As filed with the Securities and Exchange Commission on April 13, 2001
Registration No. 333-___/811-07342
================================================================================
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ Post-Effective Amendment No.___
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
J.P. MORGAN INSTITUTIONAL FUNDS
Area Code and Telephone Number:
(617) 557-0700
Address of Principal Executive Offices:
60 State Street, Suite 1300
Boston, Massachusetts 02109
Name and Address of Agent for Service:
Margaret W. Chambers
c/o Fund Distributors, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109
Copies to:
JOSEPH J. BERTINI, ESQ. SARAH E. COGAN, ESQ. JOHN E. BAUMGARDNER, JR., ESQ.
PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett Sullivan & Cromwell
J.P. Morgan Fleming Asset Management 425 Lexington Avenue 125 Broad Street
(USA) Inc. New York, NY 10017-3954 New York, NY 10004
522 Fifth Avenue
New York, NY 10036
================================================================================
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on May 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. 033-54642/811-07342) pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant's
Form 24f-2 for the fiscal year ended June 30, 2000 was filed on October 3, 2000.
Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. Morgan Diversified 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 Diversified Fund (the
"Merging Fund"), a series of J.P. Morgan Funds ("JPF"), will be held on July 3,
2001 at 9:00 a.m., Eastern Time. Formal notice of the meeting appears after this
letter, followed by materials regarding the meeting.
As you may be aware, The Chase Manhattan Corporation has recently completed
a merger with J.P. Morgan & Co. Incorporated, the former corporate parent of the
investment adviser of the Merging Fund's assets, to form J.P. Morgan Chase & Co.
("JPMC"). As a result of this merger, JPMC is seeking to reorganize parts of its
investment management business and funds advised by its subsidiaries. At the
special meeting (the "Meeting"), shareholders will be asked to consider and vote
upon the proposed reorganization of the Merging Fund into J.P. Morgan
Institutional Diversified Fund (the "Surviving Fund"), a series of J.P. Morgan
Institutional Funds ("JPMF") (the "Reorganization"). After the Reorganization,
shareholders of the Merging Fund would hold Select Class Shares of the Surviving
Fund. The investment objective and policies of the Surviving Fund are identical
to those of the Merging Fund. Both the Merging Fund and the Surviving Fund
currently invest all of their investable assets in The Diversified Portfolio
(the "Master Portfolio"). Concurrent with the Reorganization, the Surviving Fund
will cease to operate under a "master/feeder" structure and will instead invest
directly in portfolio securities. In connection with the Reorganization, the
Surviving Fund will be renamed "JPMorgan Diversified Fund."
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPF.
The investment adviser for the assets of both the Merging Fund and the
Surviving Fund is J.P. Morgan Investment Management Inc. ("JPMIM").
Please see the enclosed Combined Prospectus/Proxy Statement for detailed
information regarding the proposed Reorganization and a comparison of the
Merging Fund and JPF to the Surviving Fund and JPMF. The cost and expenses
associated with the Reorganization, including costs of soliciting proxies, will
be borne by JPMC and not by the Merging Fund, JPF, the Surviving Fund, JPMF or
their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive Select Class shares of the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees of JPF,
which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPF UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
EACH OF THE PROPOSALS.
Following this letter is a list of commonly asked questions. If you have
any additional questions on voting of proxies and/or the meeting agenda, please
call us at 1-800-521-5411.
A proxy card is enclosed for your use in the shareholder meeting. This card
represents shares you held as of the record date, April 6, 2001. IT IS IMPORTANT
THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED OR
CALL _______ AS SOON AS POSSIBLE. This will ensure that your shares will be
represented at the Meeting to be held on July 3, 2001.
Please read the enclosed materials carefully. You may, of course, attend
the meeting in person if you wish, in which case the proxy can be revoked by you
at the Meeting.
Sincerely,
Matthew Healey
Chairman
SPECIAL NOTE: Certain shareholders may receive a telephone call from our proxy
solicitor, D.F. King & Co., Inc., or us to answer any questions you may have or
to provide assistance in voting. Remember, your vote is important! Please sign,
date and promptly mail your proxy card(s) in the return envelope provided or
call _________ in order to vote.
2
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes that it
is in the best interest of the shareholders to operate in a multi-class rather
than a master/feeder structure.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
In connection with the Reorganization, the Merging Fund will transfer all of its
assets and liabilities to the Surviving Fund and will receive, in exchange,
Select Class shares of the Surviving Fund. The Merging Fund will then be
liquidated and the Select Class shares of the Surviving Fund will be distributed
pro rata to shareholders such as you. After the Reorganization, you will own
Select Class shares of the Surviving Fund rather than shares of the Merging
Fund.
WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY
INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED?
The Surviving Fund has identical investment objectives and policies to those of
the Merging Fund. Both the Merging Fund and the Surviving Fund currently invest
all of their investable assets in the Master Portfolio. In connection with the
Reorganization, the Surviving Fund will cease to operate under a "master/feeder"
structure and will instead invest its assets directly in portfolio securities
rather than in the Master Portfolio.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
As a result of the Reorganization, the contractual (or pre-waiver) total expense
ratios are expected to be higher for your shares in the Surviving Fund than they
are for your shares in the Merging Fund. However, the actual (or post-waiver)
total expense ratios are expected to be the same or less for your shares in the
Surviving Fund than they are for your shares in the Merging Fund. This is
because Morgan Guaranty Trust Company of New York has contractually agreed to
waive fees payable to it and reimburse expenses so that the total expense ratio
will remain the same for at least THREE YEARS after the Reorganization.
WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT?
No. JPMIM will continue to manage the assets of the Surviving Fund after the
Reorganization.
WHO WILL PAY FOR THE REORGANIZATION?
The cost and expenses associated with the Reorganization, including costs of
soliciting proxies, will be borne by JPMC and not by either the Merging Fund or
the Surviving Fund (or shareholders of either fund).
3
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive Select Class shares of the Surviving Fund.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR JPF IF AFTER THE
REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF JPMF?
Even if the Reorganization is approved, other mutual funds that are series of
JPF will continue to exist and operate. All shareholders of any series of JPF as
of the record date (April 6, 2001) are required to be given a vote on proposals
regarding Trustees. Because as of the record date you are still a shareholder in
JPF, you are entitled to vote on this proposal. Shareholders of JPMF are being
asked to approve the same Trustees that are proposed for JPF.
AS A HOLDER OF SHARES OF THE MERGING FUND, WHAT DO I NEED TO DO?
Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your vote
is important! Accordingly, please sign, date and mail the proxy card(s) promptly
in the enclosed return envelope as soon as possible after reviewing the enclosed
Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
4
J.P. Morgan Diversified 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 Diversified Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of J.P. Morgan Diversified Fund (the "Merging Fund"), a series
of J.P. Morgan Funds ("JPF"), will be held at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st Floor, New York, NY, on July 3, 2001 at
9:00 a.m., (Eastern time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Plan") by and
among JPF, on behalf of the Merging Fund, J.P. Morgan
Institutional Funds ("JPMF"), on behalf of J.P. Morgan
Institutional Diversified Fund (the "Surviving Fund") and J.P.
Morgan Chase & Co., and the transactions contemplated thereby,
including (a) the transfer of all of the assets and liabilities
of the Merging Fund to the Surviving Fund in exchange for
Select Class shares of the Surviving Fund (the "Select Class
Shares"), and (b) the distribution of such Select Class Shares
to the Shareholders of the Merging Fund in connection with the
liquidation of the Merging Fund.
ITEM 2. To elect ___ Trustees to serve as members of the Board of
Trustees of JPF.
ITEM 3. To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1
AND 2.
Each proposal is described in the accompanying Combined Prospectus/Proxy
Statement. Attached as Appendix A to the Combined Prospectus/Proxy Statement is
a copy of the Reorganization Plan.
Shareholders of record as of the close of business on April 6, 2001 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPF. THIS IS IMPORTANT
TO ENSURE A QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME
BEFORE THEY ARE EXERCISED BY SUBMITTING TO THE MERGING FUND A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING
AND VOTING IN PERSON.
Margaret W. Chambers
Secretary
May 12, 2001
2
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 12, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN DIVERSIFIED FUND
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
BY AND IN EXCHANGE FOR SELECT CLASS SHARES OF
J.P. MORGAN INSTITUTIONAL DIVERSIFIED FUND,
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of J.P. Morgan Diversified Fund (the "Merging Fund"), a series of
J.P. Morgan Funds ("JPF"), into J.P. Morgan Institutional Diversified Fund (the
"Surviving Fund"), a series of J.P. Morgan Institutional Funds ("JPMF"). If
approved by shareholders of the Merging Fund, the proposed reorganization will
be effected by transferring all of the assets and liabilities of the Merging
Fund to the Surviving Fund, which has identical investment objectives and
policies to those of the Merging Fund, in exchange for Select Class shares of
the Surviving Fund (the "Reorganization"). Therefore, as a result of the
proposed Reorganization, current shareholders of the Merging Fund (the "Merging
Fund Shareholders") will become shareholders of the Surviving Fund ("Surviving
Fund Shareholders"). JPF and JPMF are both open-end management investment
companies offering shares in several portfolios. In connection with the
Reorganization, the JPMorgan Institutional Diversified Fund will be renamed
"JPMorgan Diversified Fund."
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Select Class and
Institutional Class shares. If the proposed Reorganization is approved by
Merging Fund Shareholders, each Merging Fund Shareholder will receive Select
Class shares (the "Select Class Shares") of the Surviving Fund with a value
equal to such Merging Fund Shareholder's holdings in the Merging Fund. Merging
Fund Shareholders will not pay a sales charge on Select Class Shares received in
the Reorganization or Select Class Shares of the Surviving Fund or other
JPMorgan Funds subsequently purchased or received as a result of an exchange.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPF.
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
i
"Reorganization Plan") among JPF, on behalf of the Merging Fund, JPMF, on
behalf of the Surviving Fund and J.P.Morgan Chase & Co. attached to this
Combined Prospectus/Proxy Statement as Appendix A.
The Board of Trustees for JPF is soliciting proxies in connection with
a Special Meeting (the "Meeting") of Shareholders to be held on July 3, 2001 at
9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211 Avenue
of the Americas, 41st Floor, New York, NY, at which meeting shareholders in the
Merging Fund will be asked to consider and approve the proposed Reorganization
Plan, certain transactions contemplated by the Reorganization Plan and certain
other proposals. This Combined Prospectus/Proxy Statement constitutes the proxy
statement of the Merging Fund for the meeting of its Shareholders and also
constitutes JPMF's prospectus for Select Class Shares that have been registered
with the Securities and Exchange Commission (the "Commission") and are to be
issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about JPF and JPMF that
an investor should know before voting on the proposals. The current
Prospectuses, Statements of Additional Information and Annual Reports of the
Merging Fund and the Surviving Fund (including the Annual Report of the
Diversified Portfolio), and the Semi-Annual Reports of the Merging Fund and the
Surviving Fund (including the Semi-Annual Report of The Diversified Portfolio)
are incorporated herein by reference, and the current Prospectus, Annual Report
(including the Annual Report of the Diversified Portfolio), and Semi-Annual
Report (including the Semi-Annual Report of The Diversified Portfolio) for the
Surviving Fund is enclosed with this Combined Prospectus/Proxy Statement. A
Statement of Additional Information relating to this Combined Prospectus/Proxy
Statement dated May 12, 2001 containing additional information about JPF and
JPMF has been filed with the Commission and is incorporated by reference into
this Combined Prospectus/Proxy Statement. A copy of the Statement of Additional
Information, as well as the Prospectus, Statement of Additional Information,
Annual Report and Semi-Annual Report of the Merging Fund may be obtained without
charge by writing to JPMF at its address noted above or by calling
1-800-766-7722.
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 JPF OR JPMF.
ii
INVESTMENTS IN THE SURVIVING FUND ARE SUBJECT TO RISK--INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. NO SHARES IN THE SURVIVING FUND ARE BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY
INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
iii
TABLE OF CONTENTS
PAGE
INTRODUCTION....................................................................1
PROPOSAL 1: REORGANIZATION PLAN................................................1
SUMMARY.........................................................................2
COMPARATIVE FEE AND EXPENSE TABLES..............................................6
RISK FACTORS....................................................................8
INFORMATION RELATING TO THE PROPOSED REORGANIZATION.............................9
PURCHASES, REDEMPTIONS AND EXCHANGES...........................................14
DISTRIBUTIONS AND TAXES........................................................17
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE....................................................18
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER
SERVICES..................................................................20
PROPOSAL 2: ELECTION OF TRUSTEES...............................................23
INFORMATION RELATING TO VOTING MATTERS.........................................27
ADDITIONAL INFORMATION ABOUT JPF...............................................29
ADDITIONAL INFORMATION ABOUT JPMF..............................................30
FINANCIAL STATEMENTS AND EXPERTS...............................................30
OTHER BUSINESS.................................................................31
LITIGATION.....................................................................31
SHAREHOLDER INQUIRIES..........................................................31
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION..............................A-1
iv
INTRODUCTION
GENERAL
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of the Merging Fund, an open-end management investment company, in
connection with the solicitation by the Board of Trustees of JPF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st Floor, New York, NY (together with any
adjournments thereof, the "Meeting"). It is expected that the mailing of this
Combined Prospectus/Proxy Statement will be made on or about May 12, 2001.
PROPOSAL 1: REORGANIZATION PLAN
-------------------------------
At the Meeting, Merging Fund Shareholders will consider and vote upon
the Agreement and Plan of Reorganization (the "Reorganization Plan") dated
_______, 2001 among JPF, on behalf of the Merging Fund, JPMF, on behalf of the
Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined
as the "Funds") and J.P. Morgan Chase & Co. ("JPMC") pursuant to which all of
the assets and liabilities of the Merging Fund will be transferred to the
Surviving Fund in exchange for Select Class Shares of the Surviving Fund. As a
result of the Reorganization, Merging Fund Shareholders will become shareholders
of the Surviving Fund and will receive Select Class Shares equal in value to
their holdings in the Merging Fund on the date of the Reorganization. In
connection with the Reorganization, the Surviving Fund will be renamed "JPMorgan
Diversified Fund." Further information relating to the Surviving Fund is set
forth herein, and the Surviving Fund's Prospectus and Annual Report (including
the Annual Report of The Diversified Portfolio) is enclosed with this Combined
Prospectus/Proxy Statement.
THE JPF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL 1.
VOTE REQUIRED
Approval of the Reorganization Plan by the Merging Fund requires the
affirmative vote of the lesser of (i) 67% or more of the shares of the Merging
Fund present at the Meeting if the holders of more than 50% of the outstanding
shares of the Merging Fund are present or represented by proxy and (ii) more
than 50% of all outstanding shares of the Merging Fund. If the Reorganization
Plan is not approved by the Merging Fund Shareholders, the JPF Board will
consider other appropriate courses of action.
1
SUMMARY
The following is a summary of certain information relating to the
proposed Reorganization, the parties thereto and the transactions contemplated
thereby, and is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus,
Statement of Additional Information, Annual Report (including the Annual Report
of The Diversified Portfolio), and Semi-Annual Report (including the Semi-Annual
Report of The Diversified Portfolio) in respect of each of the Surviving Fund
and the Merging Fund, and the Reorganization Plan attached to this Combined
Prospectus/Proxy Statement as Appendix A.
PROPOSED REORGANIZATION
Each of the Surviving Fund and the Merging Fund currently invests all
of its investable assets in The Diversified Portfolio (the "Master Portfolio"),
which has identical investment objectives and policies as the Surviving Fund and
the Merging Fund and which is advised by J.P. Morgan Investment Management Inc.
("JPMIM").
If the Reorganization is approved by the shareholders of the Merging
Fund and certain other conditions are met, the Merging Fund and the Feeder
Portfolio will be reorganized into the Surviving Fund. Concurrent with the
Reorganization, the Surviving Fund will cease to operate under a "master/feeder"
structure and will instead invest its assets directly in portfolio securities
rather than in the Master Portfolio.
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Select Class
Shares and Institutional Class Shares. Pursuant to the proposed Reorganization,
the Merging Fund will transfer all of its assets and liabilities to the
Surviving Fund in exchange for Select Class Shares.
Under the proposed Reorganization, each Merging Fund Shareholder will
receive a number of Select Class Shares of the Surviving Fund with an aggregate
net asset value equal on the date of the exchange to the aggregate net asset
value of such shareholder's Merging Fund Shares on such date. Therefore,
following the proposed Reorganization, Merging Fund Shareholders will be
Surviving Fund Shareholders. Merging Fund Shareholders will not pay a sales load
in connection with the Reorganization. See "Information Relating to the Proposed
Reorganization."
The Surviving Fund has investment objectives, policies and restrictions
identical to the Merging Fund. However, while the Merging Fund and the Surviving
Fund currently invest all of their assets in the Master Portfolio (which in turn
invests in portfolio securities), after the Reorganization the Surviving Fund
will invest directly in portfolio securities. Following the Reorganization the
Surviving Fund will have substantially similar purchase, redemption and dividend
policies as the Merging Fund.
Based upon their evaluation of the relevant information presented to
them, including an analysis of the operation of the Surviving Fund both before
and after the Reorganization, the terms of the Reorganization Plan, the
opportunity to combine the two Funds with identical investment objectives and
policies, and the fact that the Reorganization will be tax-free, and in
2
light of their fiduciary duties under federal and state law, the JPF 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 that it is in the best interest of the shareholders to operate in a
multi-class rather than a master/feeder structure.
FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett will issue an opinion (based on certain
assumptions) as of the effective time of the Reorganization to the effect that
the transaction will not give rise to the recognition of income, gain or loss
for federal income tax purposes to the Merging Fund, the Surviving Fund or the
shareholders of the Merging Fund. A shareholder's holding period and tax basis
of Select Class Shares received by a Shareholder of the Merging Fund will be the
same as the holding period and tax basis of the shareholder's shares of the
Merging Fund. In addition, the holding period and tax basis of those assets
owned by the Merging Fund and transferred to the Surviving Fund will be
identical for the Surviving Fund. See "Information Relating to the Proposed
Reorganization - Federal Income Tax Consequences."
INVESTMENT ADVISER
The investment adviser for the Master Portfolio (and therefore the
assets of the Merging Fund, the Feeder Portfolio and the Surviving Fund) is
JPMIM. Following the Reorganization, JPMIM will serve as the Surviving Fund's
investment adviser. JPMIM is a wholly owned subsidiary of JPMC.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Surviving Fund and the Merging Fund is
to provide high total return from a diversified portfolio of stocks and bonds.
See "Risk Factors." Both Funds have identical investment policies, and the
Surviving Fund's investment policies will not change after the Reorganization,
although, as mentioned above, the Surviving Fund will invest in portfolio
securities rather than the Master Portfolio. For more information regarding the
Surviving Fund's investment policies, see the Surviving Fund's Prospectus
enclosed with this Combined Proxy Statement. Each Fund may change its objective
without shareholder approval.
Drawing on a variety of analytical tools, each Fund's portfolio
management team allocates assets among various types of stock and bond
investments, based on a model allocation as follows:
- 52% medium-and large-cap U.S. stocks
- 35% U.S. and foreign bonds
3
- 10% foreign stocks
- 3% small-cap U.S. stocks
The team periodically adjusts the Surviving Fund's actual asset
allocation according to the relative attractiveness of each asset class.
Within this asset allocation framework, each Fund's team selects the
Fund's securities. With the stock portion of its portfolio, each Fund keeps its
economic sector weighting in line with the markets in which it invests, while
actively seeking the most attractive stocks within each sector. In choosing
individual stocks, the Fund's team ranks them according to their relative value
using a proprietary model that incorporates research from JPMIM's worldwide
network of analysts. Foreign stocks are chosen using a similar process, while
also monitoring country allocation and currency exposure.
With the bond portion of its portfolio, each Fund's team uses
fundamental, economic, and capital markets research to select securities. The
team actively manages the mix of U.S. and foreign bonds while typically keeping
duration - a common measurement of sensitivity to interest rate movements -
within one year of the average for the U.S. investment-grade bond universe
(currently about 5 years).
Under normal circumstances the Surviving Fund plans to remain fully
invested, with at least 65% in stocks and 35% in bonds and other fixed income
securities. Stock investments may include U.S. and foreign common stocks,
convertible securities, preferred stocks, trust or partnership interests,
warrants, rights, and investment company securities. Bond investments may
include U.S. and foreign corporate and government bonds, mortgage-backed and
asset-backed securities, convertible securities, participation interests and
private placements. The Surviving Fund seeks to limit risk and enhance
performance through careful management, sector allocation, individual securities
selection, duration management and diversification. During severe market
downturns, the Surviving Fund has the option of investing up to 100% of assets
in investment-grade short-term securities.
The Surviving Fund's maintains its own policies for balancing credit
quality against potential yields and gains in light of its investment goals. At
least 75% of the Surviving Fund bonds must be investment-grade (BBB/Baa or
better, of which 65% must be A or better), and no more than 25% BB/Ba or B; the
fund may include unrated bonds of equivalent quality in these categories. J.P.
Morgan develops its own ratings of unrated securities and makes a credit quality
determination for unrated securities.
The Surviving Fund anticipates that total foreign investments will not
exceed 30% of assets. The Surviving Fund actively manages the currency exposure
of its foreign investments relative to its benchmark, and may hedge back into
the U.S. dollar from time to time, although the fund typically maintains full
currency exposure to those emerging markets in which its invests.
4
PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND
The value of your investment in the Surviving Fund will fluctuate in
response to movements in the stock and bond markets. The Surviving Fund's broad
diversification among asset classes and among individual stocks and bonds is
more effective in reducing volatility when asset classes perform differently.
Fund performance will also depend on the effectiveness of JPMIM research and the
management team's asset allocation and security selection decisions.
To the extent that the Surviving Fund invests in foreign securities, it
could lose money because of foreign government actions, political instability,
currency fluctuation or lack of adequate and accurate information. While the
portfolio may engage in options, futures and foreign currency transactions for
hedging or risk management purposes only, these transactions sometimes may
reduce returns or increase volatility.
Over the long term, investors can anticipate that the Surviving Fund's
total return and volatility should exceed those of bonds but remain less than
those of medium-and large-capitalization domestic stocks.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund's and the Merging Fund's
assets is JPMIM. JPMIM oversees the asset management of both funds. As
compensation for its services, JPMIM receives a management fee indirectly from
both funds at an annual rate of 0.55% of average daily net assets. Following the
Reorganization, JPMIM will manage the Surviving Fund's assets and will receive a
fee at an annual rate of 0.55% of average daily net assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the
distributor for the Surviving Fund. Morgan Guaranty Trust Company of New York
("Morgan") currently serves as administrator and shareholder servicing agent and
an affiliate of the Distributor currently serves as sub-administrator. It is
anticipated that prior to the consummation of the Reorganization, Morgan will
merge with The Chase Manhattan Bank ("Chase") which will become the Surviving
Fund's administrator and shareholder servicing agent. The Bank of New York
("BONY") currently serves as fund accountant and custodian, and DST Systems,
Inc. ("DST") currently serves as transfer agent and dividend disbursing agent
for the Surviving Fund. It is anticipated that prior to the consummation of the
Reorganization, Chase will become the Surviving Fund's fund accountant and
custodian. PricewaterhouseCoopers LLP serves as the Surviving Fund's independent
accountants.
ADMINISTRATOR
In connection with the Reorganization, the administration fee paid
to Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on assets in
excess of $26 billion.
ADMINISTRATOR
In connection with the Reorganization, the administration fee paid
to Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on assets in
excess of $26 billion.
ORGANIZATION
Each of JPF and JPMF is organized as a Massachusetts business trust.
The Merging Fund is organized as a series of JPF and the Surviving Fund is
organized as a series of JPMF.
5
PURCHASES, REDEMPTIONS AND EXCHANGES
After the Reorganization, the procedures for making purchases,
redemptions and exchanges of Select Class Shares of the Surviving Fund will be
substantially similar to those with respect to shares of the Merging Fund, as
described in this Combined Prospectus/Proxy Statement and the Surviving Fund's
Prospectus and Statement of Additional Information.
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and
expenses paid by each of the Merging Fund and the Surviving Fund that reflect
current expense arrangements and (ii) estimated fees and expenses on a pro
forma basis for the Surviving Fund after giving effect to the Reorganization.
Under the Reorganization, holders of Shares in the Merging Fund will receive
Select Class Shares in the Surviving Fund. Please note that the Surviving
Fund currently has one class of shares. In connection with the
Reorganization, this class will be re-named "Institutional Class" and the
Select Class share class will be introduced.
The table indicates that while contractual (pre-waiver) total
expense ratios for current shareholders of the Merging Fund are anticipated
to be higher following the Reorganization, actual (post-waiver) total expense
ratios for current shareholders of the Merging Fund are anticipated to be
less or stay the same following the Reorganization. This is because Morgan
has agreed to waive certain fees and/or reimburse certain expenses to ensure
that actual total operating expenses do not increase for at least three years.
THE MERGING FUND THE SURVIVING FUND
------------------ --------------------
SHARES SHARES
------------------ --------------------
SHAREHOLDER FEES (FEES PAID None None
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) when you buy
shares, shown as % of the offering price.......
Maximum Deferred Sales Charge (Load) shown as
lower of original purchase price or
redemption proceeds............................ None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
Management Fees...................................... 0.55% 0.55%
Distribution (12b-1) Fees............................ None None
Other Expenses....................................... 0.43% 0.25%
Total Annual Fund Operating Expenses................. 0.98% 0.80%
Fee Waivers and Expense
Reimbursements(1).................................... 0.15%
Net Expenses......................................... 0.98% 0.65%
- ------------------------
(1) Reflects an agreement dated 11/1/00 by Morgan, an affiliate of JPMC, to
reimburse the Fund to the extent total operating expenses (which exclude
interest, taxes and extraordinary expenses) exceed 0.65% of average
daily net assets with respect to Institutional Class Shares through
10/31/01.
6
THE SURVIVING FUND
-------------------------------
PRO FORMA WITH REORGANIZATION
-------------------------------
SELECT CLASS SHARES
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) when you buy shares,
shown as % of the offering price.............. None
Maximum Deferred Sales Charge (Load) shown as
lower of original purchase price or redemption
proceeds....................................... None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees...................................... 0.55%
Distribution (12b-1) Fees............................ None
Other Expenses....................................... 0.51%
Total Annual Fund Operating Expenses................. 1.06%
Fee Waivers and Expense Reimbursements(2)............ 0.08%
Net Expenses......................................... 0.98%
- ------------------------
(2) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the
Fund to the extent total operating expenses (which exclude interest,
taxes and extraordinary expenses) exceed 0.98% of average daily net assets
with respect to Select Class Shares for three years after the
Reorganization. The total annual Fund operating expenses are not expected
to exceed 0.91% for Select Class Shares due to contractual caps on other
classes of shares which require Fund level subsidies. Morgan may end
this arrangement when these fund level subsidies are no longer required.
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.
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........................................ $ 100 $ 312 $ 542 $ 1,201
The Surviving Fund...................................... $ 66 $ 240 $ 429 $ 976
PRO FORMA THE SURVIVING FUND WITH REORGANIZATION
Select Shares........................................... $ 100 $ 312 $ 560 $ 1,271
7
RISK FACTORS
The following discussion highlights the principal risk factors
associated with an investment in the Surviving Fund. The Surviving Fund has
investment policies and investment restrictions, and therefore risks, identical
to those of the Merging Fund. This discussion is qualified in its entirety by
the more extensive discussion of risk factors set forth in the Prospectus and
Statement of Additional Information of the Surviving Fund, which are
incorporated herein by reference.
All mutual funds carry a certain amount of risk. You may lose money on
your investment in the Surviving Fund. The Surviving Fund may not achieve its
objective if JPMIM's expectations regarding particular securities or markets are
not met. In addition, the Surviving Fund's share price, and performance will
fluctuate in response to stock and bond market movements. The value of the
Surviving Fund's bonds (and potentially its convertible securities and stocks)
will fall when interest rates rise, and the longer a bond's maturity and the
lower its credit quality, the more its value typically falls. How well the
Surviving Fund's performance compares to that of similar funds will depend on
the success of the investment process.
Mortgage-backed and asset-backed securities (securities representing an
interest in, or secured by, a pool of mortgages or other assets such as
receivable) could generate capital losses or periods of low yields if they are
paid off substantially earlier or later than anticipated.
Adverse market conditions may from time to time cause the Surviving
Fund to take temporary defensive positions that are inconsistent with its
principal investment strategies and may hinder the Surviving Fund from achieving
its investment objective. The Surviving Fund could underperform its benchmark
due to its securities and asset allocation choices and other management
decisions.
The default of an issuer would leave the Surviving Fund with unpaid
interest or principal. Non-investment grade bonds have a higher risk of default,
tend to be less liquid, and may be more difficult to value.
Currency exchange rate movements could reduce gains or create losses.
The Surviving Fund could lose money because of foreign government actions,
political instability, or lack of adequate and/or accurate information.
Investment risks tend to be higher in emerging markets. These markets also
present higher liquidity and valuation risks.
The Surviving Fund may buy securities before issue or for delayed
delivery.
The Surviving Fund may use derivatives for hedging and for risk
management (i.e. to adjust duration or yield curve exposure, or to establish or
adjust exposure to particular securities, markets or currencies.) Derivatives
such as futures, options, swaps and forward foreign currency contracts that are
used for hedging the portfolio or specific securities may not fully offset the
underlying positions and this could result in losses to the Surviving Fund that
would not have otherwise occurred. Derivatives used for risk management may not
have the intended effects and may result in losses or missed opportunities. The
counterparty to a derivatives contract could default. Certain types of
derivatives involve costs to the Surviving Fund which can reduce returns.
Derivatives that involve leverage could magnify losses.
8
The Surviving Fund may lend some of its portfolio securities in order
to earn income. When the Surviving Fund lends a security, there is a risk that
the loaned securities may not be returned if the borrower defaults. The
collateral the Surviving Fund receives from the borrower will be subject to the
risks of the securities in which it is invested. While the Surviving Fund may
engage in securities lending, it generally does not do so.
The Surviving Fund may purchase illiquid holdings. The Surviving Fund
could have difficulty valuing illiquid holdings precisely. The Surviving Fund
could be unable to sell these holdings at the time or price it desires.
The Surviving Fund may engage in short-term trading. Increased trading
could raise the Surviving Fund's brokerage and related costs. Increased
short-term capital gains distributions could raise shareholders' income tax
liability.
An investment in the Surviving Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. You could lose money if you sell when the Surviving
Fund's share price is lower than when you invested.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
DESCRIPTION OF THE REORGANIZATION PLAN
The Reorganization Plan provides that at the Effective Time (as defined
in the Reorganization Plan) of the Reorganization, the assets and liabilities of
the Merging Fund will be transferred to and assumed by the Surviving Fund. In
exchange for the transfer of the assets and the assumption of the liabilities of
the Merging Fund, JPMF will issue at the Effective Time of the Reorganization
full and fractional Select Class Shares of the Surviving Fund equal in aggregate
dollar value to the aggregate net asset value of full and fractional outstanding
shares of the Merging Fund as determined at the valuation time specified in the
Reorganization Plan. The Reorganization Plan provides that the Merging Fund will
declare a dividend or dividends prior to the Effective Time of the
Reorganization which, together with all previous dividends, will have the effect
of distributing to Merging Fund Shareholders all undistributed net investment
income earned and net capital gain realized up to and including the Effective
Time of the Reorganization.
Following the transfer of assets to, and the assumption of the
liabilities of the Merging Fund by, the Surviving Fund, the Merging Fund will
distribute Select Class Shares received by it to the Merging Fund Shareholders
in liquidation of the Merging Fund. Each Merging Fund Shareholder at the
Effective Time of the Reorganization will receive an amount of Select Class
9
Shares with a total net asset value equal to the net asset value of their
Merging Fund Shares plus the right to receive any dividends or distributions
which were declared before the Effective Time of the Reorganization but that
remained unpaid at that time with respect to the shares of the Merging Fund.
The Surviving Fund expects to maintain most of the portfolio
investments of the Merging Fund in light of the identical investment policies of
the Merging Fund and the Surviving Fund. Concurrently with the Reorganization,
the Surviving Fund will cease to operate under a "master/feeder" structure and
will instead invest directly in portfolio securities rather than in the Master
Portfolio.
After the Reorganization, all of the issued and outstanding shares of
the Merging Fund shall be canceled on the books of the Merging Fund and the
stock transfer books of the Merging Fund will be permanently closed.
The Reorganization is subject to a number of conditions, including
without limitation: approval of the Reorganization Plan and the transactions
contemplated thereby described in this Combined Prospectus/Proxy Statement by
the Merging Fund Shareholders; the receipt of a legal opinion from Simpson
Thacher & Bartlett with respect to certain tax issues, as more fully
described in "Federal Income Tax Consequences" below; and the parties'
performance in all material respects of their respective agreements and
undertakings in the Reorganization Plan. Assuming satisfaction of the
conditions in the Reorganization Plan, the Effective Time of the
Reorganization will be on August 11, 2001 or such other date as is agreed to
by the parties.
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition to the performance of such party under the
Reorganization Plan or a material covenant of the other party is not fulfilled
by the date specified in the Reorganization Plan or if there is a material
default or material breach of the Reorganization Plan by the other party. In
addition, either party may terminate the Reorganization Plan if its trustees
determine that proceeding with the Reorganization Plan is not in the best
interests of their Fund's shareholders.
BOARD CONSIDERATIONS
In 1993, the JPF Board and shareholders approved the restructuring of
the Funds into their current "master-feeder" format, pursuant to which the Funds
(the feeders) invested their assets in a common Portfolio - the "master" - and
shares of each Fund were sold to different categories of investors with
different distribution and shareholder services and fees. Among other reasons
for the 1993 restructuring was the opportunity to obtain the economies of scale
from an investment and expense perspective that might come from the investment
and administration of a larger pool of assets than any one fund could expect to
have on its own. An important factor in the Board's decision at the time was
that non-U.S. investors' assets would be invested alongside those of U.S.
investors within the master Portfolio on a basis that was not disadvantageous to
the non-U.S. investors from a U.S. tax perspective. For various reasons, the
non-U.S. feeders withdrew their assets from the master commencing in 1997,
thereby
10
eliminating one of the principal reasons for the master-feeder format.
Nevertheless, the Funds continued in that format and, the Board believes,
conducted their operations on a basis at least as favorable to the Funds as
would have obtained if the format had been abandoned, as is now proposed.
Following the announcement of the J.P. Morgan-Chase merger, JPMIM and
Morgan and their counterparts within the Chase organization reviewed the
compatibilities of their various mutual fund groups, including their respective
organizational structures, service providers, distribution arrangements and
methodologies, and fees and expenses. The proposed Reorganization of the Merging
Fund into the Surviving Fund is a part of the more general integration of the
J.P. Morgan funds complex with the Chase Vista funds complex to create a single
mutual fund complex with substantially similar arrangements for the provision of
advisory, administration, distribution, custody and fund accounting and transfer
agency services.
The JPF Board believes that the conversion by way of the proposed
Reorganization of the current master-feeder format into the multiclass format
discussed in this proxy statement and the adoption of the service arrangements
by the Surviving Fund described herein (the "Service Arrangements") are in the
best interests of the Surviving and Merging Funds and their respective
shareholders and that the interests of shareholders will not be diluted as a
result of the Reorganization.
In considering the proposed Reorganization and Service Arrangements,
the JPF Board also noted that there were important benefits expected to arise
out of the integration of the J.P. Morgan and Chase Vista mutual funds
complexes. Among these benefits, the Board considered (1) investor and
shareholder confusion should be mitigated if not eliminated by the adoption by
both the J.P. Morgan and the Chase Vista mutual funds of common organizational
structures and common service providers, (2) Surviving Fund shareholders would
be able to exchange into a larger number and greater variety of funds without
paying sales charges, (3) additional share classes offered by the Surviving Fund
should have a positive effect on asset growth, which in turn over time could
result in a lower total expense ratio as economies of scale were realized; (4)
JPMIM advised the Board that it believes that the outsourcing of many functions
to the subadministrator will (a) upgrade the quality of services currently being
provided to the Funds, and (b) enhance Morgan's ability effectively to monitor
and oversee the quality of all Fund service providers, including the investment
adviser, distributor, custodian and transfer agent; (5) Morgan's undertaking for
three years to waive fees or reimburse the Surviving Fund's expenses in order
that the total expense ratios of the Select and Institutional Classes do not
exceed those of
11
the Merging Fund and the Surviving Fund, respectively; (6) the fact that all
costs and expenses of the Reorganization and implementation of the Service
Arrangements would be borne by JPMC and (7) the fact that the Reorganization
would constitute a tax-free reorganization.
In addition, the Board took into account that, notwithstanding the
increase in the contract fee rate of Morgan, J.P. Morgan agreed to increase from
one to three years noted above its undertaking to cap the total expense ratio on
the Select and Institutional Classes and to institute a breakpoint in the
Administration fee from .15% of the average daily net assets in the aggregate of
all funds in the fully integrated funds group to .075% of such assets over [$25]
billion (the aggregate of such assets being [$19] billion as of March 31, 2001).
Moreover, JPMIM agreed that, notwithstanding its proposed increase to $1 million
of the minimum investment in the Select Class, all current shareholders of the
Merging Fund (for which the current minimum is $2,500) will be entitled to make
additional investments in the Select Class of the Surviving Fund or of any other
fund in the integrated fund complex or to exchange shares of the Select Class of
the Surviving Fund for Select Shares of any other such fund. The Board also
noted that J.P. Morgan did not propose and advised that it does not expect to
propose the imposition of any distribution (12b-1) fees or shareholder servicing
fees on the Select or Institutional Class that are not already in place. Finally
the Board was advised that the custody and fund accounting fees to be charged by
Chase Global Investors Services will be lower than those currently charged by
The Bank of New York. It should be recognized that, at current asset levels and
in consequence of the expense cap, the lower custody and fund accounting fees
will not have an immediate effect on the Surviving Fund's total expense ratio
but should have some positive effect in the future.
Based upon their evaluation of the relevant information provided to
them, the changes effected in the Service Arrangements in the negotiations
between the Trustees and J.P. Morgan, and in light of their fiduciary duties
under federal and state law, the Trustees, including a majority who are not
interested persons of the Funds or JPMC as defined in the 1940 Act, determined
that the proposed Reorganization is in the best interests of both the Merging
and Surviving Fund, that the interests of the shareholders of each of the
Merging Fund and the Surviving Fund would not be diluted as a result of the
Reorganization, and that the Service Arrangements are in the best interests of
the Surviving Fund.
THE JPF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSAL.
The JPF Board has not determined what action the Merging Fund will take
in the event shareholders do not approve the Reorganization Plan or for any
reason the Reorganization is not consummated. In either such event, the Board
will consider other appropriate courses of action.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that JPF
receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of the Merging Fund to the Surviving Fund in exchange for the Select
Class Shares and the liquidating distributions to shareholders of the Select
Class Shares so received, as described in the Reorganization Plan, will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as
12
amended (the "Code"), and with respect to the Reorganization, the Merging Fund
and the Surviving Fund will each be considered "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Merging Fund as a result of such transaction; (iii) no gain
or loss will be recognized by the Surviving Fund as a result of such
transaction; (iv) no gain or loss will be recognized by the Merging Fund
Shareholders on the distribution to the Merging Fund Shareholders of the
Select Class Shares solely in exchange for their Merging Fund Shares; (v) the
aggregate basis of shares of the Surviving Fund received by a shareholder of
the Merging Fund will be the same as the aggregate basis of such Merging Fund
Shareholder's Merging Fund Shares immediately prior to the Reorganization;
(vi) the basis of the Surviving Fund in the assets of the Merging Fund
received pursuant to such transaction will be the same as the basis of such
assets in the hands of the Merging Fund immediately before such transaction;
(vii) a Merging Fund Shareholder's holding period for the Select Class Shares
will be determined by including the period for which such Merging Fund
Shareholder held the Merging Fund Shares exchanged therefor, provided that the
Merging Fund Shareholder held such Merging Fund Shares as a capital asset; and
(viii) the Surviving Fund's holding period with respect to the assets received
in the Reorganization will include the period for which such assets were held
by the Merging Fund.
JPF has not sought a tax ruling from the Internal Revenue Service (the
"IRS"), but is acting in reliance upon the opinion of counsel discussed in the
previous paragraph. That opinion is not binding on the IRS and does not preclude
the IRS from adopting a contrary position. Shareholders should consult their own
advisers concerning the potential tax consequences to them, including state and
local income taxes.
CAPITALIZATION
Because the Merging Fund will be combined with the Surviving Fund in
the Reorganization, the total capitalization of the Surviving Fund after the
Reorganization is expected to be greater than the current capitalization of the
Merging Fund. The following table sets forth as of December 31, 2000: (i) the
capitalization of the Merging Fund; (ii) the capitalization of the Surviving
Fund and (iii) the pro forma capitalization of the Surviving Fund as adjusted to
give effect to the Reorganization. There is, of course, no assurance that the
Reorganization will be consummated. Moreover, if consummated, the
capitalizations of the Surviving Fund and the Merging Fund are likely to be
different at the Effective Time of the Reorganization as a result of
fluctuations in the value of portfolio securities of each Fund and daily share
purchase and redemption activity in each Fund. The Surviving Fund currently has
one class of shares. In connection with the Reorganization, this class will be
renamed Institutional Class and the Select Class share class will be introduced.
THE MERGING THE SURVIVING
FUND FUND PRO FORMA COMBINED WITH REORGANIZATION
----------- ------------- -------------------------------------------
SELECT CLASS SHARES INSTITUTIONAL
------------------- -------------
Net Assets
12/31/00....... $327,441,102 $621,057,264 $327,441,102 $621,057,264
Beneficial
Interest
Outstanding
12/31/00....... 21,535,238 45,376,091 - -
Shares Outstanding - - 23,923,715 45,376,091
13
Net Asset Value $15.20 $13.69 $13.69 13.69
PURCHASES, REDEMPTIONS AND EXCHANGES
Following the Reorganization, the procedures for purchases, redemptions
and exchanges of shares of the Surviving Fund will be substantially similar to
those of the Merging Fund. The Surviving Fund currently has one class of shares.
In connection with the Reorganization, this class will be renamed "Institutional
Class" and the Class A share class and the Select Class share class will be
introduced. The following discussion reflects the new class structure. This
section is qualified in its entirety by the discussion in the Prospectus and
Statement of Additional Information of the Surviving Fund, which are
incorporated herein by reference.
BUYING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF THE SELECT CLASS
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
The price shareholders pay for their shares is the net asset value per
share (NAV). NAV is the value of everything the Surviving Fund owns, minus
everything it owes, divided by the number of shares held by investors. The
Surviving Fund generally values its assets at fair market values but may use
fair value if market prices are unavailable.
The NAV of each class of the Surviving Fund's shares is generally
calculated once each day at the close of regular trading on the New York Stock
Exchange. A shareholder will pay the next NAV calculated after the 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.
14
Select Class Shares of the Surviving Fund generally may be purchased
only through financial service firms, such as broker-dealers and banks that have
an agreement with the 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 Select Class Shares in the Surviving Fund or in other JPMorgan
Funds 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 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.
A systematic investment plan is available for Select Class Shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE SELECT CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
Select Class Shares of the Surviving Fund may be sold on any day the
Center is open for trading, either directly to the Fund or through an investment
representative. Shareholders of the Surviving Fund will receive the next NAV
calculated after the Center accepts his or her sale order less any applicable
deferred sales charge.
Under normal circumstances, if a request is received before the close
of regular trading on the New York Stock Exchange, the Surviving Fund will send
the proceeds the next business day. An order to sell shares will not be accepted
if the Surviving Fund has not collected payment for the shares. The Surviving
Fund may stop accepting orders to sell and may postpone payments for more than
seven days, as federal securities laws permit.
Generally, proceeds are sent by check, electronic transfer or wire for
Select Class Shares. However, if a shareholder's address of record has changed
within the 30 days prior to the sale request or if more than $25,000 of shares
is sold by phone, proceeds will be sent by electronic transfer or wire only to
the bank account on the Surviving Fund's records.
For Select Class Shares, a shareholder will need to have his or her
signature guaranteed if he or she wants payment to be sent to an address other
than the one in the Surviving Fund's records. Additional documents or a letter
from a surviving joint owner may also be needed.
15
A shareholder who purchased through an investment representative, or
through a financial service firm, should contact that representative, who will
send the necessary documents to the Center. The representative might charge a
fee for this service.
Shareholders may also sell their shares by contacting the Center
directly. Select Class shareholders may call ___________.
A systematic withdrawal plan is available for Select Class Shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF THE SELECT CLASS
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Select Class Shares of the Surviving Fund may be exchanged for shares
of the same class in certain other 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.
The exchange privilege is not a means of short-term trading as this
could increase management cost and affect all shareholders of the Surviving
Fund. The Fund reserves the right to limit the number of exchanges or refuse an
exchange. Each exchange privilege may also be terminated. The Fund charges an
administration fee of $5 for each exchange if an investor makes more than 10
exchanges in a year or three in a quarter.
OTHER INFORMATION CONCERNING THE SURVIVING FUND
For Select Class Shares, the Surviving Fund may close an account if the
balance falls below $___________. The Surviving Fund may also close the account
if an investor is in the systematic investment plan and fails to meet investment
minimums over a 12-month period. At least 60 days' notice will be given before
closing the account.
Unless a shareholder indicates otherwise on his or her account
application, the Surviving Fund is authorized to act on redemption and transfer
instructions received by phone. If someone trades on an account by phone, the
Surviving Fund will ask that person to confirm the account registration and
address to make sure they match those in the Surviving Fund records. If they do
correspond, the Fund is generally authorized to follow that person's
instructions. The Surviving Fund will take all reasonable precautions to confirm
that the instructions are genuine. Investors agree that they will not hold the
Surviving Fund liable for any loss or expenses from any sales request, if the
Surviving Fund takes reasonable precautions. The Surviving Fund will be liable
for any losses to a shareholder from an unauthorized sale or fraud against such
shareholder if the Surviving Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This
may be true at times of unusual market changes and shareholder activity. In that
event, shareholders can mail instructions to the Surviving Fund or contact their
investment representative or agent. The Fund may modify or cancel the sale of
shares by phone without notice.
16
JPMF, on behalf of the Surviving Fund, has entered into agreements with
certain shareholder servicing agents (including Chase) under which the
shareholder servicing agents will agree to provide certain support services to
their customers. For performing these services, each shareholder-servicing agent
will receive an annual fee of up to 0.25% of the average daily net assets of the
Select Class Shares held by investors serviced by the shareholder-servicing
agent. The Merging Fund likewise has similar arrangements with respect to its
Shares.
JPMIM and/or the Distributor may, at their own expense, make additional
payments to certain selected dealers or other shareholder servicing agents for
performing administrative services for their customers.
The Surviving Fund issues multiple classes of shares. Each class may
have different requirements for who may invest, and may have different sales
charges and expense levels. A person who gets compensated for selling Fund
Shares may receive a different amount for each class.
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 four
times a year. Net capital gain, if any, is distributed annually. You have three
options for your Surviving Fund distributions. You may:
- reinvest all of them in additional Surviving Fund shares;
- take distributions of net investment income in cash or as a
deposit in a pre-assigned bank account and reinvest
distributions of net capital gain in additional shares; or
- take all distributions in cash or as a deposit in a pre-assigned
bank account.
If you don't notify us otherwise, we'll reinvest all distributions. If
your distributions are reinvested, they will be in the form of shares of the
same class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary
income at the federal, state and local levels.
If you receive distributions of net capital gain, the tax rate will be
based on how long the Surviving Fund held a particular asset, not on how long
you have owned your shares. If you buy shares just before a distribution, you
will pay tax on the entire amount of the taxable distribution you receive, even
though the NAV will be higher on that date because it includes the distribution
amount.
Early in each calendar year, the Surviving Fund will send its
shareholders a notice showing the amount of distributions received in the
preceding year and the tax status of those distributions.
17
The above is only a general summary of tax implications of investing in
the Surviving Fund. Shareholders should consult their tax advisors to see how
investing in the Surviving Fund will affect their own tax situation.
COMPARISON OF THE MERGING FUND'S
AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE
There are no material differences in the organizational structure of
the Merging Fund and the Surviving Fund. Set forth below are descriptions of the
structure, voting rights, shareholder liability and the liability of Trustees.
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of JPF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPF's operations are governed by JPF's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Merging Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
STRUCTURE OF THE SURVIVING FUND
The Surviving Fund is organized as a series of JPMF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPMF's operations are governed by JPMF's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Surviving Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
TRUSTEES AND OFFICERS
Subject to the provisions of its trust documents, the business of the
Merging Fund is managed by JPF's Trustees and the business of the Surviving Fund
is managed by JPMF's Trustees, who serve indefinite terms and have all powers
necessary or convenient to carry out their responsibilities.
Information concerning the current Trustees and officers of JPF and
JPMF is set forth in the Funds' respective Statements of Additional Information,
which are incorporated herein by reference.
SHARES OF FUNDS
Each of JPF and JPMF is a trust with an unlimited number of authorized
shares of beneficial interest which may be divided into series or classes
thereof. Each Fund is one series of a trust and may issue multiple classes of
shares. Each share of a series or class of a trust represents an equal
proportionate interest in that series or class with each other share of that
series or class. The shares of each series or class of either JPF or JPMF
participate equally in the earnings, dividends and assets of the particular
series or class. Fractional shares have proportionate rights to full shares.
Expenses of JPF or JPMF that are not attributable to a specific
18
series or class will be allocated to all the series of that trust in a manner
believed by its board to be fair and equitable. Generally, shares of each
series will be voted separately, for example, to approve an investment
advisory agreement. Likewise, shares of each class of each series will be
voted separately, for example, to approve a distribution plan, but shares of
all series and classes vote together, to the extent required by the 1940 Act,
including for the election of Trustees. Neither JPF nor JPMF is required to
hold regular annual meetings of shareholders, but may hold special meetings
from time to time. There are no conversion or preemptive rights in connection
with shares of either JPF or JPMF.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either JPF or JPMF resulting from the
resignation of a Trustee or otherwise may be filled similarly by a vote of a
majority of the remaining Trustees then in office, subject to the 1940 Act. In
addition, Trustees may be removed from office by a vote of holders of shares
representing two-thirds of the outstanding shares of each portfolio of that
trust. A meeting of shareholders shall be held upon the written request of the
holders of shares representing not less than 10% of the outstanding shares
entitled to vote on the matters specified in the written request. Except as set
forth above, the Trustees may continue to hold office and may appoint successor
Trustees.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of either JPF or JPMF could,
under certain circumstances, be held personally liable as partners for the
obligations of that trust. However, the Declaration of Trust of each of JPF and
JPMF disclaims shareholder liability for acts or obligations of that trust and
provides for indemnification and reimbursement of expenses out of trust property
for any shareholder held personally liable for the obligations of that trust.
Each of JPF and JPMF may maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of that trust,
its shareholders, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability generally is limited to circumstances
in which both inadequate insurance existed and the trust itself was unable to
meet its obligations.
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of JPF and JPMF, the Trustees of
that trust are personally liable only for bad faith, willful misfeasance, gross
negligence or reckless disregard of their duties as Trustees. Under the
Declaration of Trust of each of JPF and JPMF, a Trustee or officer will
generally be indemnified against all liability and against all expenses
reasonably incurred or paid by such person in connection with any claim, action,
suit or proceeding in which such person becomes involved as a party or otherwise
by virtue of such person being or having been a Trustee or officer and against
amounts paid or incurred by such person in the settlement thereof.
The foregoing is only a summary of certain organizational and governing
documents and Massachusetts business trust law. It is not a complete
description. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies
19
of the Declaration of Trust and By-Laws of each of JPF and JPMF are available
without charge upon written request to that trust.
INFORMATION RELATING TO THE ADVISORY CONTRACTS
AND OTHER SERVICES
GENERAL INFORMATION
As noted above, the assets of the Surviving Fund currently invested in
the Master Portfolio are managed by JPMIM pursuant to an Advisory Agreement
between JPMIM and the Master Portfolio, and JPMIM is responsible for the
day-to-day management of the Surviving Fund's assets. Following the
Reorganization, the Surviving Fund's assets will be managed directly by JPMIM
pursuant to an Advisory Agreement substantially similar to the agreement between
the Master Portfolio and JPMIM.
DESCRIPTION OF JPMIM
JPMIM is an indirect wholly-owned subsidiary of JPMC incorporated under
the laws of Delaware. JPMIM's principal executive offices are located at 522
Fifth Avenue, New York, New York 10036. JPMIM, a registered investment adviser,
manages employee benefit funds of corporations, labor unions and state and local
governments and the accounts of other institutional investors, including
investment companies. As of _______ __, 2001, JPMIM and certain of its
affiliates provided investment management services with respect to assets of
approximately $___ billion.
Under the Advisory Agreement, JPMIM will be responsible for making
decisions with respect to, and placing orders for, all purchases and sales of
the portfolio securities of the Surviving Fund. JPMIM's responsibilities under
the Advisory Agreement will include supervising the Surviving Fund's investments
and maintaining a continuous investment program, placing purchase and sale
orders and paying costs of certain clerical and administrative services involved
in managing and servicing the Surviving Fund's investments and complying with
regulatory reporting requirements. The services to be provided to the Surviving
Fund by JPMIM are substantially similar to the services currently provided to
the Master Portfolio and, therefore, indirectly to the Merging Fund by JPMIM.
EXPENSES AND MANAGEMENT FEES. The Advisory Agreement provides that the
Surviving Fund will pay JPMIM a monthly management fee based upon the net assets
of the Surviving Fund. The annual rate of this management fee is 0.55%. The
Master Portfolio and, therefore, indirectly the Merging Fund also currently pays
0.55% of average net assets to JPMIM for its advisory services. JPMIM may waive
fees from time to time.
Under the Advisory Agreement, except as indicated above, the Surviving
Fund is responsible for its operating expenses including, but not limited to,
taxes; interest; fees (including fees paid to its Trustees who are not
affiliated with JPMIM or any of its affiliates); fees payable to the Commission;
state securities qualification fees; association membership dues; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to existing shareholders; management and administrative fees; charges of the
custodian and transfer agent; insurance premiums; auditing and legal expenses;
costs of shareholders' reports and
20
shareholder meetings; any extraordinary expenses; and brokerage fees and
commissions, if any, in connection with the purchase or sale of portfolio
securities.
LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMIM
will not be liable for any error of judgment or mistake of law or for any act or
omission or loss suffered by JPMF or the Surviving Fund in connection with the
performance of the Advisory Agreement except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or from
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties under the Advisory
Agreement.
DURATION AND TERMINATION. The Advisory Agreement will continue in
effect from year to year with respect to the Surviving Fund, only so long as
such continuation is approved at least annually by (i) the Board of Trustees of
JPMF or the majority vote of the outstanding voting securities of the Surviving
Fund, and (ii) a majority of those Trustees who are neither parties to the
Advisory Agreement nor "interested persons," as defined in the 1940 Act, of any
such party, acting in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement will terminate automatically in the event
of its "assignment," as defined in the 1940 Act. In addition, the Advisory
Agreement is terminable at any time as to the Surviving Fund without penalty by
the JPMF Board or by vote of the majority of the Surviving Fund's outstanding
voting securities upon 60 days' written notice to JPMIM, and by JPMIM on 90
days' written notice to JPMF.
PORTFOLIO MANAGER
The portfolio management team for the Surviving Fund is led by Anne
Lester, vice president, who joined the team in June of 2000 and has been at
JPMorgan since 1992 and John M. Devlin, vice president, who joined the team in
December of 1993 and has been at JPMorgan since 1986. Prior to managing this
fund, Ms. Lester worked in the Product Development group and as a fixed income
and currency trader and portfolio manger in Milan.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
JPMIM places orders for the Surviving Fund for all purchases and sales
of portfolio securities, enters into repurchase agreements, and may enter into
reverse repurchase agreements and execute loans of portfolio securities on
behalf of the Surviving Fund. Fixed income and debt securities and municipal
bonds and notes are generally traded at a net price with dealers acting as
principal for their own accounts without a stated commission. The price of the
security usually includes profit to the dealers. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain securities may be purchased
directly from an issuer, in which case no commissions or discounts are paid.
Portfolio transactions for the Surviving Fund will be undertaken
principally to accomplish the Surviving Fund's objective in relation to expected
movements in the general level of interest rates. The Surviving Fund may engage
in short-term trading consistent with its objectives.
21
In connection with portfolio transactions, JPMIM intends to seek best
execution on a competitive basis for both purchases and sales of securities.
Subject to the overriding objective of obtaining the best execution of orders,
JPMIM may allocate a portion of the Surviving Fund's brokerage transactions to
affiliates of JPMIM. Under the 1940 Act, persons affiliated with the Surviving
Fund and persons who are affiliated with such persons are prohibited from
dealing with the fund as principal in the purchase and sale of securities unless
a permissive order allowing such transactions is obtained from the Commission.
However, affiliated persons of the Fund may serve as its broker in listed or
over-the-counter transactions conducted on an agency basis provided that, among
other things, the fee or commission received by such affiliated broker is
reasonable and fair compared to the fee or commission received by non-affiliated
brokers in connection with comparable transactions. In addition, the Surviving
Fund may not purchase securities during the existence of any underwriting
syndicate for such securities of which JPMIM or an affiliate is a member or in a
private placement in which JPMIM or an affiliate serves as placement agent
except pursuant to procedures adopted by the Board of Trustees that either
comply with rules adopted by the Commission or with interpretations of the
Commission's staff.
Investment decisions made by JPMIM are the product of many factors in
addition to basic suitability for the particular fund or other client in
question. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the same security. The Surviving Fund may
only sell a security to other portfolios or accounts managed by JPMIM or its
affiliates in accordance with procedures adopted by the Trustees.
It also sometimes happens that two or more clients simultaneously
purchase or sell the same security. On those occasions when JPMIM deems the
purchase or sale of a security to be in the best interests of the Surviving
Fund, as well as other clients including other funds, JPMIM, to the extent
permitted by applicable laws and regulations, may, but is not obligated to,
aggregate the securities to be sold or purchased for the Surviving Fund with
those to be sold or purchased for other clients in order to obtain best
execution, including lower brokerage commissions if appropriate. In such event,
allocation of the securities so purchased or sold as well as any expenses
incurred in the transaction will be made by JPMIM in the manner it considers to
be most equitable and consistent with JPMIM's fiduciary obligations to the
Surviving Fund. In some instances, this procedure might adversely affect the
Surviving Fund.
OTHER SERVICES
The Distributor, a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the Merging Fund's distributor and
sub-administrator, is the distributor and sub-administrator for the Surviving
Fund. The Distributor is unaffiliated with JPMC or any of its subsidiaries.
Morgan serves as administrator and shareholder servicing agent, BONY
serves as fund accountant and custodian, and DST serves as transfer agent and
dividend disbursing agent for the Surviving Fund. The services provided by
Morgan and BONY include day-to-day maintenance of certain books and records,
calculation of the offering price of the shares and preparation of reports. In
its role as custodian, BONY will be responsible for the daily safekeeping of
securities
In connection with the Reorganization, the administration fee paid
to Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on assets in
excess of $26 billion.
22
and cash held by the Surviving Fund. It is anticipated that prior to the
consummation of the Reorganization, Chase will become the Surviving Fund's
fund accountant and custodian.
In connection with the Reorganization, the administration fee paid
to Morgan will increase to 0.15% of average daily net assets on the first $26
billion of complex wide non-money market assets and 0.075% on assets in
excess of $26 billion.
PROPOSAL 2:
ELECTION OF TRUSTEES
--------------------
It is proposed that shareholders of the Merging Fund consider the
election of the individuals listed below (the "Nominees") to the Board of
Trustees of JPF, which is currently organized as a Massachusetts business trust.
Even if the Reorganization described in Proposal 1 is approved, other mutual
funds that are series of JPF will continue to exist and operate. All
shareholders of any series of JPF as of the record date (April 6, 2001) are
required to be given a vote on the proposal regarding Trustees. Because as of
the record date you are still a shareholder in JPF, you are entitled to vote on
this proposal. Shareholders of JPMF are being asked to approve the same Trustees
as are being proposed for JPF.
In connection with the merger of J.P. Morgan & Co. Incorporated and The
Chase Manhattan Corporation, it has been proposed, subject to shareholder
approval, that the Boards of Trustees of the investment companies managed by
JPMIM and their affiliates be rationalized in order to obtain additional
operating efficiencies by having the same Board of Trustees for all of the
funds. Therefore, the Nominees include certain current Trustees of JPF and
certain current Trustees of JPMF (and their respective Advisory Boards). Each
Nominee has consented to being named in this Proxy Statement and has agreed to
serve as a Trustee if elected.
Shareholders of JPMF are concurrently considering the election of the
same individuals to the Board of Trustees of JPMF. Biographical information
about the Nominees and other relevant information is set forth below. More
information regarding the current Trustees of JPMF and JPF is contained in the
Funds' Statements of Additional Information, which are incorporated herein by
reference.
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
THE JPF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
VOTE REQUIRED
The election of each of the Nominees listed below requires the
affirmative vote of a majority of all the votes entitled to be cast at the
Meeting by all shareholders of JPF.
The following are the nominees:
--------------------------------------------------
23
The Board of Trustees of JPF met four times during the fiscal year
ended June 30, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of JPF presently has an Audit Committee. The
members of the Audit Committee are Messrs. Addy (Chairman), Eschenlauer, Burns,
Mallardi and Healey. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters. The Audit
Committee met four times during the fiscal year ended June 30, 2000.
* Interested Trustee, as defined by the 1940 Act.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS:
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of JPMIM is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by JPMIM. Each Trustee receives a
fee, allocated among all investment companies for which the Trustees serves.
Annually, each Trustee receives $75,000.
Set forth below is information regarding compensation paid or accrued
during the calendar year ended December 31, 2000 for each Trustee of JPF:
24
Aggregate Trustee Total Trustee Compensation
Compensation Paid by Accrued by Fund Complex(1)
the Trust During 2000 During 2000(2)
Matthew Healey, Trustee(3), Chairman and Chief Executive
Officer $11,238 $75,000
Frederick S. Addy, Trustee $11,238 $75,000
William G. Burns, Trustee $11,238 $75,000
Arthur C. Eschenlauer, Trustee $11,238 $75,000
Michael P. Mallardi, Trustee $11,238 $75,000
(1) A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investment services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.
(2) No investment company within the Fund Complex has a pension or
retirement plan.
(3) During 2000, Pierpont Group, Inc. paid Mr. Healey, in his role as
Chairman of Pierpont Group, Inc., compensation in the amount of
$200,000, contributed $25,500 to a defined contribution plan on his
behalf and paid $18,400 in insurance premiums for his benefit.
The Trustees decide upon general policies and are responsible for
overseeing JPF's business affairs. Each of JPF and the Master Portfolio has
entered into a Fund Services Agreement with Pierpont Group, Inc. to assist the
Trustees in exercising their overall supervisory responsibilities. Pierpont
Group, Inc. was organized in July 1989 to provide services for the J.P. Morgan
Family of Funds (formerly "The Pierpont Family of Funds"), and the Trustees are
the equal and sole shareholders of Pierpont Group, Inc. JPF has agreed to pay
Pierpont Group, Inc. a fee in an amount representing its reasonable costs in
performing these services. These costs are periodically reviewed by the
Trustees. The principal offices of Pierpont Group, Inc. are located at 461
Fifth Avenue, New York, New York 10017. It is anticipated that the Merging
Fund and the Surviving Fund will terminate its agreement with Pierpont Group,
Inc. in connection with the Reorganization.
The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund,
the Surviving Fund and the Master Portfolio during the indicated fiscal periods
are set forth below:
MERGING FUND --For the fiscal years ended June 30, 1998, 1999 and 2000:
$4,318, $5,873 and $5,344, respectively.
SURVIVING FUND -- For the fiscal years ended June 30, 1998, 1999 and
2000: $9,751, $10,569 and $10,326, respectively.
MASTER PORTFOLIO -- For the fiscal years ended June 30, 1998, 1999 and
2000: $13,886, $16,444 and $15,670, respectively.
25
ADVISORY BOARD
The Trustees determined as of January 26, 2000 to establish an advisory
board and appoint four members ("Members of the Advisory Board") thereto. Each
member serves at the pleasure of the Trustees. The advisory board is distinct
from the Trustees and provides advice to the Trustees as to investment,
management and operations of JPF; but has no power to vote upon any matter put
to a vote of the Trustees. The advisory board and the members thereof also serve
each of the other trusts in the Fund Complex. The creation of the Advisory Board
and the appointment of the members thereof was designed so that the Board of
Trustees will continuously consist of persons able to assume the duties of
Trustees and be fully familiar with the business and affairs of JPF, in
anticipation of the current Trustees reaching the mandatory retirement age of
seventy. Each Member of the Advisory Board is paid an annual fee of $75,000 for
serving in this capacity for the Fund Complex and is reimbursed for expenses
incurred in connection for such service. The Members of the Advisory Board may
hold various other directorships unrelated to these funds. The mailing address
of the Members of the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth
Avenue, New York, New York 10017. Their names, principal occupations during the
past five years and dates of birth are set forth below:
Ann Maynard Gray -- 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:
The principal executive officers of JPF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------------- -------- --------------------------------------------------------------
Matthew Healey 63 Chief Executive Officer; Chairman, Pierpont Group, since prior to
1993. His address is Pine Tree Country Club Estates, 10286 Saint
Andrews Road, Boynton Beach, Florida 33436.
Margaret W. Chambers 41 Executive Vice President and General Counsel of THE DISTRIBUTOR
since April, 1998. From August 1996 to March 1998, Ms. Chambers
was Vice President and Assistant General Counsel for Loomis, Sayles
& Company, L.P. From January 1986 to July 1996, she was an
associate with the law firm of Ropes & Gray.
George A. Rio 46 President and Treasurer. Executive Vice President and Client
Service Director of THE DISTRIBUTOR since April 1998. From June
1995 to March 1998, Mr. Rio was Senior Vice President and Senior
Key Account Manager for Putnam Mutual Funds.
26
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 each Fund's federal income tax returns. PricewaterhouseCoopers LLP
also performs other professional accounting, auditing, tax and advisory services
when JPF 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 systems design and implementation services
rendered by PriceWaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's
affiliates that provide services to the Fund for the calendar year ended
December 31, 2000 was $0.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services, including fees for tax-related services, rendered by
PriceWaterhouseCoopers LLP to the Surviving Fund, JPMIM and JPMIM's affiliates
that provide services to the Fund for the calendar year ended December 31, 2000
was $11,029,400.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the JPF Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. JPF's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview. In
addition JPF may retain the services of professional solicitors to aid in the
solicitation of proxies for a fee. It is anticipated that banks, brokerage
houses and other custodians will be requested on behalf of JPF to forward
solicitation materials to their principals to obtain authorizations for the
execution of proxies. Any Merging Fund Shareholder giving a proxy may revoke it
at any time before it is exercised by submitting to JPF a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person.
Only the Merging Fund Shareholders of record at the close of business
on April 6, 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
27
Meeting. If a quorum is not present at the Meeting, sufficient votes in favor of
the proposals are not received by the time scheduled for the Meeting, or the
Merging Fund Shareholders determine to adjourn the Meeting for any other reason,
the Merging Fund Shareholders present (in person or proxy) may adjourn the
Meeting from time to time, without notice other than announcement at the
Meeting. Any such adjournment will require the affirmative vote of the Merging
Fund Shareholders holding a majority of the Merging Fund Shares present, in
person or by proxy, at the Meeting. The persons named in the Proxy will vote in
favor of such adjournment those Merging Fund Shares that they are entitled to
vote if such adjournment is necessary to obtain a quorum or if they determine
such an adjournment is desirable for any other reason. Business may be conducted
once a quorum is present and may continue until adjournment of the Meeting
notwithstanding the withdrawal or temporary absence of sufficient Merging Fund
Shares to reduce the number present to less than a quorum. If the accompanying
proxy is executed and returned in time for the Meeting, the shares covered
thereby will be voted in accordance with the proxy on all matters that may
properly come before the meeting (or any adjournment thereof).
PROXIES
All Merging Fund Shares represented by each properly signed proxy
received prior to the Meeting will be voted at the Meeting. If a Merging Fund
Shareholder specifies how the proxy is to be voted on any of the business to
come before the Meeting, it will be voted in accordance with such
specifications. If a Merging Fund Shareholder returns its proxy but no direction
is made on the proxy, the proxy will be voted FOR each Proposal described in
this Combined Prospectus/Proxy Statement. The Merging Fund Shareholders voting
to ABSTAIN on the Proposals will be treated as present for purposes of achieving
a quorum and in determining the votes cast on the Proposals, but not as having
voted FOR the Proposals. A properly signed proxy on which a broker has indicated
that it has no authority to vote on the Proposals on behalf of the beneficial
owner (a "broker non-vote") will be treated as present for purposes of achieving
a quorum but will not be counted in determining the votes cast on the Proposals.
A proxy granted by any Merging Fund Shareholder may be revoked by such
Merging Fund Shareholder at any time prior to its use by written notice to JPF,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other matters come before the Meeting, proxies will be voted by the persons
named as proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
JPMC, and not the Merging Fund or the Surviving Fund (or shareholders
of either fund), will bear the cost of solicitation of proxies, including the
cost of printing, preparing, assembling and mailing the Notice of Meeting,
Combined Prospectus/Proxy Statement and form of proxy. In addition to
solicitations by mail, proxies may also be solicited by officers and regular
employees of JPF by personal interview, by telephone or by telegraph without
additional remuneration thereof. Professional solicitors may also be retained.
28
ABSTENTIONS AND BROKER NON-VOTES
In tallying the Merging Fund Shareholder votes, abstentions and broker
non-votes (i.e., proxies sent in by brokers and other nominees that cannot be
voted on a proposal because instructions have not been received from the
beneficial owners) will be counted for purposes of determining whether or not a
quorum is present for purposes of convening the Meeting. Abstentions and broker
non-votes will be considered to be a vote against each proposal.
INTERESTED PARTIES
On the record date, the Trustees and officers of JPF as a group owned
less than 1% of the outstanding shares of the Merging Fund. On the record date,
the name, address and percentage ownership of the persons who owned beneficially
more than 5% of the shares of the Merging Fund or any class thereof and the
percentage of shares of the Surviving Fund or any class thereof that would be
owned by such persons upon consummation of the Reorganization based upon their
holdings at _______, 2001 are as follows:
Percentage of
Amount of Merging Fund Percentage of Surviving
Shares Owned on Record Fund Owned Upon
Name and Address Owned Date Consummation
- -------------------------------- ------------- ------------------------ --------------------------------
On the record date, the Trustees and officers of JPMF as a group owned
less than 1% of the outstanding shares of the Surviving Fund. On the record
date, the name, address and share ownership of the persons who owned
beneficially more than 5% of shares of the Surviving Fund or any class thereof
and the percentage of shares of the Surviving Fund or any class thereof that
would be owned by such person upon consummation of the Reorganization based upon
their holdings at _________, 2001 were as follows:
Amount of Percentage of
Shares Surviving Fund Owned Percentage of Surviving Fund
Name and Address Owned on Record Date Owned Upon Consummation
- -------------------------------- ------------- ------------------------ --------------------------------
ADDITIONAL INFORMATION ABOUT JPF
Information about the Merging Fund is included in its Prospectus, which
is incorporated by reference herein. Additional information about the Merging
Fund is also included in JPF's Statement of Additional Information which has
been filed with the Commission and which is incorporated herein by reference.
Copies of the Statement of Additional information may be
29
obtained without charge by calling 1-800-521-5411. JPF is subject to the
requirements of the 1940 Act and, in accordance with such requirements, files
reports and other information with the Commission. These materials can be
inspected and copied at the Public Reference Facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York, NY
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates, and are also available
on the Commission's web site at http://www.sec.gov.
ADDITIONAL INFORMATION ABOUT JPMF
Information about the Surviving Fund is included in its Prospectus,
which is incorporated by reference and enclosed herein. Additional information
about the Surviving Fund is also included in JPMF's Statement of Additional
Information which has been filed with the 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 each of the Merging Fund and the Surviving Fund for the fiscal year
ended June 30, 2000 and the audited financial statements, notes thereto and
supplementary data of the Master Portfolio for the fiscal year ended June 30,
2000, are incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement. The audited
financial highlights, financial statements, notes thereto and supplementary
data, as applicable, for the Merging Fund, the Surviving Fund and the Master
Portfolio have been incorporated herein by reference in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of each of the Merging Fund and the Surviving Fund for the fiscal period
ended December 31, 2000, and the unaudited financial statements, notes thereto
and supplementary data of the Master Portfolio for the fiscal period ended
December 31, 2000, are incorporated by reference herein and into the Statement
of Additional Information related to this Combined Prospectus/Proxy Statement.
30
OTHER BUSINESS
The JPF Board knows of no other business to be brought before the
Meeting. However, if any other matters come before the Meeting, it is the
intention of the JPF Board that proxies that do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
LITIGATION
Neither JPF nor JPMF is involved in any litigation that would have any
material adverse effect upon either the Merging Fund or the Surviving Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to JPF in writing at the address
on the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-521-5411.
* * *
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.
31
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 Diversified Fund (the
"Transferor Portfolio"), J.P. Morgan Institutional Funds (the "Acquiring
Trust"), a Massachusetts business trust, on behalf of the J.P. Morgan
Institutional Diversified Fund (the "Acquiring Portfolio") and J.P. Morgan Chase
& Co.
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends
to provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and
the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR
THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE TRANSFEROR
PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio listed
above, will convey, transfer and deliver to the Acquiring Portfolio all of the
then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Select Class share class in exchange for Shares of the
Transferor Portfolio, with the amounts of shares to be determined by the
parties. Any shares of beneficial interest (if any) of the Transferor Portfolio
("Transferor Portfolio
A-1
Shares") held in the treasury of the Transferor Trust at the Effective Time of
the Reorganization shall thereupon be retired. Such transactions shall take
place on the date provided for in Section 1(b) hereof (the "Exchange Date"). All
computations for the Transferor Portfolio and the Acquiring Portfolio shall be
performed by The Chase Manhattan Bank (the "Custodian"), as custodian and
pricing agent for the Transferor Portfolio and the Acquiring Portfolio. The
determination of said Custodian shall be conclusive and binding on all parties
in interest.
(ii) As of the Effective Time of the Reorganization, the Transferor
Trust will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio Shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the
shares of the Transferor Portfolio held by the Transferor Portfolio
shareholders. Such liquidation and distribution will be accomplished by the
transfer of the Acquiring Portfolio Shares then credited to the account of the
Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts
on the share records of the Acquiring Portfolio in the names of the Transferor
Portfolio Shareholders and representing the respective pro rata number of the
Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will
not issue certificates representing the Acquiring Portfolio Shares in connection
with such exchange.
(iii) As soon as practicable after the Effective Time of the
Reorganization, the Transferor Trust shall take all the necessary steps under
Massachusetts law, the Transferor Trust's Declaration of Trust and any other
applicable law to effect a complete termination of the Transferor Portfolio.
(b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION.
(i) Subject to the satisfaction of the conditions to the
Reorganization specified in this Plan, the Reorganization shall occur as of the
close of regularly scheduled trading on the New York Stock Exchange (the
"Effective Time of the Reorganization") on August 11, 2001, or such later date
as may be agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to
take place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New
York Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the Acquiring
Portfolio duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof.
A-2
(c) VALUATION.
(i) The net asset value of the shares of the Acquiring Portfolio and
the net value of the assets of the Transferor Portfolio to be transferred in
exchange therefore shall be determined as of the Effective Time of the
Reorganization. The net asset value of the Acquiring Portfolio Shares shall be
computed by the Custodian in the manner set forth in the Acquiring Trust's
Declaration of Trust or By-laws and then current prospectus and statement of
additional information and shall be computed to not less than two decimal
places. The net value of the assets of the Transferor Portfolio to be
transferred shall be computed by the Custodian by calculating the value of the
assets transferred by the Transferor Portfolio and by subtracting therefrom the
amount of the liabilities assigned and transferred to the Acquiring Portfolio,
said assets and liabilities to be valued in the manner set forth in the
Transferor Trust's Declaration of Trust or By-laws and then current prospectus
and statement of additional information.
(ii) The number of Select Class shares of the Acquiring Portfolio to
be issued (including fractional shares, if any) by the Acquiring Portfolio in
exchange for the Transferor Portfolio's assets attributable to the Transferor
Portfolio's shares shall be determined by an exchange ratio computed by dividing
the net value of the Transferor Portfolio's assets attributable to its shares by
the net asset value per share of the Select Class shares of the Acquiring
Portfolio, both as determined in accordance with Section 1(c)(i). All
computations of value shall be made by the Custodian in accordance with its
regular practice as pricing agent for the Acquiring Portfolio and the Transferor
Portfolio.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST
The Acquiring Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Acquiring Trust is a business
trust that is duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has the power to carry on its
business as it is now being conducted. The Acquiring Portfolio is a validly
existing series of shares of such business trust representing interests therein
under the laws of Massachusetts. Each of the Acquiring Portfolio and the
Acquiring Trust have all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Acquiring Trust is
registered under the Investment Company Act of 1940, as amended (the "Act") as
an open-end investment company of the management type; such registration has not
been revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement
of additional information of the Acquiring Trust, as amended, included in the
Acquiring Trust's registration statement on Form N-1A filed with the Securities
and Exchange Commission, comply in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the Act and
do not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
A-3
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of December 31, 2000 there
were outstanding 45,376,091 shares of the Acquiring Portfolio, and no shares of
such Portfolio were held in the treasury of the Acquiring Trust. All of the
outstanding shares of the Acquiring Trust have been duly authorized and are
validly issued, fully paid and nonassessable (except as disclosed in the
Acquiring Trust's prospectus and recognizing that under Massachusetts law,
shareholders of an Acquiring Trust portfolio could, under certain circumstances,
be held personally liable for the obligations of such Acquiring Trust
portfolio). Because the Acquiring Trust is an open-end investment company
engaged in the continuous offering and redemption of its shares, the number of
outstanding shares may change prior to the Effective Time of the Reorganization.
All of the issued and outstanding shares of the Acquiring Portfolio have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) FINANCIAL STATEMENTS.The financial statements of the Acquiring
Trust with respect to the Acquiring Portfolio and The Diversified Portfolio for
the fiscal year ended June 30, 2000, which have been audited by
PricewaterhouseCoopers LLP, fairly present the financial position of the
Acquiring Portfolio and The Diversified Portfolio as of the dates thereof and
the respective results of operations and changes in net assets for each of the
periods indicated in accordance with generally accepted accounting principles
("GAAP"). The financial statements of the Acquiring Trust with respect to the
Acquiring Portfolio and for The Diversified Portfolio for the fiscal period
ended December 31, 2000 fairly present the financial position of the Acquiring
Portfolio and The Diversified Portfolio as of the dates thereof and the
respective results of operations and changes in net assets for each of the
periods indicated in accordance with GAAP.
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio
Shares to be issued in connection with the Reorganization will be duly
authorized and upon consummation of the Reorganization will be validly issued,
fully paid and nonassessable (except as disclosed in the Trust's prospectus and
recognizing that under Massachusetts law, shareholders of an Acquiring Trust
portfolio could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf
of the Acquiring Portfolio, has the power to enter into this Plan and to carry
out its obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Acquiring Trust's Board of Trustees and no other proceedings by the
Acquiring Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Acquiring Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(h) LIABILITIES. There are no liabilities of the Acquiring
Portfolio, whether actual or contingent and whether or not determined or
determinable, other than liabilities disclosed or provided for in the Acquiring
Trust's financial statements with respect to the Acquiring Portfolio and
liabilities incurred in the ordinary course of business subsequent to
December 31, 2000 or otherwise previously disclosed to the Acquiring Trust with
respect to the Acquiring Portfolio,
A-4
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 December 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 and has qualified as a "regulated investment company" under
Subchapter M of the Code as of and since its first taxable year and intends to
continue to so qualify.
(m) NO APPROVALS REQUIRED. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders (referred to in Section 6(a) hereof), no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the consummation by the Acquiring Trust of the Reorganization,
except such as have been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a business
trust that is duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has the power to carry on its
business as it is now being conducted. The Transferor Portfolio is a validly
existing series of shares of such business trust representing interests therein
under the laws of Massachusetts. Each of Transferor Portfolio and the Transferor
Trust has all necessary federal, state and local authorization to own all of its
properties and assets and to carry on its business as now being conducted.
A-5
(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 December 31, 2000
there were outstanding 21,535,238 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 Diversified
Portfolio for the fiscal year ended June 30, 2000 which have been audited by
PricewaterhouseCoopers LLP fairly present the financial position of the
Transferor Portfolio and The Diversified Portfolio as of the dates thereof and
the respective results of operations and changes in net assets for each of the
periods indicated in accordance with GAAP. The financial statements of the
Transferor Trust with respect to the Transferor Portfolio and the Diversified
Portfolio for the fiscal period ended December 31, 2000 fairly present the
financial position of the Transferor Portfolio and The Diversified Portfolio as
of the dates thereof and the respective results of operations and changes in
net assets for each of the periods indicated in accordance with GAAP.
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on
behalf of the Transferor Portfolio, has the power to enter into this Plan and
to carry out its obligations hereunder. The execution and delivery of this Plan
and the consummation of the transactions contemplated
A-6
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 December 31, 2000 or otherwise previously disclosed to the
Transferor Trust with respect to the Transferor Portfolio, none of which has
been materially adverse to the business, assets or results of operations of the
Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since December 31, 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 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
A-7
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 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.
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 Reorganization,
the Prospectus and Statement of Additional Information, as amended or
A-9
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 December 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 laws
considered to be necessary shall have been obtained (collectively, the
"Regulatory Approvals").
A-10
(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 the immediately
prior to the Reorganization (provided the shares of the Transferor Portfolio
were held as a capital asset on such holder date of the Reorganization); and
(v) the holding period and tax basis of the assets of the Transferor Portfolio
acquired by the Acquiring Portfolio will be the same as the holding period and
tax basis of those assets to the Transferor Portfolio immediately prior to the
Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the consummation
of the Reorganization are subject to the satisfaction of the following
conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The
Transferor Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor
Trust shall have complied with each of its covenants contained herein, each of
the representations and warranties contained herein shall be true in all
material respects as of the Effective Time of the Reorganization (except as
otherwise contemplated herein), and there shall have been no material adverse
change (as described in Section 3(h)) in the financial condition, results of
operations, business, properties or assets of the Transferor Portfolio since
December 31, 2000.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the
Acquiring Portfolio in the Reorganization shall have been approved for
acquisition by J.P. Morgan Investment Management Inc. ("JPMIM"), in its
capacity as investment adviser to the Acquiring Portfolio, as consistent with
the investment policies of the Acquiring Portfolio.
A-11
(d) REGULATORY APPROVAL. The Regulatory Approvals shall have
been obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on
behalf of the Transferor Portfolio shall have distributed to the shareholders
of the Transferor Portfolio all of the Transferor Portfolio's investment
company taxable income (determined without regard to the deduction for
dividends paid) as defined in Section 852(b)(2) of the Code for its taxable
year ending on the Exchange Date and all of its net capital gain as such term
is used in Section 852(b)(3) of the Code, after reduction by any capital loss
carry forward, for its taxable year ending on the Exchange Date.
(f) TAX OPINION. The Acquiring Trust shall have received the Tax
Opinion.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS,
WARRANTIES AND REPRESENTATIONS
(a) AMENDMENTS. The parties hereto may, by agreement in writing
authorized by their respective Board of Trustees amend this Plan at any time
before or after approval hereof by the shareholders of the Transferor
Portfolio, but after such approval, no amendment shall be made which
substantially changes the terms hereof.
(b) WAIVERS. At any time prior to the Effective Time of the
Reorganization, either the Transferor Trust or the Acquiring Trust may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein, except that conditions set forth in Sections 6(c) and 7(d)
may not be waived.
(c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on
behalf of the Transferor Portfolio, may terminate this Plan with respect to the
Transferor Portfolio at any time prior to the Effective Time of the
Reorganization by notice to the Acquiring Trust and JPMIM if (i) a material
condition to the performance of the Transferor Trust hereunder or a material
covenant of the Acquiring Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material
default or material breach of this Plan shall be made by the Acquiring Trust.
In addition, this Plan may be terminated by the Transferor Trust at any time
prior to the Effective Time of the Reorganization, whether before or after
approval of this Plan by the shareholders of the Transferor Portfolio, without
liability on the part of any party hereto, its Trustees, officers or
shareholders or 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
A-12
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 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 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.
if to the Acquiring Trust (for itself or on behalf of the Acquiring
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
A-13
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to
have been material and relied upon by the Transferor Trust and the Acquiring
Trust notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each
of which shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance
with the laws of The State of New York.
(d) This Plan shall bind and inure to the benefit of the
Transferor Trust, the Transferor Portfolio, the Acquiring Trust and the
Acquiring Portfolio and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder shall
be made by any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Plan.
(e) The name "J.P. Morgan Funds" is the designation of its
Trustees under a Declaration of Trust dated November 4, 1992, as amended, and
all persons dealing with the Transferor Trust must look solely to the
Transferor Trust's property for the enforcement of any claims against the
Transferor Trust, as none of the Transferor Trustees, officers, agents or
shareholders assumes any personal liability for obligations entered into on
behalf of the Transferor Trust. No series of the Transferor Trust shall be
liable for claims against any other series of the Transferor Trust.
(f) The name "J.P. Morgan Institutional Funds" is the designation
of its Trustees under a Declaration of Trust dated November 4, 1992, as
amended, and all persons dealing with the Acquiring Trust must look solely to
the Acquiring Trust's property for the enforcement of any claims against the
Acquiring Trust, as none of the Acquiring Trustees, officers, agents or
shareholders 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-14
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the
date first above written.
J.P. MORGAN INSTITUTIONAL FUNDS
on behalf of J.P. Morgan Institutional
Diversified Fund
By:
--------------------------------------
Name:
Title:
J.P. MORGAN FUNDS
on behalf of J.P. Morgan Diversified Fund
By:
--------------------------------------
Name:
Title:
Agreed and acknowledged with respect to
Section 9:
J.P. MORGAN CHASE & CO.
By:
--------------------------------------
Name:
Title:
A-15
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
J.P. MORGAN DIVERSIFIED 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 JPMorgan
Diversified Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPF"),
to be held on July 3, 2001. Copies of the Combined Prospectus/Proxy Statement
may be obtained at no charge by calling J.P. Morgan Diversified Fund at
1-800-521-5411.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Prospectus/Proxy Statement.
Further information about the Surviving Fund and the Merging Fund is
contained in JPMF's Statement of Additional Information, which are incorporated
herein by reference.
The date of this Statement of Additional Information is May 12, 2001.
1
GENERAL INFORMATION
The Shareholders of the Merging Fund are being asked to consider and
vote on two proposals.
With respect to an Agreement and Plan of Reorganization (the
"Reorganization Plan") dated as of __________, 2001 by and among JPF, on behalf
of the Merging Fund, and JPMF, on behalf of the Surviving Fund, and JPMC, and
the transactions contemplated thereby, the Reorganization Plan contemplates the
transfer of all of the assets and liabilities of the Merging Fund to the
Surviving Fund in exchange for shares issued by JPMF in the Surviving Fund that
will have an aggregate net asset value equal to the aggregate net asset value of
the shares of the Merging Fund that are outstanding immediately before the
Effective Time of the Reorganization.
Following the exchange, the Merging Fund will make a liquidating
distribution of the Surviving Fund shares to its Shareholders, so that a holder
of Shares in the Merging Fund will receive Select Class Shares of the Surviving
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the Effective Time of the
Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees of JPF.
A Special Meeting of Shareholders of the Merging Fund to consider the
proposals and the related transaction will be held at the offices of J.P. Morgan
Chase & Co., 1211 Avenue of the Americas, 41st Floor, New York, NY, on July 3,
2001 at 9:00 a.m., Eastern time. For further information about the transaction,
see the Combined Prospectus/Proxy Statement.
2
FINANCIAL STATEMENTS
The audited financial highlights, financial statements and notes
thereto of each of the Merging Fund and the Surviving Fund contained in their
respective Annual Reports dated June 30, 2000, and the audited financial
statements, notes thereto and supplementary data of the Master Portfolio
contained in its Annual Report dated June 30, 2000, are incorporated by
reference into this Statement of Additional Information related to this Combined
Prospectus/Proxy Statement. The audited financial highlights, financial
statements and notes thereto and supplementary data, as applicable, of the
Surviving Fund's, the Merging Fund's and the Master Portfolio's Annual Report
have been audited by PricewaterhouseCoopers LLP, whose reports thereon also
appear in such Annual Reports and are also incorporated herein by reference. The
financial highlights, financial statements, notes thereto and supplementary
data, as applicable, for the Merging Fund, the Surviving Fund and the Master
Portfolio for the fiscal year ended June 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.
The unaudited financial highlights, financial statements and notes
thereto of the Merging Fund and the Surviving Fund contained in their respective
Semi-Annual Reports dated December 31, 2000, and the unaudited financial
statements, notes thereto and supplementary data of the Master Portfolio
contained in its Semi-Annual Report dated December 31, 2000, are incorporated by
reference into this Statement of Additional Information related to this Combined
Prospectus/Proxy Statement.
3
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 4.9%
$2,075,700 $2,075,700 AmeriCredit Automobile Receivables
Trust, Series 2000 A, Class A2
SEQ, 6.54%, 10/14/02 $ 2,075,377 $ 2,075,377
10,000,000 10,000,000 Associates Automobile Receivables
Trust, Series 2000-2, Class A3
SEQ, 6.82%, 2/15/05 10,153,130 10,153,130
3,204,198 3,204,198 Capital Auto Receivables Asset Trust,
Series 1999-1, Class A2 SEQ, 5.58%,
6/15/02 3,194,168 3,194,168
5,050,000 5,050,000 CNH Equipment Trust, Series 2000 A,
Class A3 SEQ, 7.14%, 8/15/04 5,116,761 5,116,761
3,200,000 3,200,000 Daimler-Benz Vehicle Trust, Series 1998 A,
Class A4 SEQ, 5.22%, 12/22/03 3,174,976 3,174,976
1,894,058 1,894,058 EQCC Home Equity Loan Trust, Series
1997-3, Class A8, 6.41%, 12/15/04 1,906,483 1,906,483
3,500,000 3,500,000 First USA Credit Card Master Trust,
Series 1997-6, Class A, 6.42%,
3/17/05 3,522,960 3,522,960
5,000,000 5,000,000 Ford Credit Auto Owner Trust, Series
2000 D, Class A4 SEQ, 7.13%, 7/15/04 5,096,095 5,096,095
4,810,000 4,810,000 Green Tree Home Improvement Loan Trust,
Series 1999 E, Class A3 SEQ, 7.18%,
6/15/15 4,808,499 4,808,499
6,700,000 6,700,000 LB Commercial Conduit Mortgage Trust,
Series 1998 C1, Class A3 SEQ, 6.48%,
1/18/08 6,708,375 6,708,375
3,265,000 3,265,000 Residential Asset Securities Corp., Series
2000 KS5, Class AI1 SEQ, 7.21%, 9/25/16 3,278,354 3,278,354
-------------- --------------
TOTAL ASSET-BACKED SECURITIES 49,035,178 49,035,178
(Cost $48,316,519) -------------- --------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 5.7%
5,300,000 5,300,000 Asset Securitization Corp., Series 1997 D5,
Class A1D SEQ, 6.85%, 2/14/41 5,339,750 5,339,750
8,000,000 8,000,000 Chase Manhattan Bank-First Union National
Bank, Series 1999-1, Class A2 SEQ, 7.44%,
7/15/09 8,462,504 8,462,504
3,600,000 3,600,000 Commercial Mortgage Acceptance Corp.,
Series 1998 C2, Class A2 SEQ, 6.03%,
3/15/08 3,520,127 3,520,127
480,000 480,000 CS First Boston Mortgage Securities Corp.,
Series 1999 C1, Class A2 SEQ, 7.29%,
9/15/09 501,900 501,900
5,470,705 5,470,705 First Nationwide Trust, Series 1999-4, Class
3PA1, SEQ, 6.50%, 10/19/29 5,364,683 5,364,683
8,000,000 8,000,000 First Union Commercial Mortgage Securities,
Inc., Series 1997 C1, Class A3 SEQ,
7.38%, 4/18/07 8,402,504 8,402,504
199,528 199,528 GE Capital Mortgage Services, Inc., Series
1995-10, Class B2, 7.00%, 10/25/10 191,377 191,377
3,000,000 3,000,000 LB-UBS Commerical Mortgage Trust, Series
2000 C3, Class A2 SEQ, 7.95%, 1/15/10 3,277,500 3,277,500
6,000,000 6,000,000 Merrill Lynch Mortgage Investors, Inc.,
Series 1998 C2, Class A2 SEQ, 6.39%,
2/15/30 5,969,064 5,969,064
$4,598,397 $4,598,397 Morgan Stanley Capital I, Series 1999 WF1,
Class A1 SEQ, 5.91%, 4/15/08 4,571,124 4,571,124
120,000 120,000 PNC Mortgage Acceptance Corp., Series
2000 C2, Class A2 SEQ, 7.30%, 9/12/10 125,426 125,426
8,220,000 8,220,000 PNC Mortgage Acceptance Corp., Series
2000 C1, Class A2 SEQ, 7.61%, 2/15/10 8,751,735 8,751,735
2,500,000 2,500,000 SACO I Inc. Series 1997-2, Class 1A5 SEQ,
7.00%, 8/25/36 2,402,735 2,402,735
-------------- --------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 56,880,429 56,880,429
(Cost $54,444,185) -------------- --------------
COMMON STOCKS - 59.7%
CAPITAL MARKETS - 1.1%
SECURITIES & ASSET MANAGEMENT - 1.1%
3,800 3,800 American Capital Strategies 95,713 95,713
12,200 12,200 Edwards (A.G.), Inc. 578,738 578,738
7,800 7,800 Espeed Inc.+ 122,363 122,363
13,931 13,931 Fimatex(i)(s)+ 90,118 90,118
38,700 38,700 Goldman Sachs Group, Inc. (The) 4,138,480 4,138,480
9,000 9,000 John Hancock Financial Services, Inc. 338,625 338,625
14,100 14,100 Lehman Brothers Holdings Inc. 953,512 953,512
50,600 50,600 Merrill Lynch & Co., Inc. 3,450,287 3,450,287
11,100 11,100 Ocwen Financial Corp.+ 70,763 70,763
5,700 5,700 Stilwell Financial Inc. 224,794 224,794
30,600 30,600 TD Waterhouse Group, Inc.+ 405,450 405,450
3,700 3,700 W.P. Stewart & Co., Ltd.+ 96,200 96,200
-------------- --------------
10,565,043 10,565,043
-------------- --------------
COMPUTER HARDWARE - 3.3%
COMPUTER HARDWARE & BUSINESS MACHINES - 3.3%
13,258 13,258 Avaya Inc.+ 136,723 136,723
349,400 349,400 Cisco Systems Inc.+ 13,364,550 13,364,550
151,800 151,800 Compaq Computer Corp. 2,284,590 2,284,590
120,300 120,300 Dell Computer Corp.+ 2,097,731 2,097,731
88,500 88,500 EMC Corp. (Mass.)+ 5,885,250 5,885,250
34,000 34,000 Hewlett-Packard Co. 1,073,125 1,073,125
9,200 9,200 Lexar Media Inc.+ 8,625 8,625
6,800 6,800 M-Systems Flash Disk Pioneers+ 94,775 94,775
14,400 14,400 Network Appliances, Inc.+ 924,300 924,300
7,800 7,800 Optimal Robotics Corp.+ 261,788 261,788
7,800 7,800 Pitney Bowes, Inc. 258,375 258,375
16,100 16,100 Quantum Corp. - DLT & Storage Systems+ 214,331 214,331
2,500 2,500 Redback Networks Inc.+ 102,500 102,500
214,900 214,900 Sun Microsystems, Inc.+ 5,990,338 5,990,338
7,784 7,784 Trintech Group Plc ADR(i)(s)+ 89,160 89,160
-------------- --------------
32,786,161 32,786,161
-------------- --------------
CONSUMER CYCLICAL - 2.2%
AIRLINES - 0.3%
8,200 8,200 AMR Corp.+ 321,338 321,338
21,000 21,000 Singapore Airlines Ltd.(i)(s) 208,305 208,305
The Accompanying Notes are an Integral Part of the Financial Statements.
4
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
10,800 10,800 SkyWest, Inc. $ 310,500 $ 310,500
54,400 54,400 Southwest Airlines Co. 1,824,031 1,824,031
-------------- --------------
2,664,174 2,664,174
-------------- --------------
APPAREL & TEXTILES - 0.1%
3,100 3,100 Coach, Inc.+ 89,125 89,125
14,200 14,200 Jones Apparel Group, Inc.+ 457,063 457,063
8,400 8,400 NIKE, Inc. 468,825 468,825
4,000 4,000 Skechers U.S.A. Inc.+ 62,000 62,000
4,800 4,800 Vans, Inc.+ 81,300 81,300
24,400 24,400 Wellman Inc. 344,650 344,650
-------------- --------------
1,502,963 1,502,963
-------------- --------------
CONSUMER DURABLES - 0.5%
41,704 41,704 Carphone Warehouse Group Plc(i)(s)+ 121,468 121,468
6,908 6,908 Christian Dior S.A.(i)(s) 331,099 331,099
5,000 5,000 Fuji Photo Film Co. Ltd.(i)(s) 209,282 209,282
2,784 2,784 Genset S.A.(i)(s)+ 115,009 115,009
36,826 36,826 Koninklijke Philips Electronics
NV(i)(s) 1,349,123 1,349,123
45,000 45,000 Matsushita Electric Industrial Co.,
Ltd.(i)(s) 1,075,744 1,075,744
2,600 2,600 Nintendo Co., Ltd.(i)(s) 409,580 409,580
4,000 4,000 Pioneer Corp(i)(s) 106,830 106,830
9,600 9,600 Sony Corp.(i)(s) 664,098 664,098
209 209 The Swatch Group AG, B Shares(i)(s) 261,169 261,169
-------------- --------------
4,643,402 4,643,402
-------------- --------------
HOTELS - 0.2%
57,700 57,700 Hilton Hotels Corp. 605,850 605,850
22,000 22,000 Marriott International, Inc. 929,500 929,500
26,200 26,200 Starwood Hotels & Resorts Worldwide, Inc. 923,550 923,550
-------------- --------------
2,458,900 2,458,900
-------------- --------------
MOTOR VEHICLES & PARTS - 1.0%
2,500 2,500 Borg-Warner Automotive, Inc. 100,000 100,000
6,300 6,300 Daimlerchrysler AG(i)(s) 264,634 264,634
24,900 24,900 Dana Corp. 381,281 381,281
65,500 65,500 Delphi Automotive Systems 736,875 736,875
87,600 87,600 Ford Motor Co. 2,053,124 2,053,124
4,000 4,000 Fuji Heavy Industries Ltd.(i)(s) 24,308 24,308
57,200 57,200 General Motors Corp. 2,913,624 2,913,624
4,500 4,500 Gentex Corp.+ 83,813 83,813
11,000 11,000 Honda Motor Co., Ltd.(i)(s) 410,333 410,333
11,700 11,700 Johnson Controls, Inc. 608,400 608,400
7,400 7,400 Monaco Coach Corp.+ 130,888 130,888
114,000 114,000 Nissan Motor Co., Ltd.(i)(s)+ 656,848 656,848
2,196 2,196 PSA Peugeot Citreon(i)(s) 499,569 499,569
29,500 29,500 Toyota Motor Corp.(i)(s) 942,863 942,863
-------------- --------------
9,806,560 9,806,560
-------------- --------------
PUBLISHING - 0.0%(z)
2,100 2,100 Knight-Ridder, Inc. 119,438 119,438
5,400 5,400 New York Times Co. (The) Cl A 216,338 216,338
-------------- --------------
335,776 335,776
-------------- --------------
RESTAURANTS - 0.1%
1,600 1,600 California Pizza Kitchen Inc.+ 45,200 45,200
31,700 31,700 McDonald's Corp. 1,077,800 1,077,800
-------------- --------------
1,123,000 1,123,000
-------------- --------------
22,534,775 22,534,775
-------------- --------------
CONSUMER SERVICES - 2.0%
ENTERTAINMENT - 0.4%
5,600 5,600 American Classic Voyages Co.+ 78,400 78,400
84,200 84,200 Viacom, Inc. Cl B+ 3,936,349 3,936,349
-------------- --------------
4,014,749 4,014,749
-------------- --------------
LEISURE - 0.5%
18,415 18,415 Amadeus Global Travel Distribution
S.A.(i)(s)+ 136,587 136,587
7,500 7,500 Anchor Gaming+ 292,500 292,500
6,800 6,800 Concord Camera Corp.+ 112,200 112,200
30,600 30,600 Eastman Kodak Co. 1,204,875 1,204,875
50,918 50,918 Granada Compass Plc(i)(s)+ 545,686 545,686
10,500 10,500 Harley-Davidson, Inc. 417,375 417,375
27,500 27,500 Hasbro, Inc. 292,188 292,188
71,300 71,300 Hilton Group Plc(i)(s) 222,580 222,580
14,000 14,000 International Game Technology+ 672,000 672,000
8,400 8,400 Mattel, Inc. 121,296 121,296
1,300 1,300 Namco Ltd.(i)(s) 23,905 23,905
1,600 1,600 Oriental Land Co., Ltd.(i)(s) 107,180 107,180
7,600 7,600 Penn National Gaming Inc.+ 77,425 77,425
10,568 10,568 Scottish & Newcastle Plc(i)(s) 74,189 74,189
12,400 12,400 Station Casinos, Inc.+ 185,225 185,225
7,300 7,300 WMS Industries Inc.+ 146,913 146,913
-------------- --------------
4,632,124 4,632,124
-------------- --------------
MEDIA - 1.1%
69,800 69,800 AT&T Corp. - Liberty Media Group Cl A+ 946,663 946,663
27,012 27,012 British SKY Broadcasting Plc(i)(s) 452,285 452,285
87,100 87,100 Comcast Corp. Cl A+ 3,636,425 3,636,425
11,400 11,400 Fox Entertainment Group, Inc. Cl A+ 203,775 203,775
10,100 10,100 Gannett Co., Inc. 636,931 636,931
8,200 8,200 HEARST-ARGYLE Television Inc.+ 167,588 167,588
11,981 11,981 Pearson Plc(i)(s) 284,538 284,538
15,000 15,000 Singapore Press Holdings(i)(s) 221,453 221,453
85,300 85,300 Time Warner Inc. 4,456,071 4,456,071
5,039 5,039 VNU NV(i)(s) 247,668 247,668
-------------- --------------
11,253,397 11,253,397
-------------- --------------
19,900,270 19,900,270
-------------- --------------
CONSUMER STABLE - 3.7%
FOOD & BEVERAGE - 1.8%
15,000 15,000 Ajinomoto Co., Inc.(i)(s) 195,053 195,053
49,000 49,000 Asahi Breweries, Ltd.(i)(s) 499,869 499,869
34,415 34,415 British American Tobacco Plc(i)(s) 262,032 262,032
29,600 29,600 Cadbury Schweppes Plc(i)(s) 204,702 204,702
59,600 59,600 Coca-Cola Co. (The) 3,631,874 3,631,874
83,167 83,167 Foster's Brewing Group Ltd.(i)(s) 218,119 218,119
20,900 20,900 Gallagher Group Plc(i)(s) 132,674 132,674
The Accompanying Notes are an Integral Part of the Financial Statements.
5
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
1,900 1,900 General Mills, Inc. $ 84,669 $ 84,669
2,629 2,629 Groupe Danone(i)(s) 396,411 396,411
7,412 7,412 Heineken Holding NV(i)(s) 313,154 313,154
4,208 4,208 Heineken NV(i)(s) 254,629 254,629
36,700 36,700 Heinz (H.J.) Co. 1,740,956 1,740,956
2,000 2,000 Hershey Foods Corp. 128,750 128,750
11,000 11,000 KAO Corp.(i)(s) 319,790 319,790
7,900 7,900 Keebler Foods Co. 327,356 327,356
24,700 24,700 Kellogg Co. 648,375 648,375
114,916 114,916 Lion Nathan Ltd.(i)(s) 258,827 258,827
808 808 Nestle S.A.(i)(s)+ 1,884,752 1,884,752
17,000 17,000 Nippon Meat Packers, Inc.(i)(s) 231,629 231,629
6,610 6,610 Numico NV(i)(s) 332,641 332,641
27,800 27,800 PepsiCo, Inc. 1,377,838 1,377,838
13,000 13,000 Quaker Oats Co. (The) 1,265,875 1,265,875
24,800 24,800 Reckitt Benckiser Plc(i)(s) 341,532 341,532
28,000 28,000 Snow Brand Milk Products Co.,
Ltd.(i)(s) 96,357 96,357
42,700 42,700 Unilever NV New York Shares(i) 2,687,431 2,687,431
35,900 35,900 Unilever Plc(i)(s) 307,255 307,255
-------------- --------------
18,142,550 18,142,550
-------------- --------------
HOME PRODUCTS - 1.0%
8,200 8,200 Alberto-Culver Co. Cl B 351,063 351,063
16,500 16,500 Clorox Co. 585,750 585,750
17,200 17,200 Estee Lauder Companies, Inc. 753,575 753,575
91,900 91,900 Gillette Co. 3,319,888 3,319,888
69,600 69,600 Procter & Gamble Co. (The) 5,459,249 5,459,249
-------------- --------------
10,469,525 10,469,525
-------------- --------------
TOBACCO - 0.9%
203,800 203,800 Philip Morris Companies Inc. 8,967,199 8,967,199
-------------- --------------
37,579,274 37,579,274
-------------- --------------
ENERGY - 4.4%
ENERGY RESERVES & PRODUCTION - 3.0%
6,500 6,500 Abraxas Petroleum Corp.+ 28,438 28,438
9,100 9,100 Anadarko Petroleum Corp. 646,828 646,828
300 300 Apache Corp. 21,019 21,019
69,500 69,500 Chevron Corp. 5,868,406 5,868,406
3,200 3,200 Devon Energy Corp. 195,104 195,104
3,000 3,000 Evergreen Resources, Inc.+ 115,875 115,875
154,000 154,000 Exxon Mobil Corp. 13,388,375 13,388,375
10,400 10,400 Newfield Exploration Co.+ 493,350 493,350
143,300 143,300 Royal Dutch Petroleum Co. New York
Shares(i) 8,678,606 8,678,606
8,500 8,500 Spinnaker Exploration Co.+ 361,250 361,250
5,900 5,900 Westport Resources Corp.+ 129,431 129,431
300 300 Williams Companies, Inc. (The) 11,981 11,981
-------------- --------------
29,938,663 29,938,663
-------------- --------------
OIL REFINING - 0.3%
5,000 5,000 Conoco Inc. Cl A 143,125 143,125
40,200 40,200 Texaco Inc. 2,497,425 2,497,425
-------------- --------------
2,640,550 2,640,550
-------------- --------------
OIL SERVICES - 1.1%
33,600 33,600 Baker Hughes Inc. 1,396,500 1,396,500
245,982 245,982 BP Amoco Plc(i)(s) 1,984,022 1,984,022
23,426 23,426 Broken Hill Proprietary Co.(i)(s)+ 246,743 246,743
11,900 11,900 Cooper Cameron Corp.+ 786,144 786,144
6,200 6,200 Core Laboratories NV+ 169,338 169,338
2,400 2,400 Diamond Offshore Drilling, Inc. 96,000 96,000
111,211 111,211 ENI SpA(i)(s) 710,013 710,013
6,200 6,200 Global Industries, Ltd.+ 84,863 84,863
48,200 48,200 Global Marine Inc.+ 1,367,675 1,367,675
4,300 4,300 Gulf Island Fabrication, Inc.+ 78,206 78,206
2,600 2,600 Halliburton Co. 94,250 94,250
28,800 28,800 McDermott International, Inc. 309,600 309,600
14,300 14,300 National-Oilwell, Inc.+ 553,231 553,231
22,840 22,840 Repsol YPF S.A.(i)(s) 364,977 364,977
11,482 11,482 Royal Dutch Petroleum Co.(i)(s) 703,516 703,516
11,393 11,393 Total Fina Elf S.A. Cl B(i)(s)+ 1,694,349 1,694,349
-------------- --------------
10,639,427 10,639,427
-------------- --------------
43,218,640 43,218,640
-------------- --------------
FINANCE - 9.5%
BANKS - 5.0%
35,800 35,800 Amsouth Bancorp. 545,950 545,950
35,100 35,100 Australia & New Zealand Banking
Group Ltd.(i)(s) 280,457 280,457
65,709 65,709 Banco Bilbao Vizcaya Argentaria
S.A.(i)(s) 977,831 977,831
58,900 58,900 Bank of America Corp. 2,702,038 2,702,038
36,000 36,000 Bank of Fukuoka Ltd.(i)(s) 153,835 153,835
45,000 45,000 Bank of Tokyo-Mitsubishi, Ltd.(i)(s) 448,030 448,030
100,700 100,700 Bank One Corp. 3,688,137 3,688,137
9,300 9,300 Banknorth Group Inc. 185,419 185,419
26,400 26,400 Barclays Plc(i)(s) 817,040 817,040
11,830 11,830 BNP Paribas(i)(s) 1,038,499 1,038,499
294,600 294,600 Citigroup Inc. 15,043,012 15,043,012
5,700 5,700 City National Corp. 221,231 221,231
20,511 20,511 Commerzbank AG(i)(s) 594,859 594,859
31,900 31,900 Commonwealth Bank of Australia(i)(s) 547,779 547,779
70,246 70,246 Credito Emiliano SpA(i)(s) 307,339 307,339
13,379 13,379 DBS Group Holdings Ltd.(i)(s) 151,227 151,227
17,667 17,667 Dresdner Bank AG(i)(s) 770,474 770,474
111,900 111,900 First Union Corp. 3,112,219 3,112,219
1,000 1,000 Fleet Boston Financial Corp. 37,563 37,563
20,900 20,900 Hang Seng Bank Ltd.(i)(s) 281,350 281,350
8,200 8,200 Hibernia Corp. Cl A 104,550 104,550
136,567 136,567 HSBC Holdings Plc(i)(s) 2,010,422 2,010,422
1,100 1,100 Irwin Financial Corp. 23,306 23,306
38,900 38,900 KeyCorp 1,089,200 1,089,200
42,465 42,465 Lloyds TSB Group Plc(i)(s) 449,070 449,070
101 101 Mizuho Holdings Inc.(i)(s) 626,165 626,165
22,300 22,300 National Commerce Bancorp. 551,925 551,925
The Accompanying Notes are an Integral Part of the Financial Statements.
6
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
10,600 10,600 Net.B@nk, Inc.+ $ 69,563 $ 69,563
7,800 7,800 Pacific Century Financial Corp. 137,963 137,963
35,100 35,100 PNC Bank Corp. 2,564,494 2,564,494
35,600 35,600 Royal Bank of Scotland Plc(i)(s) 841,213 841,213
42,000 42,000 Sumitomo Bank Ltd.(i)(s) 431,401 431,401
65,000 65,000 Sumitomo Trust & Banking Co., Ltd.(i)(s) 442,250 442,250
20,000 20,000 Summit Bancorp 763,750 763,750
8,600 8,600 SunTrust Banks, Inc. 541,800 541,800
160,800 160,800 U.S. Bancorp 4,693,349 4,693,349
10,328 10,328 UBS AG(i)(s) 1,685,749 1,685,749
106,406 106,406 Unicredito Italiano SpA(i)(s) 556,456 556,456
-------------- --------------
49,486,915 49,486,915
-------------- --------------
FINANCIAL SERVICES - 4.0%
7,300 7,300 3I Group Plc(i)(s) 134,987 134,987
1,850 1,850 Aiful Corp.(i)(s) 151,143 151,143
18,200 18,200 Allied Capital Corp. 379,925 379,925
16,400 16,400 American Express Co. 900,975 900,975
9,000 9,000 AmeriCredit Corp.+ 245,250 245,250
13,000 13,000 Amvescap Plc(i)(s) 266,796 266,796
22,100 22,100 AON Corp. 756,925 756,925
44,000 44,000 Capital One Financial Corp. 2,895,750 2,895,750
105,300 105,300 Cendant Corp.+ 1,013,513 1,013,513
32,200 32,200 CIT Group Inc. 648,025 648,025
2,295 2,295 Consors Discount-Broker AG(i)(s)+ 130,146 130,146
21,900 21,900 Countrywide Credit Industries, Inc. 1,100,475 1,100,475
10,300 10,300 Doral Financial Corp. 249,131 249,131
29,800 29,800 Fannie Mae 2,585,150 2,585,150
24,400 24,400 Federal Home Loan Mortgage Corp. 1,680,550 1,680,550
418,400 418,400 General Electric Co. (U.S.) 20,057,049 20,057,049
6,800 6,800 Household International, Inc. 374,000 374,000
18,297 18,297 ING Groep NV(i)(s) 1,461,561 1,461,561
5,000 5,000 MBNA Corp. 184,688 184,688
10,100 10,100 Medallion Financial Corp. 147,713 147,713
13,200 13,200 NextCard Inc.+ 105,600 105,600
54,000 54,000 Nomura Securities Co., Ltd.(i)(s) 971,716 971,716
1,700 1,700 Orix Corp.(i)(s) 170,595 170,595
3,300 3,300 Promise Co., Ltd.(i)(s) 234,063 234,063
59,000 59,000 Providian Financial Corp. 3,392,499 3,392,499
-------------- --------------
40,238,225 40,238,225
-------------- --------------
THRIFTS - 0.5%
5,100 5,100 Bank United Corp. 347,756 347,756
20,400 20,400 Dime Bancorp, Inc. 603,075 603,075
10,500 10,500 GreenPoint Financial Corp. 429,844 429,844
8,000 8,000 Sovereign Bancorp Inc. 65,000 65,000
59,600 59,600 Washington Mutual, Inc. 3,162,524 3,162,524
6,500 6,500 Waypoint Financial Corp.+ 71,500 71,500
-------------- --------------
4,679,699 4,679,699
-------------- --------------
94,404,839 94,404,839
-------------- --------------
HEALTH SERVICES & SYSTEMS - 2.0%
MEDICAL PRODUCTS & SUPPLIES - 1.4%
46,000 46,000 Abbott Laboratories 2,228,125 2,228,125
11,500 11,500 Bard (C.R.), Inc. 535,469 535,469
33,100 33,100 Becton Dickinson & Co. 1,146,088 1,146,088
51,600 51,600 Boston Scientific Corp.+ 706,275 706,275
1,000 1,000 Ciphergen Biosystems Inc.+ 13,250 13,250
7,500 7,500 Cyberonics, Inc.+ 174,375 174,375
27,300 27,300 Guidant Corp.+ 1,472,494 1,472,494
9,500 9,500 I-STAT Corp.+ 251,156 251,156
55,700 55,700 Johnson & Johnson 5,851,980 5,851,980
6,500 6,500 Medtronic, Inc. 392,438 392,438
3,600 3,600 Physiometrix, Inc.+ 57,375 57,375
14,600 14,600 St. Jude Medical, Inc.+ 896,988 896,988
10,500 10,500 Staar Surgical Co.+ 131,906 131,906
1,000 1,000 Wilson Greatbatch Technologies Inc.+ 28,250 28,250
-------------- --------------
13,886,169 13,886,169
-------------- --------------
MEDICAL PROVIDERS & SERVICES - 0.6%
2,400 2,400 Accredo Health Inc.+ 120,450 120,450
2,600 2,600 Aetna Inc.+ 106,763 106,763
5,900 5,900 Charles River Laboratories+ 161,513 161,513
4,500 4,500 Deltagen Inc.+ 46,969 46,969
64,600 64,600 HCA - The Healthcare Co. 2,843,045 2,843,045
20,300 20,300 Hooper Holmes, Inc. 224,518 224,518
8,900 8,900 Omnicare, Inc. 192,463 192,463
55,400 55,400 Tenet Healthcare Corp.+ 2,461,837 2,461,837
7,600 7,600 Triad Hospitals Inc.+ 247,475 247,475
-------------- --------------
6,405,033 6,405,033
-------------- --------------
20,291,202 20,291,202
-------------- --------------
INDUSTRIAL CYCLICAL - 7.2%
CHEMICALS - 1.2%
47,400 47,400 Air Products & Chemicals, Inc. 1,943,399 1,943,399
9,600 9,600 Albemarle Corp. 237,600 237,600
18,895 18,895 BASF AG(i)(s) 854,542 854,542
15,493 15,493 Bayer AG(i)(s) 812,688 812,688
57,700 57,700 Dow Chemical Co. 2,113,262 2,113,262
18,120 18,120 GenTek Inc. 298,980 298,980
15,700 15,700 Georgia Gulf Corp. 267,881 267,881
2,800 2,800 Minerals Technologies Inc. 95,725 95,725
208,000 208,000 Mitsubishi Chemical Corp.(i)(s) 548,231 548,231
22,400 22,400 PPG Industries, Inc. 1,037,400 1,037,400
28,800 28,800 Praxair, Inc. 1,278,000 1,278,000
45,400 45,400 Rohm and Haas Co. 1,648,587 1,648,587
943 943 Syngenta AG(i)(s)+ 50,627 50,627
36,000 36,000 Tokuyama Corp.(i)(s) 141,856 141,856
-------------- --------------
11,328,778 11,328,778
-------------- --------------
CONSTRUCTION & REAL PROPERTY - 0.1%
6,000 6,000 Catellus Development Corp.+ 105,000 105,000
8,750 8,750 Elcor Corp. 147,656 147,656
28,000 28,000 Mitsubishi Estate Co. Ltd.(i)(s) 299,124 299,124
The Accompanying Notes are an Integral Part of the Financial Statements.
7
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
90,000 90,000 Nishimatsu Construction Co., Ltd.(i)(s) $ 307,356 $ 307,356
27,000 27,000 Sekisui House, Ltd.(i)(s) 247,067 247,067
6,024 6,024 Vinci S.A.(i)(s) 370,455 370,455
-------------- --------------
1,476,658 1,476,658
-------------- --------------
DEFENSE/AEROSPACE - 0.5%
35,721 35,721 Bae Systems Plc(i)(s) 203,815 203,815
20,000 20,000 Boeing Co. 1,320,000 1,320,000
4,600 4,600 Ectel Ltd.+ 52,613 52,613
13,327 13,327 European Aeronautic Defence and Space
Co.(i)(s)+ 296,044 296,044
4,200 4,200 Goodrich (B.F.) Co. (The) 152,775 152,775
57,900 57,900 Honeywell Inc. 2,739,393 2,739,393
2,800 2,800 Innovative Solutions+ 49,044 49,044
-------------- --------------
4,813,684 4,813,684
-------------- --------------
ELECTRICAL EQUIPMENT - 2.1%
3,903 3,903 ABB Ltd.(i)(s) 416,071 416,071
14,100 14,100 Advanced Fibre Communications, Inc.+ 254,681 254,681
22,500 22,500 Agilent Technologies, Inc.+ 1,231,875 1,231,875
4,068 4,068 Alcatel Optronics(i)(s)+ 179,548 179,548
6,200 6,200 August Technology Corp.+ 80,213 80,213
2,300 2,300 Bruker Daltronics Inc.+ 54,194 54,194
13,500 13,500 C-Cube Microsystems Inc.+ 166,219 166,219
1,700 1,700 Caliper Technologies Corp.+ 79,900 79,900
59,900 59,900 Chubb Plc(s)+ 141,362 141,362
7,800 7,800 CIENA Corp.+ 633,750 633,750
62,200 62,200 Corning Inc. 3,284,937 3,284,937
3,300 3,300 DDi Corp.+ 89,925 89,925
6,600 6,600 Dover Corp. 267,713 267,713
14,400 14,400 Eaton Corp. 1,082,700 1,082,700
38,751 38,751 Ericsson LM Cl B(i)(s) 441,496 441,496
4,600 4,600 Garmin Ltd.+ 90,850 90,850
64,000 64,000 Hitachi, Ltd.(i)(s) 570,508 570,508
1,900 1,900 L-3 Communications Holdings, Inc.+ 146,300 146,300
30,600 30,600 Level 3 Communications, Inc.+ 1,004,063 1,004,063
28,400 28,400 Marconi Plc(i)(s) 304,998 304,998
9,300 9,300 Meade Corp.+ 61,031 61,031
1,800 1,800 Millipore Corp. 113,400 113,400
3,000 3,000 Molecular Devices Corp.+ 205,313 205,313
37,000 37,000 NEC Corp.(i)(s) 677,145 677,145
39,002 39,002 Nokia Oyj(i)(s) 1,739,362 1,739,362
115,200 115,200 Nortel Networks Corp. 3,693,599 3,693,599
5,000 5,000 Omron Corp.(i)(s) 103,984 103,984
7,500 7,500 Oplink Communications Inc.+ 135,469 135,469
3,000 3,000 Polycom, Inc.+ 96,563 96,563
2,900 2,900 Power-One Inc.+ 114,006 114,006
21,400 21,400 QUALCOMM Inc.+ 1,758,812 1,758,812
3,817 3,817 Siemens AG(i)(s) 498,851 498,851
6,800 6,800 Tellabs, Inc.+ 384,200 384,200
2,900 2,900 Transgenomic, Inc.+ 30,450 30,450
1,100 1,100 Ulticom Inc.+ 37,469 37,469
-------------- --------------
20,170,957 20,170,957
-------------- --------------
ENVIRONMENTAL SERVICES - 0.0%(z)
1,800 1,800 Eden Bioscience Corp.+ 53,888 53,888
-------------- --------------
FOREST PRODUCTS & PAPER - 0.4%
15,500 15,500 Buckeye Technologies Inc.+ 217,969 217,969
19,200 19,200 Caraustar Industries Inc. 180,000 180,000
61,463 61,463 CSR Ltd.(i)(s) 159,796 159,796
5,300 5,300 Georgia-Pacific Corp. 164,963 164,963
59,100 59,100 Hanson Plc(i)(s) 405,181 405,181
12,800 12,800 Kimberly-Clark Corp. 904,832 904,832
6,603 6,603 Lafarge S.A.(i)(s) 553,608 553,608
24,800 24,800 Pactiv Corp.+ 306,900 306,900
34,200 34,200 Smurfit-Stone Container Corp.+ 510,863 510,863
49,960 49,960 Stora Enso Oyj R Shares(i)(s) 590,381 590,381
2,900 2,900 Temple-Inland Inc. 155,513 155,513
26,000 26,000 Tostem Corp.(i)(s) 323,065 323,065
-------------- --------------
4,473,071 4,473,071
-------------- --------------
HEAVY ELECTRICAL EQUIPMENT - 0.1%
5,100 5,100 Active Power Inc.+ 111,881 111,881
15,200 15,200 Cooper Industries, Inc.+ 698,250 698,250
7,800 7,800 Emerson Electric Co. 614,738 614,738
-------------- --------------
1,424,869 1,424,869
-------------- --------------
HEAVY MACHINERY - 0.1%
12,200 12,200 Deere & Co. 558,913 558,913
24,000 24,000 Ebara Corp.(i)(s) 260,806 260,806
59,000 59,000 Kubota Corp.(i)(s) 179,790 179,790
17,526 17,526 Smiths Group Plc(s) 211,516 211,516
1,828 1,828 Technip S.A.(i)(s) 265,335 265,335
-------------- --------------
1,476,360 1,476,360
-------------- --------------
INDUSTRIAL PARTS - 1.4%
1,800 1,800 Applied Industrial Technologies, Inc. 37,013 37,013
10,125 10,125 Autoliv, Inc. SDR(i)(s) 158,815 158,815
4,800 4,800 Capstone Turbine Corp.+ 134,400 134,400
27,800 27,800 Caterpillar Inc. 1,315,288 1,315,288
5,100 5,100 Flowserve Corp.+ 109,013 109,013
4,600 4,600 Idex Corp. 152,375 152,375
8,100 8,100 Illinois Tool Works Inc. 482,456 482,456
28,400 28,400 Ingersoll-Rand Co. 1,189,250 1,189,250
14,300 14,300 ITT Industries, Inc. 554,125 554,125
6,400 6,400 Kennametal Inc. 186,400 186,400
6,000 6,000 Mettler-Toledo International, Inc.+ 326,250 326,250
29,000 29,000 Minebea Co., Ltd.(i)(s) 268,669 268,669
15,600 15,600 Parker-Hannifin Corp. 688,350 688,350
9,200 9,200 Shaw Group Inc. (The)+ 460,000 460,000
29,000 29,000 Sumitomo Rubber Industries, Ltd.(i)(s) 121,384 121,384
114,800 114,800 Tyco International Ltd. 6,371,399 6,371,399
6,300 6,300 United Technologies Corp.+ 495,338 495,338
-------------- --------------
13,050,525 13,050,525
-------------- --------------
INDUSTRIAL SERVICES - 0.4%
5,000 5,000 Gatx Corp. 249,375 249,375
The Accompanying Notes are an Integral Part of the Financial Statements.
8
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
1,300 1,300 Macnica Inc.(i)(s) $ 99,037 $ 99,037
88,000 88,000 Mitsubishi Corp.(i)(s) 648,827 648,827
15,300 15,300 On Assignment Inc.+ 436,050 436,050
24,838 24,838 Vivendi Environnement(i)(s)+ 1,084,374 1,084,374
25,610 25,610 Vivendi Universal(i)(s) 1,685,532 1,685,532
-------------- --------------
4,203,195 4,203,195
-------------- --------------
MINING & METALS - 0.4%
7,104 7,104 Acerinox S.A.(i)(s) 216,768 216,768
70,300 70,300 Alcoa Inc. 2,355,049 2,355,049
76,200 76,200 Billiton Plc(i) 293,646 293,646
39,900 39,900 Glynwed International Plc(i)(s) 115,022 115,022
294,000 294,000 Kawasaki Steel Corp.(i)(s) 303,783 303,783
8,100 8,100 Mueller Industries, Inc.+ 217,181 217,181
11,000 11,000 Nippon Sheet Glass Co., Ltd.(i)(s) 134,273 134,273
300 300 Phelps Dodge Corp. 16,744 16,744
9,500 9,500 Tokyo Steel Manufacturing Co., Ltd.(i)(s) 42,342 42,342
14,000 14,000 Valmont Industries, Inc. 257,250 257,250
24,836 24,836 WMC Ltd.(i)(s) 105,667 105,667
-------------- --------------
4,057,725 4,057,725
-------------- --------------
MULTI-INDUSTRY - 0.1%
37,600 37,600 Hutchison Whampoa Ltd.(i)(s) 468,801 468,801
10,938 10,938 Johnson Matthey Plc(i)(s) 172,361 172,361
5,184 5,184 Lagardere S.C.A.(i)(s) 300,790 300,790
46,300 46,300 Southcorp Ltd.(i)(s) 125,906 125,906
-------------- --------------
1,067,858 1,067,858
-------------- --------------
RAILROADS - 0.3%
40,100 40,100 Burlington Northern Santa Fe Corp. 1,135,331 1,135,331
24,000 24,000 Nippon Express Co., Ltd.(i)(s) 145,009 145,009
28,300 28,300 Union Pacific Corp. 1,436,225 1,436,225
147 147 West Japan Railway Co.(i)(s) 650,044 650,044
-------------- --------------
3,366,609 3,366,609
-------------- --------------
TRUCKING & SHIPPING & AIR FREIGHT - 0.1%
17,000 17,000 C.H. Robinson Worldwide, Inc. 534,438 534,438
11,800 11,800 FedEx Corp.+ 471,528 471,528
117,000 117,000 Nippon Yusen Kabushiki Kaisha(i)(s) 483,573 483,573
-------------- --------------
1,489,539 1,489,539
-------------- --------------
72,453,716 72,453,716
-------------- --------------
INSURANCE - 2.9%
LIFE & HEALTH INSURANCE - 1.1%
20,900 20,900 Aflac Inc. 1,508,719 1,508,719
29,200 29,200 American General Corp. 2,379,799 2,379,799
16,100 16,100 CIGNA Corp. 2,130,030 2,130,030
19,500 19,500 Lincoln National Corp. 922,594 922,594
12,400 12,400 MetLife, Inc. 434,000 434,000
1,600 1,600 MIIX Group Inc. 12,000 12,000
5,400 5,400 Nationwide Financial Services Inc. 256,500 256,500
11,900 11,900 Protective Life Corp. 383,775 383,775
3,700 3,700 Stancorp Financial Group 176,675 176,675
19,100 19,100 Torchmark Corp. 734,156 734,156
3,201 3,201 Zurich Financial Services AG(i)(s)+ 1,929,884 1,929,884
-------------- --------------
10,868,132 10,868,132
-------------- --------------
PROPERTY AND CASUALTY INSURANCE - 1.8%
5,522 5,522 Allianz AG(i)(s) 2,066,538 2,066,538
52,400 52,400 Allstate Corp. 2,282,674 2,282,674
20,600 20,600 Ambac Financial Group, Inc. 1,201,238 1,201,238
59,000 59,000 American International Group, Inc. 5,815,187 5,815,187
5,000 5,000 American Physicians Capital, Inc.+ 82,813 82,813
25,018 25,018 AMP Ltd.(i)(s) 281,096 281,096
4,600 4,600 Berkley (W.R.) Corp. 217,063 217,063
1,500 1,500 Cincinnati Financial Corp. 59,344 59,344
28,100 28,100 Hartford Financial Services Group Inc. (The) 1,984,563 1,984,563
123,700 123,700 Legal & General Group Plc(i)(s) 340,891 340,891
12,600 12,600 MBIA Inc. 933,975 933,975
20,950 20,950 Mediolanum SpA(i)(s) 266,915 266,915
5,700 5,700 Renaissancere Holdings Ltd. 446,381 446,381
60,727 60,727 Royal & Sun Alliance Insurance Group(i)(s) 519,740 519,740
59,997 59,997 Skandia Forsakrings AB(i)(s) 976,052 976,052
34,000 34,000 Tokio Marine & Fire Insurance Co.,
Ltd.(i)(s) 389,720 389,720
-------------- --------------
17,864,190 17,864,190
-------------- --------------
28,732,322 28,732,322
-------------- --------------
PHARMACEUTICALS - 5.8%
BIOTECHNOLOGY - 0.0%(z)
2,800 2,800 Harvard Bioscience, Inc.+ 27,650 27,650
700 700 Specialty Laboratories, Inc.+ 23,188 23,188
-------------- --------------
50,838 50,838
-------------- --------------
DRUGS - 5.8%
1,500 1,500 3 Dimensional Pharmaceutical, Inc.+ 22,219 22,219
4,000 4,000 Abgenix, Inc.+ 236,250 236,250
1,900 1,900 Adolar Corp.+ 41,800 41,800
13,100 13,100 Akorn Inc.+ 85,969 85,969
34,300 34,300 Alza Corp.+ 1,457,750 1,457,750
56,800 56,800 American Home Products Corp. 3,609,640 3,609,640
19,400 19,400 Amgen Inc.+ 1,240,388 1,240,388
1,500 1,500 Arena Pharmaceuticals, Inc.+ 23,250 23,250
4,100 4,100 Astrazeneca Plc(i)(s) 206,684 206,684
6,600 6,600 Bindley Western Industries Inc. 274,313 274,313
64,300 64,300 Bristol-Myers Squibb Co. 4,754,180 4,754,180
8,300 8,300 Celltech Group Plc(i)(s)+ 146,660 146,660
3,200 3,200 COR Therapeutics, Inc.+ 112,600 112,600
1,200 1,200 Durect Corp.+ 14,400 14,400
3,300 3,300 Enzon, Inc.+ 204,806 204,806
5,100 5,100 Forest Laboratories, Inc. Cl A+ 677,663 677,663
2,000 2,000 Gilead Sciences, Inc.+ 165,875 165,875
94,563 94,563 Glaxosmithkline Plc(i)(s)+ 2,669,516 2,669,516
9,000 9,000 Human Genome Sciences, Inc.+ 623,813 623,813
800 800 IDEC Pharmaceuticals Corp.+ 151,650 151,650
2,000 2,000 Immunogen Inc.+ 42,875 42,875
4,713 4,713 Inhale Therapeutic Systems Inc.Inc.+ 238,007 238,007
6,600 6,600 Isis Pharmaceuticals, Inc.+ 70,125 70,125
25,000 25,000 Ligand Pharmaceuticals Inc. Cl B+ 350,000 350,000
46,400 46,400 Lilly (Eli) & Co. 4,318,100 4,318,100
1,700 1,700 Maxygen Inc.+ 41,650 41,650
The Accompanying Notes are an Integral Part of the Financial Statements.
9
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENTS PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
7,900 7,900 Medarex Inc.+ $ 321,925 $ 321,925
3,600 3,600 MediChem Life Sciences, Inc.+ 16,650 16,650
115,600 115,600 Merck & Co., Inc. 10,823,049 10,823,049
6,700 6,700 Neurocrine Biosciences Inc.+ 221,938 221,938
943 943 Novartis AG(i)(s) 1,667,198 1,667,198
2,357 2,357 Novo Nordisk A/S Cl B(i)(s) 422,486 422,486
23,337 23,337 Nycomed Amersham Plc(i)(s) 194,330 194,330
1,000 1,000 OSI Pharmaceuticals, Inc.+ 80,125 80,125
241,200 241,200 Pfizer, Inc. 11,095,199 11,095,199
58,200 58,200 Pharmacia Corp. 3,550,200 3,550,200
4,791 4,791 POZEN Inc.+ 87,436 87,436
2,200 2,200 Priority Healthcare Corp. Cl B+ 89,788 89,788
119 119 Roche Holding AG(i)(s)+ 1,212,397 1,212,397
5,000 5,000 Sankyo Co. Ltd.(i)(s) 119,965 119,965
7,881 7,881 Schering AG(i)(s) 447,658 447,658
81,200 81,200 Schering-Plough Corp. 4,608,099 4,608,099
21,000 21,000 Takeda Chemical Industries, Ltd.(i)(s) 1,243,082 1,243,082
2,500 2,500 Trimeris Inc.+ 137,188 137,188
4,500 4,500 Vertex Pharmaceuticals, Inc.+ 321,750 321,750
2,000 2,000 Yamanouchi Pharmaceutical Co. Ltd.(i)(s) 86,515 86,515
-------------- --------------
58,527,161 58,527,161
-------------- --------------
58,577,999 58,577,999
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS - 0.2%
REAL ESTATE INVESTMENT TRUST - 0.2%
7,900 7,900 Canary Wharf Group Plc(i)(s)+ 57,524 57,524
5,000 5,000 Centerpoint Properties Corp. 236,250 236,250
7,000 7,000 Cheung Kong Holdings Ltd.(i)(s) 89,520 89,520
38,000 38,000 City Developments(i)(s) 176,413 176,413
11,450 11,450 Cousins Properties Inc. 319,884 319,884
4,700 4,700 General Growth Properties, Inc. 170,081 170,081
4,100 4,100 Manufactured Home Communities, Inc. 118,900 118,900
10,600 10,600 Mission West Properties Inc. 147,075 147,075
9,922 9,922 Post Properties, Inc. 372,695 372,695
60,000 60,000 Sun Hung Kai Properties Ltd.(i)(s) 598,086 598,086
-------------- --------------
2,286,428 2,286,428
-------------- --------------
RETAIL - 3.2%
CLOTHING STORES - 0.5%
28,200 28,200 Abercrombie & Fitch Co. Cl A+ 564,000 564,000
220 220 Compagnie Financiere Richemont AG
A Units(i)(s) 588,522 588,522
37,000 37,000 Gap, Inc. (The) 943,500 943,500
51,200 51,200 Limited., Inc. (The) 873,600 873,600
13,000 13,000 Pacific Sunwear of California, Inc.+ 333,125 333,125
51,900 51,900 TJX Companies, Inc. (The) 1,440,225 1,440,225
-------------- --------------
4,742,972 4,742,972
-------------- --------------
DEPARTMENT STORES - 1.6%
7,995 7,995 Carrefour S.A.(i)(s) 502,174 502,174
34,830 34,830 Dixons Group Plc(i)(s) 116,534 116,534
47,200 47,200 Federated Department Stores, Inc.+ 1,652,000 1,652,000
6,000 6,000 Ito-Yokado Co., Ltd.(i)(s) 299,475 299,475
14,000 14,000 Marui Co., Ltd.(i)(s) 211,471 211,471
32,700 32,700 May Department Stores Co. (The) 1,070,925 1,070,925
60,953 60,953 MFI Furniture Group Plc(i)(s) 62,455 62,455
91,600 91,600 Target Corp. 2,954,100 2,954,100
204,000 204,000 Tesco Plc(i)(s) 831,083 831,083
19,000 19,000 UNY Co., Ltd.(i)(s) 202,977 202,977
157,300 157,300 Wal-Mart Stores, Inc. 8,356,562 8,356,562
-------------- --------------
16,259,756 16,259,756
-------------- --------------
GROCERY STORES - 0.3%
64,200 64,200 Kroger Co. (The)+ 1,737,413 1,737,413
26,700 26,700 Safeway Inc.+ 1,668,750 1,668,750
-------------- --------------
3,406,163 3,406,163
-------------- --------------
SPECIALTY STORES - 0.8%
4,500 4,500 Best Buy Co., Inc.+ 133,031 133,031
2,300 2,300 BJ's Wholesale Club Inc.+ 88,263 88,263
6,200 6,200 Cost Plus, Inc.+ 182,125 182,125
13,700 13,700 Genesco Inc.+ 334,794 334,794
14,900 14,900 Grainger (W.W.), Inc. 543,850 543,850
101,900 101,900 Home Depot, Inc. 4,655,555 4,655,555
37,700 37,700 Lowe's Companies, Inc. 1,677,650 1,677,650
6,700 6,700 School Specialty Inc.+ 134,419 134,419
7,900 7,900 Walgreen Co. 330,319 330,319
-------------- --------------
8,080,006 8,080,006
-------------- --------------
32,488,897 32,488,897
-------------- --------------
SEMICONDUCTORS - 2.6%
SEMICONDUCTOR - 2.6%
2,200 2,200 Advantest Corp.(i)(s) 206,130 206,130
9,960 9,960 Agfa Gevaert NV(i)(s) 237,428 237,428
2,900 2,900 Alliance Fiber Optics Products Inc.+ 17,400 17,400
52,400 52,400 Altera Corp.+ 1,378,775 1,378,775
17,800 17,800 Analog Devices, Inc.+ 911,138 911,138
43,400 43,400 Applied Materials, Inc.+ 1,657,337 1,657,337
11,800 11,800 ARM Holdings Plc(i)(s)+ 89,183 89,183
4,900 4,900 AXT, Inc.+ 162,006 162,006
5,100 5,100 Bookham Technology Plc(i)(s)+ 72,367 72,367
7,100 7,100 Broadcom Corp.+ 596,400 596,400
6,200 6,200 Cypress Semiconductor Corp.+ 122,063 122,063
10,300 10,300 Exar Corp.+ 319,139 319,139
2,700 2,700 Fanuc Ltd.(i)(s) 183,704 183,704
34,000 34,000 Fujitsu Ltd.(i)(s) 501,366 501,366
6,000 6,000 hi/fn, Inc.+ 165,000 165,000
248,200 248,200 Intel Corp. 7,461,512 7,461,512
77,300 77,300 JDS Uniphase Corp.+ 3,222,443 3,222,443
2,200 2,200 JNI Corp.+ 49,913 49,913
12,900 12,900 Lattice Semiconductor Corp.+ 237,038 237,038
26,900 26,900 Linear Technology Corp. 1,244,125 1,244,125
13,300 13,300 Maxim Integrated Products, Inc.+ 635,906 635,906
17,100 17,100 Micron Technology, Inc.+ 607,050 607,050
2,700 2,700 Murata Manufacturing Co., Ltd.(i)(s) 316,813 316,813
9,900 9,900 PMC-Sierra, Inc.+ 778,388 778,388
The Accompanying Notes are an Integral Part of the Financial Statements.
10
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENT PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
29,000 29,000 Ricoh Co., Ltd.(i)(s) $ 535,814 $ 535,814
16,000 16,000 Silicon Image Inc.+ 87,000 87,000
13,409 13,409 Spirent Plc(i)(s) 122,173 122,173
1,000 1,000 TDK Corp.(i)(s) 97,373 97,373
52,900 52,900 Texas Instruments Inc. 2,506,137 2,506,137
31,100 31,100 Xilinx, Inc.+ 1,434,488 1,434,488
-------------- --------------
25,955,609 25,955,609
-------------- --------------
SOFTWARE & SERVICES - 4.3%
COMPUTER SOFTWARE - 3.2%
9,600 9,600 Adobe Systems Inc.+ 558,600 558,600
25,600 25,600 BEA Systems, Inc.+ 1,723,200 1,723,200
8,800 8,800 Certicom Corp.+ 179,300 179,300
6,100 6,100 Citrix Systems, Inc.+ 137,250 137,250
9,700 9,700 click2learn.com, Inc.+ 94,575 94,575
5,000 5,000 Eclipsys Corp.+ 122,500 122,500
37,900 37,900 Gemstar International Group Ltd.+ 1,748,137 1,748,137
7,100 7,100 Informatica Corp.+ 280,894 280,894
58,300 58,300 International Business Machines Corp. 4,955,499 4,955,499
5,000 5,000 Internet Security Systems+ 392,188 392,188
4,700 4,700 Metasolv Software Inc.+ 42,888 42,888
180,200 180,200 Microsoft Corp.+ 7,816,174 7,816,174
14,000 14,000 NCR Corp. 687,750 687,750
292,000 292,000 Oracle Corp.+ 8,486,249 8,486,249
24,200 24,200 Parametric Technology Corp.+ 325,188 325,188
13,600 13,600 Peregrine Systems, Inc.+ 268,600 268,600
2,700 2,700 Precise Software Solutions Ltd.+ 66,825 66,825
3,100 3,100 Rational Software Corp.+ 120,706 120,706
5,900 5,900 SeeBeyond Technology Corp.+ 60,475 60,475
4,700 4,700 Siebel Systems, Inc.+ 317,838 317,838
8,000 8,000 Smart Force Plc ADR(i)+ 300,500 300,500
2,910 2,910 Software AG(i)(s)+ 225,839 225,839
5,300 5,300 Synquest Inc.+ 39,088 39,088
2,800 2,800 Telecommunication Systems Inc.+ 9,450 9,450
3,400 3,400 TIBCO Software Inc.+ 162,988 162,988
8,000 8,000 U.S. Wireless Corp.+ 35,000 35,000
38,000 38,000 Veritas Software Corp.+ 3,324,999 3,324,999
3,200 3,200 Watchguard Tech Inc.+ 101,200 101,200
5,300 5,300 Webtrends Corp.+ 153,369 153,369
4,800 4,800 Wind River Systems, Inc.+ 163,800 163,800
6,900 6,900 Witness Systems Inc.+ 93,150 93,150
-------------- -------------
32,994,219 32,994,219
-------------- -------------
INFORMATION SERVICES - 0.6%
421 421 Adecco S.A.(i)(s) 264,992 264,992
26,000 26,000 Automatic Data Processing, Inc. 1,646,125 1,646,125
37,267 37,267 Autostrade Concessioni e Costruzioni
Autostrade SpA(i)(s) 246,674 246,674
5,000 5,000 Corillian Corp.+ 60,000 60,000
3,100 3,100 Costar Group Inc.+ 73,238 73,238
3,800 3,800 DiamondCluster International, Inc. Cl A 115,900 115,900
6,225 6,225 eFunds Corp.+ 57,192 57,192
1,500 1,500 Exelixis Inc.+ 21,938 21,938
36,757 36,757 Getronics NV(i)(s) 216,035 216,035
5,200 5,200 Getty Images Inc.+ 166,400 166,400
51,200 51,200 Hays Plc(i)(s) 295,193 295,193
1,000 1,000 Hitachi Software Engineering Co., Ltd.(i)(s) 72,680 72,680
6,042 6,042 Intershop Communications AG(i)(s)+ 189,582 189,582
8,040 8,040 Logica Plc(i)(s) 210,157 210,157
4,850 4,850 Obie Media Corp.+ 37,284 37,284
74,300 74,300 QXL.com Ricardo Plc(i)(s)+ 9,988 9,988
11,400 11,400 Railtrack Group Plc(i)(s) 157,506 157,506
15,882 15,882 Reuters Group Plc(i)(s) 268,772 268,772
1,800 1,800 SBA Communications Corp.+ 73,913 73,913
20,100 20,100 Severn Trent Plc(i)(s) 223,367 223,367
250 250 SGS Societe Generale de Surveillance
Holding S.A.(i)(s) 362,542 362,542
2,200 2,200 Softbank Corp.(i)(s) 76,480 76,480
10,500 10,500 Source Information Management Co.+ 39,375 39,375
6,300 6,300 Symyx Technologies Inc.+ 226,800 226,800
27,650 27,650 Tele1 Europe Holding AB(i)(s)+ 133,334 133,334
9,520 9,520 Tietoenator Oyj(i)(s) 270,825 270,825
28 28 TNT Post Group NV(i)(s) 677 677
1,400 1,400 Wireless Facilities, Inc.+ 50,750 50,750
-------------- --------------
5,567,719 5,567,719
-------------- --------------
INTERNET - 0.5%
22,700 22,700 Akamai Technologies, Inc.+ 478,119 478,119
61,600 61,600 America Online, Inc.+ 2,143,679 2,143,679
19,700 19,700 Ameritrade Holding Corp. Cl A+ 137,900 137,900
6,100 6,100 Apropos Technology, Inc.+ 43,463 43,463
2,700 2,700 Clarent Corp.+ 30,544 30,544
11,500 11,500 Digitalthink Inc.+ 196,219 196,219
40,600 40,600 E*trade Group Inc.+ 299,425 299,425
1,500 1,500 E.piphany, Inc.+ 80,906 80,906
8,400 8,400 eBay Inc.+ 277,200 277,200
8,600 8,600 Ibasis Inc.+ 35,475 35,475
1,300 1,300 Inet Technologies Inc.+ 52,650 52,650
2,000 2,000 internet.com Corp.+ 11,875 11,875
1,300 1,300 Interwoven Inc.+ 85,719 85,719
2,950 2,950 Netegrity Inc.+ 160,406 160,406
1,600 1,600 Nuance Communications+ 69,000 69,000
8,500 8,500 Saba Software, Inc.+ 133,875 133,875
1,200 1,200 SafeNet, Inc.+ 56,400 56,400
150,000 150,000 Sunevision Holdings Ltd.(i)(s)+ 54,328 54,328
7,500 7,500 Tumbleweed Communications Corp.+ 128,320 128,320
3,800 3,800 Yahoo! Inc.+ 114,238 114,238
------------- -------------
4,589,741 4,589,741
------------- -------------
43,151,679 43,151,679
------------- -------------
TELECOMMUNICATIONS - 3.5%
TELEPHONE - 2.2%
79,600 79,600 AT&T Corp. 1,378,075 1,378,075
47,300 47,300 BellSouth Corp. 1,936,344 1,936,344
400 400 Ectel Ltd.+ 4,575 4,575
The Accompanying Notes are an Integral Part of the Financial Statements.
11
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENT PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
14,300 14,300 FLAG Telecom Holdings Ltd.+ $ 89,375 $ 89,375
67,000 67,000 Global Crossing Ltd.+ 958,938 958,938
6,600 6,600 ITXC Corp.+ 45,788 45,788
104,800 104,800 Qwest Communications International Inc.+ 4,296,799 4,296,799
149,400 149,400 SBC Communications Inc.+ 7,133,849 7,133,849
75,148 75,148 Telenor ASA(i)(s)+ 327,231 327,231
61,700 61,700 Telstra Corp. Ltd.(i)(s) 220,203 220,203
6,600 6,600 Turnstone Systems Inc.+ 49,088 49,088
100,100 100,100 Verizon Communications 5,017,512 5,017,512
1,300 1,300 Williams Communications Group Inc.+ 15,275 15,275
74,200 74,200 WorldCom, Inc.+ 1,043,438 1,043,438
------------- -------------
22,516,490 22,516,490
------------- -------------
WIRELESS TELECOMMUNICATIONS - 1.3%
1,100 1,100 Boston Communications Group, Inc.+ 30,663 30,663
19,600 19,600 British Telecommunications Plc(i)(s) 167,456 167,456
8,152 8,152 Cable & Wireless Plc(i)(s) 109,952 109,952
7,793 7,793 Carrier1 International S.A.(i)(s)+ 139,017 139,017
42,000 42,000 China Mobile (Hong Kong) Ltd.(i)(s)+ 229,388 229,388
14 14 DDI Corp.(i)(s) 67,548 67,548
14,320 14,320 Deutsche Telekom AG(i)(s) 431,576 431,576
87,900 87,900 Nextel Communications, Inc.+ 2,175,524 2,175,524
188 188 Nippon Telegraph and Telephone Corp.(i)(s) 1,354,851 1,354,851
59,581 59,581 Royal KPN NV(i)(s) 685,816 685,816
75,500 75,500 SmarTone Telecommunications
Holding Ltd.(i)(s) 108,896 108,896
24,600 24,600 Sonera Oyj(i)(s) 445,761 445,761
76,400 76,400 Sprint Corp. (PCS Group)+ 1,561,425 1,561,425
12,799 12,799 Telecel-Comunicacoes
Pessoais, S.A.(i)(s)+ 139,394 139,394
7,653 7,653 Telecom Corp. of New Zealand(i)(s) 16,289 16,289
70,351 70,351 Telecom Italia SpA(i)(s) 778,082 778,082
84,523 84,523 Telefonica S.A.(i)(s)+ 1,396,681 1,396,681
841,957 841,957 Vodafone Group Plc(i)(s) 3,087,384 3,087,384
-------------- --------------
12,925,703 12,925,703
-------------- --------------
35,442,193 35,442,193
-------------- --------------
UTILITIES - 1.8%
ELECTRICAL UTILITY - 1.4%
15,300 15,300 Ameren Corp. 708,581 708,581
17,600 17,600 Cinergy Corp. 618,200 618,200
14,000 14,000 Cleco Corp. 766,500 766,500
35,700 35,700 CMS Energy Corp.+ 1,131,244 1,131,244
14,800 14,800 Consolidated Edison, Inc. 569,800 569,800
18,100 18,100 DTE Energy Co. 704,769 704,769
8,200 8,200 Dynegy Inc. Cl A 459,713 459,713
57,200 57,200 Entergy Corp. 2,420,274 2,420,274
14,800 14,800 FPL Group, Inc. 1,061,900 1,061,900
12,800 12,800 GPU Inc. 471,200 471,200
107,500 107,500 Hong Kong Electric Holdings Ltd.(i)(s) 396,928 396,928
32,500 32,500 PG&E Corp. 650,000 650,000
11,900 11,900 Pinnacle West Capital Corp. 566,738 566,738
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENT PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
25,500 25,500 Progress Energy, Inc. $ 1,254,281 $ 1,254,281
6,100 6,100 Reliant Energy, Inc. 264,206 264,206
24,700 24,700 Texas Utilities Co. 1,094,519 1,094,519
12,300 12,300 Wisconsin Energy Corp. 277,519 277,519
20,300 20,300 XCEL Energy Inc. 589,969 589,969
-------------- --------------
14,006,341 14,006,341
-------------- --------------
GAS & WATER UTILITIES - 0.4%
10,600 10,600 Atmos Energy Corp. 258,375 258,375
82,911 82,911 BG Group Plc(i)(s) 324,461 324,461
56,000 56,000 British Energy Plc(i)(s) 215,803 215,803
12,707 12,707 E.ON AG(i)(s) 773,086 773,086
48,851 48,851 Iberdrola S.A.(i)(s) 612,300 612,300
5,700 5,700 Kinder Morgan, Inc. 297,469 297,469
21,300 21,300 NiSource Inc. 654,975 654,975
89,000 89,000 Osaka Gas Co., Ltd.(i)(s) 270,429 270,429
49,600 49,600 ScottishPower Plc(i)(s) 391,910 391,910
15,500 15,500 Tokyo Electric Power Co.(i)(s) 384,785 384,785
78,000 78,000 Tokyo Gas Co., Ltd.(i)(s) 230,858 230,858
-------------- --------------
4,414,451 4,414,451
-------------- --------------
18,420,792 18,420,792
-------------- --------------
TOTAL COMMON STOCKS 598,789,839 598,789,839
(Cost $520,756,620) -------------- --------------
CORPORATE BONDS - 5.2%
CONSUMER SERVICES - 1.0%
MEDIA - 1.0%
$ 750,000 $ 750,000 Adelphia Communications Corp., 9.38%,
11/15/09 660,000 660,000
825,000 825,000 AT&T Corp. - Liberty Media Group, 8.25%,
2/1/30 756,599 756,599
1,850,000 1,850,000 Clear Channel Communications, 7.65%,
9/15/10 1,867,039 1,867,039
1,000,000 1,000,000 Comcast Cable Communications, 6.20%,
11/15/08 960,820 960,820
1,000,000 1,000,000 Lamar Media Corp., 8.63%, 9/15/07 1,000,000 1,000,000
1,850,000 1,850,000 TCI Communications Inc., 7.88%, 2/15/26 1,737,409 1,737,409
2,500,000 2,500,000 Time Warner Inc., 8.11%, 8/15/06 2,676,175 2,676,175
-------------- --------------
9,658,042 9,658,042
-------------- --------------
ENERGY - 0.6%
ENERGY RESERVES & PRODUCTION - 0.1%
1,425,000 1,425,000 Amerada Hess Corp., 7.88%, 10/1/29 1,494,013 1,494,013
--------------
OIL SERVICES - 0.5%
2,000,000 2,000,000 Dynegy Holdings Inc., 6.88%, 7/15/02 2,003,480 2,003,480
705,000 705,000 Dynegy Holdings Inc., 7.45%, 7/15/06 719,156 719,156
2,000,000 2,000,000 Phillips Petroleum Co., 8.75%, 5/25/10 2,288,480 2,288,480
--------------
5,011,116
--------------
6,505,129
--------------
The Accompanying Notes are an Integral Part of the Financial Statements.
12
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENT PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCE - 2.1%
BANKS - 1.0%
$ 560,000 $ 560,000 Bank One Capital III, 8.75%, 9/1/30 $ 553,347 $ 553,347
1,600,000 1,600,000 Capital One Bank, 8.25%, 6/15/05 1,623,088 1,623,088
3,000,000 3,000,000 Citigroup Inc., 7.25%, 10/1/10 3,102,870 3,102,870
1,250,000 1,250,000 FCB/SC Capital Trust I, 8.25%, 3/15/28 1,096,238 1,096,238
3,195,000 3,195,000 First Union National Bank,
7.80%, 8/18/10 3,296,026 3,296,026
------------- -------------
9,671,569 9,671,569
------------- -------------
FINANCIAL SERVICES - 1.1%
640,000 640,000 Comdisco, Inc., 6.38%, 11/30/01 582,400 582,400
2,000,000 2,000,000 ERAC USA Finance Co., 144A, 6.38%,
5/15/03 1,954,180 1,954,180
2,485,000 2,485,000 Ford Motor Credit Co., 7.88%, 6/15/10 2,556,245 2,556,245
2,000,000 2,000,000 Household Finance Corp., 8.00%, 7/15/10 2,120,180 2,120,180
750,000 750,000 McKesson Financial of Canada, 144A, 6.55%,
11/1/02 725,205 725,205
396,603 396,603 Oil Purchase Co., 144A, 7.10%, 4/30/02 376,773 376,773
530,000 530,000 Provident Financing Trust I, 7.41%, 3/15/38 385,893 385,893
1,810,000 1,810,000 St. George Funding Co. LLC, 144A, 8.49%,
12/31/49 1,547,622 1,547,622
1,785,000 1,785,000 UBS Preferred Funding Trust I, VRN, 8.62%,
10/29/49 1,879,605 1,879,605
------------- -------------
12,128,103 12,128,103
------------- -------------
21,799,672 21,799,672
------------- -------------
INDUSTRIAL CYCLICAL - 0.5%
CHEMICALS - 0.2%
1,590,000 1,590,000 Rohm & Haas Co., 7.85%, 7/15/29 1,605,900 1,605,900
------------- -------------
INDUSTRIAL SERVICES - 0.1%
845,000 845,000 Comdisco Inc., 9.50%, 8/15/03 667,550 667,550
------------- -------------
RAILROADS - 0.1%
1,750,000 1,750,000 Union Pacific Corp., 5.78%, 10/15/01 1,736,438 1,736,438
TRUCKING & SHIPPING & AIR FREIGHT - 0.1%
200,000 200,000 Atlantic Express, 10.75%, 2/1/04 151,000 151,000
802,903 802,903 FedEx Corp., Series 1999-1,
Class C, 8.25%, 1/15/19 862,542 862,542
-------------- ---------------
1,013,542 1,013,542
-------------- ---------------
5,023,430 5,023,430
-------------- ---------------
RETAIL - 0.1%
GROCERY STORES - 0.1%
995,000 995,000 Kroger Co., 8.00%, 9/15/29 1,027,745 1,027,745
-------------- ---------------
SEMICONDUCTORS - 0.1%
SEMICONDUCTOR - 0.1%
750,000 750,000 Charter Communications Holdings, LLC,
8.25%, 4/1/07 682,500 682,500
-------------- ---------------
TELECOMMUNICATIONS - 0.6%
TELEPHONE - 0.6%
1,500,000 1,500,000 AT&T Corp., 6.00%, 3/15/09 1,341,690 1,341,690
1,985,000 1,985,000 COX Communications Inc., 7.75%, 11/1/10 2,054,852 2,054,852
1,300,000 1,300,000 Qwest Capital Funding Inc., 6.25%, 7/15/05 1,268,280 1,268,280
835,000 835,000 Williams Communications Group, 10.70%,
10/1/07 642,950 642,950
-------------- --------------
5,307,772 5,307,772
UTILITIES - 0.2%
ELECTRICAL UTILITY - 0.2%
1,600,000 1,600,000 Dominion Resources Inc., Series 2000 A,
8.13%, 6/15/10 1,729,456 1,729,456
-------------- --------------
TOTAL CORPORATE BONDS 51,733,746 51,733,746
(Cost $51,680,506) -------------- --------------
FOREIGN CORPORATE BONDS - 1.3%
FINANCE - 0.3%
BANKS - 0.1%
1,000,000 1,000,000 Royal Bank of Scotland Group
Plc, 7.82%, 11/29/49 1,020,160 1,020,160
-------------- --------------
FINANCIAL SERVICES - 0.2%
1,445,000 1,445,000 HSBC Capital Funding LP, VRN, 144A,
10.18%, 12/29/49 1,659,192 1,659,192
-------------- --------------
2,679,352 2,679,352
-------------- --------------
INSURANCE - 0.2%
LIFE & HEALTH INSURANCE - 0.2%
2,155,000 2,155,000 Axa, 8.60%, 12/15/30 2,225,641 2,225,641
-------------- --------------
SOFTWARE & SERVICES - 0.2%
INFORMATION SERVICES - 0.2%
1,770,000 1,770,000 Marconi Corp. Plc, 8.38%, 9/15/30 1,611,638 1,611,638
-------------- --------------
TELECOMMUNICATIONS - 0.6%
TELEPHONE - 0.6%
1,170,000 1,170,000 Deutsche Telekom International Finance BV,
7.75%, 6/15/05 1,190,229 1,190,229
2,000,000 2,000,000 Deutsche Telekom International Finance BV,
8.00%, 6/15/10 2,031,320 2,031,320
770,000 770,000 Global Crossing Holding Ltd., 9.13%,
11/15/06 731,500 731,500
1,250,000 1,250,000 Koninklijke KPN NV, 144A, 8.38%, 10/1/30 1,143,688 1,143,688
1,000,000 1,000,000 Telefonica Europe BV, 7.75%, 9/15/10 1,012,600 1,012,600
-------------- --------------
6,109,337 6,109,337
-------------- --------------
TOTAL FOREIGN CORPORATE BONDS 12,625,968 12,625,968
(Cost $12,620,270) -------------- --------------
MORTGAGE PASS THRU - 8.2%
6,495,000 6,495,000 FHLMC, 6.90%, 12/1/10 6,721,312 6,721,312
3,384,747 3,384,747 FNMA, 6.50%, 3/1/28 3,340,339 3,340,339
2,145,030 2,145,030 FNMA, 6.00%, 12/1/28 2,077,311 2,077,311
108,203 108,203 FNMA, 6.00%, 1/1/29 104,787 104,787
1,085,000 1,085,000 FNMA, 7.13%, 1/15/30 1,214,516 1,214,516
The Accompanying Notes are an Integral Part of the Financial Statements.
13
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- ------------------------------------------- ------------------------------------------------
PRO PRO FORMA PRO PRO
FORMA SHARES/ FORMA FORMA
ACTUAL ADJUSTMENT PRINCIPAL ACTUAL ADJUSTMENTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
$10,335,000 $10,335,000 FNMA, TBA, 7.00%, 1/1/16 $ 10,444,861 $ 10,444,861
10,432,000 10,432,000 FNMA, TBA, 7.50%, 1/1/30 10,585,246 10,585,246
1,960,000 1,960,000 FNMA, TBA, 6.00%, 1/1/31 1,897,535 1,897,535
28,925,000 28,925,000 FNMA, TBA, 7.00%, 1/1/31 28,970,124 28,970,124
233,139 233,139 GNMA, 8.50%, 6/15/27 240,497 240,497
664,662 664,662 GNMA, 8.50%, 9/15/27 685,639 685,639
692,567 692,567 GNMA, 8.50%, 9/15/27 714,424 714,424
7,423,616 7,423,616 GNMA, 6.50%, 12/15/28 7,340,101 7,340,101
7,855,000 7,855,000 GNMA, TBA, 7.00%, 1/1/31 7,889,405 7,889,405
-------------- --------------
TOTAL MORTGAGE PASS THRU 82,226,097 82,226,097
(Cost $81,095,787) -------------- --------------
PREFERRED STOCKS - 0.1%
CONSUMER SERVICES - 0.1%
LEISURE - 0.0%(z)
2,100 2,100 AMCV Capital Trust I, 7.00%, 2/15/15 58,275 58,275
-------------- --------------
MEDIA - 0.1%
64,500 64,500 News Corp. Ltd.(i)(s) 458,743 458,743
-------------- --------------
TOTAL PREFERRED STOCKS 517,018 517,018
(Cost $489,147) -------------- --------------
SOVEREIGN GOVERNMENTS AND AGENCIES - 0.5%
ARGENTINA - 0.1%
$ 252,000 $ 252,000 Republic of Argentina, 7.63%, 3/27/01 229,068 229,068
390,000 390,000 Republic of Argentina, 11.75%, 4/7/09 362,700 362,700
417,600 417,600 Republic of Argentina FRB, 7.63%, 3/30/01 379,598 379,598
365,000 365,000 Republic of Argentina, Series BGL5, 11.38%,
1/30/17 325,215 325,215
-------------- --------------
1,296,581 1,296,581
-------------- --------------
BRAZIL - 0.3%
350,000 350,000 Federal Republic of Brazil, 14.50%, 10/15/09 385,000 385,000
708,061 708,061 Federal Republic of Brazil, 4.50%, 4/15/14 547,419 547,419
775,000 775,000 Federal Republic of Brazil, 11.00%, 8/17/40 631,237 631,237
425,000 425,000 Federal Republic of Brazil Discount Bonds,
Series 30 Year ZL, 7.63%, 4/15/01 324,063 324,063
-------------- --------------
1,887,719 1,887,719
-------------- --------------
BULGARIA - 0.0%(z)
195,000 195,000 Bulgaria Government International Bond
Discount Bonds, VRN, 7.75%, 1/28/01 148,200 148,200
-------------- --------------
COLOMBIA - 0.0%(z)
385,000 385,000 Republic of Colombia, 9.75%, 4/23/09 323,400 323,400
-------------- --------------
MEXICO - 0.0%(z)
155,000 155,000 United Mexican States, 9.88%, 2/1/10 166,780 166,780
175,000 175,000 United Mexican States, Series XW, 10.38%,
2/17/09 191,450 191,450
-------------- --------------
358,230 358,230
-------------- --------------
PERU - 0.0%(z)
95,000 95,000 Peru PDI, 4.50%, 3/7/17 61,275 61,275
-------------- --------------
QATAR - 0.0%(z)
225,000 225,000 State of Qatar, 144A, 9.75%, 6/15/30 225,000 225,000
-------------- --------------
RUSSIA - 0.1%
390,000 390,000 Russian Federation, 12.75%, 6/24/28 322,725 322,725
870,000 870,000 Russian Federation, 2.50%, 3/31/30 325,163 325,163
450,000 450,000 Russian Federation, VRN, 8.25%, 3/31/10 280,688 280,688
-------------- --------------
928,576 928,576
-------------- --------------
TURKEY - 0.0%(z)
175,000 175,000 Republic of Turkey, 12.38%, 6/15/09 162,750 162,750
-------------- --------------
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES 5,391,731 5,391,731
(Cost $5,372,606) -------------- --------------
U.S. GOVERNMENT AGENCY SECURITIES - 2.4%
10,260,000 10,260,000 FHLMC, 6.88%, 9/15/10 10,925,258 10,925,258
7,460,000 7,460,000 FNMA, 7.00%, 7/15/05 7,829,494 7,829,494
4,740,000 4,740,000 FNMA, 7.13%, 6/15/10 5,123,656 5,123,656
-------------- --------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 23,878,408 23,878,408
(Cost $22,771,418) -------------- --------------
U.S. TREASURY SECURITIES - 4.7%
1,235,000 1,235,000 U.S. Treasury Bonds, 8.88%, 2/15/19 1,697,162 1,697,162
3,845,000 3,845,000 U.S. Treasury Bonds, 8.00%, 11/15/21 4,975,661 4,975,661
12,650,000 12,650,000 U.S. Treasury Bonds, 6.00%, 2/15/26 13,329,938 13,329,938
1,100,000 1,100,000 U.S. Treasury Bonds, 6.75%, 8/15/26 1,272,909 1,272,909
12,360,000 12,360,000 U.S. Treasury Bonds, 6.50%, 11/15/26 13,881,763 13,881,763
3,165,000 3,165,000 U.S. Treasury Bonds, 5.25%, 2/15/29 3,031,975 3,031,975
4,000,000 4,000,000 U.S. Treasury Notes, 6.13%, 12/31/01 4,022,480 4,022,480
640,000 640,000 U.S. Treasury Notes, 6.00%, 8/15/04 658,099 658,099
660,000 660,000 U.S. Treasury Notes, 5.75%, 8/15/10 691,660 691,660
9,170,000 9,170,000 U.S. Treasury Notes, PO, 5.63%, 11/15/15(y) 4,016,735 4,016,735
-------------- --------------
TOTAL U.S. TREASURY SECURITIES 47,578,382 47,578,382
(Cost $43,544,855) -------------- --------------
SHORT-TERM INVESTMENTS - 7.3%
INVESTMENT COMPANIES - 7.3%
Pro Forma Pro Forma Pro Forma Pro Forma
Shares/Principal Amount Adjustments Shares/Principal Amount Value Adjustments Value
- ----------------------------------------------------------------------------------------------------------------------------------
6,472,260 (516,618) 5,955,642 Hamilton Money Fund 6,472,260 (516,618)(a) 5,955,642
67,411,956 J.P. Morgan Institutional
Prime Money Market Fund(a)* 67,411,956
-----------------------------------------
73,884,216 (516,618) 73,367,598
-----------------------------------------
(a) Reflects the redemption in short term securities of the J.P. Morgan
Diversified Fund - Advisor Series
The Accompanying Notes are an Integral Part of the Financial Statements.
14
THE DIVERSIFIED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 2000
Pro Forma
Value
Combined
J.P. Morgan
Pro Forma Pro Forma Pro Forma Diversified
Shares/Principal Amount Adjustments Shares/Principal Amount Value Adjustments Fund
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 0.0%(z)
$ 490,000 $ 490,000 U.S. Treasury Bills,
5.84%, 3/22/01(s)(y) $ 483,880 $ 483,880
-------------- --------------
TOTAL SHORT-TERM INVESTMENTS 74,368,096 (516,618) 73,851,478
(Cost $73,851,194) -------------- --------- --------------
TOTAL INVESTMENT SECURITIES - 100.0% $1,003,024,892 (516,618) $1,002,508,274
(Cost $914,943,106) ============== ========= ==============
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
VALUE AT UNREALIZED
CONTRACTS SETTLEMENT CONTRACTUAL DECEMBER 31, APPRECIATION
TO BUY DATE VALUE 2000 (DEPRECIATION)
- ------------------------------------------------------------------------------------
343,092,340 JPY for
3,470,000 EUR 3/21/01 $ 3,268,960 $ 3,043,414 $(225,546)
17,111,801 EUR 3/21/01 15,432,151 16,120,401 688,250
660,000 GBP 3/21/01 982,707 987,181 4,474
72,965,200 JPY 3/21/01 670,000 647,241 (22,759)
10,216,658 SEK 3/21/01 1,069,827 1,088,294 18,467
--------------------------------------------------
$21,423,645 $21,886,531 $ 462,886
==================================================
VALUE AT UNREALIZED
CONTRACTS SETTLEMENT CONTRACTUAL DECEMBER 31, APPRECIATION
TO BUY DATE VALUE 2000 (DEPRECIATION)
- ------------------------------------------------------------------------------------
1,000,000 AUD 3/21/01 $ 546,080 $ 555,990 $ (9,910)
5,124,320 CHF 3/21/01 3,033,937 3,183,543 (149,606)
3,750,000 EUR 3/21/01 3,406,587 3,532,738 (126,151)
805,374 GBP 3/21/01 1,168,300 1,204,621 (36,321)
615,947,814 JPY 3/21/01 5,614,839 5,463,789 151,050
--------------------------------------------------
$13,769,743 $13,940,681 $(170,938)
==================================================
FUTURES CONTRACTS
UNREALIZED
EXPIRATION UNDERLYING FACE APPRECIATION
PURCHASED DATE AMOUNT AT VALUE (DEPRECIATION)
- -------------------------------------------------------------------------------
164 Dow Jones Stoxx 50 March 2001 $ 7,409,332 $ (20,222)
217 US Two Year Note March 2001 44,084,908 394,589
338 US Five Year Note March 2001 35,004,125 788,350
-----------------------------------
$86,498,365 $1,162,717
===================================
Unrealized
Expiration Underlying Face Appreciation
Sold Date Amount at Value (Depreciation)
- -------------------------------------------------------------------------------
1 FTSE 100 Index March 2001 $ 92,621 $ 2,499
7 SPI 200 Index March 2001 315,539 (2,857)
5 Topix Index March 2001 561,515 (12,024)
36 0US Ten Year Note March 2001 37,749,377 (800,776)
43 US Long Bond March 2001 4,498,875 (120,838)
-----------------------------------
$43,217,927 $(933,996)
===================================
COMMON STOCKS COUNTRIES % OF TOTAL INVESTMENTS
- ------------------------------------------------------------------------------
Australia 0.2%
Finland 0.3%
France 0.9%
Germany 0.8%
Hong Kong 0.2%
Italy 0.3%
Japan 2.3%
Netherlands 0.6%
Singapore 0.1%
Spain 0.4%
Sweden 0.2%
Switzerland 1.0%
United Kingdom 2.2%
United States 50.1%
FOREIGN BONDS & SOVEREIGN
GOVERNMENTS COUNTRIES % OF TOTAL INVESTMENTS
- ------------------------------------------------------------------------------
Argentina 0.1%
Bermuda 0.1%
Brazil 0.3%
Russia 0.1%
France 0.2%
Netherlands 0.5%
United Kingdom 0.5%
ADR - American Depositary Receipt
FRB - Floating Rate Bond
PO - Principal Only
SDR - Swedish Depository Receipt
SEQ - Sequential Payer
TBA - Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal
amount and maturity will be determined upon settlement.
VRN - Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average maturity.
144A - Securities restricted for resale to Qualified Institutional Buyers
(a) Money market mutual fund registered under the Investment Co. Act of 1940,
as amended, and advised by J.P. Morgan Investment Management, Inc.
(i) Foreign security
(s) Security is fully or partially segregated with custodian as collateral for
futures or with brokers as initial margin for futures contracts.
(y) Yield to maturity
(z) Category is less than 0.05% of total investment securities.
+ Non-income producing security
* The adviser has agreed to reimburse its advisory fee from the portfolio in
an amount to offset any doubling of investment advisory and shareholder
servicing fees.
The Accompanying Notes are an Integral Part of the Financial Statements.
15
J.P. MORGAN INSTITUTIONAL DIVERSIFIED FUND / JP MORGAN DIVERSIFIED FUND /
THE DIVERSIFIED PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2000 (UNAUDITED)
J.P. MORGAN
INSTITUTIONAL J.P. MORGAN THE DIVERSIFIED
DIVERSIFIED FUND DIVERSIFIED FUND PORTFOLIO
ASSETS:
Investment securities, at value (cost $915,459,724) $ - $ - $1,003,024,892
Investment in The Diversified Portfolio, at value 621,015,940 327,543,617 -
Foreign currency, at value (cost $1,260,223) - - 1,284,829
Receivable for Investments Sold - - 6,163,051
Dividend and Interest Receivable - - 4,413,075
Unrealized Appreciation of Forward Foreign Currency Contracts - - 862,241
Receivable for Expense Reimbursements 166,312 - 28,103
Foreign Tax Reclaim Receivable - - 199,715
Variation Margin Receivable - - 81,933
Prepaid Trustees' Fees and Expenses 825 449 -
Prepaid Expenses and Other Assets 764 497 1,381
----------------------------------------------------
Total Assets 621,183,841 327,544,563 1,016,059,220
----------------------------------------------------
LIABILITIES:
Payable for Investments Purchased - - 65,347,875
Unrealized Depreciation of Forward Currency Contracts - - 570,293
Advisory Fee Payable - - 461,335
Due to Custodian - - 392,754
Shareholder Servicing Fee Payable 56,178 69,118 -
Administrative Services Fee Payable 13,378 6,584 19,975
Fund Services Fee Payable 420 204 625
Administration Fee Payable 278 117 602
Accrued Expenses and Other Liabilities 56,323 27,438 189,586
----------------------------------------------------
Total Liabilities 126,577 103,461 66,983,045
----------------------------------------------------
NET ASSETS:
Paid-in Capital 566,703,076 300,662,569 -
Undistributed (Distributions in Excess of ) Net Investment Income 113,630 108,846 -
Accumulated Net Realized Loss on Investment (4,860,001) (2,343,139) -
Net Unrealized Appreciation (Depreciation) on Investment 59,100,559 29,012,826 -
----------------------------------------------------
Net Assets $621,057,264 $327,441,102 $ 949,076,175
====================================================
Shares of Beneficial Interest Outstanding 45,376,091 21,535,238
Net Assets Value Per Share $ 13.69 $ 15.20
PRO FORMA WITH REORGANIZATION
JP MORGAN DIVERSIFIED FUND
Shares Outstanding
Select
Institutional
Net Asset Value Per Share
Select
Institutional
====================================================
PRO FORMA
ADJUSTMENTS PRO FORMA COMBINED
ASSETS:
Investment securities, at value (cost $915,459,724) $ (516,618) (d) $1,002,508,274
Investment in The Diversified Portfolio, at value (948,559,557) (a) -
Foreign currency, at value (cost $1,260,223) - 1,284,829
Receivable for Investments Sold - 6,163,051
Dividend and Interest Receivable - 4,413,075
Unrealized Appreciation of Forward Foreign Currency Contracts - 862,241
Receivable for Expense Reimbursements - 194,415
Foreign Tax Reclaim Receivable - 199,715
Variation Margin Receivable - 81,933
Prepaid Trustees' Fees and Expenses - 1,274
Prepaid Expenses and Other Assets - 2,642
----------------------------------------------
Total Assets (949,076,175) 1,015,711,449
----------------------------------------------
LIABILITIES:
Payable for Investments Purchased - 65,347,875
Unrealized Depreciation of Forward Currency Contracts - 570,293
Advisory Fee Payable - 461,335
Due to Custodian - 392,754
Shareholder Servicing Fee Payable - 125,296
Administrative Services Fee Payable - 39,937
Fund Services Fee Payable - 1,249
Administration Fee Payable - 997
Accrued Expenses and Other Liabilities - 273,347
----------------------------------------------
Total Liabilities - 67,213,083
----------------------------------------------
NET ASSETS:
Paid-in Capital - 867,365,645
Undistributed (Distributions in Excess of ) Net Investment Income - 222,476
Accumulated Net Realized Loss on Investment - (7,203,140)
Net Unrealized Appreciation (Depreciation) on Investment - 88,113,385
----------------------------------------------
Net Assets $(949,076,175) $ 948,498,366
==============================================
Shares of Beneficial Interest Outstanding (66,911,329) (c) -
Net Assets Value Per Share
PRO FORMA WITH REORGANIZATION
J.P. MORGAN INSTITUTIONAL DIVERSIFIED FUND
Shares Outstanding
Select 23,923,715 (b) 23,923,715
Institutional 45,376,091 (b) 45,376,091
Net Asset Value Per Share
Select 13.69
Institutional 13.69
==============================================
(a) Elimination of investment in master portfolio from the feeder funds.
(b) The difference in number of shares outstanding due to the Reorganization.
(c) Reallocation of feeder funds beneficial interest to Select, and
Institutional due to the Reorganization.
(d) Reflects the redemption in short term securities of the J.P. Morgan
Diversified Fund - Advisor Series.
See Notes to Pro Forma Financial Statements.
16
J.P. MORGAN INSTITUTIONAL DIVERSIFIED FUND/JP MORGAN DIVERSIFIED FUND/
THE DIVERSIFIED PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
(UNAUDITED)
J.P. MORGAN J.P. MORGAN DIVERSIFIED
INSTITUTIONAL DIVERSIFIED PORTFOLIO
DIVERSIFIED FUND FUND
INCOME:
Allocated Investment Income From Portfolio $ 21,237,481 $11,570,669 $ -
Interest Income - - 24,757,499
Dividend Income from Affiliated Investments - - 132,435
Dividend Income - - 7,983,387
Allocated Portfolio Expenses (4,074,411) (2,248,676) -
---------------------------------------------------------------
Investment Income 17,163,070 9,321,993 32,873,321
---------------------------------------------------------------
EXPENSES:
Advisory Fee - - 5,360,752
Shareholder Servicing Fee 648,890 881,280 -
Administrative Services Fee 156,638 85,117 241,804
Custodian Fees and Expenses - - 958,910
Registration Fees 40,185 52,154 -
Transfer Agent Fees 17,850 40,616 -
Professional Fees 11,997 13,373 48,314
Financial and Fund Accounting Services Fee 25,206 25,206 -
Printing Expenses 9,091 22,969 18,908
Fund Services Fee 9,550 5,198 14,753
Trustees' Fees and Expenses 9,234 4,426 14,056
Administration Fee 7,049 3,834 6,584
Insurance Expense - - 1,752
Miscellaneous 32,785 26,027 -
---------------------------------------------------------------
Total Expenses 968,475 1,160,200 6,665,833
---------------------------------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses (823,580) (181) (278,379)
---------------------------------------------------------------
---------------------------------------------------------------
Net Expenses 144,895 1,160,019 6,387,454
---------------------------------------------------------------
---------------------------------------------------------------
Net Investment Income 17,018,175 8,161,974 26,485,867
---------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Investment Transactions 2,652,282 1,385,001 3,648,818
Futures Contracts (516,468)
Foreign Currency Contracts and Transactions 909,024
Investments
Net realized loss 2,652,282 1,385,001 4,041,374
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
Investments (46,244,555) (24,141,375) (69,107,859)
Futures Contracts (1,635,358)
Foreign Currency Contracts and Transactions 353,753
Change in net unrealized depreciation (46,244,555) (24,141,375) (70,389,464)
---------------------------------------------------------------
Net decrease in net assets from operations $ (26,574,098) $ (14,594,400) $ (39,862,223)
===============================================================
PROFORMA PROFORMA
ADJUSTMENTS COMBINED
JP MORGAN
DIVERSIFIED
FUND
INCOME:
Allocated Investment Income From Portfolio $ (32,808,150)(c) $ -
Interest Income (3,324)(g) 24,754,175
Dividend Income from Affiliated Investments - 132,435
Dividend Income - 7,983,387
Allocated Portfolio Expenses 6,323,087 (b) -
---------------- ------------------
Investment Income (26,488,387) 32,869,997
---------------- ------------------
EXPENSES:
Advisory Fee (578)(g) 5,360,174
Shareholder Servicing Fee 1,530,170
Administrative Services Fee 1,014,248 (a) 1,497,807
Custodian Fees and Expenses (15,000)(d) 943,910
Registration Fees 92,339
Transfer Agent Fees 58,466
Professional Fees (22,600)(d) 51,084
Financial and Fund Accounting Services Fee (5,000)(d) 45,412
Printing Expenses (7,000)(d) 43,968
Fund Services Fee 29,501
Trustees' Fees and Expenses 27,716
Administration Fee 17,467
Insurance Expense 1,752
Miscellaneous 58,812
-
---------------- ------------------
Total Expenses 964,070 9,758,578
---------------- ------------------
Less: Amounts Waived (964,070)(a) (964,070)
Less: Reimbursement of Expenses (246,411)(a) (1,348,551)
---------------- ------------------
---------------- ------------------
Net Expenses (246,411) 7,445,957
---------------- ------------------
---------------- ------------------
Net Investment Income (26,241,976) 25,424,040
---------------- ------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Investment Transactions (4,037,283)(e) 3,648,818
Futures Contracts (516,468)
Foreign Currency Contracts and Transactions 909,024
Investments
Net realized loss (4,037,283) 4,041,374
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
Investments 70,385,930(e) (69,107,859)
Futures Contracts (1,635,358)
Foreign Currency Contracts and Transactions 353,753
Change in net unrealized depreciation 70,385,930 (70,389,464)
---------------- ------------------
Net decrease in net assets from operations $ 40,106,671 $ (40,924,050)
================ ==================
(a) Reflects adjustments to investment advisory fee, administrative fees and
shareholder servicing fees and/or related waivers based on the surviving
fund's revised fee schedule.
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under feeder expenses.
(c) Reallocation of investments income to feeder funds
(d) Reduction reflects the estimated benefit of combining operations.
(e) Reallocation of realized and unrealized loss to feeder funds.
(g) Reflects the elimination of J.P. Morgan Diversified Fund - Advisor Series
allocated expenses/income.
See Notes to Pro Forma Financial Statements
17
J.P. MORGAN INSTITUTIONAL DIVERSIFIED FUND/J.P. MORGAN
DIVERSIFIED FUND/THE DIVERSIFIED PORTFOLIO
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities, Statement of
Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of The Diversified Portfolio ("Master Portfolio"), J.P. Morgan
Institutional Diversified Fund ("Institutional Fund"), and the J.P. Morgan
Diversified Fund ("Diversified Fund"), (collectively the "feeder funds" of the
Master Portfolio) as if the proposed Reorganization occurred as of and for the
twelve months ended December 31, 2000.
The Pro Forma Statements give effect to the proposed transfer of all assets and
liabilities of Diversified Fund, and the Master Portfolio in exchange for shares
in Institutional Fund. The Pro Forma Statements should be read in conjunction
with the historical financial statements of each Fund, which have been
incorporated by reference in their respective Statements of Additional
Information.
2. SHARES OF BENEFICIAL INTEREST:
The existing shares of Institutional Fund would be renamed Institutional Shares,
and the existing shares of Diversified Fund would be renamed Select Class
Shares. The net asset values per share for Select Shares would be identical to
the closing net asset value per share for the Institutional Shares immediately
prior to the reorganization.
Under the proposed Reorganization, each shareholder of Diversified Fund would
receive shares of Institutional Fund with a value equal to their holding in
their respective funds. Holders of Diversified Fund will receive Select Class
Shares in the Institutional Fund. Therefore, as a result of the proposed
Reorganization, current shareholders of Diversified Fund will become
shareholders of Institutional Fund.
The Pro Forma net asset value per share assumes the issuance of additional
shares of Institutional Fund, which would have been issued on December 31, 2000
in connection with the proposed Reorganization. The amount of additional shares
assumed to be issued was calculated based on the December 31, 2000 net assets of
Diversified Fund and the net asset values per share of Institutional Fund.
Select Class Shares
Increase in Shares Issued 23,923,715
Net Assets 12/31/00 327,441,102
Pro Forma Net Asset Value 12/31/00 13.69
3. PRO FORMA OPERATIONS:
The Pro Forma Statement of Operations assumes similar rates of gross investment
income for the investments of each Fund. Accordingly, the combined gross
investment income is equal to the sum of each Fund's gross investment income.
Certain expenses have been adjusted to reflect the expected expenses of the
combined entity including the change in administration fee and the now expected
expense cap. The pro forma investment advisory,
shareholder servicing and distribution fees of the combined Fund are based on
the fee schedule in effect for the surviving fund at the combined level of
average net assets for the twelve months ended December 31, 2000.
FORM N-14
PART C - OTHER INFORMATION
Item 15. Indemnification.
---------------
Reference is made to Section 5.3 of Registrant's Declaration of Trust
and Section 5 of Registrant's Distribution Agreement.
Registrant, its Trustees and officers are insured against certain
expenses in connection with the defense of claims, demands, actions, suits, or
proceedings, and certain liabilities that might be imposed as a result of such
actions, suits or proceedings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
trustees, officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, trustee, officer, or controlling person of the
Registrant and the principal underwriter in connection with the successful
defense of any action, suit or proceeding) is asserted against the Registrant by
such director, trustee, officer or controlling person or principal underwriter
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
Item 16. Exhibits.
---------------
1 Declaration of Trust.
(a) Declaration of Trust, as amended, was filed as Exhibit No. 1
to Post-Effective Amendment No. 25 to the Registrant's Registration Statement
on Form N-1A (File No. 033-54642) (the "Registration Statement") filed on
September 26, 1996 (Accession Number 0000912057-96-021281).
(b) Amendment No. 5 to Declaration of Trust; Amendment and Fifth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the Registration Statement filed on December 26, 1996
(Accession Number 0001016964-96-000061).
Part C-1
(c) Amendment No. 6 to Declaration of Trust; Amendment and Sixth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. 1(b) to Post-Effective Amendment
No. 31 to the Registration Statement on February 28, 1997 (Accession Number
0001016964-97-000041).
(d) Amendment No. 7 to Declaration of Trust; Amendment and
Seventh Amended and Restated Establishment and Designation of Series of Shares
of Beneficial Interest was filed as Exhibit No. 1(c) to Post-Effective
Amendment No. 32 to the Registration Statement on April 15, 1997 (Accession
Number 0001016964-97-000053).
(e) Amendment No. 8 to Declaration of Trust; Amendment and
Eighth Amended and Restated Establishment and Designation of Series of Shares
of Beneficial Interest was filed as Exhibit No. l(d) to Post-Effective
Amendment No. 40 to the Registration Statement on October 9, 1997 (Accession
Number 0001016964-97-000158).
(f) Amendment No. 9 to Declaration of Trust; Amendment and Ninth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. l(e) to Post-Effective Amendment
No. 50 to the Registration Statement on December 29, 1997 (Accession Number
0001041455-97-000014).
(g) Amendment No. 10 to Declaration of Trust; Amendment and
Tenth Amended and Restated Establishment and Designation of Series of Shares
of Beneficial Interest and change voting procedures to dollar-based voting was
filed as Exhibit No. (a)6 to Post-Effective Amendment No. 60 to the
Registration Statement on December 31, 1998 (Accession Number
0001041455-98-000097).
(h) Amendment No. 11 to Declaration of Trust. Incorporated
herein by reference to Post-Effective Amendment No. 63 to the Registration
Statement filed on April 29, 1999 (Accession Number 00001041455-99-000041).
(i) Amendment No. 12 to Declaration of Trust. Incorporated
herein by reference to Post-Effective Amendment No. 72 to the Registration
Statement filed on April 3, 2000 (Accession Number 0001041455-00-000084).
(j) Amendment No. 13 to Declaration of Trust, incorporated
herein by reference to Post-Effective Amendment No. 78 to the Registration
Statement filed on August 1, 2000 (Accession Number 0000894088-00-000008).
(k) Amendment No.14 to Declaration of Trust incorporated herein
by reference to Post-Effective Amendment No. 78 to the Registration Statement
filed on August 1, 2000 (Accession Number 0000894088-00-000008).
2 By-laws.
(a) Restated By-Laws of Registrant. Incorporated herein by
reference to Post-Effective Amendment No. 29 to the Registration Statement
filed on December 26, 1996 (Accession Number 0001016964-96-000061).
Part C-2
(b) Amendment to Restated By-laws of Registrant. Incorporated
herein by reference to Post-Effective Amendment No. 71 to the Registration
Statement filed on February 28, 2000 (Accession Number 0001041455-00-000056).
3 Not Applicable
4 Agreement and Plan of Reorganization filed herewith as
Appendix A to the Combined Prospectus/Proxy Statement.
5 Not Applicable
6 Form of Investment Advisory Agreement to be filed by
Amendment.
7 Distribution and Sub-Administration Agreement to be filed by
Amendment.
8 Not Applicable
9 Custodian Agreement
(a) Custodian Contract between Registrant and State Street Bank
and Trust Company ("State Street"). Incorporated herein by reference to
Post-Effective Amendment No. 29 to the Registration Statement filed on
December 26, 1996 (Accession Number 0001016964-96-000061).
(b) Custodian Contract between Registrant and The Bank of New
York. Incorporated herein by reference to Post-Effective Amendment No. 71 to
the Registration Statement filed on February 28, 2000 (Accession Number
0001041455-00-000056).
10 Forms of Rule 12b-1 Distribution Plans to be filed by
Amendment.
11 Opinion and Consent of Nixon Peabody LLP as to the Legality
of Shares to be filed by Amendment.
12 Opinion and Consent of Simpson Thacher & Bartlett as to Tax
Consequences to be filed by Amendment.
13 Material Contracts.
(a) Co-Administration Agreement between Registrant and FDI.
Incorporated herein by reference to Post-Effective Amendment No. 29 to the
Registration Statement filed on December 26, 1996 (Accession Number
0001016964-96-000061).
(b) Restated Shareholder Servicing Agreement between Registrant
and Morgan Guaranty Trust Company of New York ("Morgan Guaranty") filed as
Exhibit (h)2 to Post Effective Amendment No. 54 to the Registration Statement
on August 25, 1998 (Accession No. 0001041455-98-000053).
Part C-3
(c) Transfer Agency and Service Agreement between Registrant and
State Street. Incorporated herein by reference to Post-Effective Amendment No.
29 to the Registration Statement filed on December 26,1996 (Accession Number
0001016964-96-000061).
(d) Restated Administrative Services Agreement between
Registrant and Morgan Guaranty. Incorporated herein by reference to
Post-Effective Amendment No. 29 to the Registration Statement filed on
December 26, 1996 (Accession Number 0001016964-96-000061).
(e) Fund Services Agreement, as amended, between Registrant and
Pierpont Group, Inc. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the Registration Statement filed on December 26, 1996
(Accession Number 0001016964-96-000061).
(f) Service Plan with respect to Registrant's Service Money
Market Funds. Incorporated herein by reference to Post-Effective Amendment No.
33 to the Registration Statement filed on April 30, 1997 (Accession Number
00001016964-97-000059).
(g) Service Plan with respect to Registrant's Small Company Fund
Advisor Series, Small Company Opportunities Fund -- Advisor Series,
International Equity Fund --Advisor Series, International Opportunities Fund
- -- Advisor Series, U.S. Equity Fund -- Advisor Series, Diversified Fund --
Advisor Series incorporated herein by reference to Post-Effective Amendment
No. 78 to the Registration Statement filed on August 1, 2000 (Accession Number
0000894088-00-000008).
(h) Amended Service Plan with respect to Registrant's
Disciplined Equity -- Advisor series and Direct Prime Money Market Funds.
Incorporated herein by reference to Post-Effective Amendment No. 72 to the
Registration Statement filed on April 3, 2000 (Accession Number
0001041455-00-000084).
(i) Amended Service Plan with respect to Registrant's J.P.
Morgan Prime Cash Management Fund. Incorporated herein by reference to
Post-Effective Amendment No. 75 to Registration Statement filed on May 17,
2000 (Accession Number 0001041455-00-000122).
(j) Form of Administration Agreement (to be filed by Amendment).
(k) Form of Sub-Administration Agreement (to be filed by
Amendment).
14 Consent of PricewaterhouseCoopers LLC.
15 None
16 Powers of Attorney.
17(a) Form of Proxy Card.
17(b) Prospectus for the Surviving Fund to be filed by Amendment.
17(c) Prospectus for the Merging Fund.
Part C-4
17(d) Statement of Additional Information for the Surviving Fund to
be filed by Amendment.
17(e) Statement of Additional Information for the Merging Fund.
17(f) Annual Report of the Surviving Fund (including the Annual
Report of the Master Portfolio) dated June 30, 2000.
17(g) Semi-Annual Report of the Surviving Fund (including the
Semi-Annual Report of the Master Portfolio) dated December 31,
2000.
17(h) Annual Report of the Merging Fund (including the Annual Report
of the Master Portfolio) dated June 30, 2000.
17(i) Semi-Annual Report of the Merging Fund (including the
Semi-Annual Report of the Master Portfolio) dated December 31,
2000.
Item 17. Undertakings.
---------------
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which
is part of this registration statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, as amended (the "1933 Act"), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at that
time shall be deemed to be the initial bona fide offering of them.
Part C-5
SIGNATURES
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the registrant, in the City of New York and the
State of New York, on the 12th day of April, 2001.
J.P. MORGAN INSTITUTIONAL FUNDS
Registrant
By: /s/ Christopher Kelley
-----------------------------------------
Christopher Kelley
Vice President and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on April 12, 2001.
George Rio*
- ------------------------------------
George Rio
President and Treasurer
Matthew Healey*
- ------------------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer)
Frederick S. Addy*
- ------------------------------------
Frederick S. Addy
Trustee
William G. Burns*
- ---------------------------
William G. Burns
Trustee
Arthur C. Eschenlauer*
- ---------------------------
Arthur C. Eschenlauer
Trustee
Michael P. Mallardi*
- ------------------------------------
Michael P. Mallardi
Trustee
*By /s/ Christopher Kelley
-----------------------------------
Christopher Kelley
as attorney-in-fact pursuant to a power of attorney.
EXHIBITS
ITEM DESCRIPTION
- ---- -----------
(14) Consent of PricewaterhouseCoopers LLP.
(16) Powers of Attorney.
(17) (a) Form of Proxy Card.
(c) Prospectus for the J.P. Morgan Diversified Fund.
(e) Statement of Additional Information for J.P. Morgan
Diversified Fund.
(f) Annual Report of J.P. Morgan Institutional Diversified Fund
(including Annual Report of The Diversified Portfolio) dated
June 30, 2000.
(g) Annual Report of J.P. Morgan Diversified Fund (including the
Annual Report of the Diversified Fund) dated June 30, 2000.
(h) Semi-Annual Report of J.P. Morgan Institutional Diversified
Fund (including Semi-Annual Report of the Diversified
Portfolio) dated December 31, 2000.
(i) Semi-Annual Report of J.P. Morgan Diversified Fund (including
the Semi-Annual Report of the Diversified Fund) dated
December 31, 2000.