N-14 1 a2043521zn-14.txt N-14 As filed with the Securities and Exchange Commission on April 13, 2001 Registration No. 333-___/811-07342 ================================================================================ U.S. Securities and Exchange Commission Washington, DC 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. ___ Post-Effective Amendment No.___ (Check appropriate box or boxes) Exact Name of Registrant as Specified in Charter: J.P. MORGAN INSTITUTIONAL FUNDS Area Code and Telephone Number: (617) 557-0700 Address of Principal Executive Offices: 60 State Street, Suite 1300 Boston, Massachusetts 02109 Name and Address of Agent for Service: Margaret W. Chambers c/o Fund Distributors, Inc. 60 State Street, Suite 1300 Boston, Massachusetts 02109 Copies to: JOSEPH J. BERTINI, ESQ. SARAH E. COGAN, ESQ. JOHN E. BAUMGARDNER, PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett JR., ESQ. 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 13, 2001 pursuant to Rule 488 under the Securities Act of 1933. Calculation of Registration Fee under the Securities Act of 1933: No filing fee is required because an indefinite number of shares have previously been registered on Form N-1A (Registration No. 033-54642/811-07342) pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. The Registrant's Form 24f-2 for the fiscal year ended May 31, 2000 was filed on October 3, 2000. Pursuant to Rule 429, this Registration Statement relates to the aforesaid Registration Statement on Form N-1A. J.P.Morgan U.S. Equity Fund - Advisor Series a series of J.P. Morgan Institutional Funds 60 State Street, Suite 1300 Boston, Massachusetts 02109 May 12, 2001 Dear Shareholder: A special meeting of the shareholders of J.P.Morgan U.S. Equity Fund - Advisor Series (the "Merging Fund"), a series of J.P. Morgan Institutional Funds ("JPMF"), will be held on July 3, 2001 at 9:00 a.m., Eastern time. Formal notice of the meeting appears after this letter, followed by materials regarding the meeting. As you may be aware, The Chase Manhattan Corporation recently completed a merger with J.P. Morgan & Co. Incorporated, the former corporate parent of the investment adviser of the Merging Fund's assets, to form J.P. Morgan Chase & Co. ("JPMC"). As a result of this merger, JPMC is seeking to reorganize parts of its investment management business and funds advised by its subsidiaries. At the special meeting (the "Meeting"), shareholders will be asked to consider and vote upon the proposed reorganization of the Merging Fund into JPMorgan Institutional U.S. Equity Fund (the "Surviving Fund"), another series of J.P. Morgan Institutional Funds ("JPMF") (the "Reorganization"). After the Reorganization, shareholders of the Merging Fund would hold Class A Shares of the Surviving Fund. The investment objective and policies of the Surviving Fund are identical to those of the Merging Fund. Both the Merging Fund and the Surviving Fund currently invest all of their investable assets in The U.S. Equity Portfolio (the "Master Portfolio"). Concurrent with the Reorganization, the Surviving Fund will cease to operate under a "master/feeder" structure and will instead invest directly in portfolio securities. In connection with the Reorganization, the Surviving Fund will be renamed "JPMorgan U.S. Equity Fund." The Surviving Fund has also entered into agreements and plans of reorganization with (i) JPMorgan Large Cap Equity Fund (formerly, Chase Vista Large Cap Equity Fund), a series of Mutual Fund Select Group ("MFSG") with similar investment objectives and policies to the Merging Fund (the "Chase Fund Reorganization"), and (ii) another mutual fund whose assets are managed by J.P. Morgan Investment Management Inc. ("JPMIM") with identical investment objectives and policies to the Surviving Fund (the "Feeder Reorganization" and, together with the Chase Fund Reorganization, the "Concurrent Reorganizations"). If the Concurrent Reorganizations are approved by the shareholders of these other funds and certain other conditions are met, these other funds will be reorganized into the Surviving Fund. The consummation of the Reorganization is contingent upon the consummation of the Feeder Reorganization. At the Meeting, you will also be asked to consider and vote upon the election of Trustees of JPMF. The investment adviser for the assets of both of the Merging Fund and the Surviving Fund is JPMIM. Please see the enclosed Combined Prospectus/Proxy Statement for detailed information regarding the proposed Reorganization, the Concurrent Reorganizations and a comparison of the Merging Fund and to the Surviving Fund. The cost and expenses associated with the Reorganization, including costs of soliciting proxies, will be borne by JPMC and not by the Merging Fund, the Surviving Fund, JPMF or their shareholders. If approval of the Reorganization is obtained, you will automatically receive Class A 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 1-800-766-7722. A proxy card is enclosed for your use in the shareholder meeting. This card represents shares you held as of the record date, __________, 2001. IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED OR CALL ____________ AS SOON AS POSSIBLE. This will ensure that your shares will be represented at the Meeting to be held on July 3, 2001. Please read the enclosed materials carefully. You may, of course, attend the meeting in person if you wish, in which case the proxy can be revoked by you at the Meeting. Sincerely, Matthew Healey Chairman SPECIAL NOTE: Certain shareholders may receive a telephone call from D.F. King & Co., Inc., us to answer any questions you may have or to provide assistance in voting. Remember, your vote is important! Please sign, date and promptly mail your proxy card(s) in the return envelope provided or call ________ in order to vote. 2 WHY IS THE REORGANIZATION BEING PROPOSED? The Reorganization is being proposed because each Fund's board believes it is in the best interests of shareholders to operate in a multi-class rather than a "master/feeder" structure. IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN? In connection with the Reorganization, the Merging Fund will transfer all of its assets and liabilities to the Surviving Fund and will receive, in exchange, Class A Shares of the Surviving Fund. The Merging Fund will then be liquidated and the Class A Shares of the Surviving Fund will be distributed pro rata to shareholders such as you. After the Reorganization, you will own Class A 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. Concurrent with the Reorganization, the Surviving Fund will cease to operate under a "master/feeder" structure and will instead invest its assets directly in portfolio securities. HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED? As a result of the Reorganization, the contractual (or pre-waiver) total expense ratios are expected to be higher for your shares in the Surviving Fund than they are for your shares in the Merging Fund. However, the actual (or post-waiver) total expense ratios are expected to be the same or less for your shares in the Surviving Fund than they are for your shares in the Merging Fund. This is because JPMIM has contractually agreed to waive fees payable to it and reimburse expenses so that the total expense ratio will remain the same for at least THREE YEARS after the Reorganization. WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT? 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 Class A shares of the Surviving Fund. 3 HOW WILL THE PROPOSED CONCURRENT REORGANIZATIONS AFFECT MY INVESTMENT IF THEY ARE APPROVED BY THE SHAREHOLDERS OF THE OTHER FUNDS? If the Concurrent Reorganizations are approved and certain other conditions are met, the assets and liabilities of these other merging funds will become assets and liabilities of the Surviving Fund. The consummation of the Reorganization is contingent upon the consummation of the Feeder Reorganization, but not on the consummation of the Chase Fund Reorganization. AS A HOLDER OF SHARES OF THE MERGING FUND, WHAT DO I NEED TO DO? Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your vote is important! Accordingly, please sign, date and mail the proxy card(s) promptly in the enclosed return envelope as soon as possible after reviewing the enclosed Combined Prospectus/Proxy Statement. MAY I ATTEND THE MEETING IN PERSON? Yes, you may attend the Meeting in person. If you complete a proxy card and subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure that your vote is counted, we strongly urge you to mail us your signed, dated and completed proxy card(s) even if you plan to attend the Meeting. 4 JPMorgan U.S. Equity Fund - Advisor Series a series of J.P. Morgan Institutional Funds 60 State Street, Suite 1300 Boston, Massachusetts 02109 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 3, 2001 To the Shareholders of JPMorgan U.S. Equity Fund - Advisor Series: NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders ("Shareholders") of JPMorgan U.S. Equity Fund - Advisor Series (the "Merging Fund"), a series of J.P. Morgan Institutional 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, JPMF, on behalf of JPMorgan Institutional U.S. Equity Fund (the "Surviving Fund"), and J.P. Morgan Chase & Co., and the transactions contemplated thereby, including (a) the transfer of all of the assets and liabilities of the Merging Fund to the Surviving Fund in exchange for Class A Shares of the Surviving Fund (the "Class A Shares"), and (b) the distribution of such Class A Shares to the Shareholders of the Merging Fund in connection with the liquidation of the Merging Fund. ITEM 2. To elect __ Trustees to serve as members of the Board of Trustees of JPMF. ITEM 3. To transact such other business as may properly come before the Special Meeting or any adjournment(s) thereof. YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF ITEMS 1 AND 2. Each proposal is described in the accompanying Combined Prospectus/Proxy Statement. Attached as Appendix A to the Combined Prospectus/Proxy Statement is a copy of the Reorganization Plan. Shareholders of record as of the close of business on April 6, 2001 are entitled to notice of, and to vote at, the Special Meeting or any adjournment(s) thereof. SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF JPMF. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO THE MERGING FUND A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON. Margaret W. Chambers Secretary May 12, 2001 2 COMBINED PROSPECTUS/PROXY STATEMENT DATED MAY 12, 2001 ACQUISITION OF THE ASSETS AND LIABILITIES OF JPMORGAN U.S. EQUITY FUND - ADVISOR SERIES A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS 60 STATE STREET, SUITE 1300 BOSTON, MASSACHUSETTS 02109 (617) 557-0700 BY AND IN EXCHANGE FOR CLASS A SHARES OF JPMORGAN INSTITUTIONAL U.S. EQUITY FUND, A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS 60 STATE STREET, SUITE 1300 BOSTON, MASSACHUSETTS 02109 (617) 557-0700 This Combined Prospectus/Proxy Statement relates to the proposed reorganization of J.P. Morgan U.S. Equity Fund - Advisor Series (the "Merging Fund"), a series of J.P. Morgan Institutional Funds ("JPMF"), into J.P. Morgan Institutional U.S. Equity Fund (the "Surviving Fund"), a series of JPMF. If approved by shareholders of the Merging Fund, the proposed reorganization will be effected by transferring all of the assets and liabilities of the Merging Fund to the Surviving Fund, which has identical investment objectives and policies to those of the Merging Fund, in exchange for Class A 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 is an open-end management investment company offering shares in several portfolios. In connection with the Reorganization, the JPMorgan Institutional U.S. Equity Fund will be renamed "JPMorgan U.S. Equity Fund." In connection with the proposed Reorganization, the Surviving Fund will implement a new multi-class structure under which it will offer Class A, Class B, Class C, Select Class and Institutional Class. If the proposed Reorganization is approved by Merging Fund Shareholders, each Merging Fund Shareholder will receive Class A shares (the "Class A 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 Class A Shares received in the Reorganization or other JPMorgan Funds subsequently purchased or received as a result of an exchange. At the Meeting, you will also be asked to consider and vote upon the election of Trustees of JPMF. i 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, JPMF, on behalf of the Surviving Fund, and J.P. Morgan Chase & Co., attached to this Combined Prospectus/Proxy Statement as Appendix A. The Board of Trustees for 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 JPMF's prospectus for Class A 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 that an investor should know before voting on the proposals. The current Prospectuses, Statements of Additional Information and Annual Reports of the Merging Fund and the Surviving Fund (including the Annual Report of The U.S. Equity Portfolio), and the Semi-Annual Reports of the Merging Fund and the Surviving Fund (including the Semi-Annual Report of The U.S. Equity Portfolio) are incorporated herein by reference, and the current Prospectus and Annual Report (including the Annual Report of The U.S. Equity Portfolio), and Semi-Annual Report (including the Semi-Annual Report of the U.S. Equity Portfolio) for the Surviving Fund is enclosed with this Combined Prospectus/Proxy Statement. A Statement of Additional Information relating to this Combined Prospectus/Proxy Statement containing additional information about JPMF has been filed with the Commission and is incorporated by reference into this Combined Prospectus/Proxy Statement. A copy of the Statement of Additional Information, as well as the Prospectus, Statement of Additional Information, Semi-Annual Report and Annual Report of the Merging Fund (including the Annual Report for the U.S. Equity Portfolio), may be obtained without charge by writing to JPMF at its address noted above or by calling 1-800-766-7722. This Combined Prospectus/Proxy Statement is expected to first be sent to shareholders on or about May 12, 2001. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR ii MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY JPMF. INVESTMENTS IN THE SURVIVING FUND ARE SUBJECT TO RISK--INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NO SHARES IN THE SURVIVING FUND ARE BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. iii TABLE OF CONTENTS
PAGE INTRODUCTION.............................................................................1 PROPOSAL 1: REORGANIZATION PLAN.........................................................1 SUMMARY..................................................................................2 COMPARATIVE FEE AND EXPENSE TABLES.......................................................5 RISK FACTORS.............................................................................8 INFORMATION RELATING TO THE PROPOSED REORGANIZATION......................................9 PURCHASES, REDEMPTIONS AND EXCHANGES....................................................14 DISTRIBUTIONS AND TAXES.................................................................18 COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S ORGANIZATION STRUCTURE........19 INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES.......................21 PROPOSAL 2: ELECTION OF TRUSTEES........................................................24 INFORMATION RELATING TO VOTING MATTERS..................................................28 ADDITIONAL INFORMATION ABOUT JPMF.......................................................30 FINANCIAL STATEMENTS AND EXPERTS........................................................30 OTHER BUSINESS..........................................................................30 LITIGATION..............................................................................31 SHAREHOLDER INQUIRIES...................................................................31 APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION.........................................1
iv INTRODUCTION GENERAL This Combined Prospectus/Proxy Statement is being furnished to the shareholders of the Merging Fund, an open-end management investment company, in connection with the solicitation by the Board of Trustees of JPMF of proxies to be used at a Special Meeting of Shareholders of the Merging Fund to be held on July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211 Avenue of the Americas, 41st Floor, New York, NY (together with any adjournments thereof, the "Meeting"). It is expected that the mailing of this Combined Prospectus/Proxy Statement will be made on or about May 12, 2001. PROPOSAL 1: REORGANIZATION PLAN ------------------------------- At the Meeting, Merging Fund Shareholders will consider and vote upon the Agreement and Plan of Reorganization (the "Reorganization Plan") dated _______, 2001 between JPMF, on behalf of the Merging Fund, JPMF, on behalf of the Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined as the "Funds"), and J.P. Morgan Chase & Co., pursuant to which all of the assets and liabilities of the Merging Fund will be transferred to the Surviving Fund in exchange for Class A Shares of the Surviving Fund. As a result of the Reorganization, Merging Fund Shareholders will become shareholders of the Surviving Fund and will receive Class A Shares equal in value to their holdings in the Merging Fund on the date of the Reorganization. In connection with the Reorganization, the Surviving Fund will be renamed "JPMorgan U.S. Equity Fund." Further information relating to the Surviving Fund is set forth herein, and the Surviving Fund's Prospectus and Annual Report is enclosed with this Combined Prospectus/Proxy Statement. THE JPMF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1. VOTE REQUIRED Approval of the Reorganization Plan by the Merging Fund requires the affirmative vote of the lesser of (i) 67% or more of the shares of the Merging Fund present at the Meeting if the holders of more than 50% of the outstanding shares of the Merging Fund are present or represented by proxy and (ii) more than 50% of all outstanding shares of the Merging Fund. If the Reorganization Plan is not approved by the Merging Fund Shareholders, the JPMF Board will consider other appropriate courses of action. 1 SUMMARY The following is a summary of certain information relating to the proposed Reorganization, the parties thereto and the transactions contemplated thereby, and is qualified by reference to the more complete information contained elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus, Statement of Additional Information and Annual Report (including the Annual Report and Semi-Annual Report of The U.S. Equity Portfolio) of each of the Surviving Fund and the Merging Fund, and the Reorganization Plan attached to this Combined Prospectus/Proxy Statement as Appendix A. PROPOSED REORGANIZATION Each of the Surviving Fund and the Merging Fund currently invests all of its investible assets in The U.S. Equity Portfolio (the "Master Portfolio"), which has identical investment objectives and policies as the Surviving Fund and the Merging Fund and which is advised by J.P. Morgan Investment Management Inc. ("JPMIM"). The Surviving Fund has also entered into plans of reorganization with (i) JPMorgan Large Cap Equity Fund II (formerly, Chase Vista Large Cap Equity Fund), a series of Mutual Fund Select Group ("MFSG") with similar investment objectives and policies to the Merging Fund (the "Chase Fund Reorganization ") and (ii) JPMorgan U.S. Equity Fund, a series of J.P. Morgan Funds - Advisor Series whose assets are managed by JPMIM (the "Feeder Reorganization" and, together with the Chase Fund Reorganization, the "Concurrent Reorganizations"). If each of the Reorganization and the Concurrent Reorganizations is approved by the shareholders of the respective funds and certain other conditions are met, the Merging Fund and these other funds will be reorganized into the Surviving Fund. Concurrent with the Feeder Reorganization, the Surviving Fund will cease to operate under a "master/feeder" structure and will instead invest directly in portfolio securities rather than in the Master Portfolio. The consummation of the Reorganization and the Concurrent Reorganizations are contingent upon the consummation of the Feeder Reorganization. The consummation of the Reorganization is not contingent upon the consummation of the Chase Fund Reorganization. In connection with the proposed Reorganization, the Surviving Fund will implement a new multi-class structure under which it will offer Class A, Class B, Class C, Select Class Shares and Institutional Class Shares. Pursuant to the proposed Reorganization, the Merging Fund will transfer all of its assets and liabilities to the Surviving Fund in exchange for Class A Shares. Under the proposed Reorganization, each Merging Fund Shareholder will receive a number of Class A Shares of the Surviving Fund with an aggregate net asset value equal on the date of the exchange to the aggregate net asset value of such shareholder's Merging Fund Shares on such date. Therefore, following the proposed Reorganization, Merging Fund Shareholders will be Surviving Fund Shareholders. Merging Fund Shareholders will not pay a sales load in connection with the Reorganization. See "Information Relating to the Proposed Reorganization." The Surviving Fund has investment objectives, policies and restrictions identical to the Merging Fund. However, while the Merging Fund and the Surviving Fund currently invest all of 2 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, including a majority of each Board's members who are not "interested persons" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"), have each determined that the proposed Reorganization is in the best interests of each Fund and its respective shareholders and that the interests of such shareholders will not be diluted as a result of such Reorganization. REASONS FOR THE REORGANIZATION The Reorganization is being proposed because each Fund's board believes that it is in the best interest of the shareholders to operate in a multi-class rather than a master/feeder structure. FEDERAL INCOME TAX CONSEQUENCES Simpson Thacher & Bartlett will issue an opinion (based on certain assumptions) as of the effective time of the Reorganization to the effect that the transaction will not give rise to the recognition of income, gain or loss for federal income tax purposes to the Merging Fund, the Surviving Fund or the shareholders of the Merging Fund. A shareholder's holding period and tax basis of Class A 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"). JPMIM will continue to serve as investment advisor for the Surviving Fund following the Reorganization. INVESTMENT OBJECTIVE AND POLICIES The investment objective of the Surviving Fund and the Merging Fund is to provide high total return from a portfolio of selected equity securities. See "Risk Factors." Both Funds have identical investment policies, and the Surviving Fund's investment policies will not change after the Reorganization, although, as mentioned above, the Surviving Fund will invest in portfolio securities rather than the Master Portfolio. For more information regarding the Surviving Fund's 3 investment policies, see the Surviving Fund's Prospectus enclosed with this Combined Proxy Statement. The Surviving Fund invests primarily in large- and medium-capitalization U.S. companies. Industry by industry, the Surviving Fund's weightings are similar to those of the Standard & Poor's 500 Stock Index (S&P 500). The Surviving Fund can moderately underweight or overweight industries when it believes it will benefit performance. Within each industry, the Surviving Fund focuses on those stocks that JPMIM believes are most undervalued. PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND The principal risk factors associated with an investment in the Surviving Fund are those typically associated with investing in a managed portfolio of equity securities. In particular, the value of shares of the Surviving Fund will be influenced by the performance of the securities selected for its portfolio. The value of the Surviving Fund's shares will fluctuate in response to movements in the stock market, especially movements of those stocks included in the S&P 500. See "Risk Factors." CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS ADVISORY SERVICES The investment adviser for the Surviving Fund's and the Merging Fund's assets is JPMIM. JPMIM oversees the asset management of both funds. As compensation for its services, JPMIM receives a management fee indirectly from both funds at an annual rate of 0.40% of average daily net assets. Following the Reorganization, JPMIM will manage the Surviving Fund's assets and will receive a fee at an annual rate of 0.40% of average daily net assets. 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 agent of JFD currently serves as sub-administrator. It is anticipated that prior to the consummation of the Reorganization, Morgan will merge with The Chase Manhattan Bank ("Chase") which will become the Surviving Fund's administrator and shareholder servicing agent. The Bank of New York ("BONY") currently serves as fund accountant and custodian, and DST Systems, Inc. ("DST") currently serves as transfer agent and dividend disbursing agent for the Surviving Fund. It is anticipated that prior to the consummation of the Reorganization, Chase will become the Surviving Fund's fund accountant and custodian. PricewaterhouseCoopers LLP serves as the Surviving Fund's independent accountants. ADMINISTRATOR In connection with the Reorganization, the administration fee paid to Morgan will increase to 0.15% of average daily net assets on the first $26 billion of complex wide non-money market assets and 0.075% on complex wide non-money market assets in excess of $26 billion. ORGANIZATION JPMF is organized as a Massachusetts business trust. Each of the Merging Fund and the Surviving Fund is organized as a series of JPMF. 4 PURCHASES, REDEMPTIONS AND EXCHANGES After the Reorganization, the procedures for making purchases, redemptions and exchanges of Class A Shares of the Surviving Fund will be substantially similar to those with respect to shares of the Merging Fund, as described in this Combined Prospectus/Proxy Statement and the Surviving Fund's Prospectus and Statement of Additional Information. COMPARATIVE FEE AND EXPENSE TABLES The table below shows (i) information regarding the fees and expenses paid by each of the Merging Fund and the Surviving Fund that reflect current expense arrangements, (ii) estimated fees and expenses on a pro forma basis after giving effect to the Reorganization and the Feeder Reorganization but not the Chase Fund Reorganization and (iii) estimated fees and expenses on a pro forma basis for the Surviving Fund after giving effect to the Concurrent Reorganizations. Under the proposed Reorganization, holders of Shares in the Merging Fund will receive Class A Shares in the Surviving Fund. Please note that the Surviving Fund currently has one class of shares. In connection with the Reorganization, this class will be re-named "Institutional Class" and the Class A share class, the Class B share class, Class C share class and the Select share class will be introduced. The table indicates that while contractual (pre-waiver) total expense ratios for current shareholders of the Merging Fund are anticipated to be higher following the Reorganization, actual (post-waiver) total expense ratios for current shareholders of the Merging Fund are anticipated to be less or stay the same following the Reorganization. This is because Morgan has agreed to waive certain fees and/or reimburse certain expenses to ensure that actual total operating expenses do not increase for at least three years.
THE MERGING FUND THE SURVIVING FUND ------------------------ --------------------------- SHARES SHARES ------------------------ --------------------------- SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)-- Maximum Sales Charge (Load) when you buy shares, shown as % of the offering price .......................................... None None Maximum Deferred Sales Charge (Load) shown as lower of original purchase price or redemption proceeds .......... None None
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THE MERGING FUND THE SURVIVING FUND ------------------------ --------------------------- SHARES SHARES ------------------------ --------------------------- ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees...................... .40% 0.40% Distribution (12b-1) Fees............ .25% None Other Expenses....................... .53% 0.23% Total Annual Fund Operating Expenses. 1.18% 0.63% Fee Waivers and Expense Reimbursements(1)................. 0.13% None Net Expenses......................... 1.05% 0.63%
---------------------- (1) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the Fund to the extent operating expenses (which exclude interest, taxes, and extraordinary expenses) exceed 1.05% of average daily net assets with respect to the Merging Fund through 9/30/01.
Class A Shares ---------- SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)- Maximum Sales Charge (Load) when your buy shares, shown as % of the offering price ........................... None Maximum Deferred Sales Charge (Load) shown as lower of original purchase price or redemption proceeds.................................. None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees........................... 0.40% Distribution (12b-1) Fees................. 0.25% Other Expenses............................ 0.70% Total Annual Fund Operating Expenses...... 1.35% Fee Waivers and Expense Reimbursements(2). 0.30% Net Expenses.............................. 1.05% --------------------
6 (2) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the Fund to the extent operating expenses (which exclude interest, taxes, and extraordinary expenses) exceed 1.05% of average daily net assets with respect to Class A Shares for a period of three years after the Reorganization. CLASS A SHARES --------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)- Maximum Sales Charge (Load) when you buy shares, shown as % of the offering price ................................... 5.75% Maximum Deferred Sales Charge (Load) shown as lower of original purchase price or redemption proceeds ....................................... None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees ........................................... 0.40% Distribution (12b-1) Fees ................................. 0.25% Other Expense ............................................. 0.70% Total Annual Fund Operating Expense ................................................... 1.35% Fee Waivers and Expense Reimbursements .................................... 0.30%(A) Net Expenses .............................................. 1.05%
-------------------- (A) Reflects an agreement by Morgan, an affiliate of JPMC, to reimburse the Fund to the extent total operating expenses (excluding interest, taxes, and extraordinary expenses) exceed 1.05% of average daily net assets with respect to Class A Shares for three years after the Reorganization. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE: This example helps investors compare the cost of investing in the Funds with the cost of investing in other mutual funds. The example assumes: - You invest $10,000; - You sell all of your shares at the end of each period; - Your investment has a 5% return each year; and - Each Fund's operating expenses are waived for three years after the Reorganization and unwaived for the period thereafter and remain the same as shown above. 7 Although actual costs may be higher or lower, based upon these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------- ------- ------- -------- The Merging Fund.................... $107 $358 - - The Surviving Fund.................. $ 64 $202 $351 $786 PRO FORMA COMBINED THE SURVIVING FUND WITH FEEDER Class A Shares..................... $107 $398 $649 $1541 PRO FORMA COMBINED THE SURVIVING FUND WITH CONCURRENT REORGANIZATION Class A Shares...................... $676 $890 $1186 $2027 Class A Shares without sales charge $107 $398 $649 $1541
RISK FACTORS The following discussion highlights the principal risk factors associated with an investment in the Surviving Fund. The Surviving Fund has investment policies and investment restrictions, and therefore risks, identical to those of the Merging Fund. This discussion is qualified in its entirety by the more extensive discussion of risk factors set forth in the Prospectus and Statement of Additional Information of the Surviving Fund, which are incorporated herein by reference. All mutual funds carry a certain amount of risk. You may lose money on your investment in the Surviving Fund. The Surviving Fund may not achieve its objective if JPMIM's expectations regarding particular securities or markets are not met. The Surviving Fund could underperform its benchmark due to JPMIM's securities and asset allocation choices. In general, the value of an investment in the Surviving Fund will fluctuate in response to movements in the stock market. Adverse market conditions may from time to time cause the Fund to take temporary defensive positions that are inconsistent with its principal investment strategies and may hinder the Fund from achieving its investment objective. The Surviving Fund does not expect to invest more than 20% of its assets, at the time of purchase, in foreign securities, and therefore may be subject to risks in addition to those associated with U.S. securities. For example, international currency exchange rate movements could reduce gains or create losses. Additionally, the Surviving Fund could lose money because of foreign government actions, political instability or lack of adequate and/or accurate information. The Surviving Fund may buy when-issued and delayed delivery securities. The Surviving Fund may invest in derivatives such as futures, options, swaps and forward foreign currency contracts that are used for hedging the portfolio or specific securities. 8 These derivatives may not fully offset the underlying positions. This could result in losses to the Fund that would not have otherwise occurred. Derivatives used for risk management may not have the intended effects and may result in losses or missed opportunities. The counterparty to a derivatives contract could default. Certain types of derivatives involve costs to the Fund which can reduce returns. Derivatives that involve leverage could magnify losses. The Surviving Fund may lend some of its portfolio securities in order to earn income. When the Surviving Fund lends a security, there is a risk that the loaned securities may not be returned if the borrower defaults. The collateral the Surviving Fund receives from the borrower will be subject to the risks of the securities in which it is invested. The Surviving Fund may invest in illiquid securities. The Surviving Fund could have difficulty valuing these holdings precisely. The Surviving Fund could be unable to sell these securities at the time or price desired. The Surviving Fund may use short-term trading to take advantage of attractive or unexpected opportunities or to meet demands generated by shareholder activity. Increased trading would raise the Surviving Fund's transaction costs. Increased short-term capital gains distributions would raise shareholders' income tax liability. An investment in the Surviving Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. You could lose money if you sell when the Surviving Fund's share price is lower than when you invested. INFORMATION RELATING TO THE PROPOSED REORGANIZATION GENERAL The terms and conditions under which the Reorganization may be consummated are set forth in the Reorganization Plan. Significant provisions of the Reorganization Plan are summarized below; however, this summary is qualified in its entirety by reference to the Reorganization Plan, a copy of which is attached as Appendix A to this Combined Prospectus/Proxy Statement and which is incorporated herein by reference. DESCRIPTION OF THE REORGANIZATION PLAN The Reorganization Plan provides that at the Effective Time (as defined in the Reorganization Plan) of the Reorganization, the assets and liabilities of the Merging Fund will be transferred to and assumed by the Surviving Fund. In exchange for the transfer of the assets and the assumption of the liabilities of the Merging Fund, JPMF will issue at the Effective Time of the Reorganization full and fractional Class A 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 9 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 Class A Shares received by it to the Merging Fund Shareholders in liquidation of the Merging Fund. Each Merging Fund Shareholder at the Effective Time of the Reorganization will receive an amount of Class A Shares with a total net asset value equal to the net asset value of their Merging Fund Shares plus the right to receive any dividends or distributions which were declared before the Effective Time of the Reorganization but that remained unpaid at that time with respect to the shares of the Merging Fund. The Surviving Fund expects to maintain most of the portfolio investments of the Merging Fund in light of the identical investment policies of the Merging Fund and the Surviving Fund. Concurrently with the Reorganization, the Surviving Fund will cease to operate under a "master/feeder" structure and will instead invest directly in portfolio securities rather than in the Master Portfolio. After the Reorganization, all of the issued and outstanding shares of the Merging Fund shall be canceled on the books of the Merging Fund and the stock transfer books of the Merging Fund will be permanently closed. The Reorganization is subject to a number of conditions, including without limitation: approval of the Reorganization Plan and the transactions contemplated thereby described in this Combined Prospectus/Proxy Statement by the Merging Fund Shareholders; the receipt of a legal opinion from Simpson Thacher & Bartlett with respect to certain tax issues, as more fully described in "Federal Income Tax Consequences" below; and the parties' performance in all material respects of their respective agreements and undertakings in the Reorganization Plan. Assuming satisfaction of the conditions in the Reorganization Plan, the Effective Time of the Reorganization will be on August 11, 2001 or such other date as is agreed to by the parties. In addition, the consummation of the Reorganization is contingent upon the consummation of the Feeder Reorganization. The expenses of the Funds in connection with the Reorganization will be borne by JPMC. The Reorganization Plan and the Reorganization described herein may be abandoned at any time prior to the Effective Time of the Reorganization by either party if a material condition to the performance of such party under the Reorganization Plan or a material covenant of the other party is not fulfilled by the date specified in the Reorganization Plan or if there is a material default or material breach of the Reorganization Plan by the other party. In addition, either party may terminate the Reorganization Plan if its trustees determine that proceeding with the Reorganization Plan is not in the best interests of their Fund's shareholders. BOARD CONSIDERATIONS In 1993, the JPF Board and shareholders approved the restructuring of the Funds into their current "master-feeder" format, pursuant to which the Funds (the feeders) invested their 10 assets in a common Portfolio - the "master" - and shares of each Fund were sold to different categories of investors with different distribution and shareholder services and fees. Among other reasons for the 1993 restructuring was the opportunity to obtain the economies of scale from an investment and expense perspective that might come from the investment and administration of a larger pool of assets than any one fund could expect to have on its own. An important factor in the Board's decision at the time was that non-U.S. investors' assets would be invested alongside those of U.S. investors within the master Portfolio on a basis that was not disadvantageous to the non-U.S. investors from a U.S. tax perspective. For various reasons, the non-U.S. feeders withdrew their assets from the master commencing in 1997, thereby eliminating one of the principal reasons for the master-feeder format. Nevertheless, the Funds continued in that format and, the Board believes, conducted their operations on a basis at least as favorable to the Funds as would have obtained if the format had been abandoned, as is now proposed. Following the announcement of the J.P. Morgan-Chase merger, JPMIM and Morgan and their counterparts within the Chase organization reviewed the compatibilities of their various mutual fund groups, including their respective organizational structures, service providers, distribution arrangements and methodologies, and fees and expenses. The proposed Reorganization of the Merging Fund into the Surviving Fund is a part of the more general integration of the J.P. Morgan funds complex with the Chase Vista funds complex to create a single mutual fund complex with substantially similar arrangements for the provision of advisory, administration, distribution, custody and fund accounting and transfer agency services. The JPF Board believes that the conversion by way of the proposed Reorganization of the current master-feeder format into the multiclass format discussed in this proxy statement and the adoption of the service arrangements by the Surviving Fund described herein (the "Service Arrangements") are in the best interests of the Surviving and Merging Funds and their respective shareholders and that the interests of shareholders will not be diluted as a result of the Reorganization. In considering the proposed Reorganization and Service Arrangements, the JPF Board also noted that there were important benefits expected to arise out of the integration of the J.P. Morgan and Chase Vista mutual funds complexes. Among these benefits, the Board considered (1) investor and shareholder confusion should be mitigated if not eliminated by the adoption by both the J.P. Morgan and the Chase Vista mutual funds of common organizational structures and common service providers, (2) Surviving Fund shareholders would be able to exchange into a 11 larger number and greater variety of funds without paying sales charges, (3) additional share classes offered by the Surviving Fund should have a positive effect on asset growth, which in turn over time could result in a lower total expense ratio as economies of scale were realized; (4) JPMIM advised the Board that it believes that the outsourcing of many functions to the subadministrator will (a) upgrade the quality of services currently being provided to the Funds, and (b) enhance Morgan's ability effectively to monitor and oversee the quality of all Fund service providers, including the investment adviser, distributor, custodian and transfer agent; (5) Morgan's undertaking for three years to waive fees or reimburse the Surviving Fund's expenses in order that the total expense ratios of the Select and Institutional Classes do not exceed those of the Merging Fund and the Surviving Fund, respectively; (6) the fact that all costs and expenses of the Reorganization and implementation of the Service Arrangements would be borne by JPMC and (7) the fact that the Reorganization would constitute a tax-free reorganization. In addition, the Board took into account that, notwithstanding the increase in the contract fee rate of Morgan, J.P. Morgan agreed to increase from one to three years noted above its undertaking to cap the total expense ratio on the Select and Institutional Classes and to institute a breakpoint in the Administration fee from .15% of the average daily net assets in the aggregate of all funds in the fully integrated funds group to .075% of such assets over [$25] billion (the aggregate of such assets being [$19] billion as of March 31, 2001). Moreover, JPMIM agreed that, notwithstanding its proposed increase to $1 million of the minimum investment in the Select Class, all current shareholders of the Merging Fund (for which the current minimum is $2,500) will be entitled to make additional investments in the Select Class of the Surviving Fund or of any other fund in the integrated fund complex or to exchange shares of the Select Class of the Surviving Fund for Select Shares of any other such fund. The Board also noted that J.P. Morgan did not propose and advised that it does not expect to propose the imposition of any distribution (12b-1) fees or shareholder servicing fees on the Select or Institutional Class that are not already in place. Finally the Board was advised that the custody and fund accounting fees to be charged by Chase Global Investors Services will be lower than those currently charged by The Bank of New York. It should be recognized that, at current asset levels and in consequence of the expense cap, the lower custody and fund accounting fees will not have an immediate effect on the Surviving Fund's total expense ratio but should have some positive effect in the future. Based upon their evaluation of the relevant information provided to them, the changes effected in the Service Arrangements in the negotiations between the Trustees and J.P. Morgan, and in light of their fiduciary duties under federal and state law, the Trustees, including a majority who are not interested persons of the Funds or JPMC as defined in the 1940 Act, determined that the proposed Reorganization is in the best interests of both the Merging and Surviving Fund, that the interests of the shareholders of each of the Merging Fund and the Surviving Fund would not be diluted as a result of the Reorganization, and that the Service Arrangements are in the best interests of the Surviving Fund. THE JPMF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL. 12 The JPMF Board has not determined what action the Merging Fund will take in the event shareholders do not approve the Reorganization Plan or for any reason the Reorganization is not consummated. In either such event, the Board will consider other appropriate courses of action. INFORMATION RELATING TO THE CONCURRENT REORGANIZATIONS The terms and conditions under which the Concurrent Reorganizations may be consummated are set forth in reorganization plans which are substantially similar to the Reorganization Plan you are in considering. Concurrently with the Reorganization and Feeder Reorganization, the Surviving Fund will cease to operate under a "master/feeder" structure and will instead invest directly in portfolio securities rather than in the Master Portfolio. The consummation of the Chase Fund Reorganization is contingent upon the consummation of the Reorganization and the Feeder Reorganization. FEDERAL INCOME TAX CONSEQUENCES Consummation of the Reorganization is subject to the condition that JPMF receive an opinion from Simpson Thacher & Bartlett to the effect that for federal income tax purposes: (i) the transfer of all of the assets and liabilities of the Merging Fund to the Surviving Fund in exchange for the Class A Shares and the liquidating distributions to shareholders of the Class A 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 Class A 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 Class A Shares will be determined by including the period for which such Merging Fund Shareholder held the Merging Fund Shares exchanged therefor, provided that the Merging Fund Shareholder held such Merging Fund Shares as a capital asset; and (viii) the Surviving Fund's holding period with respect to the assets received in the Reorganization will include the period for which such assets were held by the Merging Fund. The Master Portfolio currently has an aggregate basis in its assets that is higher than the aggregate basis of all of the partnership interests in the Master Portfolio. Upon consummation of the Reorganization, the Surviving Fund will have an aggregate basis in its assets equal to the aggregate basis of the partnership interests in the Master Portfolio held by the Merging Fund and the Surviving Fund immediately prior to the Reorganization rather than the higher aggregate basis that such assets had in the hands of the Master Portfolio. Thus, the benefit of such higher basis will be lost upon consummation of the Reorganization. JPMF has not sought a tax ruling from the Internal Revenue Service (the "IRS"), but is acting in reliance upon the opinion of counsel discussed in the previous paragraph. That opinion is not binding on the IRS and does not preclude the IRS from adopting a contrary position. Shareholders should consult their own advisers concerning the potential tax consequences to them, including state and local income taxes. 13 CAPITALIZATION Because the Merging Fund will be combined with the Surviving Fund in the Reorganization as well as the Feeder Advisor Portfolio as a result of the Concurrent Reorganizations, the total capitalization of the Surviving Fund after the Reorganization and the Concurrent Reorganizations is expected to be greater than the current capitalization of the Merging Fund. The following tables sets forth as of November 30, 2000: (i) the capitalization of the Merging Fund; (ii) the capitalization of the Surviving Fund and (iii) the pro forma capitalization of the Surviving Fund as adjusted to give effect to the Concurrent Reorganizations. There is, of course, no assurance that the Reorganization and the Concurrent Reorganizations will be consummated. Moreover, if consummated, the capitalizations of the Surviving Fund and the Merging Fund are likely to be different at the Effective Time of the Reorganization as a result of fluctuations in the value of portfolio securities of each Fund and daily share purchase and redemption activity in each Fund. The Surviving Fund currently has one class of shares. In connection with the Reorganization, this class will be renamed Institutional Class and the Class A share class, Class B share class, Class C share class, and the Select share class will be introduced. CAPITALIZATION PRO FORMA WITH CONCURRENT REORGANIZATION
BENEFICIAL NET ASSET INTEREST SHARES VALUE PER OUTSTANDING OUTSTANDING NET ASSETS SHARE ----------- ------------- ---------- --------------- J.P MORGAN FUNDS J.P. Morgan U.S. Equity Fund -- Advisor Series (the Merging Fund) 53,157 - 475,351 8.94 J.P. Morgan U.S. Equity Fund 16,611,076 - 343,997,623 20.71 J.P. Morgan Institutional U.S. Equity Fund (the Surviving Fund) 15,051,872 - 183,470,628 12.19 JPMORGAN LARGE CAP EQUITY FUND Class A - 3,980,818 60,636,740 15.23 Class B - 1,780,660 26,905,354 15.11 Class C - 124,782 1,876,100 15.04 Institutional - 7,076,121 108,285,188 15.30 PRO FORMA COMBINED WITH CONCURRENT REORGANIZATION Class A - 5,013,616 61,112,083 12.19 Class B - 2,207,306 26,905,349 12.19 Class C - 153,915 1,876,106 12.19 Select - 37,105,139 452,282,818 12.19 Institutional - 15,051,872 183,470,628 12.19
(1) Formerly, Chase Vista Large Cap Equity Fund PURCHASES, REDEMPTIONS AND EXCHANGES Following the Reorganization, the procedures for purchases, redemptions and exchanges of shares of the Surviving Fund will be substantially similar to those of the Merging Fund. The Surviving Fund currently has one class of shares. In connection with the Reorganization and the Concurrent Reorganizations, this class will be renamed "Institutional Class" and the Class A share class, Class B share class, Class C share class and Select Class share class will be introduced. The following discussion reflects the new class structure. This section is qualified 14 in its entirety by the discussion in the Prospectus and Statement of Additional Information of the Surviving Fund, which are incorporated herein by reference. 12b-1 FEES JFD is the distributor for the Surviving Fund. The Surviving Fund will adopt a Rule 12b-1 distribution plan for Class A Shares under which it will pay annual distribution fees of up to 0.25% of the average daily net assets attributable to Class A Shares. A similar 12b-1 distribution plan (with annual distribution fees of up to 0.25%) is currently in effect for shares of the Merging Fund. This payment covers such things as compensation for services provided by broker-dealers and expenses connected with the sale of shares. Payments are not tied to actual expenses incurred. Because 12b-1 expenses are paid out of the Surviving Fund's assets on an ongoing basis, over time these fees will increase the cost of a shareholder's investment and may cost more than other types of sales charges used by other mutual funds. There is no Rule 12b-1 distribution plan for the Select Class Shares or the Institutional Class Shares of the Surviving Fund. BUYING SURVIVING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF THE CLASS A SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS STRUCTURE. The price shareholders pay for their shares is the net asset value per share (NAV), plus any applicable sales charge. However, shareholders who receive Class A Shares as a result of the Reorganization will not be required to pay a sales charge on future purchases of Class A Shares of the Surviving Fund future purchases of Class A shares of other JPMorgan Funds or exchanges into Class A shares of other JPMorgan Funds. NAV is the value of everything the Surviving Fund owns, minus everything it owes, divided by the number of shares held by investors. The Surviving Fund generally values its assets at fair market values but may use fair value if market prices are unavailable. The NAV of each class of the Surviving Fund's shares is generally calculated once each day at the close of regular trading on the New York Stock Exchange. A shareholder will pay the next NAV calculated after the JPMorgan Funds Service Center (the "Center") receives that shareholder's order in proper form. An order is in proper form only after payment is converted into federal funds. The Center accepts purchase orders on any business day that the New York Stock Exchange is open. If an order is received in proper form by the close of regular trading on the New York Stock Exchange, it will be processed at that day's price and the purchaser will be entitled to all dividends declared on that day. If an order is received after the close of regular trading on the New York Stock Exchange, it will generally be processed at the next day's price. If a purchaser pays by check for Surviving Fund shares before the close of regular trading on the 15 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. Class A Shares of the Surviving Fund generally may be purchased only through financial service firms, such as broker-dealers and banks that have an agreement with the Fund or the Fund's distributor. For Class A Shares, checks should be made out to JPMorgan Funds in U.S. dollars. Credit cards, cash, or checks from a third party will not be accepted. Shares bought by check may not be sold for 15 calendar days. Shares bought through an automated clearing house cannot be sold until the payment clears. This could take more than seven business days. Purchase orders will be canceled if a check does not clear and the investor will be responsible for any expenses and losses to the Fund. Orders by wire will be canceled if the Center does not receive payment by 4:00 p.m., Eastern time, on the day the shareholder buys. Shareholders seeking to buy Class A Shares through an investment representative should instruct their representative to contact the Surviving Fund. Such representatives may charge investors a fee and may offer additional services, such as special purchase and redemption programs, "sweep" programs, cash advances and redemption checks. Such representative may set different minimum investments and earlier cut-off times. A systematic investment plan is available for Class A Shares. SELLING SURVIVING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE CLASS A SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS STRUCTURE. Class A Shares of the Surviving Fund may be sold on any day the Center is open for trading, either directly to the Fund or through an investment representative. Shareholders of the Surviving Fund will receive the next NAV calculated after the Center accepts his or her sale order less any applicable deferred sales charge. Under normal circumstances, if a request is received before the close of regular trading on the New York Stock Exchange, the Surviving Fund will send the proceeds the next business day. An order to sell shares will not be accepted if the Surviving Fund has not collected payment for the shares. The Surviving Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit. Generally, proceeds are sent by check, electronic transfer or wire for Class A shares. However, if a shareholder's address of record has changed within the 30 days prior to the sale 16 request or if more than $25,000 of shares is sold by phone, proceeds will be sent by electronic transfer or wire only to the bank account on the Surviving Fund's records. For Class A Shares, a shareholder will need to have his or her signature guaranteed if he or she wants payment to be sent to an address other than the one in the Surviving Fund's records. Additional documents or a letter from a surviving joint owner may also be needed. A shareholder who purchased through an investment representative, or through a financial service firm, should contact that representative, who will send the necessary documents to the Center. The representative might charge a fee for this service. Shareholders may also sell their shares by contacting the Center directly. Class A shareholders may call 1-800-_______. A systematic withdrawal plan is available for Class A Shares. EXCHANGING SURVIVING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF THE CLASS A SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION. Class A Shares of the Surviving Fund may be exchanged for shares of the same class in certain other JPMorgan Funds. For tax purposes, an exchange is treated as a sale of those shares. Shareholders should carefully read the prospectus of the fund into which they want to exchange. Shareholders who exchange must meet any minimum investment requirements and may have to pay a sales commission. 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 Class A Shares, the Surviving Fund may close an account if the balance falls below $500. The Surviving Fund may also close the account if an investor is in the systematic investment plan and fails to meet investment minimums over a 12-month period. At least 60 days' notice will be given before closing the account. Unless a shareholder indicates otherwise on his or her account application, the Surviving Fund is authorized to act on redemption and transfer instructions received by phone. If someone trades on an account by phone, the Surviving Fund will ask that person to confirm the account registration and address to make sure they match those in the Fund records. If they do correspond, the Surviving Fund is generally authorized to follow that person's instructions. The Surviving Fund will take all reasonable precautions to confirm that the instructions are genuine. 17 Investors agree that they will not hold the Surviving Fund liable for any loss or expenses from any sales request, if the Fund takes reasonable precautions. The Surviving Fund will be liable for any losses to a shareholder from an unauthorized sale or fraud against such shareholder if the Surviving Fund does not follow reasonable procedures. It may not always be possible to reach the Center by telephone. This may be true at times of unusual market changes and shareholder activity. In that event, shareholders can mail instructions to the Surviving Fund or contact their investment representative or agent. The Fund may modify or cancel the sale of shares by phone without notice. JPMF, on behalf of the Surviving Fund, has entered into agreements with certain shareholder servicing agents (including Chase) under which the shareholder servicing agents will agree to provide certain support services to their customers. For performing these services, each shareholder servicing agent will receive an annual fee of up to 0.25% of the average daily net assets of the Class A 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 JFD may, at their own expense, make additional payments to certain selected dealers or other shareholder servicing agents for performing administrative services for their customers. The Surviving Fund will issue multiple classes of shares. Each class may have different requirements for who may invest, and may have different sales charges and expense levels. A person who gets compensated for selling Class A Shares may receive a different amount for each class. DISTRIBUTIONS AND TAXES The Surviving Fund can earn income and realize capital gain. The Surviving Fund will deduct from these earnings any expenses and then pay to shareholders the distributions. The Surviving Fund typically distributes any net investment income at least monthly. Net capital gain, if any, is distributed annually. You have three options for your Surviving Fund distributions. You may: - reinvest all of them in additional Surviving Fund shares without a sales charge; - take distributions of net investment income in cash or as a deposit in a pre-assigned bank account and reinvest distributions of net capital gain in additional shares; or - 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. 18 If you receive distributions of net capital gain, the tax rate will be based on how long the Surviving Fund held a particular asset, not on how long you have owned your shares. If you buy shares just before a distribution, you will pay tax on the entire amount of the taxable distribution you receive, even though the NAV will be higher on that date because it includes the distribution amount. Early in each calendar year, the Surviving Fund will send its shareholders a notice showing the amount of distributions received in the preceding year and the tax status of those distributions. The above is only a general summary of tax implications of investing in the Surviving Fund. Shareholders should consult their tax advisors to see how investing in the Surviving Fund will affect their own tax situation. COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S ORGANIZATION STRUCTURE There are no material differences in the organizational structure of the Merging Fund and the Surviving Fund. Set forth below are descriptions of the structure, voting rights, shareholder liability and the liability of Trustees. STRUCTURE OF THE MERGING FUND AND THE SURVIVING FUND Each of the Merging Fund and the Surviving Fund is organized as a series of JPMF, which is organized under the law of the Commonwealth of Massachusetts. As a Massachusetts business trust, JPMF's operations are governed by JPMF's Declaration of Trust and By-Laws and applicable Massachusetts law. The operations of the Merging 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 and the Surviving Fund is managed by JPMF's Trustees, who serve indefinite terms and have all powers necessary or convenient to carry out their responsibilities. Information concerning the current Trustees and officers of JPMF is set forth in the Funds' respective Statements of Additional Information, which are incorporated herein by reference. SHARES OF FUNDS JPMF is a trust with an unlimited number of authorized shares of beneficial interest which may be divided into series or classes thereof. Each Fund is one series of a trust and may issue multiple classes of shares. Each share of a series or class of a trust represents an equal proportionate interest in that series or class with each other share of that series or class. The shares of each series or class of JPMF participate equally in the earnings, dividends and assets of the particular series or class. Fractional shares have proportionate rights to full shares. Expenses 19 of JPMF that are not attributable to a specific series or class will be allocated to all the series of that trust in a manner believed by its board to be fair and equitable. Generally, shares of each series will be voted separately, for example, to approve an investment advisory agreement. Likewise, shares of each class of each series will be voted separately, for example, to 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. JPMF is not 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 JPMF. SHAREHOLDER VOTING RIGHTS A vacancy in the Board of JPMF resulting from the resignation of a Trustee or otherwise may be filled similarly by a vote of a majority of the remaining Trustees then in office, subject to the 1940 Act. In addition, Trustees may be removed from office by a vote of holders of shares representing two-thirds of the outstanding shares of each portfolio of that trust. A meeting of shareholders shall be held upon the written request of the holders of shares representing not less than 10% of the outstanding shares entitled to vote on the matters specified in the written request. Except as set forth above, the Trustees may continue to hold office and may appoint successor Trustees. SHAREHOLDER LIABILITY Under Massachusetts law, shareholders of JPMF could, under certain circumstances, be held personally liable as partners for the obligations of that trust. However, the Declaration of Trust of JPMF disclaims shareholder liability for acts or obligations of that trust and provides for indemnification and reimbursement of expenses out of trust property for any shareholder held personally liable for the obligations of that trust. JPMF may maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of that trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability generally is limited to circumstances in which both inadequate insurance existed and the trust itself was unable to meet its obligations. LIABILITY OF DIRECTORS AND TRUSTEES Under the Declaration of Trust of JPMF, the Trustees of that trust are personally liable only for bad faith, willful misfeasance, gross negligence or reckless disregard of their duties as Trustees. Under the Declaration of Trust of JPMF, a Trustee or officer will generally be indemnified against all liability and against all expenses reasonably incurred or paid by such person in connection with any claim, action, suit or proceeding in which such person becomes involved as a party or otherwise by virtue of such person being or having been a Trustee or officer and against amounts paid or incurred by such person in the settlement thereof. The foregoing is only a summary of certain organizational and governing documents and Massachusetts business trust law. It is not a complete description. Shareholders should refer to the provisions of these documents and state law directly for a more thorough comparison. Copies 20 of the Declaration of Trust and By-Laws of JPMF are available without charge upon written request to that trust. INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES GENERAL INFORMATION As noted above, the assets of the Surviving Fund currently invested in the Master Portfolio are managed by JPMIM pursuant to an Advisory Agreement between JPMIM and the Master Portfolio, and JPMIM is responsible for the day-to-day management of the Surviving Fund's assets. Following the Reorganization and the Concurrent Reorganizations, the Surviving Fund's assets will be managed directly by JPMIM pursuant to an Advisory Agreement substantially similar to the agreement between the Master Portfolio and JPMIM. DESCRIPTION OF JPMIM JPMIM is an indirect wholly-owned subsidiary of JPMC incorporated under the laws of Delaware. JPMIM's principal executive offices are located at 522 Fifth Avenue, New York, New York 10036. JPMIM, a registered investment advisor, manages employee benefit funds of corporations, labor unions and state and local governments and the accounts of other institutional investors, including investment companies. As of _______ __, 2001, JPMIM and certain of its affiliates provided investment management services with respect to assets of approximately $___ billion. Under the Advisory Agreement, JPMIM will be responsible for making decisions with respect to, and placing orders for, all purchases and sales of the portfolio securities of the Surviving Fund. JPMIM's responsibilities under the Advisory Agreement will include supervising the Surviving Fund's investments and maintaining a continuous investment program, placing purchase and sale orders and paying costs of certain clerical and administrative services involved in managing and servicing the Surviving Fund's investments and complying with regulatory reporting requirements. The services to be provided to the Surviving Fund by JPMIM are substantially similar to the services currently provided to the Master Portfolio and, therefore, indirectly to the Merging Fund by JPMIM. EXPENSES AND MANAGEMENT FEES. The Advisory Agreement provides that the Surviving Fund will pay JPMIM a monthly management fee based upon the net assets of the Surviving Fund. The annual rate of this management fee is 0.40%. The Master Portfolio and, therefore, indirectly the Merging Fund also currently pay 0.40% of average net assets to JPMIM for its advisory services. JPMIM may waive fees from time to time. Under the Advisory Agreement, except as indicated above, the Surviving Fund is responsible for its operating expenses including, but not limited to, taxes; interest; fees (including fees paid to its Trustees who are not affiliated with JPMIM or any of its affiliates); fees payable to the Commission; state securities qualification fees; association membership dues; costs of preparing and printing prospectuses for regulatory purposes and for distribution to existing shareholders; management and administrative fees; charges of the custodian and transfer agent; insurance premiums; auditing and legal expenses; costs of shareholders' reports and 21 shareholder meetings; any extraordinary expenses; and brokerage fees and commissions, if any, in connection with the purchase or sale of portfolio securities. LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMIM will not be liable for any error of judgment or mistake of law or for any act or omission or loss suffered by JPMF or the Surviving Fund in connection with the performance of the Advisory Agreement except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or from willful misfeasance, bad faith, or gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the Advisory Agreement. DURATION AND TERMINATION. The Advisory Agreement will continue in effect from year to year with respect to the Surviving Fund, only so long as such continuation is approved at least annually by (i) the Board of Trustees of JPMF or the majority vote of the outstanding voting securities of the Surviving Fund, and (ii) a majority of those Trustees who are neither parties to the Advisory Agreement nor "interested persons," as defined in the 1940 Act, of any such party, acting in person at a meeting called for the purpose of voting on such approval. The Advisory Agreement will terminate automatically in the event of its "assignment," as defined in the 1940 Act. In addition, the Advisory Agreement is terminable at any time as to the Surviving Fund without penalty by the JPMF Board or by vote of the majority of the Surviving Fund's outstanding voting securities upon 60 days' written notice to JPMIM, and by JPMIM on 90 days' written notice to JPMF. PORTFOLIO MANAGER The portfolio management team for the Surviving Fund is comprised of 23 research analysts, who select stocks in their respective sectors. Henry D. Cavanna, managing director, and Bradford L. Frishberg, vice president, oversee the portfolio and manage its cash flows. Mr. Cavanna joined the team in February of 1998, and has been at JPMIM since 1971. He served as manager of U.S. equity portfolios prior to managing the fund. Mr. Frishberg has been at JPMIM since 1996 and is a portfolio manager in the equity and balanced groups. Prior to joining J.P. Morgan, he managed portfolios for Aetna Investment Management in Hong Kong. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS JPMIM places orders for the Surviving Fund for all purchases and sales of portfolio securities, enters into repurchase agreements, and may enter into reverse repurchase agreements and execute loans of portfolio securities on behalf of the Surviving Fund. Fixed income and debt securities and municipal bonds and notes are generally traded at a net price with dealers acting as principal for their own accounts without a stated commission. The price of the security usually includes profit to the dealers. In underwritten offerings, securities are purchased at a fixed price which includes an amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. On occasion, certain securities may be purchased directly from an issuer, in which case no commissions or discounts are paid. 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 22 level of interest rates. The Surviving Fund may engage in short-term trading consistent with its objectives. In connection with portfolio transactions, JPMIM intends to seek best execution on a competitive basis for both purchases and sales of securities. Subject to the overriding objective of obtaining the best execution of orders, JPMIM may allocate a portion of the Surviving Fund's brokerage transactions to affiliates of JPMIM. Under the 1940 Act, persons affiliated with the Surviving Fund and persons who are affiliated with such persons are prohibited from dealing with the fund as principal in the purchase and sale of securities unless a permissive order allowing such transactions is obtained from the Commission. However, affiliated persons of the fund may serve as its broker in listed or over-the-counter transactions conducted on an agency basis provided that, among other things, the fee or commission received by such affiliated broker is reasonable and fair compared to the fee or commission received by non-affiliated brokers in connection with comparable transactions. In addition, the Surviving Fund may not purchase securities during the existence of any underwriting syndicate for such securities of which JPMIM or an affiliate is a member or in a private placement in which JPMIM or an affiliate serves as placement agent except pursuant to procedures adopted by the Board of Trustees that either comply with rules adopted by the Commission or with interpretations of the Commission's staff. Investment decisions made by JPMIM are the product of many factors in addition to basic suitability for the particular fund or other client in question. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling the same security. The Surviving Fund may only sell a security to other portfolios or accounts managed by JPMIM or its affiliates in accordance with procedures adopted by the Trustees. It also sometimes happens that two or more clients simultaneously purchase or sell the same security. On those occasions when JPMIM deems the purchase or sale of a security to be in the best interests of the Surviving Fund, as well as other clients including other funds, JPMIM, to the extent permitted by applicable laws and regulations, may, but is not obligated to, aggregate the securities to be sold or purchased for the Surviving Fund with those to be sold or purchased for other clients in order to obtain best execution, including lower brokerage commissions if appropriate. In such event, allocation of the securities so purchased or sold as well as any expenses incurred in the transaction will be made by JPMIM in the manner it considers to be most equitable and consistent with JPMIM's fiduciary obligations to the Surviving Fund. In some instances, this procedure might adversely affect the Surviving Fund. OTHER SERVICES JFD, a wholly owned, indirect subsidiary of BISYS Fund Services, Inc., which currently serves as the Merging Fund's distributor and sub-administrator, is the distributor and sub-administrator for the Surviving Fund. JFD is unaffiliated with JPMC or any of its subsidiaries. Morgan serves as administrator and shareholder servicing agent, BONY serves as fund accountant and custodian, and DST serves as transfer agent and dividend disbursing agent for the Surviving Fund. The services provided by Morgan and BONY include day-to-day maintenance In connection with the Reorganization, the administration fee paid to Morgan will increase to 0.15% of average daily net assets on the first $26 billion of complex wide non-money market assets and 0.075% on complex wide non-money market assets in excess of $26 billion. 23 of certain books and records, calculation of the offering price of the shares and preparation of reports. In its role as custodian, BONY will be responsible for the daily safekeeping of securities and cash held by the Surviving Fund. It is anticipated that prior to the consummation of the Reorganization, Chase will become the Surviving Fund's fund accountant and custodian. 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. All shareholders of any series of JPMF as of the record date (April 16, 2001) are required to be given a vote on the proposal regarding Trustees. Because as of the record date you are a shareholder in JPMF, you are entitled to vote on this proposal. In connection with the merger of J.P. Morgan & Co. Incorporated and The Chase Manhattan Corporation, it has been proposed, subject to shareholder approval, that the Boards of Trustees of the investment companies managed by JPMIM and their affiliates be rationalized in order to obtain additional operating efficiencies by having the same Board of Trustees for all of the funds. Therefore, the Nominees include certain current Trustees of JPMF and certain current Trustees of JPMF (including certain members of their respective Advisory Boards). Each Nominee has consented to being named in this Proxy Statement and has agreed to serve as a Trustee if elected. Shareholders of JPMF are concurrently considering the election of the same individuals to the Board of Trustees of JPMF. Biographical information about the Nominees and other relevant information is set forth below. More information regarding the current Trustees of JPMF is contained in either of the Fund's Statements of Additional Information, which are incorporated herein by reference. The persons named in the accompanying form of proxy intend to vote each such proxy "FOR" the election of the Nominees, unless shareholders specifically indicate on their proxies the desire to withhold authority to vote for elections to office. It is not contemplated that any Nominee will be unable to serve as a Board member for any reason, but if that should occur prior to the Meeting, the proxy holders reserve the right to substitute another person or persons of their choice as nominee or nominees. THE JPMF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES LISTED BELOW. VOTE REQUIRED The election of each of the Nominees listed below requires the affirmative vote of a majority of all the votes entitled to be cast at the Meeting by all shareholders of JPMF. The following are the nominees: ------------------- ------------------ 24 The Board of Trustees of JPMF met four times during the fiscal year ended May 31, 2000, and each of the Trustees attended at least 75% of the meetings. The Board of Trustees of JPMF presently has an Audit Committee. The members of the Audit Committee are Messrs. Addy (Chairman), Eschenlauer, Burns, Mallardi and Healey. The function of the Audit Committee is to recommend independent auditors and monitor accounting and financial matters. The Audit Committee met four times during the fiscal year ended May 31, 2000. * Interested Trustee, as defined by the 1940 Act. REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS: Each Trustee is reimbursed for expenses incurred in attending each meeting of the Board of Trustees or any committee thereof. Each Trustee who is not an affiliate of JPMIM is compensated for his or her services according to a fee schedule which recognizes the fact that each Trustee also serves as a Trustee of other investment companies advised by JPMIM. Each Trustee receives a fee, allocated among all investment companies for which the Trustees serves. Annually, each Trustee receives $75,000. Set forth below is information regarding compensation paid or accrued during the calendar year ended December 31, 2000 for each Trustee of JPMF:
Total Trustee Aggregate Trustee Compensation Accrued Compensation Paid by by Fund Complex(1) the Trust During 2000 During 2000(2) --------------------- -------------------- Matthew Healey, Trustee(3), Chairman and Chief Executive Officer $23,538 $75,000 Frederick S. Addy, Trustee $23,538 $75,000 William G. Burns, Trustee $23,538 $75,000 Arthur C. Eschenlauer, Trustee $23,538 $75,000 Michael P. Mallardi, Trustee $23,538 $75,000 ------------------------
(1) A Fund Complex means two or more investment companies that hold themselves out to investors as related companies for purposes of investment and investment services, or have a common investment adviser or have an investment adviser that is an affiliated person of the investment adviser of any of the other investment companies. (2) No investment company within the Fund Complex has a pension or retirement plan. (3) During 2000, Pierpont Group, Inc. paid Mr. Healey, in his role as Chairman of Pierpont Group, Inc., compensation in the amount of $200,000, contributed $25,500 to a defined contribution plan on his behalf and paid $18,400 in insurance premiums for his benefit. The Trustees decide upon general policies and are responsible for overseeing JPMF's business affairs. Each of JPMF and the Master Portfolio has entered into a Fund Services Agreement with Pierpont Group, Inc. to assist the Trustees in exercising their overall supervisory responsibilities. Pierpont Group, Inc. was organized in July 1989 to provide services for the J.P. 25 Morgan Family of Funds (formerly "The Pierpont Family of Funds"), and the Trustees are the equal and sole shareholders of Pierpont Group, Inc. JPMF has agreed to pay Pierpont Group, Inc. a fee in an amount representing its reasonable costs in performing these services. These costs are periodically reviewed by the Trustees. The principal offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York, New York 10017. It is anticipated that the Fund will terminate its agreement with Pierpont Group, Inc. in connection with the Reorganization. The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund, the Surviving Fund and the Master Portfolio during the indicated fiscal periods are set forth below: MERGING FUND--For the fiscal years ended May 31, 1998, 1999 and 2000: $______, $______ and $_____, respectively. SURVIVING FUND -- For the fiscal years ended May 31, 1998, 1999 and 2000: $12,419, $7,659 and $4,651, respectively. MASTER PORTFOLIO --For the fiscal years ended May 31, 1998, 1999 and 2000: $30,613, $18,019 and $12,016, respectively. ADVISORY BOARD The Trustees determined as of January 26, 2000 to establish an advisory board and appoint four members ("Members of the Advisory Board") thereto. Each member serves at the pleasure of the Trustees. The advisory board is distinct from the Trustees and provides advice to the Trustees as to investment, management and operations of JPMF; but has no power to vote upon any matter put to a vote of the Trustees. The advisory board and the members thereof also serve each of the other trusts in the Fund Complex. The creation of the Advisory Board and the appointment of the members thereof was designed so that the Board of Trustees will continuously consist of persons able to assume the duties of Trustees and be fully familiar with the business and affairs of JPMF, in anticipation of the current Trustees reaching the mandatory retirement age of seventy. Each Member of the Advisory Board is paid an annual fee of $75,000 for serving in this capacity for the Fund Complex and is reimbursed for expenses incurred in connection for such service. The Members of the Advisory Board may hold various other directorships unrelated to these funds. The mailing address of the Members of the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth Avenue, New York, New York 10017. Their names, principal occupations during the past five years and dates of birth are set forth below: Ann Maynard Gray -- President, Diversified Publishing Group and Vice President, Capital Cities/ABC, Inc. Her date of birth is August 22, 1945. John R. Laird-- Retired; Former Chief Executive Officer, Shearson Lehman Brothers and The Boston Company. His date of birth is June 21, 1942. Gerard P. Lynch -- Retired; Former Managing Director, Morgan Stanley Group and President and Chief Operating Officer, Morgan Stanley Services, Inc. His date of birth is October 5, 1936. 26 James J. Schonbachler -- Retired; Prior to September, 1998, Managing Director, Bankers Trust Company and Chief Executive Officer and Director, Bankers Trust A.G., Zurich and BT Brokerage Corp. His date of birth is January 26, 1943. PRINCIPAL EXECUTIVE OFFICERS: The principal executive officers of JPMF are as follows: NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION ----------------- -------- ---------------------------------------------- Matthew Healey 63 Chief Executive Officer; Chairman, Pierpont Group, since prior to 1993. His address is Pine Tree Country Club Estates, 10286 Saint Andrews Road, Boynton Beach, Florida 33436. Margaret W. Chambers 41 Executive Vice President and General Counsel of JFD since April, 1998. From August 1996 to March 1998, Ms. Chambers was Vice President and Assistant General Counsel for Loomis, Sayles & Company, L.P. From January 1986 to July 1996, she was an associate with the law firm of Ropes & Gray. George A. Rio 46 President and Treasurer. Executive Vice President and Client Service Director of JFD since April 1998. From June 1995 to March 1998, Mr. Rio was Senior Vice President and Senior Key Account Manager for Putnam Mutual Funds. 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 engages it to do so. AUDIT FEES. The aggregate fees paid to PricewaterhouseCoopers LLP in connection with the annual audit of the Merging Fund and the Master Portfolio for the last fiscal year was $37,500. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The aggregate fees billed for financial systems design and implementation services rendered by PricewaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's affiliates that provide services to the Fund for the calendar year ended December 31, 2000 was $0. ALL OTHER FEES. The aggregate fees billed for all other non-audit services, including fees for tax-related services, rendered by PricewaterhouseCoopers LLP to the Merging Fund, JPMIM and JPMIM's affiliates that provide services to the Fund for the calendar year ended December 31, 2000 was $11,025,600. The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of PricewaterhouseCoopers LLP. 27 INFORMATION RELATING TO VOTING MATTERS GENERAL INFORMATION This Combined Prospectus/Proxy Statement is being furnished in connection with the solicitation of proxies by the JPMF Board for use at the Meeting. It is expected that the solicitation of proxies will be primarily by mail. JPMF's officers and service providers may also solicit proxies by telephone, facsimile machine, telegraph, the Internet or personal interview. In addition JPMF may retain the services of professional solicitors to aid in the solicitation of proxies for a fee. It is anticipated that banks, brokerage houses and other custodians will be requested on behalf of JPMF to forward solicitation materials to their principals to obtain authorizations for the execution of proxies. Any Merging Fund Shareholder giving a proxy may revoke it at any time before it is exercised by submitting to JPMF a written notice of revocation or a subsequently executed proxy or by attending the Meeting and electing to vote in person. Only the Merging Fund Shareholders of record at the close of business on _________, 2001 will be entitled to vote at the Meeting. On that date, there were outstanding and entitled to be voted _____________ Merging Fund Shares. Each share or fraction thereof is entitled to one vote or fraction thereof. The presence in person or by proxy of shareholders that own one-third of the outstanding Merging Fund Shares will constitute a quorum for purposes of transacting all business at the Meeting. If a quorum is not present at the Meeting, sufficient votes in favor of the proposals are not received by the time scheduled for the Meeting, or the Merging Fund Shareholders determine to adjourn the Meeting for any other reason, the Merging Fund Shareholders present (in person or proxy) may adjourn the Meeting from time to time, without notice other than announcement at the Meeting. Any such adjournment will require the affirmative vote of the Merging Fund Shareholders holding a majority of the Merging Fund Shares present, in person or by proxy, at the Meeting. The persons named in the Proxy will vote in favor of such adjournment those Merging Fund Shares that they are entitled to vote if such adjournment is necessary to obtain a quorum or if they determine such an adjournment is desirable for any other reason. Business may be conducted once a quorum is present and may continue until adjournment of the Meeting notwithstanding the withdrawal or temporary absence of sufficient Merging Fund Shares to reduce the number present to less than a quorum. If the accompanying proxy is executed and returned in time for the Meeting, the shares covered thereby will be voted in accordance with the proxy on all matters that may properly come before the meeting (or any adjournment thereof). PROXIES All Merging Fund Shares represented by each properly signed proxy received prior to the Meeting will be voted at the Meeting. If a Merging Fund Shareholder specifies how the proxy is to be voted on any of the business to come before the Meeting, it will be voted in accordance with such specifications. If a Merging Fund Shareholder returns its proxy but no direction is made on the proxy, the proxy will be voted FOR each Proposal described in this Combined Prospectus/Proxy Statement. The Merging Fund Shareholders voting to ABSTAIN on the Proposals will be treated as present for purposes of achieving a quorum and in determining the votes cast on the Proposals, but not as having voted FOR the Proposals. A properly signed proxy 28 on which a broker has indicated that it has no authority to vote on the Proposals on behalf of the beneficial owner (a "broker non-vote") will be treated as present for purposes of achieving a quorum but will not be counted in determining the votes cast on the Proposals. A proxy granted by any Merging Fund Shareholder may be revoked by such Merging Fund Shareholder at any time prior to its use by written notice to JPMF, by submission of a later dated Proxy or by voting in person at the Meeting. If any other matters come before the Meeting, proxies will be voted by the persons named as proxies in accordance with their best judgment. EXPENSES OF PROXY SOLICITATION JPMC, and not the Merging Fund or the Surviving Fund (or shareholders of either Fund), will bear the cost of solicitation of proxies, including the cost of printing, preparing, assembling and mailing the Notice of Meeting, Combined Prospectus/Proxy Statement and form of proxy. In addition to solicitations by mail, proxies may also be solicited by officers and regular employees of JPMF by personal interview, by telephone or by telegraph without additional remuneration thereof. Professional solicitors may also be retained. ABSTENTIONS AND BROKER NON-VOTES In tallying the Merging Fund Shareholder votes, abstentions and broker non-votes (i.e., proxies sent in by brokers and other nominees that cannot be voted on a proposal because instructions have not been received from the beneficial owners) will be counted for purposes of determining whether or not a quorum is present for purposes of convening the Meeting. Abstentions and broker non-votes will be considered to be a vote against each proposal. INTERESTED PARTIES On the record date, the Trustees and officers of JPMF as a group owned less than 1% of the outstanding shares of the Merging Fund. On the record date, the name, address and percentage ownership of the persons who owned beneficially more than 5% of the shares of the Merging Fund or any class thereof and the percentage of any class or series of shares of the Surviving Fund or any class thereof that would be owned by such persons upon consummation of the Reorganization based upon their holdings at _______, 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 ---------------------- ------------- -------------- --------------- On the record date, the Trustees and officers of JPMF as a group owned less than 1% of the outstanding shares of the Surviving Fund. On the record date, the name, address and share ownership of the persons who owned beneficially more than 5% of the shares of the Surviving Fund or any class thereof and the percentage of any class or series of shares of the Surviving Fund or any class thereof that would be owned by such person upon consummation of the Reorganization based upon their holdings at _________, 2001 were as follows: 29 Percentage of Amount of Surviving Fund Percentage of Surviving Shares Owned on Record Fund Owned Upon Name and Address Owned Date Consummation ------------------- ------------ ------------------- ------------------------ ADDITIONAL INFORMATION ABOUT JPMF Information about each of the Merging Fund and the Surviving Fund is included in its Prospectus, which is incorporated by reference herein. The Surviving Fund's Prospectus is also enclosed herein. Additional information about each of the Merging Fund and the Surviving Fund is also included in JPMF's Statements of Additional Information with respect to each of them which has been filed with the Commission and which are incorporated herein by reference. Copies of the Statements 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. FINANCIAL STATEMENTS AND EXPERTS The audited financial highlights, financial statements and notes thereto of each of the Merging Fund and the Surviving Fund for the fiscal year ended May 31, 2000, and the audited financial statements, notes thereto and supplementary data of the Master Portfolio for the fiscal year ended May 31, 2000, are incorporated by reference herein and into the Statement of Additional Information related to this Combined Prospectus/Proxy Statement. The audited financial highlights, financial statements, notes thereto and supplemental data, as applicable, of the Merging Fund, the Surviving Fund and the Master Portfolio have been incorporated herein by reference in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on their authority as experts in auditing and accounting. The unaudited financial highlights, financial statements and notes thereto of each of the Merging Fund and the Surviving Fund for the fiscal period ended November 30, 2000, and the unaudited financial statements, notes thereto and supplementary data of the Master Portfolio for the fiscal period ended November 30, 2000, are incorporated by reference herein and into the Statement of Additional Information related to this Combined Prospectus/Proxy Statement. OTHER BUSINESS The JPMF Board knows of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, it is the intention of the JPMF Board 30 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 JPMF is not involved in any litigation that would have any material adverse effect upon either the Merging Fund or the Surviving Fund. SHAREHOLDER INQUIRIES Shareholder inquiries may be addressed to JPMF in writing at the address on the cover page of this Combined Prospectus/Proxy Statement or by telephoning 1-800-766-7722. * * * SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. 31 APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this ____ day of ______, 2001 by and among J.P. Morgan Institutional Funds (the "Transferor Trust"), a Massachusetts business trust, on behalf of the J.P. Morgan U.S. Equity Fund-Advisor Series (the "Transferor Portfolio"), J.P. Morgan Institutional Funds (the "Acquiring Trust"), a Massachusetts business trust, on behalf of the J.P. Morgan Institutional U.S. Equity Fund (the "Acquiring Portfolio") and J.P. Morgan Chase & Co. WHEREAS, the Board of Trustees of each of the Transferor Trust and the Acquiring Trust has determined that the transfer of all of the assets and liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the best interests of the Transferor Portfolio and the Acquiring Portfolio, as well as the best interests of shareholders of the Transferor Portfolio and the Acquiring Portfolio, and that the interests of existing shareholders would not be diluted as a result of this transaction; WHEREAS, each of the Transferor Trust and the Acquiring Trust intends to provide for the reorganization of the Transferor Portfolio (the "Reorganization") through the acquisition by the Acquiring Portfolio of all of the assets, subject to all of the liabilities, of the Transferor Portfolio in exchange for shares of beneficial interest of the Acquiring Portfolio (the "Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and the distribution to Transferor Portfolio shareholders of such Acquiring Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows: 1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE TRANSFEROR PORTFOLIO (a) PLAN OF REORGANIZATION. (i) The Transferor Trust on behalf of the Transferor Portfolio listed above, will convey, transfer and deliver to the Acquiring Portfolio all of the then existing assets of the Transferor Portfolio (consisting, without limitation, of portfolio securities and instruments, dividend and interest receivables, cash and other assets). In consideration thereof, the Acquiring Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the extent that they exist on or after the Effective Time of the Reorganization (as defined in Section 1(b)(i) hereof), all of the obligations and liabilities of the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio full and fractional shares of beneficial interest of the Acquiring Portfolio, with respect to the Acquiring Portfolio equal to that number of full and fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio shall be of the Class A share class in exchange for Shares of the Transferor Portfolio, with the amounts of shares to be determined by the parties. A-1 Any shares of beneficial interest (if any) of the Transferor Portfolio ("Transferor Portfolio Shares") held in the treasury of the Transferor Trust at the Effective Time of the Reorganization shall thereupon be retired. Such transactions shall take place on the date provided for in Section 1(b) hereof (the "Exchange Date"). All computations for the Transferor Portfolio and the Acquiring Portfolio shall be performed by The Chase Manhattan Bank (the "Custodian"), as custodian and pricing agent for the Transferor Portfolio and the Acquiring Portfolio. The determination of said Custodian shall be conclusive and binding on all parties in interest. (ii) As of the Effective Time of the Reorganization, the Transferor Trust will liquidate and distribute pro rata to its shareholders of record ("Transferor Portfolio Shareholders") as of the Effective Time of the Reorganization the Acquiring Portfolio Shares received by such Transferor Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the shares of the Transferor Portfolio held by the Transferor Portfolio shareholders. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Portfolio Shares then credited to the account of the Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts on the share records of the Acquiring Portfolio in the names of the Transferor Portfolio Shareholders and representing the respective pro rata number of the Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will not issue certificates representing the Acquiring Portfolio Shares in connection with such exchange. (iii) As soon as practicable after the Effective Time of the Reorganization, the Transferor Trust shall take all the necessary steps under Massachusetts law, the Transferor Trust s Declaration of Trust and any other applicable law to effect a complete termination of the Transferor Portfolio. (b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION. (i) Subject to the satisfaction of the conditions to the Reorganization specified in this Plan, the Reorganization shall occur as of the close of regularly scheduled trading on the New York Stock Exchange (the "Effective Time of the Reorganization") on August 11, 2001, or such later date as may be agreed upon by the parties (the "Exchange Date"). (ii) All acts taking place on the Exchange Date shall be deemed to take place simultaneously as of the Effective Time of the Reorganization unless otherwise provided. (iii) In the event that on the proposed Exchange Date (A) the New York Stock Exchange shall be closed to trading or trading thereon shall be restricted, or (B) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate valuation of the net assets of the Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. (iv) On the Exchange Date, portfolio securities of the Transferor Portfolio shall be transferred by the Custodian to the accounts of the Acquiring Portfolio duly endorsed in proper form for transfer, in such condition as to constitute good delivery thereof in accordance with the custom of brokers, and shall be accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price thereof. A-2 (c) VALUATION. (i) The net asset value of the shares of the Acquiring Portfolio and the net value of the assets of the Transferor Portfolio to be transferred in exchange therefore shall be determined as of the Effective Time of the Reorganization. The net asset value of the Acquiring Portfolio Shares shall be computed by the Custodian in the manner set forth in the Acquiring Trust's Declaration of Trust or By-laws and then current prospectus and statement of additional information and shall be computed to not less than two decimal places. The net value of the assets of the Transferor Portfolio to be transferred shall be computed by the Custodian by calculating the value of the assets transferred by the Transferor Portfolio and by subtracting therefrom the amount of the liabilities assigned and transferred to the Acquiring Portfolio, said assets and liabilities to be valued in the manner set forth in the Transferor Trust's Declaration of Trust or By-laws and then current prospectus and statement of additional information. (ii) The number of Class A Shares of the Acquiring Portfolio to be issued (including fractional shares, if any) by the Acquiring Portfolio in exchange for the Transferor Portfolio's assets attributable to the Transferor Portfolio's 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 Class A shares of the Acquiring Portfolio, both as determined in accordance with Section 1(c)(i). All computations of value shall be made by the Custodian in accordance with its regular practice as pricing agent for the Acquiring Portfolio and the Transferor Portfolio. 2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST The Acquiring Trust represents and warrants as follows: (a) ORGANIZATION, EXISTENCE, ETC. The Acquiring Trust is a business trust that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has the power to carry on its business as it is now being conducted. The Acquiring Portfolio is a validly existing series of shares of such business trust representing interests therein under the laws of Massachusetts. Each of the Acquiring Portfolio and the Acquiring Trust have all necessary federal, state and local authorization to own all of its properties and assets and to carry on its business as now being conducted. (b) REGISTRATION AS INVESTMENT COMPANY. The Acquiring Trust is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. (c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of additional information of the Acquiring Trust, as amended, included in the Acquiring Trust's registration statement on Form N-1A filed with the Securities and Exchange Commission, comply in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act") and the Act and do not contain an untrue statement of a material fact or omit to A-3 state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) CAPITALIZATION. The Acquiring Trust has an unlimited number of authorized shares of beneficial interest, of which as of November 30, 2000 there were outstanding 15,051,872 shares of the Acquiring Portfolio, and no shares of such Portfolio were held in the treasury of the Acquiring Trust. All of the outstanding shares of the Acquiring Trust have been duly authorized and are validly issued, fully paid and nonassessable (except as disclosed in the Acquiring Trust's prospectus and recognizing that under Massachusetts law, shareholders of an Acquiring Trust portfolio could, under certain circumstances, be held personally liable for the obligations of such Acquiring Trust portfolio). Because the Acquiring Trust is an open-end investment company engaged in the continuous offering and redemption of its shares, the number of outstanding shares may change prior to the Effective Time of the Reorganization. All of the issued and outstanding shares of the Acquiring Portfolio have been offered and sold in compliance in all material respects with applicable registration requirements of the Securities Act and applicable state securities laws. (e) FINANCIAL STATEMENTS. The financial statements of the Acquiring Trust with respect to the Acquiring Portfolio and The U.S. Equity Portfolio for the fiscal year ended May 31, 2000, which have been audited by PricewaterhouseCoopers LLP, fairly present the financial position of the Acquiring Portfolio and The U.S. Equity Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with generally accepted accounting principles ("GAAP"). The financial statements of the Acquiring Trust with respect to the Acquiring Portfolio and for The U.S. Equity Portfolio for the fiscal period ended November 30, 2000 fairly present the financial position of the Acquiring Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with GAAP. (f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio Shares to be issued in connection with the Reorganization will be duly authorized and upon consummation of the Reorganization will be validly issued, fully paid and nonassessable (except as disclosed in the Trust's prospectus and recognizing that under Massachusetts law, shareholders of an Acquiring Trust portfolio could, under certain circumstances, be held personally liable for the obligations of such portfolio). (g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf of the Acquiring Portfolio, has the power to enter into this Plan and to carry out its obligations hereunder. The execution and delivery of this Plan and the consummation of the transactions contemplated hereby have been duly authorized by the Acquiring Trust's Board of Trustees and no other proceedings by the Acquiring Trust other than those contemplated under this Plan are necessary to authorize its officers to effectuate this Plan and the transactions contemplated hereby. The Acquiring Trust is not a party to or obligated under any provision of its Declaration of Trust or By-laws, or under any indenture or contract provision or any other commitment or obligation, or subject to any order or decree, which would be violated by or which would prevent its execution and performance of this Plan in accordance with its terms. A-4 (h) LIABILITIES. There are no liabilities of the Acquiring Portfolio, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the Acquiring Trust's financial statements with respect to the Acquiring Portfolio and liabilities incurred in the ordinary course of business subsequent to November 30, 2000 or otherwise previously disclosed to the Acquiring Trust with respect to the Acquiring Portfolio, none of which has been materially adverse to the business, assets or results of operations of the Acquiring Portfolio. (i) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has been no material adverse change in the financial condition, results of operations, business, properties or assets of the Acquiring Portfolio, other than those occurring in the ordinary course of business (for these purposes, a decline in net asset value and a decline in net assets due to redemptions do not constitute a material adverse change). (j) LITIGATION. There are no claims, actions, suits or proceedings pending or, to the knowledge of the Acquiring Trust, threatened which would adversely affect the Acquiring Trust or the Acquiring Portfolio's assets or business or which would prevent or hinder consummation of the transactions contemplated hereby, there are no facts which would form the basis for the institution of administrative proceedings against the Acquiring Trust or the Acquiring Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory investigations of the Acquiring Trust or the Acquiring Portfolio, pending or threatened, other than routine inspections and audits. (k) CONTRACTS. No default exists under any material contract or other commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio, is subject. (l) TAXES. The federal income tax returns of the Acquiring Trust with respect to the Acquiring Portfolio, and all other income tax returns required to be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have been filed and all taxes payable pursuant to such returns have been paid. To the knowledge of the Acquiring Trust, no such return is under audit and no assessment has been asserted in respect of any such return. All federal and other taxes owed by the Acquiring Trust with respect to the Acquiring Portfolio have been paid so far as due. The Acquiring Portfolio has elected to qualify and has qualified as a "regulated investment company" under Subchapter M of the Code as of and since its first taxable year and intends to continue to so qualify. (m) NO APPROVALS REQUIRED. Except for the Registration Statement (as defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's shareholders (referred to in Section 6(a) hereof), no consents, approvals, authorizations, registrations or exemptions under federal or state laws are necessary for the consummation by the Acquiring Trust of the Reorganization, except such as have been obtained as of the date hereof. A-5 3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST The Transferor Trust represents and warrants as follows: (a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a business trust that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has the power to carry on its business as it is now being conducted. The Transferor Portfolio is a validly existing series of shares of such business trust representing interests therein under the laws of Massachusetts. Each of Transferor Portfolio and the Transferor Trust has all necessary federal, state and local authorization to own all of its properties and assets and to carry on its business as now being conducted. (b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is registered under the Act as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. (c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of additional information of the Transferor Trust, as amended, included in the Transferor Trust's registration statement on Form N-1A filed with the Commission, comply in all material respects with the requirements of the Securities Act and the Act and do not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) CAPITALIZATION. The Transferor Trust has an unlimited number of authorized shares of beneficial interest, of which as of November 30, 2000 there were outstanding 53,157 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. A-6 (e) FINANCIAL STATEMENTS. The financial statements for the Transferor Trust with respect to the Transferor Portfolio and The U.S. Equity Portfolio for the fiscal year ended May 31, 2000 which have been audited by PricewaterhouseCoopers LLP fairly present the financial position of the Transferor Portfolio and The U.S. Equity Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with GAAP. The financial statements of the Transferor Trust with respect to the Transferor Portfolio and The U.S. Equity Portfolio for the fiscal period ended November 30, 2000 fairly present the financial position of the Transferor Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with GAAP. (f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of the Transferor Portfolio, has the power to enter into this Plan and to carry out its obligations hereunder. The execution and delivery of this Plan and the consummation of the transactions contemplated hereby have been duly authorized by the Transferor Trust s Board of Trustees and no other proceedings by the Transferor Trust other than those contemplated under this Plan are necessary to authorize its officers to effectuate this Plan and the transactions contemplated hereby. The Transferor Trust is not a party to or obligated under any provision of its Declaration of Trust or By-laws, or under any indenture or contract provision or any other commitment or obligation, or subject to any order or decree, which would be violated by or which would prevent its execution and performance of this Plan in accordance with its terms. (g) LIABILITIES. There are no liabilities of the Transferor Portfolio, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the Transferor Trust's Financial Statements with respect to the Transferor Portfolio and liabilities incurred in the ordinary course of business subsequent to November 30, 2000 or otherwise previously disclosed to the Transferor Trust with respect to the Transferor Portfolio, none of which has been materially adverse to the business, assets or results of operations of the Transferor Portfolio. (h) NO MATERIAL ADVERSE CHANGE. Since November 30, 2000, there has been no material adverse change in the financial condition, results of operations, business, properties or assets of the Transferor Portfolio, other than those occurring in the ordinary course of business (for these purposes, a decline in net asset value and a decline in net assets due to redemptions do not constitute a material adverse change). (i) LITIGATION. There are no claims, actions, suits or proceedings pending or, to the knowledge of the Transferor Trust, threatened which would adversely affect the Transferor Trust or the Transferor Portfolio's assets or business or which would prevent or hinder consummation of the transactions contemplated hereby, there are no facts which would form the basis for the institution of administrative proceedings against the Transferor Trust or the Transferor Portfolio and, to the knowledge of the Transferor Trust, there are no regulatory investigations of the Transferor Trust or the Transferor Portfolio, pending or threatened, other than routine inspections and audits. (j) CONTRACTS. The Transferor Trust, on behalf of the Transferor Portfolio, is not subject to any contracts or other commitments (other than this Plan) which will not be terminated with A-7 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 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 A-8 in connection with the meeting of the Transferor Portfolio's shareholders for the purpose of acting upon this Plan and the transactions contemplated herein. (c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by this Plan, the Acquiring Trust shall conduct the business of the Acquiring Portfolio in the ordinary course until the consummation of the Reorganization, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions. 5. COVENANTS OF THE TRANSFEROR TRUST The Transferor Trust covenants to the following: (a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor Trust shall call and hold a meeting of the shareholders of the Transferor Portfolio for the purpose of acting upon this Plan and the transactions contemplated herein. (b) PORTFOLIO SECURITIES. With respect to the assets to be transferred in accordance with Section 1(a), the Transferor Portfolio's assets shall consist of all property and assets of any nature whatsoever, including, without limitation, all cash, cash equivalents, securities, claims and receivables (including dividend and interest receivables) owned, and any deferred or prepaid expenses shown as an asset on the Transferor Trust's books maintained or 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 A-9 Act and the Regulations to be set forth in the Registration Statement (including the Prospectus and Statement of Additional Information). At the time the Registration Statement becomes effective, the Registration Statement, insofar as it relates to the Transferor Portfolio, (i) will comply in all material respects with the provisions of the Securities Act and the Regulations and (ii) will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at the time the Registration Statement becomes effective, at the time of the Transferor Portfolio's shareholders meeting referred to in Section 5(a) and at the Effective Time of the Reorganization, the Prospectus and Statement of Additional Information, as amended or supplemented by any amendments or supplements filed by the Transferor Trust, insofar as they relate to the Transferor Portfolio, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall apply only to statements in or omissions from the Registration Statement, Prospectus or Statement of Additional Information made in reliance upon and in conformity with information furnished by the Transferor Portfolio for use in the registration statement, prospectus or statement of additional information as provided in this Section 5(c). (d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to use all reasonable efforts to effectuate the Reorganization and to obtain any necessary regulatory approvals for the Reorganization. (e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by this Plan, the Transferor Trust shall conduct the business of the Transferor Portfolio in the ordinary course until the consummation of the Reorganization, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions. (f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any case within 60 days after the Exchange Date, the Transferor Trust on behalf of the Transferor Portfolio, shall prepare a statement of the earnings and profits of the Transferor Portfolio for 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 A-10 adverse change (as described in Section 2(i)) in the financial condition, results of operations, business, properties or assets of the Acquiring Portfolio since November 30, 2000. (c) REGULATORY APPROVAL. The Registration Statement shall have been declared effective by the Commission and no stop orders under the Securities Act pertaining thereto shall have been issued, and all other approvals, registrations, and exemptions under federal and state laws considered to be necessary shall have been obtained (collectively, the "Regulatory Approvals"). (d) TAX OPINION. The Transferor Trust shall have received the opinion of Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to and in form and substance satisfactory to the Transferor Trust, as to certain of the federal income tax consequences under the Code of the Reorganization, insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio, and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may rely exclusively and without independent verification, as to factual matters, upon the statements made in this Plan, the Prospectus and Statement of Additional Information, and upon such other written representations as the President or Treasurer of the Transferor Trust will have verified as of the Effective Time of the Reorganization. The Tax Opinion will be to the effect that, based on the facts and assumptions stated therein, for federal income tax purposes: (i) the Reorganization will constitute a reorganization within the meaning of section 368(a)(1) of the Code with respect to the Transferor Portfolio and the Acquiring Portfolio; (ii) no gain or loss will be recognized by any of the Transferor Portfolio or the Acquiring Portfolio upon the transfer of all the assets and liabilities, if any, of the Transferor Portfolio to the Acquiring Portfolio solely in exchange for shares of the Acquiring Portfolio or upon the distribution of the shares of the Acquiring Portfolio to the holders of the shares of the Transferor Portfolio solely in exchange for all of the shares of the Transferor Portfolio; (iii) no gain or loss will be recognized by shareholders of the Transferor Portfolio upon the exchange of shares of such Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the holding period and tax basis of the shares of the Acquiring Portfolio received by each holder of shares of the Transferor Portfolio pursuant to the Reorganization will be the same as the holding period and tax basis of shares of the Transferor Portfolio held by such holder immediately prior to the Reorganization; (provided the shares of the Transferor Portfolio were held as a capital asset on the date of the Reorganization) and (v) the holding period and tax basis of the assets of the Transferor Portfolio acquired by the Acquiring Portfolio will be the same as the holding period and tax basis of those assets to the Transferor Portfolio immediately prior to the Reorganization. (e) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan U.S. Equity Fund, a series of J.P. Morgan Funds, into the Acquiring Portfolio shall have been consummated. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST The obligations of the Acquiring Trust with respect to the consummation of the Reorganization are subject to the satisfaction of the following conditions: (a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor Shareholder Approval shall have been obtained. A-11 (b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor Trust shall have complied with each of its covenants contained herein, each of the representations and warranties contained herein shall be true in all material respects as of the Effective Time of the Reorganization (except as otherwise contemplated herein), and there shall have been no material adverse change (as described in Section 3(h)) in the financial condition, results of operations, business, properties or assets of the Transferor Portfolio since November 30, 2000. (c) PORTFOLIO SECURITIES. All securities to be acquired by the Acquiring Portfolio in the Reorganization shall have been approved for acquisition by J.P. Morgan Investment Management Inc. ("JPMIM"), in its capacity as investment adviser to the Acquiring Portfolio, as consistent with the investment policies of the Acquiring Portfolio. (d) REGULATORY APPROVAL. The Regulatory Approvals shall have been obtained. (e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on behalf of the Transferor Portfolio shall have distributed to the shareholders of the Transferor Portfolio all of the Transferor Portfolio's investment company taxable income (determined without regard to the deduction for dividends paid) as defined in Section 852(b)(2) of the Code for its taxable year ending on the Exchange Date and all of its net capital gain as such term is used in Section 852(b)(3) of the Code, after reduction by any capital loss carry forward, for its taxable year ending on the Exchange Date. (f) TAX OPINION. The Acquiring Trust shall have received the Tax Opinion. (g) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan U.S. Equity Fund , a series of J.P. Morgan Funds, into the Acquiring Portfolio shall have been consummated. 8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS (a) AMENDMENTS. The parties hereto may, by agreement in writing authorized by their Boards of Trustees amend this Plan at any time before or after approval hereof by the shareholders of the Transferor Portfolio, but after such approval, no amendment shall be made which substantially changes the terms hereof. (b) WAIVERS. At any time prior to the Effective Time of the Reorganization, either the Transferor Trust or the Acquiring Trust may by written instrument signed by it (i) waive any inaccuracies in the representations and warranties made to it contained herein and (ii) waive compliance with any of the covenants or conditions made for its benefit contained herein, except that conditions set forth in Sections 6(c) and 7(d) may not be waived. (c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on behalf of the Transferor Portfolio, may terminate this Plan with respect to the Transferor Portfolio at any time prior to the Effective Time of the Reorganization by notice to the Acquiring Trust and JPMIM if (i) a material condition to the performance of the Transferor Trust hereunder or a material covenant of the Acquiring Trust contained herein shall not be fulfilled on or before the date specified for the fulfillment thereof or (ii) a material default or material breach of this Plan shall A-12 be made by the Acquiring Trust. In addition, this Plan may be terminated by the Transferor Trust at any time prior to the Effective Time of the Reorganization, whether before or after approval of this Plan by the shareholders of the Transferor Portfolio, without liability on the part of any party hereto, its Trustees, officers or shareholders or JPMIM on notice to the other parties in the event that the Board of Trustees determines that proceeding with this Plan is not in the best interests of the shareholders of the Transferor Portfolio. (d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on behalf of the Acquiring Portfolio, may terminate this Plan with respect to the Acquiring Portfolio at any time prior to the Effective Time of the Reorganization by notice to the Transferor Trust and JPMIM if (i) a material condition to the performance of the Acquiring Trust hereunder or a material covenant of the Transferor Trust contained herein shall not be fulfilled on or before the date specified for the fulfillment thereof or (ii) a material default or material breach of this Plan shall be made by the Transferor Trust. In addition, this Plan may be terminated by the Acquiring Trust at any time prior to the Effective Time of the Reorganization, whether before or after approval of this Plan by the shareholders of the Transferor Portfolio, without liability on the part of any party hereto, its Trustees, officers or shareholders or JPMIM on notice to the other parties in the event that the Board of Trustees determines that proceeding with this Plan is not in the best interests of the shareholders of the Acquiring Portfolio. (e) SURVIVAL. No representations, warranties or covenants in or pursuant to this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan, shall survive the Reorganization. 9. EXPENSES The expenses of the Reorganization will be borne by J.P. Morgan Chase & Co ("JPMC"). Such expenses include, without limitation, (i) expenses incurred in connection with the entering into and the carrying out of the provisions of this Plan; (ii) expenses associated with the preparation and filing of the Registration Statement; (iii) fees and expenses of preparing and filing such forms as are necessary under any applicable state securities laws in connection with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii) legal fees and (viii) solicitation costs relating to the Reorganization. In addition, JPMC or an affiliate will waive fees payable to it or reimburse expenses to the extent necessary such that the actual (post-waiver) total expense ratios of the Select Class Shares and the Institutional Class Shares of the Acquiring Portfolio are not higher than those 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: A-13 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. 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 A-14 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 Institutional Funds" is the designation of its Trustees under a Declaration of Trust dated November 4, 1992, as amended, and all persons dealing with the Acquiring Trust must look solely to the Acquiring Trust's property for the enforcement of any claims against the Acquiring Trust, as none of the Acquiring Trustees, officers, agents or shareholders assumes any personal liability for obligations entered into on behalf of the Acquiring Trust. No series of the Acquiring Trust shall be liable for claims against any other series of the Acquiring Trust. A-15 IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date first above written. J.P. MORGAN INSTITUTIONAL FUNDS on behalf of J.P. Morgan Institutional U.S. Equity Fund By: --------------------------------------- Name: Title: J.P. MORGAN INSTITUTIONAL FUNDS on behalf of J.P. Morgan U.S. Equity Fund-Advisor Series By: --------------------------------------- Name: Title: Agreed and acknowledged with respect to Section 9: J.P. MORGAN CHASE & CO. By: --------------------------------------- Name: Title: A-16 STATEMENT OF ADDITIONAL INFORMATION (SPECIAL MEETING OF SHAREHOLDERS OF J.P. MORGAN U.S. EQUITY FUND-ADVISOR SERIES A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS) This Statement of Additional Information is not a prospectus but should be read in conjunction with the Combined Prospectus/Proxy Statement dated May 12, 2001 for the Special Meeting of Shareholders of J.P. Morgan U.S. Equity Fund-Advisor Series (the "Merging Fund"), a series of J.P. Morgan Institutional Funds ("JPMF"), to be held on July 3, 2001. Copies of the Combined Prospectus/Proxy Statement may be obtained at no charge by calling JPMorgan U.S. Equity Fund-Advisor Series at ______________. Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Combined Prospectus/Proxy Statement. Further information about the Surviving Fund and the Merging Fund is contained in JPMF's Statements of Additional Information for the relevant Fund, which are incorporated herein by reference. The date of this Statement of Additional Information is May 12, 2001. 1 GENERAL INFORMATION The Shareholders of the Merging Fund are being asked to consider and vote on two proposals. With respect to an Agreement and Plan of Reorganization (the "Reorganization Plan") dated as of __________, 2001 by and among JPMF, 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 Class A 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 JPMF. A Special Meeting of Shareholders of the Merging Fund to consider the proposals and the related transaction will be held at the offices of J.P. Morgan Chase & Co., 1211 Avenue of the Americas, 41st Floor, New York, NY, on July 3, 2001 at 9:00 a.m., Eastern time. For further information about the transaction, see the Combined Prospectus/Proxy Statement. 2 FINANCIAL STATEMENTS The audited financial highlights, financial statements and notes thereto of each of the Merging Fund and the Surviving Fund contained in their respective Annual Reports dated May 31, 2000, and the audited financial statements, notes thereto and supplementary data of the Master Portfolio contained in its Annual Report dated May 31, 2000, are incorporated by reference into this Statement of Additional Information related to this Combined Prospectus/Proxy Statement. The audited financial highlights, financial statements, notes thereto and supplementary data, as applicable, which appear in each of the Surviving Fund's, the Master Portfolio's and the Merging Fund's Annual Report have been audited by PricewaterhouseCoopers LLP, whose reports thereon also appear in such Annual Reports and are also incorporated herein by reference. The financial highlights, financial statements, notes thereto and supplementary data, as applicable, for the Merging Fund, the Surviving Fund and the Master Portfolio for the fiscal year ended May 31, 2000 have been incorporated herein by reference in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on their authority as experts in auditing and accounting. The unaudited financial highlights, financial statements and notes thereto of the Merging Fund and the Surviving Fund contained in their respective Semi-Annual Reports dated November 30, 2000, and the unaudited financial statements, notes thereto and supplementary data of the Master Portfolio contained in its Semi-Annual Report dated November 30, 2000, are incorporated by reference into this Statement of Additional Information related to this Combined Prospectus/Proxy Statement. 3 PRO FORMA FINANCIAL STATEMENTS J.P. MORGAN U.S. EQUITY PORTFOLIO / CHASE VISTA LARGE CAP EQUITY FUND (1) PRO FORMA COMBINING SCHEDULE OF INVESTMENTS NOVEMBER 30, 2000 (UNAUDITED)
PRINCIPAL AMOUNT MARKET VALUE ------------------------------------------- ------------------------------------------------ PRO FORMA PRO FORMA PRO FORMA PRO FORMA CHASE JPM ADJUSTMENTS COMBINED CHASE JPM ADJUSTMENTS COMBINED ---------- --------- ----------- ---------- ------------ ---------- ----------- ----------- COMMON STOCKS - 95.6% CAPITAL MARKETS CAPITAL MARKETS - 1.8% Goldman Sachs Group, Inc. (The) 119,700 119,700 - 9,830,363 - 9,830,363 TD Waterhouse Group, Inc.(+) 253,400 253,400 - 3,357,550 - 3,357,550 ------------------------------------------- ------------------------------------------------ - 373,100 - 373,100 - 13,187,913 - 13,187,913 ------------------------------------------- ------------------------------------------------ COMPUTER HARDWARE COMPUTER HARDWARE & BUSINESS MACHINES - 9.1% Avaya Inc.(+) 7,300 7,300 - 85,319 - 85,319 Cisco Systems Inc.(s)(+) 77,000 414,800 491,800 3,686,375 19,858,550 - 23,544,925 Compaq Computer Corp. 77,000 232,400 309,400 1,655,500 4,996,600 - 6,652,100 Dell Computer Corp.(+) 47,100 47,100 - 906,675 - 906,675 EMC Corp. (Mass.)(+) 46,000 104,500 150,500 3,421,250 7,772,188 - 11,193,438 Hewlett-Packard Co. 56,000 69,600 125,600 1,771,000 2,201,100 - 3,972,100 Quantum Corp. - DLT & Storage Systems(+) 202,500 202,500 - 2,733,750 - 2,733,750 Sun Microsystems, Inc.(s)(+) 36,000 186,900 222,900 2,738,250 14,216,081 - 16,954,331 ------------------------------------------- ------------------------------------------------ 292,000 1,265,100 - 1,557,100 13,272,375 52,770,263 66,042,638 ------------------------------------------- ------------------------------------------------ CONSUMER CYCLICAL HOTELS - 0.3% ------------------------------------------- ------------------------------------------------ Marriott International, Inc. 58,700 58,700 - 2,432,381 - 2,432,381 ------------------------------------------- ------------------------------------------------ MOTOR VEHICLES & PARTS - 1.9% Dana Corp. 66,400 66,400 - 1,112,200 - 1,112,200 Delphi Automotive Systems 167,500 167,500 - 2,313,594 - 2,313,594 Ford Motor Company 145,136 93,492 238,628 3,301,844 2,126,943 - 5,428,787 General Motors Corp. 32,200 23,800 56,000 1,593,900 1,178,100 - 2,772,000 Lear Corp. (+) 129,800 129,800 - 2,839,375 - 2,839,375 ------------------------------------------- ------------------------------------------------ 177,336 480,992 - 658,328 4,895,744 9,570,212 - 14,465,956 ------------------------------------------- ------------------------------------------------ RESTAURANTS - 0.3% ------------------------------------------- ------------------------------------------------ McDonald's Corp. 57,000 57,000 - 1,816,875 - 1,816,875 ------------------------------------------- ------------------------------------------------ FOOD/ BEVERAGES - 1.2% Anheuser-Busch Companies, Inc. 47,000 47,000 2,229,563 - 2,229,563 Coca-Cola Co. 42,300 42,300 2,649,038 - 2,649,038 PepsiCo, Inc. 40,000 40,000 1,815,000 - 1,815,000 Sysco Corp. 33,000 33,000 1,823,250 - 1,823,250 ------------------------------------------- ------------------------------------------------ 162,300 - - 162,300 8,516,851 - - 8,516,851 ------------------------------------------- ------------------------------------------------ CONSUMER SERVICES ENTERTAINMENT - 0.9% ------------------------------------------- ------------------------------------------------ Viacom, Inc. Cl B(+) 48,360 76,900 125,260 2,472,405 3,931,512 - 6,403,917 ------------------------------------------- ------------------------------------------------ MEDIA - 2.0% AT&T Corp. - Liberty Media Group Cl A(+) 104,200 104,200 - 1,413,213 - 1,413,213 Charter Communications, Inc.(+) 40,758 40,758 - 804,971 - 804,971 Comcast Corp. Cl A(+) 93,800 93,800 - 3,605,438 - 3,605,438 News Corp. Ltd. (The) ADR(i) 106,400 106,400 - 3,710,699 - 3,710,699 The Walt Disney Co. 49,000 49,000 1,417,938 - - 1,417,938 See notes to Pro Forma Financial Statements 4 Time Warner Inc. 29,000 27,700 56,700 1,798,000 1,717,400 - 3,515,400 ------------------------------------------- ------------------------------------------------ 78,000 372,858 - 450,858 3,215,938 11,251,721 14,467,659 ------------------------------------------- ------------------------------------------------ CONSUMER STABLE HOME PRODUCTS - 3.1% Clorox Company 52,800 52,800 - 2,359,500 - 2,359,500 Estee Lauder Companies, Inc. 62,700 62,700 - 2,715,694 - 2,715,694 Gillette Company 47,400 153,400 200,800 1,605,675 5,196,425 - 6,802,100 Procter & Gamble Co. (The) 142,000 142,000 - 10,632,250 - 10,632,250 ------------------------------------------- ------------------------------------------------ 47,400 410,900 - 458,300 1,605,675 20,903,869 - 22,509,544 ------------------------------------------- ------------------------------------------------ TOBACCO - 1.8% ------------------------------------------- ------------------------------------------------ Philip Morris Companies Inc. 41,500 295,300 336,800 1,584,781 11,276,769 - 12,861,550 ------------------------------------------- ------------------------------------------------ ENERGY ENERGY RESERVES & PRODUCTION - 5.1% Anadarko Petroleum Corp. 44,500 44,500 - 2,647,750 - 2,647,750 Chevron Corp. 42,100 37,900 80,000 3,446,938 3,103,063 - 6,550,001 Exxon Mobil Corp.(s) 95,405 217,548 312,953 8,395,640 19,144,223 - 27,539,863 ------------------------------------------- ------------------------------------------------ 137,505 299,948 - 437,453 11,842,578 24,895,036 - 36,737,614 ------------------------------------------- ------------------------------------------------ OIL REFINING - 0.2% ------------------------------------------- ------------------------------------------------ Texaco Inc. 24,100 24,100 - 1,399,306 - 1,399,306 ------------------------------------------- ------------------------------------------------ OIL SERVICES - 1.0% Baker Hughes Inc. 109,900 109,900 - 3,633,569 - 3,633,569 Global Marine Inc.(+) 108,600 108,600 - 2,382,413 - 2,382,413 ------------------------------------------- ------------------------------------------------ - 242,600 - 242,600 - 6,015,982 - 6,015,982 ------------------------------------------- ------------------------------------------------ OIL & GAS - 1.2% BP Amoco PLC, ADR (United Kingdom) 24,000 24,000 1,138,500 - - 1,138,500 Halliburton Co. 41,500 41,500 1,385,063 - - 1,385,063 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 75,800 75,800 4,524,313 - - 4,524,313 Schlumberger LTD 28,000 28,000 1,736,000 1,736,000 ------------------------------------------- ------------------------------------------------ 169,300 - - 169,300 8,783,876 - - 8,783,876 ------------------------------------------- ------------------------------------------------ FINANCE BANKS - 5.5% Amsouth Bancorporation 223,100 223,100 - 3,318,613 - 3,318,613 Bank of New York Co., Inc. 85,834 85,834 4,736,964 - - 4,736,964 Citigroup Inc. 197,000 81,566 278,566 9,813,063 4,063,006 - 13,876,069 First Union Corp. 103,000 103,000 - 2,587,875 - 2,587,875 Firstar Corp.(s) 608,000 608,000 - 11,780,000 - 11,780,000 Wells Fargo Co. 68,500 68,500 3,249,469 - - 3,249,469 ------------------------------------------- ------------------------------------------------ 351,334 792,566 - 1,143,900 17,799,496 21,749,494 - 39,548,990 ------------------------------------------- ------------------------------------------------ FINANCIAL SERVICES - 7.6% American Express Co. 66,600 66,600 3,658,838 - - 3,658,838 Associates First Capital Corp. 219,900 219,900 - 7,765,219 - 7,765,219 Capital One Financial Corp. 69,900 69,900 - 3,901,294 - 3,901,294 Countrywide Credit Industries, Inc. 95,900 95,900 - 3,560,288 - 3,560,288 Fannie Mae 20,700 20,700 1,635,300 - - 1,635,300 Federal Home Loan Mortgage Corp. 43,100 43,100 - 2,604,856 - 2,604,856 General Electric Co. (U.S.)(s) 213,916 331,700 545,616 10,602,212 16,439,880 - 27,042,092 Morgan Stanley Dean Witter & Co. 38,000 38,000 2,408,250 - - 2,408,250 Providian Financial Corp. 14,700 14,700 - 1,323,000 - 1,323,000 State Street Corp. 9,400 9,400 1,212,600 - - 1,212,600 ------------------------------------------- ------------------------------------------------ 348,616 775,200 - 1,123,816 19,517,200 35,594,537 - 55,111,737 ------------------------------------------- ------------------------------------------------ THRIFTS - 0.4% ------------------------------------------- ------------------------------------------------ Washington Mutual, Inc. 56,300 56,300 - 2,558,131 - 2,558,131 ------------------------------------------- ------------------------------------------------ HEALTH SERVICES & SYSTEMS MEDICAL PRODUCTS & SUPPLIES - 1.1% Bard (C.R.), Inc. 38,700 38,700 - 1,905,975 - 1,905,975 Becton Dickinson & Co. 89,100 89,100 - 3,029,400 - 3,029,400 Medtronic, Inc. 53,200 53,200 - 2,832,900 - 2,832,900 ------------------------------------------- ------------------------------------------------ - 181,000 - 181,000 - 7,768,275 - 7,768,275 ------------------------------------------- ------------------------------------------------ INDUSTRIAL CYCLICAL CHEMICALS - 1.9% See notes to Pro Forma Financial Statements 5 Air Products & Chemicals, Inc. 205,300 205,300 - 7,070,019 - 7,070,019 Dow Chemical Co. 33,300 33,300 1,017,731 - - 1,017,731 E.I. DuPont de Nemours Co. 52,900 52,900 2,238,331 - - 2,238,331 Rohm and Haas Co. 112,700 112,700 - 3,352,825 - 3,352,825 ------------------------------------------- ------------------------------------------------ 86,200 318,000 - 404,200 3,256,062 10,422,844 - 13,678,906 ------------------------------------------- ------------------------------------------------ DEFENSE/AEROSPACE - 0.8% ------------------------------------------- ------------------------------------------------ Honeywell Inc. 48,000 74,600 122,600 2,340,000 3,636,750 - 5,976,750 ------------------------------------------- ------------------------------------------------ ELECTRICAL EQUIPMENT - 1.6% Corning Inc. 36,000 36,000 - 2,106,000 - 2,106,000 Corvis Corp.(+) 9,900 9,900 - 285,244 - 285,244 Level 3 Communications, Inc.(+) 100,200 100,200 - 2,692,875 - 2,692,875 Nortel Networks Corp. 142,400 142,400 - 5,375,600 - 5,375,600 QUALCOMM Inc.(+) 12,500 12,500 - 1,003,125 - 1,003,125 ------------------------------------------- ------------------------------------------------ - 301,000 - 301,000 - 11,462,844 - 11,462,844 ------------------------------------------- ------------------------------------------------ ENVIRONMENTAL SERVICES - 0.5% ------------------------------------------- ------------------------------------------------ Waste Management, Inc. 139,757 139,757 - 3,345,433 - 3,345,433 ------------------------------------------- ------------------------------------------------ HEAVY ELECTRICAL EQUIPMENT - 0.4% ------------------------------------------- ------------------------------------------------ Cooper Industries, Inc. 71,600 71,600 - 2,922,175 - 2,922,175 ------------------------------------------- ------------------------------------------------ INDUSTRIAL PARTS - 2.0% ------------------------------------------- ------------------------------------------------ Tyco International Ltd.(i)(s) 281,092 281,092 - 14,827,602 - 14,827,602 ------------------------------------------- ------------------------------------------------ MACHINERY - 0.5% Caterpillar, Inc. 60,000 60,000 2,358,750 - - 2,358,750 Dover Corp. 36,000 36,000 1,473,750 - - 1,473,750 ------------------------------------------- ------------------------------------------------ 96,000 - - 96,000 3,832,500 - - 3,832,500 ------------------------------------------- ------------------------------------------------ MINING/METALS - 0.7% Alcoa Inc. 40,400 61,764 102,164 1,138,775 1,740,973 - 2,879,748 Allegheny Technologies Inc. 110,186 110,186 - 2,189,947 - 2,189,947 ------------------------------------------- ------------------------------------------------ 40,400 171,950 - 212,350 1,138,775 3,930,920 - 5,069,695 ------------------------------------------- ------------------------------------------------ OFFICE EQUIPMENT - 0.1% ------------------------------------------- ------------------------------------------------ Xerox Corp. 145,000 145,000 1,005,938 - - 1,005,938 ------------------------------------------- ------------------------------------------------ PAPER PRODUCTS - 0.4% International Paper Co. 35,100 35,100 1,189,013 - - 1,189,013 Weyerhaeuser Co. 37,000 37,000 1,618,750 - - 1,618,750 ------------------------------------------- ------------------------------------------------ 72,100 - - 72,100 2,807,763 - - 2,807,763 ------------------------------------------- ------------------------------------------------ RAILROADS - 0.3% ------------------------------------------- ------------------------------------------------ Union Pacific Corp. 51,900 51,900 - 2,413,350 - 2,413,350 ------------------------------------------- ------------------------------------------------ INSURANCE LIFE & HEALTH INSURANCE - 1.3% CIGNA Corp. 45,100 45,100 - 5,941,925 - 5,941,925 MetLife, Inc.(+) 118,600 118,600 - 3,513,525 - 3,513,525 ------------------------------------------- ------------------------------------------------ - 163,700 - 163,700 - 9,455,450 - 9,455,450 ------------------------------------------- ------------------------------------------------ PROPERTY AND CASUALTY INSURANCE - 3.8% Allstate Corp. 137,800 137,800 - 5,270,850 - 5,270,850 Ambac Financial Group, Inc. 83,400 83,400 - 6,369,675 - 6,369,675 American International Group, Inc. 117,900 117,900 11,428,931 - - 11,428,931 XL Capital Ltd. Cl A(i) 57,300 57,300 - 4,573,256 - 4,573,256 ------------------------------------------- ------------------------------------------------ 117,900 278,500 - 396,400 11,428,931 16,213,781 - 27,642,712 ------------------------------------------- ------------------------------------------------ PHARMACEUTICALS DRUGS - 11.4% Abbott Laboratories 82,000 82,000 4,515,125 - - 4,515,125 Alza Corp.(+) 125,200 125,200 - 5,555,750 - 5,555,750 American Home Products Corp. 55,000 62,300 117,300 3,306,875 3,745,788 - 7,052,663 Bristol-Myers Squibb Co. 61,700 61,700 - 4,276,581 - 4,276,581 Lilly (Eli) & Co. 35,000 88,500 123,500 3,279,063 8,291,344 - 11,570,407 Merck & Co., Inc. 64,900 64,900 - 6,015,419 - 6,015,419 See notes to Pro Forma Financial Statements 6 Pfizer, Inc.(s) 114,000 269,800 383,800 5,051,625 11,955,512 - 17,007,137 Pharmacia Corp. 115,213 181,675 296,888 7,027,993 11,082,175 - 18,110,168 Schering-Plough Corp. 153,600 153,600 - 8,611,200 - 8,611,200 ------------------------------------------- ------------------------------------------------ 401,213 1,007,675 - 1,408,888 23,180,681 59,533,769 - 82,714,450 ------------------------------------------- ------------------------------------------------ RETAIL CLOTHING STORES - 1.1% Abercrombie & Fitch Co. Cl A(+) 102,400 102,400 - 2,137,600 - 2,137,600 Gap, Inc. (The) 110,400 110,400 - 2,753,100 - 2,753,100 TJX Companies, Inc. (The) 110,300 110,300 - 2,826,438 - 2,826,438 ------------------------------------------- ------------------------------------------------ - 323,100 - 323,100 - 7,717,138 - 7,717,138 ------------------------------------------- ------------------------------------------------ DEPARTMENT STORES - 2.4% Kohls Corp. * 4,000 4,000 214,250 - - 214,250 Target Corp. 86,000 110,000 196,000 2,585,375 3,306,875 - 5,892,250 Wal-Mart Stores, Inc. 81,000 136,800 217,800 4,227,188 7,139,249 - 11,366,437 ------------------------------------------- ------------------------------------------------ 167,000 246,800 - 413,800 7,026,813 10,446,124 - 17,472,937 ------------------------------------------- ------------------------------------------------ SPECIALTY STORES - 1.1% Best Buy Co., Inc.(+) 56,100 56,100 - 1,444,575 - 1,444,575 Home Depot, Inc. 175,300 175,300 - 6,869,569 - 6,869,569 ------------------------------------------- ------------------------------------------------ - 231,400 - 231,400 - 8,314,144 - 8,314,144 ------------------------------------------- ------------------------------------------------ SEMICONDUCTORS SEMICONDUCTORS - 4.0% Altera Corp.(+) 39,500 39,500 - 945,531 - 945,531 Broadcom Corp.(+) 6,200 6,200 - 604,500 - 604,500 Intel Corp.(s) 50,000 243,500 293,500 1,903,125 9,268,219 - 11,171,344 Lattice Semiconductor Corp.(+) 2,400 2,400 - 39,900 - 39,900 Linear Technology Corp.(+) 36,700 36,700 - 1,736,369 - 1,736,369 Maxim Integrated Products, Inc.(+) 35,000 35,000 - 1,785,000 - 1,785,000 Micron Technology, Inc.(+) 55,000 55,000 - 1,732,500 - 1,732,500 SDL, Inc.(+) 17,200 17,200 - 3,126,100 - 3,126,100 Sprint Corp. (PCS Group)(+) 114,600 114,600 - - - - Texas Instruments Inc. 102,000 59,500 161,500 3,805,875 2,220,094 - 6,025,969 Xilinx, Inc.(+) 40,000 40,000 - 1,560,000 - 1,560,000 ------------------------------------------- ------------------------------------------------ 152,000 649,600 - 801,600 5,709,000 23,018,213 - 28,727,213 ------------------------------------------- ------------------------------------------------ SOFTWARE & SERVICES COMPUTER SOFTWARE - 6.8% BEA Systems, Inc.(+) 40,200 40,200 - 2,354,213 - 2,354,213 Gemstar International Group Ltd.(+) 85,100 85,100 - 3,462,506 - 3,462,506 International Business Machines Corp. 44,300 23,800 68,100 4,142,050 2,225,300 - 6,367,350 Microsoft Corp.(s)(+) 276,000 276,000 - 15,835,500 - 15,835,500 NCR Corp.(+) 160,400 160,400 - 7,578,900 - 7,578,900 Oracle Corp.(+) 162,000 141,400 303,400 4,293,000 3,747,100 - 8,040,100 Parametric Technology Corp.(+) 135,200 135,200 - 1,504,100 - 1,504,100 Veritas Software Corp.(+) 41,078 41,078 - 4,007,672 - 4,007,672 ------------------------------------------- ------------------------------------------------ - 41,078 - 41,078 8,435,050 40,715,291 - 49,150,341 ------------------------------------------- ------------------------------------------------ INTERNET - 1.0% Akamai Technologies, Inc.(+) 21,900 21,900 - 629,625 - 629,625 America Online, Inc.(+) 61,800 61,800 - 2,509,698 - 2,509,698 E*trade Group Inc.(+) 380,400 380,400 - 3,043,200 - 3,043,200 eBay Inc.(+) 18,000 18,000 - 617,625 - 617,625 ------------------------------------------- ------------------------------------------------ - 482,100 - 482,100 - 6,800,148 - 6,800,148 ------------------------------------------- ------------------------------------------------ TELECOMMUNICATIONS TELECOMMUNICATIONS - 5.1% AT&T Corp. 69,927 69,927 1,372,317 - - 1,372,317 BellSouth Corp. 55,000 55,000 2,299,688 - - 2,299,688 Motorola, Inc. 86,525 86,525 1,735,908 - - 1,735,908 Qwest Communications International Inc.(+) 109,290 109,290 - 4,125,698 - 4,125,698 SBC Communications Inc.(s) 61,000 189,600 250,600 3,351,188 10,416,149 - 13,767,337 Verizon Communications 89,800 103,300 193,100 5,045,687 5,804,169 - 10,849,856 See notes to Pro Forma Financial Statements 7 WorldCom, Inc.(+) 113,450 113,450 - 1,694,659 - 1,694,659 ------------------------------------------- ------------------------------------------------ 362,252 515,640 - 877,892 13,804,788 22,040,675 - 35,845,463 ------------------------------------------- ------------------------------------------------ WIRELESS TELECOMMUNICATIONS - 0.3% Nextel Communications, Inc.(+) 72,500 72,500 - 2,247,500 - 2,247,500 Sprint Corp. (PCS Group) (+) 114,600 114,600 - 2,599,988 - 2,599,988 ------------------------------------------- ------------------------------------------------ - 187,100 - 187,100 - 4,847,488 - 4,847,488 ------------------------------------------- ------------------------------------------------ UTILITIES ELECTRICAL UTILITY - 2.4% Ameren Corp. 95,100 95,100 - 4,220,062 - 4,220,062 C P & L Energy Inc. 70,900 70,900 - 3,061,994 - 3,061,994 DTE Energy Company 72,800 72,800 - 2,761,850 - 2,761,850 Dynegy Inc. Cl A 68,300 68,300 - 3,022,275 - 3,022,275 Entergy Corp. 100,200 100,200 - 4,120,725 - 4,120,725 ------------------------------------------- ------------------------------------------------ - 407,300 - 407,300 - 17,186,906 - 17,186,906 ------------------------------------------- ------------------------------------------------ UTILITIES 1.2% Dominion Resources, Inc. 20,300 20,300 1,218,000 - - 1,218,000 DQE, Inc. 41,000 41,000 1,417,063 - - 1,417,063 Duke Energy Corp. 28,000 28,000 2,518,250 - - 2,518,250 Enron Corp. 50,000 50,000 3,237,500 - - 3,237,500 ------------------------------------------- ------------------------------------------------ 139,300 - - 139,300 8,390,813 - - 8,390,813 ------------------------------------------- ------------------------------------------------ SHORT-TERM INVESTMENTS - 4.4% REPURCHASE AGREEMENTS - 1.6% Greenwich Capital Markets, Inc., Tri Party 6.55% due 11/01/00 11,724,000 11,724,000 11,724,000 11,724,000 U.S. TREASURY SECURITIES - 0.3% U.S. Treasury Notes, 5.25%, 5/31/01(s) 2,450,000 2,450,000 2,438,510 2,438,510 INVESTMENT COMPANIES - 2.5% J.P. Morgan Institutional Prime Money Market Fund (a) 18,245,417 18,245,417 18,245,416 18,245,416 TOTAL INVESTMENTS - 100.0% (COST $612,534,134) 197,588,033 527,057,247 - 724,645,280 ================================================
FUTURES CONTRACTS - J.P. MORGAN PRO FORM COMBINED
UNDERLYING FACE UNREALIZED UNREALIZED PURCHASED EXPIRATION DATE AMOUNT AT VALUE DEPRECIATION DEPRECIATION 45 S&P 500 Index December 2000 $ 14,866,875 $ (1,006,998) $ (1,006,998)
ADR American Depository Receipt (a) Money Market mutual fund registered under the Investment Company Act of 1940, as amended, and advised by J.P. Morgan Investment, Inc. (i) Foreign security See notes to Pro Forma Financial Statements 8 (s) Security is fully or partially segregated with custodian as collateral for futures or with brokers as initial margin for futures contracts. (+) Non-income producing security. The Portfolio may invest in one or more affiliated money market funds. The Advisor has agreed to reimburse its advisory fee from the Portfolio in an amount to offset any investment advisory, administrative fee and shareholder servicing fees related to a Portfolio investment in an affiliated money market fund. (1) Subsequently renamed JPMorgan Large Cap Equity Fund See notes to Pro Forma Financial Statements 9 JP MORGAN U.S. EQUITY FUND / JP MORGAN INSTITUTIONAL U.S. EQUITY FUND / JP MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO / CHASE VISTA LARGE CAP FUND(1) PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF NOVEMBER 30, 2000 (UNAUDITED)
J.P. MORGAN J.P. MORGAN J.P. MORGAN U.S. U.S. EQUITY INSTITUTIONAL U.S. EQUITY FUND - THE U.S. EQUITY FUND EQUITY FUND ADVISOR SERIES PORTFOLIO ASSETS Investment in The U.S. Equity Portfolio, at value $344,117,718 $ 183,522,572 $ 493,577 Investments at Value - - - $527,057,247.00 Cash - - - 844,092 Dividend and Interest Receivable - - - 659,002 Receivable for Fund Shares Sold Prepaid Trustees' Fees and Expenses 4,106 3,445 - 5,536 Receivable for Expense Reimbursements - - 12,235 - Prepaid Expenses and Other Assets 946 709 - 2558 ---------------------------------------------------------------------- TOTAL ASSETS 344,122,770 183,526,726 505,812 528,568,435 LIABILITIES Advisory Fee Payable - - - 183,688 Variation Margin Payable - - - 155,250 Shareholder Servicing Fee Payable 75,082 15,837 - - Distribution Fees - - - - Registration Fees - - - - Transfer Agent Fees - - - - Administrative Services Fee Payable 7,124 3,757 - 10,894 Trustees' fees - - - - Printing and postage - - - - Professional Fees - - - - Custodian fees - - - - Payable for Shares of Beneficial Interest Redeemed - - - - Fund Services Fee Payable 244 128 - 373 Administration Fee Payable 109 - - 621 Accrued Expenses and Other Liabilities 42,588 36,376 30,461 83,742 ---------------------------------------------------------------------- TOTAL LIABILITIES 125,147 56,098 30,461 434,568 ---------------------------------------------------------------------- NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867 ====================================================================== ANALYSIS OF NET ASSETS Paid-in Capital $288,461,024 $ 141,861,487 $ 500,225 $ 0 Undistributed ( Distributions in excess of ) Net Investment Income 653,902 597,017 261 - Accumulated Net Realized Gain (Loss) on Investment 11,006,423 6,324,567 (6,149) - Net Unrealized Appreciation (Depreciation) on Investment 43,876,274 34,687,557 (18,986) - ---------------------------------------------------------------------- NET ASSETS $343,997,623 $ 183,470,628 $ 475,351 $ 528,133,867 ====================================================================== Shares of Beneficial Interest Outstanding 16,611,076 15,051,872 53,157 - Shares Outstanding - - - - Net Asset Value Per Share $ 20.71 $ 12.19 $ 8.94 $ - PRO FORMA WITH CONCURRENT REORGANIZATION JPMORGAN U.S. EQUITY FUND Shares Outstanding Class A - - - - Class B - - - - Class C - - - - Select - - - - Institutional - - - - Net Asset Value Per Share Class A - - - - Class B - - - - Class C - - - - Select - - - - Institutional - - - - ---------------------------------------------------------------------- Cost of Investments - - - $447,506,258 ====================================================================== CHASE VISTA LARGE CAP PRO FORMA PROFORMA EQUITY FUND(1) ADJUSTMENTS COMBINED ASSETS Investment in The U.S. Equity Portfolio, at value $ (528,133,867)(a) $ - Investments at Value $ 197,588,033 - 724,645,280 Cash 920 - 845,012 Dividend and Interest Receivable 329,696 - 988,698 Receivable for Fund Shares Sold 78,457 - 78,457 Prepaid Trustees' Fees and Expenses - - 13,087 Receivable for Expense Reimbursements - - 12,235 Prepaid Expenses and Other Assets - - 4,213 ------------------------------------------------------------- TOTAL ASSETS 197,997,106 (528,133,867) 726,586,982 LIABILITIES Advisory Fee Payable 67,227 - 250,915 Variation Margin Payable - - 155,250 Shareholder Servicing Fee Payable 34,409 - 125,328 Distribution Fees 31,259 - 31,259 Registration Fees 30,784 - 30,784 Transfer Agent Fees 30,364 - 30,364 Administrative Services Fee Payable 8,403 - 30,178 Trustees' fees 29,932 - 29,932 Printing and postage 18,025 - 18,025 Professional Fees 11,566 - 11,566 Custodian fees 7,020 - 7,020 Payable for Shares of Beneficial Interest Redeemed 4,557 - 4,557 Fund Services Fee Payable - - 745 Administration Fee Payable 16,806 - 17,536 Accrued Expenses and Other Liabilities 3,372 - 196,539 ------------------------------------------------------------- TOTAL LIABILITIES 293,724 - 939,998 ------------------------------------------------------------- NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984 ============================================================= ANALYSIS OF NET ASSETS Paid-in Capital $ 150,862,920 $ 0 $ 581,685,656 Undistributed ( Distributions in excess of ) Net Investment Income (2,844,536) - ($1,593,356) Accumulated Net Realized Gain (Loss) on Investment 17,124,842 - $ 34,449,683 Net Unrealized Appreciation (Depreciation) on Investment 32,560,156 - $ 111,105,001 ------------------------------------------------------------- NET ASSETS $ 197,703,382 $ (528,133,867) $ 725,646,984 ============================================================= Shares of Beneficial Interest Outstanding - (31,716,105)(b) - Shares Outstanding 12,962,381 (12,962,381)(b) - Net Asset Value Per Share $ 15.23(A)* - - $ 15.11(B)* $ 15.04(C)* $ 15.30(I))* PRO FORMA WITH CONCURRENT REORGANIZATION JPMORGAN U.S. EQUITY FUND Shares Outstanding Class A - 5,013,616(c) 5,013,616 Class B - 2,207,306(c) 2,207,306 Class C - 153,915(c) 153,915 Select - 37,105,139(c) 37,105,139 Institutional - 15,051,872(c) 15,051,872 Net Asset Value Per Share Class A - - $ 12.19 Class B - - $ 12.19 Class C - - $ 12.19 Select - - $ 12.19 Institutional - - $ 12.19 ------------------------------------------------------------- Cost of Investments $ 165,027,877 - $ 612,534,135 =============================================================
(a) Reallocation of investments from the feeder funds to the master portfolio. (b) Reallocation of feeder fund's beneficial interest to Class A, Class B, Class C, Select, and Institutional Shares due to the Concurrent Reorganization. * Share class of fund (c) Reflects the additional number of shares outstanding due to the Concurrent Reorganization. (1) Subsequently renamed JPMorgan Large Cap Equity Fund. See Notes to Pro Forma Financial Statements -10- J.P. MORGAN U.S. EQUITY FUND / J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND / J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO/ CHASE VISTA LARGE CAP EQUITY FUND(1) PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000 (UNAUDITED)
J.P. MORGAN U.S. J.P. MORGAN J.P. MORGAN EQUITY FUND - U.S. EQUITY INSTITUTIONAL U.S ADVISOR EQUITY FUND EQUITY FUND SERIES --------------------------------------------------------------- INCOME: Allocated Investment Income From Portfolio 4,837,732 2,916,242 768 Dividend Income - - Interest Income - - - Dividend Income from Affiliated Investments - - Allocated Portfolio Expenses (1,840,805) (1,110,537) (229) -------------------------------------------------------------- Investment Income 2,996,927 1,805,705 539 -------------------------------------------------------------- EXPENSES: Advisory Fee - - - Shareholder Servicing Fee 995,379 240,314 175 Administrative Services Fee 96,491 58,277 - Distribution Fee - - 120 Transfer Agent Fees 82,056 18,473 4,914 Custodian Fees and Expenses - - - Registration Fees 23,213 24,416 11,042 Professional Fees 14,367 13,301 3,285 Financial and Fund Accounting Services Fee 15,041 15,041 6,095 Trustees' Fees and Expenses 5,498 3,128 124 Printing Expenses 10,376 5,584 2,421 Fund Services Fee 6,203 3,772 - Administration Fee 4,413 2,668 - Insurance Expense 497 123 - Line of Credit Expense (2,362) (2,913) - Miscellaneous 33,066 32,181 2,323 -------------------------------------------------------------- Total Expenses 1,284,238 414,365 30,499 -------------------------------------------------------------- Less: Amounts Waived Less: Reimbursement of Expenses (69,360) (30,221) -------------------------------------------------------------- Net Expenses 1,284,238 345,005 278 -------------------------------------------------------------- -------------------------------------------------------------- Net Investment Income 1,712,689 1,460,700 261 -------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net Realized gain (loss ) on: Investment Futures Contracts Investment 17,273,605 12,510,427 (6,149) Futures Contracts Investment Futures Contracts -------------------------------------------------------------- NET REALIZED GAIN (LOSS) 17,273,605 12,510,427 (6,149) -------------------------------------------------------------- Net Change in net unrealized appreciation (depreciation) on Investment (30,496,120) (17,066,424) (18,986) Futures Contracts -------------------------------------------------------------- NET CHANGE IN UNREALIZED DEPRECIATION (30,496,120) (17,066,424) (18,986) -------------------------------------------------------------- -------------------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS (11,509,826) (3,095,297) (24,874) ============================================================== THE U.S. EQUITY CHASE VISTA PORTFOLIO LARGE CAP EQUITY(1) ---------------------------------------- INCOME: Allocated Investment Income From Portfolio - Dividend Income 6,921,351 2,722,442 Interest Income 824,294 583,145 Dividend Income from Affiliated Investments 9,096 - Allocated Portfolio Expenses - --------------------------------------- Investment Income 7,754,741 3,305,587 --------------------------------------- EXPENSES: Advisory Fee 2,542,291 937,829 Shareholder Servicing Fee - 586,266 Administrative Services Fee 154,901 353,707 Distribution Fee - 404,746 Transfer Agent Fees - 218,229 Custodian Fees and Expenses 175,789 83,970 Registration Fees - 22,831 Professional Fees 45,775 33,693 Financial and Fund Accounting Services Fee - - Trustees' Fees and Expenses 8,150 11,785 Printing Expenses 257 22,159 Fund Services Fee 9,977 - Administration Fee 4,493 - Insurance Expense (1,285) - Line of Credit Expense - - Miscellaneous 10,320 14,303 --------------------------------------- Total Expenses 2,950,668 2,689,518 --------------------------------------- Less: Amounts Waived Less: Reimbursement of Expenses - (748,110) --------------------------------------- Net Expenses 2,950,668 1,941,408 --------------------------------------- --------------------------------------- Net Investment Income 4,804,073 1,364,179 --------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net Realized gain (loss ) on: Investment Futures Contracts Investment 30,706,898 12,946,307 Futures Contracts (929,015) Investment Futures Contracts --------------------------------------- NET REALIZED GAIN (LOSS) 29,777,883 12,946,307 --------------------------------------- Net Change in net unrealized appreciation (depreciation) on Investment (46,618,392) (12,915,903) Futures Contracts (963,832) --------------------------------------- NET CHANGE IN UNREALIZED DEPRECIATION (47,582,224) (12,915,903) --------------------------------------- --------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS (13,000,268) 1,394,583 ======================================= PRO FORMA PRO FORMA ADJUSTMENTS COMBINED -------------------------------------------------- INCOME: Allocated Investment Income From Portfolio (7,754,742) (a) - Dividend Income - 9,643,793 Interest Income - 1,407,439 Dividend Income from Affiliated Investments - 9,096 Allocated Portfolio Expenses 2,951,571 (b) - -------------------------------------------------- Investment Income (4,803,171) 11,060,328 -------------------------------------------------- EXPENSES: Advisory Fee - 3,480,120 Shareholder Servicing Fee - 1,822,134 Administrative Services Fee 643,515 (d) 1,306,891 Distribution Fee 2,374 (d) 407,240 Transfer Agent Fees - 323,672 Custodian Fees and Expenses (100,240) (e) 159,519 Registration Fees - 81,502 Professional Fees (53,900) (f) 56,521 Financial and Fund Accounting Services Fee (36,177) (e) - Trustees' Fees and Expenses - 28,685 Printing Expenses (20,500) (f) 20,297 Fund Services Fee - 19,952 Administration Fee - 11,574 Insurance Expense - (665) Line of Credit Expense - (5,275) Miscellaneous 92,193 -------------------------------------------------- Total Expenses 435,072 7,804,360 -------------------------------------------------- Less: Amounts Waived (435,072) (d) (435,072) Less: Reimbursement of Expenses (274,160) (a) (1,121,851) -------------------------------------------------- Net Expenses (274,160) 6,247,437 -------------------------------------------------- -------------------------------------------------- Net Investment Income (4,529,011) 4,812,891 -------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net Realized gain (loss ) on: Investment Futures Contracts Investment (29,777,883) (c) 43,653,205 Futures Contracts (929,015) Investment Futures Contracts -------------------------------------------------- NET REALIZED GAIN (LOSS) (29,777,883) 42,724,190 -------------------------------------------------- Net Change in net unrealized appreciation (depreciation) on Investment 47,581,530 (c) (59,534,295) Futures Contracts (963,832) -------------------------------------------------- NET CHANGE IN UNREALIZED DEPRECIATION 47,581,530 (60,498,127) -------------------------------------------------- -------------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS 13,274,636 (12,961,046) ==================================================
(a) Reallocation of investment income to feeder funds (b) Reflects the elimination of master portfolio expenses which have been disclosed under fund expenses. (c) Reflects the elimination of realized and unrealized gain (loss) of the feeder funds. (d) Reflects the adjustments to investment advisory fee, administrative fees and shareholder servicing fees and/or related waivers based on the surviving fund's revised fee schedule. (e) Custody fee includes all fund accounting charges, reflecting estimated benefit of combined fund. (f) Reduction reflects estimated benefits of combined funds. (1) Subsequently renamed JPMorgan Large Cap Equity Fund. See Notes to Pro Forma Financial Statements -11- THE U.S. EQUITY PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) -------------------------------------------------------------------------------- NOVEMBER 30, 2000
SHARES VALUE ------------------------------------------------------------------- COMMON STOCKS - 96.1% CAPITAL MARKETS - 2.5% SECURITIES & ASSET MANAGEMENT - 2.5% 119,700 Goldman Sachs Group, Inc. (The) $ 9,830,363 253,400 TD Waterhouse Group, Inc.+ 3,357,550 --------------- 13,187,913 --------------- COMPUTER HARDWARE - 10.0% COMPUTER HARDWARE & BUSINESS MACHINES - 10.0% 7,300 Avaya Inc.+ 85,319 414,800 Cisco Systems Inc.(s)+ 19,858,550 232,400 Compaq Computer Corp. 4,996,600 47,100 Dell Computer Corp.+ 906,675 104,500 EMC Corp. (Mass.)+ 7,772,188 69,600 Hewlett-Packard Co. 2,201,100 202,500 Quantum Corp. - DLT & Storage Systems+ 2,733,750 186,900 Sun Microsystems, Inc.(s)+ 14,216,081 --------------- 52,770,263 --------------- CONSUMER CYCLICAL - 2.6% HOTELS - 0.5% 58,700 Marriott International, Inc. 2,432,381 --------------- MOTOR VEHICLES & PARTS - 1.8% 66,400 Dana Corp. 1,112,200 167,500 Delphi Automotive Systems 2,313,594 93,492 Ford Motor Company 2,126,943 23,800 General Motors Corp. 1,178,100 129,800 Lear Corp.+ 2,839,375 --------------- 9,570,212 --------------- RESTAURANTS - 0.3% 57,000 McDonald's Corp. 1,816,875 --------------- 13,819,468 --------------- CONSUMER SERVICES - 2.9% ENTERTAINMENT - 0.7% 76,900 Viacom, Inc. Cl B+ 3,931,512 --------------- MEDIA - 2.2% 104,200 AT&T Corp. - Liberty Media Group Cl A+ 1,413,213 40,758 Charter Communications, Inc.+ 804,971 93,800 Comcast Corp. Cl A+ 3,605,438 106,400 News Corp. Ltd. (The) ADR(i) 3,710,699 27,700 Time Warner Inc. 1,717,400 --------------- 11,251,721 --------------- 15,183,233 --------------- CONSUMER STABLE - 6.1% HOME PRODUCTS - 4.0% 52,800 Clorox Company 2,359,500 62,700 Estee Lauder Companies, Inc. 2,715,694 SHARES VALUE ------------------------------------------------------------------- 153,400 Gillette Company $ 5,196,425 142,000 Procter & Gamble Co. (The) 10,632,250 --------------- 20,903,869 --------------- TOBACCO - 2.1% 295,300 Philip Morris Companies Inc. 11,276,769 --------------- 32,180,638 --------------- ENERGY - 6.1% ENERGY RESERVES & PRODUCTION - 4.7% 44,500 Anadarko Petroleum Corp. 2,647,750 37,900 Chevron Corp. 3,103,063 217,548 Exxon Mobil Corp.(s) 19,144,223 --------------- 24,895,036 --------------- OIL REFINING - 0.3% 24,100 Texaco Inc. 1,399,306 --------------- OIL SERVICES - 1.1% 109,900 Baker Hughes Inc. 3,633,569 108,600 Global Marine Inc.+ 2,382,413 --------------- 6,015,982 --------------- 32,310,324 --------------- FINANCE - 11.4% BANKS - 4.1% 223,100 Amsouth Bancorporation 3,318,613 81,566 Citigroup Inc. 4,063,006 103,000 First Union Corp. 2,587,875 608,000 Firstar Corp.(s) 11,780,000 --------------- 21,749,494 --------------- FINANCIAL SERVICES - 6.8% 219,900 Associates First Capital Corp. 7,765,219 69,900 Capital One Financial Corp. 3,901,294 95,900 Countrywide Credit Industries, Inc. 3,560,288 43,100 Federal Home Loan Mortgage Corp. 2,604,856 331,700 General Electric Co. (U.S.)(s) 16,439,880 14,700 Providian Financial Corp. 1,323,000 --------------- 35,594,537 --------------- THRIFTS - 0.5% 56,300 Washington Mutual, Inc. 2,558,131 --------------- 59,902,162 --------------- HEALTH SERVICES & SYSTEMS - 1.5% MEDICAL PRODUCTS & SUPPLIES - 1.5% 38,700 Bard (C.R.), Inc. 1,905,975 89,100 Becton Dickinson & Co. 3,029,400 53,200 Medtronic, Inc. 2,832,900 --------------- 7,768,275 --------------- INDUSTRIAL CYCLICAL - 10.0% CHEMICALS - 2.0% 205,300 Air Products & Chemicals, Inc. 7,070,019
The Accompanying Notes are an Integral Part of the Financial Statements. 13 THE U.S. EQUITY PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) -------------------------------------------------------------------------------- (Continued) NOVEMBER 30, 2000
SHARES VALUE ------------------------------------------------------------------- 112,700 Rohm and Haas Co. $ 3,352,825 --------------- 10,422,844 --------------- DEFENSE/AEROSPACE - 0.7% 74,600 Honeywell Inc. 3,636,750 --------------- ELECTRICAL EQUIPMENT - 2.2% 36,000 Corning Inc. 2,106,000 9,900 Corvis Corp.+ 285,244 100,200 Level 3 Communications, Inc.+ 2,692,875 142,400 Nortel Networks Corp. 5,375,600 12,500 QUALCOMM Inc.+ 1,003,125 --------------- 11,462,844 --------------- ENVIRONMENTAL SERVICES - 0.6% 139,757 Waste Management, Inc. 3,345,433 --------------- HEAVY ELECTRICAL EQUIPMENT - 0.6% 71,600 Cooper Industries, Inc. 2,922,175 --------------- INDUSTRIAL PARTS - 2.7% 281,092 Tyco International Ltd.(i)(s) 14,827,602 --------------- MINING & METALS - 0.7% 61,764 Alcoa Inc. 1,740,973 110,186 Allegheny Technologies Inc. 2,189,947 --------------- 3,930,920 --------------- RAILROADS - 0.5% 51,900 Union Pacific Corp. 2,413,350 --------------- 52,961,918 --------------- INSURANCE - 4.9% LIFE & HEALTH INSURANCE - 1.8% 45,100 CIGNA Corp. 5,941,925 118,600 MetLife, Inc.+ 3,513,525 --------------- 9,455,450 --------------- PROPERTY AND CASUALTY INSURANCE - 3.1% 137,800 Allstate Corp. 5,270,850 83,400 Ambac Financial Group, Inc. 6,369,675 57,300 XL Capital Ltd. Cl A(i) 4,573,256 --------------- 16,213,781 --------------- 25,669,231 --------------- PHARMACEUTICALS - 11.3% DRUGS - 11.3% 125,200 Alza Corp.+ 5,555,750 62,300 American Home Products Corp. 3,745,788 61,700 Bristol-Myers Squibb Co. 4,276,581 88,500 Lilly (Eli) & Co. 8,291,344 64,900 Merck & Co., Inc. 6,015,419 269,800 Pfizer, Inc.(s) 11,955,512 181,675 Pharmacia Corp. 11,082,175 153,600 Schering-Plough Corp. 8,611,200 --------------- 59,533,769 --------------- SHARES VALUE ------------------------------------------------------------------- RETAIL - 5.0% CLOTHING STORES - 1.5% 102,400 Abercrombie & Fitch Co. Cl A+ $ 2,137,600 110,400 Gap, Inc. (The) 2,753,100 110,300 TJX Companies, Inc. (The) 2,826,438 --------------- 7,717,138 --------------- DEPARTMENT STORES - 1.9% 110,000 Target Corp. 3,306,875 136,800 Wal-Mart Stores, Inc. 7,139,249 --------------- 10,446,124 --------------- SPECIALTY STORES - 1.6% 56,100 Best Buy Co., Inc.+ 1,444,575 175,300 Home Depot, Inc. 6,869,569 --------------- 8,314,144 --------------- 26,477,406 --------------- SEMICONDUCTORS - 4.4% SEMICONDUCTORS - 4.4% 39,500 Altera Corp.+ 945,531 6,200 Broadcom Corp.+ 604,500 243,500 Intel Corp.(s) 9,268,219 2,400 Lattice Semiconductor Corp.+ 39,900 36,700 Linear Technology Corp.+ 1,736,369 35,000 Maxim Integrated Products, Inc.+ 1,785,000 55,000 Micron Technology, Inc.+ 1,732,500 17,200 SDL, Inc.+ 3,126,100 59,500 Texas Instruments Inc. 2,220,094 40,000 Xilinx, Inc.+ 1,560,000 --------------- 23,018,213 --------------- SOFTWARE & SERVICES - 9.0% COMPUTER SOFTWARE - 7.7% 40,200 BEA Systems, Inc.+ 2,354,213 85,100 Gemstar International Group Ltd.+ 3,462,506 23,800 International Business Machines Corp. 2,225,300 276,000 Microsoft Corp.(s)+ 15,835,500 160,400 NCR Corp.+ 7,578,900 141,400 Oracle Corp.+ 3,747,100 135,200 Parametric Technology Corp.+ 1,504,100 41,078 Veritas Software Corp.+ 4,007,672 --------------- 40,715,291 --------------- INTERNET - 1.3% 21,900 Akamai Technologies, Inc.+ 629,625 61,800 America Online, Inc.+ 2,509,698 380,400 E*trade Group Inc.+ 3,043,200 18,000 eBay Inc.+ 617,625 --------------- 6,800,148 --------------- 47,515,439 ---------------
14 The Accompanying Notes are an Integral Part of the Financial Statements. THE U.S. EQUITY PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) -------------------------------------------------------------------------------- (Continued) NOVEMBER 30, 2000
SHARES/PRINCIPAL AMOUNT VALUE -------------------------------------------------------------------- TELECOMMUNICATIONS - 5.1% TELEPHONE - 4.2% 109,290 Qwest Communications International Inc.+ $ 4,125,698 189,600 SBC Communications Inc.(s) 10,416,149 103,300 Verizon Communications 5,804,169 113,450 WorldCom, Inc.+ 1,694,659 --------------- 22,040,675 --------------- WIRELESS TELECOMMUNICATIONS - 0.9% 72,500 Nextel Communications, Inc.+ 2,247,500 114,600 Sprint Corp. (PCS Group)+ 2,599,988 --------------- 4,847,488 --------------- 26,888,163 --------------- UTILITIES - 3.3% ELECTRICAL UTILITY - 3.3% 95,100 Ameren Corp. 4,220,062 70,900 C P & L Energy Inc. 3,061,994 72,800 DTE Energy Company 2,761,850 68,300 Dynegy Inc. Cl A 3,022,275 100,200 Entergy Corp. 4,120,725 --------------- 17,186,906 --------------- TOTAL COMMON STOCKS 506,373,321 --------------- (Cost $426,829,334) SHORT-TERM INVESTMENTS - 3.9% INVESTMENT COMPANIES - 3.4% 18,245,417 J.P. Morgan Institutional Prime Money Market Fund(a) 18,245,416 --------------- U.S. TREASURY SECURITIES - 0.5% $2,450,000 U.S. Treasury Notes, 5.25%, 5/31/01(s) 2,438,510 --------------- TOTAL SHORT-TERM INVESTMENTS 20,683,926 --------------- (Cost $20,676,924) TOTAL INVESTMENT SECURITIES - 100.0% $ 527,057,247 =============== (Cost $447,506,258) FUTURES CONTRACTS UNDERLYING FACE AMOUNT UNREALIZED PURCHASED EXPIRATION DATE AT VALUE DEPRECIATION -------------------------------------------------------------------- 45 S&P 500 Index December 2000 $14,866,875 $(1,006,998) ==============================
ADR - American Depositary Receipt (a) Money Market mutual fund registered under the Investment Company Act of 1940, as amended, and advised by J.P. Morgan Investment Management, Inc. (i) Foreign security (s) Security is fully or partially segregated with custodian as collateral for futures or with brokers as initial margin for futures contracts. + Non-income producing security. The Accompanying Notes are an Integral Part of the Financial Statements. 15 JP MORGAN U.S. EQUITY FUND / JP MORGAN INSTITUTIONAL U.S. EQUITY FUND / JP MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO Pro Forma Combining Statement of Assets & Liabilities As of November 30, 2000 (Unaudited)
J.P. MORGAN U.S. J.P. MORGAN J.P. MORGAN EQUITY FUND INSTITUTIONAL U.S. U.S. EQUITY FUND - THE U.S. EQUITY EQUITY FUND ADVISOR SERIES PORTFOLIO ASSETS Investment in The U.S. Equity Portfolio ("Portfolio"), at vale $ 344,117,718 $ 183,522,572 $ 493,577 $ - Investments at Value (Cost $447,506,258) - - - 527,057,247 Cash - - - 844,092 Dividends and Interest Receivable - - - 659,002 Prepaid Trustees' Fees and Expenses 4,106 3,445 - 5,536 Receivable for Expense Reimbursements - - 12,235 - Prepaid Expenses and Other Assets 946 709 - 2,558 ----------------------------------------------------------------------------------- TOTAL ASSETS 344,122,770 183,526,726 505,812 528,568,435 LIABILITIES Advisory Fee Payable - - - 183,688 Variation Margin Payable - - - 155,250 Shareholder Servicing Fee Payable 75,082 15,837 - 0 Administrative Services Fee Payable 7,124 3,757 - 10894 Fund Services Fee Payable 244 128 - 373 Administration Fee Payable 109 0 - 621 Accrued Expenses and Other Liabilities 42,588 36,376 30,461 83,742 ----------------------------------------------------------------------------------- TOTAL LIABILITIES 125,147 56,098 30,461 434,568 ----------------------------------------------------------------------------------- NET ASSETS $343,997,623 $183,470,628 $475,351 $528,133,867 =================================================================================== ANALYSIS OF NET ASSETS Paid-in Capital $288,461,024 $141,861,487 $500,225 - Undistributed Net Investment Income 653,902 597,017 261 - Accumulated Net Realized Gain (Loss) on Investment 11,006,423 6,324,567 (6,149) - Net Unrealized Appreciation (Depreciation) on Investment 43,876,274 34,687,557 (18,986) - ----------------------------------------------------------------------------------- NET ASSETS $343,997,623 $183,470,628 $475,351 $528,133,867 =================================================================================== Shares of Beneficial Interest Outstanding 16,611,076 15,051,872 53,157 - Net Asset Value Per Share 20.71 12.19 8.94 - PRO FORMA WITH REORGANIZATION JPMORGAN U.S. EQUITY FUND Shares Outstanding Class A Shares - - - - Select Shares - - - - Institutional Shares - - - - Net Asset Value Class A Shares - - - Select Shares - - - Institutional Shares - - - ===================================================================== PROFORMA COMBINED PROFORMA JPMORGAN ADJUSTMENTS U.S. EQUITY FUND ASSETS Investment in The U.S. Equity Portfolio ("Portfolio"), at vale $ (528,133,867) (a) $ - Investments at Value (Cost $447,506,258) - 527,057,247 Cash - 844,092 Dividends and Interest Receivable - 659,002 Prepaid Trustees' Fees and Expenses - 13,087 Receivable for Expense Reimbursements - 12,235 Prepaid Expenses and Other Assets - 4,213 ---------------------------------------------- TOTAL ASSETS (528,133,867) 528,589,876 LIABILITIES Advisory Fee Payable - 183,688 Variation Margin Payable - 155,250 Shareholder Servicing Fee Payable - 90,919 Administrative Services Fee Payable - 21,775 Fund Services Fee Payable - 745 Administration Fee Payable - 730 Accrued Expenses and Other Liabilities - 193,167 ---------------------------------------------- TOTAL LIABILITIES - 646,274 ---------------------------------------------- NET ASSETS $ (528,133,867) $ 527,943,602 ============================================== ANALYSIS OF NET ASSETS Paid-in Capital - $430,822,736 Undistributed Net Investment Income - 1,251,180 Accumulated Net Realized Gain (Loss) on Investment - 17,324,841 Net Unrealized Appreciation (Depreciation) on Investment - 78,544,845 ---------------------------------------------- NET ASSETS $ (528,133,867) $527,943,602 ============================================== Shares of Beneficial Interest Outstanding (31,716,105)(b) - Net Asset Value Per Share - - PRO FORMA WITH REORGANIZATION JPMORGAN U.S. EQUITY FUND Shares Outstanding Class A Shares 38,998 (c) 38,998 Select Shares 28,221,456 (c) 28,221,456 Institutional Shares 15,051,872 (c) 15,051,872 Net Asset Value Class A Shares - $ 12.19 Select Shares - $ 12.19 Institutional Shares - $ 12.19 ==============================================
(a) Reallocation of investments from the feeder funds to the master portfolio (b) Reallocation of feeder fund's beneficial interest to Class A, Institutional, and Select Shares due to the Reorganization (c) Reflects the additional number of shares outstanding due to the Reorganization 12 JP MORGAN U.S. EQUITY FUND / JP MORGAN INSTITUTIONAL U.S. EQUITY FUND / JP MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO PRO FORMA COMBINING STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2000 (UNAUDITED)
J.P. MORGAN U.S. J.P. MORGAN EQUITY FUND INSTITUTIONAL U.S. EQUITY FUND INCOME: Allocated Investment Income From Portfolio $ 4,837,732 $ 2,916,242 Interest Income - - Dividend Income from Affiliated Investments - Dividend Income - - Allocated Portfolio Expenses (1,840,805) (1,110,537) ----------------------------------------------- Investment Income 2,996,927 1,805,705 =============================================== EXPENSES: Advisory Fee - - Shareholder Servicing Fee 995,379 240,314 Administrative Services Fee 96,491 58,277 Custodian Fees and Expenses - - Transfer Agent Fees 82,056 18,473 Registration Fees 23,213 24,416 Professional Fees 14,367 13,301 Financial and Fund Accounting Services Fee 15,041 15,041 Fund Services Fee 6,203 3,772 Trustees' Fees and Expenses 5,498 3,128 Administration Fee 4,413 2,668 Printing Expenses 10,376 5,584 Distribution Fee - - Insurance Expense 497 123 Line of Credit Expense (2,362) (2,913) Miscellaneous 33,066 32,181 ----------------------------------------------- Total Expenses 1,284,238 414,365 ----------------------------------------------- Less: Amounts Waived Less: Reimbursement of Expenses (69,360) ----------------------------------------------- Net Expenses 1,284,238 345,005 ----------------------------------------------- ----------------------------------------------- Net Investment Income 1,712,689 1,460,700 =============================================== REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: NET REALIZED GAIN (LOSS) ON: Investment 17,273,605 12,510,427 Futures Contracts ----------------------------------------------- NET REALIZED GAIN (LOSS) 17,273,605 12,510,427 ----------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON: Investment (30,496,120) (17,066,424) Futures Contracts ----------------------------------------------- Net Change in net unrealized depreciation (30,496,120) (17,066,424) ----------------------------------------------- ----------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (11,509,826) $ (3,095,297) =============================================== J.P. MORGAN U.S. EQUITY FUND - THE U.S. EQUITY ADVISOR SERIES PORTFOLIO INCOME: Allocated Investment Income From Portfolio $ 768 $ - Interest Income - 824,294 Dividend Income from Affiliated Investments - 9,096 Dividend Income - 6,921,351 Allocated Portfolio Expenses (229) - ------------------------------------------- Investment Income 539 7,754,741 =========================================== EXPENSES: Advisory Fee - 2,542,291 Shareholder Servicing Fee 175 - Administrative Services Fee - 154,901 Custodian Fees and Expenses - 175,789 Transfer Agent Fees 4,914 - Registration Fees 11,042 - Professional Fees 3,285 45,775 Financial and Fund Accounting Services Fee 6,095 - Fund Services Fee - 9,977 Trustees' Fees and Expenses 124 8,150 Administration Fee - 4,493 Printing Expenses 2,421 257 Distribution Fee 120 - Insurance Expense - (1,285) Line of Credit Expense - - Miscellaneous 2,323 10,320 ------------------------------------------- Total Expenses 30,499 2,950,668 ------------------------------------------- Less: Amounts Waived Less: Reimbursement of Expenses (30,221) - ------------------------------------------- Net Expenses 278 2,950,668 ------------------------------------------- ------------------------------------------- Net Investment Income 261 4,804,073 =========================================== REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: NET REALIZED GAIN (LOSS) ON: Investment (6,149) 30,706,898 Futures Contracts (929,015) ------------------------------------------- NET REALIZED GAIN (LOSS) (6,149) 29,777,883 ------------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON: Investment (18,986) (46,618,392) Futures Contracts (963,832) ------------------------------------------- Net Change in net unrealized depreciation (18,986) (47,582,224) ------------------------------------------- ------------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ (24,874) $ (13,000,268) =========================================== PROFORMA COMBINED PROFORMA JPMORGAN ADJUSTMENTS U.S. EQUITY FUND INCOME: Allocated Investment Income From Portfolio $ (7,754,742) (a) $ - Interest Income - 824,294 Dividend Income from Affiliated Investments - 9,096 Dividend Income - 6,921,351 Allocated Portfolio Expenses 2,951,571 (b) - ----------------------------------------- Investment Income (4,803,171) 7,754,741 ========================================= EXPENSES: Advisory Fee - 2,542,291 Shareholder Servicing Fee - 1,235,868 Administrative Services Fee 646,002 (d) 955,671 Custodian Fees and Expenses (16,270) (e) 159,519 Transfer Agent Fees - 105,443 Registration Fees - 58,671 Professional Fees (23,900) (f) 52,828 Financial and Fund Accounting Services Fee (36,177) (e) - Fund Services Fee - 19,952 Trustees' Fees and Expenses - 16,900 Administration Fee - 11,574 Printing Expenses (10,500) (f) 8,138 Distribution Fee 490 (d) 610 Insurance Expense - (665) Line of Credit Expense - (5,275) Miscellaneous 77,890 ----------------------------------------- Total Expenses 559,645 5,239,415 ----------------------------------------- Less: Amounts Waived (559,645) (d) (559,645) Less: Reimbursement of Expenses (99,581) ----------------------------------------- - Net Expenses - 4,580,189 ----------------------------------------- - ----------------------------------------- Net Investment Income (4,803,171) 3,174,552 ========================================= REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: NET REALIZED GAIN (LOSS) ON: Investment (29,777,883) (c) 30,706,898 Futures Contracts (929,015) ----------------------------------------- NET REALIZED GAIN (LOSS) (29,777,883) 29,777,883 ----------------------------------------- NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON: - Investment 47,581,530 (c) (46,618,392) Futures Contracts (963,832) ----------------------------------------- Net Change in net unrealized depreciation 47,581,530 (47,582,224) ----------------------------------------- - - ----------------------------------------- NET DECREASE IN NET ASSETS FROM OPERATIONS $ 13,000,476 $ (14,629,789) =========================================
(a) Reallocation of investment income to feeder funds. (b) Reflects the elimination of master portfolio expenses which have been disclosed under fund expenses. (c) Reflects the elimination of master portfolio expenses which have been disclosed under fund expenses. (d) Reflects adjustments to investment advisory fee, administrative fees and shareholder servicing fees and/or related waivers based on the surviving Fund's revised fee schedule. (e) Custody fee includes all fund accounting charges, reflecting estimated benefit of combined fund. (f) Reduction reflects estimated benefits of combined funds. 13 J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND / J.P. MORGAN U.S EQUITY FUND / J.P. MORGAN U.S. EQUITY FUND - ADVISOR SERIES / THE U.S. EQUITY PORTFOLIO / CHASE VISTA LARGE CAP EQUITY FUND NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF COMBINATION: The Pro Forma Combining Statement of Assets and Liabilities, Statement of Operations and Schedule of Investments ("Pro Forma Statements") reflect the accounts of The U.S. Equity Portfolio ("Master Portfolio"), J.P. Morgan Institutional U.S. Equity Fund ("Institutional Fund"), J.P. Morgan U.S. Equity Fund ("U.S. Equity Fund") and J.P. Morgan U.S. Equity Fund - Advisor Series ("Advisor Series Fund") (collectively the "feeder funds" of the Master Portfolio) as if the proposed Reorganization occurred as of and for the twelve months ended November 30, 2000. The Pro Forma Combining Statement of Assets and Liabilities, Statement of Operations and Schedule of Investments ("Pro Forma Statements") reflect the accounts of the Master Portfolio, the feeder funds, and Chase Vista Large Cap Equity Fund ("CVLCE") (renamed JPMorgan Large Cap Equity Fund) as if the proposed Concurrent Reorganization occurred as of and for the twelve months ended November 30, 2000. 2. SHARES OF BENEFICIAL INTEREST: Under the Reorganization, the existing shares of Institutional Fund, U.S. Equity Fund, and Advisor Series Fund would be renamed Institutional Shares, Select Shares, and Class A Shares, respectively. The net asset values per share for Select Shares and Class A Shares at the commencement of offering would be identical to the closing net asset value per share for the Institutional Shares immediately prior to the Reorganization. Under the Concurrent Reorganization, the existing shares of Institutional Fund, U.S. Equity Fund, and Advisor Series Fund would be renamed Institutional Shares, Select Shares, and Class A Shares, respectively and would commence offering Class B and Class C Shares. The net asset values per share for Select Shares, Class A Shares, Class B Shares, and Class C Shares at the commencement of offering would be identical to the closing net asset value per share for the Institutional Shares immediately prior to the Reorganization. Under the proposed Reorganization, each shareholder of U.S Equity Fund and Advisor Series Fund would receive shares of Institutional Fund with a value equal to their holdings in their respective funds. Holders of U.S Equity Fund will receive Select Shares and holders of the Advisor Series Fund will receive Class Shares in Institutional Fund. Therefore, as a result of the proposed Reorganization, current shareholders of U.S. Equity Fund and Advisor Series Fund will become shareholders of Institutional Fund. Under the proposed Concurrent Reorganization, each shareholders of U.S. Equity Fund, Advisor Series Fund, and CVLCE would receive shares of Institutional Fund with a value equal to their holdings in their respective funds. Holders of U.S. Equity Fund will receive Select 14 Shares, holders of the Advisor Series Fund will receive Class A Shares, holders of Class A Shares in CVLCE will receive Class A Shares, holders of Class B Shares in CVLCE will receive Class B Shares, holders of Class C Shares in CVLCE will receive Class C Shares, and holders of Class I Shares in CVLCE will receive Select Shares in Institutional Fund. Therefore, as a result of the proposed Concurrent Reorganization, current shareholders of U.S. Equity Fund, Advisor Series Fund, and CVLCE will become shareholders of Institutional Fund. The Pro Forma net asset value per share assumes the issuance of additional shares of Institutional Fund, which would have been issued on November 30, 2000 in connection with the proposed Reorganization and the proposed Concurrent Reorganization. The amount of additional shares assumed to be issued under the Reorganization was calculated based on the November 30, 2000 net assets of U.S. Equity Fund and Advisor Series Fund and the net asset values per share of Institutional Fund. The amount of additional shares assumed to be issued under the Concurrent Reorganization was calculated based on the November 30, 2000 net assets of U.S. Equity Fund, Advisor Series Fund, and CVLCE and the net asset value per share of Institutional Fund. J.P. MORGAN U.S. EQUITY FUND WITH REORGANIZATION
CLASS A SHARES SELECT SHARES -------------- ------------- Increase in Shares Issued 38,998 28,221,456 Net Assets 11/30/00 475,351 343,997,623 Pro Forma Net Asset Value 11/30/00 12.19 12.19
J.P. MORGAN U.S. EQUITY FUND WITH CONCURRENT REORGANIZATION
CLASS A CLASS B CLASS C SELECT ------- ------- ------- ------ Increase in Shares Issued 5,013,616 2,207,306 153,915 37,105,139 Net Assets 11/30/00 61,112,083 26,905,349 1,876,106 452,282,818 Pro Forma Net Asset Value 11/30/00 12.19 12.19 12.19 12.19
3. PRO FORMA OPERATIONS: The Pro Forma Statement of Operations assumes similar rates of gross investment income for the investments of each Fund. Accordingly, the combined gross investment income is equal to the sum of each Fund's gross investment income. Certain expenses have been adjusted to reflect the expected expenses of the combined entity including the change in administration fee and the new 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 Surviving Fund at the combined level of average net assets for the twelve months ended November 30, 2000. 15 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). (f) 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). (g) 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). (h) 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). (i) 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). (j) 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). (k) 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). (l) 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). (m) 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). (n) 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). (o) 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 Form of Investment Advisory Agreement to be filed by Amendment. 7 Distribution Agreement to be filed by Amendment. 8 Not Applicable 9 Custodian Agreement (a) Custodian Contract between Registrant and State Street Bank and Trust Company ("State Street"). Incorporated herein by reference to Post-Effective Amendment No. 29 to the Registration Statement filed on December 26, 1996 (Accession Number 0001016964-96-000061). (b) Custodian Contract between Registrant and The Bank of New York. Incorporated herein by reference to Post-Effective Amendment No. 71 to the Registration Statement filed on February 28, 2000 (Accession Number 0001041455-00-000056). 10 Forms of Rule 12b1 Distribution Plans to be filed by Amendment. 11 Opinion and Consent of Nixon Peabody LLP as to legality of shares to be filed by Amendment. 12 Opinion and Consent of Simpson Thacher & Bartlett as to Tax Consequences to be filed by Amendment. 13 Material Contracts. (a) Co-Administration Agreement between Registrant and FDI. Incorporated herein by reference to Post-Effective Amendment No. 29 to the Registration Statement filed on December 26, 1996 (Accession Number 0001016964-96-000061). Part C-3 (b) Restated Shareholder Servicing Agreement between Registrant and Morgan Guaranty Trust Company of New York ("Morgan Guaranty") filed as Exhibit (h)2 to Post Effective Amendment No. 54 to the Registration Statement on August 25, 1998 (Accession No. 0001041455-98-000053). (c) Transfer Agency and Service Agreement between Registrant and State Street. Incorporated herein by reference to Post-Effective Amendment No. 29 to the Registration Statement filed on December 26,1996 (Accession Number 0001016964-96-000061). (d) Restated Administrative Services Agreement between Registrant and Morgan Guaranty. Incorporated herein by reference to Post-Effective Amendment No. 29 to the Registration Statement filed on December 26, 1996 (Accession Number 0001016964-96-000061). (e) Fund Services Agreement, as amended, between Registrant and Pierpont Group, Inc. Incorporated herein by reference to Post-Effective Amendment No. 29 to the Registration Statement filed on December 26, 1996 (Accession Number 0001016964-96-000061). (f) Service Plan with respect to Registrant's Service Money Market Funds. Incorporated herein by reference to Post-Effective Amendment No. 33 to the Registration Statement filed on April 30, 1997 (Accession Number 00001016964-97-000059). (g) Service Plan with respect to Registrant's Small Company Fund Advisor Series, Small Company Opportunities Fund-Advisor Series, International Equity Fund-Advisor Series, International Opportunities Fund-Advisor Series, U.S. Equity Fund-Advisor Series, Diversified Fund-Advisor Series incorporated herein by reference to Post-Effective Amendment No. 78 to the Registration Statement filed on August 1, 2000 (Accession Number 0000894088-00-000008). (h) Amended Service Plan with respect to Registrant's Disciplined Equity-Advisor series and Direct Prime Money Market Funds. Incorporated herein by reference to Post-Effective Amendment No. 72 to the Registration Statement filed on April 3, 2000 (Accession Number 0001041455-00-000084). (i) Amended Service Plan with respect to Registrant's J.P. Morgan Prime Cash Management Fund. Incorporated herein by reference to Post-Effective Amendment No. 75 to Registration Statement filed on May 17, 2000 (Accession Number 0001041455-00-000122). (j) Form of Administration Agreement (to be filed by Amendment) (k) Form of Sub-Administration Agreement (to be filed by Amendment) 14 Consent of PricewaterhouseCoopers LLP. 15 None 16 Powers of Attorney. Part C-4 17(a) Form of Proxy Card. 17(b) Prospectus for the Surviving Fund to be filed by Amendment. 17(c) Prospectus for the Merging Fund. 17(d) Statement of Additional Information for the Surviving Fund to be filed by Amendment. 17(e) Statement of Additional Information for the Merging Fund. 17(f) Annual Report of the Surviving Fund (including the Annual Report of the Master Portfolio), dated May 31, 2000. 17(g) Semi-Annual Report of the Surviving Fund (including the Semi-Annual Report of the Master Portfolio), dated November 30, 2000. 17(h) Annual Report of the Merging Fund (including the Annual Report of the Master Portfolio), dated May 31, 2000 (to be filed by Amendment). 17(i) Semi-Annual Report of the Merging Fund (including the Semi-Annual Report of the Master Portfolio), dated November 30, 2000. Item 17. Undertakings. ---------------- (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended (the "1933 Act"), the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. Part C-5 SIGNATURES As required by the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the City of New York and the State of New York, on the 9th day of April, 2001. J.P. MORGAN INSTITUTIONAL FUNDS Registrant By: /s/ Christopher Kelley -------------------------------- Christopher Kelley Vice President and Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities indicated on April 12, 2001. George Rio* --------------------------------------- George Rio President and Treasurer Matthew Healey* --------------------------------------- Matthew Healey Trustee, Chairman and Chief Executive Officer (Principal Executive Officer) Frederick S. Addy* --------------------------------------- Frederick S. Addy Trustee William G. Burns* --------------------------------------- William G. Burns Trustee Arthur C. Eschenlauer* --------------------------------------- Arthur C. Eschenlauer Trustee Michael P. Mallardi* --------------------------------------- Michael P. Mallardi Trustee *By /s/ Christopher Kelley --------------------------------------- Christopher Kelley as attorney-in-fact pursuant to a power of attorney. EXHIBITS ITEM DESCRIPTION (14) Consent of PricewaterhouseCoopers LLP. (16) Powers of Attorney. (17) (a) Form of Proxy Card. (c) Prospectus for the J.P. Morgan U.S. Equity Fund-Advisor Series. (e) Statement of Additional Information for J.P. Morgan U.S. Equity Fund-Advisor Series. (f) Annual Report of J.P. Morgan Institutional U.S. Equity Fund (including Annual Report of The U.S. Equity Portfolio), dated May 31, 2000. (g) Semi-Annual Report of J.P. Morgan Institutional U.S. Equity Fund (including Semi-Annual Report of The U.S. Equity Portfolio), dated November 30, 2000. (i) Semi-Annual Report of J.P. Morgan U.S. Equity Fund-Advisor Series (including Semi-Annual Report of The U.S. Equity Portfolio), dated November 30, 2000.