As filed with the Securities and Exchange Commission on May 15, 2001
Registration No. 333-58990/811-07342
================================================================================
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 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:
1-800-766-7722
Address of Principal Executive Offices:
522 Fifth Avenue
New York, NY 10036
Name and Address of Agent for Service:
Sharon Weinberg
522 Fifth Avenue
New York, NY 10036
Copies to:
JOSEPH J. BERTINI, ESQ. SARAH E. COGAN, ESQ. JOHN E. BAUMGARDNER, JR. ESQ.
PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett Sullivan & Cromwell
c/o 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 16, 2001 pursuant
to Rule 488 under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration No. 033-54642/811-07342) pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant's
Form 24f-2 for the fiscal year ended May 31, 2000 was filed on October 3, 2000.
Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. MORGAN U.S. EQUITY FUND
A SERIES OF J.P. MORGAN FUNDS
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-521-5411
May 16, 2001
Dear Shareholder:
A special meeting of the shareholders of J.P. Morgan U.S. Equity Fund (the
"Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), will be held on July 3,
2001 at 9:00 a.m., Eastern time. Formal notice of the meeting appears after this
letter, followed by materials regarding the meeting.
As you may be aware, The Chase Manhattan Corporation recently completed a
merger with J.P. Morgan & Co. Incorporated, the former corporate parent of the
investment adviser of the Merging Fund's assets, to form J.P. Morgan Chase & Co.
("JPMC"). As a result of this merger, JPMC is seeking to reorganize parts of its
investment management business and funds advised by its subsidiaries. At the
special meeting (the "Meeting"), shareholders will be asked to consider and vote
upon the proposed reorganization of the Merging Fund into J.P. Morgan
Institutional U.S. Equity Fund (the "Surviving Fund"), a series of J.P. Morgan
Institutional Funds ("JPMIF") (the "Reorganization"). After the Reorganization,
shareholders of the Merging Fund will hold Select Class Shares of the Surviving
Fund. The investment objective and policies of the Surviving Fund are identical
to those of the Merging Fund. Both the Merging Fund and the Surviving Fund
currently invest all of their investable assets in The U.S. Equity Portfolio
(the "Master Portfolio"). In connection with the Reorganization, the Surviving
Fund will cease to operate under a "master/feeder" structure and instead will
invest directly in portfolio securities. In connection with the Reorganization,
the Surviving Fund will be renamed "JPMorgan U.S. Equity Fund."
The Surviving Fund has also entered into agreements and plans of
reorganization with JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large
Cap Equity Fund), a series of Mutual Fund Group ("MFG") with similar investment
objectives and policies to the Merging Fund (the "Chase Fund Reorganization"),
and J.P. Morgan U.S. Equity Fund-Advisor Series whose assets are managed by J.P.
Morgan Investment Management Inc. ("JPMIM") with identical investment objectives
and policies to the Surviving Fund (the "Feeder Reorganization" and, together
with the Chase Fund Reorganization, the "Concurrent Reorganizations"). If the
Concurrent Reorganizations are approved by the shareholders of these other funds
and certain other conditions are met, these other funds will be reorganized into
the Surviving Fund. The consummation of the Reorganization is contingent upon
the consummation of the Feeder Reorganization.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPMF.
The investment adviser for the assets of both the Merging Fund and the
Surviving Fund is JPMIM.
Please see the enclosed Combined Prospectus/Proxy Statement for detailed
information regarding the proposed Reorganization, the Concurrent
Reorganizations and a comparison of the Merging Fund and JPMF to the Surviving
Fund and JPMIF. The cost and expenses associated with the Reorganization,
including costs of soliciting proxies, will be borne by JPMC and not by the
Merging Fund, JPMF, the Surviving Fund, JPMIF 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 JPMF,
which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPMF 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 THE NUMBER PROVIDED ON THE PROXY CARD 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,
/s/ Matthew Healey
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 they 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 the number provided on the proxy card in order to vote.
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes that
it is in the best interests of its shareholders.
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. 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.
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 will 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, the Surviving Fund's
administrator, has contractually agreed to waive fees payable to it and
reimburse expenses so that the actual total operating expenses will remain the
same for 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).
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.
HOW WILL THE PROPOSED CONCURRENT REORGANIZATIONS AFFECT MY INVESTMENT IF THEY
ARE APPROVED BY THE SHAREHOLDERS OF THE OTHER FUNDS?
If the Concurrent Reorganizations are approved and certain other conditions
are met, the assets and liabilities of these other merging funds will become
assets and liabilities of the Surviving Fund. The consummation of the
Reorganization is contingent upon the consummation of the Feeder Reorganization,
but not upon the consummation of the Chase Fund Reorganization.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR JPMF IF AFTER THE
REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF JPMIF?
Even if the Reorganization is approved, other mutual funds that are series
of JPMF will continue to exist and operate. All shareholders of any series of
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
JPMIF are being asked to approve the same Trustees that are proposed for JPMF.
AS A HOLDER OF SHARES OF THE MERGING FUND, WHAT DO I NEED TO DO?
Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your
vote is important! Accordingly, please sign, date and mail the proxy card(s)
promptly in the enclosed return envelope as soon as possible after reviewing the
enclosed Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
J.P. MORGAN U.S. EQUITY FUND
A SERIES OF J.P. MORGAN FUNDS
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-521-5411
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of J.P. Morgan U.S. Equity Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting (the "Meeting") of the
shareholders ("Shareholders") of J.P. Morgan U.S. Equity Fund (the "Merging
Fund"), a series of J.P. Morgan Funds ("JPMF"), will be held at the offices of
J.P. Morgan Chase & Co., 1211 Avenue of the Americas, 41st floor, New York, New
York, on July 3, 2001 at 9:00 a.m. (Eastern time), for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization (the "Reorganization Plan") by and among JPMF, on
behalf of the Merging Fund, J.P. Morgan Institutional Funds ("JPMIF"),
on behalf of J.P. Morgan Institutional U.S. Equity Fund (the
"Surviving Fund") and J.P. Morgan Chase & Co., and the transactions
contemplated thereby, including (a) the transfer of all of the assets
and liabilities of the Merging Fund to the Surviving Fund in exchange
for 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 eight Trustees to serve as members of the Board of Trustees
of JPMF.
ITEM 3. To transact such other business as may properly come before the
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. The Meeting will be a joint meeting with the meetings of shareholders
of all series of JPMF, which meetings are being called for purposes of
considering proposals 1 and 2 above and certain other proposals not applicable
to you.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPMF. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
THE MERGING FUND A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY
OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
/s/ Sharon Weinberg
SHARON WEINBERG
SECRETARY
May 16, 2001
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 16, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN U.S. EQUITY FUND
A SERIES OF J.P. MORGAN FUNDS
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-521-5411
BY AND IN EXCHANGE FOR SELECT CLASS SHARES OF
J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-766-7722
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of J.P. Morgan U.S. Equity Fund (the "Merging Fund"), a series of
J.P. Morgan Funds ("JPMF"), into JPMorgan Institutional U.S. Equity Fund (the
"Surviving Fund"), a series of J.P. Morgan Institutional Funds ("JPMIF"). If
approved by shareholders of the Merging Fund, the proposed reorganization will
be effected by transferring all of the assets and liabilities of the Merging
Fund to the Surviving Fund, which has identical investment objectives and
policies to those of the Merging Fund, in exchange for Select Class Shares of
the Surviving Fund (the "Reorganization"). Therefore, as a result of the
proposed Reorganization, current shareholders of the Merging Fund (the "Merging
Fund Shareholders") will become shareholders of the Surviving Fund ("Surviving
Fund Shareholders"). JPMF and JPMIF are both open-end management investment
companies offering shares in several portfolios. In connection with the
Reorganization, the J.P. Morgan Institutional U.S. Equity Fund will be renamed
"JPMorgan U.S. Equity Fund."
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Class A, Class
B, Class C, Select Class and Institutional Class. 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 on subsequent purchases or exchanges of
Select Class Shares of the Surviving Fund or other JPMorgan Funds.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPMF.
The terms and conditions of these transactions are more fully described in
this Combined Prospectus/ Proxy Statement and in the Agreement and Plan of
Reorganization (the "Reorganization Plan") among JPMF, on behalf of the Merging
Fund, JPMIF, on behalf of the Surviving Fund, and J.P. Morgan Chase & Co.,
attached to this Combined Prospectus/Proxy Statement as Appendix A.
The Board of Trustees for JPMF is soliciting proxies in connection with a
Special Meeting (the "Meeting") of Shareholders to be held on July 3, 2001 at
9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211 Avenue
of the Americas, 41st floor, New York, NY , at which meeting shareholders in the
Merging Fund will be asked to consider and approve the proposed Reorganization
Plan, certain transactions contemplated by the Reorganization Plan and certain
other proposals. This Combined Prospectus/Proxy Statement constitutes the proxy
statement of the Merging Fund for the meeting of its Shareholders and also
constitutes JPMIF'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 JPMF and JPMIF that
an investor should know before voting on the proposals. The current Prospectus,
Statement of Additional Information and Annual Report of the Merging Fund and
the preliminary Prospectus, Statement of Additional Information and the current
Annual Report of the Surviving Fund (including the Annual Report of The U.S.
Equity Portfolio), and the Semi-Annual Reports of the Merging Fund and the
Surviving Fund (including the Semi-Annual Report of The U.S. Equity
Portfolio) are incorporated herein by reference, and the preliminary Prospectus,
current Annual Report (including the Annual Report of The U.S. Fixed Income
Portfolio), and Semi-Annual Report (including the Semi-Annual Report of the U.S.
Equity Portfolio) for the Surviving Fund are enclosed with this Combined
Prospectus/Proxy Statement. A Statement of Additional Information relating to
this Combined Prospectus/ Proxy Statement dated May 16, 2001 containing
additional information about JPMF and JPMIF 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, Semi-Annual Report and Annual Report of the
Merging Fund (including the Annual Report for the U.S. Equity Portfolio) may be
obtained without charge by writing to JPMF at its address noted above or by
calling 1-800-521-5411.
This Combined Prospectus/Proxy Statement is expected to first be sent to
shareholders on or about May 16, 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 JPMF OR JPMIF.
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.
TABLE OF CONTENTS
Page
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INTRODUCTION...................................... 1
PROPOSAL 1: REORGANIZATION PLAN................... 1
SUMMARY........................................... 1
COMPARATIVE FEE AND EXPENSE TABLES................ 4
RISK FACTORS...................................... 5
INFORMATION RELATING TO THE PROPOSED
REORGANIZATION................................... 6
PURCHASES, REDEMPTIONS AND EXCHANGES.............. 10
DISTRIBUTIONS AND TAXES........................... 12
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING
FUND'S ORGANIZATION STRUCTURE.................... 13
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND
OTHER SERVICES................................... 14
INFORMATION RELATING TO VOTING MATTERS............ 21
ADDITIONAL INFORMATION ABOUT JPMF................. 23
ADDITIONAL INFORMATION ABOUT JPMIF................ 24
FINANCIAL STATEMENTS AND EXPERTS.................. 24
OTHER BUSINESS.................................... 24
LITIGATION........................................ 24
SHAREHOLDER INQUIRIES............................. 24
APPENDIX A--AGREEMENT AND PLAN OF
REORGANIZATION................................... A-1
INTRODUCTION
GENERAL
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of the Merging Fund, an open-end management investment company, in
connection with the solicitation by the Board of Trustees of JPMF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st floor, New York, NY (together with any
adjournments thereof, the "Meeting"). The Meeting will be a joint meeting with
the meetings of shareholders of all series of JPMF , which meetings are being
called for purposes of considering proposals 1 and 2 above and certain other
proposals not applicable to you. It is expected that the mailing of this
Combined Prospectus/Proxy Statement will be made on or about May 16, 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 May 11,
2001 among JPMF, on behalf of the Merging Fund, JPMIF, on behalf of the
Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined
as the "Funds"), and J.P. Morgan Chase & Co., pursuant to which all of the
assets and liabilities of the Merging Fund will be transferred to the Surviving
Fund in exchange for Select Class Shares of the Surviving Fund. As a result of
the Reorganization, Merging Fund Shareholders will become shareholders of the
Surviving Fund and will receive Select Class Shares equal in value to their
holdings in the Merging Fund on the date of the Reorganization. In connection
with the Reorganization, the Surviving Fund will be renamed "JPMorgan U.S.
Equity Fund." Further information relating to the Surviving Fund is set forth
herein, and the Surviving Fund's preliminary Prospectus, current Annual Report
and Semi-Annual Report are enclosed with this Combined Prospectus/Proxy
Statement.
THE JPMF BOARD UNANIMOUSLY RECOMMENDS 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 voting shares of the
Merging Fund present at the joint meeting if the holders of more than 50% of the
outstanding voting shares of the Merging Fund are present or represented by
proxy and (ii) more than 50% of all outstanding voting shares of the Merging
Fund. If the Reorganization Plan is not approved by the Merging Fund
Shareholders, the JPMF Board will consider other appropriate courses of action.
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization, the parties thereto and the transactions contemplated thereby,
and is qualified by reference to the more complete information contained
elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus, Statement
of Additional Information, Annual Report, and Semi-Annual Report (including the
Annual Report and Semi-Annual Report of the U.S. Equity Portfolio) and
Semi-Annual Report (including the Semi-Annual Report of the U.S. Equity
Portfolio) of the Merging Fund, the preliminary Prospectus and Statement of
Additional Information and the current Annual Report of the Surviving Fund and
the Reorganization Plan attached to this Combined Prospectus/Proxy Statement as
Appendix A.
PROPOSED REORGANIZATION
Each of the Surviving Fund and the Merging Fund currently invests all of its
investable assets in The U.S. Equity 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"). The Surviving Fund has also entered into plans of reorganization with
(i) JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large Cap Equity
Fund), a series of Mutual Fund Group ("MFG") with similar investment objectives
and policies to the Merging Fund (the "Chase Fund Reorganization ") and
(ii) J.P. Morgan U.S. Equity Fund--Advisor Series, a series of JPMIF whose
assets are managed by JPMIM with identical investment objectives and policies to
the Surviving Fund (the "Feeder Reorganization" and, together with the Chase
Fund Reorganization, the "Concurrent Reorganizations").
1
If each of the Reorganization and the Concurrent Reorganizations is approved
by the shareholders of the respective funds and certain other conditions are
met, the Merging Fund and these other funds will be reorganized into the
Surviving Fund. In connection 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. The
consummation of the Reorganization and the Chase Fund Reorganization are
contingent upon the consummation of the Feeder Reorganization. The consummation
of the Reorganization, however, is not contingent upon the consummation of the
Chase Fund Reorganization.
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Class A, Class
B, Class C, 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 those of the Merging Fund. However, while the Merging Fund and the
Surviving Fund currently invest all of their assets in the Master Portfolio
(which in turn invests in portfolio securities), after the Reorganization the
Surviving Fund will invest directly in portfolio securities. Following the
Reorganization the Surviving Fund will have substantially similar purchase,
redemption and dividend policies as the Merging Fund.
Based upon their evaluation of the relevant information presented to them,
including an analysis of the operation of the Surviving Fund both before and
after the Reorganization, the terms of the Reorganization Plan, the opportunity
to combine the two Funds with identical investment objectives and policies, and
the fact that the Reorganization will be tax-free, and in light of their
fiduciary duties under federal and state law, the JPMF Board and the JPMIF
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 its respective Fund and 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 its shareholders.
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 such shareholder's shares of the
Merging Fund. In addition, the holding period and tax basis of those assets
owned by the Merging Fund and transferred to the Surviving Fund will be
identical for the Surviving Fund. See "Information Relating to the Proposed
Reorganization--Federal Income Tax Consequences."
INVESTMENT ADVISER
The investment adviser for the Master Portfolio (and therefore the assets of
the Merging Fund and the Surviving Fund) is JPMIM. Following the Reorganization,
JPMIM will continue to serve as the Surviving Fund's investment adviser. JPMIM
is a wholly-owned subsidiary of J.P. Morgan Chase & Co. ("JPMC").
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Surviving Fund and the Merging Fund is to
provide high total return from a portfolio of selected equity securities. See
"Risk Factors." Both Funds have identical investment policies, and the Surviving
Fund's investment policies will not change as a result of the Reorganization,
although, as mentioned above, the Surviving Fund will invest directly in
portfolio securities rather than the
2
Master Portfolio. For more information regarding the Surviving Fund's investment
policies, see the Surviving Fund's Prospectus enclosed with this Combined
Prospectus/Proxy Statement.
The Surviving Fund invests primarily in large-and medium-capitalization U.S.
companies. Industry by industry, the Surviving Fund's weightings are similar to
those of the Standard & Poor's 500 Stock Index (S&P 500). The Surviving Fund can
moderately underweight or overweight industries when it believes it will benefit
performance. Within each industry, the Surviving Fund focuses on those stocks
that JPMIM believes are most undervalued.
PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND
The principal risk factors associated with an investment in the Surviving
Fund are those typically associated with investing in a managed portfolio of
equity securities. In particular, the value of shares of the Surviving Fund will
be influenced by the performance of the securities selected for its portfolio.
The value of the Surviving Fund's shares will fluctuate in response to movements
in the stock market, especially movements of those stocks included in the S&P
500. See "Risk Factors."
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund's 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 0.40% of average daily net assets. Following the
Reorganization, JPMIM will manage the Surviving Fund's assets and will receive a
fee at an annual rate of 0.40% of average daily net assets. Following the
Reorganization, JPMIM will manage the Surviving Fund's assets directly and will
receive a fee at an annual rate of 0.40% of average daily net assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the Distributor
for the Surviving Fund. Morgan Guaranty Trust Company of New York ("Morgan")
currently serves as administrator and shareholder servicing agent and the
distributor currently serves as sub-administrator. 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 subsquent to the consummation of the
Reorganization, The Chase Manhattan Bank ("Chase") will become the Surviving
Fund's fund accountant and custodian. PricewaterhouseCoopers LLP serves as the
Surviving Fund's independent accountants.
ADMINISTRATOR
As of August 11, 2001, the administration fee paid to Morgan will be
increased to 0.15% of average daily net assets for complex wide non-money market
fund assets up to $25 billion and 0.075% on assets in excess of $25 billion
(currently such assets are less than $25 billion). The Merging Fund currently
pays Morgan, its administrator, an administration fee at an effective rate of
0.048% of its average daily net assets.
ORGANIZATION
Each of JPMF and JPMIF is organized as a Massachusetts business trust. The
Merging Fund is organized as a series of JPMF and the Surviving Fund is
organized as a series of JPMIF.
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.
3
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses paid
by the Merging Fund for the most recent fiscal year that reflect current expense
arrangements; (ii) estimated fees and expenses on a pro forma basis after giving
effect to the Feeder Reorganization but not the Chase Fund Reorganization; and
(iii) estimated fees and expenses on a pro forma basis for the Surviving Fund
after giving effect to the Feeder Reorganization and the Chase Fund
Reorganization. Under the proposed 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 (which class will not
be distributed to Merging Fund Shareholders as a result of the Reorganization
and therefore no information on this class is shown in the table below). In
connection with the Reorganization and Concurrent Reorganizations, this class
will be re-named "Institutional Class" and the Class A share class, the Class B
share class, Class C share class and the Select Class share class will be
introduced.
The table indicates that while contractual (pre-waiver) total expense ratio
for current shareholders of the Merging Fund are anticipated to be higher
following the Reorganization, actual (post-waiver) total expense ratio for
current shareholders of the Merging Fund will be less or stay the same for at
least three years following the Reorganization. This is because Morgan, the
Surviving Fund's administrator, has contractually agreed to waive certain fees
and/or reimburse certain expenses to ensure that actual total operating expenses
do not increase for three years after the Reorganization.
THE MERGING FUND
----------------
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 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.38%
Total Annual Fund Operating Expenses 0.78%
THE SURVIVING FUND
------------------------------------
PRO FORMA WITH FEEDER REORGANIZATION
------------------------------------
SELECT CLASS SHARES
------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load)
when your 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 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.49%
Total Annual Fund Operating Expenses 0.89%
Fee Waivers and Expense Reimbursements(2) 0.10%
Net Expenses 0.79%
- ---------------------
(2) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the
Surviving Fund to the extent operating expenses (which exclude interest,
taxes, extraordinary expenses and expenses related to the deferred
compensation Plan) exceed 0.79% of average daily net assets with respect to
Select Class Shares of three years after the Reorganization Class Shares
for a period of three years.
4
THE SURVIVING FUND
-----------------------------------------
PRO FORMA WITH CONCURRENT REORGANIZATIONS
-----------------------------------------
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 0.40%
Distribution (12b-1) Fees None
Other Expense 0.49%
Total Annual Fund Operating Expense 0.89%
Contractual Fee Waivers and Expense Reimbursements 0.10%(A)
Net Expenses 0.79%
- ---------------------
(A) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the
Surviving Fund to the extent total operating expenses (excluding interest,
taxes, extraordinary expenses and expenses related to the deferred
compensation plan) exceed 0.79% of average daily net assets with respect to
Select Class Shares for three years after the Reorganization.
The table does not reflect charges or credits which investors might incur if
they invest through a financial institution.
EXAMPLE: This example helps investors compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example assumes:
- you invest $10,000;
- you sell all of your shares at the end of each period;
- your investment has a 5% return each year; and
- you pay net expenses for three years after the Reorganization and total
operating expenses as indicated in the table 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 $80 $249 $433 $ 966
PRO FORMA THE SURVIVING FUND
WITH FEEDER REORGANIZATION
Select Class Shares $81 $252 $462 $1,067
PRO FORMA THE SURVIVING FUND
WITH CONCURRENT
REORGANIZATION
Select Shares $81 $252 $462 $1,067
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. The Surviving Fund could underperform its benchmark due to JPMIM's
securities and asset allocation choices.
5
In general, the value of an investment in the Surviving Fund will fluctuate
in response to movements in the stock market. Adverse market conditions may from
time to time cause the Fund to take temporary defensive positions that are
inconsistent with its principal investment strategies and may hinder the Fund
from achieving its investment objective.
The Surviving Fund does not expect to invest more than 20% of its assets, at
the time of purchase, in foreign securities, and therefore may be subject to
risks in addition to those associated with U.S. securities. For example,
international currency exchange rate movements could reduce gains or create
losses. Additionally, the Surviving Fund could lose money because of foreign
government actions, political instability or lack of adequate and/or accurate
information.
The Surviving Fund may buy when-issued and delayed delivery securities.
The Surviving Fund may invest in derivatives such as futures, options, swaps
and forward foreign currency contracts that are used for hedging the portfolio
or specific securities. These derivatives may not fully offset the underlying
positions. This could result in losses to the Fund that would not have otherwise
occurred. Derivatives used for risk management may not have the intended effects
and may result in losses or missed opportunities. The counterparty to a
derivatives contract could default. Certain types of derivatives involve costs
to the Fund which can reduce returns. Derivatives that involve leverage could
magnify losses.
The Surviving Fund may lend some of its portfolio securities in order to
earn income. When the Surviving Fund lends a security, there is a risk that the
loaned securities may not be returned if the borrower defaults. The collateral
the Surviving Fund receives from the borrower will be subject to the risks of
the securities in which it is invested.
The Surviving Fund may invest in illiquid securities. The Surviving Fund
could have difficulty valuing these holdings precisely. The Surviving Fund could
be unable to sell these securities at the time or price desired.
The Surviving Fund may use short-term trading to take advantage of
attractive or unexpected opportunities or to meet demands generated by
shareholder activity. Increased trading would raise the Surviving Fund's
transaction costs. Increased short-term capital gains distributions would raise
shareholders' income tax liability.
An investment in the Surviving Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money if you sell when the Surviving Fund's
share price is lower than when you invested.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be consummated
are set forth in the Reorganization Plan. Significant provisions of the
Reorganization Plan are summarized below; however, this summary is qualified in
its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
DESCRIPTION OF THE REORGANIZATION PLAN
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, JPMIF will issue at the Effective Time of the Reorganization
full and fractional Select Class Shares of the Surviving Fund equal in aggregate
dollar value to the aggregate net asset value of full and fractional outstanding
shares of the Merging Fund as determined at the valuation time specified in the
Reorganization Plan. The Reorganization Plan provides that the Merging Fund will
declare a dividend or dividends prior to the Effective Time of the
Reorganization which, together with all previous dividends, will have the effect
of distributing to Merging Fund Shareholders all undistributed net investment
income earned and net capital gain realized up to and including the Effective
Time of the Reorganization.
Following the transfer of assets to, and the assumption of the liabilities
of the Merging Fund by, the Surviving Fund, the Merging Fund will distribute
Select Class Shares received by it to the Merging Fund Shareholders in
liquidation of the Merging Fund. Each Merging Fund Shareholder at the Effective
Time of the Reorganization will receive an amount of Select Class Shares with a
total net asset value equal to the net asset value of their Merging Fund Shares
plus the right to receive any dividends or distributions which were
6
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
September 1, 2001 or such other date as is agreed to by the parties.
In addition, the consummation of the Reorganization is contingent upon the
consummation of the Feeder Reorganization.
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC or one of its affiliates.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition to the performance of such party under the
Reorganization Plan or a material covenant of the other party is not fulfilled
by the date specified in the Reorganization Plan or if there is a material
default or material breach of the Reorganization Plan by the other party. In
addition, either party may terminate the Reorganization Plan if its trustees
determine that proceeding with the Reorganization Plan is not in the best
interests of their Fund's shareholders.
BOARD CONSIDERATIONS
The Merging Fund and the Surviving Fund currently exist in a"master/feeder"
format, pursuant to which each fund (the feeders) invests its assets in a common
portfolio--the "master"--and shares of each fund are sold to different
categories of investors with different distribution and shareholder services and
fees. Among other reasons for the creation of this structure 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
decision to structure the funds this way 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, non-U.S. feeders in
the fund complex withdrew their assets from the masters commencing in 1997,
thereby eliminating one of the principal reasons for the master/feeder format.
Nevertheless, the funds continued in that format and, the JPMF 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 merger of the Chase Manhattan Corporation
and J.P. Morgan & Co., 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 JPMF Board believes that the conversion by way of the proposed
Reorganization of the current master-feeder format into the multiclass format
discussed in this Combined Prospectus/Proxy Statement and the adoption of the
service arrangements by the Surviving Fund described herein (the "Service
7
Arrangements") are in the best interests of the Merging Funds and its
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 on
January 23 and 24 and on March 26 and 27, 2001 the JPMF 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) to the extent
that additional share classes are subsequently offered by the Surviving Fund it
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 sub-administrator will (a) upgrade the quality of services
currently being provided to the Funds, and (b) enhance Morgan's ability
effectively to monitor and oversee the quality of all Fund service providers,
including the investment adviser, distributor, custodian and transfer agent; (5)
Morgan's undertaking for three years to waive fees or reimburse the Surviving
Fund's expenses in order that the total expense ratios of the Select and
Institutional Classes do not exceed those of the Merging Fund and the Surviving
Fund, respectively; (6) the fact that all costs and expenses of the
Reorganization and implementation of the Service Arrangements would be borne by
JPMC and (7) the fact that the Reorganization would constitute a tax-free
reorganization.
In addition, each Board took into account that, notwithstanding the increase
in the administration fee paid to Morgan, Morgan agreed to cap the total
expenses as set forth in the expense table above and to institute a breakpoint
in the administration fee from 0.15% of average daily net assets for complex
wide non-money market fund assets up to $25 billion to 0.075% on assets in
excess of $25 billion (currently such assets are less than $25 billion). The
Merging Fund currently pays its administrator, Morgan, an administration fee at
an effective rate of 0.048% of its average daily net assets. 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 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
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 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 the Merging and Surviving Fund, as
applicable, that the interests of their respective shareholders 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 JPMF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PROPOSAL.
The JPMF Board has not determined what action the Merging Fund will take in
the event shareholders do not approve the Reorganization Plan or for any reason
the Reorganization is not consummated. In either such event, the Board will
consider other appropriate courses of action.
INFORMATION RELATING TO THE CONCURRENT REORGANIZATIONS
The terms and conditions under which the Concurrent Reorganizations may be
consummated are set forth in reorganization plans which are substantially
similar to the Reorganization Plan you are in considering. Concurrently with the
Reorganization and Feeder 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. The consummation of
the Chase Fund Reorganization is contingent upon the consummation of the
Reorganization and the Feeder Reorganization.
8
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that JPMF
receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of the Merging Fund to the Surviving Fund in exchange for the Select
Class Shares and the liquidating distributions to shareholders of the Select
Class Shares so received, as described in the Reorganization Plan, will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, the Merging Fund and the Surviving Fund will each be considered
"a party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Merging Fund as a result of such
transaction; (iii) no gain or loss will be recognized by the Surviving Fund as a
result of such transaction; (iv) no gain or loss will be recognized by the
Merging Fund Shareholders on the distribution to the Merging Fund Shareholders
of the Select Class Shares solely in exchange for their Merging Fund Shares; (v)
the aggregate basis of shares of the Surviving Fund received by a shareholder of
the Merging Fund will be the same as the aggregate basis of such Merging Fund
Shareholder's Merging Fund Shares immediately prior to the Reorganization; (vi)
the basis of the Surviving Fund in the assets of the Merging Fund received
pursuant to such transaction will be the same as the basis of such assets in the
hands of the Merging Fund immediately before such transaction; (vii) a Merging
Fund Shareholder's holding period for the Select Class Shares will be determined
by including the period for which such Merging Fund Shareholder held the Merging
Fund Shares exchanged therefor, provided that the Merging Fund Shareholder held
such Merging Fund Shares as a capital asset; and (viii) the Surviving Fund's
holding period with respect to the assets received in the Reorganization will
include the period for which such assets were held by the Merging Fund.
The Master Portfolio currently has an aggregate basis in its assets that is
higher than the aggregate basis of all of the partnership interests in the
Master Portfolio. Upon consummation of the Reorganization, the Surviving Fund
will have an aggregate basis in its assets equal to the aggregate basis of the
partnership interests in the Master Portfolio held by the Merging Fund and the
Surviving Fund immediately prior to the Reorganization rather than the higher
aggregate basis that such assets had in the hands of the Master Portfolio. Thus,
the benefit of such higher basis will be lost upon consummation of the
Reorganization.
JPMF has not sought a tax ruling from the Internal Revenue Service (the
"IRS"), but is acting in reliance upon the opinion of counsel discussed in the
previous paragraph. That opinion is not binding on the IRS and does not preclude
the IRS from adopting a contrary position. Shareholders should consult their own
advisers concerning the potential tax consequences to them, including state and
local income taxes.
CAPITALIZATION
Because the Merging Fund will be combined with the Surviving Fund in the
Reorganization as well as the Feeder Advisor Portfolio as a result of the
Concurrent Reorganizations, the total capitalization of the Surviving Fund after
the Reorganization and the Concurrent Reorganizations is expected to be greater
than the current capitalization of the Merging Fund. The following table sets
forth as of November 30, 2000: (i) the capitalization of the Merging Fund;
(ii) the capitalization of the Surviving Fund; (iii) the pro forma
capitalization of the Surviving Fund as adjusted to give effect to the
Reorganization and the Feeder Reorganization but not the Chase Fund
Reorganization and (iv) the pro forma capitalization of the Surviving Fund as
adjusted to give effect to the Reorganization and the Concurrent
Reorganizations. There is, of course, no assurance that the Reorganization and
the Concurrent Reorganizations will be consummated. Moreover, if consummated,
the capitalizations of the Surviving Fund and the Merging Fund are likely to be
different at the Effective Time of the Reorganization as a result of
fluctuations in the value of portfolio securities of each Fund and daily share
purchase and redemption activity in each Fund. 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, Class B share class,
Class C share class, and the Select Class share class will be introduced.
9
CAPITALIZATION
PRO FORMA WITH REORGANIZATION
BENEFICIAL NET ASSET
INTEREST SHARES VALUE PER
OUTSTANDING OUTSTANDING NET ASSETS SHARE
----------- ----------- ------------ ---------
J.P. MORGAN FUNDS
J.P. Morgan U.S. Equity
Fund--Advisor Series 53,157 -- 475,351 8.94
J.P. Morgan U.S. Equity Fund
(the Merging Fund) 16,611,076 -- 343,997,623 20.71
J.P. Morgan Institutional
U.S. Equity Fund (the
Surviving Fund) 15,051,872 -- 183,470,628 12.19
PRO FORMA COMBINED
Class A -- 38,998 475,351 12.19
Select -- 28,221,456 343,997,623 12.19
Institutional -- 15,051,872 183,470,628 12.19
CAPITALIZATION
PRO FORMA WITH CONCURRENT REORGANIZATION
BENEFICIAL NET ASSET
INTEREST SHARES VALUE PER
OUTSTANDING OUTSTANDING NET ASSETS SHARE
----------- ----------- ------------ ---------
J.P. MORGAN FUNDS
J.P. Morgan U.S. Equity
Fund--Advisor Series 53,157 -- 475,351 8.94
J.P. Morgan U.S. Equity Fund
(the Merging Fund) 16,611,076 -- 343,997,623 20.71
J.P. Morgan Institutional
U.S. Equity Fund 15,051,872 -- 183,470,628 12.19
JPMORGAN LARGE CAP EQUITY
FUND(1)
Class A -- 3,980,818 60,636,740 15.23
Class B -- 1,780,660 26,905,354 15.11
Class C -- 124,782 1,876,100 15.04
Institutional -- 7,076,121 108,285,188 15.30
PRO FORMA SURVIVING FUND
COMBINED WITH CONCURRENT
REORGANIZATION
Class A -- 5,013,616 61,112,083 12.19
Class B -- 2,207,306 26,905,349 12.19
Class C -- 153,915 1,876,106 12.19
Select -- 37,105,139 452,282,818 12.19
Institutional -- 15,051,872 183,470,628 12.19
- ---------------------
(1) Formerly Chase Vista Large Cap Equity Fund
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 and the Concurrent Reorganization, this class
will be renamed "Institutional Class" and the Class A share class, Class B share
class, Class C share class and Select Class share class will be introduced. The
following discussion reflects the new class structure. This
10
section is qualified in its entirety by the discussion in the preliminary
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 as of 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 (or such other time as determined
by your financial intermediary), 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 that time 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.
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 and may purchase
Select Class Shares in other JPMorgan Funds with an investment minimum of
$2,500. 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. 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., on the settlement
date.
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.
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.
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 same 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 only when permitted by federal securities laws.
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.
11
Shareholders may also sell their shares by contacting the Center directly or
their financial intermediary. Select Class shareholders may call 1-800-622-4273.
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 Surviving Fund charges an
administration fee of $5 for each exchange if an investor makes more than 10
exchanges in a year or three in a quarter.
OTHER INFORMATION CONCERNING THE SURVIVING FUND
For Select Class Shares, if the balance falls below the investment minimum
for 30 days as a result of selling shares (and not because of performance), then
the Surviving Fund reserves the right to request that you buy more shares or
close your account. At least 60 days' notice will be given before closing the
account.
Unless a shareholder indicates otherwise on his or her account application,
the Surviving Fund is authorized to act on redemption and transfer instructions
received by phone. If someone trades on an account by phone, the Surviving Fund
will ask that person to confirm the account registration and address to make
sure they match those in the Surviving Fund records. If they do correspond, the
Surviving Fund is generally authorized to follow that person's instructions. The
Surviving Fund will take all reasonable precautions to confirm that the
instructions are genuine. Investors agree that they will not hold the Surviving
Fund liable for any loss or expenses from any sales request, if the Surviving
Fund takes reasonable precautions. The Surviving Fund will be liable for any
losses to a shareholder from an unauthorized sale or fraud against such
shareholder if the Surviving Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This may be
true at times of unusual market changes and shareholder activity. In that event,
shareholders can mail instructions to the Surviving Fund or contact their
investment representative or agent. The Surviving Fund may modify or cancel the
sale of shares by phone without notice.
JPMIF, on behalf of the Surviving Fund, has entered into agreements with
certain shareholder servicing agents (including Morgan) under which the
shareholder servicing agents agree to provide certain support services to their
customers. For performing these services, each shareholder servicing agent will
receive an annual fee of up to 0.25% of the average daily net assets of the
Select Class Shares held by investors serviced by the shareholder servicing
agent. The Merging Fund likewise has similar arrangements with respect to its
Shares.
JPMIM and/or the Distributor may, at their own expense, make additional
payments to certain selected dealers or other shareholder servicing agents for
performing administrative services for their customers.
The Surviving Fund will issue multiple classes of shares. Each class may
have different requirements for who may invest, and may have different sales
charges and expense levels. A person who gets compensated for selling Surviving
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 at least
monthly. 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 without a sales
charge;
- take distributions of net investment income in cash or as a deposit in a
pre-assigned bank account and reinvest distributions of net capital gain
in additional shares; or
12
- take all distributions in cash or as a deposit in a pre-assigned bank
account.
If you don't notify us otherwise, we'll reinvest all distributions. If your
distributions are reinvested, they will be in the form of shares of the same
class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary income at
the federal, state and local levels.
If you receive distributions of net capital gain, the tax rate will be based
on how long the Surviving Fund held a particular asset, not on how long you have
owned your shares. If you buy shares just before a distribution, you will pay
tax on the entire amount of the taxable distribution you receive, even though
the NAV will be higher on that date because it includes the distribution amount.
Early in each calendar year, the Surviving Fund will send its shareholders a
notice showing the amount of distributions received in the preceding year and
the tax status of those distributions.
The above is only a general summary of tax implications of investing in the
Surviving Fund. Shareholders should consult their tax advisors to see how
investing in the Surviving Fund will affect their own tax situation.
COMPARISON OF THE MERGING FUND'S
AND THE SURVIVING FUND'S ORGANIZATION STRUCTURE
There are no material differences in the organizational structure of the
Merging Fund and the Surviving Fund. Set forth below are descriptions of the
structure, voting rights, shareholder liability and the liability of Trustees.
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of JPMF, which is organized under
the law of the Commonwealth of Massachusetts. As a Massachusetts business trust,
JPMF's operations are governed by JPMF's Declaration of Trust and By-Laws and
applicable Massachusetts law. The operations of the Merging Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
STRUCTURE OF THE SURVIVING FUND
The Surviving Fund is organized as a series of JPMIF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPMIF's operations are governed by JPMIF's Declaration of Trust and
By-Laws and applicable Massachusetts law. The operations of the Surviving Fund
are also subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
TRUSTEES AND OFFICERS
Subject to the provisions of its trust documents, the business of the
Merging Fund is managed by JPMF's Trustees and the business of the Surviving
Fund is managed by JPMIF's Trustees, who serve indefinite terms (subject to
mandatory retirement age) and have all powers necessary or convenient to carry
out their responsibilities. The Trustees and Officers of JPMF and JPMIF are
identical.
Information concerning the current Trustees and officers of JPMF and JPMIF
is set forth in the Funds' respective Statements of Additional Information,
which are incorporated herein by reference.
SHARES OF FUNDS
Each of JPMF and JPMIF 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 JPMF or JPMIF
participate equally in the earnings, dividends and assets of the particular
series or class. Fractional shares have proportionate rights to full shares.
Expenses of JPMF or JPMIF that are not attributable to a specific series or
class will be allocated to all the series of that trust in a manner believed by
its board to be fair and equitable. Generally, shares of each series will be
voted separately, for example, to approve an investment advisory agreement.
Likewise, shares of each class of each series will be voted separately, for
example, to approve a distribution plan, but shares of all series and classes
vote together, to the extent required by the 1940 Act, including for the
election of Trustees. Neither JPMF nor JPMIF 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 JPMF
or JPMIF.
13
SHAREHOLDER VOTING RIGHTS
With respect to all matters submitted to a vote of shareholders,
shareholders of each of JPMF and JPMIF are entitled to the number of votes (or
"voting shares") equal to the product of the number of shares owned multiplied
by the net asset value per share on the record date.
A vacancy in the Board of either JPMF or JPMIF 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 voting
shares representing two-thirds of the outstanding voting shares of each
portfolio of that trust. A meeting of shareholders shall be held upon the
written request of the holders of voting shares representing not less than 10%
of the outstanding voting 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 JPMF or JPMIF could, under
certain circumstances, be held personally liable as partners for the obligations
of that trust. However, the Declaration of Trust of each of JPMF and JPMIF
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 JPMF and JPMIF 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 exists and the trust itself is unable to meet
its obligations.
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of JPMF and JPMIF, 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 JPMF and JPMIF, a Trustee or officer will
generally be indemnified against all liability and against all expenses
reasonably incurred or paid by such person in connection with any claim, action,
suit or proceeding in which such person becomes involved as a party or otherwise
by virtue of such person being or having been a Trustee or officer and against
amounts paid or incurred by such person in the settlement thereof.
The foregoing is only a summary of certain organizational and governing
documents and Massachusetts business trust law. It is not a complete
description. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies of the Declaration of
Trust and By-Laws of each of JPMF and JPMIF 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 and the
Concurrent Reorganizations, the Surviving Fund's assets will be managed directly
by JPMIM pursuant to an Advisory Agreement substantially similar to the
agreement between the Master Portfolio and JPMIM.
DESCRIPTION OF JPMIM
JPMIM is an indirect wholly-owned subsidiary of JPMC incorporated under the
laws of Delaware. JPMIM's principal executive offices are located at 522 Fifth
Avenue, New York, New York 10036. JPMIM, a registered investment adviser,
manages employee benefit funds of corporations, labor unions and state and local
governments and the accounts of other institutional investors, including
investment companies. As of March 31, 2001, JPMIM and certain of its affiliates
provided investment management services with respect to assets of approximately
$607.7 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
14
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 0.40%. The
Master Portfolio and, therefore, indirectly the Merging Fund also currently pay
0.40% of average net assets to JPMIM for its advisory services. JPMIM may waive
fees from time to time.
Under the Advisory Agreement, except as indicated above, the Surviving Fund
is responsible for its operating expenses including, but not limited to, taxes;
interest; fees (including fees paid to its Trustees who are not affiliated with
JPMIM or any of its affiliates); fees payable to the Commission; state
securities qualification fees; association membership dues; costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
existing shareholders; management and administrative fees; charges of the
custodian and transfer agent; insurance premiums; auditing and legal expenses;
costs of shareholders' reports and shareholder meetings; any extraordinary
expenses; and brokerage fees and commissions, if any, in connection with the
purchase or sale of portfolio securities.
LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMIM will not
be liable for any error of judgment or mistake of law or for any act or omission
or loss suffered by JPMIF 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 JPMIF
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 JPMIF 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 JPMIF.
PORTFOLIO MANAGER
The portfolio management team for the Surviving Fund is comprised of 24
research analysts, who select stocks in their respective sectors. Henry D.
Cavanna, managing director, and James H. Russo, vice president and CFA, oversee
the portfolio and manage its cash flows. Mr. Cavanna has been at JPMIM since
1971. He served as manager of U.S. Equity portfolios prior to managing the fund.
Mr. Russo has been at JPMIM since 1994 and previously served in the equity
research group as an analyst covering consumer cyclical stocks.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
JPMIM places orders for the Surviving Fund for all purchases and sales of
portfolio securities, enters into repurchase agreements, and may enter into
reverse repurchase agreements and execute loans of portfolio securities on
behalf of the Surviving Fund. Fixed income and debt securities and municipal
bonds and notes are generally traded at a net price with dealers acting as
principal for their own accounts without a stated commission. The price of the
security usually includes profit to the dealers. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain securities may be purchased
directly from an issuer, in which case no commissions or discounts are paid.
Portfolio transactions for the Surviving Fund will be undertaken principally
to accomplish the Surviving Fund's objective in relation to expected movements
in the general level of interest rates. The Surviving Fund may engage in
short-term trading consistent with its objectives.
In connection with portfolio transactions, JPMIM intends to seek best
execution on a competitive basis for both purchases and sales of securities.
Subject to the overriding objective of obtaining the best execution of orders,
JPMIM may allocate a portion of the Surviving Fund's brokerage transactions to
affiliates of JPMIM. Under the 1940 Act, persons affiliated with the 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
15
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.
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.
OTHER SERVICES
The Distributor is a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the distributor for both the Surviving
Fund and Merging Fund. An affiliate of the Distributor serves as
sub-administrator for both the Surviving Fund and the Merging 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 principal business address of
Morgan is 60 Wall Street, New York, NY 10005. The services provided by Morgan
and BONY include day-to-day maintenance of certain books and records,
calculation of the offering price of the shares and preparation of reports. In
its role as custodian, BONY will be responsible for the daily safekeeping of
securities and cash held by the Surviving Fund. It is anticipated that
subsequent to the consummation of the Reorganization, Chase will become the
Surviving Fund's administrator, shareholder servicing agent, fund accountant and
custodian, and DST will become the Surviving Fund's transfer agent and dividend
disbursing agent.
In connection with the Reorganization, the administration fee paid to Morgan
will be increased on August 11, 2001 to 0.15% of average daily net assets for
complex wide non-money market fund assets up to $25 billion and 0.075% on assets
in excess of $25 billion (currently such assets are less than $25 billion). The
Merging Fund currently pays Morgan, its administrator, an administration fee at
an effective rate of 0.048% of its average daily net assets.
PROPOSAL 2:
ELECTION OF TRUSTEES
It is proposed that shareholders of the Merging Fund consider the election
of the individuals listed below (the "Nominees") to the Board of Trustees of
JPMF, which is currently organized as a Massachusetts business trust. Even if
the Reorganization described in Proposal 1 is approved, other mutual funds that
are series of JPMF will continue to exist and operate. All shareholders of any
series of JPMF as of the record date (April 6, 2001) are required to be given a
vote on the proposal regarding Trustees. Because as of the
16
record date you are still a shareholder in JPMF, you are entitled to vote on
this proposal. Shareholders of JPMIF are being asked to approve the same
Trustees as are being proposed for JPMF.
In connection with the recent 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 its affiliates be reorganized. JPMC and the Boards considered that the
Boards of Trustees for the registered investment companies advised by J.P.
Morgan Investment Management Inc. and the registered investment companies
advised by J.P. Morgan Fleming Asset Management (USA) Inc. also be integrated
and streamlined into a consolidated Board of Trustees to serve all of the funds
in the Fund Complex (as defined below) (the "Consolidated Board"). It is
anticipated that having a Consolidated Board will enhance the governance of the
larger Fund Complex and is consistent with the prior practice of having a single
Board for each predecessor fund complex. JPMC believes, and the respective
Boards similarly concluded, that the Consolidated Board will increase
administrative efficiencies for JPMC and the funds in the Fund Complex and will
benefit shareholders of all such funds. The eight individuals who are being
proposed for election to the Consolidated Board, and hence the Nominees
described in this Proposal, were nominated after a careful and deliberate
selection process by the respective Nominating Committees and Boards of
Trustees. This selection process included the consideration of various factors,
such as the desire to balance the respective expertise of the various candidates
and diversity of background, the historical experience of various Trustees and
Advisory Board members of the predecessor complexes, the size of the Board and
related future cost savings, the practicalities dictated by the age 70
retirement policy of the registered investment companies advised by J.P. Morgan
Investment Management Inc., and other factors the Boards deemed relevant.
Therefore, the Nominees include certain current Trustees of JPMF, certain
current Trustees of JPMIF, certain members of their respective Advisory Boards
and certain Trustees of the former Chase Vista Funds. Each Nominee has consented
to being named in this Combined Prospectus/Proxy Statement and has agreed to
serve as a Trustee if elected. Each Trustee will hold office for a term of
unlimited duration subject to the current retirement age of 70(1). The Trustees
have no reason to believe that any Nominee will be unavailable for election.
Shareholders of JPMIF are concurrently considering the election of the same
individuals to the Board of Trustees of JPMIF. Biographical information about
the Nominees and other relevant information is set forth below. More information
regarding the current Trustees of JPMIF and JPMF is contained in the Funds'
Statements of Additional Information, which are incorporated herein by
reference.
The persons named in the accompanying form of proxy intend to vote each such
proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
(1) Each Nominee is grandfathered with respect to the mandatory retirement age
for three years from the date of election.
THE JPMF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
VOTE REQUIRED
The affirmative vote of the holders of more than 50% of the voting shares of
JPMF present, in person or by proxy, at the joint Meeting is required to elect a
Trustee of JPMF, provided that at least one-third of the outstanding shares of
JPMF is represented at the joint Meeting, either in person or by proxy. In the
event that the requisite vote is not reached, the current Trustees would remain
as the only Trustees of JPMF.
The following are the nominees:
TRUSTEE
NAME OF NOMINEE AND OF JPMF BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATIONS
CURRENT POSITION WITH FUND COMPLEX SINCE AGE DURING THE PAST FIVE YEARS AND CURRENT DIRECTORSHIPS
- ----------------------------------- -------- --- ------------------------------------------------------
William J. Armstrong-- Nominee 59 Retired; formerly Vice President and Treasurer,
Trustee of certain other trusts Ingersoll-Rand Company (manufacturer of industrial
in the Fund Complex since 1987 supplies). Address: 287 Hampshire Ridge, Park Ridge,
NJ 07656.
17
TRUSTEE
NAME OF NOMINEE AND OF JPMF BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATIONS
CURRENT POSITION WITH FUND COMPLEX SINCE AGE DURING THE PAST FIVE YEARS AND CURRENT DIRECTORSHIPS
- ----------------------------------- -------- --- ------------------------------------------------------
Roland R. Eppley, Jr.-- Nominee 68 Retired; formerly President and Chief Executive
Trustee of certain other trusts Officer, Eastern States Bankcard Association Inc.
in the Fund Complex since 1989 (financial services) (1971-1988); Director, Janel
Hydraulics, Inc.; formerly Director of The Hanover
Funds, Inc. (open-end mutual funds) Address:
105 Coventry Place, Palm Beach Gardens, FL 33418.
Ann Maynard Gray-- Nominee 55 Former President, Diversified Publishing Group and
Member of Advisory Board of the Vice President, Capital Cities/ABC, Inc. Ms. Gray is
Trust and certain other trusts in also a director of Duke Energy Corporation and Elan
the Fund Complex since 2000 Corporation, plc (pharmaceuticals). Address: 1262
Rockrimmon Road, Stamford, CT 06903.
Matthew Healey-- 1982 63 Former Chief Executive Officer of the Trust through
Chairman of the Trust and certain April 2001; Chairman, Pierpont Group (provides
other trusts in the Fund Complex services to trustees of investment companies), since
prior to 1993. Address: Pine Tree Country Club
Estates, 10286 Saint Andrews Road, Boynton Beach,
Florida 33436.
Fergus Reid, III*-- Nominee 68 Chairman and Chief Executive Officer, Lumelite
Chairman of certain other trusts Corporation (plastics manufacturing), since September
in the Fund Complex; Trustee of 1985; Trustee, Morgan Stanley Funds. Address:
other trusts in the Fund Complex 202 June Road, Stamford, CT 06903.
since 1984
James J. Schonbachler-- Nominee 58 Retired; prior to September, 1998, Managing Director,
Member of Advisory Board of the Bankers Trust Company and Group Head and Director,
Trust and certain other trusts in Bankers Trust A.G., Zurich and BT Brokerage Corp.
the Fund Complex since 2000 (financial services) Address: 3711 Northwind Court,
Jupiter, FL 33477.
Leonard M. Spalding, Jr.*-- Nominee 65 Retired; formerly Chief Executive Officer of Chase
Trustee of certain other trusts Mutual Funds Corp.; formerly President and Chief
in the Fund Complex since 1998 Executive Officer of Vista Capital Management
(investment management); and formerly Chief Investment
Executive of The Chase Manhattan Private Bank
(investment management). Address: 2025 Lincoln Park
Road, Springfield, KY 40069.
H. Richard Vartabedian-- Nominee 65 Former President of certain other trusts in the Fund
Trustee of certain other trusts Complex through April 2001; Investment Management
in the Fund Complex since 1992 Consultant; formerly, Senior Investment Officer,
Division Executive of the Investment Management
Division of The Chase Manhattan Bank, N.A., 1980-1991.
Address: P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.
- ---------------------
* Mr. Spalding is deemed to be an "interested person" (as defined in the 1940
Act) due to his ownership of equity securities of affiliates of JPMC. It is
anticipated that Mr. Reid will be named Chairman of the Trust and therefore
will be deemed to be an "interested person" of the Trust.
If elected, each Nominee would oversee 91 separate portfolios.
The Board of Trustees and Advisory Board Members of JPMF each met five times
during the 2000 calendar year, and each of these individuals attended at least
75% of the meetings of the Board and any committee on which he or she serves.
The Board of Trustees of JPMF presently has an Audit Committee. The members
of the Audit Committee are Messrs. Addy (Chairman), Eschenlauer, Burns, Mallardi
and Healey. The function of the
18
Audit Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met four times during the 2000 calendar
year.
The Board of Trustees of JPMF presently has a Nominating Committee. The
members of the Nominating Committee are Messrs. Addy, Eschenlauer, Burns and
Mallardi. The function of the Nominating Committee is to nominate trustees for
the Board to consider. The Nominating Committee met one time during the 2000
calendar year.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Each current Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of JPMIM is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by JPMIM. Each Trustee receives a
fee, allocated among all investment companies for which the Trustee serves.
Set forth below is information regarding compensation paid or accrued during
the calendar year ended December 31, 2000 for each nominee of JPMF:
COMPENSATION FROM PENSION OR RETIREMENT TOTAL COMPENSATION FROM
"MORGAN FUND COMPLEX"(1) BENEFITS ACCRUED "FUND COMPLEX"(2)
-------------------------------- --------------------- -----------------------
William J. Armstrong NA $ 41,781 $ 90,000 (10)(3)
Roland R. Eppley, Jr. NA $ 58,206 $ 91,000 (10)(3)
Ann Maynard Gray $75,000 NA $ 75,000 (17)(3)
Matthew Healey(4) $75,000 NA $ 75,000 (17)(3)
Fergus Reid, III NA $110,091 $202,750 (10)(3)
James J. Schonbachler $75,000 NA $ 75,000 (17)(3)
Leonard M. Spalding, Jr. NA $ 35,335 $ 89,000 (10)(3)
H. Richard Vartabedian NA $ 86,791 $134,350 (10)(3)
- ---------------------
(1) The Morgan Fund Complex means registered investment companies advised by
JPMIM.
(2) A Fund Complex generally 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 (as used herein, registered
investment companies advised by JPMIM and JPMFAM).
(3) Total number of investment company boards with respect to Trustees, or
Advisory Boards with respect to Advisory Board members, served on within
the Fund Complex.
(4) 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.
Inasmuch as the Morgan Fund Complex does not have any retirement plan for
its Trustees and JPMC will also benefit from the administrative efficiencies of
a consolidated board, JPMC has agreed to pay a one-time retirement package to
the Trustees of the Morgan Fund Complex and the Advisory Board members who have
volunteered to leave the Board of Trustees or Advisory Board of the Morgan Fund
Complex prior to their normal retirement date. For each retiring Trustee, the
retirement package is equal to three times the annual fee (which may increase)
for the new Combined Board per Trustee; for each retiring Advisory Board member,
the retirement package is one and a half times the annual fee (which may
increase) for the new Combined Board per Trustee.
FORMER CHASE VISTA FUNDS' RETIREMENT PLAN AND DEFERRED COMPENSATION PLAN FOR
ELIGIBLE TRUSTEES
Effective August 21, 1995, the Trustees of the former Chase Vista Funds also
instituted a Retirement Plan for Eligible Trustees (the "Plan") pursuant to
which each Trustee (who is not an employee of the former Chase Vista Funds'
adviser, administrator or distributor or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible Trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the investment companies advised by the
adviser of certain former Chase Vista Funds and its affiliates (collectively,
the "Covered Funds"). Each Eligible Trustee is entitled to receive from the
Covered Funds an annual benefit commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to the sum of
(1) 8% of the highest annual compensation received from the Covered Funds
multiplied by the number of such Trustee's years of service
19
(not in excess of 10 years) completed with respect to any Covered Funds and
(2) 4% of the highest annual compensation received from the Covered Funds for
each year of service in excess of 10 years, provided that no Trustee's annual
benefit will exceed the highest annual compensation received by that Trustee
from the Covered Funds. Such benefit is payable to each eligible Trustee in
monthly installments for the life of the Trustee. On February 22, 2001, the
board of Trustees voted to terminate the Plan and in furtherance of this
determination agreed to pay Trustees an amount equal, in the aggregate, to
$10.95 million, of which $5.3 million had been previously accrued by the Covered
Funds. The remaining $5.65 million was paid by Chase. Messrs. Armstrong, Eppley,
Reid, Spalding and Vartabedian, who are Nominees, received $1,027,673, $800,600,
$2,249,437, $463,798 and $1,076,927, respectively, in connection with the
termination. Each nominee has elected to defer receipt of such amount pursuant
to the Deferred Compensation Plan for Eligible Trustees.
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which
each Trustee (who is not an employee of the former Chase Vista Funds' adviser,
administrator or distributor or any of their affiliates) may enter into
agreements with such Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are deemed invested in shares of funds as elected
by the Trustee at the time of deferral. If a deferring Trustee dies prior to the
distribution of amounts held in the deferral account, the balance of the
deferral account will be distributed to the Trustee's designated beneficiary in
a single lump sum payment as soon as practicable after such deferring Trustee's
death. Messrs. Armstrong, Eppley, Reid, Spalding and Vartabedian are the only
Nominees who have elected to defer compensation under such plan.
The Trustees decide upon general policies and are responsible for overseeing
JPMF's business affairs. To assist the Trustees in exercising their overall
supervisory responsibilities, each of JPMF and the Master Portfolio has entered
into a Fund Services Agreement with Pierpont Group, Inc. Pierpont Group, Inc.
was organized in July 1989 to provide services for the J.P. Morgan Family of
Funds (formerly "The Pierpont Family of Funds"), and the Trustees are the equal
and sole shareholders of Pierpont Group, Inc. JPMF paid Pierpont Group, Inc. a
fee in an amount representing its reasonable costs in performing these services.
As part of the overall integration and rationalization of the Funds within the
Fund Complex. It is anticipated that the Merging Fund will terminate its
agreement with Pierpont Group, Inc. in connection with the Reorganization. The
consolidated Board of Trustees will instead look to counsel, auditors, Morgan
and other service providers, as necessary.
The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund, the
Surviving Fund and the Master Portfolio during the indicated fiscal periods are
set forth below:
MERGING FUND--For the fiscal years ended May 31, 1998, 1999 and 2000:
$14,143, $10,353 and $7,362, respectively.
SURVIVING FUND--For the fiscal years ended May 31, 1998, 1999 and 2000:
$12,419, $7,659 and $4,651, respectively.
MASTER PORTFOLIO--For the fiscal years ended May 31, 1998, 1999 and 2000:
$30,613, $18,019 and $12,016, respectively.
PRINCIPAL EXECUTIVE OFFICERS
JPMF's principal executive officers are listed below. The officers conduct
and supervise the business operations of JPMF. The business address of each of
the officers, unless otherwise noted, is J.P. Morgan Fund Distributors, Inc.,
1211 Avenue of Americas, New York, New York, 10036. Each officer will hold
office for an indefinite term, but may be removed by the Board of Trustees at
any time.
20
The principal executive officers of JPMF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS AND OTHER INFORMATION
- ----------------- --- ---------------------------------------------------------------------
David Wezdenko 37 Vice President, J.P. Morgan Investment Management Inc. Mr. Wezdenko
President and is the Chief Operating Officer for the U.S. Mutual Funds and
Treasurer Financial Intermediaries Business. Since joining J.P. Morgan in 1996,
(April 2001-present) he has held numerous financial and operations related positions
supporting the J.P. Morgan pooled funds business.
Sharon Weinberg 41 Vice President, J.P. Morgan Investment Management Inc. Ms. Weinberg
Vice-President is head of Business and Product Strategy for the U.S. Mutual Funds
and Secretary and Financial Intermediaries business. Since joining J.P. Morgan in
(April 2001-present) 1996 in New York, she has held numerous positions throughout the
asset management business in mutual funds marketing, legal and
product development.
ACCOUNTANTS
PricewaterhouseCoopers LLP serves as the Merging Fund's, the Surviving
Fund's, and the Master Portfolio's independent accountants, auditing and
reporting on the annual financial statements and reviewing certain regulatory
reports and federal income tax returns. PricewaterhouseCoopers LLP also performs
other professional accounting, auditing, tax and advisory services when JPMF or
JPMIF engages it to do so. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Meeting, and will have an opportunity to make a
statement if they desire. Such representatives are expected to be available to
respond to appropriate questions at the Meeting.
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 ended was $37,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There were no
financial information systems design and implementation services rendered by
PricewaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's affiliates
that provide services to the Fund for the calendar year ended December 31, 2000.
ALL OTHER FEES. The aggregate fees billed for all other non-audit services,
including fees for tax-related services, rendered by PricewaterhouseCoopers LLP
to the Merging Fund, JPMIM and JPMIM's affiliates that provide services to the
Fund for the calendar year ended December 31, 2000 was $11,029,400.
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 JPMF Board for use at the Meeting. It is
expected that the solicitation of proxies will be primarily by mail. JPMF's
officers and service providers may also solicit proxies by telephone, facsimile
machine, telegraph, the Internet or personal interview. In addition JPMF may
retain the services of professional solicitors to aid in the solicitation of
proxies for a fee. It is anticipated that banks, brokerage houses and other
custodians will be requested on behalf of JPMF to forward solicitation materials
to their principals to obtain authorizations for the execution of proxies. Any
Merging Fund Shareholder giving a proxy may revoke it at any time before it is
exercised by submitting to JPMF a written notice of revocation or a subsequently
executed proxy or by attending the Meeting and electing to vote in person.
Only the Merging Fund Shareholders of record at the close of business on
April 6, 2001 will be entitled to vote at the Meeting. On that date, there were
outstanding and entitled to be voted 16,767,323.311 Merging Fund shares. Each
shareholder of the Merging Fund is entitled to the number of votes equal to the
product of the number of shares owned multiplied by the net asset value per
share on the record date.
The presence in person or by proxy of shareholders that own one-third of the
outstanding Merging Fund shares will constitute a quorum for purposes of
transacting all business at the Meeting. If a quorum is not present at the
Meeting, sufficient votes in favor of the proposals are not received by the time
scheduled for the Meeting, or the Merging Fund Shareholders determine to adjourn
the Meeting for any other reason, the Merging Fund Shareholders present (in
person or proxy) may adjourn the Meeting from time to time,
21
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 voting 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 voting 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
voting 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 voting
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 voting 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 (and therefore will have the
effect of a vote against) 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 (and therefore will
have the effect of a vote against) the Proposals.
A proxy granted by any Merging Fund Shareholder may be revoked by such
Merging Fund Shareholder at any time prior to its use by written notice to JPMF,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other matters come before the Meeting, proxies will be voted by the persons
named as proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
JPMC, and not the Merging Fund or the Surviving Fund (or shareholders of
either Fund) will pay the cost of the preparation, printing and mailing to its
shareholders of the Combined Prospectus/Proxy Statement, accompanying Notice of
Meeting, form of proxy and any supplementary solicitation of its shareholders.
It is expected that the cost of retaining D. F. King & Co., Inc., to assist
in the proxy solicitation process for the fund complex will not exceed $200,000,
which cost will be borne by JPMC.
ABSTENTIONS AND BROKER NON-VOTES
In tallying the Merging Fund Shareholder votes, abstentions and broker
non-votes (i.e., proxies sent in by brokers and other nominees that cannot be
voted on a proposal because instructions have not been received from the
beneficial owners) will be counted for purposes of determining whether or not a
quorum is present for purposes of convening the Meeting. Abstentions and broker
non-votes will be considered to be a vote against each proposal.
INTERESTED PARTIES
On the record date, the Trustees and officers of JPMF as a group owned less
than 1% of the outstanding shares of the Merging Fund. On the record date, the
name, address and percentage ownership of the persons who owned beneficially
more than 5% of the shares of the Merging Fund and the percentage of shares of
the Surviving Fund that would be owned by such persons upon consummation of the
Reorganization based upon their holdings at April 6, 2001 are as follows:
PERCENTAGE OF PERCENTAGE OF
AMOUNT OF MERGING FUND SURVIVING FUND
SHARES OWNED ON OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
- ---------------- -------------- ------------- --------------
Forest Laboratories Inc 1,861,758.7940 11.10% 4.23%
Savings & Profit Shar Plan
American Century Services Inc
Attn: RPS Mgmt Rptg
P O Box 419784
Kansas City MO 64141-6784
22
On the record date, the Trustees and officers of JPMIF as a group owned less
than 1% of the outstanding shares of the Surviving Fund. On the record date, the
name, address and share ownership of the persons who owned beneficially more
than 5% of the shares of the Surviving Fund and the percentage of shares of the
Surviving Fund that would be owned by such person upon consummation of the
Reorganization based upon their holdings at April 6, 2001 were as follows:
PERCENTAGE OF PERCENTAGE OF
AMOUNT OF SURVIVING FUND SURVIVING FUND
SHARES OWNED ON OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
- ---------------- -------------- -------------- --------------
Morgan Guaranty Trust Co 3,138,464.4850 20.77% 7.12%
As TTEE for Degussa Defined
Benefit Retirement Trust
Attn: Special Products 2/OPS3
500 Stanton Christiana Rd
Newark DE 19713-2107
JPMIM as Agent and Investment Manager 960,971.4240 6.36% 2.15%
for the United Hospital Fund
Attn: Paul Brignola
522 Fifth Avenue
New York NY 10036-7601
Harris Trust and Savings 2,020,689.0920 13.37% 4.58%
Bank as Trustee of the CTS Corp
EMP Benefits Plans
Master TR
Att J Toman VP
111 W Monroe St 5E
Chicago IL 60603-4096
The Church Pension Fund for the Retirement Savings 1,595,149.7300 10.56% 3.62%
Program
Attn: Jeff Ackerman
445 Fifth Ave 7th Floor
New York NY 10016-0109
Fifth Third Bank Trust 779,879.3270 5.16% 1.77%
Adena Health Care 01-2-3068921
TTEES
PO Box 630074
Cincinnati OH 45263-0001
Marietta College 1,132,230.0500 7.49% 2.57%
Pamela Sieburg Controller
215 5th Street
Marietta OH 45750-4033
Key Trust Co TTEE for LIN 1,743,375.4750 11.54% 3.96%
Television Corp Retirement Plan
PO Box 94871
Cleveland OH 44101-4871
PROPOSALS TO BE SUBMITTED BY SHAREHOLDERS
The Merging Fund does not generally hold an Annual Meeting of Shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposals to the
Secretary of the Merging Fund at the address set forth on the cover of this
Combined Prospectus/Proxy Statement.
ADDITIONAL INFORMATION ABOUT JPMF
Information about the Merging Fund is included in its Prospectus, which is
incorporated by reference herein. Additional information about the Merging Fund
is also included in JPMF's Statement of Additional Information which has been
filed with the Commission and which is incorporated herein by reference.
23
Copies of the Prospectus and Statement of Additional information may be obtained
without charge by calling 1-800-521-5411. JPMF is subject to the requirements of
the 1940 Act and, in accordance with such requirements, files reports and other
information with the Commission. These materials can be inspected and copied at
the Public Reference Facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at 7 World Trade Center, Suite 1300, New York, NY 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates, and are also available on the Commission's web site
at http://www.sec.gov.
ADDITIONAL INFORMATION ABOUT JPMIF
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 JPMIF's Statement of Additional Information
which has been filed with the Commission and which is incorporated herein by
reference. Copies of the Prospectus and Statement of Additional information may
be obtained without charge by calling 1-800-766-7722. JPMIF is subject to the
requirements of the 1940 Act and, in accordance with such requirements, files
reports and other information with the Commission. These materials can be
inspected and copied at the Public Reference Facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York, NY
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates, and are also available
on the Commission's web site at http://www.sec.gov.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes thereto of
each of the Merging Fund and the Surviving Fund for the fiscal year ended May
31, 2000, and the audited financial statements, notes thereto and supplementary
data of the Master Portfolio for the fiscal year ended May 31, 2000, are
incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement. The audited
financial highlights, financial statements, notes thereto and supplementary
data, as applicable, of the Merging Fund, the Surviving Fund and the Master
Portfolio have been incorporated herein by reference in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes thereto
of each of the Merging Fund and the Surviving Fund for the fiscal period ended
November 30, 2000, and the unaudited financial statements, notes thereto and
supplementary data of the Master Portfolio for the fiscal period ended November
30, 2000, are incorporated by reference herein and into the Statement of
Additional Information related to this Combined Prospectus/Proxy Statement.
OTHER BUSINESS
The JPMF Board knows of no other business to be brought before the Meeting.
However, if any other matters come before the Meeting, it is the intention of
the JPMF Board that proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LITIGATION
Neither JPMF nor JPMIF is involved in any litigation that would have any
material adverse effect upon either the Merging Fund or the Surviving Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to JPMF in writing at the address on
the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-521-5411.
* * *
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.
24
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this 11th day of
May, 2001 by and among J.P. Morgan Funds (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the J.P. Morgan U.S. Equity Fund (the
"Transferor Portfolio"), J.P. Morgan Institutional Funds (the "Acquiring
Trust"), a Massachusetts business trust, on behalf of the the JPMorgan
Institutional U.S. Equity Fund (the "Acquiring Portfolio") and J.P.Morgan Chase
& Co.
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends to
provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and
the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR THE ACQUIRING
PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE TRANSFEROR PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio listed
above, will convey, transfer and deliver to the Acquiring Portfolio all of the
then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Select Class share class in exchange for 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 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 their respective custodians and J.P.
Morgan Chase & Co. The determination of said parties 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.
A-1
(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 September 1, 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.
(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 prospectuses and statements of
additional information of the Acquiring Trust, as amended, included in the
Acquiring Trust's registration statement on Form N-1A
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filed with the Securities and Exchange Commission, comply in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Act and do not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of November 30, 2000 there
were outstanding 15,051,872 shares of the Acquiring Portfolio, and no shares of
such Portfolio were held in the treasury of the Acquiring Trust. All of the
outstanding shares of the Acquiring Trust have been duly authorized and are
validly issued, fully paid and nonassessable (except as disclosed in the
Acquiring Trust's prospectus and recognizing that under Massachusetts law,
shareholders of an Acquiring Trust portfolio could, under certain circumstances,
be held personally liable for the obligations of such Acquiring Trust
portfolio). Because the Acquiring Trust is an open-end investment company
engaged in the continuous offering and redemption of its shares, the number of
outstanding shares may change prior to the Effective Time of the Reorganization.
All of the issued and outstanding shares of the Acquiring Portfolio have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) FINANCIAL STATEMENTS. The financial statements of the Acquiring Trust
with respect to the Acquiring Portfolio and The U.S. Equity Portfolio for the
fiscal year ended May 31, 2000, which have been audited by
PricewaterhouseCoopers LLP, fairly present the financial position of the
Acquiring Portfolio and The U.S. Equity Portfolio as of the dates thereof and
the respective results of operations and changes in net assets for each of the
periods indicated in accordance with generally accepted accounting principles
("GAAP"). The financial statements of the Acquiring Trust with respect to the
Acquiring Portfolio and for The U.S. Equity Portfolio for the fiscal period
ended November 30, 2000 fairly present the financial position of the Acquiring
Portfolio and The U.S. Equity Portfolio as of the dates thereof and the
respective results of operations and changes in net assets for each of the
periods indicated in accordance with GAAP.
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio Shares
to be issued in connection with the Reorganization will be duly authorized and
upon consummation of the Reorganization will be validly issued, fully paid and
nonassessable (except as disclosed in the Trust's prospectus and recognizing
that under Massachusetts law, shareholders of an Acquiring Trust portfolio
could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf of the
Acquiring Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Acquiring Trust's Board of Trustees and no other proceedings by the
Acquiring Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Acquiring Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(h) LIABILITIES. There are no liabilities of the Acquiring Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Acquiring Trust's
financial statements with respect to the Acquiring Portfolio and liabilities
incurred in the ordinary course of business subsequent to November 30, 2000 or
otherwise previously disclosed to the Acquiring Trust with respect to the
Acquiring Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Acquiring Portfolio.
(i) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Acquiring Trust, threatened which would adversely
affect the Acquiring Trust or the Acquiring Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Acquiring Trust or the Acquiring
Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory
investigations of the Acquiring Trust or the Acquiring Portfolio, pending or
threatened, other than routine inspections and audits.
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(k) CONTRACTS. No default exists under any material contract or other
commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio,
is subject.
(l) TAXES. The federal income tax returns of the Acquiring Trust with
respect to the Acquiring Portfolio, and all other income tax returns required to
be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have
been filed, and all taxes payable pursuant to such returns have been paid. To
the knowledge of the Acquiring Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Acquiring Trust with respect to the Acquiring Portfolio
have been paid so far as due. The Acquiring Portfolio has elected to qualify and
has qualified as a "regulated investment company" under Subchapter M of the Code
as of and since its first taxable year and intends to continue to so qualify.
(m) NO APPROVALS REQUIRED. Except for the Registration Statement (as defined
in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders (referred to in Section 6(a) hereof), no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the consummation by the Acquiring Trust of the Reorganization,
except such as have been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a business trust
that is duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts and has the power to carry on its business as
it is now being conducted. The Transferor Portfolio is a validly existing series
of shares of such business trust representing interests therein under the laws
of Massachusetts. Each of Transferor Portfolio and the Transferor Trust has all
necessary federal, state and local authorization to own all of its properties
and assets and to carry on its business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is registered
under the Act as an open-end investment company of the management type; such
registration has not been revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectuses and statements of
additional information of the Transferor Trust, as amended, included in the
Transferor Trust's registration statement on Form N-1A filed with the
Commission, comply in all material respects with the requirements of the
Securities Act and the Act and do not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Transferor Trust has an unlimited number of
authorized shares of beneficial interest, of which as of November 30, 2000 there
were outstanding 16,611,076 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 U.S. Equity Portfolio for the
fiscal year ended May 31, 2000 which have been audited by PricewaterhouseCoopers
LLP fairly present the financial position of the Transferor Portfolio and
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The U.S. Equity Portfolio as of the dates thereof and the respective results of
operations and changes in net assets for each of the periods indicated in
accordance with GAAP. The financial statements of the Transferor Trust with
respect to the Transferor Portfolio and The U.S. Equity Portfolio for the fiscal
period ended November 30, 2000 fairly present the financial position of the
Transferor Portfolio and The U.S. Equity Portfolio as of the dates thereof and
the respective results of operations and changes in net assets for each of the
periods indicated in accordance with GAAP.
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of the
Transferor Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Transferor Trust's Board of Trustees and no other proceedings by the
Transferor Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Transferor Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Transferor Trust's
Financial Statements with respect to the Transferor Portfolio and liabilities
incurred in the ordinary course of business subsequent to November 30, 2000 or
otherwise previously disclosed to the Transferor Trust with respect to the
Transferor Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(i) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Transferor Trust, threatened which would
adversely affect the Transferor Trust or the Transferor Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Transferor Trust or the
Transferor Portfolio and, to the knowledge of the Transferor Trust, there are no
regulatory investigations of the Transferor Trust or the Transferor Portfolio,
pending or threatened, other than routine inspections and audits.
(j) CONTRACTS. The Transferor Trust, on behalf of the Transferor
Portfolio, is not subject to any contracts or other commitments (other than this
Plan) which will not be terminated with respect to the Transferor Portfolio
without liability to the Transferor Trust or the Transferor Portfolio as of or
prior to the Effective Time of the Reorganization.
(k) TAXES. The federal income tax returns of the Transferor Trust with
respect to the Transferor Portfolio, and all other income tax returns required
to be filed by the Transferor Trust with respect to the Transferor Portfolio,
have been filed, and all taxes payable pursuant to such returns have been paid.
To the knowledge of the Transferor Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Transferor Trust with respect to the Transferor
Portfolio have been paid so far as due. The Transferor Portfolio has elected to
qualify as a "regulated investment company" under Subchapter M of the Code, as
of and since its first taxable year, and shall continue to so qualify until the
Effective Time of the Reorganization.
(l) NO APPROVALS REQUIRED. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders referred to in Section 6(a) hereof, no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the consummation by the Transferor Trust of the Reorganization,
except such as have been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio, the
Acquiring Trust shall file with the Commission a Registration Statement on Form
N-14 (the "Registration Statement") under the Securities Act
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relating to the Acquiring Portfolio Shares issuable hereunder and the proxy
statement of the Transferor Portfolio relating to the meeting of the Transferor
Portfolio's shareholders referred to in Section 5(a) herein. At the time the
Registration Statement becomes effective, the Registration Statement (i) will
comply in all material respects with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder (the "Regulations") and
(ii) will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time the Registration Statement becomes
effective, at the time of the Transferor Portfolio shareholders' meeting
referred to in Section 5(a) hereof, and at the Effective Time of the
Reorganization, the prospectus/proxy statement (the "Prospectus") and statement
of additional information (the "Statement of Additional Information") included
therein, as amended or supplemented by any amendments or supplements filed by
the Trust, will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust agrees to
use all reasonable efforts to effectuate the Reorganization, to continue in
operation thereafter, and to obtain any necessary regulatory approvals for the
Reorganization. The Acquiring Trust shall furnish such data and information
relating to the Acquiring Trust as shall be reasonably requested for inclusion
in the information to be furnished to the Transferor Portfolio shareholders in
connection with the meeting of the Transferor Portfolio's shareholders for the
purpose of acting upon this Plan and the transactions contemplated herein.
(c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Acquiring Trust shall conduct the business of the Acquiring
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
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
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forth in the Registration Statement (including the Prospectus and Statement of
Additional Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to the Transferor
Portfolio, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at the
time the Registration Statement becomes effective, at the time of the Transferor
Portfolio's shareholders' meeting referred to in Section 5(a) and at the
Effective Time of the Reorganization, the Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or supplements filed
by the Transferor Trust, insofar as they relate to the Transferor Portfolio,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in conformity with
information furnished by the Transferor Portfolio for use in the registration
statement, prospectus or statement of additional information as provided in this
Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to
use all reasonable efforts to effectuate the Reorganization and to obtain any
necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Transferor Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within 60 days after the Exchange Date, the Transferor Trust on behalf
of the Transferor Portfolio, shall prepare a statement of the earnings and
profits of the Transferor Portfolio for federal income tax purposes, and of any
capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and the
transactions contemplated by the Reorganization shall have been approved by the
requisite vote of the shares of the Transferor Portfolio entitled to vote on the
matter ("Transferor Shareholder Approval").
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 2(i)), in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio since November 30,
2000.
(c) REGULATORY APPROVAL. The Registration Statement shall have been
declared effective by the Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued, and all other approvals,
registrations, and exemptions under federal and state laws considered to be
necessary shall have been obtained (collectively, the "Regulatory Approvals").
(d) TAX OPINION. The Transferor Trust shall have received the opinion of
Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to
and in form and substance satisfactory to the Transferor Trust, as to certain of
the federal income tax consequences under the Code of the Reorganization,
insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio,
and to shareholders of the 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
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upon the transfer of all the assets and liabilities, if any, of the Transferor
Portfolio to the Acquiring Portfolio solely in exchange for shares of the
Acquiring Portfolio or upon the distribution of the shares of the Acquiring
Portfolio to the holders of the shares of the Transferor Portfolio solely in
exchange for all of the shares of the Transferor Portfolio; (iii) no gain or
loss will be recognized by shareholders of the Transferor Portfolio upon the
exchange of shares of such Transferor Portfolio solely for shares of the
Acquiring Portfolio; (iv) the holding period and tax basis of the shares of the
Acquiring Portfolio received by each holder of shares of the Transferor
Portfolio pursuant to the Reorganization will be the same as the holding period
and tax basis of shares of the Transferor Portfolio held by such holder
immediately prior to the Reorganization (provided the shares of the Transferor
Portfolio were held as a capital asset on the date of the Reorganization); and
(v) the holding period and tax basis of the assets of the Transferor Portfolio
acquired by the Acquiring Portfolio will be the same as the holding period and
tax basis of those assets to the Transferor Portfolio immediately prior to the
Reorganization.
(e) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan U.S.
Equity Fund--Advisor Series, a series of J.P. Morgan Institutional Funds, into
the Acquiring Portfolio shall have been consummated.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 3(h)) in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio since November 30,
2000.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the Acquiring
Portfolio in the Reorganization shall have been approved for acquisition by J.P.
Morgan Investment Management Inc. ("JPMIM"), in its capacity as investment
adviser to the Acquiring Portfolio, as consistent with the investment policies
of the Acquiring Portfolio.
(d) REGULATORY APPROVAL. The Regulatory Approvals shall have been obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on behalf of the
Transferor Portfolio shall have distributed to the shareholders of the
Transferor Portfolio all of the Transferor Portfolio's investment company
taxable income (determined without regard to the deduction for dividends paid)
as defined in Section 852(b)(2) of the Code for its taxable year ending on the
Exchange Date and all of its net capital gain as such term is used in Section
852(b)(3) of the Code, after reduction by any capital loss carry forward, for
its taxable year ending on the Exchange Date.
(f) TAX OPINION. The Acquiring Trust shall have received the Tax Opinion.
(g) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan U.S.
Equity Fund--Advisor Series, a series of J.P. Morgan Institutional Funds, into
the Acquiring Portfolio shall have been consummated.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
(a) AMENDMENTS. The parties hereto may, by agreement in writing authorized
by their respective Boards of Trustees amend this Plan at any time before or
after approval hereof by the shareholders of the Transferor Portfolio, but after
such approval, no amendment shall be made which substantially changes the terms
hereof.
(b) WAIVERS. At any time prior to the Effective Time of the Reorganization,
either the Transferor Trust or the Acquiring Trust may by written instrument
signed by it (i) waive any inaccuracies in the representations and warranties
made to it contained herein and (ii) waive compliance with any of the covenants
or conditions made for its benefit contained herein, except that conditions set
forth in Sections 6(c) and 7(d) may not be waived.
A-8
(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 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, Institutional Class Shares and the
Class A Shares of the Acquiring Portfolio are not higher than those as set forth
in the Registration Statement for a period of three years, or one year with
respect to the Class B shares and Class C shares. 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.
A-9
if to the Acquiring Trust (for itself or on behalf of the Acquiring Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
if to the adviser of the Transferor Trust:
522 Fifth Avenue
New York, NY 10036
if to the adviser of the Acquiring Trust:
522 Fifth Avenue
New York, NY 10036
if to J.P. Morgan Chase & Co.:
522 Fifth Avenue
New York, NY 10036
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-10
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date first
above written.
J.P. MORGAN INSTITUTIONAL FUNDS
on behalf of J.P. Morgan Institutional U.S. Equity
Fund
By: /s/ Sharon Weinberg
--------------------------------------------
Name: Sharon Weinberg
Title: Vice President and Secretary
J.P. MORGAN FUNDS
on behalf of J.P. Morgan U.S. Equity Fund
By: /s/ Sharon Weinberg
--------------------------------------------
Name: Sharon Weinberg
Title: Vice President and Secretary
Agreed and acknowledged with respect to
Section 9:
J.P. MORGAN CHASE & CO.
By: /s/ George Gatch
--------------------------------------------
Name: George Gatch
Title: Managing Director
A-11
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
J.P. MORGAN U.S. EQUITY FUND
A SERIES OF J.P. MORGAN FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated May
16, 2001 for the Special Meeting of Shareholders of J.P. Morgan U.S. Equity Fund
(the "Merging Fund"), a series of J.P. Morgan Funds ("JPF"), to be held on July
3, 2001. Copies of the Combined Prospectus/Proxy Statement may be obtained at no
charge by calling J.P. Morgan U.S. Equity 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 each of JPMF's and JPF's Statements of Additional Information,
which are incorporated herein by reference.
The date of this Statement of Additional Information is May 16, 2001.
GENERAL INFORMATION
The Shareholders of the Merging Fund are being asked to consider and
vote on two proposals.
With respect to an Agreement and Plan of Reorganization (the
"Reorganization Plan") dated as of May 11, 2001 by and among JPF, on behalf
of the Merging Fund, JPMF, on behalf of the Surviving Fund, and JPMC and the
transactions contemplated thereby, the Reorganization Plan contemplates the
transfer of all of the assets and liabilities of the Merging Fund to the
Surviving Fund in exchange for shares issued by JPMF in the Surviving Fund
that will have an aggregate net asset value equal to the aggregate net asset
value of the shares of the Merging Fund that are outstanding immediately
before the Effective Time of the Reorganization.
Following the exchange, the Merging Fund will make a liquidating
distribution of the Surviving Fund shares to its Shareholders, so that a holder
of Shares in the Merging Fund will receive Select Class Shares of the Surviving
Fund of equal value, plus the right to receive any unpaid dividends and
distributions that were declared before the Effective Time of the
Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees of JPF.
A Special Meeting of Shareholders of the Merging Fund to consider the
proposals and the related transaction will be held at the offices of J.P. Morgan
Chase & Co., 1211 Avenue of the Americas, 41st floor, New York, NY, on July 3,
2001 at 9:00 a.m., Eastern time. For further information about the transaction,
see the Combined Prospectus/Proxy Statement.
2
FINANCIAL STATEMENTS
The audited financial highlights, financial statements and notes
thereto of each of the Merging Fund and the Surviving Fund contained in their
respective Annual Reports dated May 31, 2000, and the audited financial
statements, notes thereto and supplementary data of the Master Portfolio
contained in its Annual Report dated May 31, 2000, are incorporated by reference
into this Statement of Additional Information related to this Combined
Prospectus/Proxy Statement. The audited financial highlights, financial
statements, notes thereto and supplementary data, as applicable, which appear in
each of the Surviving Fund's, the Master Portfolio's and the Merging Fund's
Annual Report have been audited by PricewaterhouseCoopers LLP, whose reports
thereon also appear in such Annual Reports and are also incorporated herein by
reference. The financial highlights, financial statements, notes thereto and
supplementary data, as applicable, for the Merging Fund, the Surviving Fund and
the Master Portfolio for the fiscal year ended May 31, 2000 have been
incorporated herein by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on their authority as
experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of the Merging Fund and the Surviving Fund contained in their respective
Semi-Annual Reports dated November 30, 2000, and the unaudited financial
statements, notes thereto and supplementary data of the Master Portfolio
contained in its Semi-Annual Report dated November 30, 2000, are incorporated by
reference into this Statement of Additional Information related to this Combined
Prospectus/Proxy Statement.
3
PRO FORMA FINANCIAL STATEMENTS
THE U.S. EQUITY PORTFOLIO / JPMORGAN LARGE CAP EQUITY FUND(1)
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
NOVEMBER 30, 2000
(UNAUDITED)
PRINCIPAL AMOUNT MARKET VALUE
------------------------------------------- ---------------------------------------------------
PRO FORMA PRO FORMA
COMBINED JPMORGAN COMBINED
JPMORGAN THE U.S. JPMORGAN LARGE CAP THE JPMORGAN
LARGE CAP EQUITY PRO FORMA U.S. EQUITY EQUITY U.S. EQUITY PRO FORMA U.S. EQUITY
EQUITY FUND PORTFOLIO ADJUSTMENTS FUND FUND PORTFOLIO ADJUSTMENTS FUND
----------- ---------- ----------- --------- ------------ ---------- ----------- -------------
COMMON STOCKS - 95.6%
CAPITAL MARKETS
CAPITAL MARKETS - 1.8%
Goldman Sachs Group, Inc. (The) 119,700 119,700 - 9,830,363 - 9,830,363
TD Waterhouse Group, Inc.(+) 253,400 253,400 - 3,357,550 - 3,357,550
------------------------------------------- ------------------------------------------------
- 373,100 - 373,100 - 13,187,913 - 13,187,913
------------------------------------------- ------------------------------------------------
COMPUTER HARDWARE
COMPUTER HARDWARE &
BUSINESS MACHINES - 9.1%
Avaya Inc.(+) 7,300 7,300 - 85,319 - 85,319
Cisco Systems Inc.(s)(+) 77,000 414,800 491,800 3,686,375 19,858,550 - 23,544,925
Compaq Computer Corp. 77,000 232,400 309,400 1,655,500 4,996,600 - 6,652,100
Dell Computer Corp.(+) 47,100 47,100 - 906,675 - 906,675
EMC Corp. (Mass.)(+) 46,000 104,500 150,500 3,421,250 7,772,188 - 11,193,438
Hewlett-Packard Co. 56,000 69,600 125,600 1,771,000 2,201,100 - 3,972,100
Quantum Corp. - DLT & Storage
Systems(+) 202,500 202,500 - 2,733,750 - 2,733,750
Sun Microsystems, Inc.(s)(+) 36,000 186,900 222,900 2,738,250 14,216,081 - 16,954,331
------------------------------------------- ------------------------------------------------
292,000 1,265,100 - 1,557,100 13,272,375 52,770,263 66,042,638
------------------------------------------- ------------------------------------------------
CONSUMER CYCLICAL
HOTELS - 0.3%
------------------------------------------- ------------------------------------------------
Marriott International, Inc. 58,700 58,700 - 2,432,381 - 2,432,381
------------------------------------------- ------------------------------------------------
MOTOR VEHICLES & PARTS - 1.9%
Dana Corp. 66,400 66,400 - 1,112,200 - 1,112,200
Delphi Automotive Systems 167,500 167,500 - 2,313,594 - 2,313,594
Ford Motor Company 145,136 93,492 238,628 3,301,844 2,126,943 - 5,428,787
General Motors Corp. 32,200 23,800 56,000 1,593,900 1,178,100 - 2,772,000
Lear Corp. (+) 129,800 129,800 - 2,839,375 - 2,839,375
------------------------------------------- ------------------------------------------------
177,336 480,992 - 658,328 4,895,744 9,570,212 - 14,465,956
------------------------------------------- ------------------------------------------------
RESTAURANTS - 0.3%
------------------------------------------- ------------------------------------------------
McDonald's Corp. 57,000 57,000 - 1,816,875 - 1,816,875
------------------------------------------- ------------------------------------------------
FOOD/ BEVERAGES - 1.2%
Anheuser-Busch Companies, Inc. 47,000 47,000 2,229,563 - 2,229,563
Coca-Cola Co. 42,300 42,300 2,649,038 - 2,649,038
PepsiCo, Inc. 40,000 40,000 1,815,000 - 1,815,000
Sysco Corp. 33,000 33,000 1,823,250 - 1,823,250
------------------------------------------- ------------------------------------------------
162,300 - - 162,300 8,516,851 - - 8,516,851
------------------------------------------- ------------------------------------------------
CONSUMER SERVICES
ENTERTAINMENT - 0.9%
------------------------------------------- ------------------------------------------------
Viacom, Inc. Cl B(+) 48,360 76,900 125,260 2,472,405 3,931,512 - 6,403,917
------------------------------------------- ------------------------------------------------
MEDIA - 2.0%
AT&T Corp. - Liberty Media
Group Cl A(+) 104,200 104,200 - 1,413,213 - 1,413,213
Charter Communications, Inc.(+) 40,758 40,758 - 804,971 - 804,971
Comcast Corp. Cl A(+) 93,800 93,800 - 3,605,438 - 3,605,438
News Corp. Ltd. (The) ADR(i) 106,400 106,400 - 3,710,699 - 3,710,699
The Walt Disney Co. 49,000 49,000 1,417,938 - - 1,417,938
See notes to Pro Forma Financial Statements
4
Time Warner Inc. 29,000 27,700 56,700 1,798,000 1,717,400 - 3,515,400
------------------------------------------- ------------------------------------------------
78,000 372,858 - 450,858 3,215,938 11,251,721 14,467,659
------------------------------------------- ------------------------------------------------
CONSUMER STABLE
HOME PRODUCTS - 3.1%
Clorox Company 52,800 52,800 - 2,359,500 - 2,359,500
Estee Lauder Companies, Inc. 62,700 62,700 - 2,715,694 - 2,715,694
Gillette Company 47,400 153,400 200,800 1,605,675 5,196,425 - 6,802,100
Procter & Gamble Co. (The) 142,000 142,000 - 10,632,250 - 10,632,250
------------------------------------------- ------------------------------------------------
47,400 410,900 - 458,300 1,605,675 20,903,869 - 22,509,544
------------------------------------------- ------------------------------------------------
TOBACCO - 1.8%
------------------------------------------- ------------------------------------------------
Philip Morris Companies Inc. 41,500 295,300 336,800 1,584,781 11,276,769 - 12,861,550
------------------------------------------- ------------------------------------------------
ENERGY
ENERGY RESERVES &
PRODUCTION - 5.1%
Anadarko Petroleum Corp. 44,500 44,500 - 2,647,750 - 2,647,750
Chevron Corp. 42,100 37,900 80,000 3,446,938 3,103,063 - 6,550,001
Exxon Mobil Corp.(s) 95,405 217,548 312,953 8,395,640 19,144,223 - 27,539,863
------------------------------------------- ------------------------------------------------
137,505 299,948 - 437,453 11,842,578 24,895,036 - 36,737,614
------------------------------------------- ------------------------------------------------
OIL REFINING - 0.2%
------------------------------------------- ------------------------------------------------
Texaco Inc. 24,100 24,100 - 1,399,306 - 1,399,306
------------------------------------------- ------------------------------------------------
OIL SERVICES - 1.0%
Baker Hughes Inc. 109,900 109,900 - 3,633,569 - 3,633,569
Global Marine Inc.(+) 108,600 108,600 - 2,382,413 - 2,382,413
------------------------------------------- ------------------------------------------------
- 242,600 - 242,600 - 6,015,982 - 6,015,982
------------------------------------------- ------------------------------------------------
OIL & GAS - 1.2%
BP Amoco PLC, ADR
(United Kingdom) 24,000 24,000 1,138,500 - - 1,138,500
Halliburton Co. 41,500 41,500 1,385,063 - - 1,385,063
Royal Dutch Petroleum Co.,
N.Y. Registered Shares
(Netherlands) 75,800 75,800 4,524,313 - - 4,524,313
Schlumberger LTD 28,000 28,000 1,736,000 1,736,000
------------------------------------------- ------------------------------------------------
169,300 - - 169,300 8,783,876 - - 8,783,876
------------------------------------------- ------------------------------------------------
FINANCE
BANKS - 5.5%
Amsouth Bancorporation 223,100 223,100 - 3,318,613 - 3,318,613
Bank of New York Co., Inc. 85,834 85,834 4,736,964 - - 4,736,964
Citigroup Inc. 197,000 81,566 278,566 9,813,063 4,063,006 - 13,876,069
First Union Corp. 103,000 103,000 - 2,587,875 - 2,587,875
Firstar Corp.(s) 608,000 608,000 - 11,780,000 - 11,780,000
Wells Fargo Co. 68,500 68,500 3,249,469 - - 3,249,469
------------------------------------------- ------------------------------------------------
351,334 792,566 - 1,143,900 17,799,496 21,749,494 - 39,548,990
------------------------------------------- ------------------------------------------------
FINANCIAL SERVICES - 7.6%
American Express Co. 66,600 66,600 3,658,838 - - 3,658,838
Associates First
Capital Corp. 219,900 219,900 - 7,765,219 - 7,765,219
Capital One Financial Corp. 69,900 69,900 - 3,901,294 - 3,901,294
Countrywide Credit
Industries, Inc. 95,900 95,900 - 3,560,288 - 3,560,288
Fannie Mae 20,700 20,700 1,635,300 - - 1,635,300
Federal Home Loan Mortgage Corp. 43,100 43,100 - 2,604,856 - 2,604,856
General Electric Co. (U.S.)(s) 213,916 331,700 545,616 10,602,212 16,439,880 - 27,042,092
Morgan Stanley Dean Witter & Co. 38,000 38,000 2,408,250 - - 2,408,250
Providian Financial Corp. 14,700 14,700 - 1,323,000 - 1,323,000
State Street Corp. 9,400 9,400 1,212,600 - - 1,212,600
------------------------------------------- ------------------------------------------------
348,616 775,200 - 1,123,816 19,517,200 35,594,537 - 55,111,737
------------------------------------------- ------------------------------------------------
THRIFTS - 0.4%
------------------------------------------- ------------------------------------------------
Washington Mutual, Inc. 56,300 56,300 - 2,558,131 - 2,558,131
------------------------------------------- ------------------------------------------------
HEALTH SERVICES & SYSTEMS
MEDICAL PRODUCTS &
SUPPLIES - 1.1%
Bard (C.R.), Inc. 38,700 38,700 - 1,905,975 - 1,905,975
Becton Dickinson & Co. 89,100 89,100 - 3,029,400 - 3,029,400
Medtronic, Inc. 53,200 53,200 - 2,832,900 - 2,832,900
------------------------------------------- ------------------------------------------------
- 181,000 - 181,000 - 7,768,275 - 7,768,275
------------------------------------------- ------------------------------------------------
INDUSTRIAL CYCLICAL
CHEMICALS - 1.9%
See notes to Pro Forma Financial Statements
5
Air Products & Chemicals, Inc. 205,300 205,300 - 7,070,019 - 7,070,019
Dow Chemical Co. 33,300 33,300 1,017,731 - - 1,017,731
E.I. DuPont de Nemours Co. 52,900 52,900 2,238,331 - - 2,238,331
Rohm and Haas Co. 112,700 112,700 - 3,352,825 - 3,352,825
------------------------------------------- ------------------------------------------------
86,200 318,000 - 404,200 3,256,062 10,422,844 - 13,678,906
------------------------------------------- ------------------------------------------------
DEFENSE/AEROSPACE - 0.8%
------------------------------------------- ------------------------------------------------
Honeywell Inc. 48,000 74,600 122,600 2,340,000 3,636,750 - 5,976,750
------------------------------------------- ------------------------------------------------
ELECTRICAL EQUIPMENT - 1.6%
Corning Inc. 36,000 36,000 - 2,106,000 - 2,106,000
Corvis Corp.(+) 9,900 9,900 - 285,244 - 285,244
Level 3 Communications, Inc.(+) 100,200 100,200 - 2,692,875 - 2,692,875
Nortel Networks Corp. 142,400 142,400 - 5,375,600 - 5,375,600
QUALCOMM Inc.(+) 12,500 12,500 - 1,003,125 - 1,003,125
------------------------------------------- ------------------------------------------------
- 301,000 - 301,000 - 11,462,844 - 11,462,844
------------------------------------------- ------------------------------------------------
ENVIRONMENTAL SERVICES - 0.5%
------------------------------------------- ------------------------------------------------
Waste Management, Inc. 139,757 139,757 - 3,345,433 - 3,345,433
------------------------------------------- ------------------------------------------------
HEAVY ELECTRICAL
EQUIPMENT - 0.4%
------------------------------------------- ------------------------------------------------
Cooper Industries, Inc. 71,600 71,600 - 2,922,175 - 2,922,175
------------------------------------------- ------------------------------------------------
INDUSTRIAL PARTS - 2.0%
------------------------------------------- ------------------------------------------------
Tyco International Ltd.(i)(s) 281,092 281,092 - 14,827,602 - 14,827,602
------------------------------------------- ------------------------------------------------
MACHINERY - 0.5%
Caterpillar, Inc. 60,000 60,000 2,358,750 - - 2,358,750
Dover Corp. 36,000 36,000 1,473,750 - - 1,473,750
------------------------------------------- ------------------------------------------------
96,000 - - 96,000 3,832,500 - - 3,832,500
------------------------------------------- ------------------------------------------------
MINING/METALS - 0.7%
Alcoa Inc. 40,400 61,764 102,164 1,138,775 1,740,973 - 2,879,748
Allegheny Technologies Inc. 110,186 110,186 - 2,189,947 - 2,189,947
------------------------------------------- ------------------------------------------------
40,400 171,950 - 212,350 1,138,775 3,930,920 - 5,069,695
------------------------------------------- ------------------------------------------------
OFFICE EQUIPMENT - 0.1%
------------------------------------------- ------------------------------------------------
Xerox Corp. 145,000 145,000 1,005,938 - - 1,005,938
------------------------------------------- ------------------------------------------------
PAPER PRODUCTS - 0.4%
International Paper Co. 35,100 35,100 1,189,013 - - 1,189,013
Weyerhaeuser Co. 37,000 37,000 1,618,750 - - 1,618,750
------------------------------------------- ------------------------------------------------
72,100 - - 72,100 2,807,763 - - 2,807,763
------------------------------------------- ------------------------------------------------
RAILROADS - 0.3%
------------------------------------------- ------------------------------------------------
Union Pacific Corp. 51,900 51,900 - 2,413,350 - 2,413,350
------------------------------------------- ------------------------------------------------
INSURANCE
LIFE & HEALTH INSURANCE - 1.3%
CIGNA Corp. 45,100 45,100 - 5,941,925 - 5,941,925
MetLife, Inc.(+) 118,600 118,600 - 3,513,525 - 3,513,525
------------------------------------------- ------------------------------------------------
- 163,700 - 163,700 - 9,455,450 - 9,455,450
------------------------------------------- ------------------------------------------------
PROPERTY AND CASUALTY
INSURANCE - 3.8%
Allstate Corp. 137,800 137,800 - 5,270,850 - 5,270,850
Ambac Financial Group, Inc. 83,400 83,400 - 6,369,675 - 6,369,675
American International
Group, Inc. 117,900 117,900 11,428,931 - - 11,428,931
XL Capital Ltd. Cl A(i) 57,300 57,300 - 4,573,256 - 4,573,256
------------------------------------------- ------------------------------------------------
117,900 278,500 - 396,400 11,428,931 16,213,781 - 27,642,712
------------------------------------------- ------------------------------------------------
PHARMACEUTICALS
DRUGS - 11.4%
Abbott Laboratories 82,000 82,000 4,515,125 - - 4,515,125
Alza Corp.(+) 125,200 125,200 - 5,555,750 - 5,555,750
American Home Products Corp. 55,000 62,300 117,300 3,306,875 3,745,788 - 7,052,663
Bristol-Myers Squibb Co. 61,700 61,700 - 4,276,581 - 4,276,581
Lilly (Eli) & Co. 35,000 88,500 123,500 3,279,063 8,291,344 - 11,570,407
Merck & Co., Inc. 64,900 64,900 - 6,015,419 - 6,015,419
See notes to Pro Forma Financial Statements
6
Pfizer, Inc.(s) 114,000 269,800 383,800 5,051,625 11,955,512 - 17,007,137
Pharmacia Corp. 115,213 181,675 296,888 7,027,993 11,082,175 - 18,110,168
Schering-Plough Corp. 153,600 153,600 - 8,611,200 - 8,611,200
------------------------------------------- ------------------------------------------------
401,213 1,007,675 - 1,408,888 23,180,681 59,533,769 - 82,714,450
------------------------------------------- ------------------------------------------------
RETAIL
CLOTHING STORES - 1.1%
Abercrombie & Fitch Co. Cl A(+) 102,400 102,400 - 2,137,600 - 2,137,600
Gap, Inc. (The) 110,400 110,400 - 2,753,100 - 2,753,100
TJX Companies, Inc. (The) 110,300 110,300 - 2,826,438 - 2,826,438
------------------------------------------- ------------------------------------------------
- 323,100 - 323,100 - 7,717,138 - 7,717,138
------------------------------------------- ------------------------------------------------
DEPARTMENT STORES - 2.4%
Kohls Corp. * 4,000 4,000 214,250 - - 214,250
Target Corp. 86,000 110,000 196,000 2,585,375 3,306,875 - 5,892,250
Wal-Mart Stores, Inc. 81,000 136,800 217,800 4,227,188 7,139,249 - 11,366,437
------------------------------------------- ------------------------------------------------
167,000 246,800 - 413,800 7,026,813 10,446,124 - 17,472,937
------------------------------------------- ------------------------------------------------
SPECIALTY STORES - 1.1%
Best Buy Co., Inc.(+) 56,100 56,100 - 1,444,575 - 1,444,575
Home Depot, Inc. 175,300 175,300 - 6,869,569 - 6,869,569
------------------------------------------- ------------------------------------------------
- 231,400 - 231,400 - 8,314,144 - 8,314,144
------------------------------------------- ------------------------------------------------
SEMICONDUCTORS
SEMICONDUCTORS - 4.0%
Altera Corp.(+) 39,500 39,500 - 945,531 - 945,531
Broadcom Corp.(+) 6,200 6,200 - 604,500 - 604,500
Intel Corp.(s) 50,000 243,500 293,500 1,903,125 9,268,219 - 11,171,344
Lattice Semiconductor Corp.(+) 2,400 2,400 - 39,900 - 39,900
Linear Technology Corp.(+) 36,700 36,700 - 1,736,369 - 1,736,369
Maxim Integrated Products,
Inc.(+) 35,000 35,000 - 1,785,000 - 1,785,000
Micron Technology, Inc.(+) 55,000 55,000 - 1,732,500 - 1,732,500
SDL, Inc.(+) 17,200 17,200 - 3,126,100 - 3,126,100
Sprint Corp. (PCS Group)(+) 114,600 114,600 - - - -
Texas Instruments Inc. 102,000 59,500 161,500 3,805,875 2,220,094 - 6,025,969
Xilinx, Inc.(+) 40,000 40,000 - 1,560,000 - 1,560,000
------------------------------------------- ------------------------------------------------
152,000 649,600 - 801,600 5,709,000 23,018,213 - 28,727,213
------------------------------------------- ------------------------------------------------
SOFTWARE & SERVICES
COMPUTER SOFTWARE - 6.8%
BEA Systems, Inc.(+) 40,200 40,200 - 2,354,213 - 2,354,213
Gemstar International
Group Ltd.(+) 85,100 85,100 - 3,462,506 - 3,462,506
International Business
Machines Corp. 44,300 23,800 68,100 4,142,050 2,225,300 - 6,367,350
Microsoft Corp.(s)(+) 276,000 276,000 - 15,835,500 - 15,835,500
NCR Corp.(+) 160,400 160,400 - 7,578,900 - 7,578,900
Oracle Corp.(+) 162,000 141,400 303,400 4,293,000 3,747,100 - 8,040,100
Parametric Technology Corp.(+) 135,200 135,200 - 1,504,100 - 1,504,100
Veritas Software Corp.(+) 41,078 41,078 - 4,007,672 - 4,007,672
------------------------------------------- ------------------------------------------------
- 41,078 - 41,078 8,435,050 40,715,291 - 49,150,341
------------------------------------------- ------------------------------------------------
INTERNET - 1.0%
Akamai Technologies, Inc.(+) 21,900 21,900 - 629,625 - 629,625
America Online, Inc.(+) 61,800 61,800 - 2,509,698 - 2,509,698
E*trade Group Inc.(+) 380,400 380,400 - 3,043,200 - 3,043,200
eBay Inc.(+) 18,000 18,000 - 617,625 - 617,625
------------------------------------------- ------------------------------------------------
- 482,100 - 482,100 - 6,800,148 - 6,800,148
------------------------------------------- ------------------------------------------------
TELECOMMUNICATIONS
TELECOMMUNICATIONS - 5.1%
AT&T Corp. 69,927 69,927 1,372,317 - - 1,372,317
BellSouth Corp. 55,000 55,000 2,299,688 - - 2,299,688
Motorola, Inc. 86,525 86,525 1,735,908 - - 1,735,908
Qwest Communications
International Inc.(+) 109,290 109,290 - 4,125,698 - 4,125,698
SBC Communications Inc.(s) 61,000 189,600 250,600 3,351,188 10,416,149 - 13,767,337
Verizon Communications 89,800 103,300 193,100 5,045,687 5,804,169 - 10,849,856
See notes to Pro Forma Financial Statements
7
WorldCom, Inc.(+) 113,450 113,450 - 1,694,659 - 1,694,659
------------------------------------------- ------------------------------------------------
362,252 515,640 - 877,892 13,804,788 22,040,675 - 35,845,463
------------------------------------------- ------------------------------------------------
WIRELESS TELECOMMUNICATIONS - 0.3%
Nextel Communications, Inc.(+) 72,500 72,500 - 2,247,500 - 2,247,500
Sprint Corp. (PCS Group) (+) 114,600 114,600 - 2,599,988 - 2,599,988
------------------------------------------- ------------------------------------------------
- 187,100 - 187,100 - 4,847,488 - 4,847,488
------------------------------------------- ------------------------------------------------
UTILITIES
ELECTRICAL UTILITY - 2.4%
Ameren Corp. 95,100 95,100 - 4,220,062 - 4,220,062
C P & L Energy Inc. 70,900 70,900 - 3,061,994 - 3,061,994
DTE Energy Company 72,800 72,800 - 2,761,850 - 2,761,850
Dynegy Inc. Cl A 68,300 68,300 - 3,022,275 - 3,022,275
Entergy Corp. 100,200 100,200 - 4,120,725 - 4,120,725
------------------------------------------- ------------------------------------------------
- 407,300 - 407,300 - 17,186,906 - 17,186,906
------------------------------------------- ------------------------------------------------
UTILITIES 1.2%
Dominion Resources, Inc. 20,300 20,300 1,218,000 - - 1,218,000
DQE, Inc. 41,000 41,000 1,417,063 - - 1,417,063
Duke Energy Corp. 28,000 28,000 2,518,250 - - 2,518,250
Enron Corp. 50,000 50,000 3,237,500 - - 3,237,500
------------------------------------------- ------------------------------------------------
139,300 - - 139,300 8,390,813 - - 8,390,813
------------------------------------------- ------------------------------------------------
SHORT-TERM INVESTMENTS - 4.4%
REPURCHASE AGREEMENTS - 1.6%
Greenwich Capital Markets,
Inc.,
Tri Party 6.55%
due 11/01/00 11,724,000 11,724,000 11,724,000 11,724,000
U.S. TREASURY SECURITIES - 0.3%
U.S. Treasury Notes, 5.25%,
5/31/01(s) 2,450,000 2,450,000 2,438,510 2,438,510
INVESTMENT COMPANIES - 2.5%
J.P. Morgan Institutional
Prime Money Market
Fund (a) 18,245,417 18,245,417 18,245,416 18,245,416
TOTAL INVESTMENTS - 100.0%
(COST $612,534,134) 197,588,033 527,057,247 724,645,280
================================================
FUTURES CONTRACTS - J.P. MORGAN PRO FORM COMBINED
UNDERLYING FACE UNREALIZED UNREALIZED
PURCHASED EXPIRATION DATE AMOUNT AT VALUE DEPRECIATION DEPRECIATION
45 S&P 500 Index December 2000 $ 14,866,875 $ (1,006,998) $ (1,006,998)
ADR American Depository Receipt
(a) Money Market mutual fund registered under the Investment Company Act of
1940, as amended, and advised by J.P. Morgan Investment, Inc.
(i) Foreign security
See notes to Pro Forma Financial Statements
8
(s) Security is fully or partially segregated with custodian as collateral
for futures or with brokers as initial margin for futures contracts.
(+) Non-income producing security.
The Portfolio may invest in one or more affiliated money market funds.
The Advisor has agreed to reimburse its advisory fee from the Portfolio
in an amount to offset any investment advisory, administrative fee and
shareholder servicing fees related to a Portfolio investment in an
affiliated money market fund.
(1) Formerly Chase Vista Large Cap Equity Fund
See notes to Pro Forma Financial Statements
9
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO /
JPMORGAN LARGE CAP EQUITY FUND(1)
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES
AS OF NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN J.P. MORGAN J.P. MORGAN U.S.
U.S. EQUITY INSTITUTIONAL U.S. EQUITY FUND - THE U.S. EQUITY
FUND EQUITY FUND ADVISOR SERIES PORTFOLIO
ASSETS
Investment in The U.S. Equity Portfolio, at value $344,117,718 $ 183,522,572 $ 493,577
Investments at Value - - - $ 527,057,247
Cash - - - 844,092
Dividend and Interest Receivable - - - 659,002
Receivable for Fund Shares Sold
Prepaid Trustees' Fees and Expenses 4,106 3,445 - 5,536
Receivable for Expense Reimbursements - - 12,235 -
Prepaid Expenses and Other Assets 946 709 - 2558
----------------------------------------------------------------------
TOTAL ASSETS 344,122,770 183,526,726 505,812 528,568,435
LIABILITIES
Advisory Fee Payable - - - 183,688
Variation Margin Payable - - - 155,250
Shareholder Servicing Fee Payable 75,082 15,837 - -
Distribution Fees - - - -
Registration Fees - - - -
Transfer Agent Fees - - - -
Administrative Services Fee Payable 7,124 3,757 - 10,894
Trustees' fees - - - -
Printing and postage - - - -
Professional Fees - - - -
Custodian fees - - - -
Payable for Shares of Beneficial Interest Redeemed - - - -
Fund Services Fee Payable 244 128 - 373
Administration Fee Payable 109 - - 621
Accrued Expenses and Other Liabilities 42,588 36,376 30,461 83,742
----------------------------------------------------------------------
TOTAL LIABILITIES 125,147 56,098 30,461 434,568
----------------------------------------------------------------------
NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867
======================================================================
ANALYSIS OF NET ASSETS
Paid-in Capital $288,461,024 $ 141,861,487 $ 500,225 $
Undistributed ( Distributions in excess of ) Net
Investment Income 653,902 597,017 261 -
Accumulated Net Realized Gain (Loss) on Investment 11,006,423 6,324,567 (6,149) -
Net Unrealized Appreciation (Depreciation) on Investment 43,876,274 34,687,557 (18,986) -
----------------------------------------------------------------------
NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867
======================================================================
Shares of Beneficial Interest Outstanding 16,611,076 15,051,872 53,157 -
Shares Outstanding - - - -
Net Asset Value Per Share $ 20.71 $ 12.19 $ 8.94 $ -
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN U.S. EQUITY FUND
Shares Outstanding
Class A - - - -
Class B - - - -
Class C - - - -
Select - - - -
Institutional - - - -
Net Asset Value Per Share
Class A - - - -
Class B - - - -
Class C - - - -
Select - - - -
Institutional - - - -
----------------------------------------------------------------------
Cost of Investments - - - $447,506,258
======================================================================
JPMORGAN PROFORMA
LARGE CAP COMBINED
EQUITY PRO FORMA JPMORGAN
FUND(1) ADJUSTMENTS U.S. EQUITY
FUND
ASSETS
Investment in The U.S. Equity Portfolio, at value $ (528,133,867)(a) $ -
Investments at Value $ 197,588,033 - 724,645,280
Cash 920 - 845,012
Dividend and Interest Receivable 329,696 - 988,698
Receivable for Fund Shares Sold 78,457 - 78,457
Prepaid Trustees' Fees and Expenses - - 13,087
Receivable for Expense Reimbursements - - 12,235
Prepaid Expenses and Other Assets - - 4,213
-------------------------------------------------------------
TOTAL ASSETS 197,997,106 (528,133,867) 726,586,982
LIABILITIES
Advisory Fee Payable 67,227 - 250,915
Variation Margin Payable - - 155,250
Shareholder Servicing Fee Payable 34,409 - 125,328
Distribution Fees 31,259 - 31,259
Registration Fees 30,784 - 30,784
Transfer Agent Fees 30,364 - 30,364
Administrative Services Fee Payable 8,403 - 30,178
Trustees' fees 29,932 - 29,932
Printing and postage 18,025 - 18,025
Professional Fees 11,566 - 11,566
Custodian fees 7,020 - 7,020
Payable for Shares of Beneficial Interest Redeemed 4,557 - 4,557
Fund Services Fee Payable - - 745
Administration Fee Payable 16,806 - 17,536
Accrued Expenses and Other Liabilities 3,372 - 196,539
-------------------------------------------------------------
TOTAL LIABILITIES 293,724 - 939,998
-------------------------------------------------------------
NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984
=============================================================
ANALYSIS OF NET ASSETS
Paid-in Capital $ 150,862,920 $ 0 $ 581,685,656
Undistributed ( Distributions in excess of ) Net
Investment Income (2,844,536) - ($1,593,356)
Accumulated Net Realized Gain (Loss) on Investment 17,124,842 - $ 34,449,683
Net Unrealized Appreciation (Depreciation) on Investment 32,560,156 - $ 111,105,001
-------------------------------------------------------------
NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984
=============================================================
Shares of Beneficial Interest Outstanding - (31,716,105)(b) -
Shares Outstanding 12,962,381 (12,962,381)(b) -
Net Asset Value Per Share $ 15.23(A)* - -
$ 15.11(B)*
$ 15.04(C)*
$ 15.30(I))*
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN VALUE FUND
Shares Outstanding
Class A - 5,013,616(c) 5,013,616
Class B - 2,207,306(c) 2,207,306
Class C - 153,915(c) 153,915
Select - 37,105,139(c) 37,105,139
Institutional - 15,051,872(c) 15,051,872
Net Asset Value Per Share
Class A - - $ 12.19
Class B - - $ 12.19
Class C - - $ 12.19
Select - - $ 12.19
Institutional - - $ 12.19
-------------------------------------------------------------
Cost of Investments $ 165,027,877 - $ 612,534,135
=============================================================
(a) Reallocation of investments from the feeder funds to the master portfolio.
(b) Reallocation of feeder fund's beneficial interest to Class A, Class B,
Class C, Select, and Institutional Shares due to the Concurrent
Reorganization.
* Share class of fund
(c) Reflects the additional number of shares outstanding due to the Concurrent
Reorganization.
(1) Formerly Chase Vista Large Cap Equity Fund
See Notes to Pro Forma Financial Statements
-10-
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO/
JPMORGAN LARGE CAP EQUITY FUND(1)
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN U.S.
J.P. MORGAN J.P. MORGAN EQUITY FUND -
U.S. EQUITY INSTITUTIONAL U.S ADVISOR
EQUITY FUND EQUITY FUND SERIES
---------------------------------------------------------------
INCOME:
Allocated Investment Income From Portfolio 4,837,732 2,916,242 768
Dividend Income - -
Interest Income - - -
Dividend Income from Affiliated Investments - -
Allocated Portfolio Expenses (1,840,805) (1,110,537) (229)
--------------------------------------------------------------
Investment Income 2,996,927 1,805,705 539
--------------------------------------------------------------
EXPENSES:
Advisory Fee - - -
Shareholder Servicing Fee 995,379 240,314 175
Administrative Services Fee 96,491 58,277 -
Distribution Fee - - 120
Transfer Agent Fees 82,056 18,473 4,914
Custodian Fees and Expenses - - -
Registration Fees 23,213 24,416 11,042
Professional Fees 14,367 13,301 3,285
Financial and Fund Accounting Services Fee 15,041 15,041 6,095
Trustees' Fees and Expenses 5,498 3,128 124
Printing Expenses 10,376 5,584 2,421
Fund Services Fee 6,203 3,772 -
Administration Fee 4,413 2,668 -
Insurance Expense 497 123 -
Line of Credit Expense (2,362) (2,913) -
Miscellaneous 33,066 32,181 2,323
--------------------------------------------------------------
Total Expenses 1,284,238 414,365 30,499
--------------------------------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses (69,360) (30,221)
--------------------------------------------------------------
Net Expenses 1,284,238 345,005 278
--------------------------------------------------------------
--------------------------------------------------------------
Net Investment Income 1,712,689 1,460,700 261
--------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain (Loss ) on:
Investment
Futures Contracts
Investment 17,273,605 12,510,427 (6,149)
Futures Contracts
Investment
Futures Contracts
--------------------------------------------------------------
NET REALIZED GAIN (LOSS) 17,273,605 12,510,427 (6,149)
--------------------------------------------------------------
Net Change in Net Unrealized Appreciation
(Depreciation) on
Investment (30,496,120) (17,066,424) (18,986)
Futures Contracts
--------------------------------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION (30,496,120) (17,066,424) (18,986)
--------------------------------------------------------------
--------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (11,509,826) (3,095,297) (24,874)
==============================================================
THE U.S. EQUITY JPMORGAN LARGE
PORTFOLIO CAP EQUITY
FUND(1)
----------------------------------------
INCOME:
Allocated Investment Income From Portfolio -
Dividend Income 6,921,351 2,722,442
Interest Income 824,294 583,145
Dividend Income from Affiliated Investments 9,096 -
Allocated Portfolio Expenses -
---------------------------------------
Investment Income 7,754,741 3,305,587
---------------------------------------
EXPENSES:
Advisory Fee 2,542,291 937,829
Shareholder Servicing Fee - 586,266
Administrative Services Fee 154,901 353,707
Distribution Fee - 404,746
Transfer Agent Fees - 218,229
Custodian Fees and Expenses 175,789 83,970
Registration Fees - 22,831
Professional Fees 45,775 33,693
Financial and Fund Accounting Services Fee - -
Trustees' Fees and Expenses 8,150 11,785
Printing Expenses 257 22,159
Fund Services Fee 9,977 -
Administration Fee 4,493 -
Insurance Expense (1,285) -
Line of Credit Expense - -
Miscellaneous 10,320 14,303
---------------------------------------
Total Expenses 2,950,668 2,689,518
---------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses - (748,110)
---------------------------------------
Net Expenses 2,950,668 1,941,408
---------------------------------------
---------------------------------------
Net Investment Income 4,804,073 1,364,179
---------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized gain (loss ) on:
Investment
Futures Contracts
Investment 30,706,898 12,946,307
Futures Contracts (929,015)
Investment
Futures Contracts
---------------------------------------
NET REALIZED GAIN (LOSS) 29,777,883 12,946,307
---------------------------------------
Net Change in Net Unrealized Appreciation
(depreciation) on
Investment (46,618,392) (12,915,903)
Futures Contracts (963,832)
---------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION (47,582,224) (12,915,903)
---------------------------------------
---------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (13,000,268) 1,394,583
=======================================
(a) Reallocation of investment income to feeder funds
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under fund expenses.
(c) Reflects the elimination of realized and unrealized gain (loss) of the
feeder funds.
(d) Reflects the adjustments to investment advisory fee, administrative fees
and shareholder servicing fees and/or related waivers based on the
surviving fund's revised fee schedule.
(e) Custody fee includes all fund accounting charges, reflecting estimated
benefit of combined fund.
(f) Reduction reflects estimated benefits of combined funds.
(1) Formerly Chase Vista Large Cap Equity Fund
See Notes to Pro Forma Financial Statements
-11-
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO/
JPMORGAN LARGE CAP EQUITY FUND(1)
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000
(UNAUDITED)
PRO FORMA
COMBINED
JPMORGAN
PRO FORMA U.S. EQUITY
ADJUSTMENTS FUND
INCOME:
Allocated Investment Income From Portfolio (7,754,742)(a) -
Dividend Income - 9,643,793
Interest Income - 1,407,439
Dividend Income from Affiliated Investments - 9,096
Allocated Portfolio Expenses 2,951,571 (b) -
------------------------------------
Investment Income (4,803,171) 11,060,328
------------------------------------
EXPENSES:
Advisory Fee - 3,480,120
Shareholder Servicing Fee - 1,822,134
Administrative Services Fee 643,515 (d) 1,306,891
Distribution Fee 2,374 (d) 407,240
Transfer Agent Fees - 323,672
Custodian Fees and Expenses (100,240)(e) 159,519
Registration Fees - 81,502
Professional Fees (53,900)(f) 56,521
Financial and Fund Accounting Services Fee (36,177)(e) -
Trustees' Fees and Expenses - 28,685
Printing Expenses (20,500)(f) 20,297
Fund Services Fee - 19,952
Administration Fee - 11,574
Insurance Expense - (665)
Line of Credit Expense - (5,275)
Miscellaneous 92,193
------------------------------------
Total Expenses 435,072 7,804,360
------------------------------------
Less: Amounts Waived (435,072)(d) (435,072)
Less: Reimbursement of Expenses (274,160)(a) (1,121,851)
------------------------------------
Net Expenses (274,160)(a) 6,247,437
------------------------------------
Net Investment Income (4,529,011) 4,812,891
------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net Realized Gain (Loss ) on:
Investment
Futures Contracts
Investment (29,777,883)(c) 43,653,205
Futures Contracts (929,015)
Investment
Futures Contracts
------------------------------------
NET REALIZED GAIN (LOSS) (29,777,883) 42,724,190
------------------------------------
Net Change in net unrealized appreciation
(depreciation) on
Investment 47,581,530 (c) (59,534,295)
Futures Contracts (963,832)
------------------------------------
NET CHANGE IN UNREALIZED DEPRECIATION 47,581,530 (60,498,127)
------------------------------------
------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS 13,274,636 (12,961,046)
====================================
See Notes to Pro Forma Financial Statements
-12-
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOVEMBER 30, 2000
SHARES VALUE
- -------------------------------------------------------------------
COMMON STOCKS - 96.1%
CAPITAL MARKETS - 2.5%
SECURITIES & ASSET MANAGEMENT - 2.5%
119,700 Goldman Sachs Group, Inc. (The) $ 9,830,363
253,400 TD Waterhouse Group, Inc.+ 3,357,550
---------------
13,187,913
---------------
COMPUTER HARDWARE - 10.0%
COMPUTER HARDWARE & BUSINESS MACHINES - 10.0%
7,300 Avaya Inc.+ 85,319
414,800 Cisco Systems Inc.(s)+ 19,858,550
232,400 Compaq Computer Corp. 4,996,600
47,100 Dell Computer Corp.+ 906,675
104,500 EMC Corp. (Mass.)+ 7,772,188
69,600 Hewlett-Packard Co. 2,201,100
202,500 Quantum Corp. - DLT & Storage Systems+ 2,733,750
186,900 Sun Microsystems, Inc.(s)+ 14,216,081
---------------
52,770,263
---------------
CONSUMER CYCLICAL - 2.6%
HOTELS - 0.5%
58,700 Marriott International, Inc. 2,432,381
---------------
MOTOR VEHICLES & PARTS - 1.8%
66,400 Dana Corp. 1,112,200
167,500 Delphi Automotive Systems 2,313,594
93,492 Ford Motor Company 2,126,943
23,800 General Motors Corp. 1,178,100
129,800 Lear Corp.+ 2,839,375
---------------
9,570,212
---------------
RESTAURANTS - 0.3%
57,000 McDonald's Corp. 1,816,875
---------------
13,819,468
---------------
CONSUMER SERVICES - 2.9%
ENTERTAINMENT - 0.7%
76,900 Viacom, Inc. Cl B+ 3,931,512
---------------
MEDIA - 2.2%
104,200 AT&T Corp. - Liberty Media Group Cl A+ 1,413,213
40,758 Charter Communications, Inc.+ 804,971
93,800 Comcast Corp. Cl A+ 3,605,438
106,400 News Corp. Ltd. (The) ADR(i) 3,710,699
27,700 Time Warner Inc. 1,717,400
---------------
11,251,721
---------------
15,183,233
---------------
CONSUMER STABLE - 6.1%
HOME PRODUCTS - 4.0%
52,800 Clorox Company 2,359,500
62,700 Estee Lauder Companies, Inc. 2,715,694
SHARES VALUE
- -------------------------------------------------------------------
153,400 Gillette Company $ 5,196,425
142,000 Procter & Gamble Co. (The) 10,632,250
---------------
20,903,869
---------------
TOBACCO - 2.1%
295,300 Philip Morris Companies Inc. 11,276,769
---------------
32,180,638
---------------
ENERGY - 6.1%
ENERGY RESERVES & PRODUCTION - 4.7%
44,500 Anadarko Petroleum Corp. 2,647,750
37,900 Chevron Corp. 3,103,063
217,548 Exxon Mobil Corp.(s) 19,144,223
---------------
24,895,036
---------------
OIL REFINING - 0.3%
24,100 Texaco Inc. 1,399,306
---------------
OIL SERVICES - 1.1%
109,900 Baker Hughes Inc. 3,633,569
108,600 Global Marine Inc.+ 2,382,413
---------------
6,015,982
---------------
32,310,324
---------------
FINANCE - 11.4%
BANKS - 4.1%
223,100 Amsouth Bancorporation 3,318,613
81,566 Citigroup Inc. 4,063,006
103,000 First Union Corp. 2,587,875
608,000 Firstar Corp.(s) 11,780,000
---------------
21,749,494
---------------
FINANCIAL SERVICES - 6.8%
219,900 Associates First Capital Corp. 7,765,219
69,900 Capital One Financial Corp. 3,901,294
95,900 Countrywide Credit Industries, Inc. 3,560,288
43,100 Federal Home Loan Mortgage Corp. 2,604,856
331,700 General Electric Co. (U.S.)(s) 16,439,880
14,700 Providian Financial Corp. 1,323,000
---------------
35,594,537
---------------
THRIFTS - 0.5%
56,300 Washington Mutual, Inc. 2,558,131
---------------
59,902,162
---------------
HEALTH SERVICES & SYSTEMS - 1.5%
MEDICAL PRODUCTS & SUPPLIES - 1.5%
38,700 Bard (C.R.), Inc. 1,905,975
89,100 Becton Dickinson & Co. 3,029,400
53,200 Medtronic, Inc. 2,832,900
---------------
7,768,275
---------------
INDUSTRIAL CYCLICAL - 10.0%
CHEMICALS - 2.0%
205,300 Air Products & Chemicals, Inc. 7,070,019
The Accompanying Notes are an Integral Part of the Financial Statements. 13
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
NOVEMBER 30, 2000
SHARES VALUE
- -------------------------------------------------------------------
112,700 Rohm and Haas Co. $ 3,352,825
---------------
10,422,844
---------------
DEFENSE/AEROSPACE - 0.7%
74,600 Honeywell Inc. 3,636,750
---------------
ELECTRICAL EQUIPMENT - 2.2%
36,000 Corning Inc. 2,106,000
9,900 Corvis Corp.+ 285,244
100,200 Level 3 Communications, Inc.+ 2,692,875
142,400 Nortel Networks Corp. 5,375,600
12,500 QUALCOMM Inc.+ 1,003,125
---------------
11,462,844
---------------
ENVIRONMENTAL SERVICES - 0.6%
139,757 Waste Management, Inc. 3,345,433
---------------
HEAVY ELECTRICAL EQUIPMENT - 0.6%
71,600 Cooper Industries, Inc. 2,922,175
---------------
INDUSTRIAL PARTS - 2.7%
281,092 Tyco International Ltd.(i)(s) 14,827,602
---------------
MINING & METALS - 0.7%
61,764 Alcoa Inc. 1,740,973
110,186 Allegheny Technologies Inc. 2,189,947
---------------
3,930,920
---------------
RAILROADS - 0.5%
51,900 Union Pacific Corp. 2,413,350
---------------
52,961,918
---------------
INSURANCE - 4.9%
LIFE & HEALTH INSURANCE - 1.8%
45,100 CIGNA Corp. 5,941,925
118,600 MetLife, Inc.+ 3,513,525
---------------
9,455,450
---------------
PROPERTY AND CASUALTY INSURANCE - 3.1%
137,800 Allstate Corp. 5,270,850
83,400 Ambac Financial Group, Inc. 6,369,675
57,300 XL Capital Ltd. Cl A(i) 4,573,256
---------------
16,213,781
---------------
25,669,231
---------------
PHARMACEUTICALS - 11.3%
DRUGS - 11.3%
125,200 Alza Corp.+ 5,555,750
62,300 American Home Products Corp. 3,745,788
61,700 Bristol-Myers Squibb Co. 4,276,581
88,500 Lilly (Eli) & Co. 8,291,344
64,900 Merck & Co., Inc. 6,015,419
269,800 Pfizer, Inc.(s) 11,955,512
181,675 Pharmacia Corp. 11,082,175
153,600 Schering-Plough Corp. 8,611,200
---------------
59,533,769
---------------
SHARES VALUE
- -------------------------------------------------------------------
RETAIL - 5.0%
CLOTHING STORES - 1.5%
102,400 Abercrombie & Fitch Co. Cl A+ $ 2,137,600
110,400 Gap, Inc. (The) 2,753,100
110,300 TJX Companies, Inc. (The) 2,826,438
---------------
7,717,138
---------------
DEPARTMENT STORES - 1.9%
110,000 Target Corp. 3,306,875
136,800 Wal-Mart Stores, Inc. 7,139,249
---------------
10,446,124
---------------
SPECIALTY STORES - 1.6%
56,100 Best Buy Co., Inc.+ 1,444,575
175,300 Home Depot, Inc. 6,869,569
---------------
8,314,144
---------------
26,477,406
---------------
SEMICONDUCTORS - 4.4%
SEMICONDUCTORS - 4.4%
39,500 Altera Corp.+ 945,531
6,200 Broadcom Corp.+ 604,500
243,500 Intel Corp.(s) 9,268,219
2,400 Lattice Semiconductor Corp.+ 39,900
36,700 Linear Technology Corp.+ 1,736,369
35,000 Maxim Integrated Products, Inc.+ 1,785,000
55,000 Micron Technology, Inc.+ 1,732,500
17,200 SDL, Inc.+ 3,126,100
59,500 Texas Instruments Inc. 2,220,094
40,000 Xilinx, Inc.+ 1,560,000
---------------
23,018,213
---------------
SOFTWARE & SERVICES - 9.0%
COMPUTER SOFTWARE - 7.7%
40,200 BEA Systems, Inc.+ 2,354,213
85,100 Gemstar International Group Ltd.+ 3,462,506
23,800 International Business Machines Corp. 2,225,300
276,000 Microsoft Corp.(s)+ 15,835,500
160,400 NCR Corp.+ 7,578,900
141,400 Oracle Corp.+ 3,747,100
135,200 Parametric Technology Corp.+ 1,504,100
41,078 Veritas Software Corp.+ 4,007,672
---------------
40,715,291
---------------
INTERNET - 1.3%
21,900 Akamai Technologies, Inc.+ 629,625
61,800 America Online, Inc.+ 2,509,698
380,400 E*trade Group Inc.+ 3,043,200
18,000 eBay Inc.+ 617,625
---------------
6,800,148
---------------
47,515,439
---------------
14 The Accompanying Notes are an Integral Part of the Financial Statements.
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(Continued)
NOVEMBER 30, 2000
SHARES/PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------
TELECOMMUNICATIONS - 5.1%
TELEPHONE - 4.2%
109,290 Qwest Communications International Inc.+ $ 4,125,698
189,600 SBC Communications Inc.(s) 10,416,149
103,300 Verizon Communications 5,804,169
113,450 WorldCom, Inc.+ 1,694,659
---------------
22,040,675
---------------
WIRELESS TELECOMMUNICATIONS - 0.9%
72,500 Nextel Communications, Inc.+ 2,247,500
114,600 Sprint Corp. (PCS Group)+ 2,599,988
---------------
4,847,488
---------------
26,888,163
---------------
UTILITIES - 3.3%
ELECTRICAL UTILITY - 3.3%
95,100 Ameren Corp. 4,220,062
70,900 C P & L Energy Inc. 3,061,994
72,800 DTE Energy Company 2,761,850
68,300 Dynegy Inc. Cl A 3,022,275
100,200 Entergy Corp. 4,120,725
---------------
17,186,906
---------------
TOTAL COMMON STOCKS 506,373,321
---------------
(Cost $426,829,334)
SHORT-TERM INVESTMENTS - 3.9%
INVESTMENT COMPANIES - 3.4%
18,245,417 J.P. Morgan Institutional Prime Money
Market Fund(a) 18,245,416
---------------
U.S. TREASURY SECURITIES - 0.5%
$2,450,000 U.S. Treasury Notes, 5.25%, 5/31/01(s) 2,438,510
---------------
TOTAL SHORT-TERM INVESTMENTS 20,683,926
---------------
(Cost $20,676,924)
TOTAL INVESTMENT SECURITIES - 100.0% $ 527,057,247
===============
(Cost $447,506,258)
FUTURES CONTRACTS
UNDERLYING
FACE AMOUNT UNREALIZED
PURCHASED EXPIRATION DATE AT VALUE DEPRECIATION
- --------------------------------------------------------------------
45 S&P 500 Index December 2000 $14,866,875 $(1,006,998)
==============================
ADR - American Depositary Receipt
(a) Money Market mutual fund registered under the Investment Company Act of
1940, as amended, and advised by J.P. Morgan Investment Management, Inc.
(i) Foreign security
(s) Security is fully or partially segregated with custodian as collateral for
futures or with brokers as initial margin for futures contracts.
+ Non-income producing security.
The Accompanying Notes are an Integral Part of the Financial Statements. 15
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES
AS OF NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN J.P. MORGAN J.P. MORGAN U.S.
U.S. EQUITY INSTITUTIONAL U.S. EQUITY FUND -
FUND EQUITY FUND ADVISOR SERIES
ASSETS
Investment in The U.S. Equity Portfolio
("Portfolio"), at value $ 344,117,718 $ 183,522,572 $ 493,577
Investments at Value ( Cost $447,506,258) - - -
Cash - - -
Dividends and Interest Receivable - - -
Prepaid Trustees' Fees and Expenses 4,106 3,445 -
Receivable for Expense Reimbursements - - 12,235
Prepaid Expenses and Other Assets 946 709 -
------------------------------------------------------------
TOTAL ASSETS 344,122,770 183,526,726 505,812
LIABILITIES
Advisory Fee Payable - - -
Variation Margin Payable - - -
Shareholder Servicing Fee Payable 75,082 15,837 -
Administrative Services Fee Payable 7,124 3,757 -
Fund Services Fee Payable 244 128 -
Administration Fee Payable 109 0 -
Accrued Expenses and Other Liabilities 42,588 36,376 30,461
------------------------------------------------------------
TOTAL LIABILITIES 125,147 56,098 30,461
------------------------------------------------------------
NET ASSETS $ 343,997,623 $ 183,470,628 $ 475,351
============================================================
ANALYSIS OF NET ASSETS
Paid-in Capital $288,461,024 $ 141,861,487 $500,225
Undistributed Net Investment Income 653,902 597,017 261
Accumulated Net Realized Gain (Loss)
on Investment 11,006,423 6,324,567 (6,149)
Net Unrealized Appreciation (Depreciation)
on Investment 43,876,274 34,687,557 (18,986)
------------------------------------------------------------
NET ASSETS $343,997,623 $ 183,470,628 $ 475,351
============================================================
Shares of Beneficial Interest Outstanding 16,611,076 15,051,872 53,157
Net Asset Value Per Share 20.71 12.19 8.94
PRO FORMA WITH REORGANIZATION
JPMORGAN U.S. EQUITY FUND
Shares Outstanding
Class A Shares - - -
Select Shares - - -
Institutional Shares - - -
Net Asset Value
Class A Shares - - -
Select Shares - - -
Institutional Shares - - -
==============================================
THE U.S. EQUITY PRO FORMA PRO FORMA COMBINED
PORTFOLIO ADJUSTMENTS JPMORGAN U.S.
EQUITY FUND
ASSETS
Investment in The U.S. Equity Portfolio
("Portfolio"), at value $ - $(528,133,867) (a) $ -
Investments at Value ( Cost $447,506,258) 527,057,247 - 527,057,247
Cash 844,092 - 844,092
Dividends and Interest Receivable 659,002 - 659,002
Prepaid Trustees' Fees and Expenses 5,536 - 13,087
Receivable for Expense Reimbursements - - 12,235
Prepaid Expenses and Other Assets 2,558 - 4,213
----------------------------------------------------------------
TOTAL ASSETS 528,568,435 (528,133,867) 528,589,876
LIABILITIES
Advisory Fee Payable 183,688 - 183,688
Variation Margin Payable 155,250 - 155,250
Shareholder Servicing Fee Payable 0 - 90,919
Administrative Services Fee Payable 10894 - 21,775
Fund Services Fee Payable 373 - 745
Administration Fee Payable 621 - 730
Accrued Expenses and Other Liabilities 83,742 - 193,167
----------------------------------------------------------------
TOTAL LIABILITIES 434,568 - 646,274
----------------------------------------------------------------
NET ASSETS $ 528,133,867 $(528,133,867) $ 527,943,602
================================================================
ANALYSIS OF NET ASSETS
Paid-in Capital - - $ 430,822,736
Undistributed Net Investment Income - - 1,251,180
Accumulated Net Realized Gain (Loss)
on Investment - - 17,324,841
Net Unrealized Appreciation (Depreciation)
on Investment - - 78,544,845
----------------------------------------------------------------
NET ASSETS $ 528,133,867 $ (528,133,867) $ 527,943,602
================================================================
Shares of Beneficial Interest Outstanding - (31,716,105)(b) -
Net Asset Value Per Share - - -
PRO FORMA WITH REORGANIZATION
JPMORGAN U.S. EQUITY FUND
Shares Outstanding
Class A Shares - 38,998 (c) 38,998
Select Shares - 28,221,456 (c) 28,221,456
Institutional Shares - 15,051,872 (c) 15,051,872
Net Asset Value
Class A Shares - $ 12.19
Select Shares - $ 12.19
Institutional Shares - $ 12.19
================================================================
(a) Reallocation of investments from the feeder funds to the master portfolio
(b) Reallocation of feeder fund's beneficial interest to Class A, Institutional,
and Select Shares due to the Reorganization
(c) Reflects the additional number of shares outstanding due to the
Reorganization
See notes to Pro Forma Financial Statements
16
J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND /
J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000
(UNAUDITED)
J.P. MORGAN J.P. MORGAN J.P. MORGAN U.S.
U.S. EQUITY INSTITUTIONAL U.S EQUITY FUND -
FUND EQUITY FUND ADVISOR SERIES
INCOME:
Allocated Investment Income From Portfolio $ 4,837,732 $ 2,916,242 $ 768
Interest Income - - -
Dividend Income from Affiliated Investments - - -
Dividend Income - - -
Allocated Portfolio Expenses (1,840,805) (1,110,537) (229)
----------------------------------------------------------
Investment Income 2,996,927 1,805,705 539
==========================================================
EXPENSES:
Advisory Fee - - -
Shareholder Servicing Fee 995,379 240,314 175
Administrative Services Fee 96,491 58,277 -
Custodian Fees and Expenses - - -
Transfer Agent Fees 82,056 18,473 4,914
Registration Fees 23,213 24,416 11,042
Professional Fees 14,367 13,301 3,285
Financial and Fund Accounting Services Fee 15,041 15,041 6,095
Fund Services Fee 6,203 3,772 -
Trustees' Fees and Expenses 5,498 3,128 124
Administration Fee 4,413 2,668 -
Printing Expenses 10,376 5,584 2,421
Distribution Fee - - 120
Insurance Expense 497 123 -
Line of Credit Expense (2,362) (2,913) -
Miscellaneous 33,066 32,181 2,323
----------------------------------------------------------
Total Expenses 1,284,238 414,365 30,499
----------------------------------------------------------
Less: Amounts Waived
Less: Reimbursement of Expenses - (69,360) (30,221)
----------------------------------------------------------
Net Expenses 1,284,238 345,005 278
----------------------------------------------------------
----------------------------------------------------------
Net Investment Income 1,712,689 1,460,700 261
==========================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net Realized Gain (Loss) On:
Investment 17,273,605 12,510,427 (6,149)
Futures Contracts
----------------------------------------------------------
NET REALIZED GAIN (LOSS) 17,273,605 12,510,427 (6,149)
----------------------------------------------------------
Net Change in Net Unrealized Appreciation
(Depreciation) on:
Investment (30,496,120) (17,066,424) (18,986)
Futures Contracts
----------------------------------------------------------
NET CHANGE IN NET UNREALIZED DEPRECIATION (30,496,120) (17,066,424) (18,986)
----------------------------------------------------------
----------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (11,509,826) $ (3,095,297) $ (24,874)
==========================================================
JPMORGAN U.S.
THE U.S. EQUITY PRO FORMA EQUITY FUND
PORTFOLIO ADJUSTMENTS PRO FORMA COMBINED
INCOME:
Allocated Investment Income From Portfolio $ - $ (7,754,742)(a) $ -
Interest Income 824,294 - 824,294
Dividend Income from Affiliated Investments 9,095 - 9,095
Dividend Income 6,921,351 - 6,921,351
Allocated Portfolio Expenses - 2,951,571 (b) -
----------------------------------------------------------
Investment Income 7,754,740 (4,803,171) 7,754,740
==========================================================
EXPENSES:
Advisory Fee 2,542,291 - 2,542,291
Shareholder Servicing Fee - - 1,235,868
Administrative Services Fee 154,901 646,002 (d) 955,671
Custodian Fees and Expenses 175,789 (16,270)(e) 159,519
Transfer Agent Fees - - 105,443
Registration Fees - - 58,671
Professional Fees 45,775 (23,900)(f) 52,828
Financial and Fund Accounting Services Fee - (36,177)(e) -
Fund Services Fee 9,977 - 19,952
Trustees' Fees and Expenses 8,150 - 16,900
Administration Fee 4,493 - 11,574
Printing Expenses 257 (10,500)(f) 8,138
Distribution Fee - 490 (d) 610
Insurance Expense (1,285) - (665)
Line of Credit Expense - - (5,275)
Miscellaneous 10,320 77,890
----------------------------------------------------------
Total Expenses 2,950,668 559,645 5,239,415
----------------------------------------------------------
Less: Amounts Waived (559,645)(d) (559,645)
Less: Reimbursement of Expenses - (99,581)
----------------------------------------------------------
Net Expenses 2,950,668 - 4,580,189
----------------------------------------------------------
----------------------------------------------------------
Net Investment Income 4,804,072 (4,803,171) 3,174,551
==========================================================
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net Realized Gain (Loss) on:
Investment 30,706,898 (29,777,883)(c) 30,706,898
Futures Contracts (929,015) (929,015)
----------------------------------------------------------
NET REALIZED GAIN (LOSS) 29,777,883 (29,777,883) 29,777,883
----------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investment (46,618,392) 47,581,530 (c) (46,618,392)
Futures Contracts (963,832) (963,832)
----------------------------------------------------------
NET CHANGE IN NET UNREALIZED DEPRECIATION (47,582,224) 47,581,530 (47,582,224)
----------------------------------------------------------
----------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (13,000,269) $ 13,000,476 $ (14,629,790)
==========================================================
(a) Reallocation of investment income to feeder funds.
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under fund expenses.
(c) Reflects the elimination of master portfolio expenses which have been
disclosed under fund expenses.
(d) 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.
(e) Custody fee includes all fund accounting charges, reflecting estimated
benefit of combined fund.
(f) Reduction reflects estimated benefits of combined funds.
See notes to Pro Forma Financial Statements
17
J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND / J.P. MORGAN U.S. EQUITY FUND /
J.P. MORGAN-U.S. EQUITY FUND-ADVISOR SERIES /
THE U.S. EQUITY PORTFOLIO/JPMORGAN LARGE CAP EQUITY FUND(1)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities, Statement of
Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of The U.S. Equity Portfolio ("Master Portfolio"), J.P. Morgan
Institutional U.S. Equity Fund ("Institutional Fund"), J.P. Morgan U.S. Equity
Fund ("U.S. Equity Fund") and J.P. Morgan U.S. Equity Fund - Advisor Series
("Advisor Series Fund") (collectively the "feeder funds" of the Master
Portfolio) as if the proposed Reorganization occurred as of and for the twelve
months ended November 30, 2000.
The Pro Forma Combining Statement of Assets and Liabilities, Statement of
Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of the Master Portfolio, the feeder funds, and JP Morgan Large Cap
Equity Fund(1) ("JPMLCEF") as if the proposed Concurrent Reorganization occurred
as of and for the twelve months ended November 30, 2000.
Under the Reorganization, the Pro Forma Statements give effect to the proposed
transfer of all assets and liabilities of U.S. Equity Fund, Advisor Series Fund
and the Master Portfolio in exchange for shares in Institutional Fund. Under the
Concurrent Reorganization, the Pro Forma Statements give effect to the proposed
transfer of all assets and liabilities of Master Portfolio, U.S. Equity Fund,
Advisor Series Fund and JPMLCEF in exchange for shares in Institutional Fund.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of each Fund, which have been incorporated by reference in
their respective Statements of Additional Information.
2. SHARES OF BENEFICIAL INTEREST:
Under the Reorganization, the existing shares of Institutional Fund, U.S. Equity
Fund, and Advisor Series Fund would be renamed Institutional Shares, Select
Shares, and Class A Shares, respectively. The net asset values per share for
Select Shares and Class A Shares at the commencement of offering would be
identical to the closing net asset value per share for the Institutional Shares
immediately prior to the Reorganization.
Under the proposed Reorganization, each shareholder of U.S. Equity Fund and
Advisor Series Fund would receive shares of Institutional Fund with a value
equal to their holdings in their respective funds. Holders of U.S. Equity Fund
will receive Select Shares and holders of the Advisor Series Fund will receive
Class A Shares in Institutional Fund. Therefore, as a result of the proposed
Reorganization, current shareholders of U.S. Equity Fund and Advisor Series Fund
will become shareholders of Institutional Fund.
Under the proposed Concurrent Reorganization, each shareholders of U.S. Equity
Fund, Advisor Series Fund, and JPMLCEF would receive shares of Institutional
Fund with a value equal to their holdings in their respective funds. Holders of
U.S. Equity Fund will receive Select Shares, holders of the Advisor Series Fund
will receive Class A Shares, holders of Class A Shares in JPMLCEF will receive
Class A Shares, holders of Class B Shares in JPMLCEF will receive Class B
Shares, holders of Class C Shares in JPMLCEF will receive Class C Shares, and
holders of Class I Shares in JPMLCEF will
18
receive Select Shares in Institutional Fund. Therefore, as a result of the
proposed Concurrent Reorganization, current shareholders of U.S. Equity Fund,
Advisor Series Fund, and JPMLCEF will become shareholders of Institutional Fund.
The Pro Forma net asset value per share assumes the issuance of additional
shares of Institutional Fund, which would have been issued on November 30, 2000
in connection with the proposed Reorganization and the proposed Concurrent
Reorganization. The amount of additional shares assumed to be issued under the
Reorganization was calculated based on the November 30, 2000 net assets of U.S.
Equity Fund and Advisor Series Fund and the net asset values per share of
Institutional Fund. The amount of additional shares assumed to be issued under
the Concurrent Reorganization was calculated based on the November 30, 2000 net
assets of U.S. Equity Fund, Advisor Series Fund, and JPMLCEF and the net asset
value per share of Institutional Fund.
JPMORGAN U.S. EQUITY FUND WITH REORGANIZATION
SELECT SHARES
-------------
Increase in Shares Issued 28,221,456
Net Assets 11/30/00 343,997,623
Pro Forma Net Asset Value 11/30/00 12.19
JPMORGAN U.S. EQUITY FUND WITH CONCURRENT REORGANIZATION
SELECT
--------------------
Increase in Shares 37,105,139
Issued
Net Assets 11/30/00 343,997,623
Pro Forma Net Asset 12.19
Value 11/30/00
3. PRO FORMA OPERATIONS:
The Pro Forma Statement of Operations assumes similar rates of gross investment
income for the investments of each Fund. Accordingly, the combined gross
investment income is equal to the sum of each Fund's gross investment income.
Certain expenses have been adjusted to reflect the expected expenses of the
combined entity including the change in administration fee and the new expected
expense cap. The pro forma investment advisory, shareholder servicing and
distribution fees of the combined Fund are based on the fee schedule in effect
for the Surviving Fund at the combined level of average net assets for the
twelve months ended November 30, 2000.
(1) Formerly Chase Vista Large Cap Equity Fund
19
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
Part C-1
herein by reference to Post-Effective Amendment No. 29 to the Registration
Statement filed on December 26, 1996 (Accession Number 0001016964-96-000061).
(c) Amendment No. 6 to Declaration of Trust; Amendment and Sixth
Amended and Restated Establishment and Designation of Series of Shares of
Beneficial Interest was filed as Exhibit No. 1(b) to Post-Effective Amendment
No. 31 to the Registration Statement on February 28, 1997 (Accession Number
0001016964-97-000041).
(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).
Part C-2
2 By-laws.
(a) Restated By-Laws of Registrant. Incorporated herein by
reference to Post-Effective Amendment No. 29 to the Registration Statement filed
on December 26, 1996 (Accession Number 0001016964-96-000061).
(b) Amendment to Restated By-laws of Registrant. Incorporated
herein by reference to Post-Effective Amendment No. 71 to the Registration
Statement filed on February 28, 2000 (Accession Number 0001041455-00-000056).
3 Not Applicable
4 Agreement and Plan of Reorganization filed herewith as
Appendix A to the Combined Prospectus/Proxy Statement.
5 Not Applicable
6 Not applicable.
7 Distribution Agreement filed herewith.
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 None.
11 None.
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).
Part C-3
(b) Restated Shareholder Servicing Agreement between Registrant
and Morgan Guaranty Trust Company of New York ("Morgan Guaranty") filed as
Exhibit (h)2 to Post Effective Amendment No. 54 to the Registration Statement on
August 25, 1998 (Accession No. 0001041455-98-000053).
(c) Transfer Agency and Service Agreement between Registrant and
State Street. Incorporated herein by reference to Post-Effective Amendment No.
29 to the Registration Statement filed on December 26,1996 (Accession Number
0001016964-96-000061).
(d) Restated Administrative Services Agreement between Registrant
and Morgan Guaranty. Incorporated herein by reference to Post-Effective
Amendment No. 29 to the 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 filed herewith.
14 Consent of PricewaterhouseCoopers LLP.
15 None
16 Powers of Attorney filed herewith.
Part C-4
17 (a) Form of Proxy Card.
17 (b) Preliminary Prospectus for the Surviving Fund filed
herewith.
17 (c) Prospectus for the Merging Fund.
17 (d) Preliminary Statement of Additional Information for the
Surviving Fund filed herewith.
17 (e) Statement of Additional Information for the Merging Fund
incorporated herein by reference.
17 (f) Annual Report of the Surviving Fund (including the Annual
Report of the Master Portfolio) dated May 31, 2000
incorporated herein by reference.
17 (g) Semi-Annual Report of the Surviving Fund (including the
Semi-Annual Report of the Master Portfolio) dated
November 30, 2000 incorporated herein by reference.
17 (h) Annual Report of the Merging Fund (including the Annual
Report of the Master Portfolio) dated May 31, 2000
incorporated herein by reference.
17 (i) Semi-Annual Report of the Merging Fund (including the
Semi-Annual Report of the Master Portfolio) dated
November 30, 2000 filed herewith.
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 15th day of May, 2001.
J.P. MORGAN INSTITUTIONAL FUNDS
Registrant
By: /s/ Joseph J. Bertini
-----------------------------------------
Joseph J. Bertini
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 May 15, 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/ Joseph J. Bertini
-----------------------------------
Joseph J. Bertini
as attorney-in-fact pursuant to a power of attorney.
EXHIBITS
ITEM DESCRIPTION
- ---- -----------
(7) Form of Distribution Agreement
(13) (j) Form of Administration Agreement
(16) Powers of Attorney.
(17) (a) Form of Proxy Card.
(b) Preliminary Prospectus for the Surviving Fund.
(d) Preliminary Statement of Additional Information for the
Surviving Fund.
(i) Semi-Annual Report of J.P. Morgan U.S. Equity Fund
(including Semi-Annual Report of The U.S. Equity Portfolio)
dated November 30, 2000.