As filed with the Securities and Exchange Commission on April 12, 2001
Registration No. 333-___/811-07340
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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 425 Lexington Avenue 125 Broad Street
Management (USA) Inc. New York, NY 10017-3954 New York, NY 10004
522 Fifth Avenue
New York, NY 10036
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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.
JPMorgan LARGE CAP EQUITY FUND
(FORMERLY, CHASE VISTA LARGE CAP EQUITY FUND),
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
May 12, 2001
Dear Shareholder:
A special meeting of the shareholders of JPMorgan Large Cap Equity Fund
(formerly, Chase Vista Large Cap Equity Fund) (the "Merging Fund"), a series of
Mutual Fund Group ("MFG"), 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, the former
corporate parent of the Merging Fund's investment adviser, recently completed a
merger with J.P. Morgan & Co. Incorporated 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 in order to provide better service for
shareholders of 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 JPMorgan Institutional U.S. Equity Fund
(the "Surviving Fund"), a series of J.P. Morgan Institutional Funds ("JPMF")
(the "Reorganization"). After the Reorganization, shareholders would hold an
interest in the Surviving Fund. The investment objective and policies of the
Merging Fund generally are similar to those of the Surviving Fund. In connection
with the Reorganization, the Surviving Fund will be renamed "JPMorgan U.S.
Equity Fund."
After the proposed Reorganization, your investment will be in a larger
combined fund with similar investment policies.
The Surviving Fund has also entered into agreements and plans of
reorganization with J.P. Morgan U.S. Equity Fund and J.P. Morgan U.S. Equity
Fund--Advisor Series whose assets are managed by J.P. Morgan Investment
Management Inc. ("JPMIM") with identical investment objectives and policies to
the Surviving Fund (the "Concurrent Reorganizations"). If the Concurrent
Reorganizations are approved by the shareholders of these other funds and
certain other conditions are met, these other funds will be reorganized into the
Surviving Fund. The consummation of the Reorganization is contingent upon the
consummation of the Concurrent Reorganizations.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of MFG.
The investment adviser for the Merging Fund is JPMorgan Fleming
Asset Management (USA) Inc. The investment adviser for the assets of the
Surviving Fund is JPMIM. After the Reorganization, JPMIM the same investment
adviser that currently is responsible for the Surviving Fund, will make the
day-to-day investment decisions for your portfolio.
Please see the enclosed Combined Prospectus/Proxy Statement for
detailed information regarding the proposed Reorganization, the Concurrent
Reorganizations and a comparison of the Merging Fund and MFG 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, MFG, the Surviving Fund, JPMF or their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive shares in the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees of
MFG, which has approved the Proposals.
THE BOARD OF TRUSTEES OF MFG 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 1-800-348-4782.
A proxy card is enclosed for your use in the shareholder meeting. This
card represents shares you held as of the record date, __________, 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,
Fergus Reid
Chairman
SPECIAL NOTE: Certain shareholders may receive a telephone call from our proxy
solicitor D.F. King & Co., Inc., 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.
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WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes it is in
the best interests of shareholders to combine funds that have similar investment
objectives and policies and each board believes that the Reorganization should
result in a more diversified fund and in better service for shareholders,
including a wider variety of investment options.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
Under the Reorganization, the Merging Fund will transfer all of its assets and
liabilities to the Surviving Fund and will receive, in exchange, shares of the
Surviving Fund. The Merging Fund will then be liquidated and those shares of the
Surviving Fund will be distributed to shareholders such as you. After the
Reorganization, you will own shares in the Surviving Fund rather than 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 generally has similar investment objectives and policies to
those of the Merging Fund. The principal differences are as follows:
Surviving Fund Merging Fund
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- Investment objective is to provide - Investment objective is
high total return from a portfolio to seek capital growth
of selected equity securities. over the long term.
- Invests primarily in large- and - Invests at least 65% of its
medium-capitalization U.S. total assets in equity
companies. securities of companies with
market capitalizations over
$2 billion at the time of
purchase.
The Reorganization is not intended to have any immediate significant impact on
the investment strategy implemented in respect of your investment.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
As a result of the Reorganization, the contractual (or pre-waiver) and 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. If an increase does occur, JPMIM 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?
Yes. JPMIM, the investment adviser that currently manages the assets of the
Surviving Fund, will continue to manage that fund after the Reorganization.
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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).
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive shares in the Surviving Fund.
HOW WILL THE PROPOSED CONCURRENT REORGANIZATIONS AFFECT MY INVESTMENT IF THEY
ARE APPROVED BY THE SHAREHOLDERS OF THE OTHER FUNDS?
If the Concurrent Reorganizations are approved and certain other conditions are
met, the assets and liabilities of these other merging funds will become the
assets and liabilities of the Surviving Fund. The consummation of the
Reorganization is contingent upon the consummation of the Concurrent
Reorganizations.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR MFG 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
MFG will continue to exist and operate. All shareholders of any series of MFG as
of the record date (April 6, 2001) are required to be given a vote on the
proposals regarding Trustees. Because as of this record date you are still a
shareholder in MFG, you are entitled to vote on this proposal. Shareholders of
JPMF are being asked to approve the same Trustees that are proposed for MFG.
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.
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JPMORGAN LARGE CAP EQUITY FUND
(FORMERLY, CHASE VISTA LARGE CAP EQUITY FUND),
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of
JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large Cap Equity Fund):
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large
Cap Equity Fund) (the "Merging Fund"), a series of Mutual Fund Group ("MFG"),
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 MFG, on behalf of the Merging Fund, J.P. Morgan
Institutional Funds ("JPMF"), on behalf of JPMorgan
Institutional U.S. Equity 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 (i) Class A shares of the Surviving Fund (the
"Class A Shares"), (ii) Class B shares of the Surviving Fund
(the "Class B Shares"), (iii) Class C shares of the
Surviving Fund (the "Class C Shares") and (iv) Select Class
shares of the Surviving Fund ("Select Class Shares" and
together with the Class A Shares, Class B Shares and Class C
Shares, the "Surviving Fund Shares"), as applicable; and (b)
the distribution of such Surviving Fund 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 MFG.
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 attached 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 MFG. 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.
Lisa Hurley
Secretary
May 12, 2001
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 12, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
JPMORGAN LARGE CAP EQUITY FUND
(FORMERLY, CHASE VISTA LARGE CAP EQUITY FUND),
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
(800) ___________
BY AND IN EXCHANGE FOR SHARES OF
JPMORGAN INSTITUTIONAL U.S. EQUITY 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 JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large
Cap Equity Fund) (the "Merging Fund"), a series of Mutual Fund Group ("MFG"),
into JPMorgan Institutional U.S. Equity Fund (the "Surviving Fund"), a series of
J.P. Morgan Institutional Funds ("JPMF"). If approved by Shareholders, the
proposed reorganization will be effected by transferring all of the assets and
liabilities of the Merging Fund to the Surviving Fund, which has generally
similar investment objectives and policies to those of the Merging Fund, in
exchange for 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"). MFG and JPMF are both open-end management
investment companies offering shares in several portfolios. In connection with
the Reorganization, the JPMorgan Institutional U.S. Equity Fund will be renamed
"JPMorgan U.S. Equity Fund."
Under the proposed Reorganization, each Merging Fund Shareholder will
receive shares (the "Surviving Fund 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 Surviving Fund Shares received
in the Reorganization. In connection with the Reorganization, the Surviving Fund
will implement a new multi-class structure under which it will offer Class A,
Class B, Class C, Select Class and Institutional Class shares. Holders of Class
A shares of the Merging Fund will receive Class A shares (the "Class A Shares")
of the Surviving Fund, holders of Class B shares of the Merging Fund will
receive Class B shares (the "Class B Shares") of the Surviving Fund, holders of
Class C shares of the Merging Fund will receive Class C shares (the "Class C
Shares") of the Surviving Fund and holders of Institutional Class shares of the
Merging Fund will receive Select Class shares (the "Select Class Shares") of the
Surviving Fund.
-1-
At the Meeting, you also will be asked to consider and vote upon the
election of Trustees of MFG.
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 MFG, 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 MFG 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 Surviving Fund 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 MFG 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.
Equity Portfolio) and the Semi-Annual Report of the Surviving Fund (including
the Semi-Annual Report of The U.S. Equity Portfolio) are incorporated herein by
reference, and the current Prospectus, Annual Report (including the Annual
Report of The U.S. Equity Portfolio) and Semi-Annual Report (including the
Semi-Annual Report of The U.S. Equity 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
containing additional information about MFG and JPMF has been filed with the
Commission and is incorporated by reference intro 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 (including the Annual Report for the U.S. Equity
Portfolio) may be obtained without charge by writing to JPMF at its address
noted above or by calling 1-800-766-7722.
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.
-2-
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 MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MFG 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.
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TABLE OF CONTENTS
PAGE
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INTRODUCTION...................................................................1
PROPOSAL 1: REORGANIZATION PLAN...............................................1
SUMMARY .......................................................................2
COMPARATIVE FEE AND EXPENSE TABLES.............................................5
RISK FACTORS...................................................................9
INFORMATION RELATING TO THE PROPOSED REORGANIZATION...........................10
INVESTMENT POLICIES...........................................................15
PURCHASES, REDEMPTIONS AND EXCHANGES..........................................20
DISTRIBUTIONS AND TAXES.......................................................25
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING
FUND'S ORGANIZATION STRUCTURE............................................26
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND
OTHER SERVICES...........................................................28
PROPOSAL 2: ELECTION OF TRUSTEES..............................................31
INFORMATION RELATING TO VOTING MATTERS........................................35
ADDITIONAL INFORMATION ABOUT MFG..............................................38
ADDITIONAL INFORMATION ABOUT JPMF.............................................38
FINANCIAL STATEMENTS AND EXPERTS..............................................39
OTHER BUSINESS................................................................39
LITIGATION....................................................................39
SHAREHOLDER INQUIRIES.........................................................39
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION.............................A-1
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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 MFG 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
As you may be aware, The Chase Manhattan Corporation, the former
corporate parent of the Merging Fund's investment adviser, recently completed a
merger with J.P. Morgan & Co. Incorporated 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 in order to provide better service for
shareholders of funds advised by its subsidiaries. At the Meeting, Merging Fund
Shareholders will consider and vote upon the Agreement and Plan of
Reorganization (the "Reorganization Plan") dated _______, 2001 among MFG, 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 JPMC,
pursuant to which all of the assets and liabilities of the Merging Fund will be
transferred to the Surviving Fund in exchange for Surviving Fund Shares. As a
result of the Reorganization, Merging Fund Shareholders will become shareholders
of the Surviving Fund and will receive Surviving Fund 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. Equity Fund." Further information relating to the Surviving Fund is set
forth herein, and the Surviving Fund's Prospectus and Annual and Semi-Annual
Reports (including the Annual and Semi-Annual Reports of The U.S. Equity
Portfolio) are enclosed with this Combined Prospectus/Proxy Statement.
THE MFG 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 MFG 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 of each of the Surviving Fund
(including the Annual Report of The U.S. Equity Portfolio) and the Merging Fund,
the Semi-Annual Report of the Surviving Fund (including the Semi-Annual Report
of The U.S. Equity Portfolio) and the Reorganization Plan attached to this
Combined Prospectus/Proxy Statement as Appendix A.
PROPOSED REORGANIZATION
Pursuant to the proposed Reorganization Plan, the Merging Fund will
transfer all of its assets and liabilities to the Surviving Fund in exchange for
shares of the Surviving Fund.
Under the proposed Reorganization, each Merging Fund Shareholder will
receive a number of Surviving Fund Shares 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. Holders of Class A Shares of the
Merging Fund will receive Class A Shares of the Surviving Fund, holders of Class
B Shares of the Merging Fund will receive Class B Shares of the Surviving Fund,
holders of Class C Shares of the Merging Fund will receive Class C Shares of the
Surviving Fund and holders of Institutional Class Shares of the Merging Fund
will receive Select Class Shares of the Surviving Fund. 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
generally similar to the Merging Fund. In addition, 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 generally similar 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 MFG
Board and the JPMF Board, including a majority of each 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.
-2-
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.
CONCURRENT REORGANIZATIONS
The Surviving Fund currently invests all of its investable assets in
The U.S. Equity Portfolio (the "Master Portfolio"), which has identical
investment objectives and policies as the Surviving Fund and which is advised by
J.P. Morgan Investment Management Inc. ("JPMIM"). JPMorgan U.S. Equity Fund, a
series of J.P. Morgan Funds, and JPMorgan Institutional U.S. Equity Fund -
Advisor Series, a series of JPMF, which both have identical investment
objectives and policies as the Surviving Fund (collectively, the "Feeder
Portfolios") also currently invest all of their assets in the Master Portfolio.
The Surviving Fund has entered into substantially similar agreements and plans
of reorganization with each Feeder Portfolio (the "Concurrent Reorganizations").
If each of the Reorganization and the Concurrent Reorganizations is
approved by the shareholders of the respective funds and certain other
conditions are met, the Merging Fund and the Feeder Portfolios will be
reorganized into the Surviving Fund. In connection with the Reorganization and
the Concurrent Regorganizations, 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. The consummation of the
Reorganization is contingent upon the consummation of the Concurrent
Reorganizations.
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 Surviving Fund Shares received by a shareholder of the Merging Fund will be
the same as the holding period and tax basis of such 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 ADVISERS
The investment adviser for the Merging Fund is J.P. Morgan Fleming
Asset Management (USA) Inc. ("JPMFAM"). The investment adviser for the Master
Portfolio (and therefore the assets of the Surviving Fund and the Feeder
Portfolios) is JPMIM. JPMFAM and JPMIM are each wholly-owned subsidiaries of
JPMC. JPMIM will continue to serve as investment adviser for the Surviving Fund
following the Reorganization.
-3-
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Surviving Fund is to provide high total
return from a portfolio of selected equity securities. The investment objective
of the Merging Fund is to seek capital growth over the long term. See "Risk
Factors" and "Investment Policies."
The investment policies of the Surviving Fund are generally similar to
those of the Merging Fund. However, there are certain important differences. The
Surviving Fund invests primarily in large- and medium-capitalization U.S.
companies. Industry by industry, the Surviving Fund's weightings are similar to
those of the Standard & Poor's 500 Stock Index (S&P 500). The Surviving Fund can
moderately underweight or overweight industries when it believes it will benefit
performance. Within each industry, the Surviving Fund focuses on those stocks
that JPMIM believes are most undervalued. The Surviving Fund considers selling
stocks that appear overvalued. UNDER NORMAL CONDITIONS, THE MERGING FUND INVESTS
AT LEAST 80% OF ITS TOTAL ASSETS IN EQUITY SECURITIES AND AT LEAST 65% OF ITS
TOTAL ASSETS IN EQUITY SECURITIES OF COMPANIES WITH MARKET CAPITALIZATIONS OVER
$2 BILLION AT THE TIME OF PURCHASE.
PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND
The principal risk factors associated with an investment in the
Surviving Fund are those typically associated with investing in a managed
portfolio of equity securities. In particular, the value of shares of the
Surviving Fund will be influenced by the performance of the securities selected
for its portfolio. The value of the Surviving Fund's shares will fluctuate in
response to movements in the stock market, especially movements of those stocks
included in the S&P 500. See "Risk Factors."
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund's assets is JPMIM. JPMIM
oversees the asset management of the Surviving Fund. As compensation for its
services, JPMIM receives a management fee indirectly from the Surviving Fund at
an annual rate of 0.40% of average daily net assets. The Merging Fund currently
pays JPMFAM a management fee at an annual rate of 0.40% 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 0.40% 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
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
-4-
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.
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 assets in excess
of $26 billion.
ORGANIZATION
Each of MFG and JPMF is organized as a Massachusetts business trust.
The Merging Fund is organized as a series of MFG 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 shares of the Surviving Fund will be 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
for the Surviving Fund after giving effect to the proposed Reorganization and
the Concurrent Reorganizations. Under the proposed Reorganization, holders of
Class A Shares of the Merging Fund will receive Class A Shares of the Surviving
Fund, holders of Class B Shares of the Merging Fund will receive Class B Shares
of the Surviving Fund, holders of Class C Shares of the Merging Fund will
receive Class C Shares of the Surviving Fund and holders of Institutional Class
Shares of the Merging Fund will receive Select Class Shares of the Surviving
Fund. SHAREHOLDERS WILL NOT PAY A SALES LOAD ON SURVIVING FUND SHARES RECEIVED
IN THE REORGANIZATION. Please note that the Surviving Fund currently has one
class of shares. In connection with the Reorganization and the Concurrent
Reorganizations, this class will be re-named "Institutional Class" and the Class
A, Class B, Class C and Select share classes will be introduced.
-5-
- --------------------------------------------------------------------------------
THE
SURVIVING
THE MERGING FUND* FUND
--------------------------------------------------------- ---------
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES SHARES
--------- --------- --------- ------------- ---------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
-Maximum Sales Charge (Load)
when you buy shares, shown as %
of the offering price*(1)............ 5.75% None None None None
Maximum Deferred Sales Charge
(Load) shown as lower of original
purchase price or redemption
proceeds............................. None 5.00% 1.00% None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees......................... 0.40% 0.40% 0.40% 0.40% 0.40%
Distribution (12b-1) Fees............... 0.25% 0.75% 0.75% None None
Other Expenses.......................... 0.70%# 0.70%# 0.70%# 0.49% 0.23%
Total Annual Fund Operating
Expenses............................. 1.35%# 1.85%# 1.85%# 0.89% 0.63%
For Class A, B, and C, the actual Other Expenses are currently
expected to be 0.60% and Total Annual Fund Operating Expenses are
not expected to exceed 1.25%, 1.75% and 1.75%, respectively. That
is because Chase has volunteered not to collect a portion of its
fees and to reimburse others. Chase may terminate this arrangement
at any time.
* The table is based on the expenses incurred during the most recent
fiscal year.
(1) The offering price is the net asset value of the shares purchased
plus any sales charge.
# Restated from the most recent fiscal year.
-6-
THE SURVIVING FUND
----------------------------------------------------------------
PRO FORMA WITH CONCURRENT REORGANIZATIONS
----------------------------------------------------------------
SELECT CLASS
CLASS A SHARES CLASS B SHARES CLASS C SHARES SHARES
-------------- -------------- -------------- -------------
SHAREHOLDER FEES (FEES
PAID DIRECTLY FROM YOUR
INVESTMENT) -Maximum
Sales Charge (Load) when
you buy shares, shown as %
of the offering price............. 5.75% None None None
Maximum Deferred Sales
Charge (Load) Shown as
lower of original purchase
price or redemption proceeds...... None 5.00% 1.00% None
ANNUAL FUND
OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees....................... 0.40% 0.40% 0.40% 0.40%
Distribution (12b-1) Fees............. 0.25% 0.75% 0.75% None
Other Expenses........................ 0.70% 0.70% 0.70% 0.49%
Total Annual Fund Operating
Expenses........................... 1.35% 1.85% 1.85% 0.89%
Contractual Fee Waivers and
Expense Reimbursements............. 0.30% (A) 0.10% (B) 0.10% (B) 0.10% (A)
Net Expenses.......................... 1.05% 1.75% 1.75% 0.79%
(A) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the
Fund to the extent operating expenses (which exclude interest, taxes, and
extraordinary expenses) exceed 1.05% of average daily net assets with
respect to Class A Shares, 0.79% of average daily net assets with respect
to Select Class Shares for three years after the Reorganization.
(B) Reflects an agreement by Morgan, a wholly owned subsidiary of JPMC, to
reimburse the fund to the extent operating expenses (which exclude
interest, taxes, and extraordinary expenses) exceed 1.75% of average daily
net assets with respect to Class B and C Shares for one year after the
Reorganization.
-7-
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 thereafter and remain the same as shown
above.
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
Class A Shares*...................................... $ 705 $ 978 $ 1272 $ 2105
Class B Shares**..................................... 688 882 1201 2039***
Class B Shares (without redemption fee).............. 188 582 1001 2039***
Class C Shares**..................................... 288 582 1001 2169
Class C Shares (without redemption fee).............. 188 582 1001 2169
Institutional Class Shares........................... 91 284 493 1096
THE SURVIVING FUND...................................... 64 202 351 786
PRO FORMA THE SURVIVING FUND WITH CONCURRENT
REORGANIZATIONS
Class A Shares*...................................... 676 890 1186 2027
Class A Shares (without sales charge)................ 107 398 649 1541
Class B Shares**..................................... 678 872 1191 2029***
Class B Shares (without redemption fee).............. 178 572 991 2029***
Class C Shares**..................................... 278 572 991 2161
Class C Shares (without redemption fee).............. 178 572 991 2161
Select Class Shares ................................. 81 252 462 1067
- ---------------
* Assumes sales charge is deducted when shares are purchased. Shareholders
who receive Class A Shares as a result of the proposed Reorganization will
not be charged a sales load.
** Assumes applicable deferred sales charge is deducted when shares are sold.
*** Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
-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 generally similar to those of
the Merging Fund. Therefore, there should be similarities between the risk
factors associated with the Surviving Fund and 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. The Surviving Fund could underperform its benchmark due to JPMIM's
securities and asset allocation choices.
In general, the value of an investment in the Surviving Fund will
fluctuate in response to movements in the stock market. Adverse market
conditions may from time to time cause the Fund to take temporary defensive
positions that are inconsistent with its principal investment strategies and may
hinder the Fund from achieving its investment objective.
The Surviving Fund does not expect to invest more than 20% of its
assets, at the time of purchase, in foreign securities, and therefore may be
subject to risks in addition to those associated with U.S. securities. For
example, international currency exchange rate movements could reduce gains or
create losses. Additionally, the Surviving Fund could lose money because of
foreign government actions, political instability or lack of adequate and/or
accurate information.
The Surviving Fund may buy when-issued and delayed delivery securities.
When the Surviving Fund buys securities before issue or for delayed delivery, it
could be exposed to leverage risk if it does not use segregated accounts.
The Surviving Fund may invest in derivatives such as futures, options,
swaps and forward foreign currency contracts that are used for hedging the
portfolio or specific securities. These derivatives may not fully offset the
underlying positions. This could result in losses to the 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 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.
-9-
The Surviving Fund may invest in illiquid securities. The Surviving
Fund could have difficulty valuing these holdings precisely. The Surviving Fund
could be unable to sell these securities at the time or price desired.
The Surviving Fund may use short-term trading to take advantage of
attractive or unexpected opportunities or to meet demands generated by
shareholder activity. Increased trading would raise the Surviving Fund's
transaction costs. Increased short-term capital gains distributions would 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
In connection with the Reorganization and the Concurrent
Reorganization, the Merging Fund will cease investing in the Merging Fund Master
Portfolio. 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 (a) Class A Shares of the Surviving Fund
equal in aggregate dollar value to the aggregate net asset value of full and
fractional outstanding Class A Shares of the Merging Fund, (b) Class B Shares of
the Surviving Fund equal in aggregate dollar value to the aggregate net asset
value of full and fractional outstanding Class B Shares of the Merging Fund, (c)
Class C Shares of the Surviving Fund equal in aggregate dollar value to the
aggregate net asset value of full and fractional outstanding Class C Shares of
the Merging Fund and (d) Select Class Shares of the Surviving Fund equal in
aggregate dollar value to the aggregate net asset value of full and fractional
outstanding Institutional Class Shares of the Merging Fund, in each case 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.
-10-
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 Surviving Fund 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 Class A Shares,
Class B Shares, Class C Shares or Select Class Shares, as the case may be, 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 similar investment policies of
the Merging Fund and the Surviving Fund.
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.
In addition, the consummation of the Reorganization is contingent upon
the consummation of the Concurrent Reorganizations.
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
The JPMF Board met on March 26 and 27, 2001 and the MFG Board met on
April 3, 2001, and each considered and discussed the proposed Reorganization.
The Trustees of
-11-
each Board discussed the advantages of reorganizing the Merging Fund into the
Surviving Fund.
The Board of each trust has determined that it is in the best interests
of the Fund's shareholders to combine the Merging Fund with the Surviving Fund.
This Reorganization is part of the general integration of the J.P. Morgan and
former Chase Vista funds into a single mutual fund complex. In reaching the
conclusion that the Reorganization is in the best interests of Fund
shareholders, each Board considered a number of factors including, among others:
The terms of the Reorganization Plan; a comparison of each Fund's
historical and projected expense ratios; the comparative investment performance
of the Merging Fund and the Surviving Fund; the anticipated effect of such
Reorganization on the relevant Fund and its shareholders; the investment
advisory services supplied by the Surviving Fund's investment adviser; the
management and other fees payable by the Surviving Fund; the similarities and
differences in the investment objectives and policies of the Merging Fund and
the Surviving Fund; and the recommendations of the relevant Fund's current
investment adviser with respect to the proposed Reorganization.
Each Board determined that the Funds have generally similar investment
objectives and policies. They noted that the Reorganization could permit the
shareholders of the Merging Fund to pursue similar investment goals in a larger
fund that has generally had better historical performance. A larger fund should
enhance the ability of the investment adviser to effect portfolio transactions
on more favorable terms and provide greater flexibility and the ability to
select a larger number of portfolio securities. This could result in increased
diversification for shareholders. In addition, the larger aggregate asset base
could, over time, result in lower overall expense ratios for shareholders
through the spreading of both fixed and variable costs of operations over a
larger asset base. As a general rule, economies of scale may be realized with
respect to fixed expenses, such as costs of printing and fees for professional
services, although expenses that are based on the value of assets or the number
of shareholder accounts, such as custody fees, would be largely unaffected by
the Reorganization.
Each Board also considered benefits expected to arise as a result of
the Reorganization. Among these benefits, the Board noted that Surviving Fund
Shareholders would be able to exchange into a larger number and greater variety
of funds and the Surviving Fund would also benefit from the administrator's
overall intent to enhance its ability effectively to monitor and oversee the
quality of all service providers to the fund, including the investment adviser.
Finally, the Board considered the expenses related to the
Reorganization. The Board noted the administrator's undertaking to waive fees or
reimburse the Surviving Fund's expenses so that the total expense ratio of each
share class of the Merging Fund does not increase during the period specified in
the expense table. Additional important factors were that all costs and expenses
of the Reorganization would be borne by JPMC and the fact that the Board was
advised that Reorganization would constitute a tax-free reorganization.
-12-
After considering the foregoing factors, together with such information
as it believed to be relevant, and in light of its fiduciary duties under
federal and state law, each Board determined that the proposed Reorganization is
in the best interests of the applicable Fund and its shareholders, determined
the interests of the shareholders would not be diluted as a result of the
Reorganization, approved the Reorganization Plan and directed that the
Reorganization Plan be submitted to the Merging Fund Shareholders for approval.
THE MFG BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSAL.
The MFG 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.
INFORMATION RELATING TO CONCURRENT REORGANIZATIONS
The terms and conditions under which the Concurrent Reorganizations may
be consummated are set forth in reorganization plans which are substantially
similar to the Reorganization Plan you are considering. As a result of the
Reorganization and the Concurrent Reorganizations, the Surviving Fund and the
Feeder Portfolios will no longer invest their assets in the Master Portfolio.
The consummation of the Reorganization is contingent upon the consummation of
the Concurrent Reorganizations.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that MFG
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
Surviving Fund Shares and the liquidating distributions to shareholders of the
Surviving Fund 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 Surviving Fund 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 Merging Fund immediately before such
transaction; (vii) a Merging Fund Shareholder's holding period for the Surviving
Fund Shares will be determined by including the period for which such Merging
Fund Shareholder held the Merging Fund Shares exchanged therefor,
-13-
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.
MFG 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 as well as several other funds as a result of the Concurrent
Reorganizations, the total capitalization of the Surviving Fund after the
Reorganization and the Concurrent Reorganizations 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; and (iii) the pro forma capitalization of
the Surviving Fund as adjusted to give effect to the Reorganization and the
Concurrent Reorganizations. There is, of course, no assurance that the
Reorganization and the Concurrent Reorganizations 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. Please note that the
Surviving Fund currently has one class of shares. In connection with the
Reorganization and the Concurrent Reorganization, this class will be renamed
"Institutional Class" and the Class A, Class B, Class C and Select Class share
classes will be introduced.
BENEFICIAL SHARES NET ASSETS NET ASSET
INTEREST OUTSTANDING VALUE PER
OUTSTANDING SHARE
THE U.S. EQUITY PORTFOLIO
THE MERGING FUND
Class A - 3,980,818 60,636,740 15.23
Class B - 1,780,660 26,905,354 15.11
Class C - 124,782 1,876,100 15.04
Institutional - 7,076,121 108,285,188 15.30
THE SURVIVING FUND 15,051,872 - 183,470,628 12.19
PRO FORMA COMBINED
Class A - 5,013,616 61,112,083 12.19
Class B - 2,207,306 26,905,349 12.19
Class C - 153,915 1,876,106 12.19
Select - 37,105,139 452,282,818 12.19
Institutional - 15,051,872 183,470,628 12.19
-14-
INVESTMENT POLICIES
The following discussion summarizes some of the investment policies of
the Surviving Fund. Except as noted below, the Merging Fund generally has
similar investment policies to those of the Surviving Fund. 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.
OBJECTIVE
The investment objective of the Surviving Fund is to provide high total
return from a portfolio of selected equity securities. THE INVESTMENT OBJECTIVE
OF THE MERGING FUND IS TO SEEK CAPITAL GROWTH OVER THE LONG TERM. Each Fund may
change its objective without shareholder approval.
MAIN INVESTMENT STRATEGIES
The Surviving Fund invests primarily in large- and
medium-capitalization U.S. companies. Industry by industry, the Surviving Fund's
weightings are similar to those of the S&P 500. Under normal circumstances, the
Surviving Fund plans to remain fully invested, with at least 65% of its assets
in stocks, including U.S. and foreign common stocks, convertible securities,
preferred stocks, trust or partnership interests, warrants, rights and
investment company securities. The Surviving Fund seeks to limit risk through
diversification. During severe market downturns, the Surviving Fund may invest
up to 100% of its assets in investment grade short-term securities. UNDER NORMAL
CONDITIONS, THE MERGING FUND INVESTS AT LEAST 80% OF ITS TOTAL ASSETS IN EQUITY
SECURITIES AND AT LEAST 65% OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF
COMPANIES WITH MARKET CAPITALIZATIONS OVER $2 BILLION AT THE TIME OF PURCHASE.
The Surviving Fund can moderately underweight or overweight industries
when JPMIM believes it will benefit performance. Within each industry, the
Surviving Fund focuses on those stocks that JPMIM believes are most undervalued.
The Fund generally considers selling stocks that appear to JPMIM to be
overvalued. By emphasizing undervalued stocks, the Surviving Fund seeks to
produce returns that exceed those of the S&P 500. At the same time, by
controlling the industry weightings of the Fund so they differ only moderately
from those of the S&P 500, the Fund seeks to limit its volatility to that of the
overall market, as represented by the index.
The Surviving Fund may invest up to 20% of its assets in foreign
investments. The Surviving Fund actively manages the currency exposure of its
foreign investments relative to its benchmark, and it may hedge investments back
into the U.S. dollar.
The Surviving Fund may invest in when-issued and delayed delivery
securities, and uses segregated accounts to offset leverage risk.
-15-
The Surviving Fund uses derivatives, such as futures, options, swaps
and forward foreign currency contracts, 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 Fund's exposure
relative to its benchmark. The Surviving Fund only establishes hedges that JPMIM
expects will be highly correlated with underlying positions. While the Fund may
use derivatives that incidentally involve leverage, it does not use them for the
specific purpose of leveraging its portfolio.
JPMIM maintains a list of approved borrowers for securities lending.
The Fund receives collateral equal to at least 100% of the current value of
securities loaned and the lending agents indemnify the Fund against borrower
default. JPMIM's collateral investment guidelines limit the quality and duration
of collateral investment to minimize losses. Upon recall, the borrower must
return the securities loaned within the normal settlement period. While both the
Surviving Fund and the Merging Fund may engage in securities lending, neither
generally does so.
The Surviving Fund may not invest more than 15% of net assets in
illiquid holdings. To maintain adequate liquidity to meet redemptions, the
Surviving Fund may hold investment grade short-term securities (including
repurchase agreements and reverse repurchase agreements) and, for temporary or
extraordinary purposes, may borrow from banks up to 33-1/3% of the value of its
total assets.
The Surviving Fund may use short-term trading to take advantage of
attractive or unexpected opportunities or to meet demands generated by
shareholder activity.
INVESTMENT RESTRICTIONS
The Surviving Fund and the Merging Fund have each adopted the following
investment restrictions which may not be changed without approval by a "majority
of the outstanding shares" of a Fund, which means the vote of the lesser of (i)
67% or more of the shares of a Fund present at a meeting, if the holders of more
than 50% of the outstanding shares of a Fund are present or represented by
proxy, and (ii) more than 50% of the outstanding shares of a Fund.
- --------------------------------------------------------------------------------
SURVIVING FUND MERGING FUND
- --------------------------------------------------------------------------------
The Surviving Fund may not make any While the Merging Fund is also
investment inconsistent with its diversified under the 1940 Act, it
classification as a diversified is not subject to a similar
investment company under the 1940 fundamental restriction.
Act.
- --------------------------------------------------------------------------------
The Surviving Fund may not purchase The Merging Fund may not purchase
any security which would cause it the securities of any issuer (other
to concentrate its investments in than securities issued or
the securities of issuers primarily guaranteed by the U.S. government
engaged in any particular industry or any of its agencies or
except as permitted by the instrumentalities, or repurchase
Commission. agreements secured thereby) if, as
a result, more than
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-16-
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SURVIVING FUND MERGING FUND
- --------------------------------------------------------------------------------
25% of the Merging Fund's total
assets would be invested in the
securities of companies whose
principal business activities are
in the same industry.
Notwithstanding the foregoing, with
respect to the Merging Fund's
permissible futures and options
transactions in U.S. Government
securities, positions in such
options and futures shall not
be subject to this restriction.
- --------------------------------------------------------------------------------
The Surviving Fund may not borrow The Merging Fund may not borrow
money, except to the extent money, except for temporary or
permitted by applicable law. emergency purposes, or by engaging
in reverse repurchase transactions,
in an amount not exceeding 33-1/3%
of the value of its total assets at
the time when the loan is made and
may pledge, mortgage or hypothecate
no more than 1/3 of its net assets
to secure such borrowings. Any
borrowings representing more than
5% of the Merging Fund's total
assets must be repaid before the
Merging Fund may make additional
investments.
- --------------------------------------------------------------------------------
The Surviving Fund may not purchase The Merging Fund may not purchase
or sell commodities or commodity or sell physical commodities unless
contracts unless acquired as a acquired as a result of ownership
result of ownership of securities of securities or other instruments
or other instruments issued by but this shall not prevent the Fund
persons that purchase or sell from (i) purchasing or selling
commodities or commodities options and futures contracts or
contracts; but this shall not from investing in securities or
prevent the Surviving Fund from other instruments backed by
purchasing, selling and entering physical commodities or (ii)
into financial futures contracts engaging in forward purchases or
(including futures contracts on sales of foreign currencies or
indices of securities, interest securities.
rates and currencies), options on
financial futures contracts
(including futures contracts on
indices of securities, interest
rates and currencies), warrants,
swaps, forward contracts, foreign
currency spot and forward contracts
or other derivative instruments
that are not related to physical
commodities.
- --------------------------------------------------------------------------------
-17-
- --------------------------------------------------------------------------------
SURVIVING FUND MERGING FUND
- --------------------------------------------------------------------------------
The Surviving Fund may make loans The Merging Fund may not make
to other persons, in accordance loans, except that the Merging Fund
with the Fund's investment may: (i) purchase and hold debt
objective and policies and to the instruments (including without
extent permitted by applicable law. limitation, bonds, notes,
debentures or other obligations and
certificates of deposit, bankers'
acceptances and fixed time
deposits) in accordance with its
investment objectives and policies;
(ii) enter into repurchase
agreements with respect to
portfolio securities; and (iii)
lend portfolio securities with a
value not in excess of one-third of
the value of its total assets.
- --------------------------------------------------------------------------------
The Surviving Fund is not subject Notwithstanding any other
to a similar fundamental investment policy or restriction,
restriction. Although, the the Merging Fund may seek to
Surviving Fund currently invests achieve its investment objective by
all of its assets in the Master investing all of its assets in
Portfolio, following the another investment company having
Reorganization, the Surviving Fund substantially the same investment
will invest directly in portfolio objective and policies as the
securities. Merging Fund.
- --------------------------------------------------------------------------------
Neither Fund may issue senior securities, except as permitted under the
1940 Act or any rule, order or interpretation thereunder.
Neither Fund may underwrite securities of other issuers, except to the
extent that the Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the Securities Act of 1933, as amended.
Neither Fund may purchase or sell real estate (including, for the
Merging Fund, real estate limited partnerships), except that, to the extent
permitted by applicable law, each Fund may (a) invest in securities or other
instruments directly or indirectly secured by real estate and (b) invest in
securities or other instruments issued by issuers that invest in real estate.
Notwithstanding any other investment policy or restriction, the
Merging Fund may seek to achieve its investment objective by investing all of
its assets in another investment company having substantially the same
investment objective and policies as the Merging Fund. The Surviving fun is not
subject to a similar fundamental restriction. However, the Surviving Fund
currently invests all of its assets in the Master Portfolio.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment restrictions
described below are not fundamental policies of the Surviving Fund and/or the
Merging Fund and may be changed by their respective Trustees.
-18-
- --------------------------------------------------------------------------------
SURVIVING FUND MERGING FUND
- --------------------------------------------------------------------------------
The Surviving Fund may not acquire The Merging Fund may not invest
any illiquid securities, such as more than 15% of its net assets in
repurchase agreements with more illiquid securities.
than seven days to maturity or
fixed time deposits with a duration
of over seven calendar days, if as
a result thereof, more than 15% of
the market value of the Surviving
Fund's net assets would be in
investments which are illiquid.
- --------------------------------------------------------------------------------
The Surviving Fund may not purchase The Merging Fund may not make short
securities on margin, make short sales of securities, other than
sales of securities, or maintain a short sales "against the box," or
short position, provided that this purchase securities on margin
restriction shall not be deemed to except for short-term credits
be applicable to the purchase or necessary for clearance of
sale of when-issued or delayed portfolio transactions, provided
delivery securities, or to short that this restriction will not be
sales that are covered in applied to limit the use of
accordance with Commission rules. options, futures contracts and
related options, in the manner
otherwise permitted by the
investment restrictions, policies
and investment program of the Fund.
The Merging Fund does not have the
current intention of making short
sales against the box.
- --------------------------------------------------------------------------------
The Surviving Fund may not acquire Except as otherwise specified
securities of other investment herein, the Merging Fund may invest
companies, except as permitted by in securities of other investment
the 1940 Act or any order pursuant companies to the extent permitted
thereto. by the applicable federal
securities law.
- --------------------------------------------------------------------------------
The Surviving Fund is not subject The Merging Fund may not, with
to a similar non-fundamental respect to 75% of its assets, hold
restriction, although as a matter more than 10% of the outstanding
of fundamental policy the Surviving voting securities of any issuer or
Fund may not make any investment invest more than 5% of its assets
inconsistent with its in the securities of any one issuer
classification as a diversified (other than obligations of the U.S.
investment company under the 1940 Government, its agencies and
Act.. instrumentalities).
- --------------------------------------------------------------------------------
The Surviving Fund is not subject The Merging Fund may not purchase
to a similar non-fundamental or sell interests in oil, gas or
restriction. mineral leases.
- --------------------------------------------------------------------------------
The Surviving Fund is not subject The Merging Fund may not write,
to a similar non-fundamental purchase or sell any put or call
restriction. option or any combination thereof,
provided that this shall not
prevent (i) the writing, purchasing
or
- --------------------------------------------------------------------------------
-19-
- --------------------------------------------------------------------------------
SURVIVING FUND MERGING FUND
- --------------------------------------------------------------------------------
selling of puts, calls or
combinations thereof with respect
to portfolio securities or (ii)
with respect to the Merging Fund's
permissible futures and options
transactions, the writing,
purchasing, ownership, holding or
selling of futures and options
positions or of puts, calls or
combinations thereof with respect
to futures.
- --------------------------------------------------------------------------------
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.
PURCHASES, REDEMPTIONS AND EXCHANGES
Following the Reorganization, the procedures for purchases, redemptions
and exchanges of shares of the Surviving Fund will be similar to those of the
Merging Fund. Please note that the Surviving Fund currently has one class of
shares. In connection with the Reorganization and the Concurrent
Reorganizations, this class will be renamed "Institutional Class" and the Class
A, Class B, Class C and Select Class share classes 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.
SALES CHARGES
There is normally a sales charge (sometimes called a "load") to buy
Class A Shares of the Surviving Fund, and a deferred sales charge imposed if you
sell Class B or Class C Shares of the Surviving Fund within six years or one
year of purchase, respectively. Following the Reorganization, the schedules of
loads and deferred sales charges for the Surviving Fund will be identical to
those for the Merging Fund. There are also ongoing charges that holders of Class
A, Class B and Class C Shares pay as long as they own their shares, as more
fully explained below. There is no sales charge to buy or sell Select Class
Shares.
The Merging Fund Shareholders holding Class A Shares will receive Class
A Shares in the Reorganization but will not have to pay a sales charge. The
Merging Fund Shareholders holding Class B or Class C Shares will receive Class B
or Class C Shares in the Reorganization, as applicable, but will not have to pay
a deferred sales charge as a result of the Reorganization. Instead, for purposes
of calculating the deferred sales charge, the amount of time such shareholder
held Class B or Class C Shares of the Merging Fund
-20-
will be added to the amount of time they hold Class B or Class C Shares of the
Surviving Fund.
CONVERSION OF CLASS B SHARES TO CLASS A SHARES
Class B Shares automatically convert into Class A Shares at the
beginning of the ninth year after such shares were purchased. For purposes of
calculating the conversion to Class A Shares, the amount of time a shareholder
held Class B Shares of the Merging Fund will be added to the amount of time such
shareholder holds Class B Shares of the Surviving Fund.
12b-1 FEES
The distributor is the distributor for the Surviving Fund. The
Surviving Fund will adopt a Rule 12b-1 distribution plan for Class A, Class B
and Class C Shares under which it will pay annual distribution fees of up to
0.25% of the average daily net assets attributable to Class A Shares and annual
distribution fees of up to 0.75% of the average daily net assets attributable to
Class B and Class C Shares. A similar 12b-1 distribution plan (with annual
distribution fees of up to 0.25%, 0.75% and 0.75%, respectively) is currently in
effect for Class A Shares, Class B Shares and Class C Shares of the Merging
Fund.
This payment covers such things as compensation for services provided
by broker-dealers and expenses connected with the sale of shares. Payments are
not tied to actual expenses incurred.
Because 12b-1 expenses are paid out of the Surviving Fund's assets on
an ongoing basis, over time these fees will increase the cost of a shareholder's
investment and may cost more than other types of sales charges used by other
mutual funds.
There is no Rule 12b-1 distribution plan for Select Class Shares of the
Surviving Fund.
BUYING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF THE SURVIVING FUND
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), plus any applicable sales charge. 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 JPMorgan
Funds Service Center (the "Center")
-21-
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.
All purchases of Select Class Shares of the Surviving Fund must be paid
for by federal funds wire. They 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 Class A,
Class B and Class C Shares, checks should be made out to JPMorgan 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 Class A, Class B or Class C Shares through
an investment representative should instruct their representative to contact the
Surviving Fund. Such representatives may 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 Class A, Class B and
Class C Shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE SURVIVING FUND SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
-22-
Shares of the Surviving Fund may be sold on any day the Center is open
for trading, either directly to the 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
Class A, Class B and Class C Shares and by wire only for Select Class Shares.
However, for Class A, Class B and Class C, 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 Class A, Class B and Class C 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 in
the case of Select Class Shares, 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. Class A, Class B and Class C shareholders may call 1-800-__________
while Select Class Shareholders may call 1-800-________.
A systematic withdrawal plan is available for Class A, Class B and
Class C Shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF THE SURVIVING FUND
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Shares of the Surviving Fund may be exchanged for shares of the same
class in certain other JPMorgan Funds.
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. Shareholders who exchange must meet any minimum investment
requirements and may have to pay a sales commission.
-23-
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 Surviving Fund reserves the right to limit the number of exchanges or
refuse an exchange. Each exchange privilege may also be terminated. The
Surviving 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 Class A, Class B and Class C Shares, the Surviving Fund may close
an account if the balance falls below $500. 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. For Select Class Shares, the
Surviving Fund may close an account if the balance falls below $_________
because the investor has sold shares. 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 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 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 Surviving 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 The Chase Manhattan Bank) 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 Class A, Class B, Class C and Select Class Shares held by investors
serviced by the shareholder servicing agent. The Merging Fund likewise has
similar arrangements with respect to its Class A, Class B, Class C and
Institutional Class 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.
-24-
The Surviving Fund will issue 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 Fund
shares may receive a different amount for each class.
DISTRIBUTIONS AND TAXES
The Surviving Fund can earn income and realize capital gain. Surviving
Fund will deduct from these earnings any expenses and then pay to shareholders
the distributions.
The Surviving Fund generally distributes any net investment income at
least quarterly. Net capital gain is distributed annually. You have three
options for your Surviving Fund distributions. You may:
- reinvest all of them in additional Fund shares without a sales
charge;
- 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. The state or municipality where
you live may not charge you state and local taxes on tax-exempt interest earned
on certain bonds.
Dividends earned on bonds issued by the U.S. government and its
agencies may also be exempt from some types of state and local taxes.
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.
-25-
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.
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of MFG, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, MFG's operations are governed by MFG'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 MFG'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 MFG and
JPMF is set forth in the Funds' respective Statements of Additional Information,
which are incorporated herein by reference.
SHARES OF FUNDS
Each of MFG 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 MFG 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 MFG 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
-26-
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 MFG 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 MFG or JPMF.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either MFG 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 MFG 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 MFG 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 MFG 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 MFG 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 MFG 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 MFG and JPMF are available without charge upon
written request to that trust.
-27-
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 Master Portfolio, and JPMIM is responsible for the
day-to-day management of the Surviving Fund's assets. Following the
Reorganization and the Concurrent Reorganizations, 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 (including JPMFAM) 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 Merging Fund by JPMFAM.
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 0.40%. The
Merging Fund also currently pays 0.40% of average net assets to JPMFAM 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
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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.
DURATION AND TERMINATION. The Advisory Agreement continues 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 for the Surviving Fund is comprised of 23
research analysts, who select stocks in their respective sectors. Henry D.
Cavanna, managing director, and Bradford L. Frishberg, vice president, oversee
the portfolio and manage its cash flows. Mr. Cavanna joined the team in February
of 1998, and has been at JPMIM since 1971. He served as manager of U.S. equity
portfolios prior to managing the fund. Mr. Frishberg has been at JPMIM since
1996 and is a portfolio manager in the equity and balanced groups. Prior to
joining J.P. Morgan, he managed portfolios for Aetna Investment Management in
Hong Kong.
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.
-29-
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 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
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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 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 assets in excess
of $26 billion.
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 MFG, 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 MFG will continue to exist and operate. All
shareholders of any series of MFG 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 MFG, you are entitled to vote on
this proposal. Shareholders of JPMF are being asked to approve the same Trustees
as are being proposed for MFG.
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
JPMFAM, 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 MFG and
certain current Trustees of JPMF (including certain members of 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 MFG 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.
-31-
THE MFG 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 MFG.
The following are the nominees:
------------------------------------------------------
The Board of Trustees of MFG met ___ times during the fiscal year ended
October 31, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of MFG presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong,
Eppley, MacCallan and Thode. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters. The Audit
Committee met two times during the fiscal year ended October 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 JPMFAM 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 JPMFAM. Each Trustee receives a
fee, allocated among all investment companies for which the Trustees serves,
which consists of an annual retainer component and a meeting fee component. Each
Trustee of MFG receives a quarterly retainer of $_____ and an additional per
meeting fee of $_____.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 2000 for each Trustee of MFG:
-32-
PENSION OR
RETIREMENT BENEFITS TOTAL COMPENSATION
ACCRUED AS FUND FROM "FUND
COMPENSATION EXPENSES COMPLEX"(1)
---------------- ----------------------- --------------------
Fergus Reid, III, Trustee $
Richard E. Ten Haken, Trustee
William J. Armstrong, Trustee
John R. H. Blum, Trustee
Joseph J. Harkins, Trustee
H. Richard Vartabedian, Trustee
Stuart W. Cragin, Jr., Trustee
Irving L. Thode, Trustee
Roland R. Eppley, Jr., Trustee
Sarah E. Jones, Trustee
W. D. MacCallan, Trustee
W. Perry Neff, Trustee
Leonard M. Spalding, Jr., Trustee
- -----------------
(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.
MERGING FUND RETIREMENT PLAN FOR ELIGIBLE TRUSTEES
Effective August 21, 1995, the Trustees also instituted a Retirement
Plan for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is
not an employee of any of the Funds, JPMFAM, the administrator or distributor or
any of their affiliates) may be entitled to certain benefits upon retirement
from the Board of Trustees. Pursuant to the Plan, the normal retirement date is
the date on which the eligible Trustee has attained age 65 and has completed at
least five years of continuous service with one or more of the investment
companies advised by JPMFAM and its affiliates (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an
annual benefit commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to the sum of (i) 8% of the
highest annual compensation received from the Covered Funds multiplied by the
number of such Trustee's years of service (not in excess of 10 years) completed
with respect to any Covered Funds and (ii) 4% of the highest annual compensation
received from the Covered Funds for each year of service in excess of 10 years,
provided that no Trustee's annual benefit will exceed the highest annual
compensation received by that Trustee from the Covered Funds. Such benefit is
payable to each eligible Trustee in monthly installments for the life of the
Trustee. On February 22, 2001, the Board of Trustees voted to terminate the Plan
and to pay each Eligible Trustee an agreed-upon amount of compensation.
-33-
classifications. As of December 31, 2000, the estimated credited years of
service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley, Harkins,
Neff, MacCallan, Spalding, Ten Haken, Thode and Ms. Jones are 15, 7, 12, 15, 6,
10, 9, 9, 15, 1, 14, 6 and 0, respectively.
Effective August 21, 1995, the Trustees instituted a Deferred
Compensation Plan for Eligible Trustees (the "Deferred Compensation Plan")
pursuant to which each Trustee (who is not an employee of any of the Funds,
JPMFAM, the administrator or distributor or any of their affiliates) may enter
into agreements with the Funds whereby payment of the Trustees' fees are
deferred until the payment date elected by the Trustee (or the Trustee's
termination of service). The deferred amounts are deemed invested in shares of
funds selected by the Trustee. The deferred amounts are paid out in a lump sum
or over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be distributed
to the Trustee's designated beneficiary in a single lump sum payment as soon as
practicable after such deferring Trustee's death. The following Eligible
Trustees have executed a deferred compensation agreement for the 2000 calendar
year: Messrs._____________________________.
PRINCIPAL EXECUTIVE OFFICERS:
The principal executive officers of MFG are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------- --- ------------------------------------------
Martin R. Dean 37 Treasurer and Assistant Secretary. Vice President, Administration
Services, BISYS Fund Services, Inc.; formerly Senior Manager, KPMG
Peat Marwick (1987-1994). Address: 3435 Stelzer Road, Columbus,
OH 43219.
Lisa Hurley 45 Secretary. Senior Vice President and General Counsel, BISYS Fund
Services, Inc.; formerly Counsel to Moore Capital Management and
General Counsel to Global Asset Management and Northstar
Investments Management. Address: 90 Park Avenue, New York, NY
10016.
-34-
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------- --- ------------------------------------------
Vicky M. Hayes 37 Assistant Secretary. Vice President and Global Marketing Manager,
J.P. Morgan Fund Distributors, Inc.; formerly Assistant Vice
President, Alliance Capital Management and held various positions
with J. & W. Seligman & Co. Address: 1211 Avenue of the Americas,
41st Floor, New York, NY 10081.
Alaina Metz 33 Assistant Secretary. Chief Administrative Officer, BISYS Fund
Services, Inc.; formerly Supervisor, Blue Sky Department, Alliance
Capital Management L.P. Address: 3435 Stelzer Road, Columbus, OH
43219.
ACCOUNTANTS
PricewaterhouseCoopers LLP serves as the Merging Fund's and the
Surviving Fund's independent accountants, auditing and reporting on the annual
financial statements and reviewing certain regulatory reports and federal income
tax returns. PricewaterhouseCoopers LLP also performs other professional
accounting, auditing, tax and advisory services when MFG or JPMF engages it to
do so.
AUDIT FEES. The aggregate fees paid to PricewaterhouseCoopers LLP in
connection with the annual audit of the Merging Fund for the last fiscal year
ended was $19,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for information systems design and implementation services
rendered by PricewaterhouseCoopers LLP to the Merging Fund, JPMFAM and JPMFAM's
affiliates that provide services to the Fund for the calendar year ended
December 31, 2000 was $1,360,000.
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 Merging Fund, JPMFAM and JPMFAM's affiliates
that provide services to the Fund for the calendar year ended December 31, 2000
was $25,319,325.
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 MFG Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. MFG's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview. In
addition MFG 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 MFG to forward
solicitation materials
-35-
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 MFG 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 a majority
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 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 MFG,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other
-36-
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 MFG 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 MFG 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% of the 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 and the Concurrent
Reorganizations based upon their holdings at November 30, 2000 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
- ---------------- --------- --------------- -----------------------
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 share ownership of the persons who owned
beneficially more than 5% of the shares of the Surviving Fund or any class
thereof and the percentage of any shares of the Surviving Fund or any class
thereof that would be owned by such person upon consummation of the
-37-
Reorganization and the Concurrent Reorganizations based upon their holdings at
November 30, 2000 were 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 MFG
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 MFG'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 1-800-348-4782. MFG 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 Commission and which is incorporated
herein by reference. Copies of the Statement of Additional information may be
obtained without charge by calling 1-800-766-7722. 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.
-38-
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund for the fiscal year ended October 31, 2000 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 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 MFG 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 MFG 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 MFG 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 MFG in writing at the address
on the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-348-4782.
* * *
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.
-39-
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this ____
day of ______, 2001 by and among Mutual Fund Group (the "Transferor Trust"), a
Massachusetts business trust, on behalf of JPMorgan Large Cap Equity Fund
(formerly, Chase Vista Large Cap Equity Fund) (the "Transferor Portfolio"), J.P.
Morgan Institutional Funds (the "Acquiring Trust"), a Massachusetts business
trust, on behalf of the JPMorgan Institutional U.S. Equity 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 Institutional Class
Shares of the Transferor Portfolio, the Class A share class in exchange for
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Class A Shares of the Transferor Portfolio, the Class B share class in exchange
for Class B Shares of the Transferor Portfolio and the Class C share class in
exchange for Class C Shares of the Transferor Portfolio, with the amounts of
shares of each class to be determined by the parties. 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
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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.
(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 Institutional Class shares shall be determined by an exchange ratio
computed by dividing the net value of the Transferor Portfolio's assets
attributable to Institutional Class 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). The number of Class A 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 Class A shares shall be determined by an exchange ratio
computed by dividing the net value of the Transferor Portfolio's assets
attributable to Class A shares by the net asset value per share of the Class A
shares of the Acquiring Portfolio, both as determined in accordance with Section
1(c)(i). The number of Class B shares of the Acquiring Portfolio Shares 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 Class B shares shall be determined by an exchange ratio computed by
dividing the net value of the Transferor Portfolio's assets attributable to
Class B shares by the net asset value per share of the Class B shares of the
Acquiring Portfolio, both as determined in accordance with Section 1(c)(i). The
number of Class C shares of the Acquiring Portfolio Shares 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
Class C shares shall be determined by an exchange ratio computed by dividing the
net value of the Transferor Portfolio's assets attributable to Class C shares by
the net asset value per share of the Class C shares of the Acquiring Portfolio,
both as determined in accordance with Section 1(c)(i).
(iii) 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.
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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 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 15,051,872 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 for The U.S. Equity 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. Equity 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 for The U.S.
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Equity Portfolio for the fiscal period ended November 30, 2000 fairly present
the financial position of the Acquiring Portfolio and the U.S. Equity 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.
(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.
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(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.
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 3,980,818 Class A shares, 1,780,660 Class B shares,
124,782 Class C shares and 7,076,121 Institutional Class shares of the
Transferor Portfolio, and no shares of such Portfolio were held in the
treasury
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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.
(e) FINANCIAL STATEMENTS. The financial statements for the Transferor
Trust with respect to the Transferor Portfolio for the fiscal year ended October
31, 2000 which have been audited by PricewaterhouseCoopers LLP fairly present
the financial position of the Transferor 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 October 31, 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 October 31, 2000, there has been
no material adverse change in the financial condition, results of operations,
business, properties or assets of
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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 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 and has qualified 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
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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 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
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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 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
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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").
(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
A-11
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 shareholder 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.
(e) CONCURRENT REORGANIZATION. The reorganization of JPMorgan U.S.
Equity Fund, a series of J.P. Morgan Funds, and JPMorgan U.S. Equity Fund -
Advisor Series, a series of J.P. Morgan Institutional Funds, into the Acquiring
Portfolio shall have been consummated.
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) 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 October 31,
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.
A-12
(g) CONCURRENT REORGANIZATION. The reorganization of JPMorgan U.S.
Equity Fund, a series of J.P. Morgan Funds, and JPMorgan U.S. Equity Fund -
Advisor Series, a series of J.P. Morgan Institutional Funds, into the Acquiring
Portfolio shall have been consummated.
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 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 J.P.
Morgan Fleming Asset Management (USA) Inc. 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 J.P. Morgan Fleming Asset
Management (USA) Inc. 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.
A-13
(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 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 as set forth in the
Registration Statement 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):
1211 Avenue of the Americas, 41st Floor
New York, New York 10036
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Sarah E. Cogan, Esq.
if to the Acquiring Trust (for itself or on behalf of the Acquiring
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
A-14
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.
(e) The name "Mutual Fund Group" is the designation of its Trustees
under a Declaration of Trust dated May 11, 1987, 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 assumes 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 JPMorgan Institutional U.S. Equity Fund
By:
--------------------------------------------------
Name:
Title:
MUTUAL FUND GROUP
on behalf of JPMorgan Large Cap Equity Fund
By:
--------------------------------------------------
Name:
Title:
Agreed and acknowledged with respect to Section 9:
J.P. MORGAN CHASE & CO.
By:
--------------------------------------------------
Name:
Title:
A-16
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
JPMORGAN LARGE CAP EQUITY FUND
(FORMERLY, CHASE VISTA LARGE CAP EQUITY FUND),
A SERIES OF MUTUAL FUND GROUP)
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 JPMorgan Large Cap Equity
Fund (formerly, Chase Vista Large Cap Equity Fund) (the "Merging Fund"), a
series of Mutual Fund Group ("MFG"), to be held on July 3, 2001. Copies of the
Combined Prospectus/Proxy Statement may be obtained at no charge by calling
JPMorgan U.S. Equity Fund at 1-800-________.
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 and the Merging Fund is
contained in each of JPMF's and MFG's Statements of Additional Information which
are incorporated herein by reference.
The date of this Statement of Additional Information is May 12, 2001.
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 MFG, 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) a
holder of Class A Shares in the Merging Fund will receive Class A Shares of the
Surviving Fund, (b) a holder of Class B Shares in the Merging Fund will receive
Class B Shares in the Surviving Fund, (c) a holder of Class C Shares in the
Merging Fund will receive Class C Shares in the Surviving Fund and (d) a holder
of Institutional Class Shares in the Merging Fund will receive Select Class
Shares of the Surviving Fund, in each case 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 MFG.
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 Surviving Fund contained in its Annual Report dated May 31, 2000
and of the Merging Fund contained in its Annual Report dated October 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 Surviving Fund and the
Master Portfolio for the fiscal year ended May 31, 2000 and the Merging Fund for
the fiscal year ended October 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 Surviving Fund contained in its Semi-Annual Report 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-
PRO FORMA FINANCIAL STATEMENTS
J.P. MORGAN U.S. EQUITY PORTFOLIO / CHASE VISTA LARGE CAP EQUITY FUND (1)
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
NOVEMBER 30, 2000
(UNAUDITED)
PRINCIPAL AMOUNT MARKET VALUE
------------------------------------------- ------------------------------------------------
PRO FORMA PRO FORMA
COMBINED COMBINED
PRO FORMA JPMORGAN PRO FORMA JPMORGAN
CHASE JPM ADJUSTMENTS VALUE FUND CHASE JPM ADJUSTMENTS VALUE FUND
---------- --------- ----------- ---------- ------------ ---------- ----------- -----------
COMMON STOCKS - 95.6%
CAPITAL MARKETS
CAPITAL MARKETS - 1.8%
Goldman Sachs Group, Inc. (The) 119,700 119,700 - 9,830,363 - 9,830,363
TD Waterhouse Group, Inc.(+) 253,400 253,400 - 3,357,550 - 3,357,550
------------------------------------------- ------------------------------------------------
- 373,100 - 373,100 - 13,187,913 - 13,187,913
------------------------------------------- ------------------------------------------------
COMPUTER HARDWARE
COMPUTER HARDWARE &
BUSINESS MACHINES - 9.1%
Avaya Inc.(+) 7,300 7,300 - 85,319 - 85,319
Cisco Systems Inc.(s)(+) 77,000 414,800 491,800 3,686,375 19,858,550 - 23,544,925
Compaq Computer Corp. 77,000 232,400 309,400 1,655,500 4,996,600 - 6,652,100
Dell Computer Corp.(+) 47,100 47,100 - 906,675 - 906,675
EMC Corp. (Mass.)(+) 46,000 104,500 150,500 3,421,250 7,772,188 - 11,193,438
Hewlett-Packard Co. 56,000 69,600 125,600 1,771,000 2,201,100 - 3,972,100
Quantum Corp. - DLT & Storage
Systems(+) 202,500 202,500 - 2,733,750 - 2,733,750
Sun Microsystems, Inc.(s)(+) 36,000 186,900 222,900 2,738,250 14,216,081 - 16,954,331
------------------------------------------- ------------------------------------------------
292,000 1,265,100 - 1,557,100 13,272,375 52,770,263 66,042,638
------------------------------------------- ------------------------------------------------
CONSUMER CYCLICAL
HOTELS - 0.3%
------------------------------------------- ------------------------------------------------
Marriott International, Inc. 58,700 58,700 - 2,432,381 - 2,432,381
------------------------------------------- ------------------------------------------------
MOTOR VEHICLES & PARTS - 1.9%
Dana Corp. 66,400 66,400 - 1,112,200 - 1,112,200
Delphi Automotive Systems 167,500 167,500 - 2,313,594 - 2,313,594
Ford Motor Company 145,136 93,492 238,628 3,301,844 2,126,943 - 5,428,787
General Motors Corp. 32,200 23,800 56,000 1,593,900 1,178,100 - 2,772,000
Lear Corp. (+) 129,800 129,800 - 2,839,375 - 2,839,375
------------------------------------------- ------------------------------------------------
177,336 480,992 - 658,328 4,895,744 9,570,212 - 14,465,956
------------------------------------------- ------------------------------------------------
RESTAURANTS - 0.3%
------------------------------------------- ------------------------------------------------
McDonald's Corp. 57,000 57,000 - 1,816,875 - 1,816,875
------------------------------------------- ------------------------------------------------
FOOD/ BEVERAGES - 1.2%
Anheuser-Busch Companies, Inc. 47,000 47,000 2,229,563 - 2,229,563
Coca-Cola Co. 42,300 42,300 2,649,038 - 2,649,038
PepsiCo, Inc. 40,000 40,000 1,815,000 - 1,815,000
Sysco Corp. 33,000 33,000 1,823,250 - 1,823,250
------------------------------------------- ------------------------------------------------
162,300 - - 162,300 8,516,851 - - 8,516,851
------------------------------------------- ------------------------------------------------
CONSUMER SERVICES
ENTERTAINMENT - 0.9%
------------------------------------------- ------------------------------------------------
Viacom, Inc. Cl B(+) 48,360 76,900 125,260 2,472,405 3,931,512 - 6,403,917
------------------------------------------- ------------------------------------------------
MEDIA - 2.0%
AT&T Corp. - Liberty Media
Group Cl A(+) 104,200 104,200 - 1,413,213 - 1,413,213
Charter Communications, Inc.(+) 40,758 40,758 - 804,971 - 804,971
Comcast Corp. Cl A(+) 93,800 93,800 - 3,605,438 - 3,605,438
News Corp. Ltd. (The) ADR(i) 106,400 106,400 - 3,710,699 - 3,710,699
The Walt Disney Co. 49,000 49,000 1,417,938 - - 1,417,938
See notes to Pro Forma Financial Statements
-4-
Time Warner Inc. 29,000 27,700 56,700 1,798,000 1,717,400 - 3,515,400
------------------------------------------- ------------------------------------------------
78,000 372,858 - 450,858 3,215,938 11,251,721 14,467,659
------------------------------------------- ------------------------------------------------
CONSUMER STABLE
HOME PRODUCTS - 3.1%
Clorox Company 52,800 52,800 - 2,359,500 - 2,359,500
Estee Lauder Companies, Inc. 62,700 62,700 - 2,715,694 - 2,715,694
Gillette Company 47,400 153,400 200,800 1,605,675 5,196,425 - 6,802,100
Procter & Gamble Co. (The) 142,000 142,000 - 10,632,250 - 10,632,250
------------------------------------------- ------------------------------------------------
47,400 410,900 - 458,300 1,605,675 20,903,869 - 22,509,544
------------------------------------------- ------------------------------------------------
TOBACCO - 1.8%
------------------------------------------- ------------------------------------------------
Philip Morris Companies Inc. 41,500 295,300 336,800 1,584,781 11,276,769 - 12,861,550
------------------------------------------- ------------------------------------------------
ENERGY
ENERGY RESERVES &
PRODUCTION - 5.1%
Anadarko Petroleum Corp. 44,500 44,500 - 2,647,750 - 2,647,750
Chevron Corp. 42,100 37,900 80,000 3,446,938 3,103,063 - 6,550,001
Exxon Mobil Corp.(s) 95,405 217,548 312,953 8,395,640 19,144,223 - 27,539,863
------------------------------------------- ------------------------------------------------
137,505 299,948 - 437,453 11,842,578 24,895,036 - 36,737,614
------------------------------------------- ------------------------------------------------
OIL REFINING - 0.2%
------------------------------------------- ------------------------------------------------
Texaco Inc. 24,100 24,100 - 1,399,306 - 1,399,306
------------------------------------------- ------------------------------------------------
OIL SERVICES - 1.0%
Baker Hughes Inc. 109,900 109,900 - 3,633,569 - 3,633,569
Global Marine Inc.(+) 108,600 108,600 - 2,382,413 - 2,382,413
------------------------------------------- ------------------------------------------------
- 242,600 - 242,600 - 6,015,982 - 6,015,982
------------------------------------------- ------------------------------------------------
OIL & GAS - 1.2%
BP Amoco PLC, ADR
(United Kingdom) 24,000 24,000 1,138,500 - - 1,138,500
Halliburton Co. 41,500 41,500 1,385,063 - - 1,385,063
Royal Dutch Petroleum Co.,
N.Y. Registered Shares
(Netherlands) 75,800 75,800 4,524,313 - - 4,524,313
Schlumberger LTD 28,000 28,000 1,736,000 1,736,000
------------------------------------------- ------------------------------------------------
169,300 - - 169,300 8,783,876 - - 8,783,876
------------------------------------------- ------------------------------------------------
FINANCE
BANKS - 5.5%
Amsouth Bancorporation 223,100 223,100 - 3,318,613 - 3,318,613
Bank of New York Co., Inc. 85,834 85,834 4,736,964 - - 4,736,964
Citigroup Inc. 197,000 81,566 278,566 9,813,063 4,063,006 - 13,876,069
First Union Corp. 103,000 103,000 - 2,587,875 - 2,587,875
Firstar Corp.(s) 608,000 608,000 - 11,780,000 - 11,780,000
Wells Fargo Co. 68,500 68,500 3,249,469 - - 3,249,469
------------------------------------------- ------------------------------------------------
351,334 792,566 - 1,143,900 17,799,496 21,749,494 - 39,548,990
------------------------------------------- ------------------------------------------------
FINANCIAL SERVICES - 7.6%
American Express Co. 66,600 66,600 3,658,838 - - 3,658,838
Associates First
Capital Corp. 219,900 219,900 - 7,765,219 - 7,765,219
Capital One Financial Corp. 69,900 69,900 - 3,901,294 - 3,901,294
Countrywide Credit
Industries, Inc. 95,900 95,900 - 3,560,288 - 3,560,288
Fannie Mae 20,700 20,700 1,635,300 - - 1,635,300
Federal Home Loan Mortgage Corp. 43,100 43,100 - 2,604,856 - 2,604,856
General Electric Co. (U.S.)(s) 213,916 331,700 545,616 10,602,212 16,439,880 - 27,042,092
Morgan Stanley Dean Witter & Co. 38,000 38,000 2,408,250 - - 2,408,250
Providian Financial Corp. 14,700 14,700 - 1,323,000 - 1,323,000
State Street Corp. 9,400 9,400 1,212,600 - - 1,212,600
------------------------------------------- ------------------------------------------------
348,616 775,200 - 1,123,816 19,517,200 35,594,537 - 55,111,737
------------------------------------------- ------------------------------------------------
THRIFTS - 0.4%
------------------------------------------- ------------------------------------------------
Washington Mutual, Inc. 56,300 56,300 - 2,558,131 - 2,558,131
------------------------------------------- ------------------------------------------------
HEALTH SERVICES & SYSTEMS
MEDICAL PRODUCTS &
SUPPLIES - 1.1%
Bard (C.R.), Inc. 38,700 38,700 - 1,905,975 - 1,905,975
Becton Dickinson & Co. 89,100 89,100 - 3,029,400 - 3,029,400
Medtronic, Inc. 53,200 53,200 - 2,832,900 - 2,832,900
------------------------------------------- ------------------------------------------------
- 181,000 - 181,000 - 7,768,275 - 7,768,275
------------------------------------------- ------------------------------------------------
INDUSTRIAL CYCLICAL
CHEMICALS - 1.9%
See notes to Pro Forma Financial Statements
-5-
Air Products & Chemicals, Inc. 205,300 205,300 - 7,070,019 - 7,070,019
Dow Chemical Co. 33,300 33,300 1,017,731 - - 1,017,731
E.I. DuPont de Nemours Co. 52,900 52,900 2,238,331 - - 2,238,331
Rohm and Haas Co. 112,700 112,700 - 3,352,825 - 3,352,825
------------------------------------------- ------------------------------------------------
86,200 318,000 - 404,200 3,256,062 10,422,844 - 13,678,906
------------------------------------------- ------------------------------------------------
DEFENSE/AEROSPACE - 0.8%
------------------------------------------- ------------------------------------------------
Honeywell Inc. 48,000 74,600 122,600 2,340,000 3,636,750 - 5,976,750
------------------------------------------- ------------------------------------------------
ELECTRICAL EQUIPMENT - 1.6%
Corning Inc. 36,000 36,000 - 2,106,000 - 2,106,000
Corvis Corp.(+) 9,900 9,900 - 285,244 - 285,244
Level 3 Communications, Inc.(+) 100,200 100,200 - 2,692,875 - 2,692,875
Nortel Networks Corp. 142,400 142,400 - 5,375,600 - 5,375,600
QUALCOMM Inc.(+) 12,500 12,500 - 1,003,125 - 1,003,125
------------------------------------------- ------------------------------------------------
- 301,000 - 301,000 - 11,462,844 - 11,462,844
------------------------------------------- ------------------------------------------------
ENVIRONMENTAL SERVICES - 0.5%
------------------------------------------- ------------------------------------------------
Waste Management, Inc. 139,757 139,757 - 3,345,433 - 3,345,433
------------------------------------------- ------------------------------------------------
HEAVY ELECTRICAL
EQUIPMENT - 0.4%
------------------------------------------- ------------------------------------------------
Cooper Industries, Inc. 71,600 71,600 - 2,922,175 - 2,922,175
------------------------------------------- ------------------------------------------------
INDUSTRIAL PARTS - 2.0%
------------------------------------------- ------------------------------------------------
Tyco International Ltd.(i)(s) 281,092 281,092 - 14,827,602 - 14,827,602
------------------------------------------- ------------------------------------------------
MACHINERY - 0.5%
Caterpillar, Inc. 60,000 60,000 2,358,750 - - 2,358,750
Dover Corp. 36,000 36,000 1,473,750 - - 1,473,750
------------------------------------------- ------------------------------------------------
96,000 - - 96,000 3,832,500 - - 3,832,500
------------------------------------------- ------------------------------------------------
MINING/METALS - 0.7%
Alcoa Inc. 40,400 61,764 102,164 1,138,775 1,740,973 - 2,879,748
Allegheny Technologies Inc. 110,186 110,186 - 2,189,947 - 2,189,947
------------------------------------------- ------------------------------------------------
40,400 171,950 - 212,350 1,138,775 3,930,920 - 5,069,695
------------------------------------------- ------------------------------------------------
OFFICE EQUIPMENT - 0.1%
------------------------------------------- ------------------------------------------------
Xerox Corp. 145,000 145,000 1,005,938 - - 1,005,938
------------------------------------------- ------------------------------------------------
PAPER PRODUCTS - 0.4%
International Paper Co. 35,100 35,100 1,189,013 - - 1,189,013
Weyerhaeuser Co. 37,000 37,000 1,618,750 - - 1,618,750
------------------------------------------- ------------------------------------------------
72,100 - - 72,100 2,807,763 - - 2,807,763
------------------------------------------- ------------------------------------------------
RAILROADS - 0.3%
------------------------------------------- ------------------------------------------------
Union Pacific Corp. 51,900 51,900 - 2,413,350 - 2,413,350
------------------------------------------- ------------------------------------------------
INSURANCE
LIFE & HEALTH INSURANCE - 1.3%
CIGNA Corp. 45,100 45,100 - 5,941,925 - 5,941,925
MetLife, Inc.(+) 118,600 118,600 - 3,513,525 - 3,513,525
------------------------------------------- ------------------------------------------------
- 163,700 - 163,700 - 9,455,450 - 9,455,450
------------------------------------------- ------------------------------------------------
PROPERTY AND CASUALTY
INSURANCE - 3.8%
Allstate Corp. 137,800 137,800 - 5,270,850 - 5,270,850
Ambac Financial Group, Inc. 83,400 83,400 - 6,369,675 - 6,369,675
American International
Group, Inc. 117,900 117,900 11,428,931 - - 11,428,931
XL Capital Ltd. Cl A(i) 57,300 57,300 - 4,573,256 - 4,573,256
------------------------------------------- ------------------------------------------------
117,900 278,500 - 396,400 11,428,931 16,213,781 - 27,642,712
------------------------------------------- ------------------------------------------------
PHARMACEUTICALS
DRUGS - 11.4%
Abbott Laboratories 82,000 82,000 4,515,125 - - 4,515,125
Alza Corp.(+) 125,200 125,200 - 5,555,750 - 5,555,750
American Home Products Corp. 55,000 62,300 117,300 3,306,875 3,745,788 - 7,052,663
Bristol-Myers Squibb Co. 61,700 61,700 - 4,276,581 - 4,276,581
Lilly (Eli) & Co. 35,000 88,500 123,500 3,279,063 8,291,344 - 11,570,407
Merck & Co., Inc. 64,900 64,900 - 6,015,419 - 6,015,419
See notes to Pro Forma Financial Statements
-6-
Pfizer, Inc.(s) 114,000 269,800 383,800 5,051,625 11,955,512 - 17,007,137
Pharmacia Corp. 115,213 181,675 296,888 7,027,993 11,082,175 - 18,110,168
Schering-Plough Corp. 153,600 153,600 - 8,611,200 - 8,611,200
------------------------------------------- ------------------------------------------------
401,213 1,007,675 - 1,408,888 23,180,681 59,533,769 - 82,714,450
------------------------------------------- ------------------------------------------------
RETAIL
CLOTHING STORES - 1.1%
Abercrombie & Fitch Co. Cl A(+) 102,400 102,400 - 2,137,600 - 2,137,600
Gap, Inc. (The) 110,400 110,400 - 2,753,100 - 2,753,100
TJX Companies, Inc. (The) 110,300 110,300 - 2,826,438 - 2,826,438
------------------------------------------- ------------------------------------------------
- 323,100 - 323,100 - 7,717,138 - 7,717,138
------------------------------------------- ------------------------------------------------
DEPARTMENT STORES - 2.4%
Kohls Corp. * 4,000 4,000 214,250 - - 214,250
Target Corp. 86,000 110,000 196,000 2,585,375 3,306,875 - 5,892,250
Wal-Mart Stores, Inc. 81,000 136,800 217,800 4,227,188 7,139,249 - 11,366,437
------------------------------------------- ------------------------------------------------
167,000 246,800 - 413,800 7,026,813 10,446,124 - 17,472,937
------------------------------------------- ------------------------------------------------
SPECIALTY STORES - 1.1%
Best Buy Co., Inc.(+) 56,100 56,100 - 1,444,575 - 1,444,575
Home Depot, Inc. 175,300 175,300 - 6,869,569 - 6,869,569
------------------------------------------- ------------------------------------------------
- 231,400 - 231,400 - 8,314,144 - 8,314,144
------------------------------------------- ------------------------------------------------
SEMICONDUCTORS
SEMICONDUCTORS - 4.0%
Altera Corp.(+) 39,500 39,500 - 945,531 - 945,531
Broadcom Corp.(+) 6,200 6,200 - 604,500 - 604,500
Intel Corp.(s) 50,000 243,500 293,500 1,903,125 9,268,219 - 11,171,344
Lattice Semiconductor Corp.(+) 2,400 2,400 - 39,900 - 39,900
Linear Technology Corp.(+) 36,700 36,700 - 1,736,369 - 1,736,369
Maxim Integrated Products,
Inc.(+) 35,000 35,000 - 1,785,000 - 1,785,000
Micron Technology, Inc.(+) 55,000 55,000 - 1,732,500 - 1,732,500
SDL, Inc.(+) 17,200 17,200 - 3,126,100 - 3,126,100
Sprint Corp. (PCS Group)(+) 114,600 114,600 - - - -
Texas Instruments Inc. 102,000 59,500 161,500 3,805,875 2,220,094 - 6,025,969
Xilinx, Inc.(+) 40,000 40,000 - 1,560,000 - 1,560,000
------------------------------------------- ------------------------------------------------
152,000 649,600 - 801,600 5,709,000 23,018,213 - 28,727,213
------------------------------------------- ------------------------------------------------
SOFTWARE & SERVICES
COMPUTER SOFTWARE - 6.8%
BEA Systems, Inc.(+) 40,200 40,200 - 2,354,213 - 2,354,213
Gemstar International
Group Ltd.(+) 85,100 85,100 - 3,462,506 - 3,462,506
International Business
Machines Corp. 44,300 23,800 68,100 4,142,050 2,225,300 - 6,367,350
Microsoft Corp.(s)(+) 276,000 276,000 - 15,835,500 - 15,835,500
NCR Corp.(+) 160,400 160,400 - 7,578,900 - 7,578,900
Oracle Corp.(+) 162,000 141,400 303,400 4,293,000 3,747,100 - 8,040,100
Parametric Technology Corp.(+) 135,200 135,200 - 1,504,100 - 1,504,100
Veritas Software Corp.(+) 41,078 41,078 - 4,007,672 - 4,007,672
------------------------------------------- ------------------------------------------------
- 41,078 - 41,078 8,435,050 40,715,291 - 49,150,341
------------------------------------------- ------------------------------------------------
INTERNET - 1.0%
Akamai Technologies, Inc.(+) 21,900 21,900 - 629,625 - 629,625
America Online, Inc.(+) 61,800 61,800 - 2,509,698 - 2,509,698
E*trade Group Inc.(+) 380,400 380,400 - 3,043,200 - 3,043,200
eBay Inc.(+) 18,000 18,000 - 617,625 - 617,625
------------------------------------------- ------------------------------------------------
- 482,100 - 482,100 - 6,800,148 - 6,800,148
------------------------------------------- ------------------------------------------------
TELECOMMUNICATIONS
TELECOMMUNICATIONS - 5.1%
AT&T Corp. 69,927 69,927 1,372,317 - - 1,372,317
BellSouth Corp. 55,000 55,000 2,299,688 - - 2,299,688
Motorola, Inc. 86,525 86,525 1,735,908 - - 1,735,908
Qwest Communications
International Inc.(+) 109,290 109,290 - 4,125,698 - 4,125,698
SBC Communications Inc.(s) 61,000 189,600 250,600 3,351,188 10,416,149 - 13,767,337
Verizon Communications 89,800 103,300 193,100 5,045,687 5,804,169 - 10,849,856
See notes to Pro Forma Financial Statements
-7-
WorldCom, Inc.(+) 113,450 113,450 - 1,694,659 - 1,694,659
------------------------------------------- ------------------------------------------------
362,252 515,640 - 877,892 13,804,788 22,040,675 - 35,845,463
------------------------------------------- ------------------------------------------------
WIRELESS TELECOMMUNICATIONS - 0.3%
Nextel Communications, Inc.(+) 72,500 72,500 - 2,247,500 - 2,247,500
Sprint Corp. (PCS Group) (+) 114,600 114,600 - 2,599,988 - 2,599,988
------------------------------------------- ------------------------------------------------
- 187,100 - 187,100 - 4,847,488 - 4,847,481
------------------------------------------- ------------------------------------------------
UTILITIES
ELECTRICAL UTILITY - 2.4%
Ameren Corp. 95,100 95,100 - 4,220,062 - 4,220,062
C P & L Energy Inc. 70,900 70,900 - 3,061,994 - 3,061,994
DTE Energy Company 72,800 72,800 - 2,761,850 - 2,761,850
Dynegy Inc. Cl A 68,300 68,300 - 3,022,275 - 3,022,275
Entergy Corp. 100,200 100,200 - 4,120,725 - 4,120,725
------------------------------------------- ------------------------------------------------
- 407,300 - 407,300 - 17,186,906 - 17,186,906
------------------------------------------- ------------------------------------------------
UTILITIES 1.2%
Dominion Resources, Inc. 20,300 20,300 1,218,000 - - 1,218,000
DQE, Inc. 41,000 41,000 1,417,063 - - 1,417,063
Duke Energy Corp. 28,000 28,000 2,518,250 - - 2,518,250
Enron Corp. 50,000 50,000 3,237,500 - - 3,237,500
------------------------------------------- ------------------------------------------------
139,300 - - 139,300 8,390,813 - - 8,390,813
------------------------------------------- ------------------------------------------------
SHORT-TERM INVESTMENTS - 4.4%
REPURCHASE AGREEMENTS - 1.6%
Greenwich Capital Markets,
Inc.,
Tri Party 6.55%
due 11/01/00 11,724,000 11,724,000 11,724,000 11,724,000
U.S. TREASURY SECURITIES - 0.3%
U.S. Treasury Notes, 5.25%,
5/31/01(s) 2,450,000 2,450,000 2,438,510 2,438,510
INVESTMENT COMPANIES - 2.5%
J.P. Morgan Institutional
Prime Money Market
Fund (a) 18,245,417 18,245,417 18,245,416 18,245,416
TOTAL INVESTMENTS - 100.0%
(COST $612,534,134) 197,588,033 527,057,247 - 724,645,280
================================================
FUTURES CONTRACTS - J.P. MORGAN PRO FORM COMBINED
UNDERLYING FACE UNREALIZED UNREALIZED
PURCHASED EXPIRATION DATE AMOUNT AT VALUE DEPRECIATION DEPRECIATION
45 S&P 500 Index December 2000 $ 14,866,875 $ (1,006,998) $ (1,006,998)
ADR American Depository Receipt
(a) Money Market mutual fund registered under the Investment Company Act of
1940, as amended, and advised by J.P. Morgan Investment, Inc.
(i) Foreign security
See notes to Pro Forma Financial Statements
-8-
(s) Security is fully or partially segregated with custodian as collateral
for futures or with brokers as initial margin for futures contracts.
(+) Non-income producing security.
The Portfolio may invest in one or more affiliated money market funds.
The Advisor has agreed to reimburse its advisory fee from the Portfolio
in an amount to offset any investment advisory, administrative fee and
shareholder servicing fees related to a Portfolio investment in an
affiliated money market fund.
(1) Subsequently renamed JPMorgan Large Cap Equity Fund
See notes to Pro Forma Financial Statements
-9-
JP MORGAN U.S. EQUITY FUND / JP MORGAN INSTITUTIONAL U.S. EQUITY FUND /
JP MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO /
CHASE VISTA LARGE CAP FUND (1)
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES
AS OF NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN J.P. MORGAN J.P. MORGAN U.S.
U.S. EQUITY INSTITUTIONAL U.S. EQUITY FUND - THE U.S. EQUITY
FUND EQUITY FUND ADVISOR SERIES PORTFOLIO
ASSETS
Investment in The U.S. Equity Portfolio, at value $344,117,718 $ 183,522,572 $ 493,577
Investments at Value - - - $527,057,247
Cash - - - 844,092
Dividend and Interest Receivable - - - 659,002
Receivable for Fund Shares Sold
Prepaid Trustees' Fees and Expenses 4,106 3,445 - 5,536
Receivable for Expense Reimbursements - - 12,235 -
Prepaid Expenses and Other Assets 946 709 - 2,558
----------------------------------------------------------------------
TOTAL ASSETS 344,122,770 183,526,726 505,812 528,568,435
LIABILITIES
Advisory Fee Payable - - - 183,688
Variation Margin Payable - - - 155,250
Shareholder Servicing Fee Payable 75,082 15,837 - -
Distribution Fees - - - -
Registration Fees - - - -
Transfer Agent Fees - - - -
Administrative Services Fee Payable 7,124 3,757 - 10,894
Trustees' fees - - - -
Printing and postage - - - -
Professional Fees - - - -
Custodian fees - - - -
Payable for Shares of Beneficial Interest Redeemed - - - -
Fund Services Fee Payable 244 128 - 373
Administration Fee Payable 109 - - 621
Accrued Expenses and Other Liabilities 42,588 36,376 30,461 83,742
----------------------------------------------------------------------
TOTAL LIABILITIES 125,147 56,098 30,461 434,568
----------------------------------------------------------------------
NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867
======================================================================
ANALYSIS OF NET ASSETS
Paid-in Capital $288,461,024 $ 141,861,487 $ 500,225 $ -
Undistributed ( Distributions in excess of ) Net
Investment Income 653,902 597,017 261 -
Accumulated Net Realized Gain (Loss) on Investment 11,006,423 6,324,567 (6,149) -
Net Unrealized Appreciation (Depreciation) on Investment 43,876,274 34,687,557 (18,986) -
----------------------------------------------------------------------
NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867
======================================================================
Shares of Beneficial Interest Outstanding 16,611,076 15,051,872 53,157 -
Shares Outstanding - - - -
Net Asset Value Per Share $ 20.71 $ 12.19 $ 8.94 $ -
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN U.S. EQUITY FUND
Shares Outstanding
Class A - - - -
Class B - - - -
Class C - - - -
Select - - - -
Institutional - - - -
Net Asset Value Per Share
Class A - - - -
Class B - - - -
Class C - - - -
Select - - - -
Institutional - - - -
----------------------------------------------------------------------
Cost of Investments - - - $447,506,258
======================================================================
PROFORMA
COMBINED
CHASE VISTA JPMORGAN
LARGE CAP PRO FORMA U.S. EQUITY
EQUITY FUND(1) ADJUSTMENTS FUND
ASSETS
Investment in The U.S. Equity Portfolio, at value $ (528,133,867)(a) $ -
Investments at Value $ 197,588,033 - 724,645,280
Cash 920 - 845,012
Dividend and Interest Receivable 329,696 - 988,698
Receivable for Fund Shares Sold 78,457 - 78,457
Prepaid Trustees' Fees and Expenses - - 13,087
Receivable for Expense Reimbursements - - 12,235
Prepaid Expenses and Other Assets - - 4,213
-------------------------------------------------------------
TOTAL ASSETS 197,997,106 (528,133,867) 726,586,982
LIABILITIES
Advisory Fee Payable 67,227 - 250,915
Variation Margin Payable - - 155,250
Shareholder Servicing Fee Payable 34,409 - 125,328
Distribution Fees 31,259 - 31,259
Registration Fees 30,784 - 30,784
Transfer Agent Fees 30,364 - 30,364
Administrative Services Fee Payable 8,403 - 30,178
Trustees' fees 29,932 - 29,932
Printing and postage 18,025 - 18,025
Professional Fees 11,566 - 11,566
Custodian fees 7,020 - 7,020
Payable for Shares of Beneficial Interest Redeemed 4,557 - 4,557
Fund Services Fee Payable - - 745
Administration Fee Payable 16,806 - 17,536
Accrued Expenses and Other Liabilities 3,372 - 196,539
-------------------------------------------------------------
TOTAL LIABILITIES 293,724 - 939,998
-------------------------------------------------------------
NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984
=============================================================
ANALYSIS OF NET ASSETS
Paid-in Capital $ 150,862,920 $ 0 $ 581,685,656
Undistributed ( Distributions in excess of ) Net
Investment Income (2,844,536) - ($1,593,356)
Accumulated Net Realized Gain (Loss) on Investment 17,124,842 - $ 34,449,683
Net Unrealized Appreciation (Depreciation) on Investment 32,560,156 - $ 111,105,001
-------------------------------------------------------------
NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984
=============================================================
Shares of Beneficial Interest Outstanding - (31,716,105)(b) -
Shares Outstanding 12,962,381 (12,962,381)(b) -
Net Asset Value Per Share $ 15.23(A)* - -
$ 15.11(B)*
$ 15.04(C)*
$ 15.30(I))*
PRO FORMA WITH CONCURRENT REORGANIZATION
J.P. MORGAN U.S. EQUITY FUND
Shares Outstanding
Class A - 5,013,616(c) 5,013,616
Class B - 2,207,306(c) 2,207,306
Class C - 153,915(c) 153,915
Select - 37,105,139(c) 37,105,139
Institutional - 15,051,872(c) 15,051,872
Net Asset Value Per Share
Class A - - $ 12.19
Class B - - $ 12.19
Class C - - $ 12.19
Select - - $ 12.19
Institutional - - $ 12.19
-------------------------------------------------------------
Cost of Investments $ 165,027,877 - $ 612,534,134
=============================================================
(a) Reallocation of investments from the feeder funds to the master portfolio.
(b) Reallocation of feeder fund's beneficial interest to Class A, Class B,
Class C, Select, and Institutional Shares due to the Concurrent
Reorganization.
* Share class of fund.
(c) Reflects the additional number of shares outstanding due to the Concurrent
Reorganization.
(1) Subsequently renamed JPMorgan Large Cap Equity Fund.
See Notes to Pro Forma Financial Statements
-10-
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO/
CHASE VISTA LARGE CAP EQUITY FUND (1)
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN U.S.
J.P. MORGAN J.P. MORGAN EQUITY FUND -
U.S. EQUITY INSTITUTIONAL U.S ADVISOR
EQUITY FUND EQUITY FUND SERIES
---------------------------------------------------------------
INCOME:
Allocated Investment Income From Portfolio 4,837,732 2,916,242 768
Dividend Income - -
Interest Income - - -
Dividend Income from Affiliated Investments - -
Allocated Portfolio Expenses (1,840,805) (1,110,537) (229)
--------------------------------------------------------------
Investment Income 2,996,927 1,805,705 539
--------------------------------------------------------------
EXPENSES:
Advisory Fee - - -
Shareholder Servicing Fee 995,379 240,314 175
Administrative Services Fee 96,491 58,277 -
Distribution Fee - - 120
Transfer Agent Fees 82,056 18,473 4,914
Custodian Fees and Expenses - - -
Registration Fees 23,213 24,416 11,042
Professional Fees 14,367 13,301 3,285
Financial and Fund Accounting Services Fee 15,041 15,041 6,095
Trustees' Fees and Expenses 5,498 3,128 124
Printing Expenses 10,376 5,584 2,421
Fund Services Fee 6,203 3,772 -
Administration Fee 4,413 2,668 -
Insurance Expense 497 123 -
Line of Credit Expense (2,362) (2,913) -
Miscellaneous 33,066 32,181 2,323
--------------------------------------------------------------
Total Expenses 1,284,238 414,365 30,499
--------------------------------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses (69,360) (30,221)
--------------------------------------------------------------
Net Expenses 1,284,238 345,005 278
--------------------------------------------------------------
--------------------------------------------------------------
Net Investment Income 1,712,689 1,460,700 261
--------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized gain (loss ) on:
Investment
Futures Contracts
Investment 17,273,605 12,510,427 (6,149)
Futures Contracts
Investment
Futures Contracts
--------------------------------------------------------------
NET REALIZED GAIN (LOSS) 17,273,605 12,510,427 (6,149)
--------------------------------------------------------------
Net Change in net unrealized appreciation
(depreciation) on
Investment (30,496,120) (17,066,424) (18,986)
Futures Contracts
--------------------------------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION (30,496,120) (17,066,424) (18,986)
--------------------------------------------------------------
--------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (11,509,826) (3,095,297) (24,874)
==============================================================
THE U.S. EQUITY CHASE VISTA
PORTFOLIO LARGE CAP
EQUITY(1)
----------------------------------------
INCOME:
Allocated Investment Income From Portfolio -
Dividend Income 6,921,351 2,722,442
Interest Income 824,294 583,145
Dividend Income from Affiliated Investments 9,096 -
Allocated Portfolio Expenses -
---------------------------------------
Investment Income 7,754,741 3,305,587
---------------------------------------
EXPENSES:
Advisory Fee 2,542,291 937,829
Shareholder Servicing Fee - 586,266
Administrative Services Fee 154,901 353,707
Distribution Fee - 404,746
Transfer Agent Fees - 218,229
Custodian Fees and Expenses 175,789 83,970
Registration Fees - 22,831
Professional Fees 45,775 33,693
Financial and Fund Accounting Services Fee - -
Trustees' Fees and Expenses 8,150 11,785
Printing Expenses 257 22,159
Fund Services Fee 9,977 -
Administration Fee 4,493 -
Insurance Expense (1,285) -
Line of Credit Expense - -
Miscellaneous 10,320 14,303
---------------------------------------
Total Expenses 2,950,668 2,689,518
---------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses - (748,110)
---------------------------------------
Net Expenses 2,950,668 1,941,408
---------------------------------------
---------------------------------------
Net Investment Income 4,804,073 1,364,179
---------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized gain (loss ) on:
Investment
Futures Contracts
Investment 30,706,898 12,946,307
Futures Contracts (929,015)
Investment
Futures Contracts
---------------------------------------
NET REALIZED GAIN (LOSS) 29,777,883 12,946,307
---------------------------------------
Net Change in net unrealized appreciation
(depreciation) on
Investment (46,618,392) (12,915,903)
Futures Contracts (963,832)
---------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION (47,582,224) (12,915,903)
---------------------------------------
---------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (13,000,268) 1,394,583
=======================================
(a) Reallocation of investment income to feeder funds
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under fund expenses.
(c) Reflects the elimination of realized and unrealized gain (loss) of the
feeder funds.
(d) Reflects the adjustments to investment advisory fee, administrative fees
and shareholder servicing fees and/or related waivers based on the
surviving fund's revised fee schedule.
(e) Custody fee includes all fund accounting charges, reflecting estimated
benefit of combined fund.
(f) Reduction reflects estimated benefits of combined funds.
(1) Subsequently renamed JPMorgan Large Cap Equity Fund.
See Notes to Pro Forma Financial Statements
-11-
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO/
CHASE VISTA LARGE CAP EQUITY FUND (1)
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000
(UNAUDITED)
PRO FORMA
COMBINED
JPMORGAN
PRO FORMA U.S. EQUITY
ADJUSTMENTS FUND
INCOME:
Allocated Investment Income From Portfolio (7,754,742)(a) -
Dividend Income - 9,643,793
Interest Income - 1,407,439
Dividend Income from Affiliated Investments - 9,096
Allocated Portfolio Expenses 2,951,571 (b) -
------------------------------------
Investment Income (4,803,171) 11,060,328
------------------------------------
EXPENSES:
Advisory Fee - 3,480,120
Shareholder Servicing Fee - 1,822,134
Administrative Services Fee 643,515 (d) 1,306,891
Distribution Fee 2,374 (d) 407,240
Transfer Agent Fees - 323,672
Custodian Fees and Expenses (100,240)(e) 159,519
Registration Fees - 81,502
Professional Fees (53,900)(f) 56,521
Financial and Fund Accounting Services Fee (36,177)(e) -
Trustees' Fees and Expenses - 28,685
Printing Expenses (20,500)(f) 20,297
Fund Services Fee - 19,952
Administration Fee - 11,574
Insurance Expense - (665)
Line of Credit Expense - (5,275)
Miscellaneous 92,193
------------------------------------
Total Expenses 435,072 7,804,360
------------------------------------
Less: Amounts Waived (435,072)(d) (435,072)
Less: Reimbursement of Expenses (274,160)(a) (1,121,851)
------------------------------------
Net Expenses (274,160) 6,247,437
------------------------------------
Net Investment Income (4,529,011) 4,812,891
------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized gain (loss ) on:
Investment
Futures Contracts
Investment (29,777,883)(c) 43,653,205
Futures Contracts (929,015)
Investment
Futures Contracts
------------------------------------
NET REALIZED GAIN (LOSS) (29,777,883) 42,724,190
------------------------------------
Net Change in net unrealized appreciation
(depreciation) on
Investment 47,581,530 (c) (59,534,295)
Futures Contracts (963,832)
------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION 47,581,530 (60,498,127)
------------------------------------
------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS 13,274,636 (12,961,046)
====================================
See Notes to Pro Forma Financial Statements
-12-
J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND / J.P. MORGAN U.S EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE
U.S. EQUITY PORTFOLIO / CHASE VISTA LARGE CAP EQUITY FUND (1)
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. Equity Portfolio ("Master Portfolio"), J.P. Morgan
Institutional U.S. Equity Fund ("Institutional Fund"), J.P. Morgan U.S. Equity
Fund ("U.S. Equity Fund") and J.P. Morgan U.S. Equity Fund - Advisor Series
("Advisor Series 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 Combining Statement of Assets and Liabilities,
Statement of Operations and Schedule of Investments ("Pro Forma Statements")
reflect the accounts of the Master Portfolio, the feeder funds, and JPMorgan
Large Cap Equity Equity Fund (1) as if the proposed Concurrent
Reorganization occurred as of and for the twelve months ended November 30,
2000.
Under the Reorganization, the Pro Forma Statements give effect to the
proposed transfer of all assets and liabilities of U.S. Equity Fund, Advisor
Series Fund and the Master Portfolio in exchange for shares in Institutional
Fund. Under the Concurrent Reorganization, the Pro Forma Statements give effect
to the proposed transfer of all assets and liabilities of Master Portfolio, U.S.
Equity Fund, Advisor Series Fund and CVLCE 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:
Under the Reorganization, the existing shares of Institutional Fund,
U.S. Equity Fund, and Advisor Series Fund would be renamed Institutional Shares,
Select Shares, and Class A Shares, respectively. The net asset values per share
for Select Shares and Class A Shares at the commencement of offering would be
identical to the closing net asset value per share for the Institutional Shares
immediately prior to the Reorganization.
Under the proposed Reorganization, each shareholder of U.S Equity Fund
and Advisor Series Fund would receive shares of Institutional Fund with a value
equal to their holdings in their respective funds. Holders of U.S Equity Fund
will receive Select Shares and holders of the Advisor Series Fund will receive
Class Shares in Institutional Fund. Therefore, as a result of the proposed
Reorganization, current shareholders of U.S. Equity Fund and Advisor Series Fund
will become shareholders of Institutional Fund.
-13-
Under the proposed Concurrent Reorganization, each shareholder of U.S.
Equity Fund, Advisor Series Fund, and CVLCE would receive shares of
Institutional Fund with a value equal to their holdings in their respective
funds. Holders of U.S. Equity Fund will receive Select Shares, holders of the
Advisor Series Fund will receive Class A Shares, holders of Class A Shares in
CVLCE will receive Class A Shares, holders of Class B Shares in CVLCE will
receive Class B Shares, holders of Class C Shares in CVLCE will receive Class C
Shares, and holders of Class I Shares in CVLCE will receive Select Shares in
Institutional Fund. Therefore, as a result of the proposed Concurrent
Reorganization, current shareholders of U.S. Equity Fund, Advisor Series Fund,
and CVLCE 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 and the
proposed Concurrent Reorganization. The amount of additional shares assumed to
be issued under the Reorganization was calculated based on the November 30, 2000
net assets of U.S. Equity Fund and Advisor Series Fund and the net asset values
per share of Institutional Fund. The amount of additional shares assumed to be
issued under the Concurrent Reorganization was calculated based on the November
30, 2000 net assets of U.S. Equity Fund, Advisor Series Fund, and CVLCE and the
net asset value per share of Institutional Fund.
J.P. MORGAN U.S. EQUITY FUND WITH REORGANIZATION
CLASS A SHARES SELECT SHARES
Increase in Shares Issued 38,998 28,221,456
Net Assets 11/30/00 475,351 343,997,623
Pro Forma Net Asset Value 11/30/00 12.19 12.19
J.P. MORGAN U.S. EQUITY FUND WITH CONCURRENT REORGANIZATION
CLASS A CLASS B CLASS C SELECT
Increase in Shares Issued 5,013,616 2,207,306 153,915 37,105,139
Net Assets 11/30/00 61,112,083 26,905,349 1,876,106 452,282,818
Pro Forma Net Asset Value 11/30/00 12.19 12.19 12.19 12.19
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 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 the Surviving Fund at the combined level of average net assets for
the twelve months ended November 30, 2000.
(1) Subsequently renamed JPMorgan Large Cap Equity Fund.
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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.
(a) 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).
(b) 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).
(c) 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).
Part C-1
(d) 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).
(e) 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).
(f) 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).
(g) 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).
(h) 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).
(i) 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).
(j) 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).
(k) 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).
(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
Part C-2
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).
(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
Part C-3
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 LLC.
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.
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.
Part C-4
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 dated October 31, 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 9th 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 9th, 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 JPMorgan Large Cap Equity Fund (formerly, Chase Vista
Large Cap Equity Fund).
(e) Statement of Additional Information for JPMorgan Large Cap Equity
Fund (formerly, Chase Vista Large Cap Equity Fund).
(f) Annual Report of J.P. Morgan Institutional U.S. Equity Fund
(including the Annual Report of The U.S. Equity Portfolio) dated
May 31, 2000.
(g) Semi-Annual Report of JPMorgan Institutional U.S. Equity Fund
(including the Semi-Annual Report of The U.S. Equity Portfolio)
dated November 30, 2000.
(h) Annual Report of JPMorgan Large Cap Equity Fund (formerly, Chase
Vista Large Cap Equity Fund) dated October 31, 2000.