As filed with the Securities and Exchange Commission on April 16, 2001
Registration No. 333-___/811-5151
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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 SELECT 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.
PETER B. ELDRIDGE, ESQ. SARAH E. COGAN, ESQ. JOHN E. BAUMGARDNER, JR., ESQ.
J.P. Morgan Fleming Asset Simpson Thacher & Bartlett Sullivan & Cromwell
Management (USA) Inc. 425 Lexington Avenue 125 Broad Street
522 Fifth Avenue New York, NY 10017-3954 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 16, 2001 pursuant
to Rule 488 under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required because an indefinite number of shares have previously been
registered on Form N-1A (Registration No. 333-13319/811-7841) pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended. The Registrant's
lForm 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 INSTITUTIONAL TAX EXEMPT BOND FUND
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
May 16, 2001
Dear Shareholder:
A special meeting of the shareholders of J.P. Morgan Institutional
Tax Exempt Bond Fund (the "Merging Fund"), a series of J.P. Morgan
Institutional Funds ("JPMIF"), 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
Intermediate Tax Free Income Fund (formerly, Chase Vista Intermediate Tax
Free Income Fund) (the "Surviving Fund"), a series of Mutual Fund Select
Trust ("MFST") (the "Reorganization"). After the Reorganization, shareholders
of the Merging Fund would hold shares of the Surviving Fund. The investment
objective and policies of the Surviving Fund generally are similar to those
of the Merging Fund. In connection with the Reorganization, the Surviving
Fund will be renamed "JPMorgan Tax Exempt Bond 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 an agreement and plan of
reorganization with J.P. Morgan Tax Exempt Bond Fund, a fund whose assets are
managed by J.P. Morgan Investment Management Inc. ("JPMIM") and which has
identical investment objectives and policies to the Merging Fund (the
"Concurrent Reorganization"). If the Concurrent Reorganization is approved by
the shareholders of J.P. Morgan Tax Exempt Bond Fund and certain other
conditions are met, this other fund 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 JPMIF.
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 JPMIF to the
Surviving Fund and MFST. The cost and expenses associated with the
Reorganization, including costs of soliciting proxies, will be borne by JPMC
and not by the Merging Fund, JPMIF, the Surviving Fund, MFST or their
shareholders.
If approval of the Reorganization is obtained, you will
automatically receive shares of the Surviving Fund.
The Proposals have been carefully reviewed by the Board of Trustees
of JPMIF, which has approved the Proposals.
THE BOARD OF TRUSTEES OF JPMIF UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" EACH OF THE PROPOSALS.
Following this letter is a list of commonly asked questions. If you
have any additional questions on voting of proxies and/or the meeting agenda,
please call us at 1-800-766-7722.
A proxy card is enclosed for your use in the shareholder meeting.
This card represents shares you held as of the record date, __________, 2001.
IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE
ENVELOPE PROVIDED OR CALL _________ AS SOON AS POSSIBLE. This will ensure
that your shares will be represented at the Meeting to be held on July 3,
2001.
Please read the enclosed materials carefully. You may, of course,
attend the meeting in person if you wish, in which case the proxy can be
revoked by you at the Meeting.
Sincerely,
Matthew Healey
Chairman
SPECIAL NOTE: Certain shareholders may receive a telephone call from 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.
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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 a more diversified fund and in better service
for shareholders, including a wider variety of investment options.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
In connection with the Reorganization, the Merging Fund will transfer all of
its assets and liabilities to the Surviving Fund and will receive, in
exchange, shares of the Surviving Fund. The Merging Fund will then be
liquidated and those shares of the Surviving Fund will be distributed pro
rata to shareholders such as you. After the Reorganization, you will own
shares of the Surviving Fund rather than shares of 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
-------------- ------------
- Investment objective is to seek to - Investment objective is to provide a
provide monthly dividends, which high level of current income that is
are excluded from gross income, exempt from federal income tax
and to protect the value of your consistent with moderate risk of
investment by investing primarily in capital.
municipal obligations.
- Invests in securities rated - May invest up to 10% of its assets
investment grade or unrated in non-investment grade securities
securities of comparable quality. (sometimes called "junk bonds")
rated B or BB/Ba.
- The Surviving Fund is not - The Merging Fund is diversified
diversified under the 1940 Act. under the 1940 Act.
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 assets in
the Tax Exempt Bond Portfolio (the "Master Portfolio") (which in turn invests
in portfolio securities), the Surviving Fund invests directly in portfolio
securities.
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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 of the Surviving Fund.
HOW WILL THE PROPOSED CONCURRENT REORGANIZATION AFFECT MY INVESTMENT IF IT IS
APPROVED BY THE SHAREHOLDERS OF THE OTHER FUND?
If the Concurrent Reorganization is approved and certain other conditions are
met, the assets and liabilities of the other merging fund 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 JPMIF IF AFTER
THE REORGANIZATION I WILL OWN SHARES IN THE SURVIVING FUND, A SERIES OF MFST?
Even if the Reorganization is approved, other mutual funds that are series of
JPMIF will continue to exist and operate. All shareholders of any series of
JPMIF as of the record date (April 6, 2001) are required to be given a vote
on proposals regarding Trustees. Because as of the record date you are still
a shareholder in JPMIF, you are entitled to vote on this proposal.
Shareholders of MFST are being asked to approve the same Trustees that are
proposed for JPMIF.
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
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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.
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J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND,
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 3, 2001
To the Shareholders of
J.P. Morgan Tax Exempt Bond Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of J.P. Morgan Institutional Tax Exempt Bond Fund (the
"Merging Fund"), a series of J.P. Morgan Institutional Funds ("JPMIF"), will
be held at the offices of J.P. Morgan Chase & Co., 1211 Avenue of the
Americas, 41st floor, New York, NY, on July 3, 2001 at 9:00 a.m., (Eastern
time) for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement
and Plan of Reorganization (the "Reorganization Plan") by and
among JPMIF, on behalf of the Merging Fund, Mutual Fund Select
Trust ("MFST"), on behalf of JPMorgan Intermediate Tax Free
Income Fund (formerly, Chase Vista Intermediate Tax Free
Income Fund) (the "Surviving Fund"), and J.P. Morgan Chase &
Co., and the transactions contemplated thereby, including (a)
the transfer of all of the assets and liabilities of the
Merging Fund to the Surviving Fund in exchange for
Institutional 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 JPMIF.
ITEM 3. To transact such other business as may properly come before
the Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF
ITEMS 1 AND 2.
Each proposal is described in the accompanying Combined
Prospectus/Proxy Statement. Attached as Appendix A to the Combined
Prospectus/Proxy Statement is a copy of the Reorganization Plan.
Shareholders of record as of the close of business on April 6, 2001
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF JPMIF. 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 16, 2001
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COMBINED PROSPECTUS/PROXY STATEMENT
DATED MAY 16, 2001
ACQUISITION OF THE ASSETS AND LIABILITIES OF
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND,
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
60 STATE STREET, SUITE 1300
BOSTON, MASSACHUSETTS 02109
(617) 557-0700
BY AND IN EXCHANGE FOR SHARES OF
JPMORGAN INTERMEDIATE TAX FREE INCOME FUND
(FORMERLY, CHASE VISTA INTERMEDIATE TAX FREE INCOME FUND),
A SERIES OF MUTUAL FUND SELECT TRUST
1211 AVENUE OF THE AMERICAS, 41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 766-7722
This Combined Prospectus/Proxy Statement relates to the proposed
Reorganization of J.P. Morgan Institutional Tax Exempt Bond Fund (the "Merging
Fund"), a series of J.P. Morgan Institutional Funds ("JPMIF"), into JPMorgan
Intermediate Tax Free Income Fund (formerly, Chase Vista Intermediate Tax Free
Income Fund) (the "Surviving Fund"), a series of Mutual Fund Select Trust
("MFST"). If approved by shareholders of the Merging Fund, the proposed
Reorganization will be effected by transferring all of the assets and
liabilities of the Merging Fund to the Surviving Fund, which has 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"). JPMIF and MFST are both open-end
management investment companies offering shares in several portfolios. In
connection with the Reorganization, the Surviving Fund will be renamed "JPMorgan
Tax Exempt Bond Fund."
If the proposed Reorganization is approved by Merging Fund
Shareholders, each Merging Fund Shareholder will receive Institutional 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 offers Institutional Class shares. In connection with the
Reorganization, this class will be renamed "Select Class" and the Surviving Fund
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
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"Reorganization Plan") among JPMIF, on behalf of the Merging
Fund, MFST, 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 JPMIF is soliciting proxies in connection
with a Special Meeting (the "Meeting") of Shareholders to be held on July 3,
2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase & Co., 1211
Avenue of the Americas, 41st floor, New York, NY, at which meeting shareholders
in the Merging Fund will be asked to consider and approve the proposed
Reorganization Plan, certain transactions contemplated by the Reorganization
Plan and certain other proposals. This Combined Prospectus/Proxy Statement
constitutes the proxy statement of the Merging Fund for the meeting of its
Shareholders and also constitutes MFST'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 JPMIF that
an investor should know before voting on the proposals. The current
Prospectuses, Statements of Additional Information and Annual Reports of
Shareholders for the Merging Fund and the Surviving Fund (including the Annual
Report of the Master Portfolio) and the Semi-Annual Report of the Surviving Fund
(including the Semi-Annual Report of the Master Portfolio) are incorporated
herein by reference, and the current Prospectus, Annual Report (including the
Annual Report of The Tax Exempt Bond Portfolio) and the Semi-Annual Report
(including the Semi-Annual Report of the Portfolio) to Shareholders for the
Surviving Fund are enclosed with this Combined Prospectus/Proxy Statement. A
Statement of Additional Information relating to this Combined Prospectus/Proxy
Statement dated May 16, 2001 containing additional information about MFT and
JPMIF has been filed with the Commission and is incorporated by reference into
this Combined Prospectus/Proxy Statement. A copy of the Statement of Additional
Information as well as the Prospectus, Statement of Additional Information,
Annual Report and Semi-Annual Report of the Merging Fund (including the Annual
Report and Semi-Annual Report of The Tax Exempt Bond Portfolio") may be obtained
without charge by writing to MFT at its address noted above or by calling
1-800-766-7722.
This Combined Prospectus/Proxy Statement is expected to first be sent
to shareholders on or about May 16, 2001.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR
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MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MFST OR JPMIF.
INVESTMENTS IN THE SURVIVING FUND ARE SUBJECT TO RISK--INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. NO SHARES IN THE SURVIVING FUND ARE BANK DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY
INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
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TABLE OF CONTENTS
PAGE
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INTRODUCTION......................................................................................................1
PROPOSAL 1: REORGANIZATION PLAN..................................................................................1
SUMMARY...........................................................................................................1
COMPARATIVE FEE AND EXPENSE TABLES................................................................................5
RISK FACTORS......................................................................................................8
INFORMATION RELATING TO THE PROPOSED REORGANIZATION...............................................................9
INVESTMENT POLICIES..............................................................................................14
PURCHASES, REDEMPTIONS AND EXCHANGES.............................................................................19
DISTRIBUTIONS AND TAXES..........................................................................................23
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING
FUND'S ORGANIZATION STRUCTURE................................................................................24
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND
OTHER SERVICES...............................................................................................26
PROPOSAL 2: ELECTION OF TRUSTEES.................................................................................29
VOTE REQUIRED....................................................................................................30
INFORMATION RELATING TO VOTING MATTERS...........................................................................34
ADDITIONAL INFORMATION ABOUT MFST................................................................................36
ADDITIONAL INFORMATION ABOUT JPMIF...............................................................................37
FINANCIAL STATEMENTS AND EXPERTS.................................................................................37
OTHER BUSINESS...................................................................................................37
LITIGATION.......................................................................................................38
SHAREHOLDER INQUIRIES............................................................................................38
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 JPMIF of proxies to
be used at a Special Meeting of Shareholders of the Merging Fund to be held on
July 3, 2001 at 9:00 a.m., Eastern time, at the offices of J.P. Morgan Chase &
Co., 1211 Avenue of the Americas, 41st floor, New York, NY (together with any
adjournments thereof, the "Meeting"). It is expected that the mailing of this
Combined Prospectus/Proxy Statement will be made on or about May 16, 2001.
PROPOSAL 1: REORGANIZATION PLAN
At the Meeting, Merging Fund Shareholders will consider and vote upon
the Agreement and Plan of Reorganization (the "Reorganization Plan") dated
_______, 2001 among JPMIF, on behalf of the Merging Fund, MFST, on behalf of the
Surviving Fund (the Merging Fund and the Surviving Fund are collectively defined
as the "Funds"), and J.P. Morgan Chase & Co. ("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 Tax Free
Bond Fund." Further information relating to the Surviving Fund is set forth
herein, and the Surviving Fund's Prospectus and Annual Report is enclosed with
this Combined Prospectus/Proxy Statement.
THE JPMIF 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 JPMIF Board will
consider other appropriate courses of action.
SUMMARY
The following is a summary of certain information relating to the
proposed Reorganization, the parties thereto and the transactions contemplated
thereby, and is qualified by reference to the more complete information
contained elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus,
Statement of Additional Information and Annual Report in respect of each of the
Surviving Fund and the Merging
Fund (including the Annual Report of The Tax Exempt Bond Portfolio), the
Semi-Annual Report in respect of the Merging Fund (including the Semi-Annual
Report of The Tax Exempt Bond Portfolio) and the Reorganization Plan attached
to this Combined Prospectus/Proxy Statement as Appendix A.
PROPOSED REORGANIZATION
Pursuant to the proposed Reorganization, 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 Institutional 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 MFST
Board and the JPMIF Board, including a majority of each Board's members who are
not "interested persons" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act"), have each determined that the proposed
Reorganization is in the best interests of 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 combined funds that
have [similar/identical] investment objectives and policies and each board
believes that the Reorganization should result in a more diversified fund and
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
Tax Exempt Bond 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 Tax Exempt Bond
Fund, a series of J.P. Morgan Funds with identical investment objectives and
policies as the Merging Fund (the "Feeder Portfolio") also currently invests all
of its investable assets in the Master Portfolio. The Surviving Fund has entered
into a substantially similar agreement and plan of reorganization with the
Feeder Portfolio (the "Concurrent Reorganization"). If each of the
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Reorganization and the Concurrent Reorganization is approved by the shareholders
of the Merging Fund and the Feeder Portfolio, respectively, and certain other
conditions are met, the Merging Fund and the Feeder Portfolio will be
reorganized into the Surviving Fund and those funds 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. A shareholder's holding period and
tax basis of Surviving Fund Shares received by a Shareholder of a 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 Portfolio) 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 adviser
for the Surviving Fund following the Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Surviving Fund is to seek to provide
monthly dividends, which are excluded from gross income, and to protect the
value of your investment by investing primarily in municipal obligations. The
investment objective of the Merging Fund is to provide a high level of current
income that is exempt from federal income tax consistent with moderate risk of
capital. See "Risk Factors" and "Investment Policies."
The investment policies of the Surviving Fund generally are similar to
those of the Merging Fund. However, there are certain important differences. 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. As a fundamental policy, the Surviving Fund normally
invests at least 80% of its total assets in municipal obligations whose interest
payments are (i) excluded from gross income and (ii) excluded from the federal
alternative minimum tax on individuals.
The Surviving Fund invests in securities that are rated as investment
grade (BBB/Baa or above) by Standard & Poor's, Moody's or Fitch. It may also
invest in
-3-
unrated securities of comparable quality. THE MERGING FUND MAY INVEST
UP TO 10% OF ITS ASSETS IN NON-INVESTMENT GRADE SECURITIES (SOMETIMES CALLED
"JUNK BONDS") RATED B OR BB/Ba OR THE UNRATED EQUIVALENT.
The Surviving Fund is not diversified under the 1940 Act, which means
it can invest a greater percentage of its assets in a particular issuer or group
of issuers than a diversified fund would. THE MERGING FUND IS DIVERSIFIED.
The average dollar-weighted maturity of the Surviving Fund's portfolio
will be between three and 10 years. THE MERGING FUND'S SECURITIES MAY BE OF ANY
MATURITY.
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 fixed income securities. In particular, the value of shares of the
Surviving Fund will be influenced by the performance of the securities selected
for its portfolio. The principal value of fixed-income investments tends to fall
when prevailing interest rates rise. A municipality that gets into financial
trouble could find it difficult to make interest and principal payments, which
would hurt the Surviving Fund's returns and its ability to preserve capital and
liquidity. A number of issuers have a recent history of significant financial
difficulties. More than 5% of the Surviving Fund's total assets may be invested
in any one municipality, which could increase this risk. Normally, the Surviving
Fund may invest up to 20% of its total assets in securities whose interest is
subject to the federal alternative minimum tax. The Surviving Fund is not
diversified. It may invest a greater percentage of its assets in a particular
issuer or group of issuers than a diversified fund would. That makes the value
of its shares more sensitive to economic problems among those issuing the
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 0.30% of average daily net assets. The Merging Fund currently pays a
management fee indirectly at an annual rate of 0.30% of average daily net
assets. Following the Reorganization, JPMFAM will manage the Surviving Fund's
assets and will receive a fee at an annual rate of 0.30% 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, the Distributor serves as sub-administrator and DST Systems, Inc.
("DST") serves as transfer agent and dividend
-4-
disbursing agent for the Surviving Fund. PricewaterhouseCoopers LLP serves
as the Surviving Fund's independent accountants.
ADMINISTRATOR
As administrator, Chase receives a fee of 0.15% 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 0.075% for complex
wide non-money market Fund assets in excess of $25 billion.
ORGANIZATION
Each of MFST and JPMIF is organized as a Massachusetts business trust.
The Merging Fund is organized as a series of JPMIF and the Surviving Fund is
organized as a series of MFST.
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 of the Merging Fund will receive Institutional Class shares of the
Surviving Fund. Please note that the Surviving Fund currently offers
Institutional Class shares. In connection with the Reorganization and the
Concurrent Reorganization, this class will be renamed "Select Class" and the
Surviving Fund will introduce a new Institutional Class of shares.
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.
-5-
THE MERGING FUND THE SURVIVING FUND
-------------------- ----------------------
INSTITUTIONAL CLASS
SHARES SHARES*
-------------------- ----------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT) -Maximum Sales Charge (Load) when you
buy shares, shown as % of the offering price........... None None
Maximum Deferred Sales Charge
(Load) shown as lower of original purchase
price or redemption proceeds........................... None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees............................................ 0.30% 0.30%
Distribution (12b-1) Fees.................................. None None
Other Expenses............................................. 0.21% 0.45% #
Total Annual Fund Operating Expenses....................... 0.51% 0.75% #
* Based on the expenses incurred in the most recent fiscal year.
# Restated from the most recent fiscal year to reflect current expense
arrangements.
-6-
THE SURVIVING FUND
------------------------
PRO FORMA WITH
CONCURRENT
REORGANIZATION
------------------------
Institutional
Shares
------------------------
SHAREHOLDER FEES (fees paid directly from your investment)-
Maximum Sales Charge (Load) when you buy shares, shown as % of the
offering price.......................................................... None
Maximum Deferred Sales Charge (Load) shown as lower of original
purchase price or redemption proceeds None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)
Management Fees 0.30%
Distribution (12b-1) Fees None
Other Expenses 0.29%
Total Annual Fund Operating Expenses 0.59%
Fee Waivers and Expense Reimbursements (A) (0.09)%
Net Expenses 0.50%
(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 expense) exceed 0.50% of average daily net assets with
respect to Institutional Class Shares for three years after the
Reorganization.
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
-7-
- - each Fund's operating expenses are waived for three years after the
Reorganization remain the same as shown above.
Although actual costs may be higher or lower, based upon these assumptions your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---------- ---------- ----------
THE MERGING FUND........................................... $ 52 $ 164 $ 285 $ 640
THE SURVIVING FUND
Institutional Class Shares.............................. $ 77 $ 240 $ 417 $ 930
PRO FORMA THE SURVIVING FUND WITH CONCURRENT
REORGANIZATION
Institutional Class Shares.............................. $ 51 $ 160 $ 301 $ 711
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 generally 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.
All mutual funds carry a certain amount of risk. You may lose money on
your investment in the Surviving Fund. The Surviving Fund may not achieve its
objective if JPMFAM's expectations regarding particular securities or markets
are not met. Adverse market conditions may from time to time cause the Fund to
take temporary defensive positions that are inconsistent with its principal
investment strategies and may hinder the Fund from achieving its investment
objective.
The principal value of fixed-income investments tends to fall when
prevailing interest rates rise.
A municipality that gets into financial trouble could find it difficult
to make interest and principal payments, which would hurt the Surviving Fund's
returns and its ability to preserve capital and liquidity. A number of issuers
have a recent history of significant financial difficulties. More than 5% of the
Fund's total assets may be invested in any one municipality, which could
increase this risk.
The Surviving Fund is not diversified. It may invest a greater
percentage of its assets in a particular issuer or group of issuers than a
diversified fund would. That makes the value of its shares more sensitive to
economic problems among those issuing the securities. In addition, more than 25%
of the Surviving Fund's total assets may be invested in securities that rely on
similar projects for their income stream. As a result, the Surviving Fund could
be more susceptible to developments that affect those projects. THE MERGING FUND
IS DIVERSIFIED.
-8-
Under some circumstances, municipal lease obligations might not pay
interest unless the state or municipal legislature authorizes money for that
purpose. Some securities, including municipal lease obligations, carry
additional risks. For example, they may be difficult to trade or interest
payments may be tied only to a specific stream of revenue.
Normally, the Surviving Fund may invest up to 20% of its total assets
in securities whose interest is subject to the federal alternative minimum tax.
Consult your tax professional for more information.
Since some municipal obligations may be secured or guaranteed by banks
and other institutions, the risk to the Surviving Fund could increase if the
banking or financial sector suffers an economic downturn.
The Surviving Fund may invest in municipal obligations backed by
foreign institutions. This could carry more risk than securities backed by U.S.
institutions, because of political or economic instability, the imposition of
government controls, or regulations that don't match U.S. standards.
The value of zero coupon securities, inverse floaters and interest rate
caps tends to fluctuate according to interest rate changes significantly more
than the value of ordinary interest-paying debt securities. The price of a
security with an interest rate cap will change more often and to a greater
degree than a municipal security without one.
A forward commitment could lose value if the underlying security falls
in value before the settlement date or if the other party fails to meet its
obligation to complete the transaction.
Derivatives may be more risky than other types of investments because
they may respond more to changes in economic conditions than other types of
investments. If they are used for non-hedging purposes, they could cause losses
that exceed the Surviving Fund's original investment.
Investments in the Surviving Fund are not bank deposits or obligations
of, or guaranteed or endorsed by, any bank and are not insured or guaranteed by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.
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.
-9-
DESCRIPTION OF THE REORGANIZATION PLAN
In connection with the Reorganization and the Concurrent
Reorganization, the Merging Fund will cease investing in the Merging Fund 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, MFST will issue at the Effective Time of
the Reorganization full and fractional Institutional 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 Institutional Class Shares received by it to the Merging Fund
Shareholders in liquidation of the Merging Fund. Each Merging Fund Shareholder
at the Effective Time of the Reorganization will receive an amount of
Institutional 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.
-10-
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition to the performance of such party under the
Reorganization Plan or a material covenant of the other party is not fulfilled
by the date specified in the Reorganization Plan or if there is a material
default or material breach of the Reorganization Plan by the other party. In
addition, either party may terminate the Reorganization Plan if its trustees
determine that proceeding with the Reorganization Plan is not in the best
interests of their Fund's shareholders.
BOARD CONSIDERATIONS
The JPMF Board met on March 26 and 27, 2001 and the MFST Board met on
April 3, 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.
Each 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 larger
fund that has generally had better historical performance. A larger fund should
enhance the ability of the investment adviser to effect portfolio transactions
on more favorable terms and provide greater flexibility and the ability to
select a larger number of portfolio securities. This could result in increased
diversification for shareholders. In addition, the larger aggregate asset base
could, over time, result in lower overall expense ratios for shareholders
through the spreading of both fixed and variable costs of operations over a
larger asset base. As a general rule, economies of scale may be realized with
respect to fixed expenses, such as costs of printing and fees for professional
services, although expenses that are based on the
-11-
value of assets or the number of shareholder accounts, such as custody fees,
would be largely unaffected by the Reorganization.
Each 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 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
Reorganization, approved the Reorganization Plan and directed that the
Reorganization Plan be submitted to the Merging Fund Shareholders for approval.
THE JPMIF BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
The JPMIF 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 a reorganization plan which is substantially
similar to the Reorganization Plan you are considering. Concurrently with the
Reorganization and the Concurrent Reorganization, the Merging Fund and the
Feeder Portfolio 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
JPMIF receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax
-12-
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.
JPMIF has not sought a tax ruling from the Internal Revenue Service
(the "IRS"), but is acting in reliance upon the opinion of counsel discussed in
the previous paragraph. That opinion is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. Shareholders should consult
their own advisers concerning the potential tax consequences to them, including
state and local income taxes.
CAPITALIZATION
Because the Merging Fund will be combined with the Surviving Fund in
the Reorganization as well as another fund 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. The Surviving Fund
currently offers Institutional Class shares. In connection with the
Reorganization and the Concurrent Reorganization, this class will be renamed
"Select Class" and the Surviving Fund will introduce a new Institutional Class
of shares.
-13-
CAPITALIZATION
PRO FORMA WITH CONCURRENT REORGANIZATION
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
BENEFICIAL SHARES NET ASSETS NET ASSET
INTEREST OUTSTANDING VALUE PER
OUTSTANDING SHARE
J.P. MORGAN FUNDS
Tax Exempt Bond 29,761 - $354,798 $11.92
Intitutional Tax Exempt Bond
(The Merging Fund) 52,586 - $541,218 $10.29
Surviving Fund
Institutional Shares - 65,766 705,863 $10.73
PRO FORMA COMBINED WITH CONCURRENT
REORGANIZATION
Select Shares - 98,823 $1,060,661 $10.73
Institutional Shares - 50,426 $541,218 $10.73
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.
OBJECTIVE
The investment objective of the Surviving Fund is to seek to provide
monthly dividends, which are excluded from gross income, and to protect the
value of your investment by investing primarily in municipal obligations. THE
INVESTMENT OBJECTIVE OF THE MERGING FUND IS TO PROVIDE A HIGH LEVEL OF CURRENT
INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX CONSISTENT WITH MODERATE RISK OF
CAPITAL. Both Funds may change their 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.
As a fundamental policy, the Surviving Fund normally invests at least
80% of its total assets in municipal obligations whose interest payments are:
o excluded from gross income, and
o excluded from the federal alternative minimum tax on individuals.
Municipal obligations are those issued by states, territories and possessions of
the United States and their political subdivisions, agencies and
instrumentalities.
The Surviving Fund invests in securities that are rated as investment
grade by Moody's Investors Service, Inc., Standard & Poor's Corporation or Fitch
Investors Service Inc. It may also invest in unrated securities of comparable
quality. THE MERGING FUND MAY INVEST UP TO 10% OF ITS ASSETS IN NON-INVESTMENT
GRADE SECURITIES (SOMETIMES CALLED "JUNK BONDS") RATED B OR BB/BA OR THE UNRATED
EQUIVALENT.
-14-
The Surviving Fund may also invest in derivatives, inverse floaters and
interest rate caps, zero coupon securities and forward commitments. These
instruments may be used to increase the Fund's income or gain. Derivatives,
which are financial instruments whose value is based on another security, index
or exchange rate, might also be used to hedge various market risks.
The Surviving Fund seeks to develop an appropriate portfolio by
comparing, among other factors, credit quality, yields and call provisions of
different municipal issuers, and examining structural changes along the yield
curve in an attempt to maximize investment returns while minimizing risk.
The average dollar-weighted maturity of the Surviving Fund's portfolio
will be between three and 10 years. THE MERGING FUND'S SECURITIES MAY BE OF ANY
MATURITY, BUT IT'S DURATION GENERALLY WILL RANGE BETWEEN FOUR AND SEVEN YEARS.
Under normal market conditions, the Surviving Fund reserves the right
to invest up to 20% of its total assets in securities that pay interest subject
to federal income tax or the federal alternative minimum tax on individuals. To
temporarily defend the value of its assets during unusual market conditions, the
Fund may exceed this limit.
No more than 25% of total assets may be invested in any one industry,
other than governments and public authorities.
The Surviving Fund may invest in money market funds so that it can
easily convert investments into cash without losing a significant amount of
money in the process.
The Surviving Fund may also invest in municipal lease obligations.
These allow the Fund to participate in municipal lease agreements and
installment purchase contracts. The Surviving Fund may invest up to 25% of its
total assets in municipal lease obligations backed by letters of credit or
guarantees from U.S. and foreign banks and other foreign institutions.
There may be times when there are not enough securities available to
meet the Surviving Fund's needs. On these occasions, the Fund may invest in
repurchase agreements or Treasury securities that may be subject to federal
income tax.
The Surviving Fund may change any of its non-fundamental investment
policies (including its investment objective) without shareholder approval.
How frequently the Surviving Fund buys and sells securities will vary
from year to year, depending on market conditions.
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
-15-
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
----------------- ---------------
- -------------------------------------------------------- -----------------------------------------------
The Surviving Fund is non-diversified The Merging Fund may not make any
under the 1940 Act. investment inconsistent with the Fund's
classification as a diversified investment
company under the 1940 Act.
- -------------------------------------------------------- -----------------------------------------------
The Surviving Fund may not purchase the The Merging Fund may not purchase any
securities of any issuer (other than securities security which would cause it to concentrate
issued or guaranteed by the U.S. its investments in the securities of issuers
government or any of its agencies or primarily engaged in any particular industry
instrumentalities, or repurchase agreements except as permitted by the Commission.
secured 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, 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. This restriction is not
applicable to investments in the municipal
obligations where the issuer is regarded as
a state, city, municipality or other public
authority since such entities are not
members of any "industry."
- -------------------------------------------------------- -----------------------------------------------
The Surviving Fund may not borrow The Merging Fund may not borrow money,
money, except for temporary or emergency except to the extent permitted by applicable
purposes, or by engaging in reverse law.
repurchase transactions, in an amount not
exceeding 33-1/3% 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 The Merging Fund may not purchase or sell
- -------------------------------------------------------- -----------------------------------------------
-16-
sell physical commodities unless acquired commodities or commodity contracts unless
as a result of ownership of securities or acquired as a result of ownership of
other instruments but this shall not prevent securities or other instruments issued by
the Fund from (i) purchasing or selling persons that purchase or sell commodities
options and futures contracts or from or commodities contracts; but this shall not
investing in securities or other instruments prevent the Merging Fund from purchasing,
backed by physical commodities or (ii) selling and entering into financial futures
engaging in forward purchases or sales of contracts (including futures contracts on
foreign currencies or securities. 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, The Merging Fund may make loans to other
except that the Surviving Fund may: (i) persons, in accordance with the Fund's
purchase and hold debt instruments investment objective and policies and to the
(including without limitation, bonds, notes, extent permitted by applicable law.
debentures or 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 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.
-17-
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, (b) invest in
securities or other instruments issued by issuers that invest in real estate and
(c) make direct investments in mortgages.
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. The Merging Fund
currently invests all of its investable assets in the Master Portfolio.
Following the Reorganizations, 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 The Merging Fund may not acquire any
than 15% of its net assets in illiquid illiquid securities, such as repurchase
securities. agreements with more than seven days to
maturity or fixed time deposits with a
duration of over seven calendar days, if as a
result thereof, more than 15% of the market
value of the Merging Fund's net assets
would be in investments which are illiquid.
- -------------------------------------------------------- -----------------------------------------------
The Surviving Fund may not make short The Merging Fund may not purchase
sales of securities, other than short sales securities on margin, make short sales of
"against the box," or purchase securities on securities, or maintain a short position,
margin except for short-term credits provided that this restriction shall not be
necessary for clearance of portfolio deemed to be applicable to the purchase or
transactions, provided that this restriction sale of when-issued or delayed delivery
will not be applied to limit the use of securities, or to short sales that are covered
options, futures contracts and related in accordance with Commission rules.
options, in the manner otherwise permitted
by the investment restrictions, policies and
investment program of the Fund. The
Surviving Fund does not have the current
intention of making short sales against the
box.
- -------------------------------------------------------- -----------------------------------------------
-18-
The Surviving Fund may invest up to 5% of The Merging Fund may not acquire
its total assets in the securities of any one securities of other investment companies,
investment company, but may not own except as permitted by the 1940 Act or any
more than 3% of the securities of any one order pursuant thereto.
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 The Merging Fund is not subject to a
sell interests in oil, gas or mineral leases. similar non-fundamental restriction.
- -------------------------------------------------------- -----------------------------------------------
The Surviving Fund may not write, The Merging Fund is not subject to a
purchase or sell any put or call option or similar non-fundamental restriction.
any combination thereof, 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
transactions, 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 may not, with respect The Merging Fund is not subject to a
to 50% of its assets, hold more than 10% of similar non-fundamental restriction.
the outstanding voting securities of any
issuer.
- -------------------------------------------------------- -----------------------------------------------
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. Please note that the Surviving Fund
currently offers Institutional Class shares. In connection with the
Reorganization and the Concurrent Reorganization, this class will be renamed
"Select Class" and the Surviving Fund will introduce a new Institutional Class
of shares. The following discussion applies to Institutional Class shares. This
section is qualified in its entirety by the discussion in the
-19-
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 Institutional Class shares.
12b-1 FEES
There is no Rule 12b-1 distribution plan for Institutional Class
shares.
BUYING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF INSTITUTIONAL 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 generally values its assets at fair market values but may use
fair value if market prices are unavailable.
The NAV of each class of the Surviving Fund's shares is generally
calculated once each day at the close of regular trading on the New York Stock
Exchange. A shareholder will pay the next NAV calculated after the JPMorgan
Funds Service Center (the "Center") receives that shareholder's order in proper
form. An order is in proper form only after payment is converted into federal
funds.
The Center accepts purchase orders on any business day that the New
York Stock Exchange is open. If an order is received in proper form by the close
of regular trading on the New York Stock Exchange, it will be processed at that
day's price and the purchaser will be entitled to all dividends declared on that
day. If an order is received after the close of regular trading on the New York
Stock Exchange, it will generally be processed at the next day's price. If a
purchaser pays by check for Surviving Fund shares before the close of regular
trading on the New York Stock Exchange, it will generally be processed the next
day the Surviving Fund is open for business.
If a shareholder buys through an agent and not directly from the
Center, the agent could set earlier cut-off times. Each shareholder must provide
a Social Security Number or Taxpayer Identification Number when opening an
account.
The Surviving Fund has the right to reject any purchase order for any
reason.
All purchases of Institutional Class shares of the Surviving Fund must
be paid for by federal funds wire. They generally may be purchased only through
financial service firms, such as broker-dealers and banks that have an agreement
with the Surviving Fund or the Fund's distributor.
-20-
For Institutional 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 Surviving Fund. Orders by wire will be canceled if
the Center does not receive payment by 4:00 p.m., Eastern time, on the day the
shareholder buys.
Shareholders seeking to buy Institutional 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.
A systematic investment plan is available for Institutional Class
shares.
SELLING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF THE INSTITUTIONAL 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 close
of regular trading on the New York Stock Exchange, the Surviving Fund will send
the proceeds the next business day. An order to sell shares will not be accepted
if the Surviving Fund has not collected payment for the shares. The Surviving
Fund may stop accepting orders to sell and may postpone payments for more than
seven days, as federal securities laws permit.
Generally, proceeds are sent by check, electronic transfer or wire for
Institutional Class shares. 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 will be sent only to the bank account on the
Surviving Fund's records.
For Institutional 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.
-21-
Shareholders may also sell their shares by contacting the Center
directly by calling _______.
A systematic withdrawal plan is available for Institutional Class
shares.
EXCHANGING SURVIVING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF INSTITUTIONAL CLASS
SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Institutional Class shares of the Surviving Fund may be exchanged
for Institutional Class shares in certain other JPMorgan Funds.
For tax purposes, an exchange is treated as a sale of those shares.
Shareholders should carefully read the prospectus of the fund into which they
want to exchange. Shareholders who exchange must meet any minimum investment
requirements and may have to pay a sales commission.
The exchange privilege is not a means of short-term trading as this
could increase management cost and affect all shareholders of the Surviving
Fund. The 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 Institutional Class shares, the Surviving Fund may close an
account if the balance falls below $1,000,000. 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 Surviving Fund
records. If they do correspond, the Surviving Fund is generally authorized to
follow that person's instructions. The Surviving Fund will take all
reasonable precautions to confirm that the instructions are genuine.
Investors agree that they will not hold the Surviving Fund liable for any
loss or expenses from any sales request, if the Surviving Fund takes
reasonable precautions. The Surviving Fund will be liable for any losses to a
shareholder from an unauthorized sale or fraud against such shareholder if
the Surviving Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This
may be true at times of unusual market changes and shareholder activity. In
that event, shareholders can mail instructions to the Surviving Fund or
contact their investment representative or
-22-
agent. The Surviving Fund may modify or cancel the sale of shares by phone
without notice.
MFST, 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 Institutional 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 will issue multiple classes of shares. Each class
may have different requirements for who may invest, and may have different
sales charges and expense levels. A person who gets compensated for selling
Surviving 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.
The Surviving Fund distributes any net investment income at least
monthly. Net capital gain is distributed annually. You have three options for
your Surviving Fund distributions. You may:
- reinvest all of them in additional Surviving Fund shares
without a sales charge;
- take distributions of net investment income in cash or as a
deposit in a pre-assigned bank account and reinvest distributions
of net capital gain in additional shares; or
- take all distributions in cash or as a deposit in a pre-assigned
bank account.
If you don't notify us otherwise, we'll reinvest all distributions.
If your distributions are reinvested, they will be in the form of shares of
the same class. The taxation of dividends won't be affected by the form in
which you receive them.
Dividends of net investment income are usually taxable as ordinary
income at the federal, state and local levels. Dividends of tax-exempt
interest income are not subject to federal income taxes but will generally be
subject to state and local taxes. 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.
-23-
If you receive distributions of net capital gain, the tax rate will
be based on how long the Surviving Fund held a particular asset, not on how
long you have owned your shares. If you buy shares just before a
distribution, you will pay tax on the entire amount of the taxable
distribution you receive, even though the NAV will be higher on that date
because it includes the distribution amount.
Early in each calendar year, the Surviving Fund will send its
shareholders a notice showing the amount of distributions received in the
preceding year and the tax status of those distributions.
The above is only a general summary of tax implications of investing
in the Surviving Fund. Shareholders should consult their tax advisors to see
how investing in the Surviving Fund will affect their own tax situation.
COMPARISON OF THE MERGING FUND'S
AND THE SURVIVING FUND'S
ORGANIZATION STRUCTURE
There are no material differences in the organizational structure of
the Merging Fund and the Surviving Fund. Set forth below are descriptions of
the structure, voting rights, shareholder liability and the liability of
Trustees.
STRUCTURE OF THE MERGING FUND
The Merging Fund is organized as a series of JPMIF, which is
organized under the law of the Commonwealth of Massachusetts. As a
Massachusetts business trust, JPMIF's operations are governed by JPMIF's
Declaration of Trust and By-Laws and applicable Massachusetts law. The
operations of the Merging Fund are also subject to the provisions of the 1940
Act and the rules and regulations thereunder.
STRUCTURE OF THE SURVIVING FUND
The Surviving Fund is organized as a series of MFST, which is
organized under the law of the Commonwealth of Massachusetts. As a
Massachusetts business trust, MFST's operations are governed by MFST'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 JPMIF's Trustees and the business of the
Surviving Fund is managed by MFST'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 MFST and
JPMIF is set forth in the Funds' respective Statements of Additional
Information, which are incorporated herein by reference.
-24-
SHARES OF FUNDS
Each of MFST and JPMIF is a trust with an unlimited number of
authorized shares of beneficial interest which may be divided into series or
classes thereof. Each Fund is one series of a trust and may issue multiple
classes of shares. Each share of a series or class of a trust represents an
equal proportionate interest in that series or class with each other share of
that series or class. The shares of each series or class of either MFST or
JPMIF participate equally in the earnings, dividends and assets of the
particular series or class. Fractional shares have proportionate rights to
full shares. Expenses of MFST or JPMIF that are not attributable to a
specific series or class will be allocated to all the series of that trust in
a manner believed by its board to be fair and equitable. Generally, shares of
each series will be voted separately, for example, to approve an investment
advisory agreement. Likewise, shares of each class of each series will be
voted separately, for example, to approve a distribution plan, but shares of
all series and classes vote together, to the extent required by the 1940 Act,
including for the election of Trustees. Neither MFST nor JPMIF is required to
hold regular annual meetings of shareholders, but may hold special meetings
from time to time. There are no conversion or preemptive rights in connection
with shares of either MFST or JPMIF.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either MFST or JPMIF resulting from the
resignation of a Trustee or otherwise may be filled similarly by a vote of a
majority of the remaining Trustees then in office, subject to the 1940 Act.
In addition, Trustees may be removed from office by a vote of holders of
shares representing two-thirds of the outstanding shares of each portfolio of
that trust. A meeting of shareholders shall be held upon the written request
of the holders of shares representing not less than 10% of the outstanding
shares entitled to vote on the matters specified in the written request.
Except as set forth above, the Trustees may continue to hold office and may
appoint successor Trustees.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of either MFST or JPMIF could,
under certain circumstances, be held personally liable as partners for the
obligations of that trust. However, the Declaration of Trust of each of MFST
and JPMIF disclaims shareholder liability for acts or obligations of that
trust and provides for indemnification and reimbursement of expenses out of
trust property for any shareholder held personally liable for the obligations
of that trust. Each of MFST and JPMIF 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.
-25-
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of MFST and JPMIF, the
Trustees of that trust are personally liable only for bad faith, willful
misfeasance, gross negligence or reckless disregard of their duties as
Trustees. Under the Declaration of Trust of each of MFST and JPMIF, a Trustee
or officer will generally be indemnified against all liability and against
all expenses reasonably incurred or paid by such person in connection with
any claim, action, suit or proceeding in which such person becomes involved
as a party or otherwise by virtue of such person being or having been a
Trustee or officer and against amounts paid or incurred by such person in the
settlement thereof.
The foregoing is only a summary of certain organizational and
governing documents and Massachusetts business trust law. It is not a
complete description. Shareholders should refer to the provisions of these
documents and state law directly for a more thorough comparison. Copies of
the Declaration of Trust and By-Laws of each of MFST and JPMIF are available
without charge upon written request to that trust.
INFORMATION RELATING TO THE ADVISORY
CONTRACTS AND OTHER SERVICES
GENERAL INFORMATION
As noted above, the 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. JPMFAM is
responsible for the day-to-day management of the Surviving Fund.
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.
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 and, therefore,
indirectly to the Merging Fund by JPMIM.
-26-
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
0.30%. The Master Portfolio and, therefore, indirectly the Merging Fund also
currently pay 0.30% of average net assets with respect to its assets in the
Master Portfolio to JPMIM for its advisory services. 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 MFST 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 MFST or the majority vote of the outstanding voting securities of the
Surviving Fund, and (ii) a majority of those Trustees who are neither parties
to the Advisory Agreement nor "interested persons," as defined in the 1940
Act, of any such party, acting in person at a meeting called for the purpose
of voting on such approval. The Advisory Agreement will terminate
automatically in the event of its "assignment," as defined in the 1940 Act.
In addition, the Advisory Agreement is terminable at any time as to the
Surviving Fund without penalty by the MFST 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 MFST.
-27-
PORTFOLIO MANAGER
Pamela Hunter, Carolyn J. Gill , Benjamin Thompson, Robert W.
Meiselas, and Kingsly Wood, Jr. form the combined management team that is
responsible for the day-to-day management of the Surviving Fund. Ms. Hunter
is a Managing Director at JPMFAM and heads the team providing tax exempt
strategy, research and portfolio management. She has been employed at JPMFAM
and its predecessors since 1980. Ms. Gill is a Vice President and Senior
Portfolio Manager at JPMFAM. She has been employed at JPMFAM and its
predecessors since 1986. Mr. Thompson was a Vice President of JPMIM since
June 1999, and a former Senior Fixed Income Portfolio Manager at Goldman
Sachs. Mr. Meiselas was made a Vice President of JPMIM in 1997 and he has
worked at J.P. Morgan & Co. since 1987. Mr. Wood became a Vice President of
JPMIM in January 2000, prior to that he was a Senior Fixed Income Portfolio
Manager at Mercantile Bank and Trust and an Institutional Tax-Exempt Trader
at ABN-AMRO and Kemper Securities.
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 MFST 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
MFST'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
-28-
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 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 MFST'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,
MFST 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, a wholly owned, indirect subsidiary of BISYS Fund
Services, Inc., which currently serves as the Merging Fund's distributor and
sub-administrator, is the distributor and sub-administrator for the Surviving
Fund. 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.
ADMINISTRATOR
As administrator, Chase receives a fee of 0.15% 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 0.075% for complex
wide non-money market Fund assets in excess of $26 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 JPMIF, 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 JPMIF will continue to exist and operate. All
shareholders of any series of JPMIF 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 JPMIF, you are entitled to vote
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on this proposal. Shareholders of MFST are being asked to approve the same
Trustees as are being proposed for JPMIF.
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 rationalized in order to obtain
additional operating efficiencies by having the same Board of Trustees for
all of the funds. Therefore, the Nominees include certain current Trustees of
MFST and certain current Trustees of JPMIF. Each Nominee has consented to
being named in this Proxy Statement and has agreed to serve as a Trustee if
elected.
Shareholders of MFST are concurrently considering the election of
the same individuals to the Board of Trustees of MFST. Biographical
information about the Nominees and other relevant information is set forth
below. More information regarding the current Trustees of MFST and JPMIF 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 JPMIF 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 JPMIF.
The following are the nominees:
The Board of Trustees of JPMIF met ___ times during the fiscal year
ended July 31, 2000, and each of the Trustees attended at least 75% of the
meetings.
The Board of Trustees of JPMIF presently has an Audit Committee. The
members of the Audit Committee are Messrs. __________. The function of the
Audit Committee is to recommend independent auditors and monitor accounting
and financial matters. The Audit Committee met two times during the fiscal
year ended July 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 individuals are Trustees of
JPMIF, the Master Portfolio and certain other investment companies in the
Fund Complex, up to and including creating a separate board of trustees.
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*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 JPMIF's business affairs. Each of JPMIF 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.
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JPMIF 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 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 year ended August 31, 1998: $13,354. For the
eleven months ended July 31, 1999: $9,770. For the fiscal year ended July
31, 2000: $6,210.
MASTER PORTFOLIO-- For the fiscal year ended August 31, 1998: $21,294. For
the eleven months ended July 31, 1999: $17,915. For the fiscal year ended
July 31, 2000: $12,760.
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 JPMIF; 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 JPMIF, in anticipation of the current Trustees reaching the
mandatory retirement age of seventy. Each Member of the Advisory Board is
paid an annual fee of $75,000 for serving in this capacity for the Fund
Complex and is reimbursed for expenses incurred in connection for such
service. The Members of the Advisory Board may hold various other
directorships unrelated to these funds. The mailing address of the Members of
the Advisory Board is c/o Pierpont Group, Inc., 461 Fifth Avenue, New York,
New York 10017. Their names, principal occupations during the past five years
and dates of birth are set forth below:
Ann Maynard Gray -- President, Diversified Publishing Group and Vice
President, Capital Cities/ABC, Inc. Her date of birth is August 22, 1945.
John R. Laird-- Retired; Former Chief Executive Officer, Shearson
Lehman Brothers and The Boston Company. His date of birth is June 21, 1942.
Gerard P. Lynch -- Retired; Former Managing Director, Morgan Stanley
Group and President and Chief Operating Officer, Morgan Stanley Services,
Inc. His date of birth is October 5, 1936.
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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:
JPMIF'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 compensated by Funds Distributor,
Inc. ("FDI"), a wholly owned indirect subsidiary of Boston Institutional
Group, Inc. The officers conduct and supervise the business operations of
JPMIF and the Master Portfolio. JPMIF 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 JPMIF 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 FDI 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 FDI 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 MFST or JPMIF engages it to do so.
AUDIT FEES. The aggregate fees paid to PricewaterhouseCoopers LLP in
connection with the annual audit of the Merging Fund and the Master Portfolio
for the last fiscal year was $37,500.
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FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
aggregate fees billed for financial information systems design and
implementation services rendered by PricewaterhouseCoopers LLP to the Merging
Fund, the Master Portfolio, 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, the Master Portfolio, JPMIM
and JPMIM's affiliates that provide services to the Fund for the calendar
year ended December 31, 2000 was $11,029,300.
The Audit Committee has considered whether the provision of
non-audit services is compatible with maintaining the independence of
Pricewaterhouse Coopers 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 JPMIF Board for use at the
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. JPMIF's officers and service providers may also solicit proxies by
telephone, facsimile machine, telegraph, the Internet or personal interview.
In addition JPMIF 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 JPMIF 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 JPMIF 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
-34-
if they determine such an adjournment is desirable for any other reason.
Business may be conducted once a quorum is present and may continue until
adjournment of the Meeting notwithstanding the withdrawal or temporary
absence of sufficient Merging Fund Shares to reduce the number present to
less than a quorum. If the accompanying proxy is executed and returned in
time for the Meeting, the shares covered thereby will be voted in accordance
with the proxy on all matters that may properly come before the meeting (or
any adjournment thereof).
PROXIES
All Merging Fund Shares represented by each properly signed proxy
received prior to the Meeting will be voted at the Meeting. If a Merging Fund
Shareholder specifies how the proxy is to be voted on any of the business to
come before the Meeting, it will be voted in accordance with such
specifications. If a Merging Fund Shareholder returns its proxy but no
direction is made on the proxy, the proxy will be voted FOR each Proposal
described in this Combined Prospectus/Proxy Statement. The Merging Fund
Shareholders voting to ABSTAIN on the Proposals will be treated as present
for purposes of achieving a quorum and in determining the votes cast on the
Proposals, but not as having voted FOR the Proposals. A properly signed proxy
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 JPMIF, 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 JPMIF 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.
-35-
INTERESTED PARTIES
On the record date, the Trustees and officers of JPMIF 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 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:
Percentage of Percentage of
Amount of Merging Fund Surviving Fund
Shares Owned on Record Owned Upon
Name and Address Owned Date Consummation
- ----------------------------- --------- --------------- ---------------
On the record date, the Trustees and officers of MFST 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:
Percentage of
Amount of Surviving Fund Percentage of Surviving
Shares Owned on Record Fund Owned Upon
Name and Address Owned Date Consummation
- ------------------------------------ --------- ---------------- ------------------------
ADDITIONAL INFORMATION ABOUT JPMIF
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 JPMIF'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. JPMIF is subject to the
requirements of the 1940 Act and, in accordance with such requirements, files
reports and other information with the Commission. These materials can be
inspected and copied at the Public Reference Facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, Suite 1300, New York,
NY 10048 and 500
-36-
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 MFST
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 MFST'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. MFST is
subject to the requirements of the 1940 Act and, in accordance with such
requirements, files reports and other information with the Commission. These
materials can be inspected and copied at the Public Reference Facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices at 7 World Trade Center,
Suite 1300, New York, NY 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, D.C. 20549, at
prescribed rates, and are also available on the Commission's web site at
http://www.sec.gov.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund for the fiscal year ended July 31, 2000 and the
Surviving Fund for the fiscal year ended August 31, 2000 and the audited
financial statements, notes thereto and supplementary data of the Master
Portfolio for the fiscal year ended July 31, 2000 are incorporated by
reference herein and into the Statement of Additional Information related to
this Combined Prospectus/Proxy Statement. The audited financial highlights,
financial statements, notes thereto and supplementary data, as applicable, of
the Merging Fund, the Surviving Fund and the Master Portfolio have been
incorporated herein by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in auditing and accounting.
The unaudited financial highlights, financial statements and notes
thereto of the Merging Fund for the fiscal period ended January 31, 2001 and
the unaudited financial statements, notes thereto and supplementary data of
the Master Portfolio for the fiscal period ended January 31, 2001 are
incorporated by reference herein and into the Statement of Additional
Information related to this Combined Prospectus/Proxy Statement.
OTHER BUSINESS
The JPMIF 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 JPMIF
-37-
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 MFST nor JPMIF is involved in any litigation that would have
any material adverse effect upon either the Merging Fund or the Surviving
Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to JPMIF in writing at the
address on the cover page of this Combined Prospectus/Proxy Statement or by
telephoning 1-800-766-7722.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
-38-
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this
____ day of ______, 2001 by and among J.P. Morgan Institutional Funds (the
"Transferor Trust"), a Massachusetts business trust, on behalf of the J.P.
Morgan Institutional Tax Exempt Bond Fund (the "Transferor Portfolio"),
Mutual Fund Select Trust (the "Acquiring Trust"), a Massachusetts business
trust, on behalf of JPMorgan Intermediate Tax Free Income Fund (formerly,
Chase Vista Intermediate Tax Free Income Fund) (the "Acquiring Portfolio")
and J.P. Morgan Chase & Co.
WHEREAS, the Board of Trustees of each of the Transferor Trust and
the Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as
well as the best interests of shareholders of the Transferor Portfolio and
the Acquiring Portfolio, and that the interests of existing shareholders
would not be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust
intends to provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all
of the assets, subject to all of the liabilities, of the Transferor Portfolio
in exchange for shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio
and the distribution to Transferor Portfolio shareholders of such Acquiring
Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR
THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION AND TERMINATION OF THE
TRANSFEROR PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio
listed above, will convey, transfer and deliver to the Acquiring Portfolio
all of the then existing assets of the Transferor Portfolio (consisting,
without limitation, of portfolio securities and instruments, dividend and
interest receivables, cash and other assets). In consideration thereof, the
Acquiring Trust on behalf of the Acquiring Portfolio will (A) assume and pay,
to the extent that they exist on or after the Effective Time of the
Reorganization (as defined in Section 1(b)(i) hereof), all of the obligations
and liabilities of the Transferor Portfolio and (B) issue and deliver to the
Transferor Portfolio full and fractional shares of beneficial interest of the
Acquiring Portfolio, with respect to the Acquiring Portfolio equal to that
number of full and fractional Acquiring Portfolio Shares as determined in
Section 1(c) hereof. The Acquiring Portfolio Shares issued and delivered to
the Transferor Portfolio shall be of the Institutional Class share class in
A-1
exchange for shares of the Transferor Portfolio, with the amounts of shares
of each share class to be determined by the parties. Any shares of beneficial
interest (if any) of the Transferor Portfolio ("Transferor Portfolio Shares")
held in the treasury of the Transferor Trust at the Effective Time of the
Reorganization shall thereupon be retired. Such transactions shall take place
on the date provided for in Section 1(b) hereof (the "Exchange Date"). All
computations for the Transferor Portfolio and the Acquiring Portfolio shall
be performed by The Chase Manhattan Bank (the "Custodian"), as custodian and
pricing agent for the Transferor Portfolio and the Acquiring Portfolio. The
determination of said Custodian shall be conclusive and binding on all
parties in interest.
(ii) As of the Effective Time of the Reorganization, the Transferor
Trust will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio Shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for
the shares of the Transferor Portfolio held by the Transferor Portfolio
shareholders. Such liquidation and distribution will be accomplished by the
transfer of the Acquiring Portfolio Shares then credited to the account of
the Transferor Portfolio on the books of the Acquiring Portfolio, to open
accounts on the share records of the Acquiring Portfolio in the names of the
Transferor Portfolio Shareholders and representing the respective pro rata
number of the Acquiring Portfolio Shares due such shareholders. The Acquiring
Portfolio will not issue certificates representing the Acquiring Portfolio
Shares in connection with such exchange.
(iii) As soon as practicable after the Effective Time of the
Reorganization, the Transferor Trust shall take all the necessary steps under
Massachusetts law, the Transferor Trust's Declaration of Trust and any other
applicable law to effect a complete termination of the Transferor Portfolio.
(b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION.
(i) Subject to the satisfaction of the conditions to the
Reorganization specified in this Plan, the Reorganization shall occur as of
the close of regularly scheduled trading on the New York Stock Exchange (the
"Effective Time of the Reorganization") on August 11, 2001, or such later
date as may be agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to
take place simultaneously as of the Effective Time of the Reorganization
unless otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New
York Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of
the Acquiring Portfolio or the Transferor Portfolio is impracticable, the
Exchange Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the
Acquiring Portfolio duly endorsed in proper form for transfer, in such
condition as to constitute good delivery thereof in accordance with the
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 Institutional 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
Institutional 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.
(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
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material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Act and do not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of February 28, 2001
there were outstanding 65,776 shares of the Acquiring Portfolio, and no
shares of such Portfolio were held in the treasury of the Acquiring Trust.
All of the outstanding shares of the Acquiring Trust have been duly
authorized and are validly issued, fully paid and nonassessable (except as
disclosed in the Acquiring Trust's prospectus and recognizing that under
Massachusetts law, shareholders of an Acquiring Trust portfolio could, under
certain circumstances, be held personally liable for the obligations of such
Acquiring Trust portfolio). Because the Acquiring Trust is an open-end
investment company engaged in the continuous offering and redemption of its
shares, the number of outstanding shares may change prior to the Effective
Time of the Reorganization. All of the issued and outstanding shares of the
Acquiring Portfolio have been offered and sold in compliance in all material
respects with applicable registration requirements of the Securities Act and
applicable state securities laws.
(e) FINANCIAL STATEMENTS. The financial statements of the Acquiring
Trust with respect to the Acquiring Portfolio 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").
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring
Portfolio Shares to be issued in connection with the Reorganization will be
duly authorized and upon consummation of the Reorganization will be validly
issued, fully paid and nonassessable (except as disclosed in the Trust's
prospectus and recognizing that under Massachusetts law, shareholders of an
Acquiring Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf
of the Acquiring Portfolio, has the power to enter into this Plan and to
carry out its obligations hereunder. The execution and delivery of this Plan
and the consummation of the transactions contemplated hereby have been duly
authorized by the Acquiring Trust's Board of Trustees and no other
proceedings by the Acquiring Trust other than those contemplated under this
Plan are necessary to authorize its officers to effectuate this Plan and the
transactions contemplated hereby. The Acquiring Trust is not a party to or
obligated under any provision of its Declaration of Trust or By-laws, or
under any indenture or contract provision or any other commitment or
obligation, or subject to any order or decree, which would be violated by or
which would prevent its execution and performance of this Plan in accordance
with its terms.
(h) LIABILITIES. There are no liabilities of the Acquiring
Portfolio, whether actual or contingent and whether or not determined or
determinable, other than liabilities disclosed or provided for in the
Acquiring Trust's financial statements with respect to the Acquiring
Portfolio and liabilities incurred in the ordinary course of business
subsequent to August 31, 2000 or
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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 August 31, 2000, there has
been no material adverse change in the financial condition, results of
operations, business, properties or assets of the Acquiring Portfolio, other
than those occurring in the ordinary course of business (for these purposes,
a decline in net asset value and a decline in net assets due to redemptions
do not constitute a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings
pending or, to the knowledge of the Acquiring Trust, threatened which would
adversely affect the Acquiring Trust or the Acquiring Portfolio's assets or
business or which would prevent or hinder consummation of the transactions
contemplated hereby, there are no facts which would form the basis for the
institution of administrative proceedings against the Acquiring Trust or the
Acquiring Portfolio and, to the knowledge of the Acquiring Trust, there are
no regulatory investigations of the Acquiring Trust or the Acquiring
Portfolio, pending or threatened, other than routine inspections and audits.
(k) CONTRACTS. No default exists under any material contract or
other commitment to which the Acquiring Trust, on behalf of the Acquiring
Portfolio, is subject.
(l) TAXES. The federal income tax returns of the Acquiring Trust
with respect to the Acquiring Portfolio, and all other income tax returns
required to be filed by the Acquiring Trust with respect to the Acquiring
Portfolio, have been filed, and all taxes payable pursuant to such returns
have been paid. To the knowledge of the Acquiring Trust, no such return is
under audit and no assessment has been asserted in respect of any such
return. All federal and other taxes owed by the Acquiring Trust with respect
to the Acquiring Portfolio have been paid so far as due. The Acquiring
Portfolio has elected to qualify and has qualified as a "regulated investment
company" under Subchapter M of the Code as of and since its first taxable
year and intends to continue to so qualify.
(m) NO APPROVALS REQUIRED. Except for the Registration Statement
(as defined in Section 4(a) hereof) and the approval of the Transferor
Portfolio's shareholders (referred to in Section 6(a) hereof), no consents,
approvals, authorizations, registrations or exemptions under federal or state
laws are necessary for the consummation by the Acquiring Trust of the
Reorganization, except such as have been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a
business trust that is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and has the power to
carry on its business as it is now being conducted. The Transferor Portfolio
is a validly existing series of shares of such business trust representing
interests therein under the laws of Massachusetts. Each of Transferor
Portfolio and the
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Transferor Trust has all necessary federal, state and local authorization to
own all of its properties and assets and to carry on its business as now
being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is
registered under the Act as an open-end investment company of the management
type; such registration has not been revoked or rescinded and is in full
force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and
statement of additional information of the Transferor Trust, as amended,
included in the Transferor Trust's registration statement on Form N-1A filed
with the Commission, comply in all material respects with the requirements of
the Securities Act and the Act and do not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) CAPITALIZATION. The Transferor Trust has an unlimited number of
authorized shares of beneficial interest, of which as of February 28, 2001
there were outstanding 52,586 shares of the Transferor Portfolio, and no
shares of such Portfolio were held in the treasury of the Transferor Trust.
All of the outstanding shares of the Transferor Trust have been duly
authorized and are validly issued, fully paid and nonassessable (except as
disclosed in the Transferor Trust's prospectus and recognizing that under
Massachusetts law, shareholders of a Trust portfolio could, under certain
circumstances, be held personally liable for the obligations of such Trust
portfolio). Because the Transferor Trust is an open-end investment company
engaged in the continuous offering and redemption of its shares, the number
of outstanding shares may change prior to the Effective Time of the
Reorganization. All such shares will, at the Exchange Date, be held by the
shareholders of record of the Transferor Portfolio as set forth on the books
and records of the Transferor Trust in the amounts set forth therein, and as
set forth in any list of shareholders of record provided to the Acquiring
Portfolio for purposes of the Reorganization, and no such shareholders of
record will have any preemptive rights to purchase any Transferor Portfolio
shares, and the Transferor Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Transferor
Portfolio shares (other than any existing dividend reinvestment plans of the
Transferor Portfolio or as set forth in this Plan), nor are there outstanding
any securities convertible into any shares of the Transferor Portfolio
(except pursuant to any existing exchange privileges described in the current
prospectus and statement of additional information of the Transferor Trust).
All of the Transferor Portfolio's issued and outstanding shares have been
offered and sold in compliance in all material respects with applicable
registration requirements of the Securities Act and applicable state
securities laws.
(e) FINANCIAL STATEMENTS. The financial statements for the
Transferor Trust with respect to the Transferor Portfolio and The Tax Exempt
Bond Portfolio for the fiscal year ended July 31, 2000 which have been
audited by PricewaterhouseCoopers LLP fairly present the financial position
of the Transferor Portfolio and the Tax Exempt Bond Portfolio as of the dates
thereof and the respective results of operations and changes in net assets
for each of the periods indicated in accordance with GAAP. The unaudited
financial statements for the Transferor Trust with respect to the Transferor
Portfolio and The Tax Exempt Bond Portfolio for the fiscal period ended
January 31, 2001 fairly present the financial position of the Transferor
Portfolio and the Tax Exempt Bond 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.
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(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on
behalf of the Transferor Portfolio, has the power to enter into this Plan and
to carry out its obligations hereunder. The execution and delivery of this
Plan and the consummation of the transactions contemplated hereby have been
duly authorized by the Transferor Trust's Board of Trustees and no other
proceedings by the Transferor Trust other than those contemplated under this
Plan are necessary to authorize its officers to effectuate this Plan and the
transactions contemplated hereby. The Transferor Trust is not a party to or
obligated under any provision of its Declaration of Trust or By-laws, or
under any indenture or contract provision or any other commitment or
obligation, or subject to any order or decree, which would be violated by or
which would prevent its execution and performance of this Plan in accordance
with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor
Portfolio, whether actual or contingent and whether or not determined or
determinable, other than liabilities disclosed or provided for in the
Transferor Trust's Financial Statements with respect to the Transferor
Portfolio and liabilities incurred in the ordinary course of business
subsequent to January 31, 2001 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 January 31, 2001, 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
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Subchapter M of the Code, as of and since its first taxable year, and shall
continue to so qualify until the Effective Time of the Reorganization.
(l) NO APPROVALS REQUIRED. Except for the Registration Statement
(as defined in Section 4(a) hereof) and the approval of the Transferor
Portfolio's shareholders referred to in Section 6(a) hereof, no consents,
approvals, authorizations, registrations or exemptions under federal or state
laws are necessary for the consummation by the Transferor Trust of the
Reorganization, except such as have been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio,
the Acquiring Trust shall file with the Commission a Registration Statement
on Form N-14 (the "Registration Statement") under the Securities Act relating
to the Acquiring Portfolio Shares issuable hereunder and the proxy statement
of the Transferor Portfolio relating to the meeting of the Transferor
Portfolio's shareholders referred to in Section 5(a) herein. At the time the
Registration Statement becomes effective, the Registration Statement (i) will
comply in all material respects with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder (the "Regulations")
and (ii) will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time the Registration Statement
becomes effective, at the time of the Transferor Portfolio shareholders'
meeting referred to in Section 5(a) hereof, and at the Effective Time of the
Reorganization, the prospectus/proxy statement (the "Prospectus") and
statement of additional information (the "Statement of Additional
Information") included therein, as amended or supplemented by any amendments
or supplements filed by the Trust, will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust
agrees to use all reasonable efforts to effectuate the Reorganization, to
continue in operation thereafter, and to obtain any necessary regulatory
approvals for the Reorganization. The Acquiring Trust shall furnish such data
and information relating to the Acquiring Trust as shall be reasonably
requested for inclusion in the information to be furnished to the Transferor
Portfolio shareholders in connection with the meeting of the Transferor
Portfolio's shareholders for the purpose of acting upon this Plan and the
transactions contemplated herein.
(c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise
contemplated by this Plan, the Acquiring Trust shall conduct the business of
the Acquiring Portfolio in the ordinary course until the consummation of the
Reorganization, it being understood that such ordinary course of business
will include the declaration and payment of customary dividends and
distributions.
5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
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(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The
Transferor Trust shall call and hold a meeting of the shareholders of the
Transferor Portfolio for the purpose of acting upon this Plan and the
transactions contemplated herein.
(b) PORTFOLIO SECURITIES. With respect to the assets to be
transferred in accordance with Section 1(a), the Transferor Portfolio's
assets shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities, claims
and receivables (including dividend and interest receivables) owned, and any
deferred or prepaid expenses shown as an asset on the Transferor Trust's
books maintained on behalf of the Transferor Portfolio. At least five (5)
business days prior to the Exchange Date, the Transferor Portfolio will
provide the Acquiring Trust, for the benefit of the Acquiring Portfolio, with
a list of its assets and a list of its stated liabilities. The Transferor
Portfolio shall have the right to sell any of the securities or other assets
shown on the list of assets prior to the Exchange Date but will not, without
the prior approval of the Acquiring Trust, on behalf of the Acquiring
Portfolio, acquire any additional securities other than securities which the
Acquiring Portfolio is permitted to purchase, pursuant to its investment
objective and policies or otherwise (taking into consideration its own
portfolio composition as of such date). In the event that the Transferor
Portfolio holds any investments that the Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable, to the extent permitted
by its investment objective and policies and to the extent that its
shareholders would not be materially affected in an adverse manner by such a
disposition. In addition, the Transferor Trust will prepare and deliver
immediately prior to the Effective Time of the Reorganization, a Statement of
Assets and Liabilities of the Transferor Portfolio, prepared in accordance
with GAAP (each, a "Schedule"). All securities to be listed in the Schedule
for the Transferor Portfolio as of the Effective Time of the Reorganization
will be owned by the Transferor Portfolio free and clear of any liens,
claims, charges, options and encumbrances, except as indicated in such
Schedule, and, except as so indicated, none of such securities is or, after
the Reorganization as contemplated hereby, will be subject to any
restrictions, legal or contractual, on the disposition thereof (including
restrictions as to the public offering or sale thereof under the Securities
Act) and, except as so indicated, all such securities are or will be readily
marketable.
(c) REGISTRATION STATEMENT. In connection with the preparation of
the Registration Statement, the Transferor Trust will cooperate with the
Acquiring Trust and will furnish to the Acquiring Trust the information
relating to the Transferor Portfolio required by the Securities Act and the
Regulations to be set forth in the Registration Statement (including the
Prospectus and Statement of Additional Information). At the time the
Registration Statement becomes effective, the Registration Statement, insofar
as it relates to the Transferor Portfolio, (i) will comply in all material
respects with the provisions of the Securities Act and the Regulations and
(ii) will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time the Registration Statement
becomes effective, at the time of the Transferor Portfolio's shareholders'
meeting referred to in Section 5(a) and at the Effective Time of the
Reorganization, the Prospectus and Statement of 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
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under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in conformity
with information furnished by the Transferor Portfolio for use in the
registration statement, prospectus or statement of additional information as
provided in this Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust
agrees to use all reasonable efforts to effectuate the Reorganization and to
obtain any necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise
contemplated by this Plan, the Transferor Trust shall conduct the business of
the Transferor Portfolio in the ordinary course until the consummation of the
Reorganization, it being understood that such ordinary course of business
will include the declaration and payment of customary dividends and
distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable,
but in any case within 60 days after the Exchange Date, the Transferor Trust
on behalf of the Transferor Portfolio, shall prepare a statement of the
earnings and profits of the Transferor Portfolio for federal income tax
purposes, and of any capital loss carryovers and other items that the
Acquiring Portfolio will succeed to and take into account as a result of
Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan
and the transactions contemplated by the Reorganization shall have been
approved by the requisite vote of the shares of the Transferor Portfolio
entitled to vote on the matter ("Transferor Shareholder Approval").
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust
shall have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change
(as described in Section 2(i)) in the financial condition, results of
operations, business, properties or assets of the Acquiring Portfolio since
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
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Portfolio and the Acquiring Portfolio, and to shareholders of each Transferor
Portfolio (the "Tax Opinion"). For purposes of rendering the Tax Opinion,
Simpson Thacher & Bartlett may rely exclusively and without independent
verification, as to factual matters, upon the statements made in this Plan,
the Prospectus and Statement of Additional Information, and upon such other
written representations as the President or Treasurer of the Transferor Trust
will have verified as of the Effective Time of the Reorganization. The Tax
Opinion will be to the effect that, based on the facts and assumptions stated
therein, for federal income tax purposes: (i) the Reorganization will
constitute a reorganization within the meaning of section 368(a)(1) of the
Code with respect to the Transferor Portfolio and the Acquiring Portfolio;
(ii) no gain or loss will be recognized by any of the Transferor Portfolio or
the Acquiring Portfolio upon the transfer of all the assets and liabilities,
if any, of the Transferor Portfolio to the Acquiring Portfolio solely in
exchange for shares of the Acquiring Portfolio or upon the distribution of
the shares of the Acquiring Portfolio to the holders of the shares of the
Transferor Portfolio solely in exchange for all of the shares of the
Transferor Portfolio; (iii) no gain or loss will be recognized by
shareholders of the Transferor Portfolio upon the exchange of shares of such
Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the
holding period and tax basis of the shares of the Acquiring Portfolio
received by each holder of shares of the Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of shares
of the Transferor Portfolio held by such holder immediately prior to the
Reorganization (provided the shares of the Transferor Portfolio were held as
a capital asset on the date of the Reorganization); and (v) the holding
period and tax basis of the assets of the Transferor Portfolio acquired by
the Acquiring Portfolio will be the same as the holding period and tax basis
of those assets to the Transferor Portfolio immediately prior to the
Reorganization.
(e) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan
Tax Exempt Bond Fund, a series of J.P. Morgan Funds, into the Acquiring
Portfolio shall have been consummated.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST.
The obligations of the Acquiring Trust with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The
Transferor Shareholder Approval shall have been obtained.
(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
January 31, 2001.
(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.
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(d) REGULATORY APPROVAL. The Regulatory Approvals shall have been
obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on
behalf of the Transferor Portfolio shall have distributed to the shareholders
of the Transferor Portfolio all of the Transferor Portfolio's investment
company taxable income (determined without regard to the deduction for
dividends paid) as defined in Section 852(b)(2) of the Code for its taxable
year ending on the Exchange Date and all of its net capital gain as such term
is used in Section 852(b)(3) of the Code, after reduction by any capital loss
carry forward, for its taxable year ending on the Exchange Date.
(f) TAX OPINION. The Acquiring Trust shall have received the Tax
Opinion.
(g) CONCURRENT REORGANIZATION. The reorganization of J.P. Morgan
Tax Exempt Bond Fund, a series of J.P. Morgan Funds, into the Acquiring
Portfolio shall have been consummated.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES
AND REPRESENTATIONS.
(a) AMENDMENTS. The parties hereto may, by agreement in writing
authorized by their 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
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the Transferor Trust contained herein shall not be fulfilled on or before the
date specified for the fulfillment thereof or (ii) a material default or
material breach of this Plan shall be made by the Transferor Trust. In
addition, this Plan may be terminated by the Acquiring Trust at any time
prior to the Effective Time of the Reorganization, whether before or after
approval of this Plan by the shareholders of the Transferor Portfolio,
without liability on the part of any party hereto, its Trustees, officers or
shareholders or JPMIM on notice to the other parties in the event that the
Board of Trustees determines that proceeding with this Plan is not in the
best interests of the shareholders of the Acquiring Portfolio.
(e) SURVIVAL. No representations, warranties or covenants in or
pursuant to this Plan, except for the provisions of Section 5(f) and Section
9 of this Plan, shall survive the Reorganization.
9. EXPENSES.
The expenses of the Reorganization will be borne by J.P. Morgan
Chase & Co. ("JPMC"). Such expenses include, without limitation, (i) expenses
incurred in connection with the entering into and the carrying out of the
provisions of this Plan; (ii) expenses associated with the preparation and
filing of the Registration Statement; (iii) fees and expenses of preparing
and filing such forms as are necessary under any applicable state securities
laws in connection with the Reorganization; (iv) postage; (v) printing; (vi)
accounting fees; (vii) legal fees and (viii) solicitation costs relating to
the Reorganization. In addition, JPMC or an affiliate will waive fees payable
to it or reimburse expenses to the extent necessary such that the actual
(post-waiver) total expense ratios of the Acquiring Portfolio are not higher
than those set forth in the Registration Statement for a period of three
years after the Exchange Date.
10. NOTICES.
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by hand,
certified mail or by facsimile transmission, shall be deemed given when
received and shall be addressed to the parties hereto at their respective
addresses listed below or to such other persons or addresses as the relevant
party shall designate as to itself from time to time in writing delivered in
like manner:
if to the 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):
A-13
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
11. RELIANCE.
All covenants and agreements made under this Plan shall be deemed to
have been material and relied upon by the Transferor Trust and the Acquiring
Trust notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT.
(a) The section and paragraph headings contained in this Plan are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
(b) This Plan may be executed in any number of counterparts, each of
which shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance with
the laws of The State of New York.
(d) This Plan shall bind and inure to the benefit of the Transferor
Trust, the Transferor Portfolio, the Acquiring Trust and the Acquiring
Portfolio and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
any party without the written consent of the other parties. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason
of this Plan.
(e) The name "J.P. Morgan Funds" is the designation of its Trustees
under a Declaration of Trust dated November 4, 1992, as amended, and all
persons dealing with the Transferor Trust must look solely to the Transferor
Trust's property for the enforcement of any claims against the Transferor
Trust, as none of the Transferor Trustees, officers, agents or shareholders
assumes any personal liability for obligations entered into on behalf of the
Transferor Trust. No series of the Transferor Trust shall be liable for
claims against any other series of the Transferor Trust.
(f) The name "Mutual Fund Select Trust" is the designation of its
Trustees under a Declaration of Trust dated October 1, 1996, 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
A-14
shareholders assumes any personal liability for obligations entered into on
behalf of the Acquiring Trust. No series of the Acquiring Trust shall be
liable for claims against any other series of the Acquiring Trust.
A-15
IN WITNESS WHEREOF, the undersigned have executed this Plan as of
the date first above written.
J.P. MORGAN INSTITUTIONAL FUNDS
on behalf of J.P. Morgan Institutional Tax Exempt Bond Fund
By:
--------------------------------------------------
Name:
Title:
MUTUAL FUND SELECT TRUST
on behalf of JPMorgan Intermediate Tax Free Income Fund
By:
--------------------------------------------------
Name:
Title:
Agreed and acknowledged with respect to Section 9:
J.P. MORGAN CHASE & CO.
By:
--------------------------------------------------
Name:
Title:
A-16
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND,
A SERIES OF J.P. MORGAN FUNDS)
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the Combined Prospectus/Proxy Statement
dated May 16, 2001 for the Special Meeting of Shareholders of J.P. Morgan
Institutional Tax Exempt Bond Fund (the "Merging Fund"), a series of J.P.
Morgan Institutional Funds ("JPMIF"), 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 MFST's and JPMIF's Statements of Additional Information,
which are incorporated herein by reference.
The date of this Statement of Additional Information is May 16, 2001.
GENERAL INFORMATION
The Shareholders of the Merging Fund are being asked to consider and
vote on two proposals.
With respect to an Agreement and Plan of Reorganization (the
"Reorganization Plan") dated as of __________, 2001 by and among JPMIF, on
behalf of the Merging Fund, MFST, 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 MFST 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 Institutional Class shares
of the Surviving Fund of equal value, plus the right to receive any unpaid
dividends and distributions that were declared before the Effective Time of
the Reorganization.
At the Meeting, shareholders will also be asked to consider and vote
upon the election of Trustees of JPMIF.
A Special Meeting of Shareholders of the Merging Fund to consider
the proposals and the related transaction will be held at the offices of J.P.
Morgan Chase & Co., 1211 Avenue of the Americas, 41st floor, New York, NY, on
July 3, 2001 at 9:00 a.m., Eastern time. For further information about the
transaction, see the Combined Prospectus/Proxy Statement.
-2-
FINANCIAL STATEMENTS
The audited financial highlights, financial statements and notes
thereto of the Merging Fund and the audited financial statements, notes
thereto and supplementary data of the Master Portfolio contained in their
respective Annual Reports, each dated July 31, 2000, are incorporated by
reference into this Statement of Additional Information related to this
Combined Prospectus/Proxy Statement. The audited financial highlights,
financial statements and notes thereto of the Surviving Fund contained in its
Annual Report dated August 31, 2000 of Surviving Fund are incorporated by
reference into this Statement of Additional Information of the Surviving Fund
related to this Combined Prospectus/Proxy Statement. The unaudited financial
highlights, financial statements and notes thereto of the Merging Fund and
the unaudited financial statements, notes thereto and supplementary data of
the Master Portfolio contained in their respective Semi-Annual Reports, each
dated January 31, 2001, are incorporated by reference into this Statement of
Additional Information related to this Combined Prospectus/Proxy Statement.
The audited financial highlights, financial statements, notes thereto and
supplementary data, as applicable, which appear in each of the 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 July 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.
-3-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ------------ --------- --------- ------------ --------- ---------
MUNICIPALS 98.29%
GENERAL OBLIGATIONS & HOUSE AUTHORITY 58.76%
ALABAMA 0.80%
Alabama State, Public
School & College Authority, Capital Improvement,
Ser. D, Rev.,
8,485 8,485 5.25%, 8/1/2005 $ 8,975 $ - $ 8,975
2,650 2,650 Alabama State, Ser. A, GO, 5.50%, 10/1/2002 2,732 2,732
Shelby County, Alabama, Board of Education,
1,000 1,000 Capital Outlay School Warrants, 5.70%, 2/1/2009 1,070 1,070
12,777 - 12,777
CALIFORNIA 0.34%
Los Angeles County, California, Public Works
Financing Authority, Regional Park & Open
Space District, Ser. A, Rev., ^, 6.00%,
5,000 5,000 10/1/2004 5,513 5,513
COLORADO 0.21%
Eagle, Garfield & Routt Counties, Colorado,
School District No. Re 50J, GO, ^, 6.13%,
3,000 3,000 12/1/2004 3,312 3,312
CONNECTICUT 1.25%
7,240 7,240 Connecticut, Series 1997 B, 5.88%, 6/15/17 7,858 7,858
6,655 6,655 Connecticut, Series 2000 C, 5.25%, 12/15/11 7,142 7,142
Connecticut State, Special Tax Obligation,
Transportation Infrastructure, Ser. A, Rev.,
4,735 4,735 5.40%, 6/1/2009 5,003 5,003
5,003 15,000 20,003
DELAWARE 0.20%
Delaware Transportation Authority,
3,000 3,000 Transportation System, Rev., 6.00%, 7/1/2005 3,252 3,252
FLORIDA 0.56%
Dade County, Florida, Aviation, Ser. B, Rev.,
2,000 2,000 6.40%, 10/1/2006 2,205 2,205
Florida State Board Education Capital Outlay,
465 465 7.00%, 6/1/01 466 466
Florida State, Board of Education, Capital
Outlay, Public Education, Ser. B, GO, 5.25%,
1,495 1,495 6/1/2012 1,600 1,600
Florida State, Department of Corrections,
2,000 2,000 Okeechobee Correctional, COP, 6.00%, 3/1/2008 2,173 2,173
Miami-Dade County, Florida, Aviation, Ser. A,
2,350 2,350 Rev., 5.25%, 10/1/2007 2,487 2,487
8,465 466 8,931
GEORGIA 2.83%
Forsyth County, Georgia, School District, GO,
1,720 1,720 5.00%, 7/1/2012 1,800 1,800
2,630 2,630 Fulton County School District, 6.38%, 5/1/14 3,072 3,072
Georgia Municipal Electric Authority, Ser. DD,
5,000 5,000 Rev., 7.00%, 1/1/2008 5,822 5,822
5,000 5,000 Georgia State, Ser. B, GO, 6.25%, 4/1/2004 5,372 5,372
2,000 2,000 Georgia State, Ser. D, GO, 6.00%, 10/1/2004 2,156 2,156
11,000 11,000 Georgia, Series 1991 D, 3.00%, 11/1/11 9,713 9,713
3,000 3,000 Georgia, Series 1992 B, 6.30%, 3/1/10 3,450 3,450
6,000 6,000 Georgia, Series 1995 B, 7.20%, 3/1/07 6,996 6,996
-4-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ----------- ---------
Gwinnett County School District, Series 1992
2,500 2,500 B, 6.40%, 2/1/08 2,836 2,836
Metropolitan Atlanta Rapid Transit Authority,
Georgia, Sales Tax, Second Indenture, Ser. A,
3,700 3,700 Rev., ^, 6.90%, 7/1/2004 4,140 4,140
19,290 26,067 45,357
HAWAI 0.44%
4,405 4,405 Hawaii State, Ser CK, GO, ^, 5.25%, 9/1/2005 4,675 4,675
Honolulu, Hawaii, City & County, Ser. A, GO,
2,000 2,000 7.35%, 7/1/2006 2,313 2,313
6,988 - 6,988
ILLINOIS 5.18%
Chicago, Illinois, Metropolitan Water
Reclamation District, Greater Chicago,
Capital Improvement Bonds, GO, ^, 7.00%,
1,500 1,500 1/1/2008 1,746 1,746
Chicago, Illinois, Metropolitan Water
Reclamation District, Greater Chicago, Capital
10,000 10,000 Improvement, GO, 5.50%, 12/1/2012 10,895 10,895
Chicago, Illinois, Metropolitan Water
Reclamation District, Greater Chicago, GO,
5,000 5,000 5.50%, 12/1/2008 5,437 5,437
Chicago, Illinois, Metropolitan Water
Reclamation District, Greater Chicago, GO,
10,025 10,025 5.50%, 12/1/2009 10,917 10,917
Chicago, Illinois, Metropolitan Water
Reclamation District, Greater Chicago, GO,
7,200 7,200 5.95%, 12/1/2007 7,987 7,987
Chicago, Illinois, O'Hare International
Airport, General Airport, Second Lien, Ser.
3,000 3,000 A, Rev., 6.75%, 1/1/2006 3,347 3,347
Chicago, Illinois, O'Hare International
Airport, Passenger Facilities Charge, Ser.
6,055 6,055 A, Rev., 5.38%, 1/1/2007 6,440 6,440
Chicago, Illinois, Park District, Harbor
1,245 1,245 Facilities, Rev., 5.38%, 1/1/2006 1,315 1,315
Cook, Kane, Lake & McHenry Counties Community
College District No. 512, Series 2001 A,
(William Rainey Harper College), 5.50%,
4,520 4,520 12/1/17 4,672 4,672
Illinois Regional Transportation Authority,
1,000 1,000 Ser. B, Rev., 6.40%, 6/1/2012 1,165 1,165
1,810 1,810 Illinois State, 1st Ser., GO, 5.25%, 8/1/2005 1,908 1,908
2,565 2,565 Illinois State, 1st Ser., GO, 5.50%, 8/1/2006 2,751 2,751
4,000 4,000 Illinois State, 1st Ser., GO, 5.50%, 8/1/2007 4,313 4,313
5,485 5,485 Illinois State, GO, 5.25%, 4/1/2004 5,713 5,713
2,000 2,000 Illinois State, GO, 5.25%, 6/1/2010 2,125 2,125
1,320 1,320 Illinois State, GO, 5.50%, 8/1/2006 1,405 1,405
10,000 10,000 Illinois State, GO, 5.50%, 4/1/2010 10,762 10,762
78,226 4,672 82,898
INDIANA 1.42%
Indiana Municipal Power Agency, Power Supply
2,600 2,600 Systems, Ser. B, Rev., 5.63%, 1/1/2005 2,757 2,757
Indiana Municipal Power Agency, Power Supply
5,500 5,500 Systems, Ser. B, Rev.,5.80%, 1/1/2008 6,015 6,015
Indiana State, Office Building Commission
2,485 2,485 Facilities, Ser. A, Rev., 5.00%, 7/1/2004 2,576 2,576
Indianapolis, Indiana, Gas Utility,
Distribution Systems, Ser. A, Rev., 5.75%,
7,315 7,315 8/15/2008 8,030 8,030
-5-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- ---------- ------------ ---------- ---------
Indianapolis, Indiana, Local Public
Improvement, Bond Bank, Ser. A, Rev., 6.50%,
3,000 3,000 1/1/2008 3,397 3,397
22,775 - 22,775
KANSAS 0.14%
Kansas State, Department of Transportation,
2,175 2,175 Highway, Rev., 5.00%, 9/1/2003 2,245 2,245
KENTUCKY 0.02%
Owensboro, Kentucky, Electric Light & Power,
275 275 Rev., ^, 10.50%, 1/1/2004 298 298
LOUISIANA 0.22%
Lake Charles, Louisiana, Harbor & Terminal
District, Reynolds Metals Co. Project, Rev.,
3,500 3,500 5.50%, 5/1/2006 3,571 3,571
MARYLAND 3.38%
3,000 3,000 Maryland, Series 1991-3, 6.40%, 7/15/03 3,045 3,045
Maryland State GO, Series 2000-1, (State &
5,000 5,000 Local Facilities Loan), 5.13%, 8/1/05 5,275 5,275
Maryland State, Stadium Authority, Rev.,
3,335 3,335 5.75%, 12/15/2008 3,587 3,587
Maryland State, Stadium Authority, Rev.,
3,535 3,535 5.80%, 12/15/2009 3,796 3,796
Maryland State, State & Local Facilities Loan,
15,640 15,640 Third Ser., GO, 5.80%, 10/15/2008 16,768 16,768
Maryland State, Transportation Authority,
Transportation Facilities Project, Rev.,
6,500 6,500 5.80%, 7/1/2006 7,103 7,103
Montgomery County, (Consumer Public
7,000 7,000 Improvement), 4.75%, 2/1/04 7,220 7,220
Montgomery County, (Consumer Public
7,000 7,000 Improvement), 5.00%, 2/1/10 7,403 7,403
31,254 22,943 54,197
MASSACHUSETTS 2.82%
Chelsea, Massachusetts, School Project Loan
5,000 5,000 Act of 1948, GO, ^, 5.90%, 6/15/2004 5,438 5,438
Massachusetts Bay, Transportation Authority,
General Transportation Systems, Ser. A, Rev.,
2,045 2,045 5.50%, 3/1/2014 2,222 2,222
Massachusetts State GO, Series 2000 B, 5.75%,
14,035 14,035 6/1/12 15,319 15,319
Massachusetts State, Housing Finance Agency,
Residential Development, Ser. C, Rev., 6.45%,
3,000 3,000 5/15/2004 3,146 3,146
Massachusetts State, Turnpike Authority, Ser.
10,000 10,000 A, Rev., ^, 5.00%, 1/1/2013 10,445 10,445
Massachusetts State, Water Resources
3,000 3,000 Authority, Ser. C, Rev., 5.25%, 12/1/2015 3,177 3,177
Massachusetts State, Water Resources
2,000 2,000 Authority, Ser. A, Rev., 5.50%, 8/1/2013 2,185 2,185
Southeastern, Massachusetts, University
Building Authority Project, Ser. A, Rev.,
1,980 1,980 5.90%, 5/1/2009 2,138 2,138
Southeastern, Massachusetts, University
Building Authority Project, Ser. A, Rev.,
1,000 1,000 5.90%, 5/1/2010 1,076 1,076
29,827 15,319 45,146
-6-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ --------- ---------
MICHIGAN 2.26%
Michigan State, Environmental Protection
2,030 2,030 Program, GO, 5.50%, 11/1/2004 2,157 2,157
Michigan State, Trunk Line, Ser. A, Rev.,
10,750 10,750 5.25%, 11/1/2013 11,457 11,457
Michigan State, Trunk Line, Ser. A, Rev.,
4,000 4,000 5.25%, 11/1/2015 4,218 4,218
Michigan State, Underground Storage Tank,
Financial Assurance Authority, Ser. I, Rev.,
3,565 3,565 5.75%, 5/1/2010 3,824 3,824
Wayne Charter County, Michigan, Airport, Ser.
10,000 10,000 A, Rev., 5.25%, 12/1/2006 10,537 10,537
Wayne Charter County, Michigan, Airport, Ser.
3,780 3,780 A, Rev., 5.50%, 12/1/2007 4,046 4,046
36,239 - 36,239
MINNESOTA 0.84%
9,330 9,330 Minnesota State, 5.50%, 6/1/10 10,201 10,201
University of Minnesota, Ser. A, Rev., 5.75%,
3,000 3,000 7/1/2015 3,316 3,316
3,316 10,201 13,517
MISSISSIPPI 1.18%
11,150 11,150 Mississippi State, 6.20%, 2/1/08 12,405 12,405
Mississippi State, Capital Improvements Issue,
4,000 4,000 Ser. I, GO, 5.50%, 11/1/2006 4,312 4,312
2,000 2,000 Mississippi State, GO, 5.75%, 12/1/2012 2,228 2,228
6,540 12,405 18,945
MISSOURI 0.08%
Missouri State, Environmental Improvement &
Energy Resources Authority, Water Pollution
Control & Drinking Water, State Revolving
1,105 1,105 Funds Program, Ser. B, Rev., 5.50%, 7/1/2012 1,209 1,209
NEBRASKA 0.16%
American Public Energy Agency, Nebraska, Gas
Supply, Public Gas Agency Project, Ser. A,
2,635 2,635 Rev., 5.25%, 6/1/2011 2,637 2,637
NEVADA 1.17%
Henderson, Nevada, Water & Sewer, Ser. A, GO,
2,415 2,415 5.50%, 9/1/2008 2,614 2,614
1,000 1,000 Nevada State, GO, 6.75%, 7/1/2003 1,010 1,010
Nevada State, Municipal Bond Bank, GO, ^,
1,000 1,000 7.20%, 11/1/2004 1,023 1,023
Nevada State, Municipal Bond Bank, Project No.
1,000 1,000 20-23A, GO, ^, 7.20%, 7/1/2002 1,008 1,008
5,390 5,390 Nevada State, Ser. A, GO, 5.00%, 7/1/2010 5,629 5,629
5,000 5,000 Nevada State, Ser. A, GO, 5.60%, 7/15/2006 5,299 5,299
2,000 2,000 Nevada State, Ser. C, GO, 6.50%, 5/1/2005 2,197 2,197
18,780 - 18,780
NEW JERSEY 4.86%
3,245 3,245 Elizabeth, New Jersey, GO, 6.25, 8/15/2008 3,576 3,576
4,180 4,180 Jersey City, Series 1996 A, 6.25%, 10/1/11 4,815 4,815
-7-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------- ----------- ----------
New Jersey Building Authority, State Building,
10,000 10,000 Rev., 5.75%, 6/15/2009 11,015 11,015
New Jersey Economic Development Authority,
Market Transition Facility, Senior Lien, Ser.
955 955 A, Rev., 5.80%, 7/1/2008 1,029 1,029
New Jersey Economic Development Authority,
Market Transition Facility, Senior Lien, Ser.
8,800 8,800 A, Rev., 5.80%, 7/1/2009 9,482 9,482
10,000 10,000 New Jersey State, 5.50%, 5/1/07 10,815 10,815
New Jersey State, Transportation Trust Fund
7,000 7,000 Authority, Ser. B, Rev., 5.50%, 6/15/2009 7,485 7,485
New Jersey State, Transportation Trust Fund
Authority, Transportation Systems, Ser. A,
3,660 3,660 Rev., 5.75%, 6/15/2015 4,069 4,069
New Jersey State, Turnpike Authority, Rev.,
4,190 4,190 ^, 5.70%, 5/1/2013 4,536 4,536
New Jersey State, Turnpike Authority, Rev.,
400 400 ^, 10.38%, 1/1/2003 436 436
New Jersey State, Turnpike Authority, Ser. G,
3,895 3,895 Rev., ^, 5.75%, 1/1/2009 4,214 4,214
New Jersey Wastewater Treatment Trust, Ser. A,
2,545 2,545 Rev., 7.00%, 5/15/2006 2,910 2,910
New Jersey Wastewater Treatment Trust, Ser. A,
2,910 2,910 Rev., 7.00%, 5/15/2008 3,428 3,428
New Jersey Wastewater Treatment Trust, Ser. A,
3,120 3,120 Rev., 7.00%, 5/15/2009 3,724 3,724
New Jersey Wastewater Treatment Trust, Ser. C,
5,520 5,520 Rev., 6.88%, 6/15/2007 6,382 6,382
62,286 15,630 77,916
NEW MEXICO 0.14%
Gallup, New Mexico, PCR, Plains Electric
2,075 2,075 Generation, Rev., 6.40%, 8/15/2005 2,181 2,181
NEW YORK 5.16%
Long Island Power Authority, New York,
Electric Systems, Ser. A, Rev., 5.50%,
1,500 1,500 12/1/2013 1,647 1,647
50 50 New York, Series 1994 A, 5.75%, 8/1/02 52 52
11,615 11,615 New York, Series 2001 F, 5.00%, 8/1/10 12,096 12,096
New York State, Dorm Authority, Pooled Capital
155 155 Program, Rev., ^, 7.80%, 12/1/2005 158 158
New York State, Dorm Authority, St. John's
770 770 University, Rev., 6.70%, 7/1/2004 793 793
New York State, Dorm Authority, State
University Educational Facilities, Ser. A,
2,800 2,800 Rev., 5.50%, 5/15/2006 2,994 2,994
New York State, Dorm Authority, State
University Educational Facilities, Ser. A,
1,500 1,500 Rev., 5.50%, 5/15/2013 1,643 1,643
New York State, Dorm Authority, State
University Educational Facilities, Ser. A,
4,025 4,025 Rev., 5.50%, 5/15/2013 4,404 4,404
New York State, Environmental Facilities
Corp., PCR, State Water Revolving Fund, Ser.
1,200 1,200 D, Rev., 6.55%, 3/15/2008 1,227 1,227
New York State, Housing Finance Agency,
Housing Project Mortgage, Ser. A, Rev., 5.40%,
4,915 4,915 11/1/2005 5,201 5,201
New York State, Medical Care Facilities,
75 75 Finance Agency, Rev., 7.38%, 8/15/2003 75 75
-8-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ----------- --------
6,000 6,000 New York State, Ser. B, GO, 5.60%, 8/15/2007 6,426 6,426
5,000 5,000 New York State, Ser. B, GO, 5.70%, 8/15/2010 5,314 5,314
New York State, Thruway Authority, Highway &
Bridge Trust Fund, Ser. A, Rev., ^, 5.60%,
4,000 4,000 4/1/2004 4,301 4,301
New York State, Thruway Authority, Highway &
Bridge Trust Fund, Ser. B, Rev., ^, 6.00%,
5,700 5,700 4/1/2004 6,195 6,195
New York State, Thruway Authority, Service
Contract, Local Highway & Bridge, Rev., 5.10%,
5,000 5,000 4/1/2008 5,258 5,258
New York State, Thruway Authority, Service
Contract, Local Highway & Bridge, Rev., 5.20%,
10,000 10,000 4/1/2009 10,574 10,574
New York State, Thruway Authority, Service
Contract, Local Highway & Bridge, Rev., 5.25%,
7,500 7,500 4/1/2003 7,735 7,735
Port Authority of New York & New Jersey,
Consolidated Bonds 112th Ser., Rev., 5.00%,
3,910 3,910 12/1/2005 4,072 4,072
Suffolk County, New York, IDA, IDR,
Nissequogue Cogen Partners Facility, Rev.,
1,500 1,500 4.88%, 1/1/2008 1,457 1,457
Westchester County, New York, IDA, Resource
Recovery, Resco Co. Project, Ser. A, Rev.,
990 990 5.60%, 7/1/2007 1,045 1,045
70,519 12,148 82,667
NORTH CAROLINA 0.68%
North Carolina GO, Series 2000 A, (Public
10,410 10,410 Improvements), 5.00%, 9/1/04 10,870 10,870
OHIO 4.63%
Columbus GO, Series 2000-1, 5.25%, 11/15/03 to
17,385 17,385 11/15/05 18,289 18,289
Columbus GO, Series 2000-1, 5.50%, 11/15/06 to
12,245 12,245 11/15/11 13,328 13,328
Montgomery County, Ohio, Solid Waste, Rev.,
4,000 4,000 5.50%, 11/1/2010 4,267 4,267
Ohio GO, Series 2000 E, (Highway Capital
10,000 10,000 Improvements), 5.25%, 5/1/04 10,472 10,472
Ohio, Series 2000 E, (Highway Capital
10,000 10,000 Improvements), 5.63%, 5/1/10 11,005 11,005
Ohio State, Building Authority, State
Facilities, Administration Building Fund, Ser.
1,420 1,420 A, Rev., 6.00%, 10/1/2006 1,564 1,564
Ohio State, Building Authority, State
Facilities, Adult Correctional, Ser. A, Rev.,
3,360 3,360 5.75%, 10/1/2008 3,571 3,571
Ohio State, Infrastructure Improvement, Ser.
5,000 5,000 B, GO, 5.25%, 2/1/2014 5,309 5,309
Ohio State, Turnpike Commission, Ser. A, Rev.,
6,000 6,000 5.40%, 2/15/2009 6,412 6,412
21,123 53,094 74,217
OREGON 0.57%
Oregon State, State Board of Higher Education,
5,300 5,300 Ser. A, GO, ^, 6.00%, 8/1/2006 5,925 5,925
Washington County, Oregon, School District No.
3,000 3,000 3, Hillsboro, GO, ^, 6.00%, 11/1/2005 3,285 3,285
-9-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ ----------- ---------
9,210 - 9,210
PENNSYLVANIA 0.32%
Carbon County, Pennsylvania, IDA, Panther
3,000 3,000 Creek Partners Project, Rev., 6.65%, 5/1/2010 3,074 3,074
Pennsylvania State, Second Ser., GO, 5.00%,
2,000 2,000 8/1/2009 2,108 2,108
5,182 - 5,182
PUERTO RICO 1.14%
10,000 10,000 Puerto Rico Commonwealth, GO, 5.50%, 7/1/2008 10,999 10,999
5,500 5,500 Puerto Rico Commonwealth, GO, 5.50%, 7/1/2009 6,072 6,072
Puerto Rico Industrial, Medical &
Environmental PCFFA, Renasa Inc., Squibb Corp.
1,140 1,140 Project, Rev., 6.50%, 7/1/2004 1,143 1,143
18,214 - 18,214
SOUTH CAROLINA 0.87%
South Carolina, Series 2001 A, (State School
13,305 13,305 Facilities), 5.00%, 1/1/05 - 13,877 13,877
TENNESSEE 0.86%
6,820 6,820 Knox County, 6.00%, 5/1/12 to 5/1/13 7,480 7,480
Tennergy Corp., Tennessee, Gas, Rev., 5.00%,
5,335 5,335 6/1/2009 5,250 5,250
1,000 1,000 Tennessee State, Ser. A, GO, 5.00%, 5/1/2013 1,044 1,044
6,294 7,480 13,774
TEXAS 6.61%
Austin, Texas, Independent School District,
Public Property Finance, Contractual
2,000 2,000 Obligation, GO, 5.25%, 2/1/2008 2,126 2,126
Austin, Texas, Utility Systems, Rev., 5.80%,
5,255 5,255 11/15/2006 5,736 5,736
Austin, Texas, Utility Systems, Rev., ^,
3,000 3,000 6.25%, 5/15/2004 3,235 3,235
Dallas, Texas, Civic Center, Improvement,
6,200 6,200 Rev., 5.25%, 8/15/2007 6,605 6,605
4,845 4,845 Dallas, Texas, GO, 5.00%, 2/15/2009 5,105 5,105
Fort Worth Independent School District,
(Premium Capital Appreciation), 4.99%,
12,485 12,485 2/15/06(y) 9,750 9,750
6,220 6,220 Harris County, Texas, GO, 5.88%, 10/1/2007 6,856 6,856
4,940 4,940 Houston, Texas, Ser. A, GO, 5.50%, 3/1/2004 5,172 5,172
8,675 8,675 Houston, Texas, Ser. A, GO, 5.50%, 3/1/2008 9,337 9,337
Houston, Texas, Water & Sewer Systems, Ser. B,
4,975 4,975 Rev., 6.40%, 12/1/2009 5,297 5,297
Katy, Texas, Independent School District, Ser.
1,520 1,520 A, GO, 5.00%, 2/15/2011 1,585 1,585
North East Independent School District, Texas,
5,300 5,300 GO, 6.50%, 10/1/2009 6,126 6,126
Texas Series 1992 C, 5.50%, 4/1/20,
10,000 10,000 Prerefunded at 102% of Par 10,418 10,418
5,650 5,650 Texas State, Ser. A, GO, 6.00%, 10/1/2005 6,147 6,147
7,500 7,500 Texas State, Ser. A, GO, 6.00%, 10/1/2009 8,430 8,430
Texas Water Development Board, State Revolving
1,320 1,320 Fund, Senior Lien, Rev., 6.20%, 7/15/2005 1,385 1,385
-10-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------- --------- ---------
Texas Water Development Board, State Revolving
Fund, Senior Lien, Ser. A, Rev., 5.00%,
4,700 4,700 7/15/2007 4,946 4,946
Texas Water Development Board, State Revolving
Fund, Senior Lien, Ser. A, Rev., 5.25%,
3,000 3,000 7/15/2009 3,186 3,186
Texas Water Development Board, State Revolving
Fund, Senior Lien, Ser. A, Rev., 5.63%,
1,000 1,000 7/15/2011 1,084 1,084
Texas Water Development Board, State Revolving
Fund, Senior Lien, Ser. B, Rev., 5.25%,
3,175 3,175 7/15/2008 3,391 3,391
85,749 20,168 105,917
UTAH 0.73%
Intermountain Power Agency, Utah, Power
3,800 3,800 Supply, Ser. B, Rev., 6.50%, 7/1/2010 4,402 4,402
2,850 2,850 Salt Lake City, Utah, GO, 5.50%, 6/15/2011 3,101 3,101
Utah State, Building Ownership Authority,
State Facilities Master Lease Program, Ser. C,
3,915 3,915 Rev., 5.50%, 5/15/2008 4,226 4,226
11,729 - 11,729
VERMONT 0.78%
Burlington, Vermont, Electric, Ser. A, Rev.,
4,100 4,100 6.38%, 7/1/2009 4,702 4,702
3,510 3,510 Vermont State, Ser. A, GO, ^, 6.40%, 1/15/2005 3,897 3,897
3,510 3,510 Vermont State, Ser. A, GO, ^, 6.50%, 1/15/2005 3,909 3,909
12,508 - 12,508
VIRGIN ISLANDS 0.68%
Virgin Islands Public Finance Authority, Gross
Receipts, Taxes Lien Notes, Ser. A, Rev.,
2,500 2,500 5.63%, 10/1/2010 2,633 2,633
Virgin Islands Public Finance Authority,
Senior Lien, Fund Lien Notes, Ser. C, Rev.,
5,000 5,000 5.50%, 10/1/2006 5,172 5,172
Virgin Islands Water & Power Authority,
3,070 3,070 Electric Systems, Rev., 5.25%, 7/1/2007 3,151 3,151
10,956 - 10,956
VIRGINIA 0.82%
Chesapeake Bay Bridge & Tunnel Commission,
Virginia, General Resolution, Rev., 5.75%,
5,515 5,515 7/1/2008 5,968 5,968
Loudoun County, Series 2000 B, (State Aid
3,650 3,650 Withholding), 5.13%, 1/1/04 3,792 3,792
Virginia Commonwealth, Transportation Board,
Federal Highway Reimbursement Anticipation
3,135 3,135 Notes, Rev., 5.50%, 10/1/2006 3,388 3,388
9,356 3,792 13,148
WASHINGTON 1.02%
Grant County, Washington, Public Utilities
District No. 2, Electric, Ser. G, Rev., 5.25%,
4,340 4,340 1/1/2008 4,603 4,603
Washington State GO, Series 1991 R-92-A,
1,750 1,750 6.30%, 9/1/02 1,792 1,792
Washington State GO, Series 1992 B & AT-7,
4,000 4,000 6.40%, 6/1/17 4,705 4,705
5,000 5,000 Washington State, Ser. B, GO, 5.00%, 1/1/2007 5,237 5,237
-11-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ ------------ ---------
9,840 6,497 16,337
WISCONSIN 3.37%
Milwaukee County, Wisconsin, Corporate
3,025 3,025 Purpose, Ser. A, GO, 5.38%, 9/1/2005 3,210 3,210
Milwaukee County, Wisconsin, Corporate
2,350 2,350 Purpose, Ser. A, GO, 5.63%, 9/1/2010 2,558 2,558
Wisconsin State, Clean Water, Ser. 2, Rev.,
5,000 5,000 5.50%, 6/1/2011 5,437 5,437
Wisconsin State, Clean Water, Ser. 2, Rev.,
6,545 6,545 5.50%, 6/1/2014 7,090 7,090
Wisconsin State, Clean Water, Ser. 2, Rev.,
3,585 3,585 6.13%, 6/1/2006 3,941 3,941
6,000 6,000 Wisconsin State, GO, 6.20%, 5/1/2006 6,618 6,618
1,000 1,000 Wisconsin State, GO, 6.25%, 5/1/2012 1,154 1,154
2,775 2,775 Wisconsin State, Ser. 1, GO, 5.00%, 11/1/2007 2,928 2,928
6,275 6,275 Wisconsin State, Ser. 1, GO, 5.50%, 11/1/2011 6,852 6,852
5,000 5,000 Wisconsin State, Ser. 2, GO, 5.00%, 5/1/2004 5,184 5,184
4,450 4,450 Wisconsin State, Ser. 3, GO, 5.20%, 11/1/2009 4,750 4,750
Wisconsin State, Transportation, Ser. A, Rev.,
4,040 4,040 5.00%, 7/1/2005 4,212 4,212
53,934 - 53,934
TOTAL GENERAL OBLIGATIONS & HOUSE AUTHORITY 58.76% 690,598 250,629 941,227
INSURED 17.47%
ALASKA 0.13%
Anchorage GO, 6.60%, 7/1/02, Prerefunded at
2,000 2,000 100% of Par (MBIA) - 2,021 2,021
CALIFORNIA 3.79%
Bay Area Governments Association Lease Rev.,
Series 2001 A,(Bart SFO Extension-FTA Capital
35,000 35,000 Grant), 4.88%, 6/15/09 (AMBAC) 35,844 35,844
Bay Area Governments Association Lease Rev.,
Series 2001 A,(Bart SFO Extension-FTA Capital
2,140 2,140 Grant), 5.00%, 6/15/08 (AMBAC) 2,164 2,164
5,000 5,000 California, 5.00%, 12/1/09 (FGIC-TCRS) 5,378 5,378
3,000 3,000 California, 6.50%, 9/1/10 (FGIC-TCRS) 3,545 3,545
California, Series 1999, 5.50%, 2/1/10
10,000 10,000 (FGIC-TCRS) 10,997 10,997
Los Angeles County Public Works Financing
Auth. Lease Rev., Series 1996 A, 6.00%, 9/1/06
2,500 2,500 (MBIA) 2,787 2,787
- 60,715 60,715
DISTRICT OF COLUMBIA 0.83%
District of Columbia, Series 1992 B, 6.00%,
2,600 2,600 6/1/02, Escrowed to Maturity (MBIA) 2,678 2,678
District of Columbia, Series 1993 A, 6.00%,
6/1/07 to 6/1/07, Escrowed to
3,220 3,220 Maturity(MBIA-IBC) 3,552 3,552
District of Columbia, Series 1993 C, 5.25%,
6,795 6,795 12/1/03, Escrowed to Maturity (FGIC) 7,074 7,074
- 13,304 13,304
FLORIDA 0.13%
-12-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ----------- ---------
Volusia County School District, 6.10%, 8/1/02
2,000 2,000 (FGIC) - 2,060 2,060
GEORGIA 0.36%
Metropolitan Atlanta Rapid Transportation
5,000 5,000 Auth., Series 1992 P, 6.25%, 7/1/11(AMBAC) - 5,795 5,795
ILLINOIS 1.32%
Cook County, Series 2001 A, 5.38%, 11/15/14
10,065 10,065 (FGIC) 10,522 10,522
Cook County, Series 2001 A, 5.50%, 11/15/13
6,760 6,760 (FGIC) 7,202 7,202
Regional Transportation Auth., Series 1994 D,
2,810 2,810 7.75%, 6/1/07 (FGIC) 3,349 3,349
- 21,073 21,073
LOUISIANA 0.16%
New Orleans, (Capital Appreciation), 5.28%,
4,165 4,165 9/1/11(y) 2,559 2,559
MASSACHUSETTS 1.28%
Massachusetts, Series 2000 A, (Grant
18,620 18,620 Anticipation Notes), 5.75%, 12/15/12 (FSA) 20,513 20,513
MICHIGAN 1.16%
Grand Rapids Water Supply System Rev., 5.75%,
3,910 3,910 1/1/13 (FGIC) 4,267 4,267
Michigan State Hospital Finance Auth. Rev.,
Series 1999 A, (Ascension Health Credit),
13,050 13,050 6.25%, 11/15/15 (MBIA) 14,305 14,305
- 18,572 18,572
NEBRASKA 1.00%
Nebhelp Inc, Series 1993 A-5B, 6.20%, 6/1/13
5,245 5,245 (MBIA) 5,517 5,517
Nebraska Public Power District, Series 1998 A,
10,000 10,000 5.25%, 1/1/05(MBIA) 10,464 10,464
- 15,981 15,981
NEVADA 0.64%
Clark County School District, Series 1991 A,
8,200 8,200 7.00%, 6/1/11(MBIA) 9,901 9,901
Las Vegas-Clark County Library District,
280 280 Series 1991 B, 6.70%, 8/1/04(FGIC) 286 286
- 10,187 10,187
NEW JERSEY 1.14%
New Jersey Economic Development Auth. Rev.,
Series A, Market Transition Facilities Rev.,
7,000 7,000 Sr. Lien, 5.40%, 7/1/02 (MBIA) 7,174 7,174
New Jersey Economic Development Auth. Rev.,
Series A, Transition Project Sublease, 5.75%,
4,100 4,100 5/1/11 (FSA) 4,548 4,548
New Jersey State Transportation Trust Fund,
Series 1995 B,Transportation System, 6.00%,
6,000 6,000 6/15/05(MBIA) 6,516 6,516
-13-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ ----------- ---------
- 18,238 18,238
NEW YORK 0.68%
75 75 Monroe County, 6.00%, 6/1/10 (AMBAC) 85 85
New York State Thruway Auth., Series 2000 B-1,
10,000 10,000 5.50%,4/1/09 (FGIC) 10,834 10,834
- 10,919 10,919
OHIO 0.68%
Ohio State Turnpike Commission, Series 1996 A,
5.50%, 2/15/26, Prerefunded at 102% of
10,000 10,000 Par(MBIA) - 10,902 10,902
PENNSYLVANIA 0.10%
Pennsylvania, Series 1991 A2, 6.50%, 11/1/04,
1,500 1,500 Prerefunded at 101.5% of Par (MBIA) - 1,553 1,553
SOUTH CAROLINA - 3.1% 1.81%
Piedmont Municipal Power Agency Electric Rev.,
1,000 1,000 6.20%, 1/1/08 (MBIA) 1,124 1,124
Piedmont Municipal Power Agency Electric Rev.,
15,000 15,000 6.75%, 1/1/20 (FGIC) 18,075 18,075
South Carolina GO, Series 2000 A, (State
School Facilities), 4.25%, 1/1/15 (State Aid
10,310 10,310 Withholding) 9,728 9,728
- 28,927 28,927
TEXAS 2.01%
Houston Independent School District, (Capital
11,135 11,135 Appreciation), 4.76%, 8/15/13 (PSFG) (y) 6,045 6,045
Humble Independent School District, Series
2000 C, (Humble Island), 3.95%, 2/15/16 to
10,880 10,880 2/15/17 (PSFG) (y) 4,840 4,840
Lewisville Independent School District, 5.50%,
4,105 4,105 8/15/16 (PSFG) 4,262 4,262
Lubbock Health Facilities Development Corp.,
(St. Joseph Health System), 5.00%, 7/1/07
2,100 2,100 (FSA-CR) 2,185 2,185
Texas Municipal Power Agency Rev., (Capital
12,500 12,500 Appreciation), 4.76%, 9/1/13 (MBIA) (y) 6,772 6,772
Texas Public Building Auth., (Capital
10,100 10,100 Appreciation), 4.21%, 8/1/06 (MBIA) (y) 8,068 8,068
- 32,172 32,172
WASHINGTON 0.27%
Pierce County School District No. 320 Sumner,
6.60%, 12/1/02,Prerefunded at 100% of Par
1,000 1,000 (MBIA) 1,024 1,024
Snohomish County School District No. 2
1,250 1,250 Everett, Series 1991 A, 6.70%, 12/1/02 (MBIA) 1,259 1,259
Washington Public Power Supply System Rev.,
Series 1990 C, (Nuclear Project No. 2), 7.00%,
2,000 2,000 7/1/01 (FGIC) 2,022 2,022
- 4,305 4,305
TOTAL INSURED 17.47% - 279,796 279,796
PRE-REFUNDED/TAX EXEMPT 1.61%
ALABAMA 0.06%
-14-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ----------- ---------
Daphne Special Care Facilities Financing Auth.
Rev., Series 1988 A, (Presbyterian
Retirement), 7.30%, 8/15/18, Prerefunded at
1,000 1,000 100% of Par - 1,017 1,017
CONNECTICUT 0.19%
Connecticut Special Tax Obligation Rev.,
Series 1999 A, (Transportation
Infrastructure), 6.60%, 6/1/04, Prerefunded at
2,815 2,815 100% of Par - 2,994 2,994
MICHIGAN 0.66%
Detroit Water Supply System Rev., 6.37%,
10,000 10,000 3/3/01, Prerefunded at 102% of Par (FGIC) - 10,570 10,570
MISSOURI 0.61%
Missouri State Regional Convention & Sports
Complex Auth., Series A, 6.90%, 8/15/21,
5,000 5,000 Prerefunded at 100% of Par 5,381 5,381
St. Louis County Regional Convention & Sports
Complex Auth., Series 1991 B, 7.00%, 8/15/21,
4,000 4,000 Prerefunded at 100% of Par 4,314 4,314
- 9,695 9,695
TEXAS 0.10%
Dallas County Flood Control District, 9.25%,
1,305 1,305 4/1/10, Prerefunded at 100% of Par 1,581 1,581
TOTAL PRE-REFUNDED/TAX EXEMPT 1.61% - 25,857 25,857
PRIVATE PLACEMENT 2.60%
CALIFORNIA 0.09%
1,049 1,049 Kaweah Delta Hospital District, 5.25%, 6/1/14 1,047 1,047
353 353 Kawaeh Delta Hospital District, 6.40%, 6/1/14 376 376
- 1,423 1,423
FLORIDA 0.64%
10,250 10,250 Orlando Utility Commission, 4.48%, 9/1/03 - 10,299 10,299
ILLINOIS 0.19%
3,000 3,000 Illinois Development Bank, 4.90%, 8/1/28 - 3,063 3,063
NEW YORK 0.64%
New York Convention Center Operating
Corporation Certificates of Partnership, (Yale
10,000 10,000 Building Acquisition), 6.50%, 12/1/04 - 10,189 10,189
PENNSYLVANIA 0.27%
Philadelphia Auth. for Industrial Development,
4,250 4,250 4.75%, 1/1/18 - 4,262 4,262
WISCONSIN 0.78%
Wisconsin Health & Educational Facilities,
6,250 6,250 5.70%, 5/1/14 6,275 6,275
Wisconsin Health & Educational Facilities,
6,250 6,250 5.95%, 5/1/19 6,141 6,141
- 12,416 12,416
TOTAL PRIVATE PLACEMENT 2.60% - 41,652 41,652
-15-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ---------- ---------
REVENUE BONDS 17.34%
ARIZONA 0.21%
Arizona Health Facilities Auth. Rev., Series
1999 A, (Catholic Healthcare West), 6.13%,
3,430 3,430 7/1/09 - 3,416 3,416
CALIFORNIA 1.03%
California State Department of Water Resources
Center Valley Project, Series 1992 J-1, (Water
2,520 2,520 systems), 7.00%, 12/1/12 3,120 3,120
California Statewide Community Development
13,070 13,070 Auth., 6.00%, 7/1/09 13,328 13,328
- 16,448 16,448
GEORGIA 0.09%
Georgia Municipal Electric Auth., Series 1997
1,250 1,250 A, 6.50%, 1/1/12 - 1,443 1,443
ILLINOIS 0.47%
Illinois Health Facilities Auth. Rev., 6.63%,
1,665 1,665 2/15/12 1,807 1,807
Illinois Health Facilities Auth. Rev., 6.75%,
3,770 3,770 11/15/10 4,087 4,087
Metropolitan Pier & Exposition Auth. Dedicated
1,380 1,380 State Tax Rev., Series 1992 A, 8.50%, 6/15/06 1,667 1,667
- 7,561 7,561
IOWA 0.46%
6,920 6,920 Iowa Finance Auth., 6.75%, 2/15/15 to 2/15/17 - 7,433 7,433
MARYLAND 0.36%
Maryland State Health & Higher Educational
Facilities Auth. Rev., (John Hopkins
5,435 5,435 University), 5.75%, 7/1/03 - 5,703 5,703
MASSACHUSETTS 2.31%
Massachusetts Bay Transportation Auth., Series
1994 A, (General Transportation System),
5,650 5,650 7.00%, 3/1/08 6,596 6,596
Massachusetts Health & Educational Facilities
Auth., Series 2000 A, (Harvard University),
6,750 6,750 5.00%, 1/15/07 7,120 7,120
Massachusetts State College Building Auth.,
1,495 1,495 Series 1994 A, 7.50%, 5/1/11 1,864 1,864
Massachusetts State Water Pollution Abatement,
9,500 9,500 Series 1999 A, (MWRA Program), 6.00%, 8/1/15 10,513 10,513
Massachusetts State Water Resources Auth.,
10,000 10,000 Series 2000 D, 5.50%, 8/1/09 10,885 10,885
- 36,978 36,978
MICHIGAN 1.64%
Michigan State Hospital Finance Auth. Rev.,
Series 1997 T, (Mercy Health Services), 5.75%,
2,905 2,905 8/15/04 3,027 3,027
Michigan State Hospital Finance Auth. Rev.,
Series 1999 B, (Ascension Health Credit),
10,000 10,000 5.30%, 11/15/33 10,236 10,236
Michigan State Hospital Finance Auth. Rev.,
3,755 3,755 Series 2000 A, (Trinity Health), 5.50%, 12/1/05 3,876 3,876
-16-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- ---------- --------- ------------ ----------- ---------
Michigan State Hospital Finance Auth. Rev.,
Series 2000 A, (Trinity Health), 6.00%,
8,565 8,565 12/1/11 to 12/1/12 9,173 9,173
- 26,312 26,312
MINNESOTA 0.69%
University of Minnesota, Series 1996 A, 5.75%,
10,000 10,000 7/1/10 to 7/1/15 - 11,101 11,101
MISSISSIPPI 0.16%
Mississippi Higher Education Assistance Corp.,
2,505 2,505 Series 1993 B, 5.60%, 9/1/04 - 2,595 2,595
NEBRASKA 0.27%
University of Nebraska Facilities Corp.,
4,190 4,190 (Deferred Maintenance Project), 5.00%, 7/15/04 - 4,356 4,356
NEW HAMPSHIRE 0.35%
New Hampshire Higher Educational & Health
Facilities Auth., (Dartmouth College), 6.75%,
4,900 4,900 6/1/07 - 5,628 5,628
NEW YORK 1.30%
New York City Transitional Finance Auth.,
10,000 10,000 Series 2001 B, 5.50%, 2/1/15 to 2/1/16 10,553 10,553
Triborough Bridge & Tunnel Authority, 6.63%,
8,700 8,700 1/1/12 10,250 10,250
- 20,803 20,803
NORTH CAROLINA 1.00%
North Carolina Municipal Power Agency No. 1
Catawba Electric Rev., Series 1999 B, 6.13%,
8,900 8,900 1/1/06 9,351 9,351
North Carolina Municipal Power Agency No. 1
Catawba Electric Rev., Series 1999 B, 6.25%,
6,275 6,275 1/1/07 6,659 6,659
- 16,010 16,010
NORTH DAKOTA 0.72%
North Dakota State Housing Finance Agency
Mortgage Rev., Series 2000 C, (Housing Finance
11,280 11,280 Program), 5.55%, 1/1/31 - 11,522 11,522
OHIO 0.20%
Ohio State Water Development Auth., 9.38%,
2,585 2,585 12/1/10 - 3,153 3,153
PENNSYLVANIA 0.96%
Clinton County Industrial Development Auth.
Rev., Series 1992 A, (International Paper
10,000 10,000 Co.), VRN, 4.73%, 9/1/22 10,000 10,000
Pennsylvania State Higher Educational
Facilities Auth. Rev., Series 1995 A,
1,310 1,310 (University of Pennsylvania), 6.50%, 9/1/02 1,365 1,365
Pennsylvania State Higher Educational
Facilities Auth. Rev., Series 1996 A,
(University of Pennsylvania Health Services),
3,800 3,800 6.00%, 1/1/06 3,958 3,958
-17-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ ------------ ---------
- 15,323 15,323
SOUTH CAROLINA 0.54%
South Carolina Jobs-Economic Development Auth.
Hospital Facilities Rev., Series 2000 A,
5,500 5,500 (Palmetto Health Alliance), 7.00%, 12/15/10 5,662 5,662
South Carolina Jobs-Economic Development Auth.
Hospital Facilities Rev., Series 2000 A,
3,000 3,000 (Palmetto Health Alliance), 7.13%, 12/15/15 2,985 2,985
- 8,647 8,647
TEXAS 1.83%
Brazos River Auth. Rev., Series 1999 A,
10,000 10,000 (Utility Electric Company), 5.00%, 4/1/33 10,008 10,008
Dallas-Fort Worth International Airport
Facility Improvement Corp. Rev., Series 2000
13,000 13,000 B, (American Airlines), 6.05%, 5/1/29 13,321 13,321
Lubbock Health Facilities Development Corp.,
5,875 5,875 (St. Joseph Health Systems), 5.25%, 7/1/11 6,017 6,017
- 29,346 29,346
VIRGINIA 2.18%
5,000 5,000 Virginia College Building Auth., 5.75%, 2/1/03 5,195 5,195
Virginia Commonwealth Transportation Board,
27,415 27,415 (Federal Highway), 5.50%, 10/1/05 to 10/1/08 29,690 29,690
- 34,885 34,885
WASHINGTON 0.57%
Washington Public Power Supply System, Series
2,000 2,000 1990 A, (Project II), 7.25%, 7/1/06 2,295 2,295
Washington Public Power Supply System, Series
1,500 1,500 1990 C, 7.50%, 7/1/02 1,534 1,534
Washington Public Power Supply System, Series
5,265 5,265 1991 A, 6.30%, 7/1/01 5,312 5,312
- 9,141 9,141
TOTAL REVENUE BONDS 17.34% - 277,804 277,804
TAX ANTICIPATION NOTES 0.51%
CALIFORNIA 0.51%
Tustin Unified School District Rev.,
8,000 8,000 (Community Facilities 97-1), 6.10%, 9/1/02 - 8,121 8,121
TOTAL TAX ANTICIPATION NOTES 0.51% - 8,121 8,121
TOTAL MUNICIPALS 98.29% 690,598 883,859 1,574,457
SHORT-TERM INVESTMENTS 3.36%
CALIFORNIA 0.06%
California PCFA, Resource Recovery, OMS Equity
100 100 Stanislaus Project, Rev., FRDO, 1.50%, 3/1/2001 100 100
Irvine Ranch, California, Water District,
Capital Improvement Project, COP, FRDO, 1.40%,
500 500 3/1/2001 500 500
-18-
JPMORGAN TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE JPMORGAN INTERMEDIATE INTERMEDIATE JPMORGAN INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND BOND INCOME BOND BOND
FUND PORTFOLIO FUND FUND PORTFOLIO FUND
- ----------- --------- --------- ------------ --------- ---------
Irvine Ranch, California, Water District,
District No. 105, 140, 240 & 250, GO, FRDO,
100 100 1.40%, 3/1/2001 100 100
Irvine Ranch, California, Water District,
District No. 182, Ser. A, GO, FRDO, 1.40%,
100 100 3/1/2001 100 100
Los Angeles, California, Regional Airports
Improvement Corp., Terminal Facility, Los
Angeles International Airport, Rev., FRDO,
100 100 3.30%, 3/1/2001 100 100
900 - 900
INVESTMENT COMPANIES 3.29%
J.P. Morgan Institutional Tax Exempt Money
45,221 45,221 Market Fund (a) 45,221 45,221
Provident Municipal Cash Money Market Fund,
3,654 3,654 3.41% 3,654 3,654
Provident Municipal Cash Money Market Fund,
3,876 3,876 3.48% 3,876 3,876
7,530 45,221 52,751
NEW YORK 0.01%
Port Authority of New York & New Jersey,
Special Obligation, Versatile Structure
100 100 Obligation, Ser. 6, Rev., FRDO, 3.00%, 3/1/2001 100 100
TOTAL SHORT-TERM INVESTMENTS 3.36% 8,530 45,221 53,751
TOTAL INVESTMENTS 101.64% $ 699,128 $ 929,080 $1,628,208
TOTAL COST $(667,091) $(898,224) $(1,565,315)
TOTAL NET ASSETS $ 705,863 $ 899,327 $1,601,879
^ - Security is prerefunded or escrowed to
maturity. The maturity date shown is the date
of the prerefunded call
AMBAC - AMBAC Assurance Corporation
COP - Certificates of Participation
CR-
FGIC - Financial Guaranty Insurance Co.
FRDO - Floating Rate Demand Obligation. The
Maturity date shown is the next interest reset
date. The interest rate shown is the rate in
effect at February 28, 2001
FSA - Financial Securities Assurance
GO - General Obligation
IBC - IBC Financial Data, Inc.
IDA - Industrial Development Authority
IDR - Industrial Development Revenue
MBIA - MBIA Insurance Corp.
PCFFA - Pollution Control Facilities Financing
Authority
PCR - Pollution Control Revenue
PSFG - Permanent School Fund Guarantee
Rev. - Revenue Bond
Ser. - Series
TCRS -
VRN - Variable Rate Note
(a) Money market mutual fund registered under
the Investment Company Act of 1940, as
amended, and advised by J.P. Morgan Investment
Management, Inc.
(y) Yield to maturity
The Accompanying Notes are an Integral Part of
the Financial Statements.
-19-
J.P. MORGAN TAX EXEMPT BOND FUND / J.P. MORGAN INSTITUTIONAL TAX EXEMPT
BOND FUND / THE TAX EXEMPT BOND PORTFOLIO /
JPMORGAN INTERMEDIATE TAX FREE INCOME FUND
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 TAX INSTITUTIONAL TAX
EXEMPT BOND EXEMPT BOND THE TAX EXEMPT
FUND FUND BOND PORTFOLIO
ASSETS:
Investment Securities, at Value $ - $ - $ 929,080
Investment in The Tax Exempt
Bond Portfolio ("Portfolio"), at Value 356,116 543,211 -
Prepaid Trustees' Fees and Expenses - - 1
Accrued Domestic Interest Income - - 67
Accrued Municipal Bond Interest - - 10,359
Other 1 1 1
Receivables: - - -
Investment Securities Sold - - 45,754
Interest - - 679
Dividends - - 4
--------------------------------------------------------------
Total Assets 356,117 543,212 985,945
--------------------------------------------------------------
LIABILITIES:
Payables:
Investment Securities Purchased - - 72,216
Due To Custodian - - 13,851
Dividends 1,209 1,906 -
Accrued Liabilities:
Investment Advisory Fees - - 208
Shareholder Servicing Fees 68 42 -
Administrative Service Fees 6 10 16
Custodian Fees - - 41
Administration Fees - 1 1
Other 36 35 285
--------------------------------------------------------------
Total Liabilities 1,319 1,994 86,618
--------------------------------------------------------------
NET ASSETS:
Paid-in Capital 337,096 531,262 -
Accumulated Undistributed
(distributions in excess of)
Net Investment Income (103) (135) -
Accumulated Net Realized Loss on
Investment Transactions 3,151 (6,111) -
Net Unrealized appreciation on Investments and
Futures Contracts 14,654 16,202 -
--------------------------------------------------------------
Net Assets $ 354,798 $ 541,218 $ 899,327
==============================================================
Shares of Beneficial Interest Outstanding 29,761 52,586 -
Shares Outstanding - -
Net Asset Value Per Share $ 11.92 $ 10.29 -
PRO FORMA WITH CONCURRENT REORGANIZATION
JPMORGAN TAX EXEMPT BOND FUND
SHARES OUTSTANDING - - -
Select - - -
Institutional
NET ASSET VALUE PER SHARE
Select - - -
Institutional - - -
--------------------------------------------------------------
Cost of Investments $ - $ - $ 898,224
==============================================================
PRO FORMA
JPMORGAN COMBINED
INTERMEDIATE TAX JPMORGAN
FREE INCOME PRO FORMA TAX EXEMPT
FUND ADJUSTMENT BOND FUND
ASSETS:
Investment Securities, at Value $ 699,128 $ - $ 1,628,208
Investment in The Tax Exempt
Bond Portfolio ("Portfolio"), at Value - (899,327)(a) -
Prepaid Trustees' Fees and Expenses - - 1
Accrued Domestic Interest Income - - 67
Accrued Municipal Bond Interest - - 10,359
Other 9 - 12
Receivables: - - -
Investment Securities Sold - - 45,754
Interest 9,514 - 10,193
Dividends - - 4
-------------------------------------------------------------
Total Assets 708,651 (899,327) 1,694,598
-------------------------------------------------------------
LIABILITIES:
Payables:
Investment Securities Purchased - - 72,216
Due To Custodian - - 13,851
Dividends 2,216 - 5,331
Accrued Liabilities:
Investment Advisory Fees 162 - 370
Shareholder Servicing Fees 135 - 245
Administrative Service Fees 81 - 113
Custodian Fees 27 - 68
Administration Fees - - 2
Other 167 - 523
-------------------------------------------------------------
Total Liabilities 2,788 92,719
-------------------------------------------------------------
NET ASSETS:
Paid-in Capital 675,926 - 1,544,284
Accumulated Undistributed
(distributions in excess of)
Net Investment Income 40 - (198)
Accumulated Net Realized Loss on
Investment Transactions (2,140) - (5,100)
Net Unrealized appreciation on Investments and
Futures Contracts 32,037 - 62,893
-------------------------------------------------------------
Net Assets $ 705,863 $ (899,327) $ 1,601,879
=============================================================
Shares of Beneficial Interest Outstanding - (82,347)(c) -
Shares Outstanding 65,766 (65,766)(d) -
Net Asset Value Per Share $10.73 - -
PRO FORMA WITH CONCURRENT REORGANIZATION
JP MORGAN TAX EXEMPT BOND FUND
SHARES OUTSTANDING - 98,823 (b) 98,823
Select - 50,426 (b) 50,426
Institutional
NET ASSET VALUE PER SHARE
Select - - $ 10.73
Institutional - - $ 10.73
-------------------------------------------------------------
Cost of Investments $ 667,091 $ - $ 1,565,315
=============================================================
(a) Reflects reallocation of investment from the feeder funds to master
portfolio.
(b) The difference in number of shares outstanding due to the Concurrent
Reorganization.
(c) Reallocation of feeder funds beneficial interest to Select and
Institutional due to the Concurrent Reorganization.
(d) Reallocation of Chase Vista Intermediate Tax Free Income Fund's shares
outstanding to Select and Institutional shares due to the Concurrent
Reorganization.
See Notes to Pro Forma Financial Statements.
-20-
J.P. MORGAN TAX EXEMPT BOND FUND / J.P. MORGAN INSTITUTIONAL TAX EXEMPT
BOND FUND / THE TAX EXEMPT BOND PORTFOLIO /
JPMORGAN INTERMEDIATE TAX FREE INCOME FUND
Pro Forma Combining Statement of Operations
For the Twelve Months Ended February 28, 2001
(Unaudited)
(Amounts in Thousands)
J.P. MORGAN
J.P. MORGAN TAX INSTITUTIONAL TAX
EXEMPT BOND EXEMPT BOND THE TAX EXEMPT
FUND FUND BOND PORTFOLIO
INCOME:
Interest Income $ - $ - $ 42,160
Allocated Investment Income from Portfolio 17,789 24,370 -
Allocated Portfolio Expenses (1,205) (1,652) -
--------------------------------------------------------------
Investment Income 16,584 22,718 42,160
--------------------------------------------------------------
EXPENSES:
Investment Advisory Fees - - 2,437
Shareholder Servicing Fees 855 469
Administrative Service Fees 82 112 195
Custodian Fees - - 141
Professional Fees 16 16 44
Transfer Agent Fees 47 26 -
Printing and Postage 16 12 10
Trustees' Fees 6 6 12
Registration Fees (2) 4
Fund Services Fees 5 7 12
Administration Fees 4 5 5
Insurance Expense 1 - 2
Financial and Fund Accounting Services Fee 35 34 -
Other 27 22 -
--------------------------------------------------------------
Total Expenses 1,092 713 2,858
--------------------------------------------------------------
Less: Amounts Waived - - -
Less: Expense Reimbursements 13 23 26
Less: Earnings Credits - - -
--------------------------------------------------------------
Net Expenses 1,079 690 2,832
--------------------------------------------------------------
--------------------------------------------------------------
Net Investment Income $ 15,505 $ 22,028 $ 39,328
--------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain on:
Investments 3,228 4,880 8,108
Futures Transactions - - -
Change in Net Unrealized Appreciation (Depreciation)
of:
Investments 7,045 21,977 29,022
Futures Contracts - -
--------------------------------------------------------------
Net Realized and Unrealized Gain on Investments
Allocated from Portfolio 10,273 26,857 37,130
--------------------------------------------------------------
--------------------------------------------------------------
Net Increase in Net Assets from Operations $ 25,778 $ 48,885 $ 76,458
==============================================================
PRO FORMA
CHASE VISTA COMBINED
INTERMEDIATE TAX JPMORGAN
FREE INCOME PRO FORMA TAX EXEMPT
FUND ADJUSTMENT BOND FUND
INCOME:
Interest Income $ 34,643 $ - $ 76,803
Allocated Investment Income from Portfolio - (42,159) (c) -
Allocated Portfolio Expenses - 2,857 (b) -
------------------------------------------------------------
Investment Income 34,643 (39,302) 76,803
------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 2,076 - 4,513
Shareholder Servicing Fees 1,731 - 3,055
Administrative Service Fees 1,039 831 (a) 2,259
Custodian Fees 116 (95) (f,g) 162
Professional Fees 45 (22) (g) 99
Transfer Agent Fees 22 - 95
Printing and Postage 28 (7) (g) 59
Trustees' Fees 34 - 58
Registration Fees 34 - 36
Fund Services Fees - - 24
Administration Fees - - 14
Insurance Expense - - 3
Financial and Fund Accounting Services Fee - (69) (f) -
Other 35 - 84
------------------------------------------------------------
Total Expenses 5,160 638 10,461
------------------------------------------------------------
Less: Amounts Waived - 638 (a) 638
Less: Expense Reimbursements - 638 (a) 700
Less: Earnings Credits 3 - 3
------------------------------------------------------------
Net Expenses 5,157 (638) 9,120
------------------------------------------------------------
------------------------------------------------------------
Net Investment Income $ 29,486 $ (38,664) $ 67,683
------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net Realized Gain on:
Investments 2,115 (8,108) (d) 10,223
Futures Transactions 235 - 235
Change in Net Unrealized Appreciation (Depreciation)
of:
Investments 34,954 (29,022) (d) 63,976
Futures Contracts 40 40
------------------------------------------------------------
Net Realized and Unrealized Gain on Investments
Allocated from Portfolio 37,344 (37,130) 74,474
------------------------------------------------------------
------------------------------------------------------------
Net Increase in Net Assets from Operations $ 66,830 $ (75,794) $ 142,157
============================================================
(a) Reflects adjustments to administrative fees and shareholder servicing
fees and/or related waivers based on the surviving Fund's revised fee
schedule.
(b) Reflects the elimination of master portfolio expenses which have been
disclosed under feeder expenses.
(c) Reallocation of investments income to feeder funds
(d) Reallocation of realized and unrealized loss to feeder funds.
(f) Reflects reclassification of fund accounting into revised combined
custodian agreement.
(g) Reduction reflects expected benefit of combined operations.
See Notes to Pro Forma Financial Statements
-21-
PRO FORMA FINANCIAL STATEMENTS
J.P. MORGAN TAX EXEMPT BOND FUND/ J.P. MORGAN INSTITUTIONAL TAX EXEMPT
BOND FUND/ THE TAX EXEMPT BOND PORTFOLIO/ JPMORGAN
INTERMEDIATE TAX FREE INCOME FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The Pro Forma Combining Statement of Assets and Liabilities,
Statement of Operations and Schedule of Investments ("Pro Forma Statements")
reflect the accounts of The Tax Exempt Bond Portfolio ("Master Portfolio"),
J.P. Morgan Institutional Tax Exempt Bond Fund ("Institutional Fund"), J.P.
Morgan Tax Exempt Bond Fund ("Tax Exempt Bond Fund"), (collectively the
"feeder funds" of the Master Portfolio) and JPMorgan Intermediate Tax Free
Income Fund ("JPMITFIF") 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 Master
Portfolio, Tax Exempt Bond Fund, and Institutional Fund in exchange for
shares in JPMITFIF. 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, JPMITFIF would
commence offering Select Class Shares. The net asset value per share for
Select Class Shares at the commencement of offering would be identical to the
closing net asset value per share for the JPMITFIF Institutional Class Shares
prior to the Concurrent Reorganization.
Under the proposed Concurrent Reorganization, each shareholder of
Tax Exempt Bond Fund and Institutional Fund would receive shares of JPMITFIF
with a value equal to their holding in their respective funds. Holders of the
Tax Exempt Bond Fund will receive Select Class Shares, and Institutional Fund
will receive Institutional Class shares. Holders of Institutional Class in
JPMITFIF will receive Select Class Shares. Therefore, as a result of the
proposed Concurrent Reorganization, current shareholders Tax Exempt Bond Fund
and Institutional Fund will become shareholders of JPMITFIF.
The Pro Forma net asset value per share assumes the issuance of
additional shares of JPMITFIF, 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 under the Concurrent Reorganization
was calculated based on February 28, 2001 net assets of Tax Exempt Bond Fund
and Institutional Fund and net asset value per share of JPMITFIF -
Institutional Class.
-22-
JPMORGAN INTERMEDIATE TAX FREE INCOME WITH CONCURRENT REORGANIZATION
Institutional
Class Shares
Increase in Shares Issued 50,426
Net Assets 2/28/01 $541,218
Pro Forma Net Asset Value 2/28/01 $10.73
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.
-23-
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 (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.(1)
7 Form of Distribution and Sub-Administration Agreement (1)
8(a) Form of Retirement Plan for Eligible Trustees.(2)
8(b) Form of Deferred Compensation Plan for Eligible Trustees.(2)
9 Form of Custodian Agreement. (1)
10(a) Rule 12b-1 Distribution Plan of Mutual Funds including
Selected Dealer Agreement and Shareholder Service
Agreement. (2)
10(b) Rule 12b-1 Distribution Plan - Class B Shares (including
forms of Selected Dealer Agreement and Shareholder
Servicing Agreement).(4)
10(c) Form of Rule 12b-1 Distribution Plan - Class C Shares
(including forms of Shareholder Servicing Agreements).(5)
10(d) Form of Rule 18f-3 Multi-Class Plan.(4)
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) Form of Transfer Agency Agreement. (1)
13(b) Form of Shareholder Servicing Agreement. (4)
13(c) Form of Administration Agreement.(1)
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 Powers of Attorney
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) Annual Report of the Merging Fund (including the Annual
Report of the Master Portfolio) dated July 31, 2000.
17(h) Semi-Annual Report of the Merging Fund (including the
Semi-Annual Report of the Master Portfolio) dated January
31, 2001.
- --------------------
(1) Filed as an exhibit to the Registration Statement on Form N-1A of the
Registrant (File No. 333-13319) as filed with the Securities and Exchange
Commission on October 2, 1996.
(2) Incorporated by reference to Amendment No. 6 to the Registration
Statement on Form N-1A of Mutual Fund Group (File No. 33-14196) as filed with
the Securities and Exchange Commission on March 23, 1990.
Part C-3
(3) Filed as an exhibit to Pre-Effective Amendment No. 2 as filed with the
Securities and Exchange Commission on December 19, 1996.
(4) Filed as an Exhibit to Amendment No. 32 to the Registration Statement on
Form N-1A of Mutual Fund Group (File No. 33-14196) on December 28, 1995.
(5) Filed as an Exhibit to Amendment No. 45 to the Registration Statement on
Form N-1A of Mutual Fund Group (File No. 33-14196) filed on October 28, 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
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-4
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 16th day of April, 2001.
MUTUAL FUND SELECT 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 16, 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 Tax Exempt Bond Fund.+
(e) Statement of Additional Information for J.P. Morgan Tax
Exempt Bond Fund.
(f) Annual Report of JPMorgan Intermediate Tax Free Income Fund
(formerly, Chase Vista Intermediate Tax Free Income Fund)
dated August 31, 2000.
(g) Annual Report of J.P. Morgan Tax Exempt Bond Fund (including
the Annual Report of The Tax Exempt Bond Portfolio) dated
July 31, 2000.
(h) Semi-Annual Report of J.P. Morgan Tax Exempt Bond Fund
(including the Semi-Annual Report of The Tax Exempt Bond
Portfolio) dated January 31, 2001.