SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
The Virtus Funds
(Name of Registrant as Specified In Its Charter)
Board of Trustees of The Virtus Funds
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1.Title of each class of securities to which transaction applies:
2.Aggregate number of securities to which transaction applies:
3.Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4.Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1)Amount Previously Paid:
2)Form, Schedule or Registration Statement No.:
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3)Filing Party:
4)Date Filed:
THE VIRTUS FUNDS
THE STYLE MANAGER FUND
THE STYLE MANAGER: LARGE CAP FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 21, 1996
A special meeting of the shareholders of The Style Manager Fund (`Style
Manager'' and The Style Manager: Large Cap Fund (``Large Cap'') (together,
the ``unds''), portfolios of The Virtus Funds (the ``Trust''), will be held at
2:00 p.m. (Eastern time) with respect to Style Manager, and 2:15 p.m. (Eastern
time) with respect to Large Cap, at Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, Pennsylvania, 15222-3779, on October 21, 1996, for the
following purposes:
(1) To approve or disapprove a Sub-Advisory Agreement and exhibits
thereto, between Virtus Capital Management, Inc. (`VCM'') and
Trend Capital Management, Inc. (``rend''), on behalf of each of
the Funds;
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(2) To approve or disapprove an amendment to the Investment Advisory
Contract between VCM and the Trust on behalf of each of the
Funds, increasing the advisory fee payable by each of the Funds
to VCM; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Trustees has fixed August 22, 1996, as the record date for
determination of shareholders entitled to vote at the meeting.
By order of the Trustees
John W. McGonigle
Secretary
September 6, 1996
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID
ADDITIONAL EXPENSE.
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY
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RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND
THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
THE VIRTUS FUNDS
Federated Investors Tower
Pittsburgh, PA 15222-3779
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of The
Virtus Funds (the ``Trust'') with respect to The Style Manager Fund
(``Style Manager'') and The Style Manager: Large Cap Fund (``Large Cap'')
(together, the ``Funds''). The proxies will be voted at the special meeting
of shareholders of the Funds to be held on October 21, 1996 at the offices
of the Trust, Federated Investors Tower, Pittsburgh, PA 15222-3779
(such special meeting and any adjournment or
postponement thereof are referred to as the "Special Meeting"). The proxy is
revocable at any time before it is voted by sending written notice of the
revocation to the Trust or by appearing personally at the Special Meeting. THE
COST OF PREPARING AND MAILING THE NOTICE OF MEETING, THE PROXY CARD, THIS PROXY
STATEMENT AND ANY ADDITIONAL PROXY MATERIAL HAS BEEN OR IS TO BE BORNE BY VIRTUS
CAPITAL MANAGEMENT, INC. (`VCM''), THE TRUST'S INVESTMENT ADVISER.
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Proxy solicitations will be made primarily by mail, but may also be made by
telephone, telegraph, or personal interview conducted by certain officers or
employees of the Trust, of VCM, of Federated Shareholder Services Company (the
Trust's transfer agent) or of Federated Administrative Services (the Trust's
administrator). In the event that a shareholder signs, dates, and returns the
proxy ballot but does not indicate a choice as to an item on the proxy ballot,
the proxy attorneys will vote those shares in favor of such proposal.
The purposes of the Special Meeting are set forth in the accompanying Notice
of Special Meeting of Shareholders. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Special Meeting. Should other business properly be brought before the Special
Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This Proxy Statement and the enclosed proxy card are
expected to be mailed on or about September 6, 1996 to shareholders of record at
the close of business on August 22, 1996 (the "Record Date").
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. On the Record Date, Style Manager had outstanding
shares of beneficial interest and Large Cap had outstanding
- ---------------
Investment Shares and Trust Shares. A majority of the
- --------------- ----------
outstanding shares of each Fund, represented in person or by proxy, shall be
required to constitute a quorum at the Special Meeting for the purpose of voting
on the proposals offered.
Each share of a Fund is entitled to one vote, and fractional shares are
entitled to proportionate shares of one vote. At the close of business on August
22, 1996, the following persons owned, to the knowledge of management, 5% or
more of the outstanding shares of the Funds: . As of the
same
------------------
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date, the officers and Trustees of the Trust as a group owned % of the
-----
outstanding shares of the Trust.
The favorable vote of a majority, as defined in Investment Company Act of
1940, of the outstanding voting securities of a Fund is required for approval of
the proposal to approve a new Sub-Advisory Contract between VCM and Trend
Capital Management, Inc. (`Trend'') on behalf of such Fund, and for approval
of the proposed amendment to the Investment Advisory Contract between VCM and
the Trust, on behalf of such Fund, increasing the advisory fee payable by
such Fund to VCM. The vote of the holders of a majority (as so defined in
the 1940 Act) of outstanding securities means (a) the vote of the holders of
67% or more of the shares present at the meeting, if the holders of 50% or
more of the outstanding voting shares of the Fund are present or represented
by proxy, or (b) the vote of the holders of more than 50% of the outstanding
shares, whichever is less.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, shares represented by abstentions and ``roker non-votes''
will be counted as present, but not as votes cast, at the Special Meeting. Under
the Trust's Declaration of Trust, the approval of any action will be determined
on the basis of a majority of votes entitled to be cast at the Special Meeting.
Under the Investment Company Act of 1940 (the `1940 Act''), the affirmative vote
necessary to approve the matter under consideration may be determined with
reference to a percentage of votes present at the Special Meeting, which would
have the effect of treating abstentions and non-votes as if they were votes
against the proposal.
The Trust will furnish, without charge, a copy of the annual report, which
includes audited financial statements for the fiscal year ended September 30,
1995, and/or semi-annual report for the six-month period ended March 31, 1996,
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to any shareholder of record upon request. TO REQUEST AN ANNUAL OR SEMI-ANNUAL
REPORT, CALL SIGNET FINANCIAL SERVICES, INC. AT 1-800-723-9512, OR SEND A
WRITTEN REQUEST TO SIGNET FINANCIAL SERVICES, INC., 7 N. EIGHTH STREET,
RICHMOND, VA 23219. The Trustees propose to mail this proxy statement and the
enclosed Notice of meeting and proxy card on or about September 6, 1996.
IT IS ESSENTIAL THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD.
In order that your shares may be represented at the Special Meeting, you
are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
-mail the proxy card promptly in the enclosed envelope, which
requires no
postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received by 2:00 p.m. on
October 21, 1996.
BACKGROUND
Like many bank-affiliated investment managers, VCM historically managed its
equity funds using a very traditional stock selection process. In so doing, the
Funds achieved what VCM regarded as satisfactory, but not exceptional, results.
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In 1994 VCM determined to implement a new strategy, known as `style
management,''to seek to enhance equity investment returns.
Style management is a methodology which is designed to take advantage of
trends in the stock market that favor different styles of stock selection
(growth versus value) and different sizes of companies (large versus small
capitalization). Unlike most equity funds, which adhere to a specific stock
management style regardless of market conditions, VCM gives the ``tyle''
decision its complete attention in an attempt to position its portfolio in the
best investment style (e.g., large capitalization growth, large capitalization
value, small capitalization growth or small capitalization value) for the
prevailing economic and investment environment. Thus, the objective of style
management is to change investment styles in order to capture the next upward
trend in the market, rather than to maintain one style through up and down
cycles.
VCM, in order to enhance its management capabilities with respect to the
Funds and to ensure the Funds' competitive edge, proposes to enter into a Sub-
Advisory Contract with Trend giving VCM the exclusive right (with respect to
mutual funds) to use Trend's proprietary systems and models to forecast stock
market trends. Trend is one of a handful of asset managers which has the
expertise to generate `signals'' indicating these stock market trends. Upon
receipt of a signal from Trend, VCM, as the Funds' adviser, will decide whether
or not to implement the change in styles indicated by Trend's signal, and will
select a precise portfolio of stocks which will replicate that style.
In approving Trend as Sub-Advisor for the Funds, the Board considered many
factors. The most important of these factors were (i) the fact that Trend is
one of only a few asset managers which has the expertise to generate signals
24
indicating stock market trends; (ii) the consistency of Trend's long-term
performance in the area of advising equity managers which utilize the `style
management''methodology and (iii) the quality of the individuals that make up
Trend's advisory and research team.
The terms of the Sub-Advisory Contract are summarized below.
SUB-ADVISORY CONTRACT
Terms of the Sub-Advisory Contract
A copy of the Sub-Advisory Contract is attached hereto as Exhibit 1.
Under the terms of the Sub-Advisory Contract, Trend is to provide such
investment advice, and statistical and other factual information as may be
requested by VCM on behalf of the Funds.
The Sub-Advisory Contract provides that Trend shall pay all expenses
incurred by it and its staff in connection with the performance of its services
under the Sub-Advisory Agreement, including the payment of salaries of all
officers and employees who are employed by it. With respect to Style Manager,
VCM will pay Trend an annual fee as follows: (a) to the extent that the annual
fee paid by the Fund to VCM does not exceed 1% of the Fund's average daily net
assets, Trend will receive an amount equal to one-third of the annual fee paid
by the Fund to VCM, provided, however, that such fee received by Trend will not
exceed .25% of the Fund's average daily net assets; and (b) to the extent that
the annual fee paid by the Fund to VCM exceeds 1% of the Fund's average daily
net assets, Trend will receive an additional amount equal to two-thirds of the
24
annual fee paid by the Fund to VCM in excess of 1% of the Fund's average daily
net assets. (If the proposed maximum advisory fee of 1.25% of average daily net
assets of the Fund were paid to VCM, Trend would receive a sub-advisory fee from
VCM of .4167% of the Fund's average daily net assets). With respect to Large
Cap, Trend will receive an amount equal to .33 1/3% of the Fund's average daily
net assets.
The Sub-Advisory Contract provides with respect to each Fund that, if
approved by shareholders of a Fund, it will remain in effect for an initial term
of two years from the date of its execution and shall continue in effect for
successive one-year periods, provided such continuance is specifically approved
at least annually by vote of a majority of Trustees, including a majority of the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. The Sub-Advisory Contract may be terminated by the
Trustees at any time without penalty, or by a vote of a majority of the
outstanding voting securities of each Fund on 60 days' written notice, or by
Trend or VCM upon 120 days' written notice to the other party. The Sub-Advisory
Contract will immediately terminate in the event of its assignment (as such term
is defined in the 1940 Act) or in the event of the termination of the Trust's
advisory contract with VCM.
The Trustees have reviewed and unanimously approved the terms of the Sub-
Advisory Contract and directed that it be submitted to each Fund's shareholders
for their approval. In the event that the Sub-Advisory Contract is not approved
by a Fund's shareholders, VCM would be solely responsible for providing
investment advice to that Fund, and the Trustees will consider what action, if
any, should be taken, including, but not limited to, requesting that Trend
perform sub-advisory services at cost until a new sub-advisory contract is
approved by that Fund's shareholders.
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INFORMATION REGARDING TREND CAPITAL MANAGEMENT, INC.
Trend Capital Management, Inc., a Minnesota corporation, was founded in
1992 by Thomas G. Fox, its President and Chief Investment Officer, and is
located at 950 Interchange Tower, 600 S. Highway 169, Minneapolis, Minnesota
55426. Trend provides investment advisory services to individuals and
institutions, and is a registered as an investment adviser with the Securities
and Exchange Commission. Trend also provides general portfolio management
services for certain clients, subject to the client's investment objective as
determined based upon discussions between the client and the client's consultant
or Trend. Trend does not provide investment advisory services to any mutual
fund.
The principal executive officer and directors of Trend are: Thomas G. Fox,
President, Director and Chief Investment Officer; Timothy O'Malley, Director and
Attorney at Law; Wayne R. Eskew, Director and Chief Portfolio Manager; and
Darral R. Lynn, Chief Financial Officer and Director. Mr. O'Malley's address is
8581 Valley View Court, Prior Lake, Minnesota 55372. The address of Mr. Fox and
the other directors is 950 Interchange Tower, 600 S. Highway 169, Minneapolis,
Minnesota 55426. Messrs. Fox, O'Malley, Eskew, and Lynn each are either direct
or beneficial owners of more than 10% of a class of equity security of Trend.
BOARD OF TRUSTEES' RECOMMENDATION
Based on their consideration, analysis and evaluation of the above factors
and other information deemed by them to be relevant to the proposed Sub-Advisory
Agreement, the Trustees (including the Trustees who are not "interested
persons" as defined in the Investment Company Act of 1940) have concluded that
24
it would be in the best interests of the Funds and their shareholders to approve
the proposed Sub-Advisory Agreement on behalf of the Funds. Approval requires
the affirmative vote of: (a) 67% or more of the shares of the Fund present at
the Special Meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented by proxy; or (b) more than 50% of the
outstanding shares of the Fund, whichever is less.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS APPROVAL BY
SHAREHOLDERS OF THE STYLE MANAGER FUND AND THE STYLE MANAGER: LARGE
CAP FUND OF THE SUB-ADVISORY CONTRACT BETWEEN VIRTUS CAPITAL
MANAGEMENT, INC. AND TREND CAPITAL MANAGEMENT, INC.
AMENDMENT TO INVESTMENT ADVISORY CONTRACT
CURRENT INVESTMENT ADVISORY CONTRACT. VCM, or its predecessor, Signet
Asset Management, (a division of Signet Trust Company), has been the Trust's
investment adviser since 1990.
Under the current terms of the Advisory Contract, VCM, subject to the
direction of the Trustees, provides investment research and supervision of the
investments of each portfolio of the Trust and conducts a continuous program of
investment evaluation and of appropriate sale or other disposition and
reinvestment of each portfolio's assets.
24
The Advisory Contract provides that in the absence of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the obligations or duties
of VCM under the Advisory Contract, VCM and its affiliates shall not be liable
to the Trust or any shareholder for any act or omission in the course of, or
connected in any way with, rendering services, or for any losses that may be
sustained in the purchase, holding, or sale of any security.
The Advisory Contract provides that, it will remain in effect for an
initial term of two years from the date of its execution (i.e., until March 1,
1997) and shall continue in effect for successive one-year periods, provided
such continuance is specifically approved at least annually by vote of a
majority of Trustees, including a majority of the independent Trustees, cast in
person at a meeting called for the purpose of voting on such approval. The
Advisory Contract may be terminated by the Trustees at any time without penalty
with respect to any of the Trust's portfolios, or by a vote of a majority of the
outstanding voting securities of a Fund on 60 days' written notice. The
Advisory Contract will immediately terminate in the event of its assignment (as
such term is defined in the 1940 Act) or in the event of the termination of the
Trust's advisory contract with VCM.
Under the terms of the Advisory Contract, no amendment of the Advisory
Contract shall be effective with respect to the Trust or one of the Trust's
portfolios until approved by a vote of a majority of the Trustees, including a
majority of independent Trustees, at a meeting called for that purpose, and by
the holders of a majority of each Fund's outstanding voting securities entitled
to vote on the matter.
PROPOSED AMENDMENT TO ADVISORY CONTRACT. The Trustees of the Funds
recommend that shareholders approve an amendment to the Advisory Contract,
24
providing for an increase in the advisory fees payable to VCM by Style Manager
and Large Cap. The proposed amendment would not affect the terms of the
Advisory Contract, a copy of which is attached as Exhibit 2, in any other
manner.
Currently, VCM receives annual investment advisory fees from Style Manager
of 1% of average daily net assets of the Fund, and it is proposed that the fee
be increased to 1.25% of average daily net assets. VCM currently receives
annual investment advisory fees from Large Cap of .75 of 1% of average daily net
assets of the Fund, and it is proposed that the fee be increased to 1% of
average daily net assets. For the period from March 7, 1995 (date of initial
public investment) to September 30, 1995, VCM received investment advisory fees
of $374,393 for advisory services from Style Manager, all of which was waived.
For the fiscal year ended September 30, 1995, VCM received $678,512 in
investment advisory fees from Large Cap, of which $189,983 was waived. The
advisory fees paid to VCM (prior to waivers) for the same periods under the
proposed increased investment advisory fees would have been $467,991.29 and
$904,683.24 by Style Manager and Large Cap, respectively.
The Trustees believe the proposed increase in advisory fees is fair and
reasonable given (i) the unique nature and quality of advisory services being
provided by VCM in managing the Funds using the `style management'' methodology
and (ii) the fact that neither the use of this methodology, nor the engagement
of a sub-adviser, were contemplated at the time that the current fees were
negotiated.
As described in Proposal 1, the `style management'' methodology requires
VCM, in managing the Funds' portfolios, to analyze and to implement style
``ignals'' provided from time-to-time by Trend. Because of the potentially wide
24
range of securities utilized in the Funds, and the significance of portfolio
moves within the Funds (i.e., upon the receipt of a signaled change in a
`style'' trend, VCM must be able to reposition the entire portfolios of the
Funds). VCM's role in selecting portfolio securities and otherwise managing the
funds is extensive and is somewhat unique with respect domestic equity funds.
VCM believes that the Funds receive significantly more management time and
attention from VCM than most aggressive equity funds receive from their
advisers.
Because of the heightened level of management activity required of VCM and
the fact that VCM will be required to pay a portion of its advisory fee to Trend
as a Sub-Advisory fee (neither of which circumstances was contemplated when the
current advisory fees were negotiated) the Board recommends the adoption of the
increased fees.
The following tables compare current shareholder transaction expenses with
estimated annual operating expenses for the Funds as they would appear
upon shareholder approval of both the Sub-Advisory Agreement between
VCM and Trend on behalf of each of the Funds, and the amendment to the
Investment Advisory Contract between VCM and the Trust on behalf of each of the
Funds increasing the advisory fee payable by each of the Funds to VCM.
THE STYLE MANAGER: LARGE CAP FUND-INVESTMENT SHARES
SUMMARY OF FUND EXPENSES
The following Fee Table and Example summarize the
various costs and expenses that a shareholder of
Investment Shares will currently bear,
either directly or indirectly and such costs and
24
expenses if the proposed increase to the advisory fee
is approved.
Current Proposed
Maximum Sales Charge Imposed on Purchases None None
(as a percentage of offering price)........
Maximum Sales Charge Imposed on Reinvested Dividends None None
(as a percentage of offering price)...
Contingent Deferred Sales Charge 2.00% 2.00%
(as a percentage of amount redeemed, as applicable)
Redemption Fee None None
(as a percentage of amount redeemed, if applicable)
Exchange Fee None None
(As a percentage of average net assets)
Current Proposed
Management Fee 0.75% (1) 1.25%
12b-1 Fees 0.00% (2) 0.00% (2)
Total Other Expenses 0.44% 0.44%
1.19% (3) 1.69% (3)
(1) The management fee has been reduced to reflect
the voluntary waiver by the investment adviser. The
adviser can terminate
this voluntary waiver at any time at its sole
discretion. The maximum management fee for The Style
Manager: Large Cap Fund
is 0.75%.
(2) Fees paid by Investment Shares of each Fund are
for distribution and/or administrative services
provided with respect to Investment Shares.
The Style Manager Fund can pay up to 0.25% as a
12b-1 fee to the distributor. See "Management of the
Trust-Distribution Plans."
(3) Includes administration fees. See "Management
of the Trust-Administration of the Funds."
EXAMPLE:
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each
time period:
1 year 1 year(+) 3 years 3 5 10
years(+) years years
CURRENT $33 $12 $61 $39 $91 $177
PROPOSED $38 $17 $75 $53 $115 $226
+Reflects expenses on the same investment, assuming no redemption.
The purpose of the foregoing example is to assist an
investor in understanding the various costs and
expenses that a shareholder
of Investment Shares will bear, either directly or
indirectly. For a more complete description of the
various costs and expenses, see
"The Virtus Funds Information" and "Investing in
Shares." Wire-transferred redemptions of less than
$5,000 may be subject to
additional fees.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
THE STYLE MANAGER: LARGE CAP FUND-TRUST SHARES
SUMMARY OF FUND EXPENSES
The following Fee Table and Example summarize the various
costs and expenses that a shareholder of Trust Shares will
currently bear,
either directly or indirectly and such costs and expenses
24
if the proposed increase to the advisory fee is approved.
Current Proposed
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None None
Contingent Deferred Sales Charge
(as a percentage of amount redeemed, as applicable) None None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None None
Exchange Fee None None
(As a percentage of average net assets)
Current Proposed
Management Fee 0.54% (1) 1.00%
12b-1 Fees None None
Total Other Expenses 0.43% 0.43%
Total Trust Shares Fund Operating
Expenses Net of Any Waivers 0.97% (2) 1.43% (2)
(1) The management fee has been reduced to reflect the
voluntary waiver by the investment adviser. The adviser
can terminate
this voluntary waiver at any time at its sole
discretion. The maximum management fee for The Style
Manager: Large Cap Fund
is 0.75%.
(2) Includes administration fees. See "Management of the
Trust-Administration of the Funds."
EXAMPLE:
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each
time period:
24
1 year 3 years 5 years 10 years
CURRENT $10 $31 $54 $119
PROPOSED $15 $45 $78 $171
The purpose of the foregoing example is to assist an
investor in understanding the various costs and expenses
that a shareholder
of Trust Shares will bear, either directly or indirectly.
For a more complete description of the various costs and
expenses, see
"The Virtus Funds Information" and "Investing in Shares."
Wire-transferred redemptions of less than $5,000 may be
subject to
additional fees.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN
THOSE SHOWN.
24
THE STYLE MANAGER FUND
SUMMARY OF FUND EXPENSES
The following Fee Table and Example summarize the various costs and
expenses that a shareholder will currently bear,
either directly or indirectly and such costs and expenses if the proposed
increase to the advisory fee is approved.
Current Proposed
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None None
Contingent Deferred Sales Charge
(as a percentage of amount redeemed, as applicable) 2.00% 2.00%
Redemption Fee
(as a percentage of amount redeemed, if applicable) None None
Exchange Fee None None
(As a percentage of average net assets)
Current Proposed
Management Fee 0.75% (1) 1.25%
12b-1 Fees 0.00% (2) 0.00% (2)
Total Other Expenses 0.44% 0.44%
Total Investment Shares Operating
Expenses Net of Any Waivers 1.19% (3) 1.69% (3)
(1) The management fee has been reduced to reflect the voluntary waiver
by the investment adviser. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The
maximum management fee for The Style Manager Fund
is 1.00%.
(2) The Style Manager Fund can pay up to 0.25% as a 12b-1 fee to the
distributor. See "Management of the Trust-Distribution Plans."
(3) Includes administration fees. See "Management of the Trust-
Administration of the Funds."
24
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each
time period:
1 year 1 year(+) 3 years 3 years(+) 5 years 10 years
CURRENT $33 $12 $60 $38 $90 $1
PROPOSED $38 $17 $75 $53 $115 $2
+Reflects expenses on the same investment, assuming no redemption.
The purpose of the foregoing example is to assist an investor in
understanding the various costs and expenses that a shareholder
will bear, either directly or indirectly. For a more complete
description of the various costs and expenses, see "The Virtus Funds
Information" and "Investing in Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
24
INFORMATION REGARDING VIRTUS CAPITAL MANAGEMENT, INC.
VIRTUS CAPITAL MANAGEMENT, INC., A MARYLAND CORPORATION FORMED IN 1995, IS
A WHOLLY-OWNED subsidiary of Signet Banking Corporation. Signet Banking
Corporation is a multi-state, bank holding company which has provided investment
management services since 1956. VCM, which is a registered investment adviser,
manages, in addition to The Virtus Funds, the Blanchard Group of Funds, and
three fixed income common trust funds with $191 million in net assets as of June
30, 1996. The principal address of VCM is 707 East Main Street, Suite 1300,
Richmond, Virginia 23219. The principal executive officers and directors of VCM
are as follows:
Other Substantial Business,
Name Position with VCM Profession, Vocation or Employment
Garry M. Allen President and
Chief Investment Officer
E. Christian Goetz Chief Operating Officer
Josie C. Rosson Vice President, Assistant Secretary
& Compliance Officer
Tanya Orr Bird Vice President
Charles G. Weirich Vice President
John Hall Vice President
24
Robert J. King Vice President
Directors
Garry M. Allen
Tanya Orr Bird
E. Christian Goetz
Leslie P. Hunter
T. Gaylon Layfield, III
Christopher Oddleifson
Sara Wilson
PAYMENTS TO AFFILIATES OF VCM. Signet Trust Company (`Signet''), a
subsidiary of Signet Banking Corporation, which is also the parent company of
VCM, serves as custodian to the Funds. Under a Custodian Agreement with the
Trust, Signet holds the Funds' cash and securities in safekeeping and keeps all
necessary records and documents relating to its duties, for which it receives a
fee from the Funds. From the period from March 7, 1995 (date of initial public
investment) to September 30, 1995, Signet received custody fees of $34,501 from
The Style Manager Fund. For the fiscal year ended September 30, 1995, Large
Cap paid Signet $47,305 in custody fees. In addition, Large Cap paid
$80,045.65 to Signet Trust Company or its affiliates in Rule 12b-1 fees for the
year ended September 30, 1995.
PORTFOLIO TRANSACTIONS
24
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, VCM looks for prompt execution of orders at favorable
prices. In working with dealers, VCM will generally utilize those who are
recognized dealers in specific portfolio instruments except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, VCM may give consideration to those firms which
have sold or are selling shares of the Trust. VCM makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines established
by the Board of Trustees. If the Sub-Advisory Agreement is approved by
shareholders and is executed by VCM and the Trust, it is contemplated that Trend
will follow the same policies with respect to portfolio transactions as those
effected by VCM and described under this heading.
VCM may also select brokers and dealers who offer brokerage and research
services in addition to fair price and prompt execution. These services may be
furnished directly to the Trust or to VCM and may include: (a) advice as to
the advisability of investing in securities; (b) security analysis and reports;
(c) economic studies; (d) industry studies; (e) receipt of quotations for
portfolio evaluations; and
(f) similar services.
VCM and its affiliates exercise reasonable business judgment in selecting
brokers and dealers to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided.
Research services provided by brokers and dealers may be used by VCM or its
affiliates in advising the Funds and other accounts. The expenses incurred by
24
VCM will be reduced to the extent that VCM might have otherwise paid for these
services used for other accounts.
For the fiscal year ended September 30, 1995, Large Cap paid $562,493 in
commissions on brokerage transactions.
BOARD OF TRUSTEES' RECOMMENDATION
Based on their consideration, analysis and evaluation of the above factors
and other information deemed by them to be relevant to the amendment to the
Investment Advisory Contract between VCM and the Trust increasing the advisory
fee payable by the Funds to VCM, the Trustees (including the Trustees who are
not "interested persons" as defined in the Investment Company Act of 1940) have
concluded that it would be in the best interests of the Funds and their
shareholders to approve the amendment to the Investment Advisory Contract
between VCM and the Trust increasing the advisory fee payable by the Funds to
VCM. Approval requires the affirmative vote of: (a) 67% or more of the shares
of the Fund present at the Special Meeting, if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy; or (b)
more than 50% of the outstanding shares of the Fund, whichever is less.
In the event the Funds' shareholders fail to approve the amendment to the
Investment Advisory Contract between VCM and the Trust increasing the advisory
fee payable by the Funds to VCM, the Funds will continue to operate under the
present investment advisory contract.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS APPROVAL BY SHAREHOLDERS OF THE
STYLE MANAGER FUND AND THE STYLE MANAGER: LARGE CAP FUND OF THE AMENDMENT TO THE
INVESTMENT ADVISORY CONTRACT TO INCREASE THE ADVISORY FEES PAID TO VCM.
24
ADDITIONAL INFORMATION
The Funds are not required, and do not intend, to hold annual meetings of
shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to The Virtus Funds, Federated Investors Tower,
Pittsburgh, PA 15222-3779, so that they are received within a reasonable time
before any such meeting.
No business other than the matters described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Funds.
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Trust. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. If no
24
instruction is given, the persons named as proxies will vote the shares
represented thereby in favor of the matters set forth in the attached Notice.
In the event that, at the time any session of the Special Meeting is
called to order, a quorum is not present at the Special Meeting, or in the event
that a quorum is present at the Special Meeting but sufficient votes to approve
any of the proposals are not received, the persons named as proxies may propose
one or more adjournments of the Special Meeting (with respect to all or some of
the proposals) to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares affected by the
adjournment represented at the Special Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR all such proposals in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST any such
proposal against any adjournment. A shareholder vote may be taken on one or
more of the proposals in this Proxy Statement prior to any such adjournment if
sufficient votes have been received for approval. Under the Declaration of
Trust of the Trust, a quorum is constituted by the presence in person or by
proxy of the holders of a majority of the issued and outstanding shares of the
Funds entitled to vote at the Special Meeting.
Shares of the Funds (including shares which abstain or do not vote with
respect to any of the proposals presented for shareholder approval) will be
counted for purposes of determining whether a quorum is present at the Special
Meeting.
Abstentions from voting will be treated as shares that are present and
entitled to vote for purposes of determining the number of shares that are
present and entitled to vote with respect to a proposal, but will not be counted
24
as a vote in favor of that proposal. Accordingly, an abstention from voting has
the same effect as a vote against a proposal.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
EXHIBIT 1 TO PROXY STATEMENT
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between Virtus Capital Management, Inc. (hereinafter
referred to as "Adviser") and Trend Capital Management, Inc. located in
Minneapolis, Minnesota (hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree as
follows:
1. Sub-Adviser hereby agrees to furnish to Adviser in its capacity as
investment adviser to The Virtus Funds (the "Trust") such investment advice,
statistical and other factual information, as may from time to time be
reasonably requested by Adviser for one or more of the portfolios (`Funds'') of
the Trust, which may be offered in one or more classes of shares ("Classes").
24
2. For its services under this Agreement, Sub-Adviser shall receive from
Adviser an annual fee ("the Sub-Advisory Fee"), as set forth in the exhibits
hereto. In the event that the fee due from the Trust to the Adviser on behalf
of the Funds is reduced in order to meet expense limitations imposed on the
Funds by state securities laws or regulations, the Sub-Advisory Fee shall be
reduced by the same percentage as is the existing percentage that it receives of
the Adviser's fee. (For example, if the total fee paid by the Trust to the
Adviser were 1.00% of average daily net assets of the Fund, and the Sub-Adviser
was entitled to receive a sub-advisory fee of .25% of the Fund's average daily
net assets, then in the event there was a reduction in fees from the Trust to
the Adviser for the above-stated reason, then the reduction in the sub-advisory
fee would be 25% of the reduction in the advisory fee).
Notwithstanding any other provision of this Agreement, the Sub-Adviser may
from time to time and for such periods as it deems appropriate, reduce its
compensation (and, if appropriate, assume expenses of the Fund or the Class of
the Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Sub-Adviser may, by notice to the Trust on behalf of the Fund,
voluntarily declare to be effective.
3. This Agreement shall begin for the Fund on the date that the parties
execute an exhibit to this Agreement relating to such Funds and shall continue
in effect for the Fund for two years from the date of its execution and from
year to year thereafter, subject to the provisions for termination and all of
the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
24
Trustees of the Trust) cast in person at a meeting called for that purpose; and
(b) Adviser shall not have notified the Trust in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter that
it does not desire such continuation with respect to each Fund.
4. Notwithstanding any provision in this Agreement, it may be terminated
at any time without the payment of any penalty: (a) by the Trustees of the
Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Act) of the Fund on sixty (60) days' written
notice to Adviser; (b) by Sub-Adviser or Adviser upon 120 days' written notice
to the other party to the Agreement.
5. This Agreement shall automatically terminate:
(a) in the event of its assignment (as defined in the Investment
Company Act of 1940); or
(b) in the event of termination of the Investment Advisory Contract
for any reason whatsoever.
6. So long as both Adviser and Sub-Adviser shall be legally qualified to
act as an investment adviser to the Funds, neither Adviser nor Sub-Adviser shall
act as an investment adviser (as such term is defined in the Investment Company
Act of 1940) to the Funds except as provided herein and in the Investment
Advisory Contract or in such other manner as may be expressly agreed between
Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign prior to
the end of any term of this Agreement or for any reason be unable or unwilling
to serve for a successive term which has been approved by the Trustees of the
Trust pursuant to the provisions of Paragraph 3 of this Agreement or Paragraph 6
24
of the Investment Advisory Contract, the remaining party, Sub-Adviser or Adviser
as the case may be, shall not be prohibited from serving as an investment
adviser to such Fund by reason of the provisions of this Paragraph 6.
7. This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the Act, by
the holders of a majority of the outstanding voting securities (as defined in
Section 2(a)(42) of the Investment Company Act of 1940) of each Fund.
8. Adviser agrees that, except as otherwise provided by law or agreement
of the parties as may be necessary to effect the purpose and intent of this
Agreement, the advice and information provided by Sub-Adviser to Adviser
hereunder, and the trends identified therein, shall be held as confidential by
Adviser and shall not be resold or passed on by Adviser in written or oral form
by Adviser to any other non-affiliated person without Sub-Adviser's express
prior written consent.
9. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Sub-Adviser or reckless disregard by the Sub-Adviser of its
duties under this Agreement, the Sub-Adviser shall not be liable to the Adviser,
the Trust or to any shareholder of the Trust for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
24
Exhibit A
THE VIRTUS FUNDS
THE STYLE MANAGER FUND
SUB-ADVISORY CONTRACT
For all services rendered by Sub-Adviser hereunder, Adviser shall pay Sub-
Adviser a Sub-Advisory Fee as follows: (a) to the extent that the annual
advisory fee paid by the portfolio to the Adviser does not exceed 1% of the
Fund's average daily net assets, Sub-adviser will receive one-third of the
annual fee paid by the portfolio to the Adviser, provided, however, that such
fee to be received by Sub-Adviser shall not exceed .25% of the Fund's average
daily net assets; and (b) to the extent that the annual fee paid by the Fund to
Adviser exceeds 1% of the Fund's average daily net assets, Sub-Adviser will
receive an additional amount equal to two-thirds of the annual fee paid by the
Fund to Adviser in excess of 1% of the Fund's average daily net assets. (If the
proposed maximum advisory fee of 1.25% of average daily net assets of the Fund
were paid to Adviser, Sub-Adviser would receive a sub-advisory fee from Adviser
of .4167% of the Fund's average daily net assets). The Sub-Advisory Fee shall
be accrued daily, and paid monthly as set forth in the Advisory Contract dated
.
- ------------
This Exhibit duly incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, and their corporate
seals to be affixed hereto this day of , 1996.
-- ------
ATTEST: VIRTUS CAPITAL MANAGEMENT, INC.
By:
Secretary Vice President
TREND CAPITAL MANAGEMENT, INC.
By:
Secretary Vice President
Exhibit B
THE VIRTUS FUNDS
THE STYLE MANAGER: LARGE CAP FUND
SUB-ADVISORY CONTRACT
For all services rendered by Sub-Adviser hereunder, Adviser shall pay Sub-
Adviser a Sub-Advisory Fee equal to .33 1/3% of the average daily net assets
of the above-mentioned portfolio. The Sub-Advisory Fee shall be accrued daily,
and paid monthly as set forth in the Advisory Contract dated .
------------
This Exhibit duly incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, and their corporate
seals to be affixed hereto this day of , 1996.
-- ----------
ATTEST: VIRTUS CAPITAL MANAGEMENT, INC.
By:
Secretary Vice President
TREND CAPITAL MANAGEMENT, INC.
By:
Secretary Vice President
EXHIBIT 2 TO PROXY STATEMENT
CURRENT INVESTMENT ADVISORY CONTRACT BETWEEN THE VIRTUS FUNDS AND VIRTUS CAPITAL
MANAGEMENT, INC.
THE VIRTUS FUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made between Virtus Capital Management, Inc., a Maryland
Corporation having its principal place of business in Richmond, Virginia (the
`Adviser''), and The Virtus Funds, a Massachusetts business trust having its
principal place of business in Pittsburgh, Pennsylvania (the `Trust'').
WHEREAS, the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 (the `Act'') and is
registered as such with the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of the
portfolios (`Funds'') of the Trust, which may be offered in one or more classes
of shares (`Classes''), on whose behalf the Trust executes an exhibit to this
Contract, and Adviser, by its execution of each such exhibit, accepts the
appointments. Subject to the direction of the Trustees of the Trust, Adviser
shall provide investment research and supervision of the investments of each of
the Funds and conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the Fund will
be guided by each of the Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on file with the Securities and Exchange Commission.
3. The Trust shall pay or cause to be paid, on behalf of each Fund or
Class, all of the Fund's or Classes' expenses and the Fund's or Classes'
allocable share of Trust expenses.
4. The Trust, on behalf of each of the Funds shall pay to Adviser, for all
services rendered to such Fund by Adviser hereunder, the fees set forth in the
exhibits attached hereto.
5. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent that any Fund's expenses
exceed such lower expense limitation as the Adviser may, by notice to the Trust,
voluntarily declare to be effective. Furthermore, the Adviser may, if it deems
appropriate, assume expenses of one or more Fund or Class to the extent that any
Fund's or Classes' expenses exceed such lower expense limitation as the Adviser
may, by notice to the Trust, voluntarily declare to be effective.
6. This Contract shall begin for each Fund on the date that the Trust
executes an exhibit to this Contract relating to such Fund. This Contract shall
remain in effect for each Fund for two years from the date of its execution and
from year to year thereafter, subject to the provisions for termination and all
of the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Contract or interested persons of any such party (other than as Trustees
of the Trust) cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified the Trust in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year thereafter that it
does not desire such continuation with respect to that Fund.
7. Notwithstanding any provision in this Contract, it may be terminated at
any time with respect to any Fund, without the payment of any penalty, by the
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of that Fund, as defined in Section 2(a)(42) of the Act on sixty (60)
days' written notice to Adviser.
8. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. Adviser may employ or contract with
such other person, persons, corporation or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
9. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties under this Contract on the part of
the Adviser, Adviser shall not be liable to the Trust or to any of the Funds or
to any shareholder for any act or omission in the course of or connected in any
way with rendering services or for any losses that may be sustained in the
purchase, holding or sale of any security.
10. This Contract may be amended at any time by agreement of the parties
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust), cast in person at a meeting
called for that purpose, and on behalf of a Fund by a majority of the
outstanding voting securities of such Fund as defined in Section 2(a)(42) of the
Act.
11. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees that
the obligations pursuant to this Contract of a particular Fund and of the Trust
with respect to that particular Fund be limited solely to the assets of that
particular Fund, and Adviser shall not seek satisfaction of any such obligation
from the assets of any other Fund, the shareholders of any Fund, the Trustees,
officers, employees or agents of the Trust, or any of them.
12. This Contract shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
13. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
EXHIBIT A
THE U.S. GOVERNMENT SECURITIES FUND
THE VIRGINIA MUNICIPAL BOND FUND
THE MARYLAND MUNICIPAL BOND FUND
THE TREASURY MONEY MARKET FUND
THE MONEY MARKET FUND
THE TAX-FREE MONEY MARKET FUND
THE STYLE MANAGER FUND
THE STYLE MANAGER: LARGE CAP FUND
Name of Fund Percentage of Net Assets
The Treasury Money Market Fund .50 of 1%
The Money Market Fund .50 of 1%
The Tax-Free Money Market Fund .50 of 1%
The U.S. Government Securities Fund .75 of 1%
The Virginia Municipal Bond Fund .75 of 1%
The Maryland Municipal Bond Fund .75 of 1%
The Style Manager: Large Cap Fund .75 of 1%
The Style Manger Fund 1.00 of 1%
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to the following
percentage (the `applicable percentage'') of the average daily net assets of
each Fund.
The fee shall be accrued daily at the rate of 1/365th of the applicable
percentage applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 1st day of March, 1995.
Attest: VIRTUS CAPITAL MANAGEMENT, INC.
/s/ Josie Rosson By: /s/ Garry M. Allen
Secretary President
Attest: THE VIRTUS FUNDS
/s/ S. Elliott Cohan By: /s/ John W. McGonigle
Assistant Secretary Vice President
CUSIP: 927913848
CUSIP: 927913806
G01822-01 (8/96)
THE VIRTUS FUNDS - THE STYLE MANAGER FUND - SPECIAL MEETING OF SHAREHOLDERS-
OCTOBER 21, 1996
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of THE
STYLE MANAGER FUND, a portfolio of THE VIRTUS FUNDS hereby appoint Gia C.
Albanowski, C. Grant Anderson, Patricia F. Conner, Suzanne W. Land, and Jody L.
Petras, or any one of them, true and lawful attorneys, with the power of
substitution of each, to vote all shares of THE STYLE MANAGER FUND which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on October 21, 1996, at Federated Investors Tower, Pittsburgh,
Pennsylvania, at 2:00 p.m. (Eastern time), and at any adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The attorneys named
will vote the shares represented by this proxy in accordance with the choices
made on this ballot. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL
BE VOTED AFFIRMATIVELY ON THAT MATTER. The approval of each proposal is not
contingent on the approval of any other matter.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
THE STYLE MANAGER FUND
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
Vote on Proposal
FOR AGAINST ABSTAIN
1. TO APPROVE OR DISAPPROVE a Sub-Advisory
- --- --- ---
Agreement and exhibits thereto, between
Virtus Capital Management, Inc. and Trend Capital Management,
Inc. on behalf of The Style Manager Fund;
2. TO APPROVE OR DISAPPROVE an amendment to
- --- --- ---
the Investment Advisory Contract between VCM
and the Trust increasing the advisory fee
payable by The Style Manager Fund; and
3. OTHER BUSINESS.
Please sign EXACTLY as your name(s) appear above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all parties
should sign.
Signature Signature (joint owners) Date
THE VIRTUS FUNDS - THE STYLE MANAGER: LARGE CAP FUND
SPECIAL MEETING OF SHAREHOLDERS- OCTOBER 21, 1996
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of THE
STYLE MANAGER: LARGE CAP FUND, a portfolio of THE VIRTUS FUNDS hereby appoint
Gia C. Albanowski, C. Grant Anderson, Patricia F. Conner, Suzanne W. Land, and
Jody L. Petras, or any one of them, true and lawful attorneys, with the power of
substitution of each, to vote all shares of THE STYLE MANAGER FUND which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on October 21, 1996, at Federated Investors Tower, Pittsburgh,
Pennsylvania, at 2:15 p.m. (Eastern time), and at any adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The attorneys named
will vote the shares represented by this proxy in accordance with the choices
made on this ballot. IF NO CHOICE IS INDICATED AS TO ANY ITEM, THIS PROXY WILL
BE VOTED AFFIRMATIVELY ON THAT MATTER. The approval of each proposal is not
contingent on the approval of any other matter.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
THE STYLE MANAGER: LARGE CAP FUND
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
Vote on Proposal
FOR AGAINST ABSTAIN
1. TO APPROVE OR DISAPPROVE a Sub-Advisory
- --- --- ---
Agreement and exhibits thereto, between
Virtus Capital Management, Inc. and Trend
Capital Management, Inc. on behalf of The Style
Manager: Large Cap Fund;
2. TO APPROVE OR DISAPPROVE an amendment to
- --- --- ---
the Investment Advisory Contract between
VCM and the Trust increasing the advisory fee payable by
The Style Manager: Large Cap Fund; and
3. OTHER BUSINESS.
Please sign EXACTLY as your name(s) appear above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all parties
should sign.
Signature Signature (joint owners) Date