 0.00
Pro Forma Combined $ 55.669 3.966 $14.04
(1) Fund proposed to be acquired in a related transaction; however completion of
the Reorganization described herein is not contingent upon such transaction
being completed.
The foregoing tables assume that all relevant reorganization
transactions occurred on the respective "as of" dates shown above and that
nominal initial capital was invested in each New Vintage Fund immediately prior
thereto.
IMG MUTUAL FUNDS, INC.
GENERAL. IMG Mutual Funds, Inc. ("IMG Funds") is a Maryland corporation
organized in November 1994, and operates as an open-end diversified management
investment company. For a general discussion of the New Vintage Funds, see the
accompanying New Vintage Funds Prospectus dated January 14, 1998. For the
convenience of AV Funds shareholders, cross-references to such Prospectuses are
set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. No information on per-share income
and capital changes is included in the New Vintage Funds January 14, 1998
Prospectus because the New Vintage Funds have not yet commenced substantive
operations. For a discussion of New Vintage Funds' expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Expense
Summary" in the New Vintage Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the New Vintage Funds'
investment objectives and policies, see "Investment Objectives, Policies and
Restrictions" in the New Vintage Funds Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of New Vintage
Funds rests with the Board of Directors who are elected by the shareholders of
New Vintage Funds. There are currently six Directors, two of whom are
16
<PAGE>
"interested persons" of New Vintage Funds within the meaning of that term under
the 1940 Act. The Directors, in turn, elect the officers of New Vintage Funds to
supervise actively its day-to-day operations.
The names of the Directors and officers of New Vintage Funds, their
addresses, and principal occupations during the past five years are as follows:
* David W. Miles President, Treasurer and Senior Managing Director,
Director Investors Management Group
* Mark A. McClurg Vice President, Secretary and Senior Managing Director,
President and Director Investors Management Group
Johnny Danos President, Danos, Inc., a personal investment company,
Director 1994-present; Audit Partner, KPMG Peat Marwick,
1963-1994
Debra Johnson Vice President and CFO, Business Publications
Director Corporation/Iowa Title Company, a publishing and
abstracting service company
Edward J. Stanek CEO, Iowa Lottery, a government-operated lottery
Director
* Ruth L. Prochaska Controller/Compliance Officer, Investors Management
Secretary Group
- ------------------
* Denotes "interested persons," as defined in the 1940 Act, of IMG
Funds and the Advisor.
INVESTMENT ADVISER AND ADMINISTRATOR. For a discussion of IMG and the services
performed by it and its fees, see "Management and Fees" in the New Vintage Funds
Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as the
New Vintage Funds distributor, the services performed by it and its fees, see
"Management and Fees" in the New Vintage Funds Prospectus.
SHARES. For a discussion of voting rights of shares of New Vintage Funds, see
"Organization and Shares of the Funds" in the New Vintage Funds Prospectus.
REDEMPTION OF SHARES. For a discussion concerning redemption of shares of New
Vintage Funds, see "Purchasing Shares" and "Redeeming Shares" in the New Vintage
Funds Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS. For a discussion of the New Vintage
Funds' policies with respect to dividends and distributions, see "Distributions
and Taxes" in the New Vintage Funds Prospectus.
17
<PAGE>
EXCHANGE PRIVILEGES. For a discussion of a New Vintage Fund shareholder's right
to exchange shares for shares of another New Vintage Fund, see "Purchasing
Shares - Exchange Privilege" in the New Vintage Funds Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which New
Vintage Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to the New Vintage Funds
may be addressed by writing to IMG, 2203 Grand Avenue, Des Moines, Iowa
50312-5338, or by calling toll free 800-798-1819.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management discussion of fund
performance is not included for the New Vintage Funds, which have not yet
commenced operations.
AMCORE VINTAGE FUNDS
GENERAL. The AMCORE Vintage Funds ("AV Funds") are a group of investment
portfolios offered by the Coventry Group, ("Coventry"), a Massachusetts business
trust. For a general discussion of AV Funds, see the accompanying AV Funds
Prospectus dated July 31, 1997. For the convenience of shareholders, certain
cross-references to such Prospectus are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. The AV Funds Prospectus contains
information on per share income and capital changes, under the heading
"Financial Highlights." For a discussion of AV Funds' expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Fee Table" in
the AV Funds Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of AV Funds' investment
objectives and policies, see "Investment Objectives, Policies and Risk Factors
of the Funds" in the AV Funds Prospectus.
TRUSTEES AND OFFICERS. Overall responsibility for management of AV Funds rests
with its Board of Trustees, who are elected by the shareholders. The Trustees
elect the officers to supervise actively the day-to-day operations.
The names of the Trustees and officers, their addresses, and principal
occupations during the past five years are as follows:
Positions(s) Held Principal Occupation
Name, Address and Age With Coventry During Past 5 Years
- --------------------- ----------------- -------------------
* Walter B. Grimm Chairman, President From June 1992 to present,
3435 Stelzer Road and Trustee employee of BISYS Fund Services,
Columbus, Ohio 43219 from 1987 to June 1992,
Age: 51 President of Leigh Investments
(Investment firm).
18
<PAGE>
Maurice G. Stark Trustee Retired. Until December 31,
505 King Avenue 1994, Vice President-Finance and
Columbus, Ohio 43201 Treasurer, Battelle Memorial
Age: 61 Institute (scientific research
and development service
corporation).
Michael M. VanBuskirk Trustee From June 1991 to present,
37 West Broad Street Executive Vice President of The
Suite 1001 Ohio Bankers' Association (trade
Columbus, Ohio 43215 association); from September
Age: 49 1987 to June 1991, Vice
President - Communications, TRW
Information Systems Group
(electronic and space
engineering).
Chalmers P. Wylie Trustee From April 1993 to present;
754 Stonewood Court Counsel, Kegler Brown Hill &
Columbus, Ohio 43235 Ritter; from January 1993 to
Age: 76 present, Adjunct Professor,
Ohio State University; from
January 1967 to January 1993,
member of the United States
House of Representatives for
the 15th District of Ohio.
* Nancy E. Converse Trustee From July 1990 to January 1998,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 47
J. David Huber Vice President From June, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services.
Columbus, Ohio 43219
Age: 50
Thresa Dewar Treasurer From March 1997 to present,
3435 Stelzer Road employee of BISYS Fund Services,
Columbus, Ohio 43219 from September 1994 to March
Age: 47 1997 Independent Consultant;
from April 1975 to September
1994, employee of Federated
Investors, Inc.
George L. Stevens Secretary From September 1996 to present,
3435 Stelzer Road employee of BISYS Fund Services,
Columbus, Ohio 43219 from September 1995 to September
Age: 45 1996, Independent Consultant,
from September 1989 to September
1995, Senior Vice President, AM
South Bank, N.A.
- --------------------
*Mr. Grimm and Ms. Converse are each considered to be an "interested person" of
Coventry as defined in the 1940 Act.
19
<PAGE>
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of AMCORE Capital
Management, Inc., BISYS Fund Services, Inc., and the services performed by them
and their fees, see "Management of the Group" in the AV Funds Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as
distributor, see "Management of the Group" in the AV Funds Prospectus.
SHARES. For a discussion of the significant attributes of AV Funds shares, see
"General Information - Description of the Group and its Shares" in the AV Funds
Prospectus.
REDEMPTION OR REPURCHASE OF SHARES. For a discussion concerning redemption or
repurchase of shares of AV Funds, see "How to Purchase and Redeem Shares" in the
AV Funds Prospectus.
DIVIDENDS AND DISTRIBUTIONS. For a discussion of AV Funds policies with respect
to dividends and distributions, see "Dividends and Taxes" in the AV Funds
Prospectus.
EXCHANGE PRIVILEGES. For a discussion of an AV Fund shareholder's right to
exchange shares of another AV Fund, see "How to Purchase and Redeem Shares" in
the AV Funds Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which AV
Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to AV Funds may be
addressed by writing to AV Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or
calling toll-free 800-438-6375.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management's discussion of the
performance of AV Funds is found in the annual report of AV Funds, which is
incorporated by reference into the Statement of Additional Information relating
to the July 31, 1997 Prospectus of AV Funds.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Trustees of AV Funds
for use at the Special Meeting of Shareholders to be held on February 13, 1998
(the "Meeting"). It is expected that the solicitation of proxies by the Board of
Trustees will be primarily by mail. AV Funds' officers may also solicit proxies
by telephone facsimile transmission or personal interview.
The following table gives the total number of shares of AVF outstanding
at the close of business on January 8, 1998, the record date for the meeting.
AVF Government ............................... 153,056,182.210
AVF Income ........................................ 10,260,657.981
AVF Equity ....................................... 20,430,520.699
20
<PAGE>
AVF Tax-Free....................................... 4,455,014.171
AVF Balanced...................................... 3,642,842.281
AVF Total Return ............................... 4,071,591.352
AVF Growth........................................ 5,674,560.400
Each shareholder of record on the record date is entitled to one vote
for each share owned and a fractional vote for each fractional share owned on
each matter presented for shareholder vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares presented thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. If no specification is
made, the proxy will be voted FOR the enumerated proposal. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to AV Funds, c/o Secretary, 3435 Stelzer Road, Columbus, Ohio 43219,
a written notice of revocation or a subsequently executed proxy or by attending
the meeting and electing to vote in person.
SHAREHOLDER AND BOARD APPROVAL
The Agreement and Plan of Reorganization will not become effective
unless approved by a majority of outstanding shares of each AV Fund. Broker
"non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares on a particular matter with respect to which the brokers
or nominees do not have discretionary power) will be deemed to be abstentions.
An abstention will have the same effect as casting a vote against the
Reorganization.
The vote of the shareholders of New Vintage Funds is not being
solicited in connection with the approval of the Plan since their approval or
consent is not necessary for the completion of the Reorganization.
As of the Record Date, all of the officers and Directors of AV Funds
beneficially owned, individually and as a group, less than 1% of the shares of
AV Funds. As of the record date, the following persons directly or indirectly
owned the 5% or more of the outstanding shares of the AV Funds:
AV GOVERNMENT FUND
NAME # OF SHARES % OWNERSHIP
Swebak & Company 104,161,630.360 68.05
Corelink Financial, Inc. 8,745,520.430 5.71
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AV EQUITY FUND
NAME # OF SHARES % OWNERSHIP
Firwood 5,626,683.902 27.54
Swebak & Company 7,571,300.449 37.06
Corelink Financial, Inc. 4,041,004.191 19.78
AV INCOME FUND
NAME # OF SHARES % OWNERSHIP
Firwood 964,931.153 9.40
Swebak & Company 8,851,026.753 86.26
AV TAX-FREE FUND
NAME # OF SHARES % OWNERSHIP
Firwood 278,318.823 6.25
Swebak & Company 3,719,974.190 83.50
AV BALANCED FUND
NAME # OF SHARES % OWNERSHIP
Firwood 554,938.441 15.23
Corelink Financial, Inc. 1,774,405.917 48.71
Community Financial Ins. Corp 258,521.480 7.10
AV TOTAL RETURN FUND
NAME # OF SHARES % OWNERSHIP
Swebak & Company 349,390.606 8.58
Firwood 2,398,139.108 58.90
Corelink Financial, Inc. 1,212,125.612 29.77
AV AGGRESSIVE GROWTH FUND
NAME # OF SHARES % OWNERSHIP
Swebak & Company 2,911,449.702 51.31
Firwood 1,115,852.088 19.66
Corelink Financial, Inc. 862,516,848 15.20
No other person or persons is believed to own of record or beneficially
5% or more of the outstanding shares of either AV Funds or an AV Fund as of
January 8, 1998.
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QUORUM
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve a
particular proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
in favor of such adjournments, and will vote those proxies required to be voted
AGAINST such proposal against any adjournment. Under the Declaration of Trust of
Coventry, a quorum is constituted by the presence in person or by proxy of the
holders of 50% of the aggregate outstanding shares of the Portfolios entitled to
vote at the Meeting. If a proxy is properly executed and returned and is marked
with an abstention, the shares represented thereby will be considered to be
present at the Meeting for the purpose of determining the existence of a quorum
for the transaction of business.
INFORMATION FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION
This combined Proxy Statement/Prospectus and the related Statement of
Additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which IMG Mutual
Funds, Inc., and the Coventry Group, respectively, have filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933 and
the 1940 Act to which reference is hereby made. The SEC file number for the AV
Funds Prospectus and the related Statement of Additional Information which are
incorporated by reference herein is Registration No. 33-44964. The SEC file
number for the New Vintage Funds Prospectus and related Statement of Additional
Information which are incorporated by reference herein is Registration No.
33-81998.
The AV Funds and the New Vintage Funds are subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in
accordance therewith, file reports and other information with the SEC. Proxy
material, reports, proxy and information statements, registration statements and
other information can be inspected and copied at the public reference facilities
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
filings may also be available at the following SEC regional offices:
Northwestern Atrium, 500 West Madison Street, Suite 1400, Chicago, IL
60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and 73 Tremont
Street, Suite 600, Boston, MA 02108-3912. Copies of such materials can also be
obtained by mail from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, Washington, D.C. 20549, at prescribed rates.
OTHER BUSINESS
The Fund's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
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the intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares in the
Reorganization will be passed upon for IMG Mutual Funds, Inc. by Ober, Kaler,
Grimes & Shriver, 120 E. Baltimore Street, Baltimore, Maryland 21202. Certain
tax matters will be passed upon by Cline, Williams, Wright, Johnson & Oldfather,
1900 First Bank Building, 233 South 13th Street, Lincoln, Nebraska 68508. Cline,
Williams, Wright, Johnson & Oldfather acts as legal counsel to IMG Mutual Funds,
Inc., Investors Management Group, and other funds and entities managed by
Investors Management Group.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this combined Proxy Statement/Prospectus or by
telephoning 800-438-6375.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT made as of the 12th day of November 1997, is made by and
between IMG Mutual Funds, Inc., a Maryland corporation ("IMG Funds") and The
Coventry Group, a Massachusetts business trust ("Coventry").
WITNESSETH:
WHEREAS, the Board of Directors of IMG Funds, and the Board of Trustees
of Coventry, each an open-end management investment company, deem it advisable
that IMG Funds acquire certain portfolios (the "Acquired Funds" hereinafter
identified) of Coventry in exchange for the assumption by IMG Funds of all of
the liabilities of the Acquired Funds and the issuance of shares of IMG Funds
which are thereafter to be distributed by Coventry in complete liquidation and
termination of the Acquired Funds and in exchange for all of the outstanding
shares of the Acquired Funds, with the intent that the transactions described
herein shall qualify as a tax-free reorganization under Section 368(a)(1)(C) of
the Internal Revenue Code of 1986 (the "Reorganization"); and
WHEREAS, the portfolios of Coventry to be acquired pursuant to this
Agreement are AMCORE Vintage U.S. Government Obligations Fund (the "Government
Fund"), AMCORE Vintage Fixed Income Fund (the "Income Fund"), AMCORE Vintage
Intermediate Tax-Free Fund (the "Tax-Free Fund"), AMCORE Vintage Equity Fund
(the "Equity Fund"), AMCORE Vintage Balanced Fund (the "Balanced Fund"), AMCORE
Vintage Aggressive Growth Fund (the "Growth Fund") and AMCORE Vintage Fixed
Total Return Fund (the "Total Return Fund"), each an "Acquired Fund" and,
collectively, the "Acquired Funds";
NOW THEREFORE, in consideration of the mutual promises herein
contained, each of the parties hereto represents and warrants to, and agrees
with the other party as follows:
1. IMG Funds hereby represents, warrants and covenants to Coventry
that:
(a) IMG Funds is a corporation with transferable shares
duly organized and validly existing under the laws of
Maryland, and has full power to own its properties
and assets and to carry on its business as such
business is now being conducted.
(b) IMG Funds' statement of assets and liabilities as of
April 30, 1997, and the related statements of
operations and changes in net assets for the fiscal
year ended April 30, 1997, all as audited by KPMG
Peat Marwick LLP, have been prepared in accordance
with generally accepted accounting principles applied
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on a consistent basis. Such statement of assets and
liabilities fairly presents the financial position
and net assets of IMG Funds as of such date and such
statements of operations and changes in net assets
fairly present the results of its operations for the
period covered thereby;
(c) There are no claims, actions, suits or proceedings
pending or, to its knowledge, threatened against or
affecting IMG Funds or its properties or business or
its right to issue and sell shares, or which would
prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with or,
to IMG Funds' knowledge, threatened with any charge
or investigation of, any violation of any provision
of any federal, state or local law or any
administrative ruling or regulation relating to any
aspect of its business or the issuance or sale of its
shares;
(d) IMG Funds is not a party to or subject to any
judgment or decree or order entered in any suit or
proceeding brought by any governmental agency or by
any other person enjoining it in respect of, or the
effect of which is to prohibit, any business practice
or the acquisition of any property or the conduct of
business by it or the issuance or sale of its shares
in any area;
(e) IMG Funds has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has
made a proper election to be treated as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code") for each of its
taxable years. IMG Funds has not committed any action
or failed to perform any necessary action that would
render invalid its election to be treated as a
regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this
Agreement on behalf of IMG Funds does not, and the
consummation of the transactions contemplated hereby
will not violate, or conflict with any provision of
IMG Funds' Charter or By-Laws, or any provision of,
or result in the acceleration of any obligation
under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or
decree to which it is party or by which it or any of
its assets is bound, or violate or conflict with any
other material contractual or statutory restriction
of any kind or character to which it is subject;
(g) This Agreement has been duly authorized, executed,
and delivered by IMG Funds and constitutes a valid
and binding agreement of IMG Funds and all
governmental and other approvals required for IMG
Funds to carry out the transactions contemplated
hereunder have been or on or prior to the Closing
Date (as herein defined) will have been obtained. IMG
Funds will comply with all applicable laws and
regulations in carrying out the transactions
26
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contemplated hereunder, including, without
limitation, the Investment Company Act of 1940, as
amended (the "1940 Act");
(h) IMG Funds is registered under the 1940 Act as an
open-end, diversified management investment company.
IMG Funds is currently in compliance with the 1940
Act and the rules of the Securities and Exchange
Commission (the "Commission") promulgated thereunder.
(i) On the Closing Date, IMG Funds will own its assets
free and clear of all liens, claims, charges, options
and encumbrances;
(j) On or before the Closing Date IMG Funds will have
created and registered shares of seven new series
(collectively, the "Vintage Clone Funds") each of
which series will be a portfolio of securities
managed under investment objectives, policies and
restrictions substantially similar to one of the
Acquired Funds, as more fully described below;
(k) On the Closing Date the shares of the Vintage Clone
Funds to be delivered to Coventry hereunder shall
have been registered under the Securities Act of
1933, as amended (the "1933 Act") and duly
authorized, and, when issued and delivered pursuant
to this Agreement, will be validly issued, fully paid
and nonassessable; and IMG Funds will comply with all
applicable laws in connection with the issuance of
such shares and shall not be subject to a stop-order
of the Commission in connection therewith; and
(l) On the Closing Date, the shares of the Vintage Clone
Funds to be delivered to Coventry hereunder shall
have been registered with the appropriate securities
administrator or agency of each state under whose
securities law such registration is required.
2. Coventry hereby represents, warrants and covenants to IMG Funds
that:
(a) Coventry is a business trust, with transferable
shares, duly organized and validly existing under the
laws of the State of Massachusetts, and has full
power to own its properties and assets and to carry
on its business as such business is now being
conducted.
(b) The statement of assets and liabilities as of March
31, 1997, and the related statements of operations
and changes in net assets for the fiscal year ended
March 31, 1997 of each Acquired Fund, all as audited
by Ernst & Young LLP, have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis. Each such
statement of assets and liabilities fairly presents
the financial position and net assets of such
Acquired Fund as of such date and such statements of
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<PAGE>
operations and changes in net assets fairly present
the results of its operations for the period covered
thereby. All books, records and accounts of the
Acquired Funds have been maintained in accordance
with applicable legal requirements and generally
accepted accounting principles applicable to
investment companies;
(c) There are no claims, actions, suits or proceedings
pending or, to its knowledge, threatened against or
affecting Coventry or its properties or business or
its right to issue and sell shares, or which would
prevent or hinder consummation of the transactions
contemplated hereby, and it is not charged with or,
to Coventry's knowledge, threatened with any charge
or investigation of, any violation of any provision
of any federal, state or local law or any
administrative ruling or regulation relating to any
aspect of its business or the issuance or sale of its
shares;
(d) Coventry is not a party to or subject to any judgment
or decree or order entered in any suit or proceeding
brought by any governmental agency or by any other
person enjoining it in respect of, or the effect of
which is to prohibit, any business practice or the
acquisition of any property or the conduct of
business by it or the issuance or sale of its shares
in any area;
(e) Coventry has filed all tax returns required to be
filed, has no liability for any unpaid taxes and has
made a proper election to be treated as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code") for each of its
taxable years. Coventry has not committed any action
or failed to perform any necessary action that would
render invalid its election to be treated as a
regulated investment company for any of its taxable
years;
(f) The authorization, execution and delivery of this
Agreement on behalf of Coventry does not, and the
consummation of the transactions contemplated hereby,
subject to the approval of shareholders of the
Acquired Funds as referred to in paragraph 11, will
not violate, or conflict with any provision of
Coventry's Declaration of Trust or By-Laws, or any
provision of, or result in the acceleration of any
obligation under, any mortgage, lien, lease,
agreement, instrument, order, arbitration award,
judgment or decree to which it is a party or by which
it or any of its assets is bound, or violate or
conflict with any other material contractual or
statutory restriction of any kind or character to
which it is subject;
(g) This Agreement has been duly authorized, executed,
and delivered by Coventry and constitutes a valid and
binding agreement of Coventry and all governmental
and other approvals required for Coventry to carry
out the transactions contemplated hereunder have been
or on or prior to the Closing Date (as herein
defined) will have been obtained;
28
<PAGE>
(h) On the Closing Date, Coventry and each Acquired Fund
will own its assets free and clear of all liens,
claims, charges, options and encumbrances and, except
for the various agreements listed in Part C of
Coventry's current Form N-1A Registration Statement
under the 1933 Act and 1940 Act, there will be no
material contracts or agreements (other than this
Agreement) outstanding to which Coventry is a party
or to which it is subject;
(i) On the Closing Date, subject to the approval of
shareholders of the Acquired Funds as referred to in
paragraph 11, Coventry will have full right, power
and authority to sell, assign and deliver the assets
to be sold, assigned, transferred and delivered to
IMG Funds hereunder, and upon delivery and payment
for such assets, IMG Funds will acquire good and
marketable title thereto free and clear of all liens,
claims, charges, options and encumbrances;
(j) Coventry will declare to shareholders of record of
each Acquired Fund immediately prior to the Closing
Date a dividend or dividends which, together with all
previous such dividends, shall have the effect of
distributing to the shareholders all of the
investment company taxable income of each Acquired
Fund (computed without regard to any deduction for
dividends paid) and all of the net realized capital
gains, if any, through the close of business on the
business day immediately preceding the Closing Date;
and
(k) Coventry will, from time to time, as and when
requested by IMG Funds, execute and deliver or cause
to be executed and delivered, all such assignments
and other instruments, and will take and cause to be
taken such further action, as IMG Funds may deem
necessary or desirable in order to vest in and
confirm to IMG Funds, title to and possession of all
the assets of Coventry to be sold, assigned,
transferred and delivered hereunder and otherwise to
carry out the intent and purpose of this Agreement.
3. Based on the respective representations and warranties,
subject to the terms and conditions contained herein, Coventry
agrees to transfer to IMG Funds and IMG Funds agrees to
acquire from Coventry, all the assets of the Acquired Funds on
the Closing Date and to assume from Coventry all of the
liabilities of the Acquired Funds in exchange for the issuance
of the number and class of shares of Vintage Clone Funds
provided in Section 4 which will be subsequently distributed
pro rata to the shareholders of the Acquired Funds in complete
liquidation and termination of the Acquired Funds and in
exchange for all of the outstanding shares of the Acquired
Funds, as provided in Section 6. Coventry shall not issue,
sell or transfer any of its shares after the Closing Date, and
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<PAGE>
only redemption requests received by Coventry in proper form
prior to the Closing Date shall be fulfilled by Coventry.
Redemption requests received by Coventry thereafter shall be
treated as requests for redemption of those shares of Vintage
Clone Funds allocable to the shareholder in question as
provided in Section 6 of this Agreement.
4. On the Closing Date, IMG Funds will issue to Coventry that
number of full and fractional shares of the Vintage Clone
Funds as follows:
(a) IMG Funds will issue that number of Class A shares of the
Vintage Government Assets Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Government Fund of
Coventry;
(b) IMG Funds will issue that number of Class B shares of the
Vintage Income Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the Income Fund of Coventry;
(c) IMG Funds will issue that number of Class B shares of the
Vintage Municipal Bond Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Tax-Free Fund of
Coventry;
(d) IMG Funds will issue that number of Class A shares of the
Vintage Equity Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the shares of the Equity Fund
of Coventry held in fiduciary accounts of such portfolio;
(e) IMG Funds will issue that number of Class B shares of the
Vintage Equity Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate value of the net assets of
Coventry that are allocable to the shares of the Equity Fund
of Coventry held in non-fiduciary accounts of such portfolio;
(f) IMG Funds will issue that number of Class B shares of the
Vintage Balanced Fund series of IMG Funds, taken at their net
asset value on the Closing Date, having an aggregate net asset
value equal to the aggregate net asset value of Coventry that
are allocable to the Balanced Fund of Coventry;
(g) IMG Funds will issue that number of Class B shares of the
Vintage Aggressive Growth Fund series of IMG Funds, taken at
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<PAGE>
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate net asset value of
Coventry that are allocable to the Growth Fund of Coventry;
and
(h) IMG Funds will issue that number of Class B shares of the
Vintage Limited Term Bond Fund series of IMG Funds, taken at
their net asset value on the Closing Date, having an aggregate
net asset value equal to the aggregate value of the net assets
of Coventry that are allocable to the Total Return Fund of
Coventry.
The aggregate value of the net assets of each Acquired Fund
and each Vintage Clone Fund shall be determined in accordance
with the then current Prospectus of IMG Funds as of 3:00 p.m.
Central Standard Time on the business day immediately
preceding the Closing Date, unless the parties agree to
determine such values as of another date (the "Valuation
Date").
5. The closing of the transaction contemplated in this Agreement
(the "Closing") shall be held at the offices of IMG, 2203
Grand Avenue, Des Moines, Iowa 50312-5338 (or at such other
place as the parties hereto may agree) at 3:00 p.m. Central
Standard Time on February 19, 1998, or on such earlier or
later date as the parties hereto may mutually agree. The date
on which the Closing is to be held as provided in this
Agreement shall be known as the "Closing Date".
In the event that on the proposed Valuation Date or Closing
Date (a) the New York Stock Exchange is closed for other than
customary week-end and holiday closings or (b) trading on said
Exchange is restricted or (c) an emergency exists as a result
of which it is not reasonably practicable for either the
Vintage Clone Funds or the Acquired Funds to fairly determine
the value of their respective assets, the Closing shall be
postponed until the first business day after the day on which
trading shall have been fully resumed.
6. As soon as practicable after the Closing Date, Coventry shall
(a) distribute on a pro rata basis to each shareholder of
record of the Acquired Funds at the close of business on the
Valuation Date the shares of the appropriate Vintage Clone
Fund received by Coventry at the Closing in exchange for each
such shareholder's shares of an Acquired Fund and (b)
liquidate and dissolve the Acquired Funds in accordance with
applicable law and its Declaration of Trust.
For purposes of the distribution of shares of the Vintage
Clone Funds to shareholders of the Acquired Funds, IMG Funds
shall credit on the books of each Vintage Clone Fund an
appropriate number of shares of such Vintage Clone Fund to the
account of each shareholder of the corresponding Acquired
Fund. No certificates will be issued for shares of the Vintage
Clone Funds. After the Closing Date and until surrendered,
each outstanding certificate which, prior to the Closing Date,
represented shares of an Acquired Fund, shall be deemed for
all purposes of IMG Funds' Charter and By-Laws to evidence the
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appropriate number of shares of the corresponding Vintage
Clone Fund to be credited on the books of IMG Funds in respect
of such shares of such Acquired Fund as provided above.
7. Subsequent to the execution of this Agreement and prior to the
Closing Date, Coventry shall deliver to IMG Funds a list
setting forth the assets to be assigned, delivered and
transferred by each Acquired Fund to IMG Funds, including the
securities then owned by each such Acquired Fund and the
respective federal income tax basis (on an identified cost
basis) thereof, and the liabilities to be assumed by IMG Funds
pursuant to this Agreement.
8. All portfolio securities of each Acquired Fund shall be
delivered by Coventry's custodian on the Closing Date to IMG
Funds or its custodian, either endorsed in proper form for
transfer in such condition as to constitute good delivery
thereof in accordance with the practice of brokers or, if such
securities are held in a securities depository within the
meaning of Rule 17f-4 under the 1940 Act, transferred to an
account in the name of IMG Funds or its custodian with said
depository. All cash to be delivered pursuant to this
Agreement shall be wire transferred from Coventry's account at
its custodian to IMG Funds' account at its custodian. If on
the Closing Date Coventry is unable to make good delivery
pursuant to this Section 8 to IMG Funds' custodian of any of
Coventry's portfolio securities because such securities have
not yet been delivered to Coventry's custodian by its broker
or by the transfer agent for such securities, then the
delivery requirement of this Section 8 with respect to such
securities shall be waived, and Coventry shall deliver to IMG
Funds' custodian on or by said Closing Date with respect to
said undelivered securities executed copies of an agreement of
assignment in a form satisfactory to IMG Funds, and a due bill
or due bills in form and substance satisfactory to the
custodian, together with such other documents including
brokers' confirmations, as may be reasonably required by IMG
Funds.
9. The obligations of IMG Funds under this Agreement shall be
subject to receipt by IMG Funds on or prior to the Closing
Date of:
(a) Copies of the resolutions adopted by the Board of
Trustees of Coventry and the shareholders of each
Acquired Fund authorizing the execution and
performance of this Agreement by Coventry and the
transactions contemplated hereunder, certified by the
Secretary or Assistant Secretary of Coventry;
(b) A certificate of the Secretary or Assistant Secretary
of Coventry as to the signatures and incumbency of
its officers who executed this Agreement on behalf of
Coventry and any other documents delivered in
connection with the transactions contemplated thereby
on behalf of Coventry;
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<PAGE>
(c) A certificate of an appropriate officer of Coventry
as to the fulfillment of all agreements and
conditions on its part to be fulfilled hereunder at
or prior to the Closing Date and to the effect that
the representations and warranties of Coventry are
true and correct in all material respects at and as
of the Closing Date as if made at and as of such
date;
(d) Such other documents as IMG Funds may reasonably
request to show fulfillment of the purposes and
conditions of this Agreement; and
(e) An opinion of Dechert Price & Rhoads in form
reasonably satisfactory to IMG Funds and dated as of
the Closing Date of the Reorganization,
substantially to the effect that (i) Coventry is a
Massachusetts business trust duly established and
validly existing under the laws of the State of
Massachusetts; (ii) the shares of the Acquired Funds
to be delivered to IMG Funds as provided by this
Agreement are duly authorized and are validly
issued, fully paid and non-assessable; (iii) this
Agreement has been duly authorized, executed and
delivered by Coventry, and represents a legal, valid
and binding contract enforceable in accordance with
its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, moratorium or other
similar laws of general application relating to or
affecting creditors' rights generally and to the
application of general principles of equity; and
(iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the
Declaration of Trust or Bylaws of Coventry or any
material contract known to such counsel to which
Coventry is a party or by which it is bound.
10. The obligations of Coventry under this Agreement shall be
subject to receipt by Coventry on or prior to the Closing Date
of:
(a) Copies of the resolutions adopted by the Board of
Directors of IMG Funds authorizing the execution and
performance of this Agreement and the transactions
contemplated hereunder, certified by the Secretary or
Assistant Secretary of IMG Funds;
(b) A certificate of the Secretary or Assistant Secretary
of IMG Funds as to the signatures and incumbency of
its officers who executed this Agreement on behalf of
IMG Funds and any other documents delivered in
connection with the transactions contemplated thereby
on behalf of IMG Funds;
(c) A certificate of an appropriate officer of IMG Funds
as to the fulfillment of all agreements and
conditions on its part to be fulfilled hereunder at
or prior to the Closing Date and to the effect that
the representations and warranties of IMG Funds are
33
<PAGE>
true and correct in all material respects at and as
of the Closing Date as if made at and as of such
date;
(d) Such other documents as Coventry may reasonably
request to show fulfillment of the purposes and
conditions of this Agreement;
(e) An opinion of Cline, Williams, Wright, Johnson &
Oldfather in form reasonably satisfactory to
Coventry and dated as of the Closing Date of the
Reorganization, substantially to the effect that (i)
IMG Funds is a Maryland corporation duly established
and validly existing under the laws of the State of
Maryland; (ii) the shares of the Vintage Clone Funds
to be delivered to Coventry as provided for by this
Agreement are duly authorized and upon delivery will
be validly issued, fully paid and non-assessable by
IMG Funds; (iii) this Agreement has been duly
authorized, executed and delivered by IMG Funds, and
represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency,
reorganization, moratorium or other similar laws of
general application relating to or affecting
creditors' rights generally and to the application
of general principles of equity; (iv) the execution
and delivery of this Agreement did not, and the
consummation of the transactions contemplated by
this Agreement will not, violate the Charter or
By-Laws of IMG Funds or any material contract known
to such counsel to which IMG Funds is a party or by
which it is bound and (v) no consent, approval,
authorization or order of any court or governmental
authority is required for the consummation by IMG
Funds of the transactions contemplated by this
Agreement, except such as have been obtained under
the 1933 Act, the 1934 Act, the 1940 Act, the rules
and regulations under those Acts and such as may be
required by state securities laws or such as may be
required subsequent to the Closing of the
Reorganization.
(f) An opinion of Cline, Williams, Wright, Johnson &
Oldfather addressed to IMG Funds and Coventry in
form reasonably satisfactory to them, and dated as
of the Closing Date of the Reorganization,
substantially to the effect that, for federal income
tax purposes (i) the transfer by each Acquired Fund
of all of its assets to the corresponding Vintage
Clone Fund in exchange for shares of the
corresponding Vintage Clone Fund, and the
distribution of such shares to the shareholders of
the Acquired Fund, as provided in this Agreement,
will constitute a reorganization within the meaning
of Section 368(a)(1)(C) of the Code; (ii) no income,
gain or loss will be recognized by the Acquired
Funds as a result of such transactions; (iii) no
income, gain or loss will be recognized by the
Vintage Clone Funds as a result of such
transactions; (iv) no income, gain or loss will be
recognized by the shareholders of the Acquired Funds
on the distribution to them by the Acquired Funds of
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shares of the corresponding Vintage Clone Funds in
exchange for their shares of the Acquired Funds (but
shareholders of an Acquired Fund subject to taxation
will recognize income upon receipt of any net
investment income or net capital gains of such
Vintage Clone Fund which are distributed by such
Acquired Fund prior to the Closing Date of the
Reorganization); (v) the tax basis of the Vintage
Clone Fund shares received by each shareholder of an
Acquired Fund will be the same as the tax basis of
the shareholder's Acquired Fund shares exchanged
therefor; (vi) the tax basis of the Acquired Fund
assets received by each Vintage Clone Fund will be
the same as the basis of such Fund's assets in the
hands of the corresponding Acquired Fund immediately
prior to the transactions; (vii) a shareholder's
holding period for Vintage Clone Fund shares will be
determined by including the period for which the
shareholder held the shares of the Acquired Fund
exchanged therefor, provided that the shareholder
held such shares for the Vintage Clone Fund as a
capital asset at the Closing of the Reorganization;
(viii) the holding period of each Vintage Clone Fund
with respect to the Acquired Fund assets will
include the period for which such Fund's assets were
held by the corresponding Acquired Fund provided
that the Acquired Fund held such assets as capital
assets; and (ix) each Vintage Clone Fund will
succeed to and take into account the earnings and
profits, or deficit in earnings and profits, of the
corresponding Acquired Fund as of the Closing of the
Reorganization.
11. The obligations of the parties under this Agreement shall be
subject to:
(a) Any required approval, at a meeting duly called for
the purpose, of the holders of the outstanding shares
of each Acquired Fund, of this Agreement and the
transactions contemplated hereunder.
(b) The right to abandon and terminate this Agreement, if
either Coventry or IMG Funds believes that the
consummation of the transactions contemplated
hereunder would not be in the best interests of its
shareholders.
12. IMG Funds will pay its own and Coventry's out-of-pocket fees
and expenses incurred in connection with the transactions
contemplated under this Agreement, including, but not limited
to, accountants' fees, legal fees, registration fees, filing
fees, printing expenses, transfer taxes (if any) and the fees
of banks, custodians and transfer agents.
13. This Agreement may be amended by an instrument executed by the
duly authorized officers of Coventry and IMG Funds at any
time, except that after approval by the shareholders of the
Acquired Funds, no amendment may be made with respect to the
Agreement which, in the opinion of the Board of Trustees of
Coventry, materially adversely affects the interests of the
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<PAGE>
shareholders of Coventry. At any time Coventry or IMG Funds
may by written instrument signed by it (i) waive any
inaccuracies in the representations and warranties made to it
contained herein and (ii) waive compliance with any of the
covenants or conditions made for its benefit contained herein.
14. In addition to the right to terminate this Agreement described
in paragraph 11, this Agreement may be terminated and the plan
described in the Agreement abandoned at any time prior to the
Closing Date, whether before or after action thereon by the
shareholders of the Acquired Funds and notwithstanding
favorable action by such shareholders, by mutual consent of
the Board of Directors of IMG Funds and the Board of Trustees
of Coventry. This Agreement may also be terminated by action
of the Board of Directors of IMG Funds or the Board of
Trustees of Coventry, if:
(a) The plan described in this Agreement shall not have
become effective by April 1, 1998 (hereinafter called
the "Final Date") unless such Final Date shall have
been changed by mutual agreement; or
(b) Either Coventry or IMG Funds shall, at the Final
Date, have failed to comply with any of its
agreements contained herein; or
(c) Prior to the Final Date any one or more of the
conditions to the obligations of IMG Funds or
Coventry contained in this Agreement shall not be
fulfilled to the reasonable satisfaction of IMG Funds
and its counsel or Coventry and its counsel or it
shall become evident to IMG Funds or Coventry that
any of such conditions are incapable of being
fulfilled.
15. This Agreement shall bind and inure to the benefit of the
parties hereto and is not intended to confer upon any other
person any rights or remedies hereunder.
16. The parties hereto represent and warrant that they have not
employed any broker, finder or intermediary in connection with
this transaction who might be entitled to a finder's fee or
other similar fee or commission.
17. All prior or contemporaneous agreements and representations
are hereby merged into this Agreement, which constitutes the
entire contract between the parties hereto.
18 This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa.
19. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement,
and shall become effective when one or more of the
counterparts has been signed by all parties hereto.
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<PAGE>
20. Coventry shall indemnify, defend and hold harmless IMG Funds,
its officers, directors, employees and agents against all
losses, claims, demands, liabilities and expenses, including
reasonable legal and other expenses incurred in defending
claims or liabilities, whether or not resulting in any
liability to IMG Funds, its officers, directors, employees or
agents, arising out of or based on (i) any breach by Coventry
of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or (ii) any untrue
statement or alleged untrue statement of a material fact
provided by Coventry and contained in any proxy statement for
Coventry, as filed with the Commission or any amendment or
supplement thereto, or any notification prepared by or on
behalf of Coventry and filed with any state regulatory agency,
or in any information provided by Coventry included in any
proxy statement or registration statement filed by IMG Funds
with the Securities and Exchange Commission or any amendment
or supplement thereto; or which shall arise out of or be based
upon any omission or alleged omission to state therein a
material fact required to be stated in any such proxy
statement, registration statement or application necessary to
make the statements therein not misleading. This indemnity
provision shall survive the termination of this Agreement.
21. IMG Funds shall indemnify, defend and hold harmless Coventry,
its officers, trustees, employees and agents against all
losses, claims, demands, liabilities and expenses, including
reasonable legal and other expenses incurred in defending
claims or liabilities, whether or not resulting in any
liability to Coventry, its officers, trustees, employees or
agents, arising out of or based on (i) any breach by IMG Funds
of any of its representations, warranties, covenants or
agreements set forth in this Agreement, or (ii) any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement on Form N-1A or Form
N-14 for IMG Funds, as filed with the Securities and Exchange
Commission or any amendment or supplement thereto, or any
notification prepared by or on behalf of IMG Funds and
submitted to any state regulatory agency regarding the sale of
shares of IMG Funds under the securities laws thereof; or
which shall arise out of or be based upon any omission or
alleged omission to state therein a material fact required to
be stated in any such registration statement or application
necessary to make the statements therein not misleading;
provided, however, IMG Funds shall not be required to
indemnify Coventry, its officers, directors, employees and
agents against any loss, claim, demand, liability or expense
arising out of any information provided by Coventry included
in any registration statement filed by IMG Funds with the
Securities and Exchange Commission or any amendment or
supplement thereto. This indemnity provision shall survive the
termination of this Agreement.
22. The execution of this Agreement has been authorized by the
Board of Directors of IMG Funds and by the Board of Trustees
of Coventry.
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<PAGE>
23. The Declaration of Trust for The Coventry Group a copy of
which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides (i) that the name The Coventry Group refers to the
trustees under the Declaration of Trust collectively as
trustees and not as individuals or personally, (ii) that no
shareholder shall be subject to any personal liability
whatsoever to any person in connection with trust property or
the acts, obligations or affairs of the trust, and (iii) that
no trustee, officer, employee or agent of the trust shall be
subject to any personal liability whatsoever to any person,
other than to the trust or its shareholders, in connection
with trust property or the affairs of the trust, save only
that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties with respect to
such person; and all such persons shall look solely to the
trust property for satisfaction of claims of any nature
arising in connection with the affairs of the trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested by their officers thereunto duly authorized, as of the
date first written above.
IMG MUTUAL FUNDS, INC.
Attest
By: _______________________ By: ________________________
Title: _____________________ Title: _______________________
THE COVENTRY GROUP
Attest
By: _______________________ By: ________________________
Title: _____________________ Title: _______________________
38
<PAGE>
IMG MUTUAL FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
GENERAL INFORMATION.
This Statement of Additional Information contains or incorporates
information which may be of interest to investors but which is not included in
the combined Proxy Statement/Prospectus (the "Prospectus") of New Vintage Funds,
offered by IMG Mutual Funds, Inc., dated January 16, 1998, relating to the
transfer of assets from the AMCORE Vintage Funds ("Current Vintage Funds") to
corresponding portfolios of New Vintage Funds. The Statement of Additional
Information for the Current Vintage Funds dated July 31, 1997 and the Statement
of Additional Information for New Vintage Funds dated January 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 Prospectus may be obtained, without
charge, by writing AMCORE Vintage Funds, 3435 Stelzer Road, Columbus, Ohio 43219
or by calling 1-800-438-6375.
The date of this Statement of Additional Information is January 16, 1998.
39
<PAGE>
THE COVENTRY GROUP
AMCORE VINTAGE FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND
The undersigned hereby appoints D' Ray Moore and Walter B. Grimm, and each of
them separately, proxies, with power of substitution, and hereby authorizes
them to represent and to vote, as designated below, at the Special Meeting
of Shareholders of AMCORE Vintage Funds on February 13, 1998, at 10:00
a.m., Central Standard Time, and at any adjournments thereof, all of the
shares of the Funds which the undersigned would be entitled to vote if
personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE
DIRECTORS RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE:Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such; if a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number.
1. Approval of the Agreement and Plan of Reorganization for
AMCORE Vintage Funds providing for the transfer of all of the
assets of the AMCORE Vintage Funds to New Vintage Funds in
exchange for shares of New Vintage Funds and the assumption by
New Vintage Funds of all of the liabilities of AMCORE Vintage
Funds, followed by the dissolution and liquidation of AMCORE
Vintage Funds and the distribution of shares of New Vintage
Funds to the shareholders of AMCORE Vintage Funds.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
Co-owner sign here
Dated: ____________________, 1998.
