0000912057-01-534626.txt : 20011010
0000912057-01-534626.hdr.sgml : 20011010
ACCESSION NUMBER: 0000912057-01-534626
CONFORMED SUBMISSION TYPE: N-14
PUBLIC DOCUMENT COUNT: 3
FILED AS OF DATE: 20011005
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: STATE STREET RESEARCH TAX EXEMPT TRUST
CENTRAL INDEX KEY: 0000787978
STANDARD INDUSTRIAL CLASSIFICATION: []
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: N-14
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-71066
FILM NUMBER: 1753233
BUSINESS ADDRESS:
STREET 1: ONE FINANCIAL CTR
STREET 2: RM 3800
CITY: BOSTON
STATE: MA
ZIP: 02111
BUSINESS PHONE: 6173571340
MAIL ADDRESS:
STREET 1: STATE STREET RESEARCH TAX EXEMPT TRUST
STREET 2: ONE FINANCIAL CENTER
CITY: BOSTON
STATE: MA
ZIP: 02111
FORMER COMPANY:
FORMER CONFORMED NAME: METLIFE STATE STREET TAX EXEMPT TRUST
DATE OF NAME CHANGE: 19920703
N-14
1
a2060542zn-14.txt
N-14
As filed with the Securities and Exchange Commission on October 5, 2001
1933 Act Registration No. 33-
1940 Act File No. 811-4558
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
[ ] Pre-Effective Amendment No. ___
[ ] Post-Effective Amendment No. ___
State Street Research Tax-Exempt Trust
(Exact name of Registrant as Specified in Charter)
One Financial Center
Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)
(617) 357-1200
(Area Code and Telephone Number)
Francis J. McNamara, III, Esq.
Executive Vice President, Secretary and General Counsel
State Street Research & Management Company
One Financial Center
Boston, Massachusetts 02111
(Name and Address of Agent for Service)
Copies to:
Gregory D. Sheehan, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
----------------
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
------------
It is proposed that this filing will become effective on November 4,
2001 pursuant to Rule 488.
------------
STATE STREET RESEARCH NEW YORK TAX-FREE FUND
A SERIES OF
STATE STREET RESEARCH TAX-EXEMPT TRUST
One Financial Center
Boston, MA 02111
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of the State Street Research New York Tax-Free Fund (the "New York Tax-Free
Fund"), a series of State Street Research Tax-Exempt Trust (the "Trust"), to be
held at the offices of the Trust at One Financial Center, 31st Floor, Boston,
Massachusetts 02111, on February [__], 2002 at 4:00 p.m., Eastern Time.
At this important meeting you will be asked to consider and approve an
Agreement and Plan of Reorganization between the New York Tax-Free Fund and the
State Street Research Tax-Exempt Fund (the "Tax-Exempt Fund"), another series of
the Trust.
If the proposal is approved by the shareholders of the New York
Tax-Free Fund, the Tax-Exempt Fund would acquire substantially all of the assets
and liabilities of the New York Tax-Free Fund. As a result of this transaction,
you would receive, in exchange for your shares of the New York Tax-Free Fund,
shares of the corresponding class of the Tax-Exempt Fund with an aggregate value
equivalent to the aggregate net asset value of your New York Tax-Free Fund
investment on the transaction date. The transaction is conditioned upon the
receipt of an opinion of counsel to the effect that the transaction would be
free from federal income taxes to you and your Fund.
The Board of Trustees of the Trust believes the transaction is in the
best interests of the New York Tax-Free Fund and its shareholders, and
unanimously recommends that you approve the proposal. The Board believes that
the proposed reorganization may provide benefits to shareholders of the New York
Tax-Free Fund because of the potential economies of scale which may result from
investing in a larger fund with the same investment manager and similar
investment objectives and policies.
I encourage you to carefully review the enclosed materials, which
explain the proposal in detail. As a shareholder, your vote is important, and we
hope that you will respond. By voting today, you can help the New York Tax-Free
Fund avoid the cost of follow-up communications. And to make it easier for you
to respond, we have enhanced our services to now provide you with the option of
voting your proxy over the Internet, as well as by mail, touch-tone phone or by
speaking with a customer service representative. In the meantime, if you have
any questions about this proposal, please call 1-87-SSR-FUNDS (1-877-773-8637).
As always, we very much appreciate your support as a shareholder of the
New York Tax-Free Fund.
Sincerely,
[signature]
Richard S. Davis
Chairman of the Board, President and Chief Executive Officer
State Street Research Tax-Exempt Trust
October [___], 2001
QUESTIONS & ANSWERS
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote on a proposed reorganization of your Fund, the
State Street Research New York Tax-Free Fund, into State Street Research
Tax-Exempt Fund (the "Reorganization"). THE BOARD OF TRUSTEES OF
YOUR FUND UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
Q: WHY HAS THE BOARD OF TRUSTEES RECOMMENDED THAT I VOTE IN FAVOR OF THE
REORGANIZATION?
A: The Board of Trustees of your Fund believes the reorganization may provide
several benefits to shareholders of your Fund, including potential
economies of scale which may result from investing in a larger fund with
the same investment manager and similar objectives and policies. The
reorganization may also provide greater investment flexibility and
diversification.
Q: WHAT ARE THE MOST IMPORTANT DIFFERENCES BETWEEN MY FUND'S INVESTMENT
PROGRAM AND THE TAX-EXEMPT FUND'S INVESTMENT PROGRAM?
A: The New York Tax-Free Fund seeks a high level of interest income exempt
from federal income taxes and from New York State and New York City
personal income taxes. Under normal market conditions, the New York
Tax-Free Fund invests at least 80% of its net assets in securities whose
interest income is free from federal income taxes and New York State and
New York City personal income taxes, and that are investment grade at the
time of purchase.
The Tax-Exempt Fund seeks a high level of interest income exempt from
federal income taxes. Under normal market conditions, the Tax-Exempt Fund
invests at least 80% of its net assets in securities whose interest income
is free from federal income taxes, and that are investment grade at the
time of purchase. Unlike the New York Tax-Free Fund, the Tax-Exempt Fund
does not seek income exempt from New York State and New York City personal
income taxes. Shareholders of the Tax-Exempt Fund may be subject to state
and local taxes, including New York State and New York City personal income
tax, on distributions from the Tax-Exempt Fund.
Q: WHEN WILL THE REORGANIZATION OCCUR?
A: If approved by shareholders, the Reorganization is expected to occur on or
about [February __, 2002].
Q: WHAT IF I HAVE QUESTIONS?
A: If you have questions about the Reorganization proposal itself, please call
1-87-SSR-FUNDS (1-877-773-8637). If you have questions about voting, call
1-877-392-4944.
IMPORTANT ADDITIONAL INFORMATION ABOUT THE PROPOSAL IS SET FORTH IN
THE ACCOMPANYING PROSPECTUS/PROXY STATEMENT. PLEASE READ IT CAREFULLY.
STATE STREET RESEARCH NEW YORK TAX-FREE FUND
A SERIES OF
STATE STREET RESEARCH TAX-EXEMPT TRUST
One Financial Center
Boston, MA 02111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
FEBRUARY , 2002
To the Shareholders:
This is to notify you that a Special Meeting of Shareholders of the
State Street Research New York Tax-Free Fund, a series of State Street Research
Tax-Exempt Trust (the "Trust"), will be held on February [__], 2002 at 4:00
p.m., eastern time, at the offices of the Trust at One Financial Center, 31st
Floor, Boston, Massachusetts 02111, for the following purposes:
1. To approve or disapprove an Agreement and Plan of
Reorganization providing for the acquisition of all of the assets and
liabilities of the State Street Research New York Tax-Free Fund by the
State Street Research Tax-Exempt Fund, another series of the Trust; and
2. To consider and act upon any matter incidental to the
foregoing and to transact such other business as may properly come
before the meeting and any adjournments thereof.
The Trustees have fixed the close of business on _________, 2001 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Special Meeting and any adjournments thereof.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED NO LATER
THAN [_________ __, 2002]. Instructions for shares held of record in the name of
a nominee, such as a broker-dealer or trustee of an employee benefit plan, may
be subject to earlier cut-off dates established by such intermediaries for
receipt of such instructions.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND SIGN
THE ENCLOSED PROXY FORM AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. CERTAIN
SHAREHOLDERS MAY ALSO VOTE BY TELEPHONE OR OVER THE INTERNET; PLEASE SEE PAGES
__ TO __ FOR DETAILS. IF YOU DESIRE TO VOTE IN PERSON AT THE MEETING, YOU MAY
REVOKE YOUR PROXY.
By Order of the Board of Trustees
Francis J. McNamara, III
Secretary
October [___], 2001
Date of Notice
STATE STREET RESEARCH NEW YORK TAX-FREE FUND
A SERIES OF
STATE STREET RESEARCH TAX-EXEMPT TRUST
One Financial Center
Boston, MA 02111
PROSPECTUS/PROXY STATEMENT
This Prospectus/Proxy Statement is furnished to the shareholders of
State Street Research New York Tax-Free Fund (the "New York Tax-Free Fund") in
connection with the solicitation of proxies by and on behalf of the Board of
Trustees of State Street Research Tax-Exempt Trust (the "Trust") to be used at a
Special Meeting of Shareholders of the New York Tax-Free Fund (the "Meeting") to
be held at the Trust's offices, One Financial Center, 31st Floor, Boston,
Massachusetts 02111, at 4:00 P.M., on February [__], 2002, and at any
adjournments thereof.
Shareholders of record of the Fund at the close of business on October
[__], 2001 (the "Record Date") are entitled to notice of, and to vote at, the
Meeting or any adjournments thereof. This Proxy Statement, Proxy form and
accompanying Notice of Special Meeting of Shareholders were first sent or given
to shareholders on or about October [___], 2001.
This Prospectus/Proxy Statement relates to the proposed reorganization
whereby State Street Research Tax-Exempt Fund (the "Tax-Exempt Fund") would
acquire substantially all of the assets and liabilities of the New York Tax-Free
Fund (the "Reorganization"). The New York Tax-Free Fund and the Tax-Exempt Fund
are separate series of the Trust, an open-end series management investment
company organized as a Massachusetts business trust. The New York Tax-Free Fund
and the Tax-Exempt Fund are referred to in this Prospectus/Proxy Statement as
the "Funds." The Reorganization is to be effected through the transfer of all of
the assets of the New York Tax-Free Fund to the Tax-Exempt Fund, in exchange for
shares of beneficial interest of the Tax-Exempt Fund (the "Reorganization
Shares") and the assumption by the Tax-Exempt Fund of all of the liabilities of
the New York Tax-Free Fund. This will be followed by the distribution of the
Reorganization Shares to the shareholders of the New York Tax-Free Fund in
liquidation of the New York Tax-Free Fund. As a result of the proposed
transaction, each shareholder of the New York Tax-Free Fund will receive in
exchange for his or her New York Tax-Free Fund shares a number of Tax-Exempt
Fund shares of the same class equal in value at the time of the exchange to the
aggregate value of the shareholder's New York Tax-Free Fund shares. This means
that you may end up with a different number of shares compared to what you
originally held, but the total dollar value of your shares will remain the same.
Because shareholders of the New York Tax-Free Fund are being asked to
approve transactions which will result in their receiving shares of the
Tax-Exempt Fund, this Proxy Statement also serves as a Prospectus for the
Reorganization Shares of the Tax-Exempt Fund.
This Prospectus/Proxy Statement explains concisely what you should know
before investing in the Tax-Exempt Fund. Please read it carefully and keep it
for future reference.
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIME.
You can lose money by investing in the Tax-Exempt Fund. The Tax-Exempt
Fund may not achieve its goals, and is not intended as a complete investment
program. An investment in the Tax-Exempt Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
The following documents have been filed with the SEC and are
incorporated into this Prospectus/Proxy Statement by reference:
- each Fund's current Prospectus, dated May 1, 2001, including any
supplements (each a "Fund
Prospectus," and together, the "Fund Prospectuses");
- the Funds' current combined Statement of Additional Information, dated May
1, 2001 (the "SAI");
- the Statement of Additional Information relating to this Prospectus/Proxy
Statement dated _________, 2001 (the "Reorganization SAI");
- the Report of Independent Accountants and financial statements in respect
of each Fund included in each Fund's Annual Report to Shareholders for the
year ended December 31, 2000 (each an "Annual Report," and together, the
"Annual Reports"); and
- the financial statements in respect of each Fund included in each Fund's
Semi-Annual Report to Shareholders for the period ended June 30, 2001 (each
a "Semi-Annual Report," together the "Semi-Annual Reports," and together
with the Annual Reports, the "Reports").
This Prospectus/Proxy Statement is accompanied by a copy of the
Tax-Exempt Fund's Prospectus and Reports. For a free copy of the Fund
Prospectuses, SAI, Reorganization SAI, or Reports, please call 1-877-773-8637 or
write to State Street Research Tax-Exempt Trust at:
State Street Research Tax-Exempt Trust
One Financial Center
Boston, MA 02111
ATTN: _________________
c/o State Street Research Service Center
MANNER OF VOTING PROXIES
If a proxy authorization ("Proxy") is properly given in time for a vote
at the Meeting (either by returning the paper Proxy form or by submitting a
Proxy electronically by telephone or over the Internet), the shares represented
thereby will be voted at the Meeting in accordance with the shareholder's
instructions. The Proxy grants discretion to the persons named therein, as
proxies, to take such further action as they may determine appropriate in
connection with any other matter which may properly come before the Meeting or
any adjournments thereof. The Board of Trustees of the Trust does not currently
know of any matter to be considered at the Meeting other than the matters set
forth in the Notice of Special Meeting of Shareholders.
Approval of the proposed Reorganization for the New York Tax-Free Fund
will require the affirmative vote of the lesser of (i) 67% or more of the Class
A, Class B(1), Class B, Class C and Class S shares of the New York Tax-Free Fund
present or represented by proxy at the Meeting, voting together as a single
class, if holders of more than 50% of the outstanding Class A, Class B(1), Class
B, Class C and Class S shares of the New York Tax-Free Fund, taken as a single
class, are present or represented by proxy at the Meeting; or (ii) more than 50%
of the outstanding Class A, Class B(1), Class B, Class C and Class S shares of
the New York Tax-Free Fund, voting together as a single class. The holders of a
majority of shares of the New York Tax-Free Fund entitled to vote shall be a
quorum for the Meeting.
The persons named as proxies may propose one or more adjournments of
the Meeting without further notice to permit further solicitation of Proxies,
provided such persons determine that an adjournment and additional solicitation
are reasonable and in the interest of shareholders, after consideration of all
relevant factors, including the nature of the relevant proposal, the percentage
of votes then cast, the percentage of negative votes then cast, the nature of
the proposed solicitation activities and the nature of the reasons for such
further solicitation. A shareholder vote may be taken on the proposal in this
Prospectus/Proxy Statement prior to such adjournment if sufficient votes have
been received and such vote is otherwise appropriate. Any such adjournment will
require the affirmative vote of a majority of the aggregate number of shares of
the Fund present on a given proposal at the Meeting in person or by proxy.
For purposes of determining the presence of a quorum for transacting
business at the Meeting and for determining whether sufficient votes have been
received for approval of any proposal to be acted upon at the Meeting,
abstentions may, in the discretion of the Fund, be treated as present at the
Meeting and entitled to vote on the matter, but which
2
have not been voted. For this reason, abstentions could assist the Fund in
obtaining a quorum but would have the same effect as a vote against a proposal.
Broker "non-votes" ordinarily will not be considered present and entitled to
vote on a proposal. The Fund reserves discretion to count broker "non-votes" as
present based on specific instructions from a broker or nominee. Broker
non-votes are proxies from brokers or nominees indicating that such persons have
not received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have, or choose not to exercise, discretionary power.
A shareholder may vote:
- By telephone:
-- Through fully automated touch-tone voting or
-- Verbally, with a telephone representative;
- Over the Internet;
- By mail; or
- In person at the Meeting
BY TELEPHONE
There are two convenient methods to vote by using the telephone. (Please
note, however, that these two telephone methods of voting are not available to
shareholders whose shares are held by a broker or other intermediary on the
shareholder's behalf.) If telephone voting is available for a shareholder's
account, toll-free telephone numbers will be printed on the Proxy form. Prior to
calling, the shareholder should read the Proxy Statement and have his or her
Proxy form at hand.
First, a shareholder may use the automated touch-tone voting method by
calling the toll-free number for that method provided on the Proxy form. At the
prompt, the shareholder should enter the control number provided on the Proxy
form, then follow the menu.
Second, a separate toll-free number is provided on the Proxy form for
shareholders who wish to speak to a telephone representative directly and give
verbal instructions. The telephone representative will assist the shareholder
with the voting process. The representative will not be able to assist a
shareholder with information that is not contained in the Proxy Statement, and
the representative will not make recommendations on how to vote on any proposal.
Telephone calls will be recorded.
A written confirmation of the shareholder's telephone instructions will be
mailed within 72 hours. The shareholder should immediately call 1-877-392-4944
toll-free between 9 A.M. and 6 P.M. Monday through Friday eastern time if no
confirmation is received or if the shareholder's instructions have not been
properly reflected.
INTERNET VOTING
To vote over the Internet, please log on to WWW.SSRFUNDS.COM and click on
the proxy voting button. Prior to logging on, the shareholder should read the
Proxy Statement and have his or her Proxy form at hand. The shareholder should
enter the control number provided on the Proxy form, and follow the instructions
on the screen. If a shareholder receives more than one Proxy form he or she may
vote them during the same session. Each proxy form has a different control
number.
BY MAIL
To vote by mail, the shareholder should date and sign the Proxy form
included with this Prospectus/Proxy Statement, indicating his or her vote on the
proposal, and return the form in the envelope provided.
3
ADDITIONAL INFORMATION
SHAREHOLDERS VOTING THEIR PROXIES BY EITHER TELEPHONE METHOD OR OVER THE
INTERNET SHOULD NOT RETURN THEIR PROXY FORMS BY MAIL.
---
A person submitting votes by telephone or over the Internet is deemed to
represent that he or she is authorized to vote on behalf of all owners of the
account, including spouses or other joint owners. By using the telephone or the
Internet to submit voting instructions, the shareholder is authorizing PFPC
Global Fund Services ("PFPC"), a proxy solicitation firm, and its agents, to
execute a proxy to vote the shareholder's shares at the Meeting as the
shareholder has indicated.
Any shareholder who has given a Proxy, whether by telephone, over the
Internet or in written form, has the right to revoke it at any time prior to its
exercise by submitting a subsequent telephone or electronic vote, or a written
notice of revocation, or a later-dated Proxy, or by attending the Meeting and
voting his or her shares in person.
The Trust believes that the procedures for authorizing the execution of a
Proxy by telephone or over the Internet set forth above are reasonably designed
to ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
recorded.
In some cases, proxy solicitation materials may be included in one package
for more than one account with the same tax I.D. number and address of record.
PFPC and its agents will assist with the mailing and tabulation effort and
may also solicit Proxies by contacting shareholders by telephone. All the costs
of the solicitation will be borne by the New York Tax-Free Fund. The Fund's cost
for PFPC's services is not expected to exceed $25,000. The New York Tax-Free
Fund also will reimburse brokerage firms and others for their expenses in
forwarding solicitation material to the beneficial owners of shares of the Fund.
Representatives of State Street Research Service Center and other
representatives of the Trust may also solicit proxies.
Questions about the proposal should be directed to State Street Research
Service Center at 1-87-SSR-FUNDS (1-877-773-8637), One Financial Center, Boston,
Massachusetts 02111.
SHARES OUTSTANDING AND BENEFICIAL OWNERSHIP
As of the Record Date, as shown on the books of the New York Tax-Free Fund,
there were issued and outstanding the following number of shares of beneficial
interest of each class of the New York Tax-Free Fund:
CLASS A CLASS B(1) CLASS B CLASS C CLASS S TOTAL
------- ---------- ------- ------- ------- -----
New York Tax-Free Fund
As of _______, 2001, the officers and Trustees of the Trust as a group
beneficially owned less than 1% of the outstanding shares of each class of the
New York Tax-Free Fund. As of ________, 2001, to the best of the knowledge of
the Trust, the following persons each owned of record or beneficially 5% or more
of the outstanding shares of a class of the New York Tax-Free Fund or the
Tax-Exempt Fund:
4
% OF TAX-EXEMPT
FUND HELD
FUND CLASS SHAREHOLDER % OF CLASS HELD AFTER REORGANIZATION
---- ----- ----------- --------------- --------------------
NEW YORK TAX-FREE
FUND
TAX-EXEMPT FUND
*Beneficial Owner
State Street Research & Management Company (the "Investment Manager" or
"State Street Research") serves as investment manager of the Funds and State
Street Research Investment Services, Inc. (the "Distributor") serves as
distributor of the Funds. The Investment Manager and the Distributor are located
at One Financial Center, Boston, Massachusetts 02111 and are indirect,
wholly-owned subsidiaries of MetLife, Inc. ("MetLife"). MetLife and its
affiliated entities have indicated that with respect to shares of the New York
Tax-Free Fund for which they have voting authority, they intend to vote for and
against the proposal in the same relative proportion as do the other
shareholders of the Fund who cast votes at the Meeting.
5
OVERVIEW OF PROPOSED TRANSACTION
PROPOSED TRANSACTION
The Trustees of State Street Research Tax-Exempt Trust on behalf of the
New York Tax-Free Fund have approved the Reorganization of the New York Tax-Free
Fund into the Tax-Exempt Fund. The Reorganization is proposed to be accomplished
pursuant to an Agreement and Plan of Reorganization providing for the transfer
of all of the assets of the New York Tax-Free Fund to the Tax-Exempt Fund, in
exchange for shares of the Tax-Exempt Fund and the assumption by the Tax-Exempt
Fund of all the liabilities of the New York Tax-Free Fund, followed by the
liquidation of the New York Tax-Free Fund.
The investment objective and policies of the Tax-Exempt Fund are
similar to the investment objective and policies of the New York Tax-Free Fund,
which objectives and policies, and certain important differences between them,
are explained below under "Comparison of Investment Objectives, Policies,
Restrictions and Risks."
As a result of the proposed Reorganization, the New York Tax-Free Fund
will receive a number of Class A, Class B(1), Class B, Class C, and Class S
Reorganization Shares of the Tax-Exempt Fund equal in value to the value of the
net assets of the New York Tax-Free Fund being transferred and attributable to
the Class A, Class B(1), Class B, Class C, and Class S shares of the New York
Tax-Free Fund. Following the transfer, the New York Tax-Free Fund will
distribute to each of its Class A, Class B(1), Class B, Class C, and Class S
shareholders a number of full and fractional Class A, Class B(1), Class B, Class
C, and Class S Reorganization Shares of the Tax-Exempt Fund equal in value to
the aggregate value of the shareholder's Class A, Class B(1), Class B, Class C,
and Class S New York Tax-Free Fund shares, as the case may be, and the New York
Tax-Free Fund will be liquidated.
The Class A, Class B(1), Class B, Class C, and Class S shares of the
Tax-Exempt Fund have identical characteristics to the corresponding classes of
the New York Tax-Free Fund.
You will not be charged a front end sales load on the issuance of the
Reorganization Shares, or a contingent deferred sales charge (a "CDSC") on New
York Tax-Free Fund shares exchanged for Reorganization Shares. The
Reorganization Shares that you receive will be subject to a CDSC on redemption
to the same extent that the New York Tax-Free Fund shares exchanged were so
subject. In other words, the Reorganization Shares will be treated as having
been purchased on the date that you originally purchased the New York Tax-Free
Fund shares and for the price you originally paid. For purposes of determining
the conversion date of the Class B(1) and Class B Reorganization Shares into
Class A shares, the Reorganization Shares will be treated as having been
acquired on the date that you originally acquired the New York Tax-Free Fund
shares (so that the conversion of such shares will be unchanged by the
Reorganization). See the Fund Prospectuses for more information about the
characteristics of Class A, Class B(1), Class B, Class C, and Class S shares of
the Funds.
As described more fully below, the Trustees of the Trust unanimously
recommend that shareholders of the New York Tax-Free Fund approve the
Reorganization for the New York Tax-Free Fund. The Trustees believe the
Reorganization may provide several benefits to shareholders of the New York
Tax-Free Fund, including potential economies of scale which may result from
investing in a larger fund with the same investment manager and similar
investment objectives and policies. The reorganization may also provide greater
investment flexibility and diversification. See "Proposal-Background and Reasons
for the Proposed Reorganization."
OPERATING EXPENSES
As the following tables suggest, it is expected that the total
operating expense ratio of the Tax-Exempt Fund following the Reorganization will
be lower than the current gross operating expense ratio of the New York Tax-Free
Fund (before giving effect to voluntary expense reimbursements and waivers). Of
course, there can be no assurance that the Reorganization will result in expense
savings for shareholders. The expected total expense ratio of the Tax-Exempt
Fund following the Reorganization would be higher than the net expense ratio
currently borne by shareholders of the New York Tax-Free
6
Fund after giving effect to voluntary expense reimbursements and waivers. The
New York Tax-Free Fund's voluntary expense reimbursements and waivers may be
terminated at any time. These tables summarize, for Class A shares, Class B(1)
shares, Class B shares, Class C shares, and Class S shares, expenses:
- that each Fund incurred in its fiscal year ended December 31, 2000,
restated to reflect the elimination of fee waivers and expense
reimbursements previously in effect; and
- that the Tax-Exempt Fund would have incurred in its most recent fiscal year
after giving effect on a pro forma combined basis to the proposed
Reorganization, if the Reorganization had occurred at the beginning of such
fiscal year.
The tables are provided to help you understand an investor's share of
the operating expenses which each Fund incurs. The examples show the estimated
cumulative expenses attributable to a hypothetical $10,000 investment in the New
York Tax-Free Fund, the Tax-Exempt Fund, and the Tax-Exempt Fund on a pro forma
basis, over specified periods. By translating "Total Annual Fund Operating
Expenses" into dollar amounts, these examples help you compare the costs of
investing in a particular Fund, or a particular class of shares, with the costs
of investing in other mutual funds.
7
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO BOTH FUNDS)
CLASS A CLASS B(1) CLASS B CLASS C CLASS S
------- ---------- ------- ------- -------
SHAREHOLDER FEES
Maximum Sales Charge Imposed on Purchase (as a percentage of
offering price at the time of purchase) 4.5% None None None None
Maximum Contingent Deferred Sales Charge (as a percentage of
original purchase price or redemption price, whichever is
lower) None(1) 5.0%(2) 5.0%(3) 1.0%(4) None
----------
(1) Purchases of Class A shares of $1 million or more are not subject to a
sales charge. If such shares are redeemed within 12 months of purchase, a
contingent deferred sales charge of 1% will apply.
(2) 5% first year; 4% second year; 3% third and fourth year; 2% fifth year; 1%
sixth year; and 0% thereafter.
(3) 5% first year; 4% second year; 3% third and fourth year; 2% fifth year; and
0% thereafter.
(4) 0% after first year.
CURRENT EXPENSES PRO FORMA
---------------- EXPENSES
--------
NEW YORK
ANNUAL FUND OPERATING EXPENSES TAX-FREE TAX-EXEMPT TAX-EXEMPT
(as a percentage of average net assets) FUND FUND FUND
-------------- ------ ----
Management Fees
Class A 0.55% 0.55% 0.55%
Class B(1) 0.55% 0.55% 0.55%
Class B 0.55% 0.55% 0.55%
Class C 0.55% 0.55% 0.55%
Class S 0.55% 0.55% 0.55%
12b-1 Fees
Class A 0.30%(1) 0.30%(1) 0.30%(1)
Class B(1) 1.00% 1.00% 1.00%
Class B 1.00% 1.00% 1.00%
Class C 1.00% 1.00% 1.00%
Class S 0.00% 0.00% 0.00%
Other Expenses
Class A 0.74% 0.43% 0.43%
Class B(1) 0.74% 0.43% 0.43%
Class B 0.74% 0.43% 0.43%
Class C 0.74% 0.43% 0.43%
Class S 0.74% 0.43% 0.43%
Total Fund Operating Expenses
Class A 1.59%(2) 1.28% 1.28%
Class B(1) 2.29%(2) 1.98% 1.98%
Class B 2.29%(2) 1.98% 1.98%
Class C 2.29%(2) 1.98% 1.98%
Class S 1.29%(2) 0.98% 0.98%
----------
(1) The Trustees may increase the current service/distribution fee rate shown
for Class A shares at any time, provided that the fees do not exceed a
maximum of 0.40%.
(2) Because some of the New York Tax-Free Fund's expenses have been subsidized
or reduced through expense offset arrangements, actual total operating
expenses for the period ended June 30, 2001, 1.15% for Class A shares,
1.85% for Class B(1) shares, 1.85% for Class B shares, 1.85% for Class C
shares, and 0.85% for Class S shares. The Fund expects the expense subsidy
to continue, although there is no guarantee that it will.
8
EXAMPLE OF FUND EXPENSES:
An investment of $10,000 would incur the following expenses, assuming 5%
annual return, constant expenses and, except as indicated, redemption at the end
of each time period:
PRO FORMA
CURRENT EXPENSES EXPENSES
---------------- --------
NEW YORK TAX-FREE TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND
---- ---- ----
Class A
1 year $ 604 $ 575 $ 575
3 years $ 929 $ 838 $ 838
5 years $ 1,277 $ 1,121 $ 1,121
10 years $ 2,254 $ 1,926 $ 1,926
Class B(1)
1 year $ 732 $ 701 $ 701
3 years $ 1,015 $ 921 $ 921
5 years $ 1,425 $ 1,268 $ 1,268
10 years $ 2,450(1) $ 2,126(1) $ 2,126(1)
Class B(1) (no redemption)
1 year $ 232 $ 201 $ 201
3 years $ 715 $ 621 $ 621
5 years $ 1,225 $ 1,067 $ 1,067
10 years $ 2,450(1) $ 2,126(1) $ 2,126(1)
Class B
1 year $ 732 $ 701 $ 701
3 years $ 1,015 $ 921 $ 921
5 years $ 1,425 $ 1,268 $ 1,268
10 years $ 2,450(1) $ 2,126(1) $ 2,126(1)
Class B (no redemption)
1 year $ 232 $ 201 $ 201
3 years $ 715 $ 621 $ 621
5 years $ 1,225 $ 1,067 $ 1,067
10 years $ 2,450(1) $ 2,126(1) $ 2,126(1)
Class C
1 year $ 332 $ 301 $ 301
3 years $ 715 $ 621 $ 621
5 years $ 1,225 $ 1,068 $ 1,068
10 years $ 2,626 $ 2,306 $ 2,306
Class C (no redemption)
1 year $ 232 $ 201 $ 201
3 years $ 715 $ 621 $ 621
5 years $ 1,225 $ 1,068 $ 1,068
10 years $ 2,626 $ 2,306 $ 2,306
Class S
1 year $ 131 $ 100 $ 100
3 years $ 409 $ 312 $ 312
5 years $ 708 $ 542 $ 542
10 years $ 1,556 $ 1,201 $ 1,201
----------
(1) Assumes conversion to Class A shares after eight years.
9
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the Reorganization of the New York
Tax-Free Fund into the Tax-Exempt Fund will be a tax-free reorganization.
Accordingly, no gain or loss will be recognized by the New York Tax-Free Fund or
by its shareholders as a result of the Reorganization, and the aggregate tax
basis of the Reorganization Shares received by each shareholder of the New York
Tax-Free Fund will be the same as the aggregate tax basis of the shareholder's
New York Tax-Free Fund shares.
A portion of the portfolio assets of the New York Tax-Free Fund may be
sold in connection with the Reorganization of the New York Tax-Free Fund into
the Tax-Exempt Fund. The actual tax impact of such sales will depend on the
difference between the price at which such portfolio assets are sold and the
selling Fund's basis in such assets. Any capital gains recognized in these sales
will be distributed to the selling Fund's shareholders as capital gain dividends
(to the extent of net capital gains) and/or ordinary dividends (to the extent of
net short-term capital gains) during or with respect to the year of sale, and
such distributions will be taxable to shareholders subject to income tax.
For more information about the federal income tax consequences of the
Reorganization, see "Information About the Reorganization -- Federal Income Tax
Consequences."
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES, RESTRICTIONS AND RISKS
The investment objectives, policies, restrictions and risks of the
Funds, and certain differences between them, are summarized below. For a more
detailed description of the investment techniques used by the Funds, please see
the Fund Prospectuses. For more information concerning the risks associated with
investments in the Funds, see "Risk Factors," below.
The New York Tax-Free Fund seeks a high level of interest income exempt
from federal income taxes and from New York State and New York City personal
income taxes. Under normal market conditions, the New York Tax-Free Fund invests
at least 80% of its net assets in securities whose interest income is free from
federal income taxes and New York State and New York City personal income taxes,
and that are investment grade at the time of purchase.
The Tax-Exempt Fund seeks a high level of interest income exempt from
federal income taxes. Under normal market conditions, the Tax-Exempt Fund
invests at least 80% of its net assets in securities whose interest income is
free from federal income taxes, and that are investment grade at the time of
purchase. Unlike the New York Tax-Free Fund, the Tax-Exempt Fund does not seek
income exempt from New York State and New York City personal income taxes.
SHAREHOLDERS OF THE TAX-EXEMPT FUND MAY BE SUBJECT TO STATE AND LOCAL TAXES,
INCLUDING NEW YORK STATE AND NEW YORK CITY PERSONAL INCOME TAX, ON DISTRIBUTIONS
FROM THE TAX-EXEMPT FUND.
The New York Tax-Free Fund typically invests in bonds issued by the
State of New York, its counties, cities, towns, and public authorities, as well
as securities of issuers with special tax status, such as the Commonwealth of
Puerto Rico. The Fund may invest up to 20% of net assets in other securities,
including junk bonds of similar issuers (that is, bonds that are in or below the
Standard & Poor's BB or Moody's Ba major rating categories). The Tax-Exempt
Fund, by contrast, typically invests in bonds issued by various U.S. states,
counties, cities, towns, territories, and public authorities. The Tax-Exempt
Fund may also invest up to 20% of its assets in other securities, including junk
bonds of similar issuers. In managing its portfolio, each Fund focuses on
security selection, using proprietary research to identify individual bonds that
offer higher yields or higher potential total return than other bonds that
appear to be of comparable credit quality. Each Fund may invest in securities of
any maturity, and may invest in certain securities, such as municipal lease
obligations and industrial revenue bonds, that may have different risks than
ordinary municipal bonds.
In addition to the principal investment strategies for the Funds
described above, each Fund may also engage in other types of investment
practices, such as investing in limited obligation securities, restricted and
illiquid securities, derivatives, when-issued securities, and zero coupon
securities. Each Fund may also engage in securities lending and in defensive
investing. More detailed descriptions of these investment practices, and
10
associated risks, are included in the Fund Prospectuses and SAI.
While the investment restrictions of the New York Tax-Free Fund are
similar in certain respects to those of the Tax-Exempt Fund, there are
differences. Set forth below is a summary of the most significant differences.
The summary is qualified in its entirety by reference to and is made subject to
the complete text of the investment restrictions of each Fund, which are set
forth in the SAI.
The Tax-Exempt Fund has a restriction against making investments which
would cause more than 25% of the value of the Fund's total assets to be invested
in securities of issuers conducting their principal activities in the same
state. The New York Tax-Free Fund, on the other hand, is required to invest at
least 80% of its net assets in securities whose interest income is free from New
York State and New York City personal income taxes, as well as federal income
taxes. In addition, the New York Tax-Free Fund has a restriction against making
investments which would cause more than 25% of the value of that Fund's total
assets to be invested in securities of issuers principally engaged in any one
industry. The Tax-Exempt Fund has no comparable restriction.
RISK FACTORS
Certain risks associated with an investment in the Tax-Exempt Fund are
summarized below. Because the Tax-Exempt Fund and the New York Tax-Free Fund
share certain policies described more fully above under "Overview of Proposed
Transactions-Comparison of Investment Objectives, Policies, Restrictions and
Risks," many of the risks of an investment in the Tax-Exempt Fund are
substantially similar to the risks of an investment in the New York Tax-Free
Fund. A more detailed description of the risks associated with an investment in
the Tax-Exempt Fund may be found in the Tax-Exempt Fund's Prospectus under the
captions "More Information About Investment Strategies and Risks," and "Other
Risks of Investing" and in the SAI under the caption "Investment Policies and
Risks."
Because the Tax-Exempt Fund invests primarily in bonds and other fixed
income securities, its major risks are those of bond investing, including the
tendency of bond prices to fall when interest rates rise. Such a fall in bond
prices would lower the Tax-Exempt Fund's share price.
Bond prices in general tend to move in the opposite direction from
interest rates, for the reason that new bonds issued after a rise in rates will
offer higher yields to investors; the only way an existing bond with a lower
yield can appear attractive to investors is by selling at a lower price. (This
principle works in reverse as well: a fall in interest rates will tend to cause
a rise in bond prices.)
The Tax-Exempt Fund's performance may be affected by political and
economic conditions at the state, regional or federal level. These may include
budgetary problems, declines in the tax base and other factors that may cause
rating agencies to downgrade the credit ratings on certain issues. Actual or
proposed changes in tax rates, regulations or federal programs could also affect
your net return on investment.
The issuer of any bond, particularly a junk bond, could default on
principal or interest payments, which would cause a loss for the fund.
Lower-rated bonds also tend to be more sensitive to economic changes and may
increase the volatility of the fund's share price.
The success of the Tax-Exempt Fund's investment strategy depends
largely on the portfolio manager's skill in assessing the direction and impact
of interest rate movements and the creditworthiness of the securities the fund
buys. The Tax-Exempt Fund's shares will rise and fall in value and there is a
risk that investors could lose money by investing in the Tax-Exempt Fund. Also,
the Tax-Exempt Fund cannot be certain that it will achieve its goal. Finally,
Tax-Exempt Fund shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government entity or the FDIC.
In general, the New York Tax-Free Fund is subject to the same basic
types of risks as the Tax-Exempt Fund. However, the fact that the New York
Tax-Free Fund emphasizes investments in the New York geographic region may
result in increased credit risks for the New York Tax-Free Fund, because any
factors affecting the creditworthiness of New York municipal issuers could
affect a large portion of the New York Tax-Free Fund's securities.
11
COMPARISON OF DISTRIBUTION POLICIES AND PURCHASE, EXCHANGE AND REDEMPTION
PROCEDURES
Both the New York Tax-Free Fund and the Tax-Exempt Fund declare
dividends daily and pay them monthly. Each Fund distributes any net realized
capital gains annually. It is expected that, shortly prior to the Exchange Date
(defined in the Agreement and Plan of Reorganization to be February , 2002 or
such other date as may be agreed upon by the Tax-Exempt Fund and the New York
Tax-Free Fund), the New York Tax-Free Fund will declare and distribute as a
special dividend any investment company taxable income (computed without regard
to the deduction for dividends paid) and any net realized capital gains through
the Exchange Date not previously distributed.
The Funds have identical procedures for purchasing shares. Each of the
Funds offers five classes of shares, Class A, Class B(1), Class B, Class C and
Class S. Class A, Class B(1), Class C and Class S shares of the Funds may be
purchased at their net asset value next determined, plus applicable sales
charges in the case of Class A shares, through broker-dealers that have dealer
agreements with State Street Research Investment Services, Inc. (the
"Distributor"), the Funds' distributor, or through the Distributor in certain
instances. Class B shares of the Funds are available only to current Class B
shareholders through reinvestment of dividends and distributions or through
exchanges from existing Class B accounts of other State Street Research funds.
Class S shares of the Funds are available only through certain advisory accounts
of the Investment Manager and other special programs, including programs through
financial professionals with recordkeeping and other services.
Class B(1) shares of the Funds are subject to a contingent deferred
sales charge ("CDSC") at declining rates if redeemed within six years of
purchase. Class B shares of the Funds are subject to a CDSC at declining rates
if redeemed within five years of purchase. Class C shares of the Funds are
subject to a CDSC if redeemed within one year of purchase. Class B(1), Class B
and Class C Reorganization Shares will be subject to a CDSC on redemption to the
same extent that the Class B(1), Class B and Class C New York Tax-Free Fund
shares were so subject. No sales charge will be charged to New York Tax-Free
Fund shareholders on the issuance of the Reorganization Shares, and no CDSC will
be charged by the New York Tax-Free Fund. Following is a brief summary of the
main characteristics of each class:
CLASS A SHARES. Class A shares of each Fund are sold subject to a front-end
sales load of 4.50% or less, with lower sales charges applicable to larger
investments. Class A shares are also subject to a servicing and distribution fee
at a current aggregate annual rate of 0.30% (subject to a maximum annual rate of
0.40%) of assets attributable to Class A shares. Class A shares are generally
not subject to a CDSC, except in the case of certain large purchases of Class A
shares without a sales load which are redeemed within one year of purchase.
CLASS B(1) SHARES. Class B(1) shares of each Fund are sold at net asset value
without any initial sales charge, but subject to a CDSC at declining rates if
the shares are redeemed within six years of purchase. Class B(1) shares of each
Fund are subject to servicing and distribution fees at an aggregate annual rate
of 1.00% of assets attributable to Class B(1) shares. Class B(1) shares convert
automatically to Class A shares eight years after purchase.
CLASS B SHARES. Class B shares of each Fund are sold at net asset value without
any initial sales charge, but subject to a CDSC at declining rates if the shares
are redeemed within five years of purchase. Class B shares of each Fund are
subject to servicing and distribution fees at an aggregate annual rate of 1.00%
of assets attributable to Class B shares. Class B shares convert automatically
to Class A shares eight years after purchase. Note that Class B shares of each
Fund are available only to current shareholders through reinvestment of
dividends and distributions or through exchanges from existing Class B accounts
of other State Street Research funds.
CLASS C SHARES. Class C shares of each Fund are also sold at net asset value
without an initial sales charge, but subject to a CDSC if redeemed within the
first year of purchase. Class C shares are subject to servicing and distribution
fees at an aggregate annual rate of 1.00% of assets attributable to Class C
shares. Class C shares never convert to Class A shares.
CLASS S SHARES. Class S shares of each Fund are sold at net asset value without
an initial sales charge, and are not subject to a CDSC. Class S shares are not
subject to servicing and distribution fees, and therefore have lower annual
expenses than other
12
share classes of the Funds. Note, however, that Class S shares of each Fund are
available only through certain advisory accounts of the investment manager and
through other special programs, including programs through financial
professionals offering recordkeeping and other services. Such programs typically
involve special conditions and separate fees, in addition to those described
here.
Shares of each Fund can generally be exchanged for shares of the same
class of any other publicly offered and available State Street Research Fund.
For more details, see the Fund Prospectuses and SAI.
The Funds have identical redemption procedures. Shares of each Fund may
be redeemed at their net asset value next determined after receipt of the
redemption request, less any applicable CDSC, on any day the New York Stock
Exchange is open. Shares can be redeemed by mail, by telephone, through broker
dealers if a dealer agreement is in place, by wire communication, by Internet,
by check, by Systematic Withdrawal Plan, or by electronic funds transfer.
Each Fund offers the same shareholder services, including reinvestment
privileges, a systematic withdrawal plan (with automatic bank connection), a
dividend allocation program, telephone purchases, telephone exchanges, telephone
redemptions, Internet account access through the EZ-Trader service, and access
to the Investamatic Program, an automatic investment program. Because each Fund
currently offers the same shareholder services, after the closing of the
proposed Reorganization, the same services will continue to be available to the
shareholders of the New York Tax-Free Fund.
See the Fund Prospectuses for further information.
THE PROPOSAL
APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
Shareholders of the New York Tax-Free Fund are being asked to approve
or disapprove the Reorganization between the New York Tax-Free Fund and the
Tax-Exempt Fund (the "Proposal"). The Reorganization is proposed to take place
pursuant to an Agreement and Plan of Reorganization between the New York
Tax-Free Fund and the Tax-Exempt Fund (the "Agreement"), in the form attached to
this Prospectus/Proxy Statement as Appendix A.
The Agreement provides, among other things, for the transfer of all of
the assets of the New York Tax-Free Fund to the Tax-Exempt Fund in exchange for
(i) the issuance to the New York Tax-Free Fund of the Class A, Class B(1), Class
B, Class C, and Class S Reorganization Shares, the number of which will be
calculated based on the value of the net assets attributable to the Class A,
Class B(1), Class B, Class C, and Class S shares, respectively, of the New York
Tax-Free Fund acquired by the Tax-Exempt Fund and the net asset value per Class
A, Class B(1), Class B, Class C, and Class S shares of the Tax-Exempt Fund and
(ii) the assumption by the Tax-Exempt Fund of all of the liabilities of the New
York Tax-Free Fund, all as more fully described below under "Information About
the Reorganization."
After receipt of the Reorganization Shares, the New York Tax-Free Fund
will cause the Class A Reorganization Shares to be distributed to its Class A
shareholders, the Class B(1) Reorganization Shares to be distributed to its
Class B(1) shareholders, the Class B Reorganization Shares to be distributed to
its Class B shareholders, the Class C Reorganization Shares to be distributed to
its Class C shareholders, and the Class S Reorganization Shares to be
distributed to its Class S shareholders, in complete liquidation of the New York
Tax-Free Fund. Each shareholder of the New York Tax-Free Fund will receive a
number of full and fractional Class A, Class B(1), Class B, Class C, and Class S
Reorganization Shares equal in value at the date of the exchange to the
aggregate value of the shareholder's Class A, Class B(1), Class B, Class C, and
Class S New York Tax-Free Fund shares, as the case may be.
BOARD OF TRUSTEES' RECOMMENDATION. THE BOARD OF TRUSTEES OF STATE
STREET RESEARCH TAX-
13
EXEMPT TRUST, ON BEHALF OF THE NEW YORK TAX-FREE FUND, HAS VOTED UNANIMOUSLY TO
APPROVE THE PROPOSED REORGANIZATION AND TO RECOMMEND THAT SHAREHOLDERS OF THE
NEW YORK TAX-FREE FUND ALSO APPROVE THE REORGANIZATION.
REQUIRED SHAREHOLDER VOTE. Approval of the proposed Reorganization for
the New York Tax-Free Fund will require the affirmative vote of the lesser of
(i) 67% or more of the Class A, Class B(1), Class B, Class C and Class S shares
of the New York Tax-Free Fund present or represented by proxy at the Meeting,
voting together as a single class, if holders of more than 50% of the
outstanding Class A, Class B(1), Class B, Class C and Class S shares of the New
York Tax-Free Fund, taken as a single class, are present or represented by proxy
at the Meeting; or (ii) more than 50% of the outstanding Class A, Class B(1),
Class B, Class C and Class S shares, voting together as a single class, provided
a quorum is present at the Meeting. The holders of a majority of shares of the
New York Tax-Free Fund entitled to vote shall be a quorum for the Meeting.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The Board of Trustees of the Trust, including all of its Trustees who
are not "interested persons" of the Trust (the "Independent Trustees"), has
unanimously determined that the Reorganization would be in the best interests of
the New York Tax-Free Fund, and that the interests of the New York Tax-Free
Fund's shareholders would not be diluted as a result of effecting the
Reorganization. At a meeting held on August 1, 2001, the Board unanimously
approved the proposed Reorganization and recommended its approval by
shareholders. In reaching this conclusion, the Board considered a number of
factors, including the smaller size and higher gross expenses of the New York
Tax-Free Fund compared to the Tax-Exempt Fund; the efficiencies that may result
from combining the operations of two separate funds with the same investment
manager, the same multiple class structure, and the same sales load structure;
and the general compatibility of the Funds' investment objectives and policies.
As reflected in the capitalization table in "Information About the
Reorganization--Capitalization" set forth below, the New York Tax-Free Fund is
relatively small in size. As a result, its gross expenses are relatively high
and have been subsidized by the Distributor since inception; see "Table of
Annual Fund Operating Expenses" set forth above. On the other hand, the
Tax-Exempt Fund has substantially more assets and a lower unsubsidized expense
ratio. By combining the assets of the two Funds, shareholders of the combined
Fund could, over time, benefit from certain economies of scale. In particular,
greater portfolio diversification and more efficient portfolio management could
result from a larger asset base. Greater diversification is expected to be
beneficial to shareholders because it may reduce the negative effect which the
adverse performance of any one security or issuer may have on the performance of
the portfolio as a whole. Because each Fund has the same investment manager,
custodian and distributor, combining the Funds could, over time, produce
administrative economies of scale, resulting in net benefits to the Fund's
shareholders. The Board considered, among other things, the benefits to the New
York Tax-Free Fund of the elimination of duplicate services such as producing
separate prospectuses and shareholder reports.
The Board concluded that the above-cited benefits offset, in whole or
in part, the loss to the shareholders of the New York Tax-Free Fund of having a
fund devoted to investments that produce tax-exempt income for federal, New York
State and New York City income tax purposes, as compared to the Tax-Exempt Fund
which focuses primarily on securities exempt from federal income taxes.
14
INFORMATION ABOUT THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The proposed Agreement and Plan
of Reorganization provides that the Tax-Exempt Fund will acquire all of the
assets of the New York Tax-Free Fund in exchange for the issuance of the Class
A, Class B(1), Class B, Class C and Class S Reorganization Shares and for the
assumption by the Tax-Exempt Fund of all of the liabilities of the New York
Tax-Free Fund, all as of the Exchange Date. The following discussion of the
Agreement is qualified in its entirety by the full text of the Agreement, the
form of which is attached as Appendix A to this Prospectus/Proxy Statement.
The New York Tax-Free Fund will sell all of its assets to the
Tax-Exempt Fund, and, in exchange, the Tax-Exempt Fund will assume all of the
liabilities of the New York Tax-Free Fund and deliver to the New York Tax-Free
Fund a number of full and fractional Class A , Class B(1), Class B, Class C and
Class S Reorganization Shares having an aggregate net asset value equal to the
value of the assets of the New York Tax-Free Fund attributable to its Class A,
Class B(1), Class B, Class C and Class S shares, respectively, less the value of
the liabilities of the New York Tax-Free Fund assumed by the Tax-Exempt Fund
attributable to each such class of shares.
Immediately following the Exchange Date, the New York Tax-Free Fund
will distribute pro rata to its shareholders of record as of the close of
business on the Exchange Date the full and fractional Reorganization Shares
received by the New York Tax-Free Fund, with Reorganization Shares being
distributed to corresponding classes of shareholders of the New York Tax-Free
Fund. As a result of the proposed transaction, each holder of Class A, Class
B(1), Class B, Class C, and Class S shares of the New York Tax-Free Fund will
receive a number of Class A, Class B(1), Class B, Class C, and Class S
Reorganization Shares equal in aggregate value at the Exchange Date to the value
of the Class A, Class B(1), Class B, Class C, and Class S shares of the New York
Tax-Free Fund held by the shareholder.
This distribution of Reorganization Shares will be accomplished by the
establishment of accounts on the share records of the Tax-Exempt Fund in the
names of the New York Tax-Free Fund shareholders, each account representing the
respective number of full and fractional Class A, Class B(1), Class B, Class C,
and Class S Reorganization Shares due such shareholder. Because the shares of
the Tax-Exempt Fund will not be represented by certificates, certificates for
Reorganization Shares will not be issued. After the Exchange Date, certificates
originally representing shares of Class A or Class S of the New York Tax-Free
Fund will be rendered nonnegotiable. The accounts established with the
Tax-Exempt Fund will have the same shareholder account privileges and elections
as existed with the corresponding former account in the New York Tax-Free Fund.
The consummation of the Reorganization is subject to the conditions set
forth in the Agreement, any of which may be waived, except for the condition
requiring shareholder approval of the Agreement. The Agreement may be terminated
and the Reorganization abandoned at any time, before or after approval by the
shareholders of the New York Tax-Free Fund, prior to the Exchange Date, by
mutual consent of the Funds or, if any condition set forth in the Agreement has
not been fulfilled and has not been waived by the party entitled to its
benefits, by such party.
Except for the trading costs associated with the repositioning of the
portfolio of the New York Tax-Free Fund prior to the Reorganization, the fees
and expenses for the Reorganization, including legal and accounting expenses,
portfolio transfer taxes (if any) or other similar expenses incurred in
connection with the consummation of the transactions contemplated by the
Agreement and Plan of Reorganization, will be allocated ratably between the two
Funds in proportion to their net assets as of the date of the Reorganization,
except that the costs of proxy materials and proxy solicitations will be borne
by the New York Tax-Free Fund. However, to the extent that any payment by either
Fund of such fees and expenses would result in the disqualification of either
Fund as a "regulated investment company" within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code"), such fees and
15
expenses will be paid directly by the party incurring them.
DESCRIPTION OF THE REORGANIZATION SHARES. Full and fractional
Reorganization Shares will be issued to the New York Tax-Free Fund's
shareholders in accordance with the procedure under the Agreement as described
above. The Reorganization Shares are Class A, Class B(1), Class B, Class C, and
Class S shares of the Tax-Exempt Fund, which have characteristics identical to
those of the corresponding class of New York Tax-Free Fund shares with respect
to sales charges, CDSCs, conversion and 12b-1 servicing and distribution fees.
ORGANIZATION. Each of the Reorganization Shares will be fully paid and
nonassessable by the Tax-Exempt Fund when issued, will be transferable without
restriction, and will have no preemptive or conversion rights, except that
certain Class B(1) and Class B Reorganization Shares convert automatically into
Class A shares as described above. The Second Amended and Restated Master Trust
Agreement of State Street Research Tax-Exempt Trust, as amended (the
"Declaration of Trust"), permits the Trustees of the Trust to divide its shares,
without shareholder approval, into two or more series of shares representing
separate investment portfolios and to further divide any such series, without
shareholder approval, into two or more classes of shares, such series and/or
classes having such preferences and special or relative rights and privileges as
the Trustees may determine. The Tax-Exempt Fund's shares are currently divided
into five classes. The rights of shareholders of the New York Tax-Free Fund and
the Tax-Exempt Fund are identical.
FEDERAL INCOME TAX CONSEQUENCES. The Reorganization will be a tax-free
reorganization. The Reorganization will be conditioned on receipt of an opinion
from Ropes & Gray, special counsel to the Trust, to the effect that, on the
basis of the existing provisions of the Code, current administrative rules and
court decisions, for federal income tax purposes: (i) under Section 361 of the
Code, no gain or loss will be recognized by the New York Tax-Free Fund as a
result of the Reorganization; (ii) under Section 354 of the Code, no gain or
loss will be recognized by shareholders of the New York Tax-Free Fund on the
distribution of Reorganization Shares to them in exchange for their shares of
the New York Tax-Free Fund; (iii) under Section 358 of the Code, the aggregate
tax basis of the Reorganization Shares that a New York Tax-Free Fund shareholder
receives in place of his or her New York Tax-Free Fund shares will be the same
as the aggregate basis of its New York Tax-Free Fund shares; (iv) under Section
1223(1) of the Code, a New York Tax-Free Fund shareholder's holding period for
the Reorganization Shares received pursuant to the Agreement will be determined
by including the holding period for the New York Tax-Free Fund shares exchanged
for the Reorganization Shares, provided that the shareholder held the New York
Tax-Free Fund shares as a capital asset; (v) under Section 1032 of the Code, no
gain or loss will be recognized by the Tax-Exempt Fund as a result of the
Reorganization; (vi) under Section 362(b) of the Code, the Tax-Exempt Fund's tax
basis in the assets that the Tax-Exempt Fund receives from the New York Tax-Free
Fund will be the same as the New York Tax-Free Fund's basis in such assets; and
(vii) under Section 1223(2) of the Code, the Tax-Exempt Fund's holding period in
such assets will include the New York Tax-Free Fund's holding period in such
assets. The opinion will be based on certain factual certifications made by
officers of the Trust, and will also include certain qualifications and be based
on customary assumptions.
A substantial portion of the portfolio assets of the New York Tax-Free
Fund may be sold in connection with the Reorganization of that Fund into the
Tax-Exempt Fund. The actual tax impact of such sales will depend on the
difference between the price at which such portfolio assets are sold and the
selling Fund's basis in such assets. Any capital gains recognized in these sales
will be distributed to the selling Fund's shareholders as capital gain dividends
(to the extent of net capital gains) and/or ordinary dividends (to the extent of
net short-term capital gains) during or with respect to the year of sale, and
such distributions generally will be taxable to shareholders other than
tax-exempt shareholders.
Prior to the Exchange Date, the New York Tax-Free Fund will declare a
distribution to shareholders which, together with all previous distributions,
will have the effect of distributing to shareholders all of its investment
company taxable income (computed without regard to the deduction for dividends
paid), net tax-exempt income and net realized capital gains, if any, through the
Exchange Date.
The foregoing description of the federal income tax consequences of the
Reorganization is made without regard to the particular facts and
16
circumstances of any shareholder. Shareholders are urged to consult their own
tax advisers as to the specific consequences to them of the Reorganization,
including the applicability and effect of state, local, foreign and other tax
laws.
CAPITALIZATION. The following tables show the capitalization of the
Tax-Exempt Fund and the New York Tax-Free Fund as of December 31, 2000 and of
the Tax-Exempt Fund on a pro forma basis as of that date, giving effect to the
proposed acquisition by the Tax-Exempt Fund of the assets and liabilities of the
New York Tax-Free Fund at net asset value:
CAPITALIZATION TABLES
6/30/01
(UNAUDITED)
NEW YORK TAX-EXEMPT
TAX-FREE FUND PRO FORMA
FUND COMBINED
Net assets (000's omitted)
Class A $18,143 $159,277 $177,420
Class B(1) 5,175 13,227 18,402
Class B 11,917 37,328 49,245
Class C 855 2,098 2,953
Class S 20,865 6,565 27,430
Shares outstanding (000's omitted)
Class A 2,223 19,452 21,668
Class B(1) 634 1,619 2,252
Class B 1,460 4,560 6,015
Class C 105 256 361
Class S 2,553 804 3,358
Net asset value per share
Class A $8.16 $8.19 $8.19
Class B(1) 8.16 8.17 8.17
Class B 8.16 8.19 8.19
Class C 8.17 8.19 8.19
Class S 8.17 8.17 8.17
Pro forma financial statements of the Tax-Exempt Fund as of and for the
year ended [June 30, 2001] are included in the Reorganization SAI. Because the
Agreement provides that the Tax-Exempt Fund will be the "surviving" Fund
following the Reorganization and because the Tax-Exempt Fund's investment
objective and policies will remain unchanged by the Reorganization, the pro
forma financial statements reflect the transfer of the assets and liabilities of
the New York Tax-Free Fund to the Tax-Exempt Fund as contemplated by the
Agreement.
INFORMATION ABOUT THE FUNDS
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS OF SHAREHOLDERS. The
Declaration of Trust does not provide for annual meetings of shareholders, and
the Trust does not currently intend to hold such a meeting for shareholders of
the New York Tax-Free Fund in 2001. Shareholder proposals for inclusion in a
proxy statement for any subsequent meeting of the New York Tax-Free Fund's
shareholders must be received by the Trust a reasonable period of time prior to
any such meeting. If the Reorganization is consummated, there will be no
subsequent meetings of the shareholders of the New York Tax-Free Fund.
17
Other information regarding the Funds, including information with
respect to their investment objectives, policies and restrictions and financial
history may be found in the Reorganization SAI, the Fund Prospectuses, the SAI,
the Annual Reports and the Semi-Annual Reports, which are available upon request
by calling 1-877-773-8637.
Other information filed by the Trust with respect to the Funds can be
inspected and copied at the Public Reference Facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates, or at no charge from the EDGAR database on the SEC's
web site at "www.sec.gov."
October [__], 2001
18
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as
of ________, 2001 in Boston, Massachusetts, by and between State Street Research
Tax-Exempt Trust (the "Trust"), a Massachusetts business trust, on behalf of its
New York Tax-Free Fund series (the "Acquired Fund"), and State Street Research
Tax-Exempt Trust, on behalf of its Tax-Exempt Fund series (the "Acquiring
Fund").
PLAN OF REORGANIZATION
(a) The Acquired Fund will sell, assign, convey, transfer and deliver to
the Acquiring Fund on the Exchange Date (as defined in Section 6) all of its
properties and assets. In consideration therefor, the Acquiring Fund shall, on
the Exchange Date, assume all of the liabilities of the Acquired Fund existing
at the Valuation Time (as defined in Section 3(c)) and deliver to the Acquired
Fund (i) a number of full and fractional Class A shares of beneficial interest
of the Acquiring Fund (the "Class A Reorganization Shares") having an aggregate
net asset value equal to the value of the assets of the Acquired Fund
attributable to the Class A shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the Class A shares of the Acquired Fund assumed by the
Acquiring Fund on that date, (ii) a number of full and fractional Class B(1)
shares of beneficial interest of the Acquiring Fund (the "Class B(1)
Reorganization Shares") having an aggregate net asset value equal to the value
of the assets of the Acquired Fund attributable to the Class B(1) shares of the
Acquired Fund transferred to the Acquiring Fund on such date less the value of
the liabilities of the Acquired Fund attributable to the Class B(1) shares of
the Acquired Fund assumed by the Acquiring Fund on that date, (iii) a number of
full and fractional Class B shares of beneficial interest of the Acquiring Fund
(the "Class B Reorganization Shares") having an aggregate net asset value equal
to the value of the assets of the Acquired Fund attributable to the Class B
shares of the Acquired Fund transferred to the Acquiring Fund on such date less
the value of the liabilities of the Acquired Fund attributable to the Class B
shares of the Acquired Fund assumed by the Acquiring Fund on that date, (iv) a
number of full and fractional Class C shares of beneficial interest of the
Acquiring Fund (the "Class C Reorganization Shares") having an aggregate net
asset value equal to the value of the assets of the Acquired Fund attributable
to the Class C shares of the Acquired Fund transferred to the Acquiring Fund on
such date less the value of the liabilities of the Acquired Fund attributable to
the Class C shares of the Acquired Fund assumed by the Acquiring Fund on that
date, and (v) a number of full and fractional Class S shares of beneficial
interest of the Acquiring Fund (the "Class S Reorganization Shares") having an
aggregate net asset value equal to the value of the assets of the Acquired Fund
attributable to the Class S shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the Class S shares of the Acquired Fund assumed by the
Acquiring Fund on that date . (The Class A Reorganization Shares, the Class B(1)
Reorganization Shares, the Class B Reorganization Shares, the Class C
Reorganization Shares, and the Class S Reorganization Shares shall be referred
to collectively as the "Reorganization Shares"). It is intended that the
reorganization described in this Agreement shall be a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").
(b) Upon consummation of the transaction described in paragraph (a) of
this Agreement, the Acquired Fund shall distribute in complete liquidation to
its Class A, Class B(1), Class B, Class C and Class S shareholders of record as
of the Exchange Date the Class A, Class B(1), Class B, Class C and Class S
Reorganization Shares, each such shareholder being entitled to receive that
proportion of such Class A, Class B(1), Class B, Class C and Class S
Reorganization Shares which the number of Class A, Class B(1), Class B, Class C
and Class S shares of beneficial interest of the Acquired Fund held by such
shareholder bears to the number of Class A, Class B(1), Class B, Class C and
Class S shares of the Acquired Fund outstanding on such date. Certificates
representing the Class A, Class B(1), Class B, Class C and Class S
Reorganization Shares will not be issued. All issued and outstanding Class A,
Class B(1), Class B, Class C and Class S shares of the Acquired Fund will
simultaneously be canceled on the books of the Acquired Fund.
(c) As promptly as practicable after the liquidation of the Acquired Fund
as aforesaid, the Acquired Fund shall be liquidated pursuant to the provisions
of the Second Amended and Restated Master Trust Agreement of State Street
Research Tax-Exempt Trust, as amended (the "Declaration of Trust"), and
applicable law, and its legal
19
existence terminated. Any reporting responsibility of the Acquired Fund is and
shall remain the responsibility of the Acquired Fund up to and including the
Exchange Date and, if applicable, such later date on which the Acquired Fund is
liquidated.
AGREEMENT
The Acquiring Fund and the Acquired Fund agree as follows:
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ACQUIRING FUND. The
Acquiring Fund represents and warrants to and agrees with the Acquired Fund
that:
a. The Acquiring Fund is a series of the Trust, a Massachusetts business
trust duly established and validly existing under the laws of The Commonwealth
of Massachusetts, and has power to own all of its properties and assets and to
carry out its obligations under this Agreement.
b. The statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Acquiring Fund as of and for the year ended December
31, 2000 have been furnished to the Acquired Fund. Such statement of assets and
liabilities and schedule fairly present the financial position of the Acquiring
Fund as of that date and such statements of operations and changes in net assets
fairly reflect the results of its operations and changes in net assets for the
periods covered thereby in conformity with generally accepted accounting
principles.
c. The current prospectuses and statement of additional information of
the Trust, each dated May 1, 2001 (collectively, as from time to time amended,
the "Prospectus"), which have previously been furnished to the Acquired Fund,
did not as of such date and does not contain as of the date hereof, with respect
to the Acquiring Fund, any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
d. There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Acquiring Fund, threatened
against the Trust or the Acquiring Fund, which assert liability on the part of
the Acquiring Fund. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
e. The Acquiring Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown belonging to it on its statement
of assets and liabilities as of December 31, 2000, those incurred in the
ordinary course of its business as an investment company since December 31, 2000
and those to be assumed pursuant to this Agreement. Prior to the Exchange Date,
the Acquiring Fund will endeavor to quantify and to reflect on its balance sheet
all of its material known liabilities and will advise the Acquired Fund of all
material liabilities, contingent or otherwise, incurred by it subsequent to
December 31, 2000, whether or not incurred in the ordinary course of business.
f. As of the Exchange Date, the Acquiring Fund will have filed all
federal and other tax returns and reports which, to the knowledge of the Trust's
officers, are required to have been filed by the Acquiring Fund, and will have
paid or will pay all federal and other taxes shown to be due on said returns or
on any assessments received by the Acquiring Fund. All tax liabilities of the
Acquiring Fund have been adequately provided for on its books, and no tax
deficiency or liability of the Acquiring Fund has been asserted, and no question
with respect thereto has been raised or is under audit, by the Internal Revenue
Service or by any state or local tax authority for taxes in excess of those
already paid.
g. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated by this Agreement, except such as may be required
under the Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the Investment Company Act of
1940, as amended (the "1940 Act"), and state
20
insurance, securities or blue sky laws (which term as used herein shall include
the laws of the District of Columbia and of Puerto Rico).
h. The registration statement (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") by the Trust on Form
N-14 on behalf of the Acquiring Fund and relating to the Reorganization Shares
issuable hereunder and the proxy statement of the Acquired Fund relating to the
meeting of the Acquired Fund shareholders referred to in Section 7(a) herein
(together with the documents incorporated therein by reference, the "Acquired
Fund Proxy Statement"), on the effective date of the Registration Statement, (i)
will comply in all material respects with the provisions of the 1933 Act, the
1934 Act and the 1940 Act and the rules and regulations thereunder and (ii) will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and at the time of the shareholders meeting referred to in
Section 7(a) and on the Exchange Date, the prospectus which is contained in the
Registration Statement, as amended or supplemented by any amendments or
supplements filed with the Commission by the Trust, and the Acquired Fund Proxy
Statement will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that none of the
representations and warranties in this subsection shall apply to statements in
or omissions from the Registration Statement or the Acquired Fund Proxy
Statement made in reliance upon and in conformity with information furnished in
writing by the Acquired Fund to the Acquiring Fund specifically for use in the
Registration Statement or the Acquired Fund Proxy Statement.
i. There are no material contracts outstanding to which the Acquiring
Fund is a party, other than as are or will be disclosed in the Prospectus, the
Registration Statement or the Acquired Fund Proxy Statement.
j. The Acquiring Fund qualifies and will at all times through the
Exchange Date qualify for taxation as a "regulated investment company" under
Sections 851 and 852 of the Code.
k. The issuance of the Reorganization Shares pursuant to this Agreement
will be in compliance with all applicable federal and state securities laws.
l. The Reorganization Shares to be issued to the Acquired Fund have been
duly authorized and, when issued and delivered pursuant to this Agreement, will
be legally and validly issued and will be fully paid and non-assessable by the
Acquiring Fund, and no shareholder of the Acquiring Fund will have any
preemptive right of subscription or purchase in respect thereof.
m. All issued and outstanding shares of the Acquiring Fund are, and at
the Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Acquiring Fund shares, nor is there outstanding any security convertible
into any Acquiring Fund shares.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ACQUIRED FUND. The
Acquired Fund represents and warrants to and agrees with the Acquiring Fund
that:
a. The Acquired Fund is a series of the Trust, a Massachusetts business
trust duly established and validly existing under the laws of The Commonwealth
of Massachusetts, and has power to own all of its properties and assets and to
carry out this Agreement.
b. A statement of assets and liabilities, statement of operations,
statement of changes in net assets and a schedule of investments (indicating
their market values) of the Acquired Fund as of and for the year ended December
31, 2000 have been furnished to the Acquiring Fund. Such statement of assets and
liabilities and schedule fairly present the financial position of the Acquired
Fund as of that date, and such statements of operations and changes in net
assets fairly reflect the results of its operations and changes in net assets
for the period covered thereby, in conformity with generally accepted accounting
principles.
21
c. The Prospectus, which has been previously furnished to the Acquiring
Fund, did not contain as of such dates and does not contain, with respect to the
Acquired Fund, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
d. There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Acquired Fund, threatened
against the Trust or the Acquired Fund, which assert liability on the part of
the Acquired Fund. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
e. There are no material contracts outstanding to which the Acquired Fund
is a party, other than as are disclosed in the Trust's registration statement on
Form N-lA or the Prospectus.
f. The Acquired Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown on the Acquired Fund's statement
of assets and liabilities as of December 31, 2000 referred to above and those
incurred in the ordinary course of its business as an investment company since
such date. Prior to the Exchange Date, the Acquired Fund will endeavor to
quantify and to reflect on its balance sheet all of its material known
liabilities and will advise the Acquiring Fund of all material liabilities,
contingent or otherwise, incurred by it subsequent to December 31, 2000, whether
or not incurred in the ordinary course of business.
g. As of the Exchange Date, the Acquired Fund will have filed all federal
and other tax returns and reports which, to the knowledge of the Trust's
officers, are required to have been filed by the Acquired Fund, and has paid or
will pay all federal and other taxes shown to be due on said returns or on any
assessments received by the Acquired Fund. All tax liabilities of the Acquired
Fund have been adequately provided for on its books, and no tax deficiency or
liability of the Acquired Fund has been asserted, and no question with respect
thereto has been raised or is under audit, by the Internal Revenue Service or by
any state or local tax authority for taxes in excess of those already paid.
h. At the Exchange Date, the Trust, on behalf of the Acquired Fund, will
have full right, power and authority to sell, assign, transfer and deliver the
Investments (as defined below) and any other assets and liabilities of the
Acquired Fund to be transferred to the Acquiring Fund pursuant to this
Agreement. At the Exchange Date, subject only to the delivery of the Investments
and any such other assets and liabilities as contemplated by this Agreement, the
Acquiring Fund will acquire the Investments and any such other assets and
liabilities subject to no encumbrances, liens or security interests whatsoever
and without any restrictions upon the transfer thereof, except as previously
disclosed to the Acquiring Fund. As used in this Agreement, the term
"Investments" shall mean the Acquired Fund's investments shown on the schedule
of its investments as of December 31, 2000, referred to in Section 2(b) hereof,
as supplemented with such changes in the portfolio as the Acquired Fund shall
make, and changes resulting from stock dividends, stock split-ups, mergers and
similar corporate actions through the Exchange Date.
i. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, 1934 Act, the 1940 Act or state insurance, securities or
blue sky laws.
j. The Registration Statement and the Acquired Fund Proxy Statement, on
the effective date of the Registration Statement, (i) will comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder and (ii) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and at the time of the shareholders meeting referred to in Section 7(a) and on
the Exchange Date, the Acquired Fund Proxy Statement and the Registration
Statement will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that none of the
representations and warranties in this subsection shall apply to statements in
or omissions from the Registration Statement or the Acquired Fund Proxy
Statement made in reliance
22
upon and in conformity with information furnished in writing by the Acquiring
Fund to the Acquired Fund or the Trust specifically for use in the Registration
Statement or the Acquired Fund Proxy Statement.
k. The Acquired Fund qualifies and will at all times through the Exchange
Date qualify for taxation as a "regulated investment company" under Section 851
and 852 of the Code.
l. At the Exchange Date, the Acquired Fund will have sold such of its
assets, if any, as are necessary to assure that, after giving effect to the
acquisition of the assets of the Acquired Fund pursuant to this Agreement, the
Acquiring Fund will remain a "diversified company" within the meaning of Section
5(b)(1) of the 1940 Act and in compliance with such other mandatory investment
restrictions as are set forth in the Prospectus, as amended through the Exchange
Date. Notwithstanding the foregoing, nothing herein will require the Acquired
Fund to dispose of any assets if, in the reasonable judgment of the Acquired
Fund, such disposition would adversely affect the tax-free nature of the
reorganization or would violate the Acquired Fund's fiduciary duty to its
shareholders.
m. All issued and outstanding shares of the Acquired Fund are, and at the
Exchange Date will be, duly authorized, validly issued, fully paid and
non-assessable by the Acquired Fund. The Acquired Fund does not have outstanding
any options, warrants or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into any
of the Acquired Fund shares.
3. REORGANIZATION.
a. Subject to the requisite approval of the shareholders of the Acquired
Fund and to the other terms and conditions contained herein (including the
Acquired Fund's obligation to distribute to its shareholders all of its
investment company taxable income, net tax-exempt income and net capital gain as
described in Section 8(k)), the Acquired Fund agrees to sell, assign, convey,
transfer and deliver to the Acquiring Fund, and the Acquiring Fund agrees to
acquire from the Acquired Fund, on the Exchange Date all of the Investments and
all of the cash and other properties and assets of the Acquired Fund, whether
accrued or contingent (including cash received by the Acquired Fund upon the
liquidation by the Acquired Fund of any Investments), in exchange for that
number of shares of beneficial interest of the Acquiring Fund provided for in
Section 4 and the assumption by the Acquiring Fund of all of the liabilities of
the Acquired Fund, whether accrued or contingent, existing at the Valuation Time
(as defined below) except for the Acquired Fund's liabilities, if any, arising
in connection with this Agreement. Pursuant to this Agreement, the Acquired Fund
will, as soon as practicable after the Exchange Date, distribute all of the
Class A, Class B(1), Class B, Class C and Class S Reorganization Shares received
by it to the shareholders of the Acquired Fund in exchange for their Class A,
Class B(1), Class B, Class C and Class S shares of the Acquired Fund.
b. The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
interest, cash or such dividends, rights and other payments received by it on or
after the Exchange Date with respect to the Investments and other properties and
assets of the Acquired Fund, whether accrued or contingent, received by it on or
after the Exchange Date. Any such distribution shall be deemed included in the
assets transferred to the Acquiring Fund at the Exchange Date and shall not be
separately valued unless the securities in respect of which such distribution is
made shall have gone "ex" such distribution prior to the Valuation Time, in
which case any such distribution which remains unpaid at the Exchange Date shall
be included in the determination of the value of the assets of the Acquired Fund
acquired by the Acquiring Fund.
c. The Valuation Time shall be the close of regular trading on the New York
Stock Exchange (generally 4:00 p.m. Eastern time) on the Exchange Date or such
earlier or later day as may be mutually agreed upon in writing by the parties
hereto (the "Valuation Time").
4. TRANSACTION. On the Exchange Date, the Acquiring Fund will deliver to
the Acquired Fund (i) a number of full and fractional Class A Reorganization
Shares having an aggregate net asset value equal to the value of the assets of
the Acquired Fund attributable to the Class A shares of the Acquired Fund
transferred to the Acquiring Fund on such date less the value of the liabilities
of the Acquired Fund attributable to the Class A shares of the Acquired Fund
assumed by the Acquiring Fund on that date, (ii) a number of full and fractional
Class B(1) Reorganization Shares having an aggregate net asset value equal to
the value of the assets of the Acquired Fund attributable to the Class B(1)
shares of the Acquired Fund transferred to the Acquiring Fund on such date less
the
23
value of the liabilities of the Acquired Fund attributable to the Class B(1)
shares of the Acquired Fund assumed by the Acquiring Fund on that date, (iii) a
number of full and fractional Class B Reorganization Shares having an aggregate
net asset value equal to the value of the assets of the Acquired Fund
attributable to the Class B shares of the Acquired Fund transferred to the
Acquiring Fund on such date less the value of the liabilities of the Acquired
Fund attributable to the Class B shares of the Acquired Fund assumed by the
Acquiring Fund on that date, (iv) a number of full and fractional Class C
Reorganization Shares having an aggregate net asset value equal to the value of
the assets of the Acquired Fund attributable to the Class C shares of the
Acquired Fund transferred to the Acquiring Fund on such date less the value of
the liabilities of the Acquired Fund attributable to the Class C shares of the
Acquired Fund assumed by the Acquiring Fund on that date, and (v) a number of
full and fractional Class S Reorganization Shares having an aggregate net asset
value equal to the value of the assets of the Acquired Fund attributable to the
Class S shares of the Acquired Fund transferred to the Acquiring Fund on such
date less the value of the liabilities of the Acquired Fund attributable to the
Class S shares of the Acquired Fund assumed by the Acquiring Fund on that date.
a. The net asset value of the Class A, Class B(1), Class B, Class C and
Class S Reorganization Shares to be delivered to the Acquired Fund, the value of
the assets attributable to the Class A, Class B(1), Class B, Class C and Class S
shares of the Acquired Fund, and the value of the liabilities attributable to
the Class A, Class B(1), Class B, Class C and Class S shares of the Acquired
Fund to be assumed by the Acquiring Fund, shall in each case be determined as of
the Valuation Time.
b. The net asset value of the Class A, Class B(1), Class B, Class C and
Class S Reorganization Shares shall be computed in the manner set forth in the
Prospectus. The value of the assets and liabilities of the Class A, Class B(1),
Class B, Class C and Class S shares of the Acquired Fund shall be determined by
the Acquiring Fund, in cooperation with the Acquired Fund, pursuant to
procedures which the Acquiring Fund would use in determining the fair market
value of the Acquiring Fund's assets and liabilities.
c. No adjustment shall be made in the net asset value of either the
Acquired Fund or the Acquiring Fund to take into account differences in realized
and unrealized gains and losses.
d. The Acquired Fund shall distribute the Reorganization Shares to the
shareholders of the Acquired Fund by furnishing written instructions to the
Acquiring Fund's transfer agent, which will as soon as practicable set up open
accounts for the Acquired Fund shareholder in accordance with such written
instructions.
e. The Acquiring Fund shall assume all liabilities of the Acquired Fund,
whether accrued or contingent, in connection with the acquisition of assets and
subsequent dissolution of the Acquired Fund or otherwise, except for the
Acquired Fund's liabilities, if any, pursuant to this Agreement.
5. EXPENSES, FEES, ETC.
a. All fees and expenses, including legal and accounting expenses,
portfolio transfer taxes (if any) or other similar expenses incurred in
connection with the consummation by the Acquired Fund and the Acquiring Fund of
the transactions contemplated by this Agreement will be allocated ratably
between the Acquiring Fund and the Acquired Fund in proportion to their net
assets as of the Valuation Time, except that the costs of proxy materials and
proxy solicitation will be borne by the Acquired Fund; provided, however, that
such expenses will in any event be paid by the party directly incurring such
expenses if and to the extent that the payment by the other party of such
expenses would result in the disqualification of the Acquiring Fund or the
Acquired Fund, as the case may be, as a "regulated investment company" within
the meaning of Section 851 of the Code.
b. In the event the transactions contemplated by this Agreement are not
consummated for any reason, then each of the Acquiring Fund and the Acquired
Fund shall bear all of its own expenses incurred in connection with such
transactions.
c. Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
24
6. EXCHANGE DATE. Delivery of the assets of the Acquired Fund to be
transferred, assumption of the liabilities of the Acquired Fund to be assumed,
and the delivery of the Reorganization Shares to be issued shall be made at
Boston, Massachusetts, as soon as practicable after shareholder approval of the
Reorganization, the date and time upon which such delivery is to take place
being referred to herein as the "Exchange Date."
7. Meetings of Shareholders; Dissolution.
a. The Trust, on behalf of the Acquired Fund, agrees to call a meeting of
the Acquired Fund's shareholders as soon as is practicable after the effective
date of the Registration Statement for the purpose of considering the sale of
all of its assets to and the assumption of all of its liabilities by the
Acquiring Fund as herein provided and adopting this Agreement.
b. The Acquired Fund agrees that the liquidation and dissolution of the
Acquired Fund will be effected in the manner provided in the Declaration of
Trust in accordance with applicable law and that on and after the Exchange Date,
the Acquired Fund shall not conduct any business except in connection with its
liquidation and dissolution.
c. The Acquiring Fund has, in consultation with the Acquired Fund and based
in part on information furnished by the Acquired Fund, filed the Registration
Statement with the Commission. Each of the Acquired Fund and the Acquiring Fund
will cooperate with the other, and each will furnish to the other the
information relating to itself required by the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder to be set forth in the
Registration Statement.
8. CONDITIONS TO THE ACQUIRING FUND'S OBLIGATIONS. The obligations of the
Acquiring Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Acquired Fund
entitled to vote.
b. That there shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
c. That the Acquiring Fund shall have received an opinion of Ropes & Gray,
counsel to the Acquired Fund, dated the Exchange Date and in form satisfactory
to the Acquiring Fund, to the effect that (i) the Trust is a Massachusetts
business trust duly formed and is validly existing under the laws of The
Commonwealth of Massachusetts and has the power to own all its properties and to
carry on its business as presently conducted; (ii) this Agreement has been duly
authorized, executed and delivered by the Trust on behalf of the Acquired Fund
and, assuming that the Registration Statement, the Prospectus and the Acquired
Fund Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by Trust on
behalf of the Acquiring Fund, is a valid and binding obligation of the Trust and
the Acquired Fund; (iii) the Trust, on behalf of the Acquired Fund, has power to
sell, assign, convey, transfer and deliver the assets contemplated hereby and,
upon consummation of the transactions contemplated hereby in accordance with the
terms of this Agreement, the Acquired Fund will have duly sold, assigned,
conveyed, transferred and delivered such assets to the Acquiring Fund; (iv) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate the Declaration of Trust or
By-Laws or any provision of any agreement known to such counsel to which the
Trust or the Acquired Fund is a party or by which it is bound; and (v) to the
knowledge of such counsel, no consent, approval, authorization or order of any
court or governmental authority is required for the consummation by the Trust on
behalf of the Acquired Fund of the transactions contemplated hereby, except such
as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such
as may be required under state securities or blue sky laws.
d. That the Acquiring Fund shall have received an opinion of Ropes & Gray
(which opinion would be based upon certain factual representations and subject
to certain qualifications), dated the Exchange Date and in form satisfactory to
the Acquiring Fund, to the effect that, on the basis of the existing provisions
of the Code,
25
current administrative rules, and the court decisions, for federal income
tax purposes (i) no gain or loss will be recognized by the Acquiring Fund upon
receipt of the Investments transferred to the Acquiring Fund and assumption of
liabilities pursuant to this Agreement in exchange for the Reorganization
Shares; (ii) the basis to the Acquiring Fund of the Investments will be the same
as the basis of the Investments in the hands of the Acquired Fund immediately
prior to such exchange; and (iii) the Acquiring Fund's holding periods with
respect to the Investments will include the respective periods for which the
Investments were held by the Acquired Fund.
e. That the assets of the Acquired Fund to be acquired by the Acquiring
Fund will include no assets which the Acquiring Fund, by reason of charter
limitations or of investment restrictions disclosed in the Registration
Statement in effect on the Exchange Date, may not properly acquire.
f. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Acquiring Fund, threatened
by the Commission.
g. That the Trust shall have received from the Commission, any relevant
state securities administrator and any relevant state insurance regulatory
authority such order or orders as are reasonably necessary or desirable under
the 1933 Act, the 1934 Act, the 1940 Act, and any applicable state securities or
blue sky laws or state insurance laws in connection with the transactions
contemplated hereby, and that all such orders shall be in full force and effect.
h. That all actions taken by the Trust on behalf of the Acquired Fund in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to the
Acquiring Fund and its counsel.
i. That, prior to the Exchange Date, the Acquired Fund shall have declared
a dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to the shareholders of the Acquired Fund (i) all
of the excess of (x) the Acquired Fund's investment income excludable from gross
income under Section 103(a) of the Code over (y) the Acquired Fund's deductions
disallowed under Sections 265 and 171(a)(2) of the Code, (ii) all of the
Acquired Fund's investment company taxable income (as defined in Section 852 of
the Code) (computed without regard to any deduction for dividends paid) and
(iii) all of the Acquired Fund's net capital gain realized (after reduction for
any capital loss carryover), in each case for its taxable years ending on or
after December 31, 2000 and on or prior to the Exchange Date.
j. That the Acquired Fund shall have furnished to the Acquiring Fund its
records as to the tax cost to the Acquired Fund of the securities delivered to
the Acquiring Fund pursuant to this Agreement, together with any such other
evidence as to such tax cost as the Acquiring Fund may reasonably request.
k. That the Acquired Fund's custodian shall have delivered to the Acquiring
Fund a record identifying all of the assets of the Acquired Fund held or
maintained by such custodian as of the Valuation Time.
l. That the Acquired Fund's transfer agent shall have provided to the
Acquiring Fund (i) the originals or true copies of all of the records of the
Acquired Fund in the possession of such transfer agent as of the Exchange Date,
(ii) its records setting forth the number of shares of the Acquired Fund
outstanding as of the Valuation Time, and (iii) the name and address of each
holder of record of any shares and the number of shares held of record by each
such shareholder.
9. CONDITIONS TO THE ACQUIRED FUND'S OBLIGATIONS. The obligations of the
Acquired Fund hereunder shall be subject to the following conditions:
a. That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the requisite votes of the
holders of the outstanding shares of beneficial interest of the Acquired Fund
entitled to vote.
26
b. That the Trust, on behalf of the Acquiring Fund, shall have accepted
from the Acquired Fund a statement, dated as of the Exchange Date, of the
Acquired Fund of its liabilities which the Acquiring Fund will assume all of the
liabilities of the Acquired Fund existing at the Valuation Time in connection
with the transactions contemplated by this Agreement, other than liabilities
arising pursuant to this Agreement.
c. That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.
d. That the Acquired Fund shall have received an opinion of Ropes & Gray,
counsel to the Acquiring Fund, in form satisfactory to counsel to the Acquired
Fund, and dated the Exchange Date, to the effect that (i) the Trust is a
Massachusetts business trust duly formed and is validly existing under the laws
of The Commonwealth of Massachusetts and has the power to own all its properties
and to carry on its business as presently conducted; (ii) the Reorganization
Shares to be delivered to the Acquired Fund as provided for by this Agreement
are duly authorized and upon such delivery will be validly issued and will be
fully paid and non-assessable by the Trust and the Acquiring Fund and no
shareholder of the Acquiring Fund has any preemptive right to subscription or
purchase in respect thereof; (iii) this Agreement has been duly authorized,
executed and delivered by the Trust on behalf of the Acquiring Fund and,
assuming that the Prospectus, the Registration Statement and the Acquired Fund
Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by the
Trust on behalf of the Acquired Fund, is a valid and binding obligation of the
Trust and the Acquiring Fund; (iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated hereby will not,
violate the Declaration of Trust or By-Laws, or any provision of any agreement
known to such counsel to which the Trust or the Acquiring Fund is a party or by
which it is bound; (v) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by the Trust on behalf of the Acquiring Fund of the
transactions contemplated herein, except such as have been obtained under the
1933 Act, the 1934 Act and the 1940 Act and such as may be required under state
securities or blue sky laws; and (vi) the Registration Statement has become
effective under the 1933 Act, and to best of the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the 1933 Act.
e. That the Acquired Fund shall have received an opinion of Ropes & Gray,
dated the Exchange Date (which opinion would be based upon certain factual
representations and subject to certain qualifications), in form satisfactory to
the Acquired Fund and its counsel, to the effect that, on the basis of the
existing provisions of the Code, current administrative rules, and court
decisions, for federal income tax purposes: (i) no gain or loss will be
recognized by the Acquired Fund as a result of the reorganization; (ii) no gain
or loss will be recognized by shareholders of the Acquired Fund on the
distribution of Reorganization Shares to them in exchange for their shares of
the Acquired Fund; (iii) the aggregate tax basis of the Reorganization Shares
that an Acquired Fund's shareholder receives in place of its Acquired Fund
shares will be the same as the basis of its Acquired Fund shares; and (iv) an
Acquired Fund's shareholder's holding period for the Reorganization Shares
received pursuant to the Agreement will be determined by including the holding
period for the Acquired Fund shares exchanged for the Reorganization Shares,
provided that the shareholder held the Acquired Fund shares as a capital asset.
f. That all actions taken by the Trust on behalf of the Acquiring Fund in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to the
Acquired Fund and its counsel.
g. That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Acquiring Fund, threatened
by the Commission.
h. That the Trust shall have received from the Commission, any relevant
state securities administrator and any relevant state insurance regulatory
authority such order or orders as are reasonably necessary or desirable under
the 1933 Act, the 1934 Act, the 1940 Act, and any applicable state securities or
blue sky laws or state insurance laws in connection with the transactions
contemplated hereby, and that all such orders shall be in full force and effect.
27
10. WAIVER OF CONDITIONS. Each of the Acquired Fund or the Acquiring Fund,
after consultation with counsel and by consent of the trustees of the Trust on
its behalf, or an officer authorized by such trustees, may waive any condition
to their respective obligations hereunder, except for the conditions set forth
in Sections 8(a) and 9(a).
11. NO BROKER, ETC. Each of the Acquired Fund and the Acquiring Fund
represents that there is no person who has dealt with it or the Trust who by
reason of such dealings is entitled to any broker's or finder's or other similar
fee or commission arising out of the transactions contemplated by this
Agreement.
12. TERMINATION. The Acquired Fund and the Acquiring Fund may, by consent
of the trustees of the Trust on behalf of each Fund, terminate this Agreement.
13. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
14. DECLARATION OF TRUST. A copy of the Declaration of Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed by the undersigned officer or
assistant officer of the Acquired Fund or Acquiring Fund on behalf of the
trustees of the Trust on behalf of the Acquired Fund and on behalf of the
Acquiring Fund, as officer or assistant officer and not individually and that
the obligations of this instrument are not binding upon any of the trustees,
officers, agents or shareholders of State Street Research Tax-Exempt Trust
individually but are binding only upon the assets and property of the Acquired
Fund and the Acquiring Fund.
STATE STREET RESEARCH TAX-EXEMPT TRUST,
on behalf of its State Street Research
New York Tax-Free Fund series
By:_________________________________
STATE STREET RESEARCH TAX-EXEMPT TRUST,
on behalf of its State Street Research
Tax-Exempt Fund series
By:_________________________________
28
[FRONT OF PROXY CARD]
VOTE BY TELEPHONE, ON THE INTERNET OR BY MAIL
Vote this proxy card TODAY! Your prompt response will save your Fund
the expense of additional mailings.
Option 1: Automated Touch Tone Voting: Call toll-free 1-888-221-0697
Option 2: Telephone Rep. Assisted Voting: Call toll-free 1-866-720-8160
Option 3: Over the Internet at www.ssrfunds.com
Option 4: Return this proxy card using the enclosed envelope
Special Meeting of Shareholders - February [__], 2002 *** CONTROL
NUMBER:***
[arrow] Please detach at perforation before mailing [arrow]
STATE STREET RESEARCH NEW YORK TAX-FREE FUND
a series of State Street Research Tax-Exempt Trust
The undersigned hereby appoints Richard S. Davis, Francis J. McNamara,
III, Darman A. Wing and Amy L. Simmons, and each of them, as proxies with full
power of substitution to act for and vote on behalf of the undersigned all
shares of the above fund, which the undersigned would be entitled to vote if
personally present at the Special Meeting of the Shareholders to be held at the
principal offices of the Fund, One Financial Center, 31st Floor, Boston,
Massachusetts 02111, at 4:00 P.M. on February [__], 2002, or at any adjournments
thereof, on the items described on the other side of this form, as set forth in
the Notice of Special Meeting of Shareholders and the accompanying Proxy
Statement dated October [__], 2001, receipt of which is acknowledged by the
undersigned. PLEASE INDICATE ANY CHANGE OF ADDRESS BELOW. This proxy may be
revoked at any time prior to the exercise of the powers conferred thereby. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
IF NOT VOTING BY PHONE OR THE INTERNET, IT IS IMPORTANT THAT THIS
PROXY BE SIGNED AND RETURNED IN THE ENCLOSED ENVELOPE.
DATE:
--------------------------------------
NOTE: Please date and sign exactly as name or names appear hereon and return in
the enclosed envelope, which requires no postage. When signing as attorney,
executor, trustee, guardian or officer of a corporation, please give title as
such.
-------------------------------------------
-------------------------------------------
(Signatures) if held jointly (Title(s), if required)
CONTINUED ON REVERSE SIDE
PLEASE DETACH AND RETURN BOTTOM PORTION IN THE ENCLOSED ENVELOPE
If a choice is specified for a proposal, this proxy will be voted as indicated.
IF NO CHOICE IS SPECIFIED FOR A PROPOSAL, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Meeting. The Board of Trustees
unanimously recommends a vote FOR the proposal.
1. To approve or disapprove an Agreement and Plan of Reorganization
providing for the acquisition of all of the assets and liabilities of
the State Street Research New York Tax-Free Fund by the State Street
Research Tax-Exempt Fund, another series of the State Street Research
Tax-Exempt Trust.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN ON REVERSE SIDE
REQUEST TO RECONSIDER
PRIOR [ABSTENTION] ["AGAINST" VOTE]
(date)
To Shareholders of the State Street Research New York Tax-Free Fund:
Recently we solicited your proxy vote on an important proposal. Because you
returned a proxy form which indicated that you [abstained from voting] [voted
"Against"] the proposal, which is still open, we are contacting you again to ask
that you reconsider your [abstention] [vote "Against"] and vote "For" the
proposal. The Fund is very close to the requisite vote to approve the proposals
and your vote may make a difference. The meeting has been adjourned to allow
more time to obtain votes.
If the proposal is approved by the shareholders of the New York Tax-Free Fund,
the State Street Research Tax-Exempt Fund would acquire substantially all of the
assets and liabilities of the New York Tax-Free Fund. As a result of this
transaction, you would receive, in exchange for your shares of the New York
Tax-Free Fund, shares of the corresponding class of the Tax-Exempt Fund with an
aggregate value equivalent to the aggregate net asset value of your New York
Tax-Free Fund investment on the transaction date. The proposal is described in
more detail in the Proxy Statement. Please call 1-87-SSR-FUNDS (1-877-773-8637)
if you need another copy of the Proxy Statement.
Please indicate your vote, sign and return promptly the enclosed Supplemental
Proxy form in the special accompanying envelope. Returning your Supplemental
Proxy form in the accompanying envelope will expedite processing and does not
require any postage from you. (If your return envelope is for Federal Express,
call for free pick-up at 1-800-238-5355.)
You may receive a telephone call urging you to return your Supplemental Proxy
form. If you have any questions, please contact the State Street Research
Service Center toll-free nationwide at 1-87-SSR-FUNDS (1-877-773-8637) between 8
a.m. and 6 p.m. eastern time.
Thank you.
State Street Research
Service Center
SUPPLEMENTAL PROXY FORM
Special Meeting of Shareholders--February [__], 2002
The undersigned hereby submits this Supplemental Proxy to make the below
indicated changes to the [vote (s)] (abstention (s)] previously submitted by the
undersigned in connection with a Special Meeting of Shareholders as described in
a related Proxy Statement dated October [__], 2001.
THIS SUPPLEMENTAL PROXY WILL SUPERSEDE ANY PRIOR PROXY FORM SUBMITTED.
If a choice is specified for the proposal, this proxy will be voted as
indicated. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL
(AND ANY OTHER PROPOSALS). In their discretion the proxies are authorized to
vote upon such other business as may properly come before the Meeting. The Board
of Trustees unanimously recommends a vote FOR the proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
IF NOT VOTING BY PHONE OR THE INTERNET, IT IS IMPORTANT
THAT THIS PROXY BE SIGNED AND RETURNED
IN THE ENCLOSED ENVELOPE.
DATE:
NOTE: Please date and sign exactly
as name or names appear hereon and
return in the enclosed envelope,
which requires no postage. When
signing as attorney, executor,
trustee, guardian or officer of a
corporation, please give title as
such.
----------------------------------
----------------------------------
(Signatures) if held jointly
(Title(s), if required)
CONTINUED ON REVERSE SIDE
1. To approve or disapprove an Agreement and Plan of Reorganization
providing for the acquisition of all of the assets and liabilities of
the State Street Research New York Tax-Free Fund by the State Street
Research Tax-Exempt Fund, another series of the State Street Research
Tax-Exempt Trust.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN ON REVERSE SIDE
[Custom House tower graphic]
State Street Research Online Proxy Vote Center
Please Enter Control Number from Your Proxy Card:
-----------------------------
Check here / / to vote in favor of all proposals as the Board recommends,
then click the VOTE button below.
-OR-
To vote on each proposal separately, click the VOTE button only.
[VOTE BUTTON]
If you have specific questions on voting or voting procedures, please call
1-866-760-8160 between the hours of 9:00 a.m. and 6:00 p.m. eastern time, Monday
through Friday. For questions on a specific proxy proposal, please call a
Service Center representative at 1-87-SSR-FUNDS (1-877-773-8637) between the
hours of 8:00 a.m. and 6:00 p.m. eastern time, Monday through Friday.
[GRAPHIC IMAGE OF GENERIC PROXY CARD]
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Proxy Voting Form
State Street Research Tax-Exempt Trust:
State Street Research New York Tax-Free Fund
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
Proposal 1. To approve or disapprove an Agreement and Plan of
Reorganization providing for the acquisition of all
of the assets and liabilities of the State Street
Research New York Tax-Free Fund by the State Street
Research Tax-Exempt Fund, another series of the State
Street Research Tax- Exempt Trust.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please refer to the proxy statement for a complete
discussion of the proposal.
To receive email confirmation, enter your email address here:
------------------
Press this button to /SUBMIT/ your Proxy Vote.
Please review your selections carefully before voting.
If you vote more than once on the same proposal, only your last (most recent)
vote will be considered valid.
PROPOSED TELEPHONE SCRIPT
STATE STREET RESEARCH NEW YORK TAX-FREE FUND
Special Meeting of Shareholders
February [ ], 2002
THIS IS (NAME OF CALLER] ________________________________ CALLING ON BEHALF OF
YOUR STATE STREET RESEARCH NEW YORK TAX-FREE FUND.
MR./MRS. AS OF YET WE HAVE NOT RECEIVED YOUR VOTED PROXY. SINCE A NEW PROXY HAS
JUST BEEN MAILED TO YOU, WE ARE HOPING THAT YOU WOULD TAKE THIS OPPORTUNITY TO
VOTE YOUR PROXY OVER THE PHONE.
[IF THE SHAREHOLDER WISHES TO VOTE]
GREAT, MR./MRS.
IF THE PROPOSAL IS APPROVED BY THE SHAREHOLDERS OF THE YOUR FUND, ANOTHER FUND,
THE TAX-EXEMPT FUND, WOULD ACQUIRE YOUR FUND. AS A RESULT, YOU WOULD RECEIVE, IN
EXCHANGE FOR YOUR SHARES OF THE NEW YORK TAX-FREE FUND, SHARES OF THE TAX-EXEMPT
FUND. THE NEW SHARES YOU RECEIVE WILL HAVE THE SAME VALUE AS YOUR CURRENT
SHARES.
[IF THE SHAREHOLDER DECLINES TO VOTE] THANK YOU FOR YOUR TIME AND HAVE A GOOD
DAY.
[BUCKSLIP]
[STATE STREET RESEARCH LOGO]
Four easy ways to vote your proxy.
Choose the method that's most convenient for you
and vote your proxy today!
1. Vote by Automated Touch Tone Telephone. If a telephone number appears
on the upper left corner of your proxy card, you may vote by telephone.
Call Toll-Free: 1-888-221-0697
Enter the control number that appears on the front of your proxy card and follow
the voice prompts to record your vote. Telephone voting is available 24 hours a
day, 7 days a week. If you have received more than one proxy card, each card has
a different control number and must be voted separately. You can vote all of
your cards on the same phone call.
2. Vote by Speaking with a Telephone Representative. If a telephone number
appears on the upper left corner of your proxy card, you may vote by
telephone. A telephone representative will assist you with the voting
process. They are available between 9 a.m. and 6 p.m. Monday through
Friday eastern time.
Call Toll-Free: 1-877-392-4944
3. Vote over the Internet. If a control number appears on the front of your
proxy card, you may vote over the Internet. Log on to:
www.ssrfunds.com
and click on the proxy voting button. Enter the control number that appears on
the front of your proxy card and follow the instructions on the screen. You can
vote all cards in the same session.
4. Vote by mail. Sign your proxy cards and return them in the enclosed
postage-paid envelope. Note: Your proxy is not valid unless it is signed.
Note: If you vote by telephone or Internet, please do not return your proxy
card(s).
STATE STREET RESEARCH TAX-EXEMPT TRUST
FORM N-14
PART B
STATEMENT OF ADDITIONAL INFORMATION
______________, 2001
This Statement of Additional Information (the "SAI") relates to
proposed reorganization (the "Reorganization") of the State Street Research New
York Tax-Free Fund (the "New York Tax-Free Fund") into the State Street Research
Tax-Exempt Fund (the "Tax-Exempt Fund"). Each of the Funds is a series of State
Street Research Tax-Exempt Trust a Massachusetts business trust.
This SAI contains information which may be of interest to shareholders
relating to the Reorganization, but which is not included in the
Prospectus/Proxy Statement dated October [__], 2001 (the "Prospectus/Proxy
Statement") of the Tax-Exempt Fund. As described in the Prospectus/Proxy
Statement, the Reorganization would involve the transfer of substantially all
the assets of, and the assumption of substantially all the liabilities of, the
New York Tax-Free Fund, in exchange for shares of the Tax-Exempt Fund. The New
York Tax-Free Fund would distribute the Tax-Exempt Fund shares it receives to
its shareholders in complete liquidation of the New York Tax-Free Fund.
This SAI is not a prospectus, and should be read in conjunction with
the Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed
with the Securities and Exchange Commission, and is available upon request and
without charge by writing to State Street Research Tax-Exempt Trust, One
Financial Center, Boston, MA 02111, or by calling 1-877-773-8637.
I. ADDITIONAL INFORMATION ABOUT THE TAX-EXEMPT FUND AND THE NEW YORK
TAX-FREE FUNDS.
Incorporated by reference to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement Form N-1A (filed on April 26, 2001)
(Registration Nos. 33-2703 and 811-4558) (Accession No. 0000912057-01-510727).
II. FINANCIAL STATEMENTS.
This SAI is accompanied by the Annual Reports for the year ended
December 31, 2000 of the Tax-Exempt Fund and the New York Tax-Free Fund and by
the Semi-Annual Reports of the Funds for the period ended June 30, 2001, which
contain historical financial information regarding the Funds. Such reports have
been filed with the Securities and Exchange Commission, and the financial
statements and report of independent accountants therein are incorporated herein
by reference.
Pro forma financial statements of the Tax-Exempt Fund for its
Reorganization with the New York Tax-Free Fund are provided on the following
pages.
STATE STREET RESEARCH TAX-EXEMPT FUND
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
JUNE 30, 2001
(UNAUDITED)
PRINCIPAL AMOUNT VALUE
------------------------------------ ------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 100.5%
CALIFORNIA 11.3%
Santa Clara County Financing
Authority, (VMC Facility
Replacement Project), 1994
Series A Bonds, Ambac
Insured, 7.75%, 11/15/2008 $1,000,000 $0 $1,000,000 $1,236,750 $0 $1,236,750
Foothill/Eastern
Transportation Corridor
Agency, Series 1995A Senior
Lien Convertible Capital
Appreciation Bonds,
0.00%, 1/01/2010 1,695,000 0 1,695,000 1,617,827 0 1,617,827
Port Hueneme Redevelopment
Agency, Central Community
Project, 1993 Tax Allocation
Refunding Bonds, Ambac
Insured, 5.50%, 5/01/2014 1,800,000 0 1,800,000 1,956,546 0 1,956,546
California Pollution Control
Financing Authority, Pollution
Control Refunding Revenue
Bonds, (San Diego Gas &
Electric Company), 1996
Series A, 5.90%, 6/01/2014 2,200,000 0 2,200,000 2,216,896 0 2,216,896
Oakland Joint Powers Financing
Authority, Lease Revenue
Refunding Bonds, (Oakland
Convention Center), Series 2001,
Ambac Insured, 5.50%,
10/01/2014 2,000,000 0 2,000,000 2,178,040 0 2,178,040
California Educational Facilities
Authority, Series 1994 Revenue
Bonds, (Southwestern University
Project), Series 1995, 6.60%,
11/01/2014 1,000,000 0 1,000,000 1,094,170 0 1,094,170
County of Madera, California,
Certificates of Participation
(Valley Childrens Hospital
Project), Series 1995, MBIA
Insured, 6.50%, 3/15/2015 1,000,000 0 1,000,000 1,182,010 0 1,182,010
1
PRINCIPAL AMOUNT VALUE
------------------------------------ ------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
----------------------------------------------------------------------------------------------------------------
California Pollution Control
Financing Authority, Pollution
Control Revenue Bonds,
(San Diego Gas & Electric
Company), 1991 Series A,
Subject to AMT, 6.80%,
6/01/2015 $ 600,000 $0 $ 600,000 $ 643,656 $0 $ 643,656
Roseville Joint Union High
School District, 1992 General
Obligation Bonds, Series B,
FGIC Insured, 0.00%,
8/01/2015 1,000,000 0 1,000,000 487,510 0 487,510
Foothill/Eastern Transportation
Corridor Agency, Toll Road
Revenue Bonds Series 1995 A
(Fixed Rate), Capital Appreciation
Bonds, Senior Lien Series A,
0.00%, 1/01/2019 5,000,000 0 5,000,000 1,996,050 0 1,996,050
Redevelopment Agency of the
City of Pittsburg, California,
Los Medanos Community
Development, Project, Tax
Allocation Bonds, Series 1999,
Ambac Insured, 0.00%,
8/01/2019 2,000,000 0 2,000,000 746,240 0 746,240
County of Sacramento, Laguna
Creek Ranch/Elliott Ranch
Community Facilities District
No. 1, Improvement Area No. 2
Special Tax Refunding Bonds,
(Elliott Ranch), 6.30%,
9/01/2021 3,000,000 0 3,000,000 3,107,070 0 3,107,070
Anaheim Public Financing
Authority, Lease Revenue Bonds,
(Anaheim Public Improvement
Project), Subordinate, 1997
Series C Capital Appreciation
Bonds, FSA Insured, 0.00%,
9/01/2025 3,125,000 0 3,125,000 807,969 0 807,969
City of Davis, Public Facilities
Financing Authority, Local Agency
Revenue Bonds, 1997 Series A,
6.60%, 9/01/2025 1,030,000 0 1,030,000 1,068,882 0 1,068,882
2
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
Sacramento, California, City
Financing Authority, Senior
Revenue Bonds, (Sacramento
Convention Center Hotel Project),
1999 Series A, 6.25%,
1/01/2030 $ 4,000,000 $0 $ 4,000,000 $ 4,028,960 $0 $ 4,028,960
Foothill/Eastern Transportation
Corridor Agency, Toll Road
Revenue Bonds Series 1995A
Senior Lien, Prerefunding to
1/01/2007 @ 96.22, 6.50%,
1/01/2032* 6,000,000 0 6,000,000 6,837,900 0 6,837,900
----------- ----------- -----------
31,206,476 0 31,206,476
----------- ----------- -----------
COLORADO 5.8%
Colorado Department of
Transportation, Transportation
Revenue Anticipation Notes
Series 2001A, MBIA Insured,
5.50%, 6/15/2013 3,000,000 0 3,000,000 3,244,770 0 3,244,770
E-470 Public Highway Authority,
Senior Revenue Bonds,
Series 1997B, (Capital
Appreciation Bonds), MBIA
Insured, 0.00%, 9/01/2016 5,000,000 0 5,000,000 2,247,600 0 2,247,600
Eaglebend Affordable Housing
Corporation, Multifamily Housing
Project Revenue Refunding
Bonds, Series 1997A, 6.45%,
7/01/2021 2,000,000 0 2,000,000 1,966,940 0 1,966,940
Arapahoe County, Colorado,
Public Highway Authority,
Capital Improvement Trust Fund,
Highway Revenue Bonds
(E-470 Project), Prerefunded to
8/31/2005 @ 103, 7.00%,
8/31/2026 5,000,000 0 5,000,000 5,780,600 0 5,780,600
Colorado Housing and Finance
Authority, Single Family Program
Senior and Subordinate Bonds,
2001 Sereis A-2, Senior Bonds
(AMT), 6.50%, 8/01/2031 1,200,000 0 1,200,000 1,320,648 0 1,320,648
3
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
Northwest Parkway Public
Highway Authority, Revenue
Bonds, Series 2001D, First Tier
Subordinate Bonds, (Current
Interest Bonds), Ambac and FSA
Insured, 7.125%, 6/15/2041 $ 1,500,000 $0 $ 1,500,000 $ 1,488,150 $0 $ 1,488,150
----------- ---------- -----------
16,048,708 0 16,048,708
----------- ---------- -----------
CONNECTICUT 4.2%
State of Connecticut, Special Tax
Obligation Bonds, Transportation
Infrastructure Purposes,
1991 Series A, 6.50%,
10/01/2012 1,500,000 0 1,500,000 1,758,915 0 1,758,915
State of Connecticut Health and
Educational Facilities Authority,
Revenue Bonds, University of
Hartford Issue, Series D, 6.80%,
7/01/2022 5,000,000 0 5,000,000 5,122,150 0 5,122,150
State of Connecticut Health and
Educational Facilities Authority,
Revenue Bonds, Quinnipiac
College Issue, Series D, 6.00%,
7/01/2023 1,465,000 0 1,465,000 1,429,210 0 1,429,210
State of Connecticut Health and
Educational Facilities Authority,
Revenue Bonds, Quinnipiac
College Issue, Series D,
Prerefunded to 7/1/2023 @
98.25, 6.00%, 7/01/2023 3,000,000 0 3,000,000 3,223,410 0 3,223,410
----------- ---------- -----------
11,533,685 0 11,533,685
----------- ---------- -----------
FLORIDA 10.5%
Grand Haven Community
Development District (Flagler
County, Florida), Special
Assessment Bonds, Series 1997 A,
6.30%, 5/01/2002 1,660,000 0 1,660,000 1,664,831 0 1,664,831
Heritage Harbor Development
District, (Hillsborough County,
Florida), Special Assessment
Revenue Bonds, Series 1997B,
6.00%, 5/01/2003 920,000 0 920,000 921,021 0 921,021
4
PRINCIPAL AMOUNT VALUE
------------------------------------- -------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
-------------------------------------------------------------------------------------------------------------------
City of Tampa, Florida,
Guaranteed Entitlement
Refunding Revenue Bonds,
Series 2001, Ambac Insured,
Refunding, 6.00%,
10/01/2008 $1,430,000 $0 $1,430,000 $1,599,398 $0 $1,599,398
City of Tampa, Florida, Utilities
Tax and Special Revenue
Refunding Bonds, Series 2001,
Ambac Insured, Refunding, 6.00,
10/01/2009 1,000,000 0 1,000,000 1,122,550 0 1,122,550
Refunding Cerificates of
Participation, (School Board of
Collier County, Florida Master
Lease Program), Series 2001A,
FSA Insured, 5.50%,
2/15/2011+ 1,400,000 0 1,400,000 1,481,382 0 1,481,382
City of Tampa, Florida Water and
Sewer System Refunding Revenue
Bonds, Series 2002, FSA Insured,
5.50%, 10/01/2011 1,000,000 0 1,000,000 1,059,260 0 1,059,260
Orlando Utilities Commission,
Water and Electric Subordinated
Revenue Bonds, Series D,
6.75%, 10/01/2017 5,000,000 0 5,000,000 5,965,350 0 5,965,350
Grand Haven Community
Development District (Flagler
County, Florida), Special
Assessment Bonds, Series 1997B,
6.90%, 5/01/2019 710,000 0 710,000 721,395 0 721,395
North Springs Improvement
District, (Broward County,
Florida), Special Assessment
Bonds, Series 1997, (Heron Bay
Project), 7.00%, 5/01/2019 707,000 0 707,000 735,068 0 735,068
Orange County, Florida, Health
Facilities Authority, First Mortgage
Revenue Bonds, Series 1996,
(Orlando Lutheran Towers, Inc.),
8.75%, 7/01/2026 5,000,000 0 5,000,000 5,392,850 0 5,392,850
5
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
Volusia County Educational
Facility Authority, Educational
Facilities Revenue Bonds, (Embry-
Riddle Aeronautical University
Project), Series 1996A, 6.125%,
10/15/2026 $ 5,000,000 $0 $ 5,000,000 $ 5,144,400 $0 $ 5,144,400
Northern Palm Beach County,
Florida, Improvement District,
Water Control and Improvement
Bonds, Unit of Development
No. 9A, Series 1996A, 7.30%,
8/01/2027 3,000,000 0 3,000,000 3,204,180 0 3,204,180
----------- ---------- -----------
29,011,685 0 29,011,685
----------- ---------- -----------
GEORGIA 7.4%
State of Georgia, General
Obligation Bonds, Series 1992B,
6.25%, 3/01/2011 4,300,000 0 4,300,000 4,955,664 0 4,955,664
State of Georgia, General
Obligation Bonds, Series 1994E,
6.75%, 12/01/2012 1,000,000 0 1,000,000 1,204,670 0 1,204,670
City of Atlanta, Airport General
Revenue Refunding Bonds,
Series 2000C, Subject to AMT,
FGIC Insured, 6.25%,
1/01/2014 3,070,000 0 3,070,000 3,388,206 0 3,388,206
Municipal Electric Authority of
Georgia, Project One Subordinated
Bonds, Series 1998A, MBIA
Insured, 5.25%, 1/01/2014 2,000,000 0 2,000,000 2,098,300 0 2,098,300
Metropolitan Atlanta Rapid
Transit Authority, Georgia, Sales
Tax Revenue Bonds, Refunding
Series P, Ambac Insured, 6.25%,
7/01/2020 4,930,000 0 4,930,000 5,683,649 0 5,683,649
City of Atlanta, Airport General
Revenue and Refunding Bonds,
Series 2000A, FGIC Insured,
5.50%, 1/01/2026 3,000,000 0 3,000,000 3,070,920 0 3,070,920
----------- ---------- -----------
20,401,409 0 20,401,409
----------- ---------- -----------
6
PRINCIPAL AMOUNT VALUE
------------------------------------ -------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
----------------------------------------------------------------------------------------------------------------
MAINE 1.1%
Finance Authority of Maine,
Revenue Obligation Securities,
(Huntington Common Project),
Series 1997A, 7.50%,
9/01/2027 $4,000,000 $0 $4,000,000 $2,936,960 $0 $2,936,960
---------- -------- ----------
MARYLAND 2.7%
Howard County, Maryland,
Multifamily Mortgage Refunding
Bonds, Series 1994, (Chase Glen
Project), Mandatory Put
7/1/2004 @ 100, 7.00%,
7/01/2024 5,000,000 0 5,000,000 5,255,950 0 5,255,950
County of Anne Arundel,
Maryland, Special Obligation
Revenue Bonds, (Arundel Mills
Project), 7.10%, 7/01/2029 2,000,000 0 2,000,000 2,138,100 0 2,138,100
---------- -------- ----------
7,394,050 0 7,394,050
---------- -------- ----------
MASSACHUSETTS 5.4%
Massachusetts Industrial Finance
Agency, First Mortgage Revenue
Bonds, (Berkshire Retirement
Community, Lenox - 1994 Issue)
Series A, 6.375%, 7/01/2005 1,500,000 0 1,500,000 1,534,620 0 1,534,620
Massachusetts Bay Transportation
Authority, General Transportation
System Bonds, 1994 Series A,
Refunding Bonds, 7.00%,
3/01/2014 3,385,000 0 3,385,000 4,090,637 0 4,090,637
The Commonwealth of
Massachusetts, General
Obligation Bonds, Consolidated
Loan of 2000, Series B, 5.25%,
6/10/2017 3,000,000 0 3,000,000 3,054,420 0 3,054,420
Massachusetts Water Pollution
Abatement Trust, Water Pollution
Abatement Revenue Bonds,
(MWRA Program), Subordinated
Series 1999 A, 6.00%,
8/01/2017 3,000,000 0 3,000,000 3,387,540 0 3,387,540
7
PRINCIPAL AMOUNT VALUE
-------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
-----------------------------------------------------------------------------------------------------------------------
Fitchburg, Massachusetts, General
Obligation Bond, MBIA Insured,
4.50%, 2/15/2019 $ 1,000,000 $0 $ 1,000,000 $ 920,440 $0 $ 920,440
Massachusetts Industrial Finance
Agency, (Marina Bay LLC
Project - 1997 Issue), 7.50%,
12/01/2027 2,000,000 0 2,000,000 1,966,000 0 1,966,000
----------- -------- -----------
14,953,657 0 14,953,657
----------- -------- -----------
MICHIGAN 0.4%
State of Michigan, General
Obligation Refunding Bonds,
Series 2001, 5.50%,
12/01/2015 1,000,000 0 1,000,000 1,078,170 0 1,078,170
----------- -------- -----------
MINNESOTA 0.6%
Minnesota Housing Finance
Authority, Single Family
Mortgage Bonds, 1994 Series E,
5.90%, 7/01/2025 1,675,000 0 1,675,000 1,720,828 0 1,720,828
----------- -------- -----------
MISSOURI 0.8%
State Environmental Improvement
and Energy Resources Authority
(State of Missouri), Water
Pollution Control Revenue
Refunding Bonds (State Revolving
Fund Program - Master Trust),
Series 2001B, 5.50%,
7/01/2016 2,000,000 0 2,000,000 2,149,620 0 2,149,620
----------- -------- -----------
NEVADA 4.6%
Clark County School District,
Nevada, General Obligation
(Limited Tax), Building and
Renovation Bonds, Series 1997B,
FGIC Insured, 5.25%,
6/15/2017 5,045,000 0 5,045,000 5,081,425 0 5,081,425
State of Nevada, General Obligation
(Limited Tax) Bonds, Nevada
Municipal Bond Bank Project
Nos. 49 and 50, Series
November 1, 1995A, FGIC
Insured, 5.50%, 11/01/2025 5,000,000 0 5,000,000 5,060,650 0 5,060,650
8
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
Director of the State of Nevada,
Department of Business and
Industry, Las Vegas Monorail
Project Revenue Bonds, 1st Tier
Series 2000, 5.375%,
1/01/2040 $ 2,500,000 $0 $ 2,500,000 $ 2,448,250 $0 $ 2,448,250
----------- ---------- -----------
12,590,325 0 12,590,325
----------- ---------- -----------
NEW JERSEY 3.0%
New Jersey Highway Authority
(Garden State Parkway), Senior
Parkway Revenue Refunding
Bonds, 2001 Series, FGIC Insured,
5.50%, 1/01/2016+ 3,000,000 0 3,000,000 3,190,320 0 3,190,320
New Jersey Transportation Trust
Fund Authority, Transportation
System Bonds, 1996 Series B,
5.00%, 6/15/2017 5,000,000 0 5,000,000 5,030,900 0 5,030,900
----------- ---------- -----------
8,221,220 0 8,221,220
----------- ---------- -----------
NEW MEXICO 1.5%
City of Farmington, New Mexico,
Pollution Control Revenue
Refunding Bonds, 1997 Series D,
(Public Service Company of
New Mexico San Juan Project),
6.375%, 4/01/2022 4,000,000 0 4,000,000 4,043,560 0 4,043,560
----------- ---------- -----------
NEW YORK 24.9%
City of Syracuse, New York,
(Syracuse Hancock International
Airport), Certificates of
Participation, Series 1992,
Subject to AMT, 6.60%,
1/01/2006 0 1,185,000 1,185,000 0 1,221,664 1,221,664
Dormitory Authority of the State
of New York, Nyack Hospital
Revenue Bonds, Series 1996,
6.00%, 7/01/2006 0 1,500,000 1,500,000 0 1,440,000 1,440,000
City of Niagara Falls, Niagara
County, New York, Water
Treatment Plant Bonds,
Series 1994, MBIA Insured,
Subject to AMT, 8.50%,
11/01/2006 0 1,000,000 1,000,000 0 1,214,320 1,214,320
9
PRINCIPAL AMOUNT VALUE
----------------------------------- --------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
-------------------------------------------------------------------------------------------------------------------
County of Onondaga, New York,
General Improvement (Serial)
Bonds, 1992, 5.70%,
4/01/2007 $0 $2,000,000 $2,000,000 $0 $2,192,380 $2,192,380
Lyons Community Health
Initatives Corp., Facility
Revenue Bonds, Series 1994,
6.55%, 9/01/2009 0 470,000 470,000 0 509,005 509,005
New York State Environmental
Facilities Corporation, State Water
Pollution Control, Revolving Fund
Revenue Bonds, Series 1994 D,
(Pooled Loan Issue), 6.70%,
11/15/2009 0 2,000,000 2,000,000 0 2,234,280 2,234,280
Tompkins County Industrial
Development Agency, Life Care
Community Revenue Bonds, 1994
(Kendal at Ithaca Inc., Project),
7.70%, 6/01/2011 0 1,430,000 1,430,000 0 1,463,691 1,463,691
Port Authority of New York and
New Jersey, Special Project Bonds,
Series 4, KIAC Partners Project,
Subject to AMT, 6.75%,
10/01/2011 3,000,000 1,000,000 4,000,000 3,191,280 1,063,760 4,255,040
Dormitory Authority of the State
of New York, Canisius College,
Revenue Bonds, Series 1995,
CapMAC Insured, 0.00%,
7/01/2013 0 1,550,000 1,550,000 0 876,525 876,525
New York Local Government
Assistance Corp., (A Public
Benefit Corporation of the State
of New York), Series 1993E
Refunding Bonds, 6.00%,
4/01/2014 2,500,000 2,500,000 5,000,000 2,838,575 2,838,575 5,677,150
New York State Thruway Authority,
Service Contract Revenue Bonds,
Prerefunded to 4/1/2005 @
102, 6.25%, 4/01/2014 0 1,000,000 1,000,000 0 1,117,810 1,117,810
Long Island Power Authority,
Electric System General Revenue
Bonds, Series 1998A, FSA
Insured, 0.00%, 12/01/2014 0 2,000,000 2,000,000 0 1,043,660 1,043,660
10
PRINCIPAL AMOUNT VALUE
------------------------------------ -------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
-----------------------------------------------------------------------------------------------------------------
County of Nassau, New York,
General Obligation Refunding
Bonds, Series G, MBIA Insured,
5.45% 1/15/2015 $0 $1,000,000 $1,000,000 $0 $1,073,980 $1,073,980
Dormitory Authority of the State
of New York, Montefiore Medical
Center, FHA-Insured Mortgage
Hospital Revenue Bonds,
Series 1996, AMBAC Insured,
5.25%, 2/01/2015 0 1,000,000 1,000,000 0 1,022,870 1,022,870
Dormitory Authority of the State
of New York, State University
Educational Facilities, Revenue
Bonds, Series C, FSA Insured,
5.75%, 5/15/2016 0 1,000,000 1,000,000 0 1,106,320 1,106,320
Dormitory Authority of the State
of New York, City University
System Consolidated, Series A,
AMBAC Insured, 5.625%,
7/01/2016 0 1,000,000 1,000,000 0 1,093,140 1,093,140
New York City Transitional Finance
Authority, Future Tax Secured
Bonds, Fiscal 2001 Series C,
(Fixed Rate Bonds), 5.375%,
2/01/2017 0 500,000 500,000 0 518,370 518,370
County of Monroe, New York,
Public Improvement Refunding
Bonds, Series A, 6.00%,
3/01/2017 0 1,535,000 1,535,000 0 1,735,241 1,735,241
Dormitory Authority of the State
of New York, Yeshiva University,
Insured Revenue Bonds,
Series 2001, Ambac Insured,
5.375%, 7/01/2017 0 500,000 500,000 0 518,805 518,805
Dormitory Authority of the State
of New York, Department of
Health of the State of New York,
Revenue Bonds, Series 1996,
5.75%, 7/01/2017 5,000,000 0 5,000,000 5,196,900 0 5,196,900
City of New York, General
Obligation Refunding Bonds,
Series H, 6.00% 8/01/2017 0 1,500,000 1,500,000 0 1,599,915 1,599,915
11
PRINCIPAL AMOUNT VALUE
------------------------------------ -------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
-----------------------------------------------------------------------------------------------------------------
Dormitory Authority of the State
of New York, Mental Health
Services Facilities Improvement
Revenue Bonds, 5.50%
8/15/2017 $0 $ 995,000 $ 995,000 $0 $1,020,144 $1,020,144
Dormitory Authority of the State
of New York, Prerefunded Mental
Health Services Facilities
Improvement Revenue Bonds,
5.50% 8/15/2017 0 5,000 5,000 0 5,528 5,528
State of New York Mortgage
Agency, Homeowner Mortgage
Revenue Bonds, Series 55,
5.95% 10/01/2017 0 1,550,000 1,550,000 0 1,628,058 1,628,058
New York City Transitional Finance
Authority, Future Tax Secured
Bonds, Fiscal 2000 Series C,
5.875%, 11/01/2017 0 1,000,000 1,000,000 0 1,085,830 1,085,830
Orange County Industrial
Development Agency Life Care
Community Revenue Bonds, The
Glen Arden, Inc. Project
Series 1998, 5.625%, 1/01/2018 0 1,000,000 1,000,000 0 886,320 886,320
New York StateThruway Authority,
Local Highway and Bridge Service
Contract Bonds Series 1999.,
5.75%, 4/01/2019 0 1,000,000 1,000,000 0 1,062,080 1,062,080
Dormitory Authority of the State
of New York, State University
Educational Facilities, Revenue
Bonds, Series 1993 A, 5.50%,
5/15/2019 0 2,500,000 2,500,000 0 2,660,200 2,660,200
County of Orange, New York,
Various Purposes Serial
Bonds-1997, 5.125%,
9/01/2019 0 1,000,000 1,000,000 0 1,008,560 1,008,560
County of Suffolk, New York,
Industrial Development Agency,
Continuing Care Retirement
Community, First Mortgage Fixed
Rate Revenue Bonds, (Jefferson's
Ferry Project-Series 1999A),
7.20%, 11/01/2019 0 1,500,000 1,500,000 0 1,564,200 1,564,200
12
PRINCIPAL AMOUNT VALUE
------------------------------------ -------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
--------------------------------------------------------------------------------------------------------------------
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Capital Appreciation Series D,
0.00%, 6/15/2020 $0 $1,500,000 $1,500,000 $0 $ 552,750 $ 552,750
Tompkins County Industrial
Development Agency, Civic
Facility Revenue Bonds,
Series 2000 Cornell University
Project, 5.625%, 7/01/2020 0 1,000,000 1,000,000 0 1,054,780 1,054,780
Port Authority of New York and
New Jersey, Special Project Bonds,
Series 6, JFK International Air
Terminal LLC Project, MBIA
Insured, Subject to AMT, 5.75%,
12/01/2022 2,000,000 1,000,000 3,000,000 2,104,100 1,052,050 3,156,150
Tompkins County Industrial
Development Agency, Life Care
Community Revenue Bonds,
1994 (Kendal at lthaca Inc.,
Project), 7.875%, 6/01/2024 0 1,000,000 1,000,000 0 1,028,100 1,028,100
Lyons Community Health
Initiatives Corp., (New York),
Facility Revenue Bonds,
Series 1994, 6.80%,
9/01/2024 0 940,000 940,000 0 1,007,201 1,007,201
Dormitory Authority of the State
of New York, St. John's University,
Insured Revenue Bonds,
Series 2001, Ambac Insured,
5.25%, 7/01/2025 0 1,000,000 1,000,000 0 1,003,730 1,003,730
Long Island Power Authority,
Electric System General Revenue
Bonds, Series 2001A, FSA Insured,
5.125%, 9/01/2029 0 1,000,000 1,000,000 0 955,480 955,480
County of Suffolk, New York,
Industrial Development Agency
Civic Facility Revenue Bonds,
Series, 1999A, (The Southampton
Hospital Association Civic Facility),
7.25%, 1/01/2030 1,000,000 2,000,000 3,000,000 950,540 1,901,080 2,851,620
13
PRINCIPAL AMOUNT VALUE
-------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Fiscal 2000, Series B, 5.125%,
6/15/2031 $ 2,500,000 $0 $ 2,500,000 $ 2,421,850 $0 $ 2,421,850
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Fiscal 2001, Series B, 5.125%,
6/15/2031 0 1,000,000 1,000,000 0 968,740 968,740
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Fiscal 2000 Series B, Prefunded,
6.00%, 6/15/2033 1,090,000 935,000 2,025,000 1,252,889 1,074,726 2,327,615
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Fiscal 2000 Series B, Unrefunded,
6.00%, 6/15/2033 660,000 565,000 1,225,000 727,261 622,579 1,349,840
New York City Municipal Water
Finance Authority, Water and
Sewer System Revenue Bonds,
Fiscal 2001, Series A, 5.50%,
6/15/2033 2,000,000 0 2,000,000 2,043,800 0 2,043,800
----------- ----------- -----------
20,727,195 48,026,447 68,753,642
----------- ----------- -----------
NORTH CAROLINA 0.6%
North Carolina Eastern Municipal
Power Agency, Power System
Revenue Bonds, Series 1999D,
6.70%, 1/01/2019 1,500,000 0 1,500,000 1,602,780 0 1,602,780
----------- ----------- -----------
OHIO 0.9%
County of Miami, Ohio, Hospital
Facilities Revenue Refunding and
Improvement Bonds, Series 1996A,
(Upper Valley Medical Center),
6.25%, 5/15/2016 2,500,000 0 2,500,000 2,395,075 0 2,395,075
----------- ----------- -----------
14
PRINCIPAL AMOUNT VALUE
------------------------------------ ------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
----------------------------------------------------------------------------------------------------------------
PENNSYLVANIA 2.4%
Pennsylvania Economic
Development Financing
Authority, Resource Recovery
Revenue Bonds, (Northampton
Generating Project), Series 1994A,
6.40%, 1/01/2009 $2,500,000 $0 $2,500,000 $2,501,925 $0 $2,501,925
Pennsylvania Economic
Development Financing Authority,
Resource Recovery Revenue Bonds,
(Colver Project), Series 1994D,
Subject to AMT, 7.05%,
12/01/2010 1,000,000 0 1,000,000 1,033,470 0 1,033,470
Pennsylvania Turnpike
Commission, Turnpike Revenue
Refunding Bonds, Series T of 2001,
FGIC Insured, 5.50%,
12/01/2013+ 1,000,000 0 1,000,000 1,075,580 0 1,075,580
Pennsylvania Economic
Development Financing Authority,
(Northwestern Human
Services, Inc. Project), Revenue
Bonds, 1998 Series A, 5.25%,
6/01/2028 3,000,000 0 3,000,000 2,061,420 0 2,061,420
---------- -------- ----------
6,672,395 0 6,672,395
---------- -------- ----------
PUERTO RICO 4.0%
Commonwealth of Puerto Rico,
General Obligation Public
Improvement Refunding Bonds,
Series 1998, 5.25%,
7/01/2012 0 1,000,000 1,000,000 0 1,068,570 1,068,570
Commonwealth of Puerto Rico,
Aqueduct and Sewer Authority,
General Revenue Bonds, 6.25%,
7/01/2012 0 1,525,000 1,525,000 0 1,765,416 1,765,416
Commonwealth of Puerto Rico,
General Obligation Public
Improvement Refunding Bonds,
Series 1995A, MBIA Insured,
5.65%, 7/01/2015 0 1,000,000 1,000,000 0 1,105,460 1,105,460
15
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
------------------------------------------------------------------------------------------------------------------------
Commonwealth of Puerto Rico,
Public Improvement Bonds of
1999, MBIA Insured, 5.25%,
7/01/2015 $0 $ 1,000,000 $ 1,000,000 $0 $ 1,063,900 $ 1,063,900
Puerto Rico Highway and
Transportation Authority,
Transportation Revenue Bonds,
Series A, Ambac Insured, 0.00%,
7/01/2016 1,765,000 0 1,765,000 852,371 0 852,371
Commonwealth of Puerto Rico,
General Obligation Refunding
Bonds, Series 1999, MBIA Insured,
0.00%, 7/01/2017 0 1,000,000 1,000,000 0 452,510 452,510
Commonwealth of Puerto Rico,
Public Improvement Refunding
Bonds, Series 1999, (General
Obligation Bonds), 5.25%,
7/01/2017 2,000,000 0 2,000,000 2,091,740 0 2,091,740
Commonwealth of Puerto Rico
Infrastructure, Series A, 5.50%,
10/01/2017 0 1,000,000 1,000,000 1,059,000 1,059,000
Puerto Rico Highway and
Transportation Authority,
Transportation Revenue Bonds,
Series B, Ambac Insured, 5.75%,
7/01/2019 1,500,000 0 1,500,000 1,614,030 0 1.614,030
---------- ---------- -----------
4,558,141 6,514,856 11,072,997
---------- ---------- -----------
SOUTH CAROLINA 1.8%
Tobacco Settlement Revenue
Management Authority, Tobacco
Settlement Asset-Backed Bonds,
Series 2001B, 6.375%,
5/15/2030 4,750,000 0 4,750,000 4,969,117 0 4,969,117
---------- ---------- -----------
TENNESSEE 0.4%
The Health and Educational
Facilities Board of the Metropolitan
Government of Nashville and
Davidson County, Tennessee,
Revenue Refunding Bonds,
2001 Series A, The Vanderbilt
University, 5.00%,5/01/2016 1,000,000 0 1,000,000 1,001,860 0 1,001,860
---------- ---------- -----------
16
PRINCIPAL AMOUNT VALUE
------------------------------------- ---------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
----------------------------------------------------------------------------------------------------------------------
TEXAS 3.7%
Amarillo, Texas, Health Facilities
Corporation, Hospital Revenue
Bonds, (Baptist St. Anthony's
Hospital Corporation Project),
Series 1998, FSA Insured,
5.50%, 1/01/2014 $ 2,830,000 $0 $ 2,830,000 $ 2,972,490 $0 $ 2,972,490
Texas Water Development Board,
State Revolving Fund, Senior Lien
Revenue Bonds, Program
Series 1998A,
4.75%, 7/15/2020 1,000,000 0 1,000,000 937,370 0 937,370
Frisco Independent School
District, (Collin and Denton
Counties, Texas), Unlimited Tax
School Building Bonds,
Series 2000A, PSF-GTD Insured,
5.25%, 8/15/2020 1,000,000 0 1,000,000 1,001,880 0 1,001,880
Harris County - Houston Sports
Authority, Senior Lien Revenue
Refunding Bonds, Series 2001A,
MBIA Insured,
0.00%, 11/15/2020 3,000,000 0 3,000,000 1,017,210 0 1,017,210
La Joya Independent School
District (Hidalgo County, Texas),
Unlimited Tax School Building
Bonds, Series 2000,
5.50%, 2/15/2025 3,000,000 0 3,000,000 3,037,800 0 3,037,800
Austin Texas Convertible
Enterprises, Inc., Convention
Center Hotel First Tier Revenue
Bonds, Series 2001A,
6.70%, 1/01/2028 1,250,000 0 1,250,000 1,271,588 0 1,271,588
----------- ----------- -----------
10,238,338 0 10,238,338
----------- ----------- -----------
UTAH 1.0%
Intermountain Power Agency,
Utah, Power Supply Revenue
Refunding Bonds, Series A,
6.15%, 7/01/2014 1,580,000 0 1,580,000 1,743,625 0 1,743,625
17
PRINCIPAL AMOUNT VALUE
------------------------------------ ------------------------------------------
NEW YORK PRO FORMA NEW YORK PRO FORMA
TAX-EXEMPT TAX-FREE COMBINED TAX-EXEMPT TAX-FREE COMBINED
---------------------------------------------------------------------------------------------------------------------
Intermountain Power Agency,
Utah, Power Supply Revenue
Refunding Bonds, 1996, Series A,
5.15%, 7/01/2014 $ 920,000 $0 $ 920,000 $ 987,022 $0 $ 987,022
------------ ----------- ------------
2,730,647 0 2,730,647
------------ ----------- ------------
VIRGIN ISLANDS 0.4%
Virgin Islands Public Finance
Authority, Revenue Bonds,
(Virgin Islands Gross Receipts
Taxes Loan, Note), Series 1999A,
6.375%, 10/01/2019 0 1,000,000 1,000,000 0 1,075,500 1,075,500
------------ ----------- ------------
WISCONSIN 1.1%
Southeast Wisconsin Professional
Baseball Park District, Sales Tax
Revenue Refunding Bonds,
Series, 1998A, MBIA Insured,
5.50%, 12/15/2016 2,800,000 0 2,800,000 2,988,440 0 2,988,440
------------ ----------- ------------
Total Municipal Bonds (Cost $209,853,630, $51,944,553, and $261,798,183) 221,174,341 55,616,803 276,791,144
------------ ----------- ------------
SHORT-TERM OBLIGATIONS 0.4%
Lone Star, Airport International
Authority, Inc., Multiple Mode
Demand Revenue Bonds,
(American Airlines, Inc. Project),
Series A-2, 3.30%,
7/02/2001++ $400,000 $800,000 $1,200,000 $ 400,000 $ 800,000 $ 1,200,000
------------ ----------- ------------
Total Short-Term Obligations (Cost $400,000, $800,000 and $1,200,000) 400,000 800,000 1,200,000
------------ ----------- ------------
Total Investments (Cost $210,253,630, $52,744,553 and $262,998,183) 221,574,341 56,416,803 277,991,144
Cash and Other Assets, Less Liabilities (3,079,797) 538,007 (2,541,790)
------------ ----------- ------------
Net Assets $218,494,544 $56,954,810 $275,449,354
============ =========== ============
++ Interest rate on this obligation may reset daily.
+ The delivery and payment of this security is beyond the normal settlement
time. The purchase price and interest rate are fixed at the trade date
although interest is not earned until settlement date.
* A portion of this security is being used to collateralize the delayed
delivery purchase noted above. The total market value of segregated
securities is $6,837,900.
18
STATE STREET RESEARCH TAX-EXEMPT FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2001
(UNAUDITED)
TAX- NEW YORK PRO FORMA
EXEMPT TAX-FREE COMBINED
ASSETS
------------- ------------- -------------
Investments, at value (Cost $210,253,630, $52,744,553 and $262,998,183) $ 221,574,341 $ 56,416,803 $ 277,991,144
Cash 1,165,066 844,781 2,009,847
Interest receivable 3,825,810 867,525 4,693,335
Receivable for securities sold 2,160,825 0 2,160,825
Receivable for fund shares sold 82,553 57,227 139,780
Receivable from Distributor 0 42,421 42,421
Other assets 13,625 14,675 28,300
------------- ------------- -------------
TOTAL ASSETS 228,822,220 58,243,432 287,065,652
LIABILITIES
Payable for securities purchased 9,423,921 801,755 10,225,676
Dividends payable 242,318 46,261 288,579
Payable for fund shares redeemed 183,050 248,584 431,634
Accrued transfer agent and shareholder services 170,753 68,202 238,955
Accrued management fee 98,712 25,957 124,669
Accrued distribution and service fees 84,230 12,445 96,675
Accrued trustees' fees 17,203 15,081 32,284
Accrued administration fee 12,709 12,709 25,418
Other accrued expenses 94,780 57,628 152,408
------------- ------------- -------------
TOTAL LIABILITIES 10,327,676 1,288,622 11,616,298
------------- ------------- -------------
NET ASSETS $ 218,494,544 $ 56,954,810 $ 275,449,354
============= ============= =============
Net Assets consist of:
Undistributed net investment income $ 141,128 $ 65,533 $ 206,661
Unrealized appreciation of investments 11,320,711 3,672,250 14,992,961
Accumulated net realized loss (1,400,403) (1,462,199) (2,862,602)
Paid-in capital 208,433,108 54,679,226 263,112,334
------------- ------------- -------------
$ 218,494,544 $ 56,954,810 $ 275,449,354
============= ============= =============
Net Asset Value and redemption price per share
of Class A shares ($159,276,534 DIVIDED BY 19,452,271, $18,143,033 DIVIDED
BY 2,223,285 and $177,419,567 DIVIDED BY 21,667,538) $8.19 $8.16 $8.19
===== ===== =====
Maximum Offering Price per share of Class A shares
($8.19 DIVIDED BY 0.955, $8.16 DIVIDED BY 0.955 and $8.19 DIVIDED BY 0.955) $8.58 $8.54 $8.58
===== ===== =====
Net Asset Value and offering price per share of Class B(1) shares*
($13,227,091 DIVIDED BY 1,618,538, $5,174,510 DIVIDED BY 634,218 and
$18,401,601 DIVIDED BY 2,251,893) $8.17 $8.16 $8.17
===== ===== =====
Net Asset Value and offering price per share of Class B shares*
($37,328,534 DIVIDED BY 4,559,644, $11,916,761 DIVIDED BY 1,460,077 and
$49,245,295 DIVIDED BY 6,014,682) $8.19 $8.16 $8.19
===== ===== =====
Net Asset Value and offering price per share of Class C shares*
($2,097,941 DIVIDED BY 256,311, $855,186 DIVIDED BY 104,664 and
$2,953,127 DIVIDED BY 360,729) $8.19 $8.17 $8.19
===== ===== =====
Net Asset Value, offering price and redemption price per share of Class S shares
($6,564,444 DIVIDED BY 803,792, $20,865,320 DIVIDED BY 2,553,326 and
$27,429,764 DIVIDED BY 3,357,687) $8.17 $8.17 $8.17
===== ===== =====
* Redemption price per share for Class B(1), Class B and Class C is equal to
net asset value less any applicable contingent deferred sales charge.
19
STATE STREET RESEARCH TAX-EXEMPT FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2001
(UNAUDITED)
TAX- NEW YORK PRO FORMA PRO FORMA
EXEMPT TAX-FREE ADJUSTMENTS COMBINED
------------ ------------ ------------ ------------
INVESTMENT INCOME
Interest $ 13,180,714 $ 3,319,053 $ 16,499,767
EXPENSES
Management fee 1,228,408 314,217 1,542,625
Transfer agent and shareholder services 642,560 174,693 817,253
Custodian fee 142,840 118,901 ($113,206)(1) 148,535
Registration fees 60,028 8,333 (8,333)(1) 60,028
Administration fee 53,135 71,607 (66,607)(1) 58,135
Reports to shareholders 52,684 70,108 (55,108)(1) 67,684
Audit fee 56,208 16,792 (16,792)(1) 56,208
Trustees' fees 10,499 10,029 (9,029)(1) 11,499
Legal fees 9,593 4,619 (4,619)(1) 9,593
Distribution and service fees - Class A 491,265 54,659 545,924
Distribution and service fees - Class B(1) 100,866 43,741 144,607
Distribution and service fees - Class B 396,440 124,195 520,635
Distribution and service fees - Class C 19,985 7,700 27,685
Miscellaneous (Note 4) 12,839 6,919 (5,919)(1) 13,839
------------ ------------ ------------ ------------
3,277,350 1,026,513 (279,613) 4,024,250
Expenses borne by the Distributor 0 (304,599) 304,599(2) 0
Fees paid indirectly (19,329) (6,014) (25,343)
------------ ------------ ------------ ------------
3,258,021 715,900 24,986 3,998,907
------------ ------------ ------------ ------------
Net investment income 9,922,693 2,603,153 (24,986) 12,500,860
------------ ------------ ------------ ------------
Net realized gain on investments 1,999,675 356,018 2,355,693
Net unrealized appreciation of investments 5,871,203 2,095,618 7,966,821
------------ ------------ ------------ ------------
Net gain on investments 7,870,878 2,451,636 10,322,514
------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations $ 17,793,571 $ 5,054,789 ($ 24,986) $ 22,823,374
============ ============ ============ ============
(1) Adjustments reflect expected savings when the funds combine.
(2) The Distributor and its affiliates do not anticipate any voluntary
reduction of expenses
20
STATE STREET RESEARCH TAX-EXEMPT FUND
NOTES TO PRO FORMA STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2001
(UNAUDITED)
1. BASIS OF COMBINATION
The unaudited Pro Forma Combining Portfolio of Investments, the Pro Forma
Combining Statement of Assets and Liabilities and the Pro Forma Combining
Statement of Operations reflect the accounts of State Street Research Tax-Exempt
Fund ("Tax-Exempt") and State Street Research New York Tax-Free Fund ("New York
Tax-Free") (collectively the "Funds" or a "Fund") at and for the year ended June
30, 2001. These statements have been derived from the semiannual and annual
reports for Tax-Exempt and New York Tax-Free, dated June 30, 2000, December 31,
2000 and June 30, 2001.
The pro forma statements give effect to the proposed transfer of the
assets and stated liabilities of New York Tax-Free to Tax-Exempt in exchange for
shares of Tax-Exempt under generally accepted accounting principles. However, it
is possible that New York Tax-Free will not approve the merger.
The historical cost of investment securities will be carried forward to
the surviving entity and the results of operations of Tax-Exempt for
pre-combination periods will not be restated. The pro forma statements do not
reflect the expenses of each fund in carrying out its obligations under the
Agreement and Plan of Reorganization and Liquidation, which will be allocated to
each Fund on the basis of identifiable direct costs or otherwise on the basis of
relative net assets.
The Pro Forma Combining Portfolio of Investments, the Pro Forma Combining
Statement of Assets and Liabilities and the Pro Forma Combining Statement of
Operations should be read in conjunction with the historical financial
statements of the funds included or incorporated by reference in the Statement
of Additional Information.
2. PORTFOLIO VALUATION
Securities are valued by a pricing service, which utilizes market
transactions, quotations from dealers, and various relationships among
securities in determining value. Short-term obligations are valued at amortized
cost. Other securities, if any, are valued at their fair value as determined in
accordance with established methods consistently applied.
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional
shares of Tax-Exempt which would have been issued at June 30, 2001 in connection
with the proposed reorganization. The pro forma number of shares outstanding of
21,667,538, 2,251,893, 6,014,682, 360,729 and 3,357,687 in each of Class A,
Class B(1), Class B, Class C and Class S shares, respectively, includes
2,215,267, 633,355, 1,455,038, 104,418, and 2,553,895 additional shares from
each of Class A, Class B(1), Class B, Class C and Class S shares, respectively,
all of which are assumed to be issued in the reorganization at June 30, 2001.
4. MISCELLANEOUS EXPENSES
Miscellaneous expenses consist primarily of certain insurance costs and
travel reimbursements to Trustees.
21
STATE STREET RESEARCH TAX-EXEMPT TRUST
FORM N-14
PART C
OTHER INFORMATION
OCTOBER [__], 2001
ITEM 15: INDEMNIFICATION
Under Article VI of the Registrant's Second Amended and Restated Master
Trust Agreement as further amended ("Master Trust Agreement") each of
Registrant's Trustees and officers (including persons serving in such capacity
with another entity at the request of the Registrant) ("Covered Person") shall
be indemnified against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromises or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct being referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before which the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Registrant as defined in section 2(a)(19) of the 1940 Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion.
Under the Distribution Agreement between the Registrant and State
Street Research Investment Services, Inc., the Registrant's distributor, the
Registrant has agreed to indemnify and hold harmless State Street Research
Investment Services, Inc. and each person who has been, is, or may hereafter be
an officer, director, employee or agent of State Street Research Investment
Services, Inc. against any loss, damage or expense reasonably incurred by any of
them in connection with any claim or in connection with any action, suit or
proceeding to which any of them may be a party, which arises out of or is
alleged to arise out of or is based upon a violation of any of its covenants
herein contained or any untrue or alleged untrue statement of material fact, or
the omission or alleged omission to state a material fact necessary to make the
statements made not misleading, in a Registration Statement or Prospectus of the
Registrant, or any
amendment or supplement thereto, unless such statement or omission was made in
reliance upon written information furnished by State Street Research Investment
Services, Inc.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 may be permitted to trustees, officers,
underwriters and controlling persons of the Registrant, pursuant to Article VI
of the Master Trust Agreement, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 16: EXHIBITS
(1) (a) Second Amended and Restated Master Trust Agreement and
Amendments No. 1 and 2 to Second Amended and Restated Master
Trust Agreement (9)
(1) (b) Amendment No. 3 to Second Amended and Restated Master Trust
Agreement (10)
(1) (c) Amendment No. 4 to Second Amended and Restated Master Trust
Agreement (10)
(1) (d) Amendment No. 5 to Second Amended and Restated Master Trust
Agreement (12)
(2) (a) By-Laws of the Registrant (1)****
(2) (b) Amendment to By-Laws effective September 30, 1992 (6)****
(2) (c) Amendment No. 2 to By-Laws effective August 2, 2000 (14)
(3) Not applicable.
(4) Copies of the agreement of reorganization and any amendments
to it - filed as Appendix A to Part A hereof.
(5) See Second Amended and Restated Master Trust Agreement and
By-Laws of the Registrant, with amendments, included as
Exhibits above.
(6) (a) Advisory Agreement with MetLife - State Street Investment
Services, Inc. (2)*, ***
(6) (b) Transfer and Assumption of Responsibilities and Rights
relating to the Advisory Agreement (6)***
(6) (c) Letter Agreement with respect to the Advisory Agreement
relating to MetLife - State Street Research New York
Tax-Free Fund (5)**, ***
(6) (d) Amendment No. 1 to Advisory Agreement (9)
(7) (a) Distribution Agreement with MetLife - State Street Research
Investment Services, Inc. (2)**, ****
(7) (b) Form of Selected Dealer Agreement, as Supplemented (10)
(7) (c) Form of Bank and Bank Affiliated Broker-Dealer
Agreement (8)****
(7) (d) Letter Agreement with respect to the Distribution Agreement
relating to MetLife - State Street Research New York
Tax-Free Fund (5)**, ****
(8) Not applicable.
(9) (a) Custodian Contract with State Street Bank and Trust
Company (2)****
(9)(e) Amendment to the Custodian Contract with State Street Bank
and Trust Company (3)****
(9) (f) Letter Agreement with respect to Custodian Contract relating
to MetLife - State Street Research New York Tax-Free
Fund (5)**, ****
(9) (g) Data Access Services Addendum to Custodian Contract (12)
(10) First Amended and Restated Plan of Distribution Pursuant to
Rule 12b-1(7)****
(10) (b) State Street Research Tax-Exempt Trust Rule 12b-1 Plan for
Distribution of Shares (13)
(10) (c) Amendment No. 1 dated May 1, 2000 to First Amendment and
Restated Plan of Distribution Pursuant to Rule 12b-1 dated
June 5, 1993(14)
(10) (d) First Amended and Restated Multiple Class Expense Allocation
Plan Adopted Pursuant to Rule 18f-3(10)
(10) (e) Addendum to First Amended and Restated Multiple Class
Expense Allocation Plan (12)
(11) (a) Form of Opinion and Consent of Ropes & Gray - filed herewith
(12) Opinion of Ropes & Gray as to tax matters - to be filed by
post-effective amendment
(13) Not applicable.
(14) Consent of PricewaterhouseCoopers LLP - filed herewith
(15) None
(16) (a) Powers of Attorney (11)
(16) (b) Certificate of Board Resolution Respecting Powers of
Attorney (11)
(16) (c) Power of Attorney for Susan M. Phillips (12)
(16) (d) Power of Attorney for Bruce R. Bond (13)
(16) (e) Power of Attorney for Richard S. Davis (14)
(16) (f) Power of Attorney for Douglas A. Romich (14)
(17) Code of Ethics (revised March 1, 2000) (13)
----------------------------
** The series of the Registrant have changed their names at various times.
Documents in this listing of Exhibits which were effective prior to the
most recent name change accordingly refer to a former name of such
series.
*** Filed electronically April 30, 1996.
**** Filed electronically March 2, 1998.
Filed as part of the Registration Statement as noted below and incorporated
herein by reference:
FOOTNOTE SECURITIES ACT OF 1993
REFERENCE REGISTRATION/AMENDMENT DATE FILED
--------- ---------------------- ----------
1 Initial Registration January 15, 1986
2 Pre-Effective Amendment No. 1 July 25, 1986
3 Post-Effective Amendment No. 5 March 31, 1989
4 Post-Effective Amendment No. 7 June 30, 1989
5 Post-Effective Amendment No. 10 April 30, 1991
6 Post-Effective Amendment No. 13 December 8, 1992
7 Post-Effective Amendment No. 16 February 10, 1994
8 Post-Effective Amendment No. 18 April 27, 1995
9 Post-Effective Amendment No. 19 April 30, 1996
10 Post-Effective Amendment No. 20 February 28, 1997
11 Post-Effective Amendment No. 21 March 2, 1998
12 Post-Effective Amendment No. 22 March 3, 1999
13 Post-Effective Amendment No. 23 April 28, 2000
14 Post-Effective Amendment No. 24 April 26, 2001
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act [17
CFR 230.145c], the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The Registrant agrees to file, by post-effective amendment, an opinion of
counsel or a copy of an Internal Revenue Service ruling supporting the tax
consequences of the proposed mergers described in this Registration
Statement within a reasonable time after receipt of such opinion or ruling.
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of Boston and State of
Massachusetts, on the 5th day of October, 2001.
STATE STREET RESEARCH TAX-EXEMPT TRUST
By: *
-----------------------------------------
Richard S. Davis, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed on the above date by the following persons in the
capacities indicated.
Signature: Title:
* Chairman of the Board,
----------------------- President, and Chief
Richard S. Davis Executive Officer (Principal
Executive Officer)
* Acting Treasurer (Principal
----------------------- Accounting and Financial
Douglas A. Romich Officer)
* Trustee
-----------------------
Bruce R. Bond
* Trustee
-----------------------
Steve A. Garban
* Trustee
-----------------------
Dean O. Morton
* Trustee
-----------------------
Susan M. Phillips
* Trustee
-----------------------
Toby Rosenblatt
* Trustee
-----------------------
Michael S. Scott Morton
By: /s/ Francis J. McNamara, III
------------------------------------
Francis J. McNamaara, III,
Attorney-in-Fact under the Powers of
Attorney incorporated by reference from
Post-Effective Amendment No. 21 filed
March 2, 1998, Post-Effective Amendment
No. 22 filed March 3, 1999, Post-Effective
Amendment No. 23 filed April 28, 2000
and Post-Effective Amendment No. 24 filed
April 26, 2001.
INDEX TO EXHIBITS
(11)(a) Opinion and Consent of Ropes & Gray
(14) Consent of PricewaterhouseCoopers LLP
EX-16.11(A)
4
a2060542zex-16_11a.txt
EXHIBIT 16.11(A)
EXHIBIT 16.11a
February __, 2002
State Street Research Tax-Exempt
Trust, on behalf of its New York
Tax-Free Fund series
State Street Research Tax-Exempt
Trust, on behalf of its Tax-Exempt
Fund series
One Financial Center
Boston, MA 02111
Ladies and Gentlemen:
You have requested our opinion in connection with the acquisition as
contemplated by the Agreement and Plan of Reorganization, dated as of ________,
2001 (the "AGREEMENT"), by and between State Street Research Tax-Exempt Trust, a
Massachusetts business trust ( the "TRUST"), on behalf of its State Street
Research New York Tax-Free Fund series (the "ACQUIRED FUND"), and the Trust on
behalf of its Tax-Exempt Fund series (the "ACQUIRING FUND") (the
"REORGANIZATION"). This opinion is delivered to you pursuant to Sections 8(c)
and 9(d) of the Agreement. Capitalized terms used herein but not defined shall
have the meanings ascribed to them in the Agreement.
In connection with this opinion, we have examined the executed copies
of the Agreement; copies of the minutes of the meetings of the Trustees of the
Trust held on , 2001 and on ______, 2001, as certified by the Secretary of the
Trust; copies of the minutes of the meeting of the shareholders of the Trust
held on , 2001 as certified by the Secretary of the Trust; the Second Amended
and Restated Master Trust Agreement of the Trust, as amended, on file in the
offices of the Secretary of State of The Commonwealth of Massachusetts and the
Clerk of the City of Boston (the "DECLARATION OF TRUST") and as certified by the
Secretary of the Trust; a copy of the By-laws of the Trust, as amended,
certified by the Secretary of the Trust; a certificate of the Secretary of State
of The Commonwealth of Massachusetts, dated , certifying as to the existence of
the Trust; a certificate of the Treasurer of the Trust as to the receipt by the
Trust of proper consideration for the issuance of the Merger Shares; an
affidavit of an officer of PFPC Global Fund Services to the effect that it
completed the initial mailing, on or about
2 February __, 2002
________, 2001, of the Prospectus/Proxy Statement (as defined below); and such
other documents, certificates and records as we have deemed necessary for the
purpose of this opinion.
We have assumed the genuineness of the signatures on all documents
examined by us, the authenticity of all documents submitted to us as originals,
and the conformity to their corresponding originals of all documents submitted
to us as copies. We have also assumed that each of (i) the Prospectus; (ii) the
Registration Statement of the Trust on Form N-14 as filed with the Securities
Exchange Commission ("SEC") on October __, 2001 (the "REGISTRATION STATEMENT")
and as amended by Pre-effective Amendment No. __ filed with the SEC on October
__, 2001; and (iii) the proxy statement of the Acquired Fund, relating to the
meeting of the Trust's shareholders to be held on February __, 2002 to consider
the Reorganization (the "PROSPECTUS/PROXY STATEMENT") and the related soliciting
materials and statement of additional information as filed with the SEC on
October __, 2001, complies and complied at all relevant times with the
Securities Act of 1933, as amended (the "1933 ACT"), the Securities Exchange Act
of 1934, as amended (the "1934 ACT"), and the Investment Company Act of 1940, as
amended (the "1940 ACT").
We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. Further, we
express no opinion as to the state securities or blue sky laws of any
jurisdiction, including The Commonwealth of Massachusetts.
Based upon and subject to the foregoing, we are of the opinion that:
3 February __, 2002
1. The Trust is a duly formed and validly existing unincorporated voluntary
association with transferable shares existing under and by virtue of the laws of
The Commonwealth of Massachusetts and has the power to own all of its properties
and to carry on its business as presently conducted.
2. The Agreement has been duly authorized, executed, and delivered by the
Trust on behalf of the Acquired Fund and the Acquiring Fund and is a valid and
binding obligation of the Trust on behalf of the Acquired Fund and of the Trust
on behalf of the Acquiring Fund.
3. The Trust, on behalf of the Acquired Fund, has the power to sell,
assign, convey, transfer, and deliver the assets contemplated by the Agreement
and, upon consummation of the transactions contemplated by the Agreement in
accordance with the terms of the Agreement, the Acquired Fund will have duly
sold, assigned, conveyed, transferred, and delivered such assets to the
Acquiring Fund.
4. The execution and delivery of the Agreement by the Trust on behalf of
the Acquired Fund and by the Trust on behalf of the Acquiring Fund did not, and
the consummation of the Acquisitions will not, violate the Declaration of Trust
or By-laws or any provision of any agreement known to us as counsel to the Trust
to which the Trust on behalf of the Acquiring Fund or the Trust on behalf of the
Acquired Fund is a party or by which it is bound.
5. To our knowledge, no consent, approval, authorization, or order of any
court or governmental authority is required for the consummation by the Trust on
behalf of the Acquired Fund or the Acquiring Fund of the transactions
contemplated by the Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, and the 1940 Act and such as may be required under state
securities or blue sky laws.
6. The Registration Statement has become effective under the 1933 Act, and
to the best of our knowledge as counsel to the Trust, no stop order suspending
the effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or are pending or contemplated
under the 1933 Act.
7. The Merger Shares are duly authorized and upon delivery to the Acquired
Fund as provided for by the Agreement will be validly issued, fully paid and
nonassessable by the Trust and the Acquiring Fund and no shareholder of the
Acquiring Fund has any preemptive right to subscription or purchase in respect
thereof.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of the Trust could, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Declaration of Trust disclaims shareholder liability for
acts or obligations of the Trust and requires that the notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust. The Declaration of Trust provides for indemnification out of the
property of the Acquired Fund and the Acquiring Fund for all loss and expense of
any shareholder held personally liable for the obligations of the Trust solely
by reason of being or having been a shareholder of the
4 February __, 2002
Acquired Fund or the Acquiring Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Acquired Fund or the Acquiring Fund itself would be
unable to meet its obligations.
This opinion is furnished by us solely for your benefit and, except as
expressly consented to by us in writing, may not be relied upon by any other
entity or individual.
Very truly yours,
Ropes & Gray
EX-16.14
5
a2060542zex-16_14.txt
EXHIBIT 16.14
Exhibit 16.14
[Letterhead of
PricewaterhouseCoopers LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this registration statement under
the Securities Act of 1933 on Form N-14 (the "Registration Statement") of our
reports dated February 15, 2001, relating to the financial statements and
financial highlights appearing in the December 31, 2000 Annual Reports of State
Street Research Tax-Exempt Fund and the State Street Research New York Tax-Free
Fund ("Funds") (each a series of State Street Research Tax-Exempt Trust), which
reports are also referenced in the Prospectus/Proxy Statement. We also consent
to the reference to us under the heading "Independent Accountants" in the
Statement of Additional Information dated May 1, 2001, for the Funds
incorporated by reference in the Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 5, 2001