TURNER LARGE CAP GROWTH EQUITY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Your Fund will host a Special Meeting of Shareholders on FRIDAY, JUNE 9,
2000, AT 3:30 P.M., EASTERN TIME. The Meeting will be held at Turner Investment
Partners' 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
substantially all of the assets and liabilities of your Fund to Mercury
Select Growth Fund in exchange for a number of Class I shares of Mercury
Select Growth Fund equal to the number of shares of Turner Large Cap Growth
Equity Fund issued and outstanding immediately prior to the completion of
the Reorganization. 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.
If the proposed Reorganization is approved by the shareholders of Turner
Large Cap Growth Equity Fund at the Special Meeting of Shareholders and effected
by Turner Large Cap Growth Equity Fund, any shareholder (i) who files with
Turner Large Cap Growth Equity Fund, before the taking of the vote on the
approval of the Reorganization, written objection to the proposed Reorganization
stating that he or she intends to demand payment for his or her shares if the
Reorganization takes place and (ii) whose shares are not voted in favor of the
Reorganization has or may have the right to demand in writing from Mercury
Select Growth Fund, within twenty days after the date of mailing to him or her
of notice in writing that the Reorganization has become effective, payment for
his or her shares and an appraisal of the value thereof. Mercury Select Growth
Fund and any such shareholders shall in such cases have the rights and duties
and shall follow the procedure set forth in sections 88 to 98, inclusive, of
chapter 156B of the General Laws of Massachusetts. In the event that any
shareholder elects to exercise his or her statutory right of appraisal under
Massachusetts law, it is the present intention of Mercury Select Growth Fund to
petition a court of competent jurisdiction to determine whether such right of
appraisal has been superseded by the provisions of Rule 22c-1 under the
Investment Company Act of 1940, as amended.
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 May 17, 2000 at the offices of Turner
Investment Partners, 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania.
By Order of the Board of Trustees
/s/ James W. Jennings
----------------------------
James W. Jennings, Secretary
Berwyn, Pennsylvania
April 28, 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 SEE THE ENCLOSED MATERIALS FOR INTERNET AND TELEPHONE
VOTING INSTRUCTIONS.
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TURNER LARGE CAP GROWTH EQUITY FUND,
MERCURY SELECT GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS
JUNE 9, 2000
COMBINED PROXY STATEMENT/PROSPECTUS
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 substantially 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 a number of Class I shares of Mercury Select
Growth Fund equal to the number of your Fund shares owned by you immediately
prior to the completion of the Reorganization. As soon as practicable after the
transfer of the Turner fund's assets and liabilities to the Mercury fund in
exchange for Class I shares of the Mercury fund, 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.
The Turner fund's investment adviser has agreed contractually to waive fees
and to reimburse expenses in order to keep total operating expenses of the
Turner fund from exceeding 1.00% for the one year period ending January 31, 2001
or from exceeding 1.25% in any subsequent year. The Mercury fund's investment
adviser has agreed contractually to waive fees and reimburse expenses in order
to keep total operating expenses of Class I shares of the Mercury fund from
exceeding 1.25% after the Reorganization. This agreement has a three year term
that is renewable and is terminable at the end of each year. 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 would
be spread over a larger asset base which should result, over time, in economies
of scale and a lower operating expense ratio.
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.
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.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS APRIL 28, 2000.
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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 April 28, 2000, 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 and a pre-effective
amendment to its registration statement on April 28, 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 April 28, 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 1-888-763-2260.
A prospectus of Turner Large Cap Growth Equity Fund, dated January 31,
2000, as supplemented (which prospectus is also incorporated herein by
reference), a statement of additional information and an Annual Report for the
fiscal year ended September 30, 1999 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 April 28, 2000, is incorporated herein by reference and is
available from Mercury Select Growth Fund, without charge, upon request by
calling 1-888-763-2260 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 1-888-763-2260.
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TABLE OF CONTENTS
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PAGE
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I. OVERVIEW.............................................................................................. 1
II. INVESTMENT RISKS...................................................................................... 5
III. 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....................................................... 6
D. How Your Fund's Legal Form of Organization Will Change............................................. 8
E. How Many Shareholder Votes are Required to Approve the Reorganization.............................. 8
IV. INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS................................................... 9
V. MANAGEMENT OF MERCURY SELECT GROWTH FUND.............................................................. 11
VI. GENERAL INFORMATION................................................................................... 13
APPENDIX A....................................................................................................... A-1
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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 this 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 a number of Class I shares of Mercury Select Growth Fund equal to the number
of Turner Large Cap Growth Equity Fund shares owned by you immediately prior to
the completion of the Reorganization, (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 Partners' 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 11,
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 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 (companies whose total market capitalization is at least $10
billion) that are traded in the U.S. securities markets that fund management
believes have strong earnings growth potential. Each fund may also invest in
securities of mid and large cap U.S. companies (companies whose total market
capitalization is at least $1 billion and $5 billion, respectively) (indirectly
through its investment in the underlying Portfolio in the case of Mercury Select
Growth Fund), that fund management believes offer strong earnings growth
potential.
Investment Adviser. 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 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, a division of Fund Asset Management,
L.P. will be the Mercury fund's investment adviser (indirectly through the
Mercury fund's investment in the Mercury Master Select Growth Portfolio of
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Mercury Asset Management Master Trust). Details of the advisory arrangements for
your Fund and Mercury Select Growth Fund are provided beginning on page 9.
Comparing Fund Expenses. The table set forth below compares the expenses
applicable to Turner Large Cap Growth Equity Fund and the estimated expenses of
Class I shares of Mercury Select Growth Fund for the first full year after the
Reorganization is consummated.
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CLASS I SHARES
TURNER LARGE OF MERCURY
CAP GROWTH SELECT GROWTH
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) (A): EQUITY FUND FUND
- --------------------------------------------------------------------------------- ------------ --------------
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Maximum Sales Charge (Load) imposed on purchases (as a percentage of offering None 5.25% (b)
price).........................................................................
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price None None(c)
or redemption proceeds, whichever is lower)....................................
Maximum Sales Charge (Load) imposed on Dividend Reinvestments.................... None None
Redemption Fee................................................................... None None
Exchange Fee..................................................................... None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND TOTAL
ASSETS) (D)....................................................................
Management Fee................................................................... 0.75% 0.50% (e)
Distribution and/or Service (12b-1) Fees......................................... None None
Other Expenses (including transfer agency fees).................................. 0.91% 1.09% (f)
Administrative Fees.............................................................. 0.75% (g) 0.25% (h)
Total Other Expenses............................................................. 1.66% 1.34%
TOTAL ANNUAL FUND OPERATING EXPENSES............................................. 2.41% (i) 1.84% (j)
Fee Waiver and/or Expense Reimbursement (k)...................................... -1.41% -0.59%
Net Total Operating Expenses (l)................................................. 1.00% 1.25%
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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 beneficial
shareholders of the Mercury fund who are also beneficial 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. The Mercury fund's investment adviser 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, which included a minimum fee, of $65,000 under your Fund's
administration agreement.
(h) Paid by Mercury Select Growth Fund.
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(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 are 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, 2001 or from exceeding 1.25% in
any subsequent year. Mercury Asset Management US, a division of Fund Asset
Management, L.P. has agreed contractually to waive fees and reimburse expenses
in order to keep total operating expenses of Class I shares of the Mercury fund
from exceeding 1.25% after the Reorganization. This agreement has a three-year
term that is renewable and is terminable at the end of each year. 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 Turner
fund's brokerage transactions. These arrangements with broker-dealers will not
continue after the Reorganization.
(l) The net total operating expenses are restated to reflect the
contractual fee waiver and/or expense reimbursement currently in effect.
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 and then redeem
your shares at the end of those periods. 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
------ ------- ------- --------
Turner Large Cap Growth Equity Fund... $102 $ 373 $ 665 $1,505
Mercury Select Growth Fund+........... $646 $ 1,021 $ 1,425 $2,576
Mercury Select Growth Fund*+.......... $127 $ 524 $ 950 $2,165
- ------------------
* 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
beneficial shareholders who are also beneficial 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. Expenses used for the example include the fee
waiver/expense reimbursement described in footnote (k) above only for one
year.
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 Example set forth above assumes reinvestment of all
dividends and distributions. THE EXAMPLE 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.
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 a series 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 8.
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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 7.
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.
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SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING OF
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
YOU MAY ALSO VOTE OVER THE INTERNET OR BY TELEPHONE. PLEASE FOLLOW THE ENCLOSED
INSTRUCTIONS TO UTILIZE THESE METHODS OF VOTING.
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II. 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.
MARKET AND SELECTION RISK
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 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.
A discussion of an additional risk of investing in both funds is set forth
below.
DERIVATIVES
A fund may use derivatives such as futures, options, indexed securities,
inverse securities and swaps for hedging purposes, including anticipatory
hedges. Hedging is a strategy in which a fund uses a derivative to offset the
risk that other fund holdings may decrease in value. While hedging can reduce
losses, it can also reduce or eliminate gains if the market moves in a different
manner than anticipated by the fund or if the cost of the derivative outweighs
the benefit of the hedge. Hedging also involves the risk that changes in the
value of the derivative will not match those of the holdings being hedged as
expected by a fund, in which case any losses on the holdings being hedged may
not be reduced. There can be no assurance that a fund's hedging strategy will
reduce risk or that hedging transactions will be either available or cost
effective. A fund is not required to use hedging and may choose not to do so.
III. 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 Reorganization, including the following:
o Why we want to reorganize your Fund
o How we plan to accomplish the Reorganization
o How the Reorganization will affect your Fund
o How your Fund's legal form of organization will change
o 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 Turner 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 your 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
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generally provides that the parties use reasonable efforts to facilitate the
proposed Reorganization and that Mercury Asset Management US, subject to its
fiduciary duty to the Mercury fund, recommend to the Board of Directors of
Mercury Select Growth Fund that Turner Investment Partners be retained 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 Funds.
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 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
substantially 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 one Class I share of Mercury Select
Growth Fund for each share of your Fund held by you immediately prior to the
completion 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.
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 that are traded in the U.S. securities markets that fund
management believes have strong earnings growth potential. In addition, the
existing investment adviser of the Turner fund, Turner Investment Partners, will
continue to manage the Mercury 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. dollars.
However, because these practices are not part of your Fund's primary investment
strategies, it is expected that there will be no impact on the Fund's
management.
6
<PAGE>
Comparing Fund Expenses. The table set forth on page 2 compares 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 completed.
Your Fund will change its fiscal year end. Your Fund will change its
fiscal year end from September 30 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
of the Mercury fund upon completion of the Reorganization as you did of the
Turner fund immediately prior to the completion of the Reorganization. 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 on page 11 of 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 Special Meeting of Shareholders, you should contact
Mercury Select Growth Fund's Secretary, Robert E. Putney, III at Fund Asset
Management, L.P., 800 Scudders 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.
<TABLE>
<CAPTION>
PURCHASE, REDEMPTION TURNER LARGE CAP MERCURY SELECT GROWTH
AND EXCHANGE FEATURES(1) GROWTH EQUITY FUND EQUITY FUND
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Minimum initial $2,500/$50 $1,000/$50
purchase/
Additional
investments
Purchases By mail, telephone, By mail, through a securities dealer
wire, or systematic or other financial intermediary or
investment plan by automatic investment plan
Redemptions By mail, telephone or By mail, telephone, through a
systematic withdrawal plan securities dealer or other financial
(business hours only) intermediary or by systematic
withdrawal plan
Free exchange privileges Yes, with other TIP Funds Yes, with other Mercury
by mail or telephone (business funds and with Summit
hours only) Cash Reserves Fund
</TABLE>
- ------------------
1 Explanations of each of the services available through Mercury Select Growth
Fund can be found in its preliminary prospectus that accompanies this Proxy
Statement/Prospectus.
7
<PAGE>
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. Each
share is entitled to one vote. YOUR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU
APPROVE THE REORGANIZATION.
8
<PAGE>
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 Partners'
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 your Fund's assets, and for continuously reviewing, supervising and
administering the Fund's investment program. Subject to the supervision of
Mercury Asset Management US, a division of Fund Asset Management, L.P., Turner
Investment Partners will have these same responsibilities under its sub-advisory
agreement with Mercury Asset Management US.
Fund Asset Management, L.P. will act as administrator of the Mercury Select
Growth Fund. Currently, SEI Investments Mutual Funds Services acts as
administrator of your Fund.
MERCURY AND TURNER
Mercury and its affiliated companies have over $559 billion in assets over
management (as of March 31, 2000) for individuals and institutions seeking
investments worldwide. Mercury Asset Management US' principal business address
is 800 Scudders Mill Road, Plainsboro, NJ 08536.
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 March 31, 2000, Turner
Investment Partners had discretionary management authority with respect to
approximately $9.547 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 18 years of investment
experience.
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 your Fund's average daily net assets. Under its investment advisory
agreement with Mercury Asset Management Master Trust, Mercury Asset Management
US, a division of Fund Asset Management, L.P., is entitled to a fee of 0.50% of
average daily net assets of the Mercury Master Select Growth Portfolio. Under
its investment advisory agreement with Mercury Asset Management Master Trust,
Mercury Asset Management US may hire a sub-adviser to the master Portfolio for a
fee in an amount to be determined from time to time by Mercury Asset Management
US and the sub-adviser, but in no event to exceed the amount that Mercury Asset
Management US receives for providing investment management services to the
master Portfolio. Mercury Asset Management US has hired Turner Investment
Partners as sub-adviser to the Master Portfolio and Mercury Asset Management US
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%
9
<PAGE>
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 ADVISORY
AGREEMENT AND TURNER'S SUB-ADVISORY AGREEMENT WITH MERCURY MASTER SELECT GROWTH
PORTFOLIO
The investment advisory agreement between Mercury Asset Management US and
Mercury Master Select Growth Portfolio and sub-advisory agreement between Turner
Investment Partners and Mercury Asset Management US each will become effective
at the time of the 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 Select Growth Fund (indirectly through its investment in 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 advisory
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
Fund Asset Management, L.P. acts as administrator of the Mercury Select
Growth Fund. For its administrative services, Fund Asset Management, L.P. 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 your Fund's average daily net assets, subject to 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.
10
<PAGE>
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 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 of 1940. Unless otherwise noted, the
address of each Director is P.O. Box 9011, Princeton, New Jersey 08543-9011.
JEFFREY M. PEEK (53)--Director and President(1)(2)--President of Fund Asset
Management, L.P. 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 (59)--Director and Executive Vice President(1)(2)--Executive
Vice President of MLAM and Fund Asset Management, L.P. 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 (48)--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 (50)--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 1940, 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.
(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.
11
<PAGE>
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.
<TABLE>
<CAPTION>
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)
- ------------------------------------- ------------------- --------------- --------------
<S> <C> <C> <C>
David O. Beim........................ $ 6,000 None $ 47,667
James T. Flynn....................... $ 6,000 None $ 89,667
W. Carl Kester....................... $ 6,000 None $ 89,667
Karen P. Robards..................... $ 6,000 None $ 47,667
</TABLE>
- ------------------
(1) In addition to Mercury Asset Management Funds, Inc. and Mercury Asset
Management Master Trust, 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).
12
<PAGE>
VI. GENERAL INFORMATION
This section provides information on a number of topics relating to proxy
voting and shareholder meetings.
Date, Time and Place of Special Meeting of Shareholders. The Special
Meeting of Shareholders will be held on June 9, 2000, at the offices of Turner
Investment Partners, 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania at
3:30 p.m. Eastern time.
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 the Turner Large Cap Growth Equity Fund's shareholders,
including costs relating to the printing, mailing, and tabulation of proxies.
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. A quorum for purposes of the Special Meeting of
Shareholders consists of one-third of the shares entitled to vote at the
Meeting, present in person or by proxy. If, by the time scheduled for the
Special Meeting of Shareholders, a quorum of the Turner fund's shareholders is
not present or if a quorum is present but sufficient votes to approve or
disapprove the Reorganization are not received from the shareholders of the
Turner fund, the persons named as proxies may propose one or more adjournments
of the Special Meeting of Shareholders to permit further solicitation of proxies
from shareholders. Any such adjournment will require the affirmative vote of a
majority of the shares of the Turner fund present in person or by proxy and
entitled to vote at the session of the Special Meeting of Shareholders to be
adjourned. The persons named as proxies will vote in favor of any such
adjournment if they determine that adjournment and additional solicitation are
reasonable and in the interests of the shareholders of the Turner Fund. 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 Special
Meeting of Shareholders.
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 Turner 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
or any adjournment thereof. At the close of business on the Record Date, there
were 1,621,420.147 shares of Turner Large Cap Growth Equity Fund issued and
outstanding and entitled to vote.
13
<PAGE>
Security Ownership of Certain Beneficial Owners and Management of Turner
Large Cap Growth Equity Fund and Mercury Select Growth Fund. As of the Record
Date, 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:
NAME AND ADDRESS OF SHAREHOLDER PERCENTAGE AND TYPE OF OWNERSHIP
- ------------------------------- --------------------------------
Charles Schwab & Co., Inc. 32.37%; record ownership
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S. Fl 3
Denver, CO 80209
Joseph Amato 5.70%; beneficial ownership
1 Amato Dr.
Moosic, PA 18507-1788
Connecticut General Life Ins. Co. 40.12%; record ownership
Attn: Carmen Rivera H19B
280 Trumbull St.
Hartford, CT 06103-3509
Assuming that Charles Schwab & Co., Inc. ("Charles Schwab") owns the same
number of shares of the Turner Large Cap Growth Equity Fund on the date of
completion of the Reorganization as on April 19, 2000, Charles Schwab will own
of record, on a pro forma basis, 524,936.2200 shares of the Mercury Select
Growth Fund after completion of the Reorganization.
Assuming that Joseph Amato owns the same number of shares of the Turner
Large Cap Growth Equity Fund on the date of completion of the Reorganization as
on April 19, 2000, Joseph Amato will own of record, on a pro forma basis,
92,351.5320 shares of the Mercury Select Growth Fund after completion of the
Reorganization.
Assuming that Connecticut General Life Ins. Co. owns the same number of
shares of the Turner Large Cap Growth Equity Fund on the date of completion of
the Reorganization as on April 19, 2000, Connecticut General Life Ins. Co. will
own of record, on a pro forma basis, 650,524.2160 shares of the Mercury Select
Growth Fund after completion of the Reorganization.
At the Record Date, the Trustees and officers of Turner Large Cap Growth
Equity Fund as a group (19 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% or 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.
Legal Matters. 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
14
<PAGE>
Shereff Friedman, LLP will rely on the opinion of Piper Marbury Rudnick & Wolfe
LLP, 6225 Smith Avenue, Baltimore, Maryland.
Turner fund's net assets under management. As of March 31, 2000, Turner
Large Cap Growth Equity Fund had approximately $46.53 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 Mercury Asset
Management Funds, Inc. and 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.
15
<PAGE>
APPENDIX A
FORM OF
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 APRIL __, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
1. Defined Terms; Sections and Exhibits; Miscellaneous Terms............................................. A-1
a. Definitions..................................................................................... A-1
b. Use of Defined Terms............................................................................ A-3
c. Sections and Exhibits........................................................................... A-3
d. Miscellaneous Terms............................................................................. A-3
2. The Reorganization.................................................................................... A-3
a. Transfer of Assets.............................................................................. A-3
b. Assumption of Liabilities....................................................................... A-3
c. Issuance of Corresponding Shares in the Reorganization.......................................... A-3
d. Distribution of Corresponding Shares to Shareholders of the Acquired Fund....................... A-3
e. Interest; Proceeds.............................................................................. A-3
f. Valuation Time.................................................................................. A-4
g. Evidence of Transfer............................................................................ A-4
h. Termination..................................................................................... A-4
3. Representations and Warranties of TIP Funds on behalf of the Acquired Fund............................ A-4
a. Formation and Qualification..................................................................... A-4
b. Licenses........................................................................................ A-4
c. Authority....................................................................................... A-4
d. Financial Statements............................................................................ A-4
e. [Intentionally Left Blank]...................................................................... A-5
f. Prospectus and Statement of Additional Information.............................................. A-5
g. Litigation...................................................................................... A-5
h. Material Contracts.............................................................................. A-5
i. No Conflict..................................................................................... A-5
j. Undisclosed Liabilities......................................................................... A-5
k. Taxes........................................................................................... A-5
l. Assets.......................................................................................... A-5
m. Consents........................................................................................ A-5
n. N-14 Registration Statement..................................................................... A-6
o. No Adverse Change............................................................................... A-6
p. Capitalization.................................................................................. A-6
q. Books and Records............................................................................... A-6
4. Representations and Warranties of MAMF on behalf of the Acquiring Fund................................ A-6
a. Formation and Qualification..................................................................... A-6
b. Licenses........................................................................................ A-6
c. Authority....................................................................................... A-7
d. Prospectus and Statement of Additional Information.............................................. A-7
e. No Conflict..................................................................................... A-7
f. Consents........................................................................................ A-7
g. N-14 Registration Statement..................................................................... A-7
h. Capitalization.................................................................................. A-7
i. Corresponding Shares............................................................................ A-8
j. Litigation...................................................................................... A-8
</TABLE>
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<PAGE>
<TABLE>
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PAGE
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<S> <C> <C> <C>
5. Covenants of TIP Funds on Behalf of the Acquired Fund and MAMF on behalf of the Acquiring Fund........ A-8
a. Special Shareholders' Meeting................................................................... A-8
b. Unaudited Financial Statements.................................................................. A-8
c. Share Ledger Records of the Acquiring Fund...................................................... A-8
d. Conduct of Business............................................................................. A-8
e. Termination of the Acquired Fund................................................................ A-8
f. Filing of N-14 Registration Statement........................................................... A-9
g. Material Contracts.............................................................................. A-9
h. Prohibited Assets............................................................................... A-9
i. Corresponding Shares............................................................................ A-9
j. Tax Returns..................................................................................... A-9
k. Combined Proxy Statement and Prospectus Mailing................................................. A-9
l. Confirmations of Tax Basis...................................................................... A-10
m. Shareholder List................................................................................ A-10
n. The Acquiring Fund's Continued Existence........................................................ A-10
6. Exchange Date......................................................................................... A-10
7. Conditions Precedent to the obligations of TIP Funds on behalf of the Acquired Fund................... A-10
a. Representations and Warranties.................................................................. A-10
b. Performance..................................................................................... A-10
c. Shareholder Approval............................................................................ A-10
d. Approval of Board of Directors of MAMF.......................................................... A-10
e. Deliveries by MAMF on Behalf of the Acquiring Fund.............................................. A-11
f. No Adverse Change............................................................................... A-13
g. Absence of Litigation........................................................................... A-13
h. Proceedings and Documents....................................................................... A-13
i. N-14 Registration Statement..................................................................... A-13
j. Compliance with Laws; No Adverse Action or Decision............................................. A-13
k. Commission Orders or Interpretations............................................................ A-14
8. Conditions of MAMF on behalf of the Acquiring Fund.................................................... A-14
a. Representations and Warranties.................................................................. A-14
b. Performance..................................................................................... A-14
c. Shareholder Approval............................................................................ A-14
d. Approval of Board of Trustees of TIP Funds...................................................... A-14
e. Deliveries by TIP Funds on behalf of the Acquired Fund.......................................... A-14
f. No Adverse Change............................................................................... A-16
g. Absence of Litigation........................................................................... A-16
h. Proceedings and Documents....................................................................... A-16
i. N-14 Registration Statement..................................................................... A-16
j. Accountants' Letters............................................................................ A-16
k. Compliance with Laws; No Adverse Action or Decision............................................. A-17
l. Commission Orders or Interpretations............................................................ A-17
m. Assets.......................................................................................... A-17
n. Due Diligence Regarding Tax Returns............................................................. A-17
o. Dividends....................................................................................... A-17
</TABLE>
A-ii
<PAGE>
<TABLE>
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<C> <S> <C> <C>
9. Termination, Postponement and Waivers................................................................. A-18
a. Termination of Agreement........................................................................ A-18
b. Commission Order................................................................................ A-18
c. Effect of Termination........................................................................... A-18
d. Waivers; Non-Material Changes................................................................... A-18
10. Survival of Representations and Warranties; Indemnification........................................... A-19
a. Survival of Representations and Warranties...................................................... A-19
b. Indemnification Obligations of TIP Funds on behalf of the Acquired Fund......................... A-19
c. Indemnification Obligations of MAMF on behalf of the Acquiring Fund............................. A-19
d. Indemnification Procedure....................................................................... A-20
11. Other Matters......................................................................................... A-20
a. Legend.......................................................................................... A-20
b. Further Assurances.............................................................................. A-20
c. Notices......................................................................................... A-20
d. Entire Agreement................................................................................ A-21
e. Amendment....................................................................................... A-21
f. Governing Law................................................................................... A-21
g. Assignment...................................................................................... A-21
h. Fees and Expenses............................................................................... A-21
i. Severability.................................................................................... A-22
j. Headings........................................................................................ A-22
k. Counterparts.................................................................................... A-22
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
the ___ day of April, 2000, by and between Mercury Asset Management Funds, Inc.,
a Maryland corporation ("MAMF"), on behalf of its portfolio, Mercury Select
Growth Fund (the "Acquiring Fund"), and TIP Funds, a Massachusetts business
trust, 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 a number
of Class I shares of the Acquiring Fund, with a par value of $.0001 per share
(the "Corresponding Shares"), equal to the number of shares of the Acquired Fund
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 number of the Corresponding Shares to be received by each
shareholder of the Acquired Fund will equal the number 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)(F) 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, MAMF on
behalf of the Acquiring Fund and TIP Funds 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 January 31, 2000, as amended or supplemented.
"Acquired Fund Statement of Additional Information" shall mean the
statement of additional information of the Acquired Fund dated as of January 31,
2000, as amended or supplemented.
"Acquiring Fund" has the meaning ascribed thereto in the introduction
hereof.
"Acquiring Fund Prospectus" shall mean the preliminary prospectus of the
Acquiring Fund dated as of April 28, 2000 as amended or supplemented.
"Acquiring Fund Statement of Additional Information" shall mean the
preliminary statement of additional information of the Acquiring Fund dated as
of April 28, 2000 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.
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"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 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 Funds as amended and currently in effect.
"MAMF" 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.
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<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SBSF" has the meaning ascribed thereto in Section 6 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.
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, respectively, of the Acquired Fund issued and outstanding
at the Valuation Time. 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 Financial Data Services, Inc. as the transfer
agent.
e. Interest; Proceeds. TIP Funds 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.
A-3
<PAGE>
f. Valuation Time. The Valuation Time shall be 4:00 P.M., New York time,
on June 16, 2000, or such earlier or later day and time as may be mutually
agreed upon in writing between the parties hereto (the "Valuation Time").
g. Evidence of Transfer. MAMF and TIP Funds will jointly file any
instrument as may be required by the State of Maryland and/or the Commonwealth
of Massachusetts to effect the transfer of the Assets to the Acquiring Fund.
h. Termination. The Acquired Fund's existence as a portfolio of TIP Funds
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 FUNDS ON BEHALF OF THE ACQUIRED FUND.
TIP Funds on behalf of the Acquired Fund represents and warrants to MAMF 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 Funds 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 Funds is duly registered under the Investment
Company Act as an 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 Funds 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 Funds 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 Funds on behalf of the Acquired Fund have been duly
and validly authorized by all necessary action on the part of TIP Funds on
behalf of the Acquired Fund and no other proceedings on the part of TIP Funds
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(k)
hereof. This Agreement has been duly and validly executed by TIP Funds 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 Funds on behalf of the Acquired Fund enforceable against TIP Funds 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 and the remedy of specific performance and injunctive and other
forms of equitable relief.
d. Financial Statements. MAMF 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
A-4
<PAGE>
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. MAMF 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 Funds,
threatened against TIP Funds and/or the Acquired Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquired Fund. Neither TIP
Funds nor the Acquired Fund is charged with or, to TIP Funds' 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 Funds 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 Funds
on behalf of the Acquired Fund and the consummation of the transactions
contemplated hereby by TIP Funds 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 Funds, 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 Funds
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 Funds 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.
k. Taxes. TIP Funds 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
Funds 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 Actor 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
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<PAGE>
Board of Trustees of TIP Funds, 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(k) hereof.
n. N-14 Registration Statement. The registration statement filed, or to be
filed, by MAMF 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 Funds 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.
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 April 19, 2000, the Acquired Fund has
1,621,428.147 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 MAMF ON BEHALF OF THE ACQUIRING FUND.
MAMF on behalf of the Acquiring Fund represents and warrants to TIP Funds
on behalf of the Acquired Fund as follows:
a. Formation and Qualification. MAMF 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. MAMF 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. MAMF is duly registered under the Investment Company Act as a diversified,
open-end management investment company (File No. 811-8797), and such
A-6
<PAGE>
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. MAMF 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 MAMF on behalf of the Acquiring Fund have been duly and
validly authorized by all necessary action on the part of MAMF on behalf of the
Acquiring Fund and no other proceedings on the part of MAMF 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. This Agreement has
been duly and validly executed by MAMF on behalf of the Acquiring Fund and
constitutes a legal, valid and binding obligation of MAMF on behalf of the
Acquiring Fund enforceable against MAMF 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 Funds 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 MAMF on
behalf of the Acquiring Fund and the consummation of the transactions
contemplated hereby by MAMF 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 MAMF, 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 MAMF 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 MAMF 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 MAMF
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 MAMF, 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 MAMF 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 400,000,000
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 no Class I, Class A, Class B or Class
C shares issued and outstanding. All issued and outstanding shares of the
Acquiring Fund are duly authorized, validly
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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 MAMF,
threatened against MAMF and/or the Acquiring Fund that could reasonably be
expected to have a Material Adverse Effect on the Acquiring Fund. Neither MAMF
nor the Acquiring Fund is charged with or, to MAMF'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 FUNDS ON BEHALF OF THE ACQUIRED FUND AND MAMF ON BEHALF OF
THE ACQUIRING FUND.
a. Special Shareholders' Meeting. TIP Funds 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 Funds hereby agrees to furnish to
MAMF, 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.
c. Share Ledger Records of the Acquiring Fund. TIP Funds 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 Funds 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 Funds 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
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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. MAMF 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 Funds and MAMF 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 Funds and the
Acquiring Fund in the case of MAMF 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 Funds on behalf of the Acquired Fund hereby
agrees to disclose to MAMF the existence of any material contracts to which TIP
Funds 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. MAMF on behalf of the Acquiring Fund agrees to
advise TIP Funds promptly in writing if at any time prior to the Exchange Date
the Assets include any Prohibited Assets and shall provide to TIP Funds a list
of such Prohibited Assets.
i. Corresponding Shares. TIP Funds 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 Funds on behalf of the Acquired Fund and MAMF 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 Funds on behalf of the Acquired
Fund and MAMF on behalf of the Acquiring Fund agree to cooperate with each other
in filing any tax return, amended return or claim for refund, 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. MAMF 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 Funds 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 Funds 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 Funds on
behalf of the Acquired Fund to the extent such expenses have been accrued by TIP
Funds on behalf of the Acquired Fund in the ordinary course of business without
regard to the Reorganization; any excess expenses shall be borne by Turner
Investment Partners, Inc. at the time such tax returns and Forms 1099 are
prepared.
k. Combined Proxy Statement and Prospectus Mailing. TIP Funds 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.
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<PAGE>
l. Confirmations of Tax Basis. TIP Funds on behalf of the Acquired Fund
will deliver to MAMF 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 Deloitte & Touche LLP.
m. Shareholder List. As soon as practicable after the close of business on
the Exchange Date, TIP Funds on behalf of the Acquired Fund shall deliver to
MAMF 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
Funds' President or Vice President.
n. The Acquiring Fund's Continued Existence. Following the consummation of
the Reorganization, MAMF 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. MAMF 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.
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 Funds 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 FUNDS ON BEHALF OF THE
ACQUIRED FUND.
The obligations of TIP Funds 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 Funds on behalf of the Acquired Fund at any time in its sole discretion.
a. Representations and Warranties. The representations and warranties of
MAMF 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. MAMF 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 MAMF. This Agreement shall have been
adopted and the Reorganization shall have been approved by the Board of
Directors of MAMF on behalf of the Acquiring Fund. MAMF on behalf of the
Acquiring Fund shall have delivered to TIP Funds a copy of the resolutions of
the Board of Directors of MAMF authorizing the execution, delivery and
performance by MAMF on behalf of the Acquiring Fund of this Agreement and the
transactions contemplated hereby, certified by a duly authorized officer of
MAMF.
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e. Deliveries by MAMF on Behalf of the Acquiring Fund. At or prior to the
Exchange Date, MAMF on behalf of the Acquiring Fund shall deliver to TIP Funds,
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 MAMF, dated as of the Exchange Date, certifying that the
conditions specified in Sections 7(a), (b), and (f) have been fulfilled;
(ii) an opinion of SBSF, as counsel to MAMF, dated as of the Exchange
Date, in form and substance satisfactory to TIP Funds 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 MAMF on behalf of the Acquiring Fund
of the Reorganization, except for such as have been obtained from the
Board of Directors of MAMF 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 MAMF 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 MAMF on
behalf of the Acquiring Fund and the consummation of the transactions
contemplated thereby by MAMF 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 MAMF 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 MAMF 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 Trustees and officers of TIP Funds.
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,
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(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 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 MAMF with regard to matters of fact and
certain certificates and written statements of government officials with respect
to the good standing of MAMF.
(iii) an opinion of Piper Marbury Rudnick & Wolfe LLP in form and
substance satisfactory to TIP Funds as to the matters set forth below:
(1) MAMF is a corporation duly incorporated, validly existing
and in good standing under the laws of the State 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 no shareholder of the Acquiring
Fund will have any preemptive right of subscription or purchase in
respect thereof (pursuant to the charter, or the by-laws of MAMF each
as amended and in effect as of the Exchange Date);
(3) the execution and delivery of the Agreement by MAMF on
behalf of the Acquiring Fund and the consummation of the transactions
contemplated thereby by MAMF on behalf of the Acquiring Fund have
been duly and validly authorized by all necessary action on the part
of MAMF on behalf of the Acquiring Fund and no other proceedings on
the part of MAMF 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 authorized for execution and
delivery by an authorized officer of MAMF on behalf of the Acquiring
Fund and, assuming due authorization, execution, and delivery of the
Agreement by TIP Funds on behalf of the Acquired Fund, is a valid and
binding obligation of MAMF on behalf of the Acquiring Fund,
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity), and further subject to
the qualification that no opinion is expressed as to the validity or
enforceability of any provision regarding the choice of New York law
to govern the Agreement;
(5) the execution and delivery of the Agreement by MAMF on
behalf of the Acquiring Fund and the consummation of the transactions
contemplated thereby by MAMF on behalf of the Acquiring Fund do not
contravene or constitute a default under or violation of the charter
or by-laws of MAMF, each as amended and in effect as of the Exchange
Date, or Maryland law; and
(6) No Maryland regulatory consents, authorizations, or
approvals are required to be obtained by the MAMF on behalf of the
Acquiring Fund under the laws of the State of Maryland for the
consummation of the transactions contemplated by the Agreement,
except such as may be required under Maryland securities or blue sky
laws.
(iv) an opinion of SBSF, in form and substance satisfactory to TIP
Funds and MAMF, to the effect that, for Federal income tax purposes,
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(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 Funds and its counsel, and TIP Funds and
its counsel shall have received all such counterpart originals or certified or
other copies of such documents as TIP Funds 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 MAMF or TIP
Funds, contemplated by the Commission.
j. 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,
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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 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.
k. Commission Orders or Interpretations. TIP Funds 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 Funds,
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 MAMF ON BEHALF OF THE ACQUIRING FUND.
The obligations of MAMF 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 MAMF on behalf of the Acquiring Fund at any time in its sole
discretion.
a. Representations and Warranties. The representations and warranties of
TIP Funds 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 Funds 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 Trustees of TIP Funds. This Agreement shall have
been adopted and the Reorganization shall have been approved by the Board of
Trustees of TIP Funds on behalf of the Acquired Fund. TIP Funds on behalf of
the Acquired Fund shall have delivered to MAMF a copy of the resolutions of the
Board of Trustees of TIP Funds authorizing the execution, delivery and
performance by TIP Funds on behalf of the Acquired Fund of this Agreement and
the transactions contemplated hereby, certified by a duly authorized officer of
TIP Funds.
e. Deliveries by TIP Funds on behalf of the Acquired Fund. At or prior to
the Exchange Date, TIP on behalf of the Acquired Fund shall deliver to MAMF,
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 Funds, dated as of the Exchange Date, certifying that
the conditions specified in Sections 8(a), (b),(c) and (f) have been
fulfilled;
(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
Funds, dated as of the Exchange Date, in form and substance satisfactory to
MAMF, as to the matters set forth below:
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(1) TIP Funds is a business trust duly formed, validly
existing and in good standing in conformity with the laws of
Massachusetts;
(2) the execution and delivery of the Agreement by TIP Funds on
behalf of the Acquired Fund and the consummation of the transactions
contemplated thereby by TIP Funds on behalf of the Acquired Fund have
been duly and validly authorized by all necessary action on the part
of TIP Funds on behalf of the Acquired Fund and no other proceedings
on the part of TIP Funds 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
Funds on behalf of the Acquired Fund and constitutes a legal, valid
and binding obligation of TIP Funds on behalf of the Acquired Fund
enforceable against TIP Funds 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) 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 Funds on
behalf of the Acquired Fund of the Reorganization, except for such as
have been obtained from the Board of Trustees of TIP Funds and
shareholders of the Acquired Fund and such as may be required under
Massachusetts state securities law;
(5) to such counsel's knowledge, the Acquired Fund has good and
marketable title to the Assets, free and clear of all Liens;
(6) 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 Funds on behalf of the Acquired
Fund of the Reorganization, except for such as have been obtained
from the Board of Trustees of TIP Funds 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;
(7) 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;
(8) 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 Funds on behalf of
the Acquired Fund are accurate and fairly present the information
required to be shown;
(9) 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;
(10) the execution and delivery of the Agreement by TIP Funds on
behalf of the Acquired Fund and the consummation of the transactions
contemplated thereby by TIP Funds on behalf of the Acquired Fund do
not contravene or constitute a default under or violation of (i)
the Declaration of Trust or by-laws of TIP Funds, each as amended
and in effect as of the Exchange Date, (ii) any agreement or contract
known to such counsel (or require the consent
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<PAGE>
of any Person under any agreement or contract known to such counsel
that has not been obtained) to which TIP Funds is a party on behalf
of the Acquired Fund or to which the Acquired Fund's assets or
properties are subject, or (iii) Massachusetts' law, except, in the
case of subsection (ii), where such contravention, default or
violation would not have a Material Adverse Effect on the Acquired
Fund;
(11) such counsel does not have actual knowledge of any material
claims, actions, suits or legal, administrative or other proceedings
pending or threatened against TIP Funds and/or the Acquired Fund that
could reasonably be expected to have a Material Adverse Effect on the
Acquired Fund; and
(12) such opinion is solely for the benefit of the Acquiring
Fund and the Board of Directors and officers of MAMF.
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 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 Funds with regard to
matters of fact and certain certificates and written statements of governmental
officials with respect to the good standing of TIP Funds.
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 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 MAMF and its counsel, and MAMF and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as MAMF 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 Funds or
MAMF, contemplated by the Commission.
j. Accountants' Letters. MAMF shall have received from Ernst & Young LLP a
letter dated no later than May 31, 2000 and a similar letter dated at the
Valuation Time, in form and substance satisfactory to MAMF, 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;
and
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<PAGE>
(iii) on the basis of limited procedures agreed upon by MAMF on behalf
of the Acquiring Fund and TIP Funds 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 the
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, each as of March 31, 2000 and
any related unaudited supplementary information (including the information
relating to TIP Funds 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)), and inquiries of certain officials of the Acquired
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.
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 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. MAMF 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 MAMF,
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 MAMF on behalf of the Acquiring Fund in accordance with Section 5(h)
hereof.
n. Due Diligence Regarding Tax Returns. The completion by Deloitte & Touche
LLP of all due diligence regarding Federal, state and local income tax returns
of the Acquired Fund, the results of which are satisfactory to the Acquiring
Fund.
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 October 1, 1999 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 October 1, 1999 to and including the Exchange Date.
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<PAGE>
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 Funds on behalf of the Acquired Fund or MAMF on behalf of
the Acquiring Fund if:
(1) the Board of Trustees of TIP Funds and the Board of
Directors of MAMF so mutually agree in writing;
(2) the transactions contemplated by this Agreement have not
been consummated by December 31, 2000; 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 Funds on behalf of the Acquired Fund if any condition of
TIP Fund's obligations on behalf of the Acquired Fund set forth in Section
7 of this Agreement has not been fulfilled by MAMF on behalf of the
Acquiring Fund or waived by TIP Funds on behalf of the Acquired Fund, or
(iii) by MAMF on behalf of the Acquiring Fund if any condition of
MAMF's obligations on behalf of the Acquiring Fund set forth in Section 8
of this Agreement has not been fulfilled by TIP Funds on behalf of the
Acquired Fund or waived by MAMF 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 Board of Trustees
of TIP Funds and the Board of Directors of MAMF 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 have
no further force or effect, and there shall not be any liability on the part of
either TIP Funds on behalf of the Acquired Fund or MAMF 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
Trustees or 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 Board of Trustees of TIP Funds and the Board of
Directors of MAMF have delegated to the investment adviser of the Acquired Fund
and the Acquiring Fund, respectively,
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<PAGE>
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 Funds on behalf of the Acquired Fund, MAMF 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 Funds on behalf of the Acquired Fund or MAMF 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 Funds on behalf of the Acquired Fund.
TIP Funds on behalf of the Acquired Fund hereby agrees to indemnify and hold
harmless MAMF 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 MAMF 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 Funds on
behalf of the Acquired Fund, whether consisting of tax deficiencies or
otherwise, required to be paid by MAMF and/or the Acquiring Fund and based upon
a claim or claims against TIP Funds and/or the Acquired Fund which were omitted
or not fairly reflected in the financial statements delivered to MAMF 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 Funds on behalf of the Acquired Fund hereunder (iii) the failure or
threatened failure, in any material respect, of TIP Funds on behalf of the
Acquired Fund to fulfill any agreement or covenant of TIP Funds 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 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 Funds 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 MAMF on behalf of the Acquiring
Fund. MAMF on behalf of the Acquiring Fund hereby agrees to indemnify and hold
harmless TIP Funds on behalf of the Acquired Fund from and against any and all
Losses which TIP Funds 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 MAMF on behalf of the Acquiring
Fund hereunder; (ii) the failure or threatened failure, in any material respect,
of MAMF on behalf of the Acquiring Fund to fulfill any agreement or covenant of
MAMF 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 Funds or the Acquired Fund.
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<PAGE>
d. Indemnification Procedure. In the event that any claim is made against
MAMF and/or the Acquiring Fund in respect of which indemnity may be sought by
MAMF on behalf of the Acquiring Fund from TIP Funds on behalf of the Acquired
Fund under Section 10(b) hereof, or in the event that any claim is made against
TIP Funds and/or the Acquired Fund in respect of which indemnity may be sought
by TIP Funds on behalf of the Acquired Fund from MAMF 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 Funds on behalf of the Acquired Fund and MAMF 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 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, MAMF 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 OF MERCURY ASSET MANAGEMENT FUNDS, INC. (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 Funds on behalf of the
Acquired Fund will provide MAMF on the Exchange Date with the name of any
shareholder of the Acquired Fund who is to the knowledge of TIP Funds 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 Funds on behalf of
the Acquired Fund or MAMF 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)
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<PAGE>
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 Funds on behalf of c/o Turner Investment Partners, Inc.
the 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.
If to MAMF 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) the Acquiring Fund 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) Mercury Asset Management US, a division of Fund Asset Management, L.P.,
and Turner Investment Partners, Inc. shall each pay one half of all other
expenses incurred in connection with the Reorganization, including, but not
limited to, all costs related to the preparation and distribution of the N-14
Registration Statement; provided that Mercury Asset Management US, a division of
Fund Asset Management, L.P., shall be reimbursed by the Acquiring Fund for all
expenses paid by Mercury Asset Management US, a division of Fund Asset
Management, L.P., under subsection (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
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<PAGE>
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
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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<PAGE>
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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