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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] 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):
[ ] $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:
[ X ] 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.:
3) Filing Party:
4) Date Filed:
[LOGO OF VIRTUS FUNDS]
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
"Funds"), 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. ("Trend"), on behalf of each of the Funds;
(2) To approve or disapprove an amendment to the Investment Advisory
Contract between VCM and the Trust on behalf of Style Manager,
increasing the advisory fee payable by Style Manager 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
/s/John W. McGonigle
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 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.
[LOGO OF VIRTUS FUNDS]
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.
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
5,576,689.228 shares of beneficial interest, and Large Cap had outstanding
4,398,871.277 Investment Shares and 2,645,257.105 Trust Shares or a total of
7,044,128.382 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: BOVA & Co., c/o Signet
Trust Company, Richmond VA, owned approximately 4,567,833.916 shares (81.91%)
of Style Manager; Stephens, Inc., Litle Rock AR, owned approximately
1,413,595.881 shares (20.07%) of Large Cap Fund; and BOVA & Co., c/o Signet
Trust Company, Richmond VA, owned approximately 2,645,243.961 shares (37.55%)
of Large Cap Fund. As of the same date, the officers and Trustees of the
Trust
as a group owned less than 1% of the outstanding shares of the Trust.
The favorable vote of a majority, as defined in Investment Company Act of
1940 (the "1940 Act"), of the outstanding voting securities of Style Manager
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
Style Manager, and for approval of the proposed amendment to the Investment
Advisory Contract between VCM and the Trust, on behalf of Style Manager,
increasing the advisory fee payable by such Fund to VCM. With respect to
Style
Manager, in the event that either of the two proposals
described above is approved by shareholders, the Fund intends to implement
such proposal, regardless of whether or not the other proposal is approved.
The favorable vote of a majority (as so defined in the 1940 Act) of the
outstanding voting securities of Large Cap is required for approval of the
proposal to approve a new Sub-Advisory Contract between VCM and Trend on
behalf of Large Cap. 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 "broker 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 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,
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. 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 "style"
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
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) an amount equal to
.10% of the first $60 million of the Fund's average daily net assets; and (b)
with respect to average daily net assets of the Fund in excess of $60
million,
an amount equal to (i) one-third of VCM's advisory fee to the extent that
such
advisory fee is less than or equals 1% of the Fund's average daily net assets
(but not to exceed .25% of the Fund's average daily net assets); plus (ii) to
the extent that the annual advisory fee exceeds 1% of the Fund's average
daily
net assets, an additional amount equal to two-thirds of such excess. With
respect to Large Cap, VCM will pay Trend an amount equal to .15% of the first
$100 million of the Fund's average daily net assets; and .33 1/3% of the
Fund's average daily net assets in excess of $100 million.
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.
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 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
Darrel 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 1940 Act) have concluded that 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 WITH RESPECT TO STYLE MANAGER
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.
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 recommend that shareholders of Style Manager approve an
amendment to the Advisory Contract, providing for an increase in the advisory
fees payable to VCM by Style Manager. 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. Exhibit 3 attached hereto sets forth the relevant
portion
of the Advisory Contract reflecting the proposed fee increase.
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. 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. The advisory fees paid to VCM (prior to
waivers) for the same period under the proposed increased investment advisory
fee would have been $467,991.29.
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 Style Manager 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 Style Manager's portfolio, to analyze and to implement style
"signals" provided from time to time by Trend. Because of the potentially
wide
range of securities utilized in Style Manager's portfolio, and the
significance of portfolio moves within the Fund (i.e., upon the receipt of a
signaled change in a "style" trend, VCM must be able to reposition the entire
portfolio of the Fund), VCM's role in selecting portfolio securities and
otherwise managing Style Manager is extensive and is somewhat unique with
respect to domestic equity funds. VCM believes that Style Manager receives
significantly more management time and attention from VCM than most
aggressive
equity funds receive from their advisers.
In approving the increased advisory fee, the primary factors considered by
the Trustees were the nature and quality of the services provided by VCM to
Style Manager, including the relative complexity of managing such fund.
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 fee.
THE STYLE MANAGER FUND--SUMMARY OF 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 as they would appear upon shareholder approval of the
amendment to the Investment Advisory Contract between VCM and the Trust on
behalf of Style Manager increasing the advisory fee payable by Style Manager
to VCM.
SHAREHOLDER TRANSACTION EXPENSES
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, if applicable)...... 2.00% 2.00%
Redemption Fee (as a percentage of amount redeemed, if
applicable).............................................. None None
Exchange Fee.............................................. None None
ANNUAL FUND OPERATING EXPENSES
(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 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" in the
Fund's prospectus.
(3) Includes administration fees. See "Management of the Trust-Administration
of the Funds" in the Fund's prospectus.
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 5 YEARS
(+)
------ --------- ------- ---------- ------- --------
- ---
Current................. $33 $12 $60 $38 $ 90 $173
Proposed................ $38 $17 $75 $53 $115 $227
+ 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" IN THE FUND'S PROSPECTUS. 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.
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 Director, President and Chief
Investment Officer None
E. Christian Goetz Director and Chief Operating
Officer None
Tanya Orr Bird Director and Vice President None
Josie C. Rosson Vice President, Assistant
Secretary & Compliance Officer None
Charles G. Weirich Vice President None
John Hall Vice President None
Robert J. King Vice President None
Leslie P. Hunter Director Executive Vice
President, Signet
Banking Corp.
T. Gaylon Layfield, III Director Vice Chairman
and Chief
Operating
Officer, Signet
Banking Corp.
Christopher Oddleifson Director Executive Vice
President, Signet
Banking Corp.
Sara Wilson Director Executive Vice
President, Signet
Banking Corp.
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. For 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 or its affiliates in Rule 12b-1 fees for the year ended
September 30, 1995.
PORTFOLIO TRANSACTIONS
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
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 Style Manager to VCM, the Trustees (including the Trustees who
are not "interested persons" as defined in the 1940 Act) have concluded that
it would be in the best interests of Style Manager and its shareholders to
approve the amendment to the Investment Advisory Contract between VCM and the
Trust increasing the advisory fee payable by Style Manager to VCM. Approval
requires the affirmative vote of: (a) 67% or more of the shares of Style
Manager present at the Special Meeting, if the holders of more than 50% of
the
outstanding shares of Style Manager are present or represented by proxy; or
(b) more than 50% of the outstanding shares of Style Manager, whichever is
less.
In the event Style Manager's shareholders fail to approve the amendment to
the Investment Advisory Contract between VCM and the Trust increasing the
advisory fee payable by Style Manager to VCM, Style Manager 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 OF THE AMENDMENT TO THE INVESTMENT ADVISORY
CONTRACT TO INCREASE THE ADVISORY FEE PAID TO VCM.
----------------
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 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 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").
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 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 Investment Company Act of 1940) 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 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
Investment Company Act of 1940, 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 or 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.
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) an amount equal to .10% of the
first $60 million of the Fund's average daily net assets; and (b) with
respect
to average daily net assets of the Fund in excess of $60 million, an amount
equal to (i) one-third of VCM's advisory fee to the extent that such advisory
fee is less than or equals 1% of the Fund's average daily net assets (but not
to exceed .25% of the Fund's average daily net assets); plus (ii) to the
extent that the annual advisory fee exceeds 1% of the Fund's average daily
net
assets, an additional amount equal to two-thirds of such excess. The Sub-
Advisory Fee shall be accrued daily, and paid monthly as set forth in the
Advisory Contract dated March 1, 1995.
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.
VIRTUS CAPITAL MANAGEMENT, INC.
Attest:
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 .15% of the first $100 million of the
Fund's average daily net assets; and .33 1/3% of the Fund's average daily net
assets in excess of $100 million. The Sub-Advisory Fee shall be accrued
daily,
and paid monthly as set forth in the Advisory Contract dated March 1, 1995.
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.
VIRTUS CAPITAL MANAGEMENT, INC.
Attest:
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 Funds 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.
VIRTUS CAPITAL MANAGEMENT, INC.
Attest:
/s/ Josie Rosson By /s/ Garry M. Allen
Secretary President
THE VIRTUS FUNDS
/s/ Elliott Cohan By /s/ John W. McGonigle
Assistant Secretary Vice President
EXHIBIT 3 TO PROXY STATEMENT
FORM OF EXHIBIT TO CURRENT INVESTMENT
ADVISORY CONTRACT REFLECTING PROPOSED
INCREASE IN INVESTMENT ADVISORY CONTRACT
EXHIBIT B
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 Manager Fund 1.25 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 day of , 199 .
VIRTUS CAPITAL MANAGEMENT, INC.
Attest:
By
......................................
..................................
THE VIRTUS FUNDS
By
......................................
..................................
Cusip 927913848
Cusip 927913806
G01822-01 (8/96)
THE VIRTUS FUNDS - THE STYLE MANAGER FUND - SPECIAL MEETING OF SHAREHOLDERS-
OCTOBER 21, 1996
Proxy Services
P.O. Box 9156
Farmingdale NY 11735-9858
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
Stephen R. Newcamp, 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.
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.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
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; and
2. TO APPROVE OR DISAPPROVE an amendment to the
- --- --- ---
Investment Advisory Contract between Vitrus
Capital Management, Inc. and the Trust increasing
the advisory fee payable by The Style Manager
Fund.
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
Proxy Services
P.O. Box 9156
Farmingdale NY 11735-9858
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
Stephen R. Newcamp, 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.
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.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND
RETAIN THE TOP PORTION.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
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.
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