As filed with the Securities and Exchange Commission on May 15, 2001
Registration No. 333-58996/811-07342
================================================================================
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,
PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett JR., ESQ.
c/o J.P. Morgan Fleming Asset 425 Lexington Avenue Sullivan & Cromwell
Management (USA) Inc. New York, NY 10017-3954 125 Broad Street
522 Fifth Avenue New York, NY 10004
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 October 31, 2000 was filed on February 22,
2001. Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. MORGAN GLOBAL STRATEGIC INCOME 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 Global Strategic Income
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 has recently completed
a merger with J.P. Morgan & Co. Incorporated, the former corporate parent of the
investment adviser of the Merging Fund's assets, to form J.P. Morgan Chase & Co.
("JPMC"). As a result of this merger, JPMC is seeking to reorganize parts of its
investment management business and funds advised by its subsidiaries. At the
special meeting (the "Meeting"), shareholders will be asked to consider and vote
upon the proposed reorganization of the Merging Fund into J.P. Morgan
Institutional Global Strategic Income 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 Global
Strategic Income 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
Global Strategic Income Fund."
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 J.P. Morgan Investment Management Inc. ("JPMIM").
Please see the enclosed Combined Prospectus/Proxy Statement for detailed
information regarding the proposed Reorganization and a comparison of the
Merging Fund and 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) and
actual (or post-waiver) total expense ratios will be the same or less for your
shares in the Surviving Fund than they are for your shares in the Merging Fund.
If an increase does occur, Morgan Guaranty Trust Company of New York ("Morgan"),
the Surviving Fund's administrator, has contractually agreed to waive fees
payable to it and reimburse expenses so that the actual total operating expense
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.
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
JPMF 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 JPMF, 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 GLOBAL STRATEGIC INCOME 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 Global Strategic Income Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting (the "Meeting") of the
shareholders ("Shareholders") of J.P. Morgan Global Strategic Income Fund (the
"Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), will be held at the
offices of J.P. Morgan Chase & Co., 1211 Avenue of the Americas, 41st Floor, New
York, NY, on July 3, 2001 at 9:00 a.m., (Eastern time) for the following
purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization (the "Reorganization Plan") by and among JPMF, on
behalf of the Merging Fund, J.P. Morgan Institutional Funds ("JPMIF"),
on behalf of J.P. Morgan Institutional Global Strategic Income 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 GLOBAL STRATEGIC INCOME 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 GLOBAL STRATEGIC INCOME 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 Global Strategic Income Fund (the "Merging Fund"),
a series of J.P. Morgan Funds ("JPMF"), into J.P. Morgan Institutional Global
Strategic Income 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 Global
Strategic Income Fund will be renamed "JPMorgan Global Strategic Income Fund."
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Select Class,
and Institutional Class. If the proposed Reorganization is approved by Merging
Fund Shareholders, each Merging Fund Shareholder will receive Select Class
Shares (the "Select Class Shares") of the Surviving Fund with a value equal to
such Merging Fund Shareholder's holdings in the Merging Fund. Merging Fund
Shareholders will not pay a sales charge on Select Class Shares received in the
Reorganization or Select Class Shares of the Surviving Fund or on subsequent
purchases or exchanges of 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 (including the Annual
Report of The Global Strategic Income Portfolio) of the Merging Fund and the
preliminary Prospectus, Statement of Additional Information and the current
Annual Report of the Surviving Fund are incorporated herein by reference, and
the preliminary Prospectus and current Annual Report (including the Annual
Report of The Global Strategic Income 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 and Annual Report of the Merging
Fund (including the Annual Report of the Global Strategic Income 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
-----
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.............. 9
DISTRIBUTIONS AND TAXES........................... 11
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING
FUND'S ORGANIZATION STRUCTURE.................... 12
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND
OTHER SERVICES................................... 13
PROPOSAL 2: ELECTION OF TRUSTEES.................. 15
INFORMATION RELATING TO VOTING MATTERS............ 20
ADDITIONAL INFORMATION ABOUT JPF.................. 22
ADDITIONAL INFORMATION ABOUT JPMF................. 22
FINANCIAL STATEMENTS AND EXPERTS.................. 23
OTHER BUSINESS.................................... 23
LITIGATION........................................ 23
SHAREHOLDER INQUIRIES............................. 23
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 JPF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st Floor, New York, NY (together with any
adjournments thereof, the "Meeting"). 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 Global
Strategic Income Fund." Further information relating to the Surviving Fund is
set forth herein, and the Surviving Fund's preliminary Prospectus and current
Annual Report (including the Annual Report of The Global Strategic Income
Portfolio) is 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 and Annual Report (including the Annual Report of The
Strategic Income Portfolio) of the Merging Fund, the preliminary Prospuectus 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 Global Strategic Income Portfolio (the "Master
Portfolio"), which has identical investment objectives and policies as the
Surviving Fund and the Merging Fund and which is advised by J.P. Morgan
Investment Management Inc. ("JPMIM").
If the Reorganization is approved by the shareholders of the Funds and
certain other conditions are met, the Merging Fund 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.
In connection with the proposed Reorganization, the Surviving Fund will
implement a new multi-class structure under which it will offer Select Class and
Institutional Class Shares. Pursuant to the proposed
1
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 the shareholder's shares of the
Merging Fund. In addition, the holding period and tax basis of those assets
owned by the Merging Fund and transferred to the Surviving Fund will be
identical for the Surviving Fund. See "Information Relating to the Proposed
Reorganization--Federal Income Tax Consequences."
INVESTMENT ADVISER
The investment adviser for the Master Portfolio (and therefore the assets of
the Merging Fund and the Surviving Fund) is JPMIM. Following the Reorganization,
JPMIM will serve as the Surviving Fund's investment adviser. JPMIM is a
wholly-owned subsidiary of J.P. Morgan Chase & Co. ("JPMC").
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of both the Surviving Fund and the Merging Fund is
to provide high total return from a portfolio of fixed income securities of
foreign and domestic issuers. 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
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 investment policies of the Surviving Fund are identical to those of the
Merging Fund. The Surviving Fund invests in a wide range of debt securities from
the U.S. and other markets, both developed and emerging. Issuers may include
governments, corporations, financial institutions, and supranational
organizations. At least 40% of the Surviving Fund's assets must be invested in
securities that, at the time of purchase, are rated investment grade (BBB/Baa or
better) or are the unrated equivalent. The balance of its assets must be
invested in securities rated B or higher at the time of purchase (or the unrated
equivalent),
2
except that the Surviving Fund's emerging market component has no minimum
quality rating and may invest without limit in securities that are in the lowest
rating categories (or are the unrated equivalent).
There is no restriction on the Maturity of Surviving Fund's portfolio or on
any individual security in the portfolios.
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
debt securities. In particular, the value of shares of the Surviving Fund will
be influenced by the performance of the securities selected for its portfolio.
Because of credit and foreign and emerging markets investment risks, the Fund's
performance is likely to be more volatile than that of most fixed income funds.
Foreign and emerging market investment risks include foreign government actions,
political instability, currency fluctuations and lack of adequate and accurate
information. To the extent that the Surviving Fund seeks higher returns by
investing in non-investment grade bonds, often called junk bonds, it takes on
additional risks, since these bonds are more sensitive to economic news and
their issuers have a less secure financial position. The Surviving Fund has the
potential for long-term total returns that exceed those of more traditional bond
funds, but investors should also be prepared for risks that exceed those of more
traditional bond funds. 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 0.45% of average daily net assets of the Master
Portfolio. Following the Reorganization, JPMIM will manage the Surviving Fund's
assets directly and will receive a fee at an annual rate of 0.45% of average
daily net assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the distributor
for the Surviving Fund. Morgan Guaranty Trust Company of New York ("Morgan")
currently serves as administrator and shareholder servicing agent and an
affiliate of the Distributor currently serves as sub-administrator. 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 subsequent 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
reimbursement arrangements, (ii) estimated fees and expenses on a pro forma
basis for the Surviving Fund after giving effect to the 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, this class will be re-named "Institutional Class" and the Select
Class share class will be introduced.
The table indicates that both contractual (pre-waiver) and 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
----------------
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 0.45%
Distribution (12b-1) Fees None
Other Expenses 2.05%
----
Total Annual Fund Operating Expenses 2.50%
====
Fee Waivers and Expense Reimbursements (a) 1.50%
----
Net Expenses 1.00%
====
- ---------------------
(a) Reflects an agreement dated 3/1/01 by Morgan, an affiliate of JPMC, to
reimburse the Merging Fund to the extent operating expenses (which exclude
interest, taxes, and extraordinary expenses) exceed 1.00% of average daily
net assets with respect to the Merging Fund through 2/28/02. Morgan may
terminate this agreement after 2/28/02.
THE SURVIVING FUND
-----------------------------
PRO FORMA WITH REORGANIZATION
-----------------------------
SELECT CLASS SHARES
-----------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) when you
buy shares, shown as % of the offering price None
Maximum Deferred Sales Charge (Load) shown as
lower
of original purchase price or redemption
proceeds None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.45%
Distribution (12b-1) Fees None
Other Expenses 1.00%
-----
Total Annual Fund Operating Expenses 1.45%
=====
Fee Waivers and Expense Reimbursements (b) 0.45%
-----
Net Expenses 1.00%
=====
- ---------------------
(b) 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 1.00% of average daily net assets with respect to
Select Class Shares for three years after the Reorganization.
4
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 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 $102 $635 $1,195 $2,723
PRO FORMA THE SURVIVING FUND
WITH REORGANIZATION
Select Class Shares $102 $318 $ 656 $1,612
RISK FACTORS
The following discussion highlights the principal risk factors associated
with an investment in the Surviving Fund. The Surviving Fund has investment
policies and investment restrictions, and therefore risks, identical to those of
the Merging Fund. This discussion is qualified in its entirety by the more
extensive discussion of risk factors set forth in the Prospectus and Statement
of Additional Information of the Surviving Fund, which are incorporated herein
by reference.
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Surviving Fund. The Surviving Fund may not achieve its
objective if JPMIM's expectations regarding particular securities or markets are
not met. In addition, the Surviving Fund's share price, yield and total return
will vary in response to changes in interest rates, currency exchange rates and
global bond market movements. The value of most bonds will fall when interest
rates rise, and the longer a bond's maturity and the lower its credit quality,
the more its value typically falls. How well the Fund's performance compares to
that of similar fixed income funds will depend on the success of the investment
process.
To the extent that the Surviving Fund seeks higher returns by investing in
non-investment-grade bonds (those rated BB/Ba or lower and often called "junk
bonds"), it takes on additional risks. The Surviving Fund may invest up to 60%
of its assets in securities rated B or BB/Ba, and the Fund's emerging market
component has no minimum quality rating and may invest without limit in
securities that are in the lowest rating categories. These bonds are more
sensitive to economic news, their issuers have a less secure financial position
and they have a higher risk of default, tend to be less liquid, and may be more
difficult to value.
The Surviving Fund's investments in foreign securities, including those of
emerging market issuers, could result in losses because of foreign government
actions, political instability, currency fluctuation or lack of adequate and
accurate information. Currency and investment risks tend to be higher in
emerging markets.
The Surviving Fund's mortgage-backed investments involve risk of losses due
to default or prepayments that occur earlier or later than expected. The
Surviving Fund may engage in active and frequent trading, leading to increased
portfolio turnover and the possibility of increased capital gains.
The Surviving Fund may invest in asset-backed securities (securities
representing an interest in, or secured by, a pool of mortgages or other assets
such as receivables) and direct mortgages which could generate capital losses or
periods of low yields if they are paid off substantially earlier or later than
expected.
Adverse market conditions may from time to time cause the Surviving Fund to
take temporary defensive positions that are inconsistent with its principal
investment strategies and may hinder the Surviving Fund from achieving its
investment objective.
The Surviving Fund may use derivatives to help manage duration, yield curve
and market exposure, and credit and spread volatility. Derivatives such as
futures, options, swaps and forward foreign currency contracts that are used for
hedging the portfolio or specific securities may not fully offset the underlying
positions and this could result in losses to the 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.
5
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 buy when-issued and delayed delivery securities.
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.
The Surviving Fund may lend some of its portfolio securities in order to
earn income. When the Surviving Fund lends a security, there is a risk that the
loaned securities may not be returned if the borrower defaults. The collateral
the Surviving Fund receives from the borrower will be subject to the risks of
the securities in which it is invested. While both the Surviving Fund and the
Merging Fund may engage in securities lending, neither generally does so.
An investment in the Surviving Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money if you sell when the Surviving Fund's
share price is lower than when you invested.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be consummated
are set forth in the Reorganization Plan. Significant provisions of the
Reorganization Plan are summarized below; however, this summary is qualified in
its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
DESCRIPTION OF THE REORGANIZATION PLAN
In connection with the Reorganization, the Merging Fund will cease investing
in the Master Portfolio. The Reorganization Plan provides that at the Effective
Time (as defined in the Reorganization Plan) of the Reorganization, the assets
and liabilities of the Merging Fund will be transferred to and assumed by the
Surviving Fund. In exchange for the transfer of the assets and the assumption of
the liabilities of the Merging Fund, 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 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 investing in the Master Portfolio 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"
6
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.
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 Surviving Fund currently exists in "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 restructuring was the opportunity to
obtain the economies of scale from an investment and expense perspective that
might come from the investment and administration of a larger pool of assets
than any one fund could expect to have on its own. An important factor in the
Board's decision at the time was that non-U.S. investors' assets would be
invested alongside those of U.S. investors within the master portfolio on a
basis that was not disadvantageous to the non-U.S. investors from a U.S. tax
perspective. For various reasons, 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 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 multi-class format
discussed in this Combined Prospectus/Proxy Statement and the adoption of the
service arrangements by the Surviving Fund described herein (the "Service
Arrangements") are in the best interests of the Merging Fund 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, 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
7
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, as applicable, determined that the
proposed Reorganization is in the best interests of the Merging and Surviving
Fund, 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.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that JPMF
receives 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.
8
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, the total capitalization of the Surviving Fund after the
Reorganization is expected to be greater than the current capitalization of the
Merging Fund. The following table sets forth as of October 31, 2000: (i) the
capitalization of the Merging Fund and the Surviving Fund; (ii) the pro forma
capitalization of the Surviving Fund as adjusted to give effect to the
Reorganization; (iii) the pro forma capitalization of the Surviving Fund as
adjusted to give effect to the proposed Reorganization. There is, of course, no
assurance that the Reorganization. Moreover, if consummated, the capitalizations
of the Surviving Fund and the Merging Fund are likely to be different at the
Effective Time of the Reorganization as a result of fluctuations in the value of
portfolio securities of each Fund and daily share purchase and redemption
activity in each Fund. The Surviving Fund currently has one class of shares. In
connection with the Reorganization, this class will be renamed Institutional
Class and the Select Class share class will be introduced.
CAPITALIZATION
PRO FORMA WITH REORGANIZATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BENEFICIAL NET ASSET
INTEREST SHARES VALUE PER
OUTSTANDING OUTSTANDING NET ASSETS SHARE
----------- ----------- ---------- ---------
J.P. MORGAN FUNDS
The Merging Fund 785 -- 7,331 9.34
The Surviving Fund 17,589 -- 163,454 9.29
PRO FORMA COMBINED
Select -- 789 7,331 9.29
Institutional -- 17,589 163,454 9.29
PURCHASES, REDEMPTIONS AND EXCHANGES
Following the Reorganization, the procedures for purchases, redemptions and
exchanges of shares of the Surviving Fund will be substantially similar to those
of the Merging Fund. The Surviving Fund currently has one class of shares. In
connection with the Reorganization this class will be renamed "Institutional
Class" and the "Select Class" share class will be introduced. The following
discussion reflects the new class structure. This section is qualified in its
entirety by the discussion in the 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
9
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 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.
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 applicable
investment minimum for 30 days as a result of selling shares (and not because of
performance), then the Surviving Fund reserves the right to
10
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 issues multiple classes of shares. Each class may have
different requirements for who may invest, and may have different sales charges
and expense levels. A person who gets compensated for selling Select Class
Shares may receive a different amount for each class.
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;
- take distributions of net investment income in cash or as a deposit in a
pre-assigned bank account and reinvest distributions of net capital gain
in additional shares; or
- take all distributions in cash or as a deposit in a pre-assigned bank
account.
If you don't notify us otherwise, we'll reinvest all distributions. If your
distributions are reinvested, they will be in the form of shares of the same
class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary income at
the federal, state and local levels.
If you receive distributions of net capital gain, the tax rate will be based
on how long the Surviving Fund held a particular asset, not on how long you have
owned your shares. If you buy shares just before a distribution, you will pay
tax on the entire amount of the taxable distribution you receive, even though
the NAV will be higher on that date because it includes the distribution amount.
Early in each calendar year, the Surviving Fund will send its shareholders a
notice showing the amount of distributions received in the preceding year and
the tax status of those distributions.
The above is only a general summary of tax implications of investing in the
Surviving Fund. Shareholders should consult their tax advisors to see how
investing in the Surviving Fund will affect their own tax situation.
11
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.
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 portfolio 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 portfolio 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.
SHAREHOLDER VOTING RIGHTS
With respect to all matters submitted to a vote of shareholders,
shareholders of JPMF 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 JPF and JPMF may maintain appropriate insurance (for
12
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, 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 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 0.45%. The
Master Portfolio and, therefore, indirectly the Merging Fund also currently pay
0.45% 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
13
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 led by Mark E.
Smith, managing director, who joined JPMIM in 1994 and has been on the team
since the Fund's inception, and Robert J. Morena, vice president, who joined
JPMIM in 2000. Prior to joining JPMIM, Mr. Morena served as a managing director
at Forest Investment Management where he managed fixed income portfolios. Prior
to that, he served as the Department Head of The Bank of New York's
Institutional Fixed Income Division.
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 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
14
Surviving Fund, as well as other clients including other funds, JPMIM, to the
extent permitted by applicable laws and regulations, may, but is not obligated
to, aggregate the securities to be sold or purchased for the Surviving Fund with
those to be sold or purchased for other clients in order to obtain best
execution, including lower brokerage commissions if appropriate. In such event,
allocation of the securities so purchased or sold as well as any expenses
incurred in the transaction will be made by JPMIM in the manner it considers to
be most equitable and consistent with JPMIM's fiduciary obligations to the
Surviving Fund. In some instances, this procedure might adversely affect the
Surviving Fund.
OTHER SERVICES
The Distributor is a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the distributor for both the Surviving
Fund and the 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 is 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 fund accountant and custodian.
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.
PROPOSAL 2:
ELECTION OF TRUSTEES
It is proposed that shareholders of the Merging Fund consider the election
of the individuals listed below (the "Nominees") to the Board of Trustees of
JPMF, which is currently organized as a Massachusetts business trust. Even if
the Reorganization described in Proposal 1 is approved, other mutual funds that
are series of JPMF will continue to exist and operate. All shareholders of any
series of JPMF as of the record date (April 6, 2001) are required to be given a
vote on the proposal regarding Trustees. Because as of the record date you are
still a shareholder in JPMF, you are entitled to vote on this proposal.
Shareholders of 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 (including certain members of their respective
Advisory Boards) and certain Trustees of the former Chase Vista Funds. Each
Nominee has consented to being named
15
in this 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.
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 Corporation, plc (pharmaceuticals). Address: 1262
since 2000 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
16
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
- ----------------------------------- -------- --- ------------------------------------------------------
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 (financial services) Address: 3711 Northwind Court,
since 2000 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 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.
17
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 (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
18
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 has 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 period November 4,1997 (commencement of operations)
through October 31, 1998: $183. For the fiscal year ended October 31, 1999 and
2000: $149, and $82, respectively.
SURVIVING FUND--For the period November 4,1997 (commencement of operations)
through October 31, 1998: $2,473. For the fiscal year ended October 31, 1999 and
2000: $2,579, and $1,752, respectively.
MASTER PORTFOLIO--For the fiscal years ended October 31, 1998, 1999 and
2000: $57,247, $61,940 and $41,043, 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.
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 Treasurer is the Chief Operating Officer for the U.S. Mutual Funds and
(April 2001-present) Financial Intermediaries Business. Since joining J.P. Morgan in 1996,
he has held numerous financial and
Sharon Weinberg 41 Vice President, J.P. Morgan Investment Management Inc. Ms. Weinberg
Vice-President and is head of Business and Product Strategy for the U.S. Mutual Funds
Secretary (April and Financial Intermediaries business. Since joining J.P. Morgan in
2001-present) 1996 in New York, she has
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 was $47,500.
19
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 729,200.333 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, 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 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 (and therefore will have the effect of a vote against) 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
20
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
- ----------------------------------- ------------ ------------- --------------
Morgan Guaranty TR Co. of New York 44,143.2580 6.05% 0.24
as agent for Alexander Rowski
Attn: Special Products 2 OPS/3
500 Stanton Christiana Rd
Newark DE 19713-2107
Morgan Guaranty Trust Co. of New 39,984.0020 5.48% 0.22
York
As agent for P. Vintiadis IRA
Attn: Special Products 2 OPS/3
500 Stanton Christiana Rd
Newark DE 19713-2107
Charles Schwab & Co. Inc 122,024.3200 16.73% 00.67
Special Custody Account
for benefit of customers
Attn: Mutual Funds
101 Montgomery St
San Francisco CA 94104-4122
JMP FSP as agent for Yetta 162,047.2690 22.22% 0.89
Fridman Crt UWO Milton Petrie
Attn: Stanton Christiana Rd
Newark DE 19713-2107
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 shares of the Surviving Fund and the percentage of shares
21
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
AMOUNT OF MERGING FUND
SHARES OWNED ON
NAME AND ADDRESS OWNED RECORD DATE
- ---------------------------------------- ---------------- -------------
Morgan Guaranty Trust Co. 4,431,476.7520 24.58%
of New York
as Agent for Kenan
Charitable Tr
500 Stanton Christiana Road
Newark DE 19713-2107
JP Morgan Delaware as Agent 1,024,071.2730 5.68%
Diversified Growth Fund
ATTN: Special Products 2 OPS/3
500 Stanton Chritiana Road
Newark DE 19713-2107
Fenecliff Cemetary Assoc-- 1,462,409.2290 8.11%
General Fund
Bank of New York Master Trust
123 Main Street Floor 4
White Plains, NY 10601-3104
JPMIM as Agent for Univerity of 944,661.1600 5.24%
Arkansas Foundation and System
533 Fifth Avenue
New York, NY 10036-7601
JPMIM as Agent for the 1,693,089.8190 9.39%
Pritzker Foundation
ATTN: Jay Minchilli
522 Fifth Avenue
New York, NY 10036-7601
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. 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
22
of Additional Information which has been filed with the Commission and which is
incorporated herein by reference. Copies of the Statement of Additional
information may be obtained without charge by calling 1-800-766-7722. 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
October 31, 2000, and the audited financial statements, notes thereto and
supplementary data of the Master Portfolio for the fiscal year ended October 31,
2000, are incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement. The 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.
OTHER BUSINESS
The JPF Board knows of no other business to be brought before the Meeting.
However, if any other matters come before the Meeting, it is the intention of
the 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.
23
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 Global Strategic
Income Fund (the "Transferor Portfolio"), J.P. Morgan Institutional Funds (the
"Acquiring Trust"), a Massachusetts business trust, on behalf of J.P. Morgan
Institutional Global Strategic Income 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
A-2
filed with the Securities and Exchange Commission, comply in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Act and do not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of October 31, 2000 there
were outstanding 17,588,787 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 Global Strategic Income
Portfolio for the fiscal year ended October 31, 2000, which have been audited by
PricewaterhouseCoopers LLP, fairly present the financial position of the
Acquiring Portfolio and The Global Strategic Income Portfolio as of the dates
thereof and the respective results of operations and changes in net assets for
each of the periods indicated in accordance with generally accepted accounting
principles ("GAAP").
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio Shares
to be issued in connection with the Reorganization will be duly authorized and
upon consummation of the Reorganization will be validly issued, fully paid and
nonassessable (except as disclosed in the Trust's prospectus and recognizing
that under Massachusetts law, shareholders of an Acquiring Trust portfolio
could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf of the
Acquiring Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Acquiring Trust's Board of Trustees and no other proceedings by the
Acquiring Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Acquiring Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(h) LIABILITIES. There are no liabilities of the Acquiring Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Acquiring Trust's
financial statements with respect to the Acquiring Portfolio and liabilities
incurred in the ordinary course of business subsequent to October 31, 2000 or
otherwise previously disclosed to the Acquiring Trust with respect to the
Acquiring Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Acquiring Portfolio.
(i) NO MATERIAL ADVERSE CHANGE. Since October 31, 2000, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Acquiring Trust, threatened which would adversely
affect the Acquiring Trust or the Acquiring Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Acquiring Trust or the Acquiring
Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory
investigations of the Acquiring Trust or the Acquiring Portfolio, pending or
threatened, other than routine inspections and audits.
(k) CONTRACTS. No default exists under any material contract or other
commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio,
is subject.
A-3
(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 October 31, 2000 there
were outstanding 785,290,000 shares of the Transferor Portfolio, and no shares
of such Portfolio were held in the treasury of the Transferor Trust. All of the
outstanding shares of the Transferor Trust have been duly authorized and are
validly issued, fully paid and nonassessable (except as disclosed in the
Transferor Trust's prospectus and recognizing that under Massachusetts law,
shareholders of a Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such Trust portfolio). Because the
Transferor Trust is an open-end investment company engaged in the continuous
offering and redemption of its shares, the number of outstanding shares may
change prior to the Effective Time of the Reorganization. All such shares will,
at the Exchange Date, be held by the shareholders of record of the Transferor
Portfolio as set forth on the books and records of the Transferor Trust in the
amounts set forth therein, and as set forth in any list of shareholders of
record provided to the Acquiring Portfolio for purposes of the Reorganization,
and no such shareholders of record will have any preemptive rights to purchase
any Transferor Portfolio shares, and the Transferor Portfolio does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Transferor Portfolio shares (other than any existing dividend reinvestment
plans of the Transferor Portfolio or as set forth in this Plan), nor are there
outstanding any securities convertible into any shares of the Transferor
Portfolio (except pursuant to any existing exchange privileges described in the
current prospectus and statement of additional information of the Transferor
Trust). All of the Transferor Portfolio's issued and outstanding shares have
been offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) FINANCIAL STATEMENTS. The financial statements for the Transferor Trust
with respect to the Transferor Portfolio and The Global Strategic Income
Portfolio for the fiscal year ended October 31, 2000 which have been audited by
PricewaterhouseCoopers LLP fairly present the financial position of the
Transferor Portfolio as of the dates thereof and the respective results of
operations and changes in net assets for each of the periods indicated in
accordance with GAAP.
A-4
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of the
Transferor Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Transferor Trust's Board of Trustees and no other proceedings by the
Transferor Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Transferor Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Transferor Trust's
Financial Statements with respect to the Transferor Portfolio and liabilities
incurred in the ordinary course of business subsequent to October 31, 2000 or
otherwise previously disclosed to the Transferor Trust with respect to the
Transferor Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since October 31, 2000, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of 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 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
A-5
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 distributins.
5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Trust shall call and hold a meeting of the shareholders of the Transferor
Portfolio for the purpose of acting upon this Plan and the transactions
contemplated herein.
(b) PORTFOLIO SECURITIES. With respect to the assets to be transferred in
accordance with Section 1(a), the Transferor Portfolio's assets shall consist of
all property and assets of any nature whatsoever, including, without limitation,
all cash, cash equivalents, securities, claims and receivables (including
dividend and interest receivables) owned, and any deferred or prepaid expenses
shown as an asset on the Transferor Trust's books maintained on behalf of the
Transferor Portfolio. At least five (5) business days prior to the Exchange
Date, the Transferor Portfolio will provide the Acquiring Trust, for the benefit
of the Acquiring Portfolio, with a list of its assets and a list of its stated
liabilities. The Transferor Portfolio shall have the right to sell any of the
securities or other assets shown on the list of assets prior to the Exchange
Date but will not, without the prior approval of the Acquiring Trust, on behalf
of the Acquiring Portfolio, acquire any additional securities other than
securities which the Acquiring Portfolio is permitted to purchase, pursuant to
its investment objective and policies or otherwise (taking into consideration
its own portfolio composition as of such date). In the event that the Transferor
Portfolio holds any investments that the Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable, to the extent permitted by
its investment objective and policies and to the extent that its shareholders
would not be materially affected in an adverse manner by such a disposition. In
addition, the Transferor Trust will prepare and deliver immediately prior to the
Effective Time of the Reorganization, a Statement of Assets and Liabilities of
the Transferor Portfolio, prepared in accordance with GAAP (each, a "Schedule").
All securities to be listed in the Schedule for the Transferor Portfolio as of
the Effective Time of the Reorganization will be owned by the Transferor
Portfolio free and clear of any liens, claims, charges, options and
encumbrances, except as indicated in such Schedule, and, except as so indicated,
none of such securities is or, after the Reorganization as contemplated hereby,
will be subject to any restrictions, legal or contractual, on the disposition
thereof (including restrictions as to the public offering or sale thereof under
the Securities Act) and, except as so indicated, all such securities are or will
be readily marketable.
(c) REGISTRATION STATEMENT. In connection with the preparation of the
Registration Statement, the Transferor Trust will cooperate with the Acquiring
Trust and will furnish to the Acquiring Trust the information relating to the
Transferor Portfolio required by the Securities Act and the Regulations to be
set forth in the Registration Statement (including the Prospectus and Statement
of Additional Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to the Transferor
Portfolio, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at the
time the Registration Statement becomes effective, at the time of the Transferor
Portfolio's shareholders' meeting referred to in Section 5(a) and at the
Effective Time of the Reorganization, the Prospectus and Statement of
A-6
Additional Information, as amended or supplemented by any amendments or
supplements filed by the Transferor Trust, insofar as they relate to the
Transferor Portfolio, will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall apply
only to statements in or omissions from the Registration Statement, Prospectus
or Statement of Additional Information made in reliance upon and in conformity
with information furnished by the Transferor Portfolio for use in the
registration statement, prospectus or statement of additional information as
provided in this Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to
use all reasonable efforts to effectuate the Reorganization and to obtain any
necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Transferor Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within 60 days after the Exchange Date, the Transferor Trust on behalf
of the Transferor Portfolio, shall prepare a statement of the earnings and
profits of the Transferor Portfolio for federal income tax purposes, and of any
capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and the
transactions contemplated by the Reorganization shall have been approved by the
requisite vote of the shares of the Transferor Portfolio entitled to vote on the
matter ("Transferor Shareholder Approval").
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 2(i)) in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio since October 31,
2000.
(c) REGULATORY APPROVAL. The Registration Statement shall have been
declared effective by the Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued, and all other approvals,
registrations, and exemptions under federal and state 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 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
A-7
period and tax basis of shares of the Transferor Portfolio held by such holder
immediately prior to the Reorganization (provided the shares of the Transferor
Portfolio were held as a capital asset on the date of the Reorganization); and
(v) the holding period and tax basis of the assets of the Transferor Portfolio
acquired by the Acquiring Portfolio will be the same as the holding period and
tax basis of those assets to the Transferor Portfolio immediately prior to the
Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 3(h)) in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio since October 31,
2000.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the Acquiring
Portfolio in the Reorganization shall have been approved for acquisition by J.P.
Morgan Investment Management Inc. ("JPMIM"), in its capacity as investment
adviser to the Acquiring Portfolio, as consistent with the investment policies
of the Acquiring Portfolio.
(d) REGULATORY APPROVAL. The Regulatory Approvals shall have been obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on behalf of the
Transferor Portfolio shall have distributed to the shareholders of the
Transferor Portfolio all of the Transferor Portfolio's investment company
taxable income (determined without regard to the deduction for dividends paid)
as defined in Section 852(b)(2) of the Code for its taxable year ending on the
Exchange Date and all of its net capital gain as such term is used in Section
852(b)(3) of the Code, after reduction by any capital loss carry forward, for
its taxable year ending on the Exchange Date.
(f) TAX OPINION. the Acquiring Trust shall have received the Tax Opinion.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
(a) AMENDMENTS. The parties hereto may, by agreement in writing authorized
by their respective Board of Trustees amend this Plan at any time before or
after approval hereof by the shareholders of the Transferor Portfolio, but after
such approval, no amendment shall be made which substantially changes the terms
hereof.
(b) WAIVERS. At any time prior to the Effective Time of the Reorganization,
either the Transferor Trust or the Acquiring Trust may by written instrument
signed by it (i) waive any inaccuracies in the representations and warranties
made to it contained herein and (ii) waive compliance with any of the covenants
or conditions made for its benefit contained herein, except that conditions set
forth in Sections 6(c) and 7(d) may not be waived.
(c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on behalf of
the Transferor Portfolio, may terminate this Plan with respect to the Transferor
Portfolio at any time prior to the Effective Time of the Reorganization by
notice to the Acquiring Portfolio 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
A-8
Reorganization by notice to the Transferor Trust and JPMIM if (i) a material
condition to the performance of the Acquiring Trust hereunder or a material
covenant of the Transferor Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Transferor Trust. In
addition, this Plan may be terminated by the Acquiring Trust at any time prior
to the Effective Time of the Reorganization, whether before or after approval of
this Plan by the shareholders of the Transferor Portfolio, without liability on
the part of any party hereto, its Trustees, officers or shareholders or JPMIM on
notice to the other parties in the event that the Board of Trustees determines
that proceeding with this Plan is not in the best interests of the shareholders
of the Acquiring Portfolio.
(e) Survival. No representations, warranties or covenants in or pursuant to
this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan,
shall survive the Reorganization.
9. EXPENSES
The expenses of the Reorganization will be borne by J.P. Morgan Chase & Co.
("JPMC"). Such expenses include, without limitation, (i) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii)
legal fees and (viii) solicitation costs relating to the Reorganization. In
addition, JPMC or an affiliate will waive fees payable to it or reimburse
expenses to the extent necessary such that the actual (post-waiver) total
expense ratios of the Select Class Shares and the Institutional Class Shares of
the Acquiring Portfolio are not higher than those as set forth in the
Registration Statement Portfolio for a period of three years after the Exchange
Date.
10. NOTICES
Any notice, report, statement or demand required or permitted by any provision
of this Plan shall be in writing and shall be given by hand, certified mail or
by facsimile transmission, shall be deemed given when received and shall be
addressed to the parties hereto at their respective addresses listed below or to
such other persons or addresses as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
if to the Transferor Trust (for itself or on behalf of the Transferor
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
if to the Acquiring Trust (for itself or on behalf of the Acquiring Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
if to the adviser of the Transferor Trust:
522 Fifth Avenue
New York, NY 10036
A-9
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 assume any
personal liability for obligations entered into on behalf of the Acquiring
Trust. No series of the Acquiring Trust shall be liable for claims against any
other series of the Acquiring Trust.
A-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 Global
Strategic Income Fund
By: /s/ Sharon Weinberg
--------------------------------------------
Name: Sharon Weinberg
Title: Vice President and Secretary
J.P. MORGAN FUNDS
on behalf of J.P. Morgan Global Strategic Income
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 GLOBAL STRATEGIC INCOME 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 Global Strategic
Income 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 Global Strategic Income 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 October 31, 2000, and the audited financial statements,
notes thereto and supplementary data of the Master Portfolio contained in its
Annual Report dated October 31, 2000, are incorporated by reference into this
Statement of Additional Information related to this Combined Prospectus/Proxy
Statement. The audited financial highlights, financial statements, notes thereto
and supplementary data, as applicable, which appear in each of the Surviving
Fund's, the Master Portfolio's and the Merging Fund's Annual Report have been
audited by PricewaterhouseCoopers LLP, whose reports thereon also appear in such
Annual Reports and are also incorporated herein by reference. The financial
highlights, financial statements, notes thereto and supplementary data, as
applicable, for the Merging Fund, the Surviving Fund and the Master Portfolio
for the fiscal year ended October 31, 2000 have been incorporated herein by
reference in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on their authority as experts in auditing and accounting.
-3-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
OCTOBER 31, 2000, (UNAUDITED)
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 2.4%
FINANCIAL SERVICES - 2.4%
$ 549,406 DLJMAC, Series 1997 A1, 8.11%, 7/25/27 $ 514,725
2,500,000 Green Tree Financial Corporation, Series
1999-2, Class B1, 8.41%, 12/1/30 2,289,050
2,000,000 Green Tree Financial Corporation, Series
1999-3, Class B1, 8.37%, 2/1/31 1,815,000
109,196 Home MAC Mortgage Securities Corp.,
Series 1985-1, 11.38%, 8/1/15 107,422
---------------
TOTAL ASSET-BACKED SECURITIES
(Cost $5,168,086) 4,726,197
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 7.8%
FINANCIAL SERVICES - 7.8%
1,544,257 Banc of America Commercial Mortgage Inc.,
Series 2000-1, Class A1A SEQ, 7.11%,
11/15/08 1,547,636
500,000 COMM, Series 2000 FL1A, Class H, Floater,
7.90%, 11/16/00, resets monthly off the
1-month LIBOR plus 1.28% 490,000
400,000 COMM, Series 2000 FL2A, Class G-NW
Floater, 7.82%, 11/15/00, resets monthly off
the 1-month LIBOR plus 1.20% 400,000
11,250,879 CS First Boston Mortgage Securities Corp.,
Series 1997-2, Class X, I0,144A, CSTR, NTL
1.01%, 6/25/20(v) 299,870
1,200,000 CS First Boston Mortgage Securities Corp.,
Series 1999 C1, Class A2 SEQ, 7.29%,
9/15/09 1,214,324
1,331,239 First Union Commercial Mortgage Trust, Series
1999 C1, Class A1 SEQ, 5.73%, 1/15/08 1,277,625
3,529,056 FNMA, Series 1994-53, Class G, PO,
11/25/23(s) 2,203,454
1,200,000 Heller Financial Commercial Mortgage Asset,
Series 1999 PH1, Class A2 SEQ, 6.85%,
5/15/31 1,179,187
1,000,000 Morgan Stanley Capital I, Series 1997 XL1,
Class G, 144A, 7.70%, 10/3/30(s) 854,531
1,500,000 Morgan Stanley Capital I, Series 1998 XL1,
Class A3 SEQ, 6.48%, 6/3/30(s) 1,451,016
1,195,588 Morgan Stanley Capital I, Series 1999 WF1,
Class A1 SEQ, 5.91%, 4/15/08(s) 1,148,978
300,000 Morgan Stanley Capital I, Series 2000 HG,
Class E, 144A, CSTR, 8.20%, 12/3/05 301,922
1,440,000 Nomura Asset Securities Corporation, Series
1998 D6, Class A1B SEQ, 6.59%, 3/17/28 1,394,100
300,000 PNC Mortgage Acceptance Corp., Series 2000
C2, Class A2 SEQ, 7.30%, 9/12/10 301,172
1,500,000 Salomon Brothers Mortgage Securities VII,
Series 2000 C1, Class A2 SEQ, 7.52%,
12/18/09 1,479,375
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $15,748,253) 15,543,190
---------------
CORPORATE BONDS - 15.3%
AIRLINES - 0.4%
$ 700,000 Northwest Airlines Corp., Series 2000-1,
Class G, 8.07%, 10/1/19(s) $ 710,703
---------------
APPAREL & TEXTILES - 0.1%
170,000 Polymer Group Inc., Series B, 9.00%, 7/1/07 122,400
---------------
BANKS - 0.4%
750,000 First Union Corp., 8.13%, 6/24/02(s) 760,433
---------------
CHEMICALS - 0.4%
300,000 Huntsman ICI Chemicals LLC, 10.13%, 7/1/09 288,000
500,000 Scotts Co., 144A, 8.63%, 1/15/09 477,500
---------------
765,500
---------------
DEFENSE/AEROSPACE - 0.3%
500,000 Northrop-Grumman Corp., 9.38%, 10/15/24(s) 512,480
---------------
ELECTRICAL EQUIPMENT - 0.2%
450,000 Flextronics International Ltd., 144A, 9.88%,
7/1/10 454,500
---------------
ELECTRICAL UTILITY - 0.9%
300,000 Calpine Corp., 7.88%, 4/1/08 288,000
400,000 Cogentrix Energy Inc., 8.75%, 10/15/08 401,000
500,000 Dominion Resources Inc., Series 2010 A,
8.13%, 6/15/10(s) 515,530
739,791 Kincaid Generation LLC, 144A, 7.33%,
6/15/20(s) 656,557
---------------
1,861,087
---------------
ENTERTAINMENT - 0.2%
700,000 Six Flags Inc., 12.58%, 4/1/08(v)(y) 472,500
---------------
FINANCIAL SERVICES - 1.0%
750,000 Destination Film Funding Corp, 144A, 6.25%,
10/15/03(s) 699,375
325,000 ERAC USA Finance Company, 144A, MTN,
9.13%, 12/15/04(s) 345,553
750,000 Ford Motor Credit Co., 7.88%, 6/15/10(s) 752,077
229,364 Oil Purchase Company, 144A, 7.10%, 4/30/02(s) 219,043
---------------
2,016,048
---------------
FOOD & BEVERAGE - 0.3%
350,000 Smithfield Foods Inc., 7.63%, 2/15/08 317,625
275,000 Sun World International, Series B, 11.25%,
4/15/04 254,375
---------------
572,000
---------------
FOREST PRODUCTS & PAPER - 0.6%
450,000 International Paper Co., 144A, 8.13%, 7/8/05(s) 463,127
500,000 Riverwood International Corp., 10.63%, 8/1/07 490,000
250,000 Stone Container Corp., 12.25%, 4/1/02(v) 250,000
---------------
1,203,127
---------------
INDUSTRIAL PARTS - 0.1%
140,000 US Can Corp., 144A, 12.38%, 10/1/10 137,200
---------------
The Accompanying Notes are an Integral Part of the Financial Statements.
-4-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.1%
$ 140,000 Allied Waste Industries, Inc., Series B,
10.00%, 8/1/09 $ 118,300
---------------
INTERNET - 0.3%
300,000 Exodus Communications Inc., 144A, 11.63%,
7/15/10 280,500
250,000 PSINet Inc., 10.50%, 12/1/06 121,250
250,000 PSINet Inc., Series B, 10.00%, 2/15/05 121,250
---------------
523,000
---------------
LEISURE - 0.2%
195,000 MGM Mirage, 9.75%, 6/1/07 202,069
285,000 Park Place Entertainment Corp., 8.88%,
9/15/08 280,012
---------------
482,081
---------------
LIFE & HEALTH INSURANCE - 0.3%
695,000 Prudential Insurance Company of America,
144A, 6.38%, 7/23/06(s) 656,872
---------------
MEDIA - 2.9%
700,000 Ackerley Group Inc., 9.00%, 144A, 1/15/09 654,500
500,000 Adelphia Communications, 8.13%, 7/15/03 455,000
400,000 Chancellor Broadcasting Co., Series B, 8.75%,
6/15/07 410,000
400,000 Charter Communications Holdings LLC,
14.07%, 4/1/11(v)(y) 230,000
250,000 Charter Communications Holdings LLC/
Charter Communications Holdings Capital
Corp., 10.00%, 4/1/09 244,375
250,000 Classic Cable Inc., 10.50%, 3/1/10 205,000
500,000 Clear Channel Communications, 7.88%,
6/15/05(s) 503,920
500,000 CSC Holdings Inc., 10.50%, 5/15/16 530,000
500,000 Echostar DBS Corp., 9.38%, 2/1/09 491,875
600,000 Emmis Communications Corp., 8.13%, 3/15/09 562,500
300,000 Fox Family Worldwide Inc., 9.25%, 11/1/07 284,250
500,000 Fox Sports Networks LLC, 8.88%, 8/15/07 502,500
450,000 Lamar Media Corp., 8.63%, 9/15/07 438,750
---------------
5,512,670
---------------
MEDICAL PROVIDERS & SERVICES - 0.3%
140,000 Healthsouth Corp., 144A, 10.75%, 10/1/08 141,400
700,000 Mariner Post-Acute Network, Inc., Series B,
9.50%, 4/1/06(d)+ 3,500
500,000 Triad Hospitals Holdings Inc., 144A, 11.00%,
5/15/09 520,000
---------------
664,900
---------------
MINING & METALS - 0.2%
400,000 P&L Coal Holdings Corp., Series B, 9.63%,
5/15/08 388,500
---------------
OIL REFINING - 0.4%
500,000 Lasmo (USA), Inc., 7.50%, 6/30/06 498,245
300,000 Pogo Producing Co., Series B, 10.38%,
2/15/09 312,000
---------------
810,245
---------------
OIL SERVICES - 1.1%
$ 300,000 Eott Energy Partners LP/Eott Energy Finance
Corp., 11.00%, 10/1/09 $ 318,750
300,000 Newpark Resources, Series B, 8.63%, 12/15/07 277,500
300,000 Ocean Energy, Inc., Series B, 8.88%, 7/15/07 303,750
500,000 Phillips Petroleum Co., 8.75%, 5/25/10 545,320
750,000 Williams Cos. Inc., 6.20%, 8/1/02 738,090
---------------
2,183,410
---------------
PUBLISHING - 0.2%
400,000 American Media Operation Inc., 10.25%,
5/1/09 393,000
---------------
REAL ESTATE INVESTMENT TRUST - 0.1%
100,000 Felcor Lodging LP, 144A, 9.50%, 9/15/08 98,811
180,000 Host Marriott LP, 144A, 9.25%, 10/1/07 178,650
---------------
277,461
---------------
TELEPHONE - 2.7%
500,000 Alaska Communications Systems Holdings
Inc., 9.38%, 5/15/09 430,000
160,000 Allegiance Telecom, Inc., 12.88%, 5/15/08 160,800
300,000 Focal Communications Corp., 11.88%,
1/15/10 219,000
275,000 Global Crossing Holding Ltd., 9.13%,
11/15/06 262,625
140,000 Intermedia Communications, Series B, 9.50%,
3/1/09 136,500
300,000 ITC Deltacom Inc., 8.88%, 3/1/08 231,000
200,000 ITC Deltacom Inc., 9.75%, 11/15/08 161,500
500,000 Level 3 Communications Inc., 9.13%, 5/1/08 405,000
155,000 McLeodUSA Inc., 9.50%, 11/1/08 144,150
100,000 McLeodUSA Inc., 8.13%, 2/15/09 86,500
500,000 Metromedia Fiber Network Inc., Series B,
10.00%, 11/15/08 445,000
300,000 XO Communications, 10.75%, 11/15/08 262,500
500,000 NTL Communications Corp., 11.50%, 10/1/08 460,000
1,000,000 Qwest Capital Funding Inc., 7.90%, 8/15/10(s) 1,014,410
350,000 RCN Corp., 10.00%, 10/15/07 252,000
600,000 Sprint Capital Corp., 6.38%, 5/1/09(s) 536,940
250,000 Time Warner Telecom Inc., 9.75%, 7/15/08 221,250
---------------
5,429,175
---------------
THRIFTS - 0.2%
400,000 Sovereign Bancorp Inc., 10.50%, 11/15/06 406,000
---------------
TRUCKING & SHIPPING & AIR FREIGHT - 0.3%
250,000 Atlantic Express, 10.75%, 2/1/04 215,000
400,000 Teekay Shipping Corp., 8.32%, 2/1/08 382,000
---------------
597,000
---------------
WIRELESS TELECOMMUNICATIONS - 1.1%
650,000 Crown Castle International Corp., 11.45%,
5/15/11(v)(y) 416,000
400,000 FLAG Telecom Holdings Ltd., 8.25%, 1/30/08 336,000
500,000 Nextel Communications, Inc., 9.38%, 11/15/09 485,000
200,000 Nextel Partners Inc., 11.00%, 3/15/10 199,000
250,000 TeleCorp PCS Inc., 10.63%, 7/15/10 247,500
200,000 Tritel PCS Inc., 12.88%, 5/15/09(v)(y) 128,000
The Accompanying Notes are an Integral Part of the Financial Statements.
-5-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
$ 400,000 Voicestream Wireless Corp./Voicestream
Wireless Holding Corp., 10.38%, 11/15/09 $ 427,000
-------------
2,238,500
-------------
TOTAL CORPORATE BONDS 30,269,092
(Cost $32,630,990) -------------
FOREIGN CORPORATE BONDS - 5.2%
BANKS - 1.1%
950,000 Barclays Bank Plc, 144A, 8.55%, 9/29/49(s) 956,365
170,000 Cho Hung Bank Co., Ltd., 144A, 11.50%,
4/1/10 162,350
300,000 National Australia Bank, 6.60%, 12/10/07(s) 285,135
1,000,000 National Australia Bank, 8.60%, 5/19/10(s) 1,062,699
-------------
2,466,549
-------------
CHEMICALS - 0.3%
300,000 Avecia Group Plc, 11.00%, 7/1/09 289,500
250,000 Reliance Industries Ltd., 144A, 10.38%,
6/24/16 236,550
-------------
526,050
-------------
CONSTRUCTION & REAL PROPERTY - 0.1%
100,000 Cemex Central S.A. de C.V., 144A, 8.63%,
7/18/03 99,750
-------------
ELECTRICAL UTILITY - 0.1%
50,000 CE Casecnan Water & Energy, Series B,
11.95%, 11/15/10 44,000
225,000 Financiera Energetica Nacional, 144A, 9.38%,
6/15/06 177,750
-------------
221,750
-------------
FINANCIAL SERVICES - 0.1%
150,000 HSBC Capital Funding LP, 144A, 10.18%, 6/30/30,
resets quarterly after 6/30/30 off the 3-month
LIBOR plus 4.98% with no caps(s)(v) 164,153
-------------
GAS & WATER UTILITIES - 0.4%
750,000 United Utilities Plc, 6.25%, 8/15/05(s) 704,865
-------------
INFORMATION SERVICES - 0.4%
750,000 Marconi Corporation Plc, 8.38%, 9/15/30(s) 715,223
-------------
MEDIA - 0.7%
150,000 Callahan Nordrhein-Westfalen GmbH, 144A,
14.00%, 7/15/10 144,750
275,000 eKabel Hessen GmbH, 144A, 14.50%, 9/1/10 258,500
500,000 Rogers Cablesystems Ltd., 10.00%, 12/1/07 520,000
250,000 Telewest Communications Plc, 144A, 9.88%,
2/1/10 197,500
100,000 TV Azteca S.A. de C.V., 10.50%, 2/15/07 92,000
400,000 United Pan-Europe Communications, Series B,
10.88%, 11/1/07 320,000
-------------
1,532,750
-------------
OIL REFINING - 0.1%
160,000 Triton Energy Ltd., 144A, 8.88%, 10/1/07 160,000
-------------
OIL SERVICES(z)
$ 100,000 RAS Laffan Liquify Natural Gas, 144A, 8.29%,
3/15/14 $ 91,750
-------------
RAILROADS - 0.1%
140,000 TFM S.A. de C.V., 4.01%, 6/15/09(v)(y) 99,400
-------------
TELECOMMUNICATIONS - 0.2%
350,000 360networks Inc., 12.50%, 12/15/05 301,000
-------------
TELEPHONE - 1.0%
200,000 Asia Global Crossing Ltd., 144A, 13.38%,
10/15/10 185,000
425,000 Deutsche Telekom International Finance BV,
8.00%, 6/15/10(s) 433,194
250,000 Globe Telecom Inc., 144A, 13.00%, 8/1/09 252,500
100,000 Globo Comunicacoes e Participacoes S.A.,
10.63%, 12/5/08 83,500
510,000 Microcell Telecommunications Inc., Series B,
10.27%, 6/1/06(v)(y) 489,600
250,000 PTC International Finance II SA, 11.25%,
12/1/09 225,000
525,000 Telefonica Europe BV, 7.75%, 9/15/10(s) 527,058
-------------
2,195,852
-------------
WIRELESS TELECOMMUNICATIONS - 0.6%
465,000 Clearnet Communications Inc., 9.64%,
12/15/05(v)(y) 493,481
100,000 Grupo Iusacell S.A de C.V., 14.25%, 12/1/06 101,250
500,000 Vodafone Group Plc, 7.63%, 2/15/05 507,250
-------------
1,101,981
-------------
TOTAL FOREIGN CORPORATE BONDS 10,381,073
(Cost $10,567,121) -------------
MORTGAGE PASS THRU - 14.9%
3,000,000 FHLMC, TBA, 7.00%, 11/01/15 2,982,180
7,500,000 FNMA , TBA, 7.00%, 11/1/30 7,347,675
2,530,000 FNMA, TBA, 7.00%, 11/1/15 2,514,188
2,300,000 FNMA, TBA, 6.50%, 11/1/30 2,210,162
9,700,000 FNMA, TBA, 7.50%, 12/1/30 9,675,750
5,000,000 GNMA, TBA, 6.50%, 11/1/30 4,826,550
-------------
TOTAL MORTGAGE PASS THRU 29,556,505
(Cost $29,534,366) -------------
PRIVATE PLACEMENTS - 8.4%
CO-OP APARTMENTS - 4.5%
2,862,943 127-129-131 West 96th St. Corp. (1st Mortgage
Agreement on Cooperative Building in New York
City), 6.85%, 12/1/18(f) 2,729,815
1,064,725 14-16 East 17th St. (1st Mortgage Agreement
on Cooperative Building in New York City),
7.00%, 3/1/12(f) 1,020,379
The Accompanying Notes are an Integral Part of the Financial Statements.
-6-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
$ 1,516,947 270 Fifth Street (1st Mortgage Agreement on
Cooperative Building in Brooklyn, New York),
6.93%, 8/1/18(f) $ 1,455,344
480,267 31-33 Mercer Street (1st Mortgage Agreement
on Cooperative Building in New York City),
7.49%, 1/1/23(f) 476,901
601,995 3512 Oxford Avenue (1st Mortgage Agreement
on Cooperative Building in Riverdale, New
York), 8.45%, 6/1/17(f) 637,670
602,256 3810 Greystone Avenue (1st Mortgage
Agreement on Cooperative Building in
Riverdale, New York), 8.50%, 6/1/17(f) 633,705
791,706 421 West 57th Street (1st Mortgage Agreement
on Cooperative Building in New York City),
8.98%, 7/1/22(f) 868,803
477,157 482 East 9th Street, Kensington Gardens Corp.
(1st Mortgage Agreement on Cooperative
Building in New York City), 6.85%,
12/1/18(f) 453,194
581,084 86-06/86-42 155th Ave., Dartmouth
Cooperative Corp. (1st Mortgage Agreement
on Cooperative Building in Howard Beach,
New York), 7.00%, 1/1/14(f) 562,600
-------------
8,838,411
-------------
CONVENTIONAL MULTI-FAMILY - 3.0%
727,775 Huntington National Bank, 7.24%, 12/5/20(f) 641,381
1,564,351 PC Bel Clare Estates, 6.93%, 8/1/18(f) 1,485,383
1,329,034 PC Northstar Terrace, 6.63%, 10/1/18(f) 1,224,426
1,613,704 PC Shangri LA MHC Co., 6.52%, 10/1/08(f) 1,490,723
1,277,623 Three Lakes Estate, 6.06%, 10/1/13(f) 1,135,181
-------------
5,977,094
-------------
DIRECT OBLIGATIONS - 0.2%
163,187 Amerada Hess Corp., Leveraged Lease,
7.33%, 1/1/14(f) 156,834
320,715 Amerada Hess Corp., Leveraged Lease,
Series A, 6.14%, 1/1/14(f) 287,845
-------------
444,679
-------------
NET LEASE LOANS - 0.7%
1,357,189 Walgreen Benderson, 7.63%, 11/15/13(f) 1,301,952
-------------
TOTAL PRIVATE PLACEMENTS 16,562,136
(Cost $17,316,032) -------------
SOVEREIGN GOVERNMENTS AND AGENCIES - 20.7%
ARGENTINA - 1.0%
257,883 Argentina Bocon, Series Pro-2, 6.62%,
11/1/00, resets monthly off the 1-month
LIBOR with no caps(v) 201,763
190,000 City of Buenos Aires, 11.25%, 4/11/07 166,250
20,986 Republic of Argentina Pre-2, 6.62%, 4/1/01(v) 14,737
39,600 Republic of Argentina, VRN, 7.63%, 3/27/01, resets
semi-annually off the 6-month LIBOR plus
0.8125% with no caps(v) 34,422
395,000 Republic of Argentina, 11.38%, 3/15/10 337,725
145,000 Republic of Argentina, 11.75%, 6/15/15 123,613
$ 210,000 Republic of Argentina, 12.00%, 2/1/20$ 181,440
380,000 Republic of Argentina, 9.75%, 9/19/27 285,950
122,000 Republic of Argentina Discount Bonds,
Series L-GL, 7.88%, 11/30/00(v) 92,415
495,360 Republic of Argentina, Floater, 7.63%,
3/31/05(v)(s) 434,988
200,000 Republic of Argentina, Series BGL5, 11.38%,
1/30/17 168,000
-------------
2,041,303
-------------
BARBADOS - 0.1%
155,000 Government of Barbados, 144A, 8.75%,
6/15/10 155,775
-------------
BRAZIL - 2.7%
440,000 Federal Republic of Brazil, 12.25%, 3/6/30 382,800
100,000 Federal Republic of Brazil, 11.63%, 4/15/04 101,400
520,000 Federal Republic of Brazil, 11.25%, 7/26/07 514,800
310,000 Federal Republic of Brazil, 9.38%, 4/7/08 271,250
676,000 Federal Republic of Brazil, 14.50%, 10/15/09(s) 721,967
1,084,872 Federal Republic of Brazil C Bonds, 8.00%,
4/15/14(s) 809,586
55,413 Federal Republic of Brazil C Bonds, 8.00%,
4/15/14 41,352
460,000 Federal Republic of Brazil, 12.75%, 1/15/20 425,500
340,000 Federal Republic of Brazil, 10.13%, 5/15/27 255,000
710,000 Federal Republic of Brazil, 11.00%, 8/17/40 543,150
264,000 Federal Republic of Brazil, Series L, 7.63%,
4/15/06(s)(v) 241,230
460,000 Federal Republic of Brazil DCB, Series 18
Year L, 7.69%, 4/15/12 342,125
90,000 Federal Republic of Brazil DCB, Series RG-L,
7.69%, 4/15/12 66,938
165,000 Federal Republic of Brazil Discount Bonds,
Series 30 Year ZL, 7.63%, 4/15/01, resets
semi-annually off the 6-month LIBOR plus
0.8125% with no caps(v) 126,122
290,000 Federal Republic of Brazil NMB, Series 15
Year L, 7.69%, 4/17/01, resets semi-
annually off the 6-month LIBOR plus
0.875% with no caps(v) 248,675
390,000 Federal Republic of Brazil Par Bonds, Series
30 Year ZL, 6.00%, 4/15/24 256,425
-------------
5,348,320
-------------
BULGARIA - 0.5%
205,000 Republic of Bulgaria, 7.75%, 1/28/01, resets
semi-annually off the 6-month LIBOR plus
0.8125% with no caps(v) 153,238
525,000 Republic of Bulgaria, 3.00%, 7/28/12 376,031
695,000 Republic of Bulgaria Discount Bonds, Series A,
7.75%, 1/28/01(v) 522,119
20,000 Republic of Bulgaria IAB, Series PDI, 7.75%,
1/28/01, resets semi-annually off the
6-month LIBOR plus 0.8125% with no caps(v) 14,950
-------------
1,066,338
-------------
CANADA - 0.7%
CAD 840,000 Government of Canada, 5.50%, 6/1/10 538,165
1,000,000 Province of Quebec, 5.75%, 2/15/09 916,800
-------------
1,454,965
-------------
The Accompanying Notes are an Integral Part of the Financial Statements.
-7-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
COLOMBIA - 0.4%
$ 150,000 Republic of Colombia, 7.27%, 6/15/03 $ 135,750
240,000 Republic of Colombia, 10.88%, 3/9/04 227,400
360,000 Republic of Colombia, 9.75%, 4/23/09 287,280
120,000 Republic of Colombia, 11.75%, 2/25/20 95,400
-------------
745,830
-------------
COSTA RICA - 0.1%
290,000 Republic of Costa Rica, 144A, 10.00%, 8/1/20 290,000
-------------
DENMARK - 0.6%
DKK 9,265,000 Kingdom of Denmark, 8.00%, 5/15/03 1,114,298
-------------
FRANCE - 5.1%
EUR 1,740,000 Government of France, 3.50%, 7/12/04 1,394,596
EUR 1,400,000 Government of France, 5.50%, 4/25/07 1,200,407
EUR 3,855,000 Government of France, 4.00%, 4/25/09 2,973,427
EUR 414,000 Government of France, 4.00%, 4/25/09 319,325
EUR 4,150,000 Government of France, 4.00%, 10/25/09 3,183,378
EUR 350,000 Government of France, 8.50%, 12/26/12 377,352
EUR 380,000 Government of France, 8.50%, 4/25/23 433,370
EUR 250,000 Government of France, 5.50%, 4/25/29 207,217
-------------
10,089,072
-------------
GERMANY - 0.9%
EUR 210,000 German Federal Republic, Series 94, 6.25%,
1/4/24 190,812
EUR 1,000,000 German Federal Republic, Series 97, 6.00%,
7/4/07 883,963
EUR 835,000 German Federal Republic, Series 98, 5.63%,
1/4/28 705,128
-------------
1,779,903
-------------
ITALY - 2.2%
EUR 2,590,000 Republic of Italy, 3.00%, 2/15/02 2,135,795
EUR 2,655,000 Republic of Italy, 3.25%, 4/15/04 2,105,007
EUR 140,000 Republic of Italy, 7.25%, 11/1/26 138,090
-------------
4,378,892
-------------
JAPAN - 0.4%
JPY 96,000,000 Government of Japan, 1.80%, 6/21/10 869,003
-------------
MEXICO - 1.0%
50,000 Banco Nacional de Obras, 9.63%, 11/15/03 51,625
120,000 Petroleos Mexicanos, 9.50%, 9/15/27 115,500
20,000 Petroleos Mexicanos, 9.50%, 9/15/27 20,200
400,000 United Mexican States, 7.53%, 4/19/01,
resets semi-annually off the 6-month LIBOR
plus 0.8125% with no caps(v) 406,000
175,000 United Mexican States, 9.88%, 1/15/07 180,688
175,000 United Mexican States, 10.38%, 2/17/09 186,375
50,000 United Mexican States, 11.38%, 9/15/16 56,625
65,000 United Mexican States, 11.38%, 9/15/16 73,613
350,000 United Mexican States, 6.25%, 12/31/19 307,125
150,000 United Mexican States, 7.52%, 12/31/19,
resets semi-annually off the 6-month LIBOR
plus 0.8125% with no caps(v) 152,250
405,000 United Mexican States, 11.50%, 5/15/26(s) 477,900
-------------
2,027,901
-------------
MOROCCO - 0.2%
427,398 Kingdom of Morocco, Tranche A, 7.75%,
12/17/00 373,439
-------------
NETHERLANDS - 0.6%
100,000 Cellco Finance NV, 12.75%, 8/1/05 98,500
EUR 940,000 Government of Netherlands, 6.00%, 1/15/06 824,153
EUR 340,000 Netherlands Government, 6.00%, 1/15/06 298,271
-------------
1,220,924
-------------
PANAMA - 0.3%
141,466 Republic of Panama, PDI, 7.75%, 1/17/01(v) 109,636
190,000 Republic of Panama, 10.75%, 5/15/20 185,725
115,000 Republic of Panama, 8.88%, 9/30/27 96,888
160,000 Republic of Panama IRB, Series 18 Year,
4.50%, 7/17/14(v) 126,800
-------------
519,049
-------------
PERU - 0.1%
215,000 Republic of Peru, PDI, Series 20 year,
4.50%, 3/7/17(v) 129,269
-------------
PHILIPPINES - 0.2%
350,000 Philippine Government International Bond,
8.60%, 6/15/27 227,500
90,000 Republic of Philippines, 8.88%, 4/15/08 76,050
130,000 Republic of Philippines, Series B, 6.50%,
12/1/17 98,150
-------------
401,700
-------------
QATAR - 0.2%
100,000 State of Qatar, 144A, 9.50%, 5/21/09 102,500
170,000 State of Qatar, 144A, 9.75%, 6/15/30 163,625
-------------
266,125
-------------
RUSSIAN FEDERATION - 1.1%
290,000 Russian Federation, 10.00%, 6/26/07 217,500
966,750 Russian Federation, 8.25%, 3/31/10 622,345
380,000 Russian Federation, 12.75%, 6/24/28 320,625
2,685,000 Russian Federation, 2.50%, 3/31/30 1,013,588
-------------
2,174,058
-------------
SWEDEN - 0.3%
SEK 5,800,000 Swedish Government, 5.50%, 4/12/02 586,777
-------------
TRINIDAD & TOBAGO - 0.4%
450,000 Republic of Trinidad & Tobago, 144A, 9.88%,
10/1/09 468,000
300,000 Republic of Trinidad & Tobago, 144A, 9.75%,
7/1/20(s) 303,000
-------------
771,000
-------------
TURKEY - 0.4%
220,000 Republic of Turkey, 12.00%, 12/15/08 227,700
465,000 Republic of Turkey, 12.38%, 6/15/09 467,325
170,000 Republic of Turkey, 11.88%, 1/15/30 166,175
-------------
861,200
-------------
The Accompanying Notes are an Integral Part of the Financial Statements.
-8-
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PRINCIPAL AMOUNT # VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.9%
GBP 450,000 United Kingdom Gilt, 6.75%, 11/26/04 $ 680,717
GBP 650,000 United Kingdom Gilt, 7.25%, 12/7/07 1,043,379
-------------
1,724,096
-------------
URUGUAY - 0.1%
220,000 Republic of Uruguay, 8.75%, 6/22/10 213,950
-------------
VENEZUELA - 0.2%
357,140 Republic of Venezuela DCB, Series DL, 7.88%,
12/18/07(v) 299,105
250,000 Republic of Venezuela Par Bonds, Series W-A,
6.75%, 3/31/20 185,625
-------------
484,730
-------------
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES
(Cost $43,346,797) 41,087,917
-------------
U.S. TREASURY SECURITIES - 1.1%
85,000 U.S. Treasury Bonds, 5.50%, 8/15/28(s) 79,926
1,700,000 U.S. Treasury Notes, 6.25%, 2/28/02(s) 1,701,054
150,000 U.S. Treasury Notes, 4.25%, 11/15/03(s) 143,226
160,000 U.S. Treasury Notes, 6.88%, 5/15/06(s) 167,650
100,000 U.S. Treasury Notes, 6.63%, 5/15/07 104,094
-------------
TOTAL U.S. TREASURY SECURITIES
(Cost $2,220,457) 2,195,950
-------------
RIGHTS(z)
860,000 Mexico Value Recovery Rights, Expiring
6/30/03+ -
-------------
(Cost $0)
SHORT-TERM INVESTMENTS - 24.2%
INVESTMENT COMPANIES - 20.0%
39,509,398 J.P. Morgan Institutional Prime Money
Market Fund*(s) 39,509,398
-------------
TIME DEPOSITS - 4.0%
4,000,000 Deutsche Bank AG, 6.50%, 11/2/00 4,000,000
4,000,000 UBS AG London, 6.56%, 11/2/00 4,000,000
-------------
8,000,000
-------------
U.S. TREASURY SECURITIES - 0.2%
310,000 U.S. Treasury Bills, 6.19%, 3/22/01(y) 302,607
140,000 U.S. Treasury Notes, 5.63%, 11/30/00(s) 139,911
-------------
442,518
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $47,952,129) 47,951,916
-------------
TOTAL INVESTMENT SECURITIES - 100.0%
(Cost $204,484,231) $ 198,273,976
=============
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
CONTRACTS SETTLEMENT SETTLEMENT UNREALIZED
TO BUY DATE VALUE VALUE APPRECIATION
- ---------------------------------------------------------------------------
116,000 EUR 12/14/00 $ 96,415 $ 98,524 $ 2,109
159,000 EUR 12/14/00 133,662 135,046 1,384
--------------------------------------------
$ 230,077 $ 233,570 $ 3,493
============================================
UNREALIZED
CONTRACTS SETTLEMENT SETTLEMENT APPRECIATION
TO SELL DATE VALUE VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------
89,414,275 JPY 12/14/00 $ 827,910 $ 825,452 $ 2,458
231,000 EUR 12/14/00 192,354 196,198 (3,845)
782,506 CAD 12/14/00 518,216 512,889 5,327
9,760,198 DKK 12/14/00 1,105,095 1,113,317 (8,222)
5,686,011 SEK 12/14/00 562,971 569,534 (6,563)
1,145,588 GBP 12/14/00 1,658,531 1,665,022 (6,490)
21,111,288 EUR 12/14/00 17,858,039 17,930,737 (72,698)
--------------------------------------------
$ 22,723,116 $22,813,149 $ (90,033)
============================================
FUTURES CONTRACTS
UNREALIZED
EXPIRATION UNDERLYING FACE APPRECIATION
PURCHASED DATE AMOUNT AT VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------
45 Eurex Ten Year
Euro Bond December 2000 $ 4,022,461 $ 8,280
53 U.S. Five-Year
Treasury Note December 2000 5,336,438 23,685
55 U.S. Five-Year
Treasury Note December 2000 5,491,406 (14,850)
5 U.S. Ten-Year
Treasury Note December 2000 503,516 (2,715)
-----------------------------------
$15,353,821 $ 14,400
===================================
EXPIRATION UNDERLYING FACE UNREALIZED
SOLD DATE AMOUNT AT VALUE DEPRECIATION
- --------------------------------------------------------------------------------
15 U.S. Five-Year
Treasury Note December 2000 $ 1,510,313 $ (14,379)
142 U.S. Ten-Year
Treasury Note December 2000 14,299,844 (86,602)
-----------------------------------
$15,810,157 $ (100,981)
===================================
20 The Accompanying Notes are an Integral Part of the Financial Statements.
THE GLOBAL STRATEGIC INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
PERCENT OF FOREIGN BONDS % OF TOTAL INVESTMENTS
- -----------------------------------------------------------
Australia 0.7%
Argentina 1.0%
Barbados 0.1%
Brazil 2.7%
Bulgaria 0.5%
Canada 1.6%
Cayman Islands 0.1%
Colombia 0.5%
Costa Rica 0.1%
Denmark 0.6%
France 5.1%
Germany 1.1%
Indonesia 0.1%
Italy 2.2%
Japan 0.4%
Mexico 1.2%
Morocco 0.2%
Netherlands 1.2%
Panama 0.3%
Peru 0.1%
Philippines 0.3%
Poland 0.1%
Qatar 0.2%
Russian Federation 1.1%
South Korea 0.2%
Sweden 0.3%
Trinidad & Tobago 0.4%
Turkey 0.4%
United Kingdom 2.8%
Uruguay 0.1%
Venezuela 0.2%
----
25.9%
C - Capitalization
CAD - Canadian Dollar
CSTR - Collateralized Strip Rate
DCB - Debt Conversion Bonds
DKK - Danish Krone
EUR - Euro
FHLMC - Federal Home Loan Mortgage Corp.
FNMA - Federal National Mortgage Association
GBP - British Pound
GNMA - Government National Mortgage Association
IAB - Interest in Arrears Bond
IO - Interest Only
IRB - Interest Reduction Bonds
JPY - Japanese Yen
LIBOR - London Interbank Offered Rate
MTN - Medium Term Note
NMB - New Money Bond
NTL - Notional Principal
PDI - Past Due Interest
PO - Principal Only
resets - The frequency with which a security's coupon changes, based
on current market conditions or an underlying index.
SEK - Swedish Krona
SEQ - Sequential Payer
TBA - Securities purchased (sold) on a forward commitment basis with an
approximate principal amount and no definite maturity date. The actual
principal amount and maturity will be determined upon settlement.
VRN - Variable rate note. Interest rate date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is
effective October 31, 2000.
144A - Securities restricted for resale to Qualified Institutional Buyers
# Denominated in USD unless otherwise indicated
* Money Market mutual fund registered under the Investment Act of 1940,
as amended, and advised by J.P. Morgan Investment Management, Inc.
+ Non-income producing security
(d) Defaulted security
(f) Illiquid and fair valued security. Approximately $16,562,136 or 8.4% of the
market value of the securities have been valued at fair value. (See Note 1)
(s) Security is fully or partially segregated with custodian as collateral for
TBA and when issued securities or futures contracts or with brokers as
initial margin for futures contracts.
(v) Variable or floating rate instrument or instrument with step coupon rate
(y) Yield to maturity
(z) Category is less than 0.05% of total investment securities
The Accompanying Notes are an Integral Part of the Financial Statements.
-9-
J.P. MORGAN GLOBAL STRATEGIC INCOME FUND/ J.P. MORGAN INSTITUTIONAL
GLOBAL STRATEGIC INCOME FUND/
THE GLOBAL STRATEGIC INCOME PORTFOLIO
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000 (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
J.P. MORGAN J.P.MORGAN THE GLOBAL STRATEGIC PRO FORMA PRO FORMA
GLOBAL STRATEGIC INSTITUTIONAL INCOME PORTFOLIO ADJUSTMENTS COMBINED
INCOME FUND GLOBAL STRATEGIC JPMORGAN
INCOME FUND GLOBAL STRATEGIC
INCOME FUND
ASSETS:
Investments at Value $ - $ - $ 158,765 $ - $ 158,765
Investments in The Global Strategic
Income Portfolio, at value 7,363 163,930 - (171,293)(a) -
Investment in Affiliated Fund - - 39,509 - 39,509
Cash - - 1,018 - 1,018
Foreign Currency at Value (Cost $210) - - 215 - 215
Investment Securities Sold - - 21,349 - 21,349
Dividend and Interest Receivable - - 2,343 - 2,343
Expense Reimbursement 11 21 1 32(b) 65
Unrealized Appreciation of Forward
Foreign Currency Contracts - - 11 - 11
Deferred Organization Expense 15 10 7 (32)(b) -
Prepaid Trustees' Fees and Expenses - - 1 - 1
Prepaid Expenses and Other Assets - 1 7 - 8
--------------------------------------------------------------------------------------
Total Assets 7,389 163,962 223,226 (171,293) 223,284
--------------------------------------------------------------------------------------
LIABILITIES:
Securities Purchased Payable - - 51,648 - 51,648
Dividends Payable 13 433 - - 446
Open forward currency contracts - - 98 - 98
Advisory Fee Payable - - 64 - 64
Shareholder Servicing Fee Payable 1 14 - - 15
Administration Services Fee Payable - 3 3 - 6
Variation Margin Payable - - 1 - 1
Accrued Expenses and Other Payables 44 58 119 - 221
--------------------------------------------------------------------------------------
Total Liabilities 58 508 51,933 - 52,499
--------------------------------------------------------------------------------------
NET ASSETS:
Paid-in Capital 8,303 185,165 - - 193,468
Undistributed Net Investment Income 210 4,412 - - 4,622
Accumulated Net Realized Loss (902) (20,046) - - (20,948)
Net Unrealized Appreciation (Depreciation)
of Investments (280) (6,077) - - (6,357)
--------------------------------------------------------------------------------------
Net Assets $ 7,331 $ 163,454 $ 171,293 $(171,293) $ 170,785
======================================================================================
Shares of beneficial interest outstanding 785 17,589 - (18,374) (d) -
Net Asset Value: $ 9.34 $ 9.29 - - $ -
PRO FORMA WITH REORGANIZATION
JPMORGAN GLOBAL STRATEGIC
INCOME FUND
Shares Outstanding
Select - - - 789 (c) 789
Institutional - - - 17,589 (c) 17,589
Net Asset Value:
Select - - - - $ 9.29
Institutional - - - - $ 9.29
--------------------------------------------------------------------------------------
Cost of Investments $ - $ - $ 204,484 $ - $ 204,484
======================================================================================
(a) Reflects elimination of feeder funds' investments in master fund.
(b) Reflects write off of deferred organization expense.
(c) Reflects the additional number of shares outstanding due to the
Reorganization
(d) Reallocation of feeder funds beneficial interest to Select and
Institutional Class Shares due to the Reorganization.
See Notes to Pro Forma Financial Statements
-10-
JP MORGAN GLOBAL STRATEGIC INCOME FUND / JP MORGAN INSTITUTIONAL GLOBAL
STRATEGIC INCOME FUND / THE GLOBAL STRATEGIC INCOME PORTFOLIO
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
J.P. MORGAN J.P. MORGAN THE GLOBAL PRO FORMA PRO FORMA
GLOBAL STRATEGIC INSTITUTIONAL STATEGIC INCOME ADJUSTMENTS COMBINED
INCOME FUND GLOBAL STRATEGIC PORTFOLIO JPMORGAN
INCOME FUND GLOBAL STRATEGIC
INCOME FUND
INCOME:
Allocated Investment Income From Portfolio $ 577 $ 12,857 $ - $ (13,434) (c) $ -
Interest Income - - 12,024 - 12,024
Dividend Income from Affiliated Investments - - 1,452 - 1,452
Dividend income - - 5 - 5
Allocated Portfolio Expenses (43) (964) - 1,007 (b) -
-------------------------------------------------------------------------------
Investment Income 534 11,893 13,481 (12,427) 13,481
-------------------------------------------------------------------------------
EXPENSES:
Advisory Fee - - 758 - 758
Administrative Services Fee 2 39 41 170 (a) 252
Shareholder Servicing Fee 18 160 - - 178
Custodian Fees and Expenses - - 186 (111) (g,e) 75
Professional Fees 11 13 51 (22) (e) 53
Amortization of Organizational Expenses 10 7 5 22 (f) 44
Transfer Agent Fees 23 20 - - 43
Registration Fees 17 15 - - 32
Printing Expenses 13 11 9 (7) (e) 26
Fund Services Fee - 3 3 - 6
Trustees' Fees and Expenses - 2 2 - 4
Administration Fee - 2 1 - 3
Financial and Fund Accounting Services Fee 39 39 - (78) (g) -
Miscellaneous 3 10 1 - 14
-------------------------------------------------------------------------------
Total Expenses 136 321 1,057 (26) 1,488
-------------------------------------------------------------------------------
Less: Reimbursement of Expenses (108) (241) (3) 26 (a) (326)
-------------------------------------------------------------------------------
Net Expenses 28 80 1,054 - 1,162
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Investment Income 506 11,813 12,427 (12,427) 12,319
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain (Loss) on Investments
Investment Transactions (114) (2,626) (7,163) 2,740 (d) (7,163)
Futures Contracts - - 493 - 493
Foreign Currency Contracts and Translations - - 3,930 - 3,930
-------------------------------------------------------------------------------
Net Realized (Loss) on Investments (114) (2,626) (2,740) 2,740 (2,740)
-------------------------------------------------------------------------------
Net Change in Net Unrealized Appreciation
(Depreciation)on Investments
Investment Transactions 31 1,429 2,003 (1,460) (d) 2,003
Futures Contracts - - (157) - (157)
Foreign Currency Contracts and Translations - - (386) - (386)
-------------------------------------------------------------------------------
Net Change in Net Unrealized Appreciation 31 1,429 1,460 (1,460) 1,460
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $ 423 $ 10,616 $ 11,147 $ (11,147) $ 11,039
===============================================================================
(a) Reflects adjustments to investment advisory fee, administrative fees
and shareholder servicing fees and/or related waivers based on the
surviving Fund's revised fee schedule.
(b) Reflects the elimination of master portfolio expenses which have beed
disclosed under feeder expenses.
(c) Reallocation of investments income to feeder funds
(d) Reallocation of realized and unrealized gain (loss )to feeder funds.
(e) Reduction reflects estimated benefits of combined funds.
(f) Reflects write-off of deferred organization expenses of the portfolio
(g) Custody charges inclusive of fund accounting charges
See Notes to Pro Forma Financial Statements
-11-
J.P. MORGAN GLOBAL STRATEGIC INCOME FUND/ J.P. MORGAN INSTITUTIONAL
GLOBAL STRATEGIC INCOME FUND/ THE GLOBAL STRATEGIC INCOME PORTFOLIO
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities, Statement of
Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of The Global Strategic Portfolio ("Master Portfolio"), J.P. Morgan
Institutional Global Strategic Income Fund ("Institutional Fund"), and J.P.
Morgan Global Strategic Income Fund ("Global Strategic Fund") (collectively the
"feeder funds" of the Master Portfolio) as if the proposed Reorganization
occurred as of and for the twelve months ended October 31, 2000.
Under the Reorganization, the Pro Forma Statements give effect to the
proposed transfer of all assets and liabilities of the Master Portfolio and
Global Strategic Fund 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 and
Global Strategic Fund would be renamed Institutional Class Shares and Select
Class Shares respectively. The net asset values per share for Institutional
Class Shares and Select Class Shares at the commencement of offering would be
identical to the closing net asset value per share for the Institutional Fund
immediately prior to the Reorganization.
Under the proposed Reorganization, each shareholder of Global Strategic
Fund would receive shares of Institutional Fund with a value equal to their
holding in their respective funds. Therefore, as a result of the proposed
Reorganization, current shareholders of Global Strategic Fund will become
shareholders of Institutional Fund.
The Pro Forma net asset value per share assumes the issuance of additional
shares of Institutional Fund, which would have been issued on October 31, 2000
in connection with the proposed Reorganization. The amount of additional shares
assumed to be issued was calculated based on the October 31, 2000 net assets of
Global Strategic Fund and net assets values per share of Institutional Fund.
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNT) SELECT CLASS SHARES
-------------------
Increase in Shares Issued 789
Net Assets 10/31/00 7,331
Pro Forma Net Asset Value 9.29
10/31/00
-12-
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 October 31, 2000.
-13-
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 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 incorporated herein by reference
to Registration Statement on Form N-14 filed on April 16, 2001
(Accession Number 0000912057-01-508842).
17 (d) Statement of Additional Information for the Surviving Fund filed
herewith.
17 (e) Statement of Additional Information for the Merging Fund
incorporated herein by reference to Registration Statement on
Form N-14 filed on April 16, 2001 (Accession
Number 0000912057-01-508842).
17 (f) Annual Report of the Surviving Fund (including the Annual Report
of the Master Portfolio) dated October 31, 2000 incorporated
herein by reference to Registration Statement on Form N-14 filed
on April 16, 2001 (Accession Number 0000912057-01-508842).
17 (g) Annual Report of the Merging Fund (including the Annual Report of
the Master Portfolio) dated October 31, 2000 incorporated herein
by reference to Registration Statement on Form N-14 filed on
April 16, 2001 (Accession Number 0000912057-01-508842).
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.