As filed with the Securities and Exchange Commission on May 15, 2001
Registration No. 333-58986/811-7841
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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. 1 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:
1-800-348-4782
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.
c/o 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
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-766-7722
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 and funds advised by its
subsidiaries. At the special meeting (the "Meeting"), shareholders will be asked
to consider and vote upon the proposed reorganization of the Merging Fund into
JPMorgan 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 will 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 Intermediate Tax Free Income 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 simultaneous
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, April 6, 2001. IT IS IMPORTANT
THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED OR
CALL THE NUMBER PROVIDED ON THE PROXY CARD 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,
/s/ Matthew Healey
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 the number provided on the proxy card in order to vote.
2
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed because each Fund's board believes it
is in the best interests of its shareholders.
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. 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 provide monthly - Investment objective is to provide a high level of
dividends, which are excluded from gross income, and to current income that is exempt from federal income tax
protect the value of your investment by investing consistent with moderate risk of capital.
primarily in municipal obligations.
- - Invests in securities rated investment grade or unrated - May invest up to 10% of its assets in non-investment
securities of comparable quality. grade securities (sometimes called "junk bonds") rated B
or BB/Ba.
- - The Surviving Fund is not diversified under the 1940 Act. - The Merging Fund is diversified 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.
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, the Surviving Fund's administrator,
has contractually agreed to waive fees payable to it and reimburse expenses so
that the actual total operating expense 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 simultaneous
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 were 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 return envelope as soon as possible after reviewing the
enclosed Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND,
A SERIES OF J.P. MORGAN INSTITUTIONAL FUNDS
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-766-7722
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 (the "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 eight 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
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. The Meeting will be a joint meeting with the meetings of shareholders
of all series of JPMIF, which meetings are being called for purposes of
considering proposals 1 and 2 and certain other proposals not applicable to you.
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.
/s/ Sharon Weinberg
SHARON WEINBERG
SECRETARY
May 16, 2001
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
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-766-7722
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
522 FIFTH AVENUE
NEW YORK, NY 10036
1-800-348-4782
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
Intermediate Tax Free Income 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 and the Concurrent Reorganization (defined below), 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 "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 Prospectus,
Statement of Additional Information and Annual Report and Semi-Annual Report for
the Merging Fund (including the Annual and Semi-Annual Reports of the Master
Portfolio) and the preliminary Prospectus, Statement of Additional Information
and the current Annual and
Semi-Annual Report for the Surviving Fund and the Semi-Annual Report of the
Surviving Fund are incorporated herein by reference, and the preliminary
Prospectus and current 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 JPMIF 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 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.
TABLE OF CONTENTS
Page
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INTRODUCTION...................................... 1
PROPOSAL 1: REORGANIZATION PLAN................... 1
SUMMARY........................................... 1
COMPARATIVE FEE AND EXPENSE TABLES................ 4
RISK FACTORS...................................... 5
INFORMATION RELATING TO THE PROPOSED
REORGANIZATION................................... 6
INVESTMENT POLICIES............................... 10
PURCHASES, REDEMPTIONS AND EXCHANGES.............. 14
DISTRIBUTIONS AND TAXES........................... 15
COMPARISON OF THE MERGING FUND'S AND THE SURVIVING
FUND'S ORGANIZATION STRUCTURE.................... 16
INFORMATION RELATING TO THE ADVISORY CONTRACTS AND
OTHER SERVICES................................... 17
PROPOSAL 2: ELECTION OF TRUSTEES.................. 19
INFORMATION RELATING TO VOTING MATTERS............ 23
ADDITIONAL INFORMATION ABOUT JPMIF................ 25
ADDITIONAL INFORMATION ABOUT MFST................. 25
FINANCIAL STATEMENTS AND EXPERTS.................. 26
OTHER BUSINESS.................................... 26
LITIGATION........................................ 26
SHAREHOLDER INQUIRIES............................. 26
APPENDIX A--AGREEMENT AND PLAN OF
REORGANIZATION.................................. A-1
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, New York (together with
any adjournments thereof, the "Meeting"). The Meeting will be a joint meeting
with the meetings of shareholders of all series of JPMIF, which meetings are
being called for purposes of considering proposals 1 and 2 above and certain
other proposals not applicable to you. 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 May 11,
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
Intermediate Tax Free Income Fund." Further information relating to the
Surviving Fund is set forth herein, and the Surviving Fund's preliminary
Prospectus and current Annual Report and Semi-Annual Report are enclosed with
this Combined Prospectus/Proxy Statement.
THE JPMIF BOARD UNANIMOUSLY RECOMMENDS 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 voting shares of the
Merging Fund present at the joint meeting if the holders of more than 50% of the
outstanding voting shares of the Merging Fund are present or represented by
proxy and (ii) more than 50% of all outstanding voting 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 and Semi-Annual Report of the
Merging Fund (including the Annual and Semi Annual Reports of The Tax Exempt
Bond Portfolio), the preliminary Prospectus and Statement of Additional
Information and the current Annual and the Semi-Annual Report in respect of the
Surviving Fund 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. See "Information Relating to the Proposed
Reorganization."
The Surviving Fund has investment objectives, policies and restrictions
generally similar to the Merging Fund.
1
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 its respective Fund and 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 its shareholders.
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 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
simultaneous 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
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.
2
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 UNDER THE
1940 ACT.
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 UNDER NORMAL MARKET CONDITIONS THE MERGING FUND'S DURATION WILL
GENERALLY RANGE BETWEEN FOUR AND SEVEN YEARS.
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 to JPMIM 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 disbursing agent for the Surviving Fund.
PricewaterhouseCoopers LLP serves as the Surviving Fund's independent
accountants.
ADMINISTRATOR
As of August 11, 2001, Chase will receive an administration fee from the
Surviving Fund of 0.15% of average daily net assets for complex wide non-money
market fund assets up to $25 billion and 0.075% on assets in excess of $25
billion (currently such assets are less than $25 billion). The Merging Fund pays
Morgan, its administrator, a fee at an effective rate of 0.048% of its average
daily net assets.
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.
3
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses paid
by the Merging Fund for the most recent fiscal year that reflect current expense
reimbursement 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. The Surviving Fund currently offers Institutional Class shares
(which class will not be distributed to Merging Fund shareholders as a result of
the Reorganization and therefore no information on this class is shown in the
table below). 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 the contractual (pre-waiver) total expense
ratio for current shareholders of the Merging Fund will be higher following the
Reorganization, the actual (post-waiver) total expense ratio for current
shareholders of the Merging Fund is anticipated to be less or stay the same for
at least three years following the Reorganization. This is because Chase, the
Surviving Fund's administrator, has contractually agreed to waive certain fees
and/or reimburse certain expenses to ensure that actual total operating expenses
do not increase for three years after the Reorganization.
THE MERGING FUND
----------------
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 0.21%
----
Total Annual Fund Operating Expenses 0.51%
====
4
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
Surviving Fund to the extent operating expenses (excluding interest, taxes,
extraordinary expenses, and expenses related to the deferred compensation
plan) 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
- you pay net expenses for three years after the Reorganization, total
annual operating expenses thereafter as indicated in the table 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
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
5
Fund to take temporary defensive positions that are inconsistent with its
principal investment strategies and may hinder the Surviving 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 under the 1940 Act. 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 UNDER THE 1940 ACT.
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.
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
6
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
September 1, 2001 or such other date as is agreed to by the parties.
In addition, the consummation of the Reorganization is contingent upon the
simultaneous consummation of the Concurrent Reorganization.
The expenses of the Funds in connection with the Reorganization will be
borne by JPMC.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition 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 January 23 and 24 and on March 26 and 27, 2001 and the
MFST Board met on February 22 and 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
its 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 the Fund's
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. In addition, each Board took into
account that, notwithstanding the fact that the Surviving Fund currently pays a
higher administration fee than the Merging Fund, Chase agreed to cap the total
expenses as set forth in the expense table above and to institute a breakpoint
in the administration fee from 0.15% of average daily net assets for complex
wide non-money market fund assets up to $25 billion to 0.075% on assets in
excess of $25 billion (currently such assets
7
are less than $25 billion). The Merging Fund pays its administrator, Morgan, a
fee at an effective rate of 0.048% of its average daily net assets.
Each Board also considered additional benefits expected to arise out of the
integration of the J.P. Morgan and Chase Vista mutual fund complexes. Among
these benefits, the Boards considered: (1) Surviving Fund shareholders would be
able to exchange into a larger number and greater variety of funds; (2) the
administrator's intent to enhance its ability effectively to monitor and oversee
the quality of all Fund service providers, including the investment adviser,
distributor, custodian and transfer agent; (3) the administrator's undertaking
to waive fees or reimburse the Surviving Fund's expenses in order that the total
expense ratio of each share class of the Merging Fund does not increase during
the period specified in the expense table; (4) the fact that all costs and
expenses of the Reorganization would be borne by JPMC; and (5) the fact that the
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 simultaneous
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 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.
8
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.
9
CAPITALIZATION
PRO FORMA WITH CONCURRENT REORGANIZATION
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
BENEFICIAL NET ASSETS
INTERESTING SHARES VALUE
OUTSTANDING OUTSTANDING NET ASSETS PER 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:
- excluded from gross income, and
- 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.
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 Surviving 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 ITS DURATION GENERALLY WILL RANGE BETWEEN FOUR AND SEVEN YEARS.
10
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
Surviving Fund may exceed this limit.
No more than 25% of the Surviving Fund's 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 Surviving 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 voting shares of a Fund present at a meeting, if the holders
of more than 50% of the outstanding voting shares of a Fund are present or
represented by proxy, and (ii) more than 50% of the outstanding voting shares of
a Fund.
SURVIVING FUND MERGING FUND
- -------------- --------------------------------------------------
The Surviving Fund is non-diversified under the The Merging Fund may not make any investment
1940 Act. inconsistent with the Fund's classification as a
diversified investment company under the 1940 Act.
The Surviving Fund may not purchase the securities The Merging Fund may not purchase any security
of any issuer (other than securities issued or which would cause it to concentrate its
guaranteed by the U.S. government or any of its investments in the securities of issuers primarily
agencies or instrumentalities, or repurchase engaged in any particular industry except as
agreements secured thereby) if, as a result, more permitted by the Commission.
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."
11
SURVIVING FUND MERGING FUND
- -------------- --------------------------------------------------
The Surviving Fund may not borrow money, except The Merging Fund may not borrow money, except to
for temporary or emergency purposes, or by the extent permitted by applicable law.
engaging in reverse 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 sell The Merging Fund may not purchase or sell
physical commodities unless acquired as a result commodities or commodity contracts unless acquired
of ownership of securities or other instruments as a result of ownership of securities or other
but this shall not prevent the Fund from (i) instruments issued by persons that purchase or
purchasing or selling options and futures sell commodities or commodities contracts; but
contracts or from investing in securities or other this shall not prevent the Merging Fund from
instruments backed by physical commodities or (ii) purchasing, selling and entering into financial
engaging in forward purchases or sales of foreign futures contracts (including futures contracts on
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, except that The Merging Fund may make loans to other persons,
the Surviving Fund may: (i) purchase and hold debt in accordance with the Fund's investment objective
instruments (including without limitation, bonds, and policies and to the extent permitted by
notes, debentures or other obligations and applicable law.
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 SIMILAR TO THE MERGING
FUND'S RESTRICTION.
Neither Fund may issue senior securities, except as permitted under the 1940
Act or any rule, order or interpretation thereunder.
Neither Fund may underwrite securities of other issuers, except to the
extent that the Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the Securities Act of 1933, as amended.
Neither Fund may purchase or sell real estate (including, for the Surviving
Fund, real estate limited partnerships), except that, to the extent permitted by
applicable law, each Fund may (a) invest in securities or other instruments
directly or indirectly secured by real estate, (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
12
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 than 15% of The Merging Fund may not acquire any illiquid
its net assets in illiquid securities. securities, such as repurchase 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 sales of The Merging Fund may not purchase securities on
securities, other than short sales "against the margin, make short sales of securities, or
box," or purchase securities on margin except for maintain a short position, provided that this
short-term credits necessary for clearance of restriction shall not be deemed to be applicable
portfolio transactions, provided that this to the purchase or sale of when-issued or delayed
restriction will not be applied to limit the use delivery securities, or to short sales that are
of options, futures contracts and related options, covered in accordance with Commission rules.
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.
The Surviving Fund may invest up to 5% of its The Merging Fund may not acquire securities of
total assets in the securities of any one other investment companies, except as permitted by
investment company, but may not own more than 3% the 1940 Act or any order pursuant thereto.
of the securities of any one investment company or
invest more than 10% of its total assets in the
securities of other investment companies.
The Surviving Fund may not purchase or sell The Merging Fund is not subject to a similar non-
interests in oil, gas or mineral leases. fundamental restriction.
The Surviving Fund may not write, purchase or sell The Merging Fund is not subject to a similar non-
any put or call option or any combination thereof, fundamental restriction.
provided that this shall not prevent (i) the
writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio
securities or (ii) with respect to the Surviving
Fund's permissible futures and options
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 to 50% of The Merging Fund is not subject to a similar non-
its assets, hold more than 10% of the outstanding fundamental restriction.
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.
13
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 preliminary
Prospectus and Statement of Additional Information of the Surviving Fund, which
are incorporated herein by reference.
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 Institutional
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.
The investment minimum for Institutional Class Shares is $10,000,000.
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.
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 same 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 only when permitted by federal securities laws.
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.
14
Shareholders may also sell their shares by contacting the Center directly by
calling 1-800-766-7722 or their financial intermediary.
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, if the balance falls below the applicable
investment minimum for 30 days as a result of selling shares (and not because of
performance), then the Surviving Fund reserves the right to request that you buy
more shares or close your account. 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 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;
15
- 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.
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.
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
16
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
With respect to all matters submitted to a vote of shareholders,
shareholders of MFST are entitled to one vote (or a fraction thereof) for each
share (or a fraction thereof) owned on the record date, and shareholders of
JPMIF are entitled to the number of votes (or "voting shares") equal to the
product of the number of shares owned multiplied by the net asset value per
share on the record date.
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 two-thirds of the
outstanding shares (in the case of MFST), or voting shares (in the case of
JPMIF) of each portfolio of that trust. A meeting of shareholders shall be held
upon the written request of 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.
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 March 31, 2001, JPMFAM and certain of
its affiliates (including JPMIM) provided investment management services with
respect to assets of approximately $607.7 billion.
17
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.
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.
PORTFOLIO MANAGER
The Surviving Fund is managed by a team comprised of individuals from JPMIM
and JPMFAM.
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
18
favorable to such Fund. In assessing the best overall terms available for any
transaction, JPMFAM shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, research services
provided to JPMFAM, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In no event shall JPMFAM be
under any duty to obtain the lowest commission or the best net price for the
Fund on any particular transaction, nor shall JPMFAM be under any duty to
execute any order in a fashion either preferential to such Fund relative to
other accounts managed by JPMFAM or otherwise materially adverse to such other
accounts.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to JPMFAM, the Fund and/or the other accounts over which
JPMFAM exercises investment discretion. JPMFAM is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if JPMFAM determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of JPMFAM with respect to accounts
over which it exercises investment discretion. JPMFAM shall report to the Board
regarding overall commissions paid by the Fund and their reasonableness in
relation to the benefits to such Fund.
In executing portfolio transactions for the Fund, JPMFAM may, to the extent
permitted by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be sold or purchased with those of other funds or
its other clients if, in JPMFAM's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to such fund, taking into 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 distributor for both the Surviving and
Merging Fund and as sub-administrator for the Surviving Fund. An affiliate of
the Distributor is the sub-administrator for the Merging Fund. The Distributor
is unaffiliated with JPMC or any of its subsidiaries.
Chase serves as administrator, shareholder servicing agent, fund accountant
and custodian, and DST serves as transfer agent and dividend disbursing agent,
for the Surviving Fund. The principal business address of Chase is 270 Park
Avenue, New York, NY 10017. 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.
As of August 11, 2001, Chase will receive an administration fee from the
Surviving Fund of 0.15% of average daily net assets for complex wide non-money
market fund assets up to $25 billion and 0.075% on assets in excess of $25
billion (currently such assets are less than $25 billion). The Merging Fund pays
Morgan, its administrator, a fee at an effective rate of 0.048% of its average
daily net assets.
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
19
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 were
still a shareholder in JPMIF, you are entitled to vote 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 reorganized. JPMC and the Boards
considered that the Boards of Trustees for the registered investment companies
advised by J.P. Morgan Investment Management Inc. and the registered investment
companies advised by J.P. Morgan Fleming Asset Management (USA) Inc. also be
integrated and streamlined into a consolidated Board of Trustees to serve all of
the funds in the Fund Complex (as defined below) (the "Consolidated Board"). It
is anticipated that having a Consolidated Board will enhance the governance of
the larger Fund Complex and is consistent with the prior practice of having a
single Board for each predecessor fund complex. JPMC believes, and the
respective Boards similarly concluded, that the Consolidated Board will increase
administrative efficiencies for JPMC and the funds in the Fund Complex and will
benefit shareholders of all such funds. The eight individuals who are being
proposed for election to the Consolidated Board, and hence the Nominees
described in this Proposal, were nominated after a careful and deliberate
selection process by the respective Nominating Committees and Boards of
Trustees. This selection process included the consideration of various factors,
such as the desire to balance the respective expertise of the various candidates
and diversity of background, the historical experience of various Trustees and
Advisory Board members of the predecessor complexes, the size of the Board and
related future cost savings, the practicalities dictated by the age 70
retirement policy of the registered investment companies advised by J.P. Morgan
Investment Management Inc. and other factors the Boards deemed relevant.
Therefore, the Nominees include certain current Trustees of MFST and certain
current Trustees of JPMIF (including certain members of JPMIF's Advisory Board).
Each Nominee has consented to being named in this Combined Prospectus/Proxy
Statement and has agreed to serve as a Trustee if elected. Each Trustee will
hold office for a term of unlimited duration subject to the current retirement
age of 70.(1) The Trustees have no reason to believe that any Nominee will be
unavailable for election.
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.
(1)Each Nominee is grandfathered with respect to the mandatory retirement
age for three years from the date of election.
20
THE JPMIF BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED BELOW.
VOTE REQUIRED
The affirmative vote of the holders of more than 50% of the voting shares of
JPMIF present, in person or by proxy, at the joint Meeting is required to elect
a Trustee of JPMIF, provided that at least one-third of the outstanding shares
of JPMIF is represented at the joint Meeting, either in person or by proxy. In
the event that the requisite vote is not reached, the current Trustees would
remain as the only Trustees of JPMIF.
The following are the nominees:
TRUSTEE
NAME OF NOMINEE AND OF JPMIF BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATIONS
CURRENT POSITION WITH FUND COMPLEX SINCE AGE DURING THE PAST FIVE YEARS AND CURRENT DIRECTORSHIPS
- ----------------------------------- -------- --- ------------------------------------------------------
William J. Armstrong-- Nominee 59 Retired; formerly Vice President and Treasurer,
Trustee of certain other trusts Ingersoll-Rand Company (manufacturer of industrial
in the Fund Complex supplies). Address: 287 Hampshire Ridge, Park Ridge,
since 1987 NJ 07656.
Roland R. Eppley, Jr.-- Nominee 68 Retired; formerly President and Chief Executive
Trustee of certain other trusts Officer, Eastern States Bankcard Association Inc.
in the Fund Complex (financial services) (1971-1988); Director, Janel
since 1989 Hydraulics, Inc.; formerly Director of The Hanover
Funds, Inc. (open-end mutual funds). Address: 105
Coventry Place, Palm Beach Gardens, FL 33418.
Ann Maynard Gray-- Nominee 55 Former President, Diversified Publishing Group and
Member of Advisory Board of the Vice President, Capital Cities/ABC, Inc. Ms. Gray is
Trust and certain other trusts in also a director of Duke Energy Corporation and Elan
the Fund Complex since 2000 Corporation, plc (pharmaceuticals). Address: 1262
Rockrimmon Road, Stamford, CT 06903.
Matthew Healey-- 1982 63 Former Chief Executive Officer of the Trust through
Chairman of the Trust and certain April 2001; Chairman, Pierpont Group (provides
other trusts in the Fund Complex services to trustees of investment companies), since
prior to 1993. Address: Pine Tree Country Club
Estates, 10286 Saint Andrews Road, Boynton Beach,
Florida 33436.
Fergus Reid, III*-- Nominee 68 Chairman and Chief Executive Officer, Lumelite
Chairman of certain other trusts Corporation (plastics manufacturing), since
in the Fund Complex; Trustee of September 1985; Trustee, Morgan Stanley Funds.
other trusts in the Fund Complex Address: 202 June Road, Stamford, CT 06903.
since 1984
James J. Schonbachler-- Nominee 58 Retired; prior to September, 1998, Managing Director,
Member of Advisory Board of the Bankers Trust Company and Group Head and Director,
Trust and certain other trusts in Bankers Trust A.G., Zurich and BT Brokerage Corp.
the Fund Complex since 2000 (financial services). Address: 3711 Northwind Court,
Jupiter, FL 33477
Leonard M. Spalding, Jr.*-- Nominee 65 Retired; formerly Chief Executive Officer of Chase
Trustee of certain other trusts Mutual Funds Corp.; formerly President and Chief
in the Fund Complex since 1998 Executive Officer of Vista Capital Management
(investment management); and formerly Chief Investment
Executive of The Chase Manhattan Private Bank
(investment management). Address: 2025 Lincoln Park
Road, Springfield, KY 40069.
H. Richard Vartabedian-- Nominee 65 Former President of certain other trusts in the Fund
Trustee of certain other trusts Complex through April 2001; Investment Management
in the Fund Complex since 1992 Consultant; formerly, Senior Investment Officer,
Division Executive of the Investment Management
Division of The Chase Manhattan Bank, N.A., 1980-1991.
Address: P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.
- ---------------------
* Mr. Spalding is deemed to be an "interested person" (as defined in the 1940
Act) due to his ownership of equity securities of affiliates of JPMC. It is
anticipated that Mr. Reid will be named Chairman of the Trust and therefore
will be deemed to be an "interested person" of the Trust.
If elected, each nominee would oversee 91 separate portfolios.
21
The Board of Trustees and Advisory Board Members of JPMIF each met five
times during the 2000 calendar year, and each of these individuals attended at
least 75% of the meetings of the Board and any committee on which he or she
serves.
The Board of Trustees of JPMIF presently has an Audit Committee. The members
of the Audit Committee are Messrs. Addy (Chairman), Eschenlauer, Burns, Mallardi
and Healey. The function of the Audit Committee is to recommend independent
auditors and monitor accounting and financial matters. The Audit Committee met
four times during the 2000 calendar year.
The Board of Trustees of JPMIF presently has a Nominating Committee. The
members of the Nominating Committee are Messrs. Addy, Eschenlauer, Burns and
Mallardi. The function of the Nominating Committee is to nominate trustees for
the Board to consider. The Nominating Committee met one time during the 2000
calendar year.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS
Each current Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of JPMIM is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by JPMIM. Each Trustee receives a
fee, allocated among all investment companies for which the Trustee serves.
Set forth below is information regarding compensation paid or accrued during
the calendar year ended December 31, 2000 for each nominee of JPMIF:
COMPENSATION FROM PENSION OR RETIREMENT TOTAL COMPENSATION FROM
"MORGAN FUND COMPLEX"(1) BENEFITS ACCRUED "FUND COMPLEX"(2)
-------------------------------- --------------------- -----------------------
William J. Armstrong NA $ 41,781 $ 90,000 (10)(3)
Roland R. Eppley, Jr. NA $ 58,206 $ 91,000 (10)(3)
Ann Maynard Gray $75,000 NA $ 75,000 (17)(3)
Matthew Healey(4) $75,000 NA $ 75,000 (17)(3)
Fergus Reid, III NA $110,091 $202,750 (10)(3)
James J. Schonbachler $75,000 NA $ 75,000 (17)(3)
Leonard M. Spalding, Jr. NA $ 35,335 $ 89,000 (10)(3)
H. Richard Vartabedian NA $ 86,791 $134,350 (10)(3)
- ---------------------
(1) The Morgan Fund Complex means registered investment companies advised by
JPMIM.
(2) A Fund Complex generally 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 (as used herein, registered
investment companies advised by JPMIM and JPMFAM).
(3) Total number of investment company boards with respect to Trustees, or
Advisory Boards with respect to Advisory Board members, served on within
the Fund Complex.
(4) 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.
Inasmuch as the Morgan Fund Complex does not have any retirement plan for
its Trustees and JPMC will also benefit from the administrative efficiencies of
a consolidated board, JPMC has agreed to pay a one-time retirement package to
the Trustees of the Morgan Fund Complex and the Advisory Board members who have
volunteered to leave the Board of Trustees or Advisory Board of the Morgan Fund
Complex prior to their normal retirement date. For each retiring Trustee, the
retirement package is equal to three times the annual fee (which may increase)
for the new Combined Board per Trustee; for each retiring Advisory Board member,
the retirement package is one and a half times the annual fee (which may
increase) for the new Combined Board per Trustee.
FORMER CHASE VISTA FUNDS' RETIREMENT PLAN AND DEFERRED COMPENSATION PLAN FOR
ELIGIBLE TRUSTEES
Effective August 21, 1995, the Trustees of the former Chase Vista Funds also
instituted a Retirement Plan for Eligible Trustees (the "Plan") pursuant to
which each Trustee (who is not an employee of the former Chase Vista Funds'
adviser, administrator or distributor or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible Trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the investment companies advised by the
adviser of certain former Chase Vista Funds and its affiliates (collectively,
the "Covered Funds"). Each Eligible Trustee is entitled to receive from the
Covered Funds an annual benefit commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to the sum of
(1) 8% of the highest annual compensation received from the Covered Funds
multiplied by the number of such Trustee's years of service (not in excess of 10
years) completed with respect to any Covered Funds and (2) 4% of the highest
annual compensation received from the Covered Funds for each year of service in
excess of 10 years, provided that no Trustee's annual benefit will exceed the
highest annual compensation received by that Trustee from the Covered Funds.
Such benefit is payable to each eligible Trustee in monthly installments for the
life of the Trustee. On February 22, 2001, the board of Trustees voted to
terminate the Plan and in furtherance of this
22
determination agreed to pay Trustees an amount equal, in the aggregate, to
$10.95 million, of which $5.3 million had been previously accrued by the Covered
Funds. The remaining $5.65 million was paid by Chase. Messrs. Armstrong, Eppley,
Reid, Spalding and Vartabedian, who are Nominees, received $1,027,673, $800,600,
$2,249,437, $463,798 and $1,076,927, respectively, in connection with the
termination. Each nominee has elected to defer receipt of such amount pursuant
to the Deferred Compensation Plan for Eligible Trustees.
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which
each Trustee (who is not an employee of the former Chase Vista Funds' adviser,
administrator or distributor or any of their affiliates) may enter into
agreements with such Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are deemed invested in shares of funds as elected
by the Trustee at the time of deferral. If a deferring Trustee dies prior to the
distribution of amounts held in the deferral account, the balance of the
deferral account will be distributed to the Trustee's designated beneficiary in
a single lump sum payment as soon as practicable after such deferring Trustee's
death. Messrs. Armstrong, Eppley, Reid, Spalding and Vartabedian are the only
Nominees who have elected to defer compensation under such plan.
The Trustees decide upon general policies and are responsible for overseeing
JPMIF's business affairs. To assist the Trustees in exercising their overall
supervisory responsibilities, each of JPMIF and the Master Portfolio has entered
into a Fund Services Agreement with Pierpont Group, Inc. 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. JPMIF paid Pierpont Group, Inc. a
fee in an amount representing its reasonable costs in performing these services.
These costs are periodically reviewed by the Trustees. As part of the overall
integration and rationalization of the Funds within the Fund Complex it is
anticipated that the Merging Fund will terminate its agreement with Pierpont
Group, Inc. in connection with the Reorganization. The consolidated Board of
Trustees will instead look to counsel, auditors, Morgan and other service
providers, as necessary.
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.
PRINCIPAL EXECUTIVE OFFICERS
JPMIF's principal executive officers are listed below. The officers conduct
and supervise the business operations of JPMIF. The business address of each of
the officers, unless otherwise noted, is J.P. Morgan Fund Distributors, Inc.,
1211 Avenue of Americas, New York, New York, 10036. Each officer will hold
office for an indefinite term, but may be removed by the Board of Trustees at
any time. The principal executive officers of JPMIF are as follows:
NAME AND POSITION AGE PRINCIPAL OCCUPATION DURING THE LAST FIVE YEARS AND OTHER INFORMATION
- ----------------- --- ---------------------------------------------------------------------
David Wezdenko, 37 Vice President, J.P. Morgan Investment Management Inc. Mr. Wezdenko
President and is the Chief Operating Officer for the U.S. Mutual Funds and
Treasurer (April Financial Intermediaries Business. Since joining J.P. Morgan in 1996,
2001-present) he has held numerous financial and operations related positions
supporting the J.P. Morgan pooled funds business.
Sharon Weinberg, 41 Vice President, J.P. Morgan Investment Management Inc. Ms. Weinberg
Vice-President and is head of Business and Product Strategy for the U.S. Mutual Funds
Secretary (April and Financial Intermediaries business. Since joining J.P. Morgan in
2001-present) 1996 in New York, she has held numerous positions throughout the
asset management business in mutual funds marketing, legal and
product development.
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. Representatives of PricewaterhouseCoopers LLP are
expected to be present at the Meeting, and will have an opportunity to make a
statement if they desire. Such representatives are expected to be available to
respond to appropriate questions at the Meeting.
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
23
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
April 6, 2001 will be entitled to vote at the Meeting. On that date, there were
outstanding and entitled to be voted 53,418,048.239 Merging Fund shares. Each
shareholder of the Merging Fund is entitled to the number of votes equal to the
product of the number of shares owned multiplied by the net asset value per
share on the record date.
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 voting 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 voting shares that they are entitled to vote if such adjournment is
necessary to obtain a quorum or if they determine such an adjournment is
desirable for any other reason. Business may be conducted once a quorum is
present and may continue until adjournment of the Meeting notwithstanding the
withdrawal or temporary absence of sufficient Merging Fund voting 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 voting 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 voting 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 (and therefore will have the effect of a vote against) 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 (and therefore will have the effect of
a vote against) 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 pay the cost of the preparation, printing and mailing to its
shareholders of the Combined Prospectus/Proxy Statement, accompanying Notice of
Meeting, form of proxy and any supplementary solicitation of its shareholders.
It is expected that the cost of retaining D. F. King & Co., Inc., to assist
in the proxy solicitation process for the Fund Complex will not exceed $200,000,
which cost will be borne by JPMC.
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 and the percentage
24
of shares of the Surviving Fund that would be owned by such persons upon
consummation of the Reorganization and the Concurrent Reorganization based upon
their holdings at April 6, 2001 are as follows:
PERCENTAGE OF PERCENTAGE OF
AMOUNT MERGING FUND SURVIVING FUND
OF SHARES OWNED ON OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
- ---------------- -------------- ------------- --------------
MGT CO OF NY AS AGENT FOR 1,642,058.6010 8.10% 1.89%
TRUST U/W OF LHP KLOTZ FBO
RUTH KLOTZ
ATTN: SPECIAL PRODUCT 2 OPS/3
500 STANTON CHRISTIANA ROAD
NEWARK DE 19713-2107
CHARLES SCHWAB & CO. INC. 1,628,896.0530 8.03% 1.87%
SPECIAL CUSTODY ACCOUNT
FOR BENEFIT OF CUSTOMERS
ATTN: MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4122
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 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 April 6, 2001 are as follows:
PERCENTAGE OF PERCENTAGE OF
SURVIVING FUND SURVIVING FUND
AMOUNT OF OWNED ON OWNED UPON
NAME AND ADDRESS SHARES OWNED RECORD DATE CONSUMMATION
- ---------------- --------------- -------------- --------------
Balsa & Co Rebate Account 55,739,690.0970 83.80% 37.0%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston TX 77252-2558
Penlin & Co Rebate Account 5,904,913.2230 8.88% 3.94%
CO The Chase Manhattan Bank
Attn Mut FDS/T-C
PO Box 31412
Rochester NY 14603-1412
PROPOSALS TO BE SUBMITTED BY SHAREHOLDERS
The Merging Fund does not generally hold an Annual Meeting of Shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a subsequent shareholders' meeting should send their written proposals to the
Secretary of the Merging Fund at the address set forth on the cover of this
Combined Prospectus/Proxy Statement.
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 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
25
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, unaudited
highlights, financial statements and notes thereto of the Surviving Fund for the
fiscal period ended February 28, 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 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.
26
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this 11th day of
May, 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 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 their respective
custodians and J.P. Morgan Chase & Co. The determination of said parties 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.
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(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 September 1, 2001, or such later date as may be
agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to take
place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New York
Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the Acquiring
Portfolio duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof.
(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.
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(c) CURRENT OFFERING DOCUMENTS. The current prospectuses and statements of
additional information of the Acquiring Trust, as amended, included in the
Acquiring Trust's registration statement on Form N-1A filed with the Securities
and Exchange Commission, comply in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the Act and
do not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, of which as of February 28, 2001 there
were outstanding 65,776,000 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
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.
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(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 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 prospectuses and statements 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 52,586,000 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
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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.
(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 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
A-5
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:
(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
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forth in the Registration Statement (including the Prospectus and Statement of
Additional Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to the Transferor
Portfolio, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at the
time the Registration Statement becomes effective, at the time of the Transferor
Portfolio's shareholders' meeting referred to in Section 5(a) and at the
Effective Time of the Reorganization, the Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or supplements filed
by the Transferor Trust, insofar as they relate to the Transferor Portfolio,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in conformity with
information furnished by the Transferor Portfolio for use in the registration
statement, prospectus or statement of additional information as provided in this
Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to
use all reasonable efforts to effectuate the Reorganization and to obtain any
necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Transferor Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within 60 days after the Exchange Date, the Transferor Trust on behalf
of the Transferor Portfolio, shall prepare a statement of the earnings and
profits of the Transferor Portfolio for federal income tax purposes, and of any
capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and the
transactions contemplated by the Reorganization shall have been approved by the
requisite vote of the shares of the Transferor Portfolio entitled to vote on the
matter ("Transferor Shareholder Approval").
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 2(i)) in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio since August 31, 2000.
(c) REGULATORY APPROVAL. The Registration Statement shall have been
declared effective by the Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued, and all other approvals,
registrations, and exemptions under federal and state laws considered to be
necessary shall have been obtained (collectively, the "Regulatory Approvals").
(d) TAX OPINION. The Transferor Trust shall have received the opinion of
Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to
and in form and substance satisfactory to the Transferor Trust, as to certain of
the federal income tax consequences under the Code of the Reorganization,
insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio,
and to shareholders of the 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
A-7
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.
(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.
A-8
(c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on behalf of
the Transferor Portfolio, may terminate this Plan with respect to the Transferor
Portfolio at any time prior to the Effective Time of the Reorganization by
notice to the Acquiring Trust and JPMFAM if (i) a material condition to the
performance of the Transferor Trust hereunder or a material covenant of the
Acquiring Trust contained herein shall not be fulfilled on or before the date
specified for the fulfillment thereof or (ii) a material default or material
breach of this Plan shall be made by the Acquiring Trust. In addition, this Plan
may be terminated by the Transferor Trust at any time prior to the Effective
Time of the Reorganization, whether before or after approval of this Plan by the
shareholders of the Transferor Portfolio, without liability on the part of any
party hereto, its Trustees, officers or shareholders or J.P. Morgan Investment
Management Inc. ("JPMIM") on notice to the other parties in the event that the
Board of Trustees determines that proceeding with this Plan is not in the best
interests of the shareholders of the Transferor Portfolio.
(d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on behalf of
the Acquiring Portfolio, may terminate this Plan with respect to the Acquiring
Portfolio at any time prior to the Effective Time of the Reorganization by
notice to the Transferor Trust and JPMIM if (i) a material condition to the
performance of the Acquiring Trust hereunder or a material covenant of the
Transferor Trust contained herein shall not be fulfilled on or before the date
specified for the fulfillment thereof or (ii) a material default or material
breach of this Plan shall be made by the Transferor Trust. In addition, this
Plan may be terminated by the Acquiring Trust at any time prior to the Effective
Time of the Reorganization, whether before or after approval of this Plan by the
shareholders of the Transferor Portfolio, without liability on the part of any
party hereto, its Trustees, officers or shareholders or JPMIM on notice to the
other parties in the event that the Board of Trustees determines that proceeding
with this Plan is not in the best interests of the shareholders of the Acquiring
Portfolio.
(e) SURVIVAL. No representations, warranties or covenants in or pursuant to
this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan,
shall survive the Reorganization.
9. EXPENSES.
The expenses of the Reorganization will be borne by J.P. Morgan Chase & Co.
("JPMC"). Such expenses include, without limitation, (i) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees;
(vii) legal fees and (viii) solicitation costs relating to the Reorganization.
In addition, JPMC or an affiliate will waive fees payable to it or reimburse
expenses to the extent necessary such that the actual (post-waiver) total
expense ratios of the Select Class Shares and Institutional Class Shares 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.
A-9
if to the Transferor Trust (for itself or on behalf of the Transferor
Portfolio):
60 State Street
Suite 1300
Boston, Massachusetts 02109
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: John E. Baumgardner, Jr., Esq.
if to the adviser of the Transferor Trust:
522 Fifth Avenue
New York, NY 10036
if to the adviser of the Acquiring Trust:
522 Fifth Avenue
New York, NY 10036
if to J.P. Morgan Chase & Co.:
522 Fifth Avenue
New York, NY 10036
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 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-10
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: /s/ Sharon Weinberg
--------------------------------------------
Name: Sharon Weinberg
Title: Vice President and Secretary
MUTUAL FUND SELECT TRUST
on behalf of JPMorgan Intermediate Tax Free
Income Fund
By: /s/ Fergus Reid, III
--------------------------------------------
Name: Fergus Reid, III
Title: Chairman
Agreed and acknowledged with respect to
Section 9:
J.P. MORGAN CHASE & CO.
By: /s/ George Gatch
--------------------------------------------
Name: George Gatch
Title: Managing Director
A-11
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 May 11, 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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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-
THE TAX EXEMPT BOND PORTFOLIO / JPMORGAN INTERMEDIATE TAX FREE
INCOME FUND
PORTFOLIO OF INVESTMENTS
PROFORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 2001 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
MARKET
SHARES VALUE
PRO PRO
FORMA FORMA
COMBINED COMBINED
JPMORGAN JPMORGAN JPMORGAN JPMORGAN
INTERMEDIATE THE INTERMEDIATE INTERMEDIATE THE INTERMEDIATE
TAX TAX TAX TAX TAX TAX
FREE EXEMPT FREE FREE EXEMPT FREE
INCOME BOND INCOME INCOME BOND INCOME
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 INCOME 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 INCOME 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) (e,f) 162
Professional Fees 45 (22) (f) 99
Transfer Agent Fees 22 - 95
Printing and Postage 28 (7) (f) 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) (e) -
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.
(e) Reflects reclassification of fund accounting into revised combined
custodian agreement.
(f) 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
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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 None.
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)
14 None.
15 None.
16 Powers of Attorney(6)
17(a) Form of Proxy Card.
17(b) Preliminary Prospectus for the Surviving Fund filed
herewith.
17(c) Preliminary Prospectus for the Merging Fund filed herewith.
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.(6)
17(f) Annual Report of the Surviving Fund dated August 31,
2000.(6)
17(g) Annual Report of the Merging Fund (including the Annual
Report of the Master Portfolio) dated July 31, 2000.(6)
17(h) Semi-Annual Report of the Merging Fund (including the
Semi-Annual Report of the Master Portfolio) dated January
31, 2001.(6)
- --------------------
(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.
(6) Filed as an Exhibit to the Registration Statement of the Registrant on
Form N-14 (File No. 333-58944) as filed with the Securities and Exchange
Commission on April 13, 2001.
- ----------------
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 15th day of May, 2001.
MUTUAL FUND SELECT TRUST
Registrant
By: /s/ Fergus Reid, III
-----------------------------------------
Fergus Reid, III
Chairman
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 May 15, 2001.
* Chairman and Trustee
- -------------------------------
Fergus Reid, III
* 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
* Trustee
- -------------------------------
George E. McDavid
/s/ Martin R. Dean Treasurer and
- ------------------------------- Principal Financial
Martin R. Dean Officer
/s/ Peter B. Eldridge Attorney in Fact
- -------------------------------
Peter B. Eldridge
EXHIBITS
ITEM DESCRIPTION
- ---- -----------
(17) (a) Form of Proxy Card.
(b) Preliminary Prospectus for the Surviving Fund.
(d) Preliminary Statement of Additional Information for the
Surviving Fund.