As filed with the Securities and Exchange Commission on April 13, 2001
Registration No. 333-___/811-8358
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U.S. Securities and Exchange Commission
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ Post-Effective Amendment No.___
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
MUTUAL FUND TRUST
Area Code and Telephone Number:
(212) 492-1600
Address of Principal Executive Offices:
1211 Avenue of the Americas, 41st Floor
New York, New York 10036
Name and Address of Agent for Service:
Lisa Hurley
c/o BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Copies to:
JOSEPH J. BERTINI, ESQ. SARAH E. COGAN, ESQ. JOHN E.
PETER B. ELDRIDGE, ESQ. Simpson Thacher & Bartlett BAUMGARDNER, JR., ESQ.
J.P. Morgan Fleming Asset 425 Lexington Avenue Sullivan & Cromwell
Management (USA) Inc. New York, NY 10017-3954 125 Broad Street
522 Fifth Avenue New York, NY 10004
New York, NY 10036
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Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on May 13, 2001 pursuant
to Rule 488 under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration No. 033-75250/811-8358) pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant's
Form 24f-2 for the fiscal year ended August 31, 2000 was filed on November 27,
2000. Pursuant to Rule 429, this Registration Statement relates to the aforesaid
Registration Statement on Form N-1A.
J.P. MORGAN FEDERAL MONEY MARKET FUND
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
May 12, 2001
Dear Shareholder:
A special meeting of the shareholders of J.P. Morgan Federal Money
Market Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), will
be held on July 3, 2001 at 9:00 a.m., Eastern time. Formal notice of the meeting
appears after this letter, followed by materials regarding the meeting.
As you may be aware, J.P. Morgan & Co. Incorporated, the former
corporate parent of the investment adviser of the Merging Fund's assets,
recently completed a merger with The Chase Manhattan Corporation to form J.P.
Morgan Chase & Co. ("JPMC"). As a result of this merger, JPMC is seeking to
reorganize parts of its investment management business in order to provide
better service for shareholders of funds advised by its subsidiaries. At the
special meeting (the "Meeting"), shareholders will be asked to consider and vote
upon the proposed reorganization of the Merging Fund into JPMorgan Federal Money
Market Fund II (formerly, Chase Vista Federal Money Market Fund) (the "Surviving
Fund"), a series of Mutual Fund Trust ("MFT") (the "Reorganization"). After the
Reorganization, shareholders would hold an interest in the Surviving Fund. The
investment objective and policies of the Merging Fund generally are similar to
those of the Surviving Fund. In connection with the Reorganization, the
Surviving Fund will be renamed "JPMorgan Federal Money Market Fund."
After the proposed Reorganization, your investment will be in a larger
combined fund with similar investment policies.
The Surviving Fund has also entered into agreements and plans of
reorganization with other money market funds whose assets are managed by J.P.
Morgan Investment Management Inc. ("JPMIM") and which have identical investment
objectives and policies to the Merging Fund (collectively, the "Concurrent
Reorganization"). If the Concurrent Reorganization is approved by the
shareholders of these other funds and certain other conditions are met, these
funds will be reorganized into the Surviving Fund. The consummation of the
Reorganization is contingent upon the consummation of the Concurrent
Reorganization.
At the Meeting, you will also be asked to consider and vote upon the
election of Trustees of JPMF.
The investment adviser for the assets of the Merging Fund is JPMIM. The
investment adviser for the Surviving Fund is J.P. Morgan Fleming Asset
Management (USA) Inc. ("JPMFAM"). After the Reorganization, JPMFAM, the same
investment adviser that currently is responsible for the Surviving Fund, will
make the day-to-day investment decisions for your portfolio.
Please see the enclosed Combined Prospectus/Proxy Statement for
detailed information regarding the proposed Reorganization, the Concurrent
Reorganization and a comparison of the Merging Fund and JPMF to the Surviving
Fund and MFT. The cost and expenses associated with the Reorganization,
including costs of soliciting proxies, will be borne by JPMC and not by the
Merging Fund, JPMF, the Surviving Fund, MFT or their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive shares in the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees of
JPMF, which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPMF UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" EACH OF THE PROPOSALS.
Following this letter is a list of commonly asked questions. If you
have any additional questions on voting of proxies and/or the meeting agenda,
please call us at 1-800-_____.
A proxy card is enclosed for your use in the shareholder meeting. This
card represents shares you held as of the record date, __________, 2001. IT IS
IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE
PROVIDED OR CALL ____________ AS SOON AS POSSIBLE. This will ensure that your
shares will be represented at the Meeting to be held on July 3, 2001.
Please read the enclosed materials carefully. You may, of course,
attend the meeting in person if you wish, in which case the proxy can be revoked
by you at the Meeting.
Sincerely,
Matthew Healey
Chairman
SPECIAL NOTE: Certain shareholders may receive a telephone call from our proxy
solicitor, D.F. King & Co., Inc., or us to answer any questions you may have or
to provide assistance in voting. Remember, your vote is important! Please sign,
date and promptly mail your proxy card(s) in the return envelope provided or
call _________ in order to vote.
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes it is in
the best interests of shareholders to combine funds that have similar investment
objectives and policies and each board believes that the Reorganization should
result in better service for shareholders, including a wider variety of
investment options.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
Under the Reorganization, the Merging Fund will cease investing in The Federal
Money Market Portfolio (the "Master Portfolio" in which it currently invests),
will transfer all of its assets and liabilities to the Surviving Fund and will
receive, in exchange, shares of the Surviving Fund. The Merging Fund will then
be liquidated and those shares of the Surviving Fund will be distributed to
shareholders such as you. After the Reorganization, you will own shares in the
Surviving Fund rather than the Merging Fund. The Surviving Fund invests directly
in portfolio securities rather than in a master portfolio.
WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY
INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED?
The Surviving Fund generally has similar investment objectives and policies to
those of the Merging Fund. The principal differences are as follows:
SURVIVING FUND MERGING FUND
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- - The Surviving Fund's investment objective is to aim - The Merging Fund's investment objective is to provide
to provide current income while still preserving high current income consistent with the preservation
capital and maintaining liquidity. of capital and same-day liquidity.
- - Invests primarily in direct debt securities of the - Invests exclusively in U.S. Treasury Securities and
U.S. Treasury, including Treasury bills, bonds and in U.S. government agency obligations, the income
notes, and debt securities that certain U.S. from which is generally free from state and local
government agencies or authorities have either issued income taxes.
or guaranteed as to principal and interest.
The Reorganization is not intended to have any immediate significant impact on
the investment strategy implemented in respect of your investment. However,
please note that while the Merging Fund invests all of its asset in the Master
Portfolio (which in turn invests in portfolio securities), the Surviving Fund
invests directly in portfolio securities.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
As a result of the Reorganization, the contractual (or pre-waiver) total expense
ratios are expected to be higher for your shares in the Surviving Fund than they
are for your shares in the
Merging Fund. However, the actual (or post-waiver) total expense ratios are
expected to be the same or less for your shares in the Surviving Fund than they
are for your shares in the Merging Fund. This is because The Chase Manhattan
Bank has contractually agreed to waive fees payable to it and reimburse expenses
so that the total expense ratio will remain the same for at least THREE YEARS
after the Reorganization.
WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT?
Yes. JPMFAM, the investment adviser that currently manages the day-to-day
investment activities of the Surviving Fund, will continue to manage that fund
after the Reorganization.
WHO WILL PAY FOR THE REORGANIZATION?
The cost and expenses associated with the Reorganization, including costs of
soliciting proxies, will be borne by JPMC and not by either the Merging Fund or
the Surviving Fund (or shareholders of either fund).
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive shares in the Surviving Fund.
HOW WILL THE PROPOSED CONCURRENT REORGANIZATION AFFECT MY INVESTMENT IF IT IS
APPROVED BY THE SHAREHOLDERS OF THE OTHER FUNDS?
If the Concurrent Reorganization is approved and certain other conditions are
met, the assets and liabilities of the other merging funds will become the
assets and liabilities of the Surviving Fund. The consummation of the
Reorganization is contingent upon the consummation of the Concurrent
Reorganization.
WHY AM I BEING ASKED TO VOTE ON THE ELECTION OF TRUSTEES FOR JPMF IF AFTER THE
REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF MFT?
Even if the Reorganization is approved, other mutual funds that are series of
JPMF will continue to exist and operate. All shareholders of any series of JPMF
as of the record date (April 6, 2001) are required to be given a vote on the
proposal regarding Trustees. Because as of the record date you are still a
shareholder in JPMF, you are entitled to vote on the proposal. Shareholders of
MFT are being asked to approve the same Trustees that are proposed for JPMF.
AS A HOLDER OF SHARES OF THE MERGING FUND, WHAT DO I NEED TO DO?
Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your vote
is important! Accordingly, please sign, date and mail the proxy card(s) promptly
in the enclosed return envelope as soon as possible after reviewing the enclosed
Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
J.P. MORGAN FEDERAL MONEY MARKET FUND,
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of
J.P. Morgan Federal Money Market Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of J.P. Morgan Federal Money Market Fund (the "Merging Fund"),
a series of J.P. Morgan Funds ("JPMF"), will be held at the offices of J.P.
Morgan Chase & Co., 1211 Avenue of the Americas, 41st Floor, New York, New York,
on July 3, 2001 at 9:00 a.m., (Eastern time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Plan") by and
among JPMF, on behalf of the Merging Fund, Mutual Fund Trust
("MFT"), on behalf of JPMorgan Federal Money Market Fund II
(formerly, Chase Vista Federal Money Market Fund) (the
"Surviving Fund"), and J.P. Morgan Chase & Co., and the
transactions contemplated thereby, including (a) the transfer
of all of the assets and liabilities of the Merging Fund to
the Surviving Fund in exchange for Premier Class shares of the
Surviving Fund (the "Surviving Fund Shares"); and (b) the
distribution of such Surviving Fund Shares to the Shareholders
of the Merging Fund in connection with the liquidation of the
Merging Fund.
ITEM 2. To elect __ Trustees to serve as members of the Board of
Trustees of JPMF.
ITEM 3. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEMS 1 AND 2.
Each proposal is described in the attached Combined Prospectus/Proxy
Statement. Attached as Appendix A to the Combined Prospectus/Proxy Statement is
a copy of the Reorganization Plan.
Shareholders of record as of the close of business on April 6, 2001 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPMF. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
THE MERGING FUND A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY
OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
Margaret W. Chambers
Secretary
May 12, 2001
COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 12, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN FEDERAL MONEY MARKET FUND,
A SERIES OF J.P. MORGAN FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
BY AND IN EXCHANGE FOR SHARES OF
JPMORGAN FEDERAL MONEY MARKET FUND II
(FORMERLY, CHASE VISTA FEDERAL MONEY MARKET FUND),
A SERIES OF MUTUAL FUND TRUST
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 348-4782
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of J.P. Morgan Federal Money Market Fund (the "Merging Fund"), a
series of J.P. Morgan Funds ("JPMF"), into JPMorgan Federal Money Market Fund II
(formerly, Chase Vista Federal Money Market Fund) (the "Surviving Fund"), a
series of Mutual Fund Trust ("MFT"). If approved by Shareholders, the proposed
reorganization will be effected by transferring all of the assets and
liabilities of the Merging Fund to the Surviving Fund, which has generally
similar investment objectives and policies to those of the Merging Fund, in
exchange for shares of the Surviving Fund (the "Reorganization"). Therefore, as
a result of the proposed Reorganization, current shareholders of the Merging
Fund (the "Merging Fund Shareholders") will become shareholders of the Surviving
Fund ("Surviving Fund Shareholders"). JPMF and MFT are both open-end management
investment companies offering shares in several portfolios. In connection with
the Reorganization, the Surviving Fund will be renamed "JPMorgan Federal Money
Market Fund."
Under the proposed Reorganization, each Merging Fund Shareholder will
receive Premier Class shares (the "Surviving Fund Shares") of the Surviving Fund
with a value equal to such Merging Fund Shareholder's holdings in the Merging
Fund. The Surviving Fund currently has a multi-class structure under which it
offers Reserves Class, Vista Class, Premier Class and Institutional Class
shares. In connection with the Reorganization, the Surviving Fund will rename
the Vista Class "Morgan Class," will rename Institutional Class "Agency Class"
shares and will introduce a new "Institutional Class" of shares.
At the Meeting, you also will be asked to consider and vote upon the
election of Trustees of JPMF.
The terms and conditions of these transactions are more fully described
in this Combined Prospectus/Proxy Statement and in the Agreement and Plan of
Reorganization (the
"Reorganization Plan") among JPMF, on behalf of the Merging Fund, MFT, on behalf
of the Surviving Fund and J.P. Morgan Chase & Co., attached to this Combined
Prospectus/Proxy Statement as Appendix A.
The Board of Trustees for JPMF is soliciting proxies in connection with
a Special Meeting (the "Meeting") of Shareholders to be held on July 3, 2001 at
9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211 Avenue
of the Americas, 41st Floor, New York, New York, at which meeting shareholders
in the Merging Fund will be asked to consider and approve the proposed
Reorganization Plan, certain transactions contemplated by the Reorganization
Plan and certain other proposals. This Combined Prospectus/Proxy Statement
constitutes the proxy statement of the Merging Fund for the meeting of its
Shareholders and also constitutes MFT's prospectus for Surviving Fund Shares
that have been registered with the Securities and Exchange Commission (the
"Commission") and are to be issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about MFT and JPMF that
an investor should know before voting on the proposals. The current
Prospectuses, Statements of Additional Information and Annual Reports for the
Merging Fund and the Surviving Fund (including the Annual Report of The Federal
Money Market Portfolio) and the Semi-Annual Report of the Surviving Fund are
incorporated herein by reference, and the current Prospectus, Annual Report and
the Semi-Annual Report of the Surviving Fund (including the Semi-Annual Report
of the Federal Money Market Portfolio) are enclosed with this Combined
Prospectus/Proxy Statement. A Statement of Additional Information relating to
this Combined Prospectus/Proxy Statement dated May 12, 2001 containing
additional information about MFT and JPMF has been filed with the Commission and
is incorporated by reference into this Combined Prospectus/Proxy Statement. A
copy of the Statement of Additional Information, as well as the Prospectus,
Statement of Additional Information and Annual Report of the Merging Fund
(including the Annual Report for The Federal Money Market Portfolio), may be
obtained without charge by writing to MFT at its address noted above or by
calling 1-800-348-4782.
This Combined Prospectus/Proxy Statement is expected to first be sent
to shareholders on or about May 12, 2001.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MFT OR JPMF.
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INVESTMENTS IN THE SURVIVING FUND ARE SUBJECT TO RISK--INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. NO SHARES IN THE SURVIVING FUND ARE BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY
INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
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TABLE OF CONTENTS
PAGE
INTRODUCTION..................................................................1
PROPOSAL 1: REORGANIZATION PLAN..............................................1
SUMMARY.......................................................................1
COMPARATIVE FEE AND EXPENSE TABLES............................................5
RISK FACTORS..................................................................8
INFORMATION RELATING TO THE PROPOSED REORGANIZATION...........................8
INVESTMENT POLICIES..........................................................12
PURCHASES, REDEMPTIONS AND EXCHANGES.........................................18
DISTRIBUTIONS AND TAXES......................................................21
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING FUND'S ORGANIZATION
STRUCTURE....................................................................22
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES............24
PROPOSAL 2: ELECTION OF TRUSTEES.............................................27
VOTE REQUIRED................................................................28
INFORMATION RELATING TO VOTING MATTERS.......................................32
ADDITIONAL INFORMATION ABOUT MFT.............................................34
ADDITIONAL INFORMATION ABOUT JPMF............................................34
FINANCIAL STATEMENTS AND EXPERTS.............................................35
OTHER BUSINESS...............................................................35
LITIGATION...................................................................35
SHAREHOLDER INQUIRIES........................................................35
APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION............................A-1
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INTRODUCTION
GENERAL
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of the Merging Fund, an open-end management investment company, in
connection with the solicitation by the Board of Trustees of JPMF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st Floor, New York, New York, (together with
any adjournments thereof, the "Meeting"). It is expected that the mailing of
this Combined Prospectus/Proxy Statement will be made on or about May 12, 2001.
PROPOSAL 1: REORGANIZATION PLAN
As you may be aware, J.P. Morgan & Co. Incorporated, the former
corporate parent of the investment adviser of the Merging Fund's assets,
recently completed a merger with The Chase Manhattan Corporation to form J.P.
Morgan Chase & Co. ("JPMC"). As a result of this merger, JPMC is seeking to
reorganize parts of its investment management business in order to provide
better service for shareholders of funds advised by its subsidiaries. At the
Meeting, Merging Fund Shareholders will consider and vote upon the Agreement and
Plan of Reorganization (the "Reorganization Plan") dated _______, 2001 among
JPMF, on behalf of the Merging Fund, MFT, on behalf of the Surviving Fund (the
Merging Fund and the Surviving Fund are collectively defined as the "Funds"),
and JPMC pursuant to which all of the assets and liabilities of the Merging Fund
will be transferred to the Surviving Fund in exchange for Surviving Fund Shares.
As a result of the Reorganization, Merging Fund Shareholders will become
shareholders of the Surviving Fund and will receive Surviving Fund Shares equal
in value to their holdings in the Merging Fund on the date of the
Reorganization. In connection with the Reorganization, the Surviving Fund will
be renamed "JPMorgan Federal Money Market Fund." Further information relating to
the Surviving Fund is set forth herein, and the Surviving Fund's Prospectus,
Annual Report and Semi-Annual Report are enclosed with this Combined
Prospectus/Proxy Statement.
THE JPMF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL 1.
VOTE REQUIRED
Approval of the Reorganization Plan by the Merging Fund requires the
affirmative vote of the lesser of (i) 67% or more of the shares of the Merging
Fund present at the Meeting if the holders of more than 50% of the outstanding
shares of the Merging Fund are present or represented by proxy and (ii) more
than 50% of all outstanding shares of the Merging Fund. If the Reorganization
Plan is not approved by the Merging Fund Shareholders, the JPMF Board will
consider other appropriate courses of action.
SUMMARY
The following is a summary of certain information relating to the
proposed Reorganization, the parties thereto and the transactions contemplated
thereby, and is qualified by
reference to the more complete information contained elsewhere in this Combined
Prospectus/Proxy Statement, the Prospectus, Statement of Additional Information,
Annual Report of each of the Surviving Fund and the Merging Fund (including the
Annual Report of The Federal Money Market Portfolio), the Semi-Annual Report of
the Surviving Fund (including the Semi-Annual Report of The Federal Money Market
Portfolio), and the Reorganization Plan attached to this Combined
Prospectus/Proxy Statement as Appendix A.
PROPOSED REORGANIZATION
Pursuant to the proposed Reorganization Plan, the Merging Fund will
transfer all of its assets and liabilities to the Surviving Fund in exchange for
shares of the Surviving Fund.
Under the proposed Reorganization, each Merging Fund Shareholder will
receive a number of Premier Class shares of the Surviving Fund with an aggregate
net asset value equal on the date of the exchange to the aggregate net asset
value of such shareholder's Merging Fund Shares on such date. Therefore,
following the proposed Reorganization, Merging Fund Shareholders will be
Surviving Fund Shareholders. Merging Fund Shareholders will not pay a sales
charge in connection with the Reorganization. See "Information Relating to the
Proposed Reorganization."
The Surviving Fund has investment objectives, policies and restrictions
generally similar to the Merging Fund.
Based upon their evaluation of the relevant information presented to
them, including an analysis of the operation of the Surviving Fund both before
and after the Reorganization, the terms of the Reorganization Plan, the
opportunity to combine the two Funds with generally similar investment
objectives and policies, and the fact that the Reorganization will be tax-free,
and in light of their fiduciary duties under federal and state law, the MFT
Board and the JPMF Board, including a majority of each Board's members who are
not "interested persons" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act"), have each determined that the proposed
Reorganization is in the best interests of each Fund and its respective
shareholders and that the interests of such shareholders will not be diluted as
a result of such Reorganization.
REASONS FOR THE REORGANIZATION
The Reorganization is being proposed because each Fund's board believes
it is in the best interests of shareholders to combine funds that have similar
investment objectives and policies and each board believes that the
Reorganization should result in better service for shareholders, including a
wider variety of investment options.
CONCURRENT REORGANIZATION
The Merging Fund currently invests all of its investable assets in The
Federal Money Market Portfolio (the "Master Portfolio"), which has identical
investment objectives and policies as the Merging Fund and which is advised by
J.P. Morgan Investment Management Inc. ("JPMIM"). J.P. Morgan Institutional
Service Federal Money Market Fund, and J.P. Morgan Institutional Federal Money
Market Fund, each a series of J.P. Morgan Institutional Funds, each
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have identical investment objectives and policies as the Merging Fund (the
"Feeder Portfolios") and also currently invest all of their assets in the Master
Portfolio. The Surviving Fund has entered into substantially similar agreements
and plans of reorganization with each Feeder Portfolio (collectively, the
"Concurrent Reorganization"). If each of the Reorganization and the Concurrent
Reorganization is approved by the shareholders of the Merging Fund and each
Feeder Portfolio, respectively, and certain other conditions are met, the
Merging Fund and the Feeder Portfolios will be reorganized into the Surviving
Fund and the Merging Fund and the Feeder Portfolios will no longer invest their
assets in the Master Portfolio. The consummation of the Reorganization is
contingent upon the consummation of the Concurrent Reorganization.
FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett will issue an opinion (based on certain
assumptions) as of the effective time of the Reorganization to the effect that
the transaction will not give rise to the recognition of income, gain or loss
for federal income tax purposes to the Merging Fund, the Surviving Fund or the
shareholders of the Merging Fund. The holding period and tax basis of Surviving
Fund Shares received by a shareholder of the Merging Fund will be the same as
the holding period and tax basis of such shareholder's shares of the Merging
Fund. In addition, the holding period and tax basis of those assets owned by the
Merging Fund and transferred to the Surviving Fund will be identical for the
Surviving Fund. See "Information Relating to the Proposed Reorganization -
Federal Income Tax Consequences."
INVESTMENT ADVISERS
The investment adviser for the Master Portfolio (and therefore the
assets of the Merging Fund and the Feeder Portfolios) is JPMIM. The investment
adviser for the Surviving Fund is J.P. Morgan Fleming Asset Management (USA)
Inc. ("JPMFAM"). JPMFAM and JPMIM are each wholly-owned subsidiaries of JPMC.
JPMFAM will continue to serve as investment advisor following the
Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
The Surviving Fund's investment objective is to aim to provide current
income while still preserving capital and maintaining liquidity. The Merging
Fund's investment objective is to provide high current income consistent with
the preservation of capital and same-day liquidity. See "Risk Factors" and
"Investment Restrictions."
The investment policies of the Surviving Fund are generally similar to
those of the Merging Fund, although the Surviving Fund invests its assets
directly in portfolio securities, while the Merging Fund invests its assets in
the Master Portfolio, which in turn invests in portfolio securities. The
Surviving Fund invests primarily in direct debt securities of the U.S. Treasury,
including Treasury bills, bonds and notes, and debt securities that certain U.S.
government agencies or authorities have either issued or guaranteed as to
principal and interest. The dollar weighted average maturity of the Surviving
Fund will be 90 days or less and the Fund will buy only those instruments which
have remaining maturities of 397 days or less. The Surviving Fund invests only
in securities issued and payable in U.S. dollars. THE MERGING FUND INVESTS
EXCLUSIVELY IN U.S. TREASURY SECURITIES AND IN U.S. GOVERNMENT AGENCY
OBLIGATIONS THE
-3-
INCOME FROM WHICH IS GENERALLY FREE FROM STATE AND LOCAL INCOME TAXES. Each Fund
seeks to maintain a net asset value of $1.00 per share.
PRINCIPAL RISKS OF INVESTING IN THE SURVIVING FUND
The principal risk factors associated with an investment in the
Surviving Fund are those typically associated with investing in a managed
portfolio of money market securities. The Surviving Fund attempts to keep its
net asset value at $1.00, although there is no guarantee it will be able to do
so. In general, the value of a money market investment tends to fall when
prevailing interest rates rise, although it tends to be less sensitive to
interest rate changes than the value of longer-term securities. Additionally,
investments in the Surviving Fund may not earn as high a current income as
longer-term or lower-quality securities. See "Risk Factors."
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for the Surviving Fund is JPMFAM. JPMFAM
oversees the asset management of the Surviving Fund. As compensation for its
services, JPMFAM receives a management fee from the Surviving Fund at an annual
rate of 0.10% of average daily net asset. The Merging Fund currently pays a
management fee at an annual rate of 0.20% of the first $1 billion of average
daily net assets and 0.10% of average daily net assets for assets over $1
billion. Following the Reorganization, JPMIM will manage the Surviving Fund's
assets and will receive a fee at an annual rate of 0.10% of average daily net
assets.
OTHER SERVICES
J.P. Morgan Fund Distributors, Inc. (the "Distributor") is the
distributor for the Surviving Fund. The Chase Manhattan Bank ("Chase") serves as
shareholder servicing agent, administrator, fund accountant and custodian, an
affiliate of the Distributor serves as sub-administrator and DST Systems, Inc.
("DST") serves as transfer agent and dividend disbursing agent for the Surviving
Fund. It is anticipated that prior to the consummation of the Reorganization,
The Bank of New York ("BONY") will become the Surviving Fund's fund accountant
and custodian. PricewaterhouseCoopers LLP serves as the Surviving Fund's
independent accountants.
ADMINISTRATOR
As administrator, Chase receives a fee of 0.10% of average daily net
assets. It is anticipated that, in connection with the Reorganization, the
administration fee will be amended to reduce the fee to 0.05% for complex wide
money market Fund assets in excess of $100 billion.
ORGANIZATION
Each of MFT and JPMF is organized as a Massachusetts business trust.
The Merging Fund is organized as a series of JPMF and the Surviving Fund is
organized as a series of MFT.
-4-
PURCHASES, REDEMPTIONS AND EXCHANGES
After the Reorganization, the procedures for making purchases,
redemptions and exchanges of shares of the Surviving Fund will be as described
in this Combined Prospectus/Proxy Statement and in the Surviving Fund's
Prospectus and Statement of Additional Information.
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses
paid by each of the Merging Fund and the Surviving Fund that reflect current
expense arrangements, and (ii) estimated fees and expenses on a pro forma basis
for the Surviving Fund after giving effect to the proposed Reorganization and
the Concurrent Reorganization. Under the proposed Reorganization, holders of
shares in the Merging Fund will receive Premier Class shares in the Surviving
Fund. Please note that the Surviving Fund currently has four classes of shares:
Reserves Class, Vista Class, Premier Class and Institutional Class. In
connection with the Reorganization, the Surviving Fund will rename the Vista
Class "Morgan Class," will rename the Institutional Class "Agency Class" and
will introduce a new "Institutional Class" of shares.
-5-
The table indicates that while contractual (pre-waiver) total expense ratios for
current shareholders of the Merging Fund are anticipated to be higher following
the Reorganization, actual (post-waiver) total expense ratios for current
shareholders of the Merging Fund are anticipated to be less or stay the same
following the Reorganization. This is because Chase has agreed to waive certain
fees and/or reimburse certain expenses to ensure that actual total operating
expenses do not increase for at least three years.
THE MERGING
FUND THE SURVIVING FUND
----------- --------------------------------------------------------
RESERVES PREMIER VISTA CLASS INSTITUTIONAL
SHARES CLASS SHARES CLASS SHARES SHARES CLASS SHARES
----------- ------------ ------------ ------------- -------------
SHAREHOLDER FEES* (FEES PAID
DIRECTLY FROM YOUR
INVESTMENT) -
- -------------------------------
Maximum Sales Charge (Load)
when you buy shares, shown
as % of the offering price.. None None None None None
Maximum Deferred Sales
Charge (Load) shown as
lower of original purchase
price or redemption proceeds None None None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees................ 0.13% 0.10% 0.10% 0.10% 0.10%
Distribution (12b-1) Fees...... None 0.30% None 0.10% None
Other Expenses................. 0.34% 1.04% 0.39%# 0.52%# 0.23%#
Total Annual Fund Operating
Expenses.................... 0.47% 1.44% 0.49%# 0.72%# 0.33%#
* The table is based on estimated expenses for current fiscal year.
# Restated from the most recent fiscal year to reflect current expense
arrangements.
The actual Distribution Fees are expected to be 0.00%. The actual Other Expenses
are expected to be 0.16%, 0.50% and 0.69% and Total Annual Fund Operating
Expenses are not expected to exceed 0.26%, 0.70% and 0.79% for Institutional
Class Shares, Vista Class Shares and Reserve Class Shares respectively. That is
because Chase has volunteered not to collect a portion of its fees and to
reimburse others. Chase may terminate this arrangement at any time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
-6-
THE SURVIVING FUND
-------------------------
PRO FORMA WITH CONCURRENT
REORGANIZATION
-------------------------
PREMIER CLASS SHARES
-------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOU
INVESTMENT)-
Maximum Sales Charge (Load) when you buy
shares, shown as % of the offering price........ None
Maximum Deferred Sales Charge (Load) shown as
lower of original purchase price or redemption
proceeds........................................ None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees.................................... 0.10%
Distribution (12b-1) Fees.......................... None
Other Expense...................................... 0.38%
Total Annual Fund Operating Expense................ 0.48%
Fee Waivers and Expense Reimbursements(A).......... 0.03%
Net Expenses....................................... 0.45%
(A) Reflects an agreement by Chase, an affiliate of JPMC, to reimburse the Fund
to the extent operating expenses (which exclude interest, taxes, and
extraordinary expenses) exceed 0.45% of average daily net assets with respect to
Premier Shares for three years after the Reorganization.
The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
EXAMPLE: This example helps investors compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example assumes:
- - you invest $10,000;
- - you sell all of your shares at the end of each period;
- - your investment has a 5% return each year; and
- - each Fund's operating expenses are waived for three years after the
Reorganization and unwaived for the period thereafter and remain the same
as shown above.
-7-
Although actual costs may be higher or lower, based upon these assumptions your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
THE MERGING FUND $48 $151 $263 $591
THE SURVIVING FUND......................................
Vista Class Shares................................... $74 $230 $401 $894
Reserve Class Shares................................. $147 $456 $787 $1,724
Premier Class Shares................................. $50 $157 $274 $616
Institutional Class Shares........................... $34 $106 $185 $418
Pro Forma The Surviving Fund With Concurrent
Reorganization Premier Shares........................ $46 $144 $259 $595
RISK FACTORS
The following discussion highlights the principal risk factors
associated with an investment in the Surviving Fund. The Surviving Fund
generally has investment policies and investment restrictions similar to those
of the Merging Fund. Therefore, there should be similarities between the risk
factors associated with the Surviving Fund and the Merging Fund. This discussion
is qualified in its entirety by the more extensive discussion of risk factors
set forth in the Prospectus and Statement of Additional Information of the
Surviving Fund, which are incorporated herein by reference.
The Surviving Fund attempts to keep its net asset value constant, but
there is no guarantee it will be able to do so. Investments in the Surviving
Fund are not bank deposits or obligations of, or guaranteed or endorsed by,
Chase or any of its affiliates and are not insured by the FDIC, the Federal
Reserve Board or any other government agency. Although the Surviving Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Surviving Fund.
The value of a money market investment tends to fall when prevailing
interest rates rise, although it tends to be generally less sensitive to
interest rate changes than the value of longer-term securities. Although the
Surviving Fund seeks to be fully invested, it may at times hold some of its
assets in cash, which could hurt the Fund's performance. Securities in the
Fund's portfolio may not earn as high a current income as longer term or
lower-quality securities.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
-8-
DESCRIPTION OF THE REORGANIZATION PLAN
In connection with the Reorganization and the Concurrent
Reorganization, the Merging Fund and the Feeder Portfolios will cease investing
in the Master Portfolio. The Reorganization Plan provides that at the Effective
Time (as defined in the Reorganization Plan) of the Reorganization, the assets
and liabilities of the Merging Fund will be transferred to and assumed by the
Surviving Fund. In exchange for the transfer of the assets and the assumption of
the liabilities of the Merging Fund, MFT will issue at the Effective Time of the
Reorganization full and fractional Agency Class shares of the Surviving Fund
equal in aggregate dollar value to the aggregate net asset value of full and
fractional outstanding shares of the Merging Fund as determined at the valuation
time specified in the Reorganization Plan. The Reorganization Plan provides that
the Merging Fund will declare a dividend or dividends prior to the Effective
Time of the Reorganization which, together with all previous dividends, will
have the effect of distributing to Merging Fund Shareholders all undistributed
net investment income earned and net capital gain realized up to and including
the Effective Time of the Reorganization.
Following the transfer of assets to, and the assumption of the
liabilities of the Merging Fund by, the Surviving Fund, the Merging Fund will
distribute Surviving Fund Shares received by it to the Merging Fund Shareholders
in liquidation of the Merging Fund. Each Merging Fund Shareholder at the
Effective Time of the Reorganization will receive an amount of Premier Class
shares with a total net asset value equal to the net asset value of their
Merging Fund Shares plus the right to receive any dividends or distributions
which were declared before the Effective Time of the Reorganization but that
remained unpaid at that time with respect to the shares of the Merging Fund.
The Surviving Fund expects to maintain most of the portfolio
investments of the Merging Fund in light of the similar investment policies of
the Merging Fund and the Surviving Fund.
After the Reorganization, all of the issued and outstanding shares of
the Merging Fund shall be canceled on the books of the Merging Fund and the
stock transfer books of the Merging Fund will be permanently closed.
The Reorganization is subject to a number of conditions, including
without limitation: approval of the Reorganization Plan and the transactions
contemplated thereby described in this Combined Prospectus/Proxy Statement by
the Merging Fund Shareholders; the receipt of a legal opinion from Simpson
Thacher & Bartlett with respect to certain tax issues, as more fully described
in "Federal Income Tax Consequences" below; and the parties' performance in all
material respects of their respective agreements and undertakings in the
Reorganization Plan. Assuming satisfaction of the conditions in the
Reorganization Plan, the Effective Time of the Reorganization will be on August
11, 2001 or such other date as is agreed to by the parties.
In addition, the consummation of the Reorganization is contingent upon
the consummation of the Concurrent Reorganization.
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition
-9-
to the performance of such party under the Reorganization Plan or a material
covenant of the other party is not fulfilled by the date specified in the
Reorganization Plan or if there is a material default or material breach of the
Reorganization Plan by the other party. In addition, either party may terminate
the Reorganization Plan if its trustees determine that proceeding with the
Reorganization Plan is not in the best interests of their Fund's shareholders.
BOARD CONSIDERATIONS
The JPMF Board met on March 26 and 27, 2001 and the MFT Board met on
April 12, 2001, and each considered and discussed the proposed Reorganization.
The Trustees of each Board discussed the advantages of reorganizing the Merging
Fund into the Surviving Fund.
The Board of each trust has determined that it is in the best interests
of the Fund's shareholders to combine the Merging Fund with the Surviving Fund.
This Reorganization is part of the general integration of the J.P. Morgan and
former Chase Vista funds into a single mutual fund complex. In reaching the
conclusion that the Reorganization is in the best interests of Fund
shareholders, each Board considered a number of factors including, among others:
the terms of the Reorganization Plan; a comparison of each Fund's historical and
projected expense ratios; the comparative investment performance of the Merging
Fund and the Surviving Fund; the anticipated effect of such Reorganization on
the relevant Fund and its shareholders; the investment advisory services
supplied by the Surviving Fund's investment adviser; the management and other
fees payable by the Surviving Fund; the similarities and differences in the
investment objectives and policies of the Merging Fund and the Surviving Fund;
and the recommendations of the relevant Fund's current investment adviser with
respect to the proposed Reorganization.
The Board determined that the Funds have generally similar investment
objectives and policies. They noted that the Reorganization could permit the
shareholders of the Merging Fund to pursue similar investment goals in a single
larger fund.
The Board also considered benefits expected to arise as a result of the
Reorganization. Among these benefits, the Board noted that Surviving Fund
Shareholders would be able to exchange into a larger number and greater variety
of funds and the Surviving Fund would also benefit from the administrator's
overall intent to enhance its ability effectively to monitor and oversee the
quality of all service providers to the fund, including the investment adviser.
Finally, the Board considered the expenses related to the
Reorganization. The Board noted to the administrator's undertaking to waive fees
or reimburse the Surviving Fund's expenses so that the total expense ratio of
each share class of the Merging Fund does not increase during the period
specified in the expense table. Additional important factors were that all costs
and expenses of the Reorganization would be borne by JPMC and the fact that the
Board was advised that Reorganization would constitute a tax-free
reorganization.
After considering the foregoing factors, together with such information
as it believed to be relevant, and in light of its fiduciary duties under
federal and state law, each Board determined that the proposed Reorganization is
in the best interests of the applicable Fund and its shareholders, determined
the interests of the shareholders would not be diluted as a result of the
-10-
Reorganization, approved the Reorganization Plan and directed that the
Reorganization Plan be submitted to the Merging Fund Shareholders for approval.
THE JPMF BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
The JPMF Board has not determined what action the Merging Fund will
take in the event shareholders do not approve the Reorganization Plan or for any
reason the Reorganization is not consummated. In either such event, the Board
will consider other appropriate courses of action.
INFORMATION RELATING TO CONCURRENT REORGANIZATION
The terms and conditions under which the Concurrent Reorganization may
be consummated are set forth in reorganization plans which are substantially
similar to the Reorganization Plan you are considering. As a result of the
Reorganization and the Concurrent Reorganization, the Merging Fund and the
Feeder Portfolios will no longer invest their assets in the Master Portfolio.
The consummation of the Reorganization is contingent upon the consummation of
the Concurrent Reorganization.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that
JPMF receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of the Merging Fund to the Surviving Fund in exchange for the
Surviving Fund Shares and the liquidating distributions to shareholders of the
Surviving Fund Shares so received, as described in the Reorganization Plan, will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, the Merging Fund and the Surviving Fund will each be considered
"a party to a reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by the Merging Fund as a result of such
transaction; (iii) no gain or loss will be recognized by the Surviving Fund as a
result of such transaction; (iv) no gain or loss will be recognized by the
Merging Fund Shareholders on the distribution to the Merging Fund Shareholders
of the Surviving Fund Shares solely in exchange for their Merging Fund Shares;
(v) the aggregate basis of shares of the Surviving Fund received by a
shareholder of the Merging Fund will be the same as the aggregate basis of such
Merging Fund Shareholder's Merging Fund Shares immediately prior to the
Reorganization; (vi) the basis of the Surviving Fund in the assets of the
Merging Fund received pursuant to such transaction will be the same as the basis
of such assets in the hands of the Merging Fund immediately before such
transaction; (vii) a Merging Fund Shareholder's holding period for the Surviving
Fund Shares will be determined by including the period for which such Merging
Fund Shareholder held the Merging Fund Shares exchanged therefor, provided that
the Merging Fund Shareholder held such Merging Fund Shares as a capital asset;
and (viii) the Surviving Fund's holding period with respect to the assets
received in the Reorganization will include the period for which such assets
were held by the Merging Fund.
JPMF has not sought a tax ruling from the Internal Revenue Service (the
"IRS"), but is acting in reliance upon the opinion of counsel discussed in the
previous paragraph. That opinion
-11-
is not binding on the IRS and does not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisers concerning the
potential tax consequences to them, including state and local income taxes.
CAPITALIZATION
Because the Merging Fund will be combined with the Surviving Fund in
the Reorganization as well as other funds as a result of the Concurrent
Reorganization, the total capitalization of the Surviving Fund after the
Reorganization and the Concurrent Reorganization is expected to be greater than
the current capitalization of the Merging Fund. The following table sets forth
as of February 28, 2001: (i) the capitalization of the Merging Fund; (ii) the
capitalization of the Surviving Fund; and (iii) the pro forma capitalization of
the Surviving Fund as adjusted to give effect to the Reorganization and the
Concurrent Reorganization. There is, of course, no assurance that the
Reorganization and the Concurrent Reorganization will be consummated. Moreover,
if consummated, the capitalizations of the Surviving Fund and the Merging Fund
are likely to be different at the Effective Time of the Reorganization as a
result of fluctuations in the value of portfolio securities of each Fund and
daily share purchase and redemption activity in each Fund. Please note that the
Surviving Fund currently has four classes of shares: Reserves Class, Vista
Class, Premier Class and Institutional Class. In connection with the
Reorganization, the Surviving Fund will rename the Vista Class the "Morgan
Class," will rename the Institutional Class "Agency Class" and will introduce a
new "Institutional Class" of shares.
CAPITALIZATION
PRO FORMA WITH CONCURRENT REORGANIZATION
(AMOUNTS IN THOUSANDS, EXCEPT NAV PER SHARE AMOUNTS)
BENEFICIAL NET ASSET
INTEREST SHARES VALUE PER
OUTSTANDING OUTSTANDING NET ASSETS SHARE
J.P. MORGAN FUNDS
J.P. Morgan Federal Money Market
Fund (Merging Fund) 1,920,547 - 1,920,590 $1.00
J.P. Morgan Institutional Federal
Money Market Fund 2,197,615 - 2,197,648 $1.00
J.P. Morgan Institutional Service
Federal Money Market Fund 17,167 - 17,172 $1.00
JPMORGAN FEDERAL MONEY MARKET FUND II
Vista 673,027 673,013 $1.00
Premier 312,286 312,277
Institutional (Renamed Agency) 906,471 906,486
Reserve 1 1
PRO FORMA COMBINED WITH
CONCURRENT-REORGANIZATION
Agency 906,471 906,486 $1.00
Morgan 673,028 673,014 $1.00
Premier 2,250,000 2,250,039 $1.00
Institutional 2,197,615 2,197,648 $1.00
INVESTMENT POLICIES
The following discussion summarizes some of the investment policies of
the Surviving Fund. Except as noted below, the Merging Fund generally has
similar investment policies to those of the Surviving Fund. This section is
qualified in its entirety by the discussion in the Prospectus and Statement of
Additional Information of the Surviving Fund, which are incorporated herein by
reference.
-12-
OBJECTIVE
The Surviving Fund's investment objective is to aim to provide current
income while still preserving capital and maintaining liquidity. THE MERGING
FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE HIGH CURRENT INCOME CONSISTENT WITH
THE PRESERVATION OF CAPITAL AND SAME-DAY LIQUIDITY. The Surviving Fund cannot
change its objective without shareholder approval. THE MERGING FUND MAY CHANGE
ITS OBJECTIVE WITHOUT SUCH APPROVAL. However, shareholders of the Surviving Fund
are currently considering a proposal that, if passed at a shareholder meeting to
be held the same day as the Meeting of the Merging Fund, would allow the
Surviving Fund to change it's objective without shareholder approval.
SHAREHOLDERS OF THE SURVIVING FUND CURRENTLY ARE CONSIDERING A PROPOSAL THAT, IF
PASSED AT A SHAREHOLDER MEETING TO BE HELD THE SAME DAY AS THE MEETING OF THE
MERGING FUND, WOULD ALLOW THE SURVIVING FUND TO CHANGE ITS OBJECTIVE WITHOUT
SHAREHOLDER APPROVAL.
MAIN INVESTMENT STRATEGIES
The Surviving Fund invests its assets directly in portfolio securities.
THE MERGING FUND INVESTS ITS ASSETS IN THE MASTER PORTFOLIO, WHICH IN TURN
INVESTS IN PORTFOLIO SECURITIES.
The Surviving Fund invests primarily in direct debt securities of the
U.S. Treasury, including Treasury bills, bonds and notes, and debt securities
that certain U.S. government agencies or authorities have either issued or
guaranteed as to principal and interest. The Surviving Fund does not enter into
repurchase agreements. THE MERGING FUND INVESTS EXCLUSIVELY IN U.S. TREASURY
SECURITIES AND IN U.S. GOVERNMENT AGENCY OBLIGATIONS THE INCOME FROM WHICH IS
GENERALLY FREE FROM STATE AND LOCAL INCOME TAXES.
The Surviving Fund seeks to maintain a net asset value of $1.00 per
share.
The dollar weighted average maturity of the Surviving Fund will be 90
days or less and the Fund will buy only those instruments which have remaining
maturities of 397 days or less.
The Surviving Fund may invest significantly in securities with floating
or variable rates of interest. Their yields will vary as interest rates change.
The Surviving Fund invests only in securities issued and payable in
U.S. dollars. Each investment must have the highest possible short-term rating
from at least two national rating organizations, or one such rating if only one
organization rates that security. Alternatively, some securities may have
additional third party guarantees in order to meet the rating requirements
mentioned above. If the security is not rated, it must be considered of
comparable quality by JPMFAM. The Surviving Fund seeks to develop an appropriate
portfolio by considering the differences in yields among securities of different
maturities, market sectors and issuers.
-13-
INVESTMENT RESTRICTIONS
The Surviving Fund and the Merging Fund have each adopted the following
investment restrictions which may not be changed without approval by a "majority
of the outstanding shares" of a Fund, which means the vote of the lesser of (i)
67% or more of the shares of a Fund present at a meeting, if the holders of more
than 50% of the outstanding shares of a Fund are present or represented by
proxy, and (ii) more than 50% of the outstanding shares of a Fund.
- ------------------------------------------------------------ ---------------------------------------------------------
SURVIVING FUND MERGING FUND
-------------- ------------
- ------------------------------------------------------------ ---------------------------------------------------------
While the Surviving Fund is also diversified under the The Merging Fund may not make any investment inconsistent
1940 Act, it is not subject to a similar fundamental with its classification as a diversified investment
restriction. company under the 1940 Act.
- ------------------------------------------------------------ ---------------------------------------------------------
The Surviving Fund may not purchase the securities of any The Merging Fund may not purchase any security that would
issuer (other than securities issued or guaranteed by the cause it to concentrate its investments in the securities
U.S. government or any of its agencies or of issuers primarily engaged in any particular industry
instrumentalities, or repurchase agreements secured except as permitted by the Commission.
thereby) if, as a result, more than 25% of the Surviving
Fund's total assets would be invested in the securities of
companies whose principal business activities are in the
same industry. Notwithstanding the foregoing, (i) with
respect to the Surviving Fund's permissible futures and
options transactions in U.S. Government securities,
positions in such options and futures shall not be subject
to this restriction; and (ii) the Surviving Fund may
invest more than 25% of its total assets in obligations
issued by banks, including U.S. banks.
- ------------------------------------------------------------ ---------------------------------------------------------
The Surviving Fund may not borrow money, except for The Merging Fund may not borrow money, except to the
temporary or emergency purposes, or by engaging in reverse extent permitted by applicable law.
repurchase transactions, in an amount not exceeding 33% of
the value of its total assets at the time when the loan is
made and may pledge, mortgage or hypothecate no more than
1/3 of its net assets to secure such borrowings. Any
borrowings representing more than 5% of the Surviving
Fund's total assets must be repaid before the Surviving
Fund may make additional investments.
- ------------------------------------------------------------ ---------------------------------------------------------
The Surviving Fund may not purchase or sell physical The Merging Fund may not purchase or sell commodities
commodities unless acquired as a result of ownership of or commodity contracts unless acquired as a result of
securities or other ownership of securities
- ------------------------------------------------------------ ---------------------------------------------------------
-14-
- ------------------------------------------------------------ ---------------------------------------------------------
instruments but this shall not prevent the Fund from (i) or other instruments issued by persons that purchase or
purchasing or selling options and futures contracts or from sell commodities or commodities contracts; but this
investing in securities or other instruments backed by shall not prevent the Merging Fund from purchasing,
physical commodities or (ii) engaging in forward purchases selling and entering into financial futures contracts
or sales of foreign currencies or securities. (including futures contracts on indices of securities,
interest rates and currencies), options on financial
futures contracts (including futures contracts on
indices of securities, interest rates and currencies),
warrants, swaps, forward contracts, foreign currency
spot and forward contracts or other derivative
instruments that are not related to physical commodities.
- ------------------------------------------------------------ ---------------------------------------------------------
The Surviving Fund may not make loans, except that the The Merging Fund may make loans to other persons, in
Surviving Fund may: (i) purchase and hold debt instruments accordance with the Fund's investment objective and
(including without limitation, bonds, notes, debentures or policies and to the extent permitted by applicable law.
other obligations and certificates of deposit, bankers'
acceptances and fixed time deposits) in accordance with
its investment objectives and policies; (ii) enter into
repurchase agreements with respect to portfolio
securities; and (iii) lend portfolio securities with a
value not in excess of one-third of the value of its total
assets. SHAREHOLDERS OF THE SURVIVING FUND CURRENTLY ARE
CONSIDERING A PROPOSAL THAT, IF PASSED AT A SHAREHOLDER
MEETING TO BE HELD THE SAME DAY AS THE MEETING OF THE
MERGING FUND, WOULD ADOPT A FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING LOANS THAT IS IDENTICAL TO THE
MERGING FUND'S RESTRICTION.
- ------------------------------------------------------------ ---------------------------------------------------------
Neither Fund may issue senior securities, except as permitted under the
1940 Act or any rule, order or interpretation thereunder.
Neither Fund may underwrite securities of other issuers, except to the
extent that the Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the Securities Act of 1933, as amended.
Neither Fund may purchase or sell real estate (including, for the
Surviving Fund, real estate limited partnerships), except that, to the extent
permitted by applicable law, each Fund may (a) invest in securities or other
instruments directly or indirectly secured by real estate and (b) invest in
securities or other instruments issued by issuers that invest in real estate.
-15-
Notwithstanding any other investment policy or restriction, the
Surviving Fund may seek to achieve its investment objective by investing all of
its investable assets in another investment company having substantially the
same investment objective and policies as the Surviving Fund. Although the
Merging Fund currently invests all of its investable assets in the Master
Portfolio, following the Reorganization, the Merging Fund will invest directly
in portfolio securities.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment restrictions
described below are not fundamental policies of the Surviving Fund and/or the
Merging Fund and may be changed by their respective Trustees.
- -------------------------------------------------------- ------------------------------------------------------
SURVIVING FUND MERGING FUND
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may not invest more than 10% of its The Merging Fund may not acquire any illiquid
net assets in illiquid securities. For purposes of securities, such as repurchase agreements with more
this non-fundamental restriction, "illiquid than seven days to maturity or fixed time deposits
securities" include securities restricted as to resale with a duration of over seven calendar days, if as a
unless they are determined to be readily marketable in result thereof, more than 10% of the market value of
accordance with the procedures established by the the Merging Fund's total assets would be in
Board of Trustees. investments which are illiquid.
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may not make short sales of The Merging Fund may not purchase securities on
securities, other than short sales "against the box," margin, make short sales of securities, or maintain
or purchase securities on margin except for short-term a short position, provided that this restriction
credits necessary for clearance of portfolio shall not be deemed to be applicable to the purchase
transactions, provided that this restriction will not or sale of when-issued or delayed delivery
be applied to limit the use of options, futures securities.
contracts and related options, in the manner otherwise
permitted by the investment restrictions, policies and
investment program of the Fund. The Surviving Fund
has no current intention of making short sales against
the box.
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may not, with respect to 75% of its The Merging Fund is not subject to a similar
assets, hold more than 10% of the outstanding voting non-fundamental restriction, although as a matter of
securities of any issuer or invest more than 5% of its fundamental policy the Merging Fund may not make any
assets in the securities of any one issuer (other than investment inconsistent with its classification as a
obligations of the U.S. Government, its agencies and diversified investment company under the 1940 Act.
instrumentalities).
- -------------------------------------------------------- ------------------------------------------------------
-16-
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may invest up to 5% of its total The Merging Fund may not acquire securities of other
assets in the securities of any one investment investment companies, except as permitted by the 1940
company, but may not own more than 3% of the Act or any order pursuant thereto.
securities of any one investment company or invest
more than 10% of its total assets in the securities of
other investment companies.
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may not purchase or sell interests The Merging Fund is not subject to a similar
in oil, gas or mineral leases. non-fundamental restriction.
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund may not write, purchase or sell any The Merging Fund is not subject to a similar
put or call option or any combination thereof, non-fundamental restriction.
provided that this shall not prevent (i) the writing,
purchasing or selling of puts, calls or combinations
thereof with respect to portfolio securities or (ii)
with respect to the Surviving Fund's permissible
futures and options trans-actions, the writing,
purchasing, ownership, holding or selling of futures
and options positions or of puts, calls or
combinations thereof with respect to futures.
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund will not invest more than 25% of The Merging Fund is not subject to a similar
its total assets in obligations issued by foreign non-fundamental restriction.
banks (other than foreign branches of U.S. banks).
- -------------------------------------------------------- ------------------------------------------------------
The Surviving Fund is not subject to a similar The Merging Fund may not borrow money (not including
non-fundamental restriction, although it is subject to reverse repurchase agreements), except from banks for
the fundamental restriction regarding borrowing temporary or extraordinary or emergency purposes and
described above. then only in amounts up to 10% of the value of the
Fund's total assets, taken at cost at the time of such
borrowing (and provided that such borrowings and
reverse repurchase agreements do not exceed in the
aggregate one-third of the market value of the Fund's
total assets less liabilities other than the
obligations represented by the bank borrowings and
reverse repurchase agreements). The Merging Fund may
not mortgage, pledge, or hypothecate any assets except
in connection with any such borrowing and in amounts
up to 10% of the value of the Fund's net assets at the
time of such borrowing. The Fund
-17-
- -------------------------------------------------------- ------------------------------------------------------
will not purchase securities while borrowings exceed
5% of the Fund's total assets; provided, however,
that the Fund may increase its interest in an
open-end management investment company with the same
investment objective and restrictions as the Fund
while such borrowings are outstanding. This borrowing
provision is included to facilitate the orderly sale
of portfolio securities, for example, in the event of
abnormally heavy redemption requests, and is not for
investment purposes.
- -------------------------------------------------------- ------------------------------------------------------
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.
PURCHASES, REDEMPTIONS AND EXCHANGES
Following the Reorganization, the procedures for purchases, redemptions
and exchanges of shares will be those of the Surviving Fund, which are generally
similar to those of the Merging Fund. The following discussion applies to
Premier Class shares. This section is qualified in its entirety by the
discussion in the Prospectus and Statement of Additional Information of the
Surviving Fund, which are incorporated herein by reference.
SALES CHARGES
There is no sales charge to buy or sell Premier Class Shares.
12b-1 FEES
There is no Rule 12b-1 distribution plan for Premier Class Shares of
the Surviving Fund.
BUYING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF PREMIER CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
The price shareholders pay for their shares is the net asset value per
share (NAV). NAV is the value of everything the Surviving Fund owns, minus
everything it owes, divided by the number of shares held by investors. The
Surviving Fund seeks to maintain a stable NAV of $1.00. The Surviving Fund uses
the amortized cost method to value its portfolio of securities. This method
provides more stability in valuations. However, it may also result in periods
during which the stated value of a security is different than the price the
Surviving Fund would receive if it sold the investment.
-18-
The NAV of each class of shares is generally calculated as of 4:00 p.m.
Eastern time each day the Surviving Fund is accepting purchase orders.
A shareholder will pay the next NAV calculated after the JPMorgan Funds
Service Center (the "Center") receives that shareholder's order in proper form.
An order is in proper form only after payment is converted into federal funds.
The Center accepts purchase orders on any business day that the Federal
Reserve Bank of New York and the New York Stock Exchange are open. If an order
is sent in proper form by the Surviving Fund's cut-off time, it will be
processed at that day's price and you will be entitled to all dividends declared
on that day. If your order is received after the cut-off time, it generally will
be processed at the next day's price. If you pay by check before the cut-off
time, your order generally will be processed the next day the Surviving Fund is
open for business. Normally, the cut-off (in Eastern time) is 2:00 p.m. A later
cut-off time may be permitted for investors buying their shares through Chase or
a bank affiliate of Chase so long as such later cut-off time is before the
Fund's NAV is calculated. If you buy through an agent and not directly from the
Center, the agent could set earlier cut-off times. The Surviving Fund can set an
earlier cut-off time if the Public Securities Association recommends that the
U.S. Government securities market close trading early. You must provide a
Taxpayer Identification Number when you open an account.
The Surviving Fund has the right to reject any purchase order for any
reason.
Premier Shares are available only to qualified investors. These are
defined as institutions, trusts, partnerships, corporations and certain
retirement plans and fiduciary accounts opened by a bank, trust company or
thrift institution which has investment authority over such accounts, as well as
individuals who meet the Surviving Fund's minimum investment requirements.
Shareholders receiving Premier Class shares in the Reorganization will be
permitted to purchase additional Premier shares in the future.
For Premier Class Shares, checks should be made out to JPMorgan Funds
in U.S. dollars. Credit cards, cash, or checks from a third party will not be
accepted. Shares bought by check may not be sold for 15 calendar days. Shares
bought through an automated clearing house cannot be sold until the payment
clears. This could take more than seven business days. Purchase orders will be
canceled if a check does not clear and the investor will be responsible for any
expenses and losses to the Fund. Orders by wire will be canceled if the Center
does not receive payment by 4:30 p.m., Eastern time, on the day the shareholder
buys.
Shareholders seeking to buy Premier Class Shares through an investment
representative should instruct their representative to contact the Surviving
Fund. Such representatives may charge investors a fee and may offer additional
services, such as special purchase and redemption programs, "sweep" programs,
cash advances and redemption checks. Such representative may set different
minimum investments and earlier cut-off times.
-19-
A systematic investment plan is available for Premier Class Shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE PREMIER CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Shares of the Surviving Fund may be sold on any day the Center is open
for trading, either directly to the Fund or through an investment
representative. Shareholders of the Surviving Fund will receive the next NAV
calculated after the Center accepts his or her sale order.
Under normal circumstances, if a request is received before the cut-off
time, the Surviving Fund will send the proceeds the next business day. An order
to sell shares will not be accepted if the Surviving Fund has not collected
payment for the shares. The Surviving Fund may stop accepting orders to sell and
may postpone payments for more than seven days, as federal securities laws
permit.
Generally, proceeds are sent by check, electronic transfer or wire. If
a shareholder's address of record has changed within the 30 days prior to the
sale request or if more than $25,000 of shares is sold by phone, proceeds by
electronic transfer or wire will be sent only to the bank account on the
Surviving Fund's records.
For Premier Class shares, a shareholder will need to have his or her
signature guaranteed if he or she wants payment to be sent to an address other
than the one in the Surviving Fund's records. Additional documents or a letter
from a surviving joint owner may also be needed.
A shareholder who purchased through an investment representative or
through a financial service firm, should contact that representative, who will
send the necessary documents to the Center. The representative might charge a
fee for this service.
Shareholders may also sell their shares by contacting the Center
directly by calling 1-800-___-____.
A systematic withdrawal plan is available for Premier Class Shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF PREMIER CLASS SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Premier Class shares of the Surviving Fund may be exchanged for shares
of the same class in certain other JPMorgan Funds.
For tax purposes, an exchange is treated as a sale of those shares.
Shareholders should carefully read the prospectus of the fund into which they
want to exchange. Shareholders who exchange must meet any minimum investment
requirements and may have to pay a sales commission.
-20-
The exchange privilege is not a means of short-term trading as this
could increase management cost and affect all shareholders of the Surviving
Fund. The Surviving Fund reserves the right to limit the number of exchanges or
refuse an exchange. Each exchange privilege may also be terminated. The
Surviving Fund charges an administration fee of $5 for each exchange if an
investor makes more than 10 exchanges in a year or three in a quarter.
OTHER INFORMATION CONCERNING THE SURVIVING FUND
For Premier Class shares, the Surviving Fund may close an account if
the balance falls below $100,000. The Surviving Fund may also close the account
if an investor is in the systematic investment plan and fails to meet investment
minimums over a 12-month period. At least 60 days' notice will be given before
closing the account.
Unless a shareholder indicates otherwise on his or her account
application, the Surviving Fund is authorized to act on redemption and transfer
instructions received by phone. If someone trades on an account by phone, the
Surviving Fund will ask that person to confirm the account registration and
address to make sure they match those in the Fund records. If they do
correspond, the Surviving Fund is generally authorized to follow that person's
instructions. The Surviving Fund will take all reasonable precautions to confirm
that the instructions are genuine. Investors agree that they will not hold the
Fund liable for any loss or expenses from any sales request, if the Fund takes
reasonable precautions. The Surviving Fund will be liable for any losses to a
shareholder from an unauthorized sale or fraud against such shareholder if the
Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This
may be true at times of unusual market changes and shareholder activity. In that
event, shareholders can mail instructions to the Surviving Fund or contact their
investment representative or agent. The Fund may modify or cancel the sale of
shares by phone without notice.
MFT, on behalf of the Surviving Fund, has entered into agreements with
certain shareholder servicing agents (including Chase) under which the
shareholder servicing agents agree to provide certain support services to their
customers. For performing these services, each shareholder servicing agent will
receive an annual fee of up to 0.10% of the average daily net assets of the
Premier Class shares held by investors serviced by the shareholder servicing
agent.
JPMFAM and/or the Distributor may, at their own expense, make
additional payments to certain selected dealers or other shareholder servicing
agents for performing administrative services for their customers.
The Surviving Fund issues multiple classes of shares. Each class may
have different requirements for who may invest, and may have different sales
charges and expense levels. A person who gets compensated for selling Fund
shares may receive a different amount for each class.
DISTRIBUTIONS AND TAXES
The Surviving Fund can earn income and realize capital gain. The
Surviving Fund will deduct from these earnings any expenses and then pay to
shareholders the distributions.
-21-
The Surviving Fund declares dividends daily and distributes any net
investment income at least monthly. Net capital gain is distributed annually.
You have two options for your Surviving Fund distributions. You may:
- reinvest all of them in additional Fund shares without a sales
charge; or
- take all distributions in cash or as a deposit in a pre-assigned bank
account.
If you don't notify us otherwise, we'll reinvest all distributions. If
your distributions are reinvested, they will be in the form of shares of the
same class. The taxation of dividends won't be affected by the form in which you
receive them.
Dividends of net investment income are usually taxable as ordinary
income at the federal, state and local levels. The state or municipality where
you live may not charge you state and local taxes on tax-exempt interest earned
on certain bonds. Dividends earned on bonds issued by the U.S. government and
its agencies may also be exempt from some types of state and local taxes.
If you receive distributions of net capital gain, the tax rate will be
based on how long the Surviving Fund held a particular asset, not on how long
you have owned your shares. If you buy shares just before a distribution, you
will pay tax on the entire amount of the taxable distribution you receive, even
though the NAV will be higher on that date because it includes the distribution
amount.
Early in each calendar year, the Surviving Fund will send its
shareholders a notice showing the amount of distributions received in the
preceding year and the tax status of those distributions.
The above is only a general summary of tax implications of investing in
the Surviving Fund. Shareholders should consult their tax advisors to see how
investing in the Funds will affect their own tax situation.
COMPARISON OF THE MERGING FUND'S
AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE
There are no material differences in the organizational structure of
the Merging Fund and the Surviving Fund. Set forth below are descriptions of the
structure, voting rights, shareholder liability and the liability of Trustees.
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of JPMF, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, JPMF's operations are governed by JPMF's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Merging Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
-22-
STRUCTURE OF THE SURVIVING FUND
The Surviving Fund is organized as a series of MFT, which is organized
under the law of the Commonwealth of Massachusetts. As a Massachusetts business
trust, MFT's operations are governed by MFT's Declaration of Trust and By-Laws
and applicable Massachusetts law. The operations of the Surviving Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
TRUSTEES AND OFFICERS
Subject to the provisions of its trust documents, the business of the
Merging Fund is managed by JPMF's Trustees and the business of the Surviving
Fund is managed by MFT's Trustees, who serve indefinite terms and have all
powers necessary or convenient to carry out their responsibilities.
Information concerning the current Trustees and officers of MFT and
JPMF is set forth in the Funds' respective Statements of Additional Information,
which are incorporated herein by reference.
SHARES OF FUNDS
Each of MFT and JPMF is a trust with an unlimited number of authorized
shares of beneficial interest which may be divided into series or classes
thereof. Each Fund is one series of a trust and may issue multiple classes of
shares. Each share of a series or class of a trust represents an equal
proportionate interest in that series or class with each other share of that
series or class. The shares of each series or class of either MFT or JPMF
participate equally in the earnings, dividends and assets of the particular
series or class. Fractional shares have proportionate rights to full shares.
Expenses of MFT or JPMF that are not attributable to a specific series or class
will be allocated to all the series of that trust in a manner believed by its
board to be fair and equitable. Generally, shares of each will be voted
separately, for example, to approve an investment advisory agreement. Likewise,
shares of each class of each series will be voted separately, for example, to
approve a distribution plan, but shares of all series and classes vote together,
to the extent required by the 1940 Act, including for the election of Trustees.
Neither MFT nor JPMF is required to hold regular annual meetings of
shareholders, but may hold special meetings from time to time. There are no
conversion or preemptive rights in connection with shares of either MFT or JPMF.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either MFT or JPMF resulting from the
resignation of a Trustee or otherwise may be filled similarly by a vote of a
majority of the remaining Trustees then in office, subject to the 1940 Act. In
addition, Trustees may be removed from office by a vote of holders of shares
representing two-thirds of the outstanding shares of each portfolio of that
trust. A meeting of shareholders shall be held upon the written request of the
holders of shares representing not less than 10% of the outstanding shares
entitled to vote on the matters specified in the written request. Except as set
forth above, the Trustees may continue to hold office and may appoint successor
Trustees.
-23-
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of either MFT or JPMF could,
under certain circumstances, be held personally liable as partners for the
obligations of that trust. However, the Declaration of Trust of each of MFT and
JPMF disclaims shareholder liability for acts or obligations of that trust and
provides for indemnification and reimbursement of expenses out of trust property
for any shareholder held personally liable for the obligations of that trust.
Each of MFT and JPMF may maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of that trust,
its shareholders, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability generally is limited to circumstances
in which both inadequate insurance existed and the trust itself was unable to
meet its obligations.
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of MFT and JPMF, the Trustees of
that trust are personally liable only for bad faith, willful misfeasance, gross
negligence or reckless disregard of their duties as Trustees. Under the
Declaration of Trust of each of MFT and JPMF, a Trustee or officer will
generally be indemnified against all liability and against all expenses
reasonably incurred or paid by such person in connection with any claim, action,
suit or proceeding in which such person becomes involved as a party or otherwise
by virtue of such person being or having been a Trustee or officer and against
amounts paid or incurred by such person in the settlement thereof.
The foregoing is only a summary of certain organizational and governing
documents and Massachusetts business trust law. It is not a complete
description. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies of the Declaration of
Trust and By-Laws of each of MFT and JPMF are available without charge upon
written request to that trust.
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND OTHER SERVICES
GENERAL INFORMATION
As noted above, the investment adviser of the Master Portfolio (and
therefore the Merging Fund's assets) is JPMIM. Pursuant to an Advisory
Agreement, the investment adviser of the Surviving Fund is JPMFAM.
DESCRIPTION OF JPMFAM
JPMFAM is an indirect wholly-owned subsidiary of JPMC, incorporated
under the laws of Delaware. JPMFAM's principal executive offices are located at
522 Fifth Avenue, New York, New York 10036. As of _______ __, 2001, JPMFAM and
certain of its affiliates (including JPMIM) provided investment management
services with respect to assets of approximately $___ billion.
-24-
Under the Advisory Agreement, JPMFAM is responsible for making
decisions with respect to, and placing orders for, all purchases and sales of
the portfolio securities of the Surviving Fund. JPMFAM's responsibilities under
the Advisory Agreement include supervising the Surviving Fund's investments and
maintaining a continuous investment program, placing purchase and sale orders
and paying costs of certain clerical and administrative services involved in
managing and servicing the Surviving Fund's investments and complying with
regulatory reporting requirements. Under the Advisory Agreement, JPMFAM is
obligated to furnish employees, office space and facilities required for the
operation of the Surviving Fund. The services provided to the Surviving Fund by
JPMFAM are substantially similar to the services currently provided to the
Master Portfolio by JPMIM.
EXPENSES AND MANAGEMENT FEES. The Advisory Agreement provides that the
Surviving Fund will pay JPMFAM a monthly management fee based upon the net
assets of the Surviving Fund. The annual rate of this management fee is 0.10%.
The Merging Fund currently pays JPMIM 0.20% of the first $1 billion of average
daily net assets and 0.10% of average daily net assets in excess of $1 billion
with respect to its assets in the Master Portfolio. JPMFAM may waive fees from
time to time.
Under the Advisory Agreement, except as indicated above, the Surviving
Fund is responsible for its operating expenses including, but not limited to,
taxes; interest; fees (including fees paid to its Trustees who are not
affiliated with JPMFAM or any of its affiliates); fees payable to the
Commission; state securities qualification fees; association membership dues;
costs of preparing and printing prospectuses for regulatory purposes and for
distribution to existing shareholders; advisory and administrative fees; charges
of the custodian and transfer agent; insurance premiums; auditing and legal
expenses; costs of shareholders' reports and shareholder meetings; any
extraordinary expenses; and brokerage fees and commissions, if any, in
connection with the purchase or sale of portfolio securities.
SUBCONTRACTING. JPMFAM is authorized by the Advisory Agreement to
employ or associate with such other persons or entities as it believes to be
appropriate to assist it in the performance of its duties. Any such person is
required to be compensated by JPMFAM, not by the Surviving Fund, and to be
approved by the shareholders of that Fund as required by the 1940 Act.
LIMITATION ON LIABILITY. The Advisory Agreement provides that JPMFAM
will not be liable for any error of judgment or mistake of law or for any act or
omission or loss suffered by MFT or the Surviving Fund in connection with the
performance of the Advisory Agreement except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or from
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or reckless disregard of its obligations and duties under the Advisory
Agreement.
DURATION AND TERMINATION. The Advisory Agreement will continue in
effect from year to year with respect to the Surviving Fund, only so long as
such continuation is approved at least annually by (i) the Board of Trustees of
MFT or the majority vote of the outstanding voting securities of the Surviving
Fund, and (ii) a majority of those Trustees who are neither parties to the
Advisory Agreement nor "interested persons," as defined in the 1940 Act, of any
such party,
-25-
acting in person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement will terminate automatically in the event of its
"assignment," as defined in the 1940 Act. In addition, the Advisory Agreement is
terminable at any time as to the Surviving Fund without penalty by the MFT Board
or by vote of the majority of the Surviving Fund's outstanding voting securities
upon 60 days' written notice to JPMFAM, and by JPMFAM on 60 days' written notice
to MFT.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
JPMFAM, as the investment adviser to the Surviving Fund, has
responsibilities with respect to the Fund's portfolio transactions and brokerage
arrangements pursuant to the Fund's policies, subject to the overall authority
of the MFT Board.
Under the Advisory Agreement, JPMFAM, subject to the general
supervision of the Board, is responsible for the placement of orders for the
purchase and sale of portfolio securities for the Surviving Fund with brokers
and dealers selected by JPMFAM. These brokers and dealers may include brokers or
dealers affiliated with JPMFAM to the extent permitted by the 1940 Act and MFT's
policies and procedures applicable to the Fund. JPMFAM shall use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the most favorable to
such Fund. In assessing the best overall terms available for any transaction,
JPMFAM shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, research services provided to
JPMFAM, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In no event shall JPMFAM be under any
duty to obtain the lowest commission or the best net price for the Fund on any
particular transaction, nor shall JPMFAM be under any duty to execute any order
in a fashion either preferential to such Fund relative to other accounts managed
by JPMFAM or otherwise materially adverse to such other accounts.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to JPMFAM, the Fund and/or the other accounts over which
JPMFAM exercises investment discretion. JPMFAM is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if JPMFAM determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of JPMFAM with respect to accounts
over which it exercises investment discretion. JPMFAM shall report to the Board
regarding overall commissions paid by the Fund and their reasonableness in
relation to the benefits to such Fund.
In executing portfolio transactions for the Fund, JPMFAM may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those of other funds
or its other clients if, in JPMFAM's reasonable judgment, such aggregation (i)
will result in an overall economic benefit to such fund, taking into
-26-
consideration the advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements, and (ii) is not inconsistent with
the policies set forth in MFT's registration statement, as the case may be, and
the Fund's Prospectus and Statement of Additional Information. In such event,
JPMFAM will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner, consistent with its
fiduciary obligations to such Fund and such other clients.
It is possible that certain of the brokerage and research services
received will primarily benefit one or more other investment companies or other
accounts for which JPMFAM exercises investment discretion. Conversely, MFT or
any of its portfolios may be the primary beneficiary of the brokerage or
research services received as a result of portfolio transactions effected for
such other accounts or investment companies.
OTHER SERVICES
The Distributor is a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc. which currently serves as the distributor for both the Surviving
Fund and the Merging Fund. BISYS is the sub-administrator for both the Surviving
Fund and the Merging Fund. The Distributor is unaffiliated with JPMC or any of
its subsidiaries.
Chase serves as administrator, shareholder servicing agent, fund
accountant and custodian, and DST serves as transfer agent and dividend
disbursing agent, for the Surviving Fund. The services provided by Chase include
day-to-day maintenance of certain books and records, calculation of the offering
price of the shares and preparation of reports. In its role as custodian, Chase
is responsible for the daily safekeeping of securities and cash held by the
Surviving Fund. It is anticipated that prior to the consummation of the
Reorganization, BONY will become the Surviving Fund's fund accountant and
custodian.
As administrator, Chase receives a fee of 0.10% of average daily net
assets. It is anticipated that, in connection with the Reorganization, the
administration fee will be amended to reduce the fee to 0.05% for complex wide
non-money market Fund assets in excess of $100 billion.
PROPOSAL 2:
ELECTION OF TRUSTEES
It is proposed that shareholders of the Merging Fund consider the
election of the individuals listed below (the "Nominees") to the Board of
Trustees of JPMF, which is currently organized as a Massachusetts business
trust. Even if the Reorganization described in Proposal 1 is approved, other
mutual funds that are series of JPMF will continue to exist and operate. All
shareholders of any series of JPMF as of the record date (April 6, 2001) are
required to be given a vote on the proposal regarding Trustees. Because as of
the record date you are still a shareholder in JPMF, you are entitled to vote on
this proposal. Shareholders of MFT are being asked to approve the same Trustees
as are being proposed for JPMF.
In connection with the merger of J.P. Morgan & Co. Incorporated and The
Chase Manhattan Corporation, it has been proposed, subject to shareholder
approval, that the Boards of Trustees of the investment companies managed by
JPMFAM, JPMIM and their affiliates be
-27-
rationalized in order to obtain additional operating efficiencies by having the
same Board of Trustees for all of the funds. Therefore, the Nominees include
certain JPMF's current Trustees of MFT and certain current Trustees of JPMF
(including certain members of Advisory Board). Each Nominee has consented to
being named in this Proxy Statement and has agreed to serve as a Trustee if
elected.
Shareholders of MFT are concurrently considering the election of the
same individuals to the Board of Trustees of MFT. Biographical information about
the Nominees and other relevant information is set forth below. More information
regarding the current Trustees of MFT and JPMF is contained in the Funds'
Statements of Additional Information, which are incorporated herein by
reference.
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
THE JPMF BOARD HAS UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
VOTE REQUIRED
The election of each of the Nominees listed below requires the
affirmative vote of a majority of all the votes entitled to be cast at the
Meeting by all shareholders of JPMF.
The following are the nominees:
----------------------------------------
The Board of Trustees of JPMF met 4 times during the fiscal year ended
October 31, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of JPMF presently has an Audit Committee. The
members of the Audit Committee are Messrs. Addy (Chairman), Eschenlauer, Burns,
Mallardi and Healey. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters. The Audit
Committee met four times during the fiscal year ended October 31, 2000.
A majority of the disinterested Trustees have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising from the fact that the same
-28-
individuals are Trustees of JPMF, the Master Portfolio and certain other
investment companies in the Fund Complex, up to and including creating a
separate board of trustees.
*Interested Trustee, as defined by the 1940 Act.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Each Trustee is currently paid an annual fee of $75,000 for serving as
Trustee of the investment companies in the Fund Complex and is reimbursed for
expenses incurred in connection with service as a Trustee. The Trustees may hold
various other directorships unrelated to these funds.
Trustee compensation expenses paid for the calendar year ended December
31, 2000 are set forth below.
Aggregate Trustee
Compensation Paid by the Total Trustee Compensation Accrued
Name of Trustee Trust During 2000 by Fund Complex(1) During 2000(2)
--------------- ----------------- ---------------------------------
Frederick S. Addy, Trustee $ 11,238 $ 75,000
William G. Burns, Trustee $ 11,238 $ 75,000
Arthur C. Eschenlauer, Trustee $ 11,238 $ 75,000
Matthew Healey, Trustee(3)
Chairman and Chief Executive Officer $ 11,238 $ 75,000
Michael P. Mallardi, Trustee $ 11,238 $ 75,000
- ---------------
(1) A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investment services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.
(2) No investment company within the Fund Complex has a pension or
retirement plan.
(3) During 2000, Pierpont Group, Inc. paid Mr. Healey, in his role as
Chairman of Pierpont Group, Inc., compensation in the amount of
$200,000, contributed $25,500 to a defined contribution plan on his
behalf and paid $18,400 in insurance premiums for his benefit.
The Trustees decide upon general policies and are responsible for
overseeing JPMF's business affairs. Each of JPMF and the Master Portfolio has
entered into a Fund Services Agreement with Pierpont Group, Inc. to assist the
Trustees in exercising their overall supervisory responsibilities. Pierpont
Group, Inc. was organized in July 1989 to provide services for the J.P. Morgan
Family of Funds (formerly "The Pierpont Family of Funds"), and the Trustees are
the equal and sole shareholders of Pierpont Group, Inc. JPMF has agreed to pay
Pierpont Group, Inc. a fee in an amount representing its reasonable costs in
performing these services. These costs are periodically reviewed by the
Trustees. The principal offices of Pierpont Group, Inc. are located at 461 Fifth
Avenue, New York, New York 10017. It is anticipated that the Merging
-29-
Fund will terminate its agreement with Pierpont Group, Inc. in connection with
the Reorganization.
The aggregate fees paid to Pierpont Group, Inc. by the Merging Fund and
the Master Portfolio during the indicated fiscal periods are set forth below:
MERGING FUND -- For the fiscal years ended October 31, 1998, 1999 and 2000:
$10,963, $14,921 and $19,457.
MASTER PORTFOLIO -- For the fiscal years ended October 31, 1998, 1999 and 2000:
$25,893, $36,961 and $46,373.
ADVISORY BOARD
The Trustees determined as of January 26, 2000 to establish an advisory
board and appoint four members ("Members of the Advisory Board") thereto. Each
member serves at the pleasure of the Trustees. The Advisory Board is distinct
from the Trustees and provides advice to the Trustees as to investment,
management and operations of JPMF; but has no power to vote upon any matter put
to a vote of the Trustees. The Advisory Board and the members thereof also serve
each of the other trusts in the Fund Complex. The creation of the Advisory Board
and the appointment of the members thereof was designed so that the Board of
Trustees will continuously consist of persons able to assume the duties of
Trustees and be fully familiar with the business and affairs of JPMF, in
anticipation of the current Trustees reaching the mandatory retirement age of
seventy. Each Member of the Advisory Board is paid an annual fee of $75,000 for
serving in this capacity for the Fund Complex and is reimbursed for expenses
incurred in connection for such service. The Members of the Advisory Board may
hold various other directorships unrelated to these funds. The mailing address
of the Members of the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth
Avenue, New York, New York 10017. Their names, principal occupations during the
past five years and dates of birth are set forth below:
Ann Maynard Gray -- Former President, Diversified Publishing Group and
Vice President, Capital Cities/ABC, Inc. Her date of birth is August 22, 1945.
John R. Laird-- Retired; Former Chief Executive Officer, Shearson
Lehman Brothers and The Boston Company. His date of birth is June 21, 1942.
Gerard P. Lynch -- Retired; Former Managing Director, Morgan Stanley
Group and President and Chief Operating Officer, Morgan Stanley Services, Inc.
His date of birth is October 5, 1936.
James J. Schonbachler -- Retired; Prior to September, 1998, Managing
Director, Bankers Trust Company and Chief Executive Officer and Director,
Bankers Trust A.G., Zurich and BT Brokerage Corp. His date of birth is January
26, 1943.
PRINCIPAL EXECUTIVE OFFICERS:
JPMF's and the Master Portfolio's principal executive officers (listed
below), other than the Chief Executive Officer and the officers who are
employees of JPMIM, are provided and
-30-
compensated by Funds Distributors, Inc., a wholly owned indirect subsidiary of
Boston Institutional Group, Inc. The officers conduct and supervise the business
operations of JPMF and the Master Portfolio. JPMF and the Master Portfolio have
no employees.
The business address of each of the officers unless otherwise noted is
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston, Massachusetts
02109. The principal executive officers of JPMF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------- --- ------------------------------------------
Matthew Healey 63 Chief Executive Officer; Chairman, Pierpont Group,
since prior to 1993. His address is Pine Tree Country
Club Estates, 10286 Saint Andrews Road, Boynton Beach,
Florida 33436.
Margaret W. Chambers 41 Vice President and Secretary. Senior Vice President
and General Counsel of JFD since April, 1998. From
August 1996 to March 1998, Ms. Chambers was Vice
President and Assistant General Counsel for Loomis,
Sayles & Company, L.P. From January 1986 to July 1996,
she was an associate with the law firm of Ropes & Gray.
George A. Rio 46 President and Treasurer. Executive Vice President and
Client Service Director of JFD since April 1998. From
June 1995 to March 1998, Mr. Rio was Senior Vice
President and Senior Key Account Manager for Putnam
Mutual Funds. From May 1994 to June 1995, Mr. Rio was
Director of Business Development for First Data
Corporation.
ACCOUNTANTS
PricewaterhouseCoopers LLP serves as the Merging Fund's, the Master
Portfolio's and the Surviving Fund's independent accountants, auditing and
reporting on the annual financial statements and reviewing certain regulatory
reports and federal income tax returns. PricewaterhouseCoopers LLP also performs
other professional accounting, auditing, tax and advisory services when MFT or
JPMF engages it to do so.
AUDIT FEES. The aggregate fees paid to PricewaterhouseCoopers LLP in
connection with the annual audit of the Merging Fund and the Master Portfolio
and for the last fiscal year was $32,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for financial information systems and design
implementation services rendered by PricewaterhouseCoopers LLP to the Merging
Fund, JPMIM and JPMIM's affiliates that provide services to the Fund for the
calendar year ended December 31, 2000 was $0.
ALL OTHER FEES. The aggregate fees billed for all other non-audit
services, including fees for tax-related services, rendered by
PricewaterhouseCoopers LLP to the Merging Fund, JPMIM
-31-
and JPMIM's affiliates that provide services to the Fund for the calendar year
ended December 31, 2000 was $11,029,150.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the JPMF Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. JPMF's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview. In
addition JPMF may retain the services of professional solicitors to aid in the
solicitation of proxies for a fee. It is anticipated that banks, brokerage
houses and other custodians will be requested on behalf of JPMF to forward
solicitation materials to their principals to obtain authorizations for the
execution of proxies. Any Merging Fund Shareholder giving a proxy may revoke it
at any time before it is exercised by submitting to JPMF a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
electing to vote in person.
Only the Merging Fund Shareholders of record at the close of business
on _________, 2001 will be entitled to vote at the Meeting. On that date, there
were outstanding and entitled to be voted _____________ Merging Fund Shares.
Each share or fraction thereof is entitled to one vote or fraction thereof.
The presence in person or by proxy of shareholders that own one-third
of the outstanding Merging Fund Shares will constitute a quorum for purposes of
transacting all business at the Meeting. If a quorum is not present at the
Meeting, sufficient votes in favor of the proposals are not received by the time
scheduled for the Meeting, or the Merging Fund Shareholders determine to adjourn
the Meeting for any other reason, the Merging Fund Shareholders present (in
person or proxy) may adjourn the Meeting from time to time, without notice other
than announcement at the Meeting. Any such adjournment will require the
affirmative vote of the Merging Fund Shareholders holding a majority of the
Merging Fund Shares present, in person or by proxy, at the Meeting. The persons
named in the Proxy will vote in favor of such adjournment those Merging Fund
Shares that they are entitled to vote if such adjournment is necessary to obtain
a quorum or if they determine such an adjournment is desirable for any other
reason. Business may be conducted once a quorum is present and may continue
until adjournment of the Meeting notwithstanding the withdrawal or temporary
absence of sufficient Merging Fund Shares to reduce the number present to less
than a quorum. If the accompanying proxy is executed and returned in time for
the Meeting, the shares covered thereby will be voted in accordance with the
proxy on all matters that may properly come before the meeting (or any
adjournment thereof).
-32-
PROXIES
All Merging Fund Shares represented by each properly signed proxy
received prior to the Meeting will be voted at the Meeting. If a Merging Fund
Shareholder specifies how the proxy is to be voted on any of the business to
come before the Meeting, it will be voted in accordance with such
specifications. If a Merging Fund Shareholder returns its proxy but no direction
is made on the proxy, the proxy will be voted FOR each Proposal described in
this Combined Prospectus/Proxy Statement. The Merging Fund Shareholders voting
to ABSTAIN on the Proposals will be treated as present for purposes of achieving
a quorum and in determining the votes cast on the Proposals, but not as having
voted FOR the Proposals. A properly signed proxy on which a broker has indicated
that it has no authority to vote on the Proposals on behalf of the beneficial
owner (a "broker non-vote") will be treated as present for purposes of achieving
a quorum but will not be counted in determining the votes cast on the Proposals.
A proxy granted by any Merging Fund Shareholder may be revoked by such
Merging Fund Shareholder at any time prior to its use by written notice to JPMF,
by submission of a later dated Proxy or by voting in person at the Meeting. If
any other matters come before the Meeting, proxies will be voted by the persons
named as proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
JPMC, and not the Merging Fund or the Surviving Fund (or shareholders
of either Fund), will bear the cost of solicitation of proxies, including the
cost of printing, preparing, assembling and mailing the Notice of Meeting,
Combined Prospectus/Proxy Statement and form of proxy. In addition to
solicitations by mail, proxies may also be solicited by officers and regular
employees of JPMF by personal interview, by telephone or by telegraph without
additional remuneration thereof. Professional solicitors may also be retained.
ABSTENTIONS AND BROKER NON-VOTES
In tallying the Merging Fund Shareholder votes, abstentions and broker
non-votes (i.e., proxies sent in by brokers and other nominees that cannot be
voted on a proposal because instructions have not been received from the
beneficial owners) will be counted for purposes of determining whether or not a
quorum is present for purposes of convening the Meeting. Abstentions and broker
non-votes will be considered to be a vote against each proposal.
INTERESTED PARTIES
On the record date, the Trustees and officers of JPMF as a group owned
less than 1% of the outstanding shares of the Merging Fund. On the record date,
the name, address and percentage ownership of the persons who owned beneficially
more than 5% of the shares of the Merging Fund or any class thereof and the
percentage of any class or series of shares of the Surviving Fund or any class
thereof that would be owned by such persons upon consummation of the
Reorganization and the Concurrent Reorganization based upon their holdings at
_______, 2001 are as follows:
-33-
Amount of Percentage of Merging Fund Percentage of Surviving Fund
Name and Address Shares Owned Owned on Record Date Owned Upon Consummation
- -------------------------------------------------------------------------------------------------------------------
On the record date, the Trustees and officers of MFT as a group owned
less than 1% of the outstanding shares of the Surviving Fund. On the record
date, the name, address and percentage ownership of the persons who owned
beneficially more than 5% of the shares of the Surviving Fund or any class
thereof and the percentage of shares of the Surviving Fund or any class thereof
that would be owned by such persons upon consummation of the Reorganization and
the Concurrent Reorganization based upon their holdings at _______, 2001 are as
follows:
Amount of Percentage of Surviving Percentage of Surviving Fund
Name and Address Shares Owned Fund Owned on Record Date Owned Upon Consummation
- -------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT MFT
Information about the Surviving Fund is included in its Prospectus,
which is incorporated by reference and enclosed herein. Additional information
about the Surviving Fund is also included in MFT's Statement of Additional
Information, which has been filed with the Commission and which is incorporated
herein by reference. Copies of the Statement of Additional information may be
obtained without charge by calling 1-800-348-4782. MFT is subject to the
requirements of the 1940 Act and, in accordance with such requirements, files
reports and other information with the Commission. These materials can be
inspected and copied at the Public Reference Facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York, NY
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates, and are also available
on the Commission's web site at http://www.sec.gov.
ADDITIONAL INFORMATION ABOUT JPMF
Information about the Merging Fund is included in its Prospectus, which
is incorporated by reference herein. Additional information about the Merging
Fund is also included in JPMF's Statement of Additional Information which has
been filed with the Commission and which is incorporated herein by reference.
Copies of the Statement of Additional information may be obtained without charge
by calling 1-800-766-7722. JPMF is subject to the requirements of the 1940 Act
and, in accordance with such requirements, files reports and other information
with the Commission. These materials can be inspected and copied at the Public
Reference Facilities
-34-
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at 7 World Trade Center, Suite 1300,
New York, NY 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20549, at prescribed rates, and are also
available on the Commission's web site at http://www.sec.gov.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund for the fiscal year ended October 31, 2000, the
audited financial statements, notes thereto and supplementary data of the Master
Portfolio for the fiscal year ended October 31, 2000 and the audited financial
highlights, financial statements and notes thereto of the Surviving Fund for the
fiscal year ended August 31, 2000 are incorporated by reference herein and into
the Statement of Additional Information related to this Combined
Prospectus/Proxy Statement. The audited financial highlights, financial
statements, notes thereto and supplementary data, as applicable, for the Merging
Fund, the Master Portfolio and the Surviving Fund have been incorporated herein
by reference in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on their authority as experts in auditing and
accounting.
The unaudited financial highlights, financial statements and notes
thereto of the Surviving Fund for the fiscal period ended February 28, 2001, are
incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement.
OTHER BUSINESS
The JPMF Board knows of no other business to be brought before the
Meeting. However, if any other matters come before the Meeting, it is the
intention of the JPMF Board that proxies that do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
LITIGATION
Neither MFT nor JPMF is involved in any litigation that would have any
material adverse effect upon either the Merging Fund or the Surviving Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to JPMF in writing at the
address on the cover page of this Combined Prospectus/Proxy Statement or by
telephoning 1-800-766-7722.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
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RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
-36-
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this ____
day of ______, 2001 by and among J.P. Morgan Funds (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the J.P. Morgan Federal Money Market
Fund (the "Transferor Portfolio"), Mutual Fund Trust (the "Acquiring Trust"), a
Massachusetts business trust, on behalf of JPMorgan Federal Money Market Fund II
(formerly, Chase Vista Federal Money Market Fund) (the "Acquiring Portfolio")
and J.P. Morgan Chase & Co.
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends
to provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and
the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE
FOR THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE
TRANSFEROR PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio
listed above, will convey, transfer and deliver to the Acquiring Portfolio all
of the then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Premier Class share class in exchange for shares of the
Transferor Portfolio, with the amounts of shares of each share class to be
A-1
determined by the parties. Any shares of beneficial interest (if any) of the
Transferor Portfolio ("Transferor Portfolio Shares") held in the treasury of the
Transferor Trust at the Effective Time of the Reorganization shall thereupon be
retired. Such transactions shall take place on the date provided for in Section
1(b) hereof (the "Exchange Date"). All computations for the Transferor Portfolio
and the Acquiring Portfolio shall be performed by The Bank of New York (the
"Custodian"), as custodian and pricing agent for the Transferor Portfolio and
the Acquiring Portfolio. The determination of said Custodian shall be conclusive
and binding on all parties in interest.
(ii) As of the Effective Time of the Reorganization, the Transferor
Trust will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio Shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the
shares of the Transferor Portfolio held by the Transferor Portfolio
shareholders. Such liquidation and distribution will be accomplished by the
transfer of the Acquiring Portfolio Shares then credited to the account of the
Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts
on the share records of the Acquiring Portfolio in the names of the Transferor
Portfolio Shareholders and representing the respective pro rata number of the
Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will
not issue certificates representing the Acquiring Portfolio Shares in connection
with such exchange.
(iii) As soon as practicable after the Effective Time of the
Reorganization, the Transferor Trust shall take all the necessary steps under
Massachusetts law, the Transferor Trust's Declaration of Trust and any other
applicable law to effect a complete termination of the Transferor Portfolio.
(b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION.
(i) Subject to the satisfaction of the conditions to the
Reorganization specified in this Plan, the Reorganization shall occur as of the
close of regularly scheduled trading on the New York Stock Exchange (the
"Effective Time of the Reorganization") on August 11, 2001, or such later date
as may be agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to
take place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New
York Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the Acquiring
Portfolio duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the
A-2
custom of brokers, and shall be accompanied by all necessary federal and state
stock transfer stamps or a check for the appropriate purchase price thereof.
(c) VALUATION.
(i) The net asset value of the shares of the Acquiring Portfolio
and the net value of the assets of the Transferor Portfolio to be transferred in
exchange therefore shall be determined as of the Effective Time of the
Reorganization. The net asset value of the Acquiring Portfolio Shares shall be
computed by the Custodian in the manner set forth in the Acquiring Trust's
Declaration of Trust or By-laws and then current prospectus and statement of
additional information and shall be computed to not less than two decimal
places. The net value of the assets of the Transferor Portfolio to be
transferred shall be computed by the Custodian by calculating the value of the
assets transferred by the Transferor Portfolio and by subtracting therefrom the
amount of the liabilities assigned and transferred to the Acquiring Portfolio,
said assets and liabilities to be valued in the manner set forth in the
Transferor Trust's Declaration of Trust or By-laws and then current prospectus
and statement of additional information.
(ii) The number of Premier Class shares of the Acquiring Portfolio
to be issued (including fractional shares, if any) by the Acquiring Portfolio in
exchange for the Transferor Portfolio's assets attributable to the Transferor
Portfolio's shares shall be determined by an exchange ratio computed by dividing
the net value of the Transferor Portfolio's assets attributable to its shares by
the net asset value per share of the Premier Class shares of the Acquiring
Portfolio, both as determined in accordance with Section 1(c)(i).
(iii) All computations of value shall be made by the Custodian in
accordance with its regular practice as pricing agent for the Acquiring
Portfolio and the Transferor Portfolio.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST
The Acquiring Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC.
The Acquiring Trust is a business trust that is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business as it
is now being conducted. The Acquiring Portfolio is a validly existing series of
shares of such business trust representing interests therein under the laws of
Massachusetts. Each of the Acquiring Portfolio and the Acquiring Trust have all
necessary federal, state and local authorization to own all of its properties
and assets and to carry on its business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY.
The Acquiring Trust is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end investment company of
the management type; such registration has not been revoked or rescinded and is
in full force and effect.
A-3
(c) CURRENT OFFERING DOCUMENTS.
The current prospectus and statement of additional
information of the Acquiring Trust, as amended, included in the Acquiring
Trust's registration statement on Form N-1A filed with the Securities and
Exchange Commission, comply in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the Act and do
not contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(d) CAPITALIZATION.
The Acquiring Trust has an unlimited number of authorized
shares of which as of February 28, 2001 there were outstanding 312,286 shares
of the Premier Class Acquiring Portfolio, and no shares of such Portfolio
were held in the treasury of the Acquiring Trust. All of the outstanding
shares of the Acquiring Trust have been duly authorized and are validly
issued, fully paid and nonassessable (except as disclosed in the Acquiring
Trust's prospectus and recognizing that under Massachusetts law, shareholders
of an Acquiring Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such Acquiring Trust portfolio).
Because the Acquiring Trust is an open-end investment company engaged in the
continuous offering and redemption of its shares, the number of outstanding
shares may change prior to the Effective Time of the Reorganization. All of
the issued and outstanding shares of the Acquiring Portfolio have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state
securities laws.
(e) FINANCIAL STATEMENTS.
The financial statements of the Acquiring Trust with respect
to the Acquiring Portfolio for the fiscal year ended August 31, 2000, which have
been audited by PricewaterhouseCoopers LLP, fairly present the financial
position of the Acquiring Portfolio as of the dates thereof and the respective
results of operations and changes in net assets for each of the periods
indicated in accordance with generally accepted accounting principles ("GAAP").
The financial statements of the Acquiring Trust with respect to the Acquiring
Portfolio fairly present the financial position of the Acquiring Portfolio as of
the dates thereof and the respective results of operations and changes in net
assets for each of the periods indicated in accordance with GAAP.
(f) SHARES TO BE ISSUED UPON REORGANIZATION.
The Acquiring Portfolio Shares to be issued in connection
with the Reorganization will be duly authorized and upon consummation of the
Reorganization will be validly issued, fully paid and nonassessable (except as
disclosed in the Trust's prospectus and recognizing that under Massachusetts
law, shareholders of an Acquiring Trust portfolio could, under certain
circumstances, be held personally liable for the obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN.
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The Acquiring Trust, on behalf of the Acquiring Portfolio,
has the power to enter into this Plan and to carry out its obligations
hereunder. The execution and delivery of this Plan and the consummation of the
transactions contemplated hereby have been duly authorized by the Acquiring
Trust's Board of Trustees and no other proceedings by the Acquiring Trust other
than those contemplated under this Plan are necessary to authorize its officers
to effectuate this Plan and the transactions contemplated hereby. The Acquiring
Trust is not a party to or obligated under any provision of its Declaration of
Trust or By-laws, or under any indenture or contract provision or any other
commitment or obligation, or subject to any order or decree, which would be
violated by or which would prevent its execution and performance of this Plan in
accordance with its terms.
(h) LIABILITIES.
There are no liabilities of the Acquiring Portfolio, whether
actual or contingent and whether or not determined or determinable, other than
liabilities disclosed or provided for in the Acquiring Trust's financial
statements with respect to the Acquiring Portfolio and liabilities incurred in
the ordinary course of business subsequent to February 28, 2001 or otherwise
previously disclosed to the Acquiring Trust with respect to the Acquiring
Portfolio, none of which has been materially adverse to the business, assets or
results of operations of the Acquiring Portfolio.
(i) NO MATERIAL ADVERSE CHANGE.
Since February 28, 2001, there has been no material adverse
change in the financial condition, results of operations, business, properties
or assets of the Acquiring Portfolio, other than those occurring in the ordinary
course of business (for these purposes, a decline in net asset value and a
decline in net assets due to redemptions do not constitute a material adverse
change).
(j) LITIGATION.
There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Acquiring Trust, threatened which would adversely
affect the Acquiring Trust or the Acquiring Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Acquiring Trust or the Acquiring
Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory
investigations of the Acquiring Trust or the Acquiring Portfolio, pending or
threatened, other than routine inspections and audits.
(k) CONTRACTS.
No default exists under any material contract or other
commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio,
is subject.
(l) TAXES.
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The federal income tax returns of the Acquiring Trust with
respect to the Acquiring Portfolio, and all other income tax returns required to
be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have
been filed, and all taxes payable pursuant to such returns have been paid. To
the knowledge of the Acquiring Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Acquiring Trust with respect to the Acquiring Portfolio
have been paid so far as due. The Acquiring Portfolio has elected to qualify and
has qualified as a "regulated investment company" under Subchapter M of the Code
as of and since its first taxable year and intends to continue to so qualify.
(m) NO APPROVALS REQUIRED.
Except for the Registration Statement (as defined in Section
4(a) hereof) and the approval of the Transferor Portfolio's shareholders
(referred to in Section 6(a) hereof), no consents, approvals, authorizations,
registrations or exemptions under federal or state laws are necessary for the
consummation by the Acquiring Trust of the Reorganization, except such as have
been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC.
The Transferor Trust is a business trust that is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business as it
is now being conducted. The Transferor Portfolio is a validly existing series of
shares of such business trust representing interests therein under the laws of
Massachusetts. Each of Transferor Portfolio and the Transferor Trust has all
necessary federal, state and local authorization to own all of its properties
and assets and to carry on its business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY.
The Transferor Trust is registered under the Act as an
open-end investment company of the management type; such registration has not
been revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS.
The current prospectus and statement of additional
information of the Transferor Trust, as amended, included in the Transferor
Trust's registration statement on Form N-1A filed with the Commission, comply in
all material respects with the requirements of the Securities Act and the Act
and do not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(d) CAPITALIZATION.
The Transferor Trust has an unlimited number of authorized
shares of beneficial interest of which as of February 28, 2001 there were
outstanding 1,920,547 shares of the Transferor Portfolio, and no shares of such
Portfolio were held in the treasury of the Transferor Trust. All of the
outstanding shares of the Transferor Trust have been duly authorized and are
validly issued, fully paid and nonassessable (except as disclosed in the
Transferor Trust's prospectus and recognizing that under Massachusetts law,
shareholders of a Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such Trust portfolio). Because the
Transferor Trust is an open-end investment company engaged in the continuous
offering and redemption of its shares, the number of outstanding shares may
change prior to the Effective Time of the Reorganization. All such shares will,
at the Exchange Date, be held by the shareholders of record of the Transferor
Portfolio as set forth on the books and records of the Transferor Trust in the
amounts set forth therein, and as set forth in any list of shareholders of
record provided to the Acquiring Portfolio for purposes of the Reorganization,
and no such shareholders of record will have any preemptive rights to purchase
any Transferor Portfolio shares, and the Transferor Portfolio does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Transferor Portfolio shares (other than any existing dividend reinvestment
plans of the Transferor Portfolio or as set forth in this Plan), nor are there
outstanding any securities convertible into any shares of the Transferor
Portfolio (except pursuant to any existing exchange privileges described in the
current prospectus and statement of additional information of the Transferor
Trust). All of the Transferor Portfolio's issued and outstanding shares have
been offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state securities
laws.
(e) FINANCIAL STATEMENTS.
The financial statements for the Transferor Trust with
respect to the Transferor Portfolio and for The Federal Money Market Portfolio
for the fiscal year ended October 31, 2000 which have been audited by
PricewaterhouseCoopers LLP fairly present the financial position of the
Transferor Portfolio and The Federal Money Market Portfolio as of the dates
thereof and the respective results of operations and changes in net assets for
each of the periods indicated in accordance with GAAP.
(f) AUTHORITY RELATIVE TO THIS PLAN.
The Transferor Trust, on behalf of the Transferor Portfolio,
has the power to enter into this Plan and to carry out its obligations
hereunder. The execution and delivery of this Plan and the consummation of the
transactions contemplated hereby have been duly authorized by the Transferor
Trust's Board of Trustees and no other proceedings by the Transferor Trust other
than those contemplated under this Plan are necessary to authorize its officers
to effectuate this Plan and the transactions contemplated hereby. The Transferor
Trust is not a party to or obligated under any provision of its Declaration of
Trust or By-laws, or under any indenture or contract provision or any other
commitment or obligation, or subject to any order or decree, which would be
violated by or which would prevent its execution and performance of this Plan in
accordance with its terms.
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(g) LIABILITIES.
There are no liabilities of the Transferor Portfolio, whether
actual or contingent and whether or not determined or determinable, other than
liabilities disclosed or provided for in the Transferor Trust's Financial
Statements with respect to the Transferor Portfolio and liabilities incurred in
the ordinary course of business subsequent to October 31, 2000 or otherwise
previously disclosed to the Transferor Trust with respect to the Transferor
Portfolio, none of which has been materially adverse to the business, assets or
results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE.
Since October 31, 2000, there has been no material adverse
change in the financial condition, results of operations, business, properties
or assets of the Transferor Portfolio, other than those occurring in the
ordinary course of business (for these purposes, a decline in net asset value
and a decline in net assets due to redemptions do not constitute a material
adverse change).
(i) LITIGATION.
There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Transferor Trust, threatened which would adversely
affect the Transferor Trust or the Transferor Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Transferor Trust or the Transferor
Portfolio and, to the knowledge of the Transferor Trust, there are no regulatory
investigations of the Transferor Trust or the Transferor Portfolio, pending or
threatened, other than routine inspections and audits.
(j) CONTRACTS.
The Transferor Trust, on behalf of the Transferor Portfolio,
is not subject to any contracts or other commitments (other than this Plan)
which will not be terminated with respect to the Transferor Portfolio without
liability to the Transferor Trust or the Transferor Portfolio as of or prior to
the Effective Time of the Reorganization.
(k) TAXES.
The federal income tax returns of the Transferor Trust with
respect to the Transferor Portfolio, and all other income tax returns required
to be filed by the Transferor Trust with respect to the Transferor Portfolio,
have been filed, and all taxes payable pursuant to such returns have been paid.
To the knowledge of the Transferor Trust, no such return is under audit and no
assessment has been asserted in respect of any such return. All federal and
other taxes owed by the Transferor Trust with respect to the Transferor
Portfolio have been paid so far as due. The Transferor Portfolio has elected to
qualify as a "regulated investment company" under Subchapter M of the Code, as
of and since its first taxable year, and shall continue to so qualify until the
Effective Time of the Reorganization.
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(l) NO APPROVALS REQUIRED.
Except for the Registration Statement (as defined in Section
4(a) hereof) and the approval of the Transferor Portfolio's shareholders
referred to in Section 6(a) hereof, no consents, approvals, authorizations,
registrations or exemptions under federal or state laws are necessary for the
consummation by the Transferor Trust of the Reorganization, except such as have
been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT.
On behalf of the Acquiring Portfolio, the Acquiring Trust
shall file with the Commission a Registration Statement on Form N-14 (the
"Registration Statement") under the Securities Act relating to the Acquiring
Portfolio Shares issuable hereunder and the proxy statement of the Transferor
Portfolio relating to the meeting of the Transferor Portfolio's shareholders
referred to in Section 5(a) herein. At the time the Registration Statement
becomes effective, the Registration Statement (i) will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
of the Commission thereunder (the "Regulations") and (ii) will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and at the time the Registration Statement becomes effective, at the time of the
Transferor Portfolio shareholders' meeting referred to in Section 5(a) hereof,
and at the Effective Time of the Reorganization, the prospectus/proxy statement
(the "Prospectus") and statement of additional information (the "Statement of
Additional Information") included therein, as amended or supplemented by any
amendments or supplements filed by the Trust, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION.
The Acquiring Trust agrees to use all reasonable efforts to
effectuate the Reorganization, to continue in operation thereafter, and to
obtain any necessary regulatory approvals for the Reorganization. The Acquiring
Trust shall furnish such data and information relating to the Acquiring Trust as
shall be reasonably requested for inclusion in the information to be furnished
to the Transferor Portfolio shareholders in connection with the meeting of the
Transferor Portfolio's shareholders for the purpose of acting upon this Plan and
the transactions contemplated herein.
(c) OPERATIONS IN THE ORDINARY COURSE.
Except as otherwise contemplated by this Plan, the Acquiring
Trust shall conduct the business of the Acquiring Portfolio in the ordinary
course until the consummation of the Reorganization, it being understood that
such ordinary course of business will include the declaration and payment of
customary dividends and distributions.
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5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS.
The Transferor Trust shall call and hold a meeting of the
shareholders of the Transferor Portfolio for the purpose of acting upon this
Plan and the transactions contemplated herein.
(b) PORTFOLIO SECURITIES.
With respect to the assets to be transferred in accordance
with Section 1(a), the Transferor Portfolio's assets shall consist of all
property and assets of any nature whatsoever, including, without limitation, all
cash, cash equivalents, securities, claims and receivables (including dividend
and interest receivables) owned, and any deferred or prepaid expenses shown as
an asset on the Transferor Trust's books maintained on behalf of the Transferor
Portfolio. At least five (5) business days prior to the Exchange Date, the
Transferor Portfolio will provide the Acquiring Trust, for the benefit of the
Acquiring Portfolio, with a list of its assets and a list of its stated
liabilities. The Transferor Portfolio shall have the right to sell any of the
securities or other assets shown on the list of assets prior to the Exchange
Date but will not, without the prior approval of the Acquiring Trust, on behalf
of the Acquiring Portfolio, acquire any additional securities other than
securities which the Acquiring Portfolio is permitted to purchase, pursuant to
its investment objective and policies or otherwise (taking into consideration
its own portfolio composition as of such date). In the event that the Transferor
Portfolio holds any investments that the Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable, to the extent permitted by
its investment objective and policies and to the extent that its shareholders
would not be materially affected in an adverse manner by such a disposition. In
addition, the Transferor Trust will prepare and deliver immediately prior to the
Effective Time of the Reorganization, a Statement of Assets and Liabilities of
the Transferor Portfolio, prepared in accordance with GAAP (each, a "Schedule").
All securities to be listed in the Schedule for the Transferor Portfolio as of
the Effective Time of the Reorganization will be owned by the Transferor
Portfolio free and clear of any liens, claims, charges, options and
encumbrances, except as indicated in such Schedule, and, except as so indicated,
none of such securities is or, after the Reorganization as contemplated hereby,
will be subject to any restrictions, legal or contractual, on the disposition
thereof (including restrictions as to the public offering or sale thereof under
the Securities Act) and, except as so indicated, all such securities are or will
be readily marketable.
(c) REGISTRATION STATEMENT.
In connection with the preparation of the Registration
Statement, the Transferor Trust will cooperate with the Acquiring Trust and will
furnish to the Acquiring Trust the information relating to the Transferor
Portfolio required by the Securities Act and the Regulations to be set forth in
the Registration Statement (including the Prospectus and Statement of Additional
Information). At the time the Registration Statement becomes effective, the
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Registration Statement, insofar as it relates to the Transferor Portfolio, (i)
will comply in all material respects with the provisions of the Securities Act
and the Regulations and (ii) will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and at the time the Registration
Statement becomes effective, at the time of the Transferor Portfolio's
shareholders' meeting referred to in Section 5(a) and at the Effective Time of
the Reorganization, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed by the Transferor
Trust, insofar as they relate to the Transferor Portfolio, will not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the representations and
warranties in this subsection shall apply only to statements in or omissions
from the Registration Statement, Prospectus or Statement of Additional
Information made in reliance upon and in conformity with information furnished
by the Transferor Portfolio for use in the registration statement, prospectus or
statement of additional information as provided in this Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION.
The Transferor Trust agrees to use all reasonable efforts to
effectuate the Reorganization and to obtain any necessary regulatory approvals
for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE.
Except as otherwise contemplated by this Plan, the Transferor
Trust shall conduct the business of the Transferor Portfolio in the ordinary
course until the consummation of the Reorganization, it being understood that
such ordinary course of business will include the declaration and payment of
customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS.
As promptly as practicable, but in any case within 60 days
after the Exchange Date, the Transferor Trust on behalf of the Transferor
Portfolio, shall prepare a statement of the earnings and profits of the
Transferor Portfolio for federal income tax purposes, and of any capital loss
carryovers and other items that the Acquiring Portfolio will succeed to and take
into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS.
This Plan and the transactions contemplated by the
Reorganization shall have been approved by the requisite vote of the shares of
the Transferor Portfolio entitled to vote on the matter ("Transferor Shareholder
Approval").
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(b) COVENANTS, WARRANTIES AND REPRESENTATIONS.
The Acquiring Trust shall have complied with each of its
covenants contained herein, each of the representations and warranties contained
herein shall be true in all material respects as of the Effective Time of the
Reorganization (except as otherwise contemplated herein), and there shall have
been no material adverse change (as described in Section 2(i)) in the financial
condition, results of operations, business, properties or assets of the
Acquiring Portfolio since August 31, 2000.
(c) REGULATORY APPROVAL.
The Registration Statement shall have been declared effective
by the Commission and no stop orders under the Securities Act pertaining thereto
shall have been issued, and all other approvals, registrations, and exemptions
under federal and state laws considered to be necessary shall have been obtained
(collectively, the "Regulatory Approvals").
(d) TAX OPINION.
The Transferor Trust shall have received the opinion of
Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to
and in form and substance satisfactory to the Transferor Trust, as to certain of
the federal income tax consequences under the Code of the Reorganization,
insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio,
and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For
purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may rely
exclusively and without independent verification, as to factual matters, upon
the statements made in this Plan, the Prospectus and Statement of Additional
Information, and upon such other written representations as the President or
Treasurer of the Transferor Trust will have verified as of the Effective Time of
the Reorganization. The Tax Opinion will be to the effect that, based on the
facts and assumptions stated therein, for federal income tax purposes: (i) the
Reorganization will constitute a reorganization within the meaning of section
368(a)(1) of the Code with respect to the Transferor Portfolio and the Acquiring
Portfolio; (ii) no gain or loss will be recognized by any of the Transferor
Portfolio or the Acquiring Portfolio upon the transfer of all the assets and
liabilities, if any, of the Transferor Portfolio to the Acquiring Portfolio
solely in exchange for shares of the Acquiring Portfolio or upon the
distribution of the shares of the Acquiring Portfolio to the holders of the
shares of the Transferor Portfolio solely in exchange for all of the shares of
the Transferor Portfolio; (iii) no gain or loss will be recognized by
shareholders of the Transferor Portfolio upon the exchange of shares of such
Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the
holding period and tax basis of the shares of the Acquiring Portfolio received
by each holder of shares of the Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of shares of
the Transferor Portfolio held by such holder immediately prior to the
Reorganization (provided the shares of the Transferor Portfolio were held as a
capital asset on the date of the Reorganization); and (v) the holding period and
tax basis of the assets of the Transferor Portfolio acquired by the Acquiring
Portfolio will be the same as the holding period and tax basis of those assets
to the Transferor Portfolio immediately prior to the Reorganization.
(e) CONCURRENT REORGANIZATION.
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The reorganization of each of J.P. Morgan Institutional
Service Federal Money Market Fund and J.P. Morgan Institutional Federal Money
Market Fund, each a series of J.P. Morgan Institutional Funds, into the
Acquiring Portfolio shall have been consummated.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS.
The Transferor Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS.
The Transferor Trust shall have complied with each of its
covenants contained herein, each of the representations and warranties contained
herein shall be true in all material respects as of the Effective Time of the
Reorganization (except as otherwise contemplated herein), and there shall have
been no material adverse change (as described in Section 3(h)) in the financial
condition, results of operations, business, properties or assets of the
Transferor Portfolio since October 31, 2000.
(c) PORTFOLIO SECURITIES.
All securities to be acquired by the Acquiring Portfolio in
the Reorganization shall have been approved for acquisition by J.P. Morgan
Fleming Asset Management (USA) Inc. ("JPMFAM"), in its capacity as investment
adviser to the Acquiring Portfolio, as consistent with the investment policies
of the Acquiring Portfolio.
(d) REGULATORY APPROVAL.
The Regulatory Approvals shall have been obtained.
(e) DISTRIBUTION OF INCOME AND GAINS.
The Transferor Trust on behalf of the Transferor Portfolio
shall have distributed to the shareholders of the Transferor Portfolio all of
the Transferor Portfolio's investment company taxable income (determined without
regard to the deduction for dividends paid) as defined in Section 852(b)(2) of
the Code for its taxable year ending on the Exchange Date and all of its net
capital gain as such term is used in Section 852(b)(3) of the Code, after
reduction by any capital loss carry forward, for its taxable year ending on the
Exchange Date.
(f) TAX OPINION.
The Acquiring Trust shall have received the Tax Opinion.
(g) CONCURRENT REORGANIZATION.
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The reorganization of each of J.P. Morgan Institutional
Service Federal Money Market Fund and J.P. Morgan Institutional Federal Money
Market Fund, a series of J.P. Morgan Institutional Funds, into the Acquiring
Portfolio shall have been consummated.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES
AND REPRESENTATIONS
(a) AMENDMENTS.
The parties hereto may, by agreement in writing authorized by
their respective Boards of Trustees amend this Plan at any time before or after
approval hereof by the shareholders of the Transferor Portfolio, but after such
approval, no amendment shall be made which substantially changes the terms
hereof.
(b) WAIVERS.
At any time prior to the Effective Time of the
Reorganization, either the Transferor Trust or the Acquiring Trust may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein, except that conditions set forth in Sections 6(c) and 7(d) may
not be waived.
(c) TERMINATION BY THE TRANSFEROR TRUST.
The Transferor Trust, on behalf of the Transferor Portfolio,
may terminate this Plan with respect to the Transferor Portfolio at any time
prior to the Effective Time of the Reorganization by notice to the Acquiring
Trust and JPMFAM if (i) a material condition to the performance of the
Transferor Trust hereunder or a material covenant of the Acquiring Trust
contained herein shall not be fulfilled on or before the date specified for the
fulfillment thereof or (ii) a material default or material breach of this Plan
shall be made by the Acquiring Trust. In addition, this Plan may be terminated
by the Transferor Trust at any time prior to the Effective Time of the
Reorganization, whether before or after approval of this Plan by the
shareholders of the Transferor Portfolio, without liability on the part of any
party hereto, its Trustees, officers or shareholders or J.P. Morgan Investment
Management Inc. ("JPMIM") on notice to the other parties in the event that the
Board of Trustees determines that proceeding with this Plan is not in the best
interests of the shareholders of the Transferor Portfolio.
(d) TERMINATION BY THE ACQUIRING TRUST.
The Acquiring Trust, on behalf of the Acquiring Portfolio,
may terminate this Plan with respect to the Acquiring Portfolio at any time
prior to the Effective Time of the Reorganization by notice to the Transferor
Trust and JPMIM if (i) a material condition to the performance of the Acquiring
Trust hereunder or a material covenant of the Transferor Trust contained herein
shall not be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this Plan shall be made
by the Transferor Trust. In addition, this Plan may be terminated by the
Acquiring Trust at any time prior to the Effective Time of the Reorganization,
whether before or after approval of this Plan by the shareholders of
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the Transferor Portfolio, without liability on the part of any party hereto, its
Trustees, officers or shareholders or JPMIM on notice to the other parties in
the event that the Board of Trustees determines that proceeding with this Plan
is not in the best interests of the shareholders of the Acquiring Portfolio.
(e) SURVIVAL.
No representations, warranties or covenants in or pursuant to
this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan,
shall survive the Reorganization.
9. EXPENSES
The expenses of the Reorganization will be borne by J.P. Morgan Chase &
Co. ("JPMC"). Such expenses include, without limitation, (i) expenses incurred
in connection with the entering into and the carrying out of the provisions of
this Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii)
legal fees and (viii) solicitation costs relating to the Reorganization.
10. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by hand, certified
mail or by facsimile transmission, shall be deemed given when received and shall
be addressed to the parties hereto at their respective addresses listed below or
to such other persons or addresses as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
if to the Acquiring Trust (for itself or on behalf of the Acquiring
Portfolio):
1211 Avenue of the Americas, 41st Floor
New York, New York 10036
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Sarah E. Cogan, Esq.
if to the Transferor Trust (for itself or on behalf of the Transferor
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
A-15
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to
have been material and relied upon by the Transferor Trust and the Acquiring
Trust notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each
of which shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance
with the laws of The State of New York.
(d) This Plan shall bind and inure to the benefit of the
Transferor Trust, the Transferor Portfolio, the Acquiring Trust and the
Acquiring Portfolio and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder shall be
made by any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Plan.
(e) The name "J.P. Morgan Institutional Funds" is the designation
of its Trustees under a Declaration of Trust dated November 4, 1992, as amended,
and all persons dealing with the Transferor Trust must look solely to the
Transferor Trust's property for the enforcement of any claims against the
Transferor Trust, as none of the Transferor Trustees, officers, agents or
shareholders assumes any personal liability for obligations entered into on
behalf of the Transferor Trust. No series of the Transferor Trust shall be
liable for claims against any other series of the Transferor Trust.
(f) The name "Mutual Fund Trust" is the designation of its
Trustees under a Declaration of Trust dated February 1, 1994, as amended, and
all persons dealing with the Acquiring Trust must look solely to the Acquiring
Trust's property for the enforcement of any claims against the Acquiring Trust,
as none of the Acquiring Trustees, officers, agents or shareholders assumes any
personal liability for obligations entered into on behalf of the Acquiring
Trust. No series of the Acquiring Trust shall be liable for claims against any
other series of the Acquiring Trust.
A-16
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the
date first above written.
J.P. MORGAN FUNDS
on behalf of J.P. Morgan Federal Money Market Fund
By:
--------------------------------------------------
Name:
Title:
MUTUAL FUND TRUST
on behalf of JPMorgan Federal Money Market Fund II
By:
--------------------------------------------------
Name:
Title:
Agreed and acknowledged with respect to Section 9:
J.P. MORGAN CHASE & CO.
By:
--------------------------------------------------
Name:
Title:
A-17
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
J.P. MORGAN FEDERAL MONEY MARKET FUND,
A SERIES OF J.P. MORGAN FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated May
12, 2001 for the Special Meeting of Shareholders of J.P. Morgan Federal Money
Market Fund (the "Merging Fund"), a series of J.P. Morgan Funds ("JPMF"), to be
held on July 3, 2001. Copies of the Combined Prospectus/Proxy Statement may be
obtained at no charge by calling the Merging Fund at 1-800-766-7722.
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Prospectus/Proxy Statement.
Further information about the Surviving Fund and the Merging Fund is
contained in each of MFT's and JPMF's Statements of Additional Information,
which are incorporated herein by reference.
The date of this Statement of Additional Information is May 12, 2001.
GENERAL INFORMATION
The Shareholders of the Merging Fund are being asked to consider and
vote on two proposals.
With respect to an Agreement and Plan of Reorganization (the
"Reorganization Plan") dated as of __________, 2001 by and among JPMF, on behalf
of the Merging Fund, and MFT, on behalf of the Surviving Fund, and JPMC, and the
transactions contemplated thereby, the Reorganization Plan contemplates the
transfer of all of the assets and liabilities of the Merging Fund to the
Surviving Fund in exchange for shares issued by MFT in the Surviving Fund that
will have an aggregate net asset value equal to the aggregate net asset value of
the shares of the Merging Fund that are outstanding immediately before the
Effective Time of the Reorganization.
Following the exchange, the Merging Fund will make a liquidating
distribution of the Surviving Fund shares to its Shareholders, so that a holder
of shares in the Merging Fund will receive Premier Class shares of the Surviving
of equal value, plus the right to receive any unpaid dividends and distributions
that were declared before the Effective Time of the Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees of JPMF.
A Special Meeting of Shareholders of the Merging Fund to consider the
proposals and the related transaction will be held at the offices of J.P. Morgan
Chase & Co., 1211 Avenue of the Americas, 41st Floor, New York, New York, on
July 3, 2001 at 9:00 a.m., Eastern time. For further information about the
transaction, see the Combined Prospectus/Proxy Statement.
-2-
FINANCIAL STATEMENTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund and the Surviving Fund contained in their Annual
Reports dated October 31, 2000 and August 31, 2000, respectively, are
incorporated by reference into this Statement of Additional Information related
to this Combined Prospectus/Proxy Statement. The audited financial statements,
notes thereto and supplementary data of the Master Portfolio contained in its
Annual Report dated October 31, 2000 are incorporated by reference into this
Statement of Additional Information related to this Combined Prospectus/Proxy
Statement. The financial highlights, financial statements, notes thereto and
supplementary data, as applicable, which appear in each of the Merging Fund's,
the Master Portfolio's and the Surviving Fund's Annual Report have been audited
by PricewaterhouseCoopers LLP, whose reports thereon also appear in such Annual
Reports and are also incorporated herein by reference. The financial highlights,
financial statements, notes thereto and supplementary data, as applicable, for
the Merging Fund and the Master Portfolio for the fiscal year ended October 31,
2000 and for the Surviving Fund for the fiscal year ended August 31, 2000 have
been incorporated herein by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on their authority as
experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of the Surviving Fund for the fiscal period ended February 28, 2001, are
incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement.
-3-
PRO FORMA FINANCIAL STATEMENTS
JPMorgan Federal Money Market Portfolio / JPMorgan Federal Money Market Fund II
Proforma Combining Schedule of Portfolio Investments
February 28, 2001
(Amounts in Thousands)
PRINCIPAL AMOUNT
---------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
JPMORGAN FEDERAL MONEY FEDERAL
FEDERAL MONEY MARKET PRO FORMA MONEY MARKET
MARKET FUND II PORTFOLIO ADJUSTMENTS FUND
-------------- --------- ----------- ------------
MONEY MARKET INSTRUMENTS 101.77%
U.S. GOVERNMENT AGENCY SECURITIES 94.7%
FEDERAL FARM CREDIT BANK - 15.67%
Federal Farm Credit Bank,
5.13%, 04/02/01 $ 2,075 $ 2,075
5.32%, 03/01/01 250,000 250,000
5.35%, 03/25/01 100,000 100,000
5.38%, 03/11/01 100,000 100,000
5.40%, 03/10/01 25,000 25,000
5.88%, 07/02/01 50,000 50,000
6.60%, 03/01/01 88,300 88,300
DN, 4.26%, 03/05/01 1,375 1,375
DN, 4.82%, 08/27/01 15,000 15,000
DN, 5.04%, 04/06/01 38,925 38,925
DN, 5.07%, 01/09/02 50,000 50,000
DN, 5.09%, 03/29/01 14,000 14,000
DN, 5.13%, 03/26/01 20,195 20,195
DN, 5.21%, 03/09/01 72,580 72,580
DN, 5.39%, 03/05/01 20,000 20,000
FRN, 6.45%, 05/01/01 100,000 100,000
FEDERAL HOME LOAN BANK - 78.21%
Federal Home Loan Bank,
5.12%, 01/16/02 20,000 20,000
5.31%, 05/01/01 100,000 100,000
5.34%, 03/26/01 100,000 100,000
5.37%, 03/15/01 100,000 100,000
5.39%, 03/17/01 50,000 50,000
5.47%, 03/01/01 130,000 130,000
5.50%, 03/01/01 100,000 100,000
5.89%, 07/19/01 28,500 28,500
6.38%, 12/20/01 50,000 50,000
6.50%, 04/26/01 50,000 50,000
6.67%, 04/06/01 40,000 40,000
6.75%, 03/01/01 25,000 25,000
7.13%, 11/15/01 50,000 50,000
DN, 4.75%, 03/01/01 9,005 4,032 13,037
DN, 4.76%, 03/09/01 100,000 100,000
DN, 4.83%, 08/22/01 15,000 15,000
DN, 4.86%, 08/10/01 35,000 35,000
VALUE
-------------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN
JPMORGAN JPMORGAN FEDERAL
FEDERAL MONEY FEDERAL MONEY PRO FORMA MONEY MARKET
MARKET FUND II MARKET PORTFOLIO ADJUSTMENTS FUND
-------------- ---------------- ----------- -------------
MONEY MARKET INSTRUMENTS 101.77%
U.S. GOVERNMENT AGENCY SECURITIES 94.7%
FEDERAL FARM CREDIT BANK - 15.67%
Federal Farm Credit Bank,
5.13%, 04/02/01 $ 2,072 $ 2,072
5.32%, 03/01/01 250,000 250,000
5.35%, 03/25/01 100,000 100,000
5.38%, 03/11/01 99,993 99,993
5.40%, 03/10/01 25,000 25,000
5.88%, 07/02/01 49,875 49,875
6.60%, 03/01/01 88,300 88,300
DN, 4.26%, 03/05/01 1,374 1,374
DN, 4.82%, 08/27/01 14,647 14,647
DN, 5.04%, 04/06/01 38,703 38,703
DN, 5.07%, 01/09/02 47,898 47,898
DN, 5.09%, 03/29/01 13,943 13,943
DN, 5.13%, 03/26/01 20,120 20,120
DN, 5.21%, 03/09/01 72,484 72,484
DN, 5.39%, 03/05/01 19,988 19,988
FRN, 6.45%, 05/01/01 99,992 99,992
-----------
944,389
FEDERAL HOME LOAN BANK - 78.21%
Federal Home Loan Bank,
5.12%, 01/16/02 19,986 19,986
5.31%, 05/01/01 99,975 99,975
5.34%, 03/26/01 99,966 99,966
5.37%, 03/15/01 99,968 99,968
5.39%, 03/17/01 49,989 49,989
5.47%, 03/01/01 129,965 129,965
5.50%, 03/01/01 99,999 99,999
5.89%, 07/19/01 28,477 28,477
6.38%, 12/20/01 50,000 50,000
6.50%, 04/26/01 49,992 49,992
6.67%, 04/06/01 40,000 40,000
6.75%, 03/01/01 25,000 25,000
7.13%, 11/15/01 50,325 50,325
DN, 4.75%, 03/01/01 9,005 4,032 13,037
DN, 4.76%, 03/09/01 99,881 99,881
DN, 4.83%, 08/22/01 14,656 14,656
DN, 4.86%, 08/22/01 34,252 34,252
See Notes to Pro Forma Financial Statements.
-4-
PRO FINANCIAL STATEMENTS
JPMorgan Federal Money Market Portfolio / JPMorgan Federal Money Market Fund II
Proforma Combining Schedule of Portfolio Investments
February 28, 2001
(Amounts in Thousands)
PRINCIPAL AMOUNT
---------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
JPMORGAN FEDERAL MONEY FEDERAL
FEDERAL MONEY MARKET PRO FORMA MONEY MARKET
MARKET FUND II PORTFOLIO ADJUSTMENTS FUND
-------------- --------- ----------- ------------
DN, 4.86%, 08/10/01 35,000 35,000
DN, 4.89%, 08/15/01 101,345 101,345
DN, 4.90%, 08/24/01 62,762 62,762
DN, 4.92%, 08/01/01 33,895 33,895
DN, 4.95%, 08/03/01 40,000 40,000
DN, 5.03%, 03/16/01 86,350 86,350
DN, 5.03%, 04/04/01 148,312 148,312
DN, 5.07%, 05/02/01 70,439 70,439
DN, 5.09%, 04/06/01 11,480 11,480
DN, 5.11%, 04/25/01 74,798 74,798
DN, 5.13%, 03/21/01 213,513 213,513
DN, 5.16%, 04/11/01 25,000 25,000
DN, 5.18%, 04/17/01 96,199 96,199
DN, 5.18%, 07/06/01 90,000 90,000
DN, 5.19%, 04/27/01 23,216 23,216
DN, 5.21%, 03/07/01 150,000 150,000
DN, 5.22%, 04/27/01 60,000 60,000
DN, 5.23%, 03/01/01 300,000 300,000
DN, 5.25%, 03/28/01 50,000 50,000
DN, 5.26%, 04/20/01 149,056 149,056
DN, 5.29%, 04/18/01 97,656 97,656
DN, 5.36%, 03/02/01 50,000 50,000
DN, 5.38%, 03/02/01 100,000 100,000
DN, 5.46%, 03/22/01 50,000 50,000
DN, 5.77%, 06/01/01 7,313 7,313
DN, 5.84%, 05/11/01 24,345 24,345
DN, 5.85%, 04/09/01 121,000 121,000
DN, 5.88%, 06/27/01 150,000 150,000
DN, 5.95%, 05/11/01 75,000 75,000
DN, 6.03%, 05/01/01 75,000 75,000
DN, 6.23%, 04/16/01 51,564 51,564
DN, 6.37%, 05/04/01 50,000 50,000
DN, 6.51%, 03/15/01 25,000 25,000
DN, 6.55%, 04/09/01 25,000 25,000
DN, 6.55%, 09/13/01 25,000 25,000
DN, 6.57%, 04/20/01 25,000 25,000
DN, 6.63%, 08/31/01 25,000 25,000
FRN, 5.14%, 03/05/01 98,000 98,000
FRN, 5.24%, 05/10/01 50,000 50,000
FRN, 5.39%, 03/20/01 100,000 100,000
FRN, 5.40%, 03/15/01 160,000 160,000
FRN, 5.45%, 02/21/02 100,000 100,000
FRN, 5.45%, 03/01/01 160,000 160,000
FRN, 5.48%, 7/18/01 50,000 50,000
VALUE
-------------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN
JPMORGAN JPMORGAN FEDERAL
FEDERAL MONEY FEDERAL MONEY PRO FORMA MONEY MARKET
MARKET FUND II MARKET PORTFOLIO ADJUSTMENTS FUND
-------------- ---------------- ----------- ---------
DN, 4.86%, 08/10/01 34,252 34,252
DN, 4.89%, 08/15/01 99,074 99,074
DN, 4.90%, 08/24/01 61,288 61,288
DN, 4.92%, 08/01/01 33,196 33,196
DN, 4.95%, 08/03/01 39,166 39,166
DN, 5.03%, 03/16/01 86,153 86,153
DN, 5.03%, 04/04/01 147,453 147,453
DN, 5.07%, 05/02/01 69,821 69,821
DN, 5.09%, 04/06/01 11,420 11,420
DN, 5.11%, 04/25/01 74,208 74,208
DN, 5.13%, 03/21/01 212,796 212,796
DN, 5.16%, 04/11/01 24,851 24,851
DN, 5.18%, 04/17/01 95,540 95,540
DN, 5.18%, 07/06/01 88,397 88,397
DN, 5.19%, 04/27/01 23,027 23,027
DN, 5.21%, 03/07/01 149,858 149,858
DN, 5.22%, 04/27/01 59,499 59,499
DN, 5.23%, 03/01/01 300,000 300,000
DN, 5.25%, 03/28/01 49,797 49,797
DN, 5.26%, 04/20/01 147,955 147,955
DN, 5.29%, 04/18/01 96,960 96,960
DN, 5.36%, 03/02/01 49,993 49,993
DN, 5.38%, 03/02/01 99,985 99,985
DN, 5.46%, 03/22/01 49,842 49,842
DN, 5.77%, 06/01/01 7,206 7,206
DN, 5.84%, 05/11/01 24,064 24,064
DN, 5.85%, 04/09/01 120,219 120,219
DN, 5.88%, 06/27/01 147,139 147,139
DN, 5.95%, 05/11/01 74,139 74,139
DN, 6.03%, 05/01/01 74,250 74,250
DN, 6.23%, 04/16/01 51,148 51,148
DN, 6.37%, 05/04/01 49,449 49,449
DN, 6.51%, 03/15/01 24,941 24,941
DN, 6.55%, 04/09/01 24,833 24,833
DN, 6.55%, 09/13/01 24,163 24,163
DN, 6.57%, 04/20/01 24,786 24,786
DN, 6.63%, 08/31/01 24,210 24,210
FRN, 5.14%, 03/05/01 98,000 98,000
FRN, 5.24%, 05/10/01 49,995 49,995
FRN, 5.39%, 03/20/01 99,977 99,977
FRN, 5.40%, 03/15/01 159,955 159,955
FRN, 5.45%, 02/21/02 99,981 99,981
FRN, 5.45%, 03/01/01 159,970 159,970
FRN, 5.48%, 7/18/01 49,987 49,987
See Notes to Pro Forma Financial Statements.
-5-
PRO FORMA FINANCIAL STATEMENTS
JPMorgan Federal Money Market Portfolio / JPMorgan Federal Money Market Fund II
Pro forma Combining Schedule of Portfolio Investments
February 28, 2001
(Amounts in Thousands)
PRINCIPAL AMOUNT
---------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN JPMORGAN
JPMORGAN FEDERAL MONEY FEDERAL
FEDERAL MONEY MARKET PRO FORMA MONEY MARKET
MARKET FUND II PORTFOLIO ADJUSTMENTS FUND
-------------- --------- ----------- --------
FRN, 5.52%, 04/19/01 125,000 125,000
FRN, 5.52%, 10/19/01 50,000 50,000
MTN, FRN, 5.47%, 03/20/01 75,000 75,000
FEDERAL HOME LOAN MORTGAGE COMPANY - 0.82%
Federal Home Loan Mortgage Company,
DN, 5.13%, 03/19/01 25,000 25,000
DN, 5.57%, 03/08/01 24,790 24,790
STUDENT LOAN MARKETING ASSOCIATION - 6.15%
Student Loan Marketing Association,
DN, 5.00%, 03/01/01 6,175 6,175
DN, 5.05%, 03/30/01 30,000 30,000
DN, 6.02%, 04/02/01 93,750 93,750
FRN, 5.25%, 11/15/01 50,000 50,000
FRN, 5.28%, 07/19/01 28,200 28,200
FRN, 5.35%, 08/23/01 113,000 113,000
MTN, FRN, 5.25%, 09/13/01 50,000 50,000
STATE AND MUNICIPAL OBLIGATIONS - 0.91%
Tennessee Valley Authority,
DN, 4.28%, 03/05/01 55,000 55,000
TOTAL INVESTMENTS - 101.77% $1,903,421 $4,257,724 $ 6,161,145
VALUE
-------------------------------------------------------------
PRO FORMA
COMBINED
JPMORGAN
JPMORGAN JPMORGAN FEDERAL
FEDERAL MONEY FEDERAL MONEY PRO FORMA MONEY MARKET
MARKET FUND II MARKET PORTFOLIO ADJUSTMENTS FUND
-------------- ---------------- ----------- ---------
FRN, 5.52%, 04/19/01 124,946 124,946
FRN, 5.52%, 10/19/01 49,978 49,978
MTN, FRN, 5.47%, 03/20/01 74,998 74,998
-----------
4,714,076
FEDERAL HOME LOAN MORTGAGE COMPANY - 0.82%
Federal Home Loan Mortgage Company,
DN, 5.13%, 03/19/01 24,933 24,933
DN, 5.57%, 03/08/01 24,759 24,759
-----------
49,692
STUDENT LOAN MARKETING ASSOCIATION - 6.15%
Student Loan Marketing Association,
DN, 5.00%, 03/01/01 6,175 6,175
DN, 5.05%, 03/30/01 29,874 29,874
DN, 6.02%, 04/02/01 93,236 93,236
FRN, 5.25%, 11/15/01 50,000 50,000
FRN, 5.28%, 07/19/01 28,198 28,198
FRN, 5.35%, 08/23/01 113,011 113,011
MTN, FRN, 5.25%, 09/13/01 49,984 49,984
-----------
370,478
STATE AND MUNICIPAL OBLIGATIONS - 0.91%
Tennessee Valley Authority,
DN, 4.28%, 03/05/01 54,967 54,967
TOTAL INVESTMENTS - 101.77% $ 1,893,759 $ 4,239,843 $ 6,133,602
(COST $1,893,759) (COST $4,239,843)
DN - Discount Notes: The rate shown is the effective yield at the date of
purchase.
FRN - Floating Rate Note: The maturity date is the actual maturity date; the
rate shown is the rate in effect at February 28, 2001.
MTN - Medium Term Notes
See Notes to Pro Forma Financial Statements.
-6-
J.P. MORGAN FEDERAL MONEY MARKET PORTFOLIO /
JPMORGAN FEDERAL MONEY MARKET FUND II
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
AS OF FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
J.P. MORGAN J.P. MORGAN J.P. MORGAN
FEDERAL MONEY INSTITUTIONAL INSTITUTIONAL
MARKET FUND FEDERAL MONEY SERVICE FEDERAL
MARKET FUND MONEY MARKET
FUND
ASSETS:
Investment securities, at value $ - $ - $ -
Investment in The Federal Money Market Portfolio ("Portfolio"), at value 1,929,099 2,206,876 17,331
Cash - - -
Deferred organization cost - - 4
Other assets 1 331 37
Receivables:
Interest - - -
Expenses reimbursement from distributor - - -
---------------------------------------
Total Assets 1,929,100 2,207,207 17,372
---------------------------------------
LIABILITIES:
Payables:
Investment securities purchased - - -
Dividends 8,054 9,268 116
Other 5 (0) -
Accrued liabilities:
Investment advisory fees - -
Administrative service fees 374 168 9
Administration fees 37 41 5
Shareholder servicing fees - - -
Custodian fees - - -
Distribution fees - - -
Other - 82 70
---------------------------------------
Total Liabilities 8,471 9,559 200
---------------------------------------
NET ASSETS:
Paid-in capital 1,920,549 2,197,614 17,167
Accumulated undistributed (distributions in excess of ) net
investment income 18 22 5
Accumulated net realized gain on investment transactions 23 12 -
---------------------------------------
Net Assets $ 1,920,590 $ 2,197,648 $ 17,172
---------------------------------------
Shares of beneficial interest outstanding 1,920,547 2,197,615 17,167
Shares outstanding
Agency
Morgan
Premier
Institutional
Net Asset Value Per Share $ 1.00 $ 1.00 $ 1.00
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN FEDERAL MONEY MARKET FUND
Shares outstanding
Agency
Morgan
Premier
Institutional
Net Asset Value:
Agency
Investor
Premier
Institutional
---------------------------------------
Cost of investments - - -
=======================================
J.P. MORGAN FEDERAL JPMORGAN
FEDERAL MONEY FEDERAL MONEY
MARKET PORTFOLIO MARKET FUND II
ASSETS:
Investment securities, at value $ 4,239,843 $ 1,893,759
Investment in The Federal Money Market Portfolio ("Portfolio"), at value - -
Cash 32 1
Deferred organization cost - -
Other assets 4 7
Receivables:
Interest 11,986 6,762
Expenses reimbursement from distributor - 7
----------------- --------------
Total Assets 4,251,865 1,900,536
----------------- --------------
LIABILITIES:
Payables:
Investment securities purchased 98,000 -
Dividends - 7,618
Other - -
Accrued liabilities:
Investment advisory fees 412 143
Administrative service fees 1 -
Administration fees 81 143
Shareholder servicing fees - 246
Custodian fees 25 38
Distribution fees - 52
Other 40 519
----------------- --------------
Total Liabilities 98,559 8,759
----------------- --------------
NET ASSETS:
Paid-in capital - 1,891,793
Accumulated undistributed (distributions in excess of ) net
investment income - (35)
Accumulated net realized gain on investment transactions - 19
----------------- --------------
Net Assets $ 4,153,306 $ 1,891,777
----------------- --------------
Shares of beneficial interest outstanding
Shares outstanding
Agency 673,027
Investor 312,286
Premier 906,471
Institutional 1
Net Asset Value Per Share $ 1.00
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN FEDERAL MONEY MARKET FUND
Shares outstanding
Agency
Investor
Premier
Institutional
Net Asset Value:
Agency
Investor
Premier
Institutional
----------------- --------------
Cost of investments 4,239,843 $ 1,893,759
================= ==============
PRO FORMA PRO FORMA
ADJUSTMENTS COMBINED
JPMORGAN
FEDERAL MONEY
MARKET FUND
------------------ --------------
ASSETS:
Investment securities, at value $ - $ 6,133,602
Investment in The Federal Money Market Portfolio ("Portfolio"), at value (4,153,306) (a) -
Cash - 33
Deferred organization cost (4) (b) -
Other assets 380
Receivables: -
Interest - 18,748
Expenses reimbursement from distributor 4 (b) 11
------------------- -------------
Total Assets (4,153,306) 6,152,774
------------------- -------------
LIABILITIES:
Payables:
Investment securities purchased - 98,000
Dividends - 25,056
Other - 5
Accrued liabilities:
Investment advisory fees - 555
Administrative service fees - 552
Administration fees - 307
Shareholder servicing fees - 246
Custodian fees - 63
Distribution fees - 52
Other - 711
------------------- -------------
Total Liabilities - 125,547
------------------- -------------
NET ASSETS:
Paid-in capital - 6,027,123
Accumulated undistributed (distributions in excess of ) net
investment income 10
Accumulated net realized gain on investment transactions - 54
------------------- -------------
Net Assets $ (4,153,306) $ 6,027,187
------------------- -------------
Shares of beneficial interest outstanding (4,135,329) (d) -
Shares outstanding
Agency (673,027) (e) -
Morgan (312,286) (e) -
Premier (906,471) (e) -
Institutional (1) (e) -
Net Asset Value Per Share
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN FEDERAL MONEY MARKET FUND
Shares outstanding
Agency 906,471 (c) 906,471
Morgan 673,027 (c) 673,027
Premier 2,250,000 (c) 2,250,000
Institutional 2,197,615 (c) 2,197,615
Net Asset Value:
Agency $ 1.00
Morgan $ 1.00
Premier $ 1.00
Institutional $ 1.00
------------------- -------------
Cost of investments - 6,133,602
=================== =============
(a) Reallocation of investment from the feeder funds to the master portfolio.
(b) Write-off of deferred organization expenses of the portfolio.
(c) Reflects the additional number of shares outstanding due to the Concurrent
Reorganization.
(d) Reallocation of feeder fund's beneficial interest to Agency, Investor,
Premier, Institutional and Reserves Shares due to the Concurrent
Reorganization.
(e) Reallocation of Chase Vista Federal Money Market Fund II shares outstanding
to Agency, Investor, Premier, Institutional and Reserves Shares due to the
Concurrent Reorganization.
See Notes to Pro Forma Financial Statements.
-7-
J.P. MORGAN FEDERAL MONEY MARKET PORTFOLIO / JPMORGAN
FEDERAL MONEY MARKET FUND II
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
J.P. MORGAN J.P. MORGAN J.P. MORGAN J.P. MORGAN FEDERAL
FEDERAL MONEY INSTITUTIONAL INSTITUTIONAL FEDERAL MONEY
MARKET FUND FEDERAL MONEY SERVICE FEDERAL MARKET PORTFOLIO
MARKET FUND MONEY MARKET
FUND
INCOME:
Allocated investment income from portfolio $ 90,903 $ 117,347 $ 10,568 $ -
Interest income 224,708
------------------------------------------------------------------
Investment income 90,903 117,347 10,568 224,708
------------------------------------------------------------------
EXPENSES:
Investment advisory fees - - - 4,538
Administration fees 368 472 42 867
Shareholder servicing fees 3,679 1,895 74 -
Financial and fund accounting services 20 20 20 -
Distribution fees - - - -
Custodian fees - - - 329
Registration costs 171 223 43 -
Transfer agent fees 32 24 12 -
Professional fees 18 20 11 54
Printing and postage 10 8 10 10
Trustees' fees 17 19 1 37
Fund service fees - 26 1 33
Service organization fees - - 432 -
Amortization of organizational expenses - - 1 -
Other 28 14 5 22
------------------------------------------------------------------
Total expenses 4,343 2,721 652 5,890
------------------------------------------------------------------
Less amounts waived
Less earnings credit
Less expense reimbursements - 2,091 169 -
------------------------------------------------------------------
Net expenses 4,343 630 483 5,890
------------------------------------------------------------------
------------------------------------------------------------------
Net investment income 86,560 116,717 10,085 218,818
------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 62 67 5 134
Net unrealized gain (loss) on investment transactions - - - -
------------------------------------------------------------------
Net increase in net assets from operations 86,622 116,784 10,090 218,952
==================================================================
JPMORGAN FEDERAL PRO FORMA PRO FORMA
FEDERAL MONEY ADJUSTMENTS COMBINED
MARKET FUND II JPMORGAN
FEDERAL MONEY
MARKET FUND
-------------- --------------
INCOME:
Allocated investment income from portfolio $ - $ (218,818)(c) $ -
Interest income 86,715 311,423
----------------------------------------------------------
Investment income 86,715 (218,818) 311,423
----------------------------------------------------------
EXPENSES:
Investment advisory fees 1,380 (176) (a) 5,742
Administration fees 1,380 890 (a) 4,019
Shareholder servicing fees 3,304 168 (a) 9,120
Financial and fund accounting services - (60) (e) -
Distribution fees 599 - 599
Custodian fees 131 296 (e) 756
Registration costs 53 - 490
Transfer agent fees 458 - 526
Professional fees 49 (24) (f) 128
Printing and postage 14 (10) (f) 42
Trustees' fees 68 - 142
Fund service fees - - 60
Service organization fees - - 432
Amortization of organizational expenses - 4 (d) 5
Other 5 - 74
---------------------- --------------- -------------
Total expenses 7,441 1,088 22,135
---------------------- --------------- -------------
Less amounts waived 546 1,088 (a) 1,634
Less earnings credit 11 11
Less expense reimbursements 11 114 (a) 2,385
---------------------- --------------- -------------
Net expenses 6,873 (114) 18,105
---------------------- --------------- -------------
---------------------- --------------- -------------
Net investment income 79,842 (218,704) 293,318
---------------------- --------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions 73 (134)(b) 207
Net unrealized gain (loss) on investment transactions - -
---------------------- --------------- -------------
Net increase in net assets from operations 79,915 (218,838) 293,525
====================== =============== =============
(a) Reflects adjustments to administrative fees and/or related waivers based
on the surviving Fund's revised fee schedule.
(b) Reflects the elimination of realized gain of the feeder funds.
(c) Reallocation of investment income to feeder funds.
(d) Reflects write-off of deferred organization expenses of the portfolio.
(e) Reclassification of fund accounting into new combined custody fees.
(f) Reduction reflects expected benefits of combined operations.
See Notes to Pro Forma Financial Statements.
-8-
J.P. MORGAN FEDERAL MONEY MARKET FUND /J.P. MORGAN INSTITUTIONAL FEDERAL MONEY
MARKET FUND/ J.P. MORGAN INSTITUTIONAL SERVICE FEDERAL MONEY MARKET FUND / THE
FEDERAL MONEY MARKET PORTFOLIO / JPMORGAN FEDERAL MONEY MARKET FUND II
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities, Statement of
Operations and Schedule of Investments ("Pro Forma Statements") reflect the
accounts of The Federal Money Market Portfolio ("Master Portfolio"), J.P.
Morgan Federal Money Market Fund ("Federal Money Market Fund"), J.P. Morgan
Institutional Service Federal Money Market Fund ("Institutional Service") and
J.P. Morgan Institutional Money Market Fund ("Institutional"), (collectively
the "feeder funds" of the Master Portfolio) and JPMorgan Federal Money Market
Fund II ("JPMFMF") as if the proposed Concurrent Reorganization occurred as
of and for the twelve months ended February 28, 2001.
Under the Concurrent Reorganization, the Pro Forma Statements give effect to
the proposed transfer of all assets and liabilities of the Master Portfolio
and the feeder funds in exchange for shares in JPMFMF. The Pro Forma
Statements should be read in conjunction with the historical financial
statements of each Fund, which have been incorporated by reference in their
respective Statements of Additional Information.
2. SHARES OF BENEFICIAL INTEREST:
Immediately prior to the Concurrent Reorganization, JPMFMF would commence
offering Institutional Shares. The net asset value per share for the
Institutional Shares at the commencement of offering would be identical to the
closing net asset value per share for the Premier Shares immediately prior to
Concurrent Reorganization.
Under the Concurrent Reorganization, the existing shares of the Federal Money
Market Fund and Institutional Service Fund would be renamed Premier Class
Shares and the Institutional Fund would be renamed Institutional Class
Shares. The net asset values per share for the Premier and Institutional
Class Shares at the commencement of offering would be identical to the
closing net asset value per share for the Premier Shares immediately prior to
the Reorganization. In addition, the Chase Vista and Reserve Class shares
will combine and be renamed the Morgan Class and the Chase Institutional
Class shares will be renamed Agency Class Shares.
Under the proposed Concurrent Reorganization, each shareholder of the Federal
Money Market Fund, Institutional Class Service Fund and the Institutional
Class Fund would receive shares of JPMFMF with a value equal to their
holdings in their respective funds. Holders of the Federal Money Market Fund
and Institutional Service will receive Premier Class Shares in JPMFMF and
holders of the Institutional Fund will receive Institutional Class Shares.
Therefore, as a result of the proposed Concurrent Reorganization, current
shareholders of Federal Money Market Fund, Institutional Service Fund and
Institutional Fund will become shareholders of JPMFMF.
-9-
The Pro Forma net asset value per share assumes the issuance of additional
shares of JPMFMF, which would have been issued on February 28, 2001 in
connection with the proposed Concurrent Reorganization. The amount of
additional shares assumed to be issued was calculated based on the February
28, 2001 net assets of Federal Money Market Fund, Institutional Service and
Institutional Class and the net asset value per share of JPMFMF- Premier
Class.
JPMORGAN FEDERAL MONEY MARKET FUND II WITH CONCURRENT REORGANIZATION
Premier Institutional
Class Shares Class Shares
Increase in Shares Issued 1,937,714 2,197,615
Net Assets 2/28/01 $1,937,714 $2,197,615
Pro Forma Net Asset Value 2/28/01 $1.00 $1.00
3. PRO FORMA OPERATIONS:
The Pro Forma Statement of Operations assumes similar rates of gross
investment income for the investments of each Fund. Accordingly, the combined
gross investment income is equal to the sum of each Fund's gross investment
income. Certain expenses have been adjusted to reflect the expected expenses
of the combined entity. The pro forma investment advisory, administration,
shareholder servicing and distribution fees of the combined Fund and/or the
related waivers are based on the fee schedule in effect for The Surviving
Fund at the combined level of average net assets for the twelve months ended
February 28, 2001.
-10-
FORM N-14
PART C - OTHER INFORMATION
Item 15. Indemnification.
---------------
Reference is hereby made to Article V of the Registrant's Declaration
of Trust.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of Trust, the
Registrant may indemnify any person who was or is a Trustee, officer or employee
of the Registrant to the maximum extent permitted by law; provided, however,
that any such indemnification (unless ordered by a court) shall be made by the
Registrant only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who are neither described in Section 2(a)(19) of the
Investment Company Act of 1940 nor parties to the proceeding, or (ii) if the
required quorum is not obtainable or, if a quorum of such Trustees so directs,
by independent legal counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
Insofar as the conditional advancing of indemnification monies for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Registrant by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable insurance or an equivalent form
of security which assures that any repayments may be obtained by the Registrant
without delay or litigation, which bond, insurance or other form of security
must be provided by the recipient of the advance, or (b) a majority of a quorum
of the Registrant's disinterested, non-party Trustees, or an independent legal
counsel in a written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be found
entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Part C-1
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 16. Exhibits.
---------------
Declaration of Trust.
1 Declaration of Trust, as amended. (1)
2 By-laws. (1)
3 None.
4 Agreement and Plan of Reorganization filed herewith as Appendix A to the Combined
Prospectus/Proxy Statement.
5 None.
6 Form of Investment Advisory Agreement.(6)
7 Distribution and Sub-Administration Agreement dated August 21, 1995.(6)
8(a) Retirement Plan for Eligible Trustees.(6)
8(b) Deferred Compensation Plan for Eligible Trustees.(6)
9 Custodian Agreement. (1)
10(a) Rule 12b-1 Distribution Plan of Mutual Funds including Selected Dealer Agreement and
Shareholder Service Agreement. (1) and (3)
10(b) Rule 12b-1 Distribution Plan - Class B Shares (including forms of Selected Dealer
Agreement and Shareholder Servicing Agreement).(6)
10(c) Form of Rule 12b-1 Distribution Plan - Class C Shares (including forms of Shareholder
Servicing Agreements).(12)
10(d) Form of Rule 18f-3 Multi-Class Plan.(12)
Part C-2
11 Opinion and Consent of Nixon Peabody LLP as to the Legality of Shares to be filed by
Amendment.
12 Opinion and Consent of Simpson Thacher & Bartlett as to Tax Consequences to be filed
by Amendment.
13(a) Transfer Agency Agreement. (1)
13(b) Form of Shareholder Servicing Agreement. (6)
13(c) Form of Administration Agreement.(6)
13(d) Form of Administration Agreement (to be filed by Amendment).
13(e) Form of Sub-Administration Agreement (to be filed by Amendment).
14 Consent of PricewaterhouseCoopers LLP.
15 None.
16(a) Powers of Attorney for: Fergus Reid, III, H. Richard Vartabedian, William J.
Armstrong, John R.H. Blum, Stuart W. Cragin, Jr., Roland R. Eppley, Jr., Joseph J.
Harkins, W.D. MacCallan, W. Perry Neff, Richard E. Ten Haken, Irving L. Thode.
16(b) Powers of Attorney for: Sarah E. Jones and Leonard M. Spalding, Jr.
17(a) Form of Proxy Card.
17(b) Prospectus for the Surviving Fund to be filed by Amendment.
17(c) Prospectus for the Merging Fund.
17(d) Statement of Additional Information for the Surviving Fund to be filed by Amendment.
17(e) Statement of Additional Information for the Merging Fund.
17(f) Annual Report of the Surviving Fund dated August 31, 2000.
17(g) Semi-Annual Report of the Surviving Fund dated February 28, 2001.
17(h) Annual Report of the Merging Fund (including the Annual Report
of the Master Portfolio) dated October 31, 2000.
- ----------
(1) Filed as an Exhibit to the Registration Statement on Form N-1A of the
Registrant (File No. 33-75250) as filed with the Securities and
Exchange Commission on February 14,
Part C-3
1994.
(2) Filed as an Exhibit to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of the Registrant (File No.
33-75250) as filed with the Securities and Exchange Commission on
August 29, 1994.
(3) Filed as an Exhibit to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of the Registrant (File No.
33-75250) as filed with the Securities and Exchange Commission on
October 28, 1994.
(4) Filed as an Exhibit to Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A of the Registrant (File No. 33-
75250) as filed with the Securities and Exchange Commission on October
31, 1995.
(5) Filed as an Exhibit to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on December 28, 1995.
(6) Filed as an Exhibit to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on March 7, 1996.
(7) Filed as an Exhibit to Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on April 22, 1996.
(8) Filed as an exhibit to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on September 6, 1996.
(9) Filed as an exhibit to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on December 27, 1996.
(10) Filed herewith.
(11) Filed as an exhibit to Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of the Registrant as filed with the
Securities and Exchange Commission on October 27, 1997.
Item 17. Undertakings.
---------------
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
as amended (the "1933 Act"), the reoffering prospectus will contain
Part C-4
the information called for by the applicable registration form for reofferings
by persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
Part C-5
SIGNATURES
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the registrant, in the City of New York and the
State of New York, on the 12th day of April, 2001.
MUTUAL FUND TRUST
Registrant
By: /s/ H. Richard Vartabedian
-----------------------------------------
H. Richard Vartabedian
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on April 12, 2001.
* Chairman and Trustee
- ------------------------------------
Fergus Reid, III
/s/ H. Richard Vartabedian President
- ------------------------------------ and Trustee
H. Richard Vartabedian
* Trustee
- ------------------------------------
William J. Armstrong
* Trustee
- ------------------------------------
John R.H. Blum
* Trustee
- ------------------------------------
Stuart W. Cragin, Jr.
* Trustee
- ------------------------------------
Roland R. Eppley, Jr.
* Trustee
- ------------------------------------
Joseph J. Harkins
* Trustee
- ------------------------------------
Sarah E. Jones
* Trustee
- ------------------------------------
W.D. MacCallan
* Trustee
- ------------------------------------
W. Perry Neff
* Trustee
- ------------------------------------
Leonard M. Spalding, Jr.
* Trustee
- ------------------------------------
Irv Thode
* Trustee
- ------------------------------------
Richard E. Ten Haken
/s/ Martin R. Dean Treasurer and
- ------------------------------------ Principal Financial
Martin R. Dean Officer
/s/ H. Richard Vartabedian Attorney in Fact
- ---------------------------
H. Richard Vartabedian
EXHIBITS
ITEM DESCRIPTION
(14) Consent of PricewaterhouseCoopers LLP.
(16) Powers of Attorney.
(17) (a) Form of Proxy Card.
(c) Prospectus for J.P. Morgan Federal Money Market Fund.
(e) Statement of Additional Information for J.P. Morgan Federal Money Market Fund.
(f) Annual Report of JPMorgan Federal Money Market Fund II (formerly, Chase Vista Federal Money
Market Fund) dated August 31, 2000.
(h) Annual Report of J.P. Morgan Federal Money Market Fund (including the Annual Report of The
Federal Money Market Portfolio) dated October 31, 2000.