As filed with the Securities and Exchange Commission on March 10, 2000
Securities Act File No. 333-_____
Investment Company Act File No. 811-08797
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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[ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No.
(Check appropriate box or boxes)
MERCURY SELECT GROWTH FUND
of Mercury Asset Management Funds, Inc.
(Exact Name of Registrant as Specified in its Charter)
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(609) 282-2800
(Area Code and Telephone Number)
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800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices:
Number, Street, City, State, Zip Code)
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Jeffrey M. Peek
Mercury Select Growth Fund
of Mercury Asset Management Funds, Inc.
800 Scudders Mill Road, Plainsboro, New Jersey 08536
Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
(Name and Address of Agent for Service)
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Copies to:
Counsel for the Fund: and ROBERT E.PUTNEY III, Esq.
JOEL H. GOLDBERG, Esq. P.O. Box 9011
Swidler Berlin Shereff Friedman, LLP Princeton, New Jersey 08543-9011
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
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Approximate Date of Proposed Public Offering:
As soon as practicable after the Registration Statement becomes effective
under the Securities Act of 1933.
Title of Securities Being Registered: Shares of Common Stock, Par Value $.0001
per share.
No filing fee is required because of reliance on Section 24(f) under the
Investment Company Act of 1940, as amended.
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE ON APRIL 10, 2000, PURSUANT TO
RULE 888.
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TURNER LARGE CAP GROWTH EQUITY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Your Fund will host a Special Meeting of Shareholders on Wednesday, May 31,
2000, at 3:30 p.m., Eastern time. The Meeting will be held at Turner
Investment Partners's offices at 1235 Westlakes Drive, Suite 350, Berwyn,
Pennsylvania. At the Meeting, we will ask shareholders to vote on:
1. A proposal to reorganize Turner Large Cap Growth Equity Fund
into Mercury Select Growth Fund. The Reorganization includes
the transfer of all of the assets and liabilities of your Fund
to Mercury Select Growth Fund in exchange for an equal
aggregate value of Class I shares of Mercury Select Growth
Fund. Because Mercury Select Growth Fund invests all of its
assets in another fund in a "master/feeder" structure, the
Reorganization also includes the transfer of those assets and
certain liabilities to the master fund to implement this
structure. A vote in favor of this proposal constitutes a vote
in favor of both parts of the reorganization, as well as a vote
in favor of the liquidation and termination of your Fund's
existence.
2. Any other business properly brought before the meeting.
The Board of Trustees of Turner Large Cap Growth Equity Fund has fixed the
close of business on April 19, 2000 as the record date for the determination
of shareholders entitled to notice of, and to vote at, the Special Meeting of
Shareholders or any adjournment thereof.
A complete list of the shareholders of Turner Large Cap Growth Equity Fund
entitled to vote at the Special Meeting of Shareholders will be available and
open to the examination of any shareholders of Turner Large Cap Growth Equity
Fund for any purpose germane to the Special Meeting of Shareholders during
ordinary business hours from and after _______, 2000 at the offices of Turner
Investment Partners, 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania.
By Order of the Board of Trustees
James W. Jennings, Secretary
Berwyn, Pennsylvania
April ____, 2000
YOUR VOTE IS IMPORTANT!
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING OF SHAREHOLDERS.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING CAN VOTE EASILY AND
QUICKLY. JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON YOUR ENCLOSED
PROXY CARD. PLEASE HELP YOUR FUND AVOID THE EXPENSE TO SHAREHOLDERS OF A
FOLLOW-UP MAILING BY VOTING TODAY!
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities
may not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
TURNER LARGE CAP GROWTH EQUITY FUND
MERCURY SELECT GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
MAY 31, 2000
COMBINED PROXY STATEMENT/PROSPECTUS
PROPOSAL SUMMARY. This Proxy Statement/Prospectus is furnished in connection
with the solicitation of proxies on behalf of the Board of Trustees of Turner
Large Cap Growth Equity Fund for use at the Special Meeting of Shareholders.
The Special Meeting of Shareholders has been called to consider a proposal to
reorganize Turner Large Cap Growth Equity Fund into a substantially similar
fund that is being created by Mercury Asset Management Funds, Inc., called
Mercury Select Growth Fund. The Reorganization involves four basic steps.
First, your Fund will transfer all of its assets and liabilities to Mercury
Select Growth Fund. Simultaneously, Mercury Select Growth Fund will open an
account for you, crediting you with Class I shares of Mercury Select Growth
Fund that are equivalent in value to your investment in the Fund at the time
of the Reorganization. In addition, as soon as practicable thereafter,
Mercury Select Growth Fund will transfer all of its assets and certain
liabilities to the underlying Portfolio in which it invests as part of a
"master/feeder" structure in exchange for an equal aggregate value of shares
of that Portfolio. Finally, your Fund's existence will terminate.
Mercury Select Growth Fund is part of a "master/feeder" structure, which means
that Mercury Select Growth Fund invests all of its assets in the corresponding
Portfolio of Mercury Asset Management Master Trust with the same investment
objectives and strategies as Mercury Select Growth Fund. This structure
creates the potential for investing the assets of Mercury Select Growth Fund
together with the assets of other feeder funds, thus positioning the Mercury
fund to benefit from potential economies of scale. Accordingly, immediately
after the initial transfer of the assets and liabilities of your Fund to
Mercury Select Growth Fund, Mercury Select Growth Fund will further transfer
these assets and certain liabilities to the Mercury Master Select Growth
Portfolio of Mercury Asset Management Master Trust in exchange for an
equivalent value of interests of that Portfolio. A vote in favor of the
Reorganization will also be a vote in favor of this further transfer.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OF THIS COMBINED PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS _______________, 2000.
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Both Turner Large Cap Growth Equity Fund and Mercury Select Growth Fund seek
to provide shareholders with capital appreciation by investing primarily in
companies whose total market capitalization is at least $10 billion ("very
large cap companies") that are traded in the U.S. securities markets with
strong earnings growth potential. There can be no assurance that Turner Large
Cap Growth Equity Fund, or Mercury Select Growth Fund after the
Reorganization, would achieve its investment objective.
READ AND KEEP THESE DOCUMENTS. Please read the entire Proxy
Statement/Prospectus, along with Mercury Select Growth Fund's preliminary
prospectus, which accompanies this Proxy Statement/Prospectus, before casting
your vote. These documents contain information that is important to your
proxy decision, and you should keep them for future reference. The
preliminary prospectus of Mercury Select Growth Fund, dated _____________,
accompanies this Proxy Statement/Prospectus and is incorporated herein by
reference.
ADDITIONAL INFORMATION IS AVAILABLE. Mercury Select Growth Fund is being
organized as a separate investment portfolio of Mercury Asset Management
Funds, Inc. Mercury Select Growth Fund filed a preliminary registration
statement with the Securities and Exchange Commission on March 10, 2000.
Mercury Select Growth Fund has not yet been declared effective by the
Securities and Exchange Commission.
A preliminary statement of additional information relating to Mercury Select
Growth Fund, dated _________, 2000, has been filed with the Securities and
Exchange Commission. This statement of additional information may be obtained
without charge, by either writing Mercury Select Growth Fund at P.O. Box 9011,
Princeton, New Jersey 08543-9011 or by calling 1-800-_____________.
A prospectus of Turner Large Cap Growth Equity Fund, dated January 31, 2000,
as supplemented (which prospectus is also incorporated herein by reference)
and a statement of additional information relating to Turner Large Cap Growth
Equity Fund have also been filed with the Securities and Exchange Commission.
Such documents may be obtained without charge by either writing Turner Large
Cap Growth Equity Fund at 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312 or
by calling 1-800-224-6312.
A statement of additional information relating to the Reorganization,
including financial statements of Turner Large Cap Growth Equity Fund, is on
file with the Securities and Exchange Commission. This statement of
additional information, dated ___________, is incorporated herein by reference
and is available from Mercury Select Growth Fund, without charge, upon request
by calling 1-800-______________ or by writing Mercury Select Growth Fund at
P.O. Box 9011, Princeton, New Jersey 08543-9011.
The Securities and Exchange Commission maintains a website
(http://www.sec.gov) that contains the prospectuses and statements of
additional information of Mercury Select Growth Fund and Turner Large Cap
Growth Equity Fund, other material incorporated herein by reference and other
information regarding these funds.
The address of the principal executive offices of Turner Large Cap Growth
Equity Fund is 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312 and the
telephone number is 1-800-224-6312. The address of the principal executive
offices of Mercury Select Growth Fund is 800 Scudders Mill Road, Plainsboro,
New Jersey 08536, and the telephone number is _________________
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TABLE OF CONTENTS
Page
I. OVERVIEW.........................................................-4-
II. DETAILS OF REORGANIZATION PROPOSAL..............................-5-
A.WHY WE WANT TO REORGANIZE YOUR FUND...........................-5-
B.HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION..................-6-
C.HOW THE REORGANIZATION WILL AFFECT YOUR FUND..................-7-
D.HOW YOUR FUND'S LEGAL FORM OF ORGANIZATION WILL CHANGE.......-11-
E.HOW MANY SHAREHOLDER VOTES ARE REQUIRED TO APPROVE
THE REORGANIZATION...........................................-11-
III. INVESTMENT RISKS...............................................-11-
IV. INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS............-12-
V. MANAGEMENT OF MERCURY SELECT GROWTH FUND.......................-15-
VI. GENERAL INFORMATION............................................-17-
APPENDIX A..........................................................-19-
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I. OVERVIEW
This Section summarizes key information concerning your Fund's proposal. Keep
in mind that more detailed information appears throughout the Proxy
Statement/Prospectus (including documents incorporated by reference) and in
the Agreement and Plan of Reorganization which appears as Appendix A. Please
be sure to read everything.
In this Proxy Statement/Prospectus, the term "Reorganization" refers
collectively to (i) the transfer of substantially all of the assets and
liabilities of your Fund to Mercury Select Growth Fund, (ii) the opening of an
account for you with Mercury Select Growth Fund and the credit to your account
of Class I shares of Mercury Select Growth Fund that equal your investment in
Turner Large Cap Growth Equity Fund, (iii), the further transfer by Mercury
Select Growth Fund to the Mercury Master Select Growth Portfolio of Mercury
Asset Management Master Trust of the assets acquired and certain liabilities
assumed from your Fund in exchange for an equal value of interests in the
Mercury Master Select Growth Portfolio, and (iv) the termination of your Fund
as a series of TIP Funds.
THE PROPOSED REORGANIZATION. At their meeting on February 25, 2000, Turner
Large Cap Growth Equity Fund's Board of Trustees approved a plan to reorganize
your Fund into Mercury Select Growth Fund. The Board of Trustees, including
a majority of the Trustees who are not "interested persons," as defined in the
Investment Company Act of 1940, as amended, determined that the proposed
Reorganization is in the best interests of your Fund and its shareholders.
Specifically, the Trustees considered that after the Reorganization,
shareholders of Turner Large Cap Growth Equity Fund will remain invested in an
open-end fund with a diversified portfolio of equity securities and
substantially the same investment objectives and policies. The Trustees also
considered that, due to Mercury's substantial mutual fund distribution
capabilities, your Fund is expected to grow as part of the Mercury Group of
Funds. Accordingly, your Fund's expenses will be spread over a larger asset
base which should result, over time, in economies of scale and a lower
operating expense ratio. In addition, the Reorganization will not dilute the
interests of the Fund's shareholders. If your Fund does not obtain
shareholder approval of the Reorganization, the Fund will simply continue in
existence unless the Board of Trustees decides otherwise. However, absent a
substantial growth in assets of your Fund, shareholder expenses could make
Turner Investment Partner's continued subsidization of your Fund not
economical.
NEW BOARD OF DIRECTORS. The Board of Directors of Mercury Select Growth Fund
is different than the Board of Trustees of your Fund. Beginning on page
____, we describe the backgrounds and compensation of the individuals who
serve as directors of Mercury Select Growth Fund (the same individuals are
also trustees of the underlying Mercury Master Select Growth Fund Portfolio).
INVESTMENT OBJECTIVES AND POLICIES OF EACH FUND. Mercury Select Growth Fund is
being created with an investment objective and investment policies that are
substantially similar to those of Turner Large Cap Growth Equity Fund. Both
Turner Large Cap Growth Equity Fund and Mercury Select Growth Fund seek to
provide shareholders with capital appreciation. Each fund invests (indirectly
through its investment in the underlying Portfolio in the case of Mercury
Select Growth Fund) at least 65% of its respective assets in equity securities
of very large cap companies that Fund management believes have strong earnings
growth potential. Each fund may also invest in smaller capitalization
companies, which have between $1 billion and $10 billion total market
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capitalization, (indirectly through its investment in the underlying Portfolio
in the case of Mercury Select Growth Fund) that offer growth potential.
INVESTMENT ADVISER. The Fund's current investment adviser, Turner Investment
Partners, will serve as sub-adviser to Mercury Select Growth Fund (indirectly
through the Mercury fund's investment in the Mercury Master Select Growth
Portfolio of Mercury Asset Management Master Trust), continuing to be in
charge of the day-to-day management of your Fund's investments. Mercury Asset
Management US will be the Mercury fund's investment adviser (indirectly
through the Mercury fund's investment in the Mercury Master Select Growth
Portfolio of Mercury Asset Management Master Trust). Details of the advisory
arrangements for your Fund and Mercury Select Growth Fund are provided
beginning on page ______.
INDEPENDENT AUDITORS. Deloitte & Touche LLP serves as independent auditors
to Mercury Select Growth Fund. In contrast, Turner Large Cap Growth Equity
Fund retains Ernst & Young LLP as its independent auditors.
NEW FORM OF ORGANIZATION. For legal purposes, Turner Large Cap Growth Equity
Fund is organized as part of TIP Funds, a Massachusetts business trust. On
the other hand, Mercury Select Growth Fund is being organized as a separate
portfolio of Mercury Asset Management Funds, Inc., a Maryland corporation. The
minor differences in these forms of organization are described beginning on
page ____.
MASTER/FEEDER STRUCTURE. Mercury Select Growth Fund is a "feeder" fund in a
"master/feeder" structure. This means that Mercury Select Growth Fund invests
all of its assets in Mercury Master Select Growth Portfolio, the corresponding
series of Mercury Asset Management Master Trust, the underlying "master" fund,
which has the same investment objectives and strategies as Mercury Select
Growth Fund. This structure creates the potential for investing the assets of
the Mercury Select Growth Fund together with the assets of other feeder funds,
thus positioning the Mercury fund to benefit from additional economies of
scale.
PURCHASE, REDEMPTION AND EXCHANGE INFORMATION. The purchase, redemption and
exchange procedures for both funds are similar, though not identical. Details
of these procedures are provided on page ____.
TAX CONSIDERATIONS. As part of the Reorganization, Mercury Select Growth Fund
has requested an opinion of counsel with respect to the Reorganization to the
effect that, among other things, neither fund will recognize gain or loss on
the transaction and shareholders of Turner Large Cap Growth Equity Fund will
not recognize gain or loss on the exchange of their shares of the Turner fund
for shares of Mercury Select Growth Fund. The completion of the Reorganization
is subject to the receipt of such opinion of counsel.
II. DETAILS OF REORGANIZATION PROPOSAL
Turner Large Cap Growth Equity Fund's Board of Trustees has approved a
plan to reorganize your Fund into a substantially similar fund that is being
created by Mercury Asset Management Funds, Inc., called Mercury Select Growth
Fund. (A copy of the Agreement and Plan of Reorganization is attached as
Appendix A to this Proxy Statement/Prospectus.) To proceed with the
Reorganization, we need shareholder approval. The next few pages of this
Proxy Statement/Prospectus discuss important details of the Agreement and Plan
of Reorganization, including the following:
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- Why we want to reorganize your Fund.
- How we plan to accomplish the Reorganization.
- How the Reorganization will affect your Fund.
- How your Fund's legal form of organization will change.
- How many shareholder votes are required to approve the Reorganization.
a. WHY WE WANT TO REORGANIZE YOUR FUND
The mutual fund marketplace is much more competitive today than it was five
years ago, and there is no reason to think that this competition will not
continue. The Reorganization will allow Turner Investment Partners to better
focus on its core competencies. Turner Investment Partners believes that the
ultimate beneficiaries of the Reorganization will be the Fund's shareholders
because they will get access to Mercury's expansive client services and
substantial mutual fund distribution capabilities, while Turner Investment
Partners can focus on investment performance. In addition, due to expected
economies of scale as a result of the Reorganization, shareholders should over
time gain efficiencies in the form of lower fees, and a more stable, long-term
client base, which should result in lower transaction costs to the Fund as
part of the Mercury Group of Funds.
Mercury Asset Management US, a division of Fund Asset Management, L.P., has
entered into an Agreement with Turner Investment Partners, Inc., the current
investment adviser of your Fund, which generally provides that the parties
will use reasonable efforts to facilitate the proposed Reorganization and
Turner Investment Partners will act as sub-adviser to Mercury Select Growth
Fund. However, neither Turner Investment Partners nor any other party is
being paid by Mercury Asset Management US in consideration of Turner Large Cap
Growth Equity Fund joining the Mercury Group of Investment Companies.
b. HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. TIP Funds, on behalf of your Fund,
has entered into an Agreement and Plan of Reorganization with Mercury Asset
Management Funds, Inc. on behalf of its portfolio, Mercury Select Growth Fund.
This agreement sets forth the terms and conditions that will apply to your
Fund's Reorganization into Mercury Select Growth Fund (assuming that
shareholders approve this proposal). For a complete description of these
terms and conditions, please see the summary on page ____, or see the
Agreement and Plan of Reorganization, which appears as Appendix A to this
Proxy Statement/Prospectus.
FOUR STEPS TO REORGANIZE. After shareholder approval, the Reorganization
will be accomplished in a four-step process. First, your Fund will transfer
all of its assets and liabilities to Mercury Select Growth Fund. Second, and
simultaneously with step one, Mercury Select Growth Fund will open an account
for you, crediting you with shares of Mercury Select Growth Fund that are
equivalent in value to your investment in the Fund at the time of the
Reorganization. In addition, as soon as practicable thereafter, Mercury Select
Growth Fund will transfer all of its assets and certain liabilities to the
corresponding Portfolio of Mercury Asset Management Master Trust in exchange
for an equal value of interests in that Portfolio. Finally, Turner Large Cap
Growth Equity Fund will cease to exist.
EFFECTIVE AS SOON AS PRACTICABLE. If approved by shareholders, the
Reorganization will take place as soon as practicable after all necessary
regulatory approvals and legal opinions are received. We think this could be
accomplished by mid-June 2000.
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THE REORGANIZATION IS CONDITIONED ON TAX-FREE TREATMENT AT THE FEDERAL
LEVEL. We fully expect that the Reorganization will have no federal income
tax consequences for you or your Fund. We will not proceed with the
Reorganization until this point is confirmed by opinion of counsel. Following
the Reorganization, from a tax standpoint, the adjusted basis of your Fund
shares will be the same as before. We do not expect shareholders to incur any
personal state or local taxes as a result of the Reorganization, but you
should consult your own tax adviser to be sure. There is more information
about the tax consequences of the Reorganization in the Agreement and Plan of
Reorganization, which appears as Appendix A to this Proxy
Statement/Prospectus.
c. HOW THE REORGANIZATION WILL AFFECT YOUR FUND
THE INVESTMENT OBJECTIVE AND DAY-TO-DAY MANAGEMENT OF YOUR FUND WILL STAY
THE SAME, AND ITS INVESTMENT POLICIES WILL BE VERY SIMILAR. The
Reorganization will not materially change any of these. As reorganized, your
Fund, which will become Mercury Select Growth Fund, will continue to seek
capital appreciation through investments in a diversified portfolio of common
stocks of very large cap companies with strong earnings growth potential. In
addition, the existing investment adviser, Turner Investment Partners, will
continue to manage the Fund's day-to-day investments as sub-adviser to the
underlying Portfolio in which the Mercury fund invests. Several of the
investment policies will change, but these changes will not have a material
impact on the management of your Fund. Specifically, Mercury Select Growth
Fund has a less restrictive fundamental policy (e.g. policies that may only be
changed with shareholder approval) relating to investments in oil and gas, and
your Fund has less restrictive fundamental policies with respect to investing
for purposes of exercising control of a portfolio company. In addition,
although Mercury Select Growth Fund has no present intention to make such
investments, it has generally less restrictive policies relating to use of
leverage and investments in convertible securities, forwards, investments in
certain types of futures and options contracts and securities denominated in
non-U.S. dollar. However, because these practices are not part of the Fund's
primary investment strategies, it is expected that there will be no impact on
the Fund's management.
COMPARING FUND EXPENSES. The table set forth below compares the expenses
applicable to Turner Large Cap Growth Equity Fund and the estimated expenses
of the Mercury Select Growth Fund for the first full year after the
Reorganization is consummated.
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Shareholder Fees Turner Large Class I Shares
(fees paid directly from your investment) Cap Growth of Mercury
(a): Equity Fund Select Growth Fund
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Maximum Sales Charge (Load) imposed on
purchases (as a percentage of
offering price) None 5.25% (b)
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Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is lower) None None (c)
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Maximum Sales Charge (Load) imposed on
Dividend Reinvestments None None
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Redemption Fee None None
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Exchange Fee None None
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ANNUAL FUND OPERATING EXPENSES (EXPENSES
THAT ARE DEDUCTED FROM FUND TOTAL ASSETS) (D)
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Management Fee 0.75% 0.50% (e)
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Distribution and/or Service (12b-1) Fees None None
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Other Expenses (including transfer
agency fees) 0.91% 1.10% (f)
Administrative Fees 0.75% (g) 0.25% (h)
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Total Other Expenses 1.66% 1.35%
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TOTAL ANNUAL FUND OPERATING EXPENSES 2.41% (i) 1.85% (j)
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Fee Waiver and/or Expense Reimbursement (k) 1.41% 0.60%
Net Total Operating Expenses 1.00% 1.25% (l)
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(a) In addition, certain securities dealers or other financial intermediaries
may charge a fee to process a purchase or sale of shares.
(b) This sales charge (load) will be waived for any purchases by shareholders
of the Mercury fund who are also shareholders of Turner Large Cap Growth
Equity Fund as of the date of the closing of the Reorganization.
(c) You may pay a deferred sales charge if you purchase $1 million or more
and you redeem within one year. This deferred sales change will be waived
for shareholders of the Mercury fund who are also shareholders of Turner
Large Cap Growth Equity Fund as of the date of the closing of the
Reorganization.
(d) The fees and expenses include the expenses of both Mercury Select Growth
Fund and the underlying Portfolio in which it invests.
(e) Paid by the underlying Portfolio in which Mercury Select Growth Fund
invests. Mercury pays the Sub-adviser out of this fee.
(f) The Transfer Agent is an affiliate of Mercury. The Fund pays the
Transfer Agent a fee for each shareholder account and reimburses it for
out-of-pocket expenses. The fee ranges from $11.00 to $23.00 per account
(depending on the level of services required), but is set at 0.10% for
certain accounts that participate in certain fee-based programs. Mercury
Select Growth Fund also pays a $0.20 monthly closed account charge, which
is assessed upon all accounts that close during the calendar year. The
fee begins the month following the month the account is closed and ends
at the end of the calendar year. Mercury or its affiliate provides
accounting services to the underlying Portfolio in which Mercury Select
Growth Fund invests at its cost.
(g) For the fiscal year ended September 30, 1999, your Fund paid
administrative fees including a minimum fee of $65,000 under
your Fund's administration agreement.
(h) Paid by Mercury Select Growth Fund. Mercury Select Growth Fund's
administrator provides accounting services to Mercury Select Growth Fund
at its cost.
(i) The total annual fund operating expenses reflect expenses actually
incurred during your Fund's fiscal year ended September 30, 1999 restated
to reflect current expenses.
(j) The total annual fund operating expenses reflect expenses actually
incurred during your Fund's fiscal year ended September 30, 1999 restated
to reflect current expenses and estimated post-Reorganization expenses.
(k) Turner Investment Partners has contractually agreed to waive fees and to
reimburse expenses in order to keep total operating expenses from
exceeding 1.00% for the one year period ending January 31, 2000 or from
exceeding 1.25% in any subsequent year. Mercury has agreed contractually
to waive fees and reimburse expenses in order to keep total operating
expenses from exceeding 1.25% after the Reorganization. In addition,
your Fund has an arrangement with certain broker-dealers who have agreed
to pay certain Fund expenses in return for the direction of a percentage
of the Fund's brokerage transactions. These arrangements with broker-
dealers will not continue after the Reorganization.
(l) The net total operating expenses reflect expenses actually incurred
during your Fund's fiscal year ended September 1999 restated to reflect
the contractual fee waiver and/or expense reimbursement currently in
effect.
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EXAMPLE
This example is intended to help you compare the cost of investing in the
funds with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the funds for the time periods indicated. The
Example also assumes that each year your investment has a 5% return and fund
expenses remain the same.
1 Year 3 Years 5 Years 10 Years
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Turner Growth Equity Fund $102 $373 $665 $1,505
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Mercury Select Growth Fund* $127 $397 $686 $1,511
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* These expenses do not include front end sales charges applicable to Class I
shares of Mercury Select Growth Fund which are waived for the Mercury fund
shareholders who are also shareholders of Turner Large Cap Growth Equity Fund
as of the date of the closing of the Reorganization. These expenses assume
(i) a contractual agreement by Mercury to waive fees and reimburse expenses in
order to keep total operating expenses from exceeding 1.25% after the
Reorganization and (ii) that your Fund's assets currently under management
will not increase as part of Mercury Select Growth Fund after the
Reorganization.
The foregoing Fee Tables are intended to assist investors in understanding the
costs and expenses that a shareholder of Turner Large Cap Growth Equity Fund
bears directly or indirectly as compared to the costs and expenses that would
be borne by such investors on a pro forma basis taking into account the
completion of the Reorganization. The Examples set forth above assume
reinvestment of all dividends and distributions. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATES OF
RETURN, AND ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN
THOSE ASSUMED FOR PURPOSES OF THE EXAMPLES.
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YOUR FUND WILL CHANGE ITS FISCAL YEAR END. Your Fund will change its fiscal
year end to May 31.
THE REORGANIZATION WILL HAVE NO IMPACT ON YOUR FUND'S SHARE PRICE. On the day
of the Reorganization, Mercury Select Growth Fund's share price will be the
same as that of your existing Fund. The Reorganization will not cause your
Fund's share price to go up or down, and you will own the same number of
shares. Any declared but undistributed dividends or capital gains will carry
over in the Reorganization.
YOUR FUND'S EXISTING TRUSTEES WILL BE REPLACED BY MERCURY ASSET MANAGEMENT
FUNDS INC.'S DIRECTORS. As previously mentioned, your Fund will become a
separate investment portfolio of Mercury Asset Management Funds, Inc. if
shareholders of Turner Large Cap Growth Equity Fund approve the
Reorganization. Information regarding Mercury Asset Management Funds, Inc.'s
Directors (who are also the trustees of the corresponding master Portfolio in
which Mercury Select Growth Fund invests) appears further in this Proxy
Statement/Prospectus.
YOUR FUND'S EXISTING INDEPENDENT AUDITOR WILL BE REPLACED BY DELOITTE &
TOUCHE, LLP. Currently, your Fund employs Ernst & Young LLP as its
independent auditor. However, Deloitte & Touche, LLP will serve as the
independent auditor for Mercury Select Growth Fund and the Mercury Master
Select Growth Portfolio in which it invests. In this role, Deloitte & Touche,
LLP will audit the Mercury funds' financial statements. Neither Deloitte
& Touche, LLP nor any of its partners have any direct or material
indirect financial interest in Mercury Select Growth Fund. If you
wish to request the attendance of a Deloitte & Touche, LLP representative at
the shareholder meeting, you should contact Mercury Select Growth Fund's
Secretary, Robert E. Putney, III at Fund Asset Management, L.P., 800 Scudder
Mill Road, Plainsboro, NJ 08536.
PURCHASE, REDEMPTION AND EXCHANGE INFORMATION. The following chart highlights
the purchase, redemption and exchange features of your Fund as compared to
such features of Mercury Select Growth Fund.
Purchase, Redemption Turner Large Cap Mercury Select Growth
and Growth Equity Fund Equity Fund
Exchange Features1
- ------------------------------------------------------------------------------
Minimum initial purchase/ $2,500/$50 $1,000/$50
Additional investments
- ------------------------------------------------------------------------------
Purchases By mail, telephone, By mail, through a
wire, or systematic securities dealer or
investment plan other financial
intermediary or by
automatic investment
plan
- ------------------------------------------------------------------------------
Redemptions By mail, telephone or By mail, telephone,
systematic withdrawal through a securities
plan (business hours dealer or other finan-
only) cial intermediary or
by systematic with-
drawal plan
- ------------------------------------------------------------------------------
Free exchange privileges Yes, with other TIP Yes, with other Mercury
Funds--by mail or funds and with Summit
telephone (business Cash Reserves Fund
hours only)
- -----------------------------------------------------------------------------
1. Explanations of each of the services available through Mercury Select
Growth Fund can be found in the preliminary prospectus that accompanies
this Proxy Statement/Prospectus.
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CALCULATING NET ASSET VALUE. Turner Large Cap Growth Equity Fund calculates
its net asset value per share (NAV) once each business day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). Similarly, Mercury Select Growth Fund
calculates its NAV after the close of regular trading on the New York Stock
Exchange, based on prices at the time of closing.
d. HOW YOUR FUND'S LEGAL FORM OF ORGANIZATION WILL CHANGE
Federal securities laws have much to say about the way that mutual funds
operate, but they do not cover every aspect of a fund's existence. State law
and each fund's governing documents fill in most of the gaps. Mercury Select
Growth Fund is organized as a corporation under Maryland law, while your Fund
is organized as a business trust under Massachusetts law. The laws of the
Commonwealth of Massachusetts governing business trusts and Maryland governing
corporations that are mutual funds are similar in all material respects with
one exception. Shareholders of Massachusetts business trusts could be
personally liable for the obligations of the trust in certain highly unlikely
circumstances. However, under Maryland law, there is no similar provision
providing for shareholder liability for obligations of the fund. As a result
of the Reorganization, this very remote potential for personal liability will
be eliminated.
e. HOW MANY SHAREHOLDER VOTES ARE REQUIRED TO APPROVE THE REORGANIZATION
To go forward with the Reorganization, a majority of your Fund's
outstanding shares on April 19, 2000, must vote in favor of this proposal.
YOUR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU APPROVE THE REORGANIZATION.
III. INVESTMENT RISKS
Many of the investment risks associated with an investment in the Mercury
Select Growth Fund are substantially the same as those associated with an
investment in your Fund. A discussion of certain principal risks of investing
in both funds is set forth below.
STOCK MARKET RISK
Stock market risk is the risk that the U.S. stock market in which a fund
invests will go down in value, including the possibility that the U.S. stock
market will go down sharply and unpredictably.
SELECTION RISK
Selection risk is the risk that the investments that Fund management selects
will underperform the stock markets or other funds with similar investment
objectives and investment strategies. A fund is subject to the risk that its
principal market segment, very large capitalization growth stocks, may
underperform compared to other market segments or to the equity markets as a
whole.
LIQUIDITY, INFORMATION AND VALUATION RISKS
Certain securities, including securities of small companies and "restricted
securities," may be illiquid or volatile, making it difficult or impossible to
sell them at the time and at the price that a fund would like. Restricted
securities have contractual or legal restrictions on their resale and include
"private placement" securities that a fund may buy directly from the issuer.
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Also, important information about certain companies, securities or the markets
in which they trade may be inaccurate or unavailable. It may be difficult to
value accurately these types of securities. Certain derivatives may be
subject to these risks as well.
DEBT SECURITIES
Debt securities, such as bonds, involve credit risk, which is the risk that
the borrower will not make timely payments of principal and interest. These
securities are also subject to interest rate risk, which is the risk that the
value of the security may fall when interest rates rise. In general, the
market price of debt securities with longer maturities will go up or down more
in response to changes in interest rates than shorter term securities.
DERIVATIVES
Each fund may also use instruments referred to as "Derivatives." Derivatives
are financial instruments whose value is derived from another security, a
commodity (such as gold or oil) or an index (a measure of value or rates, such
as the Standard & Poor's 500 Composite Stock Price Index or the prime lending
rate). Derivatives are volatile and involve risks, including many of the risks
described above. Derivatives may not always be available or cost efficient. If
a fund invests in derivatives, the investments may not be effective as a hedge
against price movements and can limit potential for growth in fund share
value.
IV. INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS
OVERVIEW
Mercury Select Growth Fund does not have an investment adviser because it
invests all of its assets in the Mercury Master Select Growth Portfolio of
Mercury Asset Management Master Trust. Mercury Asset Management US, a division
of Fund Asset Management, L.P., is the investment adviser of Mercury Master
Select Growth Portfolio, and therefore is indirectly the investment adviser of
Mercury Select Growth Fund. Turner Large Cap Growth Equity Fund's current
investment adviser, Turner Investment Partners, will serve as sub-adviser to
Mercury Select Growth Fund (indirectly through the Mercury fund's investment
in the Mercury Master Select Growth Portfolio), continuing to be in charge of
the day-to-day management of your Fund's investments. Turner Investment
Partner's address is 1235 Westlakes Drive, Berwyn, Pennsylvania 19312. Under
its investment advisory agreement dated April 28, 1996 with your Fund, Turner
Investment Partners is responsible for managing the investment and
reinvestment of the Fund's assets, and for continuously reviewing, supervising
and administering the Fund's investment program. Subject to the supervision
of Mercury Asset Management US, Turner Investment Partners will have these
same responsibilities under its sub-advisory agreement with Mercury Asset
Management US.
Fund Asset Management, L.P. ("FAM") will act as administrator of the Mercury
Select Growth Fund. SEI Investments Mutual Funds Services acts as administrator
of your Fund.
MERCURY AND TURNER
Mercury and its affiliated companies have over $546 billion in assets over
management (as of February 2000) for individuals and institutions seeking
investments worldwide. Mercury Asset Management US' principal business
address is 800 Scudders Mill Road, Plainsboro, NJ 08536.
<PAGE>
<PAGE>
Turner Investment Partners, Inc., is a professional investment management firm
founded in March, 1990. Robert E. Turner is the Chairman and controlling
shareholder of Turner Investment Partners. As of December 31, 1999, Turner
Investment Partners had discretionary management authority with respect to
approximately $5.6 billion of assets. Turner Investment Partners has provided
investment advisory services to investment companies since 1992. The
principal business address of Turner Investment Partners is 1235 Westlakes
Drive, Suite 350, Berwyn, Pennsylvania 19312.
Robert E. Turner, a Trustee of TIP Funds, is lead manager of the Turner Large
Cap Growth Equity Fund. Mr. Turner is also Chairman and Chief Investment
Officer of Turner Investment Partners. He has held this position since the
founding of Turner Investment Partners in 1990. He has been in the investment
business since 1982.
The other members of the committee that manages the Turner Large Cap Growth
Equity Fund are John Hammerschmidt and Mark Turner. Mr. Hammerschmidt is a
Senior Equity Portfolio Manager at Turner Investment Partners, and he has 17
years of investment experience. Mark Turner, Vice Chairman of Turner
Investment Partners, co-founded Turner Investment Partners in 1990, and has 18
years of investment experience.
COMPARISON OF INVESTMENT ADVISORY AGREEMENTS
Under the advisory agreement between Turner Large Cap Growth Equity Fund and
Turner Investment Partners, Turner Investment Partners is entitled to a fee of
0.75% of the Fund's average daily net assets. Under its advisory agreement
with Mercury Asset Management Master Trust, Mercury Asset Management US is
entitled to a fee of 0.50% of average daily net assets of the Mercury Master
Select Growth Portfolio. Mercury Asset Management US hires Turner Investment
Partners as sub-adviser to the master Portfolio for a fee in an amount to be
determined from time to time by Mercury and Turner Investment Partners, but in
no event to exceed the amount that Mercury receives for providing investment
management services to the master Portfolio. Mercury and Turner Investment
Partners have agreed that the sub-advisory fee will be paid at the following
annual rates of average daily net assets of the master Portfolio: 0.40% for
the first $500 million of net assets, 0.35% for net assets exceeding $500
million and less than or equal to $1.5 billion, and 0.30% for net assets
exceeding $1.5 billion. This fee is paid by Mercury Asset Management US and
not by Mercury Select Growth Fund or the master Portfolio.
Apart from the differences in compensation, the agreement between Turner
Investment Partners and your Fund, and the agreements between Mercury Asset
Management US, Turner Investment Partners and the Mercury Master Select Growth
Portfolio, are substantially similar. Specifically, the standard of care is
the same, and the duration and termination provisions are substantially
similar. The sub-advisory agreement includes mutual indemnities by Mercury
Asset Management US and Turner Investment Partners; however, these indemnities
relate solely to the responsibilities of the two advisers to each other and do
not affect their responsibilities to the Mercury Portfolio or its
shareholders.
DURATION AND TERMINATION OF MERCURY ASSET MANAGEMENT US' INVESTMENT MANAGEMENT
AGREEMENT AND TURNER'S SUB-ADVISORY AGREEMENT WITH MERCURY MASTER SELECT
GROWTH PORTFOLIO
The investment management between Mercury Asset Management US and Mercury
Master Select Growth Portfolio and sub-advisory agreement between Turner
Investment Partners and Mercury each will become effective at the time of the
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<PAGE>
Reorganization, if this transaction is approved by shareholders. The
agreements will remain in effect for an initial two-year period, and may be
continued beyond that for successive one-year periods, if approved at least
annually by the vote of the Board of Trustees or shareholders of Mercury
Master Select Growth Portfolio. Board approval must include the votes of a
majority of those Trustees who are not parties to the contract or "interested
persons" (as defined under Federal securities laws) of any party to the
contract. In addition, Trustees must vote in person on the investment
management and sub-advisory agreements, at a meeting called for that purpose.
Each agreement is automatically terminated if assigned and may be terminated
without penalty at any time (i) either by vote of the master Portfolio's
Trustees or by vote of a majority of the outstanding shares of the master
Portfolio, or (ii) by Mercury Asset Management US or Turner Investment
Partners, as the case may be, on 60 days' written notice to the other party.
In addition, the sub-advisory agreement will also terminate in the event that
the investment management agreement is terminated.
FUTURE CHANGES TO MERCURY MASTER SELECT GROWTH PORTFOLIO'S ADVISORY
ARRANGEMENTS
Although there are no current plans to do so, Mercury Asset Management US may
assume, subject to approval of the Board of Trustees or shareholders of the
underlying Portfolio in which Mercury Select Growth Fund invests, Turner
Investment Partners' day-to-day investment advisory responsibilities or hire
one or more new advisers either as additions to or replacements for Turner
Investment Partners. In a separate agreement between Turner Investment
Partners and Mercury Asset Management US, Mercury has agreed, subject to its
fiduciary duty to Mercury Select Growth Fund and its shareholders, to
recommend to the Board of Directors of Mercury Select Growth Fund that Turner
Investment Partners be retained as sub-adviser pursuant to a Sub-Advisory
Agreement between Mercury Asset Management US and Turner Investment Partners.
Mercury Asset Management US has further agreed to pay liquidated damages to
Turner Investment Partners if the sub-advisory agreement is terminated within
three years following the Reorganization, unless the termination results from
certain specified events such as the failure of Mercury Select Growth Fund to
meet certain performance standards or if Robert E. Turner is no longer
employed by Turner Investment Partners.
ADMINISTRATIVE ARRANGEMENTS
FAM acts as administrator of the Mercury Select Growth Fund. For its
administrative services, FAM is paid a fee of 0.25% of Mercury Select Growth
Fund's average daily net assets. SEI Investments Mutual Funds Services acts
as administrator for Turner Large Cap Growth Equity Fund. For such services,
SEI is paid a fee ranging between 0.04% and 0.09% of
the Fund's average daily net assets, including a minimum annual fee equal
to $65,000. The aggregate advisory and administrative fees paid by Mercury
Select Growth Fund and Mercury Master Select Growth Portfolio is less than the
aggregate amount of the advisory and administrative fees currently paid by the
Turner Large Cap Growth Equity Fund.
V. MANAGEMENT OF MERCURY SELECT GROWTH FUND
The six individuals listed below serve as Directors of Mercury Asset
Management Funds, Inc. and Trustees of Mercury Asset Management Master Trust.
(As previously mentioned, your Fund will become an investment portfolio of
Mercury Asset Management Funds, Inc., which invests in Mercury Asset
Management Master Trust through a "master/feeder" structure, if shareholders
approve the Reorganization.) Each of these individuals was elected to
<PAGE>
<PAGE>
office by shareholders upon organization of Mercury Asset Management Funds,
Inc. and Mercury Asset Management Master Trust in 1998.
DIRECTORS AND OFFICERS
The Directors of Mercury Asset Management Funds, Inc. and Trustees of Mercury
Asset Management Master Trust consist of six individuals, four of whom are not
"interested persons." They are responsible for the overall supervision of the
operations of Mercury Select Growth Fund and the corresponding master
Portfolio and perform the various duties imposed on the directors of
investment companies by the Investment Company Act. Unless otherwise noted,
the address of each Director is P.O. Box 9011, Princeton, New Jersey
08543-9011.
Jeffrey M. Peek (52) -- Director and President(1)(2) -- President of FAM
and Merrill Lynch Asset Management, L.P. ("MLAM") since 1997; President and
Director of Princeton Services, Inc. since 1997; Executive Vice President of
Merrill Lynch & Co., Inc. ("ML&Co.") since 1997; Co-Head of Merrill Lynch
Investment Banking Division from March 1997 to December 1997; Director of
Merrill Lynch Global Securities Research and Economics Division from 1995 to
1997; Head of Merrill Lynch Global Industries Group from 1993 to 1995.
Terry K. Glenn (58) -- Director and Executive Vice President(1)(2) --
Executive Vice President of MLAM and FAM since 1983; Executive Vice President
and Director of Princeton Services, inc. since 1993; President of Princeton
Funds Distributor, Inc. since 1986 and Director thereof since 1991; President
of Princeton Administrators, L.P. since 1988.
David O. Beim (59) -- Director(2)(3) -- 410 Uris Hall, Columbia
University, New York, New York 10027. Professor of Finance and Economics at
the Columbia University Graduate School of Business since 1991; Chairman of
Outward Bound USA since 1997; Chairman of Wave Hill, Inc. since 1980.
James T. Flynn (60) -- Director(2)(3) -- 340 East 72nd Street, New
York, New York 10021. Chief Financial Officer of J.P. Morgan & Co. Inc. from
1990 to 1995 and an employee of J.P. Morgan in various capacities from 1967 to
1995.
W. Carl Kester (47) -- Director(2)(3) -- Harvard Business School,
Morgan Hall 393, Soldiers Field, Boston, Massachusetts 02163. Industrial Bank
of Japan Professor of Finance, Senior Associate Dean and Chairman of the MBA
Program of Harvard University Graduate School of Business Administration since
1999; James R. Williston Professor of Business Administration of Harvard
University Graduate School of Business from 1997 to 1999; MBA Class of 1958
Professor of Business Administration of Harvard University Graduate School of
Business Administration from 1981 to 1997; Independent Consultant since 1978.
Karen P. Robards (49) -- Director(2)(3) -- Robards & Company, 173
Riverside Drive, New York, New York 10024. President of Robards & Company, a
financial advisory firm, for more than five years; Director of Enable Medical
Corp. since 1996; Director of CineMuse Inc. since 1996; Director of the Cooke
Center for Learning and Development, a not-for-profit organization, since
1987.
- ---------------------------
(1) Interested person, as defined in the Investment Company Act, of Mercury
Select Growth Fund.
(2) Such Director or officer is a trustee, director or officer of other
investment companies for which Mercury or its affiliates, acts as investment
adviser.
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(3) Member of the master and feeder's Audit and Nominating Committee, which is
responsible for the selection of the independent auditors and the selection
and nomination of Directors and Trustees not affiliated with Mercury or with
an affiliate of Mercury).
DIRECTOR AND TRUSTEE COMPENSATION
Mercury Select Growth Fund and the underlying master Portfolio pay each non-
interested Director/Trustee, for service to the Mercury fund and the
underlying Portfolio, a fee of $3,000 per year plus $500 per Board meeting
attended. They also compensate each member of the Audit and Nominating
Committee, which consists of all of the non-interested Directors/Trustees, at
a rate of $1,000 per year. Mercury Select Growth Fund and the underlying
master Portfolio reimburse each non-interested Director/Trustee for his out-
of-pocket expenses relating to attendance at Board and Audit and Nominating
Committee meetings.
The following table sets forth the aggregate compensation Mercury Select
Growth Fund and the underlying master Portfolio expect to pay to the
non-interested Directors/Trustees for their first full fiscal year and the
aggregate compensation paid by all investment companies advised by Mercury
Asset Management US or its affiliates ("Mercury US and Affiliates-Advised
Funds") to the non-interested Directors/Trustees for the calendar year ending
December 31, 1999.
Total
Compensation
from
Pension or Fund/Portfolio
Retirement and Mercury
Benefits and Affiliates
Accrued as Advised Funds
Aggregate Part of Paid to
Compensation Fund/Portfolio Directors/
Name of Director/Trustee From Fund/Portfolio Expenses Trustees(1)
- ------------------------ -------------------- --------------- -----------
David O. Beim [$5,500] None $35,667
James T. Flynn [$5,500] None $67,500
W. Carl Kester [$5,000] None $67,167
Karen P. Robards [$5,500] None $35,667
- -----------------------
(1) In addition to Mercury Select Growth Fund and the underlying master
Portfolio, the Directors/Trustees served on other Mercury and Affiliates-
Advised Funds as follows: Mr. Beim (1 registered investment company consisting
of 2 portfolios); Mr. Flynn (3 registered investment companies consisting of 8
portfolios); Mr. Kester (3 registered investment companies consisting of 8
portfolios); and Ms. Robards (1 registered investment company consisting of 2
portfolios).
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VI. GENERAL INFORMATION
This section provides information on a number of topics relating to proxy
voting and shareholder meetings.
PROXY SOLICITATION METHODS
Turner Large Cap Growth Equity Fund will solicit shareholder proxies in a
variety of ways. All shareholders that are entitled to vote will receive these
proxy materials by mail. In addition, Turner Investment Partners employees and
officers may solicit shareholder proxies in person, by telephone, or through
the Internet.
PROXY SOLICITATION COSTS
Turner Investment Partners will pay all costs of soliciting proxies from its
own shareholders, including costs relating to the printing, mailing, and
tabulation of proxies. By voting immediately, you can help your Fund avoid the
considerable expense of a second solicitation.
QUORUM
In order for the shareholder meeting to go forward, Turner Large Cap Growth
Equity Fund must achieve a quorum. This means that a majority of your Fund's
shares must be represented at the Special Meeting of Shareholders, either in
person or by proxy. All returned proxies count towards a quorum, regardless of
how they are voted ("For," "Against," or "Abstain"). Your Fund will count
broker non-votes toward a quorum, but not toward the approval of any
proposals. (Broker non-votes are shares for which (i) the underlying owner has
not voted and (ii) the broker holding the shares does not have discretionary
authority to vote on the particular matter.)
REVOKING YOUR PROXY
You may revoke your proxy at any time up until voting results are announced at
the Special Meeting of Shareholders. You can do this by writing to your Fund's
Secretary, c/o Turner Investment Partners, 1235 Westlakes Drive, Suite 350,
Berwyn, PA 19312, or by voting in person at the meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the proxy statement for Turner
Large Cap Growth Equity Fund's next annual or special meeting must be received
by the Fund within a reasonable period of time prior to that meeting. Your
Fund has no current plans to hold an annual or special meeting in 2000.
NOMINEE ACCOUNTS
Upon request, Turner Large Cap Growth Equity Fund will reimburse nominees for
their reasonable expenses in forwarding proxy materials to beneficial owners
of the fund's shares. Please submit invoices for our review to Turner
Investment Partners, 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of shares of Turner Large Cap Growth Equity Fund at the
close of business on April 19, 2000 (the "Record Date") are entitled to vote
at the Special Meeting of Shareholders any adjournment thereof. At the close
of business on the Record Date, there were ___________ shares of Turner Large
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Cap Growth Equity Fund issued and outstanding and entitled to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF TURNER LARGE
CAP GROWTH EQUITY FUND AND MERCURY SELECT GROWTH FUND
As of March 31, 2000, each of the following persons was known to be the
beneficial owner of more than 5% of the outstanding shares of Turner Large Cap
Growth Equity Fund: [to be provided]
At the Record Date, the Trustees and officers of Turner Large Cap Growth
Equity Fund as a group (__ persons) owned an aggregate of less than 1% of the
outstanding shares of Turner Large Cap Growth Equity Fund.
To the knowledge of Mercury Select Growth Fund, as of the Record Date, no
person or entity owned beneficially or of record 5% of more of any class of
shares of Mercury Select Growth Fund or of all classes of Mercury Select
Growth Fund shares in the aggregate.
As of the Record Date, the Directors and officers of Mercury Select Growth
Fund as a group (nine persons) owned an aggregate of less than 1% of the
outstanding shares of Mercury Select Growth Fund and Mercury's parent
corporation.
ANNUAL/SEMI-ANNUAL REPORTS
Turner Large Cap Growth Equity Fund's most recent annual and semi annual
reports to shareholders are available at no cost. To request a report, please
call Turner Investment Partners toll-free at 1-800-224-6312 or write us at
P.O. Box 219805, Kansas City, Missouri 64141-6805.
LITIGATION
There are no material legal proceedings to which Turner Large Cap Growth
Equity Fund or Mercury Select Growth Fund is a Party.
Certain legal matters in connection with the Reorganization will be passed
upon for Mercury Select Growth Fund by Swidler Berlin Shereff Friedman, LLP,
The Chrysler Building, 405 Lexington Avenue, New York, New York and for Turner
Large Cap Growth Equity Fund by Morgan Lewis & Bockius, LLP, 1701 Market
Street, Philadelphia, PA 19103. As to matters of Maryland law, Swidler Berlin
Shereff Friedman, LLP will rely on the opinion of [insert name and address of
Maryland counsel].
TURNER FUND'S NET ASSETS UNDER MANAGEMENT
As of March 31, 2000, Turner Large Cap Growth Equity Fund had approximately
$___ million in net assets.
OTHER MATTERS
At this point, we know of no other business to be brought before the Special
Meeting of Shareholders. However, if any other matters do come up, we will use
our best judgment to vote on your behalf. If you object to our voting other
matters on your behalf, please tell us so in writing before the meeting.
OBTAINING INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION
Mercury Asset Management Funds, Inc. is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and must file
certain reports and other information with the Securities and Exchange
Commission.
The proxy materials, reports and other information filed by the TIP Funds can
be inspected and copied at the public reference facilities maintained by the
Securities Exchange Commission located at 450 5th Street N.W., Washington,
D.C. 20549, and 7 World Trade Center, Suite 1300, New York, NY 10048.
Copies of such material also can 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.
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APPENDIX A
Agreement and Plan of Reorganization
By and Between
Mercury Asset Management Funds, Inc.,
On Behalf of Mercury Select Growth Fund
and
TIP Funds
On behalf of Turner large Cap Growth Equity Fund
Dated as of March ___, 2000
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<PAGE>
TABLE OF CONTENTS
Page No.
1. Defined Terms; Sections and Exhibits; Miscellaneous Terms..........A-1
2. The Reorganization.................................................A-4
a. Transfer of Assets.................................................A-4
b. Assumption of Liabilities..........................................A-4
c. Issuance of Corresponding Shares in the Reorganization............ A-4
d. Distribution of Corresponding Shares to Shareholders
of the Acquired Fund...............................................A-4
e. Interest; Proceeds.................................................A-4
f. Valuation Time.....................................................A-5
g. Evidence of Transfer...............................................A-5
h. Termination........................................................A-5
3. Representations and Warranties of TIP on behalf of the
Acquired Fund......................................................A-5
a. Formation and Qualification........................................A-5
b. Licenses...........................................................A-5
c. Authority..........................................................A-5
d. Financial Statements...............................................A-6
e. [Intentionally Left Blank].........................................A-6
f. Prospectus and Statement of Additional Information.................A-6
g. Litigation.........................................................A-6
h. Material Contracts.................................................A-6
i. No Conflict........................................................A-6
j. Undisclosed Liabilities............................................A-7
k. Taxes..............................................................A-7
l. Assets.............................................................A-7
m. Consents...........................................................A-7
n. N-14 Registration Statement........................................A-7
o. No Adverse Change..................................................A-7
p. Capitalization.....................................................A-8
q. Books and Records..................................................A-8
4. Representations and Warranties of MAM on behalf of the
Acquiring Fund.....................................................A-8
a. Formation and Qualification........................................A-8
b. Licenses...........................................................A-8
c. Authority..........................................................A-8
d. Prospectus and Statement of Additional Information.................A-9
e. No Conflict........................................................A-9
f. Consents...........................................................A-9
g. N-14 Registration Statement........................................A-9
h. Capitalization.....................................................A-10
i. Corresponding Shares...............................................A-10
j. Litigation.........................................................A-10
5. Covenants of TIP on Behalf of the Acquired Fund and MAM
on behalf of the Acquiring Fund....................................A-10
a. Special Shareholders' Meeting......................................A-10
b. Unaudited Financial Statements.....................................A-10
c. Share Ledger Records of the Acquiring Fund.........................A-11
d. Conduct of Business................................................A-11
e. Termination of the Acquired Fund...................................A-11
f. Filing of N-14 Registration Statement..............................A-11
g. Material Contracts.................................................A-11
h. Prohibited Assets..................................................A-11
i. Corresponding Shares...............................................A-11
j. Tax Returns........................................................A-12
k. Combined Proxy Statement and Prospectus Mailing....................A-12
l. Confirmations of Tax Basis.........................................A-12
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m. Shareholder List...................................................A-12
n. The Acquiring Fund's Continued Existence...........................A-12
6. Exchange Date......................................................A-13
7. Conditions Precedent to the obligations of TIP on behalf
of the Acquired Fund...............................................A-13
a. Representations and Warranties.....................................A-13
b. Performance........................................................A-13
c. Shareholder Approval...............................................A-13
d. Approval of Board of Directors of MAMA-13
e. Deliveries by MAM on Behalf of the Acquiring Fund..................A-13
f. No Adverse Change..................................................A-17
g. Absence of Litigation..............................................A-17
h. Proceedings and Documents..........................................A-17
i. N-14 Registration Statement........................................A-17
j. Accountants' Letters...............................................A-17
k. Compliance with Laws; No Adverse Action or Decision................A-18
l. Commission Orders or Interpretations...............................A-18
8. Conditions of MAM on behalf of the Acquiring Fund..................A-18
a. Representations and Warranties.....................................A-19
b. Performance........................................................A-19
c. Shareholder Approval...............................................A-19
d. Approval of Board of Directors of TIP..............................A-19
e. Deliveries by TIP on behalf of the Acquired Fund...................A-19
f. No Adverse Change..................................................A-21
g. Absence of Litigation..............................................A-22
h. Proceedings and Documents..........................................A-22
i. N-14 Registration Statement........................................A-22
j. Accountants' Letters...............................................A-22
k. Compliance with Laws; No Adverse Action or Decision................A-23
l. Commission Orders or Interpretations...............................A-23
m. Assets.............................................................A-23
n. Letter Regarding Tax Returns.......................................A-23
o. Dividends..........................................................A-23
9. Termination, Postponement and Waivers..............................A-24
a. Termination of Agreement...........................................A-24
b. Commission Order...................................................A-24
c. Effect of Termination..............................................A-25
d. Waivers; Non-Material Changes......................................A-25
10.Survival of Representations and Warranties; Indemnification........A-25
a. Survival of Representations and Warranties.........................A-25
b. Indemnification Obligations of TIP on behalf
of the Acquired Fund...............................................A-25
c. Indemnification Obligations of MAM on behalf
of the Acquiring Fund..............................................A-26
d. Indemnification Procedure..........................................A-26
11.Other Matters......................................................A-27
a. Legend.............................................................A-27
b. Further Assurances.................................................A-27
c. Notices............................................................A-27
d. Entire Agreement...................................................A-28
e. Amendment..........................................................A-28
f. Governing Law......................................................A-28
g. Assignment.........................................................A-28
h. Fees and Expenses..................................................A-28
i. Severability.......................................................A-29
j. Headings...........................................................A-29
k. Counterparts.......................................................A-29
<PAGE>
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the ___ day of March, 2000, by and between Mercury Asset Management Funds,
Inc., a Maryland corporation ("MAM"), on behalf of its portfolio, Mercury
Select Growth Fund (the "Acquiring Fund"), and TIP Funds, a Massachusetts
business trust ("TIP"), on behalf of its portfolio, Turner Large Cap Growth
Equity Fund (the "Acquired Fund").
PLAN OF REORGANIZATION
The reorganization will consist of (i) the acquisition of the Assets (as
defined herein) by the Acquiring Fund solely in exchange for the assumption by
the Acquiring Fund of the Assumed Liabilities (as defined herein) and an
aggregate value of Class I shares of the Acquiring Fund, with a par value of
$.0001 per share (the "Corresponding Shares"), equal to the net asset value of
the Assets determined in accordance with Section 2(c) hereof, (ii) the
subsequent distribution by the Acquired Fund of the Corresponding Shares to
its shareholders in exchange for such shareholders' respective shares of the
Acquired Fund in liquidation of the Acquired Fund, and (iii) the termination
of the Acquired Fund, all upon and subject to the terms hereinafter set forth
(the "Reorganization"). The aggregate net asset value of the Corresponding
Shares to be received by each shareholder of the Acquired Fund will equal the
aggregate net asset value of the Acquired Fund's shares owned by such
shareholder at the Valuation Time (as defined below). It is intended that the
Reorganization described herein shall be a reorganization within the meaning
of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and any successor provision.
As promptly as practicable after the liquidation of the Acquired Fund
pursuant to the Reorganization, the Acquired Fund shall be terminated in
accordance with the laws of Massachusetts.
AGREEMENT
NOW, THEREFORE, in order to consummate the Reorganization and in
consideration of the premises and the covenants and agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and intending to be legally bound, MAM on
behalf of the Acquiring Fund and TIP on behalf of the Acquired Fund hereby
agree as follows:
1. Defined Terms; Sections and Exhibits; Miscellaneous Terms.
a. Definitions. As used herein the following terms have the following
respective meanings (such definitions to be equally applicable to both the
singular and plural forms of the terms defined):
"Acquired Fund" has the meaning ascribed thereto in the introduction
hereof.
"Acquired Fund Prospectus" shall mean the prospectus of the Acquired
Fund dated as of ______________, as amended or supplemented.
"Acquired Fund Statement of Additional Information" shall mean the
statement of additional information of the Acquired Fund dated as of
_______________, as amended or supplemented.
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"Acquiring Fund" has the meaning ascribed thereto in the
introduction hereof.
"Acquiring Fund Prospectus" shall mean the prospectus of the
Acquiring Fund dated as of _________________, as amended or supplemented.
"Acquiring Fund Statement of Additional Information" shall mean the
statement of additional information of the Acquiring Fund dated as of
________________, as amended or supplemented.
"Agreement" has the meaning ascribed thereto in the introduction
hereof.
"Assets" has the meaning ascribed thereto in Section 2(a) hereof.
"Assumed Liabilities" has the meaning ascribed thereto in Section
2(b) hereof.
"Code" has the meaning ascribed thereto in the first paragraph under
the heading "Plan of Reorganization" hereof.
"Commission" shall mean the Securities and Exchange Commission.
"Corresponding Shares" has the meaning ascribed thereto in the first
paragraph under the heading "Plan of Reorganization" hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Date" has the meaning ascribed thereto in Section 6
hereof.
"Governmental Authority" shall mean any governmental or quasi-
governmental authority including, without limitation, any federal, state,
territorial, county, municipal or other governmental or quasi-governmental
agency, board, branch, bureau, commission, court, arbitral body, department or
other instrumentality or political unit or subdivision, whether domestic or
foreign.
"Indemnified Party" has the meaning ascribed thereto in Section
10(b) hereof.
"Indemnifying Party" has the meaning ascribed thereto in Section
10(b) hereof.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investments" shall mean, with respect to each Person, (i) the
investments of such Person shown on the schedule of its investments as of the
date set forth therein, and (ii) all other assets owned by such Person or
liabilities incurred as of such date.
"Licenses" has the meaning ascribed thereto in Section 3(b) hereof.
"Lien" shall mean any security agreement, financing statement
(whether or not filed), mortgage, lien (statutory or otherwise), charge,
pledge, hypothecation, conditional sales agreement, adverse claim, title
retention agreement or other security interest, encumbrance, restriction, deed
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<PAGE>
of trust, indenture, option, limitation, exception to or other title defect in
or on any interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale, lease, consignment, or
bailment given for security purposes, trust receipt or other title retention
agreement with respect to any property or asset of such Person, whether
direct, indirect, accrued or contingent.
"Losses" has the meaning ascribed thereto in Section 10(b) hereof.
"Majority Shareholder Vote" has the meaning ascribed thereto in the
Declaration of Trust of TIP as amended and currently in effect.
"MAM" has the meaning ascribed thereto in the introduction hereof.
"Material Adverse Effect" shall mean, with respect to any Person,
any event, circumstance or condition that, individually or when aggregated
with all other similar events, circumstances or conditions could reasonably be
expected to have, or has had, a material adverse effect on: (i) the business,
property, operations, condition (financial or otherwise), results of
operations or prospects of such Person or (ii) the ability of such Person to
consummate the transactions contemplated hereunder in the manner contemplated
hereby.
"N-14 Registration Statement" has the meaning ascribed thereto in
Section 3(n) hereof.
"Person" any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.
"Prohibited Assets" has the meaning ascribed thereto in Section 2(a)
hereof.
"Reorganization" has the meaning ascribed thereto in the first
paragraph under the heading "Plan of Reorganization" hereof.
"RICs" has the meaning ascribed thereto in Section 3(b) hereof.
"Ruling" has the meaning ascribed thereto in Section 7(e)(v) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SBSF" has the meaning ascribed thereto in Section 6 hereof.
"TIP" has the meaning ascribed thereto in the introduction hereof.
"Valuation Time" has the meaning ascribed thereto in Section 2(f)
hereof.
b. Use of Defined Terms. Any defined term used in the plural shall refer to
all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class. The use
of any gender shall be applicable to all genders.
c. Sections and Exhibits. References in this Agreement to Sections, Exhibits
and Schedules are to Sections, Exhibits and Schedules of and to this
Agreement. The Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.
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<PAGE>
d. Miscellaneous Terms. The term "or" shall not be exclusive. The terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such
terms shall refer to this Agreement as a whole and not merely to the specific
article, section, paragraph or clause where such terms may appear. The term
"including" shall mean "including, but not limited to."
2. The Reorganization.
a. Transfer of Assets. Subject to receiving the requisite approval of the
shareholders of the Acquired Fund, and to the other terms and conditions
contained herein, on the Exchange Date, the Acquired Fund shall convey,
transfer and deliver to the Acquiring Fund, and the Acquiring Fund shall
purchase, acquire and accept from the Acquired Fund, free and clear of all
Liens, substantially all of the assets (including interest accrued as of the
Valuation Time on debt instruments) of the Acquired Fund (such assets
(excluding the Prohibited Assets) are collectively referred to herein as the
"Assets"). Notwithstanding anything to the contrary in this Agreement, the
Acquired Fund shall retain and shall not convey, transfer or deliver to the
Acquiring Fund, and the Acquiring Fund shall not purchase, acquire or accept
any Assets that the Acquiring Fund advises the Acquired Fund in writing, in
accordance with Section 5(h) hereof, it is not permitted, or the Acquiring
Fund reasonably believes to be unsuitable for it, to acquire (collectively,
the "Prohibited Assets").
b. Assumption of Liabilities. Subject to receiving the requisite approval of
the shareholders of the Acquired Fund and to the other terms and conditions
contained herein, on the Exchange Date, the Acquiring Fund will assume and
agree to pay, perform and discharge when due substantially all of the
obligations and liabilities of the Acquired Fund then existing, whether
absolute, accrued, contingent or otherwise (collectively, the "Assumed
Liabilities"); provided that recourse for such liabilities will be limited to
the net Assets of the Acquired Fund acquired by the Acquiring Fund hereunder.
c. Issuance of Corresponding Shares in the Reorganization. A full
Corresponding Share, and to the extent necessary, a fractional Corresponding
Share, shall be issued by the Acquiring Fund to the Acquired Fund for each
full and fractional share of the Acquired Fund issued and outstanding at the
Valuation Time in exchange for the Assets. The Acquiring Fund shall issue its
Corresponding Shares to the Acquired Fund in one certificate or share deposit
receipt registered in the name of the Acquired Fund.
d. Distribution of Corresponding Shares to Shareholders of the Acquired Fund.
Pursuant to this Agreement, as soon as practicable after the Valuation Time,
the Acquired Fund will distribute all Corresponding Shares received by it from
the Acquiring Fund in connection with the Reorganization to its shareholders
in exchange for their shares of the Acquired Fund. Such distribution shall be
accomplished by the opening of shareholder accounts on the share ledger
records of the Acquiring Fund in the amounts due the shareholders of the
Acquired Fund based on their respective holdings in the Acquired Fund as of
the Valuation Time and the delivery by the Acquired Fund of the certificate or
share deposit receipt evidencing the Corresponding Shares received by it from
the Acquiring Fund hereunder to [insert name of transfer agent] as the
transfer agent.
e. Interest; Proceeds. TIP on behalf of the Acquired Fund will pay or cause
to be paid to the Acquiring Fund any interest or proceeds it receives on or
after the Exchange Date with respect to the Assets.
Valuation Time. The Valuation Time shall be 4:00 P.M., New York time, on
__________, 2000, or such earlier or later day and time as may be mutually
<PAGE>
<PAGE>
agreed upon in writing between the parties hereto (the "Valuation Time").
f. Evidence of Transfer. MAM and TIP will jointly file any instrument as may
be required by the State of Maryland and the Commonwealth of Massachusetts to
effect the transfer of the Assets to the Acquiring Fund.
g. Termination. The Acquired Fund's existence as a portfolio of TIP will be
terminated as soon as practicable following the Exchange Date by making any
required filings with the Commonwealth of Massachusetts.
3. REPRESENTATIONS AND WARRANTIES OF TIP ON BEHALF OF THE ACQUIRED FUND.
TIP on behalf of the Acquired Fund represents and warrants to MAM on
behalf of the Acquiring Fund as follows:
a. Formation and Qualification. TIP is a Massachusetts business trust duly
formed, validly existing and in good standing in conformity with the laws of
the Commonwealth of Massachusetts and has all requisite power and authority to
own all of its properties or assets and carry on its business as presently
conducted, is duly qualified, registered or licensed as a foreign corporation
to do business and is in good standing in each jurisdiction in which the
ownership of its properties or assets or the character of its present
operations makes such qualification, registration or licensing necessary,
except where the failure to so qualify or be in good standing would not have a
Material Adverse Effect on the Acquired Fund.
b. Licenses. TIP on behalf of the Acquired Fund holds all permits, consents,
registrations, certificates, authorizations and other approvals (collectively,
"Licenses") required for the conduct of the Acquired Fund's business as now
being conducted; all such Licenses are in full force and effect and no
suspension or cancellation of any of them is pending or threatened; and none
of such Licenses will be affected by the consummation of the transactions
contemplated by this Agreement in a manner that would have a Material Adverse
Effect on the Acquired Fund. TIP is duly registered under the Investment
Company Act as a diversified, open-end management investment company (File No.
811-7527), and such registration has not been revoked or rescinded and is in
full force and effect. TIP on behalf of the Acquired Fund has elected and
qualified for the special tax treatment afforded regulated investment
companies ("RICs") under Sections 851-855 of the Code at all times since its
inception and intends to continue to so qualify for the taxable year ending
upon the liquidation of the Acquired Fund.
c. Authority. TIP has full power and authority to execute and deliver this
Agreement on behalf of the Acquired Fund and to consummate the transactions
contemplated hereby on behalf of the Acquired Fund. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by TIP on behalf of the Acquired Fund have been duly and
validly authorized by all necessary action on the part of TIP on behalf of the
Acquired Fund and no other proceedings on the part of TIP are necessary to
authorize this Agreement on behalf of the Acquired Fund or the consummation of
the transactions contemplated hereby on behalf of the Acquired Fund, except
for the approval of the Acquired Fund's shareholders as provided in Section
7(c) hereof and the receipt from the Commission of an exemptive order from
Section 15(f) under the Investment Company Act as provided in Section 7(l)
hereof. This Agreement has been duly and validly executed by TIP on behalf of
the Acquired Fund and, subject to receipt of the requisite shareholder
approval, this Agreement constitutes a legal, valid and binding obligation of
TIP on behalf of the Acquired Fund enforceable against TIP on behalf of the
Acquired Fund in accordance with its terms, subject to the effects of
<PAGE>
<PAGE>
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto and the remedy of specific performance and injunctive and
other forms of equitable relief.
d. Financial Statements. MAM has been furnished with an accurate, correct
and complete statement of assets and liabilities and a schedule of Investments
of the Acquired Fund, each as of September 30, 1999 said financial statements
having been audited by Ernst & Young LLP, independent auditors.
Such audited financial statements fairly present in all material respects the
financial position of the Acquired Fund as of the dates and for the periods
referred to therein and in conformity with generally accepted accounting
principles applied on a consistent basis.
e. [Intentionally Left Blank]
f. Prospectus and Statement of Additional Information. MAM has been
furnished with the Acquired Fund Prospectus and the Acquired Fund Statement of
Additional Information, and said prospectus and statement of additional
information do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
g. Litigation. There are no material claims, actions, suits or legal,
administrative or other proceedings pending or, to the knowledge of TIP,
threatened against TIP and/or the Acquired Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquired Fund. Neither TIP
nor the Acquired Fund is charged with or, to TIP's knowledge, threatened with
any violation, or investigation of any possible violation, of any provisions
of any Federal, state or local law or regulation or administrative ruling
relating to any aspect of its business that could reasonably be expected to
have a Material Adverse Effect on the Acquired Fund.
h. Material Contracts. There are no material contracts outstanding to which
TIP is a party on behalf of the Acquired Fund that have not been disclosed in
the N-14 Registration Statement, the Acquired Fund Prospectus, the Acquired
Fund Statement of Additional Information or which will not otherwise be
disclosed to MAM prior to the Valuation Time.
i. No Conflict. The execution and delivery of this Agreement by TIP on
behalf of the Acquired Fund and the consummation of the transactions
contemplated hereby by TIP on behalf of the Acquired Fund will not contravene
or constitute a default under or violation of (i) the Declaration of Trust or
by-laws of TIP, each as amended and in effect as of the date hereof, (ii) any
agreement or contract (or require the consent of any Person under any
agreement or contract that has not been obtained) to which TIP is a party on
behalf of the Acquired Fund or to which the Acquired Fund's assets or
properties are subject, or (iii) any judgment, injunction, order or decree, or
other instrument binding upon TIP on behalf of the Acquired Fund or any of the
assets or properties of the Acquired Fund, except where such contravention,
default or violation would not have a Material Adverse Effect on the Acquired
Fund.
j. Undisclosed Liabilities. The Acquired Fund has no material liabilities,
contingent or otherwise, other than those shown on the Acquired Fund's
statements of assets and liabilities referred to herein, those incurred in the
ordinary course of its business as an investment company since September 30,
1999 and those incurred in connection with the Reorganization.
<PAGE>
<PAGE>
k. Taxes. TIP has filed (or caused to be filed), or has obtained extensions
to file, all Federal, state and local tax returns which are required to be
filed by the Acquired Fund, and has paid (or caused to be paid) or has
obtained extensions to pay, all taxes shown on said returns to be due and
owing and all assessments received by it, up to and including the taxable year
in which the Exchange Date occurs. All tax liabilities of the Acquired Fund
have been adequately provided for on its books, and no tax deficiency or
liability of the Acquired Fund has been asserted and no question with respect
thereto has been raised by the Internal Revenue Service or by any state or
local tax authority for taxes in excess of those already paid, up to and
including the taxable year in which the Exchange Date occurs.
l. Assets. The Acquired Fund has good and marketable title to the Assets,
free and clear of all Liens. The Acquired Fund is the direct, sole and
exclusive owner of the Assets. At the Exchange Date, upon consummation of the
transactions contemplated hereby, the Acquiring Fund will have good and
marketable title to the Assets, free and clear of all Liens.
m. Consents. No filing or registration with, or consent, approval,
authorization or order of, any Person is required for the consummation by TIP
on behalf of the Acquired Fund of the Reorganization, except for (i) such as
may be required under the Securities Act, the Exchange Act, and the Investment
Company Act or state securities laws (which term as used herein shall include
the laws of the District of Columbia and Puerto Rico), (ii) the Majority
Shareholder Vote, and (iii) the approval of a majority of the members of the
Board of Directors of TIP, and (iv) the receipt from the Commission of an
exemptive order from Section 15(f) under the Investment Company Act as
provided in Section 7(l) hereof.
n. N-14 Registration Statement. The registration statement filed, or to be
filed, by MAM on Form N-14 relating to the Corresponding Shares to be issued
pursuant to this Agreement, which includes the proxy statement of the Acquired
Fund and the prospectus of the Acquiring Fund with respect to the transactions
contemplated herein, and any supplement or amendment thereto or to the
documents therein (as amended, the "N-14 Registration Statement"), on the
effective date of the N-14 Registration Statement, at the time of the
shareholders' meeting referred to in Section 5(a) hereof and on the Exchange
Date, insofar as it relates to TIP and the Acquired Fund (i) complied, or will
comply, as the case may be, in all material respects, with the applicable
provisions of the Securities Act, the Exchange Act and the Investment Company
Act and the rules and regulations promulgated thereunder, and (ii) did not, or
will not, as the case may be, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
o. No Adverse Change. Since September 30, 1999 there has not been with
respect to the Acquired Fund any:
(i) material adverse change in the Acquired Fund's condition (financial or
otherwise), assets, liabilities, business, prospects or results of operation
other than changes in the ordinary course of business;
(ii) change in accounting principles, methods or practices, except for
such changes as were necessary to conform with generally accepted accounting
principles; or
(iii) incurrence of indebtedness maturing more than one year from the date
that such indebtedness was incurred.
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<PAGE>
p. Capitalization. The Acquired Fund is authorized to issue an unlimited
number of full and fractional units of beneficial interest, par value $.00001
per share, of a single class. As of the date hereof, the Acquired Fund has
_______ units of a single class issued and outstanding. All issued and
outstanding units of the Acquired Fund are duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights. [Except for in
connection with any automatic dividend reinvestment plan available to
shareholders of the Acquired Fund,] there are no options, warrants,
subscriptions, calls or other rights, agreements or commitments obligating the
Acquired Fund to issue any of its shares or securities convertible into its
shares.
q. Books and Records. To the Acquired Fund's knowledge, the books and
records of the Acquired Fund made available to the Acquiring Fund and/or its
counsel are substantially true and correct and contain no material
misstatements or omissions with respect to the operations of the Acquired
Fund.
4. REPRESENTATIONS AND WARRANTIES OF MAM ON BEHALF OF THE ACQUIRING FUND.
MAM on behalf of the Acquiring Fund represents and warrants to TIP on
behalf of the Acquired Fund as follows:
a. Formation and Qualification. MAM is a corporation duly incorporated,
validly existing and in good standing in conformity with the laws of the State
of Maryland, and has all requisite power and authority to own all of its
properties or assets and carry on its business as presently conducted, is duly
qualified, registered or licensed as a foreign corporation to do business and
is in good standing in each jurisdiction in which the ownership of its
properties or assets or the character of its present operations makes such
qualification, registration or licensing necessary, except where the failure
to so qualify or be in good standing would not have a Material Adverse Effect
on the Acquiring Fund.
b. Licenses. MAM on behalf of the Acquiring Fund holds all Licenses required
for the conduct of the Acquiring Fund's business as now being conducted; all
such Licenses are in full force and effect and no suspension or cancellation
of any of them is pending or threatened; and none of such Licenses will be
affected by the consummation of the transactions contemplated by this
Agreement in a manner that would have a Material Adverse Effect on the
Acquiring Fund. MAM is duly registered under the Investment Company Act as a
diversified, open-end management investment company (File No. 811-8797), and
such registration has not been revoked or rescinded and is in full force and
effect. The Acquiring Fund has elected and qualified for the special tax
treatment afforded to RICs under Sections 851-855 of the Code at all times
since its inception and intends to continue to so qualify both until
consummation of the Reorganization and thereafter.
c. Authority. MAM has full power and authority to execute and deliver this
Agreement on behalf of the Acquiring Fund and to consummate the transactions
contemplated hereby on behalf of the Acquiring Fund. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by MAM on behalf of the Acquiring Fund have been duly and
validly authorized by all necessary action on the part of MAM on behalf of the
Acquiring Fund and no other proceedings on the part of MAM are necessary to
authorize this Agreement on behalf of the Acquiring Fund or the consummation
of the transactions contemplated hereby on behalf of the Acquiring Fund,
except the receipt from the Commission of an exemptive order from Section
15(f) under the Investment Company Act as provided in Section 8(l) hereof.
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<PAGE>
This Agreement has been duly and validly executed by MAM on behalf of the
Acquiring Fund and constitutes a legal, valid and binding obligation of MAM on
behalf of the Acquiring Fund enforceable against MAM on behalf of the
Acquiring Fund in accordance with its terms, subject to the effects of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto and the remedy of specific performance and injunctive and
other forms of equitable relief.
d. Prospectus and Statement of Additional Information. TIP has been
furnished with the Acquiring Fund Prospectus and the Acquiring Fund Statement
of Additional Information, and said prospectus and statement of additional
information do not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
e. No Conflict. The execution and delivery of this Agreement by MAM on
behalf of the Acquiring Fund and the consummation of the transactions
contemplated hereby by MAM on behalf of the Acquiring Fund will not contravene
or constitute a default under or violation of (i) the Certificate of
Incorporation or by-laws of MAM, each as amended and in effect as of the date
hereof, (ii) any agreement or contract (or require the consent of any Person
under any agreement or contract that has not been obtained) to which MAM is a
party on behalf of the Acquiring Fund or to which the Acquiring Fund's assets
or properties are subject, or (iii) any judgment, injunction, order or decree,
or other instrument binding upon MAM on behalf of the Acquiring Fund or any of
the assets or properties of the Acquiring Fund, except where such
contravention, default or violation would not have a Material Adverse Effect
on the Acquiring Fund.
f. Consents. No filing or registration with, or consent, approval,
authorization or order of, any Person is required for the consummation by MAM
on behalf of the Acquiring Fund of the Reorganization, except for (i) such as
may be required under the Securities Act, the Exchange Act, and the Investment
Company Act or state securities laws (which term as used herein shall include
the laws of the District of Columbia and Puerto Rico), (ii) the approval of a
majority of the members of the Board of Directors of MAM, and (iii) the
receipt from the Commission of an exemptive order from Section 15(f) under the
Investment Company Act as provided in Section 8(l) hereof.
g. N-14 Registration Statement. The N-14 Registration Statement, on its
effective date, at the time of the shareholders' meeting referred to in
Section 5(a) hereof and on the Exchange Date, insofar as it relates to MAM and
the Acquiring Fund (i) complied, or will comply, as the case may be, in all
material respects, with the applicable provisions of the Securities Act, the
Exchange Act and the Investment Company Act and the rules and regulations
promulgated thereunder, and (ii) did not, or will not, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
h. Capitalization. The Acquiring Fund is authorized to issue
________________ full and fractional shares of beneficial interest, par value
[$.0001] per share, divided into four classes, designated Class I, Class A,
Class B and Class C. As of the date hereof, the Acquiring Fund has
___________, ___________, ___________, and ___________ Class I, Class A, Class
B and Class C shares issued and outstanding, respectively. All issued and
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<PAGE>
outstanding shares of the Acquiring Fund are duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights. Except for (i)
the right of Class B shares of the Acquiring Fund to automatically convert to
Class A shares of the Acquiring Fund approximately eight years after the
purchase thereof or (ii) in connection with any automatic dividend
reinvestment plan available to shareholders of the Acquiring Fund, there are
no options, warrants, subscriptions, calls or other rights, agreements or
commitments obligating the Acquiring Fund to issue any of its shares or
securities convertible into its shares.
i. Corresponding Shares.
(i) The Corresponding Shares to be issued by the Acquiring Fund to the
Acquired Fund and subsequently distributed by the Acquired Fund to its
shareholders as provided in this Agreement have been duly and validly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and nonassessable and will
have full voting rights, and no shareholder of the Acquiring Fund will have
any preemptive right of subscription or purchase in respect thereof.
(ii) At or prior to the Exchange Date, the Corresponding Shares to be
issued by the Acquiring Fund to the Acquired Fund hereunder will be duly
qualified for offering to the public in all states of the United States in
which the sale of shares of the Acquiring Fund presently are qualified, and
there are a sufficient number of such shares registered under the Securities
Act and with each pertinent state securities commission to permit the
transfers contemplated by this Agreement to be consummated.
j. Litigation. There are no material claims, actions, suits or legal,
administrative or other proceedings pending or, to the knowledge of MAM,
threatened against MAM and/or the Acquiring Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquiring Fund. Neither MAM
nor the Acquiring Fund is charged with or, to MAM's knowledge, threatened with
any violation, or investigation of any possible violation, of any provisions
of any Federal, state or local law or regulation or administrative ruling
relating to any aspect of its business that could reasonably be expected to
have a Material Adverse Effect on the Acquiring Fund.
5. COVENANTS OF TIP ON BEHALF OF THE ACQUIRED FUND AND MAM ON BEHALF OF THE
ACQUIRING FUND.
a. Special Shareholders' Meeting. TIP on behalf of the Acquired Fund agrees
to call a special meeting of the shareholders of the Acquired Fund as soon as
practicable after the effective date of the N-14 Registration Statement for
the purpose of considering the Reorganization as described in this Agreement.
b. Unaudited Financial Statements. TIP hereby agrees to furnish to MAM, at or
prior to the Exchange Date, an accurate, correct and complete unaudited
statement of assets and liabilities of the Acquired Fund with values
determined in accordance with the procedures described in the Acquiring Fund
Statement of Additional Information and an unaudited schedule of Investments
of the Acquired Fund (including the respective dates and costs of acquisition
thereof), each as of the Valuation Time. Such unaudited financial statements
will fairly present in all material respects the financial position of the
Acquired Fund as of the dates and for the periods referred to therein and in
conformity with generally accepted accounting principles applied on a
consistent basis.
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c. Share Ledger Records of the Acquiring Fund. TIP on behalf of the Acquired
Fund agrees, as soon as practicable after the Valuation Time, to open
shareholder accounts on its share ledger records for the shareholders of the
Acquired Fund in connection with the distribution of Corresponding Shares by
the Acquired Fund to such shareholders in accordance with Sections 2(c) and
(d) hereof.
d. Conduct of Business. TIP on behalf of the Acquired Fund covenants and
agrees to operate its business as presently conducted between the date hereof
and the Exchange Date.
e. Termination of the Acquired Fund. TIP agrees that following the
consummation of the Reorganization, (i) it will terminate the existence of the
Acquired Fund in accordance with the laws of the Commonwealth of Massachusetts
and any other applicable law; (ii) it will not make on behalf of the Acquired
Fund any distributions of any Corresponding Shares other than to the
shareholders of the Acquired Fund and without first paying or adequately
providing for the payment of all of the liabilities of the Acquired Fund not
assumed by the Acquiring Fund hereunder, if any; and (iii) on and after the
Exchange Date it shall not conduct any business on behalf of the Acquired Fund
except in connection with the termination of the Acquired Fund.
f. Filing of N-14 Registration Statement. MAM will file the N-14
Registration Statement with the Commission and will use its best efforts to
cause the N-14 Registration Statement to become effective as promptly as
practicable after the filing thereof. TIP and MAM agree to cooperate fully
with each other, and each will furnish to the other the information relating
to itself and the Acquired Fund in the case of TIP and the Acquiring Fund in
the case of MAM to be set forth in the N-14 Registration Statement as required
by the Securities Act, the Exchange Act, the Investment Company Act, and the
rules and regulations thereunder and the state securities or blue sky laws (if
applicable).
g. Material Contracts. TIP on behalf of the Acquired Fund hereby agrees to
disclose to MAM the existence of any material contracts to which TIP is a
party on behalf of the Acquired Fund that have not been otherwise disclosed in
the N-14 Registration Statement, the Acquired Fund Prospectus or the Acquired
Fund Statement of Additional Information.
h. Prohibited Assets. MAM on behalf of the Acquiring Fund agrees to advise
TIP promptly in writing if at any time prior to the Exchange Date the Assets
include any Prohibited Assets and shall provide to TIP a list of such
Prohibited Assets.
i. Corresponding Shares. TIP on behalf of the Acquired Fund agrees that it
will not sell or otherwise dispose of on behalf of the Acquired Fund any of
the Corresponding Shares to be received by the Acquired Fund from the
Acquiring Fund in connection with the Reorganization, except in distribution
to the shareholders of the Acquired Fund in accordance with the terms hereof.
j. Tax Returns. TIP on behalf of the Acquired Fund and MAM on behalf of the
Acquiring Fund each agrees that by the Exchange Date all of the Federal and
other tax returns and reports of the Acquired Fund and the Acquiring Fund,
respectively, required to be filed on or before such date shall have been
filed and all taxes shown as due on said returns either shall have been paid
or adequate liability reserves shall have been provided for the payment of
such taxes. In connection with this provision, TIP on behalf of the Acquired
Fund and MAM on behalf of the Acquiring Fund agree to cooperate with each
other in filing any tax return, amended return or claim for refund,
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determining a liability for taxes or a right to a refund of taxes or
participating in or conducting any audit or other proceeding in respect of
taxes. MAM on behalf of the Acquiring Fund agrees to retain for a period of
ten (10) years following the Exchange Date all returns, schedules and work
papers and all material records or other documents relating to tax matters of
the Acquiring Fund for its taxable period first ending after the Exchange
Date. Any information obtained under this subsection shall be kept
confidential except as otherwise may be necessary in connection with the
filing of returns or claims for refund or in conducting an audit or other
proceeding. After the Exchange Date, TIP on behalf of the Acquired Fund shall
prepare, or cause its agents to prepare, any Federal, state or local tax
returns, including any Forms 1099, required to be filed by the Acquired Fund
with respect to the Acquired Fund's final taxable year ending with its
complete liquidation and for any prior periods or taxable years and further
shall cause such tax returns and Forms 1099 to be duly filed with the
appropriate taxing authorities. Notwithstanding any of the foregoing, any
expenses incurred by TIP on behalf of the Acquired Fund (other than for
payment of taxes) in connection with the preparation and filing of said tax
returns and Forms 1099 after the Exchange Date shall be borne by TIP on behalf
of the Acquired Fund to the extent such expenses have been accrued by TIP on
behalf of the Acquired Fund in the ordinary course of business without regard
to the Reorganization; any excess expenses shall be borne by
____________________ at the time such tax returns and Forms 1099 are prepared.
k. Combined Proxy Statement and Prospectus Mailing. TIP on behalf of the
Acquired Fund agrees to mail to its shareholders of record entitled to vote at
the special meeting of shareholders at which action is to be considered
regarding this Agreement, in sufficient time to comply with requirements as to
notice thereof, a combined Proxy Statement and Prospectus which complies in
all material respects with the applicable provisions of Section 14(a) of the
Exchange Act and Section 20(a) of the Investment Company Act, and the rules
and regulations promulgated thereunder.
l. Confirmations of Tax Basis. TIP on behalf of the Acquired Fund will
deliver to MAM on the Exchange Date confirmations or other adequate evidence
as to the tax basis of each of the Assets delivered to the Acquiring Fund
hereunder, certified by [ ].
m. Shareholder List. As soon as practicable after the close of business on
the Exchange Date, TIP on behalf of the Acquired Fund shall deliver to MAM a
list of the names and addresses of all of the shareholders of record of the
Acquired Fund on the Exchange Date and the number of shares of the Acquired
Fund owned by each such shareholder as of such date, certified to the best of
its knowledge and belief by the transfer agent for the Acquired Fund or by
TIP's President or Vice President.
n. The Acquiring Fund's Continued Existence. Following the consummation of
the Reorganization, MAM expects, and agrees to use all reasonable efforts, to
cause the Acquiring Fund to stay in existence and to continue its business as
an open-end management investment company registered under the Investment
Company Act. MAM on behalf of the Acquiring Fund has no plan or intention to
sell or otherwise dispose of the Assets, except for (i) dispositions made in
the ordinary course of business and (ii) the transfer of all or substantially
all of the Assets to the corresponding series of Mercury Asset Management
Master Trust in which the Acquiring Fund expects to invest substantially all
of its assets as part of a "master/feeder" structure.
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6. EXCHANGE DATE.
The closing of the transactions contemplated by this Agreement shall be
at the offices of [Swidler Berlin Shereff Friedman, LLP ("SBSF"), The Chrysler
Building, 405 Lexington Avenue, New York, New York 10174, at 10:00 A.M.] on
the next full business day following the Valuation Time, or at such other
place, time and date agreed to by the parties hereto. The date and time upon
which such closing is to take place shall be referred to herein as the
"Exchange Date." Except with respect to Prohibited Assets, to the extent that
any Assets, for any reason, are not transferable on the Exchange Date, TIP on
behalf of the Acquired Fund shall cause such Assets to be transferred to the
Acquiring Fund's account with Brown Brothers Harriman & Co. at the earliest
practicable date thereafter.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF TIP ON BEHALF OF THE ACQUIRED
FUND.
The obligations of TIP on behalf of the Acquired Fund hereunder shall be
subject to the satisfaction, at or before the Exchange Date (or such other
date specified herein), of the conditions set forth below. The benefit of
these conditions is for the Acquired Fund only and may be waived, in whole or
in part, by TIP on behalf of the Acquired Fund at any time in its sole
discretion.
a. Representations and Warranties. The representations and warranties of MAM
on behalf of the Acquiring Fund made in this Agreement shall be true and
correct in all material respects when made, as of the Valuation Time and as of
the Exchange Date all with the same effect as if made at and as of such dates,
except that any representations and warranties that relate to a particular
date or period shall be true and correct in all material respects as of such
date or period.
b. Performance. MAM on behalf of the Acquiring Fund shall have performed,
satisfied and complied with all covenants, agreements and conditions required
to be performed, satisfied or complied with by it under this Agreement at or
prior to the Exchange Date.
c. Shareholder Approval. This Agreement shall have been adopted, and the
Reorganization shall have been approved, by the Majority Shareholder Vote.
d. Approval of Board of Directors of MAM. This Agreement shall have been
adopted and the Reorganization shall have been approved by the Board of
Directors of MAM on behalf of the Acquiring Fund. MAM on behalf of the
Acquiring Fund shall have delivered to TIP a copy of the resolutions of the
Board of Directors of MAM authorizing the execution, delivery and performance
by MAM on behalf of the Acquiring Fund of this Agreement and the transactions
contemplated hereby, certified by a duly authorized officer of MAM.
e. Deliveries by MAM on Behalf of the Acquiring Fund. At or prior to the
Exchange Date, MAM on behalf of the Acquiring Fund shall deliver to TIP,
against receipt by the Acquiring Fund of the Assets in accordance with Section
2(a) hereof, the following:
(i) a certificate executed by the President (or a Vice President) and the
Treasurer of MAM, dated as of the Exchange Date, certifying that the
conditions specified in Sections 7(a), (b), and (f) have been fulfilled;
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(ii) an opinion of SBSF, as counsel to MAM, dated as of the Exchange
Date, in form and substance satisfactory to TIP as to the matters set forth
below:
(1) to such counsel's knowledge, no filing or registration with, or
consent, approval, authorization or order of, any Person is required for the
consummation by MAM on behalf of the Acquiring Fund of the Reorganization,
except for such as have been obtained from the Board of Directors of MAM and
under the Securities Act, the Exchange Act and the Investment Company Act and
the rules and regulations promulgated thereunder (including the receipt from
the Commission of an exemptive order from Section 15(f) under the Investment
Company Act) and under Maryland law and such as may be required under state
securities laws;
(2) the N-14 Registration Statement has become effective under the
Securities Act, no stop order suspending the effectiveness of the N-14
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or, to such counsel's knowledge,
contemplated under the Securities Act, and the N-14 Registration Statement,
and each amendment or supplement thereto, as of their respective effective
dates, appear on their face to be appropriately responsive in all material
respects to the requirements of the Securities Act, the Exchange Act and the
Investment Company Act and the rules and regulations promulgated thereunder;
(3) to such counsel's knowledge, the descriptions in the N-14
Registration Statement of statutes, legal and governmental proceedings and
contracts and other documents in respect of MAM on behalf of the Acquiring
Fund are accurate and fairly present the information required to be shown;
(4) such counsel does not know of any statutes, legal or governmental
proceedings or contracts or other documents related to the Reorganization of a
character required to be described in the N-14 Registration Statement which
are not described therein or, if required to be filed, filed as required;
(5) the execution and delivery of the Agreement by MAM on behalf of the
Acquiring Fund and the consummation of the transactions contemplated thereby
by MAM on behalf of the Acquiring Fund do not contravene or constitute a
default under or violation of any agreement or contract known to such counsel
(or require the consent of any Person under any agreement or contract known to
such counsel that has not been obtained) to which MAM is a party on behalf of
the Acquiring Fund or to which the Acquiring Fund's assets or properties are
subject, except where such contravention, default or violation would not have
a Material Adverse Effect on the Acquiring Fund,
(6) such counsel does not have actual knowledge of any material claims,
actions, suits or legal, administrative or other proceedings pending or
threatened against MAM and/or the Acquiring Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquiring Fund; and
(7) such opinion is solely for the benefit of the Acquired Fund, and the
Board of Directors and officers of TIP.
Such opinion shall also state that (AA) while such counsel cannot make any
representation as to the accuracy or completeness of statements of fact in the
N-14 Registration Statement or any amendment or supplement thereto, nothing
has come to their attention that would lead them to believe that, on the
respective effective dates of the N-14 Registration Statement and any
amendment or supplement thereto, (1) the N-14 Registration Statement or any
amendment or supplement thereto contained any untrue statement of a material
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fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and (2) the prospectus included in the
N-14 Registration Statement contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (BB) such counsel does not
express any opinion or belief as to the financial statements or other
financial or statistical data relating to the Acquiring Fund contained or
incorporated by reference in the N-14 Registration Statement. In giving the
opinion set forth above, SBSF may state that it is relying on certificates of
officers of MAM with regard to matters of fact and certain certificates and
written statements of government officials with respect to the good standing
of MAM.
(iii) an opinion of [Insert Local Counsel] in form and substance
satisfactory to TIP as to the matters set forth below:
(1) MAM is a corporation duly incorporated, validly existing and in good
standing in conformity with the laws of Maryland ;
(2) the Corresponding Shares to be issued by the Acquiring Fund to the
Acquired Fund and subsequently distributed by the Acquired Fund to its
shareholders as provided for by the Agreement have been duly and validly
authorized and, when issued and delivered pursuant to the Agreement, will be
legally and validly issued and will be fully paid and nonassessable and will
have full voting rights, and no shareholder of the Acquiring Fund will have
any preemptive right of subscription or purchase in respect thereof (pursuant
to the Certificate of Incorporation, or the by-laws of MAM each as amended and
in effect as of the Exchange Date or, to the best of such counsel's knowledge,
otherwise);
(3) the execution and delivery of the Agreement by MAM on behalf of the
Acquiring Fund and the consummation of the transactions contemplated thereby
by MAM on behalf of the Acquiring Fund have been duly and validly authorized
by all necessary action on the part of MAM on behalf of the Acquiring Fund and
no other proceedings on the part of MAM on behalf of the Acquiring Fund are
necessary to authorize the Agreement or the consummation of the transactions
contemplated thereby;
(4) the Agreement has been duly and validly executed by MAM on behalf of
the Acquiring Fund and constitutes a legal, valid and binding obligation of
MAM on behalf of the Acquiring Fund enforceable against MAM on behalf of the
Acquiring Fund in accordance with its terms, subject to the effects of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto; provided, that such counsel shall express no opinion with
respect to the application of equitable principles in any proceeding, whether
at law or in equity;
(5) the execution and delivery of the Agreement by MAM on behalf of the
Acquiring Fund and the consummation of the transactions contemplated thereby
by MAM on behalf of the Acquiring Fund do not contravene or constitute a
default under or violation of the Certificate of Incorporation or by-laws of
MAM, each as amended and in effect as of the Exchange Date, or Maryland law;
and
(6) to such counsel's knowledge, no filing or registration with, or
consent, approval, authorization or order of, any Pension is required under
Maryland law for the consummation by MAM on behalf of the Acquiring Fund of
the Reorganization, except for such as have been obtained from the Board of
Directors of MAM and such as may be required under Maryland state securities
laws.
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(iv)an opinion of SBSF, in form and substance satisfactory to TIP and
MAM, to the effect that, for Federal income tax purposes,
(1) the transfer of the Assets to the Acquiring Fund in exchange solely
for the Corresponding Shares and the assumption by the Acquiring Fund of the
Assumed Liabilities as provided for in the Agreement will constitute a
reorganization within the meaning of Section 368(a)(1)(F) of the Code, and the
Acquiring Fund and the Acquired Fund will each be deemed to be a "party" to
the Reorganization within the meaning of Section 368(b) of the Code;
(2) in accordance with Section 361(a) of the Code, no gain or loss will
be recognized to the Acquired Fund under Section 361(c)(1) of the Code as a
result of the asset transfer solely in exchange for the Corresponding Shares
and the assumption by the Acquiring Fund of the Assumed Liabilities or on the
distribution of the Corresponding Shares to the Acquiring Fund shareholders as
provided for in the Agreement;
(3) under Section 1032 of the Code, no gain or loss will be recognized to
the Acquiring Fund on the receipt of the Assets in exchange for the
Corresponding Shares and the assumption by the Acquiring Fund of the Assumed
Liabilities as provided for in the Agreement;
(4) in accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized to the shareholders of the Acquired Fund on the receipt of
Corresponding Shares in exchange for their shares of the Acquired Fund;
(5) in accordance with Section 362(b) of the Code, the tax basis of the
Assets in the hands of the Acquiring Fund will be the same as the tax basis of
such Assets in the hands of the Acquired Fund immediately prior to the
consummation of the Reorganization;
(6) in accordance with Section 358 of the Code, immediately after the
Reorganization, the tax basis of the Corresponding Shares received by the
shareholders of the Acquired Fund in the Reorganization will be equal, in the
aggregate, to the tax basis of the shares of the Acquired Fund surrendered in
exchange therefor;
(7) in accordance with Section 1223 of the Code, a shareholder's holding
period for the Corresponding Shares will be determined by including the period
for which such shareholder held the shares of the Acquired Fund exchanged
therefor; provided, that such shares of the Acquired Fund were held as a
capital asset;
(8) in accordance with Section 1223 of the Code, the Acquiring Fund's
holding period with respect to the Assets acquired by it will include the
period for which such Assets were held by the Acquired Fund; and
(9) pursuant to Section 381(a) of the Code and regulations thereunder,
the Acquiring Fund will succeed to and take into account certain tax
attributes of the Acquired Fund, such as earnings and profits, capital loss
carryovers and method of accounting.
f. No Adverse Change. There shall have occurred no material adverse change
in the financial position of the Acquiring Fund since September 30, 1999 other
than changes in its portfolio securities since that date or changes in the
market value of its portfolio securities, each in the ordinary course of
business.
g. Absence of Litigation. There shall not be pending before any Governmental
Authority any material litigation with respect to the matters contemplated by
this Agreement.
h. Proceedings and Documents. All proceedings contemplated by this
Agreement, the Reorganization, and all of the other documents incident
thereto, shall be reasonably satisfactory to TIP and its counsel, and TIP and
its counsel shall have received all such counterpart originals or certified or
other copies of such documents as TIP or its counsel may reasonably request.
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i. N-14 Registration Statement. The N-14 Registration Statement shall have
become effective under the Securities Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of MAM or TIP,
contemplated by the Commission.
j. Accountants' Letters. TIP shall have received from [ ]
a letter dated as of the effective date of the N-14 Registration Statement and
a similar letter dated within five days prior to the Exchange Date, in form
and substance satisfactory to TIP, to the effect that
(i) [ ] serves as independent public accountants to the
Acquiring Fund within the meaning of the Securities Act and the applicable
rules and regulations promulgated thereunder;
(ii) in their opinion, the financial statements and supplementary
information of the Acquiring Fund included or incorporated by reference in the
N-14 Registration Statement and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the rules and regulations promulgated thereunder;
(iii)on the basis of limited procedures agreed upon by TIP on behalf of
the Acquired Fund and MAM on behalf of the Acquiring Fund and described in
such letter (but not an examination in accordance with generally accepted
auditing standards) consisting of a reading of any unaudited interim financial
statements and unaudited supplementary information of the Acquiring Fund
included in the N-14 Registration Statement, and inquiries of certain
officials of MAM responsible for financial and accounting matters of the
Acquiring Fund, nothing came to their attention that caused them to believe
that (a) such unaudited financial statements and related unaudited
supplementary information do not comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
rules and regulations promulgated thereunder, (b) such unaudited financial
statements are not fairly presented in conformity with generally accepted
accounting principles, applied on a basis substantially consistent with that
of the audited financial statements of the Acquiring Fund, or (c) such
unaudited supplementary information is not fairly stated in all material
respects in relation to the unaudited financial statements of the Acquiring
Fund taken as a whole; and
(iv)on the basis of limited procedures agreed upon by TIP on behalf of
the Acquired Fund and MAM on behalf of the Acquiring Fund and described in
such letter (but not an examination in accordance with generally accepted
auditing standards), the information relating to MAM and the Acquiring Fund
appearing in the N-14 Registration Statement, which information is expressed
in dollars (or percentages derived from such dollars) (with the exception of
performance comparisons, if any), if any, has been obtained from the
accounting records of the Acquiring Fund or from schedules prepared by
officials of MAM having responsibility for financial and reporting matters of
the Acquiring Fund and such information is in agreement with such records,
schedules or computations made therefrom.
k. Compliance with Laws; No Adverse Action or Decision. Since the date
hereof, (i) no law, statute, ordinance, code, rule or regulation shall have
been promulgated, enacted or entered that restrains, enjoins, prevents,
materially delays, prohibits or otherwise makes illegal the performance of
this Agreement, the Reorganization or the consummation of any of the
transactions contemplated hereby and thereby; (ii) the Commission shall not
have issued an unfavorable advisory report under Section 25(b) of the
Investment Company Act, nor instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Reorganization under Section
25(c) of the Investment Company Act, and (iii) no other legal, administrative
or other proceeding shall be instituted or threatened by any Governmental
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Authority which would materially affect the financial condition of the
Acquiring Fund or that seeks to restrain, enjoin, prevent, materially delay,
prohibit or otherwise make illegal the performance of this Agreement, the
Reorganization or the consummation of any of the transactions contemplated
hereby or thereby.
l. Commission Orders or Interpretations. TIP on behalf of the Acquired Fund
shall have received from the Commission such orders or interpretations,
including an exemptive order from Section 15(f) under the Investment Company
Act, as Morgan Lewis & Bockius LLP as counsel to TIP, deems reasonably
necessary or desirable under the Securities Act and the Investment Company Act
in connection with the Reorganization; provided, that such counsel shall have
requested such orders or interpretations as promptly as practicable, and all
such orders or interpretations shall be in full force and effect.
8. CONDITIONS OF MAM ON BEHALF OF THE ACQUIRING FUND.
The obligations of MAM on behalf of the Acquiring Fund hereunder shall be
subject to the satisfaction, at or before the Exchange Date (or such other
date specified herein), of the conditions set forth below. The benefit of
these conditions is for the Acquiring Fund only and may be waived, in whole or
in part, by MAM on behalf of the Acquiring Fund at any time in its sole
discretion.
a. Representations and Warranties. The representations and warranties of TIP
on behalf of the Acquired Fund made in this Agreement shall be true and
correct in all material respects when made, as of the Valuation Time and as of
the Exchange Date all with the same effect as if made at and as of such dates,
except that any representations and warranties that relate to a particular
date or period shall be true and correct in all material respects as of such
date or period.
b. Performance. TIP on behalf of the Acquired Fund shall have performed,
satisfied and complied with all covenants, agreements and conditions required
to be performed, satisfied or complied with by it under this Agreement at or
prior to the Exchange Date.
c. Shareholder Approval. This Agreement shall have been adopted, and the
Reorganization shall have been approved, by the Majority Shareholder Vote.
d. Approval of Board of Directors of TIP. This Agreement shall have been
adopted and the Reorganization shall have been approved by the Board of
Directors of TIP on behalf of the Acquired Fund. TIP on behalf of the
Acquired Fund shall have delivered to MAM a copy of the resolutions of the
Board of Directors of TIP authorizing the execution, delivery and performance
by TIP on behalf of the Acquired Fund of this Agreement and the transactions
contemplated hereby, certified by a duly authorized officer of TIP.
e. Deliveries by TIP on behalf of the Acquired Fund. At or prior to the
Exchange Date, TIP on behalf of the Acquired Fund shall deliver to MAM,
against the assumption by the Acquiring Fund of the Assumed Liabilities and
the receipt by the Acquired Fund of the Corresponding Shares in accordance
with Sections 2(b) and (c) hereof, respectively, the following:
(i)a certificate executed by the President (or a Vice President) and the
Treasurer of TIP, dated as of the Exchange Date, certifying that the
conditions specified in Sections 8(a), (b),(c) and (f) have been fulfilled;
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(ii)the unaudited financial statements of the Acquired Fund required by
Section 5(b) hereof;
(iii)an opinion of Morgan Lewis & Bockius LLP, as counsel to TIP, dated
as of the Exchange Date, in form and substance satisfactory to MAM, as to the
matters set forth below:
(1) to such counsel's knowledge, [TIP on behalf of] the Acquired Fund has
good and marketable title to the Assets, free and clear of all Liens;
(2) to such counsel's knowledge, no filing or registration with, or
consent, approval, authorization or order of, any Person is required for the
consummation by TIP on behalf of the Acquired Fund of the Reorganization,
except for such as have been obtained from the Board of Directors of TIP and
shareholders of the Acquired Fund and under the Securities Act, the Exchange
Act and the Investment Company Act and the rules and regulations promulgated
thereunder (including the receipt from the Commission of an exemptive order
from Section 15(f) under the Investment Company Act) and under Massachusetts
law and such as may be required under state securities laws;
(3) the proxy statement of the Acquired Fund contained in the N-14
Registration Statement, and each amendment or supplement thereto, as of their
respective effective dates, appear on their face to be appropriately
responsive in all material respects to the requirements of the Exchange Act
and the Investment Company Act and the rules and regulations promulgated
thereunder;
(4) to such counsel's knowledge, the descriptions in the proxy statement of
the Acquired Fund contained in the N-14 Registration Statement of statutes,
legal and governmental proceedings and contracts and other documents in
respect of TIP on behalf of the Acquired Fund are accurate and fairly present
the information required to be shown;
(5) such counsel does not know of any statutes, legal or governmental
proceedings or contracts or other documents related to the Reorganization of a
character required to be described in the N-14 Registration Statement which
are not described therein or, if required to be filed, filed as required;
(6) the execution and delivery of the Agreement by TIP on behalf of the
Acquired Fund and the consummation of the transactions contemplated thereby by
TIP on behalf of the Acquired Fund do not contravene or constitute a default
under or violation of any agreement or contract known to such counsel (or
require the consent of any Person under any agreement or contract known to
such counsel that has not been obtained) to which TIP is a party on behalf of
the Acquired Fund or to which the Acquired Fund's assets or properties are
subject, except where such contravention, default or violation would not have
a Material Adverse Effect on the Acquired Fund;
(7) such counsel does not have actual knowledge of any material claims,
actions, suits or legal, administrative or other proceedings pending or
threatened against TIP and/or the Acquired Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquired Fund; and
(8) such opinion is solely for the benefit of the Acquiring Fund and the
Board of Directors and officers of MAM.
Such opinion shall also state that (AA) while such counsel cannot make any
representation as to the accuracy or completeness of statements of fact in the
N-14 Registration Statement or any amendment or supplement thereto, nothing
has come to their attention that would lead them to believe that, on the
respective effective dates of the N-14 Registration Statement and any
amendment or supplement thereto, (1) the N-14 Registration Statement or any
amendment or supplement thereto contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and (2) the proxy statement of the
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Acquired Fund contained in the N-14 Registration Statement or any amendment or
supplement thereto contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and (BB) such counsel does not express any
opinion or belief as to the financial statements or other financial or
statistical data relating to the Acquired Fund contained or incorporated by
reference in the N-14 Registration Statement. In giving the opinion set forth
above, Morgan Lewis & Bockius LLP may state that it is relying on certificates
of officers of TIP with regard to matters of fact and certain certificates and
written statements of governmental officials with respect to the good standing
of TIP and the opinion of [insert local counsel] as to matters of
Massachusetts law.
(iv)an opinion of [insert local counsel] as Massachusetts counsel to TIP,
dated as of the Exchange Date, in form and substance satisfactory to MAM, as
to the matters set forth below:
(1)TIP is a corporation duly incorporated, validly existing and in good
standing in conformity with the laws of Massachusetts;
(2)the execution and delivery of the Agreement by TIP on behalf of the
Acquired Fund and the consummation of the transactions contemplated thereby by
TIP on behalf of the Acquired Fund have been duly and validly authorized by
all necessary action on the part of TIP on behalf of the Acquired Fund and no
other proceedings on the part of TIP on behalf of the Acquired Fund are
necessary to authorize the Agreement or the consummation of the transactions
contemplated thereby;
(3)the Agreement has been duly and validly executed by TIP on behalf of
the Acquired Fund and constitutes a legal, valid and binding obligation of TIP
on behalf of the Acquired Fund enforceable against TIP on behalf of the
Acquired Fund in accordance with its terms, subject to the effects of
bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto; provided, that such counsel shall express no opinion with
respect to the application of equitable principles in any proceeding, whether
at law or in equity;
(4)the execution and delivery of the Agreement by TIP on behalf of the
Acquired Fund and the consummation of the transactions contemplated thereby by
TIP on behalf of the Acquired Fund do not contravene or constitute a default
under or violation of the Declaration of Trust or by-laws of TIP, each as
amended and in effect as of the Exchange Date, or Massachusetts law; and
(5)to such counsel's knowledge, no filing or registration with, or
consent, approval, authorization or order of, any Person is required under
Massachusetts law for the consummation by TIP on behalf of the Acquired Fund
of the Reorganization, except for such as have been obtained from the Board of
Directors of TIP and shareholders of the Acquired Fund and such as may be
required under Massachusetts state securities law. In giving the opinion set
forth above, [insert local counsel] may state that it is relying on
certificates of officers of TIP with regard to matters of fact and certain
certificates and written statements of government officials with respect to
the good standing of TIP.
f. No Adverse Change. There shall have occurred no material adverse change
in the financial position of the Acquired Fund since September 30, 1999 other
than changes in its portfolio securities since that date or changes in the
market value of its portfolio securities, each in the ordinary course of
business.
g. Absence of Litigation. There shall not be pending before any Governmental
Authority any material litigation with respect to the matters contemplated by
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this Agreement.
h. Proceedings and Documents. All proceedings contemplated by this
Agreement, the Reorganization, and all of the other documents incident
thereto, shall be reasonably satisfactory to MAM and its counsel, and MAM and
its counsel shall have received all such counterpart originals or certified or
other copies of such documents as MAM or its counsel may reasonably request.
i. N-14 Registration Statement. The N-14 Registration Statement shall have
become effective under the Securities Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of TIP or MAM,
contemplated by the Commission.
j. Accountants' Letters. MAM shall have received from [ ] a
letter dated as of the effective date of the N-14 Registration Statement and a
similar letter dated within five days prior to the Exchange Date, in form and
substance satisfactory to MAM, to the effect that
(i)Ernst & Young LLP serves as independent public accountants to the
Acquired Fund within the meaning of the Securities Act and the applicable
rules and regulations promulgated thereunder;
(ii)in their opinion, the financial statements and supplementary
information of the Acquired Fund included or incorporated by reference in the
N-14 Registration Statement and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the rules and regulations promulgated thereunder;
(iii)on the basis of limited procedures agreed upon by MAM on behalf of
the Acquiring Fund and TIP on behalf of the Acquired Fund and described in
such letter (but not an examination in accordance with generally accepted
auditing standards) consisting of a reading of any unaudited interim financial
statements and unaudited supplementary information of the Acquiring Fund
included in the N-14 Registration Statement, and inquiries of certain
officials of the Acquiring Fund responsible for financial and accounting
matters of the Acquired Fund, nothing came to their attention that caused them
to believe that (a) such unaudited financial statements and related unaudited
supplementary information do not comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
rules and regulations promulgated thereunder, (b) such unaudited financial
statements are not fairly presented in conformity with generally accepted
accounting principles, applied on a basis substantially consistent with that
of the audited financial statements of the Acquired Fund, or (c) such
unaudited supplementary information is not fairly stated in all material
respects in relation to the unaudited financial statements of the Acquired
Fund taken as a whole; and
(iv)on the basis of limited procedures agreed upon by MAM on behalf of
the Acquiring Fund and TIP on behalf of the Acquired Fund and described in
such letter (but not an examination in accordance with generally accepted
auditing standards), the information relating to TIP and the Acquired Fund
appearing in the N-14 Registration Statement, which information is expressed
in dollars (or percentages derived from such dollars) (with the exception of
performance comparisons, if any), if any, has been obtained from the
accounting records of the Acquired Fund or from schedules prepared by
officials of TIP having responsibility for financial and reporting matters of
the Acquired Fund and such information is in agreement with such records,
schedules or computations made therefrom.
k. Compliance with Laws; No Adverse Action or Decision. Since the date
hereof, (i) no law, statute, ordinance, code, rule or regulation shall have
been promulgated, enacted or entered that restrains, enjoins, prevents,
materially delays, prohibits or otherwise makes illegal the performance of
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this Agreement, the Reorganization or the consummation of any of the
transactions contemplated hereby and thereby; (ii) the Commission shall not
have issued an unfavorable advisory report under Section 25(b) of the
Investment Company Act, nor instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Reorganization under Section
25(c) of the Investment Company Act, and (iii) no other legal, administrative
or other proceeding shall be instituted or threatened by any Governmental
Authority which would materially affect the financial condition of the
Acquired Fund or that seeks to restrain, enjoin, prevent, materially delay,
prohibit or otherwise make illegal the performance of this Agreement, the
Reorganization or the consummation of any of the transactions contemplated
hereby or thereby.
l. Commission Orders or Interpretations. MAM shall have received from the
Commission such orders or interpretations, including an exemptive order from
Section 15(f) under the Investment Company Act, as SBSF, as counsel to MAM,
deems reasonably necessary or desirable under the Securities Act and the
Investment Company Act in connection with the Reorganization; provided, that
such counsel shall have requested such orders or interpretations as promptly
as practicable, and all such orders or interpretations shall be in full force
and effect.
m. Assets. The Assets to be transferred to the Acquiring Fund, or the
Assumed Liabilities to be assumed by the Acquiring Fund, hereunder shall not
include any Prohibited Assets as identified to TIP on behalf of the Acquired
Fund by MAM on behalf of the Acquiring Fund in accordance with Section 5(h)
hereof.
n. Letter Regarding Tax Returns. TIP on behalf of the Acquired Fund shall
have delivered to MAM a letter from [ ], dated the Exchange
Date, stating that such firm has performed a limited review of the Federal,
state and local income tax returns of the Acquired Fund for the period ended
[insert date] (which returns originally were prepared and filed by TIP on
behalf of the Acquired Fund), and that based on such limited review, nothing
came to their attention which caused them to believe that such returns did not
properly reflect, in all material respects, the Federal, state and local
income taxes of the Acquired Fund for the period covered thereby; and that for
the period from [insert date] to and including the Exchange Date and for any
taxable year of the Acquired Fund ending upon the liquidation of the Acquired
Fund, such firm has performed a limited review to ascertain the amount of
applicable Federal, state and local taxes, and has determined that either such
amount has been paid or reserves established for payment of such taxes, this
review to be based on unaudited financial data; and that based on such limited
review, nothing has come to their attention which caused them to believe that
the taxes paid or reserves set aside for payment of such taxes were not
adequate in all material respects for the satisfaction of Federal, state and
local taxes for the period from [insert date] to and including the Exchange
Date and for any taxable year of the Acquired Fund ending upon the liquidation
of the Acquired Fund or that TIP would not continue to qualify as a regulated
investment company for Federal income tax purposes.
o. Dividends. Prior to the Exchange Date, the Acquired Fund shall have
declared a dividend or dividends which, together with all such previous
dividends, shall have the effect of distributing to its shareholders all of
its investment company taxable income for the period from [Insert Date] to and
including the Exchange Date, if any (computed without regard to any deduction
for dividends paid), and all of its net capital gain, if any, realized for the
period from [Insert Date] to and including the Exchange Date.
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9. TERMINATION, POSTPONEMENT AND WAIVERS.
a. Termination of Agreement. Notwithstanding anything contained in this
Agreement to the contrary, subject to Section 10(a) hereof, this Agreement may
be terminated and the Reorganization abandoned at any time (whether before or
after adoption thereof by the shareholders of the Acquired Fund) prior to the
Exchange Date, or the Exchange Date may be postponed, by notice in writing
prior to the Exchange Date
(i)by TIP on behalf of the Acquired Fund or MAM on behalf of the
Acquiring Fund if:
(1) the Boards of Directors of TIP and MAM so mutually agree in writing;
(2) the transactions contemplated by this Agreement have not been
consummated by [Insert Date]; provided, however, that the right to terminate
or postpone this Agreement under this Section 9(a)(i)(2) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of consummation
of the transactions contemplated by this Agreement on or before such date; or
(3) any Governmental Authority of competent jurisdiction shall have
issued any judgment, injunction, order, ruling or decree or taken any other
action restraining, enjoining or otherwise prohibiting this Agreement, the
Reorganization or the consummation of any of the transactions contemplated
hereby or thereby and such judgment, injunction, order, ruling, decree or
other action becomes final and non-appealable; provided, that the party
seeking to terminate this Agreement pursuant to this Section 9(a)(i)(3) shall
have used its reasonable best efforts to have such judgment, injunction,
order, ruling, decree or other action lifted, vacated or denied.
(ii)by TIP on behalf of the Acquired Fund if any condition of TIP's
obligations on behalf of the Acquired Fund set forth in Section 7 of this
Agreement has not been fulfilled by MAM on behalf of the Acquiring Fund or
waived by TIP on behalf of the Acquired Fund, or
(iii)by MAM on behalf of the Acquiring Fund if any condition of MAM's
obligations on behalf of the Acquiring Fund set forth in Section 8 of this
Agreement has not been fulfilled by TIP on behalf of the Acquired Fund or
waived by MAM on behalf of the Acquiring Fund.
b. Commission Order. If any order or orders of the Commission with respect
to this Agreement shall be issued prior to the Exchange Date and shall impose
any terms or conditions which are determined by action of the Boards of
Directors of TIP and MAM to be acceptable, such terms and conditions shall be
binding as if a part of this Agreement without further vote or approval of the
shareholders of the Acquired Fund, unless such terms and conditions shall
result in a change in the method of computing the number of Corresponding
Shares to be issued by the Acquiring Fund to the Acquired Fund in which event,
unless such terms and conditions shall have been included in the proxy
solicitation materials furnished to the shareholders of the Acquired Fund
prior to the meeting at which the Reorganization shall have been approved,
this Agreement shall not be consummated and shall terminate unless the
Acquired Fund promptly shall call a special meeting of shareholders at which
such conditions so imposed shall be submitted for approval and the requisite
approval of such conditions shall be obtained.
c. Effect of Termination. In the event of termination of this Agreement
pursuant to the provisions hereof, the same shall become null and void and
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have no further force or effect, and there shall not be any liability on the
part of either TIP on behalf of the Acquired Fund or MAM on behalf of the
Acquiring Fund or Persons who are their directors, trustees, officers, agents
or shareholders, if any in respect of this Agreement.
d. Waivers; Non-Material Changes. At any time prior to the Exchange Date,
any of the terms or conditions of this Agreement may be waived by the Board of
Directors of the party hereto that is entitled to the benefit thereof, if, in
the judgment of such Board after consultation with its counsel, such action or
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the shareholders of the Acquired Fund or the Acquiring Fund,
as the case may be, on behalf of which such action is taken. In addition, the
Boards of Directors of TIP and MAM have delegated to the investment adviser of
the Acquired Fund and the Acquiring Fund, respectively, the ability to make
non-material changes to this Agreement if such investment adviser deems it to
be in the best interests of such fund for which it serves as investment
adviser to do so.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
a. Survival of Representations and Warranties. The respective
representations and warranties contained in Sections 3 and 4 hereof shall
expire with, and be terminated by, the consummation of the Reorganization, and
neither TIP on behalf of the Acquired Fund, MAM on behalf of the Acquiring
Fund nor any of their respective officers or directors, agents or shareholders
(including shareholders of the Acquired Fund and the Acquiring Fund) shall
have any liability with respect to such representations or warranties after
the Exchange Date. This provision shall not protect any officer, director,
agent or shareholder (including shareholders of the Acquired Fund and the
Acquiring Fund) of TIP on behalf of the Acquired Fund or MAM on behalf of the
Acquiring Fund against any liability to the entity for which such Person
serves in such capacity, or to its shareholders, to which such Person would be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties in the conduct of such office.
b. Indemnification Obligations of TIP on behalf of the Acquired Fund. TIP on
behalf of the Acquired Fund hereby agrees to indemnify and hold harmless MAM
on behalf of the Acquiring Fund from and against any and all losses, claims,
damages, liabilities, costs (including reasonable attorneys' fees) and
expenses (including expenses of investigation) (collectively, "Losses") which
MAM and/or the Acquiring Fund may incur or sustain as a result of, relating to
or arising out of, (i) any corporate obligation of TIP on behalf of the
Acquired Fund, whether consisting of tax deficiencies or otherwise, required
to be paid by MAM and/or the Acquiring Fund and based upon a claim or claims
against TIP and/or the Acquired Fund which were omitted or not fairly
reflected in the financial statements delivered to MAM in connection with the
Reorganization; (ii) any breach or alleged breach in any material respect of
any warranty, or the inaccuracy in any material respect of any representation,
including without limitation, any representation regarding the performance
information of the Acquired Fund, as the case may be, made by TIP on behalf of
the Acquired Fund hereunder (iii) the failure or threatened failure, in any
material respect, of TIP on behalf of the Acquired Fund to fulfill any
agreement or covenant of TIP on behalf of the Acquired Fund contained in this
Agreement; or (iv) any claim is made alleging that (a) the N-14 Registration
Statement included any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (b) the Proxy Statement and Prospectus delivered to
the shareholders of the Acquired Fund and forming a part of the N-14
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Registration Statement included any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, insofar as such claim is based on information
relating to TIP or the Acquired Fund. The party being indemnified is referred
to herein as the "Indemnified Party" and the indemnifying party is referred to
herein as the "Indemnifying Party."
c. Indemnification Obligations of MAM on behalf of the Acquiring Fund. MAM
on behalf of the Acquiring Fund hereby agrees to indemnify and hold harmless
TIP on behalf of the Acquired Fund from and against any and all Losses which
TIP and/or the Acquired Fund may incur or sustain as a result of, relating to
or arising out of, (i) any breach or alleged breach in any material respect
of any warranty, or the inaccuracy in any material respect of any
representation, as the case may be, made by MAM on behalf of the Acquiring
Fund hereunder; (ii) the failure or threatened failure, in any material
respect, of MAM on behalf of the Acquiring Fund to fulfill any agreement or
covenant of MAM on behalf of the Acquiring Fund contained in this Agreement;
or (iii) any claim is made alleging that (a) the N-14 Registration Statement
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (b) the Proxy Statement and Prospectus delivered to
shareholders of the Acquired Fund and forming a part of the N-14 Registration
Statement included any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such claim is based on information
relating to TIP or the Acquired Fund.
d. Indemnification Procedure. In the event that any claim is made against
MAM and/or the Acquiring Fund in respect of which indemnity may be sought by
MAM on behalf of the Acquiring Fund from TIP on behalf of the Acquired Fund
under Section 10(b) hereof, or in the event that any claim is made against TIP
and/or the Acquired Fund in respect of which indemnity may be sought by TIP on
behalf of the Acquired Fund from MAM on behalf of the Acquiring Fund under
Section 10(c) hereof, then the Indemnified Party, with reasonable promptness
and before payment of such claim, shall give written notice of such claim to
the Indemnifying Party. If no objection as to the validity of the claim is
made in writing to the Indemnified Party by the Indemnifying Party within
thirty (30) days after the giving of notice hereunder, then the Indemnified
Party may pay such claim and shall be entitled to reimbursement therefor,
pursuant to this Agreement. If, prior to the termination of such thirty-day
period, objection in writing as to the validity of such claim is made to the
Indemnified Party, the Indemnified Party shall withhold payment thereof until
the validity of such claim is established (i) to the satisfaction of the
Indemnifying Party, or (ii) by a final determination of a court of competent
jurisdiction, whereupon the Indemnified Party may pay such claim and shall be
entitled to reimbursement thereof, pursuant to this Agreement, or (iii) with
respect to any tax claims, within seven (7) calendar days following the
earlier of (A) an agreement between TIP on behalf of the Acquired Fund and MAM
on behalf of the Acquiring Fund that an indemnity amount is payable, (B) an
assessment of a tax by a taxing authority, or (C) a "determination" as defined
in Section 1313(a) of the Code. For purposes of this Section, the term
"assessment" shall have the same meaning as used in Chapter 63 of the Code and
Treasury Regulations thereunder, or any comparable provision under the laws of
the appropriate taxing authority. In the event of any objection by the
Indemnifying Party, the Indemnifying Party promptly shall investigate the
claim, and if it is not satisfied with the validity thereof, the Indemnifying
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Party shall conduct the defense against such claim. All costs and expenses
incurred by the Indemnifying Party in connection with such investigation and
defense of such claim shall be borne by it. These indemnification provisions
are in addition to, and not in limitation of, any other rights the parties may
have under applicable law.
11. Other Matters.
a. Legend. Pursuant to Rule 145 under the Securities Act, and in connection
with the issuance of any shares to any Person who at the time of the
Reorganization is, to its knowledge, an affiliate of a party to the
Reorganization pursuant to Rule 145(c) of the Securities Act, MAM on behalf of
the Acquiring Fund will cause to be affixed upon the certificate(s) issued to
such Person (if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO MERCURY
SELECT GROWTH FUND (OR ITS STATUTORY SUCCESSOR) OR ITS PRINCIPAL
UNDERWRITER UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH REGISTRATION IS NOT
REQUIRED.
and, further, that stop transfer instructions will be issued to the Acquiring
Fund's transfer agent with respect to such shares. TIP on behalf of the
Acquired Fund will provide MAM on the Exchange Date with the name of any
shareholder of the Acquired Fund who is to the knowledge of TIP an affiliate
of it on such date.
b. Further Assurances. Each party hereto covenants and agrees to provide the
other party hereto and its agents and counsel with any and all documentation,
information, assistance and cooperation that may become necessary from time to
time with respect to the transactions contemplated by this Agreement.
c. Notices. Any notice, report or other communication hereunder shall be in
writing and shall be given to the Person entitled thereto by hand delivery,
prepaid certified mail or overnight service, addressed to TIP on behalf of
the Acquired Fund or MAM on behalf of the Acquiring Fund, as applicable, at
the addresses set forth below. If the notice is sent by certified mail, it
shall be deemed to have been given to the Person entitled thereto five (5)
business days after being deposited in the United States mail and if the
notice is sent by overnight service, it shall be deemed to have been given to
the Person entitled thereto one (1) business day after it was deposited with
the courier service for delivery to that Person. Notice of any change in any
address listed below also shall be given in the manner set forth above.
Whenever the giving of notice is required, the giving of such notice may be
waived by the party entitled to receive such notice.
If to TIP on behalf of the c/o Turner Investment Partners, Inc.
Acquired Fund, to: 1235 Westlakes Drive
Suite 350
Berwyn, PA 19312
Attention: Stephen Kneeley
With a copy to: Morgan Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
Attention: James W. Jennings, Esq.
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If to MAM on behalf of the c/o Mercury Asset Management Funds, Inc.
Acquiring Fund, to: 800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Terry K. Glenn
With a copy to: Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Attention: Joel H. Goldberg, Esq.
d. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters contemplated herein and
supersedes all previous agreements or understandings between the parties
related to such matters.
e. Amendment. Except as set forth in Section 9(d) hereof, this Agreement may
be amended, modified, superseded, canceled, renewed or extended, and the terms
or covenants hereof may be waived, only by a written instrument executed by
all of the parties hereto or, in the case of a waiver, by the party waiving
compliance. Except as otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time.
f. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of [New York] applicable to agreements made and to be performed
in said state, without giving effect to the principles of conflict of laws
thereof.
g. Assignment. This Agreement shall not be assigned by any of the parties
hereto, in whole or in part, whether by operation of law or otherwise, without
the prior written consent of the other party hereto. Any purported assignment
contrary to the terms hereof shall be null, void and of no effect.
h. Fees and Expenses. With respect to expenses incurred in connection with
the Reorganization, (i) MAM shall pay all expenses incurred which are solely
attributable to the Acquiring Fund and the conduct of its business, (ii)
Turner Investment Partners, Inc. shall pay all expenses incurred which are
solely attributable to the Acquired Fund and the conduct of its business, and
(iii) MAM and Turner Investment Partners, Inc. shall pay all other expenses
incurred in connection with the Reorganization pro rata according to their
respective net assets on the Valuation Date, including, but not limited to,
all costs related to the preparation and distribution of the N-14 Registration
Statement; provided that MAM shall be reimbursed by the Acquiring Fund for all
expenses paid by MAM under subsections (i) and (iii) above. Such fees and
expenses shall include costs of preparing and filing a Ruling, legal and
accounting fees, state securities fees (if any), printing costs, filing fees,
portfolio transfer taxes (if any), and any similar expenses incurred in
connection with the Reorganization. If for any reason the Reorganization is
not consummated, a party shall not be liable to the other party hereto for any
damages resulting therefrom, including, without limitation, consequential
damages, except to the extent that such party acted with willful misfeasance,
bad faith, willful misconduct or reckless disregard.
i. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
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ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
j. Headings. Headings to sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the heading of any section.
k. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be deemed to
be an original but all such counterparts together shall constitute but one
instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
MERCURY ASSET MANAGEMENT FUNDS, INC.
on behalf of its portfolio
MERCURY SELECT GROWTH FUND
By:
----------------------------------
Name:
Title:
TIP FUNDS
on behalf of its portfolio
TURNER LARGE CAP GROWTH EQUITY FUND
By:
------------------------------------
Name:
Title:
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SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 10, 2000
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
TURNER LARGE CAP GROWTH EQUITY FUND
a Series of
TIP FUNDS
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
(800) 224-6312
In Exchange For Shares of
MERCURY SELECT GROWTH FUND
a Series of
MERCURY ASSET MANAGEMENT FUNDS, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011
(609) 282-2800
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Proxy Statement/Prospectus of Turner Large Cap
Growth Equity Fund ("Turner Fund") and Mercury Select Growth Fund (the
"Mercury Fund") dated _____, 2000 (the "Proxy Statement/Prospectus"), which
has been filed with Securities and Exchange Commission and can be obtained,
without charge, by calling the Turner Fund or the Mercury Fund at
______________ and _______________, respectively, or by writing either of such
funds at its respective address referenced above. This Statement of
Additional Information has been incorporated by reference into the Proxy
Statement/Prospectus.
Further information about the Mercury Fund is contained in and
incorporated by reference to its Preliminary Prospectus, dated
_______________, 2000, and its Statement of Additional Information, dated
_______________, 2000, which are incorporated by reference into this Statement
of Additional Information. The Mercury Fund's Statement of Additional
Information and Prospectus accompany this Statement of Additional Information.
Further information about the Turner Fund is contained in and
incorporated by reference to its Prospectus, dated January 31, 2000, and its
Statement of Additional Information, dated January 31, 2000, which are
incorporated by reference into this Statement of Additional Information. The
Turner Fund's Statement of Additional Information and Prospectus accompany
this Statement of Additional Information. The Turner Fund's Annual Report to
Shareholders for the year ended September 30, 1999 is also incorporated herein
by reference. The Turner Fund's Annual Report to Shareholders for the year
ended September 30, 1999 accompanies this Statement of Additional Information.
The Commission maintains a web site (http://www.sec.gov) that contains
the prospectus and statement of additional information of each of the Turner
Fund and the Mercury Fund, other material incorporated by reference and other
information regarding the Turner Fund and the Mercury Fund.
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TABLE OF CONTENTS
General Information...............................................2
Financial Statements..............................................2
The date of this Statement of Additional Information is______________, 2000.
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GENERAL INFORMATION
The shareholders of the Turner Fund are being asked to approve (i) the
acquisition of substantially all of the assets, and assumption of
substantially all of the liabilities, of the Turner Fund by the Mercury Fund
solely in exchange for an equal aggregate value of newly-issued Class I shares
of the Mercury Fund, (ii) the subsequent transfer of such assets and certain
liabilities to the underlying Portfolio in which the Mercury Fund invests in
exchange for an equal value of interests in that Portfolio, and (iii) the
termination of the Turner Fund (collectively, the "Reorganization"). The
Mercury Fund is an open-end management investment company organized as a
portfolio of Mercury Asset Management Funds, Inc., a Maryland corporation. A
Special Meeting of Shareholders of the Turner Fund to consider the
Reorganization will be held at 1235 Westlakes Drive, Suite 350, Berwyn,
Pennsylvania, on May 31, 2000, at 3:30 p.m. Eastern time.
For detailed information about the Reorganization, shareholders of the
Turner Fund should refer to the Proxy Statement/Prospectus. For further
information about the Mercury Fund shareholders of the Turner Fund should
refer to the Mercury Fund's Preliminary Statement of Additional Information
and Prospectus, each dated ____________,2000, each of which accompany this
Statement of Additional Information and are incorporated by reference herein.
For further information about the Turner Fund, shareholders should refer to
the Turner Fund's Statement of Additional Information and Prospectus, each
dated January 31, 2000, which accompany this Statement of Additional
Information and are incorporated by reference herein.
FINANCIAL STATEMENTS
Audited financial statements and accompanying notes for the fiscal year
ended September 30, 1999, and the independent auditor's report thereon, dated
_______________, of the Turner Fund are incorporated by reference from the
Turner Fund's Annual Report to Shareholders, which accompanies this Statement
of Additional Information. On February 25, 2000, the Board of Trustees of
TIP Funds approved a plan to reorganize the Turner Large Cap Growth Equity
Fund into a similar fund that is being created by Mercury Asset Management
Funds, Inc. called the Mercury Select Growth Fund, subject to shareholder
and regulatory approval.
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PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
Reference is made to Article V of Registrant's Articles of Incorporation,
Article VI of Registrant's By-Laws and Section 2-418 of the Maryland General
Corporation Law.
Article V of the Registrant's Articles of Incorporation provides that
each acting and former director and officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the Maryland
General Corporation law, subject to the requirements of the Investment Company
Act of 1940.
Article VI of the By-Laws provides that each officer and Director of the
Registrant shall be indemnified by the Registrant to the full extent permitted
under the Maryland General Corporation Law, except that such indemnity shall
not protect any such person against any liability to the Registrant or any
stockholder thereof to which such person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. Absent a court determination
that an officer or director seeking indemnification was not liable on the
merits or guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office, the
decision by the Registrant to indemnify such person must be based upon the
reasonable determination by special legal counsel in a written opinion or the
vote of a quorum of the Directors who are neither "interested persons," as
defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended,
nor parties to the proceeding ("non-party independent Directors"), after
review of the facts, that such officer or Director is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Each officer and Director of the Registrant claiming indemnification
within the scope of Article VI of the By-Laws shall be entitled to advances
from the Registrant for payment of the reasonable expenses incurred by him in
connection with proceedings to which he is a party in the manner and to the
full extent permitted under the Maryland General Corporation Law without a
preliminary determination as to his or her ultimate entitlement to
indemnification (except as set forth below); provided, however, that the
person seeking indemnification shall provide to the Registrant a written
affirmation of his good faith belief that the standard of conduct necessary
for indemnification by the Registrant has been met and a written undertaking
to repay any such advance, if it should ultimately be determined that the
standard of conduct has not been met, and provided further that at least one
of the following additional conditions is met: (a) the person seeking
indemnification shall provide a security in form and amount acceptable to the
Registrant for his undertaking; (b) the Registrant is insured against losses
arising by reason of the advance; (c) a majority of a quorum of non-party
independent Directors, or independent legal counsel in a written opinion,
shall determine, based on a review of facts readily available to the
Registrant at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
The Registrant may purchase insurance on behalf of an officer or director
protecting such person to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his activities as officer
or Director of the Registrant. The Registrant, however, may not purchase
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insurance on behalf of any officer or Director of the Registrant that protects
or purports to protect such person from liability to the Registrant or to its
stockholders to which such officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
The Registrant may indemnify, make advances or purchase insurance to the
extent provided in Article VI of the By-Laws on behalf of an employee or agent
who is not an officer or Director of the Registrant.
In Section 9 of the Distribution Agreement relating to the securities
being offered hereby, the Registrant agrees to indemnify the Distributor and
each person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, as amended (the "Act"), against certain types of civil
liabilities arising in connection with the Registration Statement or
Prospectus and Statement of Additional Information.
Insofar as indemnification for liabilities arising under the Act may be
permitted to Directors, 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 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, 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 by such
Director, officer or controlling person or the 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 Act
and will be governed by the final adjudication of such issue.
Item 16. Exhibits:
Exhibit
Number
- --------
1 Articles of Restatement of Registrant.(2)
2(a) Amended and Restated By-Laws of Registrant.(1)
3 Not Applicable.
4 Form of Agreement and Plan of Reorganization between Registrant on
behalf of its portfolio Mercury Select Growth Fund and TIP Funds
on behalf of its portfolio Turner Large Cap Growth Equity Fund
(included in Appendix A to the Proxy Statement/Prospectus
contained in this Registration Statement).
5 Instrument Defining Rights of Shareholders, including the relevant
portions of the Articles of Restatement of Registrant or Amended
and Restated By-Laws of Registrant. Incorporated by reference to
Exhibits 1 and 2 above.
6(a) Investment Advisory Agreement between Mercury Asset Management
Funds, Inc. on behalf of its portfolio Mercury Select Growth Fund
and Mercury Asset Management, L.P.*
6(b) Form of Sub-Advisory Agreement between Mercury Asset Management
US, a division of Fund Asset Management, L.P., and Turner
Investment Partners, Inc.*
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7(a) Class I Distribution Agreement between Registrant and Mercury
Funds Distributor, a division of Princeton Funds Distributor,
Inc.(*)
7(b) Class A Distribution Agreement between Registrant and Mercury
Funds Distributor, a division of Princeton Funds Distributor,
Inc.(*)
7(c) Class B Distribution Agreement between Registrant and Mercury
Funds Distributor, a division of Princeton Funds Distributor,
Inc.(*)
7(d) Class C Distribution Agreement between Registrant and Mercury
Funds Distributor, a division of Princeton Funds Distributor,
Inc.(*)
8 None.
9 Custody Agreement between Registrant and Brown Brothers Harriman &
Co.(1)
10(a) Class A Distribution Plan and Class A Plan Sub-Agreement.(*)
10(b) Class B Distribution Plan and Class B Plan Sub-Agreement.(*)
10(c) Class C Distribution Plan and Class C Plan Sub-Agreement.(*)
10(d) Rule 18f-3 Plan.(1)
11 Opinion and consent of Swidler Berlin Shereff Friedman, LLP
counsel for Registrant as to the legality of the securities being
registered.*
12 Opinion and consent of Swidler Berlin Shereff Friedman, LLP,
counsel for Registrant as to certain tax matters.*
13 Not Applicable.
14 Consent of Ernst & Young, LLP, independent auditors for Turner
Large Cap Growth Equity Fund.
15 Not Applicable.
16 Power of Attorney (included on the signature page contained in
this Registration Statement).
17(a) Form of Proxy.
17(b) - Proxy Information Sheet.
17(c) - Q & A Sheet.
17(d) Preliminary Prospectus, dated ____, 2000, and Preliminary
Statement of Additional Information, dated ____, 2000, of
Registrant.(4)
17(e) Prospectus dated January 31, 2000 and Statement of Additional
Information dated January 31, 2000 of Turner Large Cap Growth
Equity Fund.(5)
17(f) Annual Report to Shareholders of Turner Large Cap Growth Equity
Fund for the fiscal year ended September 30, 1999.(6)
- -----------------
(1) Incorporated by reference to exhibit no. 7 to the initial
Registration Statement on Form N-1A of Mercury Global Balanced Fund
filed on February 12, 1999 (File No. 333-72239).
(2) Incorporated by reference to identically numbered exhibit to
Pre-Effective Amendment No. 2 to Mercury U.S. Small Cap Growth Fund of
Mercury Asset Management Funds, Inc.'s Registration Statement on Form
N-1A (File No. 333-85731).
(3) Incorporated by reference to Registration Statement on Form N-1A of
Mercury Select Growth Fund of Mercury Asset Management Funds, Inc.
(CIK No. 1062806).
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(4) Incorporated by reference to Post-Effective Amendment No. 15 to TIP
Funds' Registration Statement on Form N-1A (File No. 333-00641).
(5) Incorporated by reference to Annual Report on Form N-30D [(File No. 811-
07527)].
*To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through 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 reoffering prospectus will contain 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 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 Securities Act of 1933, as
amended, each post-effective amendment shall be deemed to a new registration
statement for the securities offered therein, and the offering of securities
at that time shall be deemed to be the initial bona fide offering of them.
(3) The Registrant undertakes to file, by post-effective amendment, the
opinion of counsel received as to certain tax matters, within a reasonable
time after receipt of such opinion.
<PAGE>
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SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the Township of Plainsboro and
State of New Jersey, on the 10th day of March, 2000.
Mercury Select Growth Fund of
Mercury Asset Management Funds, Inc.
(Registrant)
By: /s/ Jeffrey M. Peek
-----------------------------------
(Jeffrey M. Peek, President)
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned whose
signature appears below hereby constitutes and appoints Jeffrey M. Peek, Terry
K. Glenn and Donald C. Burke, and each of them (with full power of each of
them to act alone), his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him and on his behalf, and
in his name, place and stead, in any and all capacities to execute and sign
any and all amendments or post-effective amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact or any of them or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof and the Registrant hereby confers like authority on its behalf.
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
---------- ------ ----
/s/ Jeffrey M. Peek President and Director March 10, 2000
- ----------------------------- (Principal Executive Officer)
(Jeffrey M. Peek)
/s/ Terry K. Glenn Executive Vice President and March 20, 2000
- -------------------------- Director
(Terry K. Glenn)
/s/ Donald C. Burk Treasurer (Principal Financial March 10, 2000
- -------------------------- Accounting Officer)
(Donald C. Burk) and Vice President
/s/ David O. Beim Director March 10, 2000
- --------------------------
(David O. Beim)
/s/ James T. Flynn
- ---------------------------
(James T. Flynn) Director March 10, 2000
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<PAGE>
/s/ W. Carl Kester
- -----------------------------
(W. Carl Kester) Director March 10, 2000
/s/ Karen P. Robards
- -----------------------------
(Karen P. Robards) Director March 10, 2000
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- -------------
4 Form of Agreement and Plan of Reorganization between Registrant on
behalf of its portfolio Mercury Select Growth Fund and TIP Funds
on behalf of its portfolio Turner Large Cap Growth Equity Fund
(included in Appendix A to the Proxy Statement/Prospectus
contained in this Registration Statement).
14(a) Consent of Ernst & Young, LLP, independent auditors for Turner
Large Cap Growth Equity Fund.
16 Power of Attorney (included on the signature page contained in
this Registration Statement).
17(a) Form of Proxy.
17(b) - Proxy Information Sheet.
17(c) - Q & A Sheet.
Exhibit 14
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Independent
Auditors" and "Financial Statements" in the Prospectus and to
the inclusion in this Registration Statement (Form N-14) (No. 33-xxxxx) of
Mercury Select Growth Fund, of our report dated November 8, 1999,
included in the 1999 annual reports to shareholders of the Turner Funds.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
March 6, 2000
Exhibit 17(a)
TURNER LARGE CAP GROWTH EQUITY FUND
OF
TIP FUNDS
1235 WESTLAKES DRIVE, SUITE 350
BERWYN, PENNSYLVANIA 19312
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ________, _______ and _______ as proxies,
each with the power to appoint his substitute, and hereby authorizes each of
them to represent and to vote, as designated on the reverse hereof, all of the
shares of Turner Large Cap Growth Equity Fund (the "Fund") held of record by
the undersigned on April 19, 2000, at a Special Meeting of Shareholders of the
Fund to be held on May 31, 2000 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER HEREIN
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
By signing and dating the reverse side of this card, you authorize the
proxies to vote the proposal as marked, or if not marked, to vote "FOR" the
proposal, and to use their discretion to vote for any other matter as may
properly come before the meeting or any adjournment thereof. If you do not
intend to personally attend the meeting, please complete and return this card
at once in the enclosed envelope.
(Continued and to be signed on the reverse side)
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1. To approve the Agreement and Plan of Reorganization between Mercury
Asset Management Funds, Inc. on behalf of its portfolio Mercury Select Growth
Fund and TIP Funds on behalf of its portfolio Turner Large Cap Growth Equity
Fund and the further transfer of the assets and certain liabilities acquired
under the Agreement and Plan of Reorganization to the underlying master
portfolio in which Mercury Select Growth Fund invests in exchange for an equal
value of interests in that portfolio.
2. In their discretion, the named proxies may vote to transact such other
business as properly may come before the meeting or any adjournment thereof.
PLEASE MARK BOXES /X/ OR [X] IN BLUE OR BLACK INK. SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney or as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized persons.
Dated:
Signature
Signature, if held jointly
</TEXT.
Exhibit 17(b)
Proxy Information
Turner Large Cap Growth Equity Fund will host a Special Meeting of
Shareholders on May 31, 2000, at the offices of Turner Investment Partners,
Inc. in Berwyn, Pennsylvania. The purpose of this meeting is to vote on a
proposal to reorganize your Fund into a substantially similar fund that is
being created by Mercury Asset Management Funds, Inc., called Mercury Select
Growth Fund.
The first few pages of this booklet highlight key points about the proposed
Reorganization and explain the proxy process, including how to cast your
votes. Before you vote, please read the full text of the combined Proxy
Statement/Prospectus for a complete understanding of our proposal.
KEY POINTS ABOUT THE PROPOSED REORGANIZATION
PURPOSE OF THE REORGANIZATION
The purpose of the Reorganization is to make your Fund a part of the Mercury
Group of Funds. Under this proposal, your Fund's assets and liabilities would
be transferred to Mercury Select Growth Fund, a new fund that is being created
just for this purpose. Turner Investment Partners would serve as sub-adviser
for the underlying Portfolio in which Mercury Select Growth Fund invests as
part of a "master/feeder" structure and continue to be in charge of the day-
to-day investment of your Fund as part of Mercury Select Growth Fund.
Mercury Asset Management US, a division of Fund Asset Management, L.P.
("Mercury"), however, would replace Turner Investment Partners as the
investment manager of your Fund. Your existing Board of Trustees believes that
the Reorganization is in shareholders' best interests for the following
reasons:
POTENTIAL BENEFITS OF THE REORGANIZATION
Given the competitive nature of the mutual fund industry, Turner Investment
Partners determined that it would be prudent to enter into an arrangement with
Mercury. Joining Mercury should enable your Fund's assets to grow due to the
substantial mutual fund distribution capabilities of Mercury and its
affiliates. It is expected that assets in your Fund will grow considerably
once the Fund is within the Mercury Group of Funds, which may result in a
larger, more stable asset base for the Fund. As a result of a larger asset
base, Mercury Select Growth Fund may benefit from economies of scale which
over time may result in lower operating expenses for Mercury Select Growth
Fund than for your existing Fund.
In the past, Turner Investment Partners has contractually agreed to waive fees
and reimburse expenses in order to keep your Fund's total operating expenses
from exceeding 1.00% for the year ended January 31, 2001, or from exceeding
1.25% in any subsequent year. Due to the small size of your Fund, its
operating expenses have consistently exceeded these levels. As a result,
Turner Investment Partners has waived fees and reimbursed expenses in order to
keep overall expenses at the level of the cap. Turner Investment Partners has
also guaranteed that it will provide your Fund with fee waivers and expense
reimbursements in the future, but a higher level of 1.25%. Therefore, absent
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a substantial growth in assets of your Fund, shareholder expenses could make
Turner Investment Partner's continued subsidization of your Fund not
economical. As a result, Turner Investment Partners and your Fund's Board of
Trustees have sought a means of increasing the Fund's asset base by making it
a part of the Mercury Group of Funds. Mercury and its affiliated companies
have over $546 billion in assets over management at February 2000. Mercury
intends to devote substantial efforts in offering the Mercury Select Growth
Fund's shares for sale. Based on Mercury's estimates, Mercury Select Growth
Fund is expected to feature a total expense ratio (before waivers and
reimbursements) of 1.85% for its first full year of operations following the
Reorganization, an annual cost to shareholders of $18.50 for each $1,000
invested. This expense ratio does not include fee waivers and expense
reimbursements by Mercury equal to .60% or $6.00 for each $1,000 invested. By
contrast, your Fund's total expense ratio (before waivers and reimbursements)
for 1999 was 2.41%, an annual cost to shareholders of $24.10 for each $1,000
invested. This expense ratio does not include fee waivers and expense
reimbursements by Turner Investment Partners equal to 1.41% or $14.10 for each
$1,000 invested.
EXPANDED SHAREHOLDER SERVICES
As a shareholder of Mercury Select Growth Fund, you will have access to a wide
range of shareholder services, including 24-hour access to your account,
exchange privileges with other Mercury funds and access to Mercury's
comprehensive investor education programs.
HOW THE REORGANIZATION WILL AFFECT YOUR ACCOUNT
If shareholders approve the Reorganization, your Turner Large Cap Growth
Equity Fund shares will be exchanged, on a tax-free basis, for an equal number
of Class I shares of Mercury Select Growth Fund. Your account registration
and account options, such as dividend reinvestment elections, will remain the
same unless you change them. In addition, your aggregate cost basis in the
account will remain the same.
TAX-FREE NATURE OF THE REORGANIZATION
The Reorganization will be accomplished on a tax-free basis, meaning that you
will not realize any capital gains when your Fund shares are exchanged for
Class I shares of Mercury Select Growth Fund.
Exhibit 17(c)
-Q&A-
Q. I'm a small investor. Why should I bother to vote?
A. Your vote makes a difference. If numerous shareholders just like you
fail to vote their proxies, your Fund may not receive enough votes to go
forward with the special Meeting of Shareholders. If this happens, we'll need
to mail proxies again, which would be costly for your Fund!
Q. Who gets to vote?
A. Any person who owned shares of the Turner Large Cap Growth Equity Fund
on the "record date," which was April 19, 2000, gets to vote, even if the
investor later sold the shares. Shareholders are entitled to cast one vote for
each dollar invested in the Fund on the record date.
Q. How can I vote?
A. You can vote by mail by using the enclosed ballot or you can vote in
person at the special Meeting of Shareholders. Whichever method you choose,
please take the time to read the full text of the Proxy Statement/Prospectus
before you vote.
Q. I plan to vote by mail. How should I sign my proxy card?
A. If you are an individual account owner, please sign exactly as your
name appears on the proxy card. Either owner of a joint account may sign the
proxy card, but the signer's name must exactly match one that appears on the
card. You should sign proxy cards for other types of accounts in a way that
indicates your authority (for instance, "John Brown, Custodian").
