As filed with the Securities and Exchange Commission on April 13, 2001
Registration No. 333-___/811-5151
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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:
MUTUAL FUND GROUP
Area Code and Telephone Number:
(212) 492-1600
Address of Principal Executive Offices:
1211 Avenue of the Americas, 41st Floor
New York, New York 10036
Name and Address of Agent for Service:
Lisa Hurley
c/o BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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 13, 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. 033-14196/811-5151) 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 October 31, 2000 was filed on January 25,
2001. Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. MORGAN EUROPEAN EQUITY FUND
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
May 12, 2001
Dear Shareholder:
A special meeting of the shareholders of J.P. Morgan European Equity
Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), 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, J.P. Morgan & Co. Incorporated, the former
corporate parent of the investment adviser of the Merging Fund's assets,
recently completed a merger with The Chase Manhattan Corporation 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
Fleming European Fund (formerly, Chase Vista European Fund) (the "Surviving
Fund"), a series of Mutual Fund Group ("MFG") (the "Reorganization"). After
the Reorganization, shareholders of the Merging Fund would hold shares of the
Surviving Fund. The investment objective and policies of the Surviving Fund
generally are similar to those of the Merging 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 Institutional European Equity Fund, a fund whose
assets are managed by J.P. Morgan Investment Management Inc. ("JPMIM") and which
has identical investment objectives and policies to the Merging Fund (the
"Concurrent Reorganization"). If the Concurrent Reorganization is approved by
the shareholders of J.P. Morgan Institutional European Equity Fund and certain
other conditions are met, this other fund will be reorganized into the Surviving
Fund. The consummation of the Reorganization is contingent upon the consummation
of the Concurrent Reorganization.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPMF.
The investment adviser for the assets of the Merging Fund is JPMIM. The
investment adviser for the Surviving Fund is J.P. Morgan Fleming Asset
Management (USA) Inc. ("JPMFAM") and the sub-adviser is Chase Fleming Asset
Management (London) Limited ("CFAML"). After the Reorganization, JPMFAM and
CFAML, the same investment adviser
and sub-adviser that currently are 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
Reorganization and a comparison of the Merging Fund and JPMF to the Surviving
Fund and MFG. The cost and expenses associated with the Reorganization,
including costs of soliciting proxies, will be borne by JPMC and not by the
Merging Fund, JPMF, the Surviving Fund, MFG or their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive shares of the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees of
JPMF, which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPMF UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" EACH OF THE PROPOSALS.
Attached to 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 1-800-766-7722.
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,
Matthew Healey
Chairman
SPECIAL NOTE: Certain Shareholders may receive a telephone call from our
proxy solicitor, D.F. King & Co., Inc., or us to answer any questions you
may have or to provide assistance in voting. Remember, your vote is
important! Please sign, date and promptly mail your proxy card(s) in the
return envelope provided or call ___________________ in order to vote.
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes it is in
the best interest 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?
In connection with the Reorganization, the Merging Fund will transfer all of its
assets and liabilities to the Surviving Fund and will receive, in exchange,
shares of the Surviving Fund. The Merging Fund will then be liquidated and those
shares of the Surviving Fund will be distributed pro rata to shareholders such
as you. After the Reorganization, you will own shares of the Surviving Fund
rather than shares of the Merging Fund. The Surviving Fund invests directly in
portfolio securities rather than in a master portfolio.
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
-------------- ------------
- Investment objective is to seek total - Investment objective is to provide
return from long-term capital growth. Total high total return from a portfolio of
return consists of capital growth and European company equity securities.
current income.
- May invest up to 8% of its total assets - Generally does not invest in
in equity securities of emerging market securities of emerging market issuers.
European issuers.
- May invest in investment-grade debt - Generally does not invest in debt
securities and under normal market securities or money market instruments,
conditions is permitted to invest up to 35% but during severe market downturns may
of its total assets in high-quality money invest up to 100% of its assets in
market instruments and repurchase agreements. investment-grade short-term securities.
The Reorganization is not intended to have any immediate significant impact on
the investment strategy implemented in respect of your investment. However,
please note that while the Merging Fund invests all of its assets in The
European Equity Portfolio (the "Master Portfolio") (which in turn invests in
portfolio securities), the Surviving Fund invests directly in portfolio
securities.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
As a result of the Reorganization, the contractual (or pre-waiver) 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, The Chase Manhattan Bank 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. JPMFAM, the investment adviser and CFAML, the sub-adviser that currently
manage the day-to-day investment activities of the Surviving Fund, will continue
to manage that fund after the Reorganization.
WHO WILL PAY FOR THE REORGANIZATION?
The cost and expenses associated with the Reorganization, including costs of
soliciting proxies, will be borne by JPMC and not by either the Merging Fund or
the Surviving Fund (or shareholders of either fund).
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive shares of the Surviving Fund.
HOW WILL THE PROPOSED CONCURRENT REORGANIZATION AFFECT MY INVESTMENT IF IT IS
APPROVED BY THE SHAREHOLDERS OF THE OTHER FUND?
If the Concurrent Reorganization is approved and certain other conditions are
met, the assets and liabilities of the other merging fund will become the assets
and liabilities of the Surviving Fund. The consummation of the Reorganization is
contingent upon the consummation of the Concurrent Reorganization.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR JPMF IF AFTER THE
REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF MFG?
Even if the Reorganization is approved, other mutual funds that are series of
JPMF will continue to exist and operate. All shareholders of any series of JPMF
as of the record date (April 6, 2001) are required to be given a vote on
proposal regarding Trustees. Because as of the record date you are still a
shareholder in JPMF, you are entitled to vote on this proposal. Shareholders of
MFG are being asked to approve the same Trustees that are proposed for JPMF.
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.
J.P. MORGAN EUROPEAN EQUITY FUND,
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of
J.P. Morgan European Equity Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of J.P. Morgan European Equity Fund (the "Merging Fund"), a
series of J.P. Morgan Funds ("JPMF"), 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 JPMF, on behalf of the Merging Fund, Mutual Fund Group
("MFG"), on behalf of JPMorgan Fleming European Fund
(formerly, Chase Vista European Fund) (the "Surviving Fund"), and
J. P. Morgan Chase & Co., and the transactions contemplated
thereby, including (a) the transfer of all of the assets and
liabilities of the Merging Fund to the Surviving Fund in exchange
for Select Class shares of the Surviving Fund (the "Surviving
Fund Shares"); 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 JPMF.
ITEM 3. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEMS 1 AND 2.
Each proposal is described in the accompanying Combined
Prospectus/Proxy Statement. Attached as Appendix A to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Plan.
Shareholders of record as of the close of business on April 6, 2001 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPMF. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
THE MERGING FUND A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY
OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
Margaret W.Chambers
Secretary
May 12, 2001
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 12, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN EUROPEAN EQUITY FUND,
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
BY AND IN EXCHANGE FOR SHARES OF
JPMORGAN FLEMING EUROPEAN FUND
(FORMERLY, CHASE VISTA EUROPEAN FUND),
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 348-4782
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of J.P. Morgan European Equity Fund (the "Merging Fund"), a
series of J.P. Morgan ("JPMF"), into JPMorgan Funds Fleming European Fund
(formerly, Chase Vista European Fund) (the "Surviving Fund"), a series of
Mutual Fund Group ("MFG"). If approved by shareholders of the Merging Fund,
the proposed Reorganization will be effected by transferring all of the
assets and liabilities of the Merging Fund to the Surviving Fund, which has
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"). JPMF and
MFG are both open-end management investment companies offering shares in
several portfolios.
If the proposed Reorganization is approved by Merging Fund
Shareholders, each Merging Fund Shareholder will receive Select Class shares
(the "Surviving Fund Shares") of the Surviving Fund with a value equal to such
Merging Fund Shareholder's holdings in the Merging Fund. The Surviving Fund
currently has a multi-class structure under which it offers Class A, Class B and
Class C shares. In connection with the Reorganization, the Surviving Fund will
introduce Select Class and Institutional Class shares.
At the Meeting, you also will be asked to consider and vote upon the
election of Trustees of JPMF.
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 JPMF, on behalf of the Merging
Fund, MFG, 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 JPMF 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 MFG'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 JPF and JPMF that
an investor should know before voting on the proposals. The current
Prospectuses, Statements of Additional Information and Annual Reports of the
Merging Fund and the Surviving Fund are incorporated herein by reference, and
the current Prospectus and Annual Report (including the Annual Report of The
European 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 dated May 12, 2001
containing additional information about JPF and JPMF has been filed with the
Commission and is incorporated by reference into this Combined Prospectus/Proxy
Statement. A copy of the Statement of Additional Information as well as the
Prospectus, Statement of Additional Information, and Annual Report of the
Merging Fund (including the Annual Report for the European 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.
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,
2
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.
3
TABLE OF CONTENTS
PAGE
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INTRODUCTION................................................................. 1
PROPOSAL 1: REORGANIZATION PLAN..............................................1
SUMMARY .....................................................................1
COMPARATIVE FEE AND EXPENSE TABLES............................................5
RISK FACTORS..................................................................8
INFORMATION RELATING TO THE PROPOSED REORGANIZATION..........................10
INVESTMENT POLICIES..........................................................14
PURCHASES, REDEMPTIONS AND EXCHANGES.........................................22
DISTRIBUTIONS AND TAXES .....................................................26
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S ORGANIZATION
STRUCTURE...........................................................27
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES............29
PROPOSAL 2: ELECTION OF TRUSTEES.............................................33
INFORMATION RELATING TO VOTING MATTERS.......................................38
ADDITIONAL INFORMATION ABOUT MFG.............................................40
ADDITIONAL INFORMATION ABOUT JPMF............................................41
FINANCIAL STATEMENTS AND EXPERTS.............................................41
OTHER BUSINESS...............................................................41
LITIGATION...................................................................41
SHAREHOLDER INQUIRIES........................................................41
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION............................A-1
i
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 JPMF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st Floor, New York, NY (together with any
adjournments thereof, the "Meeting"). It is expected that the mailing of this
Combined Prospectus/Proxy Statement will be made on or about May 12, 2001.
PROPOSAL 1: REORGANIZATION PLAN
--------------------------------
At the Meeting, Merging Fund Shareholders will consider and vote upon
the Agreement and Plan of Reorganization (the "Reorganization Plan") dated
_______, 2001 among JPMF, on behalf of the Merging Fund, MFG, on behalf of the
Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined
as the "Funds") and J. P. Morgan Chase & Co. ("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. Further
information relating to the Surviving Fund is set forth herein, and the
Surviving Fund's Prospectus and Annual Report is enclosed with this Combined
Prospectus/Proxy Statement.
THE JPMF 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 JPMF 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 and Annual Report of each of the Surviving
Fund and the Merging Fund
(including the Annual Report of The European Equity Portfolio), and the
Reorganization Plan attached to this Combined Prospectus/Proxy Statement as
Appendix A.
PROPOSED REORGANIZATION
Pursuant to the proposed Reorganization, 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 Select Class shares of the Surviving Fund with an aggregate
net asset value equal on the date of the exchange to the aggregate net asset
value of such shareholder's Merging Fund Shares on such date. Therefore,
following the proposed Reorganization, Merging Fund Shareholders will be
Surviving Fund Shareholders. Merging Fund Shareholders will not pay a sales
charge 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.
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.
REASONS FOR THE REORGANIZATION
The Reorganization is being proposed because each Fund's board believes
it is in the best interest 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.
CONCURRENT REORGANIZATION
The Merging Fund currently invests all of its investable assets in The
European Equity Portfolio (the "Master Portfolio"), which has identical
investment objectives and policies as the Merging Fund and which is advised by
J.P. Morgan Investment Management Inc. ("JPMIM"). J.P. Morgan Institutional
European Equity Fund, a series of J.P. Morgan Institutional Funds with identical
investment objectives and policies as the Merging Fund (the "Feeder Portfolio")
also currently invests all of its investable assets in the Master Portfolio. The
Surviving Fund has entered into a substantially similar agreement and plan of
Reorganization with the Feeder Portfolio (the "Concurrent
2
Reorganization"). If each of the Reorganization and the Concurrent
Reorganization is approved by the shareholders of the Merging Fund and the
Feeder Portfolio, respectively, and certain other conditions are met, the
Merging Fund and the Master Portfolio will be reorganized into the Surviving
Fund. The Surviving Fund will no longer invest its assets in the Master
Portfolio. The consummation of the Reorganization is contingent upon the
consummation of the Concurrent Reorganization.
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 Master Portfolio (and therefore the
assets of the Merging Fund and the Feeder Portfolio) is JPMIM. The investment
adviser for the Surviving Fund is J.P. Morgan Fleming Asset Management (USA)
Inc. ("JPMFAM") and the sub-adviser for the Surviving Fund is Chase Fleming
Asset Management (London) Limited ("CFAML"). JPMFAM, CFAML and JPMIM are each
wholly-owned subsidiaries of JPMC. JPMFAM will continue to service as investment
adviser for the Surviving Fund following the Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Surviving Fund is to seek total return
from long-term capital growth. Total return consists of capital growth and
current income. The investment objective of the Merging Fund is to provide high
total return from a portfolio of European company equity securities. 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 its assets directly in portfolio securities, while the
Merging Fund invests its assets in the Master Portfolio, which in turn invests
in portfolio securities. The Surviving Fund invests primarily in equity
securities issued by companies with principal business activities in Western
Europe. Under normal market conditions the Surviving Fund invests at least 65%
of its total assets in equity securities of European issuers. The Merging Fund
invests primarily in equity securities from the 14 countries included in the
Morgan Stanley Capital International (MSCI) Europe Index, which is the Merging
Fund's benchmark. The
3
Merging Fund generally keeps its industry weightings similar to such index,
although it does not seek to mirror the index in its choice of individual
securities.
The Surviving Fund may invest up to 8% of its total assets in equity
securities of emerging market European issuers. The Merging Fund generally does
not invest in securities of emerging market issuers.
While the Surviving Fund invests primarily in equities, it may also
invest in investment-grade debt securities. Up to 25% of the Surviving Fund's
net assets may be invested in debt securities denominated in a currency other
than the U.S. dollar. Up to 25% of the Surviving Fund's net assets may be
invested in debt securities issued by a single foreign government or
international organization, such as the World Bank. While the Surviving Fund
intends to invest primarily in stocks and investment-grade debt securities,
under normal market conditions it is permitted to invest up to 35% of its total
assets in high-quality money market instruments and repurchase agreements. The
Merging Fund generally does not invest in debt securities or money market
instruments, but during severe market downturns the Merging Fund may invest up
to 100% of its assets in investment-grade short-term securities.
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 international 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. In general, international investing involves higher
risks than investing in U.S. markets. Foreign markets tend to be more volatile
than those of the U.S., and changes in currency exchange rates could reduce
market performance. In addition, the Surviving Fund may invest up to 8% of its
total assets in equity securities of emerging market European issuers and up to
35% of its total assets in debt securities, including up to 25% of its net
assets in debt securities denominated in a currency other than the U.S. dollar
and up to 25% of its net assets in debt securities issued by a single foreign
government or international organization, all of which are subject to certain
special risks. See "Risk Factors."
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund is JPMFAM, and the
sub-adviser for the Surviving Fund is CFAML. JPMFAM oversees the asset
management of the Surviving Fund. As compensation for its services, JPMFAM
receives a management fee indirectly from the Surviving Fund at an annual rate
of 1.00% of average daily net assets. JPMFAM delegates certain of its investment
advisory responsibilities for the Surviving Fund to CFAML. For subadvisory
services rendered to the Surviving Fund, CFAML is entitled to receive from
JPMFAM an annual fee of 0.50% of the Fund's average net assets. The Merging Fund
currently pays a management fee indirectly at an annual rate of 0.65% of average
daily net assets. Following the Reorganization, JPMFAM will manage the
4
Surviving Fund's assets and will receive a fee at an annual rate of 0.65% of
average daily net assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the
Distributor for the Surviving Fund. The Chase Manhattan Bank ("Chase")
serves as shareholder servicing agent, administrator, fund accountant and
custodian, the Distributor serves as sub-administrator and DST Systems,
Inc. ("DST") serves as transfer agent and dividend disbursing agent for
the Surviving Fund. PricewaterhouseCoopers LLP serves as the Surviving
Fund's independent accountants.
ADMINISTRATOR
As administrator, Chase receives a fee of 0.15% of average daily net
assets. It is anticipated that, in connection with the Reorganization, the
administration fee will be amended to reduce the fee to 0.075% for complex
wide non-money market Fund 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 JPMF and the Surviving Fund is
organized as a series of MFG.
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 in 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 Reorganization. Under the proposed Reorganization, holders of
shares of the Merging Fund will receive Select Class shares of the Surviving
Fund. Please note that the Surviving Fund currently has three classes of shares:
Class A, Class B and Class C. In connection with the Reorganization and the
Concurrent Reorganization, two additional classes, the Select Class and the
Institutional Class, will be introduced.
The table indicates that both contractual (pre-waiver) and actual
(post-waiver) total expense ratios for current shareholders of the Merging Fund
are anticipated to be less or stay the same following the Reorganization. In
addition, Chase has agreed to waive certain fees and/or reimburse certain
expenses to ensure that actual total operating expenses do not increase for at
least three years.
5
THE MERGING
FUND THE SURVIVING FUND
------------ -------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------ ------ ------ ------
SHAREHOLDER FEES * (FEES
PAID DIRECTLY FROM YOUR
INVESTMENT)-Maximum Sales
Charge (Load) when you buy
shares, shown as % of the offering
price (B) ............. None 5.75% None None
Maximum Deferred Sales Charge
(Load) shown as lower of
original purchase price or
redemption proceeds........... None None 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees................... 0.65% 1.00% 1.00% 1.00%
Distribution (12b-1) Fees......... None 0.25% 0.75% 0.75%
Other Expenses.................... 1.48% 0.60%# 0.85%# 0.85%#
Total Annual Fund Operating
Expenses....................... 2.13% 1.85% # 2.60% # 2.60% #
Contractual Fee Waivers and
Expense Reimbursements (A)..... 0.63% None None None
Net Expenses*..................... 1.50% 1.85% 2.60% 2.60%
(A) Reflects an agreement dated 3/1/01 by Morgan, an affiliate of
JPMC, to reimburse the Fund to the extent operating expenses
(which exclude interest, taxes, and extraordinary expenses)
exceed 1.50% of average daily net assets with respect to the
Merging Fund through 2/28/02. Morgan may terminate this
agreement after 2/28/02.
(B) The offering price is the net asset value of the shares purchased
plus any sale charges.
* The table is based on estimated expenses for current fiscal year.
# Restated from the most recent fiscal year to reflect current
expense arrangement.
With respect to the Surviving Fund, the actual Management Fee is
currently expected to be .90% and Total Annual Fund Operating Expenses are
not expected to exceed 1.75% for Class A shares and 2.50% for Class B and
Class C shares. That is because Chase, a wholly owned subsidiary of JPMC, and
some of the Fund's other service providers have volunteered not to collect a
portion of its fees and to reimburse others. Chase and these other service
providers may terminate this arrangement at any time.
6
THE SURVIVING FUND
------------------
PRO FORMA WITH CONCURRENT REORGANIZATION
----------------------------------------
SELECT CLASS
---------------
SHARES
SHAREHOLDER FEES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT) -Maximum
Sales Charge (Load) when you buy
shares, shown as % of the
offering price................... None
Maximum Deferred Sales
Charge (Load) Shown as
lower of original purchase
price or redemption
proceeds....................... None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM FUND
ASSETS)
Management Fees..................... 0.65%
Distribution (12b-1) Fees........... None
Other Expenses...................... 0.95%
Total Annual Fund Operating
Expenses......................... 1.60%
Fee Waivers and Expense
Reimbursements 0.10%
Net Expenses........................ 1.50%(A)
(A) Reflects an agreement by Chase, a wholly owned subsidiary of JPMC,
to reimburse the Fund to the extent operating expenses (which
exclude interest, taxes, and extraordinary expenses) exceed 1.50%
of average daily net assets with respect to Select Shares for
three years after the Reorganization.
The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
EXAMPLE: This example helps investors compare the cost of
investing in the Funds with the cost of investing in other mutual funds.
The example assumes:
- - you invest $10,000;
- - you sell all of your shares at the end of each period;
- - your investment has a 5% return each year; and
- - each Fund's operating expenses are waived for three years after the
Reorganization and unwaived for the period thereafter and remain the
same as shown above.
7
Although actual costs may be higher or lower, based upon these assumptions your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
THE MERGING FUND....................................... $ 153 $ 606 $1,086 $2,412
THE SURVIVING FUND
Class A Shares *................................. $ 752 $1,123 $1,518 $2,619
Class B Shares **................................ $ 763 $1,108 $1,580 $2,752
Class B Shares (without sale) *** ............... $ 263 $ 808 $1,380 $2,752
Class C Shares**................................. $ 363 $ 808 $1,380 $2,934
Class C Shares (without sale).................... $ 263 $ 808 $1,380 $2,934
PRO FORMA THE SURVIVING FUND WITH CONCURRENT REORGANIZATION
Select Shares.................................... $ 153 $ 474 $ 841 $1,873
- ----------
* Assumes sales charge is deducted when shares are purchased. Shareholders
who receive Select Class 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.
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 CFAML's expectations regarding particular securities or markets are
not met. 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.
Investments in foreign securities may be riskier than investments in
the United States. Because foreign securities are usually denominated in foreign
currencies, the value of the Surviving Fund's portfolio may be influenced by
currency exchange rates and exchange control regulations. Foreign securities may
be affected by political, social and economic instability. Some securities may
be harder to trade without incurring a loss and may be difficult to convert into
cash. There may be less public information available, differing settlement
procedures, or regulations and standards that don't match U.S.
8
standards. Some countries may nationalize or expropriate assets or impose
exchange controls. These risks increase when investing in issuers located in
developing countries.
The Surviving Fund's investments in developing countries could result
in increased volatility in the value of the Fund's shares. In addition, the
small size of securities markets in these countries and the low trading volume
may result in a lack of liquidity, which could increase volatility. Also,
developing countries may not provide adequate legal protection for private or
foreign investment or private property. THE MERGING FUND GENERALLY DOES NOT
INVEST IN DEVELOPING COUNTRIES.
The Surviving Fund's performance will be affected by political, social
and economic conditions in Europe, such as growth of the economic output (the
Gross National Product), the rate of inflation, the rate at which capital is
reinvested into European economies, the resource self-sufficiency of European
countries and interest and monetary exchange rates in European countries.
In early 1999, the European Monetary Union implemented a new currency
called the "euro," which is expected to replace national currencies by July 1,
2002. Full implementation of the euro may be delayed and difficulties with the
conversion may significantly impact European capital markets. It is possible
that the euro could increase volatility in financial markets, which could have a
negative effect on the value of shares of the Surviving Fund.
The Surviving Fund is not diversified. It may invest a greater
percentage of its assets in a particular issuer or group of issuers than a
diversified fund would. That makes the value of its shares more sensitive to
economic problems among those issuing the securities. THE MERGING FUND IS
DIVERSIFIED.
Because the Surviving Fund may invest in small companies, the value of
your investment may fluctuate more dramatically than an investment in a fund
which does not invest in small companies. That's because small companies trade
less frequently and in smaller volumes, which may lead to more volatility in the
prices of their securities. They may have limited product lines, markets or
financial resources, and they may depend on a small management group.
The market value of convertible securities and other debt securities
tends to fall when prevailing interest rates rise. The value of convertible
securities also tends to change whenever the market value of the underlying
common or preferred stock fluctuates. Securities which are rated Baa by Moody's
or BBB by Standard & Poor's may have fewer protective provisions than higher
rated securities. The issuer may have trouble making principal and interest
payments when difficult economic conditions exist.
If the Surviving Fund invests in closed-end investment companies, it
may incur added expenses such as additional management fees and trading costs.
If the Surviving Fund invests a substantial portion of its assets in
money market instruments, repurchase agreements and debt securities, including
where the Fund is
9
investing for temporary defensive purposes, it could reduce the Surviving Fund's
potential return.
Derivatives may be more risky than other types of investments because
they may respond more to changes in economic conditions than other types of
investments. If they are used for non-hedging purposes, they could cause losses
that exceed the Surviving Fund's original investment.
Unsponsored depositary receipts may not provide as much information
about the underlying issuer and may not carry the same voting privileges as
sponsored depositary receipts.
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.
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, MFG will issue at the Effective Time of the
Reorganization full and fractional Select Class shares of the Surviving Fund
equal in aggregate dollar value to the aggregate net asset value of full and
fractional outstanding shares of the Merging Fund as determined at the valuation
time specified in the Reorganization Plan. The Reorganization Plan provides that
the Merging Fund will declare a dividend or dividends prior to the Effective
Time of the Reorganization which, together with all previous dividends, will
have the effect of distributing to Merging Fund Shareholders all undistributed
net investment income earned and net capital gain realized up to and including
the Effective Time of the Reorganization.
Following the transfer of assets to, and the assumption of the
liabilities of the Merging Fund by, the Surviving Fund, the Merging Fund will
distribute Select Class Shares received by it to the Merging Fund Shareholders
in liquidation of the Merging Fund. Each Merging Fund Shareholder at the
Effective Time of the Reorganization will receive an amount of Select Class
Shares with a total net asset value equal to the net asset
10
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 Reorganization.
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 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
11
best interests of Fund shareholders, each Board considered a number of factor
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 advisor 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.
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, Board determined that the proposed Reorganization is in
the best interests of the 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.
12
THE JPMF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL.
The JPMF 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 REORGANIZATION
The terms and conditions under which the Concurrent Reorganization may
be consummated are set forth in a Reorganization plan which is substantially
similar to the Reorganization Plan you are considering. Concurrently with the
Reorganization and the Concurrent Reorganization, the Merging Fund and the
Feeder Portfolio will no longer invest their assets in the Master Portfolio. The
consummation of the Reorganization is contingent upon the consummation of the
Concurrent Reorganization.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that
JPMF 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, 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 its assets equal to the
aggregate basis of the partnership interests in the Master Portfolio held by
the Merging Fund and the Surviving Fund immediately 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.
JPMF 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.
13
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 another fund as a result of the Concurrent
Reorganization, the total capitalization of the Surviving Fund after the
Reorganization and the Concurrent Reorganization is expected to be greater than
the current capitalization of the Merging Fund. The following table sets forth
as of _____, 2001: (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 Reorganization. There is, of course, no assurance that the
Reorganization and the Concurrent Reorganization will be consummated. Moreover,
if consummated, the capitalizations of the Surviving Fund and the Merging Fund
are likely to be different at the Effective Time of the Reorganization as a
result of fluctuations in the value of portfolio securities of each Fund and
daily share purchase and redemption activity in each Fund. The Surviving Fund
currently has three classes of shares: Class A, Class B and Class C. In
connection with the Reorganization and the Concurrent Reorganization, the
Institutional Class and the Select Class will be introduced.
CAPITALIZATION
PRO FORMA WITH CONCURRENT REORGANIZATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
----------------------------------------------------------
BENEFICIAL NET ASSET
INTEREST SHARES VALUE PER
OUTSTANDING OUTSTANDING NET ASSETS SHARE
----------- ----------- ---------- -----
J.P. MORGAN FUNDS
J.P. Morgan European
Equity Fund
(Merging Fund) 784 - 12,256 15.62
J.P. Morgan
Institutional 573 - 8,354 14.58
European Equity Fund
CHASE VISTA EUROPEAN FUND
Class A - 4,243 75,800 17.87
Class B - 1,067 18,547 17.38
Class C - 243 4,228 17.37
PRO FORMA COMBINED WITH CONCURRENT REORGANIZATION
Class A - 4,243 75,800 17.87
Class B - 1,067 18,547 17.38
Class C - 243 4,228 17.37
Select - 686 12,256 17.87
Institutional - 468 8,354 17.87
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.
14
OBJECTIVE
The investment objective of the Surviving Fund is to seek total return
from long-term capital growth. Total return consists of capital growth and
current income. The Surviving Fund may not change its objective without
shareholder approval. THE INVESTMENT OBJECTIVE OF THE MERGING FUND IS TO PROVIDE
HIGH TOTAL RETURN FROM A PORTFOLIO OF EUROPEAN COMPANY EQUITY SECURITIES. THE
MERGING FUND MAY CHANGE ITS OBJECTIVE WITHOUT SHAREHOLDER APPROVAL.
SHAREHOLDERS OF THE SURVIVING FUND CURRENTLY ARE CONSIDERING A PROPOSAL
THAT, IF PASSED AT A SHAREHOLDER MEETING TO BE HELD THE SAME DAY AS THE MEETING
OF THE MERGING FUND, WOULD ALLOW THE SURVIVING FUND TO CHANGE ITS OBJECTIVE
WITHOUT SHAREHOLDER APPROVAL.
MAIN INVESTMENT STRATEGIES
The Surviving Fund invests its assets directly in portfolio securities.
THE MERGING FUND INVESTS ITS ASSETS IN THE MASTER PORTFOLIO, WHICH IN TURN
INVESTS IN PORTFOLIO SECURITIES.
The Surviving Fund invests primarily in equity securities issued by
companies with principal business activities in Western Europe.
Under normal market conditions, the Surviving Fund invests at least 65%
of its total assets in equity securities of European issuers. Equity securities
include common stocks, preferred stocks, securities that are convertible into
common stocks and warrants to buy common stocks. These investments may take the
form of depositary receipts.
The Surviving Fund may invest in Austria, Belgium, Denmark, Germany,
Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland and the United Kingdom, as well as other
Western European countries which its advisers think are appropriate. In
addition, the Surviving Fund may invest up to 8% of its total assets in equity
securities of emerging market European issuers. These countries may include
Poland, the Czech Republic, Hungary and other similar countries which the
advisers think are appropriate. THE MERGING FUND PRIMARILY INVESTS IN EQUITY
SECURITIES FROM THE 14 COUNTRIES INCLUDED IN THE MORGAN STANLEY CAPITAL
INTERNATIONAL (MSCI) EUROPE INDEX, WHICH IS THE FUND'S BENCHMARK. THE MERGING
FUND GENERALLY DOES NOT INVEST IN SECURITIES OF EMERGING MARKET ISSUERS.
The Surviving Fund may invest in securities denominated in U.S.
dollars, major reserve currencies and currencies of other countries in which it
can invest. The advisers may adjust the Fund's exposure to each currency based
on their view of the markets and issuers. They will decide how much to invest in
the securities of a particular currency or country by evaluating the yield and
potential growth of an investment, as well as the relationship between the
currency and the U.S. dollar. They may increase or decrease the emphasis on a
type of security, industry, country or currency based on their analysis of a
variety of economic factors, including fundamental economic strength, earnings
growth, quality of management, industry growth, credit quality and interest rate
trends. The
15
Surviving Fund may purchase securities where the issuer is located
in one country but the security is denominated in the currency of another.
While the Surviving Fund's assets will usually be invested in a number
of different Western European countries, the Surviving Fund's advisers may at
times invest most or all of the assets in a limited number of these countries.
The Fund will, however, try to choose a wide range of industries and companies
of varying sizes.
While the Surviving Fund invests primarily in equities, it may also
invest in investment-grade debt securities. No more than 25% of the Surviving
Fund's net assets will be invested in debt securities denominated in a currency
other than the U.S. dollar. No more than 25% of the Surviving Fund's net assets
will be invested in debt securities issued by a single foreign government or
international organization, such as the World Bank.
While the Surviving Fund intends to invest primarily in stocks and
investment-grade securities, under normal market conditions it is permitted to
invest up to 35% of its total assets in high quality money market instruments
and repurchase agreements. To temporarily defend its assets, the Surviving Fund
may invest any amount of its assets in these instruments and in debt securities
issued by supranational organizations and companies and governments of countries
in which the Surviving Fund can invest and short-term debt instruments issued or
guaranteed by the government of any member of the Organization for Economic
Cooperation and Development. These debt securities may be denominated in various
currencies. During unusual market conditions, the Surviving Fund may invest up
to 20% of its assets in U.S. Government debt securities. THE MERGING FUND
GENERALLY DOES NOT INVEST IN DEBT SECURITIES OR MONEY MARKET INSTRUMENTS, BUT
DURING SEVERE MARKET DOWNTURNS THE MERGING FUND MAY INVEST UP TO 100% OF ITS
ASSETS IN INVESTMENT-GRADE SHORT-TERM SECURITIES.
Where the capital markets in certain countries are either less
developed or not easy to access, the Surviving Fund may invest in these
countries by investing in closed-end investment companies which are authorized
to invest in those countries.
The Surviving Fund may invest in derivatives, which are financial
instruments whose values is based on another security, index or exchange rate.
The Surviving Fund may use derivatives to hedge various market risks or to
increase the fund's income or gain.
The Surviving Fund may change any of these investment policies (but not
its investment objective) without shareholder approval.
The Surviving Fund may trade securities actively, which could increase
transaction costs (and lower performance) and increase your taxable dividends.
16
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 is not The Merging Fund may not make any
diversified. investment inconsistent with its
classification as a diversified
investment company under the 1940
Act.
The Surviving Fund may not The Merging Fund may not purchase any
purchase the securities of any security which would cause it to
issuer (other than securities concentrate its investments in the
issued or guaranteed by the U.S. securities of issuers primarily engaged
government or any of its in any particular industry except as
agencies or instrumentalities, or permitted by the Commission.
repurchase agreements secured
thereby) if, as a result, more
than 25% of the Surviving 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
Surviving 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 for temporary or money, except to the extent permitted
emergency purposes, or by engaging in by applicable law.
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 Surviving Fund's total assets
must be repaid before the Surviving
Fund may make additional investments.
17
The Surviving Fund may not purchase The Merging Fund may not purchase or
or sell physical commodities unless sell commodities or commodity
acquired as a result of ownership of contracts unless acquired as a result
securities or other instruments but of ownership of securities or other
this shall not prevent the Fund from instruments issued by persons that
(i) purchasing or selling options and purchase or sell commodities or
futures contracts or from investing commodities contracts; but this shall
in securities or other instruments not prevent the Merging Fund from
backed by physical commodities or purchasing, selling and entering into
(ii) engaging in forward purchases or financial futures contracts
sales of foreign currencies or (including futures contracts on
securities. indices of securities, interest 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.
The Surviving Fund may not make The Merging Fund may make loans to
loans, except that the Surviving Fund other persons, in accordance with the
may: (i) purchase and hold debt Fund's investment objective and
instruments (including without policies and to the extent permitted
limitation, bonds, notes, debentures by applicable law.
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. SHAREHOLDERS OF THE
SURVIVING FUND CURRENTLY ARE
CONSIDERING A PROPOSAL THAT, IF
PASSED AT A SHAREHOLDER MEETING TO BE
HELD THE SAME DAY AS THE MEETING OF
THE MERGING FUND, WOULD ADOPT A
FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING LOANS THAT IS IDENTICAL TO
THE MERGING FUND'S RESTRICTION.
The Surviving Fund may not make or
guarantee loans to any person or
otherwise become liable for or in
connection with any obligation or
indebtedness of any person without
the prior written consent of the
Trustees, provided that for
purposes of this restriction the
acquisition of bonds,
18
debentures, or other corporate debt
securities and investments in
government bonds, short-term
commercial paper, certificates of
deposit and bankers' acceptances
shall not be deemed to be the
making of a loan.
The Surviving Fund may not invest in The Merging Fund is not subject to a
securities which are not traded or similar fundamental restriction.
have not sought a listing on a stock
exchange, over-the-counter market or
other organized securities market
that is open to the international
public and on which securities are
regularly traded if, regarding all
such securities, more than 10% of its
total net assets would be invested in
such securities immediately after and
as a result of such transaction.
The Surviving Fund may not deal in The Merging Fund is not subject to a
put options, write or purchase call similar fundamental restriction.
options, including warrants, unless
such options or warrants are covered
and are quoted on a stock exchange or
dealt in on a recognized market, and,
at the date of the relevant
transaction: (i) call options written
do not involve more than 25%,
calculated at the exercise price, of
the market value of the securities
within the fund's portfolio excluding
the value of any outstanding call
options purchased, and (ii) the cost
of call options or warrants purchased
does not exceed, in terms of premium,
2% of the value of the net assets of
the Fund.
The Surviving Fund may not purchase The Merging Fund is not subject to a
securities of any issuer if such similar fundamental restriction.
purchase at the time thereof would
cause more than 10% of the voting
securities of such issuer to be
held by the Fund.
Neither Fund may issue senior securities, except as permitted under the
1940 Act or any rule, order or interpretation thereunder.
19
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
Surviving 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
Surviving Fund may seek to achieve its investment objective by investing all
of its investable assets in another investment company having substantially
the same investment objective and policies as the Surviving Fund. Although
the Merging Fund currently invests all of its assets in the Master Portfolio,
following the Reorganization the Surviving Fund will invest directly in
portfolio securities.
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.
SURVIVING FUND MERGING FUND
-------------- ------------
The Surviving Fund may not invest The Merging Fund may not acquire any
more than 15% of its net assets in illiquid securities, such as
illiquid securities. repurchase agreements with more 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
Merging Fund's net assets would be in
investments which are illiquid.
The Surviving Fund may not make short The Merging Fund may not purchase
sales of securities, other than short securities on margin, make short
sales "against the box," or purchase sales of securities, or maintain a
securities on margin except for short position, provided that this
short-term credits necessary for restriction shall not be deemed to be
clearance of portfolio transactions, applicable to the purchase or sale of
provided that this restriction will when-issued or delayed delivery
not be applied to limit the use of securities, or to short sales that
options, futures contracts and are covered in accordance with
related options, in the manner Commission rules.
otherwise permitted by the investment
restrictions, policies and investment
program of the Fund. The Surviving
Fund does not have the current
intention of making short sales
against the box.
20
Except as otherwise specified The Merging Fund may not acquire
herein, the Surviving Fund may securities of other investment
invest in securities of other companies, except as permitted by the
investment companies to the extent 1940 Act or any order pursuant thereto.
permitted by the applicable federal
securities law.
The Surviving Fund may not purchase The Merging Fund is not subject to a
or sell interests in oil, gas or similar non-fundamental restriction.
mineral leases.
The Surviving Fund may not write, The Merging Fund is not subject to a
purchase or sell any put or call similar non-fundamental restriction.
option or any combination thereof,
provided that this shall not prevent
(i) the writing, purchasing or
selling of puts, calls or
combinations thereof with respect to
portfolio securities or (ii) with
respect to the Surviving 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.
The value of the Surviving Fund's The Merging Fund is not subject to a
investment in holdings of options similar non-fundamental restriction.
and warrants (other than those held
for hedging purposes) may not
exceed 15% of the total net asset
value of the Fund.
The Surviving Fund may not make any The Merging Fund is not subject to a
investment in assets that involve similar non-fundamental restriction.
assumption of any liability that is
unlimited, or acquire any investments
that are for the time being not paid
or partly paid, unless according to
the terms of the issue thereof any
call to be made thereon could be met
in full out of cash by the Fund's
portfolio.
The Surviving Fund may not sell, The Merging Fund is not subject to a
purchase or loan securities similar non-fundamental restriction.
(excluding shares in the Fund) or
grant or receive a loan or loans to
or from the adviser, corporate and
domiciliary agent, or paying agent,
the Distributor and the authorized
agents or any of their directors,
officers or employees or any of their
major shareholders (meaning a
shareholder who holds, in his own or
other
21
name (as well as a nominee's name),
more than 10% of the total issued
and outstanding shares of stock of
such company) acting as principal,
or for their own account, unless
the transaction is made within the
other restrictions set forth above
and either (i) at a price
determined by current publicly
available quotations, or (ii) at
competitive prices or interest
rates prevailing from time to time
on internationally recognized
securities markets or
internationally recognized money
markets.
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 will be those of the Surviving Fund, which are generally
similar to those of the Merging Fund. Please note that the Surviving Fund
currently has three classes of shares: Class A, Class B and Class C. In
connection with the Reorganization and the Concurrent Reorganization, two
additional classes, the Select Class and the Institutional Class, will be
introduced. The following discussion applies to Select Class shares. 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 no sales charge to buy or sell Select Class shares.
12b-1 FEES
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 SELECT CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
The price shareholders pay for their shares is the net asset value per
share (NAV). NAV is the value of everything the Surviving Fund owns, minus
everything it owes,
22
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") 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 generally only through
financial service firms, such as broker-dealers and banks that have an agreement
with the Fund or the Fund's distributor.
The investment minimum for Select Class Shares is $1,000,000. However,
shareholders who receive Select Class Shares as a result of the Reorganization
may purchase new shares without regard to such investment minimum. For Select
Class shares, checks should be made out to 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 Select Class 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.
23
A systematic investment plan is available for Select Class Shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE SELECT CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
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.
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 Fund has not collected payment for the shares. The Surviving Fund may
stop accepting orders to sell and may postpone payments for more than seven
days, as federal securities laws permit.
Generally, proceeds are sent by check, electronic transfer or wire for
Select Class Shares. 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 only to the bank account on the Surviving Fund's
records.
For Select Class Shares, a shareholder will need to have his or her
signature guaranteed if he or she wants payment to be sent to an address other
than the one in the Surviving Fund's records. Additional documents or a letter
from a surviving joint owner may also be needed.
A shareholder who purchased through an investment representative or
through a financial service firm, should contact that representative, who will
send the necessary documents to the Center. The representative might charge a
fee for this service.
Shareholders may also sell their shares by contacting the Center
directly by calling _______________.
A systematic withdrawal plan is available for Select Class Shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF SELECT CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Select Class shares of the Surviving Fund may be exchanged for Select
Class Shares 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.
24
The exchange privilege is not a means of short-term trading as this
could increase management cost and affect all shareholders of the Surviving
Fund. The Fund reserves the right to limit the number of exchanges or refuse an
exchange. Each exchange privilege may also be terminated. The 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 Select Class shares, the Surviving Fund may close an account if the
balance falls below $___________. The Surviving Fund may also close the account
if an investor is in the Systematic Investment Plan and fails to meet investment
minimums over a 12-month period. At least 60 days' notice will be given before
closing the account.
Unless a shareholder indicates otherwise on his or her account
application, the Surviving Fund is authorized to act on redemption and transfer
instructions received by phone. If someone trades on an account by phone, the
Surviving Fund will ask that person to confirm the account registration and
address to make sure they match those in the Surviving Fund records. If they do
correspond, the Surviving Fund is generally authorized to follow that person's
instructions. The Surviving Fund will take all reasonable precautions to confirm
that the instructions are genuine. Investors agree that they will not hold the
Surviving Fund liable for any loss or expenses from any sales request, if the
Surviving Fund takes reasonable precautions. The Surviving Fund will be liable
for any losses to a shareholder from an unauthorized sale or fraud against such
shareholder if the Surviving Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This
may be true at times of unusual market changes and shareholder activity. In that
event, shareholders can mail instructions to the Surviving Fund or contact their
investment representative or agent. The Surviving Fund may modify or cancel the
sale of shares by phone without notice.
MFG, on behalf of the Surviving Fund, has entered into agreements with
certain shareholder servicing agents (including Chase) under which the
shareholder servicing agents agree to provide certain support services to their
customers. For performing these services, each shareholder servicing agent will
receive an annual fee of up to 0.25% of the average daily net assets of the
Select Class shares held by investors serviced by the shareholder servicing
agent.
JPMFAM and/or the Distributor may, at their own expense, make
additional payments to certain selected dealers or other shareholder servicing
agents for performing administrative services for their customers.
The Surviving Fund issues multiple classes of shares. Each class may
have different requirements for who may invest, and may have different sales
charges and expense levels. A person who gets compensated for selling Surviving
Fund shares may receive a different amount for each class.
25
DISTRIBUTIONS AND TAXES
The Surviving Fund can earn income and realize capital gain. The
Surviving Fund will deduct from these earnings any expenses and then pay to
shareholders the distributions.
The Surviving Fund typically distributes any net investment income at
least annually. Net capital gain, if any, is distributed annually. You have
three options for your Surviving Fund distributions. You may:
- reinvest all of them in additional Fund shares;
- take distributions of net investment income in cash or as a
deposit in a pre-assigned bank account and reinvest
distributions of net capital gain in additional shares; or
- take all distributions in cash or as a deposit in a
pre-assigned bank account.
If you don't notify us otherwise, we'll reinvest all distributions. If
your distributions are reinvested, they will be in the form of shares of the
same class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary
income at the federal, state and local levels.
If you receive distributions of net capital gain, the tax rate will be
based on how long the Surviving Fund held a particular asset, not on how long
you have owned your shares. If you buy shares just before a distribution, you
will pay tax on the entire amount of the taxable distribution you receive, even
though the NAV will be higher on that date because it includes the distribution
amount.
The Surviving Fund expects that its distributions will consist
primarily of capital gains.
Investment income received by the Surviving Fund from sources in
foreign countries may be subject to foreign taxes withheld at the source. Since
it is anticipated that more than 50% of the Fund's assets at the close of its
taxable year will be in securities of foreign corporations, the Fund may elect
to "pass through" to its shareholders the foreign taxes that it paid.
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.
26
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 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 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 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 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 JPMF's Trustees and the business of the Surviving
Fund is managed by MFG'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 and 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
27
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.
28
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER
SERVICES
GENERAL INFORMATION
As noted above, the investment adviser of the Master Portfolio (and
therefore the Merging Fund's assets) is JPMIM. Pursuant to an Advisory
Agreement, the investment adviser of the Surviving Fund is JPMFAM. JPMFAM has
delegated most of its responsibilities with respect to the Surviving Fund to
CFAML pursuant to a Subadvisory Agreement between JPMFAM and CFAML. As a result,
CFAML is responsible for most of the day-to-day management of the Surviving
Fund.
DESCRIPTION OF JPMFAM
JPMFAM, a registered investment adviser, is an indirect wholly-owned
subsidiary of JPMC incorporated under the laws of Delaware. JPMFAM's principal
executive offices are located at 522 Fifth Avenue, New York, New York 10036. As
of _______ __, 2001, JPMFAM and certain of its affiliates (including JPMIM and
CFAML) provided investment management services with respect to assets of
approximately $___ billion.
Under the Advisory Agreement, JPMFAM is responsible for making
decisions with respect to, and placing orders for, all purchases and sales of
the portfolio securities of the Surviving Fund. JPMFAM's responsibilities under
the Advisory Agreement 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. JPMFAM delegates certain of these
responsibilities to CFAML. Under the Advisory Agreement, JPMFAM is obligated to
furnish employees, office space and facilities required for the operation of the
Surviving Fund. The services provided to the Surviving Fund by JPMFAM are
substantially similar to the services currently provided to the Master Portfolio
and, therefore, indirectly to the Merging Fund by JPMIM.
EXPENSES AND MANAGEMENT FEES. The Advisory Agreement provides that the
Surviving Fund will pay JPMFAM a monthly management fee based upon the net
assets of the Surviving Fund. The annual rate of this management fee is 1.00%.
The Master Portfolio and, therefore, indirectly the Merging Fund also currently
pays 0.65% of average net assets with respect to its assets in the Master
Portfolio to JPMIM for its advisory services. JPMFAM 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 JPMFAM 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; advisory and administrative fees; charges
of the custodian and transfer agent; insurance premiums; auditing and legal
expenses; costs of
29
shareholders' reports and shareholder meetings; any extraordinary expenses; and
brokerage fees and commissions, if any, in connection with the purchase or sale
of portfolio securities.
SUBCONTRACTING. JPMFAM is authorized by the Advisory Agreement to
employ or associate with such other persons or entities as it believes to be
appropriate to assist it in the performance of its duties. Any such person is
required to be compensated by JPMFAM, not by the Surviving Fund, and to be
approved by the shareholders of that Fund as required by the 1940 Act.
LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMFAM
will not be liable for any error of judgment or mistake of law or for any act or
omission or loss suffered by MFG 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 will continue in
effect from year to year with respect to the Surviving Fund, only so long as
such continuation is approved at least annually by (i) the Board of Trustees of
MFG 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 MFG Board or by vote of the majority of the Surviving Fund's outstanding
voting securities upon 60 days' written notice to JPMFAM, and by JPMFAM on 60
days' written notice to MFG.
DESCRIPTION OF CFAML
CFAML is a wholly-owned indirect subsidiary of JPMC. CFAML is located
at Colvile House, 32 Curzon Street, London W1Y8AL.
DESCRIPTION OF THE SUBADVISORY AGREEMENT
Pursuant to the Subadvisory Agreement, JPMFAM delegates to CFAML
portfolio management duties. With respect to the day-to-day management of the
Surviving Fund, CFAML makes decisions concerning, and places all orders for,
purchases and sales of securities and helps maintain the records relating to
such purchases and sales. CFAML may, in its discretion, provide such services
through its own employees or the employees of one or more affiliated companies
that are qualified to act as an investment adviser to the Fund under applicable
laws and are under the common control of JPMC; PROVIDED that (i) all persons,
when providing services under the Subadvisory Agreement, are functioning as
30
part of an organized group of persons, and (ii) such organized group of persons
is managed at all times by authorized officers of CFAML.
JPMFAM and CFAML bear all expenses in connection with the performance
of their respective services under the Subadvisory Agreement.
As investment adviser, JPMFAM oversees the management of the Surviving
Fund under the Subadvisory Agreement, and, subject to the general supervision of
the MFG Board, makes recommendations and provides guidelines to CFAML based on
general economic trends and macroeconomic factors. Among the recommendations
that may be provided by JPMFAM to CFAML are guidelines and benchmarks against
which the Surviving Fund would be managed. From the fee paid by the Surviving
Fund under the Advisory Agreement to JPMFAM, JPMFAM bears responsibility for
payment of subadvisory fees to CFAML. Therefore, the Surviving Fund does not
bear any increase in management fee rates resulting from the Subadvisory
Agreement.
SUBADVISORY FEE. As compensation for its services, CFAML receives
a fee from JPMFAM. The fee is at the annual rate of 0.50% of the current
value of the net assets of the Surviving Fund. The fee, which is accrued
daily and payable monthly, is calculated for each day by multiplying the
fraction of one over the number of calendar days in the year by the annual
subadvisory fee percentage rate and multiplying this product by the value
of the net assets of the Surviving Fund at the close of business on the
previous business day. Confirm
DURATION AND TERMINATION. The Subadvisory Agreement will continue for
successive one-year periods, provided that such continuation is specifically
approved at least annually (i) by the MFG Board, or by a majority of the
outstanding voting securities of the Surviving Fund and (ii) by a majority of
the Trustees who are not interested persons of the Fund, JPMFAM or CFAML, by
vote cast in person at a meeting called for such purposes. The Subadvisory
Agreement is terminable at any time, without penalty, by vote of the MFG Board,
by JPMFAM or by the majority of the outstanding voting securities of the
Surviving Fund, or by CFAML upon 60 days' written notice. The Subadvisory
Agreement will terminate automatically in the event of its assignment, as
defined under the 1940 Act.
PORTFOLIO MANAGER
The portfolio management team for the Surviving Fund is led by
James Elliot and Ajay Gambhir. Messrs. Elliot and Gambhir are both
assistant directors of the European Equity Group. Mr. Elliot joined CFAML
in June of 1995 as an executive in the European Investment Banking group.
He was appointed a portfolio manager in 1998 and Assistant Director in
1999. Mr. Gambhir joined CFAML in December of 1997 as a Fund manager in
the European Equity Group. Prior to that he worked as a Fund manager at
NM Rothschild & Sons Limited. Mr. Gambhir was appointed Assistant
Director in April of 2000. Both have managed the Surviving Fund since
August of 2000.
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PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
JPMFAM, as the investment adviser to the Surviving Fund, has
responsibilities with respect to the Fund's portfolio transactions and brokerage
arrangements pursuant to the Fund's policies, subject to the overall authority
of the MFG Board. In addition, the Subadvisory Agreement with CFAML currently
provides that CFAML's responsibilities with respect to portfolio transactions
and brokerage arrangements will be equivalent to those of JPMFAM under the
Advisory Agreement. Accordingly, the description below of JPMFAM's
responsibilities under the Advisory Agreement would also apply to CFAML's
responsibilities under the Subadvisory Agreement.
Under the Advisory Agreement, JPMFAM, subject to the general
supervision of the Board, is responsible for the placement of orders for the
purchase and sale of portfolio securities for the Surviving Fund with brokers
and dealers selected by JPMFAM. These brokers and dealers may include brokers or
dealers affiliated with JPMFAM to the extent permitted by the 1940 Act and MFG's
policies and procedures applicable to the Fund. JPMFAM shall use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the most favorable to
such Fund. In assessing the best overall terms available for any transaction,
JPMFAM shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, research services provided to
JPMFAM, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In no event shall JPMFAM be under any
duty to obtain the lowest commission or the best net price for the Fund on any
particular transaction, nor shall JPMFAM be under any duty to execute any order
in a fashion either preferential to such Fund relative to other accounts managed
by JPMFAM or otherwise materially adverse to such other accounts.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to JPMFAM, the Fund and/or the other accounts over which
JPMFAM exercises investment discretion. JPMFAM is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if JPMFAM determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of JPMFAM with respect to accounts
over which it exercises investment discretion. JPMFAM shall report to the Board
regarding overall commissions paid by the Fund and their reasonableness in
relation to the benefits to such Fund.
In executing portfolio transactions for the Fund, JPMFAM may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those of other funds
or its other clients if, in JPMFAM's reasonable judgment, such aggregation (i)
will result in an overall economic benefit to such fund, taking into
consideration the advantageous selling or purchase price,
32
brokerage commission and other expenses, and trading requirements, and (ii) is
not inconsistent with the policies set forth in MFG's registration statement, as
the case may be, and the Fund's Prospectus and Statement of Additional
Information. In such event, JPMFAM will allocate the securities so purchased or
sold, and the expenses incurred in the transaction, in an equitable manner,
consistent with its fiduciary obligations to such Fund and such other clients.
It is possible that certain of the brokerage and research services
received will primarily benefit one or more other investment companies or other
accounts for which JPMFAM exercises investment discretion. Conversely, MFG or
any of its portfolios may be the primary beneficiary of the brokerage or
research services received as a result of portfolio transactions effected for
such other accounts or investment companies.
OTHER SERVICES
The Distributor, a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the Merging Fund's distributor and
sub-administrator, is the distributor and sub-administrator for the Surviving
Fund. The Distributor is unaffiliated with JPMC or any of its subsidiaries.
Chase serves as administrator, shareholder servicing agent, fund
accountant and custodian, and DST serves as transfer agent and dividend
disbursing agent, for the Surviving Fund. The services provided by Chase 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, Chase
is responsible for the daily safekeeping of securities and cash held by the
Surviving Fund.
As administrator, Chase receives a fee of 0.15% of average daily net
assets. It is anticipated that, in connection with the Reorganization, the
administration fee will be amended to reduce the fee to 0.075% for complex
wide non-money market Fund 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 JPMF, 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 JPMF will continue to exist and operate. All
shareholders of any series of JPMF 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 JPMF, you are entitled to vote on
this proposal. Shareholders of MFG are being asked to approve the same Trustees
as are being proposed for JPMF.
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
33
of JPMF's Advisory Board. Each Nominee has consented to being named in this
Proxy Statement and has agreed to serve as a Trustee if elected.
Shareholders of MFG are concurrently considering the election of the
same individuals to the Board of Trustees of MFG. Biographical information about
the Nominees and other relevant information is set forth below. More information
regarding the current Trustees of MFG and JPMF is contained in the Funds'
Statements of Additional Information, which are incorporated herein by
reference.
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
THE JPMF 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 JPMF.
The following are the nominees:
================================================================================
The Board of Trustees of JPMF met 4 times during the fiscal year
ended November 30, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of JPMF presently has an Audit Committee. The
members of the Audit Committee are Messrs. _____. The function of the Audit
Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met four times during the fiscal year
ended November 30, 2001.
A majority of the disinterested Trustees have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising from the fact that the same individuals are Trustees of JPMF, the Master
Portfolio and certain other investment companies in the Fund Complex, up to and
including creating a separate board of trustees.
*Interested Trustee, as defined by the 1940 Act.
34
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Each Trustee is currently paid an annual fee of $75,000 for serving
as Trustee of the investment companies in the Fund Complex, which is
allocated among all Investment Companies for when the Trustee service and is
reimbursed for expenses incurred in connection with service as a Trustee. The
Trustees may hold various other directorships unrelated to these funds.
Trustee compensation expenses paid for the calendar year ended December
31, 2000 are set forth below.
Aggregate Trustee
Compensation Paid by the Total Trustee Compensation Accrued
Name of Trustee Trust During 2000 by Fund Complex(1) During 2000(2)
--------------- ----------------- ---------------------------------
Frederick S. Addy, Trustee $ 11,238 $ 75,000
William G. Burns, Trustee $ 11,238 $ 75,000
Arthur C. Eschenlauer, Trustee $ 11,238 $ 75,000
Matthew Healey, Trustee(3)
Chairman and Chief Executive Officer $ 11,238 $ 75,000
Michael P. Mallardi, Trustee $ 11,238 $ 75,000
- ----------
(1.) A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investment services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.
(2.) No investment company within the Fund Complex has a pension or
retirement plan.
(3.) During 2000, Pierpont Group, Inc. paid Mr. Healey, in his role as
Chairman of Pierpont Group, Inc., compensation in the amount of
$200,000, contributed $25,500 to a defined contribution plan on
his behalf and paid $18,400 in insurance premiums for his benefit.
The Trustees decide upon general policies and are responsible for
overseeing JPMF's business affairs. Each of JPMF and the Master Portfolio
has entered into a Fund Services Agreement with Pierpont Group, Inc. to
assist the Trustees in exercising their overall supervisory responsibilities.
Pierpont Group, Inc. was organized in July 1989 to provide services for the
J.P. Morgan Family of Funds (formerly "The Pierpont Family of Funds"), and
the Trustees are the equal and sole shareholders of Pierpont Group, Inc.
JPMF has agreed to pay Pierpont Group, Inc. a fee in an amount representing
its reasonable costs in performing these services. These costs are
periodically reviewed by the Trustees. The principal offices of Pierpont
Group, Inc. are located at 461 Fifth Avenue, New York, New York 10017. It is
anticipated that the Merging Fund will terminate its agreement with Pierpont
Group, Inc. in connection with Reorganization.
The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund and
the Master Portfolio during the indicated fiscal periods are set forth below:
35
MERGING FUND-- For the fiscal year ended December 31, 1997: $117. For
the period January 1, 1998 through November 30, 1998: $336. For the
fiscal year ended November 30, 1999: $274. For the fiscal year ended
November 30, 2000: $216.
MASTER PORTFOLIO-- For the fiscal year ended December 31, 1997: $21,837.
For the period January 1, 1998 through November 30, 1998: $738. For the
fiscal year ended November 30, 1999: $498. For the fiscal year ended
November 30, 2000: $384.
ADVISORY BOARD
The Trustees determined as of January 26, 2000 to establish an advisory
board and appoint four members ("Members of the Advisory Board") thereto. Each
member serves at the pleasure of the Trustees. The Advisory Board is distinct
from the Trustees and provides advice to the Trustees as to investment,
management and operations of JPMF; but has no power to vote upon any matter put
to a vote of the Trustees. The Advisory Board and the members thereof also serve
each of the other trusts in the Fund Complex. The creation of the Advisory Board
and the appointment of the members thereof was designed so that the Board of
Trustees will continuously consist of persons able to assume the duties of
Trustees and be fully familiar with the business and affairs of JPMF, in
anticipation of the current Trustees reaching the mandatory retirement age of
seventy. Each Member of the Advisory Board is paid an annual fee of $75,000 for
serving in this capacity for the Fund Complex and is reimbursed for expenses
incurred in connection for such service. The Members of the Advisory Board may
hold various other directorships unrelated to these funds. The mailing address
of the Members of the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth
Avenue, New York, New York 10017. Their names, principal occupations during the
past five years and dates of birth are set forth below:
Ann Maynard Gray -- Former President, Diversified Publishing Group
and Vice President, Capital Cities/ABC, Inc. Her date of birth is August 22,
1945.
John R. Laird-- Retired; Former Chief Executive Officer, Shearson
Lehman Brothers and The Boston Company. His date of birth is June 21,
1942.
Gerard P. Lynch -- Retired; Former Managing Director, Morgan Stanley
Group and President and Chief Operating Officer, Morgan Stanley Services, Inc.
His date of birth is October 5, 1936.
James J. Schonbachler -- Retired; Prior to September, 1998, Managing
Director, Bankers Trust Company and Chief Executive Officer and Director,
Bankers Trust A.G., Zurich and BT Brokerage Corp. His date of birth is January
26, 1943.
PRINCIPAL EXECUTIVE OFFICERS:
JPMF's and the Master Portfolio's principal executive officers (listed
below), other than the Chief Executive Officer and the officers who are
employees of JPMIM, are provided and compensated by Funds Distributor, Inc.
("FDI"), a wholly owned indirect subsidiary of Boston Institutional Group, Inc.
The officers conduct and supervise the
36
business operations of JPMF and the Master Portfolio. JPMF and the Master
Portfolio have no employees.
The business address of each of the officers unless otherwise noted is
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston, Massachusetts
02109. The principal executive officers of JPMF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
Matthew Healey 63 Chief Executive Officer; Chairman, Pierpont Group,
since prior to 1993. His address is Pine Tree Country
Club Estates, 10286 Saint Andrews Road, Boynton Beach,
Florida 33436.
Margaret W. Chambers 41 Vice President and Secretary. Senior Vice President
and General Counsel of the Distributor since April,
1998. From August 1996 to March 1998, Ms. Chambers
was Vice President and Assistant General Counsel for
Loomis, Sayles & Company, L.P. From January 1986 to
July 1996, she was an associate with the law firm of
Ropes & Gray.
George A. Rio 46 President and Treasurer. Executive Vice President and
Client Service Director of the Distributor since April
1998. From June 1995 to March 1998, Mr. Rio was
Senior Vice President and Senior Key Account Manager
for Putnam Mutual Funds. From May 1994 to June 1995,
Mr. Rio was Director of Business Development for
First Data Corporation.
ACCOUNTANTS
PricewaterhouseCoopers LLP serves as the Merging Fund's, the Surviving
Fund's and the Master Portfolio's independent accountants, auditing and
reporting on the annual financial statements 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 and the Master Portfolio
for the last fiscal year was $47,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for financial information systems design and
implementation services rendered by PricewaterhouseCoopers LLP to the Merging
Fund, JPMIM and JPMIM's affiliates that provide services to the Fund for the
calendar year ended December 31, 2000 was $0.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services, including fees for tax-related services, rendered by
PricewaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's affiliates
that provide services to the Fund for the calendar year ended December 31, 2000
was $11,032,400.
37
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 JPMF Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. JPMF's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview. In
addition JPMF 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 JPMF to forward
solicitation materials to their principals to obtain authorizations for the
execution of proxies. Any Merging Fund Shareholder giving a proxy may revoke it
at any time before it is exercised by submitting to JPMF a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person.
Only the Merging Fund Shareholders of record at the close of business
on _________, 2001 will be entitled to vote at the Meeting. On that date, there
were outstanding and entitled to be voted _____________ Merging Fund Shares.
Each share or fraction thereof is entitled to one vote or fraction thereof.
The presence in person or by proxy of shareholders that own one-third
of the outstanding Merging Fund Shares will constitute a quorum for purposes of
transacting all business at the Meeting. If a quorum is not present at the
Meeting, sufficient votes in favor of the proposals are not received by the time
scheduled for the Meeting, or the Merging Fund Shareholders determine to adjourn
the Meeting for any other reason, the Merging Fund Shareholders present (in
person or proxy) may adjourn the Meeting from time to time, without notice other
than announcement at the Meeting. Any such adjournment will require the
affirmative vote of the Merging Fund Shareholders holding a majority of the
Merging Fund Shares present, in person or by proxy, at the Meeting. The persons
named in the Proxy will vote in favor of such adjournment those Merging Fund
Shares that they are entitled to vote if such adjournment is necessary to obtain
a quorum or if they determine such an adjournment is desirable for any other
reason. Business may be conducted once a quorum is present and may continue
until adjournment of the Meeting notwithstanding the withdrawal or temporary
absence of sufficient Merging Fund Shares to reduce the number present to less
than a quorum. If the accompanying proxy is executed and returned in time for
the Meeting, the shares covered thereby will be voted in accordance with the
proxy on all matters that may properly come before the meeting (or any
adjournment thereof).
38
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 JPMF,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other matters come before the Meeting, proxies will be voted by the persons
named as proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
JPMC, and not the Merging Fund or the Surviving Fund (or shareholders
of either fund), will bear the cost of solicitation of proxies, including the
cost of printing, preparing, assembling and mailing the Notice of Meeting,
Combined Prospectus/Proxy Statement and form of proxy. In addition to
solicitations by mail, proxies may also be solicited by officers and regular
employees of JPMF 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 JPMF 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
39
consummation of the Reorganization and the Concurrent Reorganization based upon
their holdings at _______, 2001 are as follows:
Percentage of Percentage of
Amount of Merging Fund Surviving Fund
Shares Owned on Record Owned Upon
Name and Address Owned Date Consummation
- --------------------------------------------------------------------------------
On the record date, the Trustees and officers of MFG as a group owned
less than 1% of the outstanding shares of the Surviving Fund. On the record
date, the name, address and percentage ownership of the persons who owned
beneficially more than 5% of the shares of the Surviving Fund or any class
thereof and the percentage of any class or series 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 Reorganization based upon their
holdings at _______, 2001 are as follows:
Percentage of
Amount of Surviving Fund Percentage of Surviving
Shares Owned on Record Fund Owned Upon
Name and Address Owned Date Consummation
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT MFG
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 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.
40
ADDITIONAL INFORMATION ABOUT JPMF
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 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.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund and the Master Portfolio for the fiscal year ended
November 30, 2000 and the Surviving Fund for the fiscal year ended October 31,
2000 are incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement. The financial
highlights, financial statements, notes thereto and supplementary data, as
applicable, of the Merging Fund, the Master Portfolio and the Surviving Fund
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.
OTHER BUSINESS
The JPMF 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 JPMF 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 JPMF in writing at the
address on the cover page of this Combined Prospectus/Proxy Statement or by
telephoning 1-800-766-7722.
41
* * *
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.
42
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this ____
day of ______, 2001 by and among J.P. Morgan Funds (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the J.P. Morgan European Equity Fund
(the "Transferor Portfolio"), Mutual Fund Group (the "Acquiring Trust"), a
Massachusetts business trust, on behalf of JPMorgan Fleming European Fund
(formerly, Chase Vista European Fund) (the "Acquiring Portfolio") and J.P.
Morgan Chase & Co.
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends
to provide for the Reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and
the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR THE
ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE TRANSFEROR
PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio listed
above, will convey, transfer and deliver to the Acquiring Portfolio all of the
then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Select Class share class in exchange for shares of the
Transferor Portfolio, with the amounts of shares of each share class to be
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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 form for transfer, in such condition as to
constitute good delivery thereof in accordance with the
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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 shares shall be determined by an exchange ratio computed by dividing
the net value of the Transferor Portfolio's assets attributable to its shares by
the net asset value per share of the Select Class shares of the Acquiring
Portfolio, both as determined in accordance with Section 1(c)(i).
(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.
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
A-3
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 October 31, 2000
there were outstanding 573,000 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 for the fiscal year ended October
31, 2000, which have been audited by PricewaterhouseCoopers LLP, fairly present
the financial position of the Acquiring 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").
(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
A-4
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 October 31, 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 October 31, 2000, there has been
no material adverse change in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Acquiring Trust, threatened which would
adversely affect the Acquiring Trust or the Acquiring Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Acquiring Trust or the
Acquiring Portfolio and, to the knowledge of the Acquiring Trust, there are no
regulatory investigations of the Acquiring Trust or the Acquiring Portfolio,
pending or threatened, other than routine inspections and audits.
(k) CONTRACTS. No default exists under any material contract or other
commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio,
is subject.
(l) TAXES. The federal income tax returns of the Acquiring Trust with
respect to the Acquiring Portfolio, and all other income tax returns required to
be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have
been filed, and all taxes payable pursuant to such returns have been paid. To
the knowledge of the Acquiring Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Acquiring Trust with respect to the Acquiring Portfolio
have been paid so far as due. The Acquiring Portfolio has elected to qualify 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
A-5
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 October 31, 2000
there were outstanding 784,000 shares of the Transferor Portfolio, and no
shares of such Portfolio were held in the treasury of the Transferor Trust.
All of the outstanding shares of the Transferor Trust have been duly
authorized and are validly issued, fully paid and nonassessable (except as
disclosed in the Transferor Trust's prospectus and recognizing that under
Massachusetts law, shareholders of a Trust portfolio could, under certain
circumstances, be held personally liable for the obligations of such Trust
portfolio). Because the Transferor Trust is an open-end investment company
engaged in the continuous offering and redemption of its shares, the number
of outstanding shares may change prior to the Effective Time of the
Reorganization. All such shares will, at the Exchange Date, be held by the
shareholders of record of the Transferor Portfolio as set forth on the books
and records of the Transferor Trust in the amounts set forth therein, and as
set forth in any list of shareholders of record provided to the Acquiring
Portfolio for purposes of the Reorganization, and no such shareholders of
record will have any preemptive rights to purchase any Transferor Portfolio
shares, and the Transferor Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Transferor
Portfolio shares (other than any existing dividend reinvestment plans of the
Transferor Portfolio or as set forth in this Plan), nor are there outstanding
any securities convertible into any shares of the Transferor Portfolio
(except pursuant to any existing exchange privileges described in the current
prospectus and statement of additional information of the Transferor Trust).
All of the Transferor Portfolio's issued and outstanding shares have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state
securities laws.
(e) FINANCIAL STATEMENTS. The financial statements for the Transferor
Trust with respect to the Transferor Portfolio and The European Equity Portfolio
for the fiscal year ended November 30, 2000 which have been audited by
PricewaterhouseCoopers LLP fairly present the financial position of the
Transferor Portfolio and The European 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.
A-6
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of
the Transferor Portfolio, has the power to enter into this Plan and to carry out
its obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Transferor Trust's Board of Trustees and no other proceedings by the
Transferor Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Transferor Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Transferor Trust's
Financial Statements with respect to the Transferor Portfolio and liabilities
incurred in the ordinary course of business subsequent to November 30, 2000 or
otherwise previously disclosed to the Transferor Trust with respect to the
Transferor Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has been
no material adverse change in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(i) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Transferor Trust, threatened which would
adversely affect the Transferor Trust or the Transferor Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Transferor Trust or the
Transferor Portfolio and, to the knowledge of the Transferor Trust, there are no
regulatory investigations of the Transferor Trust or the Transferor Portfolio,
pending or threatened, other than routine inspections and audits.
(j) CONTRACTS. The Transferor Trust, on behalf of the Transferor
Portfolio, is not subject to any contracts or other commitments (other than this
Plan) which will not be terminated with respect to the Transferor Portfolio
without liability to the Transferor Trust or the Transferor Portfolio as of or
prior to the Effective Time of the Reorganization.
(k) TAXES. The federal income tax returns of the Transferor Trust with
respect to the Transferor Portfolio, and all other income tax returns required
to be filed by the Transferor Trust with respect to the Transferor Portfolio,
have been filed, and all taxes payable pursuant to such returns have been paid.
To the knowledge of the Transferor Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Transferor Trust with respect to the Transferor
Portfolio have been paid so far as due. The Transferor Portfolio has elected to
qualify as a "regulated investment company" under
A-7
Subchapter M of the Code, as
of and since its first taxable year; and shall continue to so qualify until the
Effective Time of the Reorganization.
(l) NO APPROVALS REQUIRED. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders referred to in Section 6(a) hereof, no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the consummation by the Transferor Trust of the Reorganization,
except such as have been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio, the
Acquiring Trust shall file with the Commission a Registration Statement on Form
N-14 (the "Registration Statement") under the Securities Act relating to the
Acquiring Portfolio Shares issuable hereunder and the proxy statement of the
Transferor Portfolio relating to the meeting of the Transferor Portfolio's
shareholders referred to in Section 5(a) herein. At the time the Registration
Statement becomes effective, the Registration Statement (i) will comply in all
material respects with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder (the "Regulations") and (ii) will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes effective, at the
time of the Transferor Portfolio shareholders' meeting referred to in Section
5(a) hereof, and at the Effective Time of the Reorganization, the
prospectus/proxy statement (the "Prospectus") and statement of additional
information (the "Statement of Additional Information") included therein, as
amended or supplemented by any amendments or supplements filed by the Trust,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust agrees
to use all reasonable efforts to effectuate the Reorganization, to continue in
operation thereafter, and to obtain any necessary regulatory approvals for the
Reorganization. The Acquiring Trust shall furnish such data and information
relating to the Acquiring Trust as shall be reasonably requested for inclusion
in the information to be furnished to the Transferor Portfolio shareholders 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.
A-8
5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Trust shall call and hold a meeting of the shareholders of the Transferor
Portfolio for the purpose of acting upon this Plan and the transactions
contemplated herein.
(b) PORTFOLIO SECURITIES. With respect to the assets to be transferred
in accordance with Section 1(a), the Transferor Portfolio's assets shall consist
of all property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims and receivables
(including dividend and interest receivables) owned, and any deferred or prepaid
expenses shown as an asset on the Transferor Trust's books maintained on behalf
of the Transferor Portfolio. At least five (5) business days prior to the
Exchange Date, the Transferor Portfolio will provide the Acquiring Trust, for
the benefit of the Acquiring Portfolio, with a list of its assets and a list of
its stated liabilities. The Transferor Portfolio shall have the right to sell
any of the securities or other assets shown on the list of assets prior to the
Exchange Date but will not, without the prior approval of the Acquiring Trust,
on behalf of the Acquiring Portfolio, acquire any additional securities other
than securities which the Acquiring Portfolio is permitted to purchase, pursuant
to its investment objective and policies or otherwise (taking into consideration
its own portfolio composition as of such date). In the event that the Transferor
Portfolio holds any investments that the Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable, to the extent permitted by
its investment objective and policies and to the extent that its shareholders
would not be materially affected in an adverse manner by such a disposition. In
addition, the Transferor Trust will prepare and deliver immediately prior to the
Effective Time of the Reorganization, a Statement of Assets and Liabilities of
the Transferor Portfolio, prepared in accordance with GAAP (each, a "Schedule").
All securities to be listed in the Schedule for the Transferor Portfolio as of
the Effective Time of the Reorganization will be owned by the Transferor
Portfolio free and clear of any liens, claims, charges, options and
encumbrances, except as indicated in such Schedule, and, except as so indicated,
none of such securities is or, after the Reorganization as contemplated hereby,
will be subject to any restrictions, legal or contractual, on the disposition
thereof (including restrictions as to the public offering or sale thereof under
the Securities Act) and, except as so indicated, all such securities are or will
be readily marketable.
(c) REGISTRATION STATEMENT. In connection with the preparation of the
Registration Statement, the Transferor Trust will cooperate with the Acquiring
Trust and will furnish to the 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
A-9
Reorganization, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed by the Transferor
Trust, insofar as they relate to the Transferor Portfolio, will not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements in or omissions
from the Registration Statement, Prospectus or Statement of Additional
Information made in reliance upon and in conformity with information furnished
by the Transferor Portfolio for use in the registration statement, prospectus or
statement of additional information as provided in this Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust
agrees to use all reasonable efforts to effectuate the Reorganization and to
obtain any necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated
by this Plan, the Transferor Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within 60 days after the Exchange Date, the Transferor Trust on
behalf of the Transferor Portfolio, shall prepare a statement of the earnings
and profits of the Transferor Portfolio for federal income tax purposes, and of
any capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and
the transactions contemplated by the Reorganization shall have been approved by
the requisite vote of the shares of the Transferor Portfolio entitled to vote on
the matter ("Transferor Shareholder Approval").
(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 October 31,
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
A-10
laws considered to be necessary shall have been obtained (collectively, the
"Regulatory Approvals").
(d) TAX OPINION. The Transferor Trust shall have received the opinion
of Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed
to and in form and substance satisfactory to the Transferor Trust, as to certain
of the federal income tax consequences under the Code of the Reorganization,
insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio,
and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For
purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may rely
exclusively and without independent verification, as to factual matters, upon
the statements made in this Plan, the Prospectus and Statement of Additional
Information, and upon such other written representations as the President or
Treasurer of the Transferor Trust will have verified as of the Effective Time of
the Reorganization. The Tax Opinion will be to the effect that, based on the
facts and assumptions stated therein, for federal income tax purposes: (i) the
Reorganization will constitute a reorganization within the meaning of section
368(a)(1) of the Code with respect to the Transferor Portfolio and the Acquiring
Portfolio; (ii) no gain or loss will be recognized by any of the Transferor
Portfolio or the Acquiring Portfolio upon the transfer of all the assets and
liabilities, if any, of the Transferor Portfolio to the Acquiring Portfolio
solely in exchange for shares of the Acquiring Portfolio or upon the
distribution of the shares of the Acquiring Portfolio to the holders of the
shares of the Transferor Portfolio solely in exchange for all of the shares of
the Transferor Portfolio; (iii) no gain or loss will be recognized by
shareholders of the Transferor Portfolio upon the exchange of shares of such
Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the
holding period and tax basis of the shares of the Acquiring Portfolio received
by each holder of shares of the Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of shares of
the Transferor Portfolio held by such holder immediately prior to the
Reorganization (provided the shares of the Transferor Portfolio were held as a
capital asset on the date of the Reorganization); and (v) the holding period and
tax basis of the assets of the Transferor Portfolio acquired by the Acquiring
Portfolio will be the same as the holding period and tax basis of those assets
to the Transferor Portfolio immediately prior to the Reorganization.
(e) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan
Institutional European Equity Fund, 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
A-11
Reorganization (except as otherwise contemplated herein), and there shall have
been no material adverse change (as described in Section 3(h)) in the financial
condition, results of operations, business, properties or assets of the
Transferor Portfolio since November 30, 2000.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the
Acquiring Portfolio in the Reorganization shall have been approved for
acquisition by J.P. Morgan Fleming Asset Management (USA) Inc. ("JPMFAM"), 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 deductions 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.
(g) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan
Institutional European Equity Fund, 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 JPMFAM 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
A-12
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 Investment Management Inc. ("JPMIM") on notice to
the other parties in the event that the Board of Trustees determines that
proceeding with this Plan is not in the best interests of the shareholders of
the Transferor Portfolio.
(d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on behalf
of the Acquiring Portfolio, may terminate this Plan with respect to the
Acquiring Portfolio at any time prior to the Effective Time of the
Reorganization by notice to the Transferor Trust and JPMIM if (i) a material
condition to the performance of the Acquiring Trust hereunder or a material
covenant of the Transferor Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Transferor Trust. In
addition, this Plan may be terminated by the Acquiring Trust at any time prior
to the Effective Time of the Reorganization, whether before or after approval of
this Plan by the shareholders of the Transferor Portfolio, without liability on
the part of any party hereto, its Trustees, officers or shareholders or JPMIM on
notice to the other parties in the event that the Board of Trustees determines
that proceeding with this Plan is not in the best interests of the shareholders
of the Acquiring Portfolio.
(e) SURVIVAL. No representations, warranties or covenants in or
pursuant to this Plan, except for the provisions of Section 5(f) and Section 9
of this Plan, shall survive the Reorganization.
9. EXPENSES
The expenses of the Reorganization will be borne by J.P. Morgan Chase &
Co. ("JPMC"). Such expenses include, without limitation, (i) expenses incurred
in connection with the entering into and the carrying out of the provisions of
this Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii)
legal fees and (viii) solicitation costs relating to the Reorganization. In
addition, JPMC or an affiliate will waive fees payable to it or reimburse
expenses to the extent necessary such that the actual (post-waiver) total
expense ratios of the Select Class Shares and the Institutional Class Shares of
the Acquiring Portfolio are not higher than those set forth in the Registration
Statement 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 Acquiring Trust (for itself or on behalf of the
Acquiring Portfolio):
A-13
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 Transferor Trust (for itself or on behalf of the
Transferor Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to
have been material and relied upon by the Transferor Trust and the Acquiring
Trust notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each of
which shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance with the
laws of The State of New York.
(d) This Plan shall bind and inure to the benefit of the Transferor
Trust, the Transferor Portfolio, the Acquiring Trust and the Acquiring Portfolio
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the written consent of the other parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this Plan.
A-14
(e) The name "J.P. Morgan Funds" is the designation of its Trustees
under a Declaration of Trust dated November 4, 1992, as amended, and all persons
dealing with the Transferor Trust must look solely to the Transferor Trust's
property for the enforcement of any claims against the Transferor Trust, as none
of the Transferor Trustees, officers, agents or shareholders assumes any
personal liability for obligations entered into on behalf of the Transferor
Trust. No series of the Transferor Trust shall be liable for claims against any
other series of the Transferor Trust.
(f) The name "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 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 FUNDS
on behalf of J.P. Morgan European Equity Fund
By:
--------------------------------------------------
Name:
Title:
MUTUAL FUND GROUP
on behalf of JPMorgan Fleming European 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
J.P. MORGAN EUROPEAN EQUITY FUND,
A SERIES OF J.P. MORGAN FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated May
12, 2001 for the Special Meeting of Shareholders of J.P. Morgan European Equity
Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), to be held on
July 3, 2001. Copies of the Combined Prospectus/Proxy Statement may be obtained
at no charge by calling the Merging Fund at 1-800-766-7722.
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 MFG's and JPMF'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 JPMF, on behalf
of the Merging Fund, MFG, on behalf of the Surviving Fund and J.P. Morgan Chase
& Co., 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 MFG in the Surviving
Fund that will have an aggregate net asset value equal to the aggregate net
asset value of the shares of the Merging Fund that are outstanding immediately
before the Effective Time of the Reorganization.
Following the exchange, the Merging Fund will make a liquidating
distribution of the Surviving Fund shares to its Shareholders, so that a holder
of shares in the Merging Fund will receive Select Class shares of the Surviving
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the Effective Time of the
Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees.
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 October 31,
2000 and of the Merging Fund contained in its Annual Report dated November 30,
2000, and the audited financial statements, notes thereto and supplementary data
of the Master Portfolio contained in its Annual Report dated October 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 October 31,
2000 and the Merging Fund for the fiscal year ended November 30, 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.
-3-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
LONG-TERM INVESTMENTS - 98.4%
COMMON STOCKS - 96.6%
BELGIUM - 1.8%
AGFA-Gevaert NV 33,100 33,100
Barco NV 8,216 8,216
Ubizen (*) 24,420 24,420
DENMARK - 3.5%
GN Store Nord A/S
(GN Great Nordic) 42,102 42,102
ISS A/S 801 801
NKT Holding A/S 4,409 4,409
Novo-Nordisk A/S 4,250 597 4,847
Vestas Wind Systems AS 23,325 23,325
FINLAND - 2.9%
Amer Group LTD 37,851 37,851
Nokia OYJ 24,871 15,386 40,257
Sampo Insurance Co., LTD 21,000 21,000
Stora Enso Oyj 8,724 8,724
FRANCE - 13.1%
Alcatel SA 37,800 6,822 44,622
Aventis SA 11,981 1,585 13,566
AXA-UAP 1,775 1,775
BNP Paribas 2,106 2,106
Carrefour 2,082 2,082
Christian Dior SA 1,080 1,080
CNP Assurances 29,981 29,981
Coflexip Stena Offshore 800 800
Compagnie Francaise d'Etudes
et de Construction SA 6,870 6,870
Credit Lyonnais SA 29,290 29,290
Fimatex 2,391 2,391
Groupe Danone 1,714 1,714
Lagardere S.C.A. 1,620 1,620
Lafarge 1,141 1,141
Ilog SA (*) 7,201 7,201
L.V.M.H. (Louis Vuitton
Moet Hennessy) 1,210 1,210
PSA Peugeot Citroen 2,686 2,686
Remy Cointreau 26,400 26,400
Renault SA 1,110 1,110
Sanofi-Synthelabo SA 18,592 18,592
Societe Generale 14,843 14,843
Suez Lyonnaise DES Eaux 835 835
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
LONG-TERM INVESTMENTS - 98.4%
COMMON STOCKS - 96.6%
BELGIUM - 1.8%
AGFA-Gevaert NV $ 685 $ 685
Barco NV 921 921
Ubizen (*) 517 517
-------------------------------------------------
2,123 - 2,123
-------------------------------------------------
DENMARK - 3.5%
GN Store Nord A/S
(GN Great Nordic) 815 815
ISS A/S $ 49 49
NKT Holding A/S 1,042 1,042
Novo-Nordisk A/S 900 126 1,027
Vestas Wind Systems AS 1,262 1,262
-------------------------------------------------
4,019 176 4,195
-------------------------------------------------
FINLAND - 2.9%
Amer Group LTD 841 841
Nokia OYJ 1,022 632 1,655
Sampo Insurance Co., LTD 854 854
Stora Enso Oyj 89 89
-------------------------------------------------
2,717 722 3,439
-------------------------------------------------
FRANCE - 13.1%
Alcatel SA 2,304 416 2,719
Aventis SA 863 114 977
AXA-UAP 235 235
BNP Paribas 181 181
Carrefour 140 140
Christian Dior SA 55 55
CNP Assurances 930 930
Coflexip Stena Offshore 93 93
Compagnie Francaise d'Etudes
et de Construction SA 878 878
Credit Lyonnais SA 1,001 1,001
Fimatex 26 26
Groupe Danone 239 239
Lagardere S.C.A. 92 92
Lafarge 84 84
Ilog SA (*) 231 231
L.V.M.H. (Louis Vuitton
Moet Hennessy) 88 88
PSA Peugeot Citroen 494 494
Remy Cointreau 882 882
Renault SA 55 55
Sanofi-Synthelabo SA 977 977
Societe Generale 842 842
Suez Lyonnaise DES Eaux 127 127
See notes to financial statements.
-4-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Total Fina SA, Class B 19,274 3,107 22,381
Vinci 1,380 1,380
Vivendi SA 5,278 5,278
Wavecom SA (*) 7,263 7,263
GERMANY - 6.3%
Allevard 797 797
Altana AG 12,339 12,339
Basf Ag 3,252 3,252
Bayer AG 4,092 4,092
Commerzbank AG 33,800 33,800
Consors Discount Broker -AG 700 700
Deutsche Telekom 7,016 7,016
Deutsche Bank AG 4,169 4,169
Dresdner Bank AG 1,613 1,613
E.ON AG 4,796 4,796
FJA AG 4,825 4,825
Heidelberger Druckmaschinen 1,000 1,000
Intershop Communications Ag 680 680
Kontron Embedded Computers (*) 2,006 2,006
MG Technologies AG 4,600 4,600
Muenchener Rueckversicher 206 206
SAP AG 1,063 1,063
Schering AG 2,099 2,099
Siemens AG 5,439 1,979 7,418
Volkswagen AG 20,206 1,170 21,376
Wella AG 16,202 16,202
IRELAND - 2.1%
CRH Plc 3,665 3,665
Fyffes Plc 1,000 1,000
Green Property PLC 73,443 73,443
IONA Technologies PLC (*) 14,813 14,813
Irish Life & Permanent Plc 10,808 10,808
Kerry Group PLC 70,930 70,930
Smurfit (Jefferson) Group Plc 40,992 40,992
Trintech Group PLC ADR 2,202 2,202
ITALY - 7.2%
Autogrill SPA 82,193 82,193
Banca Fideuram SPA 88,848 5,400 94,248
Banca Popolare Di Milano 6,350 6,350
Banca Popolare di Verona 68,915 68,915
Benetton Group SPA 482,408 482,408
Bipop-Carire SpA 9,000 9,000
Bulgari SPA 75,522 75,522
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Total Fina SA, Class B 2,755 444 3,199
Vinci 69 69
Vivendi SA 379 379
Wavecom SA (*) 614 614
-------------------------------------------------
12,771 2,837 15,608
-------------------------------------------------
GERMANY - 6.3%
Allevard 270 270
Altana AG 1,496 1,496
Basf Ag 127 127
Bayer AG 177 177
Commerzbank AG 953 953
Consors Discount Broker -AG 56 56
Deutsche Telekom 263 263
Deutsche Bank AG 341 341
Dresdner Bank AG 67 67
E.ON AG 243 243
FJA AG 178 178
Heidelberger Druckmaschinen 53 53
Intershop Communications Ag 30 30
Kontron Embedded Computers (*) 216 216
MG Technologies AG 49 49
Muenchener Rueckversicher 65 65
SAP AG 175 175
Schering AG 117 117
Siemens AG 692 252 943
Volkswagen AG 1,009 58 1,067
Wella AG 607 607
-------------------------------------------------
5,149 2,345 7,494
-------------------------------------------------
IRELAND - 2.1%
CRH Plc 56 56
Fyffes Plc 1 1
Green Property PLC 437 437
IONA Technologies PLC (*) 974 974
Irish Life & Permanent Plc 108 108
Kerry Group PLC 884 884
Smurfit (Jefferson) Group Plc 73 73
Trintech Group PLC ADR 24 24
-------------------------------------------------
2,296 261 2,557
-------------------------------------------------
ITALY - 7.2%
Autogrill SPA 906 906
Banca Fideuram SPA 1,365 83 1,448
Banca Popolare Di Milano 40 40
Banca Popolare di Verona 760 760
Benetton Group SPA 875 875
Bipop-Carire SpA 71 71
Bulgari SPA 888 888
See notes to financial statements.
-5-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
ENI-Ente Nazionale Idrocarburi SPA 144,723 35,009 179,732
Fiat SpA 3,000 3,000
Saipem S.p.A. 13,700 13,700
San Paolo - IMI S.p.A. 4,900 4,900
Telecom Italia Mobile SPA 101,000 21,530 122,530
Telecom Italia SpA 12,659 12,659
Unicredito Italiano SPA 195,305 36,760 232,065
NETHERLAND - 7.4%
Akzo Nobel NV 21,674
ASM Lithography Holding NV 1,572 1,572
Buhrmann NV 41,190 1,736 42,926
CSM NV 42,940 42,940
Heineken NV 1,172 1,172
ING Groep NV 14,152 4,206 18,358
Koninklijke KPN NV 4,603 4,603
Koninklijke Philips Electronics NV 10,682 10,682
Numico NV 18,352 2,109 20,461
Nutreco Holding NV (*) 20,675 20,675
Randstad Holding N.V. 1,300 1,300
Royal Dutch Petroleum Co. 24,385 5,119 29,504
United Pan Europe Communication Inc 6,071 6,071
VersaTel Telecom International NV (*) 1,446 1,446
VNU NV 1,616 1,616
NORWAY - 2.1%
InFocus Corp. (*) 18,554 18,554
Norsk Hydro ASA 21,605 21,605
Tandberg ASA (*) 30,005 30,005
PORTUGAL - 2.0%
Banco Espirito Santo SA 43,969 43,969
Brisa-Auto Estradas de Portugal SA 109,205 109,205
Novabase SGPS SA (*) 71,398 71,398
SPAIN - 3.6%
Amadeus Global Travel Distribution 4,200 4,200
Banco Bilboa Vizcaya Argentaria, S.A. 7,322 7,322
Banco Santander Central Hisp 13,178 13,178
Endesa S.A. 12,698 12,698
Grupo Dragados SA 160,861 160,861
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
ENI-Ente Nazionale Idrocarburi SPA 783 189 972
Fiat SpA 70 70
Saipem S.p.A. 71 71
San Paolo - IMI S.p.A. 79 79
Telecom Italia Mobile SPA 858 183 1,041
Telecom Italia SpA 146 146
Unicredito Italiano SPA 993 187 1,180
-------------------------------------------------
7,428 1,120 8,548
-------------------------------------------------
NETHERLAND - 7.4%
Akzo Nobel NV 986 986
ASM Lithography Holding NV 43 43
Buhrmann NV 1,124 47 1,172
CSM NV 979 979
Heineken NV 64 64
ING Groep NV 971 288 1,259
Koninklijke KPN NV 93 93
Koninklijke Philips Electronics NV 419 419
Numico NV 857 98 956
Nutreco Holding NV (*) 890 890
Randstad Holding N.V. 29 29
Royal Dutch Petroleum Co. 1,445 303 1,748
United Pan Europe Communication Inc 106 106
VersaTel Telecom International NV (*) 28 28
VNU NV 76 76
-------------------------------------------------
7,280 1,568 8,847
-------------------------------------------------
NORWAY - 2.1%
InFocus Corp. (*) 798 798
Norsk Hydro ASA 857 857
Tandberg ASA (*) 794 794
-------------------------------------------------
2,449 - 2,449
-------------------------------------------------
PORTUGAL - 2.0%
Banco Espirito Santo SA 667 667.13
Brisa-Auto Estradas de Portugal SA 843 843.29
Novabase SGPS SA (*) 847 846.68
-------------------------------------------------
2,357 - 2,357
-------------------------------------------------
SPAIN - 3.6%
Amadeus Global Travel Distribution 34 34
Banco Bilboa Vizcaya Argentaria, S.A. 97 97
Banco Santander Central Hisp - 128 128
Endesa S.A. 207 207
Grupo Dragados SA 1,561 1,561
See notes to financial statements.
-6-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
NH Hoteles SA 75,065 75,065
Telefonica SA 47,931 24,296 72,227
Union Electrica Fenosa Sa 4,266 4,266
SWEDEN - 3.4%
Autoliv, Inc. SDR 6,566 6,566
Ericsson LM Cl B 10,428 10,428
Micronic Laser Systems AB (*) 34,140 34,140
Nordic Baltic Holding AB 96,887 96,887
Om Gruppen Ab 1,400 1,400
Skandia Forsakrings AB 8,961 8,961
Skandinaviska ENSKILDA-A 5,049 5,049
Skandinaviska Enskilda Banken, Class C 82,610 82,610
Svenska Handelsbanken, Class A 60,434 60,434
SWITZERLAND - 8.8%
Abb LTD. 669 669
Baloise Holdings 940 940
Compagnie Financiere Richemont, Class A (*) 329 59 388
Cs Holding - Registered 839 839
Julius Baer Holding AG 201 201
Kudelski SA (*) 842 842
Nestle SA 946 258 1,204
Novartis AG 624 286 910
Roche Holding AG 35 35
SGS Societe Generale de Surveillance
Holding SA 48 48
Sia Abrasives Holding AG (*) 1,974 1,974
Swatch Group AG 260 260
Swiss Re 498 498
Usb Ag Registered 1,834 1,834
Zurich Financial Services 568 568
UNITED KINGDOM - 32.5%
3I Group Plc 5,400 5,400
Aggreko PLC 134,226 134,226
Amvescap PLC 42,534 42,534
Anite Group PLC 243,254 243,254
ARM Holdings PLC (*) 92,776 9,000 101,776
Astrazeneca Plc N/C From Zeneca Group Pl 2,604 2,604
BAA PLC 116,392 116,392
Bae Systems Plc 14,544 14,544
Barclays PLC 107,452 107,452
BG Group plc 15,422 15,422
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
NH Hoteles SA 846 846
Telefonica SA 913 463 1,376
Union Electrica Fenosa Sa 79 79
-------------------------------------------------
3,320 1,007 4,328
-------------------------------------------------
SWEDEN - 3.4%
Autoliv, Inc. SDR 144 144
Ericsson LM Cl B 138 138
Micronic Laser Systems AB (*) 1,015 1,015
Nordic Baltic Holding AB 725 725
Om Gruppen Ab 50 50
Skandia Forsakrings AB 152 152
Skandinaviska ENSKILDA-A 59 59
Skandinaviska Enskilda Banken, Class C 878 878
Svenska Handelsbanken, Class A 947 947
-------------------------------------------------
3,566 543 4,108
-------------------------------------------------
SWITZERLAND - 8.8%
Abb LTD. 59 59
Baloise Holdings 930 930
Compagnie Financiere Richemont, Class A (*) 915 164 1,079
Cs Holding - Registered 157 157
Julius Baer Holding AG 995 995
Kudelski SA (*) 1,133 1,133
Nestle SA 1,960 534 2,494
Novartis AG 946 434 1,380
Roche Holding AG 320 320
SGS Societe Generale de Surveillance
Holding SA 59 59
Sia Abrasives Holding AG (*) 242 242
Swatch Group AG 71 71
Swiss Re 982 982
Usb Ag Registered 254 254
Zurich Financial Services 275 275
-------------------------------------------------
8,102 2,327 10,429
-------------------------------------------------
UNITED KINGDOM - 32.5%
3I Group Plc 123 123
Aggreko PLC 719 719
Amvescap PLC 951 951
Anite Group PLC 636 636
ARM Holdings PLC (*) 916 89 1,005
Astrazeneca Plc N/C From Zeneca Group Pl 122 122
BAA PLC 968 968
Bae Systems Plc 83 83
Barclays PLC 3,077 3,077
BG Group plc 62 62
See notes to financial statements.
-7-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Billiton Plc 19,600 19,600
Bioglan Pharma PLC 27,036 27,036
BP Amoco PLC 356,611 80,603 437,214
British Airways Plc 4,000 4,000
British American Tobacco 7,415 7,415
British SKY Broadcasting Plc 8,589 8,589
British Telecommunications Plc 16,800 16,800
Bunzl PLC 175,242 175,242
Cable & Wireless Plc 16,788 16,788
Capita Group PLC 107,402 107,402
Celltech Group Plc 3,000 3,000
Centrica PLC 285,416 285,416
CMG Plc 2,400 2,400
Dixons Group PLC 1 12,981 12,982
Exel Plc 3,400 3,400
Fibernet Group PLC (*) 25,976 25,976
Firstgroup PLC 257,002 257,002
Fitness First PLC (*) 44,106 44,106
Glaxo Wellcome Plc 14,426 14,426
Granada Compass PLC. 9,628 9,628
Great Universal Stores Plc 9,200 9,200
Hanson Plc 13,400 13,400
Hays Plc 12,400 12,400
Hilton Group PLC. 13,000 13,000
HSBC Holdings PLC 143,577 22,157 165,734
Iceland Group PLC 212,048 212,048
Innogy Holdings Plc 8,790 8,790
Innovation Group PLC (*) 65,913 65,913
International Power Plc 8,790 8,790
Johnson Matthey PLC 61,706 3,430 65,136
Kingfisher Plc 6,600 6,600
Lattice Group Plc 15,422 15,422
Legal & General Group PLC 430,044 430,044
Lloyds Tsb Group Plc 25,508 25,508
Marconi Electronic Systems PLC 77,095 10,930 88,025
MFI Furniture Group plc 27,470 27,470
Morrison (WM.) Supermarkets 360,491 360,491
Morse Holdings PLC 107,084 107,084
NDS Group PLC (*) 8,181 8,181
Northern Rock PLC 150,554 150,554
Nycomed Amersham Plc 13,004 13,004
Pearson Plc 3,309 3,309
Pilkington PLC 582,601 582,601
Psion PLC 131,741 131,741
Reckitt Benckiser Plc 17,223 17,223
Reuters Group Plc 5,884 5,884
Royal & Sun Alliance Grp 30,127 30,127
Royal Bank Of Scotland 7,617 7,617
Royal Bank of Scotland Group Plc 1,000 1,000
ScottishPower plc 11,300 11,300
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Billiton Plc 75 75
Bioglan Pharma PLC 255 255
BP Amoco PLC 3,027 684 3,711
British Airways Plc 18 18
British American Tobacco 52 52
British SKY Broadcasting Plc 124 124
British Telecommunications Plc 197 197
Bunzl PLC 1,003 1,003
Cable & Wireless Plc 238 238
Capita Group PLC 819 819
Celltech Group Plc 60 60
Centrica PLC 982 982
CMG Plc 40 40
Dixons Group PLC 1 39 40
Exel Plc 58 58
Fibernet Group PLC (*) 603 603
Firstgroup PLC 870 870
Fitness First PLC (*) 727 727
Glaxo Wellcome Plc 416 416
Granada Compass PLC. 83 83
Great Universal Stores Plc 64 64
Hanson Plc 71 71
Hays Plc 68 68
Hilton Group PLC. 36 36
HSBC Holdings PLC 2,047 316 2,363
Iceland Group PLC 1,008 1,008
Innogy Holdings Plc 26 26
Innovation Group PLC (*) 995 995
International Power Plc 35 35
Johnson Matthey PLC 963 54 1,017
Kingfisher Plc 39 39
Lattice Group Plc 33 33
Legal & General Group PLC 1,071 1,071
Lloyds Tsb Group Plc 260 260
Marconi Electronic Systems PLC 974 138 1,112
MFI Furniture Group plc 22 22
Morrison (WM.) Supermarkets 937 937
Morse Holdings PLC 902 902
NDS Group PLC (*) 614 614
Northern Rock PLC 940 940
Nycomed Amersham Plc 117 117
Pearson Plc 89 89
Pilkington PLC 831 831
Psion PLC 798 798
Reckitt Benckiser Plc 227 227
Reuters Group Plc 115 115
Royal & Sun Alliance Grp 215 215
Royal Bank Of Scotland 171 171
Royal Bank of Scotland Group Plc 1 1
ScottishPower plc 85 85
See notes to financial statements.
-8-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Severn Trent Plc 2,975 2,975
Shell Transport & Trading Co., PLC 74,431 74,431
SmithKline Beecham PLC 180,355 20,606 200,961
Spirent PLC 133,451 133,451
Standard Chartered 5,800 5,800
Tesco Plc 41,406 41,406
Trinity Mirror Plc 3,000 3,000
Viridian Group PLC 49,025 49,025
Vodafone Airtouch Plc 235,052 235,052
WPP Group Plc 5,400 5,400
TOTAL COMMON STOCK
(Cost Chase $113,781)
PREFERRED STOCK - 1.8%
GERMANY
Hugo Boss AG 4,008 4,008
Marschollek Lautenschlaeger und
Partner AG 7,018 1,284 8,302
TOTAL PREFERRED STOCK
(Cost $1,854)
WARRANT - 0.0%
GERMANY
Muenchener Rueckversicherungs-
Gesellschaft AG,
Expires 06/03/02 71 71
(Cost $0)
CONVERTIBLE BOND - 0.0%
GERMANY
DaimlerChrysler AG, 5.57%, 06/15/02 6,240 6,240
(Cost $4)
TOTAL LONG-TERM INVESTMENTS
(Cost $118,161)
PRINCIPAL
SHORT-TERM INVESTMENTS - 0.9% AMOUNT
---------
U.S. TREASURY SECURITIES - 0.0%
U.S. Treasury Bills, 5.77%, 3/22/01 20,000 20,000
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
Severn Trent Plc 32 32
Shell Transport & Trading Co., PLC 599 599
SmithKline Beecham PLC 2,331 266 2,597
Spirent PLC 1,238 1,238
Standard Chartered 84 84
Tesco Plc 158 158
Trinity Mirror Plc 20 20
Viridian Group PLC 534 534
Vodafone Airtouch Plc 979 979
WPP Group Plc 73 73
-------------------------------------------------
32,338 6,351 38,689
-------------------------------------------------
TOTAL COMMON STOCK
(Cost Chase $113,781) 95,915 19,256 115,170
-------------------------------------------------
PREFERRED STOCK - 1.8%
GERMANY
Hugo Boss AG 1,012 1,012
Marschollek Lautenschlaeger
und Partner AG 946 174 1,119
-------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $1,854) 1,958 174 2,132
-------------------------------------------------
WARRANT - 0.0%
GERMANY
Muenchener Rueckversicherungs-
Gesellschaft AG,
Expires 06/03/02 6 6
(Cost $0)
CONVERTIBLE BOND - 0.0%
GERMANY
DaimlerChrysler AG, 5.57%, 06/15/02 2 2
(Cost $4)
-------------------------------------------------
TOTAL LONG-TERM INVESTMENTS 97,881 19,429 117,311
(Cost $118,161) -------------------------------------------------
MARKET
SHORT-TERM INVESTMENTS - 0.9% VALUE
-------
U.S. TREASURY SECURITIES - 0.0%
U.S. Treasury Bills, 5.77%, 3/22/01 20 20
See notes to financial statements.
-9-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
SHARES
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
INVESTMENT COMPANIES - 0.9%
Hamilton Money Fund Premier 1,107,967 1,107,967
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,127)
TOTAL INVESTMENTS 99.4%
(Cost $116,766)
MARKET VALUE
---------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING THE EUROPEAN FLEMING
EUROPEAN EQUITY PRO FORMA EUROPEAN
FUND (1) PORTFOLIO ADJUSTMENTS FUND
----------- ----------- ----------- ----------
INVESTMENT COMPANIES - 0.9%
Hamilton Money Fund Premier 1,107 1,107
-------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS - 1,126 1,126
(Cost $1,127) -------------------------------------------------
TOTAL INVESTMENTS 99.4% $ 97,881 $ 20,556 $ 118,437
(Cost $116,766) =================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -
------------------------------------------------------ --------------------------------------------
PRO FORMA COMBINED
THE EUROPEAN EQUITY PORTFOLIO JPMORGAN FLEMING EUROPEAN FUND
------------------------------------------------------ --------------------------------------------
CONTRACTUAL VALUE AT UNREALIZED
CONTRACTS TO SELL SETTLEMENT DATE VALUE 10/31/00 APPRECIATION
1,056,578 CHF 11/24/2000 $ 605 $ 589 $ 16
873,324 CHF 11/25/2000 515 487 28
-------------------------------------------
1,120 1,076 44
-------------------------------------------
9,202,312 EUR 11/24/2000 7,989 7,809 180
2,753,000 EUR 11/25/2000 2,518 2,336 182
-------------------------------------------
10,507 10,145 362
-------------------------------------------
2,902,925 GBP 11/24/2000 4,111 4,115 (5)
701,000 GBP 11/25/2000 1,151 1,120 31
-------------------------------------------
5,262 5,236 26
-------------------------------------------
1,852,351 SEK 11/24/2000 191 185 6
1,497,465 SEK 11/25/2000 163 150 13
-------------------------------------------
354 335 19
-------------------------------------------
13,473,562 USD 11/24/2000 13,474 13,474 -
5,079,584 USD 11/25/2000 5,080 5,080 -
-------------------------------------------
18,553 18,553 -
-------------------------------------------
$ 35,796 $ 35,345 $ 451
===========================================
------------------------------------------------------ --------------------------------------------
PRO FORMA COMBINED
THE EUROPEAN EQUITY PORTFOLIO JPMORGAN FLEMING EUROPEAN FUND
------------------------------------------------------ --------------------------------------------
CONTRACTUAL VALUE AT UNREALIZED
CONTRACTS TO BUY SETTLEMENT DATE VALUE 10/31/00 DEPRECIATION
875,745 CHF 11/24/2000 $ 500 $ 488 $ (11)
9,395,000 EUR 11/24/2000 8,146 7,972 (174)
4,220,051 EUR 11/25/2000 3,871 3,581 (290)
-------------------------------------------
12,017 11,554 (463)
-------------------------------------------
2,946,000 GBP 11/24/2000 4,276 4,280 3
752,690 GBP 11/25/2000 1,122 1,093 (29)
-------------------------------------------
5,399 5,373 (26)
-------------------------------------------
765,027 NOK 11/25/2000 86 82 (4)
See notes to financial statements.
-10-
PRO FORMA FINANCIAL STATEMENTS
THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PROFORMA COMBINING SCHEDULUE OF PORTFOLIO INVESTMENTS (UNAUDITED)
OCTOBER 31, 2000
(AMOUNTS IN THOUSANDS)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -
------------------------------------------------------ --------------------------------------------
PRO FORMA COMBINED
THE EUROPEAN EQUITY PORTFOLIO JPMORGAN FLEMING EUROPEAN FUND
------------------------------------------------------ --------------------------------------------
CONTRACTUAL VALUE AT UNREALIZED
CONTRACTS TO BUY SETTLEMENT DATE VALUE 10/31/00 DEPRECIATION
6,567,631 SEK 11/24/2000 676 657 (20)
12,770,999 USD 11/24/2000 12,771 12,771 -
4,346,746 USD 11/25/2000 4,347 4,347 -
--------------------------------------
17,118 17,118 -
--------------------------------------
--------------------------------------
$ 35,796 $ 35,272 $ (524)
======================================
UNDERLYING UNREALIZED
PURCHASED EXPIRATION DATE FACE AMOUNT APPRECIATION
FUTURES CONTRACTS - % AT VALUE (DEPRECIATION)
1 DJ Euro Stoxx 50 December 2000 664 13
1 FTSE 100 Index Fut December 2000 325 6
ADR - American Depository Receipt
CHF - Swiss Franc
EUR - Euro
GBP - British Pound
NOK - Norwegian Krone
SEK - Swedish Krona
(*) Non-income producing security
(1) Formerly Chase Vista European
Fund
See notes to financial statements.
-11-
J.P. MORGAN EUROPEAN EQUITY FUND / J.P. MORGAN INSTITUTIONAL EUROPEAN EQUITY
FUND/ THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PRO FORM COMBINING STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000 (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
J.P. MORGAN THE EUROPEAN
J.P. MORGAN INSTITUTIONAL EQUITY
EUROPEAN EUROPEAN PORTFOLIO
EQUITY FUND EQUITY FUND
ASSETS:
Investments in the Portfolio $ 12,235 $ 8,301 -
Investments at value $ 20,556
Cash 15
Currency at value 43
Other assets 66 92 19
Receivables:
Investment securities sold
Interest and dividends
Forward exchange receivable 35,272
Fund Shares sold
Accrued income receivable 14
Variation margin receivable 45
Reclaim receivable 28
Other receivables 5
--------------- --------------- -----------------
Total Assets 12,301 8,393 55,997
--------------- --------------- -----------------
LIABILITIES:
Payables:
Investment securities purchased
Open forward foreign currency contracts 35,345
Fund shares redeemed
Accrued liabilities:
Investment advisory fees
Administration fees - -
Shareholder servicing fees 3 1
Distribution Fee
Custodian fees
Transfer agent fees 5 5
Variation margin payable 22
Other 37 33 94
--------------- --------------- -----------------
Total Liabilities 45 39 35,461
--------------- --------------- -----------------
NET ASSETS:
Paid-in capital 11,267 8,075
Distributions in excess of net investment income (440) (976)
Accumulated net realized gain 340 777
Net unrealized appreciation of investment 1,089 478
--------------- --------------- -----------------
Net Assets $ 12,256 $ 8,354 $ 20,536
=============== =============== =================
Shares of beneficial interest outstanding 784 573 -
Shares outstanding
Net Asset Value per share $ 15.62 $ 14.58
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN FLEMING EUROPEAN 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 $ 18,941
--------------- --------------- -----------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
FLEMING FLEMING
EUROPEAN PRO FORMA EUROPEAN
FUND (1) ADJUSTMENTS FUND
-----------
ASSETS:
Investments in the Portfolio (20,536)(a) $ -
Investments at value $ 97,881 $ 118,437
Cash 5,442 5,457
Currency at value 43
Other assets 1 178
Receivables:
Investment securities sold 2,366 2,366
Interest and dividends 162 162
Forward exchange receivable 2 35,274
Fund Shares sold 998 998
Accrued income receivable 14
Variation margin receivable 45
Reclaim receivable 28
Other receivables 5
------------------ ---------------- -------------
Total Assets 106,852 (20,536) 163,007
------------------ ---------------- -------------
LIABILITIES:
Payables:
Investment securities purchased 7,913 7,913
Open forward foreign currency contracts 3 35,348
Fund shares redeemed 96 96
Accrued liabilities:
Investment advisory fees 73 73
Administration fees 12 12
Shareholder servicing fees 5 9
Distribution Fee 30 30
Custodian fees 35 35
Transfer agent fees 10
Variation margin payable 22
Other 110 274
------------------ ---------------- -------------
Total Liabilities 8,277 - 43,822
------------------ ---------------- -------------
NET ASSETS:
Paid-in capital 90,683 110,025
Distributions in excess of net investment income (3) (1,419)
Accumulated net realized gain 7,854 8,971
Net unrealized appreciation of investment 41 1,608
------------------ ---------------- -------------
Net Assets $ 98,575 (20,536) 119,185
================== ================ =============
Shares of beneficial interest outstanding - (1,357)(b) -
Shares outstanding 5,554 (5,554)(d) -
Class A
Class B
Class C
Net Asset Value per share $ 17.87
$ 17.38
$ 17.37
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN FLEMING EUROPEAN FUND
Shares outstanding
Class A 4,243(c) 4,243
Class B 1,067(c) 1,067
Class C 243(c) 243
Select 686(c) 686
Institutional 468(c) 468
Net Asset Value per share
Class A $ 17.87
Class B $ 17.38
Class C $ 17.37
Select $ 17.87
Institutional $ 17.87
------------------ ---------------- -------------
Cost of investments $ 97,825 $116,766
------------------ ---------------- -------------
(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.
(c) Reflects the additional number of shares outstanding due to the Concurrent
Reorganization.
(d) Reallocation of shares outstanding to Class A, Class B, Class C, Select,
and Institutional Shares due to the Concurrent Reorganization
(1) Formerly Chase Vista European Fund.
See Notes to Pro Forma Financial Statements.
-12-
J. P. MORGAN EUROPEAN EQUITY FUND / J. P. MORGAN INSTITUTIONAL EUROPEAN EQUITY
FUND / THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND (1)
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
J.P. MORGAN JPMORGAN
J.P. MORGAN INSTITUTIONAL THE EUROPEAN FLEMING
EUROPEAN EUROPEAN EQUITY EUROPEAN
EQUITY FUND EQUITY FUND PORTFOLIO FUND (1)
--------------------------------------------------------------------------
INCOME:
Allocated Investment Income From Portfolio $ 234 $ 187 $ - $ -
Interest Income - - 51 161
Dividend income - - 431 958
Foreign Taxes Withheld (61) (50)
Allocated Portfolio Expenses (138) (112) - -
---------------------------------------------------------------------
Investment Income 96 75 421 1,069
---------------------------------------------------------------------
EXPENSES:
Shareholder Servicing Fee 35 11 - 51
Registration Fees 16 15 - 39
Financial and Fund Accounting Services Fee 39 39 - -
Administrative Services Fee 3 3 7 140
Transfer Agent Fees 26 16 - 220
Professional Fees 14 12 50 40
Printing Expenses 8 5 10 50
Trustees' Fees and Expenses 1 - - 5
Distribution Fee - - - 335
Other Expenses - - 1 2
Advisory Fee - - 161 934
Custodian Fees and Expenses - - 149 160
Amortization of Organizational Expenses - 2 1 -
Miscellaneous 28 19 - -
---------------------------------------------------------------------
Total Expenses 170 122 379 1,976
---------------------------------------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses 90 111 129 190
---------------------------------------------------------------------
Net Expenses 80 11 250 1,786
---------------------------------------------------------------------
Net Investment Gain (Loss) 16 64 171 (717)
---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
NET REALIZED GAIN (LOSS) ON
Investments 293 307 433 7,988
Futures Transactions - - 265 -
Foreign Exchange Transactions - - (98) 62
--------------------------------------------------------------------------
Net Realized Gain 293 307 600 8,050
NET CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON (237) (418) (655) (5,959)
---------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 72 $ (47) $ 116 $ 1,374
=====================================================================
PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
---------------------------------------------
INCOME:
Allocated Investment Income From Portfolio $ (421)(c) $ -
Interest Income - 212
Dividend income - 1,389
Foreign Taxes Withheld - (111)
Allocated Portfolio Expenses 250(b) -
-----------------------------------------
Investment Income (171) 1,490
-----------------------------------------
EXPENSES:
Shareholder Servicing Fee - 97
Registration Fees - 70
Financial and Fund Accounting Services Fee (78)(e) -
Administrative Services Fee 25 (a) 178
Transfer Agent Fees - 262
Professional Fees (52)(f) 64
Printing Expenses (17)(f) 56
Trustees' Fees and Expenses - 6
Distribution Fee - 335
Other Expenses - 3
Advisory Fee (324)(a) 771
Custodian Fees and Expenses (79)(f) 230
Amortization of Organizational Expenses (3) -
Miscellaneous (1) 46
-----------------------------------------
Total Expenses (529) 2,118
-----------------------------------------
Less: Amounts Waived 529 (a) 529
Less: Reimbursement of Expenses 234 (a) 754
-----------------------------------------
Net Expenses 234 835
-----------------------------------------
Net Investment Gain (Loss) 63 655
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
NET REALIZED GAIN (LOSS) ON
Investments (600)(d) 8,421
Futures Transactions - 265
Foreign Exchange Transactions - (36)
-----------------------------------------
Net Realized Gain (600) 8,650
NET CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON 655(d) (6,614)
-----------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 118 $ 2,691
=========================================
(a) Reflects adjustments to investment advisory fee, administrative fees and
shareholder servicing fees and/or related waivers, expense reimbursements
based on the surviving Fund's revised fee schedule.
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under feeder expenses.
(c) Reallocation of investments income to feeder funds
(d) Reallocation of realized and unrealized loss to feeder funds.
(e) Reclassification of fund accounting into Custody charge.
(f) Reduction reflects expected benefits of combined operations.
(1) Formerly Chase Vista European Fund.
See Notes to Pro Forma Financial Statements.
-13-
J. P. MORGAN EUROPEAN EQUITY FUND / J. P. MORGAN INSTITUTIONAL EUROPEAN EQUITY
FUND / THE EUROPEAN EQUITY PORTFOLIO / JPMORGAN FLEMING EUROPEAN FUND
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 European Equity Portfolio ("Master Portfolio"), J.P. Morgan
Institutional European Equity Fund ("Institutional Fund"), J.P. Morgan
European Equity Fund ("European Equity Fund") (collectively the "feeder
funds" of the Master Portfolio) and JPMorgan Fleming European Fund ("JPMFEF")
as if the proposed Concurrent Reorganization occurred as of and for the
twelve months ended October 31, 2000.
Under the Concurrent Reorganization, the Pro Forma Statements give effect to
the proposed transfer of all assets and liabilities of the Master Portfolio
and the feeder funds in exchange for shares in JPMFEF. 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:
Immediately prior to the Concurrent Reorganization, JPMFEF would commence
offering Select Shares and Institutional Shares. The net asset value per
share for Select and Institutional Shares at the commencement of offering
would be identical to the closing net asset value per share for Class A
Shares immediately prior to Concurrent Reorganization.
Under the Concurrent Reorganization, the existing shares of Institutional
Fund, European Equity Fund, Chase Class A Shares, Chase Class B Shares and
Chase Class C Shares would be renamed Institutional, Select, Class A, Class B
and Class C respectively. The net asset values per share for Institutional
Class Shares and Select Class Shares at the commencement of offering would be
identical to the closing net asset value per share for the Class A Shares
immediately prior to the organization. In addition, the net asset value per
share for Class B Shares and Class C Shares at the commencement of offering
would be identical to the closing net asset value per share for Chase Class B
Shares and Chase Class C Shares respectively.
Under the proposed Concurrent Reorganization, each shareholder of
Institutional Fund and European Equity Fund would receive shares of JPMFEF
with a value equal to their holding in their respective funds. Holders of the
Institutional Fund will receive Institutional Class Shares in JPMFEF and
holders of the European Equity Fund will receive Select Class Shares in
JPMFEF. Therefore, as a result of the proposed Concurrent Reorganization,
current shareholders of European Equity Fund and Institutional Equity Fund
will become shareholders of JPMFEF.
The Pro Forma net asset value per share assumes the issuance of additional
shares of JPMFEF which would have been issued on October 31, 2000 in
connection with the Proposed Reorganization. The amount of additional shares
assumed to be issued was calculated based on the October 31, 2000 net assets
of Institutional Fund and European Equity Fund and the net asset value per
share of JPMFEF - Class A Shares.
-14-
JPMORGAN FLEMING EUROPEAN FUND WITH CONCURRENT REORGANIZATION
SELECT INSTITUTIONAL
Increase in Shares Issued 686 468
Pro Forma Net Assets 10/31/00 $12,256 $8,354
Pro Forma Net Asset Value 10/31/00 $17.87 $17.87
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. The pro forma investment advisory,
administration, shareholder servicing and distribution fees of the combined Fund
and/or the related waivers 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 February 28, 2001.
-15-
FORM N-14
PART C - OTHER INFORMATION
Item 15. Indemnification.
---------------
Reference is hereby made to Article V of the Registrant's Declaration
of Trust.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of Trust, the
Registrant may indemnify any person who was or is a Trustee, officer or employee
of the Registrant to the maximum extent permitted by law; provided, however,
that any such indemnification (unless ordered by a court) shall be made by the
Registrant only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who are neither described in Section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding, or (ii) if the
required quorum is not obtainable or, if a quorum of such Trustees so directs,
by independent legal counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
Insofar as the conditional advancing of indemnification monies for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Registrant by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable insurance or an equivalent form
of security which assures that any repayments may be obtained by the Registrant
without delay or litigation, which bond, insurance or other form of security
must be provided by the recipient of the advance, or (b) a majority of a quorum
of the Registrant's disinterested, non-party Trustees, or an independent legal
counsel in a written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be found
entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Part C-1
Exchange Commission such indemnification is against public policy as expressed
in the 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 trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities 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 Act and will
be governed by the final adjudication of such issue.
Item 16. Exhibits.
------------------
Declaration of Trust.
1(a) Declaration of Trust, as amended. (1)
1(b) Certificate of Amendment to Declaration of Trust
dated December 14, 1995.(6)
1(c) Certificate of Amendment to Declaration of Trust
dated October 19, 1995.(6)
1(d) Certificate of Amendment to Declaration of Trust
dated July 25, 1993.(6)
1(e) Certificate of Amendment to Declaration of Trust
dated November 1997.(10)
1(f) Certificate of Amendment to Declaration of Trust
dated June 5, 1998.(12)
2 By-laws, as amended. (1)
3 None.
4 Agreement and Plan of Reorganization filed
herewith as Appendix A to the Combined
Prospectus/Proxy Statement.
5 None.
6 Form of Investment Advisory Agreement.(6)
7 Distribution and Sub-Administration Agreement
dated August 21, 1995.(6)
8(a) Retirement Plan for Eligible Trustees.(6)
8(b) Deferred Compensation Plan for Eligible
Trustees.(6)
9 Custodian Agreement. (1)
Part C-2
10(a) Rule 12b-1 Distribution Plan of Mutual Funds
including Selected Dealer Agreement and
Shareholder Service Agreement. (1)
10(b) Rule 12b-1 Distribution Plan - Class B Shares
(including forms of Selected Dealer Agreement
and Shareholder Servicing Agreement).(6)
10(c) Form of Rule 12b-1 Distribution Plan - Class C
Shares (including forms of Shareholder Servicing
Agreements).(9)
10(d) Form of Rule 18f-3 Multi-Class Plan.(6)
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(a) Transfer Agency Agreement. (1)
13(b) Form of Shareholder Servicing Agreement. (6)
13(c) Form of Administration Agreement.(6)
14 Consent of PricewaterhouseCoopers LLP.
15 None.
16(a) Powers of Attorney for: Fergus Reid, III, H.
Richard Vartabedian, William J. Armstrong, John
R.H. Blum, Stuart W. Cragin, Jr., Roland R.
Eppley, Jr., Joseph J. Harkins, W.D. MacCallan,
W. Perry Neff, Richard E. Ten Haken, Irving L.
Thode.
16(b) Powers of Attorney for: Sarah E. Jones and
Leonard M. Spalding, Jr.
16(c) Form of Administration Agreement (to be filed by
Amendment).
16(d) Form of Sub-Administration Agreement (to be
filed by Amendment)
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.
Part C-3
17 (e) Statement of Additional Information for the
Merging Fund.
17(f) Annual Report of the Surviving Fund dated
October 31, 2000.
17(g) Annual Report of the Merging Fund (including the Annual Report
of the Master Portfolio) dated November 30, 2000.
---------------
1 Filed as an exhibit to Amendment No. 6 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on March 23,
1990.
2 Filed as an exhibit to Amendment No. 15 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on October
30, 1992.
3 Filed as an Exhibit to Amendment No. 26 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) on June 30, 1994.
4 Filed as an Exhibit to Amendment No. 27 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) on October 3,
1994.
5 Filed as an Exhibit to Amendment No. 31 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) on November 13,
1995.
6 Filed as an Exhibit to Amendment No. 32 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) on December 28,
1995.
7 Filed as an Exhibit to Amendment No. 42 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) on February 28,
1997.
8 Incorporated by reference to Post-Effective
Amendment No. 7 to the Registration Statement on
Form N-1A of Mutual Fund Trust (File No.
33-75250) as filed with the Securities and
Exchange Commission on September 6, 1996.
9 Filed as an Exhibit to Amendment No. 45 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) filed on October
28, 1997.
10 Filed as an Exhibit to Amendment No. 46 to the
Registration Statement on Form N-1A of the
Registrant (File No. 33-14196) filed on December
1, 1997.
11 Filed as an Exhibit to Amendment No. 50 to the
Registration Statement on Form N-1A on February 27, 1998.
Part C-4
12 Filed as an Exhibit to Amendment No. 53 to the
Registration Statement on Form N-1A on June 29,
1998.
Item 17. Undertakings.
----------------------
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
as amended (the "1933 Act"), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
Part C-5
SIGNATURES
----------
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the registrant, in the City of New York and the
State of New York, on the 12th day of April, 2001.
MUTUAL FUND GROUP
Registrant
By: /s/ H. Richard Vartabedian
-----------------------------------------
H. Richard Vartabedian
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on April 12, 2001.
* Chairman and Trustee
- ------------------------------------
Fergus Reid, III
/s/ H. Richard Vartabedian President
- ------------------------------------
H. Richard Vartabedian and Trustee
* Trustee
- ------------------------------------
William J. Armstrong
* Trustee
- ------------------------------------
John R.H. Blum
* Trustee
- ------------------------------------
Stuart W. Cragin, Jr.
* Trustee
- ------------------------------------
Roland R. Eppley, Jr.
* Trustee
- ------------------------------------
Joseph J. Harkins
* Trustee
- ------------------------------------
Sarah E. Jones
* Trustee
- ------------------------------------
W.D. MacCallan
* Trustee
- ------------------------------------
W. Perry Neff
* Trustee
- ------------------------------------
Leonard M. Spalding, Jr.
* Trustee
- ------------------------------------
Irv Thode
* Trustee
- ------------------------------------
Richard E. Ten Haken
/s/ Martin R. Dean Treasurer and
- ------------------------------------
Martin R. Dean Principal Financial
Officer
/s/ H. Richard Vartabedian Attorney in Fact
- ------------------------------------
H. Richard Vartabedian
EXHIBITS
ITEM DESCRIPTION
- ---- -----------
(14) Consent of PricewaterhouseCoopers LLP.
(16) Powers of Attorney
(17) (a) Form of Proxy Card.
(c) Prospectus for J.P. Morgan European Equity Fund.
(e) Statement of Additional Information for J.P. Morgan
European Equity Fund.
(f) Annual Report of JPMorgan Fleming European Fund
(formerly, Chase Vista European Fund) dated October 31,
2000.
(g) Annual Report of J.P. Morgan European Equity Fund (including
the Annual Report of The European Equity Portfolio) dated
November 30, 2000.