As filed with the Securities and Exchange Commission on April 12, 2001
Registration No. 333-___/811-07342
================================================================================
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ Post-Effective Amendment No.___
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
J.P. MORGAN INSTITUTIONAL FUNDS
Area Code and Telephone Number:
(617) 557-0700
Address of Principal Executive Offices:
60 State Street, Suite 1300
Boston, Massachusetts 02109
Name and Address of Agent for Service:
Margaret W. Chambers
c/o Fund Distributors, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109
Copies to:
JOSEPH J. BERTINI, ESQ. SARAH E. COGAN, ESQ. JOHN E. BAUMGARDNER, JR., ESQ.
PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett Sullivan & Cromwell
J.P. Morgan Fleming Asset Management 425 Lexington Avenue 125 Broad Street
(USA) Inc. New York, NY 10017-3954 New York, NY 10004
522 Fifth Avenue
New York, NY 10036
================================================================================
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on May 12, 2001 pursuant
to Rule 488 under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration No. 033-54642/811-07342) pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant's
Form 24f-2 for the fiscal year ended May 31, 2000 was filed on October 3, 2000.
Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. Morgan U.S. Small Company Fund
a series of J.P. Morgan Funds
60 State Street, Suite 1300
Boston, Massachusetts 02109
May 12, 2001
Dear Shareholder:
A special meeting of the shareholders of J.P. Morgan U.S. Small Company
Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPF"), will be held
on July 3, 2001 at 9:00 a.m., Eastern time. Formal notice of the meeting appears
after this letter, followed by materials regarding the meeting.
As you may be aware, The Chase Manhattan Corporation recently completed
a merger with J.P. Morgan & Co. Incorporated, the former corporate parent of the
investment adviser of the Merging Fund's assets, to form J.P. Morgan Chase & Co.
("JPMC"). As a result of this merger, JPMC is seeking to reorganize parts of its
investment management business and funds advised by its subsidiaries. At the
special meeting (the "Meeting"), shareholders will be asked to consider and vote
upon the proposed reorganization of the Merging Fund into J.P. Morgan
Institutional U.S. Small Company Fund (the "Surviving Fund"), a series of JPMF
(the "Reorganization"). After the Reorganization, shareholders of the Merging
Fund would hold Select Class Shares of the Surviving Fund. The investment
objective and policies of the Surviving Fund are identical to those of the
Merging Fund. Both the Merging Fund and the Surviving Fund currently invest all
of their investable assets in The U.S. Small Company Portfolio (the "Master
Portfolio"). Concurrent with the Reorganization, the Surviving Fund will cease
to operate under a Master feeder structure and will instead invest directly in
portfolio securities. In connection with the Reorganization, the Surviving Fund
will be renamed "JPMorgan U.S. Small Company Fund."
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPF.
The investment adviser for the assets of both the Merging Fund and the
Surviving Fund is J.P. Morgan Investment Management Inc. ("JPMIM").
Please see the enclosed Combined Prospectus/Proxy Statement for
detailed information regarding the proposed Reorganization and a comparison of
the Merging Fund and JPF to the Surviving Fund and JPMF. The cost and expenses
associated with the Reorganization, including costs of soliciting proxies, will
be borne by JPMC and not by the Merging Fund, JPF, the Surviving Fund, JPMF or
their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive Select Class shares of the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees of
JPF, which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPF UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
EACH OF THE PROPOSALS.
Following this letter is a list of commonly asked questions. If you
have any additional questions on voting of proxies and/or the meeting agenda,
please call us at 1-800-521-5411.
A proxy card is enclosed for your use in the shareholder meeting. This
card represents shares you held as of the record date, April 6, 2001. IT IS
IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE
PROVIDED OR CALL ___________ AS SOON AS POSSIBLE. This will ensure that your
shares will be represented at the Meeting to be held on July 3, 2001.
Please read the enclosed materials carefully. You may, of course,
attend the meeting in person if you wish, in which case the proxy can be revoked
by you at the Meeting.
Sincerely,
Matthew Healey
Chairman
SPECIAL NOTE: Certain shareholders may receive a telephone call from our
proxy solicitor D.F. King & Co., Inc. or us to answer any questions you may have
or to provide assistance in voting. Remember, your vote is important! Please
sign, date and promptly mail your proxy card(s) in the return envelope provided
or call ________ in order to vote.
2
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes that it
is in the best interest of the shareholders to operate in a multi-class rather
than a master/feeder structure.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
In connection with the Reorganization, the Merging Fund will transfer all of its
assets and liabilities to the Surviving Fund and will receive, in exchange,
Select Class shares of the Surviving Fund. The Merging Fund will then be
liquidated and the Select Class shares of the Surviving Fund will be distributed
pro rata to shareholders such as you. After the Reorganization, you will own
Select Class shares of the Surviving Fund rather than shares of the Merging
Fund.
WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY
INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED?
The Surviving Fund has identical investment objectives and policies to those of
the Merging Fund. Both the Merging Fund and the Surviving Fund currently invest
all of their investable assets in the Master Portfolio. Concurrent with the
Reorganization, the Surviving Fund will cease to operate under a "master/feeder"
structure and will instead invest its assets directly in portfolio securities.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
As a result of the Reorganization, the contractual (or pre-waiver) total expense
ratios are expected to be higher for your shares in the Surviving Fund than they
are for your shares in the Merging Fund. However, the actual (or post-waiver)
total expense ratios are expected to be the same or less for your shares in the
Surviving Fund than they are for your shares in the Merging Fund. This is
because Morgan Guaranty Trust Company of New York has contractually agreed to
waive fees payable to it and reimburse expenses so that the total expense ratio
will remain the same for at least THREE YEARS after the Reorganization.
WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT?
No. JPMIM will continue to manage the assets of the Surviving Fund after the
Reorganization.
WHO WILL PAY FOR THE REORGANIZATION?
The cost and expenses associated with the Reorganization, including costs of
soliciting proxies, will be borne by JPMC and not by either the Merging Fund or
the Surviving Fund (or shareholders of either fund).
3
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive Select Class shares of the Surviving Fund.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR JPF IF AFTER THE
REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF JPMF?
Even if the Reorganization is approved, other mutual funds that are series of
JPF will continue to exist and operate. All shareholders of any series of JPF as
of the record date (April 6, 2001) are required to be given a vote on the
proposal regarding Trustees. Because as of the record date you are still a
shareholder in JPF, you are entitled to vote on this proposal. Shareholders of
JPMF are being asked to approve the same Trustees that are proposed for JPF.
AS A HOLDER OF SHARES OF THE MERGING FUND, WHAT DO I NEED TO DO?
Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your vote
is important! Accordingly, please sign, date and mail the proxy card(s) promptly
in the enclosed return envelope as soon as possible after reviewing the enclosed
Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
4
J.P. Morgan U.S. Small Company Fund
a series of J.P. Morgan Funds
60 State Street, Suite 1300
Boston, Massachusetts 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of
J.P. Morgan U.S. Small Company Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of J.P. Morgan U.S. Small Company Fund (the "Merging Fund"), a
series of J.P. Morgan Funds ("JPF"), will be held at the offices of J.P. Morgan
Chase & Co., 1211 Avenue of the Americas, 41st floor, New York, NY, on July 3,
2001 at 9:00 a.m., (Eastern time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Plan") by
and among JPF, on behalf of the Merging Fund, J.P. Morgan
Institutional Funds ("JPMF"), on behalf of J.P. Morgan
Institutional U.S. Small Company Fund (the "Surviving
Fund"), and J.P. Morgan Chase & Co. and the transactions
contemplated thereby, including (a) the transfer of all of
the assets and liabilities of the Merging Fund to the
Surviving Fund in exchange for Select Class shares of the
Surviving Fund (the "Select Class Shares"), and (b) the
distribution of such Select Class Shares to the
Shareholders of the Merging Fund in connection with the
liquidation of the Merging Fund.
ITEM 2. To elect __ Trustees to serve as members of the Board of
Trustees of JPF.
ITEM 3. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEMS 1 AND 2.
Each proposal is described in the accompanying Combined
Prospectus/Proxy Statement. Attached as Appendix A to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Plan.
Shareholders of record as of the close of business on April 6, 2001 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPF. THIS IS IMPORTANT
TO ENSURE A QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME
BEFORE THEY ARE EXERCISED BY SUBMITTING TO THE MERGING FUND A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING
AND VOTING IN PERSON.
Margaret W. Chambers
Secretary
May 12, 2001
2
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 12, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN U.S. SMALL COMPANY FUND
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
BY AND IN EXCHANGE FOR SELECT CLASS SHARES OF
J.P. MORGAN INSTITUTIONAL U.S. SMALL COMPANY FUND
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of J.P. Morgan U.S. Small Company Fund (the "Merging Fund"), a
series of J.P. Morgan Funds ("JPF"), into J.P. Morgan Institutional U.S. Small
Company Fund (the "Surviving Fund"), a series of J.P. Morgan Institutional Funds
("JPMF"). If approved by shareholders of the Merging Fund, the proposed
reorganization will be effected by transferring all of the assets and
liabilities of the Merging Fund to the Surviving Fund, which has identical
investment objectives and policies to those of the Merging Fund, in exchange for
Select Class shares of the Surviving Fund (the "Reorganization"). Therefore, as
a result of the proposed Reorganization, current shareholders of the Merging
Fund (the "Merging Fund Shareholders") will become shareholders of the Surviving
Fund ("Surviving Fund Shareholders"). JPMF is an open-end management investment
companies offering shares in several portfolios. In connection with the
Reorganization, the J.P. Morgan Institutional U.S. Small Company Fund will be
renamed "JPMorgan U.S. Small Company Fund."
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Select Class and
Institutional Class shares. If the proposed Reorganization is approved by
Merging Fund Shareholders, each Merging Fund Shareholder will receive Select
Class shares (the "Select Class Shares") of the Surviving Fund with a value
equal to such Merging Fund Shareholder's holdings in the Merging Fund. Merging
Fund Shareholders will not pay a sales charge on Select Class Shares received in
the Reorganization or Select Class Shares of the Surviving Fund or other J.P.
Morgan Funds subsequently purchased or received as a result of an exchange.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPF.
i
The terms and conditions of these transactions are more fully described
in this Combined Prospectus/Proxy Statement and in the Agreement and Plan of
Reorganization (the "Reorganization Plan") among JPF, on behalf of the Merging
Fund, JPMF, on behalf of the Surviving Fund, and J.P. Morgan Chase & Co.,
attached to this Combined Prospectus/Proxy Statement as Appendix A.
The Board of Trustees for JPF is soliciting proxies in connection with
a Special Meeting (the "Meeting") of Shareholders to be held on July 3, 2001 at
9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211 Avenue
of the Americas, 41st floor, New York, NY, at which meeting shareholders in the
Merging Fund will be asked to consider and approve the proposed Reorganization
Plan, certain transactions contemplated by the Reorganization Plan and certain
other proposals. This Combined Prospectus/Proxy Statement constitutes the proxy
statement of the Merging Fund for the meeting of its Shareholders and also
constitutes JPMF's prospectus for Select Class Shares that have been registered
with the Securities and Exchange Commission (the "Commission") and are to be
issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about JPF and JPMF that
an investor should know before voting on the proposals. The current
Prospectuses, Statements of Additional Information and Annual Reports of the
Merging Fund and the Surviving Fund (including the Annual Report of The U.S.
Small Company Portfolio) and the Semi-Annual Report of the Merging Fund and the
Surviving Fund (including the Semi-Annual Report of The U.S. Small Company
Portfolio) are incorporated herein by reference, and the current Prospectus,
Annual Report (including the Annual Report of The U.S. Small Company Portfolio)
and Semi-Annual Report (including the Semi-Annual Report of The U.S. Small
Company Portfolio) for the Surviving Fund are enclosed with this Combined
Prospectus/Proxy Statement. A Statement of Additional Information relating to
this Combined Prospectus/Proxy Statement dated May 12, 2001 containing
additional information about JPF and JPMF has been filed with the Commission and
is incorporated by reference into this Combined Prospectus/Proxy Statement. A
copy of the Statement of Additional Information, as well as the Prospectus,
Statement of Additional Information, Annual Report, and Semi-Annual Report of
the Merging Fund may be obtained without charge by writing to JPMF at its
address noted above or by calling 1-800-521-5411.
This Combined Prospectus/Proxy Statement is expected to first be sent
to shareholders on or about May 12, 2001.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR
ii
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY JPF OR JPMF.
INVESTMENTS IN THE SURVIVING FUND ARE SUBJECT TO RISK--INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. NO SHARES IN THE SURVIVING FUND ARE BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY
INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
iii
TABLE OF CONTENTS
PAGE
----
INTRODUCTION..................................................................1
PROPOSAL 1: REORGANIZATION PLAN..............................................1
SUMMARY ......................................................................2
COMPARATIVE FEE AND EXPENSE TABLES............................................5
INFORMATION RELATING TO THE PROPOSED REORGANIZATION..........................10
PURCHASES, REDEMPTIONS AND EXCHANGES.........................................14
DISTRIBUTIONS AND TAXES......................................................18
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE ..................................................18
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER
SERVICES ................................................................20
PROPOSAL 2: ELECTION OF TRUSTEES.............................................24
INFORMATION RELATING TO VOTING MATTERS.......................................28
ADDITIONAL INFORMATION ABOUT JPF.............................................30
ADDITIONAL INFORMATION ABOUT JPMF............................................30
FINANCIAL STATEMENTS AND EXPERTS.............................................31
OTHER BUSINESS...............................................................31
LITIGATION...................................................................31
SHAREHOLDER INQUIRIES........................................................31
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION............................A-1
iv
INTRODUCTION
GENERAL
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of the Merging Fund, an open-end management investment company, in
connection with the solicitation by the Board of Trustees of JPF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st floor, New York, NY (together with any
adjournments thereof, the "Meeting"). It is expected that the mailing of this
Combined Prospectus/Proxy Statement will be made on or about May 12, 2001.
PROPOSAL 1: REORGANIZATION PLAN
At the Meeting, Merging Fund Shareholders will consider and vote upon
the Agreement and Plan of Reorganization (the "Reorganization Plan") dated
_______, 2001 among JPF, on behalf of the Merging Fund, JPMF, on behalf of the
Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined
as the "Funds"), and J.P. Morgan Chase & Co., pursuant to which all of the
assets and liabilities of the Merging Fund will be transferred to the Surviving
Fund in exchange for Select Class Shares of the Surviving Fund. As a result of
the Reorganization, Merging Fund Shareholders will become shareholders of the
Surviving Fund and will receive Select Class Shares equal in value to their
holdings in the Merging Fund on the date of the Reorganization. In connection
with the Reorganization, the Surviving Fund will be renamed "JPMorgan U.S. Small
Company Fund." Further information relating to the Surviving Fund is set forth
herein, and the Surviving Fund's Prospectus and Annual Report (including the
Annual Report of The U.S. Small Company Portfolio) is enclosed with this
Combined Prospectus/Proxy Statement.
THE JPF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL 1.
VOTE REQUIRED
Approval of the Reorganization Plan by the Merging Fund requires the
affirmative vote of the lesser of (i) 67% or more of the shares of the Merging
Fund present at the Meeting if the holders of more than 50% of the outstanding
shares of the Merging Fund are present or represented by proxy and (ii) more
than 50% of all outstanding shares of the Merging Fund. If the Reorganization
Plan is not approved by the Merging Fund Shareholders, the JPF Board will
consider other appropriate courses of action.
SUMMARY
The following is a summary of certain information relating to the
proposed Reorganization, the parties thereto and the transactions contemplated
thereby, and is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus,
Statement of Additional Information, Annual Report and Semi-Annual Report
(including the Annual Report and Semi-Annual Report of The U.S. Small Company
Portfolio) in respect of each of the Surviving Fund and the Merging Fund, and
the Reorganization Plan attached to this Combined Prospectus/Proxy Statement as
Appendix A.
PROPOSED REORGANIZATION
Each of the Surviving Fund and the Merging Fund currently invests
all of its investable assets in The U.S. Small Company Portfolio (the "Master
Portfolio"), which has identical investment objectives and policies as the
Surviving Fund and the Merging Fund and which is advised by J.P. Morgan
Investment Management Inc. ("JPMIM").
If the Reorganization is approved by the shareholders of the Merging
Fund and certain other conditions are met, the Merging Fund and the Feeder
Portfolio will be reorganized into the Surviving Fund, and the Surviving Fund
will commence investing its assets directly in portfolio securities rather than
in the Master Portfolio.
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Class A Shares,
Select Class Shares and Institutional Class Shares. Pursuant to the proposed
Reorganization, the Merging Fund will transfer all of its assets and liabilities
to the Surviving Fund in exchange for Select Class Shares.
Under the proposed Reorganization, each Merging Fund Shareholder will
receive a number of Select Class Shares of the Surviving Fund with an aggregate
net asset value equal on the date of the exchange to the aggregate net asset
value of such shareholder's Merging Fund Shares on such date. Therefore,
following the proposed Reorganization, Merging Fund Shareholders will be
Surviving Fund Shareholders. Merging Fund Shareholders will not pay a sales load
in connection with the Reorganization. See "Information Relating to the Proposed
Reorganization."
The Surviving Fund has investment objectives, policies and restrictions
identical to the Merging Fund. However, while the Merging Fund and the Surviving
Fund currently invest all of their assets in the Master Portfolio (which in turn
invests in portfolio securities), after the Reorganization the Surviving Fund
will invest directly in portfolio securities. Following the Reorganization the
Surviving Fund will have substantially similar purchase, redemption and dividend
policies as the Merging Fund.
Based upon their evaluation of the relevant information presented to
them, including an analysis of the operation of the Surviving Fund both before
and after the Reorganization, the terms of the Reorganization Plan, the
opportunity to combine the two Funds with identical investment objectives and
policies, and the fact that the Reorganization will be tax-free, and in light of
their fiduciary duties under federal and state law, the JPF Board and the JPMF
Board,
2
including a majority of the Board's members who are not "interested persons"
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act"), have each determined that the proposed Reorganization is in the
best interests of each Fund and its respective shareholders and that the
interests of such shareholders will not be diluted as a result of such
Reorganization.
REASONS FOR THE REORGANIZATION
The Reorganization is being proposed because each Fund's board
believes that it is in the best interest of the shareholders to operate in a
multi-class rather than a master/feeder structure.
FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett will issue an opinion (based on certain
assumptions) as of the effective time of the Reorganization to the effect that
the transaction will not give rise to the recognition of income, gain or loss
for federal income tax purposes to the Merging Fund, the Surviving Fund or the
shareholders of the Merging Fund. A shareholder's holding period and tax basis
of Select Class Shares received by a Shareholder of the Merging Fund will be the
same as the holding period and tax basis of the shareholder's shares of the
Merging Fund. In addition, the holding period and tax basis of those assets
owned by the Merging Fund and transferred to the Surviving Fund will be
identical for the Surviving Fund. See "Information Relating to the Proposed
Reorganization - Federal Income Tax Consequences."
INVESTMENT ADVISER
The investment adviser for the Master Portfolio (and therefore the
assets of the Merging Fund, the Feeder Portfolio and the Surviving Fund) is
JPMIM. Following the Reorganization, JPMIM will continue to serve as the
Surviving Fund's investment adviser. JPMIM is a wholly-owned subsidiary of JPMC.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Surviving Fund and the Merging Fund is
to provide high total return from a portfolio of small company stocks. See "Risk
Factors." Both Funds have identical investment policies, and the Surviving
Fund's investment policies will not change after the Reorganization, although,
as mentioned above, the Surviving Fund will invest in portfolio securities
rather than the Master Portfolio. For more information regarding the Surviving
Fund's investment policies, see the Surviving Fund's Prospectus enclosed with
this Combined Proxy Statement. Each Fund may change its objective without
shareholder approval.
Each Fund invests primarily in small and medium sized U.S. companies
whose market capitalizations are greater than $100 million and less than $2
billion that are included in the Russell 2000 Index. Industry by industry, the
fund's weightings are similar to those of the Russell 2000 Index. Each Fund can
moderately underweight or overweight industries when it believes it will benefit
performance.
3
Within each industry, each Fund focuses on those stocks that are ranked
as most undervalued. Each Fund generally considers selling stocks that appear
overvalued or have grown into large-cap stocks.
Under normal circumstances the Surviving Fund plans to remain fully
invested, with at least 65% of its net assets invested in equity securities,
including U.S. and foreign common stocks, convertible securities, preferred
stocks, trust or partnership interests, warrants, rights, depository receipts
and investment company securities. The Surviving Fund anticipates that its total
foreign investments will not exceed 20% of its net assets. The Surviving Fund
seeks to limit risk through diversification. During severe market downturns, the
Surviving Fund has the option of investing up to 100% of assets in
investment-grade short-term securities.
PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND
The value of your investment in the Surviving Fund will fluctuate in
response to movements in the stock market. Fund performance will also depend on
the effectiveness of JPMIM research and the management team's stock picking
decisions.
Although small-cap stocks have historically offered higher long-term
growth than large-cap stocks, they have also involved higher risks. The
Surviving Fund's small-cap emphasis means it is likely to be more sensitive to
economic news and is likely to fall further in value during broad market
downturns. The Surviving Fund pursues returns that exceed those of the Russell
2000 Index while seeking to limit its volatility relative to this index.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund's and the Merging Fund's
assets is JPMIM. JPMIM oversees the asset management of both funds. As
compensation for its services, JPMIM receives a management fee indirectly from
both funds at an annual rate of 0.60% of average daily net assets. Following the
Reorganization, JPMIM will manage the Surviving Fund's assets and will receive a
fee at an annual rate of 0.60% of average daily net assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the
distributor for the Surviving Fund. Morgan Guaranty Trust Company of New York
("Morgan") currently serves as administrator and shareholder servicing agent and
an affiliate of the Distributor currently serves as sub-administrator. It is
anticipated that prior to the consummation of the Reorganization, Morgan will
merge with The Chase Manhattan Bank ("Chase") which will become the Surviving
Fund's administrator and shareholder servicing agent. The Bank of New York
("BONY") currently serves as fund accountant and custodian, and DST Systems,
Inc. ("DST") currently serves as transfer agent and dividend disbursing agent
for the Surviving Fund. It is anticipated that prior to the consummation of the
Reorganization, Chase will become the Surviving Fund's fund accountant and
custodian. PricewaterhouseCoopers LLP serves as the Surviving Fund's independent
accountants.
ADMINISTRATOR
In connection with the Reorganization, the administration fee paid
to Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on complex wide
non-money market assets in excess of $26 billion.
4
ORGANIZATION
Each of JPF and JPMF is organized as a Massachusetts business trust.
The Merging Fund is organized as a series of JPF and the Surviving Fund is
organized as a series of JPMF.
PURCHASES, REDEMPTIONS AND EXCHANGES
After the Reorganization, the procedures for making purchases,
redemptions and exchanges of Select Class Shares of the Surviving Fund will be
substantially similar to those with respect to shares of the Merging Fund, as
described in this Combined Prospectus/Proxy Statement and the Surviving Fund's
Prospectus and Statement of Additional Information.
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses
paid by each of the Merging Fund and the Surviving Fund that reflect current
expense arrangements and (ii) estimated fees and expenses on a pro forma basis
after giving effect to the Reorganization. Under the Reorganization, holders of
Shares of the Merging Fund will receive Select Class Shares of the Surviving
Fund. Please note that the Surviving Fund currently has one class of shares. In
connection with the Reorganization, this class will be re-named "Institutional
Class" and the Select Class Share class will be introduced.
The table indicates that while contractual (pre-waiver) total expense
ratios for current shareholders of the Merging Fund are anticipated to be higher
following the Reorganization, actual (post-waiver) total expense ratios for
current shareholders of the Merging Fund are anticipated to be less or stay the
same following the Reorganization. This is because Morgan has agreed to waive
certain fees and/or reimburse certain expenses to ensure that actual total
operating expenses do not increase for at least three years.
5
THE MERGING FUND THE SURVIVING FUND
SHARES SHARES
---------------------- ------------------------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)-
Maximum Sales Charge (Load) when you
buy shares, shown as % of the offering
price................................... None None
Maximum Deferred Sales Charge
(Load) shown as lower of original
purchase price or redemption proceeds None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)..............
Management Fees......................... 0.60% 0.60%
Distribution (12b-1) Fees............... None None
Other Expenses..................... 0.40% 0.22%
Total Annual Fund Operating Expenses 1.00% 0.82%
6
THE SURVIVING FUND
PRO FORMA WITH REORGANIZATION
SELECT CLASS SHARES
-----------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT) - Maximum Sales
Charge (Load) when you buy shares, shown as
% of the offering price........................ None
Maximum Deferred Sales Charge (Load)
shown as lower of original purchase price or
redemption proceeds............................ None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)..............................
Management Fees................................ 0.60%
Distribution (12b-1) Fees...................... None
Other Expenses................................. 0.49%
Total Annual Fund Operating Expenses........... 1.09%
Fee Waivers and Expense Reimbursements (1)..... 0.08%
Net Expenses................................... 1.01%
(1) Per agreements by Morgan, an affiliate of JPMC, Morgan to reimburse the
Fund to the extent that operating expenses (which exclude interest, taxes
and extraordinary expenses) exceed 1.01% of average daily net assets with
respect to Select Class Shares for three years after the Reorganization.
The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
EXAMPLE: This example helps investors compare the cost of investing
in the Funds with the cost of investing in other mutual funds. The example
assumes:
- you invest $10,000;
- you sell all of your shares at the end of each period;
- your investment has a 5% return each year; and
- each Fund's operating expenses are waived for three years after
the Reorganization and unwaived for the period thereafter and
remain the same as shown above.
7
Although actual costs may be higher or lower, based upon these assumptions your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ----------- ----------- ------------
THE MERGING FUND........................................ $ 102 $ 318 $ 552 $1,225
THE SURVIVING FUND...................................... $ 84 $ 262 $ 455 $1,014
PRO FORMA THE SURVIVING FUND WITH REORGANIZATION
Select Class Shares.................................. $ 103 $ 322 $ 576 $1,306
8
RISK FACTORS
The following discussion highlights the principal risk factors
associated with an investment in the Surviving Fund. The Surviving Fund has
investment policies and investment restrictions, and therefore risks, identical
to those of the Merging Fund. This discussion is qualified in its entirety by
the more extensive discussion of risk factors set forth in the Prospectus and
Statement of Additional Information of the Surviving Fund, which are
incorporated herein by reference.
All mutual funds carry a certain amount of risk. You may lose money on
your investment in the Surviving Fund. The Surviving Fund may not achieve its
objective if JPMIM's expectations regarding particular securities or markets are
not met. In addition, the Surviving Fund's share price and performance will
fluctuate in response to stock market movements. How well the Surviving Fund's
performance compares to that of similar equity funds will depend on the success
of the investment process.
The Surviving Fund could lose money because of foreign government
actions, political instability, or lack of adequate and/or accurate information.
Currency exchange rate movements could reduce gains or create losses.
Adverse market conditions may from time to time cause the Surviving
Fund to take temporary defensive positions that are inconsistent with its
principal investment strategies and may hinder the Surviving Fund from achieving
its investment objective. The Surviving Fund could underperform its benchmark
due to its securities and asset allocation choices.
The Surviving Fund may buy securities before issue or for delayed
delivery.
The Surviving Fund may use derivatives for hedging and for risk
management (i.e. to establish or adjust exposure to particular securities,
markets or currencies.) Risk management may include management of the Surviving
Fund's exposure relative to its benchmark. Derivatives such as futures, options,
swaps and forward foreign currency contracts that are used for hedging the
portfolio or specific securities may not fully offset the underlying positions
and this could result in losses to the Surviving Fund that would not have
otherwise occurred. Derivatives used for risk management may not have the
intended effects and may result in losses or missed opportunities. The
counterparty to a derivatives contract could default. Certain types of
derivatives involve costs to the Surviving Fund which can reduce returns.
Derivatives that involve leverage could magnify losses.
The Surviving Fund may lend some of its portfolio securities in order
to earn income. When the Surviving Fund lends a security, there is a risk that
the loaned securities may not be returned if the borrower defaults. The
collateral the Surviving Fund receives from the borrower will be subject to the
risks of the securities in which it is invested.
The Surviving Fund may purchase illiquid holdings. The Surviving Fund
could have difficulty valuing illiquid holdings precisely. The Surviving Fund
could be unable to sell these holdings at the time or price it desires.
9
The Surviving Fund may engage in short-term trading. Increased trading
could raise the Surviving Fund's brokerage and related costs. Increased
short-term capital gains distributions could raise shareholders' income tax
liability.
An investment in the Surviving Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. You could lose money if you sell when the Surviving
Fund's share price is lower than when you invested.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
DESCRIPTION OF THE REORGANIZATION PLAN
The Reorganization Plan provides that at the Effective Time (as defined
in the Reorganization Plan) of the Reorganization, the assets and liabilities of
the Merging Fund will be transferred to and assumed by the Surviving Fund. In
exchange for the transfer of the assets and the assumption of the liabilities of
the Merging Fund, JPMF will issue at the Effective Time of the Reorganization
full and fractional Select Class Shares of the Surviving Fund equal in aggregate
dollar value to the aggregate net asset value of full and fractional outstanding
shares of the Merging Fund as determined at the valuation time specified in the
Reorganization Plan. The Reorganization Plan provides that the Merging Fund will
declare a dividend or dividends prior to the Effective Time of the
Reorganization which, together with all previous dividends, will have the effect
of distributing to Merging Fund Shareholders all undistributed net investment
income earned and net capital gain realized up to and including the Effective
Time of the Reorganization.
Following the transfer of assets to, and the assumption of the
liabilities of the Merging Fund by, the Surviving Fund, the Merging Fund will
distribute Select Class Shares received by it to the Merging Fund Shareholders
in liquidation of the Merging Fund. Each Merging Fund Shareholder at the
Effective Time of the Reorganization will receive an amount of Select Class
Shares with a total net asset value equal to the net asset value of their
Merging Fund Shares plus the right to receive any dividends or distributions
which were declared before the Effective Time of the Reorganization but that
remained unpaid at that time with respect to the shares of the Merging Fund.
The Surviving Fund expects to maintain most of the portfolio
investments of the Merging Fund in light of the identical investment policies of
the Merging Fund and the Surviving Fund. Concurrently with the Reorganization,
the Surviving Fund will cease to operate under a "master/feeder" structure and
will instead invest directly in portfolio securities rather than in the Master
Portfolio.
10
After the Reorganization, all of the issued and outstanding shares of
the Merging Fund shall be canceled on the books of the Merging Fund and the
stock transfer books of the Merging Fund will be permanently closed.
The Reorganization is subject to a number of conditions, including
without limitation: approval of the Reorganization Plan and the transactions
contemplated thereby described in this Combined Prospectus/Proxy Statement by
the Merging Fund Shareholders; the receipt of a legal opinion from Simpson
Thacher & Bartlett with respect to certain tax issues, as more fully described
in "Federal Income Tax Consequences" below; and the parties' performance in all
material respects of their respective agreements and undertakings in the
Reorganization Plan. Assuming satisfaction of the conditions in the
Reorganization Plan, the Effective Time of the Reorganization will be on August
11, 2001 or such other date as is agreed to by the parties.
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition to the performance of such party under the
Reorganization Plan or a material covenant of the other party is not fulfilled
by the date specified in the Reorganization Plan or if there is a material
default or material breach of the Reorganization Plan by the other party. In
addition, either party may terminate the Reorganization Plan if its trustees
determine that proceeding with the Reorganization Plan is not in the best
interests of their Fund's shareholders.
BOARD CONSIDERATIONS
In 1993, the JPF Board and shareholders approved the restructuring of
the Funds into their current "master-feeder" format, pursuant to which the Funds
(the feeders) invested their assets in a common Portfolio - the "master" - and
shares of each Fund were sold to different categories of investors with
different distribution and shareholder services and fees. Among other reasons
for the 1993 restructuring was the opportunity to obtain the economies of scale
from an investment and expense perspective that might come from the investment
and administration of a larger pool of assets than any one fund could expect to
have on its own. An important factor in the Board's decision at the time was
that non-U.S. investors' assets would be invested alongside those of U.S.
investors within the master Portfolio on a basis that was not disadvantageous to
the non-U.S. investors from a U.S. tax perspective. For various reasons, the
non-U.S. feeders withdrew their assets from the master commencing in 1997,
thereby eliminating one of the principal reasons for the master-feeder format.
Nevertheless, the Funds continued in that format and, the Board believes,
conducted their operations on a basis at least as favorable to the Funds as
would have obtained if the format had been abandoned, as is now proposed.
Following the announcement of the J.P. Morgan-Chase merger, JPMIM and
Morgan and their counterparts within the Chase organization reviewed the
compatibilities of their various mutual fund groups, including their respective
organizational structures, service providers, distribution arrangements and
methodologies, and fees and expenses. The proposed Reorganization of the Merging
Fund into the Surviving Fund is a part of the more general integration of the
J.P. Morgan funds complex with the Chase Vista funds complex to create a
11
single mutual fund complex with substantially similar arrangements for the
provision of advisory, administration, distribution, custody and fund
accounting and transfer agency services.
The JPF Board believes that the conversion by way of the proposed
Reorganization of the current master-feeder format into the multiclass format
discussed in this proxy statement and the adoption of the service arrangements
by the Surviving Fund described herein (the "Service Arrangements") are in the
best interests of the Surviving and Merging Funds and their respective
shareholders and that the interests of shareholders will not be diluted as a
result of the Reorganization.
In considering the proposed Reorganization and Service Arrangements,
the JPF Board also noted that there were important benefits expected to arise
out of the integration of the J.P. Morgan and Chase Vista mutual funds
complexes. Among these benefits, the Board considered (1) investor and
shareholder confusion should be mitigated if not eliminated by the adoption by
both the J.P. Morgan and the Chase Vista mutual funds of common organizational
structures and common service providers, (2) Surviving Fund shareholders would
be able to exchange into a larger number and greater variety of funds without
paying sales charges, (3) additional share classes offered by the Surviving Fund
should have a positive effect on asset growth, which in turn over time could
result in a lower total expense ratio as economies of scale were realized; (4)
JPMIM advised the Board that it believes that the outsourcing of many functions
to the subadministrator will (a) upgrade the quality of services currently being
provided to the Funds, and (b) enhance Morgan's ability effectively to monitor
and oversee the quality of all Fund service providers, including the investment
adviser, distributor, custodian and transfer agent; (5) Morgan's undertaking for
three years to waive fees or reimburse the Surviving Fund's expenses in order
that the total expense ratios of the Select and Institutional Classes do not
exceed those of the Merging Fund and the Surviving Fund, respectively; (6) the
fact that all costs and expenses of the Reorganization and implementation of the
Service Arrangements would be borne by JPMC and (7) the fact that the
Reorganization would constitute a tax-free reorganization.
In addition, the Board took into account that, notwithstanding the
increase in the contract fee rate of Morgan, J.P. Morgan agreed to increase from
one to three years noted above its undertaking to cap the total expense ratio on
the Select and Institutional Classes and to institute a breakpoint in the
Administration fee from .15% of the average daily net assets in the aggregate of
all funds in the fully integrated funds group to .075% of such assets over [$25]
billion (the aggregate of such assets being [$19] billion as of March 31, 2001).
Moreover, JPMIM agreed that, notwithstanding its proposed increase to $1 million
of the minimum investment in the
12
Select Class, all current shareholders of the Merging Fund (for which the
current minimum is $2,500) will be entitled to make additional investments in
the Select Class of the Surviving Fund or of any other fund in the integrated
fund complex or to exchange shares of the Select Class of the Surviving Fund
for Select Shares of any other such fund. The Board also noted that J.P. Morgan
did not propose and advised that it does not expect to propose the imposition
of any distribution (12b-1) fees or shareholder servicing fees on the Select or
Institutional Class that are not already in place. Finally the Board was
advised that the custody and fund accounting fees to be charged by Chase Global
Investors Services will be lower than those currently charged by The Bank of
New York. It should be recognized that, at current asset levels and in
consequence of the expense cap, the lower custody and fund accounting fees will
not have an immediate effect on the Surviving Fund's total expense ratio but
should have some positive effect in the future.
Based upon their evaluation of the relevant information provided to
them, the changes effected in the Service Arrangements in the negotiations
between the Trustees and J.P. Morgan, and in light of their fiduciary duties
under federal and state law, the Trustees, including a majority who are not
interested persons of the Funds or JPMC as defined in the 1940 Act, determined
that the proposed Reorganization is in the best interests of both the Merging
and Surviving Fund, that the interests of the shareholders of each of the
Merging Fund and the Surviving Fund would not be diluted as a result of the
Reorganization, and that the Service Arrangements are in the best interests of
the Surviving Fund.
THE JPF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSAL.
The JPF Board has not determined what action the Merging Fund will take
in the event shareholders do not approve the Reorganization Plan or for any
reason the Reorganization is not consummated. In either such event, the Board
will consider other appropriate courses of action.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that JPF
receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of the Merging Fund to the Surviving Fund in exchange for the Select
Class Shares and the liquidating distributions to shareholders of the Select
Class Shares so received, as described in the Reorganization Plan, will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, the Merging Fund and the Surviving Fund will each be considered
"a party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Merging Fund as a result of such
transaction; (iii) no gain or loss will be recognized by the Surviving Fund as a
result of such transaction; (iv) no gain or loss will be recognized by the
Merging Fund Shareholders on the distribution to the Merging Fund Shareholders
of the Select Class Shares solely in exchange for their Merging Fund Shares; (v)
the aggregate basis of shares of the Surviving Fund received by a shareholder of
the Merging Fund will be the same as the aggregate basis of such Merging Fund
Shareholder's Merging Fund Shares immediately prior to the Reorganization; (vi)
the basis of the Surviving Fund in the assets of the Merging Fund received
pursuant to such transaction will be the same as the basis of such assets in the
hands of the
13
Merging Fund immediately before such transaction; (vii) a Merging Fund
Shareholder's holding period for the Select Class Shares will be determined by
including the period for which such Merging Fund Shareholder held the Merging
Fund Shares exchanged therefor, provided that the Merging Fund Shareholder held
such Merging Fund Shares as a capital asset; and (viii) the Surviving Fund's
holding period with respect to the assets received in the Reorganization will
include the period for which such assets were held by the Merging Fund.
The Master Portfolio currently has an aggregate basis in its assets
that is higher than the aggregate basis of all of the partnership interests
in the Master Portfolio. Upon consummation of the Reorganization, the
Surviving Fund will have an aggregate basis in the assets that it acquires
from the Merging Fund that is equal to the basis of the partnership interest
in the Master Portfolio held by the Merging Fund prior to the Reorganization
rather than the higher aggregate basis that such assets had in the hands of
the Master Portfolio. Thus, the benefit of such higher basis will be lost
upon consummation of the Reorganization.
JPF has not sought a tax ruling from the Internal Revenue Service (the
"IRS"), but is acting in reliance upon the opinion of counsel discussed in the
previous paragraph. That opinion is not binding on the IRS and does not preclude
the IRS from adopting a contrary position. Shareholders should consult their own
advisers concerning the potential tax consequences to them, including state and
local income taxes.
CAPITALIZATION
Because the Merging Fund will be combined with the Surviving Fund in
the Reorganization, the total capitalization of the Surviving Fund after the
Reorganization is expected to be greater than the current capitalization of the
Merging Fund. The following table sets forth as of November 30, 2000: (i) the
capitalization of the Merging Fund; (ii) the capitalization of the Surviving
Fund (iii) the pro forma capitalization of the Surviving Fund as adjusted to
give effect to the Reorganization. There is, of course, no assurance that the
Reorganization will be consummated. Moreover, if consummated, the
capitalizations of the Surviving Fund and the Merging Fund are likely to be
different at the Effective Time of the Reorganization as a result of
fluctuations in the value of portfolio securities of each Fund and daily share
purchase and redemption activity in each Fund. The Surviving Fund currently has
one class of shares. In connection with the Reorganization, this class will be
renamed Institutional Class and the Select Class share class will be introduced.
THE MERGING THE SURVIVING PRO FORMA
FUND FUND COMBINED WITH REORGANIZATION
------------- ----------------- ----------------------------------
Select Institutional
------ -------------
Net Assets 11/30/00..... $ 282,284,506 $373,055,139 $282,284,506 $373,055,139
Beneficial Interest
Outstanding 11/30/00. 11,070,868 26,268,321 - -
Shares Outstanding...... - - 19,876,794 26,268,321
Net Asset Value......... $ 25.50 $ 14.20 $ 14.20 $ 14.20
------------- ------------ ------------ ------------
PURCHASES, REDEMPTIONS AND EXCHANGES
Following the Reorganization, the procedures for purchases, redemptions
and exchanges of shares of the Surviving Fund will be substantially similar to
those of the Merging Fund. The Surviving Fund currently has one class of shares.
In connection with the Reorganization, this class will be renamed "Institutional
Class" and the Select Class share class will be introduced. The following
discussion reflects the new class structure. This section is qualified in its
entirety by the discussion in the Prospectus and Statement of Additional
Information of the Surviving Fund, which are incorporated herein by reference.
14
BUYING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF THE SELECT CLASS
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
The price shareholders pay for their shares is the net asset value per
share (NAV). NAV is the value of everything the Surviving Fund owns, minus
everything it owes, divided by the number of shares held by investors. The
Surviving Fund generally values its assets at fair market values but may use
fair value if market prices are unavailable.
The NAV of each class of the Surviving Fund's shares is generally
calculated once each day at the close of regular trading on the New York Stock
Exchange. A shareholder will pay the next NAV calculated after the J.P. Morgan
Funds Service Center (the "Center") receives that shareholder's order in proper
form. An order is in proper form only after payment is converted into federal
funds.
The Center accepts purchase orders on any business day that the New
York Stock Exchange is open. If an order is received in proper form by the close
of regular trading on the New York Stock Exchange, it will be processed at that
day's price and the purchaser will be entitled to all dividends declared on that
day. If an order is received after the close of regular trading on the New York
Stock Exchange, it will generally be processed at the next day's price. If a
purchaser pays by check for Surviving Fund shares before the close of regular
trading on the New York Stock Exchange, it will generally be processed the next
day the Surviving Fund is open for business.
If a shareholder buys through an agent and not directly from the
Center, the agent could set earlier cut-off times. Each shareholder must provide
a Social Security Number or Taxpayer Identification Number when opening an
account.
The Surviving Fund has the right to reject any purchase order for any
reason.
Select Class Shares of the Surviving Fund generally may be purchased
only through financial service firms, such as broker-dealers and banks that have
an agreement with the Surviving Fund or the Surviving Fund's distributor.
The investment minimum for Select Class Shares is $1,000,000. However,
shareholders who receive Select Class Shares as a result of the Reorganization
may purchase new shares without regard to such investment minimum. For Select
Class Shares, checks should be made out to J.P. Morgan Funds in U.S. dollars.
Credit cards, cash, or checks from a third party will not be accepted. Shares
bought by check may not be sold for 15 calendar days. Shares bought through an
automated clearing house cannot be sold until the payment clears. This could
take more than seven business days. Purchase orders will be canceled if a check
does not clear and the investor will be responsible for any expenses and losses
to the Surviving Fund. Orders by wire will be canceled if the Center does not
receive payment by 4:00 p.m., Eastern time, on the day the shareholder buys.
Shareholders seeking to buy Select Class Shares through an investment
representative should instruct their representative to contact the Surviving
Fund. Such representatives may
15
charge investors a fee and may offer additional services, such as special
purchase and redemption programs, "sweep" programs, cash advances and redemption
checks. Such representative may set different minimum investments and earlier
cut-off times.
A systematic investment plan is available for Select Class Shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE SELECT CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
Select Class Shares of the Surviving Fund may be sold on any day the
Center is open for trading, either directly to the Surviving Fund or through an
investment representative. Shareholders of the Surviving Fund will receive the
next NAV calculated after the Center accepts his or her sale order less any
applicable deferred sales charge.
Under normal circumstances, if a request is received before the close
of regular trading on the New York Stock Exchange, the Surviving Fund will send
the proceeds the next business day. An order to sell shares will not be accepted
if the Surviving Fund has not collected payment for the shares. The Surviving
Fund may stop accepting orders to sell and may postpone payments for more than
seven days, as federal securities laws permit.
Generally, proceeds are sent by check, electronic transfer or wire for
Select Class Shares. However, if a shareholder's address of record has changed
within the 30 days prior to the sale request or if more than $25,000 of shares
is sold by phone, proceeds will be sent by electronic transfer or wire only to
the bank account on the Surviving Fund's records.
For Select Class Shares, a shareholder will need to have his or her
signature guaranteed if he or she wants payment to be sent to an address other
than the one in the Surviving Fund's records. Additional documents or a letter
from a surviving joint owner may also be needed.
A shareholder who purchased through an investment representative, or
through a financial service firm, should contact that representative, who will
send the necessary documents to the Center. The representative might charge a
fee for this service.
Shareholders may also sell their shares by contacting the Center
directly. Select Class shareholders may call __________.
A systematic withdrawal plan is available for Select Class Shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF THE SELECT CLASS
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Select Class Shares of the Surviving Fund may be exchanged for shares
of the same class in certain other J.P. Morgan Funds.
16
For tax purposes, an exchange is treated as a sale of those shares.
Shareholders should carefully read the prospectus of the fund into which they
want to exchange.
The exchange privilege is not a means of short-term trading as this
could increase management cost and affect all shareholders of the Surviving
Fund. The Fund reserves the right to limit the number of exchanges or refuse an
exchange. Each exchange privilege may also be terminated. The Fund charges an
administration fee of $5 for each exchange if an investor makes more than 10
exchanges in a year or three in a quarter.
OTHER INFORMATION CONCERNING THE SURVIVING FUND
For Select Class Shares, the Surviving Fund may close an account if the
balance falls below $________. The Surviving Fund may also close the account if
an investor is in the systematic investment plan and fails to meet investment
minimums over a 12-month period. At least 60 days' notice will be given before
closing the account.
Unless a shareholder indicates otherwise on his or her account
application, the Surviving Fund is authorized to act on redemption and transfer
instructions received by phone. If someone trades on an account by phone, the
Surviving Fund will ask that person to confirm the account registration and
address to make sure they match those in the Surviving Fund records. If they do
correspond, the Surviving Fund is generally authorized to follow that person's
instructions. The Surviving Fund will take all reasonable precautions to confirm
that the instructions are genuine. Investors agree that they will not hold the
Surviving Fund liable for any loss or expenses from any sales request, if the
Surviving Fund takes reasonable precautions. The Surviving Fund will be liable
for any losses to a shareholder from an unauthorized sale or fraud against such
shareholder if the Surviving Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This
may be true at times of unusual market changes and shareholder activity. In that
event, shareholders can mail instructions to the Surviving Fund or contact their
investment representative or agent. The Fund may modify or cancel the sale of
shares by phone without notice.
JPMF, on behalf of the Surviving Fund, has entered into agreements with
certain shareholder servicing agents (including Chase) under which the
shareholder servicing agents agree to provide certain support services to their
customers. For performing these services, each shareholder servicing agent will
receive an annual fee of up to 0.25% of the average daily net assets of the
Select Class Shares held by investors serviced by the shareholder servicing
agent. The Merging Fund likewise has similar arrangements with respect to its
Shares.
JPMIM and/or the Distributor may, at their own expense, make additional
payments to certain selected dealers or other shareholder servicing agents for
performing administrative services for their customers.
The Surviving Fund issues multiple classes of shares. Each class may
have different requirements for who may invest, and may have different sales
charges and expense levels. A person who gets compensated for selling Select
Class Shares may receive a different amount for each class.
17
DISTRIBUTIONS AND TAXES
The Surviving Fund can earn income and realize capital gain. The
Surviving Fund will deduct from these earnings any expenses and then pay to
shareholders the distributions.
The Surviving Fund typically distributes any net investment income
annually. Net capital gain, if any, is distributed annually. You have three
options for your Surviving Fund distributions. You may:
- reinvest all of them in additional Surviving Fund shares;
- take distributions of net investment income in cash or as a
deposit in a pre-assigned bank account and reinvest
distributions of net capital gain in additional shares; or
- take all distributions in cash or as a deposit in a pre-assigned
bank account.
If you don't notify us otherwise, we'll reinvest all distributions. If
your distributions are reinvested, they will be in the form of shares of the
same class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary
income at the federal, state and local levels.
If you receive distributions of net capital gain, the tax rate will be
based on how long the Surviving Fund held a particular asset, not on how long
you have owned your shares. If you buy shares just before a distribution, you
will pay tax on the entire amount of the taxable distribution you receive, even
though the NAV will be higher on that date because it includes the distribution
amount.
Early in each calendar year, the Surviving Fund will send its
shareholders a notice showing the amount of distributions received in the
preceding year and the tax status of those distributions.
The above is only a general summary of tax implications of investing in
the Surviving Fund. Shareholders should consult their tax advisors to see how
investing in the Surviving Fund will affect their own tax situation.
COMPARISON OF THE MERGING FUND'S
AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE
There are no material differences in the organizational structure of
the Merging Fund and the Surviving Fund. Set forth below are descriptions of the
structure, voting rights, shareholder liability and the liability of Trustees.
18
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of JPF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPF's operations are governed by JPF's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Merging Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
STRUCTURE OF THE SURVIVING FUND
The Surviving Fund is organized as a series of JPMF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPMF's operations are governed by JPMF's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Surviving Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
TRUSTEES AND OFFICERS
Subject to the provisions of its trust documents, the business of the
Merging Fund is managed by JPF's Trustees and the business of the Surviving Fund
is managed by JPMF's Trustees, who serve indefinite terms and have all powers
necessary or convenient to carry out their responsibilities.
Information concerning the current Trustees and officers of JPF and
JPMF is set forth in the Funds' respective Statements of Additional Information,
which are incorporated herein by reference.
SHARES OF FUNDS
Each of JPF and JPMF is a trust with an unlimited number of authorized
shares of beneficial interest which may be divided into series or classes
thereof. Each Fund is one series of a trust and may issue multiple classes of
shares. Each share of a series or class of a trust represents an equal
proportionate interest in that series or class with each other share of that
series or class. The shares of each series or class of either JPF or JPMF
participate equally in the earnings, dividends and assets of the particular
series or class. Fractional shares have proportionate rights to full shares.
Expenses of JPF or JPMF that are not attributable to a specific series or class
will be allocated to all the series of that trust in a manner believed by its
board to be fair and equitable. Generally, shares of each series will be voted
separately, for example, to approve an investment advisory agreement. Likewise,
shares of each class of each series will be voted separately, for example, to
approve a distribution plan, but shares of all series and classes vote together,
to the extent required by the 1940 Act, including for the election of Trustees.
Neither JPF nor JPMF is required to hold regular annual meetings of
shareholders, but may hold special meetings from time to time. There are no
conversion or preemptive rights in connection with shares of either JPF or JPMF.
19
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either JPF or JPMF resulting from the
resignation of a Trustee or otherwise may be filled similarly by a vote of a
majority of the remaining Trustees then in office, subject to the 1940 Act. In
addition, Trustees may be removed from office by a vote of holders of shares
representing two-thirds of the outstanding shares of each portfolio of that
trust. A meeting of shareholders shall be held upon the written request of the
holders of shares representing not less than 10% of the outstanding shares
entitled to vote on the matters specified in the written request. Except as set
forth above, the Trustees may continue to hold office and may appoint successor
Trustees.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of either JPF or JPMF could,
under certain circumstances, be held personally liable as partners for the
obligations of that trust. However, the Declaration of Trust of each of JPF and
JPMF disclaims shareholder liability for acts or obligations of that trust and
provides for indemnification and reimbursement of expenses out of trust property
for any shareholder held personally liable for the obligations of that trust.
Each of JPF and JPMF may maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of that trust,
its shareholders, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability generally is limited to circumstances
in which both inadequate insurance existed and the trust itself was unable to
meet its obligations.
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of JPF and JPMF, the Trustees of
that trust are personally liable only for bad faith, willful misfeasance, gross
negligence or reckless disregard of their duties as Trustees. Under the
Declaration of Trust of each of JPF and JPMF, a Trustee or officer will
generally be indemnified against all liability and against all expenses
reasonably incurred or paid by such person in connection with any claim, action,
suit or proceeding in which such person becomes involved as a party or otherwise
by virtue of such person being or having been a Trustee or officer and against
amounts paid or incurred by such person in the settlement thereof.
The foregoing is only a summary of certain organizational and governing
documents and Massachusetts business trust law. It is not a complete
description. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies of the Declaration of
Trust and By-Laws of each of JPF and JPMF are available without charge upon
written request to that trust.
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES
GENERAL INFORMATION
As noted above, the assets of the Surviving Fund currently invested in
the Master Portfolio are managed by JPMIM pursuant to an Advisory Agreement
between JPMIM and the
20
Master Portfolio, and JPMIM is responsible for the day-to-day management of the
Surviving Fund's assets. Following the Reorganization, the Surviving Fund's
assets will be managed directly by JPMIM pursuant to an Advisory Agreement
substantially similar to the agreement between the Master Portfolio and JPMIM.
DESCRIPTION OF JPMIM
JPMIM is an indirect wholly-owned subsidiary of JPMC incorporated under
the laws of Delaware. JPMIM's principal executive offices are located at 522
Fifth Avenue, New York, New York 10036. JPMIM, a registered investment adviser,
manages employee benefit funds of corporations, labor unions and state and local
governments and the accounts of other institutional investors, including
investment companies. As of _______ __, 2001, JPMIM and certain of its
affiliates provided investment management services with respect to assets of
approximately $___ billion.
Under the Advisory Agreement, JPMIM will be responsible for making
decisions with respect to, and placing orders for, all purchases and sales of
the portfolio securities of the Surviving Fund. JPMIM's responsibilities under
the Advisory Agreement will include supervising the Surviving Fund's investments
and maintaining a continuous investment program, placing purchase and sale
orders and paying costs of certain clerical and administrative services involved
in managing and servicing the Surviving Fund's investments and complying with
regulatory reporting requirements. The services to be provided to the Surviving
Fund by JPMIM are substantially similar to the services currently provided to
the Master Portfolio and, therefore, indirectly to the Merging Fund by JPMIM.
EXPENSES AND MANAGEMENT FEES. The Advisory Agreement provides that the
Surviving Fund will pay JPMIM a monthly management fee based upon the net assets
of the Surviving Fund. The annual rate of this management fee is 0.60%. The
Master Portfolio and therefore, indirectly the Merging Fund also currently pays
0.60% of average net assets to JPMIM for its advisory services. JPMIM may waive
fees from time to time.
Under the Advisory Agreement, except as indicated above, the Surviving
Fund is responsible for its operating expenses including, but not limited to,
taxes; interest; fees (including fees paid to its Trustees who are not
affiliated with JPMIM or any of its affiliates); fees payable to the Commission;
state securities qualification fees; association membership dues; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to existing shareholders; management and administrative fees; charges of the
custodian and transfer agent; insurance premiums; auditing and legal expenses;
costs of shareholders' reports and shareholder meetings; any extraordinary
expenses; and brokerage fees and commissions, if any, in connection with the
purchase or sale of portfolio securities.
LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMIM
will not be liable for any error of judgment or mistake of law or for any act or
omission or loss suffered by JPMF or the Surviving Fund in connection with the
performance of the Advisory Agreement except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or from
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties under the Advisory
Agreement.
21
DURATION AND TERMINATION. The Advisory Agreement will continue in
effect from year to year with respect to the Surviving Fund, only so long as
such continuation is approved at least annually by (i) the Board of Trustees of
JPMF or the majority vote of the outstanding voting securities of the Surviving
Fund, and (ii) a majority of those Trustees who are neither parties to the
Advisory Agreement nor "interested persons," as defined in the 1940 Act, of any
such party, acting in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement will terminate automatically in the event
of its "assignment," as defined in the 1940 Act. In addition, the Advisory
Agreement is terminable at any time as to the Surviving Fund without penalty by
the JPMF Board or by vote of the majority of the Surviving Fund's outstanding
voting securities upon 60 days' written notice to JPMIM, and by JPMIM on 90
days' written notice to JPMF.
PORTFOLIO MANAGER
The portfolio management team is led by Marian U. Pardo, managing
director, Alexandra F. Wells, vice president, and Daniel J. Anniello, vice
president. Ms. Pardo has been at J.P. Morgan since 1968, except for five
months in 1998 when she was president of a small investment management firm.
Prior to managing the fund, Ms. Pardo managed small and large cap equity
portfolios, equity and convertible funds, and several institutional portfolios.
Ms. Wells joined the team in March 1998 and has been with J.P. Morgan since
1992. Prior to managing the fund, Ms. Wells managed large cap equity
portfolios, and prior to that served as an equity research analyst. Mr.
Anniello has been a small company portfolio manager since May 2000 and employed
by J.P. Morgan since 1997. Prior to joining J.P. Morgan, Mr. Anniello worked at
Warburg Pincus Asset Management and the U.S. Securities and Exchange
Commission.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
JPMIM places orders for the Surviving Fund for all purchases and sales
of portfolio securities, enters into repurchase agreements, and may enter into
reverse repurchase agreements and execute loans of portfolio securities on
behalf of the Surviving Fund. Fixed income and debt securities and municipal
bonds and notes are generally traded at a net price with dealers acting as
principal for their own accounts without a stated commission. The price of the
security usually includes profit to the dealers. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain securities may be purchased
directly from an issuer, in which case no commissions or discounts are paid.
Portfolio transactions for the Surviving Fund will be undertaken
principally to accomplish the Surviving Fund's objective in relation to expected
movements in the general level of interest rates. The Surviving Fund may engage
in short-term trading consistent with its objectives.
In connection with portfolio transactions, JPMIM intends to seek best
execution on a competitive basis for both purchases and sales of securities.
Subject to the overriding objective of obtaining the best execution of orders,
JPMIM may allocate a portion of the Surviving Fund's brokerage transactions to
affiliates of JPMIM. Under the 1940 Act, persons affiliated with the
22
Surviving Fund and persons who are affiliated with such persons are prohibited
from dealing with the Fund as principal in the purchase and sale of securities
unless a permissive order allowing such transactions is obtained from the
Commission. However, affiliated persons of the fund may serve as its broker in
listed or over-the-counter transactions conducted on an agency basis provided
that, among other things, the fee or commission received by such affiliated
broker is reasonable and fair compared to the fee or commission received by
non-affiliated brokers in connection with comparable transactions. In addition,
the Surviving Fund may not purchase securities during the existence of any
underwriting syndicate for such securities of which JPMIM or an affiliate is a
member or in a private placement in which JPMIM or an affiliate serves as
placement agent except pursuant to procedures adopted by the Board of Trustees
that either comply with rules adopted by the Commission or with interpretations
of the Commission's staff.
Investment decisions made by JPMIM are the product of many factors in
addition to basic suitability for the particular fund or other client in
question. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the same security. The Surviving Fund may
only sell a security to other portfolios or accounts managed by JPMIM or its
affiliates in accordance with procedures adopted by the Trustees.
It also sometimes happens that two or more clients simultaneously
purchase or sell the same security. On those occasions when JPMIM deems the
purchase or sale of a security to be in the best interests of the Surviving
Fund, as well as other clients including other funds, JPMIM, to the extent
permitted by applicable laws and regulations, may, but is not obligated to,
aggregate the securities to be sold or purchased for the Surviving Fund with
those to be sold or purchased for other clients in order to obtain best
execution, including lower brokerage commissions if appropriate. In such event,
allocation of the securities so purchased or sold as well as any expenses
incurred in the transaction will be made by JPMIM in the manner it considers to
be most equitable and consistent with JPMIM's fiduciary obligations to the
Surviving Fund. In some instances, this procedure might adversely affect the
Surviving Fund.
OTHER SERVICES
The Distributor, a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the Merging Fund's distributor and
sub-administrator, is the distributor and sub-administrator for the Surviving
Fund. the Distributor is unaffiliated with JPMC or any of its subsidiaries.
Morgan serves as administrator and shareholder servicing agent, BONY
serves as fund accountant and custodian, and DST serves as transfer agent and
dividend disbursing agent for the Surviving Fund. The services provided by
Morgan and BONY include day-to-day maintenance of certain books and records,
calculation of the offering price of the shares and preparation of reports. In
its role as custodian, BONY will be responsible for the daily safekeeping of
securities and cash held by the Surviving Fund. It is anticipated that prior to
the consummation of the Reorganization, Chase will become the Surviving Fund's
fund accountant and custodian.
In connection with the Reorganization, the administrative fee paid to
Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on complex wide
non-money market assets in excess of $26 billion.
23
PROPOSAL 2:
ELECTION OF TRUSTEES
It is proposed that shareholders of the Merging Fund consider the
election of the individuals listed below (the "Nominees") to the Board of
Trustees of JPF, which is currently organized as a Massachusetts business trust.
Even if the Reorganization described in Proposal 1 is approved, other mutual
funds that are series of JPF will continue to exist and operate. All
shareholders of any series of JPF as of the record date (April 6, 2001) are
required to be given a vote on the proposal regarding Trustees. Because as of
the record date you are still a shareholder in JPF, you are entitled to vote on
this proposal. Shareholders of JPMF are being asked to approve the same Trustees
as are being proposed for JPF.
In connection with the merger of J.P. Morgan & Co. Incorporated and The
Chase Manhattan Corporation, it has been proposed, subject to shareholder
approval, that the Boards of Trustees of the investment companies managed by
JPMIM and their affiliates be rationalized in order to obtain additional
operating efficiencies by having the same Board of Trustees for all of the
funds. Therefore, the Nominees include certain current Trustees of JPF and
certain Trustees of JPMF and their respective Advisory Boards. Each Nominee has
consented to being named in this Proxy Statement and has agreed to serve as a
Trustee if elected.
Shareholders of JPMF are concurrently considering the election of the
same individuals to the Board of Trustees of JPMF. Biographical information
about the Nominees and other relevant information is set forth below. More
information regarding the current Trustees of JPMF and JPF is contained in the
Funds' Statements of Additional Information, which are incorporated herein by
reference.
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
THE JPF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
VOTE REQUIRED
The election of each of the Nominees listed below requires the
affirmative vote of a majority of all the votes entitled to be cast at the
Meeting by all shareholders of JPF.
The following are the nominees:
___________________________________.
24
The Board of Trustees of JPF met four times during the fiscal year
ended May 31, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of JPF presently has an Audit Committee. The
members of the Audit Committee are Messrs. Addy (Chairman), Burns,
Eschenlauer, Mallardi and Healey. The function of the Audit Committee is
to recommend independent auditors and monitor accounting and financial matters.
The Audit Committee met four times during the fiscal year ended May 31, 2000.
* Interested Trustee, as defined by the 1940 Act.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS:
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of JPMIM is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by JPMIM. Each Trustee receives a
fee, allocated among all investment companies for which the Trustee serves.
Each Trustee receives $75,000 annually.
Set forth below is information regarding compensation paid or accrued
during the calendar year ended December 31, 2000 for each Trustee of JPF:
Total Trustee
Aggregate Trustee Compensation Accrued
Compensation Paid by by Fund Complex(1)
the Trust During 2000 During 2000(2)
------------------------- ------------------------
Matthew Healey, Trustee(3), Chairman
and Chief Executive Officer $11,238 $75,000
Frederick S. Addy, Trustee $11,238 $75,000
William G. Burns, Trustee $11,238 $75,000
Arthur C. Eschenlauer, Trustee $11,238 $75,000
Michael P. Mallardi, Trustee $11,238 $75,000
- -----------------------
(1) A Fund Complex means two or more investment companies that hold themselves
out to investors as related companies for purposes of investment and
investment services, or have a common investment adviser or have an
investment adviser that is an affiliated person of the investment adviser
of any of the other investment companies.
(2) No investment company within the Fund Complex has a pension or retirement
plan.
(3) During 2000, Pierpont Group, Inc. paid Mr. Healey, in his role as Chairman
of Pierpont Group, Inc., compensation in the amount of $200,000,
contributed $25,500 to a defined contribution plan on his behalf and paid
$18,400 in insurance premiums for his benefit.
25
The Trustees decide upon general policies and are responsible for
overseeing JPF's business affairs. Each of JPF and the Master Portfolio has
entered into a Fund Services Agreement with Pierpont Group, Inc. to assist the
Trustees in exercising their overall supervisory responsibilities. Pierpont
Group, Inc. was organized in July 1989 to provide services for the J.P. Morgan
Family of Funds (formerly "The Pierpont Family of Funds"), and the Trustees are
the equal and sole shareholders of Pierpont Group, Inc. JPF has agreed to pay
Pierpont Group, Inc. a fee in an amount representing its reasonable costs in
performing these services. These costs are periodically reviewed by the
Trustees. The principal offices of Pierpont Group, Inc. are located at 461
Fifth Avenue, New York, New York 10017. It is anticipated that the Surviving
Fund and the Merging Fund will terminate its agreement with Pierpont Group,
Inc. in connection with the Reorganization.
The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund,
the Surviving Fund and the Master Portfolio during the indicated fiscal periods
are set forth below:
MERGING FUND --For the fiscal years ended May 31, 1998, 1999 and 2000: $9,146,
$5,130 and $4,374, respectively.
SURVIVING FUND -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$15,145, $8,809 and $6,792, respectively.
MASTER PORTFOLIO -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$36,011, $13,942 and $11,170, respectively.
ADVISORY BOARD
The Trustees determined as of January 26, 2000 to establish an advisory
board and appoint four members ("Members of the Advisory Board") thereto. Each
member serves at the pleasure of the Trustees. The advisory board is distinct
from the Trustees and provides advice to the Trustees as to investment,
management and operations of JPF; but has no power to vote upon any matter put
to a vote of the Trustees. The advisory board and the members thereof also serve
each of the other trusts in the Fund Complex. The creation of the Advisory Board
and the appointment of the members thereof was designed so that the Board of
Trustees will continuously consist of persons able to assume the duties of
Trustees and be fully familiar with the business and affairs of JPF, in
anticipation of the current Trustees reaching the mandatory retirement age of
seventy. Each Member of the Advisory Board is paid an annual fee of $75,000 for
serving in this capacity for the Fund Complex and is reimbursed for expenses
incurred in connection for such service. The Members of the Advisory Board may
hold various other directorships unrelated to these funds. The mailing address
of the Members of the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth
Avenue, New York, New York 10017. Their names, principal occupations during the
past five years and dates of birth are set forth below:
Ann Maynard Gray -- Former President, Diversified Publishing Group
and Vice President, Capital Cities/ABC, Inc. Her date of birth is August 22,
1945.
John R. Laird-- Retired; Former Chief Executive Officer, Shearson
Lehman Brothers and The Boston Company. His date of birth is June 21, 1942.
26
Gerard P. Lynch -- Retired; Former Managing Director, Morgan Stanley
Group and President and Chief Operating Officer, Morgan Stanley Services, Inc.
His date of birth is October 5, 1936.
James J. Schonbachler -- Retired; Prior to September, 1998, Managing
Director, Bankers Trust Company and Chief Executive Officer and Director,
Bankers Trust A.G., Zurich and BT Brokerage Corp. His date of birth is January
26, 1943.
PRINCIPAL EXECUTIVE OFFICERS:
The principal executive officers of JPF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------- --------- ------------------------------------------------------------------
Matthew Healey 63 Chief Executive Officer; Chairman, Pierpont Group, since prior to
1993. His address is Pine Tree Country Club Estates, 10286 Saint
Andrews Road, Boynton Beach, Florida 33436.
Margaret W. Chambers 41 Executive Vice President and General Counsel of the Distributor
since April, 1998. From August 1996 to March 1998, Ms. Chambers
was Vice President and Assistant General Counsel for Loomis, Sayles
& Company, L.P. From January 1986 to July 1996, she was an
associate with the law firm of Ropes & Gray.
George A. Rio 46 President and Treasurer. Executive Vice President and Client
Service Director of the Distributor since April 1998. From June
1995 to March 1998, Mr. Rio was Senior Vice President and Senior
Key Account Manager for Putnam Mutual Funds.
ACCOUNTANTS
PricewaterhouseCoopers LLP serves as the Merging Fund's, the Surviving
Fund's and the Master Portfolio's independent accountants, auditing and
reporting on the annual financial statements of each Fund and reviewing certain
regulatory reports and each Fund's federal income tax returns.
PricewaterhouseCoopers LLP also performs other professional accounting,
auditing, tax and advisory services when JPF engages it to do so.
AUDIT FEES. The aggregate fees paid to PricewaterhouseCoopers LLP in
connection with the annual audit of the Merging Fund and the Master Portfolio
for the last calendar year ended was $37,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for financial systems design and implementation services
rendered by PricewaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's
affiliates that provide services to the Fund for the calendar year ended
December 31, 2000 was $0.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services, including fees for tax-related services, rendered by
PricewaterhouseCoopers LLP to the Surviving Fund, JPMIM and JPMIM's affiliates
that provide services to the Fund for the fiscal year ended May 31, 2000 was
$11,029,400.
27
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the JPF Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. JPF's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview. In
addition JPF may retain the services of professional solicitors to aid in the
solicitation of proxies for a fee. It is anticipated that banks, brokerage
houses and other custodians will be requested on behalf of JPF to forward
solicitation materials to their principals to obtain authorizations for the
execution of proxies. Any Merging Fund Shareholder giving a proxy may revoke it
at any time before it is exercised by submitting to JPF a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person.
Only the Merging Fund Shareholders of record at the close of business
on _________, 2001 will be entitled to vote at the Meeting. On that date, there
were outstanding and entitled to be voted _____________ Merging Fund Shares.
Each share or fraction thereof is entitled to one vote or fraction thereof.
The presence in person or by proxy of shareholders that own one-third
of the outstanding Merging Fund Shares will constitute a quorum for purposes of
transacting all business at the Meeting. If a quorum is not present at the
Meeting, sufficient votes in favor of the proposals are not received by the time
scheduled for the Meeting, or the Merging Fund Shareholders determine to adjourn
the Meeting for any other reason, the Merging Fund Shareholders present (in
person or proxy) may adjourn the Meeting from time to time, without notice other
than announcement at the Meeting. Any such adjournment will require the
affirmative vote of the Merging Fund Shareholders holding a majority of the
Merging Fund Shares present, in person or by proxy, at the Meeting. The persons
named in the Proxy will vote in favor of such adjournment those Merging Fund
Shares that they are entitled to vote if such adjournment is necessary to obtain
a quorum or if they determine such an adjournment is desirable for any other
reason. Business may be conducted once a quorum is present and may continue
until adjournment of the Meeting notwithstanding the withdrawal or temporary
absence of sufficient Merging Fund Shares to reduce the number present to less
than a quorum. If the accompanying proxy is executed and returned in time for
the Meeting, the shares covered thereby will be voted in accordance with the
proxy on all matters that may properly come before the meeting (or any
adjournment thereof).
PROXIES
All Merging Fund Shares represented by each properly signed proxy
received prior to the Meeting will be voted at the Meeting. If a Merging Fund
Shareholder specifies how the proxy is to be voted on any of the business to
come before the Meeting, it will be voted in accordance with such
specifications. If a Merging Fund Shareholder returns its proxy but no direction
is made on the proxy, the proxy will be voted FOR each Proposal described in
this Combined
28
Prospectus/Proxy Statement. The Merging Fund Shareholders voting to ABSTAIN on
the Proposals will be treated as present for purposes of achieving a quorum and
in determining the votes cast on the Proposals, but not as having voted FOR the
Proposals. A properly signed proxy on which a broker has indicated that it has
no authority to vote on the Proposals on behalf of the beneficial owner (a
"broker non-vote") will be treated as present for purposes of achieving a quorum
but will not be counted in determining the votes cast on the Proposals.
A proxy granted by any Merging Fund Shareholder may be revoked by such
Merging Fund Shareholder at any time prior to its use by written notice to JPF,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other matters come before the Meeting, proxies will be voted by the persons
named as proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
JPMC, and not the Merging Fund or the Surviving Fund (or shareholders
of either Fund), will bear the cost of solicitation of proxies, including the
cost of printing, preparing, assembling and mailing the Notice of Meeting,
Combined Prospectus/Proxy Statement and form of proxy. In addition to
solicitations by mail, proxies may also be solicited by officers and regular
employees of JPF by personal interview, by telephone or by telegraph without
additional remuneration thereof. Professional solicitors may also be retained.
ABSTENTIONS AND BROKER NON-VOTES
In tallying the Merging Fund Shareholder votes, abstentions and broker
non-votes (i.e., proxies sent in by brokers and other nominees that cannot be
voted on a proposal because instructions have not been received from the
beneficial owners) will be counted for purposes of determining whether or not a
quorum is present for purposes of convening the Meeting. Abstentions and broker
non-votes will be considered to be a vote against each proposal.
INTERESTED PARTIES
On the record date, the Trustees and officers of JPF as a group owned
less than 1% of the outstanding shares of the Merging Fund. On the record date,
the name, address and percentage ownership of the persons who owned beneficially
more than 5% the of shares of the Merging Fund or any class thereof and the
percentage of shares of the Surviving Fund or any class thereof that would be
owned by such persons upon consummation of the Reorganization based upon their
holdings at _______, 2001 are as follows:
29
Amount of Percentage of Percentage of Surviving
Shares Merging Fund Owned Fund Owned Upon
Name and Address Owned on Record Date Consummation
- -------------------------------- ------------ ---------------------- ---------------------------
INTERESTED PARTIES
On the record date, the Trustees and officers of JPMF as a group owned
less than 1% of the outstanding shares of the Surviving Fund. On the record
date, the name, address and percentage ownership of the persons who owned
beneficially more than 5% of shares of the Surviving Fund or any class thereof
and the percentage of shares of the Surviving Fund that would be owned by such
persons upon consummation of the Reorganization based upon their holdings at
_______, 2001 are as follows:
Percentage of
Amount of Surviving Fund Percentage of Surviving
Shares Owned on Record Fund Owned Upon
Name and Address Owned Date Consummation
- ----------------------------------- ------------- ------------------- ---------------------------
ADDITIONAL INFORMATION ABOUT JPF
Information about the Merging Fund is included in its Prospectus, which
is incorporated by reference herein. Additional information about the Merging
Fund is also included in JPF's Statement of Additional Information which has
been filed with the Commission and which is incorporated herein by reference.
Copies of the Statement of Additional information may be obtained without charge
by calling 1-800-521-5411. JPF is subject to the requirements of the 1940 Act
and, in accordance with such requirements, files reports and other information
with the Commission. These materials can be inspected and copied at the Public
Reference Facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at 7 World
Trade Center, Suite 1300, New York, NY 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at
prescribed rates, and are also available on the Commission's web site at
http://www.sec.gov.
ADDITIONAL INFORMATION ABOUT JPMF
Information about the Surviving Fund is included in its Prospectus,
which is incorporated by reference and enclosed herein. Additional information
about the Surviving Fund is also included in JPMF's Statement of Additional
Information which has been filed with the
30
Commission and which is incorporated herein by reference. Copies of the
Statement of Additional information may be obtained without charge by calling
1-800-521-5411. JPMF is subject to the requirements of the 1940 Act and, in
accordance with such requirements, files reports and other information with the
Commission. These materials can be inspected and copied at the Public Reference
Facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center,
Suite 1300, New York, NY 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates,
and are also available on the Commission's web site at http://www.sec.gov.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes
thereto of each of the Merging Fund and the Surviving Fund for the fiscal year
ended May 31, 2000, and the audited financial statements, notes thereto and
supplementary data of the Master Portfolio for the fiscal year ended May 31,
2000, are incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement. The audited
financial highlights, financial statements, notes thereto and supplementary
data, as applicable, for the Merging Fund, the Surviving Fund and the Master
Portfolio have been incorporated herein by reference in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of each of the Merging Fund and the Surviving Fund for the fiscal period
ended November 30, 2000, and the unaudited financial statements, notes thereto
and supplementary data of the Master Portfolio for the fiscal period ended
November 30, 2000, are incorporated by reference herein and into the Statement
of Additional Information related to this Combined Prospectus/Proxy Statement.
OTHER BUSINESS
The JPF Board knows of no other business to be brought before the
Meeting. However, if any other matters come before the Meeting, it is the
intention of the JPF Board that proxies that do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
LITIGATION
Neither JPF nor JPMF is involved in any litigation that would have any
material adverse effect upon either the Merging Fund or the Surviving Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to JPF in writing at the address
on the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-521-5411.
* * *
31
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
32
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this ____
day of ______, 2001 by and among J.P. Morgan Funds (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the J.P. Morgan U.S. Small Company
Fund (the "Transferor Portfolio"), J.P. Morgan Institutional Funds (the
"Acquiring Trust"), a Massachusetts business trust, on behalf of the J.P. Morgan
Institutional U.S. Small Company Fund (the "Acquiring Portfolio"), and J.P.
Morgan Chase & Co..
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends
to provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and
the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR
THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE TRANSFEROR
PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio
listed above, will convey, transfer and deliver to the Acquiring Portfolio all
of the then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Select Class share class in exchange for Shares of the
Transferor Portfolio, with the amounts of shares to be determined by the
parties.
A-1
Any shares of beneficial interest (if any) of the Transferor Portfolio
("Transferor Portfolio Shares") held in the treasury of the Transferor Trust at
the Effective Time of the Reorganization shall thereupon be retired. Such
transactions shall take place on the date provided for in Section 1(b) hereof
(the "Exchange Date"). All computations for the Transferor Portfolio and the
Acquiring Portfolio shall be performed by The Chase Manhattan Bank (the
"Custodian"), as custodian and pricing agent for the Transferor Portfolio and
the Acquiring Portfolio. The determination of said Custodian shall be conclusive
and binding on all parties in interest.
(ii) As of the Effective Time of the Reorganization, the Transferor
Trust will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio Shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the
shares of the Transferor Portfolio held by the Transferor Portfolio
shareholders. Such liquidation and distribution will be accomplished by the
transfer of the Acquiring Portfolio Shares then credited to the account of the
Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts
on the share records of the Acquiring Portfolio in the names of the Transferor
Portfolio Shareholders and representing the respective pro rata number of the
Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will
not issue certificates representing the Acquiring Portfolio Shares in connection
with such exchange.
(iii) As soon as practicable after the Effective Time of the
Reorganization, the Transferor Trust shall take all the necessary steps under
Massachusetts law, the Transferor Trust's Declaration of Trust and any other
applicable law to effect a complete termination of the Transferor Portfolio.
(b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION.
(i) Subject to the satisfaction of the conditions to the
Reorganization specified in this Plan, the Reorganization shall occur as of the
close of regularly scheduled trading on the New York Stock Exchange (the
"Effective Time of the Reorganization") on August 11, 2001, or such later date
as may be agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to
take place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New
York Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the Acquiring
Portfolio duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof.
A-2
(c) VALUATION.
(i) The net asset value of the shares of the Acquiring Portfolio
and the net value of the assets of the Transferor Portfolio to be transferred in
exchange therefore shall be determined as of the Effective Time of the
Reorganization. The net asset value of the Acquiring Portfolio Shares shall be
computed by the Custodian in the manner set forth in the Acquiring Trust's
Declaration of Trust or By-laws and then current prospectus and statement of
additional information and shall be computed to not less than two decimal
places. The net value of the assets of the Transferor Portfolio to be
transferred shall be computed by the Custodian by calculating the value of the
assets transferred by the Transferor Portfolio and by subtracting therefrom the
amount of the liabilities assigned and transferred to the Acquiring Portfolio,
said assets and liabilities to be valued in the manner set forth in the
Transferor Trust's Declaration of Trust or By-laws and then current prospectus
and statement of additional information.
(ii) The number of Select Class shares of the Acquiring Portfolio
to be issued (including fractional shares, if any) by the Acquiring Portfolio in
exchange for the Transferor Portfolio's assets attributable to the Transferor
Portfolio's shares shall be determined by an exchange ratio computed by dividing
the net value of the Transferor Portfolio's assets attributable to its shares by
the net asset value per share of the Select Class shares of the Acquiring
Portfolio, both as determined in accordance with Section 1(c)(i). All
computations of value shall be made by the Custodian in accordance with its
regular practice as pricing agent for the Acquiring Portfolio and the Transferor
Portfolio.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST
The Acquiring Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Acquiring Trust is a
business trust that is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the power to carry
on its business as it is now being conducted. The Acquiring Portfolio is a
validly existing series of shares of such business trust representing interests
therein under the laws of Massachusetts. Each of the Acquiring Portfolio and the
Acquiring Trust have all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Acquiring Trust is
registered under the Investment Company Act of 1940, as amended (the "Act") as
an open-end investment company of the management type; such registration has not
been revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and
statement of additional information of the Acquiring Trust, as amended, included
in the Acquiring Trust's registration statement on Form N-1A filed with the
Securities and Exchange Commission, comply in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the Act and do not contain an untrue statement of a material fact or omit to
A-3
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of November 30, 2000,
there were outstanding 26,268,321 shares of the Acquiring Portfolio, and no
shares of such Portfolio were held in the treasury of the Acquiring Trust. All
of the outstanding shares of the Acquiring Trust have been duly authorized and
are validly issued, fully paid and nonassessable (except as disclosed in the
Acquiring Trust's prospectus and recognizing that under Massachusetts law,
shareholders of an Acquiring Trust portfolio could, under certain circumstances,
be held personally liable for the obligations of such Acquiring Trust
portfolio). Because the Acquiring Trust is an open-end investment company
engaged in the continuous offering and redemption of its shares, the number of
outstanding shares may change prior to the Effective Time of the Reorganization.
All of the issued and outstanding shares of the Acquiring Portfolio have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) FINANCIAL STATEMENTS. The financial statements of the
Acquiring Trust with respect to the Acquiring Portfolio and The U.S. Small
Company Portfolio for the fiscal year ended May 31, 2000, which have been
audited by PricewaterhouseCoopers LLP, fairly present the financial position of
the Acquiring Portfolio and The U.S. Small Company Portfolio as of the dates
thereof and the respective results of operations and changes in net assets for
each of the periods indicated in accordance with generally accepted accounting
principles ("GAAP"). The financial statements of the Acquiring Trust with
respect to the Acquiring Portfolio and The U.S. Small Company Portfolio for the
fiscal period ended November 30, 2000 fairly present the financial position of
the Acquiring Portfolio and The U.S. Small Company Portfolio as of the dates
thereof and the respective results of operations and changes in net assets for
each of the periods indicated in accordance with GAAP.
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring
Portfolio Shares to be issued in connection with the Reorganization will be duly
authorized and upon consummation of the Reorganization will be validly issued,
fully paid and nonassessable (except as disclosed in the Trust's prospectus and
recognizing that under Massachusetts law, shareholders of an Acquiring Trust
portfolio could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on
behalf of the Acquiring Portfolio, has the power to enter into this Plan and to
carry out its obligations hereunder. The execution and delivery of this Plan and
the consummation of the transactions contemplated hereby have been duly
authorized by the Acquiring Trust's Board of Trustees and no other proceedings
by the Acquiring Trust other than those contemplated under this Plan are
necessary to authorize its officers to effectuate this Plan and the transactions
contemplated hereby. The Acquiring Trust is not a party to or obligated under
any provision of its Declaration of Trust or By-laws, or under any indenture or
contract provision or any other commitment or obligation, or subject to any
order or decree, which would be violated by or which would prevent its execution
and performance of this Plan in accordance with its terms.
A-4
(h) LIABILITIES. There are no liabilities of the Acquiring
Portfolio, whether actual or contingent and whether or not determined or
determinable, other than liabilities disclosed or provided for in the Acquiring
Trust's financial statements with respect to the Acquiring Portfolio and
liabilities incurred in the ordinary course of business subsequent to November
30, 2000 or otherwise previously disclosed to the Acquiring Trust with respect
to the Acquiring Portfolio, none of which has been materially adverse to the
business, assets or results of operations of the Acquiring Portfolio.
(i) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has
been no material adverse change in the financial condition, results of
operations, business, properties or assets of the Acquiring Portfolio, other
than those occurring in the ordinary course of business (for these purposes, a
decline in net asset value and a decline in net assets due to redemptions do not
constitute a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Acquiring Trust, threatened which would
adversely affect the Acquiring Trust or the Acquiring Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Acquiring Trust or the
Acquiring Portfolio and, to the knowledge of the Acquiring Trust, there are no
regulatory investigations of the Acquiring Trust or the Acquiring Portfolio,
pending or threatened, other than routine inspections and audits.
(k) CONTRACTS. No default exists under any material contract or
other commitment to which the Acquiring Trust, on behalf of the Acquiring
Portfolio, is subject.
(l) TAXES. The federal income tax returns of the Acquiring Trust
with respect to the Acquiring Portfolio, and all other income tax returns
required to be filed by the Acquiring Trust with respect to the Acquiring
Portfolio, have been filed and all taxes payable pursuant to such returns have
been paid. To the knowledge of the Acquiring Trust, no such return is under
audit and no assessment has been asserted in respect of any such return. All
federal and other taxes owed by the Acquiring Trust with respect to the
Acquiring Portfolio have been paid so far as due. The Acquiring Portfolio has
elected to qualify and has qualified as a "regulated investment company" under
Subchapter M of the Code as of and since its first taxable year and intends to
continue to so qualify.
(m) NO APPROVALS REQUIRED. Except for the Registration Statement
(as defined in Section 4(a) hereof) and the approval of the Transferor
Portfolio's shareholders (referred to in Section 6(a) hereof), no consents,
approvals, authorizations, registrations or exemptions under federal or state
laws are necessary for the consummation by the Acquiring Trust of the
Reorganization, except such as have been obtained as of the date hereof.
A-5
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a
business trust that is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the power to carry
on its business as it is now being conducted. The Transferor Portfolio is a
validly existing series of shares of such business trust representing interests
therein under the laws of Massachusetts. Each of Transferor Portfolio and the
Transferor Trust has all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is
registered under the Act as an open-end investment company of the management
type; such registration has not been revoked or rescinded and is in full force
and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and
statement of additional information of the Transferor Trust, as amended,
included in the Transferor Trust's registration statement on Form N-1A filed
with the Commission, comply in all material respects with the requirements of
the Securities Act and the Act and do not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) CAPITALIZATION. The Transferor Trust has an unlimited number
of authorized shares of beneficial interest, of which as of November 30, 2000
there were outstanding 11,070,868 shares of the Transferor Portfolio, and no
shares of such Portfolio were held in the treasury of the Transferor Trust. All
of the outstanding shares of the Transferor Trust have been duly authorized and
are validly issued, fully paid and nonassessable (except as disclosed in the
Transferor Trust's prospectus and recognizing that under Massachusetts law,
shareholders of a Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such Trust portfolio). Because the
Transferor Trust is an open-end investment company engaged in the continuous
offering and redemption of its shares, the number of outstanding shares may
change prior to the Effective Time of the Reorganization. All such shares will,
at the Exchange Date, be held by the shareholders of record of the Transferor
Portfolio as set forth on the books and records of the Transferor Trust in the
amounts set forth therein, and as set forth in any list of shareholders of
record provided to the Acquiring Portfolio for purposes of the Reorganization,
and no such shareholders of record will have any preemptive rights to purchase
any Transferor Portfolio shares, and the Transferor Portfolio does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Transferor Portfolio shares (other than any existing dividend reinvestment
plans of the Transferor Portfolio or as set forth in this Plan), nor are there
outstanding any securities convertible into any shares of the Transferor
Portfolio (except pursuant to any existing exchange privileges described in the
current prospectus and statement of additional information of the Transferor
Trust). All of the Transferor Portfolio's issued and outstanding shares have
been offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
A-6
(e) FINANCIAL STATEMENTS. The financial statements for the
Transferor Trust with respect to the Transferor Portfolio and The U.S. Small
Company Portfolio for the fiscal year ended May 31, 2000 which have been audited
by PricewaterhouseCoopers LLP fairly present the financial position of the
Transferor Portfolio and The U.S. Small Company Portfolio as of the dates
thereof and the respective results of operations and changes in net assets for
each of the periods indicated in accordance with GAAP. The financial statements
of the Transferor Trust with respect to the Transferor Portfolio and The U.S.
Small Company Portfolio for the fiscal period ended November 30, 2000 fairly
present the financial position of the Transferor Portfolio and The U.S. Small
Company Portfolio as of the dates thereof and the respective results of
operations and changes in net assets for each of the periods indicated in
accordance with GAAP.
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on
behalf of the Transferor Portfolio, has the power to enter into this Plan and to
carry out its obligations hereunder. The execution and delivery of this Plan and
the consummation of the transactions contemplated hereby have been duly
authorized by the Transferor Trust's Board of Trustees and no other proceedings
by the Transferor Trust other than those contemplated under this Plan are
necessary to authorize its officers to effectuate this Plan and the transactions
contemplated hereby. The Transferor Trust is not a party to or obligated under
any provision of its Declaration of Trust or By-laws, or under any indenture or
contract provision or any other commitment or obligation, or subject to any
order or decree, which would be violated by or which would prevent its execution
and performance of this Plan in accordance with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor
Portfolio, whether actual or contingent and whether or not determined or
determinable, other than liabilities disclosed or provided for in the Transferor
Trust's Financial Statements with respect to the Transferor Portfolio and
liabilities incurred in the ordinary course of business subsequent to November
30, 2000 or otherwise previously disclosed to the Transferor Trust with respect
to the Transferor Portfolio, none of which has been materially adverse to the
business, assets or results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has
been no material adverse change in the financial condition, results of
operations, business, properties or assets of the Transferor Portfolio, other
than those occurring in the ordinary course of business (for these purposes, a
decline in net asset value and a decline in net assets due to redemptions do not
constitute a material adverse change).
(i) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Transferor Trust, threatened which would
adversely affect the Transferor Trust or the Transferor Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Transferor Trust or the
Transferor Portfolio and, to the knowledge of the Transferor Trust, there are no
regulatory investigations of the Transferor Trust or the Transferor Portfolio,
pending or threatened, other than routine inspections and audits.
(j) CONTRACTS. The Transferor Trust, on behalf of the Transferor
Portfolio, is not subject to any contracts or other commitments (other than this
Plan) which will not be terminated
A-7
with respect to the Transferor Portfolio without liability to the Transferor
Trust or the Transferor Portfolio as of or prior to the Effective Time of the
Reorganization.
(k) TAXES. The federal income tax returns of the Transferor Trust
with respect to the Transferor Portfolio, and all other income tax returns
required to be filed by the Transferor Trust with respect to the Transferor
Portfolio, have been filed and all taxes payable pursuant to such returns have
been paid. To the knowledge of the Transferor Trust, no such return is under
audit and no assessment has been asserted in respect of any such return. All
federal and other taxes owed by the Transferor Trust with respect to the
Transferor Portfolio have been paid so far as due. The Transferor Portfolio has
elected to qualify as a "regulated investment company" under Subchapter M of the
Code, as of and since its first taxable year, and shall continue to so qualify
until the Effective Time of the Reorganization.
(l) NO APPROVALS REQUIRED. Except for the Registration Statement
(as defined in Section 4(a) hereof) and the approval of the Transferor
Portfolio's shareholders referred to in Section 6(a) hereof, no consents,
approvals, authorizations, registrations or exemptions under federal or state
laws are necessary for the consummation by the Transferor Trust of the
Reorganization, except such as have been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio,
the Acquiring Trust shall file with the Commission a Registration Statement on
Form N-14 (the "Registration Statement") under the Securities Act relating to
the Acquiring Portfolio Shares issuable hereunder and the proxy statement of the
Transferor Portfolio relating to the meeting of the Transferor Portfolio's
shareholders referred to in Section 5(a) herein. At the time the Registration
Statement becomes effective, the Registration Statement (i) will comply in all
material respects with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder (the "Regulations") and (ii) will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes effective, at the
time of the Transferor Portfolio shareholders' meeting referred to in Section
5(a) hereof, and at the Effective Time of the Reorganization, the
prospectus/proxy statement (the "Prospectus") and statement of additional
information (the "Statement of Additional Information") included therein, as
amended or supplemented by any amendments or supplements filed by the Trust,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust
agrees to use all reasonable efforts to effectuate the Reorganization, to
continue in operation thereafter, and to obtain any necessary regulatory
approvals for the Reorganization. The Acquiring Trust shall furnish such data
and information relating to the Acquiring Trust as shall be reasonably requested
for inclusion in the information to be furnished to the Transferor Portfolio
shareholders
A-8
in connection with the meeting of the Transferor Portfolio's shareholders for
the purpose of acting upon this Plan and the transactions contemplated herein.
(c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise
contemplated by this Plan, the Acquiring Trust shall conduct the business of the
Acquiring Portfolio in the ordinary course until the consummation of the
Reorganization, it being understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions.
5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The
Transferor Trust shall call and hold a meeting of the shareholders of the
Transferor Portfolio for the purpose of acting upon this Plan and the
transactions contemplated herein.
(b) PORTFOLIO SECURITIES. With respect to the assets to be
transferred in accordance with Section 1(a), the Transferor Portfolio's assets
shall consist of all property and assets of any nature whatsoever, including,
without limitation, all cash, cash equivalents, securities, claims and
receivables (including dividend and interest receivables) owned, and any
deferred or prepaid expenses shown as an asset on the Transferor Trust's books
maintained on behalf of the Transferor Portfolio. At least five (5) business
days prior to the Exchange Date, the Transferor Portfolio will provide the
Acquiring Trust, for the benefit of the Acquiring Portfolio, with a list of its
assets and a list of its stated liabilities. The Transferor Portfolio shall have
the right to sell any of the securities or other assets shown on the list of
assets prior to the Exchange Date but will not, without the prior approval of
the Acquiring Trust, on behalf of the Acquiring Portfolio, acquire any
additional securities other than securities which the Acquiring Portfolio is
permitted to purchase, pursuant to its investment objective and policies or
otherwise (taking into consideration its own portfolio composition as of such
date). In the event that the Transferor Portfolio holds any investments that the
Acquiring Portfolio would not be permitted to hold, the Transferor Portfolio
will dispose of such securities prior to the Exchange Date to the extent
practicable, to the extent permitted by its investment objective and policies
and to the extent that its shareholders would not be materially affected in an
adverse manner by such a disposition. In addition, the Transferor Trust will
prepare and deliver immediately prior to the Effective Time of the
Reorganization, a Statement of Assets and Liabilities of the Transferor
Portfolio, prepared in accordance with GAAP (each, a "Schedule"). All securities
to be listed in the Schedule for the Transferor Portfolio as of the Effective
Time of the Reorganization will be owned by the Transferor Portfolio free and
clear of any liens, claims, charges, options and encumbrances, except as
indicated in such Schedule, and, except as so indicated, none of such securities
is or, after the Reorganization as contemplated hereby, will be subject to any
restrictions, legal or contractual, on the disposition thereof (including
restrictions as to the public offering or sale thereof under the Securities Act)
and, except as so indicated, all such securities are or will be readily
marketable.
(c) REGISTRATION STATEMENT. In connection with the preparation of
the Registration Statement, the Transferor Trust will cooperate with the
Acquiring Trust and will furnish to the
A-9
Acquiring Trust the information relating to the Transferor Portfolio required by
the Securities Act and the Regulations to be set forth in the Registration
Statement (including the Prospectus and Statement of Additional Information). At
the time the Registration Statement becomes effective, the Registration
Statement, insofar as it relates to the Transferor Portfolio, (i) will comply in
all material respects with the provisions of the Securities Act and the
Regulations and (ii) will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and at the time the Registration
Statement becomes effective, at the time of the Transferor Portfolio's
shareholders' meeting referred to in Section 5(a) and at the Effective Time of
the Reorganization, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed by the Transferor
Trust, insofar as they relate to the Transferor Portfolio, will not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements in or omissions
from the Registration Statement, Prospectus or Statement of Additional
Information made in reliance upon and in conformity with information furnished
by the Transferor Portfolio for use in the registration statement, prospectus or
statement of additional information as provided in this Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust
agrees to use all reasonable efforts to effectuate the Reorganization and to
obtain any necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise
contemplated by this Plan, the Transferor Trust shall conduct the business of
the Transferor Portfolio in the ordinary course until the consummation of the
Reorganization, it being understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable,
but in any case within 60 days after the Exchange Date, the Transferor Trust on
behalf of the Transferor Portfolio, shall prepare a statement of the earnings
and profits of the Transferor Portfolio for federal income tax purposes, and of
any capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan
and the transactions contemplated by the Reorganization shall have been approved
by the requisite vote of the shares of the Transferor Portfolio entitled to vote
on the matter ("Transferor Shareholder Approval").
A-10
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust
shall have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 2(i)) in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio since November 30,
2000.
(c) REGULATORY APPROVAL. The Registration Statement shall have
been declared effective by the Commission and no stop orders under the
Securities Act pertaining thereto shall have been issued, and all other
approvals, registrations, and exemptions under federal and state laws considered
to be necessary shall have been obtained (collectively, the "Regulatory
Approvals").
(d) TAX OPINION. The Transferor Trust shall have received the
opinion of Simpson Thacher & Bartlett, dated on or before the Exchange Date,
addressed to and in form and substance satisfactory to the Transferor Trust, as
to certain of the federal income tax consequences under the Code of the
Reorganization, insofar as it relates to the Transferor Portfolio and the
Acquiring Portfolio, and to shareholders of each Transferor Portfolio (the "Tax
Opinion"). For purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett
may rely exclusively and without independent verification, as to factual
matters, upon the statements made in this Plan, the Prospectus and Statement of
Additional Information, and upon such other written representations as the
President or Treasurer of the Transferor Trust will have verified as of the
Effective Time of the Reorganization. The Tax Opinion will be to the effect
that, based on the facts and assumptions stated therein, for federal income tax
purposes: (i) the Reorganization will constitute a reorganization within the
meaning of section 368(a)(1) of the Code with respect to the Transferor
Portfolio and the Acquiring Portfolio; (ii) no gain or loss will be recognized
by any of the Transferor Portfolio or the Acquiring Portfolio upon the transfer
of all the assets and liabilities, if any, of the Transferor Portfolio to the
Acquiring Portfolio solely in exchange for shares of the Acquiring Portfolio or
upon the distribution of the shares of the Acquiring Portfolio to the holders of
the shares of the Transferor Portfolio solely in exchange for all of the shares
of the Transferor Portfolio; (iii) no gain or loss will be recognized by
shareholders of the Transferor Portfolio upon the exchange of shares of such
Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the
holding period and tax basis of the shares of the Acquiring Portfolio received
by each holder of shares of the Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of shares of
the Transferor Portfolio held by such holder immediately prior to the
Reorganization (provided the shares of the Transferor Portfolio were held as a
capital asset on the date of the Reorganization); and (v) the holding period and
tax basis of the assets of the Transferor Portfolio acquired by the Acquiring
Portfolio will be the same as the holding period and tax basis of those assets
to the Transferor Portfolio immediately prior to the Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the consummation
of the Reorganization are subject to the satisfaction of the following
conditions:
A-11
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The
Transferor Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor
Trust shall have complied with each of its covenants contained herein, each of
the representations and warranties contained herein shall be true in all
material respects as of the Effective Time of the Reorganization (except as
otherwise contemplated herein), and there shall have been no material adverse
change (as described in Section 3(h)) in the financial condition, results of
operations, business, properties or assets of the Transferor Portfolio since
November 30, 2000.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the
Acquiring Portfolio in the Reorganization shall have been approved for
acquisition by J.P. Morgan Investment Management Inc. ("JPMIM"), in its capacity
as investment adviser to the Acquiring Portfolio, as consistent with the
investment policies of the Acquiring Portfolio.
(d) REGULATORY APPROVAL. The Regulatory Approvals shall have been
obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on
behalf of the Transferor Portfolio shall have distributed to the shareholders of
the Transferor Portfolio all of the Transferor Portfolio's investment company
taxable income (determined without regard to the deduction for dividends paid)
as defined in Section 852(b)(2) of the Code for its taxable year ending on the
Exchange Date and all of its net capital gain as such term is used in Section
852(b)(3) of the Code, after reduction by any capital loss carry forward, for
its taxable year ending on the Exchange Date.
(f) TAX OPINION. The Acquiring Trust shall have received the Tax
Opinion.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES
AND REPRESENTATIONS
(a) AMENDMENTS. The parties hereto may, by agreement in writing
authorized by their respective Boards of Trustees amend this Plan at any time
before or after approval hereof by the shareholders of the Transferor Portfolio,
but after such approval, no amendment shall be made which substantially changes
the terms hereof.
(b) WAIVERS. At any time prior to the Effective Time of the
Reorganization, either the Transferor Trust or the Acquiring Trust may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein, except that conditions set forth in Sections 6(c) and 7(d) may
not be waived.
(c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on
behalf of the Transferor Portfolio, may terminate this Plan with respect to the
Transferor Portfolio at any time prior to the Effective Time of the
Reorganization by notice to the Acquiring Trust and JPMIM if (i) a material
condition to the performance of the Transferor Trust hereunder or a material
covenant of the Acquiring Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Acquiring Trust. In
addition, this Plan may be terminated by the Transferor
A-12
Trust at any time prior to the Effective Time of the Reorganization, whether
before or after approval of this Plan by the shareholders of the Transferor
Portfolio, without liability on the part of any party hereto, its Trustees,
officers or shareholders or JPMIM on notice to the other parties in the event
that the Board of Trustees determines that proceeding with this Plan is not in
the best interests of the shareholders of the Transferor Portfolio.
(d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on
behalf of the Acquiring Portfolio, may terminate this Plan with respect to the
Acquiring Portfolio at any time prior to the Effective Time of the
Reorganization by notice to the Transferor Trust and JPMIM if (i) a material
condition to the performance of the Acquiring Trust hereunder or a material
covenant of the Transferor Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Transferor Trust. In
addition, this Plan may be terminated by the Acquiring Trust at any time prior
to the Effective Time of the Reorganization, whether before or after approval of
this Plan by the shareholders of the Transferor Portfolio, without liability on
the part of any party hereto, its Trustees, officers or shareholders or JPMIM on
notice to the other parties in the event that the Board of Trustees determines
that proceeding with this Plan is not in the best interests of the shareholders
of the Acquiring Portfolio.
(e) SURVIVAL. No representations, warranties or covenants in or
pursuant to this Plan, except for the provisions of Section 5(f) and Section 9
of this Plan, shall survive the Reorganization.
9. EXPENSES
The expenses of the Reorganization will be borne by J.P. Morgan Chase &
Co.("JPMC"). Such expenses include, without limitation, (i) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii)
legal fees and (viii) solicitation costs relating to the Reorganization. In
addition, JPMC or an affiliate will waive fees payable to it or reimburse
expenses to the extent necessary such that the actual (post-waiver) total
expense ratios of the Select Class Shares and the Institutional Class Shares of
the Acquiring Portfolio are not higher than those set forth in the Registration
Statement Portfolio for a period of three years after the Exchange Date.
10. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by hand, certified
mail or by facsimile transmission, shall be deemed given when received and shall
be addressed to the parties hereto at their respective addresses listed below or
to such other persons or addresses as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
if to the Transferor Trust (for itself or on behalf of the Transferor
Portfolio):
A-13
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
if to the Acquiring Trust (for itself or on behalf of the Acquiring
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to
have been material and relied upon by the Transferor Trust and the Acquiring
Trust notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each of
which shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance with the
laws of The State of New York.
(d) This Plan shall bind and inure to the benefit of the Transferor
Trust, the Transferor Portfolio, the Acquiring Trust and the Acquiring Portfolio
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the written consent of the other parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this Plan.
A-14
(e) The name "J.P. Morgan Funds" is the designation of its Trustees
under a Declaration of Trust dated November 4, 1992, as amended, and all persons
dealing with the Transferor Trust must look solely to the Transferor Trust's
property for the enforcement of any claims against the Transferor Trust, as none
of the Transferor Trustees, officers, agents or shareholders assumes any
personal liability for obligations entered into on behalf of the Transferor
Trust. No series of the Transferor Trust shall be liable for claims against any
other series of the Transferor Trust.
(f) The name "J.P. Morgan Institutional Funds" is the designation of
its Trustees under a Declaration of Trust dated November 4, 1992, as amended,
and all persons dealing with the Acquiring Trust must look solely to the
Acquiring Trust's property for the enforcement of any claims against the
Acquiring Trust, as none of the Acquiring Trustees, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Acquiring Trust. No series of the Acquiring Trust shall be liable
for claims against any other series of the Acquiring Trust.
A-15
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the
date first above written.
J.P. MORGAN INSTITUTIONAL FUNDS
on behalf of J.P. Morgan Institutional U.S. Small Company Fund
By:
------------------------------------------------
Name:
Title:
J.P. MORGAN FUNDS
on behalf of J.P. Morgan U.S. Small Company Fund
By:
------------------------------------------------
Name:
Title:
Agreed and acknowledged with respect to Section 9:
J.P. MORGAN CHASE & CO.
By:
------------------------------------------------
Name:
Title:
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
J.P. MORGAN U.S. SMALL COMPANY FUND
A SERIES OF J.P. MORGAN FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated May
12, 2001 for the Special Meeting of Shareholders of J.P. Morgan U.S. Small
Company Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPF"), to be
held on July 3, 2001. Copies of the Combined Prospectus/Proxy Statement may be
obtained at no charge by calling J.P. Morgan U.S. Small Company Fund at
1-800-521-5411.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Prospectus/Proxy Statement.
Further information about the Surviving Fund is contained in its
Statement of Additional Information and further information about the Merging
Fund is contained in its Statement of Additional Information, each of which are
incorporated herein by reference.
The date of this Statement of Additional Information is May 12, 2001.
1
GENERAL INFORMATION
The Shareholders of the Merging Fund are being asked to consider and
vote on two proposals.
With respect to an Agreement and Plan of Reorganization (the
"Reorganization Plan") dated as of __________, 2001 by and among JPF, on behalf
of the Merging Fund, JPMF, on behalf of the Surviving Fund, and JPMC, and the
transactions contemplated thereby, the Reorganization Plan contemplates the
transfer of all of the assets and liabilities of the Merging Fund to the
Surviving Fund in exchange for shares issued by JPMF in the Surviving Fund that
will have an aggregate net asset value equal to the aggregate net asset value of
the shares of the Merging Fund that are outstanding immediately before the
Effective Time of the Reorganization.
Following the exchange, the Merging Fund will make a liquidating
distribution of the Surviving Fund shares to its Shareholders, so that a holder
of Shares in the Merging Fund will receive Select Class Shares of the Surviving
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the Effective Time of the
Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees of JPF.
A Special Meeting of Shareholders of the Merging Fund to consider the
proposals and the related transaction will be held at the offices of J.P. Morgan
Chase & Co., 1211 Avenue of the Americas, 41st floor, New York, NY, on July 3,
2001 at 9:00 a.m., Eastern time. For further information about the transaction,
see the Combined Prospectus/Proxy Statement.
2
FINANCIAL STATEMENTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund and the Surviving Fund contained in their respective
Annual Reports dated May 31, 2000, and the audited financial statements, notes
thereto and supplementary data of the Master Portfolio contained in its Annual
Report dated May 31, 2000, are incorporated by reference into this Statement of
Additional Information related to this Combined Prospectus/Proxy Statement. The
audited financial highlights, financial statements, notes thereto and
supplementary data, as applicable, which appear in each of the Surviving Fund's,
the Master Portfolio's and the Merging Fund's Annual Report have been audited by
PricewaterhouseCoopers LLP, whose reports thereon also appear in such Annual
Reports and are also incorporated herein by reference. The financial highlights,
financial statements, notes thereto and supplementary data, as applicable, for
the Merging Fund, the Surviving Fund and the Master Portfolio for the fiscal
year ended May 31, 2000 have been incorporated herein by reference in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
their authority as experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of the Merging Fund and the Surviving Fund contained in their respective
Semi-Annual Reports dated November 30, 2000, and the unaudited financial
statements, notes thereto and supplementary data of the Master Portfolio
contained in its Semi-Annual Report dated November 30, 2000, are incorporated by
reference into this Statement of Additional Information related to this Combined
Prospectus/Proxy Statement.
3
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
NOVEMBER 30, 2000
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 91.5%
CAPITAL MARKETS - 1.0%
SECURITIES & ASSET MANAGEMENT - 1.0%
77,400 American Capital Strategies $ 1,649,588
143,800 Espeed Inc.+ 1,995,224
228,200 Ocwen Financial Corp.+ 1,297,888
67,750 Southwest Securities Group 1,359,234
69,400 Web Street Inc.+ 104,100
----------------
6,406,034
----------------
COMPUTER HARDWARE - 1.2%
COMPUTER HARDWARE & BUSINESS MACHINES - 1.2%
349,800 Lexar Media Inc.+ 1,858,313
133,300 M-Systems Flash Disk Pioneers+ 2,441,056
136,900 Optimal Robotics Corp.+ 3,627,850
----------------
7,927,219
----------------
CONSUMER CYCLICAL - 5.4%
AIRLINES - 1.0%
114,500 SkyWest, Inc. 6,812,749
----------------
APPAREL & TEXTILES - 1.6%
68,200 Coach, Inc.+ 1,508,925
102,400 Vans, Inc.+ 1,548,800
514,800 Wellman Incorporated 6,692,400
----------------
9,750,125
----------------
CONSUMER DURABLES - 0.3%
102,000 Stanley Furniture Co. Inc.+ 2,237,625
----------------
HOTELS - 1.3%
165,000 Anchor Gaming+ 6,228,750
149,000 Boca Resorts Inc. Cl A+ 2,281,563
----------------
8,510,313
----------------
MOTOR VEHICLES & PARTS - 1.0%
53,500 Borg-Warner Automotive, Inc. 1,959,438
93,000 Gentex Corp.+ 1,615,875
147,000 Monaco Coach Corp.+ 2,223,375
104,600 National R.V. Holdings, Inc.+ 954,475
----------------
6,753,163
----------------
RESTAURANTS - 0.2%
35,100 California Pizza Kitchen Inc.+ 1,066,163
----------------
35,130,138
----------------
CONSUMER SERVICES - 2.7%
ENTERTAINMENT - 0.2%
118,000 American Classic Voyages Co.+ 1,548,750
----------------
LEISURE - 1.9%
145,900 Concord Camera Corp.+ 2,918,000
91,800 Penn National Gaming Inc.+ 1,457,325
262,300 Station Casinos, Inc.+ 4,885,337
152,100 WMS Industries Inc.+ 2,671,256
----------------
11,931,918
----------------
MEDIA - 0.6%
159,400 HEARST-ARGYLE Television Inc.+ 2,879,163
101,800 Insight Communications Co., Inc.+ 1,342,488
----------------
4,221,651
----------------
17,702,319
----------------
CONSUMER STABLE - 1.8%
FOOD & BEVERAGE - 0.9%
139,800 Keebler Foods Co. 5,758,013
----------------
HOME PRODUCTS - 0.9%
156,400 Alberto-Culver Co. Cl B 5,728,150
----------------
11,486,163
----------------
ENERGY - 5.3%
ENERGY RESERVES & PRODUCTION - 2.2%
128,200 Abraxas Petroleum Corp.+ 360,563
174,600 Newfield Exploration Co.+ 6,372,899
63,500 Precise Software Solutions Ltd.+ 1,738,313
161,100 Spinnaker Exploration Co.+ 4,188,600
113,000 Westport Resources Corp.+ 1,991,625
----------------
14,652,000
----------------
OIL SERVICES - 3.1%
127,200 Core Laboratories N.V.+ 2,528,100
130,500 Global Industries, Ltd.+ 1,321,313
89,100 Gulf Island Fabrication, Inc.+ 1,414,463
507,100 McDermott International, Inc. 4,563,900
250,200 National-Oilwell, Inc.+ 7,975,124
40,600 Smith International, Inc.+ 2,357,338
----------------
20,160,238
----------------
34,812,238
----------------
FINANCE - 6.9%
BANKS - 2.1%
119,400 City National Corp. 3,947,663
95,000 Hamilton Bancorp Inc.+ 623,438
151,800 National Commerce Bancorporation 3,339,600
220,200 Net.B@nk, Inc.+ 1,486,350
164,400 Pacific Century Financial Corp. 2,445,450
51,600 Westamerica Bancorporation 1,757,625
----------------
13,600,126
----------------
FINANCIAL SERVICES - 3.5%
398,800 Allied Capital Corp. 8,150,474
114,200 American Home Mortgage Holdings Inc.+ 478,213
187,300 Doral Financial Corp. 3,535,288
256,100 Heller Financial, Inc. 6,770,643
151,900 Medallion Financial Corp. 1,784,825
48,000 MicroFinancial Inc. 504,000
275,700 NextCard Inc.+ 2,291,756
----------------
23,515,199
----------------
The Accompanying Notes are an Integral Part of the Financial Statements.
4
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
(CONTINUED)
NOVEMBER 30, 2000
SHARES VALUE
- -------------------------------------------------------------------------------
THRIFTS - 1.3%
120,200 Bank United Corp. $ 6,979,112
129,200 Waypoint Financial Corp.+ 1,187,025
8,166,137
----------------
45,281,462
----------------
HEALTH SERVICES & SYSTEMS - 4.2%
MEDICAL PRODUCTS & SUPPLIES - 1.6%
21,600 Ciphergen Biosystems Inc.+ 237,600
146,700 Cyberonics, Inc.+ 3,245,738
164,400 I-STAT Corp.+ 3,061,950
59,800 Physiometrix, Inc.+ 964,275
176,200 Staar Surgical Co.+ 2,444,775
23,600 Wilson Greatbatch Technologies Inc.+ 564,925
----------------
10,519,263
----------------
MEDICAL PROVIDERS & SERVICES - 2.6%
73,750 Accredo Health Inc.+ 2,968,438
107,900 Charles River Laboratories+ 2,306,363
95,300 Deltagen Inc.+ 1,143,600
429,400 Hooper Holmes, Inc. 4,289,705
178,900 Omnicare, Inc. 2,929,488
113,900 Triad Hospitals Inc.+ 3,402,762
----------------
17,040,356
----------------
27,559,619
----------------
INDUSTRIAL CYCLICAL - 20.9%
CHEMICALS - 2.9%
216,400 Albemarle Corp. 4,774,324
308,060 GenTek Inc. 4,505,377
273,300 Georgia Gulf Corp. 3,399,169
108,300 Minerals Technologies Inc. 3,655,125
501,500 PolyOne Corp. 2,789,594
----------------
19,123,589
----------------
CONSTRUCTION & REAL PROPERTY - 0.7%
127,500 Catellus Development Corp.+ 2,342,813
158,750 Elcor Corp. 2,182,813
----------------
4,525,626
----------------
DEFENSE/AEROSPACE - 0.3%
87,600 Ectel Ltd.+ 996,450
62,600 Innovative Solutions+ 829,450
----------------
1,825,900
----------------
ELECTRICAL EQUIPMENT - 5.1%
211,600 Advanced Fibre Communications, Inc.+ 5,475,149
146,700 August Technology Corp.+ 1,687,050
34,800 Bruker Daltronics Inc.+ 630,750
201,900 C-Cube Microsystems Inc.+ 3,053,738
35,100 Caliper Technologies Corp.+ 1,555,369
86,500 DDi Corp.+ 1,903,000
46,700 Ditech Communications Corp.+ 732,606
39,600 L-3 Communications Holdings, Inc.+ 2,559,150
201,100 Meade Corp.+ 1,709,350
35,300 Millipore Corp. 1,584,088
61,400 Molecular Devices Corp.+ 3,000,925
108,100 Oplink Communications Inc.+ 851,288
69,100 Polycom, Inc.+ 2,336,444
88,900 Power-One Inc.+ 3,761,581
61,100 Transgenomic, Inc.+ 500,256
18,000 Ulticom Inc.+ 569,250
81,900 Vyyo Inc.+ 721,744
----------------
32,631,738
----------------
ENVIRONMENTAL SERVICES - 0.1%
22,900 Eden Bioscience Corp.+ 798,638
----------------
FOREST PRODUCTS & PAPER - 2.9%
48,200 Bowater Inc. 2,569,663
323,700 Buckeye Technologies Inc.+ 4,086,713
325,800 Caraustar Industries Inc. 2,871,113
537,400 Pactiv Corp.+ 6,280,862
229,900 Universal Forest Products 2,945,594
----------------
18,753,945
----------------
HEAVY ELECTRICAL EQUIPMENT - 0.2%
83,600 Active Power Inc.+ 1,144,275
----------------
INDUSTRIAL PARTS - 3.4%
59,500 Capstone Turbine Corp.+ 1,100,750
77,200 Flowserve Corp.+ 1,616,375
99,600 Idex Corp. 3,218,325
116,200 Kennametal Inc. 3,333,488
153,200 Mettler-Toledo International, Inc.+ 7,190,824
93,600 Shaw Group Inc. (The)+ 5,768,099
----------------
22,227,861
----------------
INDUSTRIAL SERVICES - 2.3%
102,000 Gatx Corp. 4,793,999
267,900 On Assignment Inc.+ 6,714,243
43,900 Universal Compression Holdings Inc.+ 1,443,213
218,400 Willis Lease Finance Corp.+ 1,856,400
----------------
14,807,855
----------------
MINING & METALS - 1.2%
155,900 Mueller Industries, Inc.+ 3,585,700
228,000 Valmont Industries, Inc. 4,189,500
----------------
7,775,200
----------------
TRUCKING & SHIPPING & AIR FREIGHT - 1.8%
139,900 C.H. Robinson Worldwide, Inc. 7,921,837
288,825 Werner Enterprises Inc. 4,079,653
----------------
12,001,490
----------------
135,616,117
----------------
INSURANCE - 3.9%
LIFE & HEALTH INSURANCE - 2.1%
24,600 MIIX Group Inc. 164,513
117,200 Nationwide Financial Services Inc. 4,812,525
242,700 Protective Life Corp. 5,824,800
64,900 Stancorp Financial Group 2,806,925
----------------
13,608,763
----------------
The Accompanying Notes are an Integral Part of the Financial Statements.
5
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(CONTINUED)
NOVEMBER 30, 2000
SHARES VALUE
- --------------------------------------------------------------------------------
PROPERTY AND CASUALTY INSURANCE - 1.8%
97,400 Berkley (W.R.) Corp. $ 3,494,225
112,800 Renaissancere Holdings Ltd. 8,178,000
----------------
11,672,225
----------------
25,280,988
----------------
PHARMACEUTICALS - 9.3%
DRUGS - 9.3%
30,100 3 Dimensional Pharmaceutical, Inc.+ 387,538
84,000 Abgenix, Inc.+ 4,100,250
39,800 Adolor Corp.+ 825,228
224,800 Akorn Inc.+ 1,067,800
30,600 Arena Pharmaceuticals, Inc.+ 596,700
175,000 Bindley Western Industries Inc. 5,512,499
67,800 COR Therapeutics, Inc.+ 2,402,663
59,400 Corixa Corp.+ 1,859,963
40,600 Diversa Corp.+ 786,625
26,200 Durect Corp.+ 353,700
70,900 Enzon, Inc.+ 3,957,106
37,900 Gilead Sciences, Inc.+ 3,086,481
106,000 Human Genome Sciences, Inc.+ 6,591,874
33,500 IDEC Pharmaceuticals Corp.+ 5,831,093
41,900 Immunogen Inc.+ 1,055,356
50,100 Inhale Therapeutic Systems Inc.Inc.+ 1,928,850
371,000 Ligand Pharmaceuticals Inc. Cl B+ 4,660,688
17,500 Maxygen Inc.+ 528,281
71,300 MediChem Life Sciences, Inc.+ 356,500
100,600 Neurocrine Biosciences Inc.+ 2,923,688
22,000 OSI Pharmaceuticals, Inc.+ 1,234,750
70,000 POZEN Inc.+ 1,023,750
19,600 Priority Healthcare Corp. Cl B+ 534,100
54,500 Trimeris Inc.+ 3,726,438
94,000 Vertex Pharmaceuticals, Inc.+ 5,252,250
----------------
60,584,171
----------------
REAL ESTATE INVESTMENT TRUSTS - 4.1%
REAL ESTATE INVESTMENT TRUST - 4.1%
67,700 Arden Realty Inc. 1,654,419
106,300 Centerpoint Properties Corp. 4,916,375
220,050 Cousins Properties Inc. 6,065,127
97,300 General Growth Properties, Inc. 3,198,738
121,100 Manufactured Home Communities, Inc. 3,072,913
165,000 Mission West Properties Inc. 2,145,000
173,700 Post Properties, Inc. 5,981,794
----------------
27,034,366
----------------
RETAIL - 3.5%
CLOTHING STORES - 1.5%
169,000 Abercrombie & Fitch Co. Cl A+ 3,527,875
271,400 Pacific Sunwear of California, Inc.+ 6,038,650
----------------
9,566,525
----------------
SPECIALTY STORES - 2.0%
48,300 BJ's Wholesale Club Inc.+ 1,621,069
130,000 Cost Plus, Inc.+ 3,477,500
284,900 Genesco Inc.+ 6,071,931
113,300 School Specialty Inc.+ 1,876,531
----------------
13,047,031
----------------
22,613,556
----------------
SEMICONDUCTORS - 2.7%
SEMICONDUCTORS - 2.7%
43,600 Alliance Fiber Optics Products Inc.+ 250,700
92,700 AXT, Inc.+ 2,786,794
206,900 Exar Corp.+ 5,198,362
11,700 Genesis Microchip Inc.+ 105,483
124,700 hi/fn, inc.+ 4,091,718
100,800 Integrated Circuit Systems, Inc.+ 1,600,200
46,700 JNI Corp.+ 1,868,000
15,500 Lattice Semiconductor Corp.+ 257,688
5,000 Optical Communications Products, Inc.+ 51,250
254,500 Silicon Image Inc.+ 1,622,438
----------------
17,832,633
----------------
SOFTWARE & SERVICES - 13.7%
COMPUTER SOFTWARE - 7.5%
110,100 Agile Software Corp.+ 5,080,082
144,300 CBT Group Public Ltd. Co. ADR(i)+ 4,626,618
183,300 Certicom Corp.+ 3,024,450
171,800 click2learn.com, Inc.+ 1,771,688
93,500 Dendrite International, Inc.+ 1,583,656
57,400 Eclipsys Corp. 1,281,690
15,200 Excalibur Technologies Corp.+ 338,200
74,400 Informatica Corp.+ 5,198,699
105,600 Internet Security Systems+ 7,801,199
99,700 MetaSolv Software Inc.+ 822,525
165,000 Peregrine Systems, Inc.+ 2,681,250
26,000 Precise Software Solutions Ltd.+ 728,000
91,800 Retek Inc.+ 1,916,325
98,600 SeeBeyond Technology Corp.+ 850,425
108,300 Synquest Inc.+ 727,641
55,000 Telecommunication Systems Inc.+ 457,188
129,100 U.S. Wireless Corp.+ 661,638
69,100 Watchguard Tech Inc.+ 1,572,025
113,200 Webtrends Corp.+ 2,865,375
84,300 Wind River Systems, Inc.+ 3,372,000
129,100 Witness Systems Inc.+ 1,702,506
----------------
49,063,180
----------------
INFORMATION SERVICES - 3.2%
105,200 Corillian Corp.+ 1,091,450
64,700 Costar Group Inc.+ 1,443,619
165,500 Diamond Technology Partners Inc.+ 5,233,937
137,100 eFunds Corp.+ 1,156,781
28,300 Exelixis Inc.+ 410,350
The Accompanying Notes are an Integral Part of the Financial Statements.
6
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -------------------------------------------------------------------------------
(CONTINUED)
NOVEMBER 30, 2000
SHARES VALUE
- -------------------------------------------------------------------------------
110,900 Getty Images Inc.+ $ 3,091,338
95,840 Obie Media Corp.+ 527,120
29,600 SBA Communications Corp.+ 1,102,600
205,400 Source Information Management Co.+ 1,027,000
111,300 Symyx Technologies Inc.+ 3,492,037
56,107 Valassis Communications, Inc.+ 1,567,489
29,500 Wireless Facilities, Inc.+ 942,156
----------------
21,085,877
----------------
INTERNET - 3.0%
412,700 Ameritrade Holding Corp. Cl A+ 3,404,775
130,800 Apropos Technology, Inc.+ 727,575
55,000 Clarent Corp.+ 660,000
143,500 Digitalthink Inc.+ 1,569,531
53,750 E.piphany, Inc.+ 2,108,008
23,210 Inet Technologies Inc.+ 719,510
45,700 internet.com Corp.+ 337,038
15,400 Interwoven Inc.+ 847,963
40,350 Netegrity Inc.+ 1,863,666
32,200 Nuance Communications+ 984,113
176,800 Saba Software, Inc.+ 2,408,900
28,900 SafeNet, Inc.+ 1,089,169
157,900 Tumbleweed Communications Corp.+ 2,348,763
32,400 WorldGate Communications, Inc.+ 228,825
----------------
19,297,836
----------------
89,446,893
----------------
TELECOMMUNICATIONS - 0.8%
TELEPHONE - 0.7%
30,900 Advanced Switching Communications, Inc.+ 137,119
48,550 Dycom Industries, Inc.+ 1,814,556
236,700 FLAG Telecom Holdings Ltd.+ 1,893,600
132,100 Turnstone Systems Inc.+ 796,728
----------------
4,642,003
----------------
WIRELESS TELECOMMUNICATIONS - 0.1%
23,000 Boston Communications Group, Inc.+ 468,625
5,400 TeleCorp PCS, Inc. Cl A+ 101,925
----------------
570,550
----------------
5,212,553
----------------
UTILITIES - 4.1%
ELECTRICAL UTILITY - 2.6%
203,700 Cleco Corp. 9,535,706
283,200 CMS Energy Corp. 7,876,500
----------------
17,412,206
----------------
GAS & WATER UTILITIES - 1.5%
194,700 Atmos Energy Corp. 4,891,838
114,800 Kinder Morgan, Inc. 4,757,025
----------------
9,648,863
----------------
27,061,069
----------------
TOTAL COMMON STOCKS 596,987,538
(Cost $598,455,473) ----------------
SHARES/PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
CONVERTIBLE BONDS - 0.1%
SOFTWARE & SERVICES - 0.1%
COMPUTER SOFTWARE - 0.1%
$ 750,000 Peregrine Systems Inc., 144A, 5.50%,
11/15/07 $ 656,250
----------------
(Cost $750,000)
CORPORATE BONDS - 0.1%
SOFTWARE & SERVICES - 0.1%
INTERNET - 0.1%
$1,322,000 Online Resources & Communications Corp.,
144A, 8.00%, 9/30/05 965,060
----------------
(Cost $1,322,000)
PREFERRED STOCKS - 0.1%
CONSUMER SERVICES - 0.1%
LEISURE - 0.1%
25,900 Amcv Capital Trust I, 7.00%, 2/15/15 734,913
----------------
(Cost $1,295,000)
SHORT-TERM INVESTMENTS - 8.2%
INVESTMENT COMPANIES - 8.2%
53,880,874 J.P. Morgan Institutional Prime
Money Market(a) 53,880,874
----------------
(Cost $53,880,874)
TOTAL INVESTMENT SECURITIES - 100.0% $ 653,224,635
================
(Cost $655,703,347)
ADR - American Depositary Receipt
144A - Securities restricted for resale to Qualified Institutional Buyers
(a) Money Market mutual fund registered under the Investment Company Act
of 1940, as amended, and advised by J.P. Morgan Investment Management, Inc.
(i) Foreign security
+ Non-income producing
The Accompanying Notes are an Integral Part of the Financial Statements.
16
7
J.P. Morgan U.S. Small Company Fund/J.P. Morgan Institutional U.S. Small Company
Fund/The U.S. Small Company Portfolio
Pro Forma Combining Statement of Assets and Liabilities
As of November 30, 2000
(Unaudited)
J.P. Morgan U.S. J.P. Morgan Institutional The U.S. Small
Small Company U.S. Small Company Company Portfolio
Fund Fund
ASSETS:
Investments at Value (Cost $655,703,347) $ -- $ -- $ 653,224,635
Investment in the U.S. Small Company Portfolio, at Value 282,457,087 373,274,007 --
Cash -- -- 4,685,200
Receivable for Investments Sold -- -- 8,675,757
Dividend and Interest Receivable -- -- 672,455
Receivable for Shares of Beneficial Interest Sold 139,322 134,535 --
Prepaid Trustees' Fees and Expenses 772 384 541
Prepaid Expenses and Other Assets 485 810 1,288
----------------------------------------------------------------------
Total Assets 282,597,666 373,409,736 667,259,876
----------------------------------------------------------------------
LIABILITIES:
Payable for Investments Purchased -- -- 10,640,710
Payable for Shares of Beneficial Interest Redeemed 223,216 253,381 --
Advisory Fee Payable -- -- 364,007
Shareholder Servicing Fee Payable 65,362 34,469 --
Administrative Services Fee Payable 6,202 8,177 14,391
Fund Services Fee Payable 215 280 495
Administration Fee Payable 118 164 663
Accrued Expenses and Other Liabilities 18,047 58,126 57,779
----------------------------------------------------------------------
Total Liabilities 313,160 354,597 11,078,045
----------------------------------------------------------------------
NET ASSETS:
Paid-in Capital 261,138,924 321,656,572
Undistributed Net Investment Income 478,836 962,181
Accumulated Net Realized Gain (Loss) on Investment 25,947,837 47,566,747
Net Unrealized (Depreciation) Appreciation on Investment (5,281,091) 2,869,639
----------------------------------------------------------------------
Net Assets $ 282,284,506 $ 373,055,139 $ 656,181,831
======================================================================
Shares of Beneficial Interest Outstanding 11,070,868 26,268,321
Net Assets Value Per Share $25.50 $14.20
PRO FORMA WITH REORGANIZATION
JPMORGAN U.S. SMALL COMPANY FUND
Shares Outstanding
Select
Institutional
Net Asset Value Per Share
Select
Institutional
======================================================================
Pro Forma Combined
Pro Forma JPMorgan U.S. Small
Adjustments Company Fund
ASSETS:
Investments at Value (Cost $655,703,347) $ -- $ 653,224,635
Investment in the U.S. Small Company Portfolio, at Value (655,731,094) (a) --
Cash (450,737) (d) 4,234,463
Receivable for Investments Sold -- 8,675,757
Dividend and Interest Receivable -- 672,455
Receivable for Shares of Beneficial Interest Sold -- 273,857
Prepaid Trustees' Fees and Expenses -- 1,697
Prepaid Expenses and Other Assets -- 2,583
------------------------------------------
Total Assets (656,181,831) 667,085,447
------------------------------------------
LIABILITIES:
Payable for Investments Purchased -- 10,640,710
Payable for Shares of Beneficial Interest Redeemed -- 476,597
Advisory Fee Payable -- 364,007
Shareholder Servicing Fee Payable -- 99,831
Administrative Services Fee Payable -- 28,770
Fund Services Fee Payable -- 990
Administration Fee Payable -- 945
Accrued Expenses and Other Liabilities -- 133,952
------------------------------------------
Total Liabilities -- 11,745,802
------------------------------------------
NET ASSETS:
Paid-in Capital -- 582,795,496
Undistributed Net Investment Income -- 1,441,017
Accumulated Net Realized Gain (Loss) on Investment -- 73,514,584
Net Unrealized (Depreciation) Appreciation on Investment -- (2,411,452)
------------------------------------------
Net Assets $ (656,181,831) $ 655,339,645
==========================================
Shares of Beneficial Interest Outstanding (37,339,189) (c) 37,339,189
Net Assets Value Per Share
PRO FORMA WITH REORGANIZATION
JPMORGAN U.S. SMALL COMPANY FUND
Shares Outstanding
Select 19,876,794 (b) 19,876,794
Institutional 26,268,321 (b) 26,268,321
Net Asset Value Per Share
Select $ 14.20
Institutional $ 14.20
==========================================
(a) Reallocation of investments from the feeder funds to master
portfolio.
(b) The difference in number of shares outstanding due to the
Reorganization.
(c) Reallocation of feeder fund's beneficial interest to Select and
Institutional Shares due to the Reorganization.
(d) Reflects the redemption in cash of the J.P. Morgan US Small
Company - Advisor Series Fund.
See Notes to Pro Forma Financial Statements
8
J.P. Morgan U.S. Small Company Fund/J.P. Morgan Institutional U.S. Small Company
Fund/The U.S. Small Company Portfolio
Pro Forma Combining Statement of Operations
For the Twelve Months Ended November 30, 2000
(Unaudited)
J.P. Morgan U.S. J.P. Morgan Institutional The U.S. Small
Small Company U.S. Small Company Company Portfolio
Fund Fund
INCOME:
Allocated Investment Income From Portfolio $ 3,628,110 $ 4,828,527 $ --
Dividend Income -- -- 5,440,898
Interest Income -- -- 2,960,007
Dividend Income from Affiliated Investments -- -- 56,445
Allocated Portfolio Expenses (2,106,556) (2,818,868) --
---------------------------------------------------------------------------
Investment Income 1,521,554 2,009,659 8,457,350
---------------------------------------------------------------------------
EXPENSES:
Advisory Fee -- -- 4,467,853
Shareholder Servicing Fee 800,714 429,702 --
Administrative Services Fee 77,522 104,074 181,651
Custodian Fees and Expenses -- -- 191,545
Transfer Agent Fees 48,507 22,341 --
Registration Fees 20,152 30,225 --
Professional Fees 13,247 14,078 45,663
Printing Expenses 9,445 13,844 9,616
Fund Services Fee 4,900 6,650 11,552
Trustees' Fees and Expenses 4,193 6,725 11,090
Line of Credit Expense 7,940 11,150 --
Financial and Fund Accounting Services Fee 15,041 15,041 --
Administration Fee 3,527 4,757 5,187
Distribution Fee -- -- --
Miscellaneous 69,052 20,324 1,590
---------------------------------------------------------------------------
Total Expenses 1,074,240 678,911 4,925,747
---------------------------------------------------------------------------
Less: Amounts waived
Less: Reimbursement of Expenses -- (39,002) --
---------------------------------------------------------------------------
Net Expenses 1,074,240 639,909 4,925,747
---------------------------------------------------------------------------
Net Investment Income 447,314 1,369,750 3,531,603
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) 37,710,615 54,383,232 92,093,795
Change in net unrealized depreciation (67,110,545) (84,246,554) (151,424,373)
---------------------------------------------------------------------------
Net decrease in net assets from operations $ (28,952,616) $ (28,493,572) $ (55,798,975)
===========================================================================
Pro Forma Combined
Pro Forma JPMorgan U.S. Small
Adjustments Company Fund
INCOME:
Allocated Investment Income From Portfolio $ (8,456,637) (c) $ --
Dividend Income (713) (f) 5,440,185
Interest Income 2,960,007
Dividend Income from Affiliated Investments 56,445
Allocated Portfolio Expenses 4,925,424 (b) --
------------------------------------------
Investment Income (3,531,926) 8,456,637
------------------------------------------
EXPENSES:
Advisory Fee (323) (f) 4,467,530
Shareholder Servicing Fee -- 1,230,416
Administrative Services Fee 761,247 (a) 1,124,494
Custodian Fees and Expenses (15,000) (d) 176,545
Transfer Agent Fees -- 70,848
Registration Fees -- 50,377
Professional Fees (22,600) (d) 50,388
Printing Expenses (7,000) (d) 25,905
Fund Services Fee -- 23,102
Trustees' Fees and Expenses -- 22,008
Line of Credit Expense -- 19,090
Financial and Fund Accounting Services Fee (15,000) (d) 15,082
Administration Fee -- 13,471
Distribution Fee -- --
Miscellaneous -- 90,966
------------------------------------------
Total Expenses 701,324 7,380,222
------------------------------------------
Less: Amounts waived (701,324) (a) (701,324)
Less: Reimbursement of Expenses -- (39,002)
------------------------------------------
Net Expenses -- 6,639,896
------------------------------------------
Net Investment Income (3,531,926) 1,816,741
------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) (92,093,847) (e) 92,093,795
Change in net unrealized depreciation 151,357,099 (e) (151,424,373)
------------------------------------------
Net decrease in net assets from operations $ 55,731,326 $ (57,513,837)
==========================================
(a) Reflects adjustments to investment advisory fee,
administrative fees and shareholder servicing fees and/or
related waivers based on the surviving fund's revised fee
schedule.
(b) Reflects the elimination of master portofolio expenses which
have been disclosed under fund expenses.
(c) Reallocation of investment income to feeder funds.
(d) Reduction reflects the estimated benefits of combining
operations.
(e) Reallocation of realized and unrealized loss to feeder
funds.
(f) Reflects the elimination of J.P. Morgan U.S. Small Company
Fund - Advisor Series allocated income/expenses.
See Notes to Pro Forma Financial Statements
9
J.P. MORGAN INSTITUTIONAL U.S. SMALL COMPANY/J.P. MORGAN U.S. SMALL COMPANY
FUND/THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities, Statement
of Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of The U.S. Small Company Portfolio (the "Master Portfolio"), J.P.
Morgan Institutional U.S. Small Company Fund ("Institutional Fund"), and J.P.
Morgan U.S. Small Company Fund ("U.S. Small Company Fund") (collectively the
"feeder funds" of the Master Portfolio) as if the proposed Reorganization
occurred as of and for the twelve months ended November 30, 2000.
The Pro Forma Statements give effect to the proposed transfer of all
assets and liabilities of the feeder funds and the Master Portfolio in exchange
for shares in Institutional Fund. The Pro Forma Statements should be read in
conjunction with the historical financial statements of each Fund, which have
been incorporated by reference in their respective Statements of Additional
Information.
2. SHARES OF BENEFICIAL INTEREST:
The existing shares of Institutional Fund would be renamed
Institutional Class Shares and existing shares of U.S Small Company Fund
would be renamed Select Class Shares. The net asset values per share for
Select Class Shares at the commencement of offering would be identical to the
closing net asset value per share for the Institutional Class Shares
immediately prior to the Reorganization.
Under the proposed Reorganization, each shareholder of U.S. Small
Company Fund would receive shares of Institutional Fund with a value equal to
their holding in their respective fund. Holders of U.S. Small Company Fund will
receive Select Class Shares in Institutional Fund. Therefore, as a result of the
proposed Reorganization, current shareholders of U.S. Small Company Fund will
become shareholders of Institutional Fund.
The Pro Forma net asset value per share assumes the issuance of
additional shares of Institutional Fund, which would have been issued on
November 30, 2000 in connection with the proposed Reorganization. The amount of
additional shares assumed to be issued was calculated based on the November 30,
2000 net assets of U.S. Small Company Fund and the net asset values per share of
Institutional Fund.
SELECT CLASS SHARES
-------------------
Increase in Shares Issued 19,876,794
Net Assets 11/30/00 $282,284,506
Pro Forma Net Asset Value 11/30/00 $14.20
10
3. PRO FORMA OPERATIONS:
The Pro Forma Statement of Operations assumes similar rates of gross
investment income for the investments of each Fund. Accordingly, the combined
gross investment income is equal to the sum of each Fund's gross investment
income. Certain expenses have been adjusted to reflect the expected expenses
of the combined entity including the change in the administration fee and the
new expected expense cap. The pro forma investment advisory, shareholder
servicing and distribution fees of the combined Fund are based on the fee
schedule in effect for Surviving Fund at the combined level of average
net assets for the twelve months ended November 30, 2000.
11
FORM N-14
PART C - OTHER INFORMATION
Item 15. Indemnification.
---------------
Reference is made to Section 5.3 of Registrant's Declaration of Trust
and Section 5 of Registrant's Distribution Agreement.
Registrant, its Trustees and officers are insured against certain
expenses in connection with the defense of claims, demands, actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
directors, trustees, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, trustee, officer, or
controlling person of the Registrant and the principal underwriter in connection
with the successful defense of any action, suit or proceeding) is asserted
against the Registrant by such director, trustee, officer or controlling person
or principal underwriter in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
Item 16. Exhibits.
---------------
1 Declaration of Trust.
(b) Declaration of Trust, as amended, was filed as Exhibit No. 1 to
Post-Effective Amendment No. 25 to the Registrant's Registration Statement on
Form N-1A (File No. 033-54642) (the "Registration Statement") filed on September
26, 1996 (Accession Number 0000912057-96-021281).
(c) Amendment No. 5 to Declaration of Trust; Amendment and Fifth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the Registration Statement filed on December 26, 1996
(Accession Number 0001016964-96-000061).
Part C-1
(d) Amendment No. 6 to Declaration of Trust; Amendment and Sixth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. 1(b) to Post-Effective Amendment
No. 31 to the Registration Statement on February 28, 1997 (Accession Number
0001016964-97-000041).
(e) Amendment No. 7 to Declaration of Trust; Amendment and
Seventh Amended and Restated Establishment and Designation of Series of
Shares of Beneficial Interest was filed as Exhibit No. 1(c) to Post-Effective
Amendment No. 32 to the Registration Statement on April 15, 1997 (Accession
Number 0001016964-97-000053).
(f) Amendment No. 8 to Declaration of Trust; Amendment and Eighth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. l(d) to Post-Effective Amendment
No. 40 to the Registration Statement on October 9, 1997 (Accession Number
0001016964-97-000158).
(g) Amendment No. 9 to Declaration of Trust; Amendment and Ninth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. l(e) to Post-Effective Amendment
No. 50 to the Registration Statement on December 29, 1997 (Accession Number
0001041455-97-000014).
(h) Amendment No. 10 to Declaration of Trust; Amendment and Tenth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest and change voting procedures to dollar-based voting was
filed as Exhibit No. (a)6 to Post-Effective Amendment No. 60 to the
Registration Statement on December 31, 1998 (Accession Number
0001041455-98-000097).
(i) Amendment No. 11 to Declaration of Trust. Incorporated herein
by reference to Post-Effective Amendment No. 63 to the Registration Statement
filed on April 29, 1999 (Accession Number 00001041455-99-000041).
(j) Amendment No. 12 to Declaration of Trust. Incorporated herein
by reference to Post-Effective Amendment No. 72 to the Registration Statement
filed on April 3, 2000 (Accession Number 0001041455-00-000084).
(k) Amendment No. 13 to Declaration of Trust, incorporated herein
by reference to Post-Effective Amendment No. 78 to the Registration Statement
filed on August 1, 2000 (Accession Number 0000894088-00-000008).
(l) Amendment No.14 to Declaration of Trust incorporated herein by
reference to Post-Effective Amendment No. 78 to the Registration Statement
filed on August 1, 2000 (Accession Number 0000894088-00-000008).
2 By-laws.
(a) Restated By-Laws of Registrant. Incorporated herein by
reference to Post-Effective Amendment No. 29 to the Registration Statement
filed on December 26, 1996 (Accession Number 0001016964-96-000061).
Part C-2
(b) Amendment to Restated By-laws of Registrant. Incorporated
herein by reference to Post-Effective Amendment No. 71 to the Registration
Statement filed on February 28, 2000 (Accession Number 0001041455-00-000056).
3 Not Applicable
4 Agreement and Plan of Reorganization filed herewith as
Appendix A to the Combined Prospectus/Proxy Statement.
5 Not Applicable
6 Form of Investment Advisory Agreement to be filed by
Amendment.
7 Distribution Agreement to be filed by Amendment.
8 Not Applicable
9 Custodian Agreement
(a) Custodian Contract between Registrant and State Street Bank and
Trust Company ("State Street"). Incorporated herein by reference to
Post-Effective Amendment No. 29 to the Registration Statement filed on December
26, 1996 (Accession Number 0001016964-96-000061).
(b) Custodian Contract between Registrant and The Bank of New York.
Incorporated herein by reference to Post-Effective Amendment No. 71 to the
Registration Statement filed on February 28, 2000 (Accession Number
0001041455-00-000056).
10 Forms of Rule 12b-1 Distribution Plans to be filed by
Amendment.
11 Opinion and Consent of Nixon Peabody LLP as to the Legality
of Shares to be filed by Amendment.
12 Opinion and Consent of Simpson Thacher & Bartlett as to Tax
Consequences to be filed by Amendment.
13 Material Contracts.
(a) Co-Administration Agreement between Registrant and FDI.
Incorporated herein by reference to Post-Effective Amendment No. 29 to the
Registration Statement filed on December 26, 1996 (Accession Number
0001016964-96-000061).
(b) Restated Shareholder Servicing Agreement between Registrant
and Morgan Guaranty Trust Company of New York ("Morgan Guaranty") filed as
Exhibit (h)2 to Post Effective Amendment No. 54 to the Registration Statement
on August 25, 1998 (Accession No. 0001041455-98-000053).
Part C-3
(c) Transfer Agency and Service Agreement between Registrant and
State Street. Incorporated herein by reference to Post-Effective Amendment
No. 29 to the Registration Statement filed on December 26,1996 (Accession
Number 0001016964-96-000061).
(d) Restated Administrative Services Agreement between Registrant
and Morgan Guaranty. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the Registration Statement filed on December 26, 1996
(Accession Number 0001016964-96-000061).
(e) Fund Services Agreement, as amended, between Registrant and
Pierpont Group, Inc. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the Registration Statement filed on December 26, 1996
(Accession Number 0001016964-96-000061).
(f) Service Plan with respect to Registrant's Service Money
Market Funds. Incorporated herein by reference to Post-Effective Amendment
No. 33 to the Registration Statement filed on April 30, 1997 (Accession
Number 00001016964-97-000059).
(g) Service Plan with respect to Registrant's Small Company Fund
Advisor Series, Small Company Opportunities Fund -- Advisor Series,
International Equity Fund -- Advisor Series, International Opportunities Fund
- --Advisor Series, U.S. Equity Fund -- Advisor Series, Diversified Fund --
Advisor Series incorporated herein by reference to Post-Effective Amendment
No. 78 to the Registration Statement filed on August 1, 2000 (Accession
Number 0000894088-00-000008).
(h) Amended Service Plan with respect to Registrant's Disciplined
Equity -- Advisor series and Direct Prime Money Market Funds. Incorporated
herein by reference to Post-Effective Amendment No. 72 to the Registration
Statement filed on April 3, 2000 (Accession Number 0001041455-00-000084).
(i) Amended Service Plan with respect to Registrant's J.P. Morgan
Prime Cash Management Fund. Incorporated herein by reference to
Post-Effective Amendment No. 75 to Registration Statement filed on May 17,
2000 (Accession Number 0001041455-00-000122).
(j) Form of Administration Agreement to be filed by Amendment.
(k) Form of Sub-Administration Agreement to be filed by Amendment.
14 Consent of PricewaterhouseCoopers LLP.
15 None
16 Powers of Attorney.
17 (a) Form of Proxy Card.
17 (b) Prospectus for the Surviving Fund to be filed by
Amendment.
17 (c) Prospectus for the Merging Fund.
Part C-4
17 (d) Statement of Additional Information for the Surviving
Fund to be filed by Amendment.
17 (e) Statement of Additional Information for the Merging Fund.
17 (f) Annual Report of the Surviving Fund (including the Annual
Report of the Master Portfolio) dated May 31, 2000.
17 (g) Semi-Annual Report of the Surviving Fund (including the
Semi-Annual Report of the Master Portfolio) dated
November 30, 2000.
17 (h) Annual Report of the Merging Fund (including the Annual
Report of the Master Portfolio) dated October 31, 2000.
17 (i) Semi-Annual Report of the Merging Fund (including the
Semi-Annual Report of the Master Portfolio) dated
November 30, 2000.
Item 17. Undertakings.
---------------
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered through the use of a
prospectus which is part of this registration statement by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c) of
the Securities Act of 1933, as amended (the "1933 Act"), the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the
applicable form.
(2) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as part of an amendment
to the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
Part C-5
SIGNATURES
As required by the Securities Act of 1933, this registration
statement has been signed on behalf of the registrant, in the City of New York
and the State of New York, on the 12th day of April, 2001.
J.P. MORGAN INSTITUTIONAL FUNDS
Registrant
By: /s/ Christopher Kelley
----------------------------------------
Christopher Kelley
Vice President and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on April 12, 2001.
George Rio*
- -------------------------------
George Rio
President and Treasurer
Matthew Healey*
- -------------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer)
Frederick S. Addy*
- -------------------------------
Frederick S. Addy
Trustee
William G. Burns*
- -------------------------------
William G. Burns
Trustee
Arthur C. Eschenlauer*
- -------------------------------
Arthur C. Eschenlauer
Trustee
Michael P. Mallardi*
- -------------------------------
Michael P. Mallardi
Trustee
*By: /s/ Christopher Kelley
---------------------------------
Christopher Kelley
as attorney-in-fact pursuant to a power of attorney.
EXHIBITS
ITEM DESCRIPTION
- ---- -----------
(14) Consent of PricewaterhouseCoopers LLP.
(16) Powers of Attorney.
(17) (a) Form of Proxy Card.
(c) Prospectus for the J.P. Morgan U.S. Small Company Fund.
(e) Statement of Additional Information for J.P. Morgan U.S. Small
Company Fund.
(f) Annual Report of J.P. Morgan Institutional U.S. Small Company Fund
(including the Annual Report of The U.S. Small Company Portfolio)
dated May 31, 2000.
(g) Semi-Annual Report of J.P. Morgan Institutional U.S. Small Company
Fund (including the Semi-Annual Report of The U.S. Small Company
Portfolio) dated November 30, 2000.
(h) Annual Report of J.P. Morgan U.S. Small Company Fund (including
the Annual Report of The U.S. Small Company Portfolio) dated
May 31, 2000.
(i) Semi-Annual Report of J.P. Morgan U.S. Small Company Fund (including
the Semi-Annual Report of The U.S. Small Company Portfolio) dated
November 30, 2000.