SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Co-Registrants _X_
Filed by a Party other than Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement
___ Confidentital, for use of the Commission Only (as permitted by Rule
14a-6(e) (2)
___ Definitive Proxy Statement
___ Definitive Additional materials
___ Soliciting Material Pursuant to ss.240.14a-1 1(c) or ss.240.14a-12
- -------------------------------------------------------------------------------
J.P. MORGAN FUNDS
J.P. MORGAN INSTITUTIONAL FUNDS
J.P. MORGAN SERIES TRUST
(Name of Co-Registrant as Specified in Their Charters)
Payment of Filing Fee (Check the appropriate box):
_X__ No fee required.
____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
____ Fee paid previously with preliminary materials
<PAGE>
IMPORTANT NEWS
FOR SHAREHOLDERS OF J.P. MORGAN FUNDS, J.P. MORGAN INSTITUTIONAL FUNDS, J.P.
MORGAN SERIES TRUST AND THE MANAGERS
MONEY MARKET FUND
We encourage you to read the attached proxy statement in full. By way
of introduction, we have included the following questions and answers regarding
this proxy.
WHEN WILL THE SPECIAL MEETING BE HELD? WHO IS ELIGIBLE TO VOTE?
The meeting will be held on Thursday, June 25, 1998, at 10:00 a.m.
Eastern time at [522 Fifth Avenue, 7th Floor, New York, New York 10036]. Please
note that this meeting will only cover the items listed in this proxy statement.
There will be no presentations about the Funds. The record date is the close of
business on April 13, 1998. Only shareholders who own shares at that time are
entitled to vote at the meeting.
WHAT ARE THE ISSUES CONTAINED IN THIS PROXY?
Your Board of Trustees is recommending that shareholders consider the
following proposals:
<TABLE>
Proposal Funds Affected
--------------------------------------------------------------------------
<S> <C>
1. To elect the Board of Trustees; All
2. To approve the adoption of standardized All
investment restrictions and reclassification of
others as nonfundamental;
3. To approve the reclassification of All except J.P.
the investment objective from Morgan and J.P. Morgan
fundamental to nonfundamental; Institutional Disciplined Equity,
International Opportunities and Global
Strategic Income Funds; J.P. Morgan Emerging
Markets Debt and U.S. Small Company
Opportunities Funds; J.P. Morgan Series Trust
Tax Aware U.S. Equity, Tax Aware Disciplined
Equity and California Bond Funds; and J.P.
Morgan Institutional Treasury Money Market and
Service Treasury Money Market Funds
4. To approve a new investment advisory agreement All
between each Fund (or the portfolio in which the Fund
invests, as applicable) and J.P. Morgan Investment
Management Inc.;
5. To amend the Declaration of Trust to provide J.P. Morgan Funds
dollar-based voting rights; J.P. Morgan Institutional Funds
6. To ratify the selection of independent accountants; All
7. To transact any other business which may properly
come before the Meeting or any adjournments thereof.
</TABLE>
WHO ARE THE NOMINEES TO BE MY TRUSTEES?
Each of the Nominees currently serves as a Trustee of J.P. Morgan Funds,
J.P. Morgan Institutional Funds and J.P. Morgan Series Trust. They are Frederick
S. Addy, William G. Burns, Arthur C. Eschenlauer, Matthew Healey and Michael P.
Mallardi. Biographical information for these Nominees can be found on page ____.
WHY AM I BEING ASKED TO ADOPT STANDARDIZED FUNDAMENTAL INVESTMENT RESTRICTIONS?
Currently the Funds have fundamental investment restrictions
(restrictions which may only be changed with a shareholder vote) that vary
between Trusts and between Funds within the same Trust. These fundamental
investment restrictions reflect legal, regulatory or industry conditions or
practices which are or need no longer be applicable to the Funds. To promote
greater efficiency in the management of the Funds, Morgan Guaranty Trust Company
of New York ("MGT" or the "Advisor") has analyzed the fundamental investment
limitations and policies of the Funds in an effort to formulate a standard set
of policies for all Funds which reflect current industry practice and will allow
the Funds to respond to changes in regulatory and industry practice without the
expense and delay of a shareholder vote.
Except as noted in the proposal, the adoption of the proposed changes
is not expected to materially affect the way the Funds are managed.
Some of the proposed changes are quite technical. A full discussion of
the specific changes, as well as a further discussion of the benefits of
standardization, begins on page __.
WHY AM I BEING ASKED TO APPROVE THE RECLASSIFICATION OF CERTAIN FUND INVESTMENT
OBJECTIVES?
Some of the Funds' investment objectives were adopted as fundamental
policies and therefore, may be changed only by a vote of the Fund shareholders.
In order to respond more quickly to market or regulatory changes, without the
costs associated with a shareholder meeting, it is proposed that these Funds
reclassify their investment objectives as nonfundamental. These objectives could
then be changed at any time without a vote of Fund shareholders. A full
discussion of this proposal, along with discussion of proposed changes to the
investment objectives of J.P. Morgan and J.P. Morgan Institutional Short Term
Bond and New York Total Return Bond Funds, begins on page ___.
WHAT CHANGES ARE BEING PROPOSED TO THE INVESTMENT ADVISORY AGREEMENT?
Currently MGT is the investment advisor to the Funds or the portfolios
in which they invest. The Trustees propose changing the investment advisor to
J.P. Morgan Investment Management Inc. ("JPMIM"), an affiliate of MGT. Each of
MGT and JPMIM is directly wholly-owned by J.P. Morgan & Co. Incorporated ("JP
Morgan"). JP Morgan believes that the change will enhance fund marketing because
of the greater name recognition accorded to JP Morgan than to MGT. The proposed
change will not affect the Funds' investments or other operations and would not
involve a change in the actual personnel providing advisory services to the
Funds or the portfolios in which they invest.
A full discussion of the specific proposal begins on page ___.
WHY AM I BEING ASKED TO AMEND THE DECLARATIONS OF TRUST TO PROVIDE DOLLAR-BASED
VOTING RIGHTS?
Currently, under each of J.P. Morgan Fund's and J.P Morgan Institutional
Fund's Declaration of Trust, each share is entitled to one vote, regardless of
the relative value of shares of each Trust. The original intent of the
one-share, one-vote provision was to provide equitable voting rights to all
shareholders as required by the 1940 Act. In the case where a Trust has several
Funds, voting rights may have become disproportionate since the net asset value
per share ("NAV") of the separate funds generally diverge over time.
The proposed amendment would provide voting rights based on a
shareholder's total dollar interest in a Fund (dollar-based voting), rather than
on the number of shares owned. As a result, voting power would be allocated
according to the value of each shareholder's investment. A full discussion of
this proposal begins on page ___.
WHAT IS THE "RATIFICATION" OF THE INDEPENDENT ACCOUNTANTS?
The Investment Company Act of 1940 requires your Board of Trustees to
select independent accountants for the Funds and also requires the Trustees to
submit their selection to the shareholders for their approval (technically
called a "ratification") in any year that a shareholder meeting is being held.
A full discussion of the proposal to ratify the selection of Price
Waterhouse LLP as independent accountants to J.P. Morgan and J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust begins on page ___.
HOW DO THE TRUSTEES OF MY FUND RECOMMEND THAT I VOTE?
The Board members of all the Funds recommend that you vote FOR all of the
proposals on the enclosed proxy card.
WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
Please call ________________________ at ______________________ for
additional information. You can vote using any of the following methods:
Use the enclosed proxy card to record your vote of either For, Against or
Abstain for each proposal, then return the card in the postpaid envelope
provided.
or
Complete the enclosed proxy card and FAX it to _________________.
or
Call _________________________ and record your vote by telephone.
<PAGE>
LOGO
April 1998
Dear fellow Shareholder:
We are writing to inform you of a special shareholder meeting to be held on
June 25, 1998. Before that meeting we would like you to vote on the important
issues affecting your Fund(s) as described in the attached proxy statement.
We are asking you to vote on several proposals, which are explained in
further detail in the proxy statement.
The Boards of Trustees have unanimously approved the proposals and
recommend that you vote FOR all of the proposals described in this document.
We realize that this proxy statement will take time to review, but your
vote is very important. Please familiarize yourself with the proposals and sign
and return your proxy card(s) in the enclosed postage-paid envelope today. You
may receive more than one proxy card if you own shares in more than one Fund.
Please sign and return each card you receive.
If we do not receive your completed proxy card(s), you may be contacted by
officers or employees of J.P. Morgan, its affiliates or other representatives of
the Fund(s) or by our proxy solicitor, D.F. King & Co., Inc. D.F. King has been
engaged to assist your Fund(s) in soliciting proxies. They will remind you to
vote your shares. You may also call D.F. King & Co., Inc. directly at
800-290-6429 and vote by phone.
Thank you for taking this matter seriously and participating in this
important process.
Sincerely,
LOGO LOGO
<PAGE>
J.P. MORGAN FUNDS
J.P. MORGAN INSTITUTIONAL FUNDS
J.P. MORGAN SERIES TRUST
60 State Street, Suite 1300
Boston, Massachusetts 02109
THE MANAGERS MONEY MARKET FUND
(a series of The Managers Funds)
40 Richards Avenue
Norwalk, Connecticut 06854
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 25, 1998
NOTICE IS HEREBY GIVEN that a Joint Special Meeting (the "Meeting") of
Shareholders of each series of J.P. Morgan Funds, J.P. Morgan Institutional
Funds and J.P. Morgan Series Trust (each a "Trust") and Managers Money Market
Fund, a series of The Managers Funds (the "Managers Fund") (each individual
series and the Managers Fund, each a "Fund"), will be held at [522 Fifth Avenue,
7th Floor, New York, New York 10036] on Thursday, June 25, 1998 at 10:00 a.m.,
Eastern time, for the following purposes, all of which are more fully described
in the accompanying Proxy Statement dated [May , 1998]:
1. To elect the Board of Trustees;
2. To approve the adoption of standardized fundamental investment
restrictions and the reclassification of certain fundamental
investment restrictions as nonfundamental;
3. For each Fund which has a fundamental investment objective, to approve
the proposed reclassification of the investment objective from
fundamental to nonfundamental. Upon approval, the investment
objectives of J.P Morgan and J.P. Morgan Institutional Short Term Bond
and New York Total Return Bond Funds will be changed as described more
fully in the proxy statement. No other changes are currently
contemplated.
4. To approve a new investment advisory agreement between each Fund (or the
portfolio in which the Fund invests) and J.P. Morgan Investment Management Inc.;
5. To amend the Declaration of Trust of J.P. Morgan Funds and J.P. Morgan
Institutional Funds to provide dollar-based voting rights;
6. To ratify the selection of the independent accountants; and
7. To transact any other business which may properly come before the
Meeting or any adjournments thereof.
The Boards of Trustees of each Trust and of the Managers Fund have fixed
the close of business on April 13, 1998 as the record date for the determination
of shareholders of each Fund entitled to notice of and to vote at the Meeting or
any adjournments thereof. The enclosed proxy is being solicited on behalf of the
Boards of Trustees of each Trust and of the Managers Fund.
<PAGE>
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN WITHOUT DELAY AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
J.P. MORGAN FUNDS
J.P. MORGAN INSTITUTIONAL FUNDS
J.P. MORGAN SERIES TRUST
By Order of the Boards of Trustees
Richard W. Ingram
President
THE MANAGERS FUNDS
(a series of The Managers Funds)
By Order of the Board of Trustees
[-------------------------]
President
[May , 1998]
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may be of assistance to
you and may help to avoid the time and expense involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears on the proxy
card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown on the proxy card.
3. All Other Accounts: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the name on the
proxy card. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. (1) ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe, Treasurer
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan (3) John Doe, Trustee
Trust Accounts
(1) ABC Trust (1) Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee (2) Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. (1) John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. (2) John B. Smith, Jr.,
Executor
<PAGE>
NY12531:227598.7 23
PROXY STATEMENT
J.P. MORGAN FUNDS
60 State Street, Suite 1300
Boston, Massachusetts 02109
<PAGE>
Bond Fund
Disciplined Equity Fund Diversified Fund
Emerging Markets Equity Fund
European Equity Fund Federal Money Market Fund
Global Strategic Income Fund International Equity Fund International
Opportunities Fund
Japan Equity Fund
New York Total Return Bond Fund
Prime Money Market Fund
Short Term Bond Fund
Tax Exempt Bond Fund
Tax Exempt Money Market Fund
U.S. Equity Fund
U.S. Small Company Fund
Emerging Markets Debt Fund U.S. Small Company Opportunities Fund
<PAGE>
J.P. MORGAN INSTITUTIONAL FUNDS
60 State Street, Suite 1300
Boston, Massachusetts 02109
<PAGE>
Bond Fund
Disciplined Equity Fund
Diversified Fund
Emerging Markets Equity Fund
European Equity Fund Federal Money Market Fund Global Strategic Income Fund
International Equity Fund International Opportunities Fund
Japan Equity Fund
Japan Equity Fund
New York Total Return Bond Fund
Prime Money Market Fund
Short Term Bond Fund
Tax Exempt Bond Fund
Tax Exempt Money Market Fund
U.S. Equity Fund
U.S. Small Company Fund
Bond Fund - Ultra
International Bond Fund
Service Federal Money Market Fund
Service Prime Money Market Fund
Service Tax Exempt Money Market Fund
Service Treasury Money Market Fund
Treasury Money Market Fund
<PAGE>
J.P. MORGAN SERIES TRUST
60 State Street, Suite 1300
Boston, Massachusetts 02109
<PAGE>
California Bond Fund:
Select Shares
Institutional Shares
Tax Aware Disciplined Equity Fund: Institutional Shares Tax Aware
U.S. Equity Fund: Select Shares
<PAGE>
THE MANAGERS MONEY MARKET FUND
(a series of The Mangers Funds)
40 Richards Avenue
Norwalk, Connecticut 06854
Joint Special Meeting of Shareholders
June 25, 1998
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies by the Boards of Trustees of J.P. Morgan Funds, J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust (each a "Trust," and
collectively, the "Trusts") and The Managers Funds (the "Managers Funds") for
use at the joint special meeting of shareholders to be held at [522 Fifth
Avenue, 7th Floor, New York, New York 10036] on Thursday, June 25, 1998 at 10:00
a.m., and all adjournments thereof (the "Meeting"). Shareholders of record at
the close of business on April 13, 1998 (the "Record Date") are entitled to
notice of, and to vote at, the Meeting. This proxy statement and the
accompanying notice of meeting and proxy card(s) are first being mailed to
shareholders on or about [May , 1998].
Each Trust is composed of one or more separate series or portfolios. The
Managers Money Market Fund (the "Managers Fund") is a series of the Managers
Funds that invests in the Prime Money Market Portfolio (each individual series
and the Managers Fund, a "Fund"). Each Trust and the Managers Funds is a
registered management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and is organized as a Massachusetts business
trust. Certain Funds (the "Feeder Funds") seek to achieve their investment
objective by investing in a Master Portfolio (a "Portfolio" and collectively the
"Portfolios") with the same investment objective and policies as the Feeder
Fund. The Portfolios are also registered management investment companies under
the 1940 Act. Whenever a Feeder Fund is requested to vote on a matter pertaining
to a Portfolio, the Feeder Fund is required to hold a meeting of its
shareholders to consider the matter. Accordingly, the shareholders of each
Feeder Fund are also being asked to vote on the proposals insofar as they relate
to its corresponding Portfolio.
The Trusts' principal underwriter is Funds Distributor, Inc., 60 State
Street, Suite 1300, Boston, Massachusetts 02109 ("FDI"), which is also the
Trusts' co-administrator.
Set forth below is a summary of the proposals on which the shareholders of
each Fund defined as "Fund" will vote. The summary also identifies which
proposals relate to the Portfolios.
SUMMARY OF PROPOSALS REQUIRING SHAREHOLDER VOTE
Proposal 1. Election of the Board of Trustees
Matter Requiring Shareholder Vote Fund For Which Shareholder Vote is Required
To elect the Board of Trustees J.P. Morgan Funds, J.P. Morgan Institutional
Funds, the Portfolios and J.P. Morgan Series Trust
Proposal 2. Changes to Fundamental Investment Restrictions
Standardization of Fundamental Investment Restrictions (Proposals 2A-2H)
Matter Requiring Shareholder Vote Funds For Which Shareholder Vote is Required
2A. Diversification of Investments All Funds and Portfolios
2B. Concentration of Fund's Assets in a Particular All Funds and Portfolios
Industry
2C. Issuance of Senior Securities All Funds and Portfolios
2D. Borrowing All Funds and Portfolios
2E. Underwriting All Funds and Portfolios
2F. Investment in Real Estate All Funds and Portfolios
2G. Commodities All Funds and Portfolios
2H. Lending All Funds and Portfolios
Reclassification of Other Fundamental Restrictions as Nonfundamental
(Proposal 2I)
Matter Requiring Shareholder Vote Funds For Which Shareholder Vote is Required
2I. (See current fundamental restrictions indicated by All Funds and Portfolios
an "NF" in Exhibit B)
<PAGE>
Proposal 3. Reclassification of Investment Objectives from Fundamental
to Nonfundamental
Matter Requiring Shareholder Vote Funds For Which Shareholder Vote is
Required
Reclassification of Investment All Funds except J.P. Morgan and J.P.
Objectives from Fundamental to Morgan Institutional Disciplined Equity,
Nonfundamental International Opportunities and Global
Strategic Income Funds; J.P. Morgan
Emerging Markets Debt and U.S. Small
Company Opportunities Funds; J.P. Morgan
Tax Aware U.S. Equity, Tax Aware
Disciplined Equity and California Bond
Funds; and J.P. Morgan Institutional
Treasury Money Market and Service Treasury
Money Market Funds
Proposal 4. Approval of New Investment Advisory Agreement
Matter Requiring Shareholder Vote Funds For Which Shareholder
Management Inc.s) and J.P. Morgan Investment Vote is Required
All Funds and Portfolios
Proposal 5. Amendment of the Declaration of Trust
Matter Requiring Shareholder Vote Funds For Which Shareholder Vote is
To amend the Declaration of Trust to Required J.P. Morgan Funds and J.P.
provide dollar-based voting rights Morgan Institutional Funds
Proposal 6. Ratification of Selection of Independent Accountants
Matter Requiring Shareholder Vote Fund For Which Shareholder Vote
To ratify the selection of Price Waterhouse LLP is Required J.P. Morgan Funds,
as independent accountants J.P. Morgan Institutional Funds,
the Portfolios and J.P. Morgan
SeriesTrust
Feeder Funds. Each Proposal other than Proposal 4 requires corresponding
changes in respect of each relevant Portfolio, and Proposal 4 represents an
instruction by the Feeder Fund to vote on the new advisory agreement between the
relevant Portfolio and JPMIM. Accordingly, where shareholders of a Feeder Fund
or an entire Trust are asked to vote on these Proposals, the Feeder Fund will
cast all of its votes at its corresponding Portfolio's shareholder meeting in
the same proportion as the votes of the Feeder Fund's shareholders, even if all
Feeder Fund shareholders did not vote. As a result of this so-called
"pass-through voting" requirement, the proxy tabulator shall tally the votes of
each Feeder Fund separately, regardless of the statements herein of the
requisite votes for approving the various Proposals. Most Portfolios, however,
have more than one Feeder Fund investor and, accordingly, it is possible that
the shareholders of one Feeder Fund may vote differently from the other
investors in the Portfolio. In such event, although the Trustees of the Feeder
Fund may determine to withdraw the Feeder Fund's investment in its corresponding
Portfolio, the Trustees of each Feeder Fund currently anticipate that each
Feeder Fund will continue to invest in its corresponding Portfolio. Where
appropriate, this proxy statement uses the term "the Fund" to mean the feeder
fund and its master portfolio taken together.
PROPOSAL ONE
ELECTION OF BOARD OF TRUSTEES
It is proposed that shareholders of J.P. Morgan Funds, J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust consider the election of the
individuals listed below (each, a "Nominee" and collectively, the "Nominees") as
Trustees of each Trust. Each Nominee is currently a Trustee of each Trust (and
each Portfolio, including for example, the Prime Money Market Portfolio as it
relates to the Managers Fund). Each Trustee will hold office for a term of
unlimited duration subject to the mandatory retirement age of 70. The Trustees
have no reason to believe that any Nominee will be unavailable for election.
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
Trustee 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.
Certain information concerning Trustees of J.P. Morgan Funds, J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust is set forth below:
<TABLE>
Name, age, positions and offices with the Trusts, Year first Number of shares Beneficially
principal occupations during the past became a owned directly or indirectly as
five years [and other directorships] Trustee of April 13, 1998
<S> <C> <C>
Frederick S. Addy, 66, Trustee; Retired; Former Executive Vice 1982(1)
President and Chief Financial Officer, Amoco Corporation since 1992(2)
prior to April 1994 1996(3)
William G. Burns, 65, Trustee; Retired; Former Vice Chairman and 1982(1)
Chief Financial Officer, NYNEX 1992(2)
1996(3)
Arthur C. Eschenlauer, 63, Trustee; Retired; Former Senior Vice 1987(1)
President, Morgan Guaranty Trust Company of New York. 1992(2)
1996(3)
Matthew Healey*, 60, Trustee; Chairman and Chief Executive 1982(1)
Officer; Chairman, Pierpont Group, Inc. since prior to 1992. 1992(2)
1996(3)
Michael P. Mallardi, 64, Trustee; Retired; Former Senior Vice 1982(1)
President, Capital Cities/ABC, Inc. and President, Broadcast 1992(2)
Group since prior to April 1996. 1996(3)
</TABLE>
*Mr. Healey is an "interested person" (as defined in the 1940 Act) of each Trust
and the Advisor.
(1) For J.P. Morgan Funds.
(2) For J.P. Morgan Institutional Funds.
For J.P. Morgan Series Trust.
(4) The Trustees of the Trusts are the same as the Trustees of each of
the Portfolios. A majority of the disinterested Trustees have adopted written
procedures reasonably believed to be appropriate to deal with potential
conflicts of interest arising from the fact that the same individuals are
Trustees of each Trust and each of the Portfolios up to and including creating a
separate board of trustees.
Each Trustee is currently paid an annual fee of $75,000 for serving as
Trustee of each of the Portfolios, the J.P. Morgan Funds, J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust. Each Trustee is also
reimbursed for expenses incurred in connection with service as a Trustee and is
reimbursed for travel and out-of-pocket expenses relating to attendance at
meetings. The Trustees may hold various other directorships unrelated to these
funds.
Trustee compensation expenses paid by the Trusts and the Portfolios
for the calendar year ended December 31, 1997 are set forth below.
<TABLE>
<CAPTION>
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
TOTAL TRUSTEE
COMPENSATION
ACCRUED BY THE
PORTFOLIOS(*),
J.P. MORGAN
AGGREGATE FUNDS, J.P.
TRUSTEE AGGREGATE MORGAN
AGGREGATE COMPENSATION TRUSTEE INSTITUTIONAL
TRUSTEE PAID BY COMPENSATION FUNDS AND J.P.
COMPENSATION J.P. MORGAN PAID BY MORGAN SERIES
NAME OF TRUSTEE PAID BY INSTITUTIONAL J.P. MORGAN TRUST (***)
J.P. MORGAN FUNDS SERIES TRUST
FUNDS
<S> <C> <C> <C> <C>
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
Frederick S. Addy, Trustee $12,641.75 $11,772.77 $90.92 $72,500
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
William G. Burns, Trustee $12,644.75 $11,786.38 $90.92 $72,500
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
Arthur C. Eschenlauer, Trustee $12,644.75 $11,786.38 $90.92 $72,500
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
Matthew Healey, Trustee (**) $12,644.75 $11,786.38 $90.92 $72,500
Chairman and Chief
Executive Officer
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
Michael P. Mallardi, Trustee $12,644.75 $11,786.38 $90.92 $72,500
- ------------------------------------ ---------------------- ---------------------- ---------------------- ------------------------
</TABLE>
(*) Includes 22 portfolios for which Morgan acts as investment advisor.
(**) During 1997, Pierpont Group, Inc. paid Mr. Healey, in his role as
Chairman of Pierpont Group, Inc., compensation in the amount of $147,500,
contributed $22,100 to a defined contribution plan on his behalf and paid
$20,500 in insurance premiums for his benefit.
(***) No investment company within the fund complex has a pension or
retirement plan. Currently there are 18 investment companies (15 investment
companies comprising the Portfolios, the J.P. Morgan Funds, J.P. Morgan
Institutional Funds and J.P. Morgan Series Trust) in the fund complex.
The Trustees, in addition to reviewing actions of the Trusts' and the
Portfolios' various service providers, decide upon matters of general policy.
Each of the Portfolios and each Trust has entered into a Fund Services Agreement
with Pierpont Group, Inc. to assist the Trustees in exercising their overall
supervisory responsibilities over the affairs of the Portfolios and the Trusts.
Pierpont Group, Inc. was organized in July 1989 to provide services for The
Pierpont Family of Funds (now the J.P. Morgan Family of Funds), and the Trustees
are the equal and sole shareholders of Pierpont Group, Inc. The Trusts and the
Portfolios have agreed to pay Pierpont Group, Inc. a fee in an amount
representing its reasonable costs in performing these services to the Trusts,
the Portfolios and certain other investment companies subject to similar
agreements with Pierpont Group, Inc. These costs are periodically reviewed by
the Trustees. The principal offices of Pierpont Group, Inc. are located at 461
Fifth Avenue, New York, New York 10017.
As of [_______________, 1998], all officers and Trustees as a group owned
[less than 1%] of the outstanding shares of each Fund. Each of the Boards of
Trustees held four regularly scheduled meetings during 1997; each Trustee
attended at least 75% of those meetings. The Boards of Trustees do not have
audit committees or nominating committees. Audit-related matters are reviewed as
they arise throughout the year by the Boards of Trustees as a whole. The
executive officers of the Trusts and of the Managers Funds and the shares of the
Funds beneficially owned by such officers are set forth in Exhibit [__].
Recommendation of Trustees
At the meetings of the Trustees called for the purpose on April 23, 1998,
the Trustees of each Trust voted for the approval of the election of Trustees.
[If elected, the Trustees will hold office subject to the mandatory retirement
age except (a) any Trustee may resign, and (b) any Trustee may be removed by
shareholders upon an affirmative vote of a majority of all the shares entitled
to be cast for the election of Trustees.]
Required Vote
The affirmative vote of the holders present at the Meeting, in person or by
proxy, holding more than 50% of the voting securities of a Trust present at the
Meeting is required to elect a Trustee of the Trust.
The Trustees of each Trust recommend that shareholders vote to approve
Proposal 1.
PROPOSAL TWO
CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
Adoption of Standardized Investment Restrictions (Proposals 2A-2H)
The primary purpose of Proposals 2A through 2H is to revise and standardize
the Funds' and, where applicable, the Portfolios' investment restrictions that
are fundamental (the "Restrictions"). These Restrictions may only be changed
with a shareholder vote. The Trustees have concurred with Morgan Guaranty Trust
Company of New York's ("MGT" or the "Advisor") efforts to analyze the
fundamental and nonfundamental investment restrictions of the Funds and
Portfolios and propose to shareholders adoption of standardized Restrictions.
Certain of the current Restrictions reflect regulatory, business or
industry conditions, practices or requirements that are or need no longer be in
effect. Other Restrictions reflect regulatory requirements which remain in
effect, but which are not required to be fundamental restrictions. Also, as new
Funds have been created over a period of years, substantially similar
Restrictions often have been phrased in slightly different ways, sometimes
resulting in minor but unintended differences in effect or potentially giving
rise to unintended differences in interpretation.
Accordingly, the Advisor proposed and the Trustees approved revision to the
respective Funds' Restrictions in order to simplify, modernize and make more
uniform those investment restrictions that are required to be fundamental, and
to make nonfundamental those restrictions that are not legally required to be
fundamental or adopt other nonfundamental policies in their place.
The Trustees believe that eliminating the disparities among the Funds'
Restrictions will enhance the Advisor's ability to respond to changing
regulatory and investment conventions, practices and requirements. By reducing
to a minimum those policies that can be changed only by shareholder vote, each
Fund will more often be able to avoid the costs and delays associated with a
shareholder meeting when making changes to its investment policies that, at a
future time, its Advisor considers desirable. The Trustees must approve any
changes to nonfundamental restrictions. Although the proposed changes in
Restrictions will allow the Funds greater investment flexibility to respond to
future investment opportunities, the Advisor does not anticipate that the
changes, except as discussed in this proposal, will result at this time in a
material change in the level of investment risk associated with an investment in
any Fund.
Set forth below, as sub-sections of this Proposal, are general descriptions
of each of the proposed changes. You are given the option to approve all, some,
or none of the proposed changes on the proxy card enclosed with this proxy
statement.
A listing of the proposed standardized Restrictions to be adopted by each
Fund is set forth in Exhibit A to this proxy statement. A listing of the current
Restrictions of each Fund is set forth in Exhibit B. Exhibit B contains an index
to assist you in locating the page(s) at which your Fund(s)' current
Restrictions are described. Those Restrictions that you are being requested to
vote to standardize are shown in Exhibit B by an "S", which stands for "To be
Standardized." If a particular change is not approved by shareholders of a Fund,
the current Restriction will remain in place.
Because of the variety of ways in which the various Funds' current
Restrictions are expressed, the discussions below are general. To compare your
Fund's current Restriction to the proposed changed Restriction, please refer to
Exhibit B.
If the proposed changes are approved, the Funds' prospectuses and
statements of additional information ("SAI") will be revised, as appropriate and
as soon as practicable, to reflect these changes. Shareholders will be notified
by the Fund of any future investment policy changes either in the Fund's
prospectus or SAI, which are updated at least annually, or in other Fund
correspondence.
If approved by shareholders, the revised Restrictions described in
Proposals 2A through 2H will remain fundamental and, as such, cannot be changed
without a further shareholder vote. On the other hand, if a proposed
standardized Restriction is not approved by shareholders of a particular Fund,
the current Restriction will remain in place as a fundamental restriction, and
shareholder approval (and its attendant costs and delays) will continue to be
required prior to any change in the Restriction.
Proposal 2A: To Amend The Fundamental Restriction Concerning Diversification
of Investments
Diversified Funds
Many of the Funds' current Restrictions concerning diversification of
investments provide generally that the Fund cannot purchase the securities of an
issuer if the purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer, except U.S.
government securities, or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in the Fund's
portfolio. Most Funds apply this limitation to 75% of their total assets. These
Funds express this Restriction in a variety of ways. It is proposed that
shareholders approve new language standardizing this Restriction.
Most of the Funds have elected to be "diversified" open-end management
investment companies under the 1940 Act, which requires that the 5% of assets
and 10% of outstanding voting securities tests described above apply to 75% of
the total assets of the Fund. The current policy of J.P. Morgan Federal Money
Market, J.P. Morgan Institutional Federal Money Market and J.P. Morgan
Institutional Service Federal Money Market Funds is more restrictive than
required by the 1940 Act, since such Funds apply the foregoing tests to 100% of
their assets, rather than 75% of their assets. The primary purpose of the
proposed change with respect to these Funds is to allow the Funds to invest in
accordance with the less restrictive limits contained in the 1940 Act for
diversified investment companies. The proposed change would allow these Funds
the flexibility to purchase larger amounts of issuers' securities when their
investment adviser deems an opportunity attractive.
With respect to those Funds currently applying the 1940 Act "diversified"
standard, the amendment of the fundamental Restriction will allow such Funds to
respond more quickly to changes of that standard, as well as to other legal,
regulatory, and market developments, without the delay or expense of a
shareholder vote. The amendment of the fundamental Restriction would also
standardize the Restrictions across the Funds. Adoption of this change is not
expected to materially affect the operation of the Funds.
Non-diversified Funds
J.P. Morgan Japan Equity, J.P. Morgan Institutional Japan Equity and J.P.
Morgan Institutional International Bond, J.P. Morgan New York Total Return Bond,
J.P. Morgan Institutional New York Total Return Bond, J.P. Morgan Emerging
Markets Debt Fund and J.P. Morgan Series Trust California Bond Funds are
classified as "non-diversified" under the 1940 Act and therefore are not subject
to the 1940 Act requirement. For these Funds, no change is being proposed.
No Fund is changing its current classification. Each diversified Fund's
fundamental Restriction will be replaced with the following fundamental
Restriction:
"The Fund may not make any investment inconsistent with the
Fund's classification as a diversified investment company
under the Investment Company Act of 1940."
Proposal 2B: To Amend The Fundamental Restriction Concerning Concentration
of a Fund's Assets in a Particular Industry
All of the Funds currently have a Restriction concerning the concentration
of investments in a particular industry. The staff of the SEC takes the position
that a mutual fund "concentrates" its investments in a particular industry if
more than 25% of the mutual fund's assets (exclusive of cash and U.S. government
securities) are invested in the securities of issuers in such industry. The
Restrictions generally embody the SEC staff interpretation by stating that a
fund will not concentrate its investments in a particular industry by investing
more than 25% of its assets, exclusive of cash and U.S. Government securities,
in securities of issuers in any one industry. Additionally, the money market
funds currently exclude investments in negotiable certificates of deposit, time
deposits, and bankers' acceptances of U.S. branches of U.S. banks for purposes
of industry concentration.
Shareholders of the Funds are being requested to approve an amendment of
the foregoing fundamental Restriction. As proposed, each Fund's current
fundamental Restriction regarding concentration of the Fund's assets in a
particular industry will be replaced by the following fundamental Restriction:
"The Fund may not purchase any security which would cause the
Fund to concentrate its investments in the securities of
issuers primarily engaged in any particular industry except as
permitted by the SEC (except that in the case of J.P. Morgan
Prime Money Market Fund and J.P. Morgan Institutional Prime
Money Market and Service Prime Money Market Funds [and the
Managers Fund], this restriction does not apply to instruments
considered to be domestic bank money market instruments)."
The purpose of the proposed amendment is to allow for future investment
flexibility in response to regulatory requirements, for example, if the SEC
increased the current 25% concentration limitation, without the necessity of a
further shareholder vote. Adoption of this change is not expected to materially
affect the operation of the Funds.
Proposal 2C: To Amend The Fundamental Restriction Concerning the Issuance of
Senior Securities
The Funds' current Restrictions regarding the issuance of senior securities
generally state that a Fund shall not issue any senior security or state the
criteria under which a security is deemed not to be a senior security as
described in Exhibit B.
It is proposed that shareholders approve replacing the Funds' current
Restrictions concerning the issuance of senior securities with the following
fundamental Restriction governing the issuance of senior securities:
"The Fund may not issue senior securities, except as permitted
under the Investment Company Act of 1940 or any rule, order or
interpretation thereunder."
The primary purpose of this proposed change is to standardize the Funds'
Restrictions regarding senior securities.
The proposed Restriction clarifies that the Funds may issue senior
securities to the full extent permitted under the 1940 Act. Although the
definition of a "senior security" involves complex statutory and regulatory
concepts, a senior security is generally an obligation of a Fund which has a
claim to the Fund's assets or earnings that takes precedence over the claims of
the Fund's shareholders. The 1940 Act generally prohibits mutual funds from
issuing any senior securities with limited exceptions; however, under current
SEC staff interpretations, mutual funds are permitted to engage in certain types
of transactions that might be considered "senior securities" as long as certain
conditions are satisfied. For example, a transaction that obligates a Fund to
pay money at a future date (e.g., the purchase of securities to be settled on a
date that is farther away than the normal settlement period) may be considered a
"senior security." A mutual fund is permitted to enter into this type of
transaction if it maintains a segregated account containing liquid securities in
an amount equal to its obligation to pay cash for the securities at a future
date. Funds currently engage and would engage in transactions that could be
considered to involve "senior securities" only in accordance with applicable
regulatory requirements under the 1940 Act.
Adoption of the proposed Restriction concerning senior securities is not
expected to materially affect the operation of the Funds. However, adoption of a
standardized Restriction will allow the Funds to respond to legal, regulatory
and market developments which may make the use of permissible senior securities
advantageous to the Funds and their shareholders.
Reverse Repurchase Agreements that are supported by segregated assets
("covered") in compliance with guidance from the Securities and Exchange
Commission or its staff are not considered to be senior securities. Please see
the proposed amendment to borrowing (Proposal 2D) inasmuch as the topics are
interrelated.
Proposal 2D: To Amend The Fundamental Restriction Concerning Borrowing
The Restrictions for Funds with the most restrictive provisions concerning
borrowing state that a Fund shall not borrow money except in an amount not in
excess of 10% of the total assets of the Fund, and then only for emergency and
extraordinary purposes. Some Funds have broader borrowing authority. When
reviewing your Fund(s)' policies on borrowings as set forth in Exhibit B, you
should also review your Fund(s)' policies on the issuance of senior securities
and reverse repurchase agreements since the topics are interrelated.
In general, under the 1940 Act, a Fund may not borrow money, except that
(i) a Fund may borrow from banks (as defined in the 1940 Act) and enter into
reverse repurchase agreements, in amounts up to 33 1/3% of its total assets
(including the amount borrowed) less liabilities (other than borrowings), (ii) a
Fund may borrow up to 5% of its total assets for temporary purposes, (iii) a
Fund may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities, and (iv) a Fund may not pledge its
assets other than to secure such borrowings or, to the extent permitted by the
Fund's investment policies as set forth in its current prospectus and statement
of additional information, in connection with hedging transactions, short sales,
when-issued and forward commitment transactions and similar investment
strategies. Reverse Repurchase Agreements that are not covered are both senior
securities and considered to be borrowing and will not be entered into. Reverse
Repurchase Agreements that are "covered" are neither senior securities nor a
form of borrowing and may be entered into without limit if the proposed
restriction is adopted. (See the discussion under Proposal 2C above.)
It is proposed that shareholders approve replacing the Funds' current
Restrictions regarding borrowing with the following Restriction:
"The Fund may not borrow money, except to the extent permitted by
applicable law."
The primary purpose of the proposed change to the Restriction concerning
borrowing is to standardize the Restriction and conform it to the current
regulatory and market environment.
While the proposed Restriction is more liberal, adoption of the proposed
Restriction is not expected to materially affect the operations of the Funds.
However, many of the Funds' current Restrictions restrict borrowing to a lower
percentage of total assets than the 33 1/3% permitted under the 1940 Act. In
addition, certain funds are currently prohibited from purchasing securities
while borrowings representing more than 5% of total assets are outstanding. The
proposed Restriction would allow a Fund to purchase a security while borrowings
represent more than 5% of total assets. While the Funds have no current
intention to purchase securities while borrowings represent more than 5% of
total assets, the flexibility to purchase securities in such circumstances may
be beneficial to a Fund under certain circumstances. This may be considered a
form of indirect leverage. Even though the Advisor does not intend to borrow
specifically to purchase securities, purchasing securities when borrowings
incurred for other purposes remain outstanding has a similar effect in
leveraging the Portfolio.
Proposal 2E: To Amend The Fundamental Restriction Concerning Underwriting
Each Fund is currently subject to a Restriction concerning underwriting.
The Restrictions generally provide that a Fund shall not underwrite any
securities. It is proposed that shareholders approve replacing the current
Restriction with the following Restriction concerning underwriting:
"The Fund may not 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 1933 Act."
The primary purpose of the proposed change is to clarify that the Funds are
not prohibited from selling securities if, as a result of the sale, the Funds
would technically be considered underwriters under the federal securities laws.
It is also intended to standardize the Funds' Restrictions regarding
underwriting. While the proposed change will have no current impact on the
Funds, adoption of the proposed standardized Restriction will advance the goals
of standardization.
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Proposal 2F: To Amend The Fundamental Restriction Concerning Investment in
Real Estate
The Funds currently have a Restriction concerning the purchase of real
estate. In general, the Restrictions state that a Fund shall not purchase or
sell real estate. In the opinion of the Advisor, this Restriction does not
currently preclude investment in securities of issuers that deal in real estate.
Shareholders are being asked to approve amendments of Restrictions similar
to that described above in order to clarify the types of investments in which
the Funds are authorized to invest and to standardize the Funds' Restriction
concerning real estate. As proposed, the Funds' current Restrictions relating to
investment in real estate will be replaced by the following Restriction which
will govern future purchases and sales of real estate:
"The Fund may not purchase or sell real estate, except that,
to the extent permitted by applicable law, the Fund may (a)
invest in securities directly or indirectly secured by real
estate, (b) invest in securities issued by issuers that invest
in real estate, and (c) in the case of the fixed income funds
and J.P. Morgan Diversified and J.P. Morgan Institutional
Diversified Funds make direct investments in mortgages."
The adoption of this proposal would allow the fixed income and Diversified
Funds, most of which are currently prohibited from investing in direct
mortgages, to now do so. The proposed Restriction would also make it explicit
that each of the Funds may acquire a security or other instrument whose payments
of interest and principal may be secured by real property with a right to
foreclose on real estate, in the event of default. Investments in these
securities are, of course, subject to the Fund's investment objective and
policies and to other limitations regarding diversification and concentration.
To the extent that a Fund buys securities and instruments of companies in
the real estate business or invests directly in mortgages, the Fund's
performance will be affected by the condition of the real estate market. This
industry is sensitive to factors such as changes in real estate values and
property taxes, overbuilding, variations in rental income, and interest rates.
Performance could also be affected by the structure, cash flow, and management
skill of real estate companies. Direct investments in mortgages and securities
directly or indirectly secured by real estate are often subject to more rapid
repayment than their stated maturity dates would indicate as a result of
principal prepayments on the underlying loans. This can result in significantly
greater price and yield volatility than with traditional fixed income
securities. During periods of declining interest rates, prepayments can be
expected to accelerate and thus impair the Fund's ability to reinvest the
returns of principal at comparable yields. Conversely, in a rising interest rate
environment, a declining prepayment rate will extend the average life of many
mortgage-backed securities and prevent the Fund from taking advantage of such
higher yields. In the event that the Fund forecloses on any non-performing
mortgage, and acquires a direct interest in the real property, the Fund will be
subject to the risks generally associated with the ownership of real property,
such as the possibility of fluctuation in the market value of the foreclosed
property and its occupancy rates, rent schedules and operating expenses. There
may be adverse changes in local, regional or general economic conditions,
deterioration of the real estate market and financial circumstances of tenants
and sellers, unfavorable changes in zoning, building, environmental and other
laws, increased real property taxes, rising interest rates, reduced availability
and increased cost of mortgage borrowings, the need for unanticipated
renovations, unexpected increases in the cost of energy, environmental factors,
acts of God and other factors which are beyond the control of the Advisor.
Hazardous or toxic substances may be present on, at or under the mortgaged
property and adversely affect the value of the property. In addition, the owners
of property containing such substances may be held responsible, under various
laws, for containing, monitoring, removing or cleaning up such substances. The
presence of such substances may also provide a basis for other claims by third
parties. Costs of clean-up or of liabilities to third parties may exceed the
value of the property. In addition, these risks may be uninsurable. In light of
these and similar risks, it may be impossible to dispose profitably of
properties in foreclosure. However, these investment opportunities can provide
attractive potential yields compared to other investments.
It is anticipated that upon approval of this proposal, J.P. Morgan and J.P.
Morgan Institutional Short Term Bond, Bond, Tax Exempt Bond, New York Total
Return Bond and Diversified Funds, J.P. Morgan Emerging Markets Debt Fund, J.P.
Morgan Institutional Bond Fund - Ultra, J.P. Morgan Institutional International
Bond Fund and J.P. Morgan California Bond Fund may enter into direct mortgages.
Only J.P. Morgan and J.P. Morgan Institutional Short Term Bond, Diversified and
Bond Funds and J.P. Morgan Institutional Bond Fund - Ultra intend to do so at
this time. J.P. Morgan and J.P. Morgan Institutional Tax Exempt, New York Total
Return Bond Funds, J.P. Morgan Emerging Markets Debt Fund and J.P. Morgan
Institutional International Bond Fund would be able to enter into direct
mortgages, but currently do not intend to do so. Adoption of the proposed
standardized fundamental Restriction will also advance the goals of
standardization.
Proposal 2G: To Amend The Fundamental Investment Restriction Concerning
Commodities
The Funds currently are subject to various Restrictions concerning
commodities. The Money Market Funds' Restriction prohibits the purchase of
commodities. Certain other Funds' Restrictions (J.P. Morgan and J.P. Morgan
Institutional Short Term Bond, Bond, Tax Exempt Bond, Diversified, U.S. Equity,
U.S. Small Company and International Equity Funds) prohibit the purchase or sale
of commodities or commodity contracts, except that the Funds may, for hedging
purposes, buy or sell financial futures contracts and options.
It is proposed that shareholders approve replacing the current Restrictions
with the following Restriction concerning commodities:
"The Fund may not purchase or sell commodities or commodity
contracts unless acquired as a result of ownership of
securities or other instruments issued by persons that
purchase or sell commodities or commodities contracts, but
this shall not prevent the Fund from purchasing, selling and
entering into financial futures contracts (including futures
contracts on indices of securities, interest rates and
currencies), options on financial futures contracts, warrants,
swaps, forward contracts, foreign currency spot and forward
contracts, or other derivative instruments that are not
related to physical commodities."
The proposed Restriction is intended to standardize the Funds' Restriction
on purchasing and selling commodities and expand the ability of certain Funds to
engage in futures and options transactions. Currently, certain of the Funds'
investment restrictions permit such Funds to use futures and options for hedging
purposes only. The proposed Restriction if adopted will permit the J.P. Morgan
and J.P. Morgan Institutional Short Term Bond, Bond, Tax Exempt Bond,
Diversified, U.S. Equity, U.S. Small Company and International Equity Funds to
take advantage of potential risk management opportunities and techniques.
The use of derivatives involves market and other risks. Entering into a
derivative contract involves a risk that the applicable market will move against
the Fund's position and that the Fund will incur a loss. For derivative
contracts other than purchased options, this loss may substantially exceed the
amount of any initial payment made or received by the Fund. Derivatives may
sometimes increase or leverage the Fund's exposure to a particular market risk.
In addition to market risks, leverage may enhance the price volatility of the
Fund's net asset value. If the Fund enters into futures contracts or swap
agreements, writes options, engages in certain foreign currency exchange
transactions, or enters into certain other types of transactions that could be
viewed as leveraging, it is required by applicable policies of the SEC staff to
maintain a segregated account consisting of cash or liquid assets or to
otherwise maintain "cover" which may partially offset the leverage inherent in
these transactions. Over-the-counter derivatives, including swap agreements,
also involve a risk that the counterparty will fail to perform its contractual
obligations. Some derivatives may have a limited or no trading market. Illiquid
derivatives may be difficult to value due to the unavailability of reliable
broker quotes for these contracts.
If the proposed amendment is approved, J.P. Morgan and J.P. Morgan
Institutional Short Term Bond, Bond, Tax Exempt Bond, Diversified, U.S. Equity,
U.S. Small Company and International Equity Funds will have the ability to enter
into futures contracts and options on futures contracts for risk management and
other non-hedging purposes. Examples of non-hedging risk management strategies
include increasing a Fund's exposure to the equity markets of particular
countries by purchasing futures contracts on the stock indices of those
countries and effectively increasing the duration of a bond portfolio by
purchasing futures contracts on fixed income securities. Such non-hedging risk
management techniques are not speculative, but, like all leveraged transactions,
they involve the possibility of losses as well as gains that are greater than if
these techniques involved the purchase and sale of the underlying securities
themselves. If this proposal is adopted, the money market funds will
theoretically have the ability to enter into futures contracts and related
option contracts and to utilize other derivatives. However, money market funds
are prohibited from engaging in such transactions by current regulations. For
the Funds currently allowed to utilize derivatives for hedging and risk
management purposes, these changes will have no effect on the management style
but would advance the goal of standardization.
Adoption of this proposal will not affect any Fund's policy on investments
in foreign currencies or currency contracts.
Proposal 2H: To Amend The Fundamental Investment Restriction Concerning
Lending
The Funds' current Restrictions concerning lending state generally that a
Fund may not make direct loans but may purchase and hold debt securities and may
lend portfolio securities in accordance with the Funds' investment objectives
and policies.
It is proposed that shareholders approve the replacement of the foregoing
Restriction with the following amended fundamental Restriction concerning
lending:
"The Fund may make loans to other persons, in accordance with
the Fund's investment objectives and policies and to the
extent permitted by applicable law."
The proposed Restriction would permit the Funds to invest in direct debt
instruments such as loans and loan participations, which are interests in
amounts owed to another party. Loans may be made to companies, governments and
other borrowers, including one or more Funds or Portfolios. These types of
investments may have additional risks beyond conventional debt securities
because they may provide less legal protection for the Fund, or because there
may be a requirement that the Fund supply additional cash to a borrower on
demand.
The adoption of the proposed standardized Restriction will also advance the
goals of standardization. An amendment to this Restriction is also consistent
with Proposal 2F pursuant to which certain Funds would be permitted to enter
into direct mortgage arrangements. However the adoption of the proposed
standardized Restriction would allow certain funds to take advantage of
potentially attractive yields as compared to other investments.
Proposal 2I: Reclassification as Nonfundamental of All Current Fundamental
Restrictions Other than the Fundamental Restrictions Described in
the Foregoing Proposals 2A through 2H.
Like all mutual funds, when the Funds were established the Trustees adopted
certain investment Restrictions that would govern the efforts of the Funds to
achieve their respective investment objectives. Some of these Restrictions were
designated as "fundamental" and, as such, may not be changed unless the change
has first been approved by the Trustees and then by the shareholders of the
relevant Fund. Many of the Funds' investment restrictions were required to be
classified as fundamental under the securities laws of various states. Since
October 1996, all state securities laws and regulations regarding fundamental
investment restrictions have been preempted by federal law and no longer apply.
The Funds' Restrictions were established to reflect certain regulatory,
business or industry conditions as they existed at the time a Fund was
established. Many such conditions no longer exist. The 1940 Act requires only
that the Restrictions discussed in Proposals 2A through 2H above be classified
as fundamental.
Nonfundamental Restrictions may be changed or eliminated by a Fund's
Trustees at any time without approval of the Fund's shareholders. The current
Restrictions proposed to be reclassified as nonfundamental or eliminated or
amended as indicated below are shown in Exhibit B by an "NF" ("To be
reclassified as Non-Fundamental"), by an "E" (to be Eliminated) or by an "A" (to
be Amended and reclassified). You will find the page(s) in which your Fund's(s')
Restrictions are described in the index at the beginning of Exhibit B.
Other Investment Policy Changes
Short Sales
It is anticipated that upon approval of Proposal 2I and upon the Trustees'
approval of the elimination of certain nonfundamental restrictions related to
short sales, all Funds except for J.P. Morgan and J.P. Morgan Institutional
Prime Money Market, Tax Exempt Money Market and Federal Money Market Funds and
J.P. Morgan Institutional Treasury Money Market, Service Prime Money Market,
Service Tax Exempt Money Market, Service Federal Money Market and Service
Treasury Money Market Funds will have the ability to engage in short sales. Each
of these Funds may sell any security short if it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short or if it
covers such short sales as required by the current rules or positions of the SEC
or its staff. Transactions in futures contracts and options shall not constitute
selling securities short.
Investments in Other Affiliated Funds
The Funds have submitted an exemptive application to the SEC requesting
permission to invest more than 5% of a Fund's assets in other J.P. Morgan, J.P.
Morgan Institutional or J.P. Morgan Series Trust Funds. Upon approval of
Proposal 2I and the granting of exemptive relief by the SEC, certain Funds
intend to invest in other Funds to achieve asset allocation goals more
efficiently, and each Fund may invest in one or more of the money market Funds,
to more efficiently invest in money market instruments.
None of these proposed changes will alter any Fund's investment objective.
Indeed, the Trustees believe that approval of the reclassification of
fundamental Restrictions to nonfundamental Restrictions will enhance the ability
of the Funds to achieve their respective investment objectives because the Funds
will have greater investment management flexibility to respond to changing
market, industry or regulatory conditions without the uncertainty, delay and
expense associated with the solicitation of shareholder approval.
Recommendation of Trustees
The Trustees of each Fund have reviewed the potential benefits associated
with the proposed standardization of the Funds' fundamental Restrictions
(Proposals 2A through 2H) as well as the potential benefits associated with the
reclassification of certain of the Funds' other Restrictions to nonfundamental,
the elimination of certain Restrictions and the amendment and reclassification
of others (Proposal 2I).
At the meetings of the Trustees called for the purpose of considering the
aforementioned proposals on April 22, 1998, the Trustees of each Trust voted to
approve the proposed standardization of the Funds' fundamental Restrictions
(Proposals 2A through 2H) and the reclassification from fundamental to
nonfundamental or the elimination or amendment of certain of the Funds' other
Restrictions (Proposal 2I). The Trustees also approved the elimination of
certain Funds' nonfundamental investment restrictions regarding short sales. The
Trustees recommended that shareholders vote in favor of the corresponding
changes for the fundamental restrictions of the Funds. In making this
recommendation, the Trustees considered that the Funds and their corresponding
Portfolios remain subject to specific restrictions under the 1940 Act and the
Internal Revenue Code, which limit certain investments and strategies, but do
not eliminate risk.
At a meeting of the Trustees of The Managers Funds called for the purpose
on March 9, 1998, the Trustees of The Managers Funds voted to approve the
changes to the Manager Money Market Fund's fundamental Restrictions (Proposals
2A through 2H) and the reclassification from fundamental to nonfundamental or
the elimination of certain of the Funds' other Restrictions (Proposal 2I). The
Trustees also recommended that shareholders vote in favor of the corresponding
changes for the Money Market Portfolio's fundamental Restrictions. In making
this recommendation, the Trustees considered that as money market funds, the
Managers Money Market Fund, and its corresponding Portfolio, are subject to
detailed restrictions under the 1940 Act on the types of investments they can
make and practices that they can engage in, so that the proposed changes are not
likely to have a material effect on the operations of the Fund or the Portfolio.
The Trustees also considered the advantages to the Manager Money Market Fund and
its shareholders from investing in the Portfolio, and the fact that if the
Managers Money Market Fund does not approve the proposed changes but the changes
are approved at the Portfolio level, the Fund may not be able to continue to
invest in the Portfolio .
Required Vote
With respect to each of the proposals regarding fundamental Restrictions
(Proposals 2A through 2H), the affirmative vote of the holders of "a majority of
the outstanding voting securities" of a Fund is required for approval of such
change for such Fund and the reclassification of other fundamental Restrictions
to nonfundamental (Proposal 2I). Under the 1940 Act, the affirmative vote of "a
majority of the outstanding voting securities" of a Fund is defined as the
lesser of (a) 67% or more of the voting securities of the Fund present or
represented by proxy at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy,
or (b) more than 50% of the outstanding voting securities of the Fund ("1940 Act
Majority").
The Trustees recommend that shareholders vote to approve Proposal 2.
PROPOSAL THREE
RECLASSIFICATION AS NONFUNDAMENTAL OF THE INVESTMENT
OBJECTIVE OF THOSE FUNDS WHOSE INVESTMENT OBJECTIVE IS CURRENTLY
CLASSIFIED AS FUNDAMENTAL
Reclassification of Fundamental Investment Objectives as Nonfundamental
Under the 1940 Act, a Fund's investment objective is not required to be
classified as "fundamental." A fundamental investment objective may be changed
only by vote of a Fund's shareholders. Nevertheless, certain Funds' investment
objectives were established as fundamental in response to then current
regulatory practices. In order to provide the investment advisor with enhanced
investment management flexibility to respond to market, industry or regulatory
changes, the Advisor of these Funds proposed and the Trustees approved the
reclassification from fundamental to nonfundamental of each such Fund's
investment objective. A nonfundamental investment objective may be changed at
any time by the Trustees of a Fund without approval by the Fund's shareholders.
For a complete description of the investment objective(s) of your Fund(s),
please consult your Fund(s)' prospectuses. The reclassification from fundamental
to nonfundamental will not alter any Fund's investment objective, except that it
is anticipated that, upon approval of this proposal, the investment objectives
of J.P. Morgan and J.P. Morgan Institutional Short Term Bond Funds and New York
Total Return Bond Funds will immediately change as described below. If at any
time in the future, the Trustees of a Fund approve a change in a Fund's
nonfundamental investment objective, shareholders of such Fund will be given
notice of such change prior to its implementation; however, if such a change
were to occur, shareholders would not be asked to approve such change.
If the reclassification of any Fund's investment objective from fundamental
to nonfundamental is not approved by shareholders of a particular Fund, such
Fund's investment objective will remain fundamental and shareholder approval
will continue to be required prior to any change in investment objective.
It is anticipated that upon approval of this proposal of the investment
objective of J.P. Morgan and J.P. Morgan Institutional Short Term Bond Funds and
New York Total Return Bond Funds will be replaced with the following:
<TABLE>
- -------------------------------------- --------------------------------- -----------------------------------
J.P. Morgan and Current Investment Objective Proposed Investment Objective
J.P. Morgan Institutional
<S> <C> <C>
- -------------------------------------- --------------------------------- -----------------------------------
- -------------------------------------- --------------------------------- -----------------------------------
Short Term Bond Fund To provide a high total return To provide a high total return
while attempting to limit the consistent with low volatility
likelihood of negative of principal
quarterly returns
- -------------------------------------- --------------------------------- -----------------------------------
- -------------------------------------- --------------------------------- -----------------------------------
New York Total Return Bond Fund To provide a high after tax To provide a high level of
total return for New York income exempt from Federal, New
residents consistent with York State and local income
moderate risk of capital taxes consistent with moderate
risk of principal
- -------------------------------------- --------------------------------- -----------------------------------
</TABLE>
If this proposal is adopted, J.P. Morgan and J.P. Morgan Institutional New
York Total Return Bond Funds plan on changing their names to J.P. Morgan and
J.P. Morgan Institutional New York Tax Exempt Bond Funds.
Recommendation of Trustees
The Trustees have considered the enhanced management flexibility to respond
to market, industry or regulatory changes that would accrue to the Funds if each
Fund's fundamental investment objectives were reclassified as nonfundamental. In
addition, for J.P. Morgan and J.P. Morgan Institutional Short Term Bond Funds
and New York Total Return Bond Funds, the Trustees have determined that changing
the current investment objectives as stated above would clarify the investment
objectives of the J.P. Morgan and J.P. Morgan Institutional Short Term Bond
Funds and will emphasize the production of triple tax free income for J.P.
Morgan and J.P. Morgan Institutional New York Total Return Bond Funds. In other
words, the change of objective for the New York Total Return Bond Funds is
expected to result in closer attention to triple tax free income, but is not
otherwise expected to significantly affect the Funds' investments.
At the meetings of the Trustees called for the purpose on April 23, 1998
(March 9, 1998 in the case of the Managers Fund), the Trustees of each Trust
voted to approve the reclassification of the investment objective of each Fund
currently classified as fundamental to nonfundamental as well as changing the
investment objectives of J.P. Morgan and J.P. Morgan Institutional Short Term
Bond Funds and New York Total Return Bond Funds.
Required Vote
The affirmative vote of the holders of a 1940 Act Majority is required to
approve the reclassification of a Fund's investment objective from fundamental
to nonfundamental.
The Trustees recommend that shareholders vote to approve Proposal 3.
PROPOSAL FOUR
APPROVAL OF NEW AND SEPARATE INVESTMENT ADVISORY AGREEMENTS BETWEEN EACH FUND
OR THE PORTFOLIO IN WHICH THE FUND
INVESTS, AS APPLICABLE, AND J.P. MORGAN INVESTMENT MANAGEMENT INC.
J.P. Morgan has proposed changing the investment advisor of each Fund of
J.P. Morgan Series Trust and each of the portfolios (the "Portfolios") in which
the Feeder Funds invest from MGT to its affiliate, J.P. Morgan Investment
Management Inc. ("JPMIM"). Both MGT and JPMIM are wholly owned subsidiaries of
J.P. Morgan & Co. Incorporated ("Morgan"), all of which are located at 522 Fifth
Avenue, New York, NY 10036. The proposed change would not affect the Funds'
investments or other operations.
JPMIM manages accounts for mutual funds, pension funds, and other
institutional accounts. As of December 31,1997, JPMIM managed approximately $221
billion in assets including approximately $20 billion in mutual fund assets, and
is one of the top 7 out of 3,378 investment managers in the U.S. based on assets
under management. With offices in London and Singapore, JPMIM draws from a
worldwide resource base to provide comprehensive service to an international
group of clients. Investment management activities in Japan, Australia, and
Germany are carried out by affiliates such as J.P. Morgan Investment Management
Australia Limited in Melbourne, and J.P.
Morgan Investment GMBH in Frankfurt.
If this proposal is approved, a new investment advisory agreement with
JPMIM (the "New Agreement") will be adopted for each Portfolio and each Fund of
J.P. Morgan Series Trust. The terms of the New Agreement are identical to the
terms of the current investment advisory agreement (the "Current Agreement"),
except for the name of the advisor and the date. A copy of the proposed New
Agreement marked to show the change to JPMIM is attached as Exhibit C. For each
Portfolio, the contractual rate chargeable for investment advisory services will
remain the same. Set forth in Exhibit [__] is the date of each Current
Agreement, the rate of compensation thereunder and the fee paid to MGT during
the last fiscal year (and any fee waivers), the date the agreement was last
submitted to shareholders and the purpose of such submission, and the date each
agreement was last continued in effect by the Trustees.
In connection with each Fund's/Portfolio's approval of the New Agreement,
its Trustees considered that the change in investment advisor will not result in
any change in the investment objectives, policies, investment operations of a
Fund/Portfolio or the investment personnel of the advisor. The Trustees also
considered that the proposed change of investment advisor would not affect
shareholder services or other business activities of the Funds as these are
provided to the Funds under separate agreements. This change will also not
affect the administration and shareholder services agreements between MGT and
the Funds/Portfolios. The amount of payments by the Funds/Portfolios to MGT
during the last fiscal year under these agreements is also set forth in Exhibit
[__].
While the change would not have any impact on Fund/Portfolio investment
operations, it would bring the Funds'/Portfolios' advisory arrangements more in
line with the current business alignment within Morgan and would also facilitate
marketing efforts for the Funds. When the Funds started in the early 1980's,
J.P. Morgan's U.S. investment operations were conducted by MGT. In response to
developments in the market for asset management services and in light of
evolving regulatory requirements and their respective franchises, MGT continues
to be responsible for investments for Morgan's individual private banking
clients and investment products designed for their use, and JPMIM advises
institutional clients. In light of easing regulatory considerations and because
mutual funds are similar to institutional accounts, J.P. Morgan is now proposing
that the advisor be changed to JPMIM.
The proposed changes would also facilitate marketing efforts designed to
enable your Funds to grow. As you know, the names of the Trusts and the Funds
thereof were recently changed to J.P. Morgan and J.P. Morgan Institutional Funds
to take greater advantage of the name recognition accorded to J.P. Morgan and as
a direct way of advising investors and potential investors of J.P. Morgan's
roles in connection with these Funds. These marketing efforts could, however, be
advanced even further with JPMIM as the advisor. The name JPMIM emphasizes the
investment management business of the advisor and, because many potential
investors access information about mutual funds by reference to the investment
advisor, those familiar with J.P. Morgan, and not MGT, would assume there are no
available investment companies managed by J.P. Morgan.
There are, of course, some differences between MGT and JPMIM. At December
31, 1997, JPMIM's capital was approximately $90 million, while MGT's at that
date was over $10 billion. This difference relates to the substantial
differences in the overall businesses in which the two affiliates are engaged.
In addition, the two entities are subject to different regulatory requirements.
J.P. Morgan has advised the Trustees that it does not expect these differences,
discussed further below, to have any effect on Fund shareholders.
The amount of an advisor's capital generally does not affect a fund's
operations. There is no minimum capital required by law specifically for fund
advisors, although MGT as a bank is subject to minimum capital requirements.
Capital becomes relevant only when adverse financial developments or the
incurrence of liabilities may adversely affect the ability of an advisor to
operate its business. J.P. Morgan does not expect these circumstances to arise.
The other difference between the Funds'/Portfolios' having JPMIM as advisor
instead of MGT relates to technical regulatory requirements. JPMIM is an SEC
registered investment adviser subject to the Investment Advisers Act of 1940
(the "Advisers Act"); as a bank affiliate, it is also subject to a variety of
federal banking law provisions. MGT as a bank is not subject to the Advisers
Act, but is subject to comprehensive regulation under federal and state banking
laws. Although these regulatory schemes differ in their particulars and are
enforced by separate regulatory bodies, their substance is so similar that a
change in advisor to JPMIM is not expected to have any effect on Fund operations
or shareholders. In any event, the provisions of the 1940 Act applicable to the
relationship between the Funds and their advisor (whether MGT or JPMIM) are
unaffected by the identity of the advisor.
The directors and principal executive officers of JPMIM and their principal
occupations are listed below.
Name and Address* Position with JPMIM and Principal Occupation
C. Nicholas Potter hairman of the Board], and Retired Managing Director.
Kenneth W. Anderson Director and Managing Director.**
Robert A. Anselmi Director, Managing Director** and Secretary.
Jean L. Brunel Director.
William L. Cobb, Jr. Vice Chairman, Director and Managing Director.**
Michael R. Granito Director and Managing Director.**
Thomas M. Luddy Director and Managing Director.**
Michael E. Patterson [Chairman], Director and Managing Director.**
60 Wall Street
New York, NY 10260
Keith M. Schappert President, Director and Managing Director.**
* Unless otherwise noted, the address for each is 522 Fifth Avenue, New York, NY
10036. ** Managing Director is an officer's title, and those who hold it are not
necessarily directors of JPMIM.
The directors and principal executive officers of MGT, their addresses and their
principal occupations are set forth in Exhibit [__].
Required Vote
With respect to each Fund of JPM Series Trust, the affirmative vote of the
holders of a 1940 Act Majority is required to approve for such Fund the proposed
change of investment advisor from MGT to JPMIM.
With respect to each Portfolio, the affirmative vote of the holders of a
1940 Act Majority (based on the aggregate shares of all Feeder Funds that invest
in such Portfolio) is required to approve for such Portfolio the proposed change
of investment advisor from MGT to JPMIM.
The Trustees of each Trust recommend that shareholders vote to approve
Proposal 4.
PROPOSAL FIVE
AMENDMENT OF THE DECLARATIONS OF TRUST OF J.P. MORGAN FUNDS AND J.P. MORGAN
INSTITUTIONAL FUNDS TO PROVIDE
DOLLAR-BASED VOTING RIGHTS FOR SHAREHOLDERS
The Board of Trustees has approved, and recommends that shareholders of
J.P. Morgan Funds and J.P. Morgan Institutional Funds approve, a proposal to
amend Article VI, Section 6.8 of each Trust's Declaration of Trust (see Exhibit
D). The amendment would provide voting rights based on a shareholder's total
dollar interest in a Fund (dollar-based voting), rather than on the number of
shares owned, for all shareholder votes for a Fund. As a result, voting power
would be allocated in proportion to the value of each shareholder's investment.
Currently, under these Trusts' Declarations of Trust, each share is
entitled to one vote, regardless of the relative value of the shares of each
Trust. The original intent of the one-share, one-vote provision was to provide
equitable voting rights to all shareholders as required by the 1940 Act. In the
case where a Trust has several funds, voting rights may have become
disproportionate since the net asset value per share ("NAV") of the separate
funds generally diverge over time.
The Staff of the Securities and Exchange Commission ("SEC") has issued a
"no-action" letter permitting a trust to seek shareholder approval of a
dollar-based voting system. The proposed amendment will comply with the
conditions stated in the no-action letter. If approved, the amendment would
provide a more equitable distribution of voting rights for certain votes than
the one-share, one-vote system currently in effect. The voting power of each
shareholder would be commensurate with the value of the shareholder's dollar
investment rather than with the number of shares held. Under the current voting
provisions, an investment in a fund with a lower NAV may have significantly
greater voting power than the same dollar amount invested in a fund with a
higher NAV. The table below shows a hypothetical example of this.
$1,000 investment in
Fund Net Asset Value terms of number of shares
A $ 10.00 100.00
B $ 7.57 132.100
C $ 10.93 91.491
D $ 1.00 1,000.00
For example, Fund D shareholders would have ten times the voting power
of Fund A shareholders, because a $1,000 investment in Fund D would buy ten
times as many shares as a $1,000 investment in Fund A. Accordingly, a one-share,
one-vote system may provide certain shareholders with a disproportionate ability
to affect the vote relative to shareholders of other funds in the trust. If
dollar-based voting had been in effect, each shareholder would have had 1,000
voting shares. Their voting power would be proportionate to their economic
interest, which J.P. Morgan believes is a more equitable result, and which is
the result with respect to a typical corporation where each voting share
generally has an equal market price.
Article VI, Section 6.8 sets forth the method of calculating voting rights
for all shareholder votes for J.P. Morgan Funds and J.P. Morgan Institutional
Funds. If approved, Article VI, Section 6.8 will be amended as in Exhibit D
(material to be added is underlined and material to be deleted is [bracketed]).
Recommendation of Trustees
The Trustees of J.P. Morgan Funds and J.P. Morgan Institutional Funds have
concluded that the proposal will benefit the Trusts and its shareholders. At the
meetings of the Trustees called for the purpose on April 23, 1998, the Trustees
of each Trust voted for the approval of the amendments to the Declaration of
Trust. The amendment will become effective upon shareholder approval. If the
proposal is not approved by the shareholders of a Trust, Article VI, Section 6.8
of such Trust's Declaration of Trust will remain unchanged.
Required Vote
The affirmative vote of the holders present at the Meeting, in person or by
proxy, holding more than 50% of the voting securities of a Trust present at the
Meeting is required to approve the amendment to such Trust's Declaration of
Trust to provide dollar-based voting rights for each shareholder of the Trust.
The Trustees recommend that shareholders vote to approve
Proposal 5.
PROPOSAL SIX
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS OF THE TRUSTS
The 1940 Act requires that every registered investment company be audited
at least once a year by independent accountants selected by its Trustees,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act). The 1940 Act also requires that the selection be
submitted for ratification by shareholders at their next meeting following the
selection.
The Boards of Trustees of J.P. Morgan Funds, J.P. Morgan Institutional
Funds and J.P. Morgan Series Trust (and the Board of Trustees of the Managers
Fund, as it relates to the Portfolio) recommend that the shareholders of each
Trust ratify the selection of Price Waterhouse LLP as independent accountants.
Their selection was approved by the vote, cast in person, of a majority of the
Trustees of each Trust. Price Waterhouse LLP has audited the accounts of each
Trust since 1992 and does not have any direct financial interest or any material
indirect interest in any Trust, MGT or JPMIM. A representative of Price
Waterhouse LLP is expected to attend the Meeting and to have the opportunity to
make a statement and to respond to appropriate questions from the shareholders.
Required Vote
The affirmative vote of the holders present at the Meeting, in person or by
proxy, holding more than 50% of the voting securities of a Trust present at the
Meeting is required to ratify the selection of the independent accountants for
the Trust.
The Trustees of each Trust recommend that shareholders vote to approve
Proposal 6.
VOTING INFORMATION CONCERNING THE MEETING
Only shareholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournment
thereof. The holders of one third of the shares outstanding at the close of
business on the Record Date present in person or represented by proxy will
constitute a quorum for the Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Proxies that reflect abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote or (ii) the broker or nominee
does not have discretionary voting power on a particular matter) will be counted
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum; however, abstentions and broker non-votes will have the
effect of a vote against the proposal. A proxy may be revoked at any time before
the Meeting by written notice to the Secretary of the appropriate Trust or the
Managers Funds, as the case may be, at the mailing address set forth on the
cover page of this proxy statement, or by personally delivering your revocation
to the Secretary at the Meeting. Unless revoked, all valid proxies will be voted
in accordance with the specifications thereon or, in the absence of such
specifications, FOR the proposals described in this proxy statement.
With respect to each Fund other than the Series Trust's Funds, each full
share outstanding as of the Record Date is entitled to one vote, and each
fractional share outstanding is entitled to a proportionate share of one vote.
With respect to shares of the J.P. Morgan Series Trust, each dollar of net asset
value (number of J.P. Morgan Series Trust shares of a class owned times its net
asset value per such share) shall be entitled to one vote on any matter on which
such shares are entitled to vote, and each fractional dollar amount shall be
entitled to a proportionate fractional vote. The number of shares of each Fund
outstanding (and the net asset value per share with respect to each class of
shares of J.P. Morgan Series Trust's Funds) as of the close of business on the
Record Date is set forth in Exhibit E.
Proxy solicitations will be made primarily by mail, but proxy solicitations
may also be made by telephone, telegraph or personal solicitations conducted by
officers and employees of Morgan, its affiliates or other representatives of the
Funds, including, in the case of the Managers Fund, by representatives of the
Managers Funds (who will not be paid for their solicitation activities). D.F.
King & Co., Inc. ("DF King") and its agents have been engaged by the Funds to
assist in soliciting proxies, and may call shareholders to ask if they would be
willing to authorize DF King to execute a proxy on their behalf authorizing the
voting of their shares in accordance with the instructions given over the
telephone by the shareholders. In addition, shareholders may call DF King at
1-800-290-6429 between the hours of 8:00 a.m. and 8:00 p.m. eastern time in
order to initiate the processing of their votes by telephone. DF King will
utilize a telephone vote solicitation procedure designed to authenticate the
shareholder's identity by asking the shareholder to provide the last four digits
of his or her social security number (in the case of an individual) or taxpayer
identification number (in the case of an entity). The shareholder's telephone
instructions will be implemented in a proxy executed by DF King and a
confirmation will be sent to the shareholder to ensure that the vote has been
authorized in accordance with the shareholder's instructions. Although a
shareholder's vote may be solicited and cast in this manner, each shareholder
will receive a copy of this proxy statement and may vote by mail using the
enclosed proxy card.
In the event that a quorum is not present at the Meeting, or sufficient
votes to approve a proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. In determining whether to adjourn the Meeting, the following factors
may be considered: the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
No Fund is required or intends to hold annual or other periodic meetings of
shareholders except as may be required by the 1940 Act. If any change proposed
in this proxy statement is not approved by shareholders of a Fund, the current
restriction, limitation or policy will remain in place as to such Fund.
Shareholders wishing to submit proposals for consideration for inclusion in a
proxy statement for a subsequent shareholder meeting should send their written
proposals to the Secretary of the Trust or the Managers Funds, as the case may
be, at the address set forth on the cover of this proxy statement such that they
will be received by the Trust or the Managers Funds, respectively, in a
reasonable period of time prior to any such meeting.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise each Fund whether other persons are beneficial owners of shares
for which proxies are being solicited and, if so, the number of copies of this
proxy statement needed to supply copies to the beneficial owners of the
respective shares.
ADDITIONAL INFORMATION
Payment of Expenses
[Each Fund will pay its proportionate share of expenses of the preparation,
printing and mailing to its shareholders of the proxy, accompanying notice of
meeting and this proxy statement and any supplementary solicitation of its
shareholders.]
It is expected that the cost of retaining DF King to assist in the proxy
solicitation process will not exceed [$ , , ] which cost will be borne by [ - ].
Beneficial Ownership
Exhibit F contains information about the beneficial ownership by
shareholders of five percent or more of each Fund's outstanding Shares, as of
March 31, 1998. On that date, the existing Trustees and officers of the Funds,
together as a group, "beneficially owned" [less than ___ percent] of each Fund's
outstanding Shares.
The term "beneficial ownership" is as defined under Section 13(d) of the
1934 Act. The information as to beneficial ownership is based on statements
furnished to each Fund by the existing Trustees, officers of such Fund, and/or
on records of [________________].
<PAGE>
Annual and Semi-Annual Reports to Shareholders
Each of the Funds will furnish, without charge, a copy of its most recent
annual report (and most recent semi-annual report succeeding the annual report,
if any) to a shareholder of the Fund upon request. Any such request should be
directed to J.P. Morgan Funds Services at (800) 521-5411 for J.P. Morgan Funds,
(800) 766-7722 for J.P. Morgan Institutional Funds, [(800)_______] for J.P.
Morgan Series Trust and (800) 835-3879 for the Managers Fund.
OTHER BUSINESS
The Boards do not intend to present any other business at the Meeting. If,
however, any other matters are properly brought before the Meeting, the persons
named in the accompanying proxy card(s) will vote thereon in accordance with
their judgment.
THE TRUSTEES RECOMMEND APPROVAL OF EACH PROPOSAL AND ANY UNMARKED PROXIES
WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE
PROPOSALS.
[May ___ , 1998]
<PAGE>
NY12531:227598.7 A-2
EXHIBIT A
PROPOSED STANDARDIZED FUNDAMENTAL RESTRICTIONS
1. Diversification of Investments
`The Fund may not make any investment inconsistent with the Fund's
classification as a diversified investment company under the Investment
Company Act of 1940.
2. Concentration of a Fund's Assets in a Particular Industry
The Fund may not purchase any security which would cause the Fund to
concentrate its investments in the securities of issuers primarily engaged
in any particular industry except as permitted by the SEC (except that in
the case of J.P. Morgan Prime Money Market Fund and J.P. Morgan
Institutional Prime Money Market and Service Prime Money Market Funds, this
restriction does not apply to instruments considered to be domestic bank
money instruments).
3. Issuance of Senior Securities
The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940 or any rule, order or interpretation
thereunder.
4. Borrowing
The Fund may not borrow money, except to the extent permitted by applicable
law.
5. Underwriting
The Fund may not 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 1933 Act.
6. Investment in Real Estate
The Fund may not purchase or sell real estate, except that, to the extent
permitted by applicable law, the Fund may (a) invest in securities directly
or indirectly secured by real estate, (b) invest in securities issued by
issuers that invest in real estate, and (c) in the case of the fixed income
funds and J.P. Morgan Diversified and J.P. Morgan Institutional Diversified
Funds make direct investments in mortgages.
7. Commodities
The Fund may not purchase or sell commodities or commodity
contracts unless acquired as a result of ownership of
securities or other instruments issued by persons that
purchase or sell commodities or commodities contracts; but
this shall not prevent the Fund from purchasing, selling and
entering into financial futures contracts (including futures
contracts on indices of securities, interest rates and
currencies), options on financial futures contracts (including
futures contracts on indices of securities, interest rates and
currencies), warrants, swaps, forward contracts, foreign
currency spot and forward contracts or other derivative
instruments that are not related to physical commodities.
8. Lending
The Fund may make loans to other persons, in accordance with the Fund's
investment objectives and policies and to the extent permitted by
applicable law.
<PAGE>
NY12531:227598.7
PROPOSED STANDARDIZED NONFUNDAMENTAL RESTRICTIONS
FOR THE MONEY MARKET FUNDS
The Fund may not acquire any illiquid 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 10% of the market value of the Fund's total
assets would be in investments which are illiquid.
The Fund may not purchase securities on margin, make short
sales of securities, or maintain a short position, provided that this
restriction shall not be deemed to be applicable to the purchase or
sale of when-issued securities or of securities for delayed delivery
securities.
The Fund may not acquire securities of other investment
companies, except as permitted by the 1940 Act or any order pursuant
thereto.
<PAGE>
PROPOSED STANDARDIZED NONFUNDAMENTAL RESTRICTIONS
FOR THE NON-MONEY MARKET FUNDS
The Fund may not acquire any illiquid 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 Fund's net
assets would be in investments which are illiquid.
The Fund may not acquire securities of other investment
companies, except as permitted by the 1940 Act or any order pursuant
thereto.
<PAGE>
NY12531:227598.7
EXHIBIT B
INDEX
Page B-
J.P. Morgan Funds
J.P. Morgan Prime Money Market Fund (JPMPMMF) B-1
J.P. Morgan Tax Exempt Money Market Fund (JPMTEMMF) B-2
J.P. Morgan Federal Money Market Fund (JPMFMMF) B-3
J.P. Morgan Short Term Bond Fund (JPMSTBF) B-5
J.P. Morgan Bond Fund (JPMBF) B-7
J.P. Morgan Tax Exempt Bond Fund (JPMTEBF) B-8
J.P. Morgan New York Total Return Bond Fund (JPMNYTRBF) B-9
J.P. Morgan Diversified Fund (JPMDF) B-10
J.P. Morgan U.S. Equity Fund (JPMUSEF) B-11
J.P. Morgan U.S. Small Company Fund (JPMUSSCF) B-11
J.P. Morgan International Equity Fund (JPMIEF) B-13
J.P. Morgan Emerging Markets Equity Fund (JPMEMEF) B-14
J.P. Morgan European Equity Fund (JPMEEF) B-14
J.P. Morgan Japan Equity Fund (JPMJEF) B-15
J.P. Morgan Disciplined Equity Fund (JPMDEF) B-16
J.P. Morgan International Opportunities Fund (JPMIOF) B-16
J.P. Morgan Global Strategic Income Fund (JPMGSIF) B-16
J.P. Morgan Emerging Markets Debt Fund (JPMEMDF) B-18
J.P. Morgan U.S. Small Company Opportunities Fund (JPMUSSCOF) B-18
J.P. Morgan Institutional Funds
J.P. Morgan Institutional Prime Money Market Fund (JPMIPMMF) B-1
J.P. Morgan Institutional Service Prime Money Market Fund
(JPMISPMMF) B-1
J.P. Morgan Institutional Tax Exempt Money Market Fund
(JPMITEMMF) B-2
J.P. Morgan Institutional Service Tax Exempt Money Market Fund
(JPMISTEMMF) B-2
J.P. Morgan Institutional Federal Money Market Fund (JPMIFMMF) B-3
J.P. Morgan Institutional Service Federal Money Market Fund
(JPMISFMMF) B-3
J.P. Morgan Institutional Treasury Money Market Fund (JPMITMMF) B-4
J.P. Morgan Institutional Short Term Bond Fund (JPMISTBF) B-5
J.P. Morgan Institutional Bond Fund (JPMIBF) B-7
J.P. Morgan Institutional Bond Fund - Ultra (JPMIBF-U) B-7
J.P. Morgan Institutional Tax Exempt Bond Fund (JPMITEBF) B-8
J.P. Morgan Institutional New York Total Return Bond Fund
(JPMINYTRBF) B-9
J.P. Morgan Institutional Diversified Fund (JPMIDF) B-10
J.P. Morgan Institutional U.S. Equity Fund (JPMIUSEF) B-11
J.P. Morgan Institutional U.S. Small Company Fund (JPMIUSSCF) B-11
J.P. Morgan Institutional International Equity Fund (JPMIIEF) B-13
J.P. Morgan Institutional Emerging Markets Equity Fund (JPMIEMEF) B-14
J.P. Morgan Institutional European Equity Fund (JPMIEEF) B-14
J.P. Morgan Institutional International Bond Fund (JPMIIBF) B-15
J.P. Morgan Institutional Japan Equity Fund (JPMIJEF) B-15
J.P. Morgan Institutional Disciplined Equity Fund (JPMIDEF) B-16
J.P. Morgan Institutional International Opportunities Fund B-16
(JPMIIOF)
J.P. Morgan Institutional Global Strategic Income Fund (JPMIGSIF) B-16
J.P. Morgan Series Trust
The Tax Aware U.S. Equity Fund (JPMSTAUSEF) B-19
The Tax Aware Disciplined Equity Fund (JPMSTADEF) B-19
The California Bond Fund (JPMSCBF) B-19
The Managers Fund B-1
<PAGE>
EXHIBIT B
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
"S": Fundamental Restriction to be Standardized
"NF": Fundamental Restriction to be Reclassified as Non-Fundamental
"E": Fundamental Restriction to be Eliminated
"A": Fundamental Restriction to be Reclassified as Non-Fundamental and Amended
<PAGE>
NY12531:227598.7 B-21
JPMPMMF, JPMIPMMF, JPMISPMMF and the Managers Fund may not:
NF 1. Acquire any illiquid 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 10% of the market value of the Fund's total assets would be in
investments which are illiquid;
E 2. Enter into reverse repurchase agreements exceeding in the
aggregate one-third of the market value of the Fund's total assets,
less liabilities other than obligations created by reverse
repurchase agreements;
S 3. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of the Fund's
total assets, taken at cost, at the time of such borrowing. Mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 10% of the value of the Fund's net assets at the time of
such borrowing. The Fund will not purchase securities while borrowings exceed 5%
of the Fund's total assets; provided, however, that the Fund may increase its
interest in an open-end management investment company with the same investment
objective and restrictions as the Fund while such borrowings are outstanding.
This borrowing provision is included to facilitate the orderly sale of portfolio
securities, for example, in the event of abnormally heavy redemption requests,
and is not for investment purposes and shall not apply to reverse repurchase
agreements;
S 4. Purchase the securities or other obligations of any one issuer
if, immediately after such purchase, more than 5% of the value of
the Fund's total assets would be invested in securities or other
obligations of any one such issuer; provided, however, that the Fund
may invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund. This limitation shall not apply to issues
of the U.S. Government, its agencies or instrumentalities and to
permitted investments of up to 25% of the Fund's total assets;
S 5. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately after
such purchase, the value of its investment in such industry would exceed 25% of
the value of the Fund's total assets; provided, however, that the Fund may
invest all or part of its investable assets in an open-end management investment
company with the same investment objective and restrictions as the Fund. For
purposes of industry concentration, there is no percentage limitation with
respect to investments in U.S. Government securities, negotiable certificates of
deposit, time deposits, and bankers' acceptances of U.S. branches of U.S. banks;
S 6. Make loans, except through purchasing or holding debt
obligations, or entering into repurchase agreements, or loans of
portfolio securities in accordance with the Fund's investment
objective and policies;
S 7. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real estate, commodities, or commodity
contracts or interests in oil, gas, or mineral exploration or
development programs. However, the Fund may purchase bonds or
commercial paper issued by companies which invest in real estate or
interests therein including real estate investment trusts;
NF 8. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not
be deemed to be applicable to the purchase or sale of when-issued
securities or of securities for delivery at a future date;
NF 9. Acquire securities of other investment companies, except as permitted
by the 1940 Act;
S 10. Act as an underwriter of securities; or
S 11. Issue senior securities, except as may otherwise be permitted by
the foregoing investment restrictions or under the 1940 Act or any
rule, order or interpretation thereunder.
JPMTEMMF, JPMITEMMF and JPMISTEMMF may not:
S 1. Borrow money, except from banks for temporary, extraordinary or
emergency purposes and then only in amounts up to 10% of the value of the Fund's
total assets, taken at cost at the time of such borrowing; or mortgage, pledge
or hypothecate any assets except in connection with any such borrowing in
amounts up to 10% of the value of the Fund's net assets at the time of such
borrowing. The Fund will not purchase securities while borrowings exceed 5% of
the Fund's total assets, provided, however, that the Fund may increase its
interest in an open-end management investment company with the same investment
objective and restrictions as the Fund's while such borrowings are outstanding.
This borrowing provision, for example, facilitates the orderly sale of portfolio
securities in the event of abnormally heavy redemption requests or in the event
of redemption requests during periods of tight market supply. This provision is
not for leveraging purposes;
S 2. Invest more than 25% of its total assets in securities of
governmental units located in any one state, territory, or
possession of the United States. The Fund may invest more then 25%
of its total assets in industrial development and pollution control
obligations whether or not the users of facilities financed by such
obligations are in the same industry;1
E 3. Purchase industrial revenue bonds if, as a result of such
purchase, more than 5% of total Fund assets would be invested in
industrial revenue bonds where payment of principal and interest are
the responsibility of companies with fewer than three years of
operating history;
S 4. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer, provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. Each state and each
political subdivision, agency or instrumentality of such state and each
multi-state agency of which such state is a member will be a separate issuer if
the security is backed only by the assets and revenues of that issuer. If the
security is guaranteed by another entity, the guarantor will be deemed to be the
issuer. This limitation shall not apply to securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or to permitted
investments of up to 25% of the Fund's total assets;2
S 5. Make loans, except through the purchase or holding of debt
obligations, repurchase agreements, or loans of portfolio securities
in accordance with the Fund's investment objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof except to the extent that securities subject to
a demand obligation, stand-by commitments and puts may be purchased;
real estate; commodities; commodity contracts; or interests in oil,
gas, or mineral exploration or development programs. However, the
Fund may purchase municipal bonds, notes or commercial paper secured
by interests in real estate;
NF 7. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not
be deemed to be applicable to the purchase or sale of when-issued
securities or of securities for delayed delivery;
NF 8. Acquire securities of other investment companies, except as permitted
by the 1940 Act;
S 9. Act as an underwriter of securities; or
S 10. Issue senior securities, except as may otherwise be permitted by
the foregoing investment restrictions or under the 1940 Act or any
rule, order or interpretation thereunder.
JPMFMMF, JPMIFMMF and JPMISFMMF may not:
S 1. Enter into reverse repurchase agreements which together with any
other borrowing exceeds in the aggregate one-third of the market
value of the Fund's or the Portfolio's total assets, less
liabilities other than the obligations created by reverse repurchase
agreements;
S 2. Borrow money (not including reverse repurchase agreements), except
from banks for temporary or extraordinary or emergency purposes and then only in
amounts up to 10% of the value of the Fund's or the Portfolio's total assets,
taken at cost at the time of such borrowing (and provided that such borrowings
and reverse repurchase agreements do not exceed in the aggregate one-third of
the market value of the Fund's and the Portfolio's total assets less liabilities
other than the obligations represented by the bank borrowings and reverse
repurchase agreements). Mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts up to 10% of the value of the
Fund's or the Portfolio's net assets at the time of such borrowing. The Fund or
the Portfolio will not purchase securities while borrowings exceed 5% of the
Fund's or the Portfolio's total assets, respectively; provided, however, that
the Fund may increase its interest in an open-end management investment company
with the same investment objective and restrictions as the Fund while such
borrowings are outstanding. This borrowing provision is included to facilitate
the orderly sale of portfolio securities, for example, in the event of
abnormally heavy redemption requests, and is not for investment purposes;
S 3. Purchase the securities or other obligations of any one issuer
if, immediately after such purchase, more than 5% of the value of
the Fund's or the Portfolio's total assets would be invested in
securities or other obligations of any one such issuer; provided,
however, that the Fund may invest all or part of its investable
assets in an open-end management investment company with the same
investment objective and restrictions as the Fund. This limitation
also shall not apply to issues of the U.S. Government and repurchase
agreements related thereto;
S 4. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately after
such purchase, the value of its investment in such industry would exceed 25% of
the value of the Fund's or the Portfolio's total assets; provided, however, that
the Fund may invest all or part of its assets in an open-end management
investment company with the same investment objective and restrictions as the
Fund. For purposes of industry concentration, there is no percentage limitation
with respect to investments in U.S. Government securities and repurchase
agreements related thereto;
S 5. Make loans, except through purchasing or holding debt
obligations, repurchase agreements, or loans of portfolio securities
in accordance with the Fund's or the Portfolio's investment
objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real estate, commodities, or commodity
contracts or interests in oil, gas, or mineral exploration or
development programs;
NF 7. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not
be deemed to be applicable to the purchase or sale of when-issued
securities or of securities for delivery at a future date;
NF 8. Acquire securities of other investment companies, except as
permitted by the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of
the Fund's assets in an open-end management investment company with
the same investment objective and restrictions as the Fund;
S 9. Act as an underwriter of securities; or
S 10. Issue senior securities, except as may otherwise be permitted by
the foregoing investment restrictions or under the 1940 Act or any
rule, order or interpretation thereunder.
JPMITMMF may not:
S 1.Enter into reverse repurchase agreements which together with any
other borrowing exceed in the aggregate one-third of the market
value of the Fund's or the Portfolio's total assets, less
liabilities other than the obligations created by reverse repurchase
agreements;
S 2. Borrow money, except in amounts not to exceed one third of the Fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings) (i) from banks for temporary or short-term purposes or for the
clearance of transactions, (ii) in connection with the redemption of Fund shares
or to finance failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets, (iii) in order to fulfill
commitments or plans to purchase additional securities pending the anticipated
sale of other portfolio securities or assets and (iv) pursuant to reverse
repurchase agreements entered into by the Fund.3
S 3. Purchase the securities or other obligations of any one issuer
if, immediately after such purchase, more than 5% of the value of
the Fund's or the Portfolio's total assets would be invested in
securities or other obligations of any one such issuer; provided,
however, that the Fund may invest all or part of its investable
assets in an open-end management investment company with the same
investment objective and restrictions as the Fund. This limitation
also shall not apply to issues of the U.S. Government and repurchase
agreements related thereto;
S 4. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately after
such purchase, the value of its investment in such industry would exceed 25% of
the value of the Fund's or the Portfolio's total assets; provided, however, that
the Fund may invest all or part of its assets in an open-end management
investment company with the same investment objective and restrictions as the
Fund. For purposes of industry concentration, there is no percentage limitation
with respect to investments in U.S. Government securities and repurchase
agreements related thereto;
S 5. Make loans, except through purchasing or holding debt
obligations, repurchase agreements, or loans of portfolio securities
in accordance with the Fund's or the Portfolio's investment
objective and policies (see "Investment Objectives and Policies");
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real estate, commodities, or commodity
contracts or interests in oil, gas, or mineral exploration or
development programs;
NF 7. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not
be deemed to be applicable to the purchase or sale of when-issued
securities or of securities for delivery at a future date;
NF 8. Acquire securities of other investment companies, except as
permitted by the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of
the Fund's assets in an open-end management investment company with
the same investment objective and restrictions as the Fund;
S 9. Act as an underwriter of securities; or
S 10. Issue senior securities, except as may otherwise be permitted by
the foregoing investment restrictions or under the 1940 Act or any
rule, order or interpretation thereunder.
JPMSTBF and JPMISTBF may not:
S 1. Purchase securities or other obligations of issuers conducting
their principal business activity in the same industry if,
immediately after such purchase the value of its investments in such
industry would exceed 25% of the value of the Fund's total assets;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with
the same investment objective and restrictions as the Fund's. For
purposes of industry concentration, there is no percentage
limitation with respect to investments in U.S. Government
securities;
S 2. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer; provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. This limitation shall not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or to permitted investments of up to 25% of the Fund's total
assets;
S 3. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. This limitation shall not apply to
permitted investments of up to 25% of the Fund's total assets;
S 4. Borrow money (not including reverse repurchase agreements), except
from banks for temporary or extraordinary or emergency purposes and then only in
amounts up to 30% of the value of the Fund's or the Portfolio's total assets,
taken at cost at the time of such borrowing (and provided that such borrowings
and reverse repurchase agreements do not exceed in the aggregate one-third of
the market value of the Fund's and the Portfolio's total assets less liabilities
other than the obligations represented by the bank borrowings and reverse
repurchase agreements). The Fund will not mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts not to exceed
30% of the value of the Fund's or the Portfolio's net assets at the time of such
borrowing. The Fund or the Portfolio will not purchase securities while
borrowings exceed 5% of the Fund's total assets; provided, however, that the
Fund may increase its interest in an open-end management investment company with
the same investment objective and restrictions as the Fund's while such
borrowings are outstanding. Collateral arrangements for premium and margin
payments in connection with the Fund's hedging activities are not deemed to be a
pledge of assets;
S 5. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is permitted
to incur pursuant to Investment Restriction No. 4 and except that the Fund may
enter into reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-third
of the market value of the Fund's total assets, less liabilities other than
obligations created by reverse repurchase agreements. The Fund's arrangements in
connection with its hedging activities as described in "Investment Objectives
and Policies" section of the Statement of Additional Information shall not be
considered senior securities for purposes hereof;
S 6. Make loans, except through the purchase or holding of debt
obligations (including privately placed securities) or the entering
into of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 7. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts, except for the Fund's
interests in hedging activities as described under "Investment Objectives and
Policies" section of the Statement of Additional Information; or interests in
oil, gas, or mineral exploration or development programs. However, the Fund may
purchase securities or commercial paper issued by companies which invest in real
estate or interests therein, including real estate investment trusts, and
purchase instruments secured by real estate or interests therein;
A 8. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such
short-term credit as necessary for the clearance of purchases and
sales of securities; provided that this restriction shall not be
deemed to be applicable to the purchase or sale of when-issued
securities or delayed delivery securities;
A 9. Acquire securities of other investment companies, except as
permitted by the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of
the Fund's assets in an open-end management investment company with
the same investment objective and restrictions as the Fund; or
S 10. Act as an underwriter of securities.
JPMBF, JPMIBF and JPMIBF-U may not:
S 1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 30% of the value of the Fund's total
assets, taken at cost at the time of such borrowing and except in connection
with reverse repurchase agreements permitted by Investment Restriction No. 8.
Mortgage, pledge, or hypothecate any assets except in connection with any such
borrowing in amounts up to 30% of the value of the Fund's net assets at the time
of such borrowing. The Fund will not purchase securities while borrowings
(including reverse repurchase agreements) exceed 5% of the Fund's total assets;
provided, however, that the Fund may increase its interest in an open-end
management investment company with the same investment objective and
restrictions as the Fund's while such borrowings are outstanding. This borrowing
provision facilitates the orderly sale of portfolio securities, for example, in
the event of abnormally heavy redemption requests. This provision is not for
investment purposes. Collateral arrangements for premium and margin payments in
connection with the Fund's hedging activities are not deemed to be a pledge of
assets;
S 2. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer; provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. This limitation shall not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or to permitted investments of up to 25% of the Fund's total
assets;
S 3. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. This limitation shall not apply to
permitted investments of up to 25% of the Fund's total assets;
S 4. Purchase securities or other obligations of issuers conducting
their principal business activity in the same industry if,
immediately after such purchase the value of its investments in such
industry would exceed 25% of the value of the Fund's total assets;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with
the same investment objective and restrictions as the Fund's. For
purposes of industry concentration, there is no percentage
limitation with respect to investments in U.S. Government
securities;
S 5. Make loans, except through the purchase or holding of debt
obligations (including privately placed securities) or the entering
into of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real estate, commodities, commodity contracts,
except for the Fund's interest in hedging activities as described
under "Investment Objectives and Policies" section of the Statement
of Additional Information; or interests in oil, gas, or mineral
exploration or development programs. However, the Fund may purchase
debt obligations secured by interests in real estate or issued by
companies which invest in real estate or interests therein including
real estate investment trusts;
A 7. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except in the course of the
Fund's hedging activities, unless at all times when a short position
is open the Fund owns an equal amount of such securities, provided
that this restriction shall not be deemed to be applicable to the
purchase or sale of when-issued securities or delayed delivery
securities;
S 8. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is permitted
to incur pursuant to Investment Restriction No. 1 and except that the Fund may
enter into reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-third
of the market value of the Fund's total assets, less liabilities other than
obligations created by reverse repurchase agreements. The Fund's arrangements in
connection with its hedging activities as described in "Investment Objectives
and Policies" section of the Statement of Additional Information shall not be
considered senior securities for purposes hereof;
NF 9. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or
S 10. Act as an underwriter of securities.
JPMTEBF and JPMITEBF may not:
S 1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 10% of the value of the Fund's total
assets, taken at cost at the time of such borrowing; or mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing in amounts
up to 10% of the value of the Fund's net assets at the time of such borrowing.
The Fund will not purchase securities while borrowings exceed 5% of the Fund's
total assets; provided, however, that the Fund may increase its interest in an
open-end management investment company with the same investment objective and
restrictions as the Fund's while such borrowings are outstanding. This borrowing
provision facilitates the orderly sale of portfolio securities, for example, in
the event of abnormally heavy redemption requests. This provision is not for
investment purposes. Collateral arrangements for premium and margin payments in
connection with the Fund's hedging activities are not deemed to be a pledge of
assets;
S 2. Purchase securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer; provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. Each state and each
political subdivision, agency or instrumentality of such state and each
multi-state agency of which such state is a member will be a separate issuer if
the security is backed only by the assets and revenue of that issuer. If the
security is guaranteed by another entity, the guarantor will be deemed to be the
issuer.5 This limitation shall not apply to securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or to permitted
investments of up to 25% of the Fund's total assets;
S 3. Invest more than 25% of its total assets in securities of
governmental units located in any one state, territory, or
possession of the United States. The Fund may invest more than 25%
of its total assets in industrial developments and pollution control
obligations whether or not the users of facilities financed by such
obligations are in that same industry;6
E 4. Purchase industrial revenue bonds if, as a result of such
purchase, more than 5% of total Fund assets would be invested in
industrial revenue bonds where payment of principal and interest are
the responsibility of companies with fewer than three years of
operating history (including predecessors);
S 5. Make loans, except through the purchase or holding of debt
obligations (including privately placed securities) or the entering
into of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof except to the extent that securities subject to
a demand obligation, stand-by commitments and puts may be purchased
; real estate; commodities; commodity contracts, except for the
Fund's interests in hedging activities as described under
"Investment Objectives and Policies" section of the Statement of
Additional Information; or interests in oil, gas, or mineral
exploration or development programs. However, the Fund may purchase
municipal bonds, notes or commercial paper secured by interests in
real estate;
A 7. Purchase securities on margin, make short sales of securities, or
maintain a short position, except in the course of the Fund's
hedging activities, unless at all times when a short position is
open the Fund owns an equal amount of such securities or owns
securities which, without payment of any further consideration, are
convertible into or exchangeable for securities of the same issue
as, and equal in amount to, the securities sold short; provided that
this restriction shall not be deemed to be applicable to the
purchase or sale of when-issued or delayed delivery securities;
S 8. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to
Investment Restriction No. 1. The Fund's arrangements in connection
with its hedging activities as described in "Investment Objectives
and Policies" section of the Statement of Additional Information
shall not be considered senior securities for purposes hereof;
NF 9. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or
S 10. Act as an underwriter of securities.
JPMNYTRBF and JPMINYTRBF may not:
S 1. Purchase any security if, as a result, more than 25% of the value
of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry. This limitation shall not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;
S 2. Borrow money, except that the Fund may (i) borrow money from
banks for temporary or emergency purposes (not for leveraging
purposes) and (ii) enter into reverse repurchase agreements for any
purpose; provided that (i) and (ii) in total do not exceed 33 1/3%
of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). If at any time
any borrowings come to exceed 33 1/3% of the value of the Fund's
total assets, the Fund will reduce its borrowings within three
business days to the extent necessary to comply with the 33 1/3%
limitation;
S 3. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;
S 4. Purchase or sell physical commodities or contracts thereon,
unless acquired as a result of the ownership of securities or
instruments, but the Fund may purchase or sell futures contracts or
options (including options on futures contracts, but excluding
options or futures contracts on physical commodities) and may enter
into foreign currency forward contracts;
S 5. Purchase or sell real estate, but the Fund may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in
real estate;
S 6. Underwrite securities of other issuers, except to the extent the
Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act;
S 7. Issue senior securities, except as permitted under the 1940 Act
or any rule, order or interpretation thereunder; or
NF 8. Notwithstanding any other investment restriction of the Fund, the
Fund may invest all of its investable assets in an open-end
management investment company having the same investment objective
and restrictions as the Fund.
JPMDF and JPMIDF may not:
S 1. Purchase the securities or other obligations of issuers
conducting their principal business activity in the same industry
if, immediately after such purchase the value of its investments in
such industry would exceed 25% of the value of the Fund's total
assets; provided, however, that the Fund may invest all or part of
its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's.
For purposes of industry concentration, there is no percentage
limitation with respect to investments in U.S. Government
securities;
S 2. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer; provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. This limitation shall not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or to permitted investments of up to 25% of the Fund's total
assets;
S 3. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. This limitation shall not apply to
permitted investments of up to 25% of the Fund's total assets;
S 4. Borrow money (not including reverse repurchase agreements), except
from banks for temporary or extraordinary or emergency purposes and then only in
amounts up to 30% of the value of the Fund's or the Portfolio's total assets,
taken at cost at the time of such borrowing (and provided that such borrowings
and reverse repurchase agreements do not exceed in the aggregate one-third of
the market value of the Fund's and the Portfolio's total assets less liabilities
other than the obligations represented by the bank borrowings and reverse
repurchase agreements). The Fund will not mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts not to exceed
30% of the value of the Fund's or the Portfolio's net assets at the time of such
borrowing. The Fund or the Portfolio will not purchase securities while
borrowings exceed 5% of the Fund's total assets; provided, however, that the
Fund may increase its interest in an open-end management investment company with
the same investment objective and restrictions as the Fund's while such
borrowings are outstanding. This borrowing provision is included to facilitate
the orderly sale of portfolio securities, for example, in the event of
abnormally heavy redemption requests, and is not for investment purposes.
Collateral arrangements for premium and margin payments in connection with the
Fund's use of futures contracts and options are not deemed to be a pledge of
assets;
S 5. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is permitted
to incur pursuant to Investment Restriction No. 4 and except that the Fund may
enter into reverse repurchase agreements, provided that the aggregate of senior
securities, including reverse repurchase agreements, shall not exceed one-third
of the market value of the Fund's total assets, less liabilities other than
obligations created by reverse repurchase agreements. The Fund's arrangements in
connection with its use of futures contracts and options shall not be considered
senior securities for purposes hereof;
S 6. Make loans, except through the purchase or holding of debt
obligations (including privately placed securities), or the entering
into of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 7. Purchase or sell commodities or commodity contracts, but this
restriction shall not prohibit the Fund from purchasing or selling futures
contracts or options (including options on futures contracts, but excluding
options or futures contracts on physical commodities) or entering into foreign
currency forward contracts; or purchase or sell real estate or interests in oil,
gas, or mineral exploration or development programs. However, the Fund may
purchase securities or commercial paper issued by companies which invest in real
estate or interests therein, including real estate investment trusts, and
purchase instruments secured by real estate or interests therein;
A 8. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such short
term credit as necessary for the clearance of purchases and sales of
securities, provided that this restriction shall not be deemed to be
applicable to the purchase or sale of when-issued securities or
delayed delivery securities or to restrict the Fund's use of futures
contracts or options;
NF 9. Acquire securities of other investment companies, except as
permitted by the 1940 Act or in connection with a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange; provided, however, that nothing in this investment
restriction shall prevent the Trust from investing all or part of
the Fund's assets in an open-end management investment company with
the same investment objective and restrictions as the Fund; or
S 10. Act as an underwriter of securities.
Each of the JPMUSEF, JPMIUSEF, JPMUSSCF and JPMIUSSCF may not:
S 1. Purchase the securities or other obligations of issuers
conducting their principal business activity in the same industry
if, immediately after such purchase the value of its investments in
such industry would exceed 25% of the value of the Fund's total
assets; provided, however, that the Fund may invest all or part of
its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's.
For purposes of industry concentration, there is no percentage
limitation with respect to investments in U.S. Government
securities;
S 2. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of
the Fund's total assets, taken at cost, at the time of such
borrowing. Mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not to exceed 10%
of the value of the Fund's net assets at the time of such borrowing.
will not purchase securities while borrowings exceed 5% of the Fund's
total assets; provided, however, that the Fund may increase its
interest in an open-end management investment company with the same
investment objective and restrictions as the Fund's while such
borrowings are outstanding. This borrowing provision is included to
facilitate the orderly sale of portfolio securities, for example, in
the event of abnormally heavy redemption requests, and is not for
investment purposes. Collateral arrangements for premium and margin
payments in connection with the Fund's hedging activities are not
deemed to be a pledge of assets;
S 3. Purchase the securities or other obligations of any one issuer
if, immediately after such purchase, more than 5% of the value of
the Fund's total assets would be invested in securities or other
obligations of any one such issuer; provided, however, that the Fund
may invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. This limitation shall not apply to
issues of the U.S. Government, its agencies or instrumentalities and
to permitted investments of up to 25% of the Fund's total assets;
S 4. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's;
S 5. Make loans, except through the purchase or holding of debt
obligations (including privately placed securities), or the entering
into of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts, except for the Fund's
interests in hedging activities as described under "Investment Objectives and
Policies" section of the Statement of Additional Information; or interests in
oil, gas, or mineral exploration or development programs. However, the Fund may
purchase securities or commercial paper issued by companies which invest in real
estate or interests therein, including real estate investment trusts;
A 7. Purchase securities on margin, make short sales of securities, or
maintain a short position, except in the course of the Fund's
hedging activities, provided that this restriction shall not be
deemed to be applicable to the purchase or sale of when-issued
securities or delayed delivery securities;
NF 8. Acquire securities of other investment companies, except as
permitted by the 1940 Act;
S 9. Act as an underwriter of securities;
S 10. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to
Investment Restriction No. 2. The Fund's arrangements in connection
with its hedging activities as described in "Investment Objectives
and Policies" section of the Statement of Additional Information
shall not be considered senior securities for purposes hereof; or
E 11. Purchase any equity security if, as a result, the Fund would
then have more than 5% of its total assets invested in securities of
companies (including predecessors) that have been in continuous
operation for fewer than three years.
JPMIEF and JPMIIEF may not:
S 1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 30% of the value of the Fund's net
assets at the time of borrowing, and except in connection with reverse
repurchase agreements and then only in amounts up to 33 1/3% of the value of the
Fund's net assets; or purchase securities while borrowings, including reverse
repurchase agreements, exceed 5% of the Fund's total assets; provided, however,
that the Fund may increase its interest in an open-end management investment
company with the same investment objective and restrictions as the Fund's while
such borrowings are outstanding. The Fund will not mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 30% of the value of the Fund's net assets at the time of
such borrowing;
S 2. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any one such
issuer; provided, however, that the Fund may invest all or part of its
investable assets in an open-end management investment company with the same
investment objective and restrictions as the Fund's. This limitation shall not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or to permitted investments of up to 25% of the Fund's total
assets;
S 3. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. This limitation shall not apply to
permitted investments of up to 25% of the Fund's total assets;
S 4. Purchase the securities or other obligations of issuers
conducting their principal business activity in the same industry
if, immediately after such purchase, the value of its investments in
such industry would exceed 25% of the value of the Fund's total
assets; provided, however, that the Fund may invest all or part of
its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's.
For purposes of industry concentration, there is no percentage
limitation with respect to investments in U.S. Government
securities;
S 5. Make loans, except through the purchase or holding of debt
obligations (including restricted securities), or the entering into
of repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies;
S 6. Purchase or sell puts, calls, straddles, spreads, or any
combination thereof, real property, including limited partnership
interests, commodities, or commodity contracts, except for the
Fund's interests in hedging and foreign exchange activities as
described under "Additional Investment Information" in the
Prospectus; or interests in oil, gas, mineral or other exploration
or development programs or leases. However, the Fund may purchase
securities or commercial paper issued by companies that invest in
real estate or interests therein including real estate investment
trusts;
A 7. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such
short-term credit as necessary for the clearance of purchases and
sales of securities, provided that this restriction shall not be
deemed to apply to the purchase or sale of when-issued securities or
delayed delivery securities;
NF 8. Acquire securities of other investment companies, except as
permitted by the 1940 Act;
S 9. Act as an underwriter of securities, except insofar as the Fund
may be deemed to be an underwriter under the 1933 Act by virtue of
disposing of portfolio securities; or
S 10. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to
Investment Restriction No. 1. The Fund's arrangements in connection
with its hedging activities as described in "Additional Investment
Information" in the Prospectus shall not be considered senior
securities for purposes hereof.
Unless Sections 8(b)(1) and 13(a) of the 1940 Act, or any SEC or SEC staff
interpretations thereof, are amended or modified, JPMEMEF, JPMIEMEF, JPMEEF and
JPMIEEF may not:
S 1. Purchase any security if, as a result, more than 25% of the value
of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry. This limitation shall not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities;
S 2. Borrow money, except that the Fund may (i) borrow money from
banks for temporary or emergency purposes (not for leveraging
purposes) and (ii) enter into reverse repurchase agreements for any
purpose; provided that (i) and (ii) in total do not exceed 33 1/3%
of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). If at any time
any borrowings come to exceed 33 1/3% of the value of the Fund's
total assets, the Fund will reduce its borrowings within three
business days to the extent necessary to comply with the 33 1/3%
limitation;
S 3. With respect to 75% of its total assets, purchase any security
if, as a result, (a) more than 5% of the value of the Fund's total
assets would be invested in securities or other obligations of any
one issuer; or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer. This limitation shall
not apply to Government securities (as defined in the 1940 Act);
S 4. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;
S 5. Purchase or sell physical commodities or contracts thereon,
unless acquired as a result of the ownership of securities or
instruments, but the Fund may purchase or sell futures contracts or
options (including options on futures contracts, but excluding
options or futures contracts on physical commodities) and may enter
into foreign currency forward contracts;
S 6. Purchase or sell real estate, but the Fund may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in
real estate;
S 7. Underwrite securities of other issuers, except to the extent the
Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act;
S 8. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder; and
NF 9. Notwithstanding any other investment restriction of the Fund, the
Fund may invest all of its investable assets in an open-end
management investment company having the same investment objective
and restrictions as the Fund.
Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof are amended or modified, JPMIIBF, JPMJEF and JPMIJEF may
not:
S 1. Purchase any security if, as a result, more than 25% of the value of
the Fund's total assets would be invested in securities of issuers having their
principal business activities in the same industry. This limitation shall not
apply to obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. In addition, and while subject to changing
interpretations, so long as a single foreign government or supranational
organization is considered to be an "industry" for the purposes of this 25%
limitation, the Portfolio will comply therewith. The staff of the SEC considers
all supranational organizations (as a group) to be a single industry for
concentration purposes;
S 2. Borrow money, except that the Fund may (i) borrow money from
banks for temporary or emergency purposes (not for leveraging
purposes) and (ii) enter into reverse repurchase agreements for any
purpose; provided that (i) and (ii) in total do not exceed 33 1/3%
of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). If at any time
any borrowings come to exceed 33 1/3% of the value of the Fund's
total assets, the Fund will reduce its borrowings within three
business days to the extent necessary to comply with the 33 1/3%
limitation;
S 3. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;
S 4. Purchase or sell physical commodities or contracts thereon,
unless acquired as a result of the ownership of securities or
instruments, but the Fund may purchase or sell futures contracts or
options (including options on futures contracts, but excluding
options or futures contracts on physical commodities) and may enter
into foreign currency forward contracts;
S 5. Purchase or sell real estate, but the Fund may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in
real estate;
S 6. Underwrite securities of other issuers, except to the extent the
Fund, in disposing of portfolio securities, may be deemed an
underwriter within the meaning of the 1933 Act;
S 7. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder; and
NF 8. Notwithstanding any other investment restriction of the Fund, the
Fund may invest all of its investable assets in an open-end
management investment company having substantially the same
investment objective and restrictions as the Fund.
Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof are amended or modified, JPMDEF, JPMIDEF, JPMIOF and
JPMIIOF may not:
S 1. Purchase any security if, as a result, more than 25% its total
assets would be invested in securities of issuers in any single
industry. This limitation shall not apply to securities issued or
guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities.
S 2. Issue senior securities. For purposes of this restriction,
borrowing money in accordance with paragraph 3 below, making loans
in accordance with paragraph 7 below, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or
sale of options, futures contracts, forward commitments, swaps and
transactions in repurchase agreements are not deemed to be senior
securities.
S 3. Borrow money, except in amounts not to exceed one third of the Fund's
total assets (including the amount borrowed) (i) from banks for temporary or
short-term purposes or for the clearance of transactions, (ii) in connection
with the redemption of Fund shares or to finance failed settlements of portfolio
trades without immediately liquidating portfolio securities or other assets,
(iii) in order to fulfill commitments or plans to purchase additional securities
pending the anticipated sale of other portfolio securities or assets and (iv)
pursuant to reverse repurchase agreements entered into by the Fund.
S 4. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities,
the Fund may be deemed to be an underwriter under the 1933 Act.
S 5. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and (v)
hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
S 6. Purchase or sell commodities or commodity contracts, except the
Fund may purchase and sell financial futures contracts, options on
financial futures contracts and warrants and may enter into swap and
forward commitment transactions.
S 7. Make loans, except that the Fund (1) may lend portfolio
securities with a value not exceeding one-third of the Fund's net
assets, (2) enter into repurchase agreements, and (3) purchase all
or a portion of an issue of debt securities (including privately
issued debt securities), bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
S 8. With respect to 75% of its total assets, purchase securities of
an issuer (other than the U.S. Government, its agencies,
instrumentalities or authorities or repurchase agreements
collateralized by U.S. Government securities), if:
a. such purchase would cause more than 5% of the Fund's total assets to be
invested in the securities of such issuer; or
b. such purchase would cause the Fund to hold more than 10% of the
outstanding voting securities of such issuer.
Unless Section 8(b)(1), and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof, are amended or modified, JPMGSIF and JPMIGSIF may not:
S 1. Purchase any security if, as a result, more than 25% of the value
of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry. This limitation shall not apply to obligations issued or
guaranteed by the U. S. Government, its agencies or
instrumentalities.
S 2. Issue senior securities. For purposes of this restriction,
borrowing money in accordance with paragraph 3 below, making loans
in accordance with non-fundamental restriction no. (v), the issuance
of shares of beneficial interest in multiple classes or series, the
purchase or sale of options, futures contracts, forward commitments,
swaps and transactions in repurchase agreements are not deemed to be
senior securities.
S 3. Borrow money, except in amounts not to exceed one third of the Fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings)(i) from banks for temporary or short-term purposes or for the
clearance of transactions, (ii) in connection with the redemption of Fund shares
or to finance failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets, (iii) in order to fulfill
commitments or plans to purchase additional securities pending the anticipated
sale of other portfolio securities or assets and (iv) pursuant to reverse
repurchase agreement entered into by the Fund.7
S 4. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities,
the Fund may be deemed to be an underwriter under the 1933 Act.
S 5. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) make direct investments in mortgages, (v) purchase and
sell mortgage-related securities and (vi) hold and sell real estate
acquired by the Fund as a result of the ownership of securities
including mortgages.
S 6. Purchase or sell commodities or commodity contracts, unless
acquired as a result of the ownership of securities or instruments,
except the Fund may purchase and sell financial futures contracts,
options on financial futures contracts and warrants and may enter
into swap and forward commitment transactions.
S 7. With respect to 75% of its total assets, purchase securities of
an issuer (other than the U. S. Government, its agencies,
instrumentalities or authorities or repurchase agreements
collateralized by U.S. Government securities), if:
a. such purchase would cause more than 5% of the Fund's total assets to be
invested in the securities of such issuer; or
b. such purchase would cause the Fund to hold more than 10% of the
outstanding voting securities of such issuer.
Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof, are amended or modified, the JPMEMDF may not:
S 1. Purchase any security if, as a result, more than 25% of the value
of the Fund's total assets would be invested in securities of
issuers having their principal business activities in the same
industry. This limitation shall not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities.
S 2. Issue senior securities. For purposes of this restriction,
borrowing money in accordance with paragraph 3 below, making loans
in accordance with paragraph 7 below, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or
sale of options, futures contracts, forward commitments, swaps and
transactions in repurchase agreements are not deemed to be senior
securities.
S 3. Borrow money, except in amounts not to exceed one third of the Fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings) (i) from banks for temporary or short-term purposes or for the
clearance of transactions, (ii) in connection with the redemption of Fund shares
or to finance failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets, (iii) in order to fulfill
commitments or plans to purchase additional securities pending the anticipated
sale of other portfolio securities or assets and (iv) pursuant to reverse
repurchase agreement entered into by the Fund.8
S 4. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities,
the Fund may be deemed to be an underwriter under the 1933 Act.
S 5. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) make direct investments in mortgages, (v) purchase and
sell mortgage-related securities and (vi) hold and sell real estate
acquired by the Fund as a result of the ownership of securities
including mortgages.
S 6. Purchase or sell commodities or commodity contracts, unless
acquired as a result of the ownership of securities or instruments,
except the Fund may purchase and sell financial futures contracts,
options on financial futures contracts and warrants and may enter
into swap and forward commitment transactions.
S 7. Make loans, except that the Fund (1) may lend portfolio
securities with a value not exceeding one third of the Fund's total
assets, (2) enter into repurchase agreements, and (3) purchase all
or a portion of an issue of debt obligations (including privately
issued debt obligations and direct investments in mortgages), bank
loan participation interests, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities.
JPMUSSCOF may not:
S 1. Purchase any security if, as a result, more than 25% its total
assets would be invested in securities of issuers in any single
industry. This limitation shall not apply to securities issued or
guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities.
S 2. Issue senior securities. For purposes of this restriction,
borrowing money in accordance with paragraph 3 below, making loans
in accordance with paragraph 7 below, the issuance of beneficial
interests in multiple classes or series, the purchase or sale of
options, futures contracts, forward commitments, swaps and
transactions in repurchase agreements are not deemed to be senior
securities.
S 3. Borrow money, except in amounts not to exceed one third of the
Portfolio's total assets (including the amount borrowed) (i) from
banks for temporary or short-term purposes or for the clearance of
transactions, (ii) in connection with redemptions or to finance
failed settlements of portfolio trades without immediately
liquidating portfolio securities or other assets, (iii) in order to
fulfill commitments or plans to purchase additional securities
pending the anticipated sale of other portfolio securities or assets
and (iv) pursuant to reverse repurchase agreements entered into by
the Portfolio.
S 4. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities,
the Portfolio may be deemed to be an underwriter under the 1933 Act.
S 5. Purchase or sell real estate except that the Portfolio may (i)
acquire or lease office space for its own use, (ii) invest in
securities of issuers that invest in real estate or interests
therein, (iii) invest in securities that are secured by real estate
or interests therein, (iv) purchase and sell mortgage-related
securities and (v) hold and sell real estate acquired by the
Portfolio as a result of the ownership of securities.
S 6. Purchase or sell commodities or commodity contracts, except the
Portfolio may purchase and sell financial futures contracts, options
on financial futures contracts and warrants and may enter into swap
and forward commitment transactions.
S 7. Make loans, except that the Portfolio (1) may lend portfolio
securities with a value not exceeding one-third of the Portfolio's
net assets, (2) enter into repurchase agreements, and (3) purchase
all or a portion of an issue of debt securities (including privately
issued debt securities), bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
S 8. With respect to 75% of its total assets, purchase securities of
an issuer (other than the U.S. Government, its agencies,
instrumentalities or authorities or repurchase agreements
collateralized by U.S. Government securities), if:
a. such purchase would cause more than 5% of the Portfolio's total assets
to be invested in the securities of such issuer; or
b. such purchase would cause the Portfolio to hold more than 10% of
the outstanding voting securities of such issuer.
Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof are amended or modified, JPMSTAUSEF, JPMSTADEF and
JPMSCBF may not:
S 1. Purchase any security if, as a result, more than 25% of its total
assets would be invested in the securities of issuers in any single
industry. This limitation shall not apply to securities issued or
guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities.
S 2. Issue senior securities. For purposes of this restriction,
borrowing money in accordance with paragraph 3 below, making loans
in accordance with paragraph 8 below, the issuance of shares of
beneficial interest in multiple classes or series, the purchase or
sale of options, futures contracts, forward commitments, swaps and
transactions in repurchase agreements are not deemed to be senior
securities.
S 3. Borrow money, except in amounts not to exceed one third of the Fund's
total assets (including the amount borrowed) (i) from banks for temporary or
short-term purposes or for the clearance of transactions, (ii) in connection
with the redemption of Fund shares or to finance failed settlements of portfolio
trades without immediately liquidating portfolio securities or other assets,
(iii) in order to fulfill commitments or plans to purchase additional securities
pending the anticipated sale of other portfolio securities or assets and (iv)
pursuant to reverse repurchase agreements entered into by the Fund.
S 4. Underwrite the securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities,
the Fund may be deemed to be an underwriter under the 1933 Act.
S 5. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities of
issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and (v)
hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
A 6. Purchase securities on margin (except that the Fund may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities).
S 7. Purchase or sell commodities or commodity contracts, except the
Fund may purchase and sell financial futures contracts, options on
financial futures contracts and warrants and may enter into swap and
forward commitment transactions.
S 8. Make loans, except that the Fund (1) may lend portfolio
securities with a value not exceeding one-third of the Fund's total
assets, (2) enter into repurchase agreements, and (3) purchase all
or a portion of an issue of debt securities (including privately
issued debt securities), bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
S 9. In the case of each Equity Fund, with respect to 75% of its total
assets, purchase securities of an issuer (other than the U.S.
Government, its agencies, instrumentalities or authorities or
repurchase agreements collateralized by U.S. Government securities),
if:
a. such purchase would cause more than 5% of the Fund's total assets to be
invested in the securities of such issuer; or
b. such purchase would cause the Fund to hold more than 10% of the
outstanding voting securities of such issuer.
[For purposes of fundamental investment restriction (1) regarding
industry concentration, the Advisor may classify issuers by industry
in accordance with classifications set forth in the Directory of
Companies Filing Annual Reports With The Securities and Exchange
Commission or other sources. In the absence of such classification
or if the Advisor determines in good faith based on its own
information that the economic characteristics affecting a particular
issuer make it more appropriately considered to be engaged in a
different industry, the Advisor may classify an issuer accordingly.
For instance, personal credit finance companies and business credit
finance companies are deemed to be separate industries and wholly
owned finance companies are considered to be in the industry of
their parents if their activities are primarily related to financing
the activities of their parents.]
<PAGE>
NY12531:227598.7 C-4
EXHIBIT C
FORM OF
THE U.S. EQUITY PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
Agreement, made this __ day of ______, 1998, between The U.S. Equity
Portfolio, a trust organized under the law of the State of New York (the
"Portfolio"), and J.P. Morgan Investment Management Inc., a Delaware corporation
(the "Advisor"),
WHEREAS, the Portfolio is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Portfolio desires to retain the Advisor to render
investment advisory services to the Portfolio, and the Advisor is willing to
render such services;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
that in consideration of the premises and mutual promises hereinafter set forth,
the parties hereto agree as follows:
1. The Portfolio hereby appoints the Advisor to act as investment
adviser to the Portfolio for the period and on the terms set forth in this
Agreement. The Advisor accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Subject to the general supervision of the Trustees of the
Portfolio, the Advisor shall manage the investment operations of the Portfolio
and the composition of the Portfolio's holdings of securities and investments,
including cash, the purchase, retention and disposition thereof and agreements
relating thereto, in accordance with the Portfolio's investment objectives and
policies as stated in the Registration Statement (as defined in paragraph 3(d)
of this Agreement) and subject to the following understandings:
(a) the Advisor shall furnish a continuous investment program for
the Portfolio and determine from time to time what investments or securities
will be purchased, retained, sold or lent by the Portfolio, and what portion of
the assets will be invested or held uninvested as cash;
(b) the Advisor shall use the same skill and care in the management
of the Portfolio's investments as it uses in the administration of other
accounts for which it has investment responsibility as agent;
(c) the Advisor, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of Trust,
By-Laws and Registration Statement of the Portfolio and with the instructions
and directions of the Trustees of the Portfolio and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations;
(d) the Advisor shall determine the securities to be purchased, sold
or lent by the Portfolio and as agent for the Portfolio will effect portfolio
transactions pursuant to its determinations either directly with the issuer or
with any broker and/or dealer in such securities; in placing orders with brokers
and/or dealers the Advisor intends to seek best price and execution for
purchases and sales; the Advisor shall also determine whether or not the
Portfolio shall enter into repurchase or reverse repurchase agreements;
On occasions when the Advisor deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other customers
of the Advisor, the Advisor may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be so
sold or purchased in order to obtain best execution, including lower brokerage
commissions, if applicable. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Advisor in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Portfolio;
(e) the Advisor shall maintain books and records with respect to the
Portfolio's securities transactions and shall render to the Portfolio's Trustees
such periodic and special reports as the Trustees may reasonably request; and
(f) the investment management services of the Advisor to the
Portfolio under this Agreement are not to be deemed exclusive, and the Advisor
shall be free to render similar services to others.
3. The Portfolio has delivered copies of each of the following
documents to the Advisor and will promptly notify and deliver to it all future
amendments and supplements, if any:
(a) Declaration of Trust of the Portfolio (such Declaration of
Trust, as presently in effect and as amended from time to time, is herein called
the "Declaration of Trust");
(b) By-Laws of the Portfolio (such By-Laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Trustees of the Portfolio authorizing the
appointment of the Advisor and approving the form of this Agreement; and
(d) The Portfolio's Notification of Registration on Form N-8A and
Registration Statement on Form N-1A (No. 811-7880) each under the 1940 Act (the
"Registration Statement") as filed with the Securities and Exchange Commission
(the "Commission") on July 14, 1993, all amendments thereto.
4. The Advisor shall keep the Portfolio's books and records required
to be maintained by it pursuant to paragraph 2(e). The Advisor agrees that all
records which it maintains for the Portfolio are the property of the Portfolio
and it will promptly surrender any of such records to the Portfolio upon the
Portfolio's request. The Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the Advisor with respect to the Portfolio by
Rule 31a-1 of the Commission under the 1940 Act.
5. During the term of this Agreement the Advisor will pay all
expenses incurred by it in connection with its activities under this Agreement,
other than the cost of securities and investments purchased for the Portfolio
(including taxes and brokerage commissions, if any).
6. For the services provided and the expenses borne pursuant to this
Agreement, the Portfolio will pay to the Advisor as full compensation therefor a
fee at an annual rate equal to .40% of the Portfolio's average daily net assets.
This fee will be computed daily and payable as agreed by the Portfolio and the
Advisor, but no more frequently than monthly.
7. The Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolio in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
8. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Portfolio at any
time, without the payment of any penalty, by vote of a majority of all the
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio on 60 days' written notice to the Advisor, or by the
Advisor at any time, without the payment of any penalty, on 90 days' written
notice to the Portfolio. This Agreement will automatically and immediately
terminate in the event of its assignment (as defined in the 1940 Act).
9. The Advisor shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Trustees of the Portfolio from time to time, have no authority
to act for or represent the Portfolio in any way or otherwise be deemed an agent
of the Portfolio.
10. This Agreement may be amended by mutual consent, but the consent
of the Portfolio must be approved (a) by vote of a majority of those Trustees of
the Portfolio who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
amendment, and (b) by vote of a majority of the outstanding voting securities of
the Portfolio.
11. Notices of any kind to be given to the Advisor by the Portfolio
shall be in writing and shall be duly given if mailed or delivered to the
Advisor at 522 Fifth Avenue, New York, New York 10019, Attention: Managing
Director, Funds Management Division, or at such other address or to such other
individual as shall be specified by the Advisor to the Portfolio. Notices of any
kind to be given to the Portfolio by the Advisor shall be in writing and shall
be duly given if mailed or delivered to the Portfolio c/o State Street Cayman
Trust Co., Ltd., Elizabethan Square, 2nd Floor, Shedden Road, George Town, Grand
Cayman, BWI or at such other address or to such other individual as shall be
specified by the Portfolio to the Advisor.
12. The Trustees have authorized the execution of this Agreement in
their capacity as Trustees and not individually and the Advisor agrees that
neither the shareholders nor the Trustees nor any officer, employee,
representative or agent of the Portfolio shall be personally liable upon, or
shall resort be had to their private property for the satisfaction of,
obligations given, executed or delivered on behalf of or by the Portfolio, that
the shareholders, trustees, officers, employees, representatives and agents of
the Portfolio shall not be personally liable hereunder, and that it shall look
solely to the property of the Portfolio for the satisfaction of any claim
thereunder.
13. This Agreement may be executed in one or more counterparts, each
of which shall be seemed to be an original.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the __ day of _______,
1998.
THE U.S. EQUITY PORTFOLIO
By:
J.P. MORGAN INVESTMENT MANAGEMENT INC.
By:
<PAGE>
NY12531:227598.7 D-1
EXHIBIT D
DECLARATION OF TRUST
J.P. MORGAN FUNDS
J.P. MORGAN INSTITUTIONAL FUNDS
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.8 Voting Powers. The Shareholder shall have the power to
vote...with respect to such additional matters relating to the Trust as may be
required by the Declaration, the By-Laws or any registration of the Trust with
the Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. [Each whole share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional share shall
be entitled to a proportionate fractional vote, except that shares held in the
treasury of the Trust shall not be voted.] Each share of a Fund shall be
entitled to one vote for each dollar of net asset value (or a proportionate
fractional vote in respect of a fractional dollar amount), on matters on which
shares of the Fund shall be entitled to vote. Shares shall be voted by
individual series on any matter submitted to a vote of the Shareholders of the
Trust except as provided in Section 6.9(g) hereof. There shall be no cumulative
voting in the election of Trustees. Until shares are issued, the Trustees may
exercise all rights of shareholders of the Trust or of any series of the Trust,
a Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are not otherwise represented
in person or by proxy at the meeting, proportionately in accordance with the
votes cast by holders of all shares otherwise represented at the meeting in
person or by proxy as to which such Shareholder Servicing Agent will be deemed
represented at the meeting for quorum purposes. The By-Laws may include further
provisions for shareholder votes and meetings and related matters.
<PAGE>
NY12531:227598.7 E-2
EXHIBIT E
NUMBER OF SHARES OF EACH FUND (OR CLASS)
OUTSTANDING AS OF THE CLOSE OF BUSINESS ON
APRIL 13, 1998
J.P. MORGAN FUNDS
Name of Fund Number of Shares of Fund Outstanding
JPM FEDERAL MM 344,123,479.42
JPM PRIME MM 2,776,871,760.15
JPM T/E MONEY MKT 1,236,274,928.69
JPM BOND 18,467,914.28
JPM T/E BOND 35,744,946.62
JPM U.S. EQUITY 17,646,152.08
JPM U.S. SMALL CO. 9,485,194.98
JPM DISC EQUITY 415,088.91.
JPM EMERG MKTS DEBT 1,405,126.36
JPM SMALL CO. OPP 13,877,409.50
JPM INTL OPP 7,781,038.12
JPM INTL EQUITY 10,157,432.15
JPM GLOBAL STRATEGIC 1,039,658.55
JPM EUROPE FUND 760,755.61
JPM JAPAN FUND 166,521.71
JPM NY BOND FUND 8,320,794.33
JPM EMERGING MARKETS 6,031,722.38
JPM DIVERSIFIED FD 14,803,549.24
JPM S/T BOND 2,363,838.43
J.P. MORGAN INSTITUTIONAL FUNDS
Name of Fund Number of Shares of Fund Outstanding
JPM INSTIT FEDERAL MM 658,076,376.66
JPM INST PRIME MM 2,072,368,445.35
JPM INST TEMM FUND 649,753,166.68
JPM INST S/T BOND 7,269,925.04
JPM INST BOND FUND 90,348,542.66
JPM INST TEB FUND 25,858,138.60
JPM INST U.S. EQUITY 22,725,399.06
JPM INST BOND ULTRA 5,335,279.33
JPM INST SVC TAX EX MNY 283,401.85
JPM INST SVC FEDERAL MNY 929,271.43
JPM INST SVC PRIME MNY MK 273,049,607.57
JPM INST SVC TREASURY MNY 499,376,836.73
JPM INST TREASURY MNY MKT 148,167,715.06
JPM INST INTL OPP 38,236,641.16
JPM INST GLOBAL STRATEGIC 17,875,337.02
JPM INST DISCIPLINED EQ 18,154,515.18
JPM INST SMALL COMPANY 27,660,652.33
JPM INST EUROPE EQUITY 1,019,806.66
JPM INST JAPAN EQUITY 251,599.39
JPM INST NY BOND FUND 10,592,844.43
JPM INST EMERGING MKTS 28,237,818.19
JPM INST INTL BOND FUND 772,667.94
JPM INST DIV FUND 23,625,712.84
JPM INST INTL EQUITY 41,399,085.69
JPM INST CALIFORNIA BOND 4,885,088.08
THE MANAGERS FUND
[TO COME LATER]
J.P. MORGAN SERIES TRUST
Name of Fund and Class Number of Shares of Net Asset Value
Class Outstanding Per Share
JPM TAX AWARE US EQ
JPM TAX AWARE DIS EQUITY [TO COME LATER]
JPM CALIFORNIA BOND
<PAGE>
NY12531:227598.7 F-8
EXHIBIT F
PRINCIPAL HOLDERS OF
VOTING SECURITIES
As of March 31, 1998, the following shareholders were known to the Trusts
and to the Managers Fund to own beneficially 5% or more of the shares of a Fund
(or a Class thereof):
J.P. MORGAN FUNDS
Percent of
Outstanding
Name of Fund Name and Address of Record Owner Shares Owned
Shares of Fund
J.P. MORGAN INSTITUTIONAL FUNDS
Percent of
Outstanding
Name of Fund Name and Address of Record Owner Shares Owned Shares of Fund
J.P. MORGAN SERIES TRUST
Percent of
utstanding
Name of Fund Name and Address of Record Owner Class Shares Owned Shares
of Class
THE MANAGERS FUND
Percent of
Outstanding
Name of Fund Name and Address of Record Owner Shares Owned Shares of Fund
LOGO
<PAGE>
NY12531:227598.71
EXHIBIT ___
EXECUTIVE OFFICERS
OF THE TRUSTS
The business address of each of the officers unless otherwise noted is
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston Massachusetts
02109.
MATTHEW HEALEY;
Chief Executive
Officer; Chairman,
Pierpont Group,
since prior to
1993. His address
is Pine Tree Club
Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436. His date of birth is
August 23, 1937.
MARIE E. CONNOLLY;
Vice President and
Assistant
Treasurer. President, Chief Executive Officer, Chief Compliance Officer and
Director of FDI, Premier Mutual Fund Services, Inc., an affiliate of FDI
("Premier Mutual") and an officer of certain investment companies advised or
administered by the Dreyfus Corporation ("Dreyfus") or its affiliates. From
December 1991 to July 1994, she was President and Chief Compliance Officer of
FDI. Her date of birth is August 1, 1957.
RICHARD W. INGRAM;
President and
Treasurer.
Executive Vice
President and
Director of Client Services and Treasury Administration of FDI, Senior Vice
President of Premier Mutual and an officer of RCM Capital Funds, Inc., RCM
Equity Funds, Inc. (together "RCM"), Waterhouse Investors Cash Management Fund,
Inc. ("Waterhouse") and certain investment companies advised or administered by
Dreyfus or Harris Trust and Savings Bank ("Harris") or their respective
affiliates. Prior to April 1997, Mr. Ingram was Senior Vice President and
Director of Client Services and Treasury Administration of FDI. From March 1994
to November 1995, Mr. Ingram was Vice President and Division Manager of First
Data Investor Services Group, Inc. From 1989 to 1994, Mr. Ingram was Vice
President, Assistant Treasurer and Tax Director Mutual Funds of the Boston
Company, Inc. His date of birth is September 15, 1955.
CHRISTOPHER J.
KELLEY; Vice
President and
Assistant
Secretary. Vice
President and
Associate General
Counsel of FDI and
Premier Mutual and
an officer of
Waterhouse and
certain investment
companies advised or
administered by
Harris or its
affiliates. From
April 1994 to July
1996, Mr. Kelley was
Assistant Counsel at
Forum Financial
Group. From 1992 to
1994, Mr. Kelley was
employed by Putnam
Investments in legal
and compliance
capacities. Prior
to September 1992,
Mr. Kelley was
enrolled at Boston
College Law School
and received his JD
in May 1992. His
date of birth is
December 24, 1964.
- --------
1 Pursuant to an interpretation of the staff of the SEC, the Fund may not invest
more than 25% of its assets in industrial development bonds in projects of
similar type or in the same state. The Fund shall comply with this
interpretation until such time as it may be modified by the staff of the SEC.
2 For purposes of interpretation of Investment Restriction No. 4 "guaranteed by
another entity" includes credit substitutions, such as letters of credit or
insurance, unless the Advisor determines that the security meets the Fund's
credit standards without regard to the credit substitution.
3 Although the Fund is permitted to fulfill plans to purchase additional
securities pending the anticipated sale of other portfolio securities or assets,
the Fund has no current intention of engaging in this form of leverage
5 For purposes of interpretation of Investment Restriction No. 2, "guaranteed by
another entity" includes credit substitutions, such as letters of credit or
insurance, unless the Advisor determines that the security meets the Fund's
credit standards without regard to the credit substitution.
6 Pursuant to an interpretation of the staff of the SEC, the Fund may not invest
more than 25% of its assets in industrial development bonds in projects of
similar type or in the same state. The Fund shall comply with this
interpretation until such time as it may be modified by the staff of the SEC.
7 Although the Portfolio is permitted to fulfill plans to purchase additional
securities pending the anticipated sale of other portfolio securities or assets,
the Portfolio has no current intention of engaging in this form of leverage.
8 Although the Fund is permitted to fulfill plans to purchase additional
securities pending the anticipated sale of other portfolio securities or assets,
the Fund has no current intention of engaging in this form of leverage.
<PAGE>
The Board of Trustees recommends a vote FOR Items 1,2,3,4 and 6. Please mark
your vote as indicated in this example. / / /
ITEM 1-ELECTION OF TRUSTEES
Nominees:
Frederick S. Addy
William G. Burns
Arthur C. Eschenlauer
Matthew Healey
Michael P. Mallardi
/ / FOR ALL
/ / WITHOLD FOR ALL
WITHELD FOR:(Write that nominees name in the space provided below.)
ITEM 2 -APPROVAL OF FOR AGAINST ABSTAIN
STANDARIZED INVESTMENT ALL ALL ALL
RESTRICTIONS AND THE ELIMINATION / / / / / /
OF RECLASSIFICATION AS
NONFUNDAMENTAL OF OTHERS
2A. Diversification of Investments
2B. Concentration of Assets in a Particular Industry
2C. Issuance in Real Estate
2D. Borrowing
2E. Underwriting
2F. Investment in Real Estate
2G. Commodities
2H. Lending
2I. Reclassification of Other Fundamental Restrictions as Nonfundamental
To vote against or abstain with respect to a particular proposed change, write
the designation of the sub-proposal on the line below.
ITEM 3-APPROVAL OF THE RECLASSIFICATION FOR AGAINST ABSTAIN
OF THE INVESTMENT OBJECTIVE / / / / / /
FROM FUNDAMENTAL TO NON-FUNDAMENTAL
ITEM 4-APPROVAL OF NEW FOR AGAINST ABSTAIN
INVESTMENT ADVISORY AGREEMENT / / / / / /
ITEM 5-AMENDMENT OF DECLARATION FOR AGAINST ABSTAIN
OF TRUST / / / / / /
ITEM 6-RATIFICATION OF SELECTION FOR AGAINST ABSTAIN
OF INDEPENDENT ACCOUNTANTS / / / / / /
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARDS OF TRUSTEES
J.P. MORGAN FAMILY OF FUNDS
The undersigned herdby appoints Mary Jo Pace and Christine Rotundo as
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares standing in the name of the undersigned with all powers which the
undersigned would possess if present at the Joint Special Meeting of
Shareholders to be held June 25, 1998 or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE
SHARES REPRESENTED BY THIS PROXY FOR ALL TRUSTEES AND ALL OTHER PROPSALS LISTED
ON THE REVERSE SIDE AND WILL VOTE IN THEIR DISCRETION ON SUCH OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THIS MEETING.
To vote by telephone, please call toll Free 1-800-240-6429 between 8:00 a.m.
and 8:00 p.m. (EST).
To vote by mail, please date and sign on reverse and return promptly in the
enclosed envelope.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
