Registration No. 33-81998
811-8910
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 11 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 14 [x]
(Check appropriate box or boxes.)
VINTAGE MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (515) 244-5426
MARK A. MCCLURG, President
Vintage Mutual Funds, Inc.
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Name and Address of Agent for Service)
Copies of all Communications to:
JOHN C. MILES, ESQ.
Cline, Williams, Wright, Johnson & Oldfather
1900 FirsTier Bank Building
Lincoln, Nebraska 68508
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective.
It is proposed that this filing will become effective immediately pursuant to
paragraph (b) of Rule 485 under the Securities Act of 1933.
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Securites Company Act of
1940, and the Rule 24f-2 Notice for the year ended April 30, 1997 was filed on
or about June 25, 1997.
<PAGE>
VINTAGE MUTUAL FUNDS, INC.
Cross-Reference Sheet
Required by Rule 404(a)
PART A
N-1A ITEM NO. LOCATION IN VINTAGE MUTUAL FUNDS PROSPECTUS
- ------------- -------------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSPECTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RISK FACTORS OF THE FUNDS; INVESTMENT
RESTRICTIONS; GENERAL INFORMATION-
DESCRIPTION OF THE COMPANY AND ITS
SHARES
5. Management of the Fund...............MANAGEMENT OF THE COMPANY
6. Capital Stock and Other Securities...HOW TO PURCHASE AND REDEEM SHARES;
DISTRIBUTIONS AND TAXES; GENERAL
INFORMATION-DESCRIPTION OF THE COMPANY
AND ITS SHARES; GENERAL INFORMATION-
MISCELLANEOUS
7. Purchase of Securities Being
Offered..............................VALUATION OF SHARES; HOW TO PURCHASE
AND REDEEM SHARES
8. Redemption or Repurchase.............HOW TO PURCHASE AND REDEEM SHARES
9. Legal Proceedings....................NOT APPLICABLE
LOCATION IN GOVERNMENT ASSETS FUND - "S"
SHARES, LIQUID ASSETS FUND - "S" SHARES
AND MUNICIPAL ASSETS FUND - "S" SHARES
COMBINED PROSPECTUS
----------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSEPCTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS
5. Management of the Fund...............MANAGEMENT AND FEES
6. Capital Stock and Other Securities...COVER PAGE; DISTRIBUTIONS AND TAXES;
ORGANIZATION AND SHARES OF THE FUNDS
7. Purchase of Securities Being
Offered..............................OPENING AN ACCOUNT; SHAREHOLDER
SERVICES
8. Redemption or Repurchase.............REDEEMING SHARES
9. Legal Proceedings....................NOT APPLICABLE
LOCATION IN GOVERNMENT ASSETS FUND - "S"
SHARES, LIQUID ASSETS FUND - "S2" SHARES
AND MUNICIPAL ASSETS FUND - "S" SHARES
COMBINED PROSPECTUS
-----------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSEPCTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS
5. Management of the Fund...............MANAGEMENT AND FEES
6. Capital Stock and Other Securities...COVER PAGE; DISTRIBUTIONS AND TAXES;
ORGANIZATION AND SHARES OF THE FUNDS
7. Purchase of Securities Being
Offered..............................OPENING AN ACCOUNT; SHAREHOLDER
SERVICES
8. Redemption or Repurchase.............REDEEMING SHARES
9. Legal Proceedings....................NOT APPLICABLE
<PAGE>
LOCATION IN GOVERNMENT ASSETS FUND - "T"
SHARES, LIQUID ASSETS FUND - "T" SHARES
AND MUNICIPAL ASSETS FUND - "T" SHARES
COMBINED PROSPECTUS
----------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSEPCTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS
5. Management of the Fund...............MANAGEMENT AND FEES
6. Capital Stock and Other Securities...COVER PAGE; DISTRIBUTIONS AND TAXES;
ORGANIZATION AND SHARES OF THE FUNDS
7. Purchase of Securities Being
Offered..............................OPENING AN ACCOUNT; SHAREHOLDER
SERVICES
8. Redemption or Repurchase.............REDEEMING SHARES
9. Legal Proceedings....................NOT APPLICABLE
LOCATION IN LIQUID ASSETS FUND - "I"
SHARES AND MUNICIPAL ASSETS FUND - "I"
SHARES COMBINED PROSPECTUS
-----------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSEPCTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS
5. Management of the Fund...............MANAGEMENT AND FEES
6. Capital Stock and Other Securities...COVER PAGE; DISTRIBUTIONS AND TAXES;
ORGANIZATION AND SHARES OF THE FUNDS
7. Purchase of Securities Being
Offered..............................OPENING AN ACCOUNT; SHAREHOLDER
SERVICES
8. Redemption or Repurchase.............REDEEMING SHARES
9. Legal Proceedings....................NOT APPLICABLE
LOCATION IN EQUITY FUND -"T" SHARES
PROSPECTUS
----------------------------------------
1. Cover Page...........................COVER PAGE
2. Synopsis.............................PROSPECTUS SUMMARY
3. Financial Highlights.................FINANCIAL HIGHLIGHTS
4. General Description of Registrant....INVESTMENT OBJECTIVES, POLICIES AND
RISK FACTORS OF THE FUNDS; INVESTMENT
RESTRICTIONS; GENERAL INFORMATION-
DESCRIPTION OF THE COMPANY AND ITS
SHARES
5. Management of the Fund...............MANAGEMENT OF THE COMPANY
6. Capital Stock and Other Securities...HOW TO PURCHASE AND REDEEM SHARES;
DISTRIBUTIONS AND TAXES; GENERAL
INFORMATION-DESCRIPTION OF THE COMPANY
AND ITS SHARES; GENERAL INFORMATION-
MISCELLANEOUS
7. Purchase of Securities Being
Offered..............................VALUATION OF SHARES; HOW TO PURCHASE
AND REDEEM SHARES
8. Redemption or Repurchase.............HOW TO PURCHASE AND REDEEM SHARES
9. Legal Proceedings....................NOT APPLICABLE
<PAGE>
PART B
LOCATION IN VINTAGE MUTUAL FUNDS
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
10. Cover Page...........................COVER PAGE
11. Table of Contents....................TABLE OF CONTENTS
12. General Information and History......GENERAL INFORMATION; ADDITIONAL
INFORMATION
13. Investment Objective and Policies....INVESTMENT OBJECTIVES, POLICIES AND
RETRICTIONS
14. Management of the Fund...............MANAGEMENT OF THE COMPANY
15. Control Persons and Principal
Holders of Securities................ADDITIONAL INFORMATION-DESCRIPTION
OF SHARES
16. Investment Advisory and Other
Services.............................MANAGEMENT OF THE COMPANY
17. Brokerage Allocation.................MANAGEMENT OF THE COMPANY-PORTFOLIO
TRANSACTIONS
18. Capital Stock and Other Securities...ADDITIONAL INFORMATION-DESCRIPTION OF
SHARES
19. Purchase, Redemption and Pricing
of Securities Being Offered..........NET ASSET VALUE; ADDITIONAL PURCHASE
AND REDEMPTION INFORMATION
20. Tax Status...........................ADDITIONAL INFORMATION-ADDITIONAL TAX
INFORMATION
21. Underwriters.........................MANAGEMENT OF THE COMPANY-DISTRIBUTOR
22. Calculation of Performance data......ADDITIONAL INFORMATION
23. Financial Statements.................FINANCIAL STATEMENTS
PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C to this Registration Statement.
<PAGE>
[GRAPHIC OMITTED]
GOVERNMENT ASSETS FUND, "T" Shares VINTAGE INCOME FUND
LIQUID ASSETS FUND, "T" Shares VINTAGE MUNICIPAL BOND FUND
MUNICIPAL ASSETS FUND, "T" Shares VINTAGE BALANCED FUND
VINTAGE LIMITED TERM BOND FUND VINTAGE EQUITY FUND, "S" Shares
VINTAGE BOND FUND VINTAGE AGGRESSIVE GROWTH FUND
For current yield, purchase, and redemption
information, call (800) 438-6375.
Vintage Mutual Funds, Inc. (the "Company") is a Maryland corporation
organized as an open-end management investment company issuing its shares in
series (each series referred to as a "Fund" and collectively as "Funds"), each
representing a diversified portfolio of investments with its own investment
objective and policies. The portfolios offered in this prospectus are the
Government Assets Fund, the Liquid Assets Fund, the Municipal Assets Fund, the
Vintage Limited Term Bond Fund, the Vintage Bond Fund, the Vintage Income Fund,
the Vintage Municipal Bond Fund, the Vintage Balanced Fund, the Vintage Equity
Fund, and the Vintage Aggressive Growth Fund.
The Government Assets, Liquid Assets, Municipal Assets and Equity Funds are
offered in multiple classes of shares ("Shares"). This Prospectus describes "T"
Shares of the Government Assets, Liquid Assets and Municipal Assets Funds and
"S" Shares of the Vintage Equity Fund. All classes of Shares accrue dividends in
the same manner except that different classes of Shares bear different
distribution and/or administrative servicing fees. (see "GENERAL INFORMATION -
Description of the Company and Its Shares"). Differences in class level expenses
may affect performance.
The Government Assets Fund's investment objective is to seek current income
consistent with maintaining liquidity and stability of principal. The Government
Assets Fund invests exclusively in short-term U.S. Treasury bills, notes and
other short-term obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and repurchase agreements with respect thereto.
The Liquid Assets Fund seeks maximum current income consistent with safety of
principal and maintenance of liquidity. The Municipal Assets Fund seeks maximum
current income exempt from federal income tax, consistent with safety of
principal and maintenance of liquidity.
THE GOVERNMENT ASSETS FUND, LIQUID ASSETS FUND, AND MUNICIPAL ASSETS FUND
EACH SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE, BUT THERE
CAN BE NO ASSURANCE THAT THE NET ASSET VALUE WILL NOT VARY.
The investment objective of the Limited Term Bond Fund is to seek total
return from a portfolio of limited term fixed income securities.
The Bond Fund seeks income and capital appreciation, consistent with the
preservation of capital. The investment objective of the Income Fund is to
seek current income, consistent with the preservation of
capital.
The Limited Term Bond Fund, Bond Fund, and Income Fund all invest primarily
in high-quality, fixed income securities. The Limited Term Bond Fund expects to
maintain a dollar-weighted average portfolio maturity of 1 to 4 years. The Bond
Fund and Income Fund expect to maintain a dollar-weighted average portfolio
maturity of 4 to 10 years.
The investment objective of the Municipal Bond Fund is to seek current
income, consistent with the preservation of capital that is exempt from federal
income taxes.
The investment objective of the Balanced Fund is to seek long-term growth
of capital and income. The Balanced Fund invests primarily in a diversified
portfolio of equity securities and fixed income securities. The Balanced Fund
expects to maintain a dollar-weighted average portfolio maturity of 4 to 10
years on the fixed income portion of the portfolio.
The investment objective of the Equity Fund is long-term capital
appreciation. The Equity Fund invests primarily in a diversified portfolio of
equity securities of mainly large capitalization companies with strong earnings
potential.
The investment objective of the Aggressive Growth Fund is long-term capital
growth. The Aggressive Growth Fund invests primarily in common stocks and other
equity-type securities of small, medium and large capitalized companies that
exhibit a strong potential for price appreciation relative to other equity
securities.
Investors Management Group, Ltd. ("IMG") acts as the investment advisor to
the Funds.
AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE
UNITED STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUNDS ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Additional information about the Funds, contained in a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission (the "Commission") and is available upon request without charge by
writing to the Funds at their address or by calling the Funds at the telephone
number shown above. The Statement of Additional Information bears the same date
as this Prospectus and is incorporated by reference in its entirety into this
Prospectus.
This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Please read this Prospectus
carefully and retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY
STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 23, 1998
<PAGE>
PROSPECTUS SUMMARY
The Funds..............................Government Assets Fund, Liquid Assets
Fund, Municipal Assets Fund, Vintage
Limited Term Bond Fund, Vintage Bond
Fund, Vintage Income Fund, Vintage
Municipal Bond Fund, Vintage Balanced
Fund, Vintage Equity Fund, and Vintage
Aggressive Growth Fund, each a
diversified investment portfolio
(collectively, the "Funds") of Vintage
Mutual Funds, Inc., an open-end
management investment company organized
as a Maryland corporation.
Shares Offered.........................Shares of common stock ("Shares") of the
Funds. See "HOW TO PURCHASE AND REDEEM
SHARES".
Offering Price.........................The public offering price of Shares of
each of the Government Assets Fund, the
Liquid Assets Fund, and the Municipal
Assets Fund Shares is equal to the net
asset value per Share, which these Funds
will seek to maintain at $1.00.
The public offering price of Shares of
each of the Limited Term Bond Fund, the
Bond Fund, the Income Fund, the Municipal
Bond Fund, the Balanced Fund, the Equity
Fund, and the Aggressive Growth Fund is
equal to the net asset value per Share.
Minimum Purchase.......................$1,000 minimum for the initial investment
with a $50 minimum for subsequent
investments. (See "HOW TO PURCHASE AND
REDEEM SHARES--Purchases of Shares and
Auto Invest Plan" for a discussion of
lower minimum purchase amounts).
Investment Objective...................The Government Assets Fund seeks current
income consistent with maintaining
liquidity and stability of principal.
The Liquid Assets Fund seeks maximum
current income consistent with safety of
principal and maintenance of liquidity.
The Municipal Assets Fund seeks maximum
current income exempt from federal income
tax, consistent with safety of principal
and maintenance of liquidity.
The Limited Term Bond Fund seeks total
return from a portfolio of limited term
fixed income securities.
<PAGE>
The Bond Fund seeks income and capital
appreciation, consistent with the
preservation of capital.
The Income Fund seeks current income,
consistent with the preservation of
capital.
The Municipal Bond Fund seeks current
income, consistent with the preservation
of capital, that is exempt from federal
income taxes.
The Balanced Fund seeks long-term growth
of capital and income.
The Equity Fund seeks long-term capital
appreciation.
The Aggressive Growth Fund seeks long-
term capital growth.
Investment Policy and Risks............See "INVESTMENT OBJECTIVES, POLICIES AND
RISK FACTORS OF THE FUNDS". The
Government Assets Fund invests
exclusively in short-term U.S. Treasury
bills, notes and other short-term
obligations issued or guaranteed by the
U.S. Government or its agencies or
instrumentalities, and repurchase
agreements with respect thereto, having a
dollar-weighted average maturity of 90
days or less. The Fund seeks to maintain
a net asset value of $1.00 per share.
Under normal market conditions, the
Liquid Assets Fund invests in a
diversified portfolio of high quality,
U.S. dollar denominated short-term debt
obligations including, primarily,
redeemable Certificates backed by
federally insured student loans and
Farmers Home Administration guaranteed
loans, commercial paper, bank
obligations, short-term corporate
obligations and obligations issued or
guaranteed by the U.S. government, its
agencies or instrumentalities and
repurchase agreements collateralized by
such obligations having a dollar-weighted
average maturity of 90 days or less. The
Fund seeks to maintain a net asset value
of $1.00 per share.
Under normal market conditions, the
Municipal Assets Fund invests in a
diversified portfolio of high quality,
U.S. dollar denominated short-term
municipal securities, which mature or
have a demand feature exercisable in one
year or less from the date of
acquisition, having a dollar-weighted
average maturity of 90 days or less. The
<PAGE>
Fund seeks to maintain a net asset value
of $1.00 per share.
Under normal market conditions, the
Limited Term Bond Fund invests primarily
in a diversified portfolio of fixed
income securities and expects to maintain
a dollar-weighted average portfolio
maturity of 1 to 4 years. Investment in
the Limited Term Bond Fund is subject to
the interest rate risks inherent in
investing in fixed income securities and
lower rated securities.
Under normal market conditions, the Bond
Fund invests primarily in a diversified
portfolio of fixed income securities, and
expects to maintain a dollar-weighted
average portfolio maturity of 4 to 10
years. Investment in the Bond Fund is
subject to the interest rate risks
inherent in investing in fixed income
securities and lower rated securities.
Under normal market conditions, the
Income Fund invests primarily in a
diversified portfolio of fixed income
securities and expects to maintain a
dollar-weighted average portfolio
maturity of 4 to 10 years. Investment in
the Income Fund is subject to the
interest rate risks inherent in investing
in fixed income securities and lower
rated securities.
Under normal market conditions, the
Municipal Bond Fund invests primarily in
a diversified portfolio of tax-exempt
fixed income securities and expects to
maintain a dollar-weighted average
portfolio maturity of 4 to 10 years.
Investment in the Municipal Bond Fund is
subject to the interest rate risks
inherent in investing in fixed income
securities and lower rated securities.
Under normal market conditions, the
Balanced Fund invests primarily in a
diversified portfolio of equity
securities and fixed income securities,
and expects to maintain a dollar-weighted
average portfolio maturity of 4 to 10
years on the fixed income portion of the
portfolio. Investment in the Balanced
Fund is subject to the interest rate
risks inherent in investing in fixed
income securities and the risks inherent
in investing in equity securities.
Under normal market conditions, the
Equity Fund invests primarily in equity
securities of mainly large capitalization
<PAGE>
companies with strong earnings potential.
Investment in the Equity Fund is subject
to the inherent risks associated with
investing in common stocks and various
types of equity securities, call options
and foreign securities.
Under normal market conditions, the
Aggressive Growth Fund invests primarily
in equity securities of small, medium and
large capitalized companies that exhibit
a strong potential for price appreciation
relative to other equity securities.
Investment in the Aggressive Growth Fund
is subject to the inherent risks of
investing in common stocks, and various
types of equity securities, call options
and foreign securities.
Investment Advisor.....................Investors Management Group, Ltd.,
and Administrator Des Moines, Iowa ("IMG").
Dividends..............................The Government Assets Fund, Liquid Assets
Fund, and Municipal Assets Fund intend to
declare dividends from net investment
income daily and pay such dividends
monthly. The Income Fund and the
Municipal Bond Fund intend to declare
dividends from net investment income and
pay such dividends monthly. The Limited
Term Bond Fund, the Bond Fund, the
Balanced Fund, the Equity Fund, and the
Aggressive Growth Fund intend to declare
dividends from net investment income
quarterly and pay such dividends
quarterly. Dividends will be
automatically reinvested unless the
shareholder elects otherwise.
Distributor............................BISYS Fund Services Limited Partnership
<PAGE>
EXPENSE SUMMARY
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS ASSETS ASSETS
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 1
Maximum Sales Load Imposed on Purchases (as a percentage of 0.00% 0.00% 0.00%
offering price)
Maximum Sales Load Imposed on Reinvested Dividends 0.00% 0.00% 0.00%
(as a percentage of offering price)
Deferred Sales Load (as a percentage of original purchase 0.00% 0.00% 0.00%
price or redemption proceeds, as applicable)
Redemption Fees (as a percentage of amount
redeemed, if applicable) 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.40% 0.35% 0.35%
12b-1 Fees 0.00% 0.00% 0.00%
Other Expenses
Servicing Fees After Limitations2 0.00% 0.15% 0.15%
Administrative Fees3 0.21% 0.06% 0.06%
Other Expenses 0.16% 0.11% 0.15%
----- ----- -----
Total Other Expenses 0.37% 0.32% 0.36%
----- ----- -----
Total Fund Operating Expenses After Limitations4 0.77% 0.67% 0.71%
</TABLE>
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 table reflects the current fees for
the Funds. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of a Fund (a "Class"). See "MANAGEMENT OF THE COMPANY" and
"GENERAL INFORMATION" for a more complete discussion of the Shareholder
transaction expenses and annual operating expenses for the Fund. THE FOREGOING
SUMMARY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 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.
1 A "Participating Organization" (as defined in this Prospectus) may charge a
Customer (as defined in the Prospectus) account fees for automatic investment
and other investment management services provided in connection with
investment in the Fund. (See "HOW TO PURCHASE AND REDEEM SHARES--Purchases of
Shares.")
2 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund or Class described in this Prospectus is
authorized to pay Participating Organizations 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 ("Servicing
Fees"). Currently the Company is not paying any such fees under the Services
Plan for the Government Assets Fund, and has limited these fees to an annual
rate of 0.15% of the average daily net assets of the Liquid Assets and
Municipal Assets Funds. However, Servicing Fees may be absorbed by the
Advisor in its sole discretion without further notice and at no expense to a
Class or Fund. The Company may elect to pay such fees at any time without
further notice to shareholders.
3 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds have agreed to an annual rate of 0.21% of the
average daily net assets for Government Assets Fund and an annual rate of
0.06% of the average daily net assets for the Liquid Assets and Municipal
Assets Funds.
4 Absent the fee waivers described above, "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.02% for the Government
Assets Fund, 0.77% for the Liquid Assets Fund, 0.81% for the Municipal Assets
Fund.
<PAGE>
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Government Assets Fund $8 $25 $43 $95
Liquid Assets Fund $7 $21 $37 $83
Municipal Assets Fund $7 $23 $40 $88
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. Please refer to "MANAGEMENT OF THE COMPANY" for a more complete
discussion of the Shareholder transaction expenses and annual operating expenses
for the Funds.
<TABLE>
<CAPTION>
LIMITED AGGRESSIVE
TERM BOND BOND INCOME BOND BALANCED EQUITY GROWTH
FUND FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES1
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred Sales Load (as a percentage of original
Purchase price or redemption proceeds,
as applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Redemption Fees (as a percentage
of amount redeemed, if applicable) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Exchange Fee $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.60% 0.55% 0.60% 0.60% 0.75% 0.75% 0.95%
12b-1 Fees 2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses
Servicing Fees3 0.00% 0.00% 0.00% 0.00% 0.00% 0.25% 0.00%
Administrative Fees4 0.26% 0.26% 0.26% 0.26% 0.26% 0.26% 0.26%
Other Expenses 0.20% 0.16% 0.15% 0.23% 0.35% 0.13% 0.23%
----- ----- ----- ----- ----- ----- -----
Total Other Expenses 0.46% 0.42% 0.41% 0.49% 0.61% 0.64% 0.49%
----- ----- ----- ----- ----- ----- -----
Total Fund Operating Expenses5 1.06% 0.97% 1.01% 1.09% 1.36% 1.39% 1.44%
</TABLE>
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 table reflects the current fees for
the Funds. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of a Fund (a "Class"). See "MANAGEMENT OF THE COMPANY" and
"GENERAL INFORMATION" for a more complete discussion of the Shareholder
transaction expenses and annual operating expenses for the Fund. THE FOREGOING
SUMMARY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 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.
1 A "Participating Organization" (as defined in this Prospectus) may charge a
Customer (as defined in this Prospectus) account fees for automatic
investment and other investment management services provided in connection
with investment in the Fund. (See "HOW TO PURCHASE AND REDEEM
SHARES--Purchases of Shares.")
2 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which each Fund or Class described in this Prospectus 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 or Class ("Shareholder Fees"). Currently, no such fees will be paid
under the Plan by the Company. However, Shareholder Fees may be absorbed by
<PAGE>
the Advisor in its sole discretion without further notice and at no expense
to a Class or Fund. Shareholders will be given at least 30 days' notice prior
to payment by the Company of any increased fees under the Plan.
3 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which a Fund or Class is authorized to pay Participating
Organizations 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 or Class ("Servicing Fees"). Currently
the Company is paying 0.25% annually for "S" Shares of the Equity Fund under
the Services Plan. However, Servicing Fees may be absorbed by the Advisor in
its sole discretion without further notice and at no expense to a Fund or
Class. The company may elect to pay such fees at any time without further
notice to shareholders.
4 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds are authorized to pay a periodic fee calculated
at an annual rate of 0.26% of the average daily net assets for each of the
Funds.
5 Absent the fee waivers described above, "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.56% for the Limited Term
Bond Fund, 1.47% for the Bond Fund, 1.51% for the Income Fund, 1.59% for the
Municipal Bond Fund, 1.86% for the Balanced Fund, 1.64% for the Equity Fund-S
Shares, and 1.94% for the Aggressive Growth Fund.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Limited Term Bond Fund $11 $34 $58 $129
Bond Fund $10 $31 $54 $119
Income Fund $10 $32 $56 $124
Municipal Bond Fund $11 $35 $60 $133
Balanced Fund $14 $43 $74 $164
Equity Fund $14 $44 $76 $167
Aggressive Growth Fund $15 $46 $79 $172
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. Please refer to "MANAGEMENT OF THE COMPANY" for a more complete
discussion of the Shareholder transaction expenses and annual operating expenses
for the Funds.
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below set forth for each Fund certain financial data, other operating
information and investment results for each of the predecessor Funds, which were
acquired by the Company on February 13, 1998, and the IMG Bond Fund which
changed its name to Vintage Bond Fund on February 13, 1998, expressed in one
share outstanding throughout the period. The Financial Highlights contained in
the tables below for the Liquid Assets, Municipal Assets and Bond Fund are
derived from the financial statements audited (unless otherwise indicated) by
KPMG Peat Marwick LLP, independent auditors for those predecessor Funds. The
Financial Highlights for all other Funds are derived from the financial
statements audited (unless otherwise indicated) by Ernst & Young LLP,
independent auditors for the AMCORE Vintage Mutual Funds, the predecessors to
these Funds. The Financial Highlights should be read in conjunction with the
financial statements, related notes, and other financial information which are
incorporated herein by reference in the Statement of Additional Information.
<TABLE>
<CAPTION>
GOVERNMENT ASSETS FUND*
------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 21,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(1)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Net Investment Income .023 .045 .051 .042 .027 .007
---- ---- ---- ---- ---- ----
Dividends Distributed (.023) (.045) (.051) (.042) (.027) (.007)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
TOTAL RETURN 2.37%(a) 4.62% 5.24% 4.32% 2.73% 0.75%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $142,375 $158,698 $153,836 $137,888 $105,345 $87,928
Ratio of Expenses to Average Net Assets 0.73%(b) 0.76% 0.54% 0.50% 0.56% 0.58%(b)
Ratio of Net Investment Income to
Average Net Assets 4.73%(b) 4.53% 5.08% 4.26% 2.70% 2.68%(b)
Ratio of Expenses to Average Net Assets2 0.98%(b) 1.01% 0.72% 0.98% 1.02% 1.14%(b)
Ratio of Net Investment Income to
Average Net Assets2 4.48%(b) 4.28% 4.90% 3.78% 2.23% 2.12%(b)
</TABLE>
1 Period from Commencement of Operations
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage U.S. Government Obligations Fund, a
corresponding predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
LIQUID ASSETS FUND*
-------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, JANUARY 2, 1997 TO
1997 JUNE 30, 1997(1)
---- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
------- --------
Net Investment Income .051 .025
---- ----
Dividends Distributed (.051) (.025)
----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======= ========
TOTAL RETURN 2.59%(a) 2.51%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $34,064 $ 17,859
Ratio of Expenses to Average Net Assets 0.71% 0.70%
Ratio of Net Investment Income to
Average Net Assets 5.08%(b) 4.96%(b)
1 Period from Commencement of Operations.
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
(a)Not Annualized
(b)Annualized
MUNICIPAL ASSETS FUND*
----------------------------------
SIX MONTHS
ENDED
DECEMBER 31, JANUARY 2, 1997 TO
1997 JUNE 30, 1997(1)
---- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
------- --------
Net Investment Income .032 .016
---- ----
Dividends Distributed (.032) (.016)
----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======= ========
TOTAL RETURN 1.62%(a) 1.61%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $25,594 $ 25,036
Ratio of Expenses to Average Net Assets** 0.68% 0.66%
Ratio of Net Investment Income to
Average Net Assets 3.19%(b) 3.17%(b)
1 Period from Commencement of Operations.
* Performance data relates to Municipal Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
** During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 0.90 percent.
(a)Not Annualized
(b)Annualized
<PAGE>
<TABLE>
<CAPTION>
LIMITED TERM BOND FUND*
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 15, 1995 TO
SEPTEMBER 30, MARCH 31, MARCH 31,
1997 1997 1996(1)
---- ---- -------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.69 $ 9.89 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.50 0.44
Net Gains or Losses on Securities
(both realized and unrealized) 0.23 (0.20) (0.11)
---- ----- -----
Total from Investment Operations 0.48 0.30 0.33
---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.25) (0.50) (0.43)
Distributions (from capital gains) 0.00 0.00 (0.01)
Returns of Capital 0.00 0.00 0.00
---- ---- ----
Total Distributions (0.25) (0.50) (0.44)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 9.92 $ 9.69 $ 9.89
======= ======= =======
TOTAL RETURN 5.03% (a) 3.13% 3.40% (a)
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $41,292 $38,835 $41,178
Ratio of Expenses to Average Net Assets 1.39% (b) 1.40% 1.18% (b)
Ratio of Net Investment Income
to Average Net Assets 5.09% (b) 5.18% 5.53% (b)
Ratio of Expenses to Average Net Assets2 1.64% (b) 1.65% 1.18% (b)
Ratio of Net Investment Income
to Average Net Assets2 4.84% (b) 4.93% 5.53% (b)
Portfolio Turnover Rate 37.25% 70.63% 69.30%
Average Commission Rate Paid3 N/A N/A N/A
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
3 Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged. Disclosure is not required for periods prior to
March 31, 1997.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Fixed Total Return Fund, a
corresponding predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
BOND FUND*
----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JULY 7, 1995
OCTOBER 31, APRIL 30, APRIL 30,
1997 1997 1996(1)
---- ---- -------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 9.78 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.33 0.62 0.49
Net Realized and Unrealized Gains 0.34 0.04 (0.28)
---- ---- -----
Total from Investment Operations 0.67 0.66 0.21
---- ---- ----
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.32 0.62 0.42
Distributions from Net Realized Gains 0.00 0.00 0.01
---- ---- ----
Total Distributions 0.32 0.62 0.43
---- ---- ----
NET ASSET VALUE, END OF PERIOD $ 10.17 $ 9.82 $ 9.78
======= ======= =======
TOTAL RETURN 6.93% (a) 6.97% 2.10% (a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 3,000 $ 3,200 $ 3,641
Ratio of Expenses to Average Net Assets 0.85% (b) 0.83% 0.80%
Ratio of Net Investment Income to Average
Net Assets 6.23% (b) 6.16% 6.24% (b)
Portfolio Turnover Rate 23.29% 42.22% 60.43%
</TABLE>
1 Period from Commencement of Operations.
(a)Not Annualized
(b)Annualized
* Performance data relates to IMG Bond Fund-Select Shares whose name was
changed to the Vintage Bond Fund on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
INCOME FUND*
--------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(1)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.70 $ 9.93 $ 9.71 $ 9.92 $ 10.28 $ 10.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.27 0.54 0.61 0.54 0.59 0.18
Net Gains or Losses on Securities
(both realized and unrealized) 0.26 (0.24) 0.23 (0.22) (0.33) 0.27
---- ----- ---- ----- ----- ----
Total From Investment Operations 0.53 0.30 0.84 0.32 0.26 0.45
---- ---- ---- ---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.27) (0.53) (0.62) (0.53) (0.59) (0.17)
Distributions (from capital gains) 0.00 0.00 0.00 0.00 (0.03) 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ---- ----
Total Distributions (0.27) (0.53) (0.62) (0.53) (0.62) (0.17)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 9.96 $ 9.70 $ 9.93 $ 9.71 $ 9.92 $ 10.28
======== ======== ======== ======== ======== ========
TOTAL RETURN 5.54% (a) 3.14% 8.74% 3.46% 2.43% 4.54% (a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 99,035 $ 92,031 $ 84,752 $ 81,673 $ 90,301 $ 50,127
Ratio of Expenses to Average Net Assets 1.18% (b) 1.20% 0.97% 0.94% 0.51% 0.29% (b)
Ratio of Net Investment Income to Average Net Assets 5.49% (b) 5.52% 5.77% 5.53% 5.74% 6.58% (b)
Ratio of Expenses to Average Net Assets2 1.43% (b) 1.45% 0.97% 1.22% 1.24% 1.34% (b)
Ratio of Net Investment Income to Average Net Assets2 5.24% (b) 5.27% 5.77% 5.26% 5.01% 5.53% (b)
Portfolio Turnover Rate 10.60% 59.70% 113.25% 32.38% 32.03% 17.44%
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Fixed Income Fund, a corresponding
predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND*
-------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR FEBRUARY 15,
ENDED ENDED ENDED ENDED ENDED 1993 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(1)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.22 $ 10.27 $ 9.97 $ 9.91 $ 10.05 $ 10.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.19 0.38 0.43 0.43 0.42 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 0.32 (0.05) 0.30 0.07 (0.13) 0.04
---- ----- ---- ---- ----- ----
Total From Investment Operations 0.51 0.33 0.73 0.50 0.29 0.09
---- ---- ---- ---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.19) (0.38) (0.43) (0.43) (0.42) (0.04)
Distributions (from capital gains) 0.00 0.00 0.00 (0.01) (0.01) 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ---- ----
Total Distributions (0.19) (0.38) (0.43) (0.44) (0.43) (0.04)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 10.54 $ 10.22 $ 10.27 $ 9.97 $ 9.91 $ 10.05
======== ======== ======== ======== ======== ========
TOTAL RETURN 5.08% (a) 3.22% 7.43% 5.29% 2.79% 0.90% (a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $ 46,659 $ 45,164 $ 42,436 $ 30,717 $ 32,983 $ 13,043
Ratio of Expenses to Average Net Assets 1.25% (b) 1.28% 0.75% 0.73% 0.57% 0.42% (b)
Ratio of Net Investment Income to Average Net Assets 3.73% (b) 3.68% 4.21% 4.42% 4.19% 4.31% (b)
Ratio of Expenses to Average Net Assets2 1.50% (b) 1.53% 1.02% 1.30% 1.38% 1.47% (b)
Ratio of Net Investment Income to Average Net Assets2 3.48% (b) 3.43% 3.94% 3.84% 3.37% 3.26% (b)
Portfolio Turnover Rate 22.53% 21.00% 14.21% 5.77% 13.26% 0.00%
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Intermediate Tax-Free Fund, a
corresponding predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND*
--------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED JUNE 1, 1995 TO
SEPTEMBER 30, MARCH 31, MARCH 31,
1997 1997 1996(1)
---- ---- -------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.72 $ 11.08 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.08 0.18 0.24
Net Gains or Losses on Securities
(both realized and unrealized) 2.32 1.05 1.08
---- ---- ----
Total from Investment Operations 2.40 1.23 1.32
---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.08) (0.18) (0.24)
Distributions (from capital gains) 0.00 (0.41) 0.00
Returns of Capital 0.00 0.00 0.00
---- ---- ----
Total Distributions (0.08) (0.59) (0.24)
----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 14.04 $ 11.72 $ 11.08
======== ======== ========
TOTAL RETURN 20.55% (a) 11.05% 13.29% (a)
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $ 44,746 $ 32,012 $ 13,516
Ratio of Expenses to Average Net Assets 1.39% (b) 1.55% 1.32% (b)
Ratio of Net Investment Income to Average
Net Assets 1.39% (b) 1.58% 2.66% (b)
Ratio of Expenses to Average Net Assets2 1.64% (b) 1.80% 1.32% (b)
Ratio of Net Investment Income to Average
Net Assets2 1.14% (b) 1.33% 2.66% (b)
Portfolio Turnover Rate 14.84% 38.35% 61.72%
Average Commission Rate Paid3 $ 0.083 $ 0.1039 --
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
3 Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged. Disclosure is not required for periods prior to
March 31, 1997.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Balanced Fund, a corresponding
predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND*
-------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 15,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(1)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.58 $ 14.48 $ 11.44 $ 10.05 $ 10.20 $ 10.00
-------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.01 0.05 0.13 0.15 0.19 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 4.54 2.60 3.27 1.41 (0.14) 0.19
---- ---- ---- ---- ----- ----
Total From Investment Operations 4.55 2.65 3.40 1.56 0.05 0.24
---- ---- ---- ---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.01) (0.05) (0.13) (0.15) (0.20) (0.04)
Distributions (from capital gains) 0.00 (0.50) (0.23) (0.02) 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ---- ----
Total Distributions (0.01) (0.55) (0.36) (0.17) (0.20) (0.04)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 21.12 $ 16.58 $14.48 $ 11.44 $ 10.05 $ 10.20
======== ======== ====== ======== ======== =======
TOTAL RETURN 27.46% (a) 18.35% 29.96% 15.74% 0.45% 2.45% (a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (000) $397,295 $309,669 $210,950 $149,233 $125,203 $74,720
Ratio of Expenses to Average Net Assets 1.30% (b) 1.33% 1.09% 1.07% 0.54% 0.23% (b)
Ratio of Net Investment Income to Average Net Assets 0.08% (b) 0.32% 0.96% 1.47% 1.97% 2.40% (b)
Ratio of Expenses to Average Net Assets2 1.55% (b) 1.58% 1.09% 1.35% 1.37% 1.43% (b)
Ratio of Net Investment Income to Average Net Assets2 (0.17%)(b) 0.07% 0.96% 1.19% 1.15% 1.20% (b)
Portfolio Turnover Rate 31.03% 37.08% 33.23% 20.54% 3.98% 0.00%
Average Commission Rate Paid3 $ 0.0528 $ 0.0677 -- -- -- --
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
3 Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged. Disclosure is not required for periods prior to
March 31, 1997.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Equity Fund, a corresponding
predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND*
------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 29, 1995
SEPTEMBER 30, MARCH 31, TO MARCH 31,
1997 1997 1996(1)
---- ---- -------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.90 $ 10.88 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (0.05) (0.06) 0.00
Net Gains or Losses on Securities
(both realized and unrealized) 4.10 1.08 0.90
---- ---- ----
Total from Investment Operations 4.05 1.02 0.90
---- ---- ----
LESS DISTRIBUTIONS
Dividends (from net investment income) 0.00 0.00 0.00
Distributions (from capital gains) 0.00 0.00 (0.02)
Returns of Capital 0.00 0.00 0.00
---- ---- ----
Total Distributions 0.00 0.00 (0.02)
---- ---- -----
NET ASSET VALUE, END OF PERIOD $ 15.95 $ 11.90 $ 10.88
======== ======== ========
TOTAL RETURN 34.03% (a) 9.39% 9.10% (a)
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $ 82,107 $ 49,413 $ 23,319
Ratio of Expenses to Average Net Assets 1.59% (b) 1.63% 1.57% (b)
Ratio of Net Investment Income to Average
Net Assets (0.77%)(b) (0.64%) 0.08% (b)
Ratio of Expenses to Average Net Assets2 1.84% (b) 1.88% 1.57% (b)
Ratio of Net Investment Income to Average
Net Assets2 (1.02%) (b) (0.89%) 0.08% (b)
Portfolio Turnover Rate 16.61% 45.14% 4.31%
Average Commission Rate Paid3 $ 0.0751 $ 0.0941 --
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
3 Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged. Disclosure is not required for periods prior to
March 31, 1997.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Aggressive Growth Fund, a
corresponding predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS OF THE FUNDS
Each Fund has its own investment objective and policies, which are described
below. There is no assurance that a Fund will be successful in achieving its
investment objective. The investment objective of each Fund is a fundamental
policy and, as such, may not be changed without a vote of the holders of a
majority of the outstanding Shares of a Fund (as described in the Statement of
Additional Information). The other policies of a Fund may be changed without a
vote of the holders of a majority of Shares unless (1) the policy is expressly
deemed to be a fundamental policy of the Fund or (2) the policy is expressly
deemed to be changeable only by such majority vote.
GOVERNMENT ASSETS FUND
The investment objective of the Government Assets Fund is to seek current income
consistent with maintaining liquidity and stability of principal. The Fund seeks
to maintain a stable net asset value of $1.00 per Share.
The Government Assets Fund invests exclusively in U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government Obligations") maturing in 397 days or less
at date of purchase, and in repurchase agreements with respect to U.S.
Government Obligations. The short-term U.S. Government Obligations in the Fund's
portfolio will differ in their interest rates, maturities and times of issuance.
The dollar-weighted average maturity of the obligations held by the Government
Assets Fund will not exceed 90 days.
LIQUID ASSETS FUND
The investment objective of the Liquid Assets Fund is to seek maximum current
income consistent with safety of principal and maintenance of liquidity. The
Fund invests in the following money market instruments maturing in 397 days or
less from the time of investment, (with certain exceptions):
(1) U.S. Treasury bills, notes and other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
Obligations"). Such securities will include those supported by the full
faith and credit of the United States Treasury or the right of the agency or
instrumentality to borrow from the Treasury, as well as those supported only
by the credit of the issuing agency or instrumentality.
(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities to
the Liquid Assets Fund with the concurrent agreement of the seller to
repurchase them at a specified time and price to yield an agreed upon rate
of interest. Repurchase agreements may involve certain risks which are
described in greater detail in the Statement of Additional Information.
(3) Redeemable interest-bearing trust certificates ("Student Loan Certificates")
issued by the Iowa Student Loan Trust and/or other Student Loan Trusts
established by the Liquid Assets Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days but
<PAGE>
will be redeemable by the Liquid Assets Fund at their face amount upon not
more than five days' written notice to the issuing Student Loan Trust.
Further details concerning the Student Loan Trusts and the Fund's
investments in Student Loan Certificates are found in the Statement of
Additional Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but will
be redeemable by the Liquid Assets Fund at their face amount upon not more
than five days' written notice to the issuing FmHA Trust. Further details
concerning the FmHA Trusts and the Liquid Assets Fund's investment in FmHA
Certificates and FmHA guaranteed loans are found in the Statement of
Additional Information. The Liquid Assets Fund intends to invest at least 25
percent of its total assets in Student Loan Certificates, and/or FmHA
Certificates, except when such investments are either not available in
sufficient quantity or do not carry yields competitive with alternative
investments.
(5) Commercial paper which at the time of investment (a) is rated (or the issuer
of which has been rated) highest quality by two nationally recognized
statistical rating organizations ("NRSRO") if rated by two or more NRSROs;
(b) is rated (or the issuer of which has been rated) highest quality if
rated by only one NRSRO; or (c) is determined to be of equivalent quality by
the Company's Board of Directors if unrated.
(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at the
date of investment, have capital, surplus, and undivided profits (as of the
date of their most recently published financial statements) in excess of
$10,000,000; and obligations of other banks or savings and loans if such
obligations are insured by the Federal Deposit Insurance Corporation,
provided that not more than 10 percent of the total assets of the Fund will
be invested in such insured obligations.
(7) Short-term (maturing in one year or less) corporate obligations which at the
time of investment (a) are rated in the highest rating category by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the highest rating
category if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Company's Board of Directors if unrated.
It is the policy of the Liquid Assets Fund that any illiquid securities
(including repurchase agreements of more than seven days duration) may not
constitute, at the time of purchase or at any time, more than ten percent of the
value of the total net assets of the Fund. As a fundamental policy, the Liquid
Assets Fund will not concentrate its investments in any one industry and
pursuant to Section 18(f) of the 1940 Act, the Fund may not issue senior
securities.
The Liquid Assets Fund has adopted a number of investment policies and
restrictions, some of which can be changed by the Board of Directors. Others may
be changed only by holders of a majority of the outstanding shares and include
the following: Without shareholder approval the Liquid Assets Fund may not: (1)
purchase any securities other than those described above; (2) invest more than
80 percent of its total assets in Student Loan Certificates and/or FmHA
Certificates; (3) purchase or sell real estate (other than short-term loans
secured by real estate or interests therein or loans to companies which invest
in or engage in other activities related to real estate), commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; (4) make short sales of securities or maintain a short
position or write, purchase, or sell puts (excluding repayment and guarantee
arrangements on loan participations purchased from banks), calls, straddles,
spreads or combinations thereof; (5) make loans to other persons, provided the
Fund may invest up to 80 percent of its total assets in Student Loan
Certificates or FmHA Certificates, as described in (2) above, and may make the
investments and enter into repurchase agreements as described above; (6) invest
in securities with legal or contractual restrictions on resale (except for
repurchase agreements, Student Loan Certificates, and FmHA Certificates) or for
which no ready market exists; (7) enter into repurchase agreements if, as a
result thereof, more than five percent of the Liquid Assets Fund's total assets
(taken at market value at the time of such investment) would be subject to
repurchase agreements maturing in more than seven days.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Liquid Assets
Fund's outstanding voting securities, as defined in the Statement of Additional
Information. The Statement of Additional Information includes discussion of
<PAGE>
certain other investment policies and restrictions, some of which are also
considered fundamental and may not be changed without shareholder approval.
MUNICIPAL ASSETS FUND
The investment objective of the Municipal Assets Fund is maximum current income
exempt from federal income tax, consistent with safety of principal and
maintenance of liquidity. The Municipal Assets Fund invests in the following
types of money market instruments maturing in 397 days or less from time of
investment (with certain exceptions), as defined herein:
(1) Tax-exempt debt obligations issued by state and municipal governmental units
and public authorities within the United States and participation interests
therein. With few exceptions such obligations will be nonrated and of
limited marketability. However, they will be backed by demand repurchase
commitments of the issuers thereof and irrevocable bank letters of credit or
guarantees (collectively referred to herein as "Liquidity Agreements"). The
Liquidity Agreements will permit the holder of the securities to demand
payment of the unpaid principal balance plus accrued interest upon a
specified number of days' notice either from the issuer or by drawing on an
irrevocable bank letter of credit or guarantee. In addition, all obligations
with maturities longer than 397 days from date of purchase will, by their
terms, bear rates of interest that are adjusted upward or downward no less
frequently than semiannually by means of a formula intended to reflect
market changes in interest rates. Certain types of industrial development
bonds issued by public bodies to finance the construction of industrial and
commercial facilities and equipment are also purchased. The Statement of
Additional Information contains further details concerning the Fund's
policies and procedures with respect to investments in such tax-exempt
obligations and participation interests.
(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit of
the United States. Such obligations will be purchased only if backed by the
full faith and credit of the United States or rated Aaa, Aa, MIG-1, MIG-2 or
Prime-1 by Moody's Investors Service, Inc., or AAA, AA, or A-1 by Standard &
Poor's Corporation. Nonrated securities may also be purchased if determined
by the Company's Board of Directors to be of comparable quality to the rated
securities in which the Fund may invest.
(3) Taxable obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government may be acquired from time to time on a temporary basis
for defensive purposes.
(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to the
Fund with the concurrent agreement of the seller to repurchase them at a
specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Municipal Assets Fund's outstanding voting securities.
It is the policy of the Municipal Assets Fund that any illiquid securities may
not constitute, at the time of purchase or at anytime, more than ten percent of
the value of the total net assets of the Municipal Assets Fund. The Fund will
not concentrate its investments in any one industry and pursuant to Section
18(f) of the 1940 Act may not issue senior securities.
<PAGE>
New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Municipal Assets Fund may
occasionally enter into such commitments, subject to certain limitations and
procedures discussed in the Statement of Additional Information.
The Municipal Assets Fund has adopted a number of investment policies and
restrictions, some of which can be changed by the Board of Directors. Others may
be changed only by holders of a majority of the outstanding shares and include
the following: Without shareholder approval the Municipal Assets Fund may not:
(1) purchase any securities other than those described above; (2) invest more
than 80 percent of its total assets in tax-exempt fixed and variable rate debt
obligations (or participation interests therein) issued by state and local
governmental units within the United States which are backed by Liquidity
Agreements; (3) invest more than five percent of its total assets (determined as
of the date of purchase) in tax-exempt obligations or participation interests
therein subject to Liquidity Agreements issued by any one bank; (4) purchase or
sell real estate, commodities or commodity contracts, interests in oil, gas or
other mineral exploration or development programs; (5) make short sales of
securities or maintain a short position or write, purchase, or sell puts
(excluding Liquidity Agreements covering certain tax-exempt obligations
purchased by the Municipal Assets Fund), calls, straddles, spreads or
combinations thereof; (6) make loans to other persons, provided the Municipal
Assets Fund may make investments and enter into repurchase agreements as
described above; (7) invest in securities with legal or contractual restrictions
on resale (except for tax-exempt debt obligations subject to Liquidity
Agreements) or for which no ready market exists; (8) enter into a Liquidity
Agreement with any bank unless such bank is a United States bank which has a
record, together with predecessors, of at least five years of continuous
operations; (9) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven days; and (10) enter into Liquidity Agreements with any bank if five
percent or more of the securities of such bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such bank.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Municipal Assets
Fund's outstanding voting securities, as defined in the Statement of Additional
Information. The Statement of Additional Information includes discussion of
certain other investment policies and restrictions, some of which are also
considered fundamental and may not be changed without shareholder approval.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Government Assets, Liquid Assets and Municipal Assets Funds each limits its
investments to those U.S. dollar-denominated instruments determined by the Board
of Directors to present minimal credit risk and which are "Eligible Securities"
as that term is defined by Rule 2a-7. For additional requirements of Rule 2a-7,
see "Valuation of Shares". Assets purchased will consist of securities with
maturities of 397 days or less at date of purchase or, if maturing beyond 397
days, will be backed by Liquidity and Servicing Agreements or Guaranteed Funding
Agreements and will have variable interest rates adjustable at least
semiannually. In determining whether particular variable rate investments backed
by Liquidity and Servicing Agreements or Guaranteed Funding Agreements may be
made, the period remaining until maturity will be deemed to be the longer of the
demand notice period required before the Fund is entitled to receive payment of
the principal amount or the period remaining until the next interest adjustment.
The dollar-weighted average maturity of each Fund's investments will be 90 days
or less, determined in the same manner. While the underlying security in a
repurchase agreement may have a maturity of more than 397 days, the repurchase
agreement itself will terminate in less than 397 days, and typically within a
few days.
<PAGE>
As a general policy, the Government Assets, Liquid Assets, and Municipal Assets
Funds each intends to hold investments until they mature. However, in an effort
to increase portfolio yields each Fund may periodically trade securities to take
advantage of perceived disparities between markets for various short-term money
market instruments. It is also possible that redemptions from a Fund could
necessitate the sale of portfolio investments prior to maturity and at times
when such sale would be undesirable because of unfavorable market conditions.
While investments by the Government Assets, Liquid Assets, and Municipal Assets
Funds will be confined to high quality financial instruments, the complete
elimination of risk is not possible. Under certain circumstances described in
more detail in the Statement of Additional Information, the net asset value per
share of each Fund could decrease. It is also possible that guarantors or
borrowers will default on the provisions of their agreements with the Fund,
which could cause the net asset value of the Fund per share to decrease.
In light of these various contingencies, there can be no assurances the
Government Assets, Liquid Assets, and Municipal Assets Funds will achieve their
investment objectives.
LIMITED TERM BOND FUND
The investment objective of the Limited Term Bond Fund is to seek total return
from a portfolio of limited term fixed income securities. Total return includes
a combination of interest income from the Fund's underlying fixed income
securities, appreciation or depreciation in the value of these fixed income
securities and gains or losses realized upon the sale of such securities.
Because the market value of fixed income securities can be expected to vary
inversely to changes in prevailing interest rates, investing in such fixed
income securities provides an opportunity for appreciation when interest rates
decline and depreciation when interest rates rise. It is anticipated that the
Fund will place primary emphasis on capital appreciation as well as capital
preservation through periodic adjustment of the average maturity or duration of
the Fund's portfolio, securities selection, maturity structure and sector
allocation, with the level of current income being a secondary consideration and
that investments will be made without regard to tax ramifications.
Under normal conditions, the Limited Term Bond Fund 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 a nationally
recognized statistical rating organization (an "NRSRO") or, if unrated, found by
the Advisor to be of comparable quality. Such securities will include but not be
limited to, corporate debt securities (including notes, bonds and debentures),
U.S. Government Obligations, mortgage-related securities, high quality money
market instruments (commercial paper, certificates of deposit and bankers'
acceptances), variable amount master demand notes, variable and floating rate
notes, taxable municipal bonds, leasing instruments and trust certificates and
asset backed securities.
The Limited Term Bond Fund expects to invest in bonds, notes and debentures of a
wide range of U.S. corporate issuers. Such obligations, in the case of
debentures, will represent unsecured promises to pay, in the case of notes and
bonds, may be secured by mortgages on real property or security interests in
personal property and will in most cases differ in their interest rates,
maturities and times of issuance. The Limited Term Bond Fund will invest in such
corporate debt securities only if they are rated within the five highest rating
categories at the time of purchase by an NRSRO or, if unrated, found by IMG to
be of comparable quality. Securities rated in the fourth highest rating category
may have speculative characteristics and poor credit protection, even though
they are of investment grade quality. Up to 25% of the Limited Term Bond Fund's
total assets could be invested in securities rated in the fifth highest rating
category, which are considered below investment grade securities (commonly known
as "junk bonds"). Currently, the Fund does not expect to invest in (i)
securities rated lower than the fifth highest rating category; and (ii) unrated
debt securities of similar quality. See "Lower Rated Securities" below for
information concerning risks associated with investing in below investment grade
bonds.
<PAGE>
In addition, the Limited Term Bond Fund may engage in certain loans of portfolio
securities, repurchase agreements and reverse repurchase agreements and futures
and options. The Limited Term Bond Fund may also invest in securities of other
investment companies and in other investment portfolios advised by IMG, as
described more fully under "Other Investment Policies." The Limited Term Bond
Fund expects to maintain a dollar-weighted average portfolio maturity of 1 to 4
years.
BOND FUND
The investment objective of the Bond Fund is to seek income and capital
appreciation, consistent with the preservation of capital. Because the market
value of fixed income securities can be expected to vary inversely to changes in
prevailing interest rates, investing in such fixed income securities can provide
an opportunity for capital appreciation when interest rates are expected to
decline. Conversely, when interest rates rise, the net asset value of the Bond
Fund can be expected to fall.
Under normal conditions, the Bond Fund 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 a nationally recognized statistical
rating organization (an "NRSRO") or, if unrated, found by the Advisor to be of
comparable quality. Such securities will include but not be limited to,
corporate debt securities (including notes, bonds and debentures), U.S.
Government Obligations and mortgage-related securities, variable and floating
rate notes, taxable municipal bonds, asset backed securities, high quality money
market instruments (commercial paper, certificates of deposit and bankers'
acceptances), variable amount master demand notes, leasing instruments and trust
certificates. In addition, the Bond Fund may engage in certain loans of
portfolio securities, repurchase agreements and reverse repurchase agreements
and futures and options. The Bond Fund may also invest in securities of other
investment companies and in other investment portfolios advised by IMG. The Bond
Fund expects to maintain a dollar-weighted average portfolio maturity of 4 to 10
years.
To meet the objectives of the Bond Fund and to seek additional stability of
principal, the Bond Fund will be managed to adjust the average maturity based on
the interest rate outlook. During periods of rising interest rates and falling
prices, a shorter average maturity may be adopted to cushion the effect of price
declines on the Bond Fund's net asset value. When rates are falling and prices
are rising, a longer average maturity for the Bond Fund may be considered.
The Bond Fund expects to invest in bonds, notes and debentures of a wide range
of U.S. corporate issuers. Such obligations, in the case of debentures, will
represent unsecured promises to pay, in the case of notes and bonds, may be
secured by mortgages on real property or security interests in personal property
and will in most cases differ in their interest rates, maturities and times of
issuance. The Bond Fund will invest in such corporate debt securities only if
they are rated within the five highest rating categories at the time of purchase
by an NRSRO or, if unrated, found by the Advisor to be of comparable quality.
Securities rated in the fourth highest rating category have speculative
characteristics and poor credit protection, even though they are of investment
grade quality. Up to 25% of the Bond Fund's total assets could be invested in
securities rated in the fifth highest rating category, which are considered
below investment grade securities (commonly known as "junk bonds"). Currently,
the Fund does not expect to invest in (i) securities rated lower than the fifth
highest rating category; and (ii) unrated debt securities of similar quality.
See "Lower Rated Securities" below for information concerning risks associated
with investing in below investment grade bonds.
Subject to the foregoing limitations, the Bond Fund may invest in U.S.
dollar-denominated international certificates of deposit, banker's acceptances
and foreign fixed income issues for which the primary trading market is in the
United States ("Yankee Obligations").
The Bond Fund will purchase commercial paper rated at the time of purchase
within the two highest rating categories by an NRSRO or, if not rated, found by
<PAGE>
IMG to be of comparable quality. See the Appendix to the Statement of Additional
Information for a description of these ratings.
For temporary defensive purposes, the Bond Fund may invest all or any portion of
its assets in the money market instruments and repurchase agreements described
above when, in the opinion of the Advisor, it is in the best interests of the
Fund to do so.
INCOME FUND
The investment objective of the Income Fund is to seek current income,
consistent with the preservation of capital. Because the market value of fixed
income securities can be expected to vary inversely to changes in prevailing
interest rates, investing in such fixed income securities can provide an
opportunity for capital appreciation when interest rates are expected to
decline.
Under normal conditions, the Income Fund 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 a nationally recognized
statistical rating organization (an "NRSRO") or, if unrated, found by the
Advisor to be of comparable quality. Such securities will include but not be
limited to, corporate debt securities (including notes, bonds and debentures),
U.S. Government Obligations and mortgage-related securities, variable and
floating rate notes, taxable municipal bonds, asset backed securities, high
quality money market instruments (commercial paper, certificates of deposit and
bankers' acceptances), variable amount master demand notes, leasing instruments
and trust certificates. In addition, the Income Fund may engage in certain loans
of portfolio securities, repurchase agreements and reverse repurchase agreements
and futures and options. The Income Fund may also invest in securities of other
investment companies and in other investment portfolios advised by IMG. The
Income Fund expects to maintain a dollar-weighted average portfolio maturity of
four to ten years.
To meet the objectives of the Income Fund and to seek additional stability of
principal, the Income Fund will be managed to adjust the average maturity based
on the interest rate outlook. During periods of rising interest rates and
falling prices, a shorter average maturity may be adopted to cushion the effect
of price declines on the Income Fund's net asset value. When rates are falling
and prices are rising, a longer average maturity for the Income Fund may be
considered.
The Income Fund expects to invest in bonds, notes and debentures of a wide range
of U.S. corporate issuers. Such obligations, in the case of debentures, will
represent unsecured promises to pay, in the case of notes and bonds, may be
secured by mortgages on real property or security interests in personal property
and will in most cases differ in their interest rates, maturities and times of
issuance. The Income Fund will invest in such corporate debt securities only if
they are rated within the five highest rating categories at the time of an NRSRO
or, if unrated, found by the Advisor to be of comparable quality. Securities
rated in the fourth highest rating category may have speculative characteristics
and poor credit protection,, even though they are of investment grade quality.
Up to 25% of the Income Fund's total assets could be invested in securities
rated in the fifth highest rating category, which are considered below
investment grade securities (commonly known as "junk bonds"). Currently, the
Fund does not expect to invest in (i) securities rated lower than the fifth
highest rating category; and (ii) the unrated debt securities of similar
quality. See "Lower Rated Securities" below for information concerning risks
associated with investing in below investment grade bonds.
Subject to the foregoing limitations, the Income Fund may invest in U.S.
dollar-denominated international certificates of deposit, banker's acceptances
and foreign fixed income issues for which the primary trading market is in the
United States ("Yankee Obligations").
The Income Fund will purchase commercial paper rated at the time of purchase
within the two highest rating categories by an NRSRO or, if not rated, found by
IMG to be of comparable quality. See the Appendix to the Statement of Additional
Information for a description of these ratings. For temporary defensive
<PAGE>
purposes, the Income Fund may invest all or any portion of its assets in the
money market instruments and repurchase agreements described above when, in the
opinion of the Advisor, it is in the best interests of the Fund to do so.
MUNICIPAL BOND FUND
The Municipal Bond Fund seeks to produce current income, consistent with the
preservation of capital that is exempt from federal income taxes to the extent
described below. The Municipal Bond Fund invests primarily in a diversified
portfolio of tax-exempt fixed income securities.
As a fundamental policy, under normal market conditions at least 80% of the net
assets of the Municipal Bond Fund will be invested in a diversified portfolio of
obligations (such as bonds, notes, and debentures) issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and other political subdivisions, agencies, instrumentalities and
authorities, the interest on which is both exempt from regular federal income
taxes and not treated as a preference item for individuals for purposes of the
federal alternative minimum tax ("Municipal Securities"). It should be noted
that interest on such bonds will nonetheless be part of an adjustment to the
alternative minimum taxable income for purposes of the alternative minimum tax
imposed on corporations as well as the environmental tax imposed on corporations
under Section 59A of the Internal Revenue Code of 1986, as amended. Under normal
market conditions, the Municipal Bond Fund will invest in Municipal Securities
that have a stated or remaining maturity of 25 years or less or in Municipal
Securities with a stated or remaining maturity in excess of 25 years if such
securities have an unconditional put to sell or redeem the securities within 25
years from the date of purchase. The Municipal Bond Fund expects to maintain a
dollar-weighted average portfolio maturity of 4 to 10 years.
Under normal market conditions, the Municipal Bond Fund may invest up to 20% of
its net assets in obligations the interest on which is either subject to regular
federal income taxation or treated as a preference item for purposes of the
federal alternative minimum tax ("Taxable Obligations"). At times, the Advisor
may determine that, because of unstable conditions in the markets for Municipal
Securities, pursuing the Municipal Bond Fund's basic investment strategies is
inconsistent with the best interests of the Shareholders of the Municipal Bond
Fund. At such times, the Advisor may use temporary defensive strategies
differing from those designed to achieve the Municipal Bond Fund's investment
objective, by increasing the Municipal Bond Fund's holdings in Taxable
Obligations to over 20% of the Municipal Bond Fund's total assets and by holding
uninvested cash reserves pending investment. Taxable Obligations may include
U.S. Government Obligations (some of which may be subject to repurchase
agreements), certificates of deposit, demand and time deposits, and bankers'
acceptances of selected banks, and commercial paper meeting the Municipal Bond
Fund's quality standards (as described below) for tax-exempt commercial paper.
These obligations are described further in the Statement of Additional
Information.
The Municipal Bond Fund may also invest in private activity bonds. Interest on
private activity bonds is exempt from the regular federal income tax only if the
bonds fall within certain defined categories of qualified private activity bonds
and meet the requirements specified in those respective categories. Even if
private activity bonds so qualify, interest on private activity bonds may be
subject to the alternative minimum tax, and, in the case of corporate investors,
to the environmental tax under Code Section 59A. However, private activity bonds
will only be considered Municipal Securities for the purposes of this Prospectus
if the interest thereon is not an item of tax preference for individuals. For
additional information on the federal alternative minimum tax, see
"DISTRIBUTIONS AND TAXES."
The Municipal Bond Fund invests in Municipal Securities that are rated within
the five highest rating categories at the time of purchase by an NRSRO in the
case of bonds and rated within the two highest rating categories in the case of
notes, tax-exempt commercial paper, and variable rate demand obligations. The
<PAGE>
respective rating services apply classifications in each rating category to
indicate the security's ranking within the category. The Municipal Bond Fund may
invest in securities within any of the classifications in a category. Securities
rated in the fourth highest rating category may have speculative characteristics
and poor credit protection, even though they are of investment grade quality. Up
to 25% of the Municipal Bond Fund's total assets could be invested in securities
rated in the fifth highest rating category, which are considered below
investment grade securities (commonly known as "junk bonds"). Currently, the
Fund does not expect to invest in (i) securities rated lower than the fifth
highest rating category; and (ii) unrated debt securities of similar quality.
See "Lower Rated Securities" below for information concerning risks associated
with investing in below investment grade bonds.
The Fund may also invest up to 10% of the Municipal Bond Fund's total assets in
Municipal Securities that are unrated at the time of purchase but are determined
to be of comparable quality by the Advisor pursuant to guidelines approved by
the Fund's Board of Directors. Municipal Securities may be purchased in reliance
upon a rating only when the rating organization is not affiliated with the
issuer or guarantor of the Municipal Securities. The applicable Municipal
Securities ratings are described in the Appendix to the Statement of Additional
Information.
The two principal classifications of Municipal Securities that may be held by
the Municipal Bond Fund are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities, or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Municipal Bond Fund
are in most cases revenue securities and are not payable from the unrestricted
revenues of the issuer. Consequently, the credit quality of private activity
bonds is usually directly related to the credit standing of the corporate user
of the facility involved.
Municipal Securities in which the Municipal Bond Fund may invest may also
include "moral obligation" bonds, which are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to meet
its debt service obligations from current revenues, it may draw on a reserve
fund, the restoration of which is a moral commitment but not a legal obligation
of the state or municipality that created the issue.
Opinions relating to the validity of Municipal Securities and to the exemption
of interest thereon from federal income tax are rendered by bond counsel to the
respective issuers at the time of issuance. Neither the Municipal Bond Fund, the
Advisor, nor legal counsel to either will review the proceedings relating to the
issuance of Municipal Securities or the basis for such opinions.
The Municipal Bond Fund does not intend to invest more than 25% of its total
assets in Municipal Securities which are related in such a way that an economic,
business, or political development or change affecting one such security would
likewise affect the other Municipal Securities. Examples of such securities are
obligations the repayment of which is dependent upon similar types of projects
or projects located in the same state. Such investments would be made only if
deemed necessary or appropriate by the Advisor. To the extent that the Municipal
Bond Fund's assets are concentrated in Municipal Securities that are so related,
the Municipal Bond Fund will be subject to the peculiar risks presented by such
Municipal Securities, such as negative developments in a particular industry or
state, to a greater extent than it would be if the Municipal Bond Fund's assets
were not so concentrated.
Municipal Securities purchased by the Municipal Bond Fund may include rated and
unrated variable and floating rate tax-exempt notes. There may be no active
secondary market with respect to a particular variable or floating rate note.
Nevertheless, the periodic readjustments of their interest rates tend to assure
that their value to the Municipal Bond Fund will approximate their par value.
<PAGE>
Variable and floating rate notes for which no readily available market exists
will be purchased in an amount which, together with other securities which are
not readily marketable, exceeds 15% of the Municipal Bond Fund's net assets only
if such notes are subject to a demand feature that will require payment of the
principal within seven days after demand by the Municipal Bond Fund.
The Municipal Bond Fund may also invest in master demand notes in order to
satisfy short-term needs or, if warranted, as part of its temporary defensive
investment strategy. Such notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a United States commercial bank acting as
agent for the payees of such notes. Master demand notes are direct lending
arrangements between the Municipal Bond Fund and the issuer of such notes.
Master demand notes are callable on demand by the Municipal Bond Fund, but are
not marketable to third parties. The quality of master demand notes will be
reviewed by the Advisor at least quarterly, which review will consider the
earning power, cash flow and debt-to-equity ratios indicating the borrower's
ability to pay principal together with accrued interest on demand. While master
demand notes are not typically rated by credit rating agencies, issuers of such
notes must satisfy the same criteria for the Municipal Bond Fund set forth above
for commercial paper.
BALANCED FUND
The investment objective of the Balanced Fund is to seek long-term growth of
capital and income. The Balanced Fund will invest in a diversified portfolio of
equity securities and fixed income securities. The investment manager will
allocate holdings within established ranges to best take advantage of economic
conditions, general market trends, interest rate levels, and changes in fiscal
and monetary policies.
To the extent that the Balanced Fund invests in equity securities, it will
invest in common stocks, preferred stocks, securities convertible into common
stocks, warrants and any rights to purchase common stocks. Under normal market
conditions, the Balanced Fund may invest up to 75% of its total assets in equity
securities. The Balanced Fund may also invest in foreign securities through the
purchase of ADR's.
Under normal conditions, the Balanced Fund will invest at least 25% of the value
of its total assets in fixed income securities. Within the fixed income portion
of the portfolio, the Balanced Fund will normally 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 a nationally recognized
statistical rating organization (an "NRSRO") or, if unrated found by the Advisor
to be of comparable quality. Such securities will include but not be limited to,
corporate debt securities (including notes, bonds and debentures), U.S.
Government Obligations, mortgage-related securities, high quality money market
instruments (commercial paper, certificates of deposit and bankers'
acceptances), variable amount master demand notes, variable and floating rate
notes, taxable municipal bonds, leasing instruments and trust certificates and
asset backed securities. In addition, the Balanced Fund may engage in certain
loans of portfolio securities, repurchase agreements and reverse repurchase
agreements and futures and options. The Balanced Fund may also invest in
securities of other investment companies and in other investment portfolios
advised by IMG. The Balanced Fund expects to maintain a dollar-weighted average
portfolio maturity of 4 to 10 years on the fixed income portion of the
portfolio.
The Balanced Fund expects to invest in bonds, notes and debentures of a wide
range of U.S. Corporate issuers. Such obligations, in the case of debentures,
will represent unsecured promises to pay, in the case of notes and bonds, may be
secured by mortgages on real property or security interests in personal property
and will in most cases differ in their interest rates, maturities and times of
issuance. The Balanced Fund will invest in such corporate debt securities only
if they are rated within the five highest rating categories at the time of
purchase by an "NRSRO" or, if unrated, found by the Advisor to be of comparable
quality. Securities rated in the fourth highest rating category may have
speculative characteristics and poor credit protection, even though they are of
<PAGE>
investment grade quality. Up to 25% of the Balanced Fund's total assets could be
invested in securities rated in the fifth highest rating category, which are
considered below investment grade securities (commonly known as "junk bonds").
Currently, the Fund does not expect to invest in (i) securities rated lower than
the fifth highest rating category and (ii) unrated debt securities of similar
quality. See "Lower Rated Securities" below for information concerning risks
associated with investing in below investment grade bonds.
Under normal market conditions the Balanced Fund will invest at least 25% of its
total assets in fixed income senior securities. In addition, the Balanced Fund
may invest, without limit, in any combination of U.S. Government Obligations,
money market instruments and repurchase agreements when, in the opinion of the
Advisor, it is determined that a temporary defensive position is warranted based
upon current market conditions.
EQUITY FUND
The investment objective of the Equity Fund is long term capital appreciation.
The Equity Fund will invest primarily in equity securities of mainly large
capitalization companies with strong earnings potential and will strive for high
over-all return while minimizing risk through the selection of a majority of
quality dividend paying equity securities.
Under normal market conditions, the Equity Fund will invest substantially all,
but in no event less than 75%, of its total assets in equity securities, which
are defined as common stocks, preferred stocks, securities convertible into
common stocks, warrants and any rights to purchase common stocks. The remainder
of the Equity Fund's assets may be invested in U.S. Government Obligations and
repurchase agreements with respect thereto. The Equity Fund may also use call
options on equity securities, as described below. Because the market value of
fixed income securities, such as U.S. Government Obligations, can be expected to
vary inversely to changes in prevailing interest rates, investing in such fixed
income securities can provide an opportunity for capital appreciation when
interest rates are expected to decline.
The Equity Fund may, for daily cash management purposes, also invest in high
quality money market securities (commercial paper, certificates of deposit and
bankers' acceptances), as well as the repurchase agreements referred to above.
In addition, the Equity Fund may invest, without limit, in any combination of
U.S. Government Obligations, money market instruments and repurchase agreements
referred to above when, in the opinion of the Advisor, it is determined that a
temporary defensive position is warranted based upon current market conditions.
The Equity Fund may also invest in securities of other investment companies
including the other investment portfolios advised by IMG, as described more
fully under "Other Investment Policies."
Subject to the foregoing limitations, the Equity Fund may invest in foreign
securities through the purchase of American Depository Receipts ("ADRs").
Ownership of unsponsored ADRs may not entitle the Equity Fund to financial or
other reports from the issuer, to which it would be entitled as the owner of
sponsored ADRs. Investment in foreign securities is subject to special risks
that differ in some respects from those related to investments in securities of
U.S. domestic issuers. Such risks include trade balances and imbalances, and
related economic policies, future adverse political, economic and social
developments, the possible imposition of withholding taxes on interest and
dividend income and other taxes, possible seizure, nationalization, or
expropriation of foreign investments or deposits, currency blockage, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, or the adoption of other foreign
governmental restrictions. For additional information regarding the special
risks associated with investments in foreign securities, see "INVESTMENT
OBJECTIVES, POLICIES, AND RESTRICTIONS--FOREIGN INVESTMENTS" in the Statement of
Additional Information.
<PAGE>
AGGRESSIVE GROWTH FUND
The investment objective of the Aggressive Growth Fund is long-term capital
growth. The Aggressive Growth Fund will invest primarily in equity securities of
small, medium and large capitalization companies that exhibit a strong potential
for price appreciation relative to the general equity markets. Dividend income
is not a factor in selecting investment securities.
The Aggressive Growth Fund may invest in equity securities which consist of
common stocks, preferred stocks, securities convertible into common stocks,
warrants and any rights to purchase common stocks.
The manager will consider numerous factors in a company, among them: quality of
management over time, the company's leadership in its field, distinctive
marketing capabilities, return on equity over the past 3-5 years, cash flows,
debt levels, and earnings growth. The Fund will seek positions in high growth
industries, firms with products in niche markets, and stocks, which are
perceived to be temporarily undervalued. Positions may be accumulated in
industry sectors or firms, which are felt to be particularly attractive;
positions may be decreased or eliminated in industry sectors or firms, which are
less attractive.
The Aggressive Growth Fund may, for daily cash management purposes, also invest
in high quality money market securities (commercial paper, certificates of
deposit and bankers' acceptances), as well as the repurchase agreements referred
to above. In addition, the Aggressive Growth Fund may invest, without limit, in
any combination of U.S. Government Obligations, money market instruments and
repurchase agreements when, in the opinion of the Advisor, it is determined that
a temporary defensive position is warranted based upon current market
conditions. The Aggressive Growth Fund may also invest in securities of other
investment companies including the other investment portfolios advised by the
Advisor, as described more fully under "Other Investment Policies."
Subject to the foregoing limitations, the Aggressive Growth Fund may invest in
foreign securities through the purchase of American Depository Receipts
("ADRs"). Ownership of unsponsored ADRs may not entitle the Aggressive Growth
Fund to financial or other reports from the issuer, to which it would be
entitled as the owner of sponsored ADRs. Investment in foreign securities is
subject to special risks that differ in some respects from those related to
investments in securities of U.S. DOMESTIC issuers. Such risks include trade
balances and imbalances, and related economic policies, future adverse
political, economic and social developments, the possible imposition of
withholding taxes on interest and dividend income and other taxes, possible
seizure, nationalization, or expropriation of foreign investments or deposits,
currency blockage, less stringent disclosure requirements, the possible
establishment of exchange controls or taxation at the source, or the adoption of
other foreign governmental restrictions. For additional information regarding
the special risks associated with investments in foreign securities, see
"INVESTMENT OBJECTIVES, POLICIES, AND RESTRICTIONS--FOREIGN INVESTMENTS" in the
Statement of Additional Information.
AVERAGE MATURITY
The average maturity of the Limited Term Bond, Bond, Income, and Municipal Bond
Funds, as well as the fixed income portion of the Balanced Fund, represents a
weighted average based on the stated maturity dates of each Fund's fixed income
securities, except that (I) variable-rate securities are deemed to mature at the
next interest rate adjustment date, (ii) debt securities with put features are
deemed to mature at the next put exercise date, and (iii) the maturity of
mortgage-backed and asset-backed securities which experience periodic principal
repayments is determined on an "expected life" basis.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. Government Obligations invested in by a Fund will include
obligations issued or guaranteed as to payment of principal and interest by the
full faith and credit of the U.S. Treasury, such as Treasury bills, notes, bonds
<PAGE>
and certificates of indebtedness, and obligations issued or guaranteed by the
agencies or instrumentalities of the U.S. Government, but not supported by such
full faith and credit. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as the Government National Mortgage Association and
the Export-Import Bank of the United States, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the right of the issuer to borrow from
the Treasury; others are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those of
the Federal Farm Credit Banks or the Federal Home Loan Mortgage Corporation, are
supported only by the credit of the instrumentality. No assurance can be given
that the U.S. Government would provide financial support to U.S. Government
sponsored agencies or instrumentalities if it is not obligated to do so by law.
A Fund will invest in the obligations of such agencies or instrumentalities only
when IMG believes that the credit risk with respect thereto is minimal. The U.S.
Government does not guarantee the market value of any security; therefore, the
market value of the U.S. Government Obligations in a Fund's portfolio and of the
Shares of a Fund can be expected to fluctuate as interest rates change.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
Mortgage-related securities in which each of the Limited Term Bond, Bond,
Income, Municipal Bond and Balanced Funds may invest represent pools of mortgage
loans assembled for sale to investors by various governmental agencies (such as
the Government National Mortgage Association) and government-related
organizations (such as the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation), as well as by private issuers (such as
commercial banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies). Collateralized mortgage obligations structured as
pools of mortgage pass-through certificates or mortgage loans ("CMOs") will be
purchased only if they meet the rating requirements set forth above with respect
to each of the Funds, investments in debt securities of U.S. Corporations. For
additional information on each Fund's investments in mortgage-related
securities, see the Statement of Additional Information.
Although certain mortgage-related securities may be guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. Thus, for example, if a Fund purchases a
mortgage-related security at a premium, that portion may be lost if there is a
decline in the market value of the security whether due to changes in interest
rates or prepayments of the underlying mortgage collateral. As with other
interest-bearing securities, the prices of mortgage-related securities are
inversely affected by changes in interest rates. However, although the value of
a mortgage-related security may decline when interest rates rise, the converse
is not necessarily true since, in periods of declining interest rates, the
mortgages underlying the securities are prone to prepayment. For this and other
reasons, the stated maturity of a mortgage-related security may be shortened by
unscheduled prepayments on the underlying mortgages and, accordingly, it is not
possible to predict accurately the security's return to a Fund. In addition,
regular payments received in respect to mortgage-related securities include both
interest and principal. No assurance can be given to the return a Fund will
receive when these amounts are reinvested.
Asset-backed securities (unrelated to first mortgage loans) in which each Fund
may invest represent fractional interests in pools or leases, retail installment
loans or revolving credit receivables, both secured (such as Certificates for
Automobile Receivables or "CARSSM") and unsecured (such as Credit Card
Receivable Securities or "CARDSSM"). These assets are generally held by a trust
and payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to certain
amounts by letters of credit issued by a financial institution affiliated or
unaffiliated with the trustee or originator of the trust. Asset-backed
securities will be purchased only if they meet the rating requirements set forth
above with respect to each Fund's investments in debt securities of U.S.
Corporations.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Nevertheless, principal
repayment rates tend not to vary much with interest rates and the short-term
nature of the underlying car loans or other receivables tend to dampen the
impact of any change in the prepayment level. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs or enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors. If consistent with its investment
objective and policies, each Fund may invest in other asset-backed securities
that may be developed in the future.
Issuers of mortgage-backed and asset-backed securities often issue one or more
classes of which one (the "Residual") is in the nature of equity. The Funds will
not invest in any Residual.
ILLIQUID SECURITIES
The Funds may invest up to 10 percent of its net assets in illiquid securities.
For purposes of this restriction, illiquid securities include restricted
securities (securities the disposition of which is restricted under the federal
securities laws, such as private placements), other securities without readily
available market quotations (including options traded in the over-the-counter
market, and interest-only and principal-only stripped mortgage-backed
securities), and repurchase agreements maturing in more than seven days. Risks
associated with restricted securities include the potential obligation to pay
all or part of the registration expenses in order to see certain restricted
securities. A considerable period of time may elapse between the time of the
decision to see a security and the time the Fund may be permitted to sell it
under an effective registration statement. If during such a period, adverse
conditions were to develop, the Fund might obtain a less favorable price than
that prevailing when it decided to sell.
REPURCHASE AGREEMENTS
Securities held by a Fund may be subject to repurchase agreements. Under the
terms of a repurchase agreement, a Fund would acquire securities from member
banks of the Federal Deposit Insurance Corporation and from registered
broker-dealers whom the Advisor deems creditworthy under guidelines approved by
the Company's Board of Directors. The seller agrees to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price would
generally equal the price paid by a Fund plus interest negotiated on the basis
of current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. Securities subject to repurchase agreements
must be of the same type and quality although, for the Government Assets, Liquid
Assets and Municipal Assets Funds, not subject to the same maturity
requirements, as those in which each Fund may invest directly. The seller under
a repurchase agreement will be required to maintain at all times the value of
collateral held pursuant to the agreement at not less than the repurchase price
(including accrued interest). This requirement will be continually monitored by
IMG. In addition, securities subject to a repurchase agreement will be held in a
segregated account. If the seller were to default on its repurchase obligation
or become insolvent, a Fund would suffer a loss if the proceeds from a sale of
the underlying portfolio securities were less than the repurchase price under
the agreement, or the disposition of such securities by a Fund were delayed
pending court action. Repurchase agreements are considered to be loans
collateralized by the underlying security under the Investment Company Act of
1940 (the "1940 Act"). For further information about repurchase agreements, see
"INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS--Additional Information on
Portfolio Instruments--REPURCHASE AGREEMENTS" in the Statement of Additional
Information. A Fund may not enter into repurchase agreements if, as a result,
<PAGE>
more than 10 percent of the Fund's net asset value at the time of the
transaction would be invested in the aggregate in repurchase agreements maturing
in more than seven days and other securities which are not readily marketable.
(See "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS--Additional Information
on Portfolio Instruments--ILLIQUID SECURITIES" in the Statement of Additional
Information.)
LOWER RATED SECURITIES
Investments in below investment grade fixed income securities by the Limited
Term Bond, Bond, Income, Municipal Bond and Balanced Funds while generally
providing greater income and opportunity for gain than investments in higher
rated securities, usually entail greater risk of principal and income (including
the possibility of default or bankruptcy of the issuers of each securities), and
involve greater volatility of price (especially during periods of economic
uncertainty or change) than investment in higher rated securities and because
yields may vary over time, no specific level of income can ever be assured. In
particular, securities rated lower than the fourth highest rating category or
comparable unrated securities (all commonly known as "junk bonds") are
considered speculative. These lower rated, higher yielding securities generally
tend to reflect economic changes (and the outlook for economic growth),
short-term corporate and industry developments and the market's perception of
their credit quality (especially during times of adverse publicity) to a greater
extent than higher rated securities which react primarily to fluctuations in the
general level of interest rates (although these lower rated securities are also
affected by changes in interest rates.) In the past, economic downturns or an
increase in interest rates have under certain circumstances caused a higher
incidence of default by the issuers of these securities and may do so in the
future, especially in the case of highly leveraged issuers. During certain
periods, the higher yields on each Fund's lower rated, high yielding securities
are paid primarily because of the increased risk of loss of principal and
income, arising from such factors as the heightened possibility of default or
bankruptcy of the issuers of such securities. Due to the fixed income payments
of these securities, a Fund may continue to earn the same level of interest
income while its net asset value declines due to declines in security values,
which could result in an increase in the Fund's yield despite the actual loss of
principal.
The prices for these securities may be affected by legislative and regulatory
developments. For example, federal rules require that savings and loan
associations gradually reduce their holdings of high-yield securities. An effect
of such legislation may be to depress the prices of outstanding lower rated,
high yielding securities.
Changes in the value of securities subsequent to their acquisition will not
affect cash income or yield to maturity of each Fund, but will be reflected in
the net asset value of shares of the Fund. The market for these lower rated
securities may be less liquid than the market for investment grade securities.
Furthermore, the liquidity of these lower rated securities may be affected by
the market's perception of their credit quality. Therefore, the Advisor's
judgment may at times play a greater role in valuing these securities than in
the case of investment grade securities, and it also may be more difficult
during times of certain adverse market conditions to sell these lower rated
securities at their fair market value to meet redemption requests or to respond
to changes in the market.
As noted above, each of the Limited Term Bond, Bond, Income, Municipal Bond, and
Balanced Funds may invest up to 25 percent of its total assets in fixed income
securities that are rated lower than investment grade. To the extent each Fund
invests in these lower rated securities, the achievement of its investment
objective may be more dependent on the Advisor's own credit analysis than in the
case of a fund investing in higher quality bonds. While the Advisor will refer
to ratings issued by established ratings agencies, it is not a policy of the
Company to rely exclusively on ratings issued by these agencies, but rather to
supplement such ratings with the Advisor's own independent and ongoing review of
credit quality.
The rating services' descriptions of the below investment grade securities
ratings categories in which the each Fund may invest are as follows:
Moody's Investors Services, Inc., Bond Ratings: Bonds which are rated "Ba"
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 during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
Standard and Poor's Corporation Bond Ratings: Debt rated, "BB", "B", "CCC",
and "CC" is regarded, on balance, as predominately speculative with respect
to capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and "CC"
the highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Fitch Investors Services, Inc., Bond Ratings: Bonds which are rated "BB" are
considered speculative and of low investment grade. The obligor's ability to
pay interest and repay principal is not strong and is considered likely to be
affected over time by adverse economic changes.
Duff & Phelps, Inc., Long Term Ratings: Bonds which are rated "BB+", "BB",
and "BB-", are below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions or company fortunes. Overall quality may
move up or down frequently according to industry conditions or company
fortunes. Overall quality may move up or down frequently within this
category.
The respective rating services apply classifications in each rating category to
indicate the security's ranking within the category. Each Fund may invest in
securities within any of the classifications in a category. For a description of
the rating symbols of certain NRSROs, see the Appendix to the Statement of
Additional Information.
The Funds may also invest in Fixed Income Securities rated in the fourth highest
rating category and comparable unrated securities. These securities, while
normally exhibiting adequate protection parameters, may have speculative
characteristics and changes in economic conditions and other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than in the case of higher graded securities.
See "INVESTMENT OBJECTIVES, POLICIES AND RE-STRICTIONS--Additional Information
on Portfolio Instruments" in the Statement of Additional Information for
information concerning risks associated with investing in below investment grade
bonds.
REVERSE REPURCHASE AGREEMENTS
Each Fund may borrow funds for temporary purposes by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, a Fund would sell certain of its securities
to financial institutions such as banks and broker-dealers, and agree to
repurchase them at a mutually agreed upon date and price. At the time a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid high grade debt securities, such as U.S. Government
Obligations, consistent with its investment restrictions having a value equal to
the repurchase price (including accrued interest), and will subsequently
continually monitor the account to ensure that such equivalent value is
maintained at all times. Reverse repurchase agreements involve the risk that the
market value of securities sold by a Fund may decline below the price at which
it is obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings by an investment company under he 940 Act. For
further information about verse repurchase agreements, see "INVESTMENT
OBJECTIVES, OLICIES AND RESTRICTIONS--Additional Information on Portfolio
Instruments--REVERSE EPURCHASE AGREEMENTS" in the Statement of Additional
Information.
<PAGE>
FUTURES CONTRACTS AND RELATED OPTIONS
The Funds may invest in futures contracts and options on futures contracts to
the extent permitted by the Commodity Futures Trading Commission ("CFTC") and
the Commission and thus will engage in such transactions solely for bona fide
hedging purposes to manage risk associated with various portfolio securities and
not for speculative purposes. Such transactions, including stock or bond index
futures contracts, or options thereon, act as a hedge to protect a Fund from
fluctuations in the value of its securities caused by anticipated changes in
interest rate or market conditions without necessarily buying or selling the
securities. Hedging is a specialized investment technique that entails skills
different from other investment management. A stock or bond index futures
contract is an agreement in which one party agrees to take or make delivery of
an amount of cash equal to a specified dollar amount times the difference
between the index value (which assigns relative values to the common stock or
bonds included in the index) at the close of the last trading day of the
contract and the price at which the agreement is originally made. No physical
delivery of the underlying stock or bond in the index is contemplated.
Similarly, it may be in the best interest of a Fund to purchase or sell interest
rate futures contracts, or options thereon, which provide for the future
delivery of specified securities.
The purchase and sale of futures contracts or related options will not be a
primary investment technique of the Funds. The Funds will not purchase or sell
futures contracts (or related options thereon) if, immediately after purchase,
the aggregate initial margin deposits and premiums paid by a Fund on its open
futures and options positions, exceeds 5% of the liquidation value of the Fund
after taking into account any unrealized profits and unrealized losses on any
such futures or related options contracts into which it has entered.
CALL OPTIONS
The Balanced, Equity, and Aggressive Growth Funds may each write covered call
options on securities owned by the Fund. Such instruments may also be referred
to as equity derivatives. Derivatives generally are instruments whose value is
derived from or related to the value of some other instrument, asset or
specified benchmark, such as a specific stock or stock index. A call option
gives the purchaser of the option the right to buy, and obligates the seller of
the option to sell, the underlying security at the stated exercise price at any
time prior to the expiration date of the option, regardless of the market price
of the security. When a Fund writes a covered call option and such option is
exercised, it will forgo the appreciation, if any, on the underlying security in
excess of the exercise price. In order to close out a call option it has
written, a Fund may enter into a "closing purchase transaction"--the purchase of
a call option on the same security with the same exercise price and expiration
date as the call option which the Fund previously wrote on any particular
securities. When a portfolio security subject to a call option is sold, the Fund
may effect a closing purchase transaction to close out any existing call option
on that security. If a Fund is unable to effect a closing purchase transaction,
it will not be able to sell the underlying security until the option expires or
the Fund delivers the underlying security upon exercise. Under normal
conditions, it is not expected that these Funds would permit the underlying
value of their portfolio securities subject to such options to exceed 15% of net
assets.
PUTABLE SECURITIES
The Limited Term Bond, Bond, Income, Municipal Bond and Balanced Funds may
acquire puts with respect to fixed income securities or Municipal Securities as
described above. Under a put, a Fund would have the right to sell or redeem a
specified security at a certain time or within a certain period of time at a
specified price. The security is sold to a third party or redeemed by the issuer
as provided contractually. The put may be an independent feature or may be
combined with a reset feature that is designed to reduce downward price
volatility as interest rates rise by enabling the holder to liquidate the
investment prior to maturity. The Funds may acquire putable securities to
facilitate portfolio liquidity, shorten the maturity of the underlying security,
or to permit the investment of funds at a more favorable rate of return. The
<PAGE>
price of a putable security may be higher than the price which otherwise would
be paid for the security without such put feature, thereby increasing the
security's cost and reducing its yield. The time remaining to the put date will
apply for purposes of determining the maximum maturity of such securities.
LENDING OF PORTFOLIO SECURITIES
From time to time in order to generate additional income, a Fund may lend its
portfolio securities, provided such action is consistent with its investment
objective, policies, and restrictions. During the time portfolio securities are
on loan, the borrower will pay a Fund any dividends or interest paid on the
securities. In addition, loans will be subject to termination by a Fund or the
borrower at any time.
A Fund will enter into loan arrangements only with broker-dealers, banks or
other institutions that are not affiliated directly or indirectly with the
Company and which IMG has determined are creditworthy under guidelines
established by the Company's Board of Directors. While the lending of securities
may subject a Fund to certain risks, such as delays or an inability to regain
the securities in the event the borrower defaults on its lending agreement or
enters into bankruptcy, a Fund will receive 100% collateral on loaned securities
in the form of cash or U.S. Government Obligations. This collateral will be
valued daily by IMG and, should the market value of the loaned securities
increase, the borrower will be required to furnish additional collateral to the
Fund. Although each of the Funds does not expect to do so on a regular basis, it
may lend portfolio securities in amounts representing up to 15% (30% for the
Bond Fund) of the value of the Fund's total assets. Fees earned by the Municipal
Bond Fund from lending its securities will constitute taxable income to the Fund
which, when distributed to shareholders, will likewise generally be treated as
taxable income.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
A Fund may purchase securities on a when-issued and purchase or sell securities
on a delayed-delivery basis. A Fund will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with its investment objectives and policies, not for
investment leverage. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield and
thereby involve a risk that the yield obtained in the transaction will be less
than those available in the market when delivery takes place. A Fund will
generally not pay for such securities or start earning interest on them until
they are received. When a Fund agrees to purchase such securities, however, the
Fund's custodian will set aside cash or liquid securities equal to the amount of
the commitment in a separate account. Securities purchased on a when-issued
basis are recorded as an asset and are subject to changes in the value based
upon changes in the general level of interest rates. In when-issued and
delayed-delivery transactions, a Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause a Fund to miss a price or
yield considered to be advantageous.
Each of the Government Assets, Liquid Assets, Municipal Assets, Limited Term
Bond, Bond, Income, and Municipal Bond Funds' commitments to purchase
when-issued securities will not exceed 25%, and each of the Balanced, Equity,
and Aggressive Growth Funds' commitments will not exceed 5%, of the value of its
total assets absent unusual market conditions. Each of the Funds does not intend
to purchase when-issued securities for speculative purposes but only in
furtherance of its investment objectives.
OTHER INVESTMENT POLICIES
Each of the Funds, except the Government Assets, Liquid Assets, and Municipal
Assets Funds may also invest up to 5% of its total assets in another investment
company, including the Government Assets, Liquid Assets, or Municipal Assets
Funds, not to exceed 10% of the value of its total assets in the securities of
other investment companies. In order to avoid the imposition of additional fees
as a result of investing in Shares of the Government Assets, Liquid Assets, or
Municipal Assets Funds, the Advisor and the Administrator (see "MANAGEMENT OF
<PAGE>
THE COMPANY--Investment Advisor", "MANAGEMENT OF THE COMPANY--Admini-strator",
and "MANAGEMENT OF THE COMPANY--Distributor") will waive any portion of their
usual service fees from that Fund that are attributable to investments therein
by another Fund. A Fund will incur additional expenses due to the duplication of
expenses as a result of investing in mutual funds other than the Funds.
Additional restrictions on a Fund's investments in the securities of other
mutual funds are contained in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
Each Fund is subject to a number of investment restrictions that may be changed
only by a vote of a majority of the outstanding Shares of such Fund (as defined
in the Statement of Additional Information).
Each of the Limited Term Bond, Bond, Income, Municipal Bond, Balanced, Equity,
and Aggressive Growth Funds will not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, with respect to 75% of its portfolio, more
than 5% of the value of the total assets of the Fund would be invested in
such issuer, or the Fund would hold more than 10% of any class of securities
of the issuer or more than 10% of the outstanding voting securities of the
issuer.
Each of the Limited Term Bond, Income, Balanced, Equity, and Aggressive Growth
Funds will not:
1. Purchase any securities which would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a)there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the
U.S. Government or its agencies or instrumentalities; (b)wholly-owned finance
companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents; and (c)utilities will be divided according to their services. For
example, gas, gas transmission, electric and gas, electric, and telephone
will each be considered a separate industry.
The Municipal Bond Fund will not:
1. Purchase any securities which would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a)there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the
U.S. Government or its agencies or instrumentalities; (b)there is no
limitation with respect to Municipal Securities, which, for purposes of this
limitation only, do not include private activity bonds that are backed only
by the assets and revenues of a non-governmental user; (c)wholly-owned
finance companies will be considered to be in the industries of their parents
if their activities are primarily related to financing the activities of
their parents; and (d)utilities will be divided according to their services.
For example, gas, gas transmission, electric and gas, electric, and telephone
will each be considered a separate industry.
2. Write or sell puts, calls, straddles, spreads or combinations thereof
except that the Fund may acquire puts with respect to Municipal Obligations
in its portfolio and sell those puts in conjunction with a sale of those
Municipal Obligations.
<PAGE>
Each of the Funds will not:
1. Borrow money or issue senior securities, except that the Fund may borrow
from banks or enter into reverse repurchase agreements for temporary purposes
in amounts up to 10% (25% for the Bond Fund) of the value of its total assets
at the time of such borrowing; or mortgage, pledge, or hypothecate any
assets, except in connection with any such borrowing and in amounts not in
excess of the lesser of the dollar amounts borrowed or 10% of the value of
the Fund's total assets at the time of its borrowing. The Fund will not
purchase securities while borrowings (including reverse repurchase
agreements) in excess of 5% of its total assets are outstanding.
2. Make loans, except that the Fund may purchase or hold debt securities and
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.
In addition to the above investment restrictions, each Fund is subject to
certain other investment restrictions set forth in this Prospectus above or
under "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS--Investment
restrictions" in the Funds' Statement of Additional Information.
VALUATION OF SHARES
The net asset value of each of the Funds, except the Government Assets, Liquid
Assets, and Municipal Assets Funds, is determined and its Shares are priced as
of the close of regular trading on the New York Stock Exchange ("NYSE")
(generally 3:00 p.m. Central Time) on each Business Day. The net asset value of
the Government Fund, the Liquid Assets Fund, and the Municipal Assets Fund is
determined and its Shares are priced as of 11:00 a.m. Central Time ("Valuation
Times"). As used herein, a "Business Day" constitutes any day on which the NYSE
is open for trading, and any other day except days on which there are not
sufficient changes in the value of the Fund's portfolio securities that the
Fund's net asset value might be materially affected and days during which no
Shares are tendered for redemption and no orders to purchase Shares are
received. Currently, the NYSE is closed on New Year's Day, Martin Luther King,
Jr. Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Net asset value per Share for purposes
of pricing sales and redemptions is calculated by dividing the value of all
securities and other assets of the Fund less the liabilities charged to the Fund
by the number of its outstanding Shares.
For the Limited Term Bond, Bond, Income, Municipal Bond, Balanced, Equity, and
Aggressive Growth Funds (the "Variable NAV Funds"), the net asset value per
share will fluctuate as the value of each of the Variable NAV Fund's investment
portfolio changes.
The securities in the Variable NAV Funds will be valued at market value. If
market quotations are not available, the securities will be valued by a method,
which the Board of Directors believes accurately reflects fair value. For
further information about valuation of investments, see "NET ASSET VALUE" in the
Statement of Additional Information.
The assets in the Government Assets, Liquid Assets, and Municipal Assets Funds
are valued based upon the amortized cost method, which the Directors of the
Company believe fairly reflects the market-based net asset value per Share.
Pursuant to rules and regulations of the Commission regarding the use of the
amortized cost method, the Government Assets, Liquid Assets, and Municipal
Assets Funds will maintain a dollar-weighted average portfolio maturity of 90
days or less. Although each of these Funds seeks to maintain its net asset value
per share at $1.00, there can be no assurance that the net asset value will not
vary.
Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
<PAGE>
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per Share. These procedures are described in more detail in the
Fund's Statement of Additional Information. Under the amortized cost method of
valuation, a security is initially valued at cost on the date of purchase and,
thereafter, any discount or premium is amortized on a straight-line basis to
maturity, regardless of the effect of fluctuating interest rates on the market
value of the security. U.S. government obligations, Student Loan Certificates
and FmHA Certificates, which are subject to mandatory repurchase at their
original purchase price, investments in taxable and tax-exempt debt obligations
rated by a recognized bond rating agency and regularly traded in the secondary
market, and nonrated fixed and variable rate tax-exempt obligations and
participating interests therein, not regularly traded in the secondary market
but subject to Liquidity Agreements will be valued at amortized cost. Other
assets are valued at a fair value determined in good faith by the Board of
Directors.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares of the Funds are sold on a continuous basis by the Company's Distributor,
BISYS Fund Services Limited Partnership. The principal office of the distributor
is 3435 Stelzer Road, Columbus, Ohio 43219. If you wish to purchase Shares,
contact the Funds at (800)438-6375.
PURCHASES OF SHARES
Shares of the Funds are continuously offered and may be purchased directly
either by mail, by telephone or by electronic transfer. Shares may also be
purchased through qualified banks, broker/dealers, investment advisory firms and
other organizations ("Participating Organizations") that have entered into
dealer and/or shareholder agreements with the Distributor and/or servicing
agreements with the Company. The minimum investment is generally $1,000 for the
initial purchase of Shares and $50 for subsequent purchases. For purchases that
are made in connection with 401(k) plans, 403(b) plans and other similar plans
or payroll deduction plans, the minimum investment amount for initial and
subsequent purchases is $25. In the case of such retirement plan investments,
the minimum purchase amounts are not restricted to the purchase of Shares of one
Fund. Thus, the $25 minimum amount may be spread among any of the Funds. (See
"Auto Invest Plan" below for minimum investment requirements under the Auto
Invest Plan).
Purchasers of Shares of the Funds will pay the next calculated net asset value
per Share after the Distributor's receipt of an order to purchase Shares in good
form ("public offering price") (see "Other Information Regarding Purchases"
below).
In the case of orders for the purchase of Shares placed through a Participating
Organization, the public offering price will be the net asset value as so
determined, but only if the Participating Organization receives the order prior
to the Valuation Time for that day and transmits it to the Funds by the
Valuation Time. If the Participating Organization receives the order after the
Valuation Time for that day, the price will be based on the net asset value
determined as of the Valuation Time for the next Business Day.
PURCHASES BY MAIL
To purchase Shares of a Fund, complete an Account Application and return it
along with a check (or other negotiable bank draft or money order) in at least
the minimum initial purchase amount, made payable to the appropriate Fund to:
Vintage Mutual Funds, Inc.
Dept. L-1392
Columbus, OH 43260-1392
<PAGE>
An Account Application form can be obtained by calling the Funds at
(800)438-6375. Subsequent purchases of Shares of a Fund may be made at any time
by mailing a check payable to a Fund, to the above address.
PURCHASES BY TELEPHONE
Shares of a Fund may be purchased by calling the Funds at (800)438-6375, if your
Account Application has been previously received by the Distributor. Payment for
Shares ordered by telephone is made by electronic transfer to the Funds'
custodian. Prior to wiring funds and in order to ensure that wire orders are
invested promptly, investors must call the Funds at the number above to obtain
instructions regarding the bank account number to which the funds should be
wired and other pertinent information.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through selected financial services firms such as
broker-dealer firms and banks ("Participating Organizations"). Shares of a Fund
sold to the Participating Organizations acting in a fiduciary, advisory,
custodial, or other similar capacity on behalf of customers will normally be
held of record by the Participating Organizations. With respect to Shares sold,
it is the responsibility of the holder of record to transmit purchase or
redemption orders to the Distributor and to deliver funds for the purchase
thereof by the Fund's custodian within the settlement requirements defined in
the Securities Exchange Act of 1934. If payment is not received within the
prescribed time periods or a check timely received does not clear, the purchase
will be canceled and the investor could be liable for any losses or fees
incurred. Any questions regarding current settlement requirements or electronic
payment instructions should be directed to the Funds at (800)438-6375.
Purchases of Shares in a Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES"). The public offering price of the Variable NAV
Funds will be the net asset value per Share (see "VALUATION OF SHARES") as
determined on the Business Day the order is received by the Distributor, but
only if the Distributor receives the order by the Valuation Time. Otherwise, the
price will be determined as of the Valuation Time on the next Business Day. In
the case of an order for the purchase of Shares placed through a Participating
Organization, it is the responsibility of the Participating Organization to
transmit the order to the Distributor promptly.
Participating Organizations provide varying arrangements for their clients to
purchase and redeem Fund shares. Some may establish higher minimum investment
requirements than set forth above. They may arrange with their clients for other
investment or administrative services. Such Participating Organizations may
independently establish and charge additional amounts to their clients for such
services, which charges would reduce the client's yield or return. Participating
Organizations may also hold Fund shares positions in nominee or street name as
agent for and on behalf of their customers. In such instances, the Fund's
transfer agent will have no information with respect to or control over accounts
of specific shareholders. Such shareholders may obtain access to their accounts
and information about their accounts only from their Participating
Organizations. In the alternative, a Participating Organization may elect to
establish its customers' accounts of record with the transfer agent for the
Funds. Participating Organizations may aggregate their customers' purchases to
satisfy the required minimums. Some of the Participating Organizations may
receive compensation from the Fund's Shareholder Service Agent for recordkeeping
and other expenses related to these nominee accounts. In addition, certain
privileges with respect to the purchase and redemption of shares or the
reinvestment of dividends may not be available through such Participating
Organizations. Some Participating Organizations may participate in a program
allowing them access to their clients' accounts for servicing including, without
limitation, transfers of registration and dividend payee changes; and may
perform functions such as generation of confirmation statements and disbursement
of cash dividends. This Prospectus should be read in connection with such
Participating Organizations' material regarding their fees and services.
<PAGE>
Shareholders should also consider that certain Participating Organizations may
offer services which may not be available directly from the Fund.
Shares of the Government Assets, Liquid Assets, and Municipal Assets Funds are
purchased at the net asset value per Share (see "VALUATION OF SHARES") next
determined after receipt by the Distributor of an order to purchase Shares. An
order to purchase Shares of any of the Government Assets, Liquid Assets, or
Municipal Assets Fund will be deemed to have been received by the Distributor
only when federal funds with respect thereto are available to the Funds'
custodian for investment. Federal funds are monies credited to a bank's account
with a Federal Reserve Bank. Payment for an order to purchase Shares of the
Government Assets, Liquid Assets, or Municipal Assets Fund which is transmitted
by federal funds wire will be available the same day for investment by the
Funds' custodian, if received prior to 3:00 p.m. Central Time that day. Payments
transmitted by other means (such as by check drawn on a member of the Federal
Reserve System) will normally be converted into federal funds within two banking
days after receipt. The Government Assets, Liquid Assets, and Municipal Assets
Funds each strongly recommend that investors of substantial amounts use federal
funds to purchase Shares.
An order received prior to a Valuation Time on any Business Day for the
Government Assets, Liquid Assets, or Municipal Assets Fund will be executed at
the net asset value determined as of the next Valuation Time on the date of
receipt. An order received after the Valuation Time on any Business Day will be
executed at the net asset value determined as of the next Valuation Time on the
next Business Day. Shares purchased before 11:00 a.m., Central Time, begin
earning dividends on the same Business Day. Shares purchased after 11:00 a.m.,
Central Time, begin earning dividends on the next Business Day. All Shares of
the Government Assets, Liquid Assets, and Municipal Assets Funds continue to
earn dividends through the day before their redemption.
Depending upon the terms of the particular Customer account, a Participating
Organization may charge a Customer account fees for services provided in
connection with investments in a Fund. Information concerning these services and
any charges will be provided by the Participating Organization. This Prospectus
should be read in conjunction with any such information so received from a
Participating Organization.
The Company reserves the right to reject any order for the purchase of a Fund's
Shares in whole or in part including purchases made with foreign and third party
checks.
Every Shareholder of record will receive a confirmation of each transaction in
his or her account, which will also show the total number of Shares of a Fund
owned by the Shareholder. Sending confirmations for purchases and redemptions of
Shares held by a Participating Organization on behalf of its Customer will be
the responsibility of the Participating Organization. Shareholders may rely on
these statements in lieu of certificates. Certificates representing Shares of
the Funds will not be issued.
The Distributor, at its expense, with voluntary assistance from IMG in its sole
discretion, may also provide other compensation to broker/dealers that are
Participating Organizations ("Dealers") in connection with sales of Shares of a
Fund. Compensation may include financial assistance to Dealers in connection
with conferences, sales or training programs for their employees, seminars for
the public, advertising campaigns regarding one or more of the Funds, and other
Dealer-sponsored special events. In some instances, this compensation may be
made available only to certain Dealers whose representatives have sold or are
expected to sell a significant amount of Shares. Compensation will also include
payment for travel expenses, including lodging, incurred in connection with
trips taken by invited registered representatives and members of their families
to locations within or outside of the United States for meetings or seminars of
a business nature. Compensation will also include the following types of
non-cash compensation offered through sales contests: (1)vacation trips,
including the provision of travel arrangements and lodging at luxury resorts at
exotic locations; (2)tickets for entertainment events (such as concerts, cruises
and sporting events) and (3)merchandise (such as clothing, trophies, clocks and
<PAGE>
pens). Dealers may not use sales of Shares to qualify for this compensation to
the extent such may be prohibited by the laws of any state or any
self-regulatory agency, such as the National Association of Securities Dealers,
Inc. None of the aforementioned compensation is paid for by the Funds or their
Shareholders.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
An IRA enables individuals, even if they participate in an employer-sponsored
retirement plan, to establish their own retirement program. IRA contributions
may be tax-deductible and earnings are tax-deferred. Under the Tax Reform Act of
1986, the tax deductibility of IRA contributions is restricted or eliminated for
individuals who participate in certain employer pension plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn income on a tax-deferred
basis.
All IRA distribution requests must be made in writing to the Distributor. Any
additional deposits to an IRA must distinguish the type and year of the
contribution.
For more information on an IRA call the Funds at (800)438-6375. Investment in
Shares of the Municipal Bond Fund or Municipal Assets Fund would not be
appropriate for any IRA. Shareholders are advised to consult a tax Advisor on
IRA contribution and withdrawal requirements and restrictions.
AUTO INVEST PLAN
The Auto Invest Plan enables Shareholders of the Funds to make regular monthly
or quarterly purchases of Shares through automatic deductions from their bank
accounts (which must be with a domestic member of the Automatic Clearing House).
With Shareholder authorization, the Transfer Agent will deduct the amount
specified from the Shareholder's bank account, which will automatically be
invested in Shares at the public offering price on the dates of the deduction.
The required minimum initial investment when opening an account using the Auto
Invest Plan is $250; the minimum amount for subsequent investments in a Fund is
$25. Investments may be made on the 5th or 20th of each month, on the 5th and
20th of each month, or on the 20th of each quarter (Mar., June, Sept., Dec.). To
participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the account application, which can be acquired by calling
(800)438-6375. For a Shareholder to change the Auto Invest instructions, the
request must be made in writing to the Distributor.
EXCHANGE PRIVILEGE
The Funds offer an exchange program whereby Shareholders are entitled to
exchange their Shares for Shares of the other Funds. Such exchanges will be
executed on the basis of the relative net asset values of the Shares exchanged.
The Shares exchanged must have a current value that equals or exceeds the
minimum investment that is required (either the minimum amount required for
initial or subsequent investments as the case may be) for the Fund whose Shares
are being acquired. Share exchanges will only be permitted where the Shares to
be acquired may legally be sold in the investor's state of residence. An
exchange is considered to be a sale of Shares for federal income tax purposes on
which a Shareholder may realize a taxable gain or loss. A Shareholder may make
an exchange request by calling the Funds at (800)438-6375 or by providing
written instructions to the Funds. An investor should consult the Funds for
further information regarding exchanges. During periods of significant economic
or market change, telephone exchanges may be difficult to complete. If a
Shareholder is unable to contact the Funds by telephone, a Shareholder may also
mail the exchange request to the Funds at the address listed under "Redemption
By Mail" below. The Funds reserve the right to modify or terminate the exchange
privilege described above at any time and to reject any exchange request. If an
exchange request in good order is received by the Distributor by the Valuation
Time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange should obtain and review the current
prospectus of the Fund in which he or she wishes to invest before making the
exchange. Shareholders wishing to make use of the Funds' exchange program must
<PAGE>
so indicate on the Account Application. This option will be suspended for a
period of 30 days following a telephonic address change.
AUTO EXCHANGE
Auto Exchange enables Shareholders to make regular, automatic withdrawals from
the Government Assets, Liquid Assets, or Municipal Assets Fund and use those
proceeds to benefit from dollar-cost averaging by automatically making purchases
of shares of another Fund. With shareholder authorization, the Company's
transfer agent will withdraw the amount specified (subject to the applicable
minimums) from the shareholder's Government Assets, Liquid Assets, or Municipal
Assets Fund account and will automatically invest that amount in the Fund
designated by the Shareholder at the public offering price on the date of such
deduction. In order to participate in the Auto Exchange, Shareholders must have
a minimum initial purchase of $10,000 in their Government Assets, Liquid Assets,
or Municipal Assets account and maintain a minimum account balance of $1,000. To
participate in the Auto Exchange, Shareholders should complete the appropriate
section of the Account Application Form, which can be acquired by calling the
Distributor. To change the Auto Exchange instructions or to discontinue the
feature, a Shareholder must send a written request to the Vintage Mutual Funds,
Inc., Dept. L-1392, Columbus, OH 43260-1392. The Auto Exchange may be amended or
terminated without notice at any time by the Distributor.
REDEMPTION OF SHARES
Shareholders may redeem their Shares on any day that net asset value is
calculated (see "VALUATION OF SHARES"). Redemptions will be effected at the net
asset value per share next determined after receipt of a redemption request in
good order. Redemptions may ordinarily be requested by mail or by telephone.
All or part of a Customer's Shares may be required to be redeemed in accordance
with instructions and limitations pertaining to his or her account held by a
Bank. For example, if a Customer has agreed to maintain a minimum balance in his
or her account, and the balance in that account falls below that minimum, the
Customer may be obliged to redeem, or the Bank may redeem for and on behalf of
the Customer, all or part of the Customer's Shares to the extent necessary to
maintain the required minimum balance. There may be no notice period affording
Shareholders an opportunity to increase the account balance in order to avoid an
involuntary redemption under these circumstances.
REDEMPTION BY MAIL
A written request for redemption must be received by the Funds in order to honor
the request. The Funds' address is: Vintage Mutual Funds, Inc., Dept. L-1392,
Columbus, OH 43260-1392. The Transfer Agent may require a signature guarantee by
an eligible guarantor institution. For purposes of this policy, the term
"eligible guarantor institution" shall include banks, brokers, dealers, credit
unions, securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in Rule17Ad-15 under the Securities
Exchange Act of 1934. The Transfer Agent reserves the right to reject any
signature guarantee if (1) it has reason to believe that the signature is not
genuine, (2) it has reason to believe that the transaction would otherwise be
improper, or (3) the guarantor institution is a broker or dealer that is neither
a member of a clearing corporation nor maintains net capital of at least
$100,000. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption check is payable to the
Shareholder(s) of record and (2) the redemption check is mailed to the
Shareholder(s) at the address of record or the proceeds are either mailed or
wired to a commercial bank account previously designated on the Account
Application. There is no charge for having redemption requests mailed to a
designated bank account.
If the Company receives a redemption order but a shareholder has not clearly
indicated the amount of money or number of shares involved, the Company cannot
execute the order. In such cases, the Company will request the missing
information and process the order on the day such information is received.
<PAGE>
REDEMPTION BY TELEPHONE
Shares may be redeemed by telephone if the Shareholder selected that option on
the Account Application. The Shareholder may have the proceeds mailed to his or
her address or mailed or sent electronically to a commercial bank account
previously designated on the Account Application. Electronic payment requests
may be made by the Shareholder by telephone to the Funds at (800)438-6375. For a
wire redemption, the then-current wire redemption charge may be deducted from
the proceeds of a wire redemption. This charge, if applied, will vary depending
on the receiving institution for each wire redemption. It is not necessary for
Shareholders to confirm telephone redemption requests in writing. During periods
of significant economic or market change, telephone redemptions may be difficult
to complete. If a Shareholder is unable to contact the Funds by telephone, a
Shareholder may also mail the redemption request to the Distributor at the
address listed above under "Redemption by Mail" above. Neither the Distributor,
the Transfer Agent, the Advisor nor the Company will be liable for any losses,
damages, expense or cost arising out of any telephone transaction (including
exchanges and redemptions) effected in accordance with the Funds' telephone
transaction procedures, upon instructions reasonably believed to be genuine. The
Fund will employ procedures designed to provide reasonable assurance that
instructions by telephone are genuine; if these procedures are not followed, the
Fund or its service contractors may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures include recording all phone
conversations, sending confirmations to shareholders within 72 hours of the
telephone transaction, verification of account name and account number or tax
identification number, and sending redemption proceeds only to the address of
record or to a previously authorized bank account. This option will be suspended
for a period of 10 days following a telephonic address change.
REDEMPTION BY CHECK
Free check writing is available for the Government Assets, Liquid Assets, and
Municipal Assets Funds. With this service, a Shareholder may write up to five
checks a month in amounts of $250 or more. To establish this service and to
obtain checks at the time the account is opened, a Shareholder must complete the
Signature Card section of the Account Application Form. To establish this
service and obtain checks after opening an account in the Fund, the Shareholder
must contact the Funds by telephone or mail to obtain an Account Application
Form and complete and return the signature card. A Shareholder will receive the
dividends and distributions declared on the Shares to be redeemed up to the day
that a check is presented for payment. Upon 30 days' prior written notice to
Shareholders, the check writing privilege may be modified or terminated. A
shareholder may not close a Fund account by writing a check. There is a $25
charge for each stop payment request on the draft checks. Shareholders are
subject to the same rules and regulations that banks apply to checking accounts.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of a Fund to make regular monthly
or quarterly redemptions of Shares. With Shareholder authorization, the Transfer
Agent will automatically redeem Shares at the net asset value on the dates of
the withdrawal and have a check in the amount specified mailed to the
Shareholder. The required minimum withdrawal is $100 and the Fund must maintain
a $1,000 minimum balance. To participate in the Auto Withdrawal Plan,
Shareholders should call (800)438-6375 for more information. Purchases of
additional Shares concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities. For a Shareholder to change the Auto
Withdrawal instructions the request must be made in writing to the Distributor.
DIRECTED DIVIDEND OPTION
A Shareholder may elect to have all income dividends and capital gains
distributions paid by check or reinvested in any of the Company's other Funds,
(provided the other Fund is maintained at the minimum required balance).
The Directed Dividend Option may be modified or terminated by the Company at any
<PAGE>
time after notice to participating Shareholders. Participation in the Directed
Dividend Option may be terminated or changed by the Shareholder at any time by
writing the Distributor. The Directed Dividend Option is not available to
participants in an IRA.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next determined
after the Shares are properly tendered for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934 after receipt by the
Distributor of the request for redemption. However, to the greatest extent
possible, the Company will attempt to honor requests from Shareholders for (a)
same day payments upon redemption of Government Assets, Liquid Assets, or
Municipal Assets Fund Shares if the request for redemption is received by the
Distributor before 11:00 a.m. Central Time on a Business Day or, if the request
for redemption is received after 11:00 a.m. Central Time, to honor requests for
payment on the next Business Day, or (b) next day payments upon redemption of
the Variable NAV Funds if received by the Distributor before the Valuation Time
on a Business Day or if the request for redemption is received after the
Valuation Time, to honor requests for payment within two Business Days, unless
it would be disadvantageous to the Fund or the Shareholders of the Fund to sell
or liquidate portfolio securities in an amount sufficient to satisfy requests
for payments in that manner.
At various times, a Fund may be requested to redeem Shares for which it has not
yet received good payment. In such circumstances, a Fund may delay the
forwarding of proceeds until payment has been collected for the purchase of such
Shares, which delay may be for up to 10 days or more. A Fund intends to pay cash
for all Shares redeemed, but under abnormal conditions which make payment in
cash unwise, a Fund may make payment wholly or partly in portfolio securities at
their then-current market value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such securities to cash.
Due to the relatively high cost of handling small investments, the Funds reserve
the right to redeem, at net asset value, the Shares of any Shareholder if,
because of redemptions of Shares by or on behalf of the Shareholder (but not as
a result of a decrease in the market price of such Shares), the account of such
Shareholder has a value of less than $500. Before the Funds exercise their right
to redeem such Shares and to send the proceeds to the Shareholder, the
Shareholder will be given notice that the value of the Shares in his or her
account is less than the minimum amount and will be allowed 60 days to make an
additional investment in an amount which will increase the value of the account
to at least $500.
See "ADDITIONAL PURCHASE AND REDEMPTION INFOR-MATION--Matters Affecting
Redemption" in the Statement of Additional Information for examples of when the
Company may, under applicable law and regulation, suspend the right of
redemption if it appears appropriate to do so in light of the Company's
responsibilities under the 1940 Act.
DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Income and Municipal Bond Funds each intend to declare their net investment
income monthly as a dividend to Shareholders at the close of business on the day
of declaration. The Government Assets, Liquid Assets, and Municipal Assets Funds
intend to declare net investment income daily as a dividend to Shareholders at
the close of business on the day of declaration. These Funds will generally pay
such dividends monthly. Each Fund also intends to distribute its capital gains,
if any, at least annually, normally in December of each year. The Limited Term
Bond, Bond, Balanced, Equity, and Aggressive Growth Funds intend to declare
their net investment income quarterly as a dividend to Shareholders at the close
of business on the day of declaration, and generally will pay such dividends
<PAGE>
quarterly. A Shareholder will automatically receive all income dividends and
capital gains distributions in additional full and fractional Shares of a Fund
at net asset value as of the ex-dividend date, unless the Shareholder elects to
receive dividends or distributions in cash. Such election must be made on the
Account Application; any change in such election must be made in writing to the
Funds at Dept. L-1392, Columbus, Ohio 43260-1392 and will become effective with
respect to dividends and distributions having record dates after its receipt by
the Transfer Agent. Dividends are paid in cash not later than seven business
days after a Shareholder's complete redemption of his or her Shares.
Dividends on each class of shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
shareholder and/or servicing fees (see "GENERAL INFORMATION -- Description of
the Company and Its Shares").
If you elect to receive distributions in cash, and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
FEDERAL TAXES
The following discussion is intended for general information only. Investors
should consult with their tax Advisor as to the tax consequences of an
investment in the Funds, including the status of distributions from the Funds
under applicable state or local law.
Each Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify, each Fund must meet certain income, distribution and
diversification requirements. In any year in which a Fund qualifies as a
regulated investment company and timely distributes all of its income and
substantially all of its net tax-exempt interest income, the Fund generally will
not pay any U.S. federal income or excise tax.
Dividends that are distributed by a Fund that are derived from interest income
exempt from federal income tax and are designated by the Fund as
"exempt-interest dividends" will be exempt from regular federal income taxation.
However, if tax-exempt interest earned by the Fund constitutes an item of tax
preference for purposes of the alternative minimum tax, then a portion of the
exempt-interest dividends paid by the Fund may likewise constitute an item of
tax preference. In addition, any exempt-interest dividends received by corporate
shareholders may constitute an adjustment to alternative minimum taxable income
for purposes of the alternative minimum tax and the environmental tax imposed
under Code Sections 55 and 59A, respectively. Only the Municipal Bond and
Municipal Assets Funds are expected to be eligible to designate certain
dividends as "exempt-interest dividends."
Exempt-interest dividends of a Fund, although exempt from regular federal income
tax, are includible in the tax base for determining the extent to which Social
Security and railroad benefits will be subject to federal income tax. All
shareholders are required to report the receipt of dividends and distributions,
including exempt-interest dividends, on their federal income tax returns.
Dividends paid out of a Fund's investment company taxable income (including
dividends, taxable interest and net short-term capital gains) will be taxable to
a U.S. Shareholder as ordinary income. A portion of the Balanced, Equity, and
Aggressive Growth Funds income may consist of dividends paid by U.S.
Corporations. Therefore, a portion of the dividends paid by these Funds may be
eligible for the corporate dividends-received deduction. Because no portion of
the other Funds' income is expected to consist of dividends paid by U.S.
Corporations, no portion of the dividends paid by those Funds is expected to be
<PAGE>
eligible for the corporate dividends-received deduction. Distributions of net
capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, designated by a Fund as capital gain dividends are
taxable as long-term capital gains, regardless of the length of time the
Shareholder has held a Fund's Shares. Dividends are generally treated in the
same manner whether received in cash or reinvested in additional Fund Shares.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by a Fund in October, November or December of that year
to shareholders of record on a date in such a month and paid by a Fund during
January of the following calendar year. Such distributions will be treated as
received by Shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Each year the Funds will notify Shareholders of the tax status of dividends and
distributions.
Investments in securities that are issued at a discount will result each year in
income to a Fund equal to a portion of the excess of the face value of the
securities over their issue price, even though the Fund receives no cash
interest payments from the securities. Such income generally will, however, have
to be distributed to shareholders on a timely basis.
A portion of the income earned by the Municipal Bond and Municipal Assets Funds
may be taxable rather than tax-exempt. Accordingly, a portion of the dividends
paid by the Municipal Bond and Municipal Assets Funds may be taxable to
Shareholders.
Any gain or loss realized by a Shareholder upon the sale or other disposition of
Shares of a Fund, or upon receipt of a distribution in complete liquidation of a
Fund, generally will be a taxable capital gain or loss which will be long-term
or short-term, generally depending upon the Shareholder's holding period for the
Shares. In some cases, Shareholders will not be permitted to take sales charges
into account in determining the amount of gain or loss realized on the
disposition of their shares. See "ADDITIONAL INFORMATION--Additional Tax
Information" in the Statement of Additional Information.
Shareholders should be aware that redeeming shares of the Municipal Bond Fund
after tax-exempt interest income has been accrued by the Fund but before that
income has been declared as a dividend may be disadvantageous. This is because
the gain, if any, on the redemption will be taxable, even though such gain may
be attributable in part to the accrued tax-exempt interest which, if distributed
to the shareholder as a dividend rather than as redemption proceeds, might have
qualified as an exempt-interest dividend.
The Funds may be required to withhold U.S. federal income tax at the rate of 31%
of all reportable dividends (which does not include exempt-interest dividends)
and capital gain distributions (as well as redemptions for all Funds except the
Government Assets, Liquid Assets, and Municipal Assets Funds), payable to
Shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the Shareholder's U.S. FEDERAL income tax liability.
Further information relating to tax consequences is contained in the Statement
of Additional Information.
STATE AND LOCAL TAXES
Distributions from all of the Funds may be subject to state and local taxes.
Distributions of a Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. In certain states, distributions
of the Municipal Bond and Municipal Assets Funds which are derived from interest
on obligations of that state or its municipalities or any political subdivisions
thereof may be exempt from state and local taxes. Shareholders should consult
<PAGE>
their tax advisors regarding the possible exclusion for state and local income
tax purposes of the portion of dividends paid by a Fund which is attributable to
interest from obligations of the U.S. Government and its agencies, authorities
and instrumentalities, and the particular tax consequences to them of an
investment in a Fund, including the application of state and local tax laws.
MANAGEMENT OF THE COMPANY
DIRECTORS OF THE COMPANY
Under the laws of the State of Maryland, the property, affairs and business of
the Company and the Funds are managed by the Board of Directors. The Directors
elect officers who are charged with the responsibility for the day-to-day
operation of the Funds and the execution of policies formulated by the
Directors.
The Directors receive fees and are reimbursed for their expenses in connection
with each meeting of the Board of Directors they attend. However, no officer or
employee of Investors Management Group, Ltd., AMCORE Financial, Inc., or any of
its subsidiaries, or BISYS Fund Services Limited Partnership, receives any
compensation from the Company for acting as a Director of the Company. The
officers of the Company (see the Statement of Additional Information) receive no
compensation directly from the Company for performing the duties of their
offices. Investors Management Group receives fees from the Funds for acting as
investment advisor, administrator and for providing certain fund accounting
services. BISYS Fund Services Limited Partnership receives fees from the Funds
for acting as distributor and BISYS Fund Services, Inc. receives fees from the
Funds for acting as transfer agent.
INVESTMENT ADVISOR
Investors Management Group, Ltd., ("IMG"), manages the investments and business
affairs of the Company. IMG, a wholly owned subsidiary of AMCORE Financial Inc.,
is a federally registered Investment Advisor organized in 1982 and located at
2203 Grand Avenue, Des Moines, Iowa. Since then its principal business has been
providing continuous investment management to pension and profit-sharing plans,
insurance companies, public agencies, banks, endowments and charitable
institutions, other mutual funds, individuals and others. As of February 28,
1998, IMG had approximately $3.6 billion in equity, fixed income and money
market assets under management.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Fund's portfolios:
GOVERNMENT ASSETS, LIQUID ASSETS, MUNICIPAL ASSETS, LIMITED TERM BOND, BOND,
INCOME, MUNICIPAL BOND, AND BALANCED FUNDS
KATHRYN D. BEYER, CFA, MANAGING DIRECTOR. Ms. Beyer is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1993, her experience includes serving as a securities analyst
and director of mortgage-backed securities for Central Life Assurance Company
from 1988 to 1993. Ms. Beyer received her Masters of Business Administration
degree from Drake University, Des Moines, Iowa, and her Bachelor of Science
Degree in Agricultural Engineering from Iowa State University, Ames, Iowa.
JEFFREY D. LORENZEN, CFA, MANAGING DIRECTOR. Mr. Lorenzen is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1992, his experience includes serving as a securities analyst
and corporate fixed income analyst for The Statesman Group from 1989 to 1992.
Mr. Lorenzen received his Masters of Business Administration degree from
Drake University, Des Moines, Iowa, and his Bachelor of Business
Administration from the University of Iowa, Iowa City, Iowa.
<PAGE>
ELIZABETH S. PIERSON, CFA, VICE PRESIDENT AND SENIOR FIXED INCOME MANAGER.
Ms. Pierson is a fixed income strategist and is a member of IMG's Investment
Policy Committee. She has been with AMCORE Capital Management, Inc. (or a
predecessor) since 1984 when she began her investment career. Ms. Pierson
became an employee of IMG effective with the acquisition of IMG by AMCORE
Financial, Inc. in February 1998. She has a B.S. degree from the University
of Illinois, Champaign-Urbana. Ms. Pierson chairs the Fixed Income Research
Committee. She has been responsible for investment management and credit
responsibilities in numerous individually managed advisory portfolios.
BALANCED, EQUITY AND AGGRESSIVE GROWTH FUNDS
JULIE A. O'ROURKE, CFA, VICE PRESIDENT AND EQUITY MANAGER. Ms. O'Rourke is a
member of IMG's Investment Policy Committee. She has been with AMCORE Capital
Management, Inc. (or a predecessor) since 1991 where she began her investment
career. Ms. O'Rourke became an employee of IMG effective with the acquisition
of IMG by AMCORE Financial, Inc. in February 1998. She has a B.S. from
Rockford College, Rockford, Illinois. Other responsibilities include equity
research and equity account management. She is chairperson of the Equity
Research Committee.
DARRELL C. THOMPSON, SENIOR VICE PRESIDENT AND SENIOR EQUITY MANAGER. Mr.
Thompson is a member of IMG's Investment Policy Committee. He has been with
AMCORE Capital Management, Inc. (or a predecessor) since 1973. Mr. Thompson
became an employee of IMG effective with the acquisition of IMG by AMCORE
Financial, Inc. in February 1998. He began his investment career in 1957. He
has a B.S. from Southern Illinois University. He has been responsible for
investment operations in the Equity Fund since its inception.
Subject to the general supervision of the Company's Board of Directors and in
accordance with a Fund's investment objective and restrictions, IMG manages the
investments of a Fund, makes decisions with respect to and places orders for all
purchases and sales of a Fund's portfolio securities, and maintains a Fund's
records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Company, IMG receives a fee computed daily and paid
monthly, at the annual rate of 0.60% of each of the Limited Term Bond, Income,
and Municipal Bond Fund's average daily net assets, at the annual rate of 0.55%
of the Bond Fund's average daily net assets, at the annual rate of 0.40% of the
Government Assets Fund's average daily net assets, at the annual rate of 0.35%
of each of the Liquid Assets and Municipal Assets Fund's average daily net
assets, at the annual rate of 0.75% of each of Balanced and Equity Funds average
daily net assets, and at the annual rate of 0.95% of the Aggressive Growth
Fund's average daily net assets. The investment advisory fees and administrative
fees paid by the Government Assets, Liquid Assets, Municipal Assets, Limited
Term Bond, Bond, Income, Municipal Bond, Balanced, Equity, and Aggressive Growth
Funds, absent fee waivers, are higher than those paid by most other investment
companies. IMG may periodically waive all or a portion of its advisory fee
and/or absorb certain expenses of a Fund or Class of Shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or Class and increasing the overall yield to investors in that Fund or
Class at the time any such amounts are waived and/or absorbed. IMG may not seek
reimbursement of such waived fees at a later date. The waiver or absorption of
such fee or expenses will cause the yield of a Fund or Class to be higher than
it would otherwise be in the absence of such a waiver.
ADMINISTRATOR
IMG is also the administrator for the Funds (the "Administrator"). The
Administrator generally assists in all aspects of the Funds' administration and
operation. For expenses assumed and services provided as administrator pursuant
to its Management and Administration Agreement with the Funds, the Administrator
receives a fee computed daily and paid periodically, calculated at an annual
<PAGE>
rate of 0.06% of the average daily net assets of the Liquid Assets and Municipal
Assets Fund, 0.21% of the average daily net assets of the Government Assets
Fund, and 0.26% of the average daily net assets for all other Vintage Mutual
Funds. The Administrator may periodically waive all or a portion of its
administrative fee to increase the net income of a Fund or Class available for
distribution as dividends. The Administrator may not seek reimbursement of such
waived fees at a later date. The waiver of such fee will cause the yield of a
Fund or Class to be higher than it would otherwise be in the absence of such a
waiver.
DISTRIBUTOR
BISYS Fund Services Limited Partnership, serves as distributor and principal
underwriter (the "Distributor") for the Company pursuant to a Distribution
Agreement and a Distribution and Shareholder Services Plan. The Distributor acts
as agent for the Funds in the distribution of their Shares and, in such
capacity, solicits orders for the sale of Shares, advertises, and pays the costs
of advertising, office space and its personnel involved in such activities.
EXPENSES AND PORTFOLIO TRANSACTIONS
The Advisor and the Administrator each bear all expenses in connection with the
performance of their services as investment Advisor and general manager and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Funds.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Funds. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, each Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Funds;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Funds; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Funds except that the Funds' Distribution Agreement requires that the
Distributor pay for prospectuses that are to be used for sales purposes with
persons other than current shareholders.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the funds will be borne by the Funds. Expenses attributable to a particular Fund
are charged against the assets of that Fund; other expenses of the Funds are
allocated among the Funds on a reasonable basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.
The policy of each of the Funds, regarding purchases and sales of securities for
its portfolio, is that primary consideration be given to obtaining the most
favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, IMG effects transactions with those brokers and
dealers whom IMG believes provide the most favorable prices and are capable of
providing efficient executions. If IMG believes such price and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or IMG. Such services may include, but
are not limited to, any one or more of the following: information as to the
<PAGE>
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments; wire services; and appraisals
or evaluations of portfolio securities. Such information may be useful to IMG in
serving both the Funds and other clients and, conversely, supplemental
information obtained by the placement of business of other clients may be useful
to IMG in carrying out its obligations to the Funds.
Subject to applicable limitations of the federal securities laws, broker-dealers
may receive commissions for agency transactions that are in excess of the amount
of commission charged by other broker-dealers in recognition of their research
or execution services. In order to cause the Funds to pay such higher
commissions, IMG must determine in good faith that such commissions are
reasonable in relation to the value of the brokerage and/or research services
provided by such executing broker-dealers, viewed in terms of a particular
transaction or IMG's overall responsibilities to the Funds. In reaching this
determination, IMG will not attempt to place a specific dollar value on the
brokerage and/or research services provided, or to determine what portion of the
compensation should be related to those services.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Company has adopted a
Distribution and Shareholder Service Plan (the "Plan"), under which each Fund is
authorized to pay or reimburse BISYS Fund Services Limited Partnership, as
Distributor, a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets of all Classes of the Vintage Mutual Funds
offered by this Prospectus except the Government Assets, Liquid Assets, and
Municipal Assets Funds ("Shareholder Fees"). Such amount may be used to pay
banks for administrative and shareholder services and to pay broker-dealers and
other institutions for similar services, including distribution services (each
such bank, broker-dealer and other institution is hereafter referred to as a
"Participating Organization"), pursuant to an agreement between BISYS Fund
Services Limited Partnership, and the Participating Organization.
As authorized by the Plan, the Distributor will enter into Shareholder
Agreements with Participating Organi-zations, including AMCORE Financial, Inc.,
or its affiliates, pursuant to which the Participating Organization agrees to
provide certain administrative and shareholder support services in connection
with Shares of a Fund purchased and held by the Participating Organization for
the accounts of its Customers and Shares of a Fund purchased and held by
Customers of the Participating Organization, including, but not limited to,
processing automatic investments of Participating Organization's Customer
account cash balances in Shares of a Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service, establishing
and maintaining Customer accounts and records, processing purchase and
redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone
facilities and personnel as is necessary and appropriate to accomplish such
matters. In consideration of such services, the Participating Organization may
receive a monthly fee, computed at the annual rate of .25% of the average
aggregate net asset value of the Shares of the Fund held during the period in
Customer accounts for which the Participating Organization has provided services
under this Agreement. The Distributor will be compensated by a Fund up to the
amount of any payments it makes to Participating Organization under the Rule
12b-1 Agreement. Currently, it is intended that no such amounts will be paid
under the Plan or the Rule 12b-1 Agreement by any of the Funds. However, IMG as
Advisor and Administrator to the Company may in its sole discretion make
payments to the Distributor to supplement shareholder fees paid by the Company
up to the maximum fee approved by the Plan without further notice to
shareholders and at no cost to the Company.
ADMINISTRATIVE SERVICES PLAN
The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Participating Organization"), including AMCORE
<PAGE>
Financial, Inc. and its correspondent and affiliated banks, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders (collectively, "customers") who
are the beneficial or record owner of Shares of that Fund. In consideration for
such services, a Participating Organization receives a fee from a Fund, computed
daily and paid monthly, at an annual rate of up to 0.25% of the average daily
net asset value of Shares of that Fund owned beneficially or of record by such
Participating Organization's customers for whom the Participating Organization
provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Participating Organizations receiving such compensation
to perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Funds,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into Servicing
Agreements with Participating Organizations pursuant to which the Participating
Organization has agreed to provide certain administrative support services in
connection with Shares of the Funds owned of record or beneficially by its
customers. Such administrative support services may include, but are not limited
to, (i) processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from a Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay the Participating Organization a monthly fee, computed
at an annual rate 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays servicing fees on the Classes or Funds offered by this
Prospectus as follows: 0.25% annually on the "S" Shares of Equity Fund, and
0.15% each on the "T" Shares of the Liquid Assets and Municipal Assets Funds. No
Servicing fees are paid by the Company on the other Vintage Funds or Classes
offered by this Prospectus, although it may begin to do so at any time without
further notice to shareholders. IMG, as Advisor and Administrator, may
supplement the Servicing Fees paid by the Company to the Participating
Organization up to the maximum fee approved by the Services Plan without further
notice to shareholders and at no cost to the Company.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences.
<PAGE>
CUSTODIAN
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006 serves
as custodian for the Government Assets, Limited Term Bond, Bond, Income,
Municipal Bond, Balanced, Equity, and Aggressive Growth Funds' assets. Pursuant
to the Custodian Agreement between the Company and Bankers Trust Company,
Bankers Trust Company receives compensation from each Fund for such services in
an amount equal to a designated annual fee plus fixed fees charged for certain
portfolio transactions and out-of-pocket expenses.
AMCORE Investment Group, N.A., Rockford, Illinois, serves as custodian for the
Liquid Assets and Municipal Assets Funds' assets. Pursuant to the Custodian
Agreement between the Company and AMCORE Investment Group, N.A., AMCORE receives
compensation from each Fund for such services in an amount equal to a designated
annual fee.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
IMG, 2203 Grand Avenue, Des Moines, Iowa 50312-5338, serves as the Funds'
transfer agent to certain classes of the Government Assets, Liquid Assets and
Municipal Assets Funds offered by other Prospectuses pursuant to a Transfer
Agency Agreement with the Funds and receives a fee for such services. BISYS Fund
Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as transfer
agent to the Classes and Funds offered by this Prospectus pursuant to a Transfer
Agency Agreement with the Funds and receives a fee for such services. IMG also
provides certain accounting services for the Funds pursuant to a Fund Accounting
Agreement and receives a fee for such services. The fees received and the
services provided as fund accountant, transfer agent, dividend disbursing agent
and shareholder servicing agent are in addition to those received and paid under
the Advisory Agreement and the Administrative Services Agreement. See
"MANAGE-MENT OF THE COMPANY - Transfer Agency and Fund Accounting Services" in
the Statement of Additional Information for further information.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY AND ITS SHARES
The Company is a Maryland corporation organized on November 16, 1994. The
Company consists of several Funds organized as separate series of Shares. Each
Share represents an equal proportionate interest in a Fund with other shares of
the same Fund, and is entitled to such dividends and distributions out of the
income earned on the assets belonging to that Fund as are declared at the
discretion of the Directors (see "Miscellaneous" below).
The Bond Fund was organized in November, 1994 as the IMG Bond Fund. The
Government Assets, Limited Term Bond, Income, Municipal Bond, Balanced, Equity,
and Aggressive Growth Funds were created on October 30, 1997, to acquire the
assets and continue the business of the corresponding substantially identical
investment portfolios of the AMCORE Vintage U.S. Government Obligations, Fixed
Total Return, Fixed Income, Intermediate Tax-Free, Balanced, Equity, and
Aggressive Growth Funds, respectively, seven series portfolios of The Coventry
Group, a Massachusetts Business Trust. The Liquid Assets and Municipal Assets
Funds were created on October 30, 1997, to acquire the assets and continue the
business of the corresponding substantially identical investment portfolios of
the Liquid Assets Fund, Inc. and the Municipal Asset Fund, Inc., two separately
registered open-end diversified management investment companies organized as
Iowa corporations. References herein to the "immediate predecessor" of the Funds
refer to the respective portfolios or companies which correspond to such Fund.
Each Share of a Fund represents an equal proportionate interest in that Fund
with other Shares of the same Fund, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Directors.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common stock relating to new
<PAGE>
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example
in the sales load, Rule 12b-1 fees or service plan fees applicable to different
classes of Shares offered by a particular Fund. Such an arrangement could enable
the Company to tailor its marketing efforts to a broader segment of the
investing public with a goal of attracting additional investments in the Funds.
"T" Shares of the Government Assets, Liquid Assets and Municipal Assets Funds
are described in this Prospectus. "S", "S2" and "I" Shares are offered in
separate Prospectuses which may be obtained by calling IMG, the transfer agent
for these Classes of Shares at 1-800-798-1819 or writing to 2203 Grand Avenue,
Des Moines, IA 50312. Please read the Prospectus carefully before investing or
sending money. All shares are offered to individual and institutional investors
acting on their own behalf or on behalf of their customers and bear their pro
rata portion of all operating expenses paid by the Funds, except that "S"
Shares, "S2" Shares and "T" Shares bear separate distribution and/or shareholder
servicing fees. "I" Shares bear no distribution or shareholder servicing fees.
Each Class of Shares of the Government Assets, Liquid Assets and Municipal
Assets Funds offers different privileges. "S" and "S2" Shares of Liquid Assets,
and "S" Shares of Municipal Assets and Government Assets Funds are normally
offered through financial institutions providing automatic "Sweep" investment
programs to their customers. "T" Shares offer a check writing privilege and are
also offered through trust organizations or others providing shareholder
services such as establishing and maintaining custodial accounts and records for
their customers who invest in "T" Shares, assisting customers in processing
purchase, exchange and redemption requests and responding to customers'
inquiries concerning their investments, though they may also be used in "sweep"
programs. "I" Shares pay no shareholder or servicing fees and so are normally
offered directly by the Distributor or through trust organizations providing
fiduciary account services for an additional fee. Each Class of Shares is
exchangeable only for shares of the same Class. Participating Organizations
selling or servicing "S", "S2" and "T" Shares may receive different compensation
with respect to one Class over another.
"S" Shares of the Equity Fund are described in this Prospectus. "T" Shares are
offered in a separate Prospectus which may be obtained by calling the Fund at
(800)438-6375 or writing to Dept. L-1392, Columbus, OH 43260-1392. Please read
the Prospectus carefully before investing or sending money. "T" Shares of the
Equity Fund are offered solely to fiduciary accounts of AMCORE Investment Group,
N.A., over which AMCORE Investment Group, N.A. exercises investment discretion,
and are not offered by this Prospectus. All other shareholders of the Equity
Fund are offered "S" Shares. If you qualify for Equity Fund "T" Shares, please
call (800)438-6375 for a Vintage Equity Fund "T" Share Prospectus. The other
Vintage Funds are currently offered in one Class, which Class bears fees
substantially the same as the "T" Shares offered by the Government Assets,
Liquid Assets, Municipal Assets, and Equity Funds. Shares are offered to
individual and institutional investors acting on their own behalf or on behalf
of their customers and bear their pro rata portion of all operating expenses
paid by each Fund. Participating Organizations selling or servicing "T" Shares
may receive different compensation with respect to one Class over another.
Shareholders are entitled to one vote for each full Share held and a
proportionate fractional vote for any fractional Shares held, and will vote in
the aggregate and not by series or class except as otherwise expressly required
by law. For example, shareholders of each Fund will vote in the aggregate with
other shareholders of the Company with respect to the election of Directors and
ratification of the selection of independent auditors. However, shareholders of
a particular Fund will vote as a Fund, and not in the aggregate with other
shareholders of the Company, for purposes of approval of that Fund's investment
advisory agreement, Plan and Services Plan, except that shareholders of the
Government Assets, the Liquid Assets, and Municipal Assets Funds will vote by
class on matters relating to that Fund's Plan and Services Plan.
<PAGE>
Under the laws of the State of Maryland, the Company may operate without an
annual meeting of shareholders under specified circumstances if an annual
meeting is not required by the 1940 Act. The Company has adopted the appropriate
provisions in its Bylaws and may, in its discretion, not hold annual meetings of
shareholders for the election of Directors unless otherwise required by the 1940
Act. The Company has adopted provisions in its Bylaws for the removal of
Directors by the shareholders. Shareholders may receive assistance in
communicating with other shareholders as provided in Section 16(c) of the 1940
Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Company may remove a Director by the affirmative vote of a
majority of the Company's 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 Directors 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 Company's outstanding voting shares.
All consideration received by the Funds for shares of one of the Funds and all
assets in which such consideration is invested, belong to that Fund (subject
only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income and expenses attributable to one Fund
are treated separately from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Funds, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by such matter. Rule 18f-2 further provides that a Fund shall be deemed
to be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical or that the matter does not affect the interest of such
Fund. However, the Rule exempts the selection of independent auditors and the
election of Directors from the separate voting requirements of the Rule.
PERFORMANCE INFORMATION
From time to time the Funds may advertise their average annual total return,
aggregate total return, yield and effective yield in advertisements, sales
literature and shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. Average
annual total return will be calculated for the period since the establishment of
the Fund and will reflect the imposition of the maximum sales charge. Average
annual total return is measured by comparing the value of an investment in the
Fund at the beginning of the relevant period to the redemption value of the
investment at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions) and annualizing the difference.
Aggregate total return is calculated similarly to average annual total return
except that the return figure is aggregated over the relevant period instead of
annualized. Yield for each of the Variable NAV Funds will be computed by
dividing the Fund's net investment income per share earned during a recent
one-month period by the Fund's per share maximum offering price (reduced by any
undeclared earned income expected to be paid shortly as a dividend) on the last
day of the period and annualizing the result.
The CURRENT YIELD of the Government Fund, the Liquid Assets Fund, and the
Municipal Assets Fund refers to the income generated by an investment therein
over a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over an annual
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned by an investment in
the Fund is assumed to be reinvested weekly. The EFFECTIVE YIELD is slightly
<PAGE>
higher than the yield because of the compounding effect of this assumed
reinvestment.
Distribution rates will be computed by dividing the distribution per share made
by the Fund over a twelve-month period by the maximum offering price per share.
The distribution rate includes both income and capital gain dividends and does
not reflect unrealized gains or losses. The distribution rate differs from the
yield, because it includes capital items, which are often non-recurring in
nature, whereas yield does not include such items.
The Municipal Bond Fund and the Municipal Assets Fund may also present their
taxable equivalent yields which reflect the amount of income subject to federal
income taxation that a taxpayer would have to earn in order to obtain the same
after-tax income as that derived from the yield, respectively, of the Municipal
Bond Fund and the Municipal Assets Fund. The taxable equivalent yield will be
significantly higher than the yield. See Appendix B of the Statement of
Additional Information.
Investors may also judge the performance of the Fund by comparing its
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices and to data prepared by various services which may be
published by such services or by other services or publications. In addition to
performance information, general information about the Fund that appears in such
publications may be included in advertisements, sales literature and in reports
to Shareholders.
Yield and total return are functions of the type and quality of instruments held
in the portfolio, operating expenses, and market conditions. Consequently,
current yields and total return will fluctuate and are not necessarily
representative of future results. Any fees charged by IMG or any of its
affiliates with respect to customer accounts for investing in shares of the
Funds will not be included in performance calculations; such fees, if charged,
will reduce the actual performance from that quoted. Additional information
regarding the investment performance of the Funds is contained in the annual
report of the Funds, which may be obtained without charge by writing or calling
the Funds.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent auditors. You may order statements for the current and
preceding year at no charge. However, there will be a $10.00 fee per statement
for statements ordered for other years.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to a Fund" means the consideration received by the Fund upon
the issuance or sale of shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or amounts derived from any reinvestment of such proceeds, and any general
assets of the Company not readily identified as belonging to a particular Fund
that are allocated to the Fund by the Company's Board of Directors. The Board of
Directors may allocate such general assets in any manner it deems fair and
equitable. Determinations by the Board of Directors of the Company as to the
timing of the allocation of general liabilities and expenses and as to the
timing and allocable portion of any general assets with respect to the Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of a Fund present at a meeting at which the holders
of more than 50% of the votes attributable to Shareholders of record of the Fund
are represented in person or by proxy, or (b) the holders of more than 50% of
the outstanding votes of Shareholders of a Fund.
Inquiries regarding the Funds may be directed in writing to the Funds at Dept.
L-1392, Columbus, Ohio, 43260-1392, or by calling toll free (800)438-6375.
<PAGE>
INVESTMENT ADVISOR and
ADMINISTRATOR
Investors Management Group
2203 Grand Avenue
Des Moines, Iowa 50312
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Cline, Williams, Wright, Johnson
& Oldfather
1900 First Bank Building
Lincoln, Nebraska 68508
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
2500 Ruan Center
Des Moines, Iowa 50309
TABLE OF CONTENTS Page
----
Prospectus Summary............................... 2
Expense Summary.................................. 6
Financial Highlights............................. 9
Investment Objectives, Policies and Risk
Factors of the Funds.......................... 18
Investment Restrictions.......................... 36
Valuation of Shares.............................. 37
How to Purchase and Redeem Shares................ 38
Distributions and Taxes.......................... 44
Management of the Company........................ 47
General Information.............................. 52
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE GROUP
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
GOVERNMENT ASSETS FUND "S" SHARES
LIQUID ASSETS FUND "S" SHARES
MUNICIPAL ASSETS FUND "S" SHARES
2203 Grand Avenue, Des Moines, Iowa 50312-5338
- --------------------------------------------------------------------------------
FOR CURRENT YIELD, PURCHASE AND REDEMPTION INFORMATION CALL ........800-798-1819
515-244-5426
- --------------------------------------------------------------------------------
PROSPECTUS MARCH 23, 1998
- --------------------------------------------------------------------------------
Government Assets Fund, Liquid Assets Fund and Municipal Assets Fund, each of
these a "Fund", (collectively, the "Funds") are money market mutual funds
designed to enable investors to meet short-term goals. Investors choose
whichever Fund best suits their needs and may, without charge, exchange Funds as
their investment outlook or goals change.
Government Assets Fund offers two classes of shares, Liquid Assets Fund offers
four classes of shares and Municipal Assets Fund offers three classes of shares.
This Prospectus describes the "S" Shares of each Fund. "S" Shares are normally
offered through financial institutions providing automatic "sweep" investment
programs to their own customers. The Funds also offer "T Shares". Liquid Assets
and Municipal Assets Funds offer "I" Shares, and Liquid Assets Fund offers "S2"
Shares, all of which accrue daily dividends in the same manner as "S" Shares
except that each class bears separate distribution and/or shareholder servicing
fees. (see "Organization and Shares of the Funds").
GOVERNMENT ASSETS FUND ("Government Assets") seeks income consistent with
maintaining liquidity and stability of principal, by investing exclusively in
short-term obligations issued by the U.S. Government, its agencies or
instrumentalities. LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current
income consistent with safety of principal and maintenance of liquidity.
MUNICIPAL ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. "S" Shares are offered and redeemed at $1.00 per share under rules
which allow the Funds to use the amortized cost method of valuing the Funds'
assets.
AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00, BUT UNDER
EXTRAORDINARY CIRCUMSTANCES THE VALUE OF SHARES MAY VARY FROM $1.00 AND
CONSEQUENTLY, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference. The
Statement of Additional Information (as of the date of this Prospectus) whichs
contain more detailed information about each Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference. The
Statement of Additional Information is available free upon request from the
Funds at the address and telephone number indicated above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
TYPE OF COMPANY
Each Fund is a diversified series of Vintage Mutual Funds, Inc., an open-end,
management investment company, (the "Company"), organized as a Maryland
Corporation.
INVESTMENT OBJECTIVE
For Government Assets, current income consistent with liquidity and stability of
principal.
For Liquid Assets, maximum current income consistent with safety of principal
and maintenance of liquidity.
For Municipal Assets, maximum current income exempt from federal income tax,
consistent with safety of principal and maintenance of liquidity.
INVESTMENT POLICY
Government Assets invests exclusively in short-term U.S. Treasury bills, notes
and other short-term obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities and repurchase agreements with respect
thereto, having a dollar-weighted average maturity of 90 days or less. The Fund
seeks to maintain a net asset value of $1.00 per share.
Under normal market conditions, Liquid Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term debt obligations
including, primarily, redeemable Certificates backed by federally insured
student loans and Farmers Home Administration guaranteed loans, commercial
paper, bank obligations, short-term corporate obligations and obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations having a
dollar-weighted average maturity of 90 days or less. The Fund seeks to maintain
a net asset value of $1.00 per share.
Under normal market conditions, Municipal Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term municipal
securities which mature or have a demand feature exercisable in one year or less
from the date of acquisition having a dollar-weighted average maturity of 90
days or less. The Fund seeks to maintain a net asset value of $1.00 per share.
RISK FACTORS AND SPECIAL CONDITIONS
An investment in the Funds is subject to certain risks, as set forth in detail
under "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS." As with all mutual
funds, there can be no assurance that the Funds will achieve their investment
objectives.
OFFERING PRICE
The public offering price of each Fund is equal to its net asset value of $1.00
per Share.
SHARES OFFERED
"S" Shares of common stock ("Shares") of Government Assets, Liquid Assets and
Municipal Assets, each a separate investment portfolio of the Vintage Mutual
Funds, Inc., a Maryland Corporation, (the "Company"). See "OPENING AN ACCOUNT",
"SHAREHOLDER SERVICES", and "REDEEMING SHARES" for detailed information about
how to buy and sell shares.
MINIMUM PURCHASE
The minimum initial investment is $1,000 with $50 minimum subsequent investments
(subject to certain exceptions).
DIVIDENDS
Dividends are declared daily and paid monthly and will be automatically
reinvested unless the shareholder elects otherwise.
INVESTMENT ADVISOR
Investors Management Group ("IMG" or the "Advisor").
ADMINISTRATOR
Investors Management Group ("IMG" or the "Administrator").
DISTRIBUTOR
BISYS Fund Services Limited Partnership, Columbus, Ohio (the "Distributor")
<PAGE>
EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES1
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None None
Deferred Sales Load (as a percentage of offering
original purchase price or redemption
proceeds as applicable) None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None
Exchange Fee None None None
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.40% 0.35% 0.35%
12b-1 Distribution Fees After Limitation 2 0.00% 0.40% 0.15%
Other Expenses After Limitation
Servicing Fees 3 0.25% 0.25% 0.25%
Administrative Fees 4 0.21% 0.06% 0.06%
Other Expenses 0.16% 0.11% 0.15%
---- ---- ----
Total Other Expenses 0.62% 0.42% 0.46%
---- ---- ----
Total Fund Operating Expenses After Limitation5 1.02% 1.17% 0.96%
</TABLE>
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 table reflects the current fees for
the Funds. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of a Fund (a "Class"). See "MANAGEMENT AND FEES" for a more
complete discussion of the Shareholder transaction expenses and annual operating
expenses for the Fund. THE FOREGOING SUMMARY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. 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.
1 A "Participating Organization" (as defined in this Prospectus) may charge a
Customer (as defined in this Prospectus) account fees for automatic investment
and other investment management services provided in connection with investment
in the Fund. (See "OPENING AN ACCOUNT--Purchasing Shares" and "REDEEMING
SHARES".)
2 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which Government Assets, Liquid Assets and Municipal Assets
is each authorized to pay or reimburse the Distributor a periodic amount
calculated at an annual rate not to exceed 0.25%, 0.50% and 0.25% of the average
daily net assets of each Fund respectively. ("Shareholder Fees"). Currently such
fees are limited by each Fund to 0.00%, 0.40% and 0.15%, respectively. However,
Shareholder Fees may be absorbed by the Advisor in its sole discretion without
further notice and at no expense to a Class or Fund. Shareholders will be given
at least 30 days notice prior to payment by the Company of any increased fees
under the Plan.
3 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay Participating Organizations
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 or Class ("Servicing Fees").
4 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds are authorized to pay a periodic fee calculated at
an annual rate of 0.21%, 0.06% and 0.06% of the average daily net assets for
Government Assets, Liquid Assets and Municipal Assets, respectively.
5 Absent the fee waivers described above, "Total Operating Expenses" as a
percentage of average daily net assets would be 1.27% for Government Assets,
1.27% for Liquid Assets and 1.06% for Municipal Assets.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Government Assets $10 $32 $56 $125
Liquid Assets $12 $37 $64 $142
Municipal Assets $10 $31 $53 $118
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. Please refer to "MANAGEMENT AND FEES" for a more complete discussion
of the Shareholder transaction expenses and annual operating expenses for the
Funds.
FINANCIAL HIGHLIGHTS
The tables below set forth for each Fund certain financial data, other operating
information and investment results for each of the predecessor Funds, which were
acquired by the Company on February 13, 1998, expressed in one share outstanding
throughout the period. The Financial Highlights for Government Assets are
derived from the financial statements audited (unless otherwise indicated) by
Ernst & Young LLP, independent auditors for the predecessor Fund. The Financial
Highlights contained in the tables below for Liquid Assets and Municipal Assets
are derived from the financial statements audited (unless otherwise indicated)
by KPMG Peat Marwick LLP, independent auditors for these predecessor Funds. The
Financial Highlights should be read in conjunction with the financial
statements, related notes, and other financial information which are
incorporated herein by reference in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT ASSETS FUND*
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 21,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPT. 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(A)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Net Investment Income 0.023 0.045 0.051 0.042 0.027 0.007
------ ----- ------ ----- ----- -----
Dividends Distributed (0.023) (0.045) (0.051) (0.042) (0.027) (0.007)
------ ------- ------ ------ ------- ------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
TOTAL RETURN 2.37%(b) 4.62% 5.24% 4.32% 2.73% 0.75%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at End of Period
(000 Omitted) $142,375 $158,698 $153,836 $137,888 $105,345 $ 87,928
Ratio of Expenses to Average
Net Assets 0.73%(c) 0.76% 0.54% 0.50% 0.56% 0.58%(c)
Ratio of Net Investment Income
to Average Net Assets 4.73%(c) 4.53% 5.08% 4.26% 2.70% 2.68%(c)
Ratio of Expenses to Average
Net Assets1 0.98%(c) 1.01% 0.72% 0.98% 1.02% 1.14%(c)
Ratio of Net Income to Average
Net Assets1 4.48%(c) 4.28% 4.90% 3.78% 2.23% 2.12%(c)
</TABLE>
* Performance data relates to AMCORE Vintage U.S. Government Obligations Fund,
a corresponding predecessor Fund, which was acquired as "T" Shares on
February 13, 1998.
1 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from Commencement of Operations.
(b) Not Annualized
(c) Annualized
<PAGE>
<TABLE>
<CAPTION>
LIQUID ASSETS FUND*
SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED JUNE 30,
DEC. 31, ---------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Net Investment Income 0.046 0.045 0.047 0.047 0.027 0.027 0.044 0.063 0.074 0.076 0.057
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Dividends Distributed (0.046) (0.045) (0.047) (0.047) (0.027) (0.027) (0.044) (0.063) (0.074) (0.076) (0.057)
------ ------ ------ ------ ------- ------- ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======== ======== ======== ======== ======== ======== ======== ======= =======
TOTAL RETURN 3.23%(a) 4.46% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period
(000 Omitted) $72,884 $60,663 $179,633 $167,085 $141,018 $123,949 $117,238 $111,405 $104,014 $93,335 $73,525
Ratio of Expenses to
Average Net Assets 1.21%(b) 1.20% 1.20% 1.20% 1.18% 1.16% 1.16% 1.15% 1.16% 1.17% 1.15%
Ratio of Net Income to
Average Net Assets 4.58%(b) 4.46% 4.68% 4.66% 2.66% 2.72% 4.37% 6.31% 7.40% 7.62% 5.74%
</TABLE>
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
(a) Not Annualized
(b) Annualized
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL ASSETS FUND*
SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED JUNE 30,
DEC. 31, -----------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income 0.029 0.029 0.026 0.025 0.015 0.017 0.030 0.044 0.050 0.051 0.039
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Dividends Distributed (0.029) (0.029) (0.026) (0.025) (0.015) (0.017) (0.030) (0.044) (0.050) (0.051) (0.039)
------- ------ ------ ------- ------ ------ ------ ------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN 1.49%(a) 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%
RATIOS/SUPPLEMENTARY DATA:
Net Assets End of Period
(000 Omitted) $ 5,956 $ 4,664 $10,146 $16,130 $21,355 $23,764 $29,670 $26,683 $15,077 $12,619 $14,528
Ratio of Expenses to
Average Net Assets 1 0.93%(b) 0.93% 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52%
Ratio of Net Income to
Average Net Assets 2.94%(b) 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%
</TABLE>
* Performance data relates to Municipal Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
1 During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 1.15%.
(a) Not Annualized
(b) Annualized
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of the Government Assets Fund is to seek current income
consistent with maintaining liquidity and stability of principal. The Fund seeks
to maintain a stable net asset value of $1.00 per Share.
The Government Assets Fund invests exclusively in U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government Obligations") maturing in 397 days or less
at date of purchase, and in repurchase agreements with respect to U.S.
Government Obligations. The short-term U.S. Government Obligations in the Fund's
portfolio will differ in their interest rates, maturities and times of issuance.
The dollar-weighted average maturity of the obligations held by the Government
Assets Fund will not exceed 90 days.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding Shares. Without shareholder approval,
the Fund may not: (1) Borrow money or issue senior securities, except that the
Fund may borrow from banks or enter into reverse repurchase agreements for
temporary purposes in amounts up to 10% (25% for the Bond Fund) of the value of
its total assets at the time of such borrowing; or mortgage, pledge, or
hypothecate any assets, except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of its borrowing. The Fund will not
purchase securities while borrowings (including reverse repurchase agreements)
in excess of 5% of its total assets are outstanding; (2) Make loans, except that
the Fund may purchase or hold debt securities and lend portfolio securities in
accordance with its investment objective and policies, and may enter into
repurchase agreements.
In addition to the above investment restrictions, the Fund is subject to certain
other investment restrictions set forth under "INVESTMENT OBJECTIVES, POLICIES,
AND RESTRICTIONS--Investment Restrictions" in the Fund's Statement of Additional
Information.
LIQUID ASSETS
The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following money market instruments maturing in 397 days or less from time of
investment, (with certain exceptions):
(1) Obligations issued or guaranteed by the U.S. government or any agency or
instrumentality thereof. Such securities will include those supported by
the full faith and credit of the United States Treasury or the right of the
agency or instrumentality to borrow from the Treasury, as well as those
supported only by the credit of the issuing agency or instrumentality.
(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
(3) Redeemable interest-bearing trust certificates ("Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days
but will be redeemable by the Fund at their face amount upon not more than
five days' written notice to the issuing Student Loan Trust. Further
details concerning the Student Loan Trusts and the Fund's investments in
Student Loan Certificates are found in the Statement of Additional
Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but
will be redeemable by the Fund at their face amount upon not more than five
days' written notice to the issuing FmHA Trust. Further details concerning
the FmHA Trusts and the Fund's investment in FmHA Certificates and FmHA
guaranteed loans are found in the Statement of Additional Information.
(5) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSRO") if rated by two or
more NRSROs; (b) is rated (or the issuer of which has been rated) highest
quality if rated by only one NRSRO; or (c) is determined to be of
equivalent quality by the Company's Board of Directors if unrated.
(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at
the date of investment, have capital, surplus, and undivided profits (as of
the date of their most recently published financial statements) in excess
of $10,000,000; and obligations of other banks or savings and loans if such
obligations are insured by the Federal Deposit Insurance Corporation,
provided that not more than 10 percent of the total assets of the Fund will
be invested in such insured obligations.
(7) Short-term (maturing in one year or less) corporate obligations which at
the time of investment (a) are rated in the highest rating category by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the highest rating
category if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Company's Board of Directors if unrated.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will
consist of securities with maturities of 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will have variable interest
rates adjustable at least semiannually. In determining whether particular
variable rate investments backed by Liquidity and Servicing Agreements or
Guaranteed Funding Agreements may be made, the period remaining until maturity
will be deemed to be the longer of the demand notice period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest adjustment. The dollar-weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. While the underlying security in a repurchase agreement may have a
maturity of more than 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA Certificates, except when such investments are either not available
in sufficient quantity or do not carry yields competitive with alternative
investments.
It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than ten percent of the value of the total net
assets of the Fund.
As a fundamental policy, the Fund will not concentrate its investments in any
one industry and pursuant to Section 18(f) of the 1940 Act, the Fund may not
issue senior securities. As a general policy, it is the Fund's intention to hold
investments until they mature. However, in an effort to increase portfolio
yields the Fund may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Fund shares could necessitate the sale of
portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.
While investments by the Fund will be confined to high quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible Participating Banks or borrowers will default on the provisions of
their agreements with the Fund or that banks will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, which could cause
the net asset value per share to decrease.
In light of these various contingencies, there can be no assurances the Fund
will achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described above;
(2) invest more than 80 percent of its total assets in Student Loan Certificates
and/or FmHA Certificates; (3) purchase or sell real estate (other than
short-term loans secured by real estate or interests therein or loans to
companies which invest in or engage in other activities related to real estate),
commodities or commodity contracts, interests in oil, gas or other mineral
exploration or development programs; (4) make short sales of securities or
maintain a short position or write, purchase, or sell puts (excluding repayment
and guarantee arrangements on loan participations purchased from Participating
Banks), calls, straddles, spreads or combinations thereof; (5) make loans to
other persons, provided the Fund may invest up to 80 percent of its total assets
in Student Loan Certificates or FmHA Certificates, as described in (2) above,
and may make the investments and enter into repurchase agreements as described
above; (6) invest in securities with legal or contractual restrictions on resale
(except for repurchase agreements, Student Loan Certificates, and FmHA
Certificates) or for which no ready market exists; (7) enter into repurchase
agreements if, as a result thereof, more than five percent of the Fund's total
assets (taken at market value at the time of such investment) would be subject
to repurchase agreements maturing in more than seven days.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (a) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (b)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
MUNICIPAL ASSETS
The investment objective of Municipal Assets is maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in 397 days or less from time of investment (with certain exceptions),
as defined herein:
(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank letters
of credit or guarantees (collectively referred to herein as "Liquidity
Agreements"). The Liquidity Agreements will permit the holder of the
securities to demand payment of the unpaid principal balance plus accrued
interest upon a specified number of days' notice either from the issuer or
by drawing on an irrevocable bank letter of credit or guarantee. In
addition, all obligations with maturities longer than 397 days from date of
purchase will, by their terms, bear rates of interest that are adjusted
upward or downward no less frequently than semiannually by means of a
formula intended to reflect market changes in interest rates. Certain types
of industrial development bonds issued by public bodies to finance the
construction of industrial and commercial facilities and equipment are also
purchased. The Statement of Additional Information contains further details
concerning the Fund's policies and procedures with respect to investments
in such tax-exempt obligations and participation interests.
(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit of
the United States. Such obligations will be purchased only if backed by the
full faith and credit of the United States or rated Aaa, Aa, MIG-1, MIG-2
or Prime-1 by Moody's Investors Service, Inc., or AAA, AA, or A-1 by
Standard & Poor's Corporation. Nonrated securities may also be purchased if
determined by the Company's Board of Directors to be of comparable quality
to the rated securities in which the Fund may invest.
(3) Taxable obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government may be acquired from time to time on a temporary
basis for defensive purposes.
(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.
Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Fund's outstanding voting securities.
It is the policy of the Fund that any illiquid securities may not constitute, at
the time of purchase or at anytime, more than ten percent of the value of the
total net assets of the Fund. The Fund will not concentrate its investments in
any one industry and pursuant to Section 18(f) of the 1940 Act may not issue
senior securities.
As a general policy, it is the Fund's intention to hold investments until they
mature or until immediately prior to the expiration of an applicable Liquidity
Agreement. However, in an effort to increase portfolio yields, the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable
because of unfavorable market conditions.
New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Fund may occasionally enter into
such commitments, subject to certain limitations and procedures discussed in the
Statement of Additional Information.
While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances, described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible an issuer or bank will default on the provisions of their Liquidity
Agreements, which could cause the net asset value per share to decrease. In
light of these various contingencies, there can be no assurances the Fund will
achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described under
"Investment Policy"; (2) invest more than 80 percent of its total assets in
tax-exempt fixed and variable rate debt obligations (or participation interests
therein) issued by state and local governmental units within the United States
which are backed by Liquidity Agreements; (3) invest more than five percent of
its total assets (determined as of the date of purchase) in tax-exempt
obligations or participation interests therein subject to Liquidity Agreements
issued by any one bank; (4) purchase or sell real estate, commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; (5) make short sales of securities or maintain a short
position or write, purchase, or sell puts (excluding Liquidity Agreements
covering certain tax-exempt obligations purchased by the Fund), calls,
straddles, spreads or combinations thereof; (6) make loans to other persons,
provided the Fund may make investments and enter into repurchase agreements as
described above; (7) invest in securities with legal or contractual restrictions
on resale (except for tax-exempt debt obligations subject to Liquidity
Agreements) or for which no ready market exists; (8) enter into a Liquidity
Agreement with any bank unless such bank is a United States bank which has a
record, together with predecessors, of at least five years of continuous
operations; (9) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven days; and (10) enter into Liquidity Agreements with any bank if five
percent or more of the securities of such bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such bank.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (1) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (2)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
PERFORMANCE
Performance of each Fund may be quoted in advertising in terms of current yield
and effective yield. CURRENT YIELD refers to the income generated by an
investment in either Fund over a seven-day period. This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The Fund may also present a 30-day
yield which is calculated similarly but instead refers to a 30-day period rather
than a seven-day period. EFFECTIVE YIELD is calculated similarly but, when
annualized, that income earned from the investment is assumed to be reinvested
weekly. Effective yield will be slightly higher than current yield because of
the compounding effect of this assumed reinvestment.
Performance of the Funds may also be compared to other mutual funds with similar
investment objectives, relevant indices or rankings prepared by independent
services or other financial publications, or yields on deposits at financial
institutions. Unlike the Funds, deposit accounts at financial institutions are
generally insured by the Federal Deposit Insurance Corporation and do not
fluctuate to the extent of the Funds.
Additionally, Municipal Assets may quote a taxable-equivalent yield based on a
stated income tax rate. Please see each Fund's Statement of Additional
Information for further discussion of the manner in which yields are calculated
and the comparative performance data which may be used.
Of course, the Funds' yields are not fixed nor is principal guaranteed. Yields
are functions of the type and quality of instruments held in the portfolio,
operating expenses, and market conditions. Consequently, current yields will
fluctuate and are not necessarily representative of the future results.
DISTRIBUTIONS AND TAXES
Dividends from the net income of each Fund are declared daily to Shareholders at
the close of business on each Business Day (as defined in this Prospectus) and
paid monthly. Dividends are automatically reinvested in "S" Shares unless cash
payment has been selected on the Account Application. If a shareholder has
elected to receive dividends and/or distributions in cash and the checks are
returned and marked as "undeliverable" or remain uncashed for six months, your
cash election will be changed automatically and future dividends will be
reinvested in "S" Shares of the Fund. In addition, any undeliverable checks or
checks that remain uncashed for six months will be canceled and will be
reinvested in "S" Shares of the Fund at the per share net asset value determined
as of the date of cancellation. If a shareholder redeems the entire amount in
his account during the month, dividends credited to the account from the
beginning of the month through the date of redemption are paid with the
redemption proceeds.
Dividends on each Class of Shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder servicing fees (see "Organization and Shares of
the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
Each Fund intends to qualify as a regulated investment company by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income, tax-exempt dividend income and/or capital
gains, as the case may be, from distributions whether paid in cash or received
in the form of additional shares.
Dividends derived from interest on federally tax-exempt debt obligations owned
by Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets expenses will be allocated between tax-exempt and taxable
income in the same proportion as the Fund's tax-exempt income bears to the total
of such exempt income and its gross income (excluding from gross income the
excess of capital gains over capital losses).
Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year. This discussion is only a summary and relates solely to
Federal tax matters. Further discussion of the Federal Income Tax consequences
of an investment in the Fund is provided in the Statement of Additional
Information. Dividends may also be subject to local taxation. Shareholders are
encouraged to consult with their personal tax advisors.
ORGANIZATION AND SHARES OF THE FUNDS
The Company is a Maryland corporation organized on November 16, 1994. The Funds
were created on October 30, 1997, to acquire the assets and continue the
business of the corresponding substantially identical investment portfolios of
the AMCORE Vintage U.S. Government Obligations Fund, a series portfolio of The
Coventry Group, a Massachusetts Business Trust, and the Liquid Assets Funds,
Inc., and the Municipal Assets Funds, Inc., two separately registered open-end,
diversified management investment companies organized as Iowa corporations.
References herein to the "immediate predecessor" of the Funds refer to the
respective companies which correspond to such Fund. Each Share of a Fund
represents an equal proportionate interest in that Fund with other Shares of the
same Fund, and is entitled to such dividends and distributions out of the income
earned on the assets belonging to that Fund as are declared at the discretion of
the Directors.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common stock relating to new
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example
in the sales load, Rule 12b-1 fees or service plan fees applicable to different
classes of Shares offered by a particular Fund. Such an arrangement could enable
the Company to tailor its marketing efforts to a broader segment of the
investing public with a goal of attracting additional investments in the Funds.
"S" Shares of the Funds are described in this Prospectus. "S2" Shares (Liquid
Assets only), "T" Shares, and "I" Shares (Liquid Assets and Municipal Assets
only) are offered in separate Prospectuses which may be obtained by calling the
Fund at 1-800-798-1819 or writing to the address on the cover of this
Prospectus. Please read the Prospectus carefully before investing or sending
money. All shares are offered to individual and institutional investors acting
on their own behalf or on behalf of their customers and bear their pro rata
portion of all operating expenses paid by the Funds, except that "S" Shares,
"S2" Shares and "T" Shares bear separate distribution and/or shareholder
servicing fees. "I" Shares bear no distribution or shareholder servicing fees.
Each Class of Shares of the Government Assets, Liquid Assets and Municipal
Assets Funds offers different privileges. "S" and "S2" Shares of Liquid Assets,
and "S" Shares of Municipal Assets and Government Assets are normally offered
through financial institutions providing automatic "Sweep" investment programs
to their customers. "T" Shares offer a check writing privilege and are also
offered through trust organizations or others providing shareholder services
such as establishing and maintaining custodial accounts and records for their
customers who invest in "T" Shares, assisting customers in processing purchase,
exchange and redemption requests and responding to customers' inquiries
concerning their investments, though they may also be used in "sweep" programs.
"I" Shares of Liquid Assets and Municipal Assets pay no shareholder or servicing
fees and so are normally offered directly by the Distributor or through trust
organizations providing fiduciary account services for an additional fee. Each
Class of Shares is exchangeable only for shares of the same Class. Participating
Organizations selling or servicing "S", "S2" and "T" Shares may receive
different compensation with respect to one Class over another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of "S" Shares and
"S2" Shares will vote on matters relating to the Distribution Plan for "S"
Shares and "S2" Shares. Only holders of "S" Shares, "S2" Shares and "T" Shares
will vote on matters pertaining to the Administrative Services Plan.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this 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.
SHAREHOLDER REPORTS AND MEETINGS
Each shareholder will receive monthly Fund information, an unaudited semiannual
report, and an annual report containing audited financial statements. If you
have questions about your account, call 1-800-798-1819. You may also write the
Fund at the address on the cover of this Prospectus. You may order statements
for the current and preceding year at no charge. However, there will be a $10.00
fee per statement for statements ordered for other years.
The Fund may operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the 1940 Act. The Funds
have adopted the appropriate provisions in their Bylaws and may, in their
discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. The Funds have also adopted
provisions in their Bylaws for the removal of Directors by the shareholders.
Shareholders may receive assistance in communicating with other shareholders as
provided in Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders, at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Funds may remove a Director by the affirmative vote of a
majority of the Funds' 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 Funds' outstanding voting securities.
All consideration received by the Funds for shares of one of the Funds and all
assets in which such consideration is invested, belong to that Fund (subject
only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income and expenses attributable to one Fund
are treated separately from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Funds, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by such matter. Rule 18f-2 further provides that a Fund shall be deemed
to be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical or that the matter does not affect the interest of such
Fund. However, the Rule exempts the selection of independent auditors and the
election of Directors from the separate voting requirements of the Rule.
MANAGEMENT AND FEES
Overall responsibility for management of the Company rests with the Board of
Directors, who are elected by the Shareholders of the Company's Funds. The
Company will be managed by the Directors in accordance with laws of Maryland
governing corporations. The Directors, in turn, elect the officers of the
Company to supervise the day-to-day operations. The Directors receive fees and
are reimbursed for their expenses in connection with each meeting of the Board
of Directors they attend. The officers of the Company receive no compensation
directly from the Company for performing the duties of their offices.
Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG, a wholly owned subsidiary of AMCORE Financial, Inc., is a
federally registered Investment Advisor organized in 1982 and located at 2203
Grand Avenue, Des Moines, Iowa 50312-5338. IMG has been providing continuous
investment management to pension and profit-sharing plans, insurance companies,
public agencies, banks, endowments and charitable institutions, other mutual
funds, individuals and others for over 15 years. As of February 28, 1998, IMG
had approximately $3.6 billion in equity, fixed income and money market assets
under management.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Fund's portfolios:
KATHRYN D. BEYER, CFA, MANAGING DIRECTOR. Ms. Beyer is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1993, her experience includes serving as a securities
analyst and director of mortgage-backed securities for Central Life
Assurance Company from 1988 to 1993. Ms. Beyer received her Masters of
Business Administration degree from Drake University, Des Moines, Iowa, and
her Bachelor of Science Degree in Agricultural Engineering from Iowa State
University, Ames, Iowa.
JEFFREY D. LORENZEN, CFA, MANAGING DIRECTOR. Mr. Lorenzen is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1992, his experience includes serving as a securities
analyst and corporate fixed income analyst for The Statesman Group from
1989 to 1992. Mr. Lorenzen received his Masters of Business Administration
degree from Drake University, Des Moines, Iowa, and his Bachelor of
Business Administration from the University of Iowa, Iowa City, Iowa.
ELIZABETH S. PIERSON, CFA, VICE PRESIDENT AND SENIOR FIXED INCOME MANAGER.
Ms. Pierson is a fixed income strategist and is a member of IMG's
Investment Policy Committee. She has been with AMCORE Capital Management,
Inc. (or a predecessor) since 1984 when she began her investment career.
Ms. Pierson became an employee of IMG effective with the acquisition of IMG
by AMCORE Financial, Inc. in February 1998. She has a B.S. degree from the
University of Illinois, Champaign-Urbana. Ms. Pierson chairs the Fixed
Income Research Committee. She has been responsible for investment
management and credit responsibilities in numerous individually managed
advisory portfolios.
Under an Investment Advisory Agreement between the Funds and IMG, a fee is paid
to IMG for investment advisory services. Each Fund is responsible for paying
operating expenses not assumed by IMG. The investment management fee for each
Fund is calculated daily and paid monthly. The maximum management fee for
Government Assets is 0.40% of average daily net assets; the maximum management
fee for Liquid Assets and Municipal Assets is 0.35% of average daily net assets.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
IMG may not seek reimbursement of such waived fees at a later date. The waiver
of such fee will cause the yield of a Fund to be higher than it would otherwise
be in the absence of such a waiver.
IMG also provides management and administration, fund accounting, transfer
agency, and shareholder recordkeeping services to the Funds. Under a Management
and Administration Agreement, IMG will supervise all aspects of the operations
of the Funds, except those performed under the Investment Advisory Agreement, by
the Custodian, under the Transfer Agency Agreement and under the Fund Accounting
Agreement. For these services IMG receives a fee calculated daily and paid
monthly at the annual rate of 0.21% for Government Assets and 0.06% for Liquid
Assets and Municipal Assets of the average daily net assets of each Fund. Under
a Fund Accounting Agreement, IMG provides bookkeeping and accounting services to
the Funds, including calculating daily net asset value and yield quotations. For
these services, the Funds each pay IMG a fee calculated daily and paid monthly
at an annual rate of 0.03% of the average daily net assets of each Fund. Under a
Transfer Agency Agreement, IMG provides customary and usual services of a
transfer agent to the Funds. For these services, IMG is paid various fees
depending on the class of shares of the Funds. The fees are charged to each
class of shares separately and are computed according to the number of accounts.
The fees received and the services provided under these contracts are in
addition to those received and paid to IMG under the Advisory Agreement.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Funds. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, each Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Funds;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Funds; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Funds except that the Funds' Distribution Agreement requires that the
Distributor pay for prospectuses that are to be used for sales purposes with
persons other than current shareholders.
From time to time, IMG may voluntarily waive all or a portion of the investment
management fee and/or other fees and/or absorb certain expenses of a Fund
without further notification of the commencement or termination of such waiver
or absorption. Any such waiver will have the effect of lowering the overall
expense ratio for that Fund and increasing the Fund's overall yield to investors
at the time any such amounts are waived and/or absorbed.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the Funds will be borne by the Funds. Expenses attributable to a particular Fund
are charged against the assets of that Fund; other expenses of the Funds are
allocated among the Funds on a reasonable basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.
BISYS Fund Services Limited Partnership, serves as distributor and principal
underwriter (the "Distributor") for the Company pursuant to a Distribution
Agreement and a Distribution and Shareholder Services Plan (the "Plan"). The
Distributor acts as agent for the Funds in the distribution of their Shares and,
in such capacity, solicits orders for the sale of Shares, advertises, and pays
the costs of advertising, office space and its personnel involved in such
activities.
As authorized by the Plan, the Distributor will enter into Shareholder
Agreements with Participating Organizations, including AMCORE Financial, Inc.,
or its affiliates, pursuant to which the Participating Organization agrees to
provide certain administrative and shareholder support services in connection
with Shares of a Fund purchased and held by the Participating Organization for
the accounts of its Customers and Shares of a Fund purchased and held by
Customers of the Participating Organization, including, but not limited to,
processing automatic investments of Participating Organization's Customer
account cash balances in Shares of a Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service, establishing
and maintaining Customer accounts and records, processing purchase and
redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone
facilities and personnel as is necessary and appropriate to accomplish such
matters. In consideration of such services, the Participating Organization may
receive a monthly fee, computed at an annual rate on the average aggregate net
asset value of the Shares of the Fund held during the period in Customer
accounts for which the Participating Organization has provided services under
this Agreement. The maximum fees payable under the Plan are 0.25% for Government
Assets and Municipal Assets, and 0.50% for Liquid Assets. The Distributor will
be compensated by a Fund up to the amount of any payments it makes to
Participating Organizations under the Rule 12b-1 Agreement. Presently, fees
payable under the Plan have been capped at 0.00% for Government Assets, 0.40%
for Liquid Assets and 0.15% for Municipal Assets. However, IMG as Advisor and
Administrator to the Company may in its sole discretion make payments to the
Distributor to supplement shareholder fees paid by the Company up to the maximum
fee approved by the Plan without further notice to shareholders and at no cost
to the Company.
The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Participating Organization"), including AMCORE
Financial, Inc. and its correspondent and affiliated banks, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders (collectively, "customers") who
are the beneficial or record owner of Shares of that Fund. In consideration for
such services, a Participating Organization receives a fee from a Fund, computed
daily and paid monthly, at an annual rate of up to 0.25% of the average daily
net asset value of Shares of that Fund owned beneficially or of record by such
Participating Organization's customers for whom the Participating Organization
provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Participating Organizations receiving such compensation
to perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Funds,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into Servicing
Agreements with Participating Organizations pursuant to which the Participating
Organization has agreed to provide certain administrative support services in
connection with Shares of the Funds owned of record or beneficially by its
customers. Such administrative support services may include, but are not limited
to, (i) processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from a Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay the Participating Organization a monthly fee, computed
at an annual rate 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays the full 0.25% in servicing fees on the Funds offered by this
Prospectus.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a Participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences. It is intended that none of the services provided by
such Participating Organizations other than through registered brokers will
involve the solicitation or sale of shares of the Funds.
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006 serves
as custodian for Government Assets. AMCORE Investment Group, N.A., Rockford,
Illinois, serves as custodian for Liquid Assets and Municipal Assets Funds.
Pursuant to the Custodian Agreements with Bankers Trust Company and AMCORE
Investment Group, N.A., each custodian receives compensation from each Fund for
such services in an amount equal to a designated annual fee (and as to Bankers
Trust Company, additional fees charged for certain portfolio transactions and
out-of-pocket expenses).
OPENING AN ACCOUNT
The Funds require a completed and signed application (which is attached) at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. If you have questions call
the Funds at 1-800-798-1819 from 8:00 a.m. to 4:30 p.m. Central Time.
SHARE PRICE
The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined once each Business Day, at 11:00
a.m. Central Time. The Funds are open for business each day the Federal Reserve
is open.
Your purchase will be processed at the next NAV calculated after your investment
has been converted to federal funds. If you invest by check, the Funds must
generally allow one or more days for conversion into federal funds before
accepting your purchase.
Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per Share. These procedures are described in more detail in the
Funds' Statement of Additional Information.
Under the amortized cost method of valuation, a security is initially valued at
cost on the date of purchase and, thereafter, any discount or premium is
amortized on a straight-line basis to maturity, regardless of the effect of
fluctuating interest rates on the market value of the security. U.S. government
obligations, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, investments in taxable
and tax-exempt debt obligations rated by a recognized bond rating agency and
regularly traded in the secondary market, and nonrated fixed and variable rate
tax-exempt obligations and participation interests therein, not regularly traded
in the secondary market but subject to Liquidity Agreements will be valued at
amortized cost. Other assets are valued at a fair value determined in good faith
by the Board of Directors of each Fund.
PURCHASING SHARES
Shares of each Fund may be purchased directly from BISYS Fund Services Limited
Partnership as the distributor. Shares may also be purchased by customers of
qualified banks, savings and loan associations, broker/dealers, investment
advisory firms, and other organizations ("Participating Organizations") that
have entered into servicing agreements with the Distributor. The Participating
Organization is responsible for transmitting purchase orders directly to the
Fund's Distributor. A Participating Organization may elect to hold record
ownership of shares for its customers and to show beneficial ownership of shares
on the account statements it provides to them. In the alternative, a
Participating Organization may elect to establish its customers' accounts of
record with IMG as transfer agent for the Funds. Generally, shares purchased
through Participating Organizations will be held by the Participating
Organization as shareholder of record.
Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $1,000. Subsequent investments in each Fund must be made in amounts of
not less than $50, except where purchases are made through financial
institutions providing an automatic "sweep" investment program, in which case
there is no minimum. Participating organizations may aggregate their customers'
purchases to satisfy the required minimums.
Purchases may be effected on Business Days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for "S" Shares received in good order by the Funds by 11:00
a.m. Central Time on a Business Day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for "S" Shares received after 11:00 a.m. Central Time
and prior to 3:00 p.m. Central Time on a business day for which such funds have
been received by 3:00 p.m. Central Time will be effected as of 11:00 a.m.
Central Time the following day, and will begin to accrue dividends at that time.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.
While the Funds themselves do not presently levy sales, redemption or account
service charges, Participating Organizations may elect to do so and the Funds
may elect to do so in the future. Investors should inquire regarding the nature
and costs of services provided by Participating Organizations and determine if
such services are desired, because the costs thereof will reduce the Funds'
yields to the investor below that obtainable by investing in the Funds directly.
Customers wishing to purchase shares through their Participating Organization
should contact such entity directly for appropriate instructions. (For a list of
the Participating Organizations in your area, CALL THE FUNDS AT 1-800-798-1819
OR 515-244-5426.) Direct investors may purchase shares in accordance with the
procedures described below, "Purchase Procedures".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $1,000 (minimum) $50 (minimum)
Please make your check pay- Please make your check payable
able to the Fund selected and to the Fund selected, with your
mail to the address indicated account number on the check on
the application. and mail to the address printed
on your account statement.
BY WIRE Please call for an account See instructions below.
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.
For Government Assets, Federal Funds should be wired to: Bankers Trust, New
York, New York, ABA #021001033, Account #00355557. For Liquid Assets and
Municipal Assets, Federal Funds should be wired to: Federal Reserve Bank of
Chicago for AMCORE Investment Group, N.A., Rockford, Illinois, together with
the name of the Fund, your account number and names.
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
By Electronic Not available for initial Shareholders who have an
Funds Transfer purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
SHAREHOLDER SERVICES
Some shareholder services may not be available if shares are purchased through
Participating Organizations. Call the Funds at 1-800-798-1819 for more
information.
EXCHANGE PRIVILEGE. You may exchange "S" Shares of either Fund for "S" Shares in
the other Fund described in this Prospectus. An exchange involves a redemption
of the shares of the Fund being liquidated and a purchase of the shares of the
Fund in which the redemption proceeds are to be invested. The exchange privilege
is offered as a convenience to shareholders and is not intended to be a means of
speculating on short-term movements in securities prices by transactions
involving frequent purchases and sales of shares. Each Fund reserves the right
at any time and without prior notice, to suspend, limit, modify or terminate
exchange privileges or their use by individual shareholders in order to prevent
transactions considered to be disadvantageous to existing shareholders.
TELEPHONE TRANSFERS. This service allows you to authorize transfers of money to
purchase or sell shares. Using Telephone Transfer you can move money between
your bank account and your account in the Funds with one phone call. Moneys may
be transferred either by wire or electronic funds transfer with an institution
which is a member of the Automated Clearing House ("ACH").
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. For a wire redemption, the then current wire redemption charge
may be deducted from the proceeds of a wire redemption. This charge, if applied,
will vary depending on the receiving institution for each wire redemption.
Allow two (2) days after the call for electronic funds transfer via ACH to move
moneys between your bank account and your account with either Fund.
For moneys recently invested, allow normal clearing time before redemption
proceeds are sent to your bank. In order to change the financial institution
account designated to receive redemption proceeds, it will be necessary to send
a written request to the Fund with a signature guarantee from a national or
state bank, a trust company or a federal savings and loan association, or a
member firm of the New York, American, Boston, Midwest or Pacific Stock
Exchange.
You can also arrange SYSTEMATIC PERIODIC INVESTMENTS (minimum $50) into your
Fund account. Simply select the regular investment schedule you would like when
completing your account application. Your bank account will automatically be
debited to purchase shares of the Fund you select. You will receive confirmation
of each transaction.
Your bank must be a member of ACH and you must have a checking or NOW/Money
Market Deposit account to use electronic funds transfer or systematic investing.
Please allow 20 days after receipt of your application to activate the Telephone
Transfer capability.
STATEMENTS AND REPORTS. You will receive a statement of your account listing
every transaction that affects your share balance no less than once per month.
At least twice a year you will receive the financial statements of the Fund in
which you have invested with a summary of that Fund's portfolio composition and
performance. Each Fund's Annual Report is reported on by the Funds' independent
auditors, KPMG Peat Marwick LLP.
REDEEMING SHARES
Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
in good order by the Distributor before 11:00 a.m. Central Time on a Business
Day will be redeemed as of 11:00 a.m. Central Time and will earn dividends
through the previous day; proceeds normally will be sent electronically the same
day (or mailed by check the next Business Day) to the organization that placed
the redemption order in good form. Redemption orders received after 11:00 a.m.
Central Time or on a non-Business Day will be redeemed as of 11:00 a.m. the next
Business Day and earn dividends through the date the redemption request was
received; proceeds will be sent electronically on the next Business Day (or
mailed by check on the second Business Day thereafter). While the Funds use
their best efforts to maintain their net asset value per share at $1.00, the
proceeds paid upon redemption may be more or less than the amount originally
invested.
If you purchase shares through a Participating Organization, you may redeem
shares in accordance with that Organization's rules regarding redemption
requests. Direct shareholders may redeem shares in accordance with the
procedures described under "How to Redeem Shares".
The Funds intend to pay redemption proceeds within two Business Days and in no
event will payment be made later than seven days after receipt of a redemption
request in good order. Payments to investors who request to redeem shares within
a few days after a purchase paid for by check may be delayed until the Funds can
verify the check has been collected.
The Funds reserve the right to suspend redemptions or to postpone the payment
therefore when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has permitted such suspension; or (c) an emergency as
determined by the Securities and Exchange Commission exists, making sale of
portfolio securities or valuations of the Funds' net assets not reasonably
practicable.
If an investor's account drops below $250 due to redemptions, the Funds reserve
the right to redeem any remaining shares if after 30 days' notice additional
investments to bring the account value to $250 are not made.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter specifying
TO: 2203 GRAND AVENUE the name of the Fund, the number of shares to be
DES MOINES, IA 50312-5338 sold, your name, your account number, and the
additional requirements listed below that apply to
your particular account.
TYPE OF REGISTRATION REQUIREMENTS
-------------------------- ---------------------------------------------------
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as it is
Custodial (Uniform Gifts registered, accompanied by signature guarantee(s).
or Transfers To Minors
Act), General Partners
Corporation, Association Letter of instruction and a corporate resolution
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trust A letter of instruction signed by the Trustee(s),
(as Trustee), with a signature guarantee. (If
the Trustee's name is not registered on your
account, also provide a copy of the trust docu-
ment, certified within the last 60 days.)
If you do not fall into any of these registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call for further
instructions.
A signature guarantee is designed to protect you and the Fund against
fraudulent transactions by unauthorized persons. A signature guarantee is
required for all persons registered on an account. A signature guarantee may
be obtained from an eligible guarantor institution, as defined by the
Securities and Exchange Commission. These institutions include banks, savings
and loan associations, credit unions, brokerage firms, and others. The words,
"SIGNATURE GUARANTEED" must be stamped or typed near each person's signature
and appear with the printed name, title, and signature of an officer and the
name of the guarantor institution. PLEASE NOTE THAT A NOTARY PUBLIC STAMP OR
SEAL IS NOT A SIGNATURE GUARANTEE.
FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
BY EXCHANGE-- You must meet the minimum investment requirement
of the other fund. You can only exchange between
accounts with identical names, addresses, and
taxpayer identification numbers.
BY ELECTRONIC FUNDS You must have applied for the Telephone Transfer
TRANSFER (ACH) OR WIRE-- feature on your application. Allow two days via
ACH. Call before 10:00 a.m. for same day wire.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary.....................................................2
Expense Summary........................................................4
Financial Highlights...................................................5
Investment Objectives, Policies and Restrictions.......................9
Government Assets....................................................9
Liquid Assets........................................................9
Municipal Assets....................................................13
Performance...........................................................16
Distributions and Taxes...............................................16
Organization and Shares of the Funds..................................17
Shareholder Reports and Meetings......................................19
Management and Fees...................................................20
Opening an Account....................................................25
Share Price.........................................................25
Purchasing Shares...................................................26
Shareholder Services..................................................28
Redeeming Shares......................................................29
NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY BISYS FUND SERVICES LIMITED PARTNERSHIP. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY BISYS FUND SERVICES LIMITED
PARTNERSHIP IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
GOVERNMENT ASSETS FUND "S" SHARES
LIQUID ASSETS FUND "S2" SHARES
MUNICIPAL ASSETS FUND "S" SHARES
2203 Grand Avenue, Des Moines, Iowa 50312-5338
- --------------------------------------------------------------------------------
FOR CURRENT YIELD, PURCHASE AND REDEMPTION INFORMATION CALL ........800-798-1819
515-244-5426
- --------------------------------------------------------------------------------
PROSPECTUS MARCH 23, 1998
- --------------------------------------------------------------------------------
Government Assets Fund, Liquid Assets Fund and Municipal Assets Fund, each of
these a "Fund", (collectively, the "Funds") are money market mutual funds
designed to enable investors to meet short-term goals. Investors choose
whichever Fund best suits their needs and may, without charge, exchange Funds as
their investment outlook or goals change.
Government Assets Fund offers two classes of shares, Liquid Assets Fund offers
four classes of shares and Municipal Assets Fund offers three classes of shares.
This Prospectus describes the "S2" Shares of Liquid Assets Fund and "S" Shares
of Government Assets Fund and Municipal Assets Fund, (collectively, the
"Shares"). "S" Shares and "S2" are normally offered through financial
institutions providing automatic "sweep" investment programs to their own
customers. The Funds also offer "T" Shares. Liquid Assets and Municipal Assets
Funds offer "I" Shares, and Liquid Assets Fund offers "S" Shares all of which
accrue daily dividends in the same manner as "S" Shares and "S2" Shares except
that each class bears separate distribution and/or shareholder servicing fees
(see "Organization and Shares of the Funds").
GOVERNMENT ASSETS FUND ("Government Assets") seeks income consistent with
maintaining liquidity and stability of principal, by investing exclusively in
short-term obligations issued by the U.S. Government, its agencies or
instrumentalities. LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current
income consistent with safety of principal and maintenance of liquidity.
MUNICIPAL ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. Shares are offered and redeemed at $1.00 per share under rules which
allow the Funds to use the amortized cost method of valuing the Funds' assets.
AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00, BUT UNDER
EXTRAORDINARY CIRCUMSTANCES THE VALUE OF SHARES MAY VARY FROM $1.00 AND
CONSEQUENTLY, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference. The
Statement of Additional Information (as of the date of this Prospectus) which
contain more detailed information about each Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference. The
Statement of Additional Information is available free upon request from the
Funds at the address and telephone number indicated above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
TYPE OF COMPANY
Each Fund is a diversified series of an open-end, management investment company.
INVESTMENT OBJECTIVE
For Government Assets, current income consistent with liquidity and stability of
principal.
For Liquid Assets, maximum current income consistent with safety of principal
and maintenance of liquidity.
For Municipal Assets, maximum current income exempt from federal income tax,
consistent with safety of principal and maintenance of liquidity.
INVESTMENT POLICY
Government Assets invests exclusively in short-term U.S. Treasury bills, notes
and other short-term obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities and repurchase agreements with respect
thereto, having a dollar-weighted average maturity of 90 days or less. The Fund
seeks to maintain a net asset value of $1.00 per share.
Under normal market conditions, Liquid Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term debt obligations
including, primarily, redeemable Certificates backed by federally insured
student loans and Farmers Home Administration guaranteed loans, commercial
paper, bank obligations, short-term corporate obligations and obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations having a
dollar-weighted average maturity of 90 days or less. The Fund seeks to maintain
a net asset value of $1.00 per share.
Under normal market conditions, Municipal Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term municipal
securities which mature or have a demand feature exercisable in one year or less
from the date of acquisition having a dollar-weighted average maturity of 90
days or less. The Fund seeks to maintain a net asset value of $1.00 per share.
RISK FACTORS AND SPECIAL CONDITIONS
An investment in the Funds is subject to certain risks, as set forth in detail
under "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS." As with all mutual
funds, there can be no assurance that the Funds will achieve their investment
objectives.
OFFERING PRICE
The public offering price of each Fund is equal to its net asset value of $1.00
per Share.
SHARES OFFERED
"S2" Shares of common stock of Liquid Assets and "S" Shares of common stock of
Government Assets and Municipal Assets ("Shares"), each a separate investment
portfolio of the Vintage Mutual Funds, Inc., a Maryland Corporation, (the
"Company"). See "OPENING AN ACCOUNT", "SHAREHOLDER SERVICES", and "REDEEMING
SHARES" for detailed information about how to buy and sell shares.
MINIMUM PURCHASE
The minimum initial investment is $1,000 with $50 minimum subsequent investments
(subject to certain exceptions).
DIVIDENDS
Dividends are declared daily and paid monthly and will be automatically
reinvested unless the shareholder elects otherwise.
INVESTMENT ADVISOR
Investors Management Group, Ltd. ("IMG" or the "Advisor").
ADMINISTRATOR
Investors Management Group, Ltd. ("IMG" or the "Administrator").
DISTRIBUTOR
BISYS Fund Services Limited Partnership, Columbus, Ohio (the "Distributor")
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None None
Deferred Sales Load (as a percentage of offering
original purchase price or redemption None None None
proceeds as applicable)
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None None
Exchange Fee None None None
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.40% 0.35% 0.35%
12b-1 Distribution Fees After Limitation1 0.00% 0.15% 0.15%
Other Expenses After Limitation
Servicing Fees 2 0.25% 0.25% 0.25%
Administrative Fees3 0.21% 0.06% 0.06%
Other Expenses 0.16% 0.11% 0.15%
----- ----- -----
Total Other Expenses 0.62% 0.42% 0.46%
----- ----- -----
Total Fund Operating Expenses after Limitation4 1.02% 0.92% 0.96%
</TABLE>
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 table reflects the current fees for
the Funds. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of a Fund (a "Class"). See "MANAGEMENT AND FEES" for a more
complete discussion of the Shareholder transaction expenses and annual operating
expenses for the Fund. THE FOREGOING SUMMARY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
1 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which Government Assets, Liquid Assets and Municipal
Assets is each 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 each Fund respectively ("Shareholder Fees"). Currently
such fees are limited by each Fund to 0.00%, 0.15% and 0.15%, respectively.
However, Shareholder Fees may be absorbed by the Advisor in its sole
discretion without further notice and at no expense to a Class or Fund.
Shareholders will be given at least 30 days notice prior to payment by the
Company of any increased fees under the Plan.
2 The Company has adopted an Administrative Services Plan (the "Services
Plan") pursuant to which each Fund is authorized to pay Participating
Organizations 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 or Class ("Servicing Fees").
3 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds are authorized to pay a periodic fee calculated
at an annual rate of 0.21%, 0.06% and 0.06% of the average daily net assets
for Government Assets, Liquid Assets and Municipal Assets, respectively.
4 Absent the fee waivers described above, "Total Operating Expenses" as a
percentage of average daily net assets would be 1.27% for Government
Assets, 1.02% for Liquid Assets and 1.06% for Municipal Assets.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Government Assets $10 $32 $56 $125
Liquid Assets $ 9 $29 $51 $113
Municipal Assets $10 $31 $53 $118
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. Please refer to "MANAGEMENT AND FEES" for a more complete discussion
of the Shareholder transaction expenses and annual operating expenses for the
Funds.
FINANCIAL HIGHLIGHTS
The tables below set forth for each Fund certain financial data, other operating
information and investment results for each of the predecessor Funds, which were
acquired by the Company on February 13, 1998, expressed in one share outstanding
throughout the period. The Financial Highlights for Government Assets are
derived from the financial statements audited (unless otherwise indicated) by
Ernst & Young LLP, independent auditors for the other predecessor Funds. The
Financial Highlights contained in the tables below for Liquid Assets and
Municipal Assets are derived from the financial statements audited (unless
otherwise indicated) by KPMG Peat Marwick LLP, independent auditors for those
predecessor Funds. The Financial Highlights should be read in conjunction with
the financial statements, related notes, and other financial information which
are incorporated herein by reference in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT ASSETS FUND*
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 21,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPT. 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(A)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Net Investment Income 0.023 0.045 0.051 0.042 0.027 0.007
------ ----- ------ ----- ----- -----
Dividends Distributed (0.023) (0.045) (0.051) (0.042) (0.027) (0.007)
------ ------- ------ ------ ------- ------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
TOTAL RETURN 2.37%(b) 4.62% 5.24% 4.32% 2.73% 0.75%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at End of Period
(000 Omitted) $142,375 $158,698 $153,836 $137,888 $105,345 $ 87,928
Ratio of Expenses to Average
Net Assets 0.73%(c) 0.76% 0.54% 0.50% 0.56% 0.58%(c)
Ratio of Net Investment Income
to Average Net Assets 4.73%(c) 4.53% 5.08% 4.26% 2.70% 2.68%(c)
Ratio of Expenses to Average
Net Assets1 0.98%(c) 1.01% 0.72% 0.98% 1.02% 1.14%(c)
Ratio of Net Income to Average
Net Assets1 4.48%(c) 4.28% 4.90% 3.78% 2.23% 2.12%(c)
</TABLE>
* Performance data relates to AMCORE Vintage U.S. Government Obligations Fund,
a corresponding predecessor Fund, which was acquired as "T" Shares on
February 13, 1998.
1 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from Commencement of Operations.
(b) Not Annualized
(c) Annualized
<PAGE>
LIQUID ASSETS FUND*
SIX MONTHS ENDED FEBRUARY 27, 1997 TO
DECEMBER 31, 1997 JUNE 30, 1997(1)
----------------- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
-------- --------
Net Investment Income .049 .048
---- ----
Dividends Distributed (.049) (.048)
----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======== ========
TOTAL RETURN 2.52%(a) 1.66%(a)
Net Assets, End of Period (000 Omitted) $ 2,535 $ 1,773
Ratio of Expenses to Average Net Assets 0.86%(b) 0.85%(b)
Ratio of Net Income to Average
Net Assets 4.93%(b) 4.79%(b)
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
1 Period from Commencement of Operations.
(a) Not Annualized
(b) Annualized
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL ASSETS FUND*
SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED JUNE 30,
DEC. 31, -----------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income 0.029 0.029 0.026 0.025 0.015 0.017 0.030 0.044 0.050 0.051 0.039
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Dividends Distributed (0.029) (0.029) (0.026) (0.025) (0.015) (0.017) (0.030) (0.044) (0.050) (0.051) (0.039)
------- ------ ------ ------- ------ ------ ------ ------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN 1.49%(a) 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%
RATIOS/SUPPLEMENTARY DATA:
Net Assets End of Period
(000 Omitted) $ 5,956 $ 4,664 $10,146 $16,130 $21,355 $23,764 $29,670 $26,683 $15,077 $12,619 $14,528
Ratio of Expenses to
Average Net Assets 1 0.93%(b) 0.93% 1.48% 1.38% 1.35% 1.35% 1.37% 1.39% 1.63% 1.50% 1.52%
Ratio of Net Income to
Average Net Assets 2.94%(b) 2.90% 2.64% 2.53% 1.53% 1.69% 3.06% 4.40% 4.96% 5.10% 3.94%
</TABLE>
* Performance data relates to Municipal Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
1 During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 1.15%.
(a) Not Annualized
(b) Annualized
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of the Government Assets Fund is to seek current income
consistent with maintaining liquidity and stability of principal. The Fund seeks
to maintain a stable net asset value of $1.00 per Share.
The Government Assets Fund invests exclusively in U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government Obligations") maturing in 397 days or less
at date of purchase, and in repurchase agreements with respect to U.S.
Government Obligations. The short-term U.S. Government Obligations in the Fund's
portfolio will differ in their interest rates, maturities and times of issuance.
The dollar-weighted average maturity of the obligations held by the Government
Assets Fund will not exceed 90 days.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding Shares. Without shareholder approval,
the Fund may not: (1) Borrow money or issue senior securities, except that the
Fund may borrow from banks or enter into reverse repurchase agreements for
temporary purposes in amounts up to 10% (25% for the Bond Fund) of the value of
its total assets at the time of such borrowing; or mortgage, pledge, or
hypothecate any assets, except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of its borrowing. The Fund will not
purchase securities while borrowings (including reverse repurchase agreements)
in excess of 5% of its total assets are outstanding; (2) Make loans, except that
the Fund may purchase or hold debt securities and lend portfolio securities in
accordance with its investment objective and policies, and may enter into
repurchase agreements.
In addition to the above investment restrictions, the Fund is subject to certain
other investment restrictions set forth under "INVESTMENT OBJECTIVES, POLICIES
and RESTRICTIONS--Investment Restrictions" in the Funds' Statement of Additional
Information.
LIQUID ASSETS
The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following money market instruments maturing in 397 days or less from time of
investment, (with certain exceptions):
(1) Obligations issued or guaranteed by the U.S. government or any agency or
instrumentality thereof. Such securities will include those supported by
the full faith and credit of the United States Treasury or the right of the
agency or instrumentality to borrow from the Treasury, as well as those
supported only by the credit of the issuing agency or instrumentality.
(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
(3) Redeemable interest-bearing trust certificates ("Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days
but will be redeemable by the Fund at their face amount upon not more than
five days' written notice to the issuing Student Loan Trust. Further
details concerning the Student Loan Trusts and the Fund's investments in
Student Loan Certificates are found in the Statement of Additional
Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but
will be redeemable by the Fund at their face amount upon not more than five
days' written notice to the issuing FmHA Trust. Further details concerning
the FmHA Trusts and the Fund's investment in FmHA Certificates and FmHA
guaranteed loans are found in the Statement of Additional Information.
(5) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSRO") if rated by two or
more NRSROs; (b) is rated (or the issuer of which has been rated) highest
quality if rated by only one NRSRO; or (c) is determined to be of
equivalent quality by the Company's Board of Directors if unrated.
(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at
the date of investment, have capital, surplus, and undivided profits (as of
the date of their most recently published financial statements) in excess
of $10,000,000; and obligations of other banks or savings and loans if such
obligations are insured by the Federal Deposit Insurance Corporation,
provided that not more than 10 percent of the total assets of the Fund will
be invested in such insured obligations.
(7) Short-term (maturing in one year or less) corporate obligations which at
the time of investment (a) are rated in the highest rating category by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the highest rating
category if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Company's Board of Directors if unrated.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will
consist of securities with maturities of 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will have variable interest
rates adjustable at least semiannually. In determining whether particular
variable rate investments backed by Liquidity and Servicing Agreements or
Guaranteed Funding Agreements may be made, the period remaining until maturity
will be deemed to be the longer of the demand notice period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest adjustment. The dollar-weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. While the underlying security in a repurchase agreement may have a
maturity of more than 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA Certificates, except when such investments are either not available
in sufficient quantity or do not carry yields competitive with alternative
investments.
It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than ten percent of the value of the total net
assets of the Fund.
As a fundamental policy, the Fund will not concentrate its investments in any
one industry and pursuant to Section 18(f) of the 1940 Act, the Fund may not
issue senior securities. As a general policy, it is the Fund's intention to hold
investments until they mature. However, in an effort to increase portfolio
yields the Fund may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Fund shares could necessitate the sale of
portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.
While investments by the Fund will be confined to high quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible Participating Banks or borrowers will default on the provisions of
their agreements with the Fund or that banks will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, which could cause
the net asset value per share to decrease.
In light of these various contingencies, there can be no assurances the Fund
will achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described above;
(2) invest more than 80 percent of its total assets in Student Loan Certificates
and/or FmHA Certificates; (3) purchase or sell real estate (other than
short-term loans secured by real estate or interests therein or loans to
companies which invest in or engage in other activities related to real estate),
commodities or commodity contracts, interests in oil, gas or other mineral
exploration or development programs; (4) make short sales of securities or
maintain a short position or write, purchase, or sell puts (excluding repayment
and guarantee arrangements on loan participations purchased from Participating
Banks), calls, straddles, spreads or combinations thereof; (5) make loans to
other persons, provided the Fund may invest up to 80 percent of its total assets
in Student Loan Certificates or FmHA Certificates, as described in (2) above,
and may make the investments and enter into repurchase agreements as described
above; (6) invest in securities with legal or contractual restrictions on resale
(except for repurchase agreements, Student Loan Certificates, and FmHA
Certificates) or for which no ready market exists; (7) enter into repurchase
agreements if, as a result thereof, more than five percent of the Fund's total
assets (taken at market value at the time of such investment) would be subject
to repurchase agreements maturing in more than seven days.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (a) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (b)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
MUNICIPAL ASSETS
The investment objective of Municipal Assets is maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in 397 days or less from time of investment (with certain exceptions),
as defined herein:
(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank letters
of credit or guarantees (collectively referred to herein as "Liquidity
Agreements"). The Liquidity Agreements will permit the holder of the
securities to demand payment of the unpaid principal balance plus accrued
interest upon a specified number of days' notice either from the issuer or
by drawing on an irrevocable bank letter of credit or guarantee. In
addition, all obligations with maturities longer than 397 days from date of
purchase will, by their terms, bear rates of interest that are adjusted
upward or downward no less frequently than semiannually by means of a
formula intended to reflect market changes in interest rates. Certain types
of industrial development bonds issued by public bodies to finance the
construction of industrial and commercial facilities and equipment are also
purchased. The Statement of Additional Information contains further details
concerning the Fund's policies and procedures with respect to investments
in such tax-exempt obligations and participation interests.
(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit of
the United States. Such obligations will be purchased only if backed by the
full faith and credit of the United States or rated Aaa, Aa, MIG-1, MIG-2
or Prime-1 by Moody's Investors Service, Inc., or AAA, AA, or A-1 by
Standard & Poor's Corporation. Nonrated securities may also be purchased if
determined by the Company's Board of Directors to be of comparable quality
to the rated securities in which the Fund may invest.
(3) Taxable obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government may be acquired from time to time on a temporary
basis for defensive purposes.
(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.
Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Fund's outstanding voting securities.
It is the policy of the Fund that any illiquid securities may not constitute, at
the time of purchase or at anytime, more than ten percent of the value of the
total net assets of the Fund. The Fund will not concentrate its investments in
any one industry and pursuant to Section 18(f) of the 1940 Act may not issue
senior securities.
As a general policy, it is the Fund's intention to hold investments until they
mature or until immediately prior to the expiration of an applicable Liquidity
Agreement. However, in an effort to increase portfolio yields, the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable
because of unfavorable market conditions.
New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Fund may occasionally enter into
such commitments, subject to certain limitations and procedures discussed in the
Statement of Additional Information.
While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances, described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible an issuer or bank will default on the provisions of their Liquidity
Agreements, which could cause the net asset value per share to decrease. In
light of these various contingencies, there can be no assurances the Fund will
achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described under
"Investment Policy"; (2) invest more than 80 percent of its total assets in
tax-exempt fixed and variable rate debt obligations (or participation interests
therein) issued by state and local governmental units within the United States
which are backed by Liquidity Agreements; (3) invest more than five percent of
its total assets (determined as of the date of purchase) in tax-exempt
obligations or participation interests therein subject to Liquidity Agreements
issued by any one bank; (4) purchase or sell real estate, commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; (5) make short sales of securities or maintain a short
position or write, purchase, or sell puts (excluding Liquidity Agreements
covering certain tax-exempt obligations purchased by the Fund), calls,
straddles, spreads or combinations thereof; (6) make loans to other persons,
provided the Fund may make investments and enter into repurchase agreements as
described above; (7) invest in securities with legal or contractual restrictions
on resale (except for tax-exempt debt obligations subject to Liquidity
Agreements) or for which no ready market exists; (8) enter into a Liquidity
Agreement with any bank unless such bank is a United States bank which has a
record, together with predecessors, of at least five years of continuous
operations; (9) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven days; and (10) enter into Liquidity Agreements with any bank if five
percent or more of the securities of such bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such bank.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (1) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (2)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
PERFORMANCE
Performance of each Fund may be quoted in advertising in terms of current yield
and effective yield. CURRENT YIELD refers to the income generated by an
investment in either Fund over a seven-day period. This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The Fund may also present a 30-day
yield which is calculated similarly but instead refers to a 30-day period rather
than a seven-day period. EFFECTIVE YIELD is calculated similarly but, when
annualized, that income earned from the investment is assumed to be reinvested
weekly. Effective yield will be slightly higher than current yield because of
the compounding effect of this assumed reinvestment.
Performance of the Funds may also be compared to other mutual funds with similar
investment objectives, relevant indices or rankings prepared by independent
services or other financial publications, or yields on deposits at financial
institutions. Unlike the Funds, deposit accounts at financial institutions are
generally insured by the Federal Deposit Insurance Corporation and do not
fluctuate to the extent of the Funds.
Additionally, Municipal Assets may quote a taxable-equivalent yield based on a
stated income tax rate. Please see each Fund's Statement of Additional
Information for further discussion of the manner in which yields are calculated
and the comparative performance data which may be used.
Of course, the Funds' yields are not fixed nor is principal guaranteed. Yields
are functions of the type and quality of instruments held in the portfolio,
operating expenses, and market conditions. Consequently, current yields will
fluctuate and are not necessarily representative of the future results.
DISTRIBUTIONS AND TAXES
Dividends from the net income of each Fund are declared daily to Shareholders at
the close of business on each Business Day and paid monthly. Dividends are
automatically reinvested in Shares unless cash payment has been selected on the
Account Application. If a shareholder has elected to receive dividends and/or
distributions in cash and the checks are returned and marked as "undeliverable"
or remain uncashed for six months, your cash election will be changed
automatically and future dividends will be reinvested in Shares of the Fund. In
addition, any undeliverable checks or checks that remain uncashed for six months
will be canceled and will be reinvested in Shares of the Fund at the per share
net asset value determined as of the date of cancellation. If a shareholder
redeems the entire amount in his account during the month, dividends credited to
the account from the beginning of the month through the date of redemption are
paid with the redemption proceeds.
Dividends on each Class of Shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder servicing fees (see "Organization and Shares of
the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
Each Fund intends to qualify as a regulated investment company by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income, tax-exempt dividend income and/or capital
gains, as the case may be, from distributions whether paid in cash or received
in the form of additional shares.
Dividends derived from interest on federally tax-exempt debt obligations owned
by Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets expenses will be allocated between tax-exempt and taxable
income in the same proportion as the Fund's tax-exempt income bears to the total
of such exempt income and its gross income (excluding from gross income the
excess of capital gains over capital losses).
Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year. This discussion is only a summary and relates solely to
Federal tax matters. Further discussion of the Federal Income Tax consequences
of an investment in the Fund is provided in the Statement of Additional
Information. Dividends may also be subject to local taxation. Shareholders are
encouraged to consult with their personal tax advisors.
ORGANIZATION AND SHARES OF THE FUNDS
The Company is a Maryland corporation organized on November 16, 1994. The Funds
were created on October 30, 1997, to acquire the assets and continue the
business of the corresponding substantially identical investment portfolios of
the AMCORE Vintage U.S. Government Obligations Fund, a series portfolio of The
Coventry Group, a Massachusetts Business Trust, and the Liquid Assets Funds,
Inc., and the Municipal Assets Funds, Inc., two separately registered open-end,
diversified management investment companies organized as Iowa corporations.
References herein to the "immediate predecessor" of the Funds refer to the
respective companies which correspond to such Fund. Each Share of a Fund
represents an equal proportionate interest in that Fund with other Shares of the
same Fund, and is entitled to such dividends and distributions out of the income
earned on the assets belonging to that Fund as are declared at the discretion of
the Directors.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common stock relating to new
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example
in the sales load, Rule 12b-1 fees or service plan fees applicable to different
classes of Shares offered by a particular Fund. Such an arrangement could enable
the Company to tailor its marketing efforts to a broader segment of the
investing public with a goal of attracting additional investments in the Funds.
"S2" Shares of Liquid Assets and "S" Shares of Government Assets and Municipal
Assets are described in this Prospectus. "S" Shares of Liquid Assets, "T" Shares
and "I" Shares (Liquid Assets and Municipal Assets only) are offered in separate
Prospectuses which may be obtained by calling the Fund at 1-800-798-1819 or
writing to the address on the cover of this Prospectus. Please read the
Prospectus carefully before investing or sending money. All shares are offered
to individual and institutional investors acting on their own behalf or on
behalf of their customers and bear their pro rata portion of all operating
expenses paid by the Funds, except that Shares, "S" Shares, "S2" Shares and "T"
Shares bear separate distribution and/or shareholder servicing fees. "I" Shares
bear no distribution or shareholder servicing fees.
Each Class of Shares of the Government Assets, Liquid Assets and Municipal
Assets Funds offers different privileges. "S" and "S2" Shares of Liquid Assets,
and "S" Shares of Municipal Assets and Government Assets are normally offered
through financial institutions providing automatic "Sweep" investment programs
to their customers. "T" Shares offer a check writing privilege and are also
offered through trust organizations or others providing shareholder services
such as establishing and maintaining custodial accounts and records for their
customers who invest in "T" Shares, assisting customers in processing purchase,
exchange and redemption requests and responding to customers' inquiries
concerning their investments, though they may also be used in "sweep" programs,
"I" Shares of Liquid Assets and Municipal Assets pay no shareholder or servicing
fees and so are normally offered directly by the Distributor or through trust
organizations providing fiduciary account services for an additional fee. Each
Class of Shares is exchangeable only for shares of the same Class. Participating
Organizations selling or servicing "S", "S2" and "T" Shares may receive
different compensation with respect to one Class over another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of "S" Shares and
"S2" Shares will vote on matters relating to the Distribution Plan for "S"
Shares and "S2" Shares. Only holders of "S" Shares, "S2" Shares and "T" Shares
will vote on matters pertaining to the Administrative Services Plan.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this 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.
SHAREHOLDER REPORTS AND MEETINGS
Each shareholder will receive monthly Fund information, an unaudited semiannual
report, and an annual report containing audited financial statements. If you
have questions about your account, call 1-800-798-1819. You may also write the
Fund at the address on the cover of this Prospectus. You may order statements
for the current and preceding year at no charge. However, there will be a $10.00
fee per statement for statements ordered for other years.
The Fund may operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the 1940 Act. The Funds
have adopted the appropriate provisions in their Bylaws and may, in their
discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. The Funds have also adopted
provisions in their Bylaws for the removal of Directors by the shareholders.
Shareholders may receive assistance in communicating with other shareholders as
provided in Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders, at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Funds may remove a Director by the affirmative vote of a
majority of the Funds' 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 or record of not less than 10 percent of
the Funds' outstanding voting securities.
All consideration received by the Funds for shares of one of the Funds and all
assets in which such consideration is invested, belong to that Fund (subject
only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income and expenses attributable to one Fund
are treated separately from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Funds, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by such matter. Rule 18f-2 further provides that a Fund shall be deemed
to be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical or that the matter does not affect the interest of such
Fund. However, the Rule exempts the selection of independent auditors and the
election of Directors from the separate voting requirements of the Rule.
MANAGEMENT AND FEES
Overall responsibility for management of the Company rests with the Board of
Directors, who are elected by the Shareholders of the Company's Funds. The
Company will be managed by the Directors in accordance with laws of Maryland
governing corporations. The Directors, in turn, elect the officers of the
Company to supervise the day-to-day operations. The Directors receive fees and
are reimbursed for their expenses in connection with each meeting of the Board
of Directors they attend. The officers of the Company receive no compensation
directly from the Company for performing the duties of their offices.
Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG, a wholly owned subsidiary of AMCORE Financial, Inc., is a
federally registered Investment Advisor organized in 1982 and located at 2203
Grand Avenue, Des Moines, Iowa 50312-5338. IMG has been providing continuous
investment management to pension and profit-sharing plans, insurance companies,
public agencies, banks, endowments and charitable institutions, other mutual
funds, individuals and others for over 15 years. As of February 28, 1998, IMG
had approximately $3.6 billion in equity, fixed income and money market assets
under management.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Fund's portfolios:
KATHRYN D. BEYER, CFA, MANAGING DIRECTOR. Ms. Beyer is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1993, her experience includes serving as a securities
analyst and director of mortgage-backed securities for Central Life
Assurance Company from 1988 to 1993. Ms. Beyer received her Masters of
Business Administration degree from Drake University, Des Moines, Iowa, and
her Bachelor of Science Degree in Agricultural Engineering from Iowa State
University, Ames, Iowa.
JEFFREY D. LORENZEN, CFA, MANAGING DIRECTOR. Mr. Lorenzen is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1992, his experience includes serving as a securities
analyst and corporate fixed income analyst for The Statesman Group from
1989 to 1992. Mr. Lorenzen received his Masters of Business Administration
degree from Drake University, Des Moines, Iowa, and his Bachelor of
Business Administration from the University of Iowa, Iowa City, Iowa.
ELIZABETH S. PIERSON, CFA, VICE PRESIDENT AND SENIOR FIXED INCOME MANAGER.
Ms. Pierson is a fixed income strategist and is a member of IMG's
Investment Policy Committee. She has been with AMCORE Capital Management,
Inc. (or a predecessor) since 1984 when she began her investment career.
Ms. Pierson became an employee of IMG effective with the acquisition of IMG
by AMCORE Financial, Inc. in February 1998. She has a B.S. degree from the
University of Illinois, Champaign-Urbana. Ms. Pierson chairs the Fixed
Income Research Committee. She has been responsible for investment
management and credit responsibilities in numerous individually managed
advisory portfolios.
Under an Investment Advisory Agreement between the Funds and IMG, a fee is paid
to IMG for investment advisory services. Each Fund is responsible for paying
operating expenses not assumed by IMG. The investment management fee for each
Fund is calculated daily and paid monthly. The maximum management fee for
Government Assets is 0.40% of average daily net assets; the maximum management
fee for Liquid Assets and Municipal Assets is 0.35% of average daily net assets.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
IMG may not seek reimbursement of such waived fees at a later date. The waiver
of such fee will cause the yield of a Fund to be higher than it would otherwise
be in the absence of such a waiver.
IMG also provides management and administration, fund accounting, transfer
agency, and shareholder recordkeeping services to the Funds. Under a Management
and Administration Agreement, IMG will supervise all aspects of the operations
of the Funds, except those performed under the Investment Advisory Agreement, by
the Custodian, under the Transfer Agency Agreement and under the Fund Accounting
Agreement. For these services IMG receives a fee calculated daily and paid
monthly at the annual rate of 0.21% for Government Assets and 0.06% for Liquid
Assets and Municipal Assets of the average daily net assets of each Fund. Under
a Fund Accounting Agreement, IMG provides bookkeeping and accounting services to
the Funds, including calculating daily net asset value and yield quotations. For
these services, the Funds each pay IMG a fee calculated daily and paid monthly
at an annual rate of 0.03% of the average daily net assets of each Fund. Under a
Transfer Agency Agreement, IMG provides customary and usual services of a
transfer agent to the Funds. For these services, IMG is paid various fees
depending on the class of shares of the Funds. The fees are charged to each
class of shares separately and are computed according to the number of accounts.
The fees received and the services provided under these contracts are in
addition to those received and paid to IMG under the Advisory Agreement.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Funds. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, each Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Funds;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Funds; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Funds except that the Funds' Distribution Agreement requires that the
Distributor pay for prospectuses that are to be used for sales purposes with
persons other than current shareholders.
From time to time, IMG may voluntarily waive all or a portion of the investment
management fee and/or other fees and/or absorb certain expenses of a Fund
without further notification of the commencement or termination of such waiver
or absorption. Any such waiver will have the effect of lowering the overall
expense ratio for that Fund and increasing the Fund's overall yield to investors
at the time any such amounts are waived and/or absorbed.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the Funds will be borne by the Funds. Expenses attributable to a particular Fund
are charged against the assets of that Fund; other expenses of the Funds are
allocated among the Funds on a reasonable basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.
BISYS Fund Services Limited Partnership, serves as distributor and principal
underwriter (the "Distributor") for the Company pursuant to a Distribution
Agreement and a Distribution and Shareholder Services Plan (the "Plan"). The
Distributor acts as agent for the Funds in the distribution of their Shares and,
in such capacity, solicits orders for the sale of Shares, advertises, and pays
the costs of advertising, office space and its personnel involved in such
activities.
As authorized by the Plan, the Distributor will enter into Shareholder
Agreements with Participating Organizations, including AMCORE Financial, Inc.,
or its affiliates, pursuant to which the Participating Organization agrees to
provide certain administrative and shareholder support services in connection
with Shares of a Fund purchased and held by the Participating Organization for
the accounts of its Customers and Shares of a Fund purchased and held by
Customers of the Participating Organization, including, but not limited to,
processing automatic investments of Participating Organization's Customer
account cash balances in Shares of a Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service, establishing
and maintaining Customer accounts and records, processing purchase and
redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone
facilities and personnel as is necessary and appropriate to accomplish such
matters. In consideration of such services, the Participating Organization may
receive a monthly fee, computed at an annual rate on the average aggregate net
asset value of the Shares of the Fund held during the period in Customer
accounts for which the Participating Organization has provided services under
this Agreement. The maximum fees payable under the Plan are 0.25%. The
Distributor will be compensated by a Fund up to the amount of any payments it
makes to Participating Organizations under the Rule 12b-1 Agreement. Presently,
fees payable under the Plan have been capped at 0.00% for Government Assets, and
0.15% for Liquid Assets and Municipal Assets. However, IMG as Advisor and
Administrator to the Company may in its sole discretion make payments to the
Distributor to supplement shareholder fees paid by the Company up to the maximum
fee approved by the Plan without further notice to shareholders and at no cost
to the Company.
The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Participating Organization"), including AMCORE
Financial, Inc. and its correspondent and affiliated banks, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders (collectively, "customers") who
are the beneficial or record owner of Shares of that Fund. In consideration for
such services, a Participating Organization receives a fee from a Fund, computed
daily and paid monthly, at an annual rate of up to 0.25% of the average daily
net asset value of Shares of that Fund owned beneficially or of record by such
Participating Organization's customers for whom the Participating Organization
provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Participating Organizations receiving such compensation
to perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Funds,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into Servicing
Agreements with Participating Organizations pursuant to which the Participating
Organization has agreed to provide certain administrative support services in
connection with Shares of the Funds owned of record or beneficially by its
customers. Such administrative support services may include, but are not limited
to, (i) processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from a Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay the Participating Organization a monthly fee, computed
at an annual rate 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays the full 0.25% in servicing fees on the Funds offered by this
Prospectus.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a Participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences. It is intended that none of the services provided by
such Participating Organizations other than through registered brokers will
involve the solicitation or sale of shares of the Funds.
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006 serves
as custodian for Government Assets. AMCORE Investment Group, N.A., Rockford,
Illinois, serves as custodian for Liquid Assets and Municipal Assets Funds.
Pursuant to the Custodian Agreements with Bankers Trust Company and AMCORE
Investment Group, N.A., each custodian receives compensation from each Fund for
such services in an amount equal to a designated annual fee (and as to Bankers
Trust Company, additional fees charged for certain portfolio transactions and
out-of-pocket expenses).
OPENING AN ACCOUNT
The Funds require a completed and signed application (which is attached) at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. IF YOU HAVE QUESTIONS CALL
THE FUNDS AT 1-800-798-1819 FROM 8:00 A.M. TO 4:30 P.M. CENTRAL TIME.
SHARE PRICE
The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined once each Business Day, at 11:00
a.m. Central Time. The Funds are open for business each day the Federal Reserve
is open.
Your purchase will be processed at the next NAV calculated after your investment
has been converted to federal funds. If you invest by check, the Funds must
generally allow one or more days for conversion into federal funds before
accepting your purchase.
Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per Share. These procedures are described in more detail in the
Funds' Statement of Additional Information.
Under the amortized cost method of valuation, a security is initially valued at
cost on the date of purchase and, thereafter, any discount or premium is
amortized on a straight-line basis to maturity, regardless of the effect of
fluctuating interest rates on the market value of the security. U.S. government
obligations, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, investments in taxable
and tax-exempt debt obligations rated by a recognized bond rating agency and
regularly traded in the secondary market, and nonrated fixed and variable rate
tax-exempt obligations and participation interests therein, not regularly traded
in the secondary market but subject to Liquidity Agreements will be valued at
amortized cost. Other assets are valued at a fair value determined in good faith
by the Board of Directors of each Fund.
PURCHASING SHARES
Shares of each Fund may be purchased directly from BISYS Fund Services Limited
Partnership, as the distributor. Shares may also be purchased by customers of
qualified banks, savings and loan associations, broker/dealers, investment
advisory firms, and other organizations ("Participating Organizations") that
have entered into servicing agreements with the Distributor. The Participating
Organization is responsible for transmitting purchase orders directly to the
Fund's Distributor. A Participating Organization may elect to hold record
ownership of shares for its customers and to show beneficial ownership of shares
on the account statements it provides to them. In the alternative, a
Participating Organization may elect to establish its customers' accounts of
record with IMG as transfer agent for the Funds. Generally, shares purchased
through Participating Organizations will be held by the Participating
Organization as shareholder of record.
Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $1,000. Subsequent investments in each Fund must be made in amounts of
not less than $50, except where purchases are made through financial
institutions providing an automatic "sweep" investment program, in which case
there is no minimum. Participating organizations may aggregate their customers'
purchases to satisfy the required minimums.
Purchases may be effected on Business Days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for Shares received in good order by the Funds by 11:00 a.m.
Central Time on a Business Day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for Shares received after 11:00 a.m. Central Time and
prior to 3:00 p.m. Central Time on a Business Day for which such funds have been
received by 3:00 p.m. Central Time will be effected as of 11:00 .am. Central
Time the following day, and will begin to accrue dividends at that time. If
federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.
While the Funds themselves do not presently levy sales, redemption or account
service charges, Participating Organizations may elect to do so and the Funds
may elect to do so in the future. Investors should inquire regarding the nature
and costs of services provided by Participating Organizations and determine if
such services are desired, because the costs thereof will reduce the Funds'
yields to the investor below that obtainable by investing in the Funds directly.
Customers wishing to purchase shares through their Participating Organization
should contact such entity directly for appropriate instructions. (For a list of
the Participating Organizations in your area, CALL THE FUNDS AT 1-800-798-1819
OR 515-244-5426.) Direct investors may purchase shares in accordance with the
procedures described below, "Purchase Procedures".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $1,000 (minimum) $50 (minimum)
Please make your check pay- Please make your check payable
able to the Fund selected and to the Fund selected, with your
mail to the address indicated account number on the check on
the application. and mail to the address printed
on your account statement.
BY WIRE Please call for an account See instructions below.
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.
For Government Assets, Federal Funds should be wired to: Bankers Trust, New
York, New York, ABA #021001033, Account #00355557. For Liquid Assets and
Municipal Assets, Federal Funds should be wired to: Federal Reserve Bank of
Chicago for AMCORE Investment Group, N.A., Rockford, Illinois, together with
the name of the Fund, your account number and names.
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
By Electronic Not available for initial Shareholders who have an
Funds Transfer purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
SHAREHOLDER SERVICES
Some shareholder services may not be available if shares are purchased through
Participating Organizations. Call the Funds at 1-800-798-1819 for more
information.
EXCHANGE PRIVILEGE. You may exchange Shares of either Fund for Shares in the
other Fund described in this Prospectus. An exchange involves a redemption of
the shares of the Fund being liquidated and a purchase of the shares of the Fund
in which the redemption proceeds are to be invested. The exchange privilege is
offered as a convenience to shareholders and is not intended to be a means of
speculating on short-term movements in securities prices by transactions
involving frequent purchases and sales of shares. Each Fund reserves the right
at any time and without prior notice, to suspend, limit, modify or terminate
exchange privileges or their use by individual shareholders in order to prevent
transactions considered to be disadvantageous to existing shareholders.
TELEPHONE TRANSFERS. This service allows you to authorize transfers of money to
purchase or sell shares. Using Telephone Transfer you can move money between
your bank account and your account in the Funds with one phone call. Moneys may
be transferred either by wire or electronic funds transfer with an institution
which is a member of the Automated Clearing House ("ACH").
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. For a wire redemption, the then current wire redemption charge
may be deducted from the proceeds of a wire redemption. This charge, if applied,
will vary depending on the receiving institution for each wire redemption.
Allow two (2) days after the call for electronic funds transfer via ACH to move
moneys between your bank account and your account with either Fund.
For moneys recently invested, allow normal clearing time before redemption
proceeds are sent to your bank. In order to change the financial institution
account designated to receive redemption proceeds, it will be necessary to send
a written request to the Fund with a signature guarantee from a national or
state bank, a trust company or a federal savings and loan association, or a
member firm of the New York, American, Boston, Midwest or Pacific Stock
Exchange.
You can also arrange SYSTEMATIC PERIODIC INVESTMENTS (minimum $50) into your
Fund account. Simply select the regular investment schedule you would like when
completing your account application. Your bank account will automatically be
debited to purchase shares of the Fund you select. You will receive confirmation
of each transaction.
Your bank must be a member of ACH and you must have a checking or NOW/Money
Market Deposit account to use electronic funds transfer or systematic investing.
Please allow 20 days after receipt of your application to activate the Telephone
Transfer capability.
STATEMENTS AND REPORTS. You will receive a statement of your account listing
every transaction that affects your share balance no less than once per month.
At least twice a year you will receive the financial statements of the Fund in
which you have invested with a summary of that Fund's portfolio composition and
performance. Each Fund's Annual Report is reported on by the Funds' independent
auditors, KPMG Peat Marwick LLP.
REDEEMING SHARES
Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
in good order by the Distributor before 11:00 a.m. Central Time on a Business
Day will be redeemed as of 11:00 a.m. Central Time and will earn dividends
through the previous day; proceeds normally will be sent electronically the same
day (or mailed by check the next Business Day) to the organization that placed
the redemption order in good form. Redemption orders received after 11:00 a.m.
Central Time or on a non-Business Day will be redeemed as of 11:00 a.m. the next
Business Dayu and earn dividends through the date the redemption request was
received; proceeds will be sent electronically on the next Business Day (or
mailed by check on the second Business Day thereafter). While the Funds use
their best efforts to maintain their net asset value per share at $1.00, the
proceeds paid upon redemption may be more or less than the amount originally
invested.
If you purchase shares through a Participating Organization, you may redeem
shares in accordance with that Organization's rules regarding redemption
requests. Direct shareholders may redeem shares in accordance with the
procedures described under "How to Redeem Shares".
The Funds intend to pay redemption proceeds within two Business Days and in no
event will payment be made later than seven days after receipt of a redemption
request in good order. Payments to investors who request to redeem shares within
a few days after a purchase paid for by check may be delayed until the Funds can
verify the check has been collected.
The Funds reserve the right to suspend redemptions or to postpone the payment
therefore when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has permitted such suspension; or (c) an emergency as
determined by the Securities and Exchange Commission exists, making sale of
portfolio securities or valuations of the Funds' net assets not reasonably
practicable.
If an investor's account drops below $250 due to redemptions, the Funds reserve
the right to redeem any remaining shares if after 30 days' notice additional
investments to bring the account value to $250 are not made.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter specifying
TO: 2203 GRAND AVENUE the name of the Fund, the number of shares to be
DES MOINES, IA 50312-5338 sold, your name, your account number, and the
additional requirements listed below that apply to
your particular account.
TYPE OF REGISTRATION REQUIREMENTS
-------------------------- ---------------------------------------------------
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as it is
Custodial (Uniform Gifts registered, accompanied by signature guarantee(s).
or Transfers To Minors
Act), General Partners
Corporation, Association Letter of instruction and a corporate resolution
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trust A letter of instruction signed by the Trustee(s),
(as Trustee), with a signature guarantee. (If
the Trustee's name is not registered on your
account, also provide a copy of the trust docu-
ment, certified within the last 60 days.)
If you do not fall into any of these registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call for further
instructions.
A signature guarantee is designed to protect you and the Fund against
fraudulent transactions by unauthorized persons. A signature guarantee is
required for all persons registered on an account. A signature guarantee may
be obtained from an eligible guarantor institution, as defined by the
Securities and Exchange Commission. These institutions include banks, savings
and loan associations, credit unions, brokerage firms, and others. The words,
"SIGNATURE GUARANTEED" must be stamped or typed near each person's signature
and appear with the printed name, title, and signature of an officer and the
name of the guarantor institution. PLEASE NOTE THAT A NOTARY PUBLIC STAMP OR
SEAL IS NOT A SIGNATURE GUARANTEE.
FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
BY EXCHANGE-- You must meet the minimum investment requirement
of the other fund. You can only exchange between
accounts with identical names, addresses, and
taxpayer identification numbers.
BY ELECTRONIC FUNDS You must have applied for the Telephone Transfer
TRANSFER (ACH) OR WIRE-- feature on your application. Allow two days via
ACH. Call before 10:00 a.m. for same day wire.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary......................................................2
Expense Summary of Shares...............................................4
Financial Highlights....................................................5
Investment Objectives, Policies and Restrictions........................9
Government Assets.......................................................9
Liquid Assets...........................................................9
Municipal Assets.......................................................12
Performance............................................................15
Distributions and Taxes................................................16
Organization and Shares of the Funds...................................17
Shareholder Reports and Meetings.......................................19
Management and Fees....................................................20
Opening an Account.....................................................24
Share Price..........................................................24
Purchasing Shares....................................................25
Shareholder Services...................................................27
Redeeming Shares.......................................................28
NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY BISYS FUND SERVICES LIMITED PARTNERSHIP. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY BISYS FUND SERVICES LIMITED
PARTNERSHIP, IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
GOVERNMENT ASSETS FUND "T" SHARES
LIQUID ASSETS FUND "T" SHARES
MUNICIPAL ASSETS FUND "T" SHARES
2203 Grand Avenue, Des Moines, Iowa 50312-5338
- --------------------------------------------------------------------------------
FOR CURRENT YIELD, PURCHASE AND REDEMPTION INFORMATION CALL........800-798-1819
515-244-5426
- --------------------------------------------------------------------------------
PROSPECTUS MARCH 23, 1998
- --------------------------------------------------------------------------------
Government Assets Fund, Liquid Assets Fund and Municipal Assets Fund, each of
these a "Fund", (collectively, the "Funds") are money market mutual funds
designed to enable investors to meet short-term goals. Investors choose
whichever Fund best suits their needs and may, without charge, exchange Funds as
their investment outlook or goals change.
Government Assets Fund offers two classes of shares, Liquid Assets Fund offers
four classes of shares and Municipal Assets Fund offers three classes of shares.
This Prospectus describes the "T" Shares of each Fund. "T" Shares are normally
offered through trust organizations or others providing shareholder services
such as establishing and maintaining accounts and records for their customers
who invest in "T" Shares, assisting customers in processing purchase, exchange
and redemption requests, and responding to customers' inquiries regarding their
accounts. The Funds also offer "S" Shares, Liquid Assets Fund and Municipal
Assets Fund offer "I" Shares, and Liquid Assets Fund offers "S2" Shares all of
which accrue daily dividends in the same manner as "T" Shares except that each
class bears separate distribution and/or shareholder administrative servicing
fees. (see "Organization and Shares of the Funds").
GOVERNMENT ASSETS FUND, ("Government Assets") seeks income consistent with
maintaining liquidity and stability of principal, by investing exclusively in
short-term obligations issued by the U.S. Government, its agencies or
instrumentalities. LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current
income consistent with safety of principal and maintenance of liquidity.
MUNICIPAL ASSETS FUND, ("Municipal Assets") seeks maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. "T" Shares are offered and redeemed at $1.00 per share under rules
which allow the Funds to use the amortized cost method of valuing the Funds'
assets.
AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00, BUT UNDER
EXTRAORDINARY CIRCUMSTANCES THE VALUE OF SHARES MAY VARY FROM $1.00 AND
CONSEQUENTLY, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference. The
Statement of Additional Information (as of the date of this Prospectus) which
contains more detailed information about each Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference. The
Statement of Additional Information is available free upon request from the
Funds at the address and telephone number indicated above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
TYPE OF COMPANY
Each Fund is a diversified series of an open-end, management investment company.
INVESTMENT OBJECTIVE
For Government Assets, current income consistent with liquidity and stability of
principal.
For Liquid Assets, maximum current income consistent with safety of principal
and maintenance of liquidity.
For Municipal Assets, maximum current income exempt from federal income tax,
consistent with safety of principal and maintenance of liquidity.
INVESTMENT POLICY
Government Assets invests exclusively in short-term U.S. Treasury bills, notes
and other short-term obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities and repurchase agreements with respect
thereto, having a dollar-weighted average maturity of 90 days or less. The Fund
seeks to maintain a net asset value of $1.00 per share.
Under normal market conditions, Liquid Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term debt obligations
including, primarily, redeemable Certificates backed by federally insured
student loans and Farmers Home Administration guaranteed loans, commercial
paper, bank obligations, short-term corporate obligations and obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations having a
dollar-weighted average maturity of 90 days or less. The Fund seeks to maintain
a net asset value of $1.00 per share.
Under normal market conditions, Municipal Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term municipal
securities which mature or have a demand feature exercisable in one year or less
from the date of acquisition having a dollar-weighted average maturity of 90
days or less. The Fund seeks to maintain a net asset value of $1.00 per share.
RISK FACTORS AND SPECIAL CONSIDERATION
An investment in the Funds is subject to certain risks, as set forth in detail
under "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS." As with all mutual
funds, there can be no assurance that the Funds will achieve their investment
objectives.
OFFERING PRICE
The public offering price of each Fund is equal to its net asset value of $1.00
per Share.
SHARES OFFERED
"T" Shares of common stock ("Shares") of Government Assets, Liquid Assets and
Municipal Assets, each a separate investment portfolio of the Vintage Mutual
Funds, Inc., a Maryland Corporation, (the "Company"). See "OPENING AN ACCOUNT",
"SHAREHOLDER SERVICES", and "REDEEMING SHARES" for detailed information about
how to buy and sell shares.
MINIMUM PURCHASE
The minimum initial investment is $1,000 with $50 minimum subsequent investments
(subject to certain exceptions).
DIVIDENDS
Dividends are declared daily and paid monthly and will be automatically
reinvested unless the shareholder elects otherwise.
INVESTMENT ADVISOR
Investors Management Group, Ltd. ("IMG" or the "Advisor").
ADMINISTRATOR
Investors Management Group, Ltd. ("IMG" or the "Administrator").
DISTRIBUTOR
BISYS Fund Services Limited Partnership, Columbus, Ohio (the "Distributor")
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES1
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases 0.00% 0.00% 0.00%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) 0.00% 0.00% 0.00%
Deferred Sales Load (as a percentage of offering
original purchase price or redemption
proceeds, as applicable) 0.00% 0.00% 0.00%
Redemption Fee (as a percentage of amount
redeemed, if applicable) 0.00% 0.00% 0.00%
Exchange Fee 0.00% 0.00% 0.00%
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND ASSETS FUND
----------- ----------- -----------
<S> <C> <C> <C>
ESTIMATED FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.40% 0.35% 0.35%
12b-1 Fees 0.00% 0.00% 0.00%
Other Expenses
Servicing Fees 3 After Limitation2 0.00% 0.15% 0.15%
Administrative Fees 3 0.21% 0.06% 0.06%
Other Expenses 0.16% 0.11% 0.15%
----- ----- -----
Total Other Expenses 0.37% 0.32% 0.36%
----- ----- -----
Total Fund Operating Expenses after Limitation4 0.77% 0.67% 0.71%
</TABLE>
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 table reflects the current fees for
the Funds. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of a Fund (a "Class"). See "MANAGEMENT AND FEES" for a more
complete discussion of the Shareholder transaction expenses and annual operating
expenses for the Fund. THE FOREGOING SUMMARY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. 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.
1 A "Participating Organization" (as defined in this Prospectus) may charge a
Customer (as defined in this Prospectus) account fees for automatic investment
and other investment management services provided in connection with investment
in the Fund. (See "HOW TO PURCHASE AND REDEEM SHARES--Purchases of Shares.")
2 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund or Class described in this Prospectus is authorized
to pay Participating Organizations 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 ("Servicing Fees"). Currently
the Company is not paying any such fees under the Services Plan for the
Government Assets Fund, and has limited these fees to an annual rate of 0.15% of
the average daily net assets of the Liquid Assets and Municipal Assets Funds.
However, Servicing Fees may be absorbed by the Advisor in its sole discretion
without further notice and at no expense to a Class or Fund. The Company may
elect to pay such fees at any time without further notice to shareholders.
3 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds have agreed to an annual rate of 0.21% of the
average daily net assets for Government Assets Fund and an annual rate of 0.06%
of the average daily net assets for the Liquid Assets and Municipal Assets
Funds.
4 Absent the fee waivers described above, "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.02% for the Government Assets
Fund, 0.77% for the Liquid Assets Fund, 0.81% for the Municipal Assets Fund.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Government Assets $8 $25 $43 $95
Liquid Assets $7 $21 $37 $83
Municipal Assets $7 $23 $40 $88
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. Please refer to "MANAGEMENT AND FEES" for a more complete discussion
of the Shareholder transaction expenses and annual operating expenses for the
Funds.
FINANCIAL HIGHLIGHTS
The tables below set forth for each Fund certain financial data, other operating
information and investment results for each of the predecessor Funds, which were
acquired by the Company on February 13, 1998, expressed in one share outstanding
throughout the period. The Financial Highlights for Government Assets are
derived from the financial statements audited (unless otherwise indicated) by
Ernst & Young LLP, independent auditors for the other predecessor Funds. The
Financial Highlights contained in the tables below for Liquid Assets and
Municipal Assets are derived from the financial statements audited (unless
otherwise indicated) by KPMG Peat Marwick LLP, independent auditors for those
predecessor Funds. The Financial Highlights should be read in conjunction with
the financial statements, related notes, and other financial information which
are incorporated herein by reference in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT ASSETS FUND*
------------------------------------------------------------------------
SIX MONTHS YEAR YEAR YEAR YEAR DECEMBER 21,
ENDED ENDED ENDED ENDED ENDED 1992 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 1994 1993(1)
---- ---- ---- ---- ---- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Net Investment Income .023 .045 .051 .042 .027 .007
---- ---- ---- ---- ---- ----
Dividends Distributed (.023) (.045) (.051) (.042) (.027) (.007)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
TOTAL RETURN 2.37%(a) 4.62% 5.24% 4.32% 2.73% 0.75%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $142,375 $158,698 $153,836 $137,888 $105,345 $87,928
Ratio of Expenses to Average Net Assets 0.73%(b) 0.76% 0.54% 0.50% 0.56% 0.58%(b)
Ratio of Net Investment Income to
Average Net Assets 4.73%(b) 4.53% 5.08% 4.26% 2.70% 2.68%(b)
Ratio of Expenses to Average Net Assets2 0.98%(b) 1.01% 0.72% 0.98% 1.02% 1.14%(b)
Ratio of Net Investment Income to
Average Net Assets2 4.48%(b) 4.28% 4.90% 3.78% 2.23% 2.12%(b)
</TABLE>
1 Period from Commencement of Operations
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage U.S. Government Obligations Fund, a
corresponding predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
LIQUID ASSETS FUND*
-------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, JANUARY 2, 1997 TO
1997 JUNE 30, 1997(1)
---- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
------- --------
Net Investment Income .051 .025
---- ----
Dividends Distributed (.051) (.025)
----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======= ========
TOTAL RETURN 2.59%(a) 2.51%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $34,064 $ 17,859
Ratio of Expenses to Average Net Assets 0.71% 0.70%
Ratio of Net Investment Income to
Average Net Assets 5.08%(b) 4.96%(b)
1 Period from Commencement of Operations.
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
(a)Not Annualized
(b)Annualized
MUNICIPAL ASSETS FUND*
----------------------------------
SIX MONTHS
ENDED
DECEMBER 31, JANUARY 2, 1997 TO
1997 JUNE 30, 1997(1)
---- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
------- --------
Net Investment Income .032 .016
---- ----
Dividends Distributed (.032) (.016)
----- -----
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======= ========
TOTAL RETURN 1.62%(a) 1.61%(a)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000) $25,594 $ 25,036
Ratio of Expenses to Average Net Assets** 0.68% 0.66%
Ratio of Net Investment Income to
Average Net Assets 3.19%(b) 3.17%(b)
1 Period from Commencement of Operations.
* Performance data relates to Municipal Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
** During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 0.90 percent.
(a)Not Annualized
(b)Annualized
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
GOVERNMENT ASSETS
The investment objective of the Government Assets Fund is to seek current income
consistent with maintaining liquidity and stability of principal. The Fund seeks
to maintain a stable net asset value of $1.00 per Share.
The Government Assets Fund invests exclusively in U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities ("U.S. Government Obligations") maturing in 397 days or less
at date of purchase, and in repurchase agreements with respect to U.S.
Government Obligations. The short-term U.S. Government Obligations in the Fund's
portfolio will differ in their interest rates, maturities and times of issuance.
The dollar-weighted average maturity of the obligations held by the Government
Assets Fund will not exceed 90 days.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding Shares. Without shareholder approval,
the Fund may not: (1) Borrow money or issue senior securities, except that the
Fund may borrow from banks or enter into reverse repurchase agreements for
temporary purposes in amounts up to 10% (25% for the Bond Fund) of the value of
its total assets at the time of such borrowing; or mortgage, pledge, or
hypothecate any assets, except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of its borrowing. The Fund will not
purchase securities while borrowings (including reverse repurchase agreements)
in excess of 5% of its total assets are outstanding; (2) Make loans, except that
the Fund may purchase or hold debt securities and lend portfolio securities in
accordance with its investment objective and policies, and may enter into
repurchase agreements.
In addition to the above investment restrictions, the Fund is subject to certain
other investment restrictions set forth under "INVESTMENT OBJECTIVES, POLICIES
and RESTRICTIONS--Investment Restrictions" in the Funds' Statement of Additional
Information.
LIQUID ASSETS
The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following money market instruments maturing in 397 days or less from time of
investment, (with certain exceptions):
(1) Obligations issued or guaranteed by the U.S. government or any agency or
instrumentality thereof. Such securities will include those supported by
the full faith and credit of the United States Treasury or the right of the
agency or instrumentality to borrow from the Treasury, as well as those
supported only by the credit of the issuing agency or instrumentality.
(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
(3) Redeemable interest-bearing trust certificates ("Student Loan
Certificates") issued by the Iowa Student Loan Trust and/or other Student
Loan Trusts established by the Fund, ("Student Loan Trusts"), created for
the sole purpose of purchasing from banks (which qualify as "eligible
lenders") federally insured student loans originated by banks. The Student
Loan Certificates will have original maturities of no more than 397 days
but will be redeemable by the Fund at their face amount upon not more than
five days' written notice to the issuing Student Loan Trust. Further
details concerning the Student Loan Trusts and the Fund's investments in
Student Loan Certificates are found in the Statement of Additional
Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but
will be redeemable by the Fund at their face amount upon not more than five
days' written notice to the issuing FmHA Trust. Further details concerning
the FmHA Trusts and the Fund's investment in FmHA Certificates and FmHA
guaranteed loans are found in the Statement of Additional Information.
(5) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSRO") if rated by two or
more NRSROs; (b) is rated (or the issuer of which has been rated) highest
quality if rated by only one NRSRO; or (c) is determined to be of
equivalent quality by the Company's Board of Directors if unrated.
(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at
the date of investment, have capital, surplus, and undivided profits (as of
the date of their most recently published financial statements) in excess
of $10,000,000; and obligations of other banks or savings and loans if such
obligations are insured by the Federal Deposit Insurance Corporation,
provided that not more than 10 percent of the total assets of the Fund will
be invested in such insured obligations.
(7) Short-term (maturing in one year or less) corporate obligations which at
the time of investment (a) are rated in the highest rating category by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the highest rating
category if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Company's Board of Directors if unrated.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "OPENING AN ACCOUNT-- Share Price". Assets of the Fund will
consist of securities with maturities of 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will have variable interest
rates adjustable at least semiannually. In determining whether particular
variable rate investments backed by Liquidity and Servicing Agreements or
Guaranteed Funding Agreements may be made, the period remaining until maturity
will be deemed to be the longer of the demand notice period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest adjustment. The dollar-weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. While the underlying security in a repurchase agreement may have a
maturity of more than 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA Certificates, except when such investments are either not available
in sufficient quantity or do not carry yields competitive with alternative
investments.
It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than ten percent of the value of the total net
assets of the Fund.
As a fundamental policy, the Fund will not concentrate its investments in any
one industry and pursuant to Section 18(f) of the 1940 Act, the Fund may not
issue senior securities. As a general policy, it is the Fund's intention to hold
investments until they mature. However, in an effort to increase portfolio
yields the Fund may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Fund shares could necessitate the sale of
portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.
While investments by the Fund will be confined to high quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible Participating Banks or borrowers will default on the provisions of
their agreements with the Fund or that banks will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, which could cause
the net asset value per share to decrease.
In light of these various contingencies, there can be no assurances the Fund
will achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described above;
(2) invest more than 80 percent of its total assets in Student Loan Certificates
and/or FmHA Certificates; (3) purchase or sell real estate (other than
short-term loans secured by real estate or interests therein or loans to
companies which invest in or engage in other activities related to real estate),
commodities or commodity contracts, interests in oil, gas or other mineral
exploration or development programs; (4) make short sales of securities or
maintain a short position or write, purchase, or sell puts (excluding repayment
and guarantee arrangements on loan participations purchased from Participating
Banks), calls, straddles, spreads or combinations thereof; (5) make loans to
other persons, provided the Fund may invest up to 80 percent of its total assets
in Student Loan Certificates or FmHA Certificates, as described in (2) above,
and may make the investments and enter into repurchase agreements as described
above; (6) invest in securities with legal or contractual restrictions on resale
(except for repurchase agreements, Student Loan Certificates, and FmHA
Certificates) or for which no ready market exists; (7) enter into repurchase
agreements if, as a result thereof, more than five percent of the Fund's total
assets (taken at market value at the time of such investment) would be subject
to repurchase agreements maturing in more than seven days.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (a) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (b)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
MUNICIPAL ASSETS
The investment objective of Municipal Assets is maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in 397 days or less from time of investment (with certain exceptions),
as defined herein:
(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank letters
of credit or guarantees (collectively referred to herein as "Liquidity
Agreements"). The Liquidity Agreements will permit the holder of the
securities to demand payment of the unpaid principal balance plus accrued
interest upon a specified number of days' notice either from the issuer or
by drawing on an irrevocable bank letter of credit or guarantee. In
addition, all obligations with maturities longer than 397 days from date of
purchase will, by their terms, bear rates of interest that are adjusted
upward or downward no less frequently than semiannually by means of a
formula intended to reflect market changes in interest rates. Certain types
of industrial development bonds issued by public bodies to finance the
construction of industrial and commercial facilities and equipment are also
purchased. The Statement of Additional Information contains further details
concerning the Fund's policies and procedures with respect to investments
in such tax-exempt obligations and participation interests.
(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit of
the United States. Such obligations will be purchased only if backed by the
full faith and credit of the United States or rated Aaa, Aa, MIG-1, MIG-2
or Prime-1 by Moody's Investors Service, Inc., or AAA, AA, or A-1 by
Standard & Poor's Corporation. Nonrated securities may also be purchased if
determined by the Company's Board of Directors to be of comparable quality
to the rated securities in which the Fund may invest.
(3) Taxable obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government may be acquired from time to time on a temporary
basis for defensive purposes.
(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.
Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Fund's outstanding voting securities.
It is the policy of the Fund that any illiquid securities may not constitute, at
the time of purchase or at anytime, more than ten percent of the value of the
total net assets of the Fund. The Fund will not concentrate its investments in
any one industry and pursuant to Section 18(f) of the 1940 Act may not issue
senior securities.
As a general policy, it is the Fund's intention to hold investments until they
mature or until immediately prior to the expiration of an applicable Liquidity
Agreement. However, in an effort to increase portfolio yields, the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable
because of unfavorable market conditions.
New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Fund may occasionally enter into
such commitments, subject to certain limitations and procedures discussed in the
Statement of Additional Information.
While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances, described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible an issuer or bank will default on the provisions of their Liquidity
Agreements, which could cause the net asset value per share to decrease. In
light of these various contingencies, there can be no assurances the Fund will
achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described under
"Investment Policy"; (2) invest more than 80 percent of its total assets in
tax-exempt fixed and variable rate debt obligations (or participation interests
therein) issued by state and local governmental units within the United States
which are backed by Liquidity Agreements; (3) invest more than five percent of
its total assets (determined as of the date of purchase) in tax-exempt
obligations or participation interests therein subject to Liquidity Agreements
issued by any one bank; (4) purchase or sell real estate, commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; (5) make short sales of securities or maintain a short
position or write, purchase, or sell puts (excluding Liquidity Agreements
covering certain tax-exempt obligations purchased by the Fund), calls,
straddles, spreads or combinations thereof; (6) make loans to other persons,
provided the Fund may make investments and enter into repurchase agreements as
described above; (7) invest in securities with legal or contractual restrictions
on resale (except for tax-exempt debt obligations subject to Liquidity
Agreements) or for which no ready market exists; (8) enter into a Liquidity
Agreement with any bank unless such bank is a United States bank which has a
record, together with predecessors, of at least five years of continuous
operations; (9) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven days; and (10) enter into Liquidity Agreements with any bank if five
percent or more of the securities of such bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such bank.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (1) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (2)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
PERFORMANCE
Performance of each Fund may be quoted in advertising in terms of current yield
and effective yield. CURRENT YIELD refers to the income generated by an
investment in either Fund over a seven-day period. This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The Fund may also present a 30-day
yield which is calculated similarly but instead refers to a 30-day period rather
than a seven-day period. EFFECTIVE YIELD is calculated similarly but, when
annualized, that income earned from the investment is assumed to be reinvested
weekly. Effective yield will be slightly higher than current yield because of
the compounding effect of this assumed reinvestment.
Performance of the Funds may also be compared to other mutual funds with similar
investment objectives, relevant indices or rankings prepared by independent
services or other financial publications, or yields on deposits at financial
institutions. Unlike the Funds, deposit accounts at financial institutions are
generally insured by the Federal Deposit Insurance Corporation and do not
fluctuate to the extent of the Funds.
Additionally, Municipal Assets may quote a taxable-equivalent yield based on a
stated income tax rate. Please see each Fund's Statement of Additional
Information for further discussion of the manner in which yields are calculated
and the comparative performance data which may be used.
Of course, the Funds' yields are not fixed nor is principal guaranteed. Yields
are functions of the type and quality of instruments held in the portfolio,
operating expenses, and market conditions. Consequently, current yields will
fluctuate and are not necessarily representative of the future results
DISTRIBUTIONS AND TAXES
Dividends from the net income of each Fund are declared daily to Shareholders at
the close of business on each Business Day (as definded in this Prospectus) and
paid monthly. Dividends are automatically reinvested in "T" Shares unless cash
payment has been selected on the Account Application. If a shareholder has
elected to receive dividends and/or distributions in cash and the checks are
returned and marked as "undeliverable" or remain uncashed for six months, your
cash election will be changed automatically and future dividends will be
reinvested in "T" Shares of the Fund. In addition, any undeliverable checks or
checks that remain uncashed for six months will be canceled and will be
reinvested in "T" Shares of the Fund at the per share net asset value determined
as of the date of cancellation. If a shareholder redeems the entire amount in
his account during the month, dividends credited to the account from the
beginning of the month through the date of redemption are paid with the
redemption proceeds.
Dividends on each Class of Shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder servicing fees (see "Organization and Shares of
the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
Each Fund intends to qualify as a regulated investment company by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income, tax-exempt dividend income and/or capital
gains, as the case may be, from distributions whether paid in cash or received
in the form of additional shares.
Dividends derived from interest on federally tax-exempt debt obligations owned
by Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets expenses will be allocated between tax-exempt and taxable
income in the same proportion as the Fund's tax-exempt income bears to the total
of such exempt income and its gross income (excluding from gross income the
excess of capital gains over capital losses).
Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year. This discussion is only a summary and relates solely to
Federal tax matters. Further discussion of the Federal Income Tax consequences
of an investment in the Fund is provided in the Statement of Additional
Information. Dividends may also be subject to local taxation. Shareholders are
encouraged to consult with their personal tax advisors.
ORGANIZATION AND SHARES OF THE FUNDS
The Company is a Maryland corporation organized on November 16, 1994. The Funds
were created on October 30, 1997, to acquire the assets and continue the
business of the corresponding substantially identical investment portfolios of
the AMCORE Vintage U.S. Government Obligations Fund, a series portfolio of The
Coventry Group, a Massachusetts Business Trust, and the Liquid Assets Funds,
Inc., and the Municipal Assets Funds, Inc., two separately registered open-end,
diversified management investment companies organized as Iowa corporations.
References herein to the "immediate predecessor" of the Funds refer to the
respective companies which correspond to such Fund. Each Share of a Fund
represents an equal proportionate interest in that Fund with other Shares of the
same Fund, and is entitled to such dividends and distributions out of the income
earned on the assets belonging to that Fund as are declared at the discretion of
the Directors.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common stock relating to new
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example
in the sales load, Rule 12b-1 fees or service plan fees applicable to different
classes of Shares offered by a particular Fund. Such an arrangement could enable
the Company to tailor its marketing efforts to a broader segment of the
investing public with a goal of attracting additional investments in the Funds.
"T" Shares of the Funds are described in this Prospectus. "S" Shares, "S2"
Shares (Liquid Assets only), and "I" Shares (Liquid Assets and Municipal Assets
only) are offered in separate Prospectuses which may be obtained by calling the
Fund at 1-800-798-1819 or writing to the address on the cover of this
Prospectus. Please read the Prospectus carefully before investing or sending
money. All shares are offered to individual and institutional investors acting
on their own behalf or on behalf of their customers and bear their pro rata
portion of all operating expenses paid by the Funds, except that "S" Shares,
"S2" Shares and "T" Shares bear separate distribution and/or shareholder
servicing fees. "I" Shares bear no distribution or shareholder servicing fees.
Each Class of Shares of the Government Assets, Liquid Assets and Municipal
Assets Funds offers different privileges. "S" and "S2" Shares of Liquid Assets,
and "S" Shares of Municipal Assets and Government Assets are normally offered
through financial institutions providing automatic "Sweep" investment programs
to their customers. "T" Shares offer a check writing privilege and are also
offered through trust organizations or others providing shareholder services
such as establishing and maintaining custodial accounts and records for their
customers who invest in "T" Shares, assisting customers in processing purchase,
exchange and redemption requests and responding to customers' inquiries
concerning their investments, though they may also be used in "sweep" programs.
"I" Shares of Liquid Assets and Municipal Assets pay no shareholder or servicing
fees and so are normally offered directly by the Distributor or through trust
organizations providing fiduciary account services for an additional fee. Each
Class of Shares is exchangeable only for shares of the same Class. Participating
Organizations selling or servicing "S", "S2" and "T" Shares may receive
different compensation with respect to one Class over another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of "S" Shares and
"S2" Shares will vote on matters relating to the Distribution Plan for "S"
Shares and "S2" Shares. Only holders of "S" Shares, "S2" Shares and "T" Shares
will vote on matters pertaining to the Administrative Services Plan.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this Prospectus, shares
will be fully paid and nonassessable. All shares are held in uncertified form
and will be evidenced by the appropriate notation on the books of the transfer
agent.
SHAREHOLDER REPORTS AND MEETINGS
Each shareholder will receive monthly Fund information, an unaudited semiannual
report, and an annual report containing audited financial statements. If you
have questions about your account, call 1-800-438-6375. You may also write the
Fund at the address on the cover of this Prospectus. You may order statements
for the current and preceding year at no charge. However, there will be a $10.00
fee per statement for statements ordered for other years.
The Fund may operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the 1940 Act. The Funds
have adopted the appropriate provisions in their Bylaws and may, in their
discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. The Funds have also adopted
provisions in their Bylaws for the removal of Directors by the shareholders.
Shareholders may receive assistance in communicating with other shareholders as
provided in Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders, at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Funds may remove a Director by the affirmative vote of a
majority of the Funds' 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 Funds' outstanding voting securities.
All consideration received by the Funds for shares of one of the Funds and all
assets in which such consideration is invested, belong to that Fund (subject
only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income and expenses attributable to one Fund
are treated separately from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Funds, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by such matter. Rule 18f-2 further provides that a Fund shall be deemed
to be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical or that the matter does not affect the interest of such
Fund. However, the Rule exempts the selection of independent auditors and the
election of Directors from the separate voting requirements of the Rule.
MANAGEMENT AND FEES
Overall responsibility for management of the Company rests with the Board of
Directors, who are elected by the Shareholders of the Company's Funds. The
Company will be managed by the Directors in accordance with laws of Maryland
governing corporations. The Directors, in turn, elect the officers of the
Company to supervise the day-to-day operations. The Directors receive fees and
are reimbursed for their expenses in connection with each meeting of the Board
of Directors they attend. The officers of the Company receive no compensation
directly from the Company for performing the duties of their offices.
Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG, a wholly owned subsidiary of AMCORE Financial, Inc, is a
federally registered Investment Advisor organized in 1982 and located at 2203
Grand Avenue, Des Moines, Iowa 50312-5338. IMG has been providing continuous
investment management to pension and profit-sharing plans, insurance companies,
public agencies, banks, endowments and charitable institutions, other mutual
funds, individuals and others for over 15 years. As of February 28, 1998, IMG
had approximately $3.6 billion in equity, fixed income and money market assets
under management.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Fund's portfolios:
KATHRYN D. BEYER, CFA, MANAGING DIRECTOR. Ms. Beyer is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1993, her experience includes serving as a securities
analyst and director of mortgage-backed securities for Central Life
Assurance Company from 1988 to 1993. Ms. Beyer received her Masters of
Business Administration degree from Drake University, Des Moines, Iowa, and
her Bachelor of Science Degree in Agricultural Engineering from Iowa State
University, Ames, Iowa.
JEFFREY D. LORENZEN, CFA, MANAGING DIRECTOR. Mr. Lorenzen is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1992, his experience includes serving as a securities
analyst and corporate fixed income analyst for The Statesman Group from
1989 to 1992. Mr. Lorenzen received his Masters of Business Administration
degree from Drake University, Des Moines, Iowa, and his Bachelor of
Business Administration from the University of Iowa, Iowa City, Iowa.
ELIZABETH S. PIERSON, CFA, VICE PRESIDENT AND SENIOR FIXED INCOME MANAGER.
Ms. Pierson is a fixed income strategist and is a member of IMG's
Investment Policy Committee. She has been with AMCORE Capital Management,
Inc. (or a predecessor) since 1984 when she began her investment career.
Ms. Pierson became an employee of IMG effective with the acquisition of IMG
by AMCORE Financial, Inc. in February 1998. She has a B.S. degree from the
University of Illinois, Champaign-Urbana. Ms. Pierson chairs the Fixed
Income Research Committee. She has been responsible for investment
management and credit responsibilities in numerous individually managed
advisory portfolios.
Under an Investment Advisory Agreement between the Funds and IMG, a fee is paid
to IMG for investment advisory services. Each Fund is responsible for paying
operating expenses not assumed by IMG. The investment management fee for each
Fund is calculated daily and paid monthly. The maximum management fee for
Government Assets is 0.40% of average daily net assets; the maximum management
fee for Liquid Assets and Municipal Assets is 0.35% of average daily net assets.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
IMG may not seek reimbursement of such waived fees at a later date. The waiver
of such fee will cause the yield of a Fund to be higher than it would otherwise
be in the absence of such a waiver.
IMG also provides management and administration, and shareholder recordkeeping
services to the Funds. Under a Management and Administration Agreement, IMG will
supervise all aspects of the operations of the Funds, except those performed
under the Investment Advisory Agreement, by the Custodian, under the Transfer
Agency Agreement and under the Fund Accounting Agreement. For these services IMG
receives a fee calculated daily and paid monthly at the annual rate of 0.21% for
Government Assets and 0.06% for Liquid Assets and Municipal Assets of the
average daily net assets of each Fund. Under a Fund Accounting Agreement, IMG
provides bookkeeping and accounting services to the Funds, including calculating
daily net asset value and yield quotations. For these services, the Funds each
pay IMG a fee calculated daily and paid monthly at an annual rate of 0.03% of
the average daily net assets of each Fund. The fees received and the services
provided under these contracts are in addition to those received and paid to IMG
under the Advisory Agreement.
Under a Transfer Agency Agreement, Bisys Fund Services provides customary and
usual services of a transfer agent to the Funds. For these services, Bisys Fund
Services is paid various fees.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Funds. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, each Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Funds;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Funds; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Funds except that the Funds' Distribution Agreement requires that the
Distributor pay for prospectuses that are to be used for sales purposes with
persons other than current shareholders.
From time to time, IMG may voluntarily waive all or a portion of the investment
management fee and/or other fees and/or absorb certain expenses of a Fund
without further notification of the commencement or termination of such waiver
or absorption. Any such waiver will have the effect of lowering the overall
expense ratio for that Fund and increasing the Fund's overall yield to investors
at the time any such amounts are waived and/or absorbed.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the Funds will be borne by the Funds. Expenses attributable to a particular Fund
are charged against the assets of that Fund; other expenses of the Funds are
allocated among the Funds on a reasonable basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.
The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which each Fund is authorized to pay compensation to banks and other
financial institutions (each a "Participating Organization"), including AMCORE
Financial, Inc. and its correspondent and affiliated banks, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders (collectively, "customers") who
are the beneficial or record owner of Shares of that Fund. In consideration for
such services, a Participating Organization receives a fee from a Fund, computed
daily and paid monthly, at an annual rate of up to 0.25% of the average daily
net asset value of Shares of that Fund owned beneficially or of record by such
Participating Organization's customers for whom the Participating Organization
provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Participating Organizations receiving such compensation
to perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Funds,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into Servicing
Agreements with Participating Organizations pursuant to which the Participating
Organization has agreed to provide certain administrative support services in
connection with Shares of the Funds owned of record or beneficially by its
customers. Such administrative support services may include, but are not limited
to, (i) processing dividend and distribution payments from a Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from a Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay the Participating Organization a monthly fee, computed
at an annual rate 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays servicing fees of 0.15% on the "T" Shares of the Liquid Assets
and Municipal Assets Funds. No Servicing fees are paid by the Company on
Government Assets although it may begin to do so at any time without further
notice to shareholders. IMG, as Advisor and Administrator, may supplement the
Servicing Fees paid by the Company to the Participating Organization up to the
maximum fee approved by the Services Plan without further notice to shareholders
and at no cost to the Company.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a Participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences. It is intended that none of the services provided by
such Participating Organizations other than through registered brokers will
involve the solicitation or sale of shares of the Funds.
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006 serves
as custodian for Government Assets. AMCORE Investment Group, N.A., Rockford,
Illinois, serves as custodian for Liquid Assets and Municipal Assets Funds.
Pursuant to the Custodian Agreements with Bankers Trust Company and AMCORE
Investment Group, N.A., each custodian receives compensation from each Fund for
such services in an amount equal to a designated annual fee (and as to Bankers
Trust Company, additional fees charged for certain portfolio transactions and
out-of-pocket expenses).
OPENING AN ACCOUNT
The Funds require a completed and signed application (which is attached) at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. IF YOU HAVE QUESTIONS CALL
THE FUNDS AT 1-800-798-1819 FROM 8:00 A.M. TO 4:30 P.M. CENTRAL TIME.
SHARE PRICE
The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined once each business day, at 11:00
a.m. Central Time. The Funds are open for business each day the Federal Reserve
is open.
Your purchase will be processed at the next NAV calculated after your investment
has been converted to federal funds. If you invest by check, the Funds must
generally allow one or more days for conversion into federal funds before
accepting your purchase.
Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per Share. These procedures are described in more detail in the
Funds' Statement of Additional Information.
Under the amortized cost method of valuation, a security is initially valued at
cost on the date of purchase and, thereafter, any discount or premium is
amortized on a straight-line basis to maturity, regardless of the effect of
fluctuating interest rates on the market value of the security. U.S. government
obligations, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, investments in taxable
and tax-exempt debt obligations rated by a recognized bond rating agency and
regularly traded in the secondary market, and nonrated fixed and variable rate
tax-exempt obligations and participation interests therein, not regularly traded
in the secondary market but subject to Liquidity Agreements will be valued at
amortized cost. Other assets are valued at a fair value determined in good faith
by the Board of Directors of each Fund.
PURCHASING SHARES
Shares of each Fund may be purchased directly from BISYS, Fund Services Limited
Partnership, as the distributor. Shares may also be purchased by customers of
qualified banks, savings and loan associations, broker/dealers, investment
advisory firms, and other organizations ("Participating Organizations") that
have entered into servicing agreements with the Distributor. The Participating
Organization is responsible for transmitting purchase orders directly to the
Fund's Distributor. A Participating Organization may elect to hold record
ownership of shares for its customers and to show beneficial ownership of shares
on the account statements it provides to them. In the alternative, a
Participating Organization may elect to establish its customers' accounts of
record with IMG as transfer agent for the Funds. Generally, shares purchased
through Participating Organizations will be held by the Participating
Organization as shareholder of record.
Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $1,000. Subsequent investments in each Fund must be made in amounts of
not less than $50, except where purchases are made through Participating
Organizations in which case there is no minimum. Participating Organizations may
aggregate their customers' purchases to satisfy the required minimums.
Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for "T" Shares received in good order by the Funds by 11:00
a.m. Central Time on a business day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for "T" Shares received after 11:00 a.m. Central Time
and prior to 3:00 p.m. Central Time on a business day for which such funds have
been received by 3:00 p.m. Central Time will be effected as of 11:00 a.m.
Central Time the following day, and will begin to accrue dividends at that time.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.
While the Funds themselves do not presently levy sales, redemption or account
service charges, Participating Organizations may elect to do so and the Funds
may elect to do so in the future. Investors should inquire regarding the nature
and costs of services provided by Participating Organizations and determine if
such services are desired, because the costs thereof will reduce the Funds'
yields to the investor below that obtainable by investing in the Funds directly.
Customers wishing to purchase shares through their Participating Organization
should contact such entity directly for appropriate instructions. (For a list of
the Participating Organizations in your area, CALL THE FUNDS AT 1-800-798-1819
OR 515-244-5426.) Direct investors may purchase shares in accordance with the
procedures described below, "Purchase Procedures".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $1,000 (minimum) $50 (minimum)
Please make your check pay- Please make your check payable
able to the Fund selected and to the Fund selected, with your
mail to the address indicated account number on the check on
the application. and mail to the address printed
on your account statement.
BY WIRE Please call for an account See instructions below.
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.
For Government Assets, Federal Funds should be wired to: Bankers Trust, New
York, New York, ABA #021001033, Account #00355557. For Liquid Assets and
Municipal Assets, Federal Funds should be wired to: Federal Reserve Bank of
Chicago for AMCORE Investment Group, N.A., Rockford, Illinois, together with
the name of the Fund, your account number and names.
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
By Electronic Not available for initial Shareholders who have an
Funds Transfer purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
SHAREHOLDER SERVICES
Some shareholder services may not be available if shares are purchased through
Participating Organizations. Call the Funds at 1-800-798-1819 for more
information.
EXCHANGE PRIVILEGE. You may exchange "T" Shares of either Fund for "T" Shares in
the other Fund described in this Prospectus. An exchange involves a redemption
of the shares of the Fund being liquidated and a purchase of the shares of the
Fund in which the redemption proceeds are to be invested. The exchange privilege
is offered as a convenience to shareholders and is not intended to be a means of
speculating on short-term movements in securities prices by transactions
involving frequent purchases and sales of shares. Each Fund reserves the right
at any time and without prior notice, to suspend, limit, modify or terminate
exchange privileges or their use by individual shareholders in order to prevent
transactions considered to be disadvantageous to existing shareholders.
TELEPHONE TRANSFERS. This service allows you to authorize transfers of money to
purchase or sell shares. Using Telephone Transfer you can move money between
your bank account and your account in the Funds with one phone call. Moneys may
be transferred either by wire or electronic funds transfer with an institution
which is a member of the Automated Clearing House ("ACH").
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. For a wire redemption, the then current wire redemption charge
may be deducted from the proceeds of a wire redemption. This charge, if applied,
will vary depending on the receiving institution for each wire redemption.
Allow two (2) days after the call for electronic funds transfer via ACH to move
moneys between your bank account and your account with either Fund.
For moneys recently invested, allow normal clearing time before redemption
proceeds are sent to your bank. In order to change the financial institution
account designated to receive redemption proceeds, it will be necessary to send
a written request to the Fund with a signature guarantee from a national or
state bank, a trust company or a federal savings and loan association, or a
member firm of the New York, American, Boston, Midwest or Pacific Stock
Exchange.
You can also arrange sYSTEMATIC PERIODIC INVESTMENTS (minimum $50) into your
Fund account. Simply select the regular investment schedule you would like when
completing your account application. Your bank account will automatically be
debited to purchase shares of the Fund you select. You will receive confirmation
of each transaction.
Your bank must be a member of ACH and you must have a checking or NOW/Money
Market Deposit account to use electronic funds transfer or systematic investing.
Please allow 20 days after receipt of your application to activate the Telephone
Transfer capability.
STATEMENTS AND REPORTS. You will receive a statement of your account listing
every transaction that affects your share balance no less than once per month.
At least twice a year you will receive the financial statements of the Fund in
which you have invested with a summary of that Fund's portfolio composition and
performance. Each Fund's Annual Report is reported on by the Funds' independent
auditors, KPMG Peat Marwick LLP.
REDEEMING SHARES
Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
in good order by the Distributor before 11:00 a.m. Central Time on a Business
Day will be redeemed as of 11:00 a.m. Central Time and will earn dividends
through the previous day; proceeds normally will be sent electronically the same
day (or mailed by check the next Business Day) to the organization that placed
the redemption order in good form. Redemption orders received after 11:00 a.m.
Central Time or on a non-Business Day will be redeemed as of 11:00 a.m. the next
Business Day and earn dividends through the date the redemption request was
received; proceeds will be sent electronically on the next business day (or
mailed by check on the second business day thereafter). While the Funds use
their best efforts to maintain their net asset value per share at $1.00, the
proceeds paid upon redemption may be more or less than the amount originally
invested.
If you purchase shares through a Participating Organization, you may redeem
shares in accordance with that Organization's rules regarding redemption
requests. Direct shareholders may redeem shares in accordance with the
procedures described under "How to Redeem Shares".
The Funds intend to pay redemption proceeds within two business days and in no
event will payment be made later than seven days after receipt of a redemption
request in good order. Payments to investors who request to redeem shares within
a few days after a purchase paid for by check may be delayed until the Funds can
verify the check has been collected.
The Funds reserve the right to suspend redemptions or to postpone the payment
therefore when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has permitted such suspension; or (c) an emergency as
determined by the Securities and Exchange Commission exists, making sale of
portfolio securities or valuations of the Funds' net assets not reasonably
practicable.
Check writing is available on "T" Shares of Government Assets, Liquid Assets,
and Municipal Assets Funds. A Shareholder may write up to 5 checks a month in
amounts of $250 or more. The check writing privilege is not available when
purchases are made through a financial institution providing an automatic
"sweep" investment program. Please call (800) 798-1819 for more information
regarding check writing.
If an investor's account drops below $250 due to redemptions, the Funds reserve
the right to redeem any remaining shares, if after 30 days' notice, additional
investments to bring the account value to $250 are not made.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter specifying
TO: 2203 GRAND AVENUE the name of the Fund, the number of shares to be
DES MOINES, IA 50312-5338 sold, your name, your account number, and the
additional requirements listed below that apply to
your particular account.
TYPE OF REGISTRATION REQUIREMENTS
-------------------------- ---------------------------------------------------
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as it is
Custodial (Uniform Gifts registered, accompanied by signature guarantee(s).
or Transfers To Minors
Act), General Partners
Corporation, Association Letter of instruction and a corporate resolution
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trust A letter of instruction signed by the Trustee(s),
(as Trustee), with a signature guarantee. (If
the Trustee's name is not registered on your
account, also provide a copy of the trust docu-
ment, certified within the last 60 days.)
If you do not fall into any of these registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call for further
instructions.
A signature guarantee is designed to protect you and the Fund against
fraudulent transactions by unauthorized persons. A signature guarantee is
required for all persons registered on an account. A signature guarantee may
be obtained from an eligible guarantor institution, as defined by the
Securities and Exchange Commission. These institutions include banks, savings
and loan associations, credit unions, brokerage firms, and others. The words,
"SIGNATURE GUARANTEED" must be stamped or typed near each person's signature
and appear with the printed name, title, and signature of an officer and the
name of the guarantor institution. PLEASE NOTE THAT A NOTARY PUBLIC STAMP OR
SEAL IS NOT A SIGNATURE GUARANTEE.
FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
BY EXCHANGE-- You must meet the minimum investment requirement
of the other fund. You can only exchange between
accounts with identical names, addresses, and
taxpayer identification numbers.
BY ELECTRONIC FUNDS You must have applied for the Telephone Transfer
TRANSFER (ACH) OR WIRE-- feature on your application. Allow two days via
ACH. Call before 10:00 a.m. for same day wire.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary....................................................2
Expense Summary of "T" Shares.........................................4
Financial Highlights..................................................5
Investment Objectives, Policies and Restrictions......................8
Government Assets...................................................8
Liquid Assets.......................................................8
Municipal Assets...................................................11
Performance..........................................................14
Distributions and Taxes..............................................15
Organization and Shares of the Funds.................................16
Shareholder Reports and Meetings.....................................18
Management and Fees..................................................19
Opening an Account...................................................23
Share Price........................................................23
Purchasing Shares..................................................24
Shareholder Services.................................................25
Redeeming Shares.....................................................27
NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY BISYS FUND SERVICES LIMITED PARTNERSHIP. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY BISYS FUND SERVICES LIMITED
PARTNERSHIP IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
LIQUID ASSETS FUND "I" SHARES
MUNICIPAL ASSETS FUND "I" SHARES
2203 Grand Avenue, Des Moines, Iowa 50312-5338
- --------------------------------------------------------------------------------
FOR CURRENT YIELD, PURCHASE AND REDEMPTION INFORMATION CALL.........800-798-1819
515-244-5426
- --------------------------------------------------------------------------------
PROSPECTUS MARCH 23, 1998
- --------------------------------------------------------------------------------
Liquid Assets Fund offers four classes of shares and Municipal Assets Fund
offers three classes of shares. This Prospectus describes the "I" Shares of each
Fund. "I" Shares are offered to individual and institutional customers (acting
on their own behalf or on the behalf of individuals). The Funds also offer "S"
Shares and "T" Shares which accrue daily dividends in the same manner as "I"
Shares except that each class bears separate distribution and/or shareholder
administrative servicing fees. "S2" Shares are also offered by Liquid Assets
Fund. (see "Organization and Shares of the Funds").
LIQUID ASSETS FUND, ("Liquid Assets") seeks maximum current income consistent
with safety of principal and maintenance of liquidity. MUNICIPAL ASSETS FUND,
("Municipal Assets") seeks maximum current income exempt from federal income
tax, consistent with safety of principal and maintenance of liquidity. "I"
Shares are offered and redeemed at $1.00 per share under rules which allow the
Funds to use the amortized cost method of valuing the Funds' assets.
AN INVESTMENT IN SHARES OF THE FUNDS IS NOT INSURED OR GUARANTEED BY THE UNITED
STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THE FUNDS SEEK TO MAINTAIN A CONSTANT NET ASSETS VALUE OF $1.00, BUT UNDER
EXTRAORDINARY CIRCUMSTANCES THE VALUE OF SHARES MAY VARY FROM $1.00 AND
CONSEQUENTLY, THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth basic information about each Fund that investors
should know before investing and should be retained for future reference. The
Statement of Additional Information (as of the date of this Prospectus) which
contains more detailed information about each Fund has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference. The
Statement of Additional Information is available free upon request from the
Funds at the address and telephone number indicated above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
TYPE OF COMPANY
Each Fund is a diversified series of an open-end, management investment company.
INVESTMENT OBJECTIVE
For Liquid Assets, maximum current income consistent with safety of principal
and maintenance of liquidity.
For Municipal Assets, maximum current income exempt from federal income tax,
consistent with safety of principal and maintenance of liquidity.
INVESTMENT OBJECTIVE
Under normal market conditions, Liquid Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term debt obligations
including, primarily, redeemable Certificates backed by federally insured
student loans and Farmers Home Administration guaranteed loans, commercial
paper, bank obligations, short-term corporate obligations and obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities and
repurchase agreements collateralized by such obligations having a
dollar-weighted average maturity of 90 days or less. The Fund seeks to maintain
a net asset value of $1.00 per share.
Under normal market conditions, Municipal Assets will invest in a diversified
portfolio of high quality, U.S. dollar denominated short-term municipal
securities which mature or have a demand feature exercisable in one year or less
from the date of acquisition having a dollar-weighted average maturity of 90
days or less. The Fund seeks to maintain a net asset value of $1.00 per share.
RISK FACTORS AND SPECIAL CONDITIONS
An investment in the Funds is subject to certain risks, as set forth in detail
under "INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS." As with all mutual
funds, there can be no assurance that the Funds will achieve their investment
objectives.
OFFERING PRICE
The public offering price of each Fund is equal to its net asset value of $1.00
per Share.
SHARES OFFERED
"I" Shares of common stock ("Shares") of Liquid Assets and Municipal Assets,
each a separate investment portfolio of the Vintage Mutual Funds, Inc., a
Maryland Corporation, (the "Company"). See "OPENING AN ACCOUNT", "SHAREHOLDER
SERVICES", and "REDEEMING SHARES" for detailed information about how to buy and
sell shares.
MINIMUM PURCHASE
The minimum initial investment is $1,000 with $50 minimum subsequent investments
(subject to certain exceptions).
DIVIDENDS
Dividends are declared daily and paid monthly and will be automatically
reinvested unless the shareholder elects otherwise.
INVESTMENT ADVISOR
Investors Management Group, Ltd. ("IMG" or the "Advisor").
ADMINISTRATOR
Investors Management Group, Ltd. ("IMG" or the "Administrator").
DISTRIBUTOR
BISYS Fund Services Limited Partnership, Columbus, Ohio (the "Distributor")
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES
LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND
----------- -----------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) None None
Deferred Sales Load (as a percentage of offering
original purchase price or redemption
proceeds, as applicable) None None
Redemption Fee (as a percentage of amount
redeemed, if applicable) None None
Exchange Fee None None
LIQUID MUNICIPAL
ASSETS FUND ASSETS FUND
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.35% 0.35%
Other Expenses
Administrative Fees 0.06% 0.06%
Other Expenses 0.11% 0.15%
---- ----
Total Other Expenses 0.17% 0.21%
---- ----
Total Fund Operating Expenses 0.52% 0.56%
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 "I"
Shares of a Fund will bear directly or indirectly. The table reflects current
fees and estimates other expenses. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for a Fund
or class of Shares of 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) 5% annual return and (2) redemption at the end of each time
period.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Liquid Assets $5 $17 $29 $65
Municipal Assets $6 $18 $31 $70
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. Please refer to "MANAGEMENT AND FEES" for a more complete discussion
of the Shareholder transaction expenses and annual operating expenses for the
Funds.
FINANCIAL HIGHLIGHTS
The tables below set forth for each Fund certain financial data, other operating
information and investment results for each of the predecessor Funds, which were
acquired by the Company on February 13, 1998, expressed in one share outstanding
throughout the period. The Financial Highlights contained in the tables below
for Liquid Assets and Municipal Assets are derived from the financial statements
audited (unless otherwise indicated) by KPMG Peat Marwick LLP, independent
auditors for those predecessor Funds. The Financial Highlights should be read in
conjunction with the financial statements, related notes, and other financial
information which are incorporated herein by reference in the Statement of
Additional Information.
LIQUID ASSETS FUND*
SIX MONTHS ENDED OCTOBER 29, 1996 TO
DECEMBER 31, 1997 JUNE 30, 1997(1)
----------------- ----------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
-------- --------
Net Investment Income .053 .052
---- ----
Dividends Distributed (.053) (.052)
------ ------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======== ========
TOTAL RETURN 2.72%(a) 3.51%(a)
Net Assets, End of Period (000 Omitted) $ 4,027 $ 2,356
Ratio of Expenses to Average Net Assets 0.46%(b) 0.45%(b)
Ratio of Net Investment Income to Average
Net Assets 5.33%(b) 5.19%(b)
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
1 Period from Commencement of Operations.
(a) Not Annualized
(b) Annualized
<PAGE>
MUNICIPAL ASSETS FUND*
SIX MONTHS ENDED MARCH 27, 1997 TO
DECEMBER 31, 1997 JUNE 30, 1997(1)
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
-------- --------
Net Investment Income .034 .034
---- ----
Dividends Distributed (.034) (.034)
------ ------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
======== ========
TOTAL RETURN 1.75%(a) 1.20%(a)
Net Assets, End of Period (000 Omitted) $8 $7
Ratio of Expenses to Average Net Assets 0.43%(b) 0.41%(b)
Ratio of Net Investment Income to Average
Net Assets 3.44%(b) 3.42%(b)
* Performance data relates to Liquid Assets Fund, Inc., a corresponding
predecessor Fund, which was acquired on February 13, 1998.
** During the year ended June 30, 1997, the advisor and distributor voluntarily
waived certain fees. Absent these waivers, the ratio of expenses to average
net assets would have been 0.90 percent.
1 Period from Commencement of Operations.
a) Not Annualized
b) Annualized
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
LIQUID ASSETS
The investment objective of Liquid Assets is maximum current income consistent
with safety of principal and maintenance of liquidity. The Fund invests in the
following money market instruments maturing in 397 days or less from time of
investment, (with certain exceptions):
(1) Obligations issued or guaranteed by the U.S. government or any agency or
instrumentality thereof. Such securities will include those supported by
the full faith and credit of the United States Treasury or the right of the
agency or instrumentality to borrow from the Treasury, as well as those
supported only by the credit of the issuing agency or instrumentality.
(2) Repurchase agreements involving securities in the immediately foregoing
categories. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information. (3) Redeemable
interest-bearing trust certificates ("Student Loan Certificates") issued by
the Iowa Student Loan Trust and/or other Student Loan Trusts established by
the Fund, ("Student Loan Trusts"), created for the sole purpose of
purchasing from banks (which qualify as "eligible lenders") federally
insured student loans originated by banks. The Student Loan Certificates
will have original maturities of no more than 397 days but will be
redeemable by the Fund at their face amount upon not more than five days'
written notice to the issuing Student Loan Trust. Further details
concerning the Student Loan Trusts and the Fund's investments in Student
Loan Certificates are found in the Statement of Additional Information.
(4) Redeemable interest-bearing ownership certificates ("FmHA Certificates")
issued by one or more guaranteed loan trusts ("FmHA Trusts"), each created
for the purpose of acquiring participation interests in the guaranteed
portion of Farmer's Home Administration ("FmHA") guaranteed loans. The FmHA
Certificates will have original maturities of no more than 397 days but
will be redeemable by the Fund at their face amount upon not more than five
days' written notice to the issuing FmHA Trust. Further details concerning
the FmHA Trusts and the Fund's investment in FmHA Certificates and FmHA
guaranteed loans are found in the Statement of Additional Information.
(5) Commercial paper which at the time of investment (a) is rated (or the
issuer of which has been rated) highest quality by two nationally
recognized statistical rating organizations ("NRSRO") if rated by two or
more NRSROs; (b) is rated (or the issuer of which has been rated) highest
quality if rated by only one NRSRO; or (c) is determined to be of
equivalent quality by the Company's Board of Directors if unrated.
(6) U.S. dollar-denominated bank obligations (certificates of deposit and
bankers' acceptances) issued by domestic offices of U.S. banks which, at
the date of investment, have capital, surplus, and undivided profits (as of
the date of their most recently published financial statements) in excess
of $10,000,000; and obligations of other banks or savings and loans if such
obligations are insured by the Federal Deposit Insurance Corporation,
provided that not more than 10 percent of the total assets of the Fund will
be invested in such insured obligations.
(7) Short-term (maturing in one year or less) corporate obligations which at
the time of investment (a) are rated in the highest rating category by two
NRSROs, if rated by two or more NRSROs; (b) are rated in the highest rating
category if rated by only one NRSRO; or (c) are determined to be of
equivalent quality by the Company's Board of Directors if unrated.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not have invested more than five percent of its total
assets in securities issued by a single issuer. For additional requirements of
Rule 2a-7, see "OPENING AN ACCOUNT -- Share Price". Assets of the Fund will
consist of securities with maturities of 397 days or less at date of purchase
or, if maturing beyond 397 days, will be backed by Liquidity and Servicing
Agreements or Guaranteed Funding Agreements and will have variable interest
rates adjustable at least semiannually. In determining whether particular
variable rate investments backed by Liquidity and Servicing Agreements or
Guaranteed Funding Agreements may be made, the period remaining until maturity
will be deemed to be the longer of the demand notice period required before the
Fund is entitled to receive payment of the principal amount or the period
remaining until the next interest adjustment. The dollar-weighted average
maturity of Fund investments will be 90 days or less, determined in the same
manner. While the underlying security in a repurchase agreement may have a
maturity of more than 397 days, the repurchase agreement itself will terminate
in less than 397 days, and typically within a few days. The Fund intends to
invest at least 25 percent of its total assets in Student Loan Certificates,
and/or FmHA Certificates, except when such investments are either not available
in sufficient quantity or do not carry yields competitive with alternative
investments.
It is the policy of the Fund that any illiquid securities (including repurchase
agreements of more than seven days duration) may not constitute, at the time of
purchase or at any time, more than ten percent of the value of the total net
assets of the Fund.
As a fundamental policy, the Fund will not concentrate its investments in any
one industry and pursuant to Section 18(f) of the 1940 Act, the Fund may not
issue senior securities. As a general policy, it is the Fund's intention to hold
investments until they mature. However, in an effort to increase portfolio
yields the Fund may periodically trade securities to take advantage of perceived
disparities between markets for various short-term money market instruments. It
is also possible that redemptions of Fund shares could necessitate the sale of
portfolio investments prior to maturity and at times when such sale would be
undesirable because of unfavorable market conditions.
While investments by the Fund will be confined to high quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible Participating Banks or borrowers will default on the provisions of
their agreements with the Fund or that banks will default on repurchase
agreements with the Student Loan Trusts or the FmHA Trusts, which could cause
the net asset value per share to decrease.
In light of these various contingencies, there can be no assurances the Fund
will achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding shares. Without shareholder approval
the Fund may not: (1) purchase any securities other than those described above;
(2) invest more than 80 percent of its total assets in Student Loan Certificates
and/or FmHA Certificates; (3) purchase or sell real estate (other than
short-term loans secured by real estate or interests therein or loans to
companies which invest in or engage in other activities related to real estate),
commodities or commodity contracts, interests in oil, gas or other mineral
exploration or development programs; (4) make short sales of securities or
maintain a short position or write, purchase, or sell puts (excluding repayment
and guarantee arrangements on loan participations purchased from Participating
Banks), calls, straddles, spreads or combinations thereof; (5) make loans to
other persons, provided the Fund may invest up to 80 percent of its total assets
in Student Loan Certificates or FmHA Certificates, as described in (2) above,
and may make the investments and enter into repurchase agreements as described
above; (6) invest in securities with legal or contractual restrictions on resale
(except for repurchase agreements, Student Loan Certificates, and FmHA
Certificates) or for which no ready market exists; (7) enter into repurchase
agreements if, as a result thereof, more than five percent of the Fund's total
assets (taken at market value at the time of such investment) would be subject
to repurchase agreements maturing in more than seven days.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (a) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (b)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
MUNICIPAL ASSETS
The investment objective of Municipal Assets is maximum current income exempt
from federal income tax, consistent with safety of principal and maintenance of
liquidity. The Fund invests in the following types of money market instruments
maturing in 397 days or less from time of investment (with certain exceptions),
as defined herein:
(1) Tax-exempt debt obligations issued by state and municipal governmental
units and public authorities within the United States and participation
interests therein. With few exceptions such obligations will be nonrated
and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank letters
of credit or guarantees (collectively referred to herein as "Liquidity
Agreements"). The Liquidity Agreements will permit the holder of the
securities to demand payment of the unpaid principal balance plus accrued
interest upon a specified number of days' notice either from the issuer or
by drawing on an irrevocable bank letter of credit or guarantee. In
addition, all obligations with maturities longer than 397 days from date of
purchase will, by their terms, bear rates of interest that are adjusted
upward or downward no less frequently than semiannually by means of a
formula intended to reflect market changes in interest rates. Certain types
of industrial development bonds issued by public bodies to finance the
construction of industrial and commercial facilities and equipment are also
purchased. The Statement of Additional Information contains further details
concerning the Fund's policies and procedures with respect to investments
in such tax-exempt obligations and participation interests.
(2) High quality tax-exempt debt obligations issued by state and municipal
governments and by public authorities, including issues sold as interim
financing in anticipation of tax collections, revenue receipts or bond
sales, and tax-exempt Project Notes secured by the full faith and credit of
the United States. Such obligations will be purchased only if backed by the
full faith and credit of the United States or rated Aaa, Aa, MIG-1, MIG-2
or Prime-1 by Moody's Investors Service, Inc., or AAA, AA, or A-1 by
Standard & Poor's Corporation. Nonrated securities may also be purchased if
determined by the Company's Board of Directors to be of comparable quality
to the rated securities in which the Fund may invest.
(3) Taxable obligations issued or guaranteed by agencies or instrumentalities
of the U.S. government may be acquired from time to time on a temporary
basis for defensive purposes.
(4) Repurchase agreements involving securities in the immediate foregoing
category. A repurchase agreement involves the sale of such securities to
the Fund with the concurrent agreement of the seller to repurchase them at
a specified time and price, to yield an agreed upon rate of interest.
Repurchase agreements may involve certain risks which are described in
greater detail in the Statement of Additional Information.
In accordance with procedures adopted pursuant to Rule 2a-7 under the 1940 Act,
the Fund limits its investments to those U.S. dollar-denominated instruments
determined by the Board of Directors to present minimal credit risk and which
are "Eligible Securities" as that term is defined by Rule 2a-7. Pursuant to Rule
2a-7, the Fund shall not invest more than five percent of its total assets in
securities issued by a single issuer. For additional requirements of Rule 2a-7,
see "Opening an Account -- Share Price". Assets of the Fund will consist of
securities with maturities of 397 days or less at date of purchase or, if
maturing beyond 397 days, securities which are backed by Liquidity Agreements
and which have variable interest rates adjustable at least semi-annually and
upon the adjustment of the interest rate the value of the securities will be
approximately equal to par. In determining whether particular variable rate
investments backed by Liquidity Agreements may be made, the period remaining
until maturity will be deemed to be the longer of the demand notice period
required before the Fund is entitled to receive payment of the principal amount
or the period remaining until the next interest adjustment. The dollar-weighted
average maturity of Fund investments will be 90 days or less, determined in the
same manner.
Under normal market conditions, the Fund as a matter of fundamental policy, will
invest at least 80 percent of its total net assets in tax-exempt securities, the
interest on which is exempt from federal income tax, except to the extent that
some or all of which may be subject to the alternative minimum tax. This
fundamental policy may not be changed without the approval of a majority of the
Fund's outstanding voting securities.
It is the policy of the Fund that any illiquid securities may not constitute, at
the time of purchase or at anytime, more than ten percent of the value of the
total net assets of the Fund. The Fund will not concentrate its investments in
any one industry and pursuant to Section 18(f) of the 1940 Act may not issue
senior securities.
As a general policy, it is the Fund's intention to hold investments until they
mature or until immediately prior to the expiration of an applicable Liquidity
Agreement. However, in an effort to increase portfolio yields, the Fund may
periodically trade securities to take advantage of perceived disparities between
markets for various short-term money market instruments. It is also possible
that redemptions of Fund shares could necessitate the sale of portfolio
investments prior to maturity and at times when such sale would be undesirable
because of unfavorable market conditions.
New issues of tax-exempt debt obligations are usually offered on a when-issued
basis with the securities to be delivered and paid for approximately 45 days
following the initial purchase commitment. The Fund may occasionally enter into
such commitments, subject to certain limitations and procedures discussed in the
Statement of Additional Information.
While investments by the Fund will be confined to high-quality financial
instruments, the complete elimination of risk is not possible. Under certain
circumstances, described in more detail in the Statement of Additional
Information, the net asset value of Fund shares could decrease. It is also
possible an issuer or bank will default on the provisions of their Liquidity
Agreements, which could cause the net asset value per share to decrease. In
light of these various contingencies, there can be no assurances the Fund will
achieve its investment objectives.
The Fund has adopted a number of investment policies and restrictions, some of
which can be changed by the Board of Directors. Others may be changed only by
holders of a majority of the outstanding. Without shareholder approval the Fund
may not: (1) purchase any securities other than those described under
"Investment Policy"; (2) invest more than 80 percent of its total assets in
tax-exempt fixed and variable rate debt obligations (or participation interests
therein) issued by state and local governmental units within the United States
which are backed by Liquidity Agreements; (3) invest more than five percent of
its total assets (determined as of the date of purchase) in tax-exempt
obligations or participation interests therein subject to Liquidity Agreements
issued by any one bank; (4) purchase or sell real estate, commodities or
commodity contracts, interests in oil, gas or other mineral exploration or
development programs; (5) make short sales of securities or maintain a short
position or write, purchase, or sell puts (excluding Liquidity Agreements
covering certain tax-exempt obligations purchased by the Fund), calls,
straddles, spreads or combinations thereof; (6) make loans to other persons,
provided the Fund may make investments and enter into repurchase agreements as
described above; (7) invest in securities with legal or contractual restrictions
on resale (except for tax-exempt debt obligations subject to Liquidity
Agreements) or for which no ready market exists; (8) enter into a Liquidity
Agreement with any bank unless such bank is a United States bank which has a
record, together with predecessors, of at least five years of continuous
operations; (9) enter into repurchase agreements if, as a result thereof, more
than five percent of the Fund's total assets (taken at market value at the time
of such investment) would be subject to repurchase agreements maturing in more
than seven days; and (10) enter into Liquidity Agreements with any bank if five
percent or more of the securities of such bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such bank.
The foregoing investment restrictions are considered fundamental policies which
cannot be changed without the approval of a "majority" of the Fund's outstanding
voting securities, that is, by (1) 67 percent or more of the securities voting
at a special or annual meeting if more than 50 percent of the outstanding shares
of Common Stock are represented at such meeting in person or by proxy; or (2)
more than 50 percent of the outstanding Common Stock, whichever is less. The
Statement of Additional Information includes discussion of certain other
investment policies and restrictions, some of which are also considered
fundamental and may not be changed without shareholder approval.
PERFORMANCE
Performance of each Fund may be quoted in advertising in terms of current yield
and effective yield. CURRENT YIELD refers to the income generated by an
investment in either Fund over a seven-day period. This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The Fund may also present a 30-day
yield which is calculated similarly but instead refers to a 30-day period rather
than a seven-day period. EFFECTIVE YIELD is calculated similarly but, when
annualized, that income earned from the investment is assumed to be reinvested
weekly. Effective yield will be slightly higher than current yield because of
the compounding effect of this assumed reinvestment.
Performance of the Funds may also be compared to other mutual funds with similar
investment objectives, relevant indices or rankings prepared by independent
services or other financial publications, or yields on deposits at financial
institutions. Unlike the Funds, deposit accounts at financial institutions are
generally insured by the Federal Deposit Insurance Corporation and do not
fluctuate to the extent of the Funds.
Additionally, Municipal Assets may quote a taxable-equivalent yield based on a
stated income tax rate. Please see each Fund's Statement of Additional
Information for further discussion of the manner in which yields are calculated
and the comparative performance data which may be used.
Of course, the Funds' yields are not fixed nor is principal guaranteed. Yields
are functions of the type and quality of instruments held in the portfolio,
operating expenses, and market conditions. Consequently, current yields will
fluctuate and are not necessarily representative of the future results.
DISTRIBUTIONS AND TAXES
Dividends from the net income of each Fund are declared daily to Shareholders at
the close of business on each Business Day as defined in this Prospectus and
paid monthly. Dividends are automatically reinvested in "I" Shares unless cash
payment has been selected on the Account Application. If a shareholder has
elected to receive dividends and/or distributions in cash and the checks are
returned and marked as "undeliverable" or remain uncashed for six months, your
cash election will be changed automatically and future dividends will be
reinvested in "I" Shares of the Fund. In addition, any undeliverable checks or
checks that remain uncashed for six months will be canceled and will be
reinvested in "I" Shares of the Fund at the per share net asset value determined
as of the date of cancellation. If a shareholder redeems the entire amount in
his account during the month, dividends credited to the account from the
beginning of the month through the date of redemption are paid with the
redemption proceeds.
Dividends on each Class of Shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
distribution and/or shareholder servicing fees (see "Organization and Shares of
the Funds").
Dividends declared in October, November, or December of any year, payable to
shareholders of record on a specified date in such months, will be deemed to
have been received by the shareholders and paid by the Funds on December 31 of
such year, in the event that such dividends are actually paid during January of
the following year.
Each Fund intends to qualify as a regulated investment company by distributing
substantially all of its taxable net income, including any realized capital
gains, and thus will not incur any Federal income taxes. Shareholders will
receive taxable dividend income, tax-exempt dividend income and/or capital
gains, as the case may be, from distributions whether paid in cash or received
in the form of additional shares.
Dividends derived from interest on federally tax-exempt debt obligations owned
by Municipal Assets are intended to constitute "exempt-interest dividends" which
are generally not Federally taxable to shareholders, although some could be
includable for purposes of the alternative minimum tax. Dividends derived from
other interest and the realization of capital gains are taxable to shareholders
whether or not reinvested.
Municipal Assets expenses will be allocated between tax-exempt and taxable
income in the same proportion as the Fund's tax-exempt income bears to the total
of such exempt income and its gross income (excluding from gross income the
excess of capital gains over capital losses).
Promptly after the end of each calendar year, each shareholder will receive a
statement of the Federal income tax status of all dividends and distributions
paid during the year. This discussion is only a summary and relates solely to
Federal tax matters. Further discussion of the Federal Income Tax consequences
of an investment in the Fund is provided in the Statement of Additional
Information. Dividends may also be subject to local taxation. Shareholders are
encouraged to consult with their personal tax advisors.
ORGANIZATION AND SHARES OF THE FUNDS
The Company is a Maryland corporation organized on November 16, 1994. The Funds
were created on October 30, 1997, to acquire the assets and continue the
business of the corresponding substantially identical investment portfolios of
the Liquid Assets Funds, Inc., and the Municipal Assets Funds, Inc., two
separately registered open-end, diversified management investment companies
organized as Iowa corporations. References herein to the "immediate predecessor"
of the Funds refer to the respective companies which correspond to such Fund.
Each Share of a Fund represents an equal proportionate interest in that Fund
with other Shares of the same Fund, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Directors.
The Articles of Incorporation of the Company permit the Company, 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 are utilized to create differing expense and fee structures
for investors in the same Fund. Differences exist, for example in the sales
load, Rule 12b-1 fees or service plan fees applicable to different classes of
Shares offered by a particular Fund. Such an arrangement could enable the
Company to tailor its marketing efforts to a broader segment of the investing
public with a goal of attracting additional investments in the Funds.
"I" Shares of the Funds are described in this Prospectus. "S" Shares and "T"
Shares and "S2" Shares (Liquid Assets only) are offered in separate Prospectuses
which may be obtained by calling the Fund at 1-800-798-1819 or writing to the
address on the cover of this Prospectus. Please read the Prospectus carefully
before investing or sending money. All shares are offered to individual and
institutional investors acting on their own behalf or on behalf of their
customers and bear their pro rata portion of all operating expenses paid by the
Funds, except that "S" Shares, "S2" Shares and "T" Shares bear separate
distribution and/or shareholder servicing fees. "I" Shares bear no distribution
or shareholder servicing fees.
Each Class of Shares of Liquid Assets and Municipal Assets offers different
privileges. "S" and "S2" Shares of Liquid Assets and "S" Shares of Municipal
Assets are normally offered through financial institutions providing automatic
"Sweep" investment programs to their customers. "T" Shares offer a check writing
privilege and are also offered through trust organizations or others providing
shareholder services such as establishing and maintaining custodial accounts and
records for their customers who invest in "T" Shares, assisting customers in
processing purchase, exchange and redemption requests and responding to
customers' inquiries concerning their investments, though they may also be used
in "sweep" programs. "I" Shares of pay no shareholder or servicing fees and so
are normally offered directly by the Distributor or through trust organizations
providing fiduciary account services for an additional fee. Each Class of Shares
is exchangeable only for shares of the same Class. Participating Organizations
selling or servicing "S", "S2" and "T" Shares may receive different compensation
with respect to one Class over another.
Shareholders are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held. Shares of each Fund will vote
together and not by class unless otherwise required by law or permitted by each
Fund's Board of Directors. All shareholders of each Fund will vote together as a
single class on matters relating to the Fund's investment advisory agreement,
investment objective and fundamental policies. Only holders of "S" Shares and
"S2" Shares will vote on matters relating to the Distribution Plan for "S"
Shares and "S2" Shares. Only holders of "S" Shares, "S2" Shares and "T" Shares
will vote on matters pertaining to the Administrative Services Plan.
Shares of the Funds have non-cumulative voting rights and, accordingly, the
holders of more than 50 percent of each Fund's outstanding shares (irrespective
of class) may elect all of the Directors. Shares have no preemptive rights and
only such conversion and exchange rights as each Fund's Board may grant in its
discretion. When issued for payments as described in this 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.
SHAREHOLDER REPORTS AND MEETINGS
Each shareholder will receive monthly Fund information, an unaudited semiannual
report, and an annual report containing audited financial statements. If you
have questions about your account, call 1-800-798-1819. You may also write the
Fund at the address on the cover of this Prospectus. You may order statements
for the current and preceding year at no charge. However, there will be a $10.00
fee per statement for statements ordered for other years.
The Fund may operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the 1940 Act. The Funds
have adopted the appropriate provisions in their Bylaws and may, in their
discretion, not hold annual meetings of shareholders for the election of
Directors unless otherwise required by the 1940 Act. The Funds have also adopted
provisions in their Bylaws for the removal of Directors by the shareholders.
Shareholders may receive assistance in communicating with other shareholders as
provided in Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders, at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Funds may remove a Director by the affirmative vote of a
majority of the Funds' 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 Funds' outstanding voting securities.
All consideration received by the Funds for shares of one of the Funds and all
assets in which such consideration is invested, belong to that Fund (subject
only to the rights of creditors of the Fund) and will be subject to the
liabilities related thereto. The income and expenses attributable to one Fund
are treated separately from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Funds, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each Fund
affected by such matter. Rule 18f-2 further provides that a Fund shall be deemed
to be affected by a matter unless it is clear that the interests of each Fund in
the matter are identical or that the matter does not affect the interest of such
Fund. However, the Rule exempts the selection of independent auditors and the
election of Directors from the separate voting requirements of the Rule.
MANAGEMENT AND FEES
Overall responsibility for management of the Company rests with the Board of
Directors, who are elected by the Shareholders of the Company's Funds. The
Company will be managed by the Directors in accordance with laws of Maryland
governing corporations. The Directors, in turn, elect the officers of the
Company to supervise the day-to-day operations. The Directors receive fees and
are reimbursed for their expenses in connection with each meeting of the Board
of Directors they attend. The officers of the Company receive no compensation
directly from the Company for performing the duties of their offices.
Investors Management Group, ("IMG") manages the investments and business affairs
of the Funds. IMG, a wholly owned subsidiary of AMCORE Financial, Inc., is a
federally registered Investment Advisor organized in 1982 and located at 2203
Grand Avenue, Des Moines, Iowa 50312-5338. IMG has been providing continuous
investment management to pension and profit-sharing plans, insurance companies,
public agencies, banks, endowments and charitable institutions, other mutual
funds, individuals and others for over 15 years. As of February 28, 1998, IMG
had approximately $3.6 billion in equity, fixed income and money market assets
under management.
The following individuals serve as portfolio managers for the Funds and are
primarily responsible for the day-to-day management of the Fund's portfolios:
KATHRYN D. BEYER, CFA, MANAGING DIRECTOR. Ms. Beyer is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1993, her experience includes serving as a securities
analyst and director of mortgage-backed securities for Central Life
Assurance Company from 1988 to 1993. Ms. Beyer received her Masters of
Business Administration degree from Drake University, Des Moines, Iowa, and
her Bachelor of Science Degree in Agricultural Engineering from Iowa State
University, Ames, Iowa.
JEFFREY D. LORENZEN, CFA, MANAGING DIRECTOR. Mr. Lorenzen is a fixed income
strategist and is a member of IMG's Investment Policy Committee. Prior to
joining IMG in 1992, his experience includes serving as a securities
analyst and corporate fixed income analyst for The Statesman Group from
1989 to 1992. Mr. Lorenzen received his Masters of Business Administration
degree from Drake University, Des Moines, Iowa, and his Bachelor of
Business Administration from the University of Iowa, Iowa City, Iowa.
ELIZABETH S. PIERSON, CFA, VICE PRESIDENT AND SENIOR FIXED INCOME MANAGER.
Ms. Pierson is a fixed income strategist and is a member of IMG's
Investment Policy Committee. She has been with AMCORE Capital Management,
Inc. (or a predecessor) since 1984 when she began her investment career.
Ms. Pierson became an employee of IMG effective with the acquisition of IMG
by AMCORE Financial, Inc. in February 1998. She has a B.S. degree from the
University of Illinois, Champaign-Urbana. Ms. Pierson chairs the Fixed
Income Research Committee. She has been responsible for investment
management and credit responsibilities in numerous individually managed
advisory portfolios.
Under an Investment Advisory Agreement between the Funds and IMG, a fee is paid
to IMG for investment advisory services. Each Fund is responsible for paying
operating expenses not assumed by IMG. The investment management fee for each
Fund is calculated daily and paid monthly. The maximum management fee for each
Fund is 0.35% of each Fund's average daily net assets.
From time to time, IMG may voluntarily waive all or a portion of the management
fee and/or absorb certain expenses of a Fund or class of shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for a
Fund or class of shares and increasing the overall yield to investors in that
Fund or class of shares at the time any such amounts are waived and/or absorbed.
IMG may not seek reimbursement of such waived fees at a later date. The waiver
of such fee will cause the yield of a Fund to be higher than it would otherwise
be in the absence of such a waiver.
IMG also provides management and administration, fund accounting, transfer
agency, and shareholder recordkeeping services to the Funds. Under a Management
and Administration Agreement, IMG will supervise all aspects of the operations
of the Funds, except those performed under the Investment Advisory Agreement, by
the Custodian, under the Transfer Agency Agreement and under the Fund Accounting
Agreement. For these services IMG receives a fee calculated daily and paid
monthly at the annual rate of 0.06% of the average daily net assets of each
Fund. Under a Fund Accounting Agreement, IMG provides bookkeeping and accounting
services to the Funds, including calculating daily net asset value and yield
quotations. For these services, the Funds each pay IMG a fee calculated daily
and paid monthly at an annual rate of 0.03% of the average daily net assets of
each Fund. Under a Transfer Agency Agreement, IMG provides customary and usual
services of a transfer agent to the Funds. For these services, IMG is paid
various fees depending on the class of shares of the Funds. The fees are charged
to each class of shares separately and are computed according to the number of
accounts. The fees received and the services provided under these contracts are
in addition to those received and paid to IMG under the Advisory Agreement.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Funds. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, each Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Funds;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Funds; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Funds and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Funds except that the Funds' Distribution Agreement requires that the
Distributor pay for prospectuses that are to be used for sales purposes with
persons other than current shareholders.
From time to time, IMG may voluntarily waive all or a portion of the investment
management fee and/or other fees and/or absorb certain expenses of a Fund
without further notification of the commencement or termination of such waiver
or absorption. Any such waiver will have the effect of lowering the overall
expense ratio for that Fund and increasing the Fund's overall yield to investors
at the time any such amounts are waived and/or absorbed.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the Funds will be borne by the Funds. Expenses attributable to a particular Fund
are charged against the assets of that Fund; other expenses of the Funds are
allocated among the Funds on a reasonable basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Funds. If a Participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences. It is intended that none of the services provided by
such Participating Organizations other than through registered brokers will
involve the solicitation or sale of shares of the Funds.
AMCORE Investment Group, N.A., Rockford, Illinois, serves as custodian for
Liquid Assets and Municipal Assets Funds. Pursuant to the Custodian Agreement
with AMCORE Investment Group, N.A., the custodian receives compensation from
each Fund for such services in an amount equal to a designated annual fee.
OPENING AN ACCOUNT
The Funds require a completed and signed application (which is attached) at the
time you open each new account. Additional paperwork may be required from
corporations, associations and certain fiduciaries. IF YOU HAVE QUESTIONS CALL
THE FUNDS AT 1-800-798-1819 FROM 8:00 A.M. TO 4:30 P.M. CENTRAL TIME.
SHARE PRICE
The shares of each Fund are sold without a sales charge. The price of one share
is its "net asset value" or NAV (generally $1.00). NAV is computed by adding the
value of each Fund's investments, plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The NAV of each Funds' shares is determined once each Business Day, at 11:00
a.m. Central Time. The Funds are open for business each day the Federal Reserve
is open.
Your purchase will be processed at the next NAV calculated after your investment
has been converted to federal funds. If you invest by check, the Funds must
generally allow one or more days for conversion into federal funds before
accepting your purchase.
Rule 2a-7 under the Investment Company Act of 1940 permits the Funds to compute
net asset value per share using the amortized cost method of valuing portfolio
securities. As a condition for using the amortized cost method of valuation, the
Board of Directors established procedures to stabilize each Fund's net asset
value at $1.00 per Share. These procedures are described in more detail in the
Funds' Statement of Additional Information.
Under the amortized cost method of valuation, a security is initially valued at
cost on the date of purchase and, thereafter, any discount or premium is
amortized on a straight-line basis to maturity, regardless of the effect of
fluctuating interest rates on the market value of the security. U.S. government
obligations, Student Loan Certificates and FmHA Certificates, which are subject
to mandatory repurchase at their original purchase price, investments in taxable
and tax-exempt debt obligations rated by a recognized bond rating agency and
regularly traded in the secondary market, and nonrated fixed and variable rate
tax-exempt obligations and participation interests therein, not regularly traded
in the secondary market but subject to Liquidity Agreements will be valued at
amortized cost. Other assets are valued at a fair value determined in good faith
by the board of directors of each Fund.
PURCHASING SHARES
Shares of each Fund may be purchased directly from BISYS Fund Services Limited
Partnership as the distributor. Shares may also be purchased by customers of
qualified banks, savings and loan associations, broker/dealers, investment
advisory firms, and other organizations ("Participating Organizations") that
have entered into servicing agreements with the Distributor. The Participating
Organization is responsible for transmitting purchase orders directly to the
Fund's Distributor. A Participating Organization may elect to hold record
ownership of shares for its customers and to show beneficial ownership of shares
on the account statements it provides to them. In the alternative, a
Participating Organization may elect to establish its customers' accounts of
record with IMG as transfer agent for the Funds. Generally, shares purchased
through Participating Organizations will be held by the Participating
Organization as shareholder of record.
Shares of each Fund are offered without any purchase or redemption charge
imposed by the Fund. The minimum initial investment that may be made in each
Fund is $1,000. Subsequent investments in each Fund must be made in amounts of
not less than $50, except where purchases are made through Participating
Organizations in which case there is no minimum. Participating Organizations may
aggregate their customers' purchases to satisfy the required minimums.
Purchases may be effected on business days when the Advisor, Distributor and
Custodian are open for business. The Funds reserve the right to reject any
purchase order, including purchases made with foreign and third party drafts or
checks.
A purchase order for "I" Shares received in good order by the Funds by 11:00
a.m. Central Time on a Business Day is effected at the net asset value per share
calculated as of 11:00 a.m. Central Time, and investors will receive the
dividend declared that day, IF THE CUSTODIAN HAS RECEIVED THE PURCHASE PRICE IN
FEDERAL FUNDS OR OTHER IMMEDIATELY AVAILABLE FUNDS BY 3:00 P.M. CENTRAL TIME
THAT DAY. A purchase order for "I" Shares received after 11:00 a.m. Central Time
and prior to 3:00 p.m. Central Time on a business day for which such funds have
been received by 3:00 p.m. Central Time will be effected as of 11:00 a.m.
Central Time the following day, and will begin to accrue dividends at that time.
If federal funds are not available by 3:00 p.m. Central Time, the order will be
canceled. Payment for orders which are not accepted or are canceled will be
returned after prompt inquiry to the transmitting organization.
While the Funds themselves do not presently levy sales, redemption or account
service charges, Participating Organizations may elect to do so and the Funds
may elect to do so in the future. Investors should inquire regarding the nature
and costs of services provided by Participating Organizations and determine if
such services are desired, because the costs thereof will reduce the Funds'
yields to the investor below that obtainable by investing in the Funds directly.
Customers wishing to purchase shares through their Participating Organization
should contact such entity directly for appropriate instructions. (For a list of
the Participating Organizations in your area, CALL THE FUNDS AT 1-800-798-1819
OR 515-244-5426.) Direct investors may purchase shares in accordance with the
procedures described below, "Purchase Procedures".
Certificates representing Fund shares purchased will not be issued. However, all
purchases are confirmed in writing to the investor and credited to their account
in the shareholder records maintained by the Transfer Agent. Investors will have
the same rights to their shares as if certificates had been issued.
PURCHASE PROCEDURES
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENT
BY MAIL $1,000 (minimum) $50 (minimum)
Please make your check pay- Please make your check payable
able to the Fund selected and to the Fund selected, with your
mail to the address indicated account number on the check on
the application. and mail to the address printed
on your account statement.
BY WIRE Please call for an account See instructions below.
number before initial invest-
ment at 1-800-798-1819 or
515-244-5426.
For Liquid Assets and Municipal Assets, Federal Funds should be wired to:
Federal Reserve Bank of Chicago for AMCORE Investment Group, N.A., Rockford,
Illinois, together with the name of the Fund, your account number and names.
Please note that when accounts are opened by wire you must send a completed
application at your earliest convenience. Your application must be received
by the Fund before any instructions for redemption will be accepted.
By Electronic Not available for initial Shareholders who have an
Funds Transfer purchase. account with an institution
(ACH) which is a member of the
Automated Clearing House,
may elect to purchase Fund
shares via electronic funds
transfer. Select this
service on your application
or call the Fund.
SHAREHOLDER SERVICES
Some shareholder services may not be available if shares are purchased through
Participating Organizations. Call the Funds at 1-800-798-1819 for more
information.
EXCHANGE PRIVILEGE. You may exchange "I" Shares of either Fund for "I" Shares in
the other Fund described in this Prospectus. An exchange involves a redemption
of the shares of the Fund being liquidated and a purchase of the shares of the
Fund in which the redemption proceeds are to be invested. The exchange privilege
is offered as a convenience to shareholders and is not intended to be a means of
speculating on short-term movements in securities prices by transactions
involving frequent purchases and sales of shares. Each Fund reserves the right
at any time and without prior notice, to suspend, limit, modify or terminate
exchange privileges or their use by individual shareholders in order to prevent
transactions considered to be disadvantageous to existing shareholders.
TELEPHONE TRANSFERS. This service allows you to authorize transfers of money to
purchase or sell shares. Using Telephone Transfer you can move money between
your bank account and your account in the Funds with one phone call. Moneys may
be transferred either by wire or electronic funds transfer with an institution
which is a member of the Automated Clearing House ("ACH").
Wire transfers may be used to transfer federal funds directly to/from the Funds'
custodian bank. For a wire redemption, the then current wire redemption charge
may be deducted from the proceeds of a wire redemption. This charge, if applied,
will vary depending on the receiving institution for each wire redemption.
Allow two (2) days after the call for electronic funds transfer via ACH to move
moneys between your bank account and your account with either Fund.
For moneys recently invested, allow normal clearing time before redemption
proceeds are sent to your bank. In order to change the financial institution
account designated to receive redemption proceeds, it will be necessary to send
a written request to the Fund with a signature guarantee from a national or
state bank, a trust company or a federal savings and loan association, or a
member firm of the New York, American, Boston, Midwest or Pacific Stock
Exchange.
You can also arrange SYSTEMATIC PERIODIC INVESTMENTS (minimum $50) into your
Fund account. Simply select the regular investment schedule you would like when
completing your account application. Your bank account will automatically be
debited to purchase shares of the Fund you select. You will receive confirmation
of each transaction.
Your bank must be a member of ACH and you must have a checking or NOW/Money
Market Deposit account to use electronic funds transfer or systematic investing.
Please allow 20 days after receipt of your application to activate the Telephone
Transfer capability.
STATEMENTS AND REPORTS. You will receive a statement of your account listing
every transaction that affects your share balance no less than once per month.
At least twice a year you will receive the financial statements of the Fund in
which you have invested with a summary of that Fund's portfolio composition and
performance. Each Fund's Annual Report is reported on by the Funds' independent
auditors, KPMG Peat Marwick LLP.
REDEEMING SHARES
Shareholders may request redemption of their shares at any time. Shares will be
redeemed at their net asset value as next determined after a redemption request
in good order is received by the Fund's Distributor. Redemption orders received
in good order by the Distributor before 11:00 a.m. Central Time on a Business
Day will be redeemed as of 11:00 a.m. Central Time and will earn dividends
through the previous day; proceeds normally will be sent electronically the same
day (or mailed by check the next business day) to the organization that placed
the redemption order in good form. Redemption orders received after 11:00 a.m.
Central Time or on a non-Business Day will be redeemed as of 11:00 a.m. the next
Business Day and earn dividends through the date the redemption request was
received; proceeds will be sent electronically on the next Business Day (or
mailed by check on the second business day thereafter). While the Funds use
their best efforts to maintain their net asset value per share at $1.00, the
proceeds paid upon redemption may be more or less than the amount originally
invested.
If you purchase shares through a Participating Organization, you may redeem
shares in accordance with that Organization's rules regarding redemption
requests. Direct shareholders may redeem shares in accordance with the
procedures described under "How to Redeem Shares".
The Funds intend to pay redemption proceeds within two business days and in no
event will payment be made later than seven days after receipt of a redemption
request in good order. Payments to investors who request to redeem shares within
a few days after a purchase paid for by check may be delayed until the Funds can
verify the check has been collected.
The Funds reserve the right to suspend redemptions or to postpone the payment
therefore when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has permitted such suspension; or (c) an emergency as
determined by the Securities and Exchange Commission exists, making sale of
portfolio securities or valuations of the Funds' net assets not reasonably
practicable.
If an investor's account drops below $250 due to redemptions, the Funds reserve
the right to redeem any remaining shares if after 30 days' notice additional
investments to bring the account value to $250 are not made.
HOW TO REDEEM SHARES
BY MAIL-- Send a "letter of instruction": a letter specifying
TO: 2203 GRAND AVENUE the name of the Fund, the number of shares to be
DES MOINES, IA 50312-5338 sold, your name, your account number, and the
additional requirements listed below that apply to
your particular account.
TYPE OF REGISTRATION REQUIREMENTS
-------------------------- ---------------------------------------------------
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, required to sign for the account, exactly as it is
Custodial (Uniform Gifts registered, accompanied by signature guarantee(s).
or Transfers To Minors
Act), General Partners
Corporation, Association Letter of instruction and a corporate resolution
signed by person(s) authorized to act on the
account, accompanied by signature guarantee(s).
Trust A letter of instruction signed by the Trustee(s),
(as Trustee), with a signature guarantee. (If
the Trustee's name is not registered on your
account, also provide a copy of the trust docu-
ment, certified within the last 60 days.)
If you do not fall into any of these registration categories (e.g.,
Executors, Administrators, Conservators or Guardians) please call for further
instructions.
A signature guarantee is designed to protect you and the Fund against
fraudulent transactions by unauthorized persons. A signature guarantee is
required for all persons registered on an account. A signature guarantee may
be obtained from an eligible guarantor institution, as defined by the
Securities and Exchange Commission. These institutions include banks, savings
and loan associations, credit unions, brokerage firms, and others. The words,
"SIGNATURE GUARANTEED" must be stamped or typed near each person's signature
and appear with the printed name, title, and signature of an officer and the
name of the guarantor institution. PLEASE NOTE THAT A NOTARY PUBLIC STAMP OR
SEAL IS NOT A SIGNATURE GUARANTEE.
FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-798-1819
BY EXCHANGE-- You must meet the minimum investment requirement
of the other fund. You can only exchange between
accounts with identical names, addresses, and
taxpayer identification numbers.
BY ELECTRONIC FUNDS You must have applied for the Telephone Transfer
TRANSFER (ACH) OR WIRE-- feature on your application. Allow two days via
ACH. Call before 10:00 a.m. for same day wire.
<PAGE>
TABLE OF CONTENTS
Prospectus Summary....................................................2
Expense Summary of I Shares...........................................4
Financial Highlights..................................................5
Investment Objectives, Policies and Restrictions......................6
Liquid Assets.......................................................6
Municipal Assets....................................................9
Performance..........................................................12
Distributions and Taxes..............................................13
Organization and Shares of the Funds.................................14
Shareholder Reports and Meetings.....................................15
Management and Fees..................................................16
Opening an Account...................................................19
Share Price........................................................19
Purchasing Shares..................................................20
Shareholder Services.................................................22
Redeeming Shares.....................................................23
NO SALESMAN, OR OTHER PERSON, HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS OR BY BISYS FUND SERVICES LIMITED PARTNERSHIP. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY BISYS FUND SERVICES LIMITED
PARTNERSHIP IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE>
[GRAPHIC OMITTED]
VINTAGE EQUITY FUND "T" SHARES
<PAGE>
For current yield, purchase, and redemption
information, call (800) 438-6375.
Vintage Mutual Funds, Inc. (the "Company") is a Maryland corporation
organized as an open-end management investment company issuing its shares in
series (each series referred to as a "Fund" and collectively as "Funds"), each
representing a diversified portfolio of investments with its own investment
objective and policies. This prospectus describes "T" Shares of the Vintage
Equity Fund. The Company also offers the Government Assets Fund, Liquid Assets
Fund, Municipal Assets Fund, Limited Term Bond Fund, Bond Fund, Income Fund,
Municipal Bond Fund, Balanced Fund and Aggressive Growth Fund, which are offered
through other prospectuses.
The Government Assets, Liquid Assets, Municipal Assets and Equity Funds are
offered in multiple classes of shares ("Shares"). This Prospectus describes "T"
Shares of the Vintage Equity Fund. All classes of Shares accrue dividends in the
same manner except that different classes of Shares bear different distribution
and/or administrative servicing fees. (see "GENERAL INFORMATION - Description of
the Company and Its Shares"). Differences in class level expenses may affect
performance.
"T" Shares of the Equity Fund are offered solely to fiduciary accounts of
AMCORE Investment Group, N.A., ("AIG"), over which AIG exercises investment
discretion. All other shareholders invest in "S" Shares. If you do not qualify
for "T" Shares, you may obtain a prospectus describing Equity "S" Share or any
of the other Funds or Classes by calling the Funds at (800) 438-6375 or writing
to Dept. L-1392, Columbus, OH 43260-1392. Please read the prospectus carefully
before investing or sending money.
The investment objective of the Equity Fund is long-term capital
appreciation. The Equity Fund invests primarily in a diversified portfolio of
equity securities of mainly large capitalization companies with strong earnings
potential.
Investors Management Group, Ltd. ("IMG") acts as the investment advisor to
the Equity Fund.
AN INVESTMENT IN SHARES OF THE FUND IS NOT INSURED OR GUARANTEED BY THE
UNITED STATES GOVERNMENT, BY ANY STATE, OR BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION. SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK, OR GUARANTEED BY A BANK. INVESTMENTS IN THE FUND ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Additional information about the Fund, contained in a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission (the "Commission") and is available upon request without charge by
writing to the Funds at their address or by calling the Funds at the telephone
number shown above. The Statement of Additional Information bears the same date
as this Prospectus and is incorporated by reference in its entirety into this
Prospectus.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Please read this Prospectus
carefully and retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR ANY
STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 23, 1998
<PAGE>
PROSPECTUS SUMMARY
The Fund....................................Vintage Equity Fund, a diversified
investment portfolio of Vintage
Mutual Funds, Inc., an open-end
management investment company
organized as a Maryland corporation.
Shares Offered..............................Shares of common stock ("Shares")
of the Fund. See "HOW TO PURCHASE
AND REDEEM SHARES".
Shares Offered..............................The public offering price of Shares
of the Equity Fund is equal to the
net asset value per Share.
Minimum Purchase............................$1,000 minimum for the initial
investment with a $50 minimum for
subsequent investments. (See "HOW
TO PURCHASE AND REDEEM SHARES--
Purchases of Shares and Auto Invest
Plan" for a discussion of lower
minimum purchase amounts).
Investment Objective........................The Equity Fund seeks long-term
capital appreciation.
Investment Policy and Risk..................See "INVESTMENT OBJECTIVES, POLICIES
AND RISK FACTORS OF THE FUND".
Under normal market conditions, the
Equity Fund invests primarily in
equity securities of mainly large
capitalization companies with strong
earnings potential. Investment in
the Equity Fund is subject to the
inherent risks associated with
investing in common stocks and
various types of equity securities,
call options and foreign securities.
Investment Advisor..........................Investors Management Group, Ltd.,
and Administrator Des Moines, Iowa ("IMG").
Dividends...................................The Equity Fund intends to declare
dividends from net investment income
quarterly and pay such dividends
quarterly. Dividends will be
automatically reinvested unless the
shareholder elects otherwise.
Distributor.................................BISYS Fund Services Limited
Partnership
<PAGE>
EXPENSE SUMMARY
Equity
Fund
SHAREHOLDER TRANSACTION EXPENSES1
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 0.00%
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price) 0.00%
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) 0.00%
Redemption Fees (as a percentage of amount redeemed, if applicable) 0.00%
Exchange Fee $0.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.75%
12b-1 Fees 2 0.00%
Other Expenses
Servicing Fees3 0.00%
Administrative Fees4 0.26%
Other Expenses 0.13%
-----
Total Other Expenses 0.39%
-----
Total Fund Operating Expenses5 1.14%
The purpose of the above table is to assist a potential purchaser of the Equity
Funds Shares in understanding the various costs and expenses that an investor
will bear directly or indirectly. The table reflects the current fees for the
Fund. The Management Fees are based on the maximum allowable under the
Investment Advisory Agreements. From time to time, the Fund's Advisor may
voluntarily waive the Management Fees and/or absorb certain expenses for the
Fund or class of Shares of the Fund (a "Class"). See "MANAGEMENT OF THE COMPANY"
and "GENERAL INFORMATION" for a more complete discussion of the Shareholder
transaction expenses and annual operating expenses for the Fund. THE FOREGOING
SUMMARY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. 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.
1 A "Participating Organization" (as defined in this Prospectus) may charge a
Customer (as defined in this Prospectus) account fees for automatic investment
and other investment management services provided in connection with
investment in the Fund. (See "HOW TO PURCHASE AND REDEEM SHARES--Purchases of
Shares.")
2 The Company has adopted a Distribution and Shareholder Service Plan (the
"Plan") pursuant to which each Fund or Class described in this Prospectus 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 or Class ("Shareholder Fees"). Currently, no such fees will be paid under
the Plan by the Company. However, Shareholder Fees may be absorbed by the
Advisor in its sole discretion without further notice and at no expense to a
Class or Fund. Shareholders will be given at least 30 days' notice prior to
payment by the Company of any increased fees under the Plan.
3 The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which a Fund or Class is authorized to pay Participating
Organizations 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 or Class ("Servicing Fees"). Currently
the Company is not paying any such fees for "T" Shares of the Equity Fund
under the Services Plan. However, Servicing Fees may be absorbed by the
Advisor in its sole discretion without further notice and at no expense to a
Fund or Class. The company may elect to pay such fees at any time without
further notice to shareholders.
4 The Funds are subject to a Management and Administration Agreement with IMG
pursuant to which the Funds are authorized to pay a periodic fee calculated at
an annual rate of 0.26% of the average daily net assets for the Fund.
5 Absent the fee waivers described above, "Total Fund Operating Expenses" as a
percentage of average daily net assets would be 1.64% for the Equity Fund "T"
Shares.
EXAMPLE
You would pay the following expenses on a $1,000 investment in the Fund
assuming, (1) 5% annual return and (2) redemption at the end of each time
period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Equity Fund $12 $36 $63 $139
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. Please refer to "MANAGEMENT OF THE COMPANY" for a more complete
discussion of the Shareholder transaction expenses and annual operating expenses
for the Fund.
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth for the Equity Fund certain financial data, other
operating information and investment results for the predecessor Fund, which was
acquired by the Company on February 13, 1998, expressed in one share outstanding
throughout the period. The Financial Highlights contained in the table are
derived from the financial statements audited (unless otherwise indicated) by
Ernst & Young LLP, independent auditors for the predecessor Fund. The Financial
Highlights should be read in conjunction with the financial statements, related
notes, and other financial information which are incorporated herein by
reference in the Statement of Additional Information.
<TABLE>
<CAPTION>
Equity Fund*
Six Months Year Year Year Year December 15,
Ended Ended Ended Ended Ended 1992 to
September 30, March 31, March 31, March 31, March 31, March 31,
1997 1997 1996 1995 1994 1993(1)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.58 $ 14.48 $ 11.44 $ 10.05 $ 10.20 $ 10.00
Income From Investment Operations
Net Investment Income 0.01 0.05 0.13 0.15 0.19 0.05
Net Gains or Losses on Securities
(both realized and unrealized) 4.54 2.60 3.27 1.41 (0.14) 0.19
---- ---- ---- ---- ------ ----
Total From Investment Operations 4.55 2.65 3.40 1.56 0.05 0.24
---- ---- ---- ---- ---- ----
Less Distributions
Dividends (from net investment income) (0.01) (0.05) (0.13) (0.15) (0.20) (0.04)
Distributions (from capital gains) 0.00 (0.50) (0.23) (0.02) 0.00 0.00
Returns of Capital 0.00 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ---- ----
Total Distributions (0.01) (0.55) (0.36) (0.17) (0.20) (0.04)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 21.12 $ 16.58 $ 14.48 $ 11.44 $ 10.05 $ 10.20
======== ======== ======== ======== ======== ========
Total Return 27.46% (a) 18.35% 29.96% 15.74% 0.45% 2.45% (a)
Ratios/Supplemental Data
Net Assets, End of Period (000) $397,295 $309,669 $210,950 $149,233 $125,203 $ 74,720
Ratio of Expenses to Average Net Assets 1.30% (b) 1.33% 1.09% 1.07% 0.54% 0.23% (b)
Ratio of Net Investment Income to Average Net Assets 0.08% (b) 0.32% 0.96% 1.47% 1.97% 2.40% (b)
Ratio of Expenses to Average Net Assets2 1.55% (b) 1.58% 1.09% 1.35% 1.37% 1.43% (b)
Ratio of Net Investment Income to Average Net Assets2 (0.17%)(b) 0.07% 0.96% 1.19% 1.15% 1.20% (b)
Portfolio Turnover Rate 31.03% 37.08% 33.23% 20.54% 3.98% 0.00%
Average Commission Rate Paid3 $ 0.0528 $ 0.0677 -- -- -- --
</TABLE>
1 Period from Commencement of Operations.
2 During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
3 Represents the dollar amount of commissions paid on portfolio transactions
divided by the total number of portfolio shares purchased and sold for which
commissions were charged. Disclosure is not required for periods prior to
March 31, 1997.
(a)Not Annualized
(b)Annualized
* Performance data relates to AMCORE Vintage Equity Fund, a corresponding
predecessor Fund, which was acquired on February 13, 1998.
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS OF THE FUND
The Equity Fund's investment objective and policies are described below. There
is no assurance that the Fund will be successful in achieving its investment
objective. The investment objective of the Fund is a fundamental policy and, as
such, may not be changed without a vote of the holders of a majority of the
outstanding Shares of the Fund (as described in the Statement of Additional
Information). The other policies of the Fund may be changed without a vote of
the holders of a majority of Shares unless (1) the policy is expressly deemed to
be a fundamental policy of the Fund or (2) the policy is expressly deemed to be
changeable only by such majority vote.
The investment objective of the Equity Fund is long term capital appreciation.
The Equity Fund will invest primarily in equity securities of mainly large
capitalization companies with strong earnings potential and will strive for high
over-all return while minimizing risk through the selection of a majority of
quality dividend paying equity securities.
Under normal market conditions, the Equity Fund will invest substantially all,
but in no event less than 75%, of its total assets in equity securities, which
are defined as common stocks, preferred stocks, securities convertible into
common stocks, warrants and any rights to purchase common stocks. The remainder
of the Equity Fund's assets may be invested in U.S. Government Obligations and
repurchase agreements with respect thereto. The Equity Fund may also use call
options on equity securities, as described below. Because the market value of
fixed income securities, such as U.S. Government Obligations, can be expected to
vary inversely to changes in prevailing interest rates, investing in such fixed
income securities can provide an opportunity for capital appreciation when
interest rates are expected to decline.
The Equity Fund may, for daily cash management purposes, also invest in high
quality money market securities (commercial paper, certificates of deposit and
bankers' acceptances), as well as the repurchase agreements referred to above.
In addition, the Equity Fund may invest, without limit, in any combination of
U.S. Government Obligations, money market instruments and repurchase agreements
referred to above when, in the opinion of the Advisor, it is determined that a
temporary defensive position is warranted based upon current market conditions.
The Equity Fund may also invest in securities of other investment companies
including the other investment portfolios advised by IMG, as described more
fully under "Other Investment Policies."
Subject to the foregoing limitations, the Equity Fund may invest in foreign
securities through the purchase of American Depository Receipts ("ADRs").
Ownership of unsponsored ADRs may not entitle the Equity Fund to financial or
other reports from the issuer, to which it would be entitled as the owner of
sponsored ADRs. Investment in foreign securities is subject to special risks
that differ in some respects from those related to investments in securities of
U.S. domestic issuers. Such risks include trade balances and imbalances, and
related economic policies, future adverse political, economic and social
developments, the possible imposition of withholding taxes on interest and
dividend income and other taxes, possible seizure, nationalization, or
expropriation of foreign investments or deposits, currency blockage, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, or the adoption of other foreign
governmental restrictions. For additional information regarding the special
risks associated with investments in foreign securities, see "INVESTMENT
OBJECTIVES, POLICIES, AND RESTRICTIONS--FOREIGN INVESTMENTS" in the Statement of
Additional Information.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. Government Obligations invested in by the Fund will include
obligations issued or guaranteed as to payment of principal and interest by the
full faith and credit of the U.S. Treasury, such as Treasury bills, notes, bonds
and certificates of indebtedness, and obligations issued or guaranteed by the
agencies or instrumentalities of the U.S. Government, but not supported by such
full faith and credit. Obligations of certain agencies and instrumentalities of
the U.S. Government, such as the Government National Mortgage Association and
the Export-Import Bank of the United States, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the right of the issuer to borrow from
the Treasury; others are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those of
the Federal Farm Credit Banks or the Federal Home Loan Mortgage Corporation, are
supported only by the credit of the instrumentality. No assurance can be given
that the U.S. Government would provide financial support to U.S. Government
sponsored agencies or instrumentalities if it is not obligated to do so by law.
The Fund will invest in the obligations of such agencies or instrumentalities
only when IMG believes that the credit risk with respect thereto is minimal. The
U.S. Government does not guarantee the market value of any security; therefore,
the market value of the U.S. Government Obligations in the Fund's portfolio and
of the Shares of the Fund can be expected to fluctuate as interest rates change.
ILLIQUID SECURITIES
The Fund may invest up to 10 percent of its net assets in illiquid securities.
For purposes of this restriction, illiquid securities include restricted
securities (securities the disposition of which is restricted under the federal
securities laws, such as private placements), other securities without readily
available market quotations (including options traded in the over-the-counter
market, and interest-only and principal-only stripped mortgage-backed
securities), and repurchase agreements maturing in more than seven days. Risks
associated with restricted securities include the potential obligation to pay
all or part of the registration expenses in order to see certain restricted
securities. A considerable period of time may elapse between the time of the
decision to see a security and the time the Fund may be permitted to sell it
under an effective registration statement. If during such a period, adverse
conditions were to develop, the Fund might obtain a less favorable price than
that prevailing when it decided to sell.
REPURCHASE AGREEMENTS
Securities held by the Fund may be subject to repurchase agreements. Under the
terms of a repurchase agreement, the Fund would acquire securities from member
banks of the Federal Deposit Insurance Corporation and from registered
broker-dealers whom the Advisor deems creditworthy under guidelines approved by
the Company's Board of Directors. The seller agrees to repurchase such
securities at a mutually agreed-upon date and price. The repurchase price would
generally equal the price paid by the Fund plus interest negotiated on the basis
of current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. Securities subject to repurchase agreements
must be of the same type and quality as those in which the Fund may invest
directly. The seller under a repurchase agreement will be required to maintain
at all times the value of collateral held pursuant to the agreement at not less
than the repurchase price (including accrued interest). This requirement will be
continually monitored by IMG. In addition, securities subject to a repurchase
agreement will be held in a segregated account. If the seller were to default on
its repurchase obligation or become insolvent, the Fund would suffer a loss if
the proceeds from a sale of the underlying portfolio securities were less than
the repurchase price under the agreement, or the disposition of such securities
by the Fund were delayed pending court action. Repurchase agreements are
considered to be loans collateralized by the underlying security under the
Investment Company Act of 1940 (the "1940 Act"). For further information about
repurchase agreements, see "INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS--Additional Information on Portfolio Instruments--REPURCHASE
AGREEMENTS" in the Statement of Additional Information. The Fund may not enter
into repurchase agreements if, as a result, more than 10 percent of the Fund's
net asset value at the time of the transaction would be invested in the
aggregate in repurchase agreements maturing in more than seven days and other
securities which are not readily marketable. (See "INVESTMENT OBJECTIVES,
POLICIES AND RESTRICTIONS--Additional Information on Portfolio
Instruments--ILLIQUID SECURITIES" in the Statement of Additional Information.)
REVERSE REPURCHASE AGREEMENTS
The Fund may borrow funds for temporary purposes by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, the Fund would sell certain of its
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them at a mutually agreed upon date and price. At the time the
Fund enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid high grade debt securities, such as U.S. Government
Obligations, consistent with its investment restrictions having a value equal to
the repurchase price (including accrued interest), and will subsequently
continually monitor the account to ensure that such equivalent value is
maintained at all times. Reverse repurchase agreements involve the risk that the
market value of securities sold by the Fund may decline below the price at which
it is obligated to repurchase the securities. Reverse repurchase agreements are
considered to be borrowings by an investment company under he 940 Act. For
further information about verse repurchase agreements, see "INVESTMENT
OBJECTIVES, OLICIES AND RESTRICTIONS--Additional Information on Portfolio
Instruments--REVERSE EPURCHASE AGREEMENTS" in the Statement of Additional
Information.
FUTURES CONTRACTS AND RELATED OPTIONS
The Fund may invest in futures contracts and options on futures contracts to the
extent permitted by the Commodity Futures Trading Commission ("CFTC") and the
Commission and thus will engage in such transactions solely for bona fide
hedging purposes to manage risk associated with various portfolio securities and
not for speculative purposes. Such transactions, including stock or bond index
futures contracts, or options thereon, act as a hedge to protect the Fund from
fluctuations in the value of its securities caused by anticipated changes in
interest rate or market conditions without necessarily buying or selling the
securities. Hedging is a specialized investment technique that entails skills
different from other investment management. A stock or bond index futures
contract is an agreement in which one party agrees to take or make delivery of
an amount of cash equal to a specified dollar amount times the difference
between the index value (which assigns relative values to the common stock or
bonds included in the index) at the close of the last trading day of the
contract and the price at which the agreement is originally made. No physical
delivery of the underlying stock or bond in the index is contemplated.
Similarly, it may be in the best interest of the Fund to purchase or sell
interest rate futures contracts, or options thereon, which provide for the
future delivery of specified securities.
The purchase and sale of futures contracts or related options will not be a
primary investment technique of the Fund. The Fund will not purchase or sell
futures contracts (or related options thereon) if, immediately after purchase,
the aggregate initial margin deposits and premiums paid by the Fund on its open
futures and options positions, exceeds 5% of the liquidation value of the Fund
after taking into account any unrealized profits and unrealized losses on any
such futures or related options contracts into which it has entered.
CALL OPTIONS
The Fund may write covered call options on securities owned by the Fund. Such
instruments may also be referred to as equity derivatives. Derivatives generally
are instruments whose value is derived from or related to the value of some
other instrument, asset or specified benchmark, such as a specific stock or
stock index. A call option gives the purchaser of the option the right to buy,
and obligates the seller of the option to sell, the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. When the Fund writes a covered
call option and such option is exercised, it will forgo the appreciation, if
any, on the underlying security in excess of the exercise price. In order to
close out a call option it has written, the Fund may enter into a "closing
purchase transaction"--the purchase of a call option on the same security with
the same exercise price and expiration date as the call option which the Fund
previously wrote on any particular securities. When a portfolio security subject
to a call option is sold, the Fund may effect a closing purchase transaction to
close out any existing call option on that security. If the Fund is unable to
effect a closing purchase transaction, it will not be able to sell the
underlying security until the option expires or the Fund delivers the underlying
security upon exercise. Under normal conditions, it is not expected that these
Funds would permit the underlying value of its portfolio securities subject to
such options to exceed 15% of net assets.
LENDING OF PORTFOLIO SECURITIES
From time to time in order to generate additional income, the Fund may lend its
portfolio securities, provided such action is consistent with its investment
objective, policies, and restrictions. During the time portfolio securities are
on loan, the borrower will pay the Fund any dividends or interest paid on the
securities. In addition, loans will be subject to termination by the Fund or the
borrower at any time.
The Fund will enter into loan arrangements only with broker-dealers, banks or
other institutions that are not affiliated directly or indirectly with the
Company and which IMG has determined are creditworthy under guidelines
established by the Company's Board of Directors. While the lending of securities
may subject the Fund to certain risks, such as delays or an inability to regain
the securities in the event the borrower defaults on its lending agreement or
enters into bankruptcy, the Fund will receive 100% collateral on loaned
securities in the form of cash or U.S. Government Obligations. This collateral
will be valued daily by IMG and, should the market value of the loaned
securities increase, the borrower will be required to furnish additional
collateral to the Fund. Although the Fund does not expect to do so on a regular
basis, it may lend portfolio securities in amounts representing up to 15% of the
value of the Fund's total assets.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued and purchase or sell
securities on a delayed-delivery basis. The Fund will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with its investment objectives and policies, not for
investment leverage. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield and
thereby involve a risk that the yield obtained in the transaction will be less
than those available in the market when delivery takes place. The Fund will
generally not pay for such securities or start earning interest on them until
they are received. When the Fund agrees to purchase such securities, however,
the Fund's custodian will set aside cash or liquid securities equal to the
amount of the commitment in a separate account. Securities purchased on a
when-issued basis are recorded as an asset and are subject to changes in the
value based upon changes in the general level of interest rates. In when-issued
and delayed-delivery transactions, the Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause the Fund to miss a price or
yield considered to be advantageous.
The Equity Fund's commitments to puchase when-issued securities will not exceed
5%, of the value of its total assets absent unusual market conditions. The Fund
does not intend to purchase when-issued securities for speculative purposes but
only in furtherance of its investment objectives.
OTHER INVESTMENT POLICIES
The Fund may also invest up to 5% of its total assets in another investment
company, including the Government Assets, Liquid Assets, or Municipal Assets
Funds, not to exceed 10% of the value of its total assets in the securities of
other investment companies. In order to avoid the imposition of additional fees
as a result of investing in Shares of the Government Assets, Liquid Assets, or
Municipal Assets Funds, the Advisor and the Administrator (see "MANAGEMENT OF
THE COMPANY--Investment Advisor", "MANAGEMENT OF THE COMPANY--Admini-strator",
and "MANAGEMENT OF THE COMPANY--Distributor") will waive any portion of their
usual service fees from that Fund that are attributable to investments therein
by the Fund. The Fund will incur additional expenses due to the duplication of
expenses as a result of investing in mutual funds other than the Funds.
Additional restrictions on the Fund's investments in the securities of other
mutual funds are contained in the Statement of Additional Information.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions that may be changed
only by a vote of a majority of the outstanding Shares of the Fund (as defined
in the Statement of Additional Information).
The Equity Fund will not:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, with respect to 75% of its portfolio, more
than 5% of the value of the total assets of the Fund would be invested in
such issuer, or the Fund would hold more than 10% of any class of securities
of the issuer or more than 10% of the outstanding voting securities of the
issuer.
2. Purchase any securities which would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a)there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the
U.S. Government or its agencies or instrumentalities; (b)wholly-owned finance
companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents; and (c)utilities will be divided according to their services. For
example, gas, gas transmission, electric and gas, electric, and telephone
will each be considered a separate industry.
3. Borrow money or issue senior securities, except that the Fund may borrow
from banks or enter into reverse repurchase agreements for temporary purposes
in amounts up to 10% of the value of its total assets at the time of such
borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of the value of the Fund's total assets
at the time of its borrowing. The Fund will not purchase securities while
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
4. Make loans, except that the Fund may purchase or hold debt securities and
lend portfolio securities in accordance with its investment objective and
policies, and may enter into repurchase agreements.
In addition to the above investment restrictions, the Fund is subject to certain
other investment restrictions set forth in this Prospectus above or under
"INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS--Investment restrictions" in
the Funds' Statement of Additional Information.
VALUATION OF SHARES
The net asset value of the Equity Fund is determined and its Shares are priced
as of the close of regular trading on the New York Stock Exchange ("NYSE")
(generally 3:00 p.m. Central Time) on each Business Day. As used herein, a
"Business Day" constitutes any day on which the NYSE is open for trading, and
any other day except days on which there are not sufficient changes in the value
of the Fund's portfolio securities that the Fund's net asset value might be
materially affected and days during which no Shares are tendered for redemption
and no orders to purchase Shares are received. Currently, the NYSE is closed on
New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Net asset value per Share for purposes of pricing sales and redemptions is
calculated by dividing the value of all securities and other assets of the Fund
less the liabilities charged to the Fund by the number of its outstanding
Shares. The net asset value per share of the Equity Fund will fluctuate as the
value of the Fund's investment portfolio changes.
The securities in the Equity Fund will be valued at market value. If market
quotations are not available, the securities will be valued by a method, which
the Board of Directors believes accurately reflects fair value. For further
information about valuation of investments, see "NET ASSET VALUE" in the
Statement of Additional Information.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares of the Fund are sold on a continuous basis by the Company's Distributor,
BISYS Fund Services Limited Partnership. The principal office of the distributor
is 3435 Stelzer Road, Columbus, Ohio 43219. If you wish to purchase Shares,
contact the Fund at (800)438-6375.
PURCHASES OF SHARES
Shares of the Fund are continuously offered and may be purchased directly either
by mail, by telephone or by electronic transfer. Shares may also be purchased
through AMCORE Investment Group, N.A., ("AIG"), which has entered into a
shareholder agreement with the Distributor and servicing agreement with the
Company. The minimum investment is generally $1,000 for the initial purchase of
Shares and $50 for subsequent purchases. For purchases that are made in
connection with 401(k) plans, 403(b) plans and other similar plans or payroll
deduction plans, the minimum investment amount for initial and subsequent
purchases is $25. In the case of such retirement plan investments, the minimum
purchase amounts are not restricted to the purchase of Shares of one Fund. Thus,
the $25 minimum amount may be spread among any of the Funds. (See "Auto Invest
Plan" below for minimum investment requirements under the Auto Invest Plan).
Purchasers of Shares of the Fund will pay the next calculated net asset value
per Share after the Distributor's receipt of an order to purchase Shares in good
form ("public offering price") (see "Other Information Regarding Purchases"
below).
PURCHASES BY MAIL
To purchase Shares of the Fund, complete an Account Application and return it
along with a check (or other negotiable bank draft or money order) in at least
the minimum initial purchase amount, made payable to the Fund to:
Vintage Mutual Funds, Inc.
Dept. L-1392
Columbus, OH 43260-1392
An Account Application form can be obtained by calling the Funds at
(800)438-6375. Subsequent purchases of Shares of the Fund may be made at any
time by mailing a check payable to the Fund, to the above address.
PURCHASES BY TELEPHONE
Shares of the Fund may be purchased by calling the Funds at (800)438-6375, if
your Account Application has been previously received by the Distributor.
Payment for Shares ordered by telephone is made by electronic transfer to the
Funds' custodian. Prior to wiring funds and in order to ensure that wire orders
are invested promptly, investors must call the Funds at the number above to
obtain instructions regarding the bank account number to which the funds should
be wired and other pertinent information.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through AIG. Shares of the Fund sold to AIG acting
in a fiduciary or other similar capacity on behalf of customers will normally be
held of record by AIG. With respect to Shares sold, it is the responsibility of
the holder of record to transmit purchase or redemption orders to the
Distributor and to deliver funds for the purchase thereof by the Fund's
custodian within the settlement requirements defined in the Securities Exchange
Act of 1934. If payment is not received within the prescribed time periods or a
check timely received does not clear, the purchase will be canceled and the
investor could be liable for any losses or fees incurred. Any questions
regarding current settlement requirements or electronic payment instructions
should be directed to the Funds at (800)438-6375.
Purchases of Shares in the Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES"). The public offering price of the Fund will be
the net asset value per Share (see "VALUATION OF SHARES") as determined on the
Business Day the order is received by the Distributor, but only if the
Distributor receives the order by the Valuation Time. Otherwise, the price will
be determined as of the Valuation Time on the next Business Day. In the case of
an order for the purchase of Shares placed through AIG, it is the responsibility
of AIG to transmit the order to the Distributor promptly.
AIG determines its own arrangements for its clients to purchase and redeem Fund
shares. AIG may establish higher minimum investment requirements than set forth
above. It may arrange with its clients for other investment or administrative
services. AIG may independently establish and charge additional amounts to its
clients for such services, which charges would reduce the client's yield or
return. AIG may also hold Fund shares positions in nominee or street name as
agent for and on behalf of their customers. In such instances, the Fund's
transfer agent will have no information with respect to or control over accounts
of specific shareholders. Such shareholders may obtain access to their accounts
and information about their accounts only from AIG. In the alternative, AIG may
elect to establish its customers' accounts of record with the transfer agent for
the Funds. AIG may aggregate its customers' purchases to satisfy the required
minimums. AIG may receive compensation from the Fund's Shareholder Service Agent
for recordkeeping and other expenses related to these nominee accounts. In
addition, certain privileges with respect to the purchase and redemption of
shares or the reinvestment of dividends may not be available through AIG. AIG
may participate in a program allowing it access to its clients' accounts for
servicing including, without limitation, transfers of registration and dividend
payee changes; and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. This Prospectus should be read in
connection AIG's material regarding its fees and services. Shareholders should
also consider that AIG may offer services which may not be available directly
from the Fund.
The Company reserves the right to reject any order for the purchase of the
Fund's Shares in whole or in part including purchases made with foreign and
third party checks.
Every Shareholder of record will receive a confirmation of each transaction in
his or her account, which will also show the total number of Shares of the Fund
owned by the Shareholder. Sending confirmations for purchases and redemptions of
Shares held by AIG on behalf of its Customers will be the responsibility of AIG.
Share-holders may rely on these statements in lieu of certificates. Certificates
representing Shares of the Funds will not be issued.
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
An IRA enables individuals, even if they participate in an employer-sponsored
retirement plan, to establish their own retirement program. IRA contributions
may be tax-deductible and earnings are tax-deferred. Under the Tax Reform Act of
1986, the tax deductibility of IRA contributions is restricted or eliminated for
individuals who participate in certain employer pension plans and whose annual
income exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn income on a tax-deferred
basis. All IRA distribution requests must be made in writing to the Distributor.
Any additional deposits to an IRA must distinguish the type and year of the
contribution.
For more information on an IRA call the Fund at (800)438-6375. Shareholders are
advised to consult a tax Advisor on IRA contribution and withdrawal requirements
and restrictions.
AUTO INVEST PLAN
The Auto Invest Plan enables Shareholders of the Funds to make regular monthly
or quarterly purchases of Shares through automatic deductions from their bank
accounts (which must be with a domestic member of the Automatic Clearing House).
With Shareholder authorization, the Transfer Agent will deduct the amount
specified from the Shareholder's bank account, which will automatically be
invested in Shares at the public offering price on the dates of the deduction.
The required minimum initial investment when opening an account using the Auto
Invest Plan is $250; the minimum amount for subsequent investments in the Fund
is $25. Investments may be made on the 5th or 20th of each month, on the 5th and
20th of each month, or on the 20th of each quarter (Mar., June, Sept., Dec.). To
participate in the Auto Invest Plan, Shareholders should complete the
appropriate section of the account application, which can be acquired by calling
(800)438-6375. For a Shareholder to change the Auto Invest instructions, the
request must be made in writing to the Distributor.
EXCHANGE PRIVILEGE
The Funds offer an exchange program whereby Shareholders are entitled to
exchange their Shares for Shares of the other Funds. Such exchanges will be
executed on the basis of the relative net asset values of the Shares exchanged.
The Shares exchanged must have a current value that equals or exceeds the
minimum investment that is required (either the minimum amount required for
initial or subsequent investments as the case may be) for the Fund whose Shares
are being acquired. Share exchanges will only be permitted where the Shares to
be acquired may legally be sold in the investor's state of residence. An
exchange is considered to be a sale of Shares for federal income tax purposes on
which a Shareholder may realize a taxable gain or loss. A Shareholder may make
an exchange request by calling the Funds at (800)438-6375 or by providing
written instructions to the Funds. An investor should consult the Funds for
further information regarding exchanges. During periods of significant economic
or market change, telephone exchanges may be difficult to complete. If a
Shareholder is unable to contact the Funds by telephone, a Shareholder may also
mail the exchange request to the Funds at the address listed under "Redemption
By Mail" below. The Funds reserve the right to modify or terminate the exchange
privilege described above at any time and to reject any exchange request. If an
exchange request in good order is received by the Distributor by the Valuation
Time, on any Business Day, the exchange usually will occur on that day. Any
Shareholder who wishes to make an exchange should obtain and review the current
prospectus of the Fund in which he or she wishes to invest before making the
exchange. Shareholders wishing to make use of the Funds' exchange program must
so indicate on the Account Application. This option will be suspended for a
period of 30 days following a telephonic address change.
AUTO EXCHANGE
Auto Exchange enables Shareholders to make regular, automatic withdrawals from
the Government Assets, Liquid Assets, or Municipal Assets Fund and use those
proceeds to benefit from dollar-cost averaging by automatically making purchases
of shares of another Fund. With shareholder authorization, the Company's
transfer agent will withdraw the amount specified (subject to the applicable
minimums) from the shareholder's Government Assets, Liquid Assets, or Municipal
Assets Fund account and will automatically invest that amount in the Fund
designated by the Shareholder at the public offering price on the date of such
deduction. In order to participate in the Auto Exchange, Shareholders must have
a minimum initial purchase of $10,000 in their Government Assets, Liquid Assets,
or Municipal Assets account and maintain a minimum account balance of $1,000. To
participate in the Auto Exchange, Shareholders should complete the appropriate
section of the Account Application Form, which can be acquired by calling the
Distributor. To change the Auto Exchange instructions or to discontinue the
feature, a Shareholder must send a written request to the Vintage Mutual Funds,
Inc., Dept. L-1392, Columbus, OH 43260-1392. The Auto Exchange may be amended or
terminated without notice at any time by the Distributor.
REDEMPTION OF SHARES
Shareholders may redeem their Shares on any day that net asset value is
calculated (see "VALUATION OF SHARES"). Redemptions will be effected at the net
asset value per share next determined after receipt of a redemption request in
good order. Redemptions may ordinarily be requested by mail or by telephone.
All or part of a Customer's Shares may be required to be redeemed in accordance
with instructions and limitations pertaining to his or her account held by AIG.
For example, if a Customer has agreed to maintain a minimum balance in his or
her account, and the balance in that account falls below that minimum, the
Customer may be obliged to redeem, or AIG may redeem for and on behalf of the
Customer, all or part of the Customer's Shares to the extent necessary to
maintain the required minimum balance. There may be no notice period affording
Shareholders an opportunity to increase the account balance in order to avoid an
involuntary redemption under these circumstances.
REDEMPTION BY MAIL
A written request for redemption must be received by the Funds in order to honor
the request. The Funds' address is: Vintage Mutual Funds, Inc., Dept. L-1392,
Columbus, OH 43260-1392. The Transfer Agent may require a signature guarantee by
an eligible guarantor institution. For purposes of this policy, the term
"eligible guarantor institution" shall include banks, brokers, dealers, credit
unions, securities exchanges and associations, clearing agencies and savings
associations as those terms are defined in Rule17Ad-15 under the Securities
Exchange Act of 1934. The Transfer Agent reserves the right to reject any
signature guarantee if (1) it has reason to believe that the signature is not
genuine, (2) it has reason to believe that the transaction would otherwise be
improper, or (3) the guarantor institution is a broker or dealer that is neither
a member of a clearing corporation nor maintains net capital of at least
$100,000. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption check is payable to the
Shareholder(s) of record and (2) the redemption check is mailed to the
Shareholder(s) at the address of record or the proceeds are either mailed or
wired to a commercial bank account previously designated on the Account
Application. There is no charge for having redemption requests mailed to a
designated bank account.
If the Company receives a redemption order but a shareholder has not clearly
indicated the amount of money or number of shares involved, the Company cannot
execute the order. In such cases, the Company will request the missing
information and process the order on the day such information is received.
REDEMPTION BY TELEPHONE
Shares may be redeemed by telephone if the Shareholder selected that option on
the Account Application. The Shareholder may have the proceeds mailed to his or
her address or mailed or sent electronically to a commercial bank account
previously designated on the Account Application. Electronic payment requests
may be made by the Shareholder by telephone to the Funds at (800)438-6375. For a
wire redemption, the then-current wire redemption charge may be deducted from
the proceeds of a wire redemption. This charge, if applied, will vary depending
on the receiving institution for each wire redemption. It is not necessary for
Shareholders to confirm telephone redemption requests in writing. During periods
of significant economic or market change, telephone redemptions may be difficult
to complete. If a Shareholder is unable to contact the Funds by telephone, a
Shareholder may also mail the redemption request to the Distributor at the
address listed above under "Redemption by Mail" above. Neither the Distributor,
the Transfer Agent, the Advisor nor the Company will be liable for any losses,
damages, expense or cost arising out of any telephone transaction (including
exchanges and redemptions) effected in accordance with the Funds' telephone
transaction procedures, upon instructions reasonably believed to be genuine. The
Fund will employ procedures designed to provide reasonable assurance that
instructions by telephone are genuine; if these procedures are not followed, the
Fund or its service contractors may be liable for any losses due to unauthorized
or fraudulent instructions. These procedures include recording all phone
conversations, sending confirmations to shareholders within 72 hours of the
telephone transaction, verification of account name and account number or tax
identification number, and sending redemption proceeds only to the address of
record or to a previously authorized bank account. This option will be suspended
for a period of 10 days following a telephonic address change.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables Shareholders of the Fund to make regular
monthly or quarterly redemptions of Shares. With Shareholder authorization, the
Transfer Agent will automatically redeem Shares at the net asset value on the
dates of the withdrawal and have a check in the amount specified mailed to the
Shareholder. The required minimum withdrawal is $100 and the Fund must maintain
a $1,000 minimum balance. To participate in the Auto Withdrawal Plan,
Shareholders should call (800)438-6375 for more information. Purchases of
additional Shares concurrent with withdrawals may be disadvantageous to certain
Shareholders because of tax liabilities. For a Shareholder to change the Auto
Withdrawal instructions the request must be made in writing to the Distributor.
DIRECTED DIVIDEND OPTION
A Shareholder may elect to have all income dividends and capital gains
distributions paid by check or reinvested in any of the Company's other Funds,
(provided the other Fund is maintained at the minimum required balance).
The Directed Dividend Option may be modified or terminated by the Company at any
time after notice to participating Shareholders. Participation in the Directed
Dividend Option may be terminated or changed by the Shareholder at any time by
writing the Distributor. The Directed Dividend Option is not available to
participants in an IRA.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next determined
after the Shares are properly tendered for redemption, as described above.
Payment to Shareholders for Shares redeemed will be made within the settlement
requirements defined in the Securities Exchange Act of 1934 after receipt by the
Distributor of the request for redemption. However, to the greatest extent
possible, the Company will attempt to honor requests from Shareholders for next
day payments upon redemption of the Fund if received by the Distributor before
the Valuation Time on a Business Day or if the request for redemption is
received after the Valuation Time, to honor requests for payment within two
Business Days, unless it would be disadvantageous to the Fund or the
Shareholders of the Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner.
At various times, the Fund may be requested to redeem Shares for which it has
not yet received good payment. In such circumstances, the Fund may delay the
forwarding of proceeds until payment has been collected for the purchase of such
Shares, which delay may be for up to 10 days or more. The Fund intends to pay
cash for all Shares redeemed, but under abnormal conditions which make payment
in cash unwise, the Fund may make payment wholly or partly in portfolio
securities at their then-current market value equal to the redemption price. In
such cases, an investor may incur brokerage costs in converting such securities
to cash.
Due to the relatively high cost of handling small investments, the Fund reserves
the right to redeem, at net asset value, the Shares of any Shareholder if,
because of redemptions of Shares by or on behalf of the Shareholder (but not as
a result of a decrease in the market price of such Shares), the account of such
Shareholder has a value of less than $500. Before the Fund exercises its right
to redeem such Shares and to send the proceeds to the Shareholder, the
Shareholder will be given notice that the value of the Shares in his or her
account is less than the minimum amount and will be allowed 60 days to make an
additional investment in an amount which will increase the value of the account
to at least $500.
See "ADDITIONAL PURCHASE AND REDEMPTION INFOR-MATION--Matters Affecting
Redemption" in the Statement of Additional Information for examples of when the
Company may, under applicable law and regulation, suspend the right of
redemption if it appears appropriate to do so in light of the Company's
responsibilities under the 1940 Act.
DISTRIBUTIONS AND TAXES
DIVIDENDS AND CAPITAL GAINS
The Equity Fund intends to declare its net investment income quarterly as a
dividend to Shareholders at the close of business on the day of declaration, and
generally will pay such dividends quarterly. A Shareholder will automatically
receive all income dividends and capital gains distributions in additional full
and fractional Shares of the Fund at net asset value as of the ex-dividend date,
unless the Shareholder elects to receive dividends or distributions in cash.
Such election must be made on the Account Application; any change in such
election must be made in writing to the Funds at Dept. L-1392, Columbus, Ohio
43260-1392 and will become effective with respect to dividends and distributions
having record dates after its receipt by the Transfer Agent. Dividends are paid
in cash not later than seven business days after a Shareholder's complete
redemption of his or her Shares.
Dividends on each class of shares are determined in the same manner and are paid
in the same amounts irrespective of class, except that each class bears separate
shareholder and/or servicing fees (see "GENERAL INFORMATION -- Description of
the Company and Its Shares").
If you elect to receive distributions in cash, and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
FEDERAL TAXES
The following discussion is intended for general information only. Investors
should consult with their tax Advisor as to the tax consequences of an
investment in the Funds, including the status of distributions from the Funds
under applicable state or local law.
The Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify, the Fund must meet certain income, distribution and
diversification requirements. In any year in which the Fund qualifies as a
regulated investment company and timely distributes all of its income and
substantially all of its net tax-exempt interest income, the Fund generally will
not pay any U.S. federal income or excise tax. Dividends paid out of the Fund's
taxable income (including dividends, taxable interest and net short-term capital
gains) will be taxable to a U.S. Shareholder as ordinary income. A portion of
the Fund's income may consist of dividends paid by U.S. Corporations. Therefore,
a portion of the dividends paid by the Fund may be eligible for the corporate
dividends-received deduction. Distributions of net capital gains (the excess of
net long-term capital gains over net short-term capital losses), if any,
designated by the Fund as capital gain dividends are taxable as long-term
capital gains, regardless of the length of time the Shareholder has held the
Fund's Shares. Dividends are generally treated in the same manner whether
received in cash or reinvested in additional Fund Shares.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by the Fund in October, November or December of that year
to shareholders of record on a date in such a month and paid by the Fund during
January of the following calendar year. Such distributions will be treated as
received by Shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
Each year the Fund will notify Shareholders of the tax status of dividends and
distributions.
Investments in securities that are issued at a discount will result each year in
income to the Fund equal to a portion of the excess of the face value of the
securities over their issue price, even though the Fund receives no cash
interest payments from the securities. Such income generally will, however, have
to be distributed to shareholders on a timely basis.
Any gain or loss realized by a Shareholder upon the sale or other disposition of
Shares of the Fund, or upon receipt of a distribution in complete liquidation of
the Fund, generally will be a taxable capital gain or loss which will be
long-term or short-term, generally depending upon the Shareholder's holding
period for the Shares. In some cases, Shareholders will not be permitted to take
sales charges into account in determining the amount of gain or loss realized on
the disposition of their shares. See "ADDITIONAL INFORMATION--Additional Tax
Information" in the Statement of Additional Information.
The Funds may be required to withhold U.S. federal income tax at the rate of 31%
of all reportable dividends and capital gain distributions payable to
Shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the Shareholder's U.S. FEDERAL income tax liability.
Further information relating to tax consequences is contained in the Statement
of Additional Information.
STATE AND LOCAL TAXES
Distributions from the Funds may be subject to state and local taxes.
Distributions of the Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. Shareholders should consult their
tax advisors regarding the possible exclusion for state and local income tax
purposes of the portion of dividends paid by the Fund which is attributable to
interest from obligations of the U.S. Government and its agencies, authorities
and instrumentalities, and the particular tax consequences to them of an
investment in the Fund, including the application of state and local tax laws.
MANAGEMENT OF THE COMPANY
DIRECTORS OF THE COMPANY
Under the laws of the State of Maryland, the property, affairs and business of
the Company and the Fund are managed by the Board of Directors. The Directors
elect officers who are charged with the responsibility for the day-to-day
operation of the Fund and the execution of policies formulated by the Directors.
The Directors receive fees and are reimbursed for their expenses in connection
with each meeting of the Board of Directors they attend. However, no officer or
employee of Investors Management Group, Ltd., AMCORE Financial, Inc., or any of
its subsidiaries, or BISYS Fund Services Limited Partnership, receives any
compensation from the Company for acting as a Director of the Company. The
officers of the Company (see the Statement of Additional Information) receive no
compensation directly from the Company for performing the duties of their
offices. Investors Management Group receives fees from the Funds for acting as
investment advisor, administrator and for providing certain fund accounting
services. BISYS Fund Services Limited Partnership receives fees from the Fund
for acting as distributor and BISYS Fund Services, Inc. receives fees from the
Fund for acting as transfer agent.
INVESTMENT ADVISOR
Investors Management Group, Ltd., ("IMG"), manages the investments and business
affairs of the Company. IMG, a wholly owned subsidiary of AMCORE Financial Inc.,
is a federally registered Investment Advisor organized in 1982 and located at
2203 Grand Avenue, Des Moines, Iowa. Since then its principal business has been
providing continuous investment management to pension and profit-sharing plans,
insurance companies, public agencies, banks, endowments and charitable
institutions, other mutual funds, individuals and others. As of February 28,
1998, IMG had approximately $3.6 billion in equity, fixed income and money
market assets under management.
The following individuals serve as portfolio managers for the Fund and are
primarily responsible for the day-to-day management of the Fund:
JULIE A. O'ROURKE, CFA, VICE PRESIDENT AND EQUITY MANAGER. Ms. O'Rourke is a
member of IMG's Investment Policy Committee. She has been with AMCORE Capital
Management, Inc. (or a predecessor) since 1991 where she began her investment
career. Ms. O'Rourke became an employee of IMG effective with the acquisition
of IMG by AMCORE Financial, Inc. in February 1998. She has a B.S. from
Rockford College, Rockford, Illinois. Other responsibilities include equity
research and equity account management. She is chairperson of the Equity
Research Committee.
DARRELL C. THOMPSON, SENIOR VICE PRESIDENT AND SENIOR EQUITY MANAGER. Mr.
Thompson is a member of IMG's Investment Policy Committee. He has been with
AMCORE Capital Management, Inc. (or a predecessor) since 1973. Mr. Thompson
became an employee of IMG effective with the acquisition of IMG by AMCORE
Financial, Inc. in February 1998. He began his investment career in 1957. He
has a B.S. from Southern Illinois University. He has been responsible for
investment operations in the Equity Fund since its inception.
Subject to the general supervision of the Company's Board of Directors and in
accordance with the Fund's investment objective and restrictions, IMG manages
the investments of the Fund, makes decisions with respect to and places orders
for all purchases and sales of the Fund's portfolio securities, and maintains
the Fund's records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Company, IMG receives a fee computed daily and paid
monthly, at the annual rate of 0.75% of Equity Fund's average daily net assets.
The investment advisory fees and administrative fees paid by the Equity Fund,
absent fee waivers, are higher than those paid by most other investment
companies. IMG may periodically waive all or a portion of its advisory fee
and/or absorb certain expenses of the Fund or Class of Shares without further
notification of the commencement or termination of such waiver or absorption.
Any such waiver will have the effect of lowering the overall expense ratio for
the Fund or Class and increasing the overall yield to investors in the Fund or
Class at the time any such amounts are waived and/or absorbed. IMG may not seek
reimbursement of such waived fees at a later date. The waiver or absorption of
such fee or expenses will cause the yield of the Fund or Class to be higher than
it would otherwise be in the absence of such a waiver.
ADMINISTRATOR
IMG is also the administrator for the Fund (the "Administrator"). The
Administrator generally assists in all aspects of the Fund's administration and
operation. For expenses assumed and services provided as administrator pursuant
to its Management and Administration Agreement with the Fund, the Administrator
receives a fee computed daily and paid periodically, calculated at an annual
rate of 0.26% of the average daily net assets of the Fund. The Administrator may
periodically waive all or a portion of its administrative fee to increase the
net income of the Fund or Class available for distribution as dividends. The
Administrator may not seek reimbursement of such waived fees at a later date.
The waiver of such fee will cause the yield of the Fund or Class to be higher
than it would otherwise be in the absence of such a waiver.
DISTRIBUTOR
BISYS Fund Services Limited Partnership, serves as distributor and principal
underwriter (the "Distributor") for the Company pursuant to a Distribution
Agreement and a Distribution and Shareholder Services Plan. The Distributor acts
as agent for the Fund in the distribution of its Shares and, in such capacity,
solicits orders for the sale of Shares, advertises, and pays the costs of
advertising, office space and its personnel involved in such activities.
EXPENSES AND PORTFOLIO TRANSACTIONS
The Advisor and the Administrator each bear all expenses in connection with the
performance of their services as investment advisor and general manager and
administrator, respectively, other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
At its expense, IMG provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of the Fund. Except for
the expenses expressly assumed by IMG pursuant to its investment advisory
agreement, the Fund is responsible for all its other expenses, including,
without limitation, governmental fees, interest charges, taxes if applicable,
membership dues in the Investment Company Institute allocable to the Fund,
broker commissions, and other expenses connected with the execution, recording
and settlement of Fund security transactions, expenses of repurchasing and
redeeming shares and expenses of servicing shareholder accounts; expenses for
preparing, printing and distributing periodic reports, notices and proxy
statements to shareholders and to governmental officers and commissions;
insurance premiums, fees and expenses of the Fund's custodian, including
safekeeping of funds and securities and maintaining required books and
accounting; expenses of calculating the net asset value of shares of the Fund;
fees and expenses of independent auditors, of legal counsel, and of any transfer
agent, registrar or dividend disbursing agent of the Fund; compensation and
expenses of Directors who are not "interested persons" of the Advisor; and
expenses of shareholder meetings. Expenses relating to the issuance,
registration and qualification of shares of the Fund and the preparation,
printing and mailing of prospectuses to existing shareholders are borne by the
Fund except that the Fund's Distribution Agreement requires that the Distributor
pay for prospectuses that are to be used for sales purposes with persons other
than current shareholders.
Except as voluntarily absorbed by IMG, all expenses incurred in the operation of
the Fund will be borne by the Fund. Expenses attributable to the Fund are
charged against the assets of the Fund; other expenses of the Fund are allocated
among the Funds on a reasonable basis determined by the Board of Directors,
including, but not limited to, proportionately in relation to the net assets of
each Fund.
The policy of the Fund regarding purchases and sales of securities for its
portfolio, is that primary consideration be given to obtaining the most
favorable prices and efficient execution of transactions. In seeking to
implement the Fund's policies, IMG effects transactions with those brokers and
dealers whom IMG believes provide the most favorable prices and are capable of
providing efficient executions. If IMG believes such price and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or IMG. Such services may include, but
are not limited to, any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments; wire services; and appraisals
or evaluations of portfolio securities. Such information may be useful to IMG in
serving both the Fund and other clients and, conversely, supplemental
information obtained by the placement of business of other clients may be useful
to IMG in carrying out its obligations to the Fund.
Subject to applicable limitations of the federal securities laws, broker-dealers
may receive commissions for agency transactions that are in excess of the amount
of commission charged by other broker-dealers in recognition of their research
or execution services. In order to cause the Fund to pay such higher
commissions, IMG must determine in good faith that such commissions are
reasonable in relation to the value of the brokerage and/or research services
provided by such executing broker-dealers, viewed in terms of a particular
transaction or IMG's overall responsibilities to the Fund. In reaching this
determination, IMG will not attempt to place a specific dollar value on the
brokerage and/or research services provided, or to determine what portion of the
compensation should be related to those services.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Company has adopted a
Distribution and Shareholder Service Plan (the "Plan"), under which the Fund is
authorized to pay or reimburse BISYS Fund Services Limited Partnership, as
Distributor, a periodic amount calculated at an annual rate not to exceed 0.25%
of the average daily net assets the Fund. Such amount may be used to pay banks
for administrative and shareholder services and to pay broker-dealers and other
institutions for similar services, including distribution services (each such
bank, broker-dealer and other institution is hereafter referred to as a
"Participating Organization"), pursuant to an agreement between BISYS Fund
Services Limited Partnership, and the Participating Organization.
As authorized by the Plan, the Distributor will enter into Shareholder
Agreements with Participating Organi-zations, including AMCORE Financial, Inc.,
or its affiliates, pursuant to which the Participating Organization agrees to
provide certain administrative and shareholder support services in connection
with Shares of the Fund purchased and held by the Participating Organization for
the accounts of its Customers and Shares of the Fund purchased and held by
Customers of the Participating Organization, including, but not limited to,
processing automatic investments of Participating Organization's Customer
account cash balances in Shares of the Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service, establishing
and maintaining Customer accounts and records, processing purchase and
redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone
facilities and personnel as is necessary and appropriate to accomplish such
matters. In consideration of such services, the Participating Organization may
receive a monthly fee, computed at the annual rate of 0.25% of the average
aggregate net asset value of the Shares of the Fund held during the period in
Customer accounts for which the Participating Organizations has provided
services under this Agreement. The Distributor will be compensated by the Fund
up to the amount of any payments it makes to Participating Organization under
the Rule 12b-1 Agreement. Currently, it is intended that no such amounts will be
paid under the Plan or the Rule 12b-1 Agreement by the Fund. However, IMG as
Advisor and Administrator to the Company may in its sole discretion make
payments to the Distributor to supplement shareholder fees paid by the Company
up to the maximum fee approved by the Plan without further notice to
shareholders and at no cost to the Company.
ADMINISTRATIVE SERVICES PLAN
The Company has adopted an Administrative Services Plan (the "Services Plan")
pursuant to which the Fund is authorized to pay compensation to banks and other
financial institutions (each a "Participating Organization"), including AMCORE
Financial, Inc. and its correspondent and affiliated banks, which agree to
provide certain ministerial, recordkeeping and/or administrative support
services for their customers or account holders (collectively, "customers") who
are the beneficial or record owner of Shares of that Fund. In consideration for
such services, a Participating Organization receives a fee from the Fund,
computed daily and paid monthly, at an annual rate of up to 0.25% of the average
daily net asset value of Shares of the Fund owned beneficially or of record by
such Participating Organization's customers for whom the Participating
Organization provides such services.
The servicing agreements adopted under the Services Plan (the "Servicing
Agreements") require the Participating Organizations receiving such compensation
to perform certain ministerial, recordkeeping and/or administrative support
services with respect to the beneficial or record owners of Shares of the Fund,
such as processing dividend and distribution payments from the Fund on behalf of
customers, providing periodic statements to customers showing their positions in
the Shares of the Fund, providing sub-accounting with respect to Shares
beneficially owned by such customers and providing customers with a service that
invests the assets of their accounts in Shares of the Fund pursuant to specific
or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into Servicing
Agreements with Participating Organizations pursuant to which the Participating
Organization has agreed to provide certain administrative support services in
connection with Shares of the Fund owned of record or beneficially by its
customers. Such administrative support services may include, but are not limited
to, (i) processing dividend and distribution payments from the Fund on behalf of
customers, (ii) providing periodic statements to its customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by the affiliate; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay the Participating Organization a monthly fee, computed
at an annual rate 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays servicing fees on Equity Fund "T" Shares. The company may begin
to pay Servicing Fees at any time without further notice to shareholders. IMG,
as Advisor and Administrator, may supplement the Servicing Fees paid by the
Company to the Participating Organization up to the maximum fee approved by the
Services Plan without further notice to shareholders and at no cost to the
Company.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging in
the business of underwriting, selling, or distributing securities. Insofar as
Participating Organizations (including banks) are compensated under the Plans,
their only function will be to perform administrative and shareholder services
for their clients who wish to invest in the Fund. If a participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences.
CUSTODIAN
Bankers Trust Company, One Bankers Trust Plaza, New York, New York 10006 serves
as custodian for the Equity Fund's assets. Pursuant to the Custodian Agreement
between the Company and Bankers Trust Company, Bankers Trust Company receives
compensation from the Fund for such services in an amount equal to a designated
annual fee plus fixed fees charged for certain portfolio transactions and
out-of-pocket expenses.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as
transfer agent to the Fund pursuant to a Transfer Agency Agreement with the Fund
and receives a fee for such services. See "MANAGEMENT OF THE COMPANY Transfer
Agency and Fund Accounting Services" in the Statement of Additional Information
for further information.
GENERAL INFORMATION
DESCRIPTION OF THE COMPANY AND ITS SHARES
The Company is a Maryland corporation organized on November 16, 1994. The
Company consists of several Funds organized as separate series of Shares. Each
Share represents an equal proportionate interest in the Fund with other shares
of the same Fund, and is entitled to such dividends and distributions out of the
income earned on the assets belonging to that Fund as are declared at the
discretion of the Directors (see "Miscellaneous" below).
The Equity Fund was created on October 30, 1997, to acquire the assets and
continue the business of the corresponding substantially identical investment
portfolio of the AMCORE Vintage Equity Fund, a series portfolio of The Coventry
Group, a Massachusetts Business Trust. References herein to the "immediate
predecessor" of the Fund refer to the respective portfolio or company which
correspond to the Fund. Each Share of the Fund represents an equal proportionate
interest in the Fund with other Shares of the Fund, and is entitled to such
dividends and distributions out of the income earned on the assets belonging to
the Fund as are declared at the discretion of the Directors.
The Articles of Incorporation of the Company permit the Company, by resolution
of its Board of Directors, to create new series of common stock relating to new
investment portfolios or to subdivide existing series of Shares into subseries
or classes. Classes could be utilized to create differing expense and fee
structures for investors in the same Fund. Differences could exist, for example
in the sales load, Rule 12b-1 fees or service plan fees applicable to different
classes of Shares offered by a particular Fund. Such an arrangement could enable
the Company to tailor its marketing efforts to a broader segment of the
investing public with a goal of attracting additional investments in the Funds.
"T" Shares of the Equity Fund are described in this Prospectus. "S" Shares of
the Equity Fund, along with Shares of the Government Assets, Liquid Assets,
Municipal Assets, Limited Term Bond, Bond, Income, Municipal Bond, Balanced, and
Aggressive Growth Funds are offered in a separate Prospectus which may be
obtained by calling the Fund at (800)438-6375 or writing to Dept. L-1392,
Columbus, OH 43260-1392. Please read the Prospectus carefully before investing
or sending money. "T" Shares of the Equity Fund are offered solely to fiduciary
accounts of AMCORE Investment Group, N.A., over which AMCORE Investment Group,
N.A. exercises investment discretion. All other shareholders of the Equity Fund
are offered "S" Shares. If you do not qualify for Equity Fund "T" Shares, please
call (800)438-6375 for a Vintage Equity Fund "S" Share Prospectus. Participating
Organizations selling or servicing "S" Shares may receive different
compensation. Shareholders are entitled to one vote for each full Share held and
a proportionate fractional vote for any fractional Shares held, and will vote in
the aggregate and not by series or class except as otherwise expressly required
by law. For example, shareholders of the Fund will vote in the aggregate with
other shareholders of the Company with respect to the election of Directors and
ratification of the selection of independent auditors. However, shareholders of
the Fund will vote as the Fund, and not in the aggregate with other shareholders
of the Company, for purposes of approval of the Fund's investment advisory
agreement, Plan and Services Plan.
Under the laws of the State of Maryland, the Company may operate without an
annual meeting of shareholders under specified circumstances if an annual
meeting is not required by the 1940 Act. The Company has adopted the appropriate
provisions in its Bylaws and may, in its discretion, not hold annual meetings of
shareholders for the election of Directors unless otherwise required by the 1940
Act. The Company has adopted provisions in its Bylaws for the removal of
Directors by the shareholders. Shareholders may receive assistance in
communicating with other shareholders as provided in Section 16(c) of the 1940
Act.
There normally will be no meetings of shareholders for the purpose of electing
Directors unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders at which time the Directors
then in office will call a shareholders' meeting for the election of Directors.
Shareholders of the Company may remove a Director by the affirmative vote of a
majority of the Company's 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 Directors 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 Company's outstanding voting shares.
All consideration received by the Fund for shares of the Fund and all assets in
which such consideration is invested, belong to the Fund (subject only to the
rights of creditors of the Fund) and will be subject to the liabilities related
thereto. The income and expenses attributable to the Fund are treated separately
from those of the other Funds.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
under the provisions of the 1940 Act or applicable state law or otherwise, to
the holders of the outstanding voting securities of an investment company, such
as the Fund, will not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of the Fund
affected by such matter. Rule 18f-2 further provides that the Fund shall be
deemed to be affected by a matter unless it is clear that the interests of the
Fund in the matter are identical or that the matter does not affect the interest
of the Fund. However, the Rule exempts the selection of independent auditors and
the election of Directors from the separate voting requirements of the Rule.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its average annual total return,
aggregate total return, yield and effective yield in advertisements, sales
literature and shareholder reports. SUCH PERFORMANCE FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. Average
annual total return will be calculated for the period since the establishment of
the Fund and will reflect the imposition of the maximum sales charge. Average
annual total return is measured by comparing the value of an investment in the
Fund at the beginning of the relevant period to the redemption value of the
investment at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions) and annualizing the difference.
Aggregate total return is calculated similarly to average annual total return
except that the return figure is aggregated over the relevant period instead of
annualized. Yield for the Fund will be computed by dividing the Fund's net
investment income per share earned during a recent one-month period by the
Fund's per share maximum offering price (reduced by any undeclared earned income
expected to be paid shortly as a dividend) on the last day of the period and
annualizing the result.
Distribution rates will be computed by dividing the distribution per share made
by the Fund over a twelve-month period by the maximum offering price per share.
The distribution rate includes both income and capital gain dividends and does
not reflect unrealized gains or losses. The distribution rate differs from the
yield, because it includes capital items, which are often non-recurring in
nature, whereas yield does not include such items.
Investors may also judge the performance of the Fund by comparing its
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices and to data prepared by various services which may be
published by such services or by other services or publications. In addition to
performance information, general information about the Fund that appears in such
publications may be included in advertisements, sales literature and in reports
to Shareholders.
Yield and total return are functions of the type and quality of instruments held
in the portfolio, operating expenses, and market conditions. Consequently,
current yields and total return will fluctuate and are not necessarily
representative of future results. Any fees charged by IMG or any of its
affiliates with respect to customer accounts for investing in shares of the Fund
will not be included in performance calculations; such fees, if charged, will
reduce the actual performance from that quoted.
Additional information regarding the investment performance of the Fund is
contained in the annual report of the Fund, which may be obtained without charge
by writing or calling the Fund.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent auditors. You may order statements for the current and
preceding year at no charge. However, there will be a $10.00 fee per statement
for statements ordered for other years.
As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to a Fund" means the consideration received by the Fund upon
the issuance or sale of shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or amounts derived from any reinvestment of such proceeds, and any general
assets of the Company not readily identified as belonging to a particular Fund
that are allocated to the Fund by the Company's Board of Directors. The Board of
Directors may allocate such general assets in any manner it deems fair and
equitable. Determinations by the Board of Directors of the Company as to the
timing of the allocation of general liabilities and expenses and as to the
timing and allocable portion of any general assets with respect to the Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of a Fund present at a meeting at which the holders
of more than 50% of the votes attributable to Shareholders of record of a Fund
are represented in person or by proxy, or (b) the holders of more than 50% of
the outstanding votes of Shareholders of a Fund.
Inquiries regarding the Funds may be directed in writing to the Funds at Dept.
L-1392, Columbus, Ohio, 43260-1392, or by calling toll free (800)438-6375.
<PAGE>
Government Assets Fund ("S" and "T" Shares)
Liquid Assets Fund ("S", "S2", "T" and "I" Shares)
Municipal Assets Fund ("S", "T" and "I" Shares")
Vintage Limited Term Bond Fund
Vintage Bond Fund
Vintage Income Fund
Vintage Municipal Bond Fund
Vintage Balanced Fund
Vintage Equity Fund ("S" and "T" Shares)
Vintage Aggressive Growth Fund
Each an Investment Portfolio of the Vintage Mutual Funds, Inc.
Statement of Additional Information
March 23, 1998
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the prospectuses for the Government Assets Fund ("S" and "T"
Shares) ("Government Assets"), the Liquid Assets Fund ("S", "S2", "T" and "I"
Shares) ("Liquid Assets"), the Municipal Assets Fund ("S", "T" and "I" Shares)
("Municipal Assets"), the Vintage Limited Term Bond Fund (the "Limited Term Bond
Fund"), the Vintage Bond Fund (the "Bond Fund"), the Vintage Income Fund (the
"Income Fund"), the Vintage Municipal Bond Fund (the "Municipal Bond Fund"), the
Vintage Balanced Fund (the "Balanced Fund"), the Vintage Equity Fund ("S" and
"T" Shares) (the "Equity Fund"), and the Vintage Aggressive Growth Fund (the
"Aggressive Growth Fund") each dated the same date as the date hereof (the
"Prospectus"), hereinafter referred to collectively as the "Funds" and singly, a
"Fund". This Statement of Additional Information is incorporated in its entirety
into the Prospectus. Copies of the Prospectus may be obtained by writing the
Funds at BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43129 or by
calling 1-800-438-6375.
<PAGE>
TABLE OF CONTENTS
Page
GENERAL INFORMATION 3
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS 3
Additional Information on Portfolio Instruments 3
Investment Restrictions 29
Portfolio Turnover 33
NET ASSET VALUE 34
Valuation of the Government Assets, Liquid Assets
and Municipal Assets Funds 34
Valuation of the Variable NAV Funds 35
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 36
Matters Affecting Redemption 36
MANAGEMENT OF THE COMPANY 36
Directors and Officers 36
Investment Adviser 39
Portfolio Transactions 41
Banking Laws 42
Administrator 43
Distributor 44
Administrative Services Plan 47
Custodian 48
Transfer Agency and Fund Accounting Services 49
Independent Auditors 50
Legal Counsel 50
ADDITIONAL INFORMATION 50
Description of Shares 50
Shareholder Meetings 51
Vote of a Majority of the Outstanding Shares 52
Additional Tax Information 53
Additional Tax Information Concerning the Municipal Assets
and Municipal Bond Funds 54
Yields and Total Returns of the Government Assets, Liquid
Assets and Municipal Assets Funds 54
Yields and Total Returns of the Variable NAV Funds 56
Performance Comparisons 59
Miscellaneous 60
FINANCIAL STATEMENTS 60
APPENDIX 62
<PAGE>
GENERAL INFORMATION
Vintage Mutual Funds, Inc. (the "Company") is an open-end management
investment company which currently offers it shares in series representing ten
investment portfolios: Government Assets, Liquid Assets, Municipal Assets,
Limited Term Bond, Bond, Income, Municipal Bond, Balanced, Equity, and
Aggressive Growth Funds (individually a "Fund" and collectively the "Funds").
The Company was organized on November 16, 1994 under the laws of Maryland.
Shares of some of the Funds may also be issued in classes with differing
distribution and shareholder servicing arrangements (a "Class"). Subject to the
Class level expenses, each share of a Fund ("Shares") represents an equal
proportionate interest in a Fund with other Shares of the same Fund, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to that Fund, subject to the class level expenses, as are
declared at the discretion of the Directors. Investors Management Group, Ltd.
("IMG") acts as the Company's investment adviser and provides various other
services to the Funds. Capitalized terms not defined herein are defined in the
Prospectus. No investment in Shares of a Fund should be made without first
reading the Prospectus. References to the "Variable NAV Funds" shall mean all of
the Funds except the Government Assets, Liquid Assets, and Municipal Assets
Funds.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Additional Information on Portfolio Instruments
- -----------------------------------------------
The following policies supplement the investment objective and policies
of the Funds as set forth in their respective Prospectuses.
BANK OBLIGATIONS. Each Fund, with the exception of the Government
Assets Fund, may invest in bank obligations such as bankers' acceptances,
certificates of deposit, and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange
typically drawn by an importer or exporter to pay for specific merchandise,
which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks having, at the time of investment, capital, surplus,
and undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements).
Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Certificates of deposit
and time deposits will be those of domestic and foreign banks and savings and
loan associations, if (a) at the time of investment the depository institution
has capital, surplus, and undivided profits in excess of $100,000,000 (as of the
date of its most recently published financial statements), or (b) the principal
amount of the instrument is insured in full by the Federal Deposit Insurance
Corporation.
COMMERCIAL PAPER. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.
The Limited Term Bond, Bond, Income and Municipal Bond Funds may
purchase commercial paper consisting of issues rated at the time of purchase
within the four highest rating categories by a nationally recognized statistical
rating organization (an "NRSRO"). The Balanced , Equity and Aggressive Growth
Funds may purchase commercial paper consisting of issues rated at the time of
purchase within the three highest rating categories by an NRSRO. These Funds may
also invest in commercial paper that is not rated but is determined by IMG under
guidelines established by the Company's Board of Directors, to be of comparable
quality.
VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand
notes, in which the Limited Term Bond, Bond, Income, Municipal Bond and Balanced
Funds may invest, are unsecured demand notes that permit the indebtedness
thereunder to vary and provide for periodic readjustments in the interest rate
according to the terms of the instrument. They are also referred to as variable
rate demand notes. Because master demand notes are direct lending arrangements
between a Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, a Fund may demand payment of principal and
accrued interest at any time or during specified periods not exceeding one year,
depending upon the instrument involved, and may resell the note at any time to a
third party. IMG will consider the earning power, cash flow, and other liquidity
ratios of the issuers of such notes and will continuously monitor their
financial status and ability to meet payment on demand. In determining
dollar-weighted average portfolio maturity, a variable amount master demand note
will be deemed to have a maturity equal to the longer of the period of time
remaining until the next interest rate adjustment or the period of time
remaining until the principal amount can be recovered from the issuer through
demand.
ILLIQUID SECURITIES. The Funds may invest in illiquid securities, which
include restricted securities (privately placed securities) and other securities
without readily available market quotations. However, a Fund will not acquire
such securities and other illiquid securities or securities without readily
available market quotations, such as repurchase agreements maturing in more than
seven days, options traded in the over-the-counter market, and private issuer
interest-only and principal-only stripped mortgage-backed securities, if as a
result they would comprise more than 10 percent of the value of the Fund's net
assets.
The Board of Directors has the ultimate authority to determine, to the extent
permissible under the federal securities laws, which securities are liquid or
illiquid for purposes of the 10 percent limitation. Certain securities exempt
from registration or issued in transactions exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), may be considered
liquid. The Board of Directors has delegated to the Advisor the day-to-day
determination of the liquidity of a security, although it has retained oversight
and ultimate responsibility for such determinations. Although no definitive
liquidity criteria are used, the Board of Directors has directed the Advisor to
look to such factors as (i) the nature of the market for a security (including
the institutional private resale market), (ii) the terms of certain securities
or other instruments allowing for the disposition to a third party or the issuer
thereof (e.g., certain repurchase obligations and demand instruments), (iii) the
availability of market quotations, and (iv) other permissible relevant factors.
Certain securities, such as repurchase obligations maturing in more than seven
days and other securities that are not readily marketable, are currently
considered illiquid.
Restricted securities may be sold only in privately negotiated transactions or
in a public offering with respect to which a registration statement is in effect
under the Securities Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expenses and a considerable
period may elapse between the time of the decision to sell and the time the Fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to sell.
Restricted securities will be priced at fair value as determined in good faith
by the Board of Directors. If through the appreciation of illiquid securities or
the depreciation of liquid securities, the Fund should be in a position where
more than 10 percent of the value of its net assets are invested in illiquid
assets, including restricted securities which are not readily marketable, the
Fund will take steps as deemed advisable, if any, to protect liquidity.
VARIABLE AND FLOATING RATE SECURITIES. Government Assets, Liquid
Assets, Municipal Assets, Limited Term Bond, Bond, Income, Municipal Bond and
Balanced Funds may acquire variable and floating rate securities, subject to
such Fund's investment objective, policies and restrictions. Variable rate
securities provide for automatic establishment of a new interest rate at fixed
intervals (e.g., daily, monthly, semi-annually, etc.). Floating rate securities
provide for automatic adjustment of the interest rate whenever some specified
interest rate index changes. The interest rate on variable or floating rate
securities is ordinarily determined by reference to or is a percentage of a
bank's prime rate, the 90-day U.S. Treasury bill rate, the rate of return on
commercial paper or bank certificates of deposit, an index of short-term
interest rates, or some other objective measure.
Variable or floating rate securities frequently include a demand
feature entitling the holder to sell the securities to the issuer at par. In
many cases, the demand feature can be exercised at any time on seven days'
notice; in other cases, the demand feature is exercisable at any time on 30
days' notice or similar notice at intervals of not more than one year.
Securities with a demand feature exercisable over a period in excess of seven
days are considered to be illiquid. (See "Illiquid Securities" above.) Some
securities which do not have variable or floating interest rates may be
accompanied by puts producing similar results and price characteristics.
Variable rate demand notes include master demand notes which are
obligations that permit the Fund to invest fluctuating amounts, which may change
daily without penalty, pursuant to direct arrangements between the Fund, as
lender, and the borrower. The interest rates on these notes fluctuate from time
to time. The issuer of such obligations normally has a corresponding right,
after a given period, to prepay in its discretion, the outstanding principal
amount of the obligations plus accrued interest upon a specified number of days'
notice to the holders of such obligations. The interest rate on a floating rate
demand obligation is based on a known lending rate, such as a bank's prime rate,
and is adjusted automatically each time such rate is adjusted. The interest rate
on a variable rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments will generally be traded, and there generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Fund's right to
redeem is dependent on the ability of the borrower to pay principal and interest
on demand. Such obligations frequently are not rated by credit rating agencies.
If not so rated, the Fund may invest in them only if the Advisor determines that
at the time of investment the obligations are of comparable quality to the other
obligations in which the Fund may invest. The Advisor, on behalf of the Fund,
will consider on an ongoing basis the creditworthiness of the issuers of the
floating and variable rate demand obligations owned by the Fund.
U.S. GOVERNMENT OBLIGATIONS. The Government Assets Fund will invest
exclusively in short-term U.S. Treasury bills, notes and other obligations
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
subject to its investment objective and policies (collectively, "U.S. Government
Obligations"). The Liquid Assets and Municipal Assets Funds, as well as the
Variable NAV Funds may also invest in U.S. Government Obligations. Obligations
of certain agencies and instrumentalities of the U.S. Government are supported
by the full faith and credit of the U.S. Treasury; others are supported by the
right of the issuer to borrow from the Treasury; others are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law. A Fund will invest in
the obligations of such agencies or instrumentalities only when IMG believes
that the credit risk with respect thereto is minimal.
STRIPPED TREASURY SECURITIES. The Variable NAV Funds may invest in
certain U.S. Government Obligations referred to as "Stripped Treasury
Securities." Stripped Treasury Securities are U.S. Treasury securities that have
been stripped of their unmatured interest coupons (which typically provide for
interest payments semi-annually), interest coupons that have been stripped from
such U.S. Treasury securities, and receipts and certificates for such stripped
debt obligations and stripped coupons. Stripped bonds and stripped coupons are
sold at a deep discount because the buyer of those securities receives only the
right to receive a future fixed payment on the security and does not receive any
rights to periodic interest payments on the security.
Stripped Treasury Securities will include coupons that have been
stripped from U.S. Treasury bonds, which may be held through the Federal Reserve
Bank's book-entry system called "Separate Trading of Registered Interest and
Principal of Securities" ("STRIPS") or through a program entitled "Coupon Under
Book-Entry Safekeeping" ("CUBES").
The U.S. Government does not issue Stripped Treasury Securities
directly. The STRIPS program, which is ongoing, is designed to facilitate the
secondary market in the stripping of selected U.S. Treasury notes and bonds into
separate interest and principal components. Under the program, the U.S. Treasury
continues to sell its notes and bonds through its customary auction process. A
purchaser of those specified notes and bonds who has access to a book-entry
account at a Federal Reserve bank, however, may separate the Treasury notes and
bonds into interest and principal components. The selected Treasury securities
thereafter may be maintained in the book-entry system operated by the Federal
Reserve in a manner that permits the separate trading and ownership of the
interest and principal payments.
CUBES, like STRIPS, are direct obligations of the U.S. Government.
CUBES are coupons that have previously been physically stripped from U.S.
Treasury notes and bonds, but which were deposited with the Federal Reserve
Bank's book-entry system and are now carried and transferable in book-entry form
only. Only stripped U.S. Treasury coupons maturing on or after January 15, 1988,
that were stripped prior to January 5, 1987, were eligible for conversion to
book-entry form under the CUBES program.
By agreement, the underlying debt obligations will be held separate
from the general assets of the custodian and nominal holder of such securities,
and will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of or against the custodian or any person claiming through
the custodian, and the custodian will be responsible for applying all payments
received on those underlying debt obligations to the related receipts or
certificates without making any deductions other than applicable tax
withholding. The custodian is required to maintain insurance for the protection
of holders of receipts or certificates in customary amounts against losses
resulting from the custody arrangement due to dishonest or fraudulent action by
the custodian's employees. The holders of receipts or certificates, as the real
parties in interest, are entitled to the rights and privileges of the underlying
debt obligations, including the right, in the event of default in payment of
principal or interest to proceed individually against the issuer without acting
in concert with other holders of those receipts or certificates or the
custodian.
FOREIGN INVESTMENTS. The Limited Term Bond, Bond, Income, Balanced,
Equity and Aggressive Growth Funds may, subject to their respective investment
objectives and policies, invest in certain obligations or securities of foreign
issuers. Permissible investments include American Depository Receipts ("ADRs")
for the Balanced, Equity and Aggressive Growth Funds and Yankee Obligations (as
described in the Prospectus) for the Limited Term Bond, Bond, Income, Balanced
and Aggressive Growth Funds. Investment in securities issued by foreign branches
of U.S. banks, foreign banks, or other foreign issuers, including ADRs may
subject such Funds to investment risks that differ in some respects from those
related to investment in obligations of U.S. domestic issuers. Such risks
include future adverse political and economic developments, possible seizure,
nationalization, or expropriation of foreign investments, less stringent
disclosure requirements, the possible establishment of exchange controls or
taxation at the source or other taxes, and the adoption of other foreign
governmental restrictions.
Additional risks include less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore many securities traded in
these markets may be less liquid and their prices more volatile than U.S.
securities, and the risk that custodian and brokerage costs may be higher.
Foreign issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic issuers of similar securities or obligations. Foreign branches of U.S.
banks and foreign banks may be subject to less stringent reserve requirements
than those applicable to domestic branches of U.S. banks.
FUTURES CONTRACTS. As discussed in the Prospectus, the Funds may invest
in futures contracts and options thereon (stock or bond index futures contracts
or interest rate futures or options) to hedge or manage risks associated with a
Fund's securities investments. To enter into a futures contract, an amount of
cash and cash equivalents, equal to the market value of the futures contracts,
is deposited in a segregated account with the Fund's Custodian and/or in a
margin account with a broker to collateralize the position and thereby ensure
that the use of such futures is unleveraged. Positions in futures contracts may
be closed out only on an exchange that provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, a Fund would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if a Fund had insufficient
cash, it might have to sell portfolio securities to meet daily margin
requirements at a time when it would be disadvantageous to do so. In addition, a
Fund might be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close options and futures positions also
could have an adverse impact on a Fund's ability to hedge or manage risks
effectively.
Successful use of futures by a Fund is also subject to the Adviser's
ability to predict movements correctly in the direction of the market. There is
an imperfect correlation between movements in the price of the future and
movements in the price of the securities that are the subject of the hedge. In
addition, the price of futures may not correlate perfectly with movement in the
cash market due to certain market distortions. Due to the possibility of price
distortion in the futures market and because of the imperfect correlation
between the movements in the cash market and movements in the price of futures,
a correct forecast of general market trends or interest rate movements by the
Adviser may still not result in a successful hedging transaction over a short
time frame.
The trading of futures contracts is also subject to the risk of trading
halts, suspension, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruption of normal trading activity, which could at times make it difficult or
impossible to liquidate existing position or to recover excess variation margin
payments.
CALL OPTIONS. The Bond, Balanced, Equity and Aggressive Growth Funds
may write (sell) "covered" call options and purchase options to close out
options previously written by them. Such options must be listed on a National
Securities Exchange and issued by the Options Clearing Corporation. The purpose
of writing covered call options is to generate additional premium income for a
Fund. This premium income will serve to enhance the Fund's total return and will
reduce the effect of any price decline of the security involved in the option.
Covered call options will generally be written on securities which, in IMG's
opinion, are not expected to make any major price moves in the near future but
which, over the long term, are deemed to be attractive investments for a Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, he may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring him to deliver the underlying
security against payment of the exercise price. This obligation terminates upon
the expiration of the call option, or such earlier time at which the writer
effects a closing purchase transaction by repurchasing an option identical to
that previously sold. To secure his obligation to deliver the underlying
security in the case of a call option, a writer is required to deposit in escrow
the underlying security or other assets in accordance with the rules of the
Options Clearing Corporation. A Fund will write only covered call options. (In
order to comply with the requirements of the securities laws in several states,
a Fund will not write a covered call option if, as a result, the aggregate
market value of all portfolio securities covering all call options exceeds 15%
of the market value of its net assets.)
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with a Fund's
investment objective. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Funds will not do), but
capable of enhancing a Fund's total return. When writing a covered call option,
a Fund, in return for the premium, gives up the opportunity for profit from a
price increase in the underlying security above the exercise price, but retains
the risk of loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Fund has no control over when it may be
required to sell the underlying securities, since it may be assigned an exercise
notice at any time prior to the expiration of its obligation as a writer. If a
call option which a Fund has written expires, the Fund will realize a gain in
the amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security during the option period. If the call
option is exercised, the Fund will realize a gain or loss from the sale of the
underlying security. The security covering the call will be maintained in a
segregated account of a Fund's Custodian. The Funds do not consider a security
covered by a call to be "pledged" as that term is used in each Fund's policy
which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium a
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, IMG in determining whether a particular call
option should be written on a particular security, will consider the
reasonableness of the anticipated premium and the likelihood that a liquid
secondary market will exist for such option. The premium received by a Fund for
writing covered call options will be recorded as a liability in the Fund's
statement of assets and liabilities. This liability will be adjusted daily to
the option's current market value, which will be the latest sale price at the
time at which the net asset value per share of a Fund is computed (close of the
New York Stock Exchange), or, in the absence of such sale, the latest asked
price. The liability will be extinguished upon expiration of the option, the
purchase of an identical option in a closing transaction, or delivery of the
underlying security upon the exercise of the option.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. This could result in higher
transaction costs. The Funds will pay transaction costs in connection with the
writing of options to close out previously written options. Such transaction
costs are normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities at the time the options are written. From time to time, a Fund may
purchase an underlying security for delivery in accordance with an exercise
notice of a call option assigned to it, rather than delivering such security
from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
PUT OPTIONS. The Municipal Bond Fund may acquire "puts" with respect to
Municipal Securities held in its portfolio and the Limited Term Bond, Bond,
Income and Balanced Funds may acquire "puts" with respect to debt securities
held in their portfolios. A put is a right to sell or redeem a specified
security (or securities) at a certain time or within a certain period of time at
a specified exercise price. The put may be an independent feature or may be
combined with a reset feature that is designed to reduce downward price
volatility as interest rates rise by enabling the holder to liquidate the
investment prior to maturity.
The amount payable to a Fund upon its exercise of a "put" is normally
(i) the Fund's acquisition cost of the securities subject to the put (excluding
any accrued interest which the Fund paid on the acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during that period.
Puts may be acquired by a Fund to facilitate the liquidity of the
portfolio assets. Puts may also be used to facilitate that reinvestment of
assets at a rate of return more favorable than that of the underlying security.
Puts may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of a Fund's assets.
The Limited Term Bond, Bond, Income, Municipal Bond and Balanced Funds
will, if necessary or advisable, pay for puts either separately in cash or by
paying a higher price for portfolio securities which are acquired subject to the
puts (thus reducing the yield to maturity otherwise available for the same
securities).
WHEN-ISSUED SECURITIES. As discussed in the Prospectuses of the Funds,
each of the Funds may purchase securities on a when-issued or delayed-delivery
basis. When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield and thereby involve a risk
that the yield obtained in the transaction will be less than those available in
the market when delivery takes place. A Fund will generally not pay for such
securities or start earning interest on them until they are received. When a
Fund agrees to purchase securities on a when-issued basis, the Custodian will
set aside cash or liquid portfolio securities equal to the amount of the
commitment in a segregated account. Normally, the Custodian will set aside
portfolio securities to satisfy the purchase commitment, and in such a case, the
Fund may be required subsequently to place additional assets in the separate
account in order to assure that the value of the account remains equal to the
amount of the Fund's commitment. It may be expected that the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. In addition,
because a Fund will set aside cash or liquid portfolio securities to satisfy its
purchase commitments in the manner described above, the Fund's liquidity and the
ability of IMG to manage it might be affected in the event its commitments to
purchase when-issued securities ever exceeded 25% of the value of its total
assets.
When a Fund engages in when issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Funds will engage in when issued delivery transactions only
for the purpose of acquiring portfolio securities consistent with the Funds'
investment objectives and policies, not for investment leverage.
MORTGAGE-RELATED SECURITIES. The Limited Term Bond, Bond, Income and
Balanced Funds may, consistent with their respective investment objectives and
policies, invest in mortgage-related securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. Mortgage-related securities,
for purposes of the Prospectus and this Statement of Additional Information,
represent pools of mortgage loans assembled for sale to investors by various
governmental agencies such as the Government National Mortgage Association and
government-related organizations such as the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation, as well as by
nongovernmental issuers such as commercial banks, savings and loan institutions,
mortgage bankers and private mortgage insurance companies. Although certain
mortgage-related securities are guaranteed by a third party or otherwise
similarly secured, the market value of the security, which may fluctuate, is not
so secured. If a Fund purchases a mortgage-related security at a premium, that
portion may be lost if there is a decline in the market value of the security
whether resulting from changes in interest rates or prepayments in the
underlying mortgage collateral. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment, thereby shortening the average life of the security and shortening
the period of time over which income at the higher rate is received. Conversely,
when interest rates are rising, the rate of prepayment tends to decrease,
thereby lengthening the average life of the security and lengthening the period
of time over which income at the lower rate is received. For these and other
reasons, a mortgage-related security's average maturity may be shortened or
lengthened as a result of interest rate fluctuations and, therefore, it is not
possible to predict accurately the security's return to the Fund. In addition,
regular payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return a Fund will
receive when these amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the authority of GNMA to
borrow Funds from the U.S. Treasury to make payments under its guarantee.
Mortgage-related securities issued by the Federal National Mortgage Association
("FNMA") include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of the FNMA and are not
backed by or entitled to the full faith and credit of the United States. The
FNMA is a government-sponsored organization owned entirely by private
stockholders. Fannie Maes are guaranteed as to timely payment of the principal
and interest by FNMA. Mortgage-related securities issued by the Federal Home
Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). The FHLMC is a corporate
instrumentality of the United States, created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
the FHLMC does not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable.
The Limited Term Bond, Bond, Income and Balanced Funds may also invest
in mortgage-related securities which are collateralized mortgage obligations
("CMOs") structured on pools of mortgage pass-through certificates or mortgage
loans. The CMOs in which these Funds may invest represent securities issued by a
private corporation or a U.S. Government instrumentality that are backed by a
portfolio of mortgages or mortgage-backed securities held under an indenture.
The issuer's obligations to make interest and principal payments is secured by
the underlying portfolio of mortgages or mortgage-backed securities. CMOs are
issued with a number of classes or series which have different maturities and
which may represent interests in some or all of the interest or principal on the
underlying collateral or a combination thereof. CMOs of different classes are
generally retired in sequence as the underlying mortgage loans in the mortgage
pool are repaid. In the event of sufficient early prepayments on such mortgages,
the class or series of a CMO first to mature generally will be retired prior to
its maturity. Thus, the early retirement of a particular class or series of a
CMO held by a Fund would have the same effect as the prepayment of mortgages
underlying a mortgage-backed pass-through security. Mortgage-related securities
will be purchased only if they meet the rating requirements set forth for each
Fund with respect to investments in debt securities of U.S. corporations or, if
unrated, which IMG deems to present attractive opportunities and are of
comparable quality.
The Limited Term Bond, Bond, Income and Balanced Funds may invest a
portion of their assets in stripped mortgage-backed securities ("SMBS") which
are derivative multiclass mortgage securities issued by agencies or
instrumentalities of the U.S. government, or by private originators, or
investors in mortgage loans, including savings and loan institutions, mortgage
banks, commercial banks and investment banks.
SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions from a pool of Mortgage
Assets. A common type of SMBS will have one class receiving some of the interest
and most of the principal from the Mortgage Assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest while the other class
will receive all of the principal. If the underlying Mortgage Assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities. The market value of the class
consisting primarily or entirely of principal payments generally is unusually
volatile in response to changes in interest rates.
OTHER ASSET-BACKED SECURITIES. The Limited Term Bond, Bond, Income and
Balanced Funds may also invest in interests in pools of receivables, such as
motor vehicle installment purchase obligations (known as Certificates of
Automobile Receivables or CARSSM) and credit card receivables (known as
Certificates of Amortizing Revolving Debts or CARDSSM). Such securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pools of assets. Such
securities may also be debt instruments which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Such securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain time period by a letter of credit issued by a financial institution
(such as a bank or insurance company) unaffiliated with the issuers of such
securities. Non-mortgage backed securities will be purchased by a Fund only if
they meet the rating requirements set forth for each Fund with respect to
investments in debt securities of U.S. corporations.
SECURITIES OF OTHER INVESTMENT COMPANIES. Each Fund, except the
Government Assets, Liquid Assets and Municipal Assets Funds, may invest in
securities issued by the other investment companies, including Shares of the
Government Assets, Liquid Assets and Municipal Assets Funds. Each of these Funds
currently intends to limit its investments so that, as determined immediately
after a securities purchase is made: (a) not more than 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of investment companies as a group; (c) not more than 3%
of the outstanding voting stock of any one investment company will be owned by
any of the Funds; and (d) not more than 10% of the outstanding voting stock of
any one investment company will be owned in the aggregate by the Funds. As a
shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of that company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations. In
order to avoid the imposition of additional fees as a result of investing in
Shares of the Government Assets, Liquid Assets and Municipal Assets Funds, IMG
will waive any portion of their advisory and administrative fees that are
attributable to investments therein by another Fund. Investment companies in
which a Fund may invest may also impose a sales or distribution charge in
connection with the purchase or redemption of their shares and other types of
commissions or charges. Such charges will be payable by the Funds and,
therefore, will be borne directly by Shareholders.
REPURCHASE AGREEMENTS. Securities held by each Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Fund would
acquire securities from member banks of the Federal Deposit Insurance
Corporation and registered broker-dealers which IMG deems creditworthy under
guidelines approved by the Company's Board of Directors, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price would generally equal the price paid by the Fund
plus interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The seller
under a repurchase agreement will be required to maintain continually the value
of collateral held pursuant to the agreement at not less than the repurchase
price (including accrued interest). If the seller were to default on its
repurchase obligation or become insolvent, the Fund holding such obligation
would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the Fund
were delayed pending court action. Additionally, there is no controlling legal
precedent confirming that a Fund would be entitled, as against a claim by such
seller or its receiver or trustee in bankruptcy, to retain the underlying
securities, although the Board of Directors of the Company believes that, under
the regular procedures normally in effect for custody of a Fund's securities
subject to repurchase agreements and under federal laws, a court of competent
jurisdiction would rule in favor of the Company if presented with the question.
Securities subject to repurchase agreements will be held by that Fund's
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a Fund
under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. As discussed in the Prospectuses, each
Fund may borrow funds for temporary purposes by entering into reverse repurchase
agreements in accordance with that Fund's investment restrictions. Pursuant to
such agreements, a Fund would sell portfolio securities to financial
institutions such as banks and broker-dealers, and agree to repurchase the
securities at a mutually agreed-upon date and price. At the time a Fund enters
into a reverse repurchase agreement, it will place in a segregated custodial
account assets such as U.S. Government securities or other liquid, high grade
debt securities consistent with the Fund's investment restrictions having a
value equal to the repurchase price (including accrued interest), and will
subsequently continually monitor the account to ensure that such equivalent
value is maintained at all times. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a Fund may decline below the
price at which a Fund is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by a Fund under the 1940
Act.
SECURITIES LENDING. Each of the Funds may seek to increase its income
by lending Fund securities. Such loans will usually be made only to member banks
of the Federal Reserve System and to member firms (and subsidiaries thereof) of
the New York Stock Exchange ("NYSE") and will be secured continuously by
collateral in cash, cash equivalents, or U.S. government securities maintained
on a current basis at an amount at least equal to the market value of the
securities loaned. Investment of the collateral underlying the Fund's securities
lending activities will be limited to short-term, liquid debt securities. The
Fund has the right to call a loan and obtain the securities loaned at any time
on customary industry settlement notice (which will usually not exceed three
days). During the existence of a loan, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and will also receive compensation based on investment of the collateral.
The Fund will not, however, have the right to vote any securities having voting
rights during the existence of the loan, but will call the loan in anticipation
of an important vote to be taken among holders of the securities or of the
giving or withholding of their consent on a material matter affecting the
investment. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower fail
financially. However, the loans would be made only to firms deemed to be of good
standing, and when the consideration which could be earned currently from
securities loans of this type justifies the attendant risk. The value of the
securities loaned will not exceed 30 percent of the value of any Fund's total
assets.
MUNICIPAL SECURITIES. Under normal market conditions, at least 80% of
the net assets of the Municipal Assets and Municipal Bond Funds will be invested
in Municipal Securities, the interest on which is exempt from the regular
federal income tax and not treated as a preference item for purposes of the
federal alternative minimum tax imposed on non-corporate taxpayers.
Municipal Securities include debt obligations issued by governmental
entities to obtain Funds for various public purposes, such as the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses, and the extension of loans to other
public institutions and facilities. Private activity bonds that are issued by or
on behalf of public authorities to finance various privately-operated facilities
are included within the term Municipal Securities if the interest paid thereon
is exempt from regular federal individual income taxes and is not treated as a
preference item for purposes of the federal alternative minimum tax.
Other types of Municipal Securities which the Municipal Assets and
Municipal Bond Funds may purchase are short-term General Obligation Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes,
Tax-Exempt Commercial Paper, Project Notes, Construction Loan Notes and other
forms of short-term tax-exempt loans. Such instruments are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds of
bond placements or other revenues. The Municipal Assets and Municipal Bond Funds
will not purchase municipal lease obligations.
Project Notes are issued by a state or local housing agency and are
sold by the Department of Housing and Urban Development. While the issuing
agency has the primary obligation with respect to its Project Notes, they are
also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the Project Notes.
As described in the Prospectus, the two principal classifications of
Municipal Securities consist of "general obligation" and "revenue" issues. The
Municipal Assets and Municipal Bond Funds may also acquire "moral obligation"
issues, which are normally issued by special purpose authorities. There are, of
course, variations in the quality of Municipal Securities, both within a
particular classification and between classifications, and the yields on
Municipal Securities depend upon a variety of factors, including general money
market conditions, the financial condition of the issuer, general conditions of
the municipal bond market, the size of a particular offering, the maturity of
the obligation and the rating of the issue. The ratings of Moody's and S&P
represent their opinions as to the quality of Municipal Securities. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality, and securities with the same maturity, interest rate and rating may
have different yields, while securities of the same maturity and interest rate
with different ratings may have the same yield. Subsequent to purchase, an issue
of Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Municipal Assets and Municipal
Bond Funds. IMG will consider such an event in determining whether the Fund
should continue to hold the obligation.
An issuer's obligations for Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the federal bankruptcy code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
LOW-RATED AND COMPARABLE UNRATED FIXED INCOME SECURITIES. The Limited
Term Bond, Bond, Income and Balanced Funds may invest in below-Investment-Grade
Securities. Below-Investment-Grade Securities (hereinafter referred to as "junk
bonds" or "low-rated and comparable unrated securities") include (i) bonds rated
below the fourth highest rating category by a nationally recognized statistical
rating organization (an "NRSRO"); and (ii) unrated debt securities of comparable
quality.
Low-rated and comparable unrated securities, while generally offering
higher yields than investment-grade securities with similar maturities, involve
greater risks, including the possibility of default or bankruptcy. They are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal. The special risk considerations in connection
with such investments are discussed below.
EFFECT OF INTEREST RATES AND ECONOMIC CHANGES. The low-rated and
comparable unrated securities market is relatively new, and its growth
paralleled a long economic expansion. As a result, it is not clear how this
market may withstand a prolonged recession or economic downturn. Such a
prolonged economic downturn could severely disrupt the market for and adversely
affect the value of such securities.
All interest-bearing securities typically experience appreciation when
interest rates decline and depreciation when interest rates rise. The market
values of low-rated and comparable unrated securities tend to reflect individual
corporate development to a greater extent than do higher-rated securities, which
react primarily to fluctuations in the general level of interest rates.
Low-rated and comparable unrated securities also tend to be more sensitive to
economic conditions than are higher-rated securities. As a result, they
generally involve more credit risk than securities in the higher-rated
categories. During an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of low-rated and comparable unrated securities
may experience financial stress and may not have sufficient revenues to meet
their payment obligations. The issuer's ability to service its debt obligations
may also be adversely affected by specific corporate developments, the issuer's
inability to meet specific projected business forecasts, or the unavailability
of additional financing. The risk of loss due to default by an issuer of
low-rated and comparable unrated securities is significantly greater than that
of issuers of higher-rated securities because such securities are generally
unsecured and are often subordinated to other creditors. Further, if the issuer
of a low-rated and comparable unrated security defaulted, the Fund might incur
additional expenses to seek recovery. Periods of economic uncertainty and
changes would also generally result in increased volatility in the market prices
of low-rated and comparable unrated securities and thus in the Fund's net asset
value.
As previously stated, the value of such a security will decrease in a
rising interest rate market and accordingly, so will the Fund's net asset value.
If the Fund experiences unexpected net redemptions in such a market, it may be
forced to liquidate a portion of its Fund securities without regard to their
investment merits. Due to the limited liquidity of high-yield securities
(discussed below) the Fund may be forced to liquidate these securities at a
substantial discount. Any such liquidation would reduce the Fund's asset base
over which expenses could be allocated and could result in a reduced rate of
return for the Fund.
PAYMENT EXPECTATIONS. Low-rated and comparable unrated securities
typically contain redemption, call or prepayment provisions which permit the
issuer of such securities containing such provisions to, at their discretion,
redeem the securities. During periods of falling interest rates, issuers of
high-yield securities are likely to redeem or prepay the securities and
refinance them with debt securities with a lower interest rate. To the extent an
issuer is able to refinance the securities, or otherwise redeem them, the Fund
may have to replace the securities with a lower-yielding security, which would
result in a lower return for the Fund.
CREDIT RATINGS. Credit ratings issued by credit-rating agencies
evaluate the safety of principal and interest payments of rated securities. They
do not, however, evaluate the market value risk of low-rated and comparable
unrated securities and, therefore, may not fully reflect the true risks of an
investment. In addition, credit-rating agencies may or may not make timely
changes in a rating to reflect changes in the economy or in the condition of the
issuer that affect the market value of the security. Consequently, credit
ratings are used only as a preliminary indicator of investment quality.
Investments in low-rated and comparable unrated securities will be more
dependent on the credit analysis than would be the case with investments in
investment-grade debt securities. The Advisor employs its own credit research
and analysis, which includes a study of existing debt, capital structure,
ability to service debt and to pay dividends, the issuer's sensitivity to
economic conditions, its operating history, and the current trend of earnings.
The Advisor continually monitors the investments owned by the Funds and
carefully evaluates whether to dispose of or to retain low-rated and comparable
unrated securities whose credit ratings or credit quality may have changed.
LIQUIDITY AND VALUATION. The Fund may have difficulty disposing of
certain low-rated and comparable unrated securities because there may be a thin
trading market for such securities. Because not all dealers maintain markets in
low-rated and comparable unrated securities, there is no established retail
secondary market for many of these securities. The Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. To the extent a secondary trading market does exist, it is generally
not as liquid as the secondary market for higher-rated securities. As a result,
the Fund's asset value and the Fund's ability to dispose of particular
securities, when necessary to meet the Fund's liquidity needs or in response to
a specific economic event, may be impacted. The lack of a liquid secondary
market for certain securities may also make it more difficult for the Fund to
obtain accurate market quotations for purposes of valuing the Fund's securities.
Market quotations are generally available on many low-rated and comparable
unrated securities only from a limited number of dealers and may not necessarily
represent firm bids of such dealers or prices for actual sales. During periods
of thin trading, the spread between bid and asked prices is likely to increase
significantly. In addition, adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and liquidity of
low-rated and comparable unrated securities, especially in a thinly-traded
market.
NEW AND PROPOSED LEGISLATION. Legislation has been adopted and, from
time to time, proposals have been discussed regarding new legislation designed
to limit the use of certain low-rated and comparable unrated securities by
certain issuers. An example of legislation is a recent law which requires
federally insured savings and loan associations to divest their investment in
these securities over time. New legislation could further reduce the market
because such securities, generally, could negatively affect the financial
condition of the issuers of high-yield securities, and could adversely affect
the market in general. It is not currently possible to determine the impact of
the recent legislation on this market. However, it is anticipated that if
additional legislation is enacted or proposed, it could have a material effect
on the value of low-rated and comparable unrated securities and the existence of
a secondary trading market for the securities.
LIQUIDITY AND SERVICING AGREEMENTS. IMG's responsibilities as Advisor
include the solicitation and approval of commercial banks selected as
"Participating Banks" from which a Fund may purchase participation interests in
short-term loans subject to Liquidity and Servicing Agreements or which may
issue irrevocable letters of credit to back the demand repayment commitments of
borrowers. A careful review of the financial condition and loan loss record of a
prospective bank will be undertaken prior to the bank being approved to enter
into a Liquidity and Servicing Agreement and, once approved, a Participating
Bank's financial condition and loan loss record will be reviewed at least
annually thereafter.
The principal criteria which the Advisor will consider in approving,
rejecting or terminating Liquidity and Servicing Agreements with Participating
Banks will include a bank's (a) ratio of capital to deposits; (b) ratio of loan
charge offs to average loans outstanding; (c) ratio of loan loss reserves to net
loans outstanding; and (d) ratio of capital to total assets. Ordinarily, the
Advisor will recommend that a Fund not enter into or continue a Liquidity and
Servicing Agreement with any bank whose ratios (as described above) are less
favorable than the average of all Iowa banks. The Advisor will also consider a
bank's classified loan experience, historical and current earnings and growth
trends, quality and liquidity of investments and stability of management and
ownership. Typically, the Advisor will utilize a variety of information sources;
including, annual audited financial statements, unaudited interim financial
statements, quarterly reports of condition and income filed with regulatory
agencies and periodic examination reports (if available) and reports of
federally insured banks concerning past-due-loans, renegotiated loans and other
loan problems.
STUDENT LOAN TRUSTS. The Liquid Assets Fund is authorized to purchase
Student Loan Certificates from one or more Student Loan Trusts. The Fund will
only purchase Student Loan Certificates from Student Loan Trusts formed for the
purpose of purchasing federally insured student loans originated and sold by
banks subject to purchase, at the option of the Student Loan Trust, on no more
than five business days' written notice. Student Loan Trusts are funded by the
issuance and sale to the Fund of Student Loan Certificates which have an
original maturity of no more than 397 days and which may be redeemed by the Fund
upon not more than five business days' written notice to the issuing Student
Loan Trust. The Fund is under no obligation to purchase Student Loan
Certificates issued by any Student Loan Trust.
The Fund's election to purchase Student Loan Certificates will be based
upon the amount of funds available for investment, the investment yield borne by
the Student Loan Certificates compared with yields available on other short-term
liquid investments and upon the aggregate amount of Student Loan Certificates,
commercial and industrial loans and participation interests therein owned by the
Fund which may not exceed 80 percent of Fund assets. The yield to the Fund on
Student Loan Certificates will be commensurate with current net yields on
federally insured student loans. Presently, net of servicing and trust fees,
such loans yield approximately the 91-day U.S. Treasury Bill rate plus 0.65 to
0.75 percent. Such fees will be paid out of the Student Loan Trust assets and no
other fees will be paid directly or indirectly by the Fund.
The Higher Education Act (the "Act") sets forth provisions establishing
a program of (i) direct federal insurance to holders of student loans, and (ii)
reimbursement to state agencies or private non-profit corporations administering
student loan insurance programs of losses sustained in the operation of their
programs (the "Federal GSL Program"). Under the Federal GSL Program, the
Secretary of Education (the "Secretary") is authorized to enter into guarantee
and interest subsidy agreements with the Iowa College Aid Commission, and
similar organizations (collectively the "Agencies"). The Federal GSL Program
provides for reimbursements to the Agencies for default claims paid by them, the
payments of administrative cost allowances to the Agencies, advances for the
Agencies' reserve funds and interest subsidy payments and Special Allowance
Payments to the holders of qualifying student loans made pursuant to the Federal
GSL Program.
Pursuant to Section 428(c)(1)(A) of the Act, the Agencies have entered
into guarantee agreements with the Secretary under which the respective Agencies
operate a Guarantee Program, whereby the Secretary agrees to reimburse the
Agencies in an amount equal to 80 percent of the amount expended by them in the
discharge of their insurance obligations on the unpaid balance of principal and
accrued interest with respect to loans guaranteed by the Agencies. The Act also
authorizes the Secretary to enter into supplemental guarantee agreements whereby
such federal reimbursement will be increased to a maximum of 100 percent of the
amount expended by the agencies in the discharge of their insurance obligations.
The supplemental guarantee agreements are subject to annual renegotiation and
the Secretary is not authorized to renew them unless the Agencies' Guarantee
Programs comply with all the terms of the supplemental guarantee agreements and
all the provisions of applicable federal regulations.
The Secretary and the Agencies have entered into interest subsidy
agreements under Section 428 (b) of the Act whereby the Secretary agrees to pay
interest subsidy payments to the holders of qualifying student loans for the
benefit of students meeting certain requirements. To be eligible for federal
reimbursement programs, such loans must be made by an "eligible lender" under
the Agencies' Guarantee Program, which must meet requirements prescribed by the
rules and regulations promulgated under the Act. The Trustee will be an eligible
lender and will purchase only loans originated by eligible lenders.
The Act, as amended in 1976, provides for Special Allowance Payments by
the Secretary to holders of qualifying student loans such as the Trust. Special
Allowance Payments are computed on the basis of the average of the bond
equivalent rates of the 91-day U.S. Treasury Bills auctioned during the
preceding quarter, and are provided as an inducement to lenders or holders of
loans to compensate them for the difference between the interest rate carried by
the student loan and the current commercial interest rates.
The Student Loan Reform Act of 1993 made various changes to the Federal
Guaranteed Student Loan Program. Effective October 1, 1993, Agencies are only
required to guarantee student loans at 98 percent of the unpaid balance of
principal and accrued interest on loans made after October 1, 1993. In addition,
other changes were made relating to origination fees, borrower interest rates,
technical revisions on how consolidated loans are treated and a limitation on
the amount of guarantee fee that can be charged by Agencies. Commencing July 1,
1995, the lender yield for Guaranteed Student Loans disbursed after July 1,
1995, was reduced to the 90 day Treasury Bill rate plus 2.5 percent.
The Student Loan Trusts from which the Fund purchases Student Loan
Certificates have agreed that all student loans purchased by the Trust will be
insured either directly by the Secretary or under the Federal GSL Program and
will qualify for interest subsidy payments and Special Allowance Payments. Loans
typically will be in amounts of $25,000 or less, repayable over a term of 15
years or less.
At June 30, 1997, assets of the Fund included Student Loan Trust in the
amount of $43,720,000 which was equal to 52.90 percent of Fund net assets. These
Certificates have an original maturity of not more than 364 days and may be
redeemed by the Fund upon not more than five business days' written notice to
the Iowa Student Loan Trust. Proceeds from the issuance of Student Loan
Certificates have been used by the Iowa Student Loan Trust to purchase federally
insured student loans initiated by Iowa banks which may be required to purchase
such loans from the Iowa Student Loan Trust on not more than five business days'
written notice. In the event a bank was unable to honor its purchase commitment
it would be necessary for the Iowa Student Loan Trust to seek other purchasers
of the loans. Because such loans are federally insured and bear a variable
interest rate the Fund believes that a ready market for them exists.
GUARANTEED LOAN TRUSTS. The Liquid Assets Fund may purchase FmHA
Certificates from one or more guaranteed loan trusts created for the purpose of
acquiring participation interests in the guaranteed portion of FmHA guaranteed
loans ("FmHA Trusts"). Interest and principal payments of the FmHA Loans would
accrue to the benefit of the Fund net of certain FmHA Trust fees and other fees
payable to certain parties for servicing the FmHA Loans and arising out of the
participation of the guaranteed portion of the FmHA Loans. Each FmHA Certificate
will provide certain identifying information regarding the specific FmHA Loan
acquired including the effective rate and reset provision. Each FmHA Certificate
will also be redeemable upon not more than five business days' written notice by
the Fund to the Trustee for an amount equal to the unpaid balance of the
participated portion of the FmHA Loan and accrued interest due thereon. The
redemption feature of the FmHA Certificates is backed by unconditional purchase
commitments between the Trustee, and Participating Banks which require the banks
to purchase such loans at par less a processing fee upon no more than five
business days prior written notice. Such purchase commitments are unconditional
and are operative whether the FmHA Loans are in default or experiencing
difficulties. The unconditional purchase commitments by the Participating Banks
are intended to provide liquidity for the FmHA Loans held by the FmHA Trust and
beneficially owned by the Fund. Insofar as the unconditional commitment creates
this liquidity, for purposes of Rule 2a-7 and the diversification requirements
thereunder, the unconditional commitments are limited in amounts necessary to
keep one Participating Bank from being obligated to purchase more than 25
percent of the total assets held by the Fund (as of the date of purchase of the
FmHA Certificate), and 10 percent as to each additional Participating Bank.
The sole purpose of the trust arrangement is to provide a convenient
structure for servicing the FmHA Loans and to eliminate the premium risk that
could arise if the Fund invested directly in the FmHA Loans and prepayment were
to occur. The Board of Directors believes that the arrangement presents minimal
credit risk and that the arrangement is a permissible investment. For purposes
of Rule 2a-7, the Fund does not consider the FmHA Loans or the certificates
evidencing ownership as illiquid and considers the arrangement with the
participating banks as standby unconditional put commitments.
FmHA guaranteed loans are originated by financial institutions, mostly
commercial banks, as a direct loan to the borrower. The FmHA guaranteed loans
acquired by the Fund will all have variable rates of interest which will rest no
less frequently than semi-annually and upon the adjustment of the interest rate
the value of the securities will be approximately equal to par. The FmHA, a
division of the U.S. Department of Agriculture, is an independent agency of the
United States Government and has the authority to grant the United States
Government's full faith and credit guarantee on loans originated by commercial
lenders. Through the Rural Development Act of 1972, the FmHA guaranteed loan
program was enacted by Congress to help meet the financing needs of small
businesses, farms and community facilities in rural areas. Guarantees are issued
on loans obtained by those persons who meet FmHA criteria. Typically borrowers
eligible for FmHA loans face a degree of financial stress which prevents them
from qualifying for non-guaranteed credit based on the standards of commercial
lenders. Applications for loan guarantees are submitted by the lender to the
local FmHA county officer for approval. The application is reviewed by local
officials to determine whether the borrower, lender and proposed loan meet
program requirements. Loan terms are negotiated with the lender and the
borrowers, but the terms must fall within FmHA guidelines. The FmHA will
guarantee up to 90 percent of the total loan depending upon the loan's
soundness.
Under the FmHA Loan program, the guaranteed portion of FmHA loans may
be participated, sold by the originating bank and traded in the secondary
market. The Fund will only invest in the guaranteed portions of FmHA Loans which
are so participated. While the most current government figures indicate the
outstanding balance on guaranteed loans to be over $4 billion, it is estimated
that approximately 20 percent of the total outstanding balance of guaranteed
loans have actually been participated in the secondary market.
The FmHA guaranty guarantees the repayment of principal and interest
unconditionally and accrues to the benefit of the person owning the participated
portion of the guaranteed FmHA loan. When the FmHA loans are sold the guaranty
is assigned to the purchaser and is unconditional and irrevocable. All FmHA
loans purchased by the Trust will be valued by the Fund at par.
The trustee will communicate to the Fund's Investment Adviser the
status of loan payments and delinquencies. In addition, Participating Banks,
subject to the unconditional commitments to purchase the participated FmHA
Loans, will be subject to on-going credit review by the Fund's Investment
Adviser. To the extent that any of the banks deteriorate in credit quality from
the standard set by regional banks with the highest credit ratings by NRSRO's
the Investment Adviser will take action to replace such banks with another bank
with an appropriate credit rating or if unrated, with a comparable credit
quality based on the Investment Adviser's analysis.
TAX-EXEMPT DEBT OBLIGATIONS USED BY THE MUNICIPAL ASSETS FUND. The
Municipal Assets Fund invests in tax-exempt debt obligations issued by state and
municipal governmental units and public authorities within the United States and
participation interests therein. With few exceptions, such obligations will be
non-rated and of limited marketability. However, they will be backed by demand
repurchase commitments of the issuers thereof and irrevocable bank letters of
credit or guarantees (collectively referred to herein as "Liquidity
Agreements"). The Liquidity Agreements will permit the holder of the securities
to demand payment of the unpaid principal balance plus accrued interest upon a
specified number of days notice either from the issuer or by drawing on an
irrevocable bank letter of credit or guarantee. The issuer of the security may
have a corresponding right to prepay the principal and accrued interest. In
addition, all obligations with maturities longer than one year from date of
purchase will, by their terms, bear rates of interest that are adjusted upward
or downward no less frequently than semiannually by means of a formula intended
to reflect market changes in interest rates.
The time period covered by Liquidity Agreements may be shorter than the
final maturity of the obligations covered thereby. At or before the expiration
of such Liquidity Agreements, the Fund will seek to obtain either extensions
thereof or replace them with new agreements and if unable to do so the Fund will
exercise its rights under existing Liquidity Agreements to require that the
obligations be purchased. Thus, at no time will the Fund's investments include
obligations with maturities longer than one year unless the obligations bear
interest rates subject to periodic adjustment at least semiannually and are
subject to sale on seven calendar days notice under existing Liquidity
Agreements.
The only banks (the "Participating Banks") which will be permitted to
sell participations in fixed and variable rate tax-exempt debt obligations of
United States governmental units to the Fund (or to provide irrevocable letters
of credit or guarantees to back the demand repurchase commitments of the issuers
of such obligations) will be United States banks which have entered into
irrevocable written agreements with respect thereto and have agreed to furnish
to the Fund whatever financial information may be requested for purposes of
evaluating the Participating Banks financial condition and capacity to fulfill
its obligations to the Fund and to perform such servicing duties as may be
mutually agreed to by the parties.
The Fund's investments may include participation interests, purchased
from Participating Banks, in fixed and variable rate tax-exempt debt obligations
(including industrial development bonds hereinafter described) owned by the
banks. A participation interest gives the Fund an undivided interest in the
tax-exempt obligation in the proportion that the Fund's participation interest
bears to the total principal amount of the obligation and carries a demand
repurchase feature. Each participation is backed by an irrevocable letter of
credit or guarantee of the Participating Bank which issued the participation.
The Fund has the right to liquidate the participation, in whole or in part, by
drawing on the letter of credit or guarantee of the Participating Bank which
issued the participation. The Fund has the right to liquidate the participation,
in whole or in part, by drawing on the letter of credit on demand, after seven
calendar days' notice, for all or any part of the principal amount of the Fund's
participation, plus accrued interest.
The Fund intends to exercise its rights under Liquidity Agreements
only: (1) upon default in the terms of the tax-exempt debt obligations covered
thereby; (2) to provide the Fund with needed liquidity to cover redemptions of
Fund shares; or (3) to insure that the value of the Fund's investment portfolio
does not vary materially from the amortized cost thereof. Participating Banks
have no contractual obligation to offer participations to the Fund, and the Fund
is not obligated to purchase or resell any participations offered or sold by
Participating Banks. The Liquidity Agreements govern the obligations of the
parties as to securities or participations actually purchased by the Fund.
The financial condition and investment and loan loss record of all
banks seeking to sell participations in fixed and variable rate tax-exempt debt
obligations to the Fund (or to provide letters of credit or guarantees to back
the demand repurchase commitments of the issuers of such obligations) will be
carefully evaluated by the Advisor, based upon guidelines established by the
Board of Directors, prior to the execution of a Liquidity Agreement by a
Participating Bank and periodically thereafter. Purchased obligations will bear
interest at or above current market rates and the rates borne by obligations
with maturities longer than one year will be adjustable at least semi-annually
to reflect changes in market rates subsequent to issuance of the securities. It
is anticipated that the tax-exempt debt obligations purchased or participated in
by the Fund will be those traditionally acquired by United States banks. These
include both general obligation and revenue bonds issued for a variety of public
purposes such as the construction of a wide range of facilities including
schools, streets, water and sewer works, highways, bridges, and housing. Also
included are bonds issued to refund outstanding obligations, to obtain funds for
general operating purposes and to lend to other public institutions and
facilities. Certain types of industrial development bonds issued by public
bodies to finance the construction of industrial and commercial facilities and
equipment are also purchased. Revenue generating facilities such as parking
garages, airports, sports and convention complexes and water supply, gas,
electricity, and sewage treatment and disposal systems are financed through
issuance of tax-exempt debt obligations as well.
Tax-exempt debt obligations are normally categorized as "general
obligation" or "revenue" issues. General obligations are secured by a pledge of
the full taxing power of the issuer while revenue obligations are payable only
from revenues generated by a facility or facilities, a specified source of tax
or other revenues or, in the case of industrial development bonds, from lease
rental or loan payments made by a commercial or industrial user of the
facilities. Revenue obligations do not generally carry the pledge of the credit
of the issuer.
Short-term tax-exempt debt obligations usually mature in less than two
years, are typically general obligations of the issuer and most often issued in
anticipation of receipts to be realized from tax collections or the sale of
long-term bonds. Project Notes are issued by local agencies under a program
administered by the United States Department of Housing and Urban Development
and are secured by the full faith and credit of the United States.
From time to time the Fund may invest 25 percent or more of its assets
in tax-exempt debt obligations, or participations therein, sufficiently similar
in character that an economic, business or political development or change
affecting one such security would also affect the other securities. Examples
might be securities whose principal and interest payments are dependent upon
revenues derived from similar projects or whose issuers are located in the same
state. In addition, investments in tax-exempt debt obligations of issuers may
from time to time become concentrated within a single state, and the Fund may
also invest 25 percent or more of its assets in industrial development bonds or
participations therein.
For entering into a Liquidity Agreement, a Participating Bank will
retain a service and letter of credit fee in an amount equal to the excess of
the interest paid on the tax-exempt obligations above the negotiated yield at
which the instruments were purchased by the Fund. Such fees may be adjusted if
adjustments are made in the interest rate paid on the tax-exempt obligations.
Each Participating Bank executing a Liquidity Agreement must be approved by the
Board of Directors of the Fund prior to, or at the next quarterly Board meeting
following, such executions. See "Liquidity and Servicing Agreements" above for a
discussion of the criteria to be used in selecting Participating Banks. The
Board of Directors will review all Participating Banks and Liquidity Agreements
quarterly in an effort to assure continued liquidity and high quality in the
Fund's portfolio.
INVESTMENT RESTRICTIONS
The following are fundamental investment restrictions and are in
addition to the investment restrictions set forth in the Prospectus. Under these
restrictions a Fund may not:
1. Underwrite securities issued by other persons, except to the extent
that a Fund may be deemed to be an underwriter under certain securities laws in
the disposition of "restricted securities";
2. Purchase or sell commodities or commodities contracts, except to the
extent disclosed in the current Prospectus of the Funds;
3. Purchase or sell real estate (although investments by the Equity
Fund and the Income Fund in marketable securities of companies engaged in such
activities are not prohibited by this restriction);
The Bond Fund has also adopted the following fundamental investment
restrictions. The Bond Fund may not:
1. Borrow money except for temporary or emergency purposes (but not for
the purpose of purchasing investments) and then, only in an amount not to exceed
25 percent of the value of the Fund's net assets at the time the borrowing is
incurred; provided, however, that the Fund may enter into transactions in
options, futures and options on futures. The Fund will not purchase securities
when borrowings exceed 5 percent of its total assets. If the Fund borrows money,
its share price may be subject to greater fluctuation until the borrowing is
paid off. To this extent, purchasing securities when borrowings are outstanding
may involve an element of leverage.
2. Make loans, except that the Fund may (i) purchase and hold debt
obligations in accordance with investment objectives and policies, (ii) enter
into repurchase agreements, and (iii) lend Fund securities against collateral
(consisting of cash or securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities) equal at all times to not less than 100
percent of the value of the securities loaned provided no such loan may be made
if as a result the aggregate of such loans of the Fund's securities exceeds 30
percent of the value of the Fund's total assets.
3. Issue senior securities, bonds or debentures.
4. Invest in the securities of a company for the purpose of exercising
control or management.
5. Sell securities short (except where the Fund holds or has the right
to obtain at no added cost a long position in the securities sold that equals or
exceeds the securities sold short) or purchase any securities on margin, except
that it may obtain such short-term credits as are necessary for the clearance of
transactions. The deposit or payment of margin in connection with transactions
in options and financial futures contracts is not considered the purchase of
securities on margin.
6. Concentrate investments in any industry. However, the Fund may
invest up to 25 percent of the value of its total assets in any one industry.
The Liquid Assets Fund has also adopted the following fundamental
investment restrictions. The Liquid Assets Fund may not:
1. Invest more than 80 percent of its total assets in loans and/or loan
participations purchased from Participating Banks, Student Loan Certificates
and/or FmHA Certificates;
2. Pursuant to Rule 22-7 invest more than 25 percent of its total
assets in loan participations purchased from, or loans backed by letters of
credit issued by, one Participating Bank and 10 percent for each Participating
Bank thereafter (determined as of the date of purchase);
3. Invest with a view to exercising control or influencing management;
4. Invest more than ten percent of the value of its total assets in
securities of other investment companies, except in connection with a merger,
acquisition, consolidation or reorganization, subject to Section 12(d)(1) of the
Investment Company Act of 1940;
5. Purchase any securities on margin, except for the clearing of
occasional purchases or sales of portfolio securities;
6. Make short sales of securities or maintain a short position or write
purchase or sell puts (excluding repayment and guarantee arrangements on loan
participations purchased from Participating Banks), calls, straddles, spreads or
combinations thereof;
7. Make loans to other persons, provided the Fund may invest up to 80
percent of its total assets in loans and/or loan participations purchased from
Participating Banks, Student Loan Certificates and/or FmHA Certificates, as
described in (1) above, and may make the investments, and enter into repurchase
agreements, as described under "Investment Objectives, Policies and
Restrictions";
8. Borrow money, except to meet extraordinary or emergency needs for
funds, and then only from banks in amounts not exceeding ten percent of its
total assets, nor purchase securities at any time borrowings exceed five percent
of the Fund's total assets;
9. Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned by the Fund except as may be
necessary in connection with borrowings outlined in (8) above and then
securities mortgaged, hypothecated or pledge may not exceed five percent of the
Funds' total assets taken at market value;
10. Invest in securities with legal or contractual restrictions on
resale (except for repurchase agreements, loans, loan participations purchased
from Participating Banks and Student Loan and FmHA Certificates) or for which no
ready market exists;
11. Purchase loan participations other than from banks which have
entered into a Liquidity and Servicing Agreement and which have a record,
together with predecessors, of at least five years of continuous operation;
12. Enter into repurchase agreements if, as a result thereof, more than
five percent of the Fund's total assets (taken at market value at the time of
such investment) would be subject to repurchase agreements maturing in more than
seven calendar days; and
13. Purchase loan participations from any Participating Bank if five
percent or more of the securities of such Bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such Participating Bank.
The Municipal Assets Fund has also adopted the following fundamental
investment restrictions. The Municipal Assets Fund may not:
1. Invest more than 80 percent of its total assets in tax-exempt fixed
and variable rate debt obligations (or participation interests therein) issued
by state and local governmental units within the United States which are backed
by Liquidity Agreements;
2. Pursuant to Rule 2a-7 invest more than 25 percent of its total
assets in tax-exempt obligations or participation interests therein subject to
Liquidity Agreements issued by one Participating Bank and 10 percent for each
Participating Bank thereafter;
3. Invest with a view to exercising control or influencing management;
4. Invest more than ten percent of the value of its total assets in
securities of other investment companies, except in connection with a merger,
acquisition, consolidation or reorganization, subject to Section 12(d)(1) of the
Investment Company Act of 1940;
5. Purchase any securities on margin, except for the clearing of
occasional purchases or sales of portfolio securities;
6. Make short sales of securities or maintain a short position or
write, purchase, or sell puts (excluding Liquidity Agreements covering certain
tax-exempt obligations purchased by the Fund), calls, straddles, spreads or
combinations thereof;
7. Make loans to other persons, provided the Fund may make investments
and enter into repurchase agreements;
8. Borrow money, except to meet extraordinary or emergency needs for
funds, and then only from banks in amounts not exceeding ten percent of its
total assets, nor purchase securities at any time borrowings exceed five percent
of its total assets;
9. Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned by the Fund except as may be
necessary in connection with borrowings outlined in (8) above and then
securities mortgaged, hypothecated or pledged may not exceed five percent of the
Fund's total assets taken at market value;
10. Invest in securities with legal or contractual restrictions on
resale (except for tax-exempt debt obligations subject to Liquidity Agreements)
or for which no ready market exists;
11. Enter into a Liquidity Agreement with any bank unless such bank is
a United States bank which has a record, together with its predecessors, of at
least five years of continuous operation;
12. Enter into repurchase agreements if, as a result thereof, more than
five percent of the Fund's total assets (taken at market value at the time of
such investment) would be subject to repurchase agreements maturing in more than
seven calendar days; and
13. Enter into Liquidity Agreements with any Participating Bank if five
percent or more of the securities of such Bank are owned by the Advisor or by
directors and officers of the Fund or the Advisor, or if any director or officer
of the Fund or the Advisor owns more than 1/2 percent of the voting securities
of such Participating Bank.
The following additional investment restrictions are not fundamental
and may be changed with respect to a particular Fund without the vote of a
majority of the outstanding Shares of that Fund. A Fund may not:
1. Enter into repurchase agreements with maturities in excess of seven
days if such investments, together with other instruments in that Fund that are
not readily marketable or are otherwise illiquid, exceed 10% of that Fund's net
assets.
2. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities;
3. Engage in any short sales;
4. Purchase participation or direct interests in oil, gas or other
mineral exploration or development programs (although investments by the Equity
Fund and the Income Fund in marketable securities of companies engaged in such
activities are not prohibited in this restriction);
5. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, and (b)
a Fund may invest in other investment companies, including other Funds for which
IMG acts as adviser, as specified in the Prospectus subject to such restrictions
as may be imposed by the 1940 Act or any state laws.
6. Invest more than 5% of total assets in puts, calls, straddles,
spreads or any combination thereof.
7. With respect to the Limited Term Bond, Bond, Income, Balanced,
Equity and Aggressive Growth Funds, invest more than 5% of total assets in
securities of issuers which together with any predecessors have a record of less
than three years continuous operation.
If any percentage restriction described above is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from a
change in asset value will not constitute a violation of such restriction.
Portfolio Turnover
- ------------------
The portfolio turnover rate for each of the Funds is calculated by
dividing the lesser of a Fund's purchases or sales of portfolio securities for
the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose remaining maturities at the time of
acquisition were one year or less.
Portfolio turnover for any of the Funds may vary greatly from year to
year as well as within a particular year. High turnover rates will generally
result in higher transaction costs to a Fund. Portfolio turnover will not be a
limiting factor in making investment decisions.
Because the Government Assets, Liquid Assets and Municipal Assets Funds
intend to invest entirely in securities with maturities of less than 397 days
and because the Commission requires such securities to be excluded from the
calculation of the portfolio turnover rate, the portfolio turnover with respect
to each of the Government Assets, Liquid Assets and Municipal Assets Funds is
expected to be zero percent for regulatory purposes.
NET ASSET VALUE
As indicated in the Prospectuses, the net asset value of each Fund is
determined and the Shares of each Fund are priced as of the Valuation Times
applicable to such Fund on each Business Day of the Company. A "Business Day"
constitutes any day on which the New York Stock Exchange (the "NYSE") is open
for trading, the Federal Reserve Bank of Chicago is open, and any other day
except days on which there are not sufficient changes in the value of the Fund's
portfolio securities that the Fund's net asset value might be materially
affected and days during which no Shares are tendered for redemption and no
orders to purchase Shares are received. Currently, either the NYSE or Federal
Reserve Bank of Chicago are closed on New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day.
Valuation of the Government Assets, Liquid Assets and Municipal Assets Funds
- ---------------------------------------------------------------------- -----
The Government Assets, Liquid Assets and Municipal Assets Funds have
elected to use the amortized cost method of valuation pursuant to Rule 2a-7
under the 1940 Act. This involves valuing an instrument at its cost initially
and thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. This method may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the
Government Assets, Liquid Assets and Municipal Assets Funds would receive if
they sold the instrument. The value of securities in the Government Assets,
Liquid Assets and Municipal Assets Funds can be expected to vary inversely with
changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Government Assets, Liquid Assets and
Municipal Assets Funds will maintain a dollar-weighted average portfolio
maturity appropriate to the Fund's objective of maintaining a stable net asset
value per share, provided that the Fund will not purchase securities with a
remaining maturity of more than 397 days (thirteen months) (securities subject
to repurchase agreements may bear longer maturities) nor maintain a
dollar-weighted average portfolio maturity which exceeds 90 days. The Company's
Board of Directors has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and the investment
objective of the Fund, to stabilize the net asset value per share of the Fund
for purposes of sales and redemptions at $1.00. These procedures include review
by the Directors, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per Share of the Fund calculated by
using available market quotations deviates from $1.00 per Share. In the event
such deviation exceeds one-half of one percent, Rule 2a-7 requires that the
Board of Directors promptly consider what action, if any, should be initiated.
If the Directors believe that the extent of any deviation from the Fund's $1.00
amortized cost price per Share may result in material dilution or other unfair
results to new or existing investors, they will take such steps as they consider
appropriate to eliminate or reduce, to the extent reasonably practicable, any
such dilution or unfair results. These steps may include selling portfolio
instruments prior to maturity, shortening the average portfolio maturity,
withholding or reducing dividends, reducing the number of the Government Assets
Fund's outstanding Shares without monetary consideration, or utilizing a net
asset value per share determined by using available market quotations.
Valuation of the Variable NAV Funds
- -----------------------------------
Portfolio securities for which market quotations are readily available
are valued based upon their current available bid prices in the principal market
(closing sales prices if the principal market is an exchange) in which such
securities are normally traded. Unlisted securities for which market quotations
are readily available will be valued at the current quoted bid prices. Other
securities and assets for which quotations are not readily available, including
restricted securities and securities purchased in private transactions, are
valued at their fair value in IMG's best judgment under the supervision of the
Company's Board of Directors.
Among the factors that will be considered, if they apply, in valuing
portfolio securities held by the Variable NAV Funds are the existence of
restrictions upon the sale of the security by the Fund, the absence of a market
for the security, the extent of any discount in acquiring the security, the
estimated time during which the security will not be freely marketable, the
expenses of registering or otherwise qualifying the security for public sale,
underwriting commissions if underwriting would be required to effect a sale, the
current yields on comparable securities for debt obligations traded
independently of any equity equivalent, changes in the financial condition and
prospects of the issuer, and any other factors affecting fair value. In making
valuations, opinions of counsel may be relied upon as to whether or not
securities are restricted securities and as to the legal requirements for public
sale.
The Company may use a pricing service to value certain portfolio
securities where the prices provided are believed to reflect the fair market
value of such securities. A pricing service would normally consider such factors
as yield, risk, quality, maturity, type of issue, trading characteristics,
special circumstances and other factors it deems relevant in determining
valuations of normal institutional trading units of debt securities and would
not rely exclusively on quoted prices. The methods used by the pricing service
and the valuations so established will be reviewed by the Company under the
general supervision of the Company's Board of Directors. Several pricing
services are available, one or more of which may be used by the Adviser from
time to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Matters Affecting Redemption
- ----------------------------
Shares in each of the Company's Funds are sold on a continuous basis by
BISYS Fund Services Limited Partnership, (the "Distributor") which has agreed to
use appropriate efforts to solicit all purchase orders. In addition to
purchasing Shares directly from the Distributor, Shares may be purchased through
procedures established by the Distributor in compliance with broker/dealers,
banks, investment advisory firms and other financial institutions
("Participating Organizations") which may include affiliates of AMCORE
Financial, Inc., the owner of IMG. Customers purchasing Shares of the Funds may
include officers, directors, or employees of AMCORE or its affiliates.
The Company may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Commission, (b) the Exchange is closed for other than customary weekend and
holiday closings, (c) the Commission has by order permitted such suspension for
the protection of security holders of the Company, or (d) the Commission has
determined that an emergency exists as a result of which (i) disposal by the
Company of securities owned by it is not reasonably practical, or (ii) it is not
reasonably practical for the Company to determine the fair value of its net
assets.
The Company may redeem Shares of each of the Funds involuntarily if
redemption appears appropriate in light of the Company's responsibilities under
the 1940 Act. See "NET ASSET VALUE" in this Statement of Additional Information.
MANAGEMENT OF THE COMPANY
Directors and Officers
- ----------------------
Overall responsibility for management of the Company rests with its
Board of Directors, which is elected by the Shareholders of the Company. The
Directors elect the officers of the Company to supervise actively its day-to-day
operations.
Directors and Officers, together with information as to their principal
business occupations during the last five years, and other information are shown
below. Each Director who is deemed an "interested person", as defined in the
Investment Company Act, is indicated by an asterisk.
Karen Branding, age 38, Director.
Chairman, President & CEO, Busch Creative Services Corporation, a marketing
and creative services subsidiary of Anheuser-Busch, 1992 to present.
*Jay Evans, age 55, Treasurer.
President and Chief Investment Officer, Investors Management Group
Lu Farber, age 48, Director.
Sole Proprietor, Tyler Associates, a strategic planning, reengineering and
organizational change consulting firm, from 1996 to present; Executive V.P.
& Sr. Trust Executive, Key Trust Company of the Northwest, from 1993 to
1996.
Barbara P. Hazlehurst, age 50, Director.
President, William R. Powers Advertising, a Des Plaines, IL based
advertising firm, from 1983 to present.
William J. Howard, age 51, Director.
Attorney at Brassfield, Cowen & Howard from 1973 to present.
Debra Johnson, age 36, Director.
Vice President and CFO, Business Publications Corporation/Iowa Title
Company, a publishing and abstracting service company.
Fred Lorber, age 74, Director.
Consultant at B. F. & Q., a manufacturer of textiles from 1996 to present;
President, Lortex, Inc., from 1984 to 1996.
*Mark A. McClurg, age 45, Vice President.
Vice President and Senior Managing Director, Investors Management Group,
and IMG Financial Services, Inc.
*David W. Miles, age 40, President.
Treasurer and Senior Managing Director, Investors Management Group, and IMG
Financial Services, Inc.
Ruth L. Prochaska, age 45, Secretary.
Controller/Compliance Officer and Secretary, Investors Management Group,
and IMG Financial Services, Inc.
Edward J. Stanek, age 50, Director.
CEO, Iowa Lottery, a government operated lottery.
* John G. Taft, age 43, Director.
President & CEO, Dougherty Summit Securities LLC, from 1997 to present;
President & CEO, Voyageur Asset Management LLC, from 1991 to 1997.
Steven Zumbach, age 48, Director.
Attorney at Belin, Lamson, McCormick, Zumbach, Flynn from 1977 to present.
The address for Messrs. Miles, McClurg, and Ms. Prochaska is 2203 Grand
Avenue, Des Moines, Iowa 50312-5338.
As of the date hereof, Officers and Directors beneficially owned no more
than 1 percent of the shares of common stock of the Fund.
Directors and Officers of the Fund who are officers, directors, employees,
or stockholders of the Advisor do not receive any remuneration from the Fund for
serving as Directors or Officers. Those Directors of the Funds who are not so
affiliated with the Advisor receive an annual retainer fee and $500 for each
Board of Directors meeting attended, plus reimbursement for out-of-pocket
expenses in attending meetings.
<TABLE>
<CAPTION>
COMPENSATION TABLE
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Total Comp-
Position Compensation Retirement Bene- Annual Bene- ensation
From Registrant fits Accrue as fits Upon From Regis-
Part of Fund Retirement trant and
Expenses and Fund
Complex
Paid to
Director
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lu Farber $0 $0 $0 $0
Director
William J. Howard 0 0 0 0
Director
Steven Zumbach 0 0 0 0
Director
Barbara P. Hazelhurst 0 0 0 0
Director
Edward J. Stanek 1,000 0 0 1,000
Director
Fred Lorber 0 0 0 0
Director
John G. Taft 0 0 0 0
Director
Karen Branding 0 0 0 0
Director
Debra L. Johnson 1,000 0 0 1,000
Director
</TABLE>
Investment Advisor
- ------------------
Investment advisory services are provided by IMG, Des Moines, Iowa,
pursuant to an Investment Advisory Agreement dated as of February 13, 1998 (the
"Investment Advisory Agreement").
Under the Investment Advisory Agreement, the Advisor has agreed to
provide investment advisory services as described in the Prospectus of the
Funds. For the services provided pursuant to the Investment Advisory Agreement,
each of the Funds pays IMG a fee computed daily and paid monthly, at an annual
rate, calculated as a percentage of the average daily net assets of that Fund,
of 0.40% for the Government Assets Fund, of 0.35% for the Liquid Assets and
Municipal Assets Funds, of 0.60% for the Limited Term Bond, Income, and
Municipal Bond Funds, of 0.55% for the Bond Fund, of 0.75% for the Balanced and
Equity Funds, and 0.95% for the Aggressive Growth Fund. IMG may periodically
waive all or a portion of its advisory fee with respect to any Fund to increase
the net income of the Fund available for distribution as dividends.
The total investment advisory fees earned by the previous advisor,
AMCORE Capital Management, Inc., ("AMCORE"), for the last three fiscal years by
the respective predecessor Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED MARCH 31 1995 1996 1997
AMCORE Vintage U.S. Government Fund $228,531 $307,937 $602,877
AMCORE Vintage Fixed Total Return Fund 1 $243,794 $306,666
AMCORE Vintage Fixed Income Fund $519,120 $471,823 $528,149
AMCORE Vintage Intermediate Tax-Free Fund $93,944 $116,481 $259,581
AMCORE Vintage Balanced Fund 2 $101,842 $139,017
AMCORE Vintage Equity Fund $1,023,315 $1,328,833 $1,837,312
AMCORE Vintage Aggressive Growth Fund 3 $81,829 $356,135
The total investment advisory fees waived or assumed by the previous
advisor, AMCORE Capital Management, Inc., ("AMCORE"), for the last three fiscal
years by the respective predecessor Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED MARCH 31 1995 1996 1997
AMCORE Vintage U.S. Government Fund $228,530 $253,524 $0
AMCORE Vintage Fixed Total Return Fund 1 $0 $0
AMCORE Vintage Fixed Income Fund $0 $0 $0
AMCORE Vintage Intermediate Tax-Free Fund $93,908 $95,510 $0
AMCORE Vintage Balanced Fund 2 $0 $0
AMCORE Vintage Equity Fund $501 $0 $0
AMCORE Vintage Aggressive Growth Fund 3 $0 $0
1 From commencement of operations on June 15, 1995
2 From commencement of operations on June 1, 1995
3 From commencement of operations on September 29, 1995
The total investment advisory fees earned by Investors Management
Group, ("IMG"), for the last three fiscal years by the respective predecessor
Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED JUNE 30 1995 1996 1997
Liquid Assets Fund $374,773 $444,793 $428,125
Municipal Assets Fund $52,311 $43,217 $51,871
The total investment advisory fees waived or assumed by Investors
Management Group, ("IMG"), for the last three fiscal years by the respective
predecessor Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED JUNE 30 1995 1996 1997
Liquid Assets Fund $0 $0 $0
Municipal Assets Fund $0 $0 $31,087
The total investment advisory fees earned by Investors Management
Group, ("IMG"), for the last three fiscal years by the respective predecessor
Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED APRIL 30 1995 1996 1997
IMG Bond Fund 1 $15,625 $23,870
1 From commencement of operations on July 7, 1995
Unless sooner terminated, the Investment Advisory Agreement will
continue in effect as to each Fund until February 2000 and from year to year
thereafter, if such continuance is approved at least annually by the Company's
Board of Directors or by vote of a majority of the outstanding Shares of the
relevant Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Funds' Prospectus), and a majority of the Directors who are not parties to the
Investment Advisory Agreement or interested persons (as defined in the 1940 Act)
of any party to the Investment Advisory Agreement by votes cast in person at a
meeting called for such purpose. The Investment Advisory Agreement is terminable
as to a Fund at any time on 60 days' written notice without penalty by the
Directors, by vote of a majority of the outstanding Shares of that Fund, or by
IMG. The Investment Advisory Agreement also terminates automatically in the
event of any assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that IMG shall not be liable
for any error of judgment or mistake of law or for any loss suffered by a Fund
in connection with the performance of the Investment Advisory Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of IMG in the performance of its duties,
or from reckless disregard by IMG of its duties and obligations thereunder.
Portfolio Transactions
- ----------------------
Pursuant to the Investment Advisory Agreement, IMG determines, subject
to the general supervision of the Board of Directors of the Company and in
accordance with each Fund's investment objective and restrictions, which
securities are to be purchased and sold by a Fund, and which brokers are to be
eligible to execute such Fund's portfolio transactions. Purchases and sales of
portfolio securities with respect to the Funds usually are principal
transactions in which portfolio securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. Purchases
from underwriters of portfolio securities generally include a commission or
concession paid by the issuer to the underwriter, and purchases from dealers
serving as market makers may include the spread between the bid and asked price.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. Transactions in the over-the-counter market are generally principal
transactions with dealers. With respect to the over-the-counter market, IMG,
where possible, will deal directly with dealers who make a market in the
securities involved except in those circumstances where better price and
execution are available elsewhere.
The Company, on behalf of the Funds, will not execute portfolio
transactions through, acquire portfolio securities issued by, make savings
deposits in, or enter into repurchase or reverse repurchase agreements with
AMCORE Investment Group, N.A. the Distributor, or their affiliates, and will not
give preference to AMCORE Investment Group, N.A. correspondents with respect to
such transactions, securities, savings deposits, repurchase agreements, and
reverse repurchase agreements.
Investment decisions for each Fund are made independently from those
for the other Funds or any other investment company or account managed by IMG.
Any such other Fund, investment company or account may also invest in the same
securities as the Company on behalf of the Funds. When a purchase or sale of the
same security is made at substantially the same time on behalf of more than one
Fund or a Fund and another investment company or account, the transaction will
be averaged as to price, and available investments will be allocated as to
amount in a manner which IMG believes to be equitable to the Fund(s) and such
other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by a Fund or the size
of the position obtained by a Fund. To the extent permitted by law, IMG may
aggregate the securities to be sold or purchased for a Fund with those to be
sold or purchased for the other Funds or for other investment companies or
accounts in order to obtain best execution. As provided by the Investment
Advisory Agreement, in making investment recommendations for the Funds, IMG will
not inquire or take into consideration whether an issuer of securities proposed
for purchase or sale by the Funds is a customer of AMCORE its parent or its
subsidiaries or affiliates and, in dealing with its customers, AMCORE, its
parent, subsidiaries, and affiliates will not inquire or take into consideration
whether securities of such customers are held by the Funds.
Total brokerage commissions paid during the last three fiscal years by
the respective predecessor Funds are as follows:
PREDECESSOR FUND
FOR FISCAL YEARS ENDED MARCH 31 1995 1996 1997
AMCORE Vintage Balanced Fund $9,625 $28,496
AMCORE Vintage Equity Fund $132,486 $214,078 $290,166
AMCORE Vintage Aggressive Growth Fund $28,295 $83,370
None of such commissions were paid to any affiliate of the Funds, AMCORE or
AMCORE Investment Group, N.A.
Banking Laws
- ------------
IMG, AMCORE Investment Group N.A. and their brokerage affiliates
believe that they possesses the legal authority to perform the services for the
Funds contemplated by the Prospectus, this Statement of Additional Information,
and Rule 12b-1 Agreement described below without violation of applicable
statutes and regulations. IMG, AMCORE Investment Group N.A. and their brokerage
affiliates have been advised by its counsel that, while the question is not free
from doubt, such laws should not prevent IMG, AMCORE Investment Group N.A. and
their brokerage affiliates from providing the services required of it under the
Rule 12b-1 Agreement. Future changes in either federal or state statutes and
regulations relating to the permissible activities of banks or bank holding
companies and the subsidiaries or affiliates of those entities, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent or restrict IMG, AMCORE
Investment Group N.A. or their brokerage affiliates from continuing to perform
such services for the Funds. Depending upon the nature of any changes in the
services which could be provided by IMG, AMCORE Investment Group N.A. or their
brokerage affiliates the Board of Directors of the Company would review the
Funds' relationship with IMG or AMCORE Investment Group N.A. and consider taking
all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of IMG, AMCORE Investment Group, N.A. and
their brokerage affiliates and/or its affiliated and correspondent banks in
connection with Customer purchases of Shares of the Funds, those banks might be
required to alter materially or discontinue the services offered by them to
Customers. It is not anticipated, however, that any change in the Company's
method of operations would affect its net asset value per share or result in
financial losses to any Customer.
Administrator
- -------------
IMG serves as administrator (the "Administrator") to the Funds pursuant
to a Management and Administration Agreement dated October 30, 1997 (the
"Administration Agreement"). The Administrator assists in supervising all
operations of each Fund (other than those performed by the Advisor under the
Investment Advisory Agreement, the Custodian under the Custodian Agreement, the
Transfer Agency Agreement and Fund Accounting Agreement.)
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities; furnish statistical and research data, clerical,
certain bookkeeping services and stationery and office supplies; prepare the
periodic reports to the Commission on Form N-SAR or any replacement forms
therefor; compile data for, prepare for execution by the Funds and file all of
the Funds' federal and state tax returns and required tax filings other than
those required to be made by the Funds' Custodian and Transfer Agent; prepare
compliance filings pursuant to state securities laws with the advice of the
Company's counsel; assist to the extent requested by the Funds with the Fund's
preparation of its Annual and Semi-Annual Reports to Shareholders and its
Registration Statement; compile data for, prepare and file timely Notices to the
Commission required pursuant to Rule 24f-2 under the 1940 Act; keep and maintain
the financial accounts and records of each Fund, including calculation of daily
expense accruals; and generally assists in all aspects of the Funds' operations
other than those performed by IMG under the Investment Advisory Agreement, by
the Custodian under the Custodian Agreement, by the Distributor under the
Distribution Agreement, and by the Transfer Agent under the Transfer Agency
Agreement. Under the Administration Agreement, the Administrator may delegate
all or any part of its responsibilities thereunder.
The Administrator receives a fee from each Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
equal to the lesser of (1) a fee calculated daily and paid periodically, at the
annual rate equal to 0.06% of the average daily net assets of the Liquid Assets
and Municipal Assets Fund, 0.21% of the average daily net assets of the
Government Assets Fund, and 0.26% of the average daily net assets for all other
Vintage Mutual Funds or (2) such other fee as may be agreed upon in writing by
the Company and the Administrator. The Administrator may periodically waive all
or a portion of its fee with respect to any Fund in order to increase the net
income of one or more of the Funds available for distribution as dividends.
Unless sooner terminated as provided therein, the Administration
Agreement will continue in effect until October 30, 1999. The Administration
Agreement thereafter shall be renewed automatically for successive annual terms,
unless written notice not to renew is given by the non-renewing party to the
other party at least 60 days prior to the expiration of the then-current term.
The Administration Agreement is terminable with respect to a particular Fund
only upon mutual agreement of the parties to the Administration Agreement and
for cause (as defined in the Administration Agreement) by the party alleging
cause, on not less than 60 days' notice by the Company's Board of Directors or
by the Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered by
any of the Funds in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or from the reckless
disregard by the Administrator of its obligations and duties thereunder.
Distributor
- -----------
BISYS Fund Services Limited Partnership serves as distributor to the
Funds pursuant to the Distribution Agreement dated February 13, 1998, (the
"Distribution Agreement"). Unless otherwise terminated, the Distribution
Agreement will continue in effect until February 13, 2000, if such continuance
is approved at least annually (i) by the Company's Board of Directors or by the
vote of a majority of the outstanding Shares of the Funds and (ii) by the vote
of a majority of the Directors of the Company who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement may be terminated
in the event of any assignment, as defined in the 1940 Act.
In its capacity as Distributor, BISYS Fund Services Limited Partnership
solicits orders for the sale of Shares, advertises and pays the costs of
advertising, office space and the personnel involved in such activities. The
Distributor receives no compensation under the Distribution Agreement with the
Company, but may receive compensation under the Distribution and Shareholder
Service Plan described below.
The Distributor received $30,080 in commissions on the AMCORE Vintage
Equity Fund, predecessor to the Equity Fund, for the fiscal year ended March 31,
1995, of which it retained $5,751 after dealer reallowances. The Distributor
received no commissions on sales of the AMCORE Vintage Fixed Income Fund,
predecessor to the Income Fund, or the AMCORE Vintage Intermediate Tax-Free
Fund, predecessor to the Municipal Bond Fund for the fiscal year ended March 31,
1995. The Funds are no longer sold subject to commissions and no commissions
were received by the Distributor for the fiscal years ended March 31, 1996 and
March 31, 1997.
As described in the Prospectus, the Company has adopted a Distribution
and Shareholder Service Plan (the "Plan") pursuant to Rule 12b-1 under the 1940
Act under which the Funds are authorized to pay the Distributor for payments it
makes to Participating Organizations.
As authorized by the Plan, the Distributor will enter into Shareholder
Agreements with Participating Organizations, including AMCORE Financial, Inc.,
or its affiliates, pursuant to which the Participating Organization agrees to
provide certain administrative and shareholder support services in connection
with Shares of a Fund purchased and held by the Participating Organization for
the accounts of its Customers and Shares of a Fund purchased and held by
Customers of the Participating Organization, including, but not limited to,
processing automatic investments of Participating Organization's Customer
account cash balances in Shares of a Fund and establishing and maintaining the
systems, accounts and records necessary to accomplish this service, establishing
and maintaining Customer accounts and records, processing purchase and
redemption transactions for Customers, answering routine Customer questions
concerning the Funds and providing such office space, equipment, telephone
facilities and personnel as is necessary and appropriate to accomplish such
matters. In consideration of such services, the Participating Organization may
receive a monthly fee, computed at an annual rate of the average aggregate net
asset value of the Shares of the Fund held during the period in Customer
accounts for which the Participating Organization has provided services under
this Agreement. The Distributor will be compensated by a Fund up to the amount
of any payments it makes to Participating Organization under the Rule 12b-1
Agreement. The maximum fee is 0.50% on "S" Shares of Liquid Assets and 0.25% on
all other Classes and Funds. Currently, such fees are limited to 0.40% for "S"
Shares of Liquid Assets, 0.15% for "S2" Shares of Liquid Assets, 0.15% for "S"
Shares of Municipal Assets and 0.00% for all other Classes and Funds. However,
IMG as Advisor and Administrator to the Company may in its sole discretion make
payments to the Distributor to supplement shareholder fees paid by the Company
up to the maximum fee approved by the Plan without further notice to
shareholders and at no cost to the Company.
As required by Rule 12b-1, the Plan was approved by the shareholders of
each Class of Shares of a Fund and by the Board of Directors, including a
majority of the Directors who are not interested persons of the Funds and who
have no direct or indirect financial interest in the operation of the Plan (the
"Independent Directors"). The Plan may be terminated with respect to a Fund by
vote of a majority of the Independent Directors, or by vote of a majority of the
outstanding Shares of the Fund. The Directors review quarterly a written report
of such costs and the purposes for which such costs have been incurred. The Plan
may be amended by vote of the Directors including a majority of the Independent
Directors, cast in person at a meeting called for that purpose. However, any
change in the Plan that would materially increase the distribution cost to a
Fund requires Shareholder approval. For so long as the Plan is in effect,
selection and nomination of the Independent Directors shall be committed to the
discretion of such disinterested persons.
All agreements with any person relating to the implementation of the
Plan may be terminated, with respect to a Fund, at any time on 60 days' written
notice without payment of any penalty, by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding Shares of the Fund. The
Plan will continue in effect for successive one-year periods, provided that each
such continuance is specifically approved (i) by the vote of a majority of the
Independent Directors, and (ii) by the vote of a majority of the entire Board of
Directors cast in person at a meeting called for that purpose. The Board of
Directors has a duty to request and evaluate such information as may be
reasonably necessary for it to make an informed determination of whether the
Plan should be implemented or continued. In addition the Directors in approving
the Plan must determine that there is a reasonable likelihood that the Plan will
benefit each Fund and its Shareholders.
The Board of Directors of the Company believes that the Plan is in the
best interests of each of the Funds to which it applies since it encourages Fund
growth. As a Fund grows in size, certain expenses, and therefore total expenses
per Share, may be reduced and overall performance per Share may be improved.
For the fiscal year ended March 31, 1997, no distribution fees were
paid by AMCORE Vintage U.S. Government Assets Fund, AMCORE Vintage Fixed Total
Return Fund, AMCORE Vintage Fixed Income Fund, AMCORE Vintage Intermediate
Tax-Free Fund, AMCORE Vintage Balanced Fund, AMCORE Vintage Equity Fund and
AMCORE Vintage Aggressive Growth Fund, predecessors to the Government Assets,
Limited Term Bond, Income, Municipal Bond, Balanced, Equity and Aggressive
Growth Funds, respectively. For the fiscal year ended June 30, 1997, Liquid
Assets Fund, Inc., predecessor to the Liquid Assets Fund, paid distribution fees
in the amount of $1,239,511; and Municipal Assets Fund, Inc., predecessor to the
Municipal Assets Fund, paid distribution fees in the amount of $50,758. For the
fiscal year ended April 30, 1997, the IMG Bond Fund, predecessor to the Bond
Fund, paid distribution fees in the amount of $5,594.
Administrative Services Plan
- ----------------------------
The Company has adopted an Administrative Services Plan (the "Services
Plan") pursuant to which each Fund is authorized to pay compensation to banks
and other financial institutions (each a "Participating Organization"), which
may include AMCORE Financial, Inc., its correspondent and affiliated banks,
which agree to provide certain ministerial, recordkeeping and/or administrative
support services for their customers or account holders (collectively,
"customers") who are the beneficial or record owner of Shares of that Fund. In
consideration for such services, a Participating Organization receives a fee
from a Fund, computed daily and paid monthly, at an annual rate of up to 0.25%
of the average daily net asset value of Shares of that Fund owned beneficially
or of record by such Participating Organization's customers for whom the
Participating Organization provides such services.
The servicing agreements adopted under the Services Plan (the
"Servicing Agreements") require the Participating Organizations receiving such
compensation to perform certain ministerial, recordkeeping and/or administrative
support services with respect to the beneficial or record owners of Shares of
the Funds, such as processing dividend and distribution payments from the Fund
on behalf of customers, providing periodic statements to customers showing their
positions in the Shares of the Fund, providing sub-accounting with respect to
Shares beneficially owned by such customers and providing customers with a
service that invests the assets of their accounts in Shares of the Fund pursuant
to specific or pre-authorized instructions.
As authorized by the Services Plan, the Company has entered into
Servicing Agreements with Participating Organizations pursuant to which the
Participating Organizations has agreed to provide certain administrative support
services in connection with Shares of the Funds owned of record or beneficially
by its customers. Such administrative support services may include, but are not
limited to, (i) processing dividend and distribution payments from a Fund on
behalf of customers, (ii) providing periodic statements to its customers showing
their positions in the Shares; (iii) arranging for bank wires; (iv) responding
to routine customer inquiries relating to services performed by the Adviser; (v)
providing sub-accounting with respect to the Shares beneficially owned by the
Participating Organization's customers or the information necessary for
sub-accounting; (vi) if required by law, forwarding shareholder communications
from a Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to its
customers; (vii) aggregating and processing purchase, exchange, and redemption
requests from customers and placing net purchase, exchange, and redemption
orders for customers; and (viii) providing customers with a service that invests
the assets of their account in the Shares pursuant to specific or pre-authorized
instructions. In consideration of such services, the Company, on behalf of each
Fund, has agreed to pay each Participating Organization a monthly fee, computed
at an annual rate of 0.25% of the average aggregate net asset value of Shares of
that Fund held during the period by customers for whom the Participating
Organization has provided services under the Servicing Agreement. At present,
the Company pays servicing fees on the Classes or Funds as follows: 0.25%
annually on the "S" Shares of Equity, Liquid Assets and Municipal Assets Funds,
and 0.15% each on the "T" Shares of the Liquid Assets and Municipal Assets
Funds. No Servicing fees are paid by the Company on the other Vintage Funds or
Classes offered by this Prospectus, although it may begin to do so at any time
without further notice to shareholders. IMG, as Advisor and Administrator, may
supplement the Servicing Fees paid by the Company to the Participating
Organization up to the maximum fee approved by the Services Plan without further
notice to shareholders and at no cost to the Company.
The Glass-Steagall Act and other applicable laws prohibit banks from
engaging in the business of underwriting, selling, or distributing securities.
Insofar as Participating Organizations (including banks) are compensated under
the Plans, their only function will be to perform administrative and shareholder
services for their clients who wish to invest in the Funds. If a participating
Organization at a future date is prohibited from acting in this capacity, the
shareholder may lose the services provided by the Participating Organization;
however, it is not expected that the shareholders would incur any adverse
financial consequences.
Custodian
- ---------
Bankers Trust Company, New York, New York, serves as custodian (the
"Custodian") for the Government Assets, Limited Term Bond, Bond, Income,
Municipal Bond, Balanced, Equity and Aggressive Growth Funds pursuant to the
Custodian Agreement between the Company and the Custodian (the "Custodian
Agreement"). AMCORE Investment Group, N.A., Rockford, IL serves as custodian
(the "Custodian") for the Liquid Assets and Municipal Assets Funds pursuant to
the Custodian Agreement between the Company and the Custodian (the "Custodian
Agreement") The Custodian's responsibilities include safeguarding and
controlling each Fund's cash and securities, handling the receipt and delivery
of securities, and collecting interest on each Fund's investments. In
consideration of such services, each of the Funds pays the Custodian an annual
fee plus fixed fees charged for certain portfolio transactions and out-of-pocket
expenses.
Unless sooner terminated, the Custodian Agreement will continue in
effect until terminated by either party upon 60 days' advance written notice to
the other party. Notwithstanding the foregoing, the Custodian Agreement, with
respect to a Fund, must be approved at least annually by the Company's Board of
Directors or by vote of a majority of the outstanding Shares of that Fund (as
defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus), and a
majority of the Directors who are not parties to the Custodian Agreement or
interested persons (as defined in the 1940 Act) of any party to the Custodian
Agreement ("Disinterested Persons") by votes cast in person at a meeting called
for such purpose.
Transfer Agency and Fund Accounting Services
- --------------------------------------------
IMG also serves as the Funds' transfer agent (the "Transfer Agent") to
"S" Shares of the Government Assets Fund, "S", "S2" and "I" Shares of the Liquid
Assets Fund, and "S" and "I" Shares of the Municipal Assets Fund, pursuant to a
Transfer Agency Agreement dated October 30, 1997. BISYS Fund Services, Inc.,
3435 Stelzer Road, Columbus, Ohio 43219 serves as transfer agent (the "Transfer
Agent") for all other Funds pursuant to a Transfer Agency Agreement dated
October 30, 1997. Pursuant to such Agreements, the Transfer Agent, among other
things, performs the following services in connection with each of the Funds'
Shareholders of record: maintenance of shareholder records for each of the
Fund's Shareholders of record; processing shareholder purchase and redemption
orders; processing transfers and exchanges of Shares of the Funds on the
shareholder files and records; processing dividend payments and reinvestments;
and assistance in the mailing of shareholder reports and proxy solicitation
materials. For such services the Transfer Agent receives a fee based on the
number of shareholders of record and out-of-pocket expenses.
In addition, IMG provides certain fund accounting services to the Funds
pursuant to a Fund Accounting Agreement dated February 13, 1998. IMG receives a
fee from each Fund for such services equal to a fee computed daily and paid
periodically at an annual rate of 0.03% of that Fund's average daily net assets.
Under such Agreement, IMG maintains the accounting books and records for each
Fund, including journals containing an itemized daily record of all purchases
and sales of portfolio securities, all receipts and disbursements of cash and
all other debits and credits, general and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense accounts, including
interest accrued and interest received, and other required separate ledger
accounts; maintains a monthly trial balance of all ledger accounts; performs
certain accounting services for the Fund, including calculation of the net asset
value per Share, calculation of the dividend and capital gain distributions, if
any, and of yield, reconciliation of cash movements with the Custodian,
affirmation to the Custodian of all portfolio trades and cash settlements,
verification and reconciliation with the Custodian of all daily trade activity;
provides certain reports; obtains dealer quotations, prices from a pricing
service or matrix prices on all portfolio securities in order to mark the
portfolio to the market; and prepares an interim balance sheet, statement of
income and expense, and statement of changes in net assets for each Fund.
Independent Auditors
- --------------------
KPMG Peat Marwick LLP, P.O. Box 772, Des Moines, Iowa 50309, has been
selected as independent auditors for the Company for the fiscal year ended March
31, 1998. KPMG Peat Marwick LLP will perform an annual audit of the Funds'
financial statements and provide other services related to filings with respect
to securities regulations. Reports of their activities will be provided to the
Company's Board of Directors.
Legal Counsel
- -------------
Cline, Williams, Wright, Johnson & Oldfather, 233 S. 13th, Suite 1900,
Lincoln, Nebraska 68508, is counsel to the Company.
ADDITIONAL INFORMATION
Description of Shares
- ---------------------
The Company is a Maryland corporation, organized on November 16, 1994.
The Company's Articles of Incorporation are on file with the Secretary of State
of Maryland. The Articles of Incorporation authorize the Board of Directors to
issue 100,000,000,000 shares, with a par value of $0.001 per share. The Company
consists of several funds organized as separate series of shares. Some series
are further divided presently in up to four additional "classes" of shares which
bear differing class level fees. Additional classes of a series may be
authorized in the future. At present, only the Government Assets, Liquid Assets,
Municipal Assets, and Vintage Equity Funds (as more fully described in their
Prospectuses) are offered with classes. The establishment of classes of Shares
was approved by the Board of Directors under the provisions of a plan adopted
pursuant to Rule 18f-3, which Plan sets forth the basis for allocating certain
expenses among the classes of the Company's shares. Under Rule 18f-3 and the
plan the Company is permitted to establish separate classes that allow for
different arrangement for shareholder services, distribution of shares and other
services and to pay different amounts of the expenses.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Directors may grant in its
discretion. When issued for payment as described in the Prospectuses and this
Statement of Additional Information, the Shares will be fully paid and
nonassessable. In the event of a liquidation or dissolution of the Company,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution. All
Shares are held in uncertificated form and will be evidenced by the appropriate
notation on the books of the Transfer Agent.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding Shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy would be effectively acted upon with respect to a Fund only if approved
by a majority of the outstanding Shares of such Fund. Approval of changes to the
Rule 12b-1 Plan applicable to a Fund, or to a Class of Shares of a Fund would
only be effectively acted upon with respect to the Fund or to a Class of Shares
of a Fund, if approved by a majority of the outstanding Shares of such Fund or
Class of Shares. However, Rule 18f-2 also provides that the ratification of
independent public accountants, the approval of principal underwriting
contracts, and the election of Directors may be effectively acted upon by
Shareholders of the Company voting without regard to series.
Shareholder Meetings
- --------------------
The Maryland Corporation Law permits registered investment companies to
operate without an annual meeting of shareholders under specified circumstances
if an annual meeting is not required by the 1940 Act. The Fund has adopted the
appropriate Bylaw provisions and may not hold an annual meeting in any year in
which the election of Directors is not required to be acted on by shareholders
under the 1940 Act.
The Bylaws also contain procedures for removal of Directors by
shareholders. At any meeting of shareholders, duly called and at which a quorum
is present, the shareholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any Director or
Directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed Directors.
Upon the written request of the holders of shares entitled to not less
than 10 percent of all the votes entitled to be cast at such meeting, the
Secretary of the Funds shall promptly call a special meeting of shareholders for
the purpose of voting upon the question of removal of any Director. Whenever 10
or more shareholders of record who have been such for at least six months
preceding the date of application, and who hold in the aggregate either shares
having a net asset value of at least $25,000 or at least 1 percent of the total
outstanding shares, whichever is less, shall apply to the Secretary in writing,
stating that they wish to communicate with other shareholders with a view to
obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to transmit,
the Secretary shall within five business days after such application either: (1)
afford to such applicants access to a list of the names and addresses of all
shareholders of record; or (2) inform such applicants as to the approximate
number of shareholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in clause (2) of
the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender or the material to be mailed
and of the reasonable expenses of mailing, shall, with reasonable promptness,
mail such material to all shareholders of record at their addresses as recorded
on the books unless within five business days after such tender the Secretary
shall mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Board of Directors to the effect
that in their opinion either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may, and if
demanded by the Board of Directors or by such applicants shall, enter an order
either sustaining one or more of such objections or refusing to sustain any of
them. If the Securities and Exchange Commission shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order sustaining
one or more of such objections, the Securities and Exchange Commission shall
find, after notice and opportunity for hearing, that all objections so sustained
have been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all shareholders with reasonable promptness after the
entry of such order and the renewal of such tender.
Vote of a Majority of the Outstanding Shares
- --------------------------------------------
As used in the Prospectus and this Statement of Additional Information,
a "vote of a majority of the outstanding Shares" of a Fund means the affirmative
vote, at a meeting of Shareholders duly called, of the lesser of (a) 67% or more
of the votes of Shareholders of that Fund present at a meeting at which the
holders of more than 50% of the votes attributable to Shareholders of record of
that Fund are represented in person or by proxy, or (b) the holders of more than
50% of the outstanding votes of Shareholders of that Fund.
Additional Tax Information
- --------------------------
TAXATION OF THE FUNDS. Each Fund intends to qualify annually and to
elect to be treated as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code").
To qualify as a regulated investment company, each Fund must, among
other things, (a) derive in each taxable year at least 90% of its gross income
from dividends, interest, and gains from the sale of securities, invest in
securities within certain statutory limits, and distribute at least 90% of its
net income each taxable year. Each Fund intends to distribute to its
Shareholders, at least annually, substantially all of its investment company
taxable income and net capital gains.
There are tax uncertainties with respect to whether increasing rate
securities will be treated as having an original issue discount. If it is
determined that the increasing rate securities have original issue discount, a
holder will be required to include as income in each taxable year, in addition
to interest paid on the security for that year, an amount equal to the sum of
the daily portions of original issue discount for each day during the taxable
year that such holder holds the security. There may be tax uncertainties with
respect to whether an extension of maturity on an increasing rate note will be
treated as a taxable exchange. In the event it is determined that an extension
of maturity is a taxable exchange, a holder will recognize a taxable gain or
loss, which will be a short-term capital gain or loss if the holder holds the
security as a capital asset, to the extent that the value of the security with
an extended maturity differs from the adjusted basis of the security deemed
exchanged therefor.
FOREIGN TAXES. Investment income on certain foreign securities may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which a Fund
would be subject. However, if a Fund invests in the stock of certain foreign
corporations that constitute a Passive Foreign Investment Company ("PFIC"), then
federal income taxes may be imposed on a Fund upon disposition of PFIC
investments.
SHAREHOLDERS' TAX STATUS. Shareholders are subject to federal income
tax on dividends and capital gains received as cash or additional shares. The
dividends received deduction for corporations will apply to ordinary income
distributions to the extent the distribution represents amounts that would
qualify for the dividends received deduction to the Funds if those Funds were
regular corporations, and to the extent designated by those Funds as so
qualifying. These dividends, and any short-term capital gains are taxable as
ordinary income.
CAPITAL GAINS. Capital gains, when experienced by a Fund, could result
in an increase in dividends. Capital losses could result in a decrease in
dividends. When a Fund realizes net long-term capital gains, it will distribute
them at least once every 12 months.
BACKUP WITHHOLDING. Each Fund may be required to withhold U.S. federal
income tax at the rate of 31% of all reportable dividends (which does not
include exempt-interest dividends) and capital gain distributions (as well as
redemptions for all Funds except the Government Assets Fund) payable to
Shareholders who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Corporate
Shareholders and certain other Shareholders specified in the Code generally are
exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the Shareholder's U.S. federal
income tax liability.
Additional Tax Information Concerning the Municipal Assets and Municipal Bond
- --------------------------------------------------------------------------------
Funds
- -----
The Municipal Assets and Municipal Bond Funds each intends to qualify
under the Code to pay "exempt-interest dividends" to its Shareholders. Each Fund
will be so qualified if, at the close of each quarter of its taxable year, at
least 50% of the value of its total assets consists of securities on which the
interest payments are exempt from the regular federal income tax. To the extent
that dividends distributed by each Fund to its Shareholders are derived from
interest income exempt from federal income tax and are designated as
"exempt-interest dividends" by the Fund, they will be excludable from the gross
incomes of the Shareholders for regular federal income tax purposes. Each Fund
will inform Shareholders annually as to the portion of the distributions from
the Fund which constituted "exempt-interest dividends."
Shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in a Fund.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of the Municipal Assets
and Municipal Bond Funds. No attempt is made to present a detailed explanation
of the income tax treatment of either Fund or its Shareholders, and this
discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of the Municipal Assets and
Municipal Bond Funds are urged to consult their tax advisers with specific
reference to their own tax situation.
Yields and Total Returns of the Government Assets, Liquid Assets and Municipal
- --------------------------------------------------------------------------------
Assets Funds
- ------------
As summarized in the Prospectuses of the Government Assets, Liquid
Assets and Municipal Assets Funds under the heading "Performance Information,"
the "current yield' of the Funds for a seven-day period (the "base period") will
be computed by determining the net change in value (calculated as set forth
below) of a hypothetical account having a balance of one share at the beginning
of the period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period return,
and multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include the value of additional Shares purchased with
dividends from the original Share and dividends declared on both the original
Share and any such additional Shares, but will not include realized gains or
losses or unrealized appreciation or depreciation on portfolio investments.
Yield may also be calculated on a compound basis (the "effective yield") which
assumes that net income is reinvested in Fund Shares at the same rate as net
income is earned for the base period.
The current yield and effective yield of the Funds will vary in
response to fluctuations in interest rates and in the expenses of the Fund. For
comparative purposes the current and effective yields should be compared to
current and effective yields offered by competing financial institutions for the
same base period and calculated by the methods described below.
The current yield and effective seven-day average yields as of
September 30, 1997 for the AMCORE Vintage U.S. Government Obligations Fund,
predecessor to the Government Assets Fund, were 4.76% and 4.87%, respectively.
Current yields and effective yields for the seven-day period ended
December 31, 1997 were as follows for the Liquid Assets Fund, Inc., predecessor
to the Liquid Assets Fund:
Current Seven-day
Yield Yield
S Shares 4.74% 4.84%
S2 Shares 5.09% 5.21%
T Shares 5.24% 5.37%
I Shares 5.49% 5.63%
Current yields and effective yields for the seven-day period ended
December 31, 1997 were as follows for the Municipal Assets Fund, Inc.,
predecessor to the Municipal Assets Fund:
Current Seven-day
Yield Yield
S Shares 3.08% 3.12%
T Shares 3.33% 3.38%
I Shares 3.58% 3.64%
Each Fund may wish to publish total return figures in its sales
literature and other advertising materials. For a discussion of the manner in
which such total return figures are calculated, see "Yields and Total Returns of
the Variable NAV Funds--Total Return Calculations" below.
Yields and Total Returns of the Variable NAV Funds
- --------------------------------------------------
YIELD CALCULATIONS. As summarized in the Prospectuses of the Funds
under the heading "PERFORMANCE INFORMATION", yields of each of the Funds except
the Government Assets, Liquid Assets and Municipal Assets Funds will be computed
by dividing the net investment income per share (as described below) earned by
the Fund during a 30-day (or one month) period by the maximum offering price per
share on the last day of the period and annualizing the result on a semi-annual
basis by adding one to the quotient, raising the sum to the power of six,
subtracting one from the result and then doubling the difference. A Fund's net
investment income per share earned during the period is based on the average
daily number of Shares outstanding during the period entitled to receive
dividends and includes dividends and interest earned during the period minus
expenses accrued for the period, net of reimbursements. This calculation can be
expressed as follows:
a - b
Yield = 2 [(------- + 1)exp(6) - 1]
s cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Shares outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per Share on the last day of the
period.
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in that Fund. Interest earned on any debt
obligations held by a Fund is calculated by computing the yield to maturity of
each obligation held by that Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
Business Day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest) and dividing the result
by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by that Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market values of such debt obligations.
Undeclared earned income will be subtracted from the net asset value
per share (variable "d" in the formula). Undeclared earned income is the net
investment income which, at the end of the base period, has not been declared as
a dividend, but is reasonably expected to be and is declared as a dividend
shortly thereafter.
For the 30-day period ended September 30, 1997, the yield for the Funds
was as follows: AMCORE Vintage Fixed Total Return Fund, predecessor to the
Limited Term Bond Fund, 4.79%, AMCORE Vintage Fixed Income Fund, predecessor to
the Income Fund, 5.42%, AMCORE Vintage Intermediate Tax-Free Fund, predecessor
to the Municipal Bond Fund, 3.56%, AMCORE Vintage Balanced Fund, predecessor to
the Balanced Fund, 1.50%, AMCORE Vintage Equity Fund, predecessor to the Equity
Fund, 0.04% and AMCORE Vintage Aggressive Growth Fund, predecessor to the
Aggressive Growth Fund, -0.62%.
For the 30-day period ended October 31, 1997, the yield for the Bond
Fund, formerly the IMG Bond Fund, was 5.48%.
During any given 30-day period, the Advisor or the Administrator may
voluntarily waive all or a portion of their fees with respect to a Fund. Such
waiver would cause the yield of that Fund to be higher than it would otherwise
be in the absence of such a waiver.
From time to time, the tax equivalent 30-day yield of the Municipal
Bond Fund may be presented in advertising and sales literature. The tax
equivalent 30-day yield will be computed by dividing that portion of the Fund's
yield which is tax-exempt by one minus a stated tax rate and adding the product
to that portion, if any, of the yield of the Fund that is not tax-exempt.
TOTAL RETURN CALCULATIONS. As summarized in the Prospectuses of the
Funds under the heading "Performance Information", average annual total return
is a measure of the change in value of an investment in a Fund over the period
covered, which assumes any dividends or capital gains distributions are
reinvested in the Fund immediately rather than paid to the investor in cash. The
Funds compute their average annual total returns by determining the average
annual compounded rates of return during specified periods that equate the
initial amount invested to the ending redeemable value of such investment. This
is done by dividing the ending redeemable value of a hypothetical $1,000 initial
payment by $1,000 and raising the quotient to a power equal to one divided by
the number of years (or fractional portion thereof) covered by the computation
and subtracting one from the result.
This calculation can be expressed as follows:
Average Annual ERV
Total Return = [(-----)exp (1/n) - 1]
P
Where: ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in
terms of years.
The Funds compute their aggregate total returns by determining the
aggregate compounded rates of return during specified periods that likewise
equate the initial amount invested to the ending redeemable value of such
investment. The formula for calculating aggregate total return is as follows:
Aggregate Total ERV
Return = [(-----] - 1]
P
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000.
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations.
Cumulative total return for the respective predecessor Funds has been:
LIFE
PREDECESSOR FUND 1 YEAR OF FUND
*AMCORE Vintage Fixed Total Return Fund 1 7.07% 12.00%
*AMCORE Vintage Fixed Income Fund 2 7.40% 31.14%
*AMCORE Vintage Intermediate Tax-Free Fund 3 6.58% 27.23%
*AMCORE Vintage Balanced Fund 4 24.84% 51.67%
*AMCORE Vintage Equity Fund 2 38.25% 133.53%
*AMCORE Vintage Aggressive Growth Fund 5 34.28% 59.96%
**IMG Bond Fund 6 8.40% 16.79%
* As of September 30, 1997
** As of October 31, 1997
1 From commencement of operations on June 15, 1995
2 From commencement of operations on December 15, 1992
3 From commencement of operations on February 16, 1993
4 From commencement of operations on June 1, 1995
5 From commencement of operations on September 29, 1995
6 From commencement of operations on July 7, 1995
Performance Comparisons
- -----------------------
Investors may judge the performance of the Funds by comparing them to
the performance of other mutual funds or mutual fund portfolios with comparable
investment objectives and policies through various mutual fund or market indices
such as those prepared by Dow Jones & Co., Inc. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors the performance of mutual funds or
Ibbotson Associates, Inc. Comparisons may also be made to indices or data
published in IBC's MONEY FUND REPORT, a nationally recognized money market fund
reporting service, Money Magazine, Forbes, Barron's, The Wall Street Journal,
The New York Times, Business Week, and U.S.A. Today. In addition to performance
information, general information about the Funds that appears in a publication
such as those mentioned above may be included in advertisements and in reports
to Shareholders. The Funds may also include in advertisements and reports to
Shareholders information comparing the performance of IMG or its predecessors to
other investment advisers; such comparisons may be published by or included in
Nelsons Directory of Investment Managers, Roger's, Casey/PIPER Manager Database
or CDA/Cadence.
Current yields or performance will fluctuate from time to time and are
not necessarily representative of future results. Accordingly, a Fund's yield or
performance may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
performance are functions of a Fund's quality, composition and maturity, as well
as expenses allocated to the Fund. Fees imposed upon Customer accounts by the
Adviser or its affiliated or correspondent banks for cash management services
will reduce a Fund's effective yield to Customers.
From time to time, the Fund may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to shareholders. The Funds may also include calculations,
such as hypothetical compounding examples, which describe hypothetical
investment results in such communications. Such performance examples will be
based on an express set of assumptions and are not indicative of the performance
of any Fund.
Miscellaneous
- -------------
The Funds may include information in their Annual Reports and
Semi-Annual Reports to Shareholders that (1) describes general economic trends,
(2) describes general trends within the financial services industry or the
mutual fund industry, (3) describes past or anticipated portfolio holdings for a
fund within the Company or (4) describes investment management strategies for
such funds. Such information is provided to inform Shareholders of the
activities of the Funds for the most recent fiscal year or half-year and to
provide the views of IMG and/or Company officers regarding expected trends and
strategies.
Individual Directors are elected by the Shareholders and, subject to
removal by the vote of two-thirds of the Board of Directors, serve for a term
lasting until the next meeting of Shareholders at which Directors are elected.
Such meetings are not required to be held at any specific intervals.
Shareholders owning not less than 10% of the outstanding Shares of the Company
entitled to vote may cause the Directors to call a special meeting, including
for the purpose of considering the removal of one or more Directors. Any Trustee
may be removed at any meeting of Shareholders by vote of two-thirds of the
Company's outstanding shares. The Declaration of Trust provides that the
Directors will assist shareholder communications to the extent required by
Section 16(c) of the 1940 Act in the event that a shareholder request to hold a
special meeting is made.
The Prospectus and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the Commission. Copies of such information may be obtained from the Commission
upon payment of the prescribed fee.
The Prospectuses and this Statement of Additional Information are not
an offering of the securities herein described in any state in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectuses and this Statement of Additional Information.
FINANCIAL STATEMENTS
On February 14, 1998, the assets of the AMCORE Vintage Mutual Funds,
Inc., Liquid Assets Fund Inc., and Municipal Assets Fund Inc., ("Predecessor
Funds") were transferred to corresponding series of the Vintage Mutual Funds,
Inc., in exchange for shares of the corresponding funds of the Vintage Mutual
Funds, Inc., and such Funds' assumption of the Predecessor Funds liabilities.
The Financial Highlights contained in the Prospectuses includes financial
information from the Predecessor Funds.
The financial statements of the AMCORE Vintage Mutual Funds, Inc.,
(Registration No. 33-44964) for the year ended March 31, 1997 were audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
and incorporated by reference herein (Post Effective Amendment No. 31 to Form
N-1A Registration Statement). The financial statements of the Liquid Assets
Funds, Inc., (Registration No. 2-78054) and Municipal Assets Funds, Inc.,
(Registration No. 2-81547) predecessor funds, for the year ended June 30, 1997
and of the IMG Bond Fund, (Registration No. 33-81998) predecessor to the Vintage
Bond Fund, for the year ended April 30, 1997 were audited by KPMG Peat Marwick
LLP, independent auditors, as set forth in their report thereon and incorporated
by reference herein (Post-Effective Amendment No. 21 , Post-Effective Amendment
No. 19 and Post-Effective Amendment No. 6 to the Form N-1A Registration
Statements, respectively). Such financial statements are incorporated by
reference herein in reliance upon such report given upon the authority of such
firms as experts in accounting and auditing.
<PAGE>
APPENDIX A
BOND RATINGS
STANDARD & POOR'S BOND RATINGS
A Standard & Poor's corporate rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers or
lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
"AAA" Bonds have the highest rating assigned by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong.
"AA" Bonds have a very strong capacity to pay interest and repay principal and
differ from the highest rated issues only in small degrees.
"A" Bonds have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
"BBB" Bonds are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.
"BB", "B", "CCC", "CC" and "C" Bonds are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. "BB" indicates the least degree of
speculation and "C" the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions. A "C" rating
is typically applied to debt subordinated to senior debt which is assigned an
actual or implied "CCC" rating. It may also be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are continued.
MOODY'S BOND RATINGS
"Aaa" Bonds are judged to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edged". Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
"Aa" Bonds are judged to be of high quality by all standards. Together with the
"Aaa" group they comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in "Aaa" securities or fluctuation of protection elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
"A" Bonds possess many favorable investment attributes and are to be considered
as upper-medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment some time in the future.
"Baa" Bonds are considered as medium-grade obligations (i.e., they are neither
highly protected nor poorly secured). Interest payments and principal security
appear adequate for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of time. Such
Bonds lack outstanding investment characteristics and in fact have speculative
characteristics as well.
"Ba" Bonds 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 during both good
and bad times over the future. Uncertainty of position characterizes Bonds in
this class.
"B" Bonds generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
"Caa" Bonds are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
"Ca" Bonds represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.
"C" Bonds are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
FITCH INVESTORS SERVICES, INC. BOND RATINGS
The Fitch Bond Rating provides a guide to investors in determining the
investment risk associated with a particular security. The rating represents its
assessment of the issuer's ability to meet the obligations of a specific debt
issue. Fitch bond ratings are not recommendations to buy, sell or hold
securities since they incorporate no information on market price or yield
relative to other debt instruments.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the record of the issuer and of
any guarantor, as well as the political and economic environment that might
affect the future financial strength and credit quality of the issuer.
Bonds which have the same rating are of similar but not necessarily identical
investment quality since the limited number of rating categories cannot fully
reflect small differences in the degree of risk. Moreover, the character of the
risk factor varies from industry to industry and between corporate, health care
and municipal obligations.
In assessing credit risk, Fitch Investors Services relies on current information
furnished by the issuer and/or guarantor and other sources which it considers
reliable. Fitch does not perform an audit of the financial statements used in
assigning a rating.
Ratings may be changed, withdrawn or suspended at any time to reflect changes in
the financial condition of the issuer, the status of the issue relative to other
debt of the issuer, or any other circumstances that Fitch considers to have a
material effect on the credit of the obligor.
"AAA" rated Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA" rated Bonds are considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal, while very
strong, is somewhat less than for "AAA" rated securities or more subject to
possible change over the term of the issue.
"A" rated Bonds are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
"BBB" rated Bonds are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken this ability than bonds with
higher ratings.
"BB" rated bonds are considered speculative and of low investment grade. The
obligor's ability to pay interest and repay principal is not strong and is
considered likely to be affected over time by adverse economic changes.
"B" rated Bonds are considered highly speculative. Bonds in this class are
highly protected as to the obligor's ability to pay interest over the life of
the issue and repay principal when due.
"CCC" rated Bonds may have certain identifiable characteristics which, if not
remedied, could lead to the possibility of default in either principal or
interest payments.
"CC" rated Bonds are minimally protected. Default in payment of interest and/or
principal seems probable.
"C" rated Bonds are in actual or imminent default in payment of interest or
principal.
DUFF & PHELPS, INC. LONG-TERM RATINGS
These ratings represent a summary opinion of the issuer's long-term fundamental
quality. Rating determination is based on qualitative and quantitative factors
which may vary according to the basic economic and financial characteristics of
each industry and each issuer. Important considerations are vulnerability to
economic cycles as well as risks related to such factors as competition,
government action, regulation, technological obsolescence, demand shifts, cost
structure and management depth and expertise. The projected viability of the
obligor at the trough of the cycle is a critical determination. Each rating also
takes into account the legal form of the security, (e.g., first mortgage bonds,
subordinated debt, preferred stock, etc.). The extent of rating dispersion among
the various classes of securities is determined by several factors, including
relative weightings of the different security classes in the capital structure,
the overall credit strength of the issuer, and the nature of covenant
protection. Review of indenture restrictions is important to the analysis of a
company's operating and financial constraints. The Credit Rating Committee
formally reviews all ratings once per quarter (more frequently, if necessary).
RATING
SCALE DEFINITION
AAA Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury
debt.
AA+ High credit quality. Protection factors are strong. Risk
AA is modest, but may vary slightly from time to time because
AA- of economic conditions.
A+ Protection factors are average but adequate. However, risk
A factors are more variable and greater in periods of
A- economic stress.
BBB+ Below average protection factors but still considered
BBB sufficient for prudent investment. Considerable
BBB- variability in risk during economic cycles.
BB+ Below investment grade but deemed likely to meet
BB obligations when due. Present or prospective financial
BB- protection factors fluctuate according to industry
conditions or company fortunes. Overall quality may
move up or down frequently within this category.
B+ Below investment grade and possessing risk that
B obligations will not be met when due. Financial
B- protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower
rating grade.
CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal,
interest or preferred dividends. Protection factors are
narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable
company developments.
DD Defaulted debt obligations. Issuer failed to meet
scheduled principal and/or interest payments.
DP Preferred stock with dividend averages.
SHORT-TERM RATINGS
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. The categories are as follows:
"A" Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues within this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
"A-1" Designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics are designated "A-1+".
"A-2" Designation indicates that the capacity for timely payment is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".
"A-3" Designation indicates a satisfactory capacity for timely payment. Issues
with this designation, however, are somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
"B" Issues are regarded as having only an adequate capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
"C" Issues have a doubtful capacity for payment.
"D" Issues are in payment default. The "D" rating category is used when interest
payments or principal payments are not made on the due date even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's rates commercial paper as either Prime, which contains three categories,
or Not Prime. The commercial paper ratings are as follows:
"P-1" Issuers (or related supporting institutions) have a superior capacity for
repayment of short-term promissory obligations, normally evidenced by the
following characteristics: (i) leading market positions in well established
industries, (ii) high rates of return on funds employed, (iii) conservative
capitalization structures with moderate reliance on debt and ample asset
protection, (iv) broad margins in earnings coverage of fixed financial charges
and high internal cash generation, and (v) well established access to a range of
financial markets and assured sources of alternate liquidity.
"P-2" Issuers (or related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations, normally evidenced by many of
the characteristics of a "P-1" rating, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"P-3" Issuers (or related supporting institutions) have an acceptable capacity
for repayment of short-term promissory obligations. The effect of industry
characteristics and market composition may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and the requirement for relatively high financial leverage.
Adequate alternate liquidity is maintained. "Not Prime" Issuers (or related
supporting institutions) do not fall within any of the Prime rating categories.
FITCH INVESTORS SERVICES, INC. SHORT-TERM RATINGS
Fitch-1+ (Exceptionally Strong Credit Quality) Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
Fitch-1 (Very Strong Credit Quality) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
Fitch-1+.
Fitch-2 (Good Credit Quality) Issues carrying this rating have a satisfactory
degree of assurance for timely payment but the margin of safety is not as great
as the two higher categories.
Fitch-3 (Fair Credit Quality) Issues carrying this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate; however,
near-term adverse change is likely to cause these securities to be rated below
investment grade.
Fitch-S (Weak Credit Quality) Issues carrying this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near term adverse changes in financial and economic conditions.
D (Default) Issues carrying this rating are in actual or imminent payment
default.
DUFF & PHELPS, INC. SHORT-TERM RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria
utilized by money market participants. The ratings apply to all obligations with
maturities of under one year, including commercial paper, the uninsured portion
of certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds, including trade
credit, bank lines and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.
A. Category 1: High Grade
----------- ----------
Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.
Duff 1 - High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small.
B. Category 2: Good Grade
----------- ----------
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
C. Category 3: Satisfactory Grade
----------- ------------------
Duff 2 Satisfactory liquidity and other protection factors qualify
issue as to investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
D. Category 4: Non-investment Grade
----------- --------------------
Duff 4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating factors and
market access may be subject to a high degree of variation.
E. Category 5: Default
----------- -------
Duff 5 Issuer failed to meet scheduled principal and/or interest
payments.
THOMAS BANKWATCH (TBW) SHORT-TERM RATINGS
The TBW Short-Term Ratings apply to commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less. The TBW Short-Term Ratings specifically assess the
likelihood of an untimely payment of principal or interest.
TBW-1 The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated TBW-1.
TBW-3 The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external) than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
Short-Term Loan/Municipal Note Ratings
- --------------------------------------
Moody's description of its two highest short-term loan/municipal note ratings:
MIG-1/VMIG-1 This designation denotes best quality. There is present
strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG-2/VMIG-2 This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.
S&P's description of its two highest municipal note ratings:
SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
Definitions of Certain Money Market Instruments
- -----------------------------------------------
Commercial Paper
Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper normally have maturities of less than
nine months and fixed rates of return.
Certificates of Deposit
Certificates of Deposit are negotiable certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return.
Bankers' Acceptances
Bankers' acceptances are negotiable drafts or bills of exchange,
normally drawn by an importer or exporter to pay for specific merchandise, which
are "accepted" by a bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity,
U.S. Treasury Obligations
U.S. Treasury Obligations are obligations issued or guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
Government. These obligations may include Treasury bills, notes and bonds, and
issues of agencies and instrumentalities of the U.S. Government, provided such
obligations are guaranteed as to payment of principal and interest by the full
faith and credit of the U.S. Government.
U.S. Government Agency and Instrumentality Obligations
Obligations of the U.S. Government include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities of
the U.S. Government, such as the Government National Mortgage Association, the
Export-Import Bank of the United States, the Tennessee Valley Authority, the
Farmers Home Administration, the Federal Home Loan Banks, the Federal
Intermediate Credit Banks, the Federal Farm Credit Banks, the Federal Land
Banks, the Federal Housing Administration, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, and the Student Loan
Marketing Association. Some of these obligations, such as those of the
Government National Mortgage Association and the Export-Import Bank of the
United States, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Federal National Mortgage Association are supported
by the right of the issuer to borrow from the Treasury; others, such as those of
the Student Loan Marketing Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Federal Farm Credit Banks, are supported only by
the credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.
<PAGE>
APPENDIX B
Tax-Exempt vs. Taxable Yields. Set forth below is a table which may be used to
compare equivalent taxable yields to tax-exempt rates of return based upon the
investor's level of taxable income. The rates shown are those in effect under
the Internal Revenue Code as of January 1, 1997 through December 31, 1997.
<TABLE>
<CAPTION>
Marginal The following TAX-EXEMPT INTEREST RATES:
TAXABLE INCOME * Single Income 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5%
Joint Return Return Tax
Bracket Equal the TAXABLE INTEREST RATES shown below:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,450 - $ 45,450 $ 2,650 - $ 26,150 15.0% 4.12% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65%
45,450 - 92,850 26,150 - 55,500 28.0% 4.86% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03%
92,850 - 156,000 55,500 - 126,150 31.0% 5.07% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42%
156,000 - 275,300 126,150 - 272,550 36.0% 5.47% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16%
Over 275,300 Over 272,550 39.6% 5.79% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76%
Maximum Corporate Rate 34.0% 5.30% 6.06% 6.82% 7.58% 8.33% 9.09% 9.85%
</TABLE>
* Net amount subject to Federal income tax after deductions and exemptions.
Assumes alternative minimum tax is not applicable and receipt of tax-exempt
interest does not cause any portion of social security benefits received to
become taxable to the taxpayer. State tax considerations are excluded.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
----------------------------------
(a) Financial Statements
(1) Included in Part A:
Financial Highlights for the Years Ended March 31,
1997, 1996, 1995, 1994 and 1993
Financial Highlights for the Period Ended
September 30, 1997 (unaudited)
Financial Highlights for the Years Ended April 30,
1997 and 1996
Financial Highlights for the Period Ended October 31,
1997 (unaudited)
Financial Highlights for the Years Ended June 30,
1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990,
1989, and 1988
Financial Highlights for the Period Ended December
31, 1997 (unaudited)
(2) Incorporated by reference in Part B:
Independent Auditors' Reports dated May 9, 1997,
May 30, 1997 and July 25, 1997
Schedules of Investments, March 31, 1997,
April 30, 1997 and June 30, 1997
Schedules of Investments, September 30, 1997,
(unaudited), October 31, 1997, (unaudited), and
December 31, 1997 (unaudited)
Statements of Assets and Liabilities, March 31,
1997, April 30, 1997 and June 30, 1997
Statements of Assets and Liabilities,
September 30, 1997, (unaudited), October 31, 1997,
(unaudited), and December 31, 1997 (unaudited)
Statements of Operations for Year Ended March 31,
1997, April 30, 1997 and June 30, 1997
Statements of Operations for the Period Ended
September 30, 1997, (unaudited), October 31, 1997,
(unaudited), and December 31, 1997, (unaudited)
Statements of Changes in Net Assets for the Years
Ended March 31, 1997 and 1996, April 30, 1997
and 1996, and June 30, 1997 and 1996
Statements of Changes in Net Assets for the Period
Ended September 30, 1997, (unaudited), October 31,
1997, (unaudited), and December 31, 1997, (unaudited)
(4) Included in Part C:
Consents of KPMG Peat Marwick LLP and
Ernst & Young LLP
(b) Exhibits
Exhibit No. Description
----------- -----------
*1. (a) Articles of Incorporation, incorporated
by reference to the Fund's Registration
Statement, filed December 14, 1994
*1. (b) Articles Supplementary, incorporated
by reference to Post-Effective Amendment
No. 9, filed January 6, 1998
*1. (c) Articles of Amendment, incorporated by
reference to Post-Effective Amendment
No. 10, filed February 25, 1998
*2. Bylaws, incorporated by reference to
the Fund's Registration Statement, filed
December 14, 1994
*5. (a)(1) Transfer Agent, Dividend Disbursing
Agent and Shareholder Servicing Agent
Agreement, incorporated by reference to
the Fund's Registration Statement, filed
December 14, 1994
*5. (a)(2) Form of Transfer Agency Agreement,
incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*5. (b)(1) Investment Advisory Agreement,
incorporated by reference to the Fund's
Registration Statement, filed
December 14, 1994
*5. (b)(2) Form of Investment Advisory Agreement,
incorporated by reference to
Post-Effective Amendment No. 7
filed November 7, 1997
*5. (c)(1) Administrative Services Agreement,
incorporated by reference to the Fund's
Registration Statement, filed
December 14, 1994
*5. (c)(2) Form of Management and Administrative
Agreement, incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*5. (d)(1) Fund Accounting Agreement, incorporated
by reference to the Fund's Registration
Statement, filed December 14, 1994
*5. (d)(2) Form of Fund Accounting Agreement,
incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*6. (a) Distribution Agreement, incorporated by
reference to the Fund's Registration
Statement, filed December 14, 1994
*6. (b) Form of Distribution Agreement,
incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*8. (a) Custodial Agreement, incorporated by
reference to the Fund's Registration
Statement, filed December 14, 1994
*8. (b) Form of Custodial Agreement,
incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*8. (c) Form of Custodial Agreement,
incorporated by reference to
Post-Effective Amendment No. 8 filed
November 12, 1997
*9. (a) Shareholder Services Plan, incorporated
by reference to the Fund's Registration
Statement, filed December 14, 1994
*9. (b) Form of Administrative Services Plan,
incorporated by reference to
Post-Effective Amendment No. 7 filed
November 7, 1997
*10. Opinion of Ober, Kaler & Shriver,
incorporated by reference to
Pre-Effective Amendment No. 2 filed
May 4, 1995
*10. (a) Opinion of Ober, Kaler, Grimes &
Shriver, incorporated by reference to
Post-Effective Amendment No. 4 filed
March 18, 1996
*10. (b) Opinion of Ober, Kaler, Grimes &
Shriver for Liquid Assets Fund and
Municipal Assets Fund, incorporated by
reference to Post-Effective Amendment
No. 9 filed January 6, 1998
*10. (c) Opinion of Ober, Kaler, Grimes &
Shriver for Vintage Funds, incorporated
by reference to Post-Effective
Amendment No. 9 filed January 6, 1998
*11. Power of Attorney, incorporated by
reference to the Fund's Registration
Statement, filed December 14, 1994
*13. Subscription Agreement of Initial
Stockholder, incorporated by reference
to the Fund's Registration Statement,
filed December 14, 1994
*15. (a) Distribution Plan, incorporated by
reference to the Fund's Registration
Statement, filed December 14, 1994
*15. (b) Distribution Plan, incorporated by
reference to Post-Effective Amendment
No. 7 filed November 7, 1997
*15. (c) Distribution Plan, incorporated by
reference to Post-Effective Amendment
No. 7 filed November 7, 1997
*15. (d) Distribution and Shareholder Services
Plan, incorporated by reference to
Post-Effective Amendment No. 8 filed
November 12, 1997
*16. (a) 18f3 Plan, incorporated by reference
to the Pre-Effective Amendment No. 3,
filed May 18, 1995
*16. (b) Amended 18f3 Plan, incorporated by
reference to Post-Effective Amendment
No. 8 filed November 12, 1997
17. Calculation of Yield Quotations,
included in Part B of this
Registration Statement
18. Financial Data Schedule
19. Power of Attorney
*All previously filed.
Item 25. Persons Controlled by or under Common Control with Registrant.
--------------------------------------------------------------
None
Item 26. Number of Holders of Securities
-------------------------------
Title of Class Number of Record Holders
-------------- ------------------------
Government Assets Fund-T Shares 1,622 as of February 20, 1998
Government Assets Fund-S Shares 0 as of February 20, 1998
Liquid Assets Fund-S Shares 509 as of February 13, 1998
Liquid Assets Fund-S2 Shares 32 as of February 13, 1998
Liquid Assets Fund-T Shares 4 as of February 20, 1998
Liquid Assets Fund-I Shares 44 as of February 13, 1998
Municipal Assets Fund-S Shares 44 as of February 13, 1998
Municipal Assets Fund-T Shares 11 as of February 20, 1998
Municipal Assets Fund-I Shares 4 as of February 13, 1998
Vintage Limited Term Bond Fund 193 as of February 13, 1998
Vintage Bond Fund 84 as of February 20, 1998
Vintage Income Fund 310 as of February 20, 1998
Vintage Municipal Bond Fund 121 as of February 20, 1998
Vintage Balanced Fund 825 as of February 20, 1998
Vintage Equity Fund-T Shares 19 as of February 20, 1998
Vintage Equity Fund-S Shares 4,135 as of February 20, 1998
Vintage Aggressive Growth Fund 1,385 as of February 20, 1998
Item 27. Indemnification
---------------
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification by the Registrant is against public policy as
expressed in the Act and, therefore, may be unenforceable. In the event that a
claim for such indemnification (except insofar as it provides for the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such director, officer or controlling
person and the Securities and Exchange Commission is still of the same opinion,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Section 2-418 of the Maryland General Corporation Law permits
the Registrant to indemnify directors and officers. In addition, Section 2-405.1
sets forth the standard of care for directors and Section 2-405.2 allows the
Registrant to include in the Charter provisions further limiting the liability
of the directors and officers in certain circumstances. Article ELEVENTH of the
Articles of Incorporation included herewith as Exhibit 1(a) (the "Articles")
limits the liability of any director or officer of the Registrant arising out of
a breach of fiduciary duty, subject to the limits of the Investment Company Act
of 1940 (the "1940 Act"). Article TWELFTH of the Articles and Article VII of the
Bylaws, included herewith as Exhibit (2), makes mandatory the indemnification of
any person made or threatened to be made a party to any action by reason of the
facts that such person is or was a director, officer or employee, subject to the
limits otherwise imposed by law or by the 1940 Act.
In addition, Paragraph 8 of the Investment Advisory Agreement
included herewith as Exhibit 5(b)(1), and Paragraph 1.11 of the Distribution
Agreement, included herewith as Exhibit 6(b), provide that Investors Management
Group, Ltd., ("IMG") and BISYS Fund Services Limited Partnership, ("BISYS"),
shall not be liable to the Registrant for any error, judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
management provided by IMG or for any distribution services provided by BISYS to
the Registrant for the performance of the duties under such agreements, except
for willful misfeasance, bad faith or gross negligence in the performance of
their duties or by reason of reckless disregard of their obligation and duties
under such agreements. In addition, Paragraph 8 of the Transfer Agent, Dividend
Disbursing Agent and Shareholder Servicing Agent Agreement, included herewith as
Exhibit 5(a)(2), further indemnify BISYS and IMG against certain liabilities
arising out of the performance of such agreements.
Item 28. Business and Other Connections of Investment Advisor.
-----------------------------------------------------
Investors Management Group
Positions with Principal Occupations (Present
Name Advisor and for Past Two Years)
- --------------------------------------------------------------------------------
Jay Evans President and Chief See caption "Directors and
Investment Officer Officers" in the Statement of
Additional Information forming
a part of this Registration
Statement
Mark A. McClurg Vice President and See caption "Directors and
Senior Managing Officers" in the Statement of
Director Additional Information forming
a part of this Registration
Statement.
David W. Miles Treasurer, Director, See caption "Directors and
and Senior Managing Officers" in the Statement of
Director Additional Information forming
a part of this Registration
Statement.
Item 29. Principal Underwriters.
-----------------------
(a)(1) BISYS Fund Services Limited Partnership acts as distributor
for the Vintage Mutual Funds, Inc., and also distribute the
securities of The Victory Funds, The Riverfront Funds, Inc.,
The HighMark Group, The Parkstone Group of Funds, The BB&T
Mutual Funds Group, the Summit Investment Trust, the Qualivest
Funds, The ARCH Fund, Inc., the American Performance Funds,
The Sessions Group, the Pacific Capital Funds, the AmSouth
Mutual Funds, the MMA Praxos Mutual Funds, the Market Watch
Funds and M.S.D.&T Funds, each of which is a open-end
management investment company.
(b)(1) Partners of BISYS Fund Services Limited Partnership, as of
March 31, 1997, were as follows:
Positions and Offices Positions and
Name and Principal with BISYS Fund Services Offices with
Business Address Limited Partnership Registrant
- ------------------------------------------------------------------------------
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Corporation Sole Limited Partner None
150 Clove Road
Little Falls, New Jersey 07424
The BISYS Group, Inc. Sole Shareholder of
150 Clove Road General Partner
Little Falls, New Jersey 07424
(c) Not applicable.
Item 30. Location of Accounts and Records.
---------------------------------
All required accounts, books and records will be maintained by
Ruth L. Prochaska, 2203 Grand Avenue, Des Moines, Iowa 50312-5338.
Item 31. Management Services.
--------------------
Not applicable.
Item 32. Undertakings.
-------------
Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to
file with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
Subject to the terms and conditions of Section 16(c) of the
Investment Company Act of 1940, the undersigned Registrant hereby undertakes to
call a meeting of shareholders for the purpose of voting upon the question of
removal of a director or directors if requested to do so by holders of at least
10 percent of a Fund's outstanding shares and to assist in communications with
other shareholders.
The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered a copy of the Registrant's latest Annual Report to
Shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company Act of 1940, the Registrant certifies that it it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485 (b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Des Moines, State of Iowa, on the 23rd day of March,
1998.
VINTAGE MUTUAL FUNDS, INC.
By _/s/__Mark A. McClurg________________
Mark A. McClurg, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the date indicated.
Signature Title
_/s/_Mark_A._McClurg________ President, Principal Executive Officer,
Mark A. McClurg Principal Financial and Accounting
Officer and Director
_________________________
|
_/s/_Karen_Branding_________ Director > _/s/David W. Miles____
Karen Branding | by David W. Miles
| Attorney in Fact
_/s/_Lu_Farber______________ Director | March 23, 1998
Lu Farber |
|
_/s/_Barbara_P._Hazelhurst__ Director |
Barbara P. Hazelhurst |
|
_/s/_William_J._Howard______ Director |
William J. Howard |
|
_/s/_Debra_L._Johnson_______ Director |
Debra L. Johnson |
|
_/s/_Fred_Lorber____________ Director |
Fred Lorber |
|
_/s/_Edward_J._Stanek_______ Director |
Edward J. Stanek |
|
_/s/_John_G._Taft___________ Director |
John G. Taft |
|
_/s/_Steven_Zumbach_________ Director |
Steven Zumbach |
_________________________|
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in Post-Effective
Amendment No. 11 to the Registration Statement (Form N-1A No. 33-81998) of
Vintage Mutual Funds, Inc. and related Prospectus and our report dated May 9,
1997 on AMCORE Vintage Mutual Funds, Inc.
Ernst & Young LLP
Columbus, Ohio
March 19, 1998
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the Registration Statement on Form
N-1A of Vintage Mutual Funds, Inc. of our report dated May 30, 1997, relating to
the financial statements and financial highlights for the IMG Bond Fund
portfolio within IMG Mutual Funds, Inc. dated April 30, 1997, and our report
dated July 25, 1997, relating to the financial statements and financial
highlights for Liquid Assets Fund, Inc. and Municipal Assets Fund, Inc. dated
June 30, 1997, and references to our Firm under the headings "Financial
Highlights" in the Prospectus and "Financial Statements" and "Independent
Auditors" in the Statement of Additional Information, which constitute part of
the Vintage Mutual Funds, Inc., Registration Statement.
KPMG Peat Marwick LLP
Des Moines, Iowa
March 19, 1998
<PAGE>
VINTAGE MUTUAL FUNDS, INC.
EXHIBIT VOLUME
TO
POST-EFFECTIVE AMENDMENT NO. 11
FORM N-1A REGISTRATION STATEMENT
<PAGE>
VINTAGE MUTUAL FUNDS, INC.
EXHIBIT INDEX
Exhibit
Number Description Page
*1. (a) Articles of Incorporation, incorporated by reference
to the Fund's Registration Statement, filed
December 14, 1994............................................
*1. (b) Articles Supplementary incorporated by reference to
Post-Effective Amendment No. 9 filed January 6, 1998.........
*1. (c) Articles of Amendment incorporated by reference to
Post-Effective Amendment No. 10, filed February 25, 1998.....
*2. Bylaws, incorporated by reference to the Fund's
Registration Statement, filed December 14, 1994..............
*5. (a)(1) Transfer Agent, Dividend Disbursing Agent and Shareholder
Servicing Agent Agreement, incorporated by reference to the
Fund's Registration Statement, filed December 14, 1994.......
*5. (a)(2) Form of Transfer Agency Agreement, incorporated by reference
to Post-Effective Amendment No. 7 filed November 7, 1997.....
*5. (b)(1) Investment Advisory Agreement, incorporated by reference to
the Fund's Registration Statement, filed December 14, 1994...
*5. (b)(2) Form of Investment Advisory Agreement, incorporated by
reference to Post-Effective Amendment No. 7 filed
November 7, 1997.............................................
*5. (c)(1) Administrative Services Agreement, incorporated by
reference to the Fund's Registration Statement, filed
December 14, 1994............................................
*5. (c)(2) Form of Management and Administration Agreement,
incorporated by reference to Post-Effective Amendment
No. 7 filed November 7, 1997.................................
*5. (d)(1) Fund Accounting Agreement, incorporated by reference to
the Fund's Registration Statement, filed December 14, 1994...
*5. (d)(2) Form of Fund Accounting Agreement, incorporated by
reference to Post-Effective Amendment No. 7 filed
November 7, 1997.............................................
*6. (a) Distribution Agreement, incorporated by reference to
the Fund's Registration Statement, filed December 14, 1994...
*6. (b) Form of Distribution Agreement, incorporated by reference
to Post-Effective Amendment No. 7 filed November 7, 1997.....
*8. (a) Custodial Agreement, incorporated by reference to the
Fund's Registration Statement, filed December 14, 1994.......
*8. (b) Form of Custodial Agreement, incorporated by reference to
Post-Effective Amendment No. 7 filed November 7, 1997........
*8. (c) Form of Custodial Agreement, incorporated by reference to
Post-Effective Amendment No. 8 filed November 12, 1997.......
*9. (a) Shareholder Services Plan, incorporated by reference to
the Fund's Registration Statement, filed December 14, 1994...
*9. (b) Form of Administrative Services Plan, incorporated by
reference to Post-Effective Amendment No. 7 filed
November 7, 1997.............................................
*10. Opinion of Ober, Kaler, Grimes & Shriver, incorporated by
reference to the Fund's Pre-Effective Amendment No. 2,
filed May 4, 1995............................................
*10. (a) Opinion of Ober, Kaler, Grimes & Shriver, incorporated by
reference to the Fund's Post-Effective Amendment No. 4,
filed March 18, 1996.........................................
*10. (b) Opinion of Ober, Kaler, Grimes & Shriver, for Liquid Assets
Fund and Municipal Assets Fund, incorporated by reference
to Post-Effective Amendment No. 9 filed January 6, 1998 .....
*10. (c) Opinion of Ober, Kaler, Grimes & Shriver, for Vintage
Funds, incorporated by reference to Post-Effective
Amendment No. 9 filed January 6, 1998........................
*11. Power of Attorney, incorporated by reference to the Fund's
Registration Statement, filed December 14, 1994..............
*13. Subscription Agreement of Initial Stockholder, incorporated
by reference to the Fund's Registration Statement,
filed December 14, 1994......................................
*15. (a) Distribution Plan, incorporated by reference to the Fund's
Registration Statement, filed December 14, 1994..............
*15. (b) Distribution Plan, incorporated by reference to
Post-Effective Amendment No. 7 filed November 7, 1997........
*15. (c) Distribution Plan, incorporated by reference to
Post-Effective Amendment No. 7 filed November 7, 1997........
*15. (d) Distribution and Shareholder Services Plan incorporated by
reference to Post-Effective Amendment No. 8 filed
November 12, 1997............................................
*16. (a) 18f3 Plan, incorporated by reference to Pre-Effective
Amendment No. 3, filed May 18, 1995..........................
*16. (b) Amended 18f3 Plan incorporated by reference to
Post-Effective Amendment No. 8 filed November 12, 1997.......
17. Calculation of Yield Quotations .............................
18. Financial Data Schedule .....................................
19. Power of Attorney ...........................................
*All previously filed.
VINTAGE MUTUAL FUNDS, INC.
EXHIBIT # 17
SCHEDULE OF CALCULATIONS OF YIELD QUOTATIONS
<PAGE>
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE EQUITY FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 12/31/85 to 09/30/97 ) :
( 6,323.6 / 1000 ( CARET SYMBOL ) ( 1 / ( 4291 / 365) ) - 1) = 16.99%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,382.5 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 38.25%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE FIXED INCOME FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 12/15/92 to 09/30/97 ) :
( 1,311.35/ 1000 ( CARET SYMBOL ) ( 1 / ( 1750 / 365) ) - 1) = 5.82%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,074.0 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 7.40%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 02/16/93 to 09/30/97 ) :
( 1,272.3 / 1000 ( CARET SYMBOL ) ( 1 / ( 1687 / 365) ) - 1) = 5.35%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,065.8 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 6.58%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE FIXED TOTAL RETURN FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 06/15/95 to 09/30/97 ) :
( 1,119.9 / 1000 ( CARET SYMBOL ) ( 1 / ( 838 / 365) ) - 1) = 5.06%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,070.7 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 7.07%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE BALANCED FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 05/31/95 to 09/30/97 ) :
( 1,516.7 / 1000 ( CARET SYMBOL ) ( 1 / ( 853 / 365) ) - 1) = 19.51%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,248.4 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 24.84%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
AMCORE VINTAGE AGGRESSIVE GROWTH FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 10/02/95 to 09/30/97 ) :
( 1,599.6 / 1000 ( CARET SYMBOL ) ( 1 / ( 730 / 365) ) - 1) = 26.48%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,342.8 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 34.28%
TOTAL RETURN
MONEY MARKET FUNDS
AMCORE VINTAGE U.S. GOVERNMENT OBLIGATIONS FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 12/21/92 to 09/30/97 ) :
( 1,216.9 / 1000 ( CARET SYMBOL ) ( 1 / ( 1745 / 365) ) - 1) = 4.19%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,047.2 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 4.72%
TOTAL RETURN
VARIABLE FUNDS
NO LOAD CALCULATIONS
IMG BOND FUND
Average Annual Total Return
- ---------------------------
T=( ERV / P ) ( CARET SYMBOL ) 1 / N - 1
Where T= Total Return
ERV= ending redeemable value at the end of the period of a hypothetical
$1,000 investment made at the beginning of the period
P= a hypothetical initial payment of $1,000
N= number of years
Example:
Since inception: ( 07/07/95 to 09/30/97 ) :
( 1,167.9 / 1000 ( CARET SYMBOL ) ( 1 / ( 847 / 365) ) - 1) = 6.92%
One Year: ( 09/30/96 to 09/30/97 ) :
( 1,080.4 / 1000 ( CARET SYMBOL ) ( 1 / ( 365 / 365) ) - 1) = 8.40%
<PAGE>
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
LIQUID ASSETS FUND
S SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $181,785.42 $7,920.72 60,706,362.98
25-Dec-97 $189,706.14 $7,920.72 60,706,362.98 0.0001304759
26-Dec-97 $197,924.91 $8,218.77 63,866,331.99 0.0001286871
27-Dec-97 $206,143.68 $8,218.77 63,866,331.99 0.0001286871
28-Dec-97 $214,362.45 $8,218.77 63,866,331.99 0.0001286871
29-Dec-97 $223,331.25 $8,968.80 69,828,768.14 0.0001284399
30-Dec-97 $231,218.81 $7,887.56 61,442,017.55 0.0001283740
31-Dec-97 $241,148.64 $9,929.83 72,884,304.28 0.0001362410
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0009095920
BASE PERIOD RETURN = 0.000909592
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 4.74%
BASE PERIOD RETURN * (365/7) 0.047428727
EFFECTIVE YIELD = 0.048473446
((1+CURRENT YIELD/12)^12)-1 4.85%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
LIQUID ASSETS FUND
S-2 SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $6,942.13 $292.61 2,089,101.44
25-Dec-97 $7,234.74 $292.61 2,089,101.44 0.0001400650
26-Dec-97 $7,541.39 $306.65 2,217,634.52 0.0001382780
27-Dec-97 $7,848.04 $306.65 2,217,634.52 0.0001382780
28-Dec-97 $8,154.69 $306.65 2,217,634.52 0.0001382780
29-Dec-97 $8,469.42 $314.73 2,280,266.12 0.0001380234
30-Dec-97 $8,780.61 $311.19 2,255,580.78 0.0001379645
31-Dec-97 $9,150.30 $369.69 2,535,089.77 0.0001458292
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0009767159
BASE PERIOD RETURN = 0.000976716
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 5.09%
BASE PERIOD RETURN * (365/7) 0.050928758
EFFECTIVE YIELD = 0.052134534
((1+CURRENT YIELD/12)^12)-1 5.21%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
LIQUID ASSETS FUND
T SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $60,180.84 $2,429.03 16,847,910.32
25-Dec-97 $62,609.87 $2,429.03 16,847,910.32 0.0001441740
26-Dec-97 $64,991.49 $2,381.62 16,726,632.87 0.0001423849
27-Dec-97 $67,373.11 $2,381.62 16,726,632.87 0.0001423849
28-Dec-97 $69,754.73 $2,381.62 16,726,632.87 0.0001423849
29-Dec-97 $72,898.57 $3,143.84 22,118,202.45 0.0001421381
30-Dec-97 $77,852.60 $4,954.03 34,869,622.60 0.0001420729
31-Dec-97 $82,960.15 $5,107.55 34,064,152.99 0.0001499391
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0010054789
BASE PERIOD RETURN = 0.001005479
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 5.24%
BASE PERIOD RETURN * (365/7) 0.052428542
EFFECTIVE YIELD = 0.053706917
((1+CURRENT YIELD/12)^12)-1 5.37%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
LIQUID ASSETS FUND
I SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $14,259.53 $608.55 4,029,512.27
25-Dec-97 $14,868.08 $608.55 4,029,512.27 0.0001510232
26-Dec-97 $15,469.31 $601.23 4,028,787.02 0.0001492335
27-Dec-97 $16,070.54 $601.23 4,028,787.02 0.0001492335
28-Dec-97 $16,671.77 $601.23 4,028,787.02 0.0001492335
29-Dec-97 $17,272.10 $600.33 4,029,405.70 0.0001489872
30-Dec-97 $17,861.66 $589.56 3,958,847.60 0.0001489221
31-Dec-97 $18,493.13 $631.47 4,027,522.30 0.0001567887
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0010534218
BASE PERIOD RETURN = 0.001053422
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 5.49%
BASE PERIOD RETURN * (365/7) 0.054928423
EFFECTIVE YIELD = 0.056332593
((1+CURRENT YIELD/12)^12)-1 5.63%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
S SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $12,378.04 $524.63 6,357,745.44
25-Dec-97 $12,902.67 $524.63 6,357,745.44 0.0000825182
26-Dec-97 $13,482.36 $579.69 6,767,423.20 0.0000856589
27-Dec-97 $14,062.05 $579.69 6,767,423.20 0.0000856589
28-Dec-97 $14,641.74 $579.69 6,767,423.20 0.0000856589
29-Dec-97 $15,202.04 $560.30 6,604,210.17 0.0000848398
30-Dec-97 $15,733.68 $531.64 6,780,105.74 0.0000784118
31-Dec-97 $16,257.22 $523.54 5,956,311.81 0.0000878967
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0005906432
BASE PERIOD RETURN = 0.000590643
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 3.08%
BASE PERIOD RETURN * (365/7) 0.030797823
EFFECTIVE YIELD = 0.031236296
((1+CURRENT YIELD/12)^12)-1 3.12%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
T SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $53,913.71 $2,747.81 30,747,092.66
25-Dec-97 $56,661.52 $2,747.81 30,747,092.66 0.0000893681
26-Dec-97 $59,570.64 $2,909.12 31,447,283.27 0.0000925078
27-Dec-97 $62,479.76 $2,909.12 31,447,283.27 0.0000925078
28-Dec-97 $65,388.88 $2,909.12 31,447,283.27 0.0000925078
29-Dec-97 $68,263.96 $2,875.08 31,357,524.14 0.0000916871
30-Dec-97 $70,532.21 $2,268.25 26,603,248.81 0.0000852621
31-Dec-97 $72,957.17 $2,424.96 25,594,549.64 0.0000947452
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0006385860
BASE PERIOD RETURN = 0.000638586
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 3.33%
BASE PERIOD RETURN * (365/7) 0.033297700
EFFECTIVE YIELD = 0.033810600
((1+CURRENT YIELD/12)^12)-1 3.38%
COMPUTATION OF CURRENT AND EFFECTIVE YIELD
MUNICIPAL ASSETS FUND
I SHARES
ENDING EARNINGS
DIVIDEND SHARES PER
PAYABLE EARNINGS OUTSTANDING SHARE
24-Dec-97 $16.97 $0.71 7,378.05
25-Dec-97 $17.68 $0.71 7,378.05 0.0000962314
26-Dec-97 $18.41 $0.73 7,378.05 0.0000989421
27-Dec-97 $19.14 $0.73 7,378.05 0.0000989421
28-Dec-97 $19.87 $0.73 7,378.05 0.0000989421
29-Dec-97 $20.60 $0.73 7,378.05 0.0000989421
30-Dec-97 $21.29 $0.69 7,378.05 0.0000935206
31-Dec-97 $22.04 $0.75 7,378.05 0.0001016529
INCOME FOR ONE SHARE FOR THE SEVEN DAYS ENDED DECEMBER 31 0.0006871734
BASE PERIOD RETURN = 0.000687173
(CHANGE/BEGINNING ACCOUNT VALUE)
CURRENT YIELD = 3.58%
BASE PERIOD RETURN * (365/7) 0.035831187
EFFECTIVE YIELD = 0.036425525
((1+CURRENT YIELD/12)^12)-1 3.64%
<PAGE>
AMCORE VINTAGE FUNDS, INC
30 DAY SEC YIELD FOR THE PERIOD ENDED SEPTEMBER 30, 1997
AMCORE VINTAGE FIXED INCOME FUND
534,831.76 Total Income
(94,276.99) Total Expenses
----------------
440,554.77 Net Income
9,911,231.6354 Average Shares
9.9600 Maximum Offering Price
----------------
98,715,867.0886 Shareholder Equity
2((730.91/164,241.9792)+1)^6-1) = 5.42%
________________________________________________________________________________
AMCORE VINTAGE BALANCED FUND
104,514.15 Total Income
(49,129.05) Total Expenses
----------------
55,385.10 Net Income
3,161,729.7887 Average Shares
14.0400 Maximum Offering Price
----------------
44,390,686.2333 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 1.50%
________________________________________________________________________________
AMCORE VINTAGE EQUITY FUND
431,347.47 Total Income
(417,425.86) Total Expenses
-----------------
13,921.61 Net Income
18,785,787.9387 Average Shares
21.1200 Maximum Offering Price
----------------
396,755,841.2653 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 0.04%
________________________________________________________________________________
AMCORE VINTAGE INTERMEDIATE TAX-FREE FUND
184,744.40 Total Income
(46,854.24) Total Expenses
-----------------
137,890.16 Net Income
4,448,391.7817 Average Shares
10.5400 Maximum Offering Price
----------------
46,886,049.3791 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 3.56%
________________________________________________________________________________
AMCORE VITNAGE FIXED TOTAL RETURN FUND
207,098.91 Total Income
(45,949.44) Total Expenses
----------------
161,149.47 Net Income
4,107,748.1060 Average Shares
9.9200 Maximum Offering Price
----------------
40,748,861.2115 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 4.79%
________________________________________________________________________________
AMCORE VINTAGE AGGRESSIVE GROWTH FUND
61,522.84 Total Income
(103,305.20) Total Expenses
----------------
(41,782.36) Net Income
5,076,886.8558 Average Shares
15.9500 Maximum Offering Price
----------------
80,976,345.3500 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = -0.62%
________________________________________________________________________________
IMG MUTAL FUNDS, INC.
30 DAY SEC YIELD FOR THE PERIOD ENDED OCTOBER 31, 1997
IMG BOND FUND
SELECT SHARES
15,650.80 Total Income
(2,082.81) Total Expenses
----------------
13,567.99 Net Income
295,465.2140 Average Shares
10.1700 Maximum Offering Price
----------------
3,004,881.2264 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 5.48%
________________________________________________________________________________
IMG BOND FUND
Institutional Shares
17,574.62 Total Income
(1,788.20) Total Expenses
----------------
15,786.42 Net Income
331,755.5620 Average Shares
10.1700 Maximum Offering Price
----------------
3,373,954.0655 Shareholder Equity
2((30,352.27/6,248,692.1844)+1)^6-1) = 5.68%
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage US Government Obligations Fund, a series of
The Coventry Group (CIK# 0000882748), and predecessor fund to the Government
Assets Fund, a series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 01
<NAME> Government Assets Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 159360672
<INVESTMENTS-AT-VALUE> 159360672
<RECEIVABLES> 96517
<ASSETS-OTHER> 5932
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 159463121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 764916
<TOTAL-LIABILITIES> 764916
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 158813928
<SHARES-COMMON-STOCK> 158814049
<SHARES-COMMON-PRIOR> 153853494
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 99356
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 16367
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 158698205
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7969862
<OTHER-INCOME> 0
<EXPENSES-NET> 1145553
<NET-INVESTMENT-INCOME> 6824309
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6824309
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6824309
<DISTRIBUTIONS-OF-GAINS> 98019
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 432771570
<NUMBER-OF-SHARES-REDEEMED> 428996222
<SHARES-REINVESTED> 1185207
<NET-CHANGE-IN-ASSETS> 4862415
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 17704
<GROSS-ADVISORY-FEES> 602877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1522184
<AVERAGE-NET-ASSETS> 150652452
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.045
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.045
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for Liquid Assets Fund, Inc., (CIK # 0000703485), predecessor
fund to the Liquid Assets Fund, a series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 02
<NAME> LIQUID ASSETS FUND
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 81973186
<INVESTMENTS-AT-VALUE> 81973186
<RECEIVABLES> 1026795
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 82999981
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 349293
<TOTAL-LIABILITIES> 349293
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 82650688
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9645750
<OTHER-INCOME> 0
<EXPENSES-NET> 2015503
<NET-INVESTMENT-INCOME> 7630247
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7630247
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 886850854
<NUMBER-OF-SHARES-REDEEMED> 983858908
<SHARES-REINVESTED> 25927
<NET-CHANGE-IN-ASSETS> (96982127)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 428125
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 161229791
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.045
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.045
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for Municipal Assets Fund, Inc., (CIK # 0000714291),
predecessor fund to the Municipal Assets Fund, a series of the Vintage Mutual
Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 03
<NAME> MUNICIPAL ASSETS FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 29545943
<INVESTMENTS-AT-VALUE> 29545943
<RECEIVABLES> 255960
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 29801903
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 94612
<TOTAL-LIABILITIES> 94612
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 29707291
<SHARES-COMMON-PRIOR> 10145763
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 29707291
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 795005
<OTHER-INCOME> 0
<EXPENSES-NET> 162262
<NET-INVESTMENT-INCOME> 632743
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 632743
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 112440950
<NUMBER-OF-SHARES-REDEEMED> 92879682
<SHARES-REINVESTED> 260
<NET-CHANGE-IN-ASSETS> 19561528
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25305
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 162262
<AVERAGE-NET-ASSETS> 32845590
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.029
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Fixed Total Return Fund, a series of The
Coventry Group (CIK# 0000882748), and predecessor fund to the Vintage Limited
Term Bond Fund, a series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 4
<NAME> Vintage Limited Term Bond Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 37813479
<INVESTMENTS-AT-VALUE> 37025622
<RECEIVABLES> 1410470
<ASSETS-OTHER> 448588
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38884680
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49871
<TOTAL-LIABILITIES> 49871
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40166856
<SHARES-COMMON-STOCK> 4009571
<SHARES-COMMON-PRIOR> 4161918
<ACCUMULATED-NII-CURRENT> 31618
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 575808
<ACCUM-APPREC-OR-DEPREC> (787857)
<NET-ASSETS> 38834809
<DIVIDEND-INCOME> 114679
<INTEREST-INCOME> 2578154
<OTHER-INCOME> 0
<EXPENSES-NET> 573706
<NET-INVESTMENT-INCOME> 2119127
<REALIZED-GAINS-CURRENT> (539307)
<APPREC-INCREASE-CURRENT> (348677)
<NET-CHANGE-FROM-OPS> 1231143
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2124369
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1340011
<NUMBER-OF-SHARES-REDEEMED> 1697121
<SHARES-REINVESTED> 204763
<NET-CHANGE-IN-ASSETS> (2343585)
<ACCUMULATED-NII-PRIOR> 31047
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 30688
<GROSS-ADVISORY-FEES> 306666
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 675935
<AVERAGE-NET-ASSETS> 40891480
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> (0.20)
<PER-SHARE-DIVIDEND> 0.50
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.69
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 5
<NAME> Vintage Bond Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Apr-30-1997
<PERIOD-START> Jul-07-1996
<PERIOD-END> Apr-30-1997
<INVESTMENTS-AT-COST> 7500481
<INVESTMENTS-AT-VALUE> 7408559
<RECEIVABLES> 154732
<ASSETS-OTHER> 1944
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7565235
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4967
<TOTAL-LIABILITIES> 4967
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 769637
<SHARES-COMMON-PRIOR> 818147
<ACCUMULATED-NII-CURRENT> 46762
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20112
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (91922)
<NET-ASSETS> 7560268
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 556858
<OTHER-INCOME> 0
<EXPENSES-NET> 57511
<NET-INVESTMENT-INCOME> 499347
<REALIZED-GAINS-CURRENT> (992)
<APPREC-INCREASE-CURRENT> 40539
<NET-CHANGE-FROM-OPS> 538894
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 505523
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 139403
<NUMBER-OF-SHARES-REDEEMED> 232945
<SHARES-REINVESTED> 46924
<NET-CHANGE-IN-ASSETS> (444304)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23870
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 57511
<AVERAGE-NET-ASSETS> 7967995
<PER-SHARE-NAV-BEGIN> 9.782
<PER-SHARE-NII> 0.619
<PER-SHARE-GAIN-APPREC> 0.049
<PER-SHARE-DIVIDEND> 0.627
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.823
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Fixed Income Fund, a series of The Coventry
Group (CIK# 0000882748), and predecessor fund to the Vintage Income Fund, a
series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 06
<NAME> Vintage Income Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 93776909
<INVESTMENTS-AT-VALUE> 91723578
<RECEIVABLES> 1361671
<ASSETS-OTHER> 55894
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 93141143
<PAYABLE-FOR-SECURITIES> 1000000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109942
<TOTAL-LIABILITIES> 1109942
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96733890
<SHARES-COMMON-STOCK> 9489321
<SHARES-COMMON-PRIOR> 8535610
<ACCUMULATED-NII-CURRENT> 85621
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 2734979
<ACCUM-APPREC-OR-DEPREC> (2053331)
<NET-ASSETS> 92031201
<DIVIDEND-INCOME> 185898
<INTEREST-INCOME> 5731143
<OTHER-INCOME> 0
<EXPENSES-NET> 1058543
<NET-INVESTMENT-INCOME> 4858498
<REALIZED-GAINS-CURRENT> (708174)
<APPREC-INCREASE-CURRENT> (1520708)
<NET-CHANGE-FROM-OPS> 2629616
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4793251
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2480499
<NUMBER-OF-SHARES-REDEEMED> 1586621
<SHARES-REINVESTED> 59833
<NET-CHANGE-IN-ASSETS> 7279633
<ACCUMULATED-NII-PRIOR> 10626
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 2017067
<GROSS-ADVISORY-FEES> 528149
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1278607
<AVERAGE-NET-ASSETS> 88025666
<PER-SHARE-NAV-BEGIN> 9.93
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> (0.24)
<PER-SHARE-DIVIDEND> 0.53
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.70
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Intermediate Tax-Free Fund, a series of The
Coventry Group (CIK# 0000882748), and predecessor fund to the Vintage Municipal
Bond Fund, a series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 07
<NAME> Vintage Municipal Bond Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 44680969
<INVESTMENTS-AT-VALUE> 44502326
<RECEIVABLES> 699685
<ASSETS-OTHER> 26366
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45228377
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64470
<TOTAL-LIABILITIES> 64470
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45461136
<SHARES-COMMON-STOCK> 4419484
<SHARES-COMMON-PRIOR> 4133363
<ACCUMULATED-NII-CURRENT> 26578
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 145164
<ACCUM-APPREC-OR-DEPREC> (178643)
<NET-ASSETS> 45163907
<DIVIDEND-INCOME> 27451
<INTEREST-INCOME> 2117031
<OTHER-INCOME> 0
<EXPENSES-NET> 552988
<NET-INVESTMENT-INCOME> 1591494
<REALIZED-GAINS-CURRENT> (3897)
<APPREC-INCREASE-CURRENT> (249407)
<NET-CHANGE-FROM-OPS> 1338190
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1588011
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1106061
<NUMBER-OF-SHARES-REDEEMED> 845708
<SHARES-REINVESTED> 25768
<NET-CHANGE-IN-ASSETS> 2727951
<ACCUMULATED-NII-PRIOR> 20540
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (138712)
<GROSS-ADVISORY-FEES> 259581
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 661147
<AVERAGE-NET-ASSETS> 43263764
<PER-SHARE-NAV-BEGIN> 10.27
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0.38
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.22
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Balanced Fund, a series of The Coventry
Group (CIK# 0000882748), and predecessor fund to the Vintage Balanced Fund, a
series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 08
<NAME> Vintage Balanced Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 30055130
<INVESTMENTS-AT-VALUE> 31969283
<RECEIVABLES> 188084
<ASSETS-OTHER> 99106
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32256473
<PAYABLE-FOR-SECURITIES> 199763
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44595
<TOTAL-LIABILITIES> 244358
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29939969
<SHARES-COMMON-STOCK> 2730940
<SHARES-COMMON-PRIOR> 1219332
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 5916
<ACCUMULATED-NET-GAINS> 163909
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1914153
<NET-ASSETS> 32012115
<DIVIDEND-INCOME> 217705
<INTEREST-INCOME> 361690
<OTHER-INCOME> 0
<EXPENSES-NET> 287249
<NET-INVESTMENT-INCOME> 292146
<REALIZED-GAINS-CURRENT> 229926
<APPREC-INCREASE-CURRENT> 643518
<NET-CHANGE-FROM-OPS> 1165590
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 293564
<DISTRIBUTIONS-OF-GAINS> 596340
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1746733
<NUMBER-OF-SHARES-REDEEMED> 308788
<SHARES-REINVESTED> 73663
<NET-CHANGE-IN-ASSETS> 18496102
<ACCUMULATED-NII-PRIOR> 3947
<ACCUMULATED-GAINS-PRIOR> 521878
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 139017
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 333589
<AVERAGE-NET-ASSETS> 18535896
<PER-SHARE-NAV-BEGIN> 11.08
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 1.05
<PER-SHARE-DIVIDEND> 0.18
<PER-SHARE-DISTRIBUTIONS> 0.41
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.72
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Equity Fund, a series of The Coventry Group
(CIK# 0000882748), and predecessor fund to the Vintage Equity Fund, a series of
the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 09
<NAME> Vintage Equity Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 216846651
<INVESTMENTS-AT-VALUE> 310053275
<RECEIVABLES> 6950305
<ASSETS-OTHER> 79626
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 317083206
<PAYABLE-FOR-SECURITIES> 7075167
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 339021
<TOTAL-LIABILITIES> 7414188
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203571302
<SHARES-COMMON-STOCK> 18679444
<SHARES-COMMON-PRIOR> 14564208
<ACCUMULATED-NII-CURRENT> 35473
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12855619
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 93206624
<NET-ASSETS> 309669018
<DIVIDEND-INCOME> 4033360
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 3251705
<NET-INVESTMENT-INCOME> 781655
<REALIZED-GAINS-CURRENT> 17515873
<APPREC-INCREASE-CURRENT> 39007591
<NET-CHANGE-FROM-OPS> 57305119
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 770677
<DISTRIBUTIONS-OF-GAINS> 7793542
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6780632
<NUMBER-OF-SHARES-REDEEMED> 3010465
<SHARES-REINVESTED> 345069
<NET-CHANGE-IN-ASSETS> 98719282
<ACCUMULATED-NII-PRIOR> 24496
<ACCUMULATED-GAINS-PRIOR> 3133289
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1837312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3864144
<AVERAGE-NET-ASSETS> 244975613
<PER-SHARE-NAV-BEGIN> 14.48
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 2.60
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.50
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.58
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from annual
financial report for AMCORE Vintage Aggressive Growth Fund, a series of The
Coventry Group (CIK# 0000882748), and predecessor fund to the Vintage Aggressive
Growth Fund, a series of the Vintage Mutual Funds, Inc.
</LEGEND>
<CIK> 0000934348
<NAME> Vintage Mutual Funds, Inc.
<SERIES>
<NUMBER> 10
<NAME> Vintage Aggressive Growth Fund
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Mar-31-1997
<PERIOD-START> Apr-01-1996
<PERIOD-END> Mar-31-1997
<INVESTMENTS-AT-COST> 46202212
<INVESTMENTS-AT-VALUE> 49038995
<RECEIVABLES> 1077136
<ASSETS-OTHER> 4412
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50120543
<PAYABLE-FOR-SECURITIES> 638350
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68825
<TOTAL-LIABILITIES> 707175
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45659646
<SHARES-COMMON-STOCK> 4153243
<SHARES-COMMON-PRIOR> 2144028
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4841
<ACCUMULATED-NET-GAINS> 921780
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2836783
<NET-ASSETS> 49413368
<DIVIDEND-INCOME> 367676
<INTEREST-INCOME> 2850
<OTHER-INCOME> 0
<EXPENSES-NET> 612031
<NET-INVESTMENT-INCOME> (241505)
<REALIZED-GAINS-CURRENT> 1189580
<APPREC-INCREASE-CURRENT> 1285550
<NET-CHANGE-FROM-OPS> 2233625
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4877
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2397474
<NUMBER-OF-SHARES-REDEEMED> 388428
<SHARES-REINVESTED> 169
<NET-CHANGE-IN-ASSETS> 26094638
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 743
<OVERDIST-NET-GAINS-PRIOR> 25516
<GROSS-ADVISORY-FEES> 356135
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 705751
<AVERAGE-NET-ASSETS> 37487845
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 1.08
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.90
<EXPENSE-RATIO> 1.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
VINTAGE MUTUAL FUNDS, INC.
EXHIBIT # 19
POWER OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Mark A. McClurg and David W. Miles, and each of them, their true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission on behalf of Vintage Mutual Funds, Inc., pursuant to the
Securities Act of 1933, the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, by means of the Securities and Exchange Act of
1934 and the Investment Company Act of 1940, by means of the Securities and
Exchange Commission's electronic disclosure system known as EDGAR; and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to sign
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of them might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE
/s/ Mark A. McClurg______________ President ________03/20/98___________
Mark A. McClurg
/s/_Ruth L. Prochaska____________ Secretary ________03/20/98___________
Ruth L. Prochaska
/s/ Karen Branding_______________ Director ________03/20/98___________
Karen Branding
/s/ Lu Farber____________________ Director ________03/20/98___________
Lu Farber
/s/ Barbara P. Hazlehurst________ Director ________03/20/98___________
Barbara P. Hazlehurst
/s/ William J. Howard____________ Director ________03/20/98___________
William J. Howard
/s/ Debra L. Johnson_____________ Director ________03/20/98___________
Debra L. Johnson
/s/ Fred Lorber__________________ Director ________03/20/98___________
Fred Lorber
/s/ Edward J. Stanek_____________ Director ________03/20/98___________
Edward J. Stanek
/s/ John G. Taft_________________ Director ________03/20/98___________
John G. Taft
/s/ Steven Zumback_______________ Director ________03/20/98___________
Steven Zumbach
Sworn to and subscribed before me this 20th day of March, 1998.
