JPM SERIES TRUST
497, 1996-11-19
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As filed with the U.S. Securities and Exchange Commission on November 8, 1996
Registration Nos. 33-11125 and 811-07795
 

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
                          PRE-EFFECTIVE AMENDMENT NO. 1

                                       AND
 
                             REGISTRATION STATEMENT
                    UNDER THE INVESTMENT COMPANY ACT OF 1940
 
                                 AMENDMENT NO. 1
 

                                JPM SERIES TRUST
               (Exact Name of Registrant as Specified in Charter)

            60 State Street, Suite 1300, Boston, Massachusetts 02109
                    (Address of Principal Executive Offices)

        Registrant's Telephone Number, including Area Code: (617) 557-0700

                                John E. Pelletier
            60 State Street, Suite 1300, Boston, Massachusetts 02109
                     (Name and Address of Agent for Service)

                                    Copy to:
                              Stephen K. West, Esq.
                               Sullivan & Cromwell
                   125 Broad Street, New York, New York 10004

Approximate Date of Proposed Public Offering:  As soon as practicable after
the effective date of this registration statement.

The Registrant hereby amends this  registration  statement on such date or dates
as may be necessary to delay its effective date until the Registrant  shall file
a further amendment which specifically  states that this registration  statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933  or  until  the  registration  statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.  Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended,  the  Registrant  hereby elects to register an indefinite  number of
shares of Registrant and any series thereof hereinafter created.

<PAGE>


JPM SERIES TRUST
CROSS-REFERENCE SHEET
(As Required by Rule 495)

PART A ITEM NO.:  Prospectus Headings.

1.  COVER PAGE:  Cover Page.
 
2.  SYNOPSIS:  Expense Table.
 
3.  CONDENSED FINANCIAL INFORMATION:  Not applicable.
 
4.  GENERAL DESCRIPTION OF REGISTRANT:  Cover Page; Expense Table;
    Investment Objective and Policies; Additional Investment Practices
    and Risks; Investment Policies and Restrictions; Organization.

5.  MANAGEMENT OF THE FUND:  Management of the Fund; Shareholder Servicing;
    Additional Information.
 
5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE:  Not applicable.

6.  CAPITAL STOCK AND OTHER SECURITIES:  Net Asset Value; Purchase of Shares;
    Taxes; Dividends and Distributions; Organization.

7.  PURCHASE OF SECURITIES BEING OFFERED:  Purchase of Shares; Exchange of
    Shares (if applicable); Who May be a Suitable Investor in the Fund(s);
    Dividends and Distributions; Net Asset Value.
 

8.  REDEMPTION OR REPURCHASE:  Redemption of Shares; Exchange of Shares (if
    applicable); Net Asset Value.
 
9.  PENDING LEGAL PROCEEDINGS:  Not applicable.


PART B ITEM NO.:  Statement of Additional Information Headings.

10. COVER PAGE:  Cover Page.

11. TABLE OF CONTENTS:  Table of Contents.

12. GENERAL INFORMATION AND HISTORY:  General.

13. INVESTMENT OBJECTIVES AND POLICIES:  Investment Objectives and Policies;
    Investment Restrictions; Appendices A and B.

14. MANAGEMENT OF THE FUND:  Trustees and Officers.

15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES:  Description of
    Shares.


<PAGE>
 
16. INVESTMENT ADVISORY AND OTHER SERVICES:  Investment Advisor; Distributor;
    Co-Administrator; Services Agent; Custodian and Transfer Agent; Independent
    Accountants; Expenses.
 
17. BROKERAGE ALLOCATION AND OTHER PRACTICES:  Portfolio Transactions.

18. CAPITAL STOCK AND OTHER SECURITIES:  Massachusetts Trust; Description of
    Shares.

19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED:  Net Asset
    Value; Purchase of Shares; Redemption of Shares; Exchange of Shares.

20. TAX STATUS:  Taxes.
 
21. UNDERWRITERS:  Distributor.
 
22. CALCULATION OF PERFORMANCE DATA:  Performance Data.

23. FINANCIAL STATEMENTS:  Financial Statements.


PART C

    Information  required  to be  included  in  Part C is set  forth  under  the
appropriately numbered items included in Part C of this registration statement.

<PAGE>

PROSPECTUS
   
 
JPM SERIES TRUST
JPM PIERPONT SHARES: TAX AWARE EQUITY FUND
JPM PIERPONT SHARES: TAX AWARE DISCIPLINED EQUITY FUND

60 STATE STREET
BOSTON, MASSACHUSETTS 02109
FOR INFORMATION CALL (800) 521-5411 

 
Tax Aware Equity Fund and Tax Aware  Disciplined  Equity Fund (the "Funds") each
seek to provide  high  total  return,  while  being  sensitive  to the impact of
capital gains taxes on investors' returns.  The Funds are designed for long-term
investors.  Each Fund  invests  primarily  in  common  stocks  and other  equity
securities of large and medium-sized U.S. companies. 

The Funds are series of JPM Series Trust (the "Trust") and are advised by Morgan
Guaranty Trust Company of New York ("Morgan" or the "Advisor").
 
This  Prospectus  sets forth  concisely the  information  about the JPM Pierpont
Shares of each Fund that a prospective investor should know before investing and
should be retained for future reference.  Additional  information has been filed
with the  Securities  and  Exchange  Commission  in a  Statement  of  Additional
Information  dated  November 18, 1996, as amended or  supplemented  from time to
time.  This  information  is  incorporated  herein by reference and is available
without  charge upon written  request from the Funds'  Distributor or by calling
(800)  221-7930.  The Funds'  Distributor is Funds  Distributor,  Inc., 60 State
Street,  Suite 1300, Boston,  Massachusetts 02109,  Attention:  JPM Pierpont Tax
Aware Funds. 

 
SHARES  OF THE FUNDS ARE NOT  DEPOSITS  OR  OBLIGATIONS  OF,  OR  GUARANTEED  OR
ENDORSED BY, MORGAN GUARANTY TRUST COMPANY OF NEW YORK OR ANY OTHER BANK. SHARES
OF THE  FUNDS  ARE  NOT  FEDERALLY  INSURED  BY THE  FEDERAL  DEPOSIT  INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. THE VALUE
OF AN  INVESTMENT  IN  EITHER  FUND MAY  FLUCTUATE  AND  MAY,  AT THE TIME IT IS
REDEEMED, BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED. 


THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

 
THE DATE OF THIS PROSPECTUS IS NOVEMBER 18, 1996 



<PAGE>


TABLE OF CONTENTS

 
                                                            Page
Expense Table                                                 1
Investment Objective and Policies                             2
Additional Investment Practices and Risks                     3
Management of the Funds                                       6
Shareholder Inquiries and Services                            8
Purchase of Shares                                            8
Redemption of Shares                                         10
Dividends and Distributions                                  11
Net Asset Value                                              12
Taxes                                                        12
Additional Information                                       13
Organization                                                 13
 


<PAGE>

 
EXPENSE TABLE
                                        JPM PIERPONT            JPM PIERPONT
                                        SHARES: TAX              SHARES: TAX
                                        AWARE EQUITY           AWARE DISCIPLINED
                                            FUND                  EQUITY FUND

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
  Purchases(1) . . . . . . . . . . . . .    None                       None
Sales Charge Imposed on
  Reinvested Distributions . . . . . . .    None                       None
Deferred Sales Load  . . . . . . . . . .    None                       None
Redemption Fees(2):
Shares held less than 1 year . . . . . .    2%                         2%
Shares held at least 1 year
 but less than 5 years . . . . . . . . .    1%                         1%
Shares held 5 years or more  . . . . . .    None                       None

ANNUAL OPERATING EXPENSES(3)
Advisory Fees  . . . . . . . . . . . . .    .45%                       .35%
Rule 12b-1 Fees  . . . . . . . . . . . .    None                       None
Other Expenses (after expense
 reimbursement)  . . . . . . . . . . . .    .40%                       .20%
                                            ----                       ----

Total Operating Expenses (after
 expense reimbursement) . . . . . . . .     .85%                       .55%
 
 
1 Certain Eligible  Institutions may charge customers fees of varying amounts in
connection  with  the  purchase  of  shares  of a  Fund  through  such  Eligible
Institutions. 
 
2 Redemption fees are retained by the Fund and are not paid to any other entity.
The fee will be prorated if the shares  redeemed have been held for time periods
subject  to  differing  fees.  Each  Fund  intends,  whenever  feasible,  to pay
redemptions  in excess of $250,000 in the Tax Aware  Equity Fund and $500,000 in
the Tax Aware  Disciplined  Equity Fund by an in-kind  distribution of portfolio
securities. There will be no redemption fee charged on in-kind redemptions. 
 
3 These expenses are based on the estimated  expenses and estimated  average net
assets for each Fund's  first fiscal year and through  February 28, 1998,  after
any applicable expense reimbursement.  Without such expense  reimbursement,  the
estimated Other Expenses and Total Operating  Expenses for the first fiscal year
would be equal on an  annual  basis to .92% and 1.37% of the  average  daily net
assets of Tax Aware  Equity Fund,  respectively,  and .63% and .98% of Tax Aware
Disciplined Equity Fund, respectively. 


                                       1

<PAGE>

 
EXAMPLE
An  investor  would  pay  the  following  expenses  on  a  hypothetical   $1,000
investment,  assuming a 5% annual return with and without  redemption at the end
of each time period. (However, each Fund's minimum initial investment is greater
than $1,000.)

                               JPM PIERPONT               JPM PIERPONT
                                SHARES: TAX                SHARES: TAX
                               AWARE EQUITY              AWARE DISCIPLINED
                                   FUND                     EQUITY FUND

Assuming No Redemption

1 Year . . . . . . . . . . . . . .    $ 9                         $ 6
3 Years  . . . . . . . . . . . . .    $27                         $18

Assuming Redemption
at the End of Each Period

1 Year . . . . . . . . . . . . . .    $29                         $26
3 Years  . . . . . . . . . . . . .    $37                         $28
 
 
The above expense  table is designed to assist  investors in  understanding  the
various  estimated  direct and indirect costs and expenses that investors in JPM
Pierpont  Shares of each Fund bear.  For a complete  description  of contractual
arrangements  and other expenses  applicable to the Funds, see Management of the
Funds and  Shareholder  Inquiries  and Services --  Shareholder  Servicing.  THE
EXAMPLE  IS  INCLUDED  SOLELY  FOR  ILLUSTRATIVE  PURPOSES  AND  SHOULD  NOT  BE
CONSIDERED A REPRESENTATION OF FUTURE  PERFORMANCE OR EXPENSES.  ACTUAL EXPENSES
MAY BE MORE OR LESS THAN THOSE SHOWN. 
 
INVESTMENT OBJECTIVE AND POLICIES 
 
The  investment  objective of Tax Aware Equity Fund (the "Equity  Fund") and Tax
Aware Disciplined Equity Fund (the "Disciplined Equity Fund") is to provide high
total  return  while  being  sensitive  to the impact of capital  gains taxes on
investors'  returns.  Each Fund invests  primarily in common stocks of large and
medium-sized U.S. companies. 
 
WHO MAY BE A  SUITABLE  INVESTOR  IN THE  FUNDS.  The  Funds  are  designed  for
long-term  taxable  investors who are  interested  in minimizing  the receipt of
taxable  distributions.  The  Funds are not  suitable  vehicles  for  short-term
trading or "market  timing." The Funds may not be suitable for  tax-deferred  or
tax-exempt retirement or pension plans, including Individual Retirement Accounts
(IRAs),  401(k)  plans and 403(b)  plans.  Whenever  feasible,  the Equity  Fund
intends  to  satisfy  redemption  requests  exceeding  $250,000  by  an  in-kind
distribution of portfolio  securities and the Disciplined Equity Fund intends to
satisfy redemption requests exceeding $500,000 in-kind. See Redemption of Shares
- -- Redemption  In-Kind.  Neither Fund is a complete investment program and there
is no assurance that a Fund will achieve its investment objective.
 
PRIMARY INVESTMENTS.  Each Fund is required, under normal market conditions,  to
invest at least 65% of its total assets in equity securities. However, each Fund
intends,  under normal market  conditions and to the extent  practicable,  to be
fully  invested in the common  stocks and other equity  securities  of large and
medium-sized U.S. companies and, to a lesser extent,  foreign companies.  Equity
securities  consist of  exchange-traded,  over-the-counter  ("OTC") and unlisted
common and preferred stocks,  warrants,  rights,  convertible securities,  trust
certificates, limited partnership interests and equity participations. 


                                       2
 <PAGE>
HOW INVESTMENTS ARE SELECTED. Morgan uses fundamental analysis, systematic stock
valuation  and a  disciplined  portfolio  construction  process to select equity
investments  for  each  Fund.  Using a  dividend  discount  model  and  based on
analysts'  industry  expertise,  Morgan ranks companies  within industry sectors
according to their  relative  values and then  separates  them into quintiles by
sector.  From those  securities  identified by the model as undervalued,  Morgan
selects securities based on several criteria,  including a company's  managerial
strength,  prospects  for  growth and  competitive  position.  The  Equity  Fund
generally  invests in stocks ranked in the top two  quintiles.  The  Disciplined
Equity Fund generally  invests in stocks ranked in the top three quintiles.  The
Equity  Fund's  industry  sector  weightings  may be  modestly  overweighted  or
underweighted  relative to the sector  weightings  in the  Standard & Poor's 500
Index (the "S&P 500"). The Disciplined  Equity Fund's industry sector weightings
(but not necessarily  the individual  securities in its portfolio) are expected,
under normal  market  conditions,  to be comparable to those of the S&P 500. The
Equity Fund's  portfolio  typically  consists of between 50 and 100 stocks.  The
Disciplined  Equity Fund's portfolio  typically  consists of between 250 and 300
stocks. 

The following chart summarizes the principal  differences between the investment
policies of the Equity Fund and the Disciplined Equity Fund:

                  MORGAN           SECTOR                     NUMBER OF
                  RANKING          WEIGHTINGS                 SECURITY POSITIONS

Equity            Concentrated     May modestly over-         50-100
Fund              in Top 2         or underweight
                  Quintiles        vs. S&P 500

Disciplined       Concentrated     Generally, seeks to        250-300
Equity            in Top 3         maintain weightings
Fund              Quintiles        comparable to S&P 500

TAX  MANAGEMENT  TECHNIQUES.  The Funds use Morgan's  proprietary  tax sensitive
optimization  model, which is designed to reduce, but not eliminate,  the impact
of capital gains taxes on shareholders' after tax total returns.  Each Fund will
try to minimize the realization of net short-term and long-term capital gains by
matching  securities  sold at a gain  with  those  sold at a loss to the  extent
practicable.  In  addition,  when selling a portfolio  security,  each Fund will
generally  select the highest  cost basis  shares of the  security to reduce the
amount of realized capital gains.  Because the gain on securities that have been
held for more than one year is subject to a lower federal income tax rate, these
securities  will  generally be sold before  securities  held less than one year.
The use of these tax management  techniques  will not necessarily
reduce a Fund's  portfolio  turnover  rate or  prevent  the Funds  from  selling
securities  to the  extent  warranted  by  shareholder  transactions,  actual or
anticipated economic, market or issuer-specific developments or other investment
considerations.  However,  the annual  portfolio  turnover  rate of each Fund is
generally not expected to exceed 100%.
 
In addition, the policy of making substantial  redemptions in-kind when feasible
may also  reduce the impact of capital  gains taxes on  shareholders'  after tax
total return. See Redemption In-Kind. 
 
ADDITIONAL INVESTMENT PRACTICES AND RISKS 
 
WARRANTS AND CONVERTIBLE SECURITIES. Warrants acquired by a Fund will entitle it
to buy common stock at a specified  price and time.  Warrants are subject to the
same  market  risks as  stocks,  but may be more  volatile  in  price.  A Fund's
investment  in  warrants  will not entitle it to receive  dividends  or exercise
voting  rights and will become  worthless if the warrants  cannot be  profitably
exercised  before  their  expiration  dates.  Convertible  debt  securities  and


                                       3
<PAGE>
preferred  stock  entitle the Fund to acquire the issuer's  stock by exchange or
purchase at a predetermined rate. Convertible securities are subject both to the
credit and interest rate risks associated with debt obligations and to the stock
market risk associated with equity securities.
 
RESTRICTED  AND ILLIQUID  SECURITIES.  Each Fund may invest up to 15% of its net
assets  in  illiquid  securities,   including  certain  restricted  and  private
placement securities.  The price a Fund pays for illiquid securities or receives
upon resale may be lower than the price paid or received for similar  securities
with a more liquid market.  Accordingly,  the valuation of these securities will
reflect any  limitations  on their  liquidity.  The Funds may also purchase Rule
144A  securities   eligible  for  resale  to  institutional   investors  without
registration  under  the  Securities  Act  of  1933.  These  securities  may  be
determined to be liquid in accordance with guidelines  established by Morgan and
approved by the Trustees.  The Trustees will monitor Morgan's  implementation of
these guidelines on a periodic basis. 
 
MONEY MARKET INSTRUMENTS.  Although the Funds intend, under normal circumstances
and to the extent  practicable,  to be fully invested in equity securities,  the
Funds may invest in money market  instruments to invest temporary cash balances,
to maintain  liquidity to meet redemptions or as a defensive  measure during, or
in anticipation of, adverse market  conditions.  These money market  instruments
include  obligations  issued or guaranteed by the U.S.  Government or any of its
agencies and instrumentalities,  commercial paper, bank obligations,  repurchase
agreements and other debt obligations.  If a repurchase  agreement  counterparty
defaults on its obligations, a Fund may, under some circumstances, be limited or
delayed in  disposing  of the  repurchase  agreement  collateral  to recover its
investment. 
 
FOREIGN  INVESTMENTS.  Each Fund may invest up to 5% of its total  assets at the
time of purchase in the equity securities of foreign companies that are included
in the S&P 500 or are listed on a U.S. stock exchange.  These investments may be
in the form of  American  Depositary  Receipts  ("ADRs")  or similar  securities
representing  interests  in  an  underlying  foreign  security.   ADRs  are  not
necessarily   denominated  in  the  same  currency  as  the  underlying  foreign
securities.  If an ADR is not sponsored by the issuer of the underlying  foreign
security, the institution issuing the ADR may have reduced access to information
about the issuer. 
 
Investments in foreign  securities involve risks in addition to those associated
with investments in the securities of U.S. issuers. These risks may include less
publicly available financial and other information about foreign companies; less
rigorous securities  regulation;  the potential imposition of currency controls,
foreign  withholding and other taxes;  and war,  expropriation  or other adverse
governmental  actions.  In addition,  the prices of unsponsored ADRs may be more
volatile  than  if  they  were  sponsored  by  the  issuers  of  the  underlying
securities. 
 
WHEN-ISSUED  AND  FORWARD  COMMITMENT  TRANSACTIONS.   The  Funds  may  purchase
when-issued  securities and enter into other forward  commitments to purchase or
sell securities.  The value of securities  purchased on a when-issued or forward
commitment basis may decline between the purchase date and the settlement date.
  
FUTURES AND OPTIONS TRANSACTIONS.  Each Fund may enter into derivative contracts
to hedge against  fluctuations  in securities  prices or as a substitute for the
purchase or sale of securities.  Each Fund may also use derivative contracts for
risk  management  purposes.  See Risk  Management in the Statement of Additional
Information. The Funds may purchase and sell (write) exchange traded and OTC put
and call options on securities and securities indexes, purchase and sell futures
contracts on securities and securities indexes and purchase and sell (write) put
and call options on futures contracts on securities and securities indexes. Some
options and futures strategies, including selling futures contracts, buying puts
and writing calls, tend to hedge a Fund's investments against price


                                       4
<PAGE>
fluctuations. Other strategies, including buying futures contracts, writing puts
and  buying  calls,  tend to  increase  market  exposure.  Options  and  futures
contracts may be combined with each other in order to adjust the risk and return
characteristics  of the Fund's overall strategy in a manner  consistent with the
Fund's objective and policies.
 
Transactions   in  derivative   contracts  often  involve  a  risk  of  loss  or
depreciation due to unanticipated  adverse changes in securities  prices. A Fund
incurs  liability to a counterparty in connection  with  transactions in futures
contracts and the writing of options.  As a result, the loss on these derivative
contracts  may  exceed a Fund's  initial  investment.  A Fund may also  lose the
entire  premium  paid for  purchased  options  that  expire  before  they can be
profitably  exercised by the Fund. In addition,  a Fund incurs transaction costs
in opening and closing positions in derivative contracts. 
 
Derivative  contracts may sometimes  increase or leverage a Fund's exposure to a
particular  market risk.  Leverage  magnifies the price volatility of derivative
contracts held by a Fund. The Funds are required to offset the leverage inherent
in derivative  contracts by maintaining a segregated  account consisting of cash
or liquid securities, by holding offsetting portfolio securities or contracts or
by covering written options. 
 
A Fund's success in using derivative contracts to hedge portfolio assets or as a
substitute  for the  purchase  or sale of assets  depends on the degree of price
correlation  between the derivative  contract and the hedged or simulated asset.
Imperfect  correlation  may be caused by several  factors,  including  temporary
price  disparities  among the trading markets for the derivative  contract,  the
assets underlying the derivative contract and the Fund's portfolio assets. 
 
During periods of extreme market volatility, a commodity or options exchange may
suspend or limit trading in an exchange-traded  derivative  contract,  which may
make the contract  temporarily illiquid and difficult to price. The staff of the
Securities and Exchange  Commission  (the "SEC") takes the position that certain
OTC options are  subject to each Fund's 15% limit on illiquid  investments.  The
Funds'  ability  to  terminate  OTC  derivative  contracts  may  depend  on  the
cooperation  of  the  counterparties  to  such  contracts.   For  thinly  traded
derivative  contracts,  the only source of price  quotations  may be the selling
dealer or counterparty.  In addition,  derivative  securities and OTC derivative
contracts  involve a risk that the issuer or  counterparty  will fail to perform
its contractual obligations. 
 
Neither Fund will engage in a  transaction  in futures or options on futures for
risk management purposes if, immediately  thereafter,  the sum of initial margin
deposits and premiums required to establish risk management positions in futures
contracts and options on futures would exceed 5% of the Fund's net assets. 
 
PORTFOLIO SECURITIES LOANS. Each Fund may lend portfolio securities with a value
up to one-third of its total assets.  Each loan must be fully  collateralized by
cash or other eligible  assets.  The Funds may pay reasonable fees in connection
with  securities  loans.  The Advisor  will  evaluate  the  creditworthiness  of
prospective  institutional  borrowers and monitor the adequacy of the collateral
to reduce the risk of default by borrowers. 
 
BORROWING AND REVERSE  REPURCHASE  AGREEMENTS.  A Fund may (1) borrow money from
banks solely for temporary or emergency (but not for leverage)  purposes and (2)
may enter into reverse  repurchase  agreements  for any purpose.  The  aggregate
amount of such  borrowings  and  reverse  repurchase  agreements  may not exceed
one-third of the Fund's total assets less liabilities  (other than  borrowings).
For the purposes of the Investment Company Act of 1940 (the "1940 Act"), reverse
repurchase  agreements  are  considered  a form  of  borrowing  by a  Fund  and,
therefore,  a form of  leverage.  Leverage  may cause any gains or losses of the
Fund to be magnified.


                                       5
<PAGE>
INVESTMENT  POLICIES  AND  RESTRICTIONS.  Except  as  otherwise  stated  in this
Prospectus  or the  Funds'  Statement  of  Additional  Information,  the  Funds'
investment  objective,  policies and restrictions are not fundamental and may be
changed without shareholder approval. Each Fund is diversified and therefore may
not,  with  respect to 75% of its total  assets,  (1) invest more than 5% of its
total assets in the  securities  of any one issuer,  other than U.S.  Government
securities, or (2) acquire more than 10% of the outstanding voting securities of
any one issuer.  Neither Fund will concentrate  (invest 25% or more of its total
assets) in the securities of issuers in any one industry. 
 
MANAGEMENT OF THE FUNDS 
 
TRUSTEES.  The Funds are series of the Trust.  The Trustees of  the Trust decide
upon  matters of general  policy and review the actions of the Advisor and other
service  providers.  The  Trustees  of the Trust are  identified below.

Frederick S. Addy  . . . .   Former Executive Vice President and Chief Financia
                             Officer, Amoco Corporation

William G. Burns  . . . . .  Former  Vice  Chairman  of  the  Board   and  Chief
                             Financial Officer, NYNEX Corporation

Arthur C. Eschenlauer . . .  Former Senior Vice President, Morgan Guaranty Trust
                             Company of New York

Matthew Healey  . . . . . .  Chairman and Chief Executive  Officer of the Trust;
                             Chairman, Pierpont Group, Inc.

Michael P. Mallardi . . . .  Former Senior Vice President,  Capital  Cities/ABC,
                             Inc. and President, Broadcast Group 
 
ADVISOR.  The Trust  has  retained  Morgan  as  Investment  Advisor  to  provide
investment advice and portfolio management services to the Funds. Subject to the
supervision  of the  Trustees,  Morgan  makes the Funds'  day-to-day  investment
decisions,  arranges for the execution of portfolio  transactions  and generally
manages the Funds' investments. 
 
Morgan, with principal offices at 60 Wall Street, New York, New York 10260, is a
New York trust  company  that  conducts a general  banking  and trust  business.
Morgan is a wholly owned  subsidiary of J.P.  Morgan & Co.  Incorporated  ("J.P.
Morgan"),  a bank holding company organized under the laws of Delaware.  Through
offices in New York City and abroad, J.P. Morgan,  through the Advisor and other
subsidiaries,  offers a wide range of services to  governmental,  institutional,
corporate and individual  customers and acts as investment advisor to individual
and  institutional  clients with combined  assets under  management of over $197
billion (of which the Advisor advises over $30 billion). 

Morgan uses a sophisticated, disciplined, collaborative process for managing all
asset  classes.  For  equity  portfolios,   this  process  utilizes  fundamental
research,  systematic  stock selection and disciplined  portfolio  construction.
Morgan has managed portfolios of U.S. equity securities on behalf of its clients
for over 40 years.  The portfolio  managers  making  investments in U.S.  equity
securities work in conjunction with Morgan's  domestic equity analysts,  as well
as  capital  market,   credit  and  economic  research  analysts,   traders  and
administrative  officers.  The  U.S.  equity  analysts  each  cover a  different
industry,  monitoring a universe of approximately  700  predominantly  large and
medium-sized U.S. companies.


                                       6
<PAGE>
The following  persons are primarily  responsible for the day-to-day  management
and  implementation  of Morgan's  processes for the Funds (the inception date of
each person's  responsibility for a Fund and his or her business  experience for
the past five years is indicated parenthetically):  Equity Fund: Terry E. Banet,
Vice President  (since November,  1996,  employed by Morgan since prior to 1991)
and Gordon B. Fowler,  Managing  Director  (since  November,  1996,  employed by
Morgan  since prior to 1991);  Disciplined  Equity Fund:  Robin B. Chance,  Vice
President  (since  November,  1996,  employed by Morgan since prior to 1991) and
Frederic A. Nelson, Managing Director (since November,  1996, employed by Morgan
since May, 1994, previously portfolio manager, Bankers Trust Company).
 
As compensation  for the services  rendered and related expenses borne by Morgan
under its investment  advisory agreement with the Trust, the Equity Fund and the
Disciplined Equity Fund have each agreed to pay Morgan a fee which is calculated
daily  and  may  be  paid  monthly  at the  annual  rate  of  0.45%  and  0.35%,
respectively, of average daily net assets. 
 
INVESTMENTS  IN THE FUNDS ARE NOT DEPOSITS OR  OBLIGATIONS  OF, OR GUARANTEED OR
ENDORSED BY, MORGAN GUARANTY TRUST COMPANY OF NEW YORK OR ANY OTHER BANK. 
 
CO-ADMINISTRATOR.  Pursuant  to a  Co-Administration  Agreement  with the Trust,
Funds Distributor,  Inc. ("FDI") serves as the  Co-Administrator  for the Funds.
FDI (i) provides office space,  equipment and clerical personnel for maintaining
the organization and books and records of the Funds;  (ii) provides officers for
the Trust; (iii) prepares and files documents required for notification of state
securities   administrators;   (iv)  reviews  and  files   marketing  and  sales
literature; and (v) maintains related books and records. 
 
For its services under the Co-Administration  Agreement, each Fund has agreed to
pay FDI fees equal to its allocable  share of an annual  complex-wide  charge of
$425,000 plus FDI's out-of-pocket expenses. The amount allocable to each Fund is
based on the ratio of the Fund's net assets to the  aggregate  net assets of the
Funds,  the other  fund in the Trust and  certain  other  registered  investment
companies subject to similar agreements with FDI. 
 
ADMINISTRATIVE  SERVICES AGENT. Pursuant to an Administrative Services Agreement
with the Trust,  Morgan  provides  administrative  and related  services to each
Fund,  including  services  related to tax compliance,  preparation of financial
statements,  calculation of performance data, oversight of service providers and
certain regulatory and Board of Trustees matters. 
 
Under the Administrative Services Agreement,  each Fund has agreed to pay Morgan
fees equal to its allocable share of an annual complex-wide  charge. This charge
is calculated  daily based on the  aggregate net assets of the Funds,  the other
fund in the Trust and certain other registered  investment  companies managed by
the Advisor in accordance with the following annual schedule: 0.09% on the first
$7  billion  of their  aggregate  average  daily net  assets  and 0.04% of their
aggregate  average  daily  net  assets  in  excess  of  $7  billion,   less  the
complex-wide fees payable to FDI. 
 
DISTRIBUTOR. FDI, a registered broker-dealer,  also serves as the Distributor of
shares  of the  Funds.  FDI is a wholly  owned  indirect  subsidiary  of  Boston
Institutional  Group, Inc. FDI's principal  business address is 60 State Street,
Suite 1300, Boston, Massachusetts 02109.


                                       7
<PAGE>
FUND SERVICES AGREEMENT.  Pursuant to a Fund Services Agreement  with the Trust,
Pierpont Group, Inc. ("PGI"),  461 Fifth  Avenue,  New  York,  New  York  10017,
assists the Trustees in exercising  their  overall  supervisory responsibilities
for the  affairs  of the Trust and other  funds for which the  Trustees  serve a
trustees.  PGI  provides  these  services for a fee approximating its reasonable
cost.

CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company,  225 Franklin
Street,  Boston,  Massachusetts  02110,  serves as the Funds' custodian and fund
accounting, transfer and dividend disbursing agent. 
 
EXPENSES.  In addition to the fees payable to the service  providers  identified
above, each Fund is responsible for usual and customary expenses associated with
its operation.  These include, among other things,  organization expenses, legal
fees,  audit and accounting  expenses,  insurance  costs,  the  compensation and
expenses of the Trustees, the expenses of printing and mailing reports,  notices
and proxy statements to Fund  shareholders,  registration fees under federal and
state securities laws, brokerage commissions,  interest, taxes and extraordinary
expenses (such as for litigation). 
 
Morgan has agreed  that it will  reimburse  each Fund  through at least the date
listed below to the extent necessary to maintain the Fund's  operating  expenses
for JPM Pierpont Shares at the following annual  percentage of average daily
net assets. 
 
JPM PIERPONT SHARES                EXPENSE CAP              DATE

Equity Fund                           .85%           February 28, 1998
Disciplined Equity Fund               .55%           February 28, 1998
 
This  expense  reimbursement  does  not  apply  to  taxes,  interest,  brokerage
commissions, litigation costs and other extraordinary expenses.
 
SHAREHOLDER INQUIRIES AND SERVICES 
 
Shareholders  may  call  J.P.  Morgan  Funds  Services  at  (800)  521-5411  for
information about the Funds and assistance with shareholder transactions. 
 
SHAREHOLDER  SERVICING.  Under a shareholder servicing agreement with the Trust,
Morgan,  acting  directly  or  through  an  agent  (designated  as  an  Eligible
Institution),   provides  account   administration   and  personal  and  account
maintenance  services to Fund shareholders.  These services include assisting in
the maintenance of accurate account records;  processing  orders to purchase and
redeem shares of a Fund, and responding to shareholder inquiries.  Each Fund has
agreed to pay Morgan a fee for these  services at an annual rate of 0.25% of the
average daily net assets of JPM Pierpont Shares. 

PURCHASE OF SHARES
 
METHOD OF PURCHASE.  Investors  may open  accounts  with a Fund only through the
Distributor.  All purchase transactions in Fund accounts are processed by Morgan
as  shareholder  servicing  agent  and  a  Fund  is  authorized  to  accept  any
instructions  relating to a Fund  account from Morgan as  shareholder  servicing
agent for the  customer.  All  purchase  orders  must be  accepted by the Funds'
Distributor.  Investors must be customers of Morgan or an Eligible  Institution.
Investors may also be employer-sponsored retirement plans that have designated a
Fund as an investment  option for the plans.  Prospective  investors who are not
already customers of Morgan may apply to


                                       8
<PAGE>
become customers of Morgan for the sole purpose of Fund transactions.  There are
no charges  associated with becoming a Morgan customer for this purpose.  Morgan
reserves the right to determine the customers that it will accept, and the Funds
reserve the right to determine the purchase orders that they will accept.
 
MINIMUM INVESTMENT REQUIREMENTS. Each Fund requires a minimum initial investment
in JPM Pierpont Shares of $100,000.  The minimum  subsequent  investment for all
investors is $5,000.  For investors who were  shareholders  of a fund in The JPM
Pierpont Funds as of September 29, 1995, the minimum  initial  investment in JPM
Pierpont  Shares or any JPM Pierpont Fund is $10,000.  These minimum  investment
requirements may be waived for certain investors,  including  investors for whom
the Advisor is a  fiduciary,  who are  employees  of the  Advisor,  who maintain
related accounts with the Funds, The JPM Pierpont Funds or the Advisor, who make
investments for a group of clients, such as financial advisors,  trust companies
and investment advisors, or who maintain retirement accounts with the Funds.
 
PURCHASE PRICE AND SETTLEMENT. Each Fund's shares are sold on a continuous basis
without a sales charge at the net asset value next  determined  after receipt of
an order.  Prospective  investors may purchase  shares with the assistance of an
Eligible Institution that may establish its own terms, conditions and charges.
 
To  purchase  JPM  Pierpont  Shares,   investors  should  request  their  Morgan
representative  (or a  representative  of their Eligible  Institution) to assist
them in placing a purchase  order with the Fund's  Distributor  and to  transfer
immediately  available funds to the Fund's Distributor on the next business day.
Any  shareholder  may also call J.P. Morgan Funds Services at (800) 521-5411 for
assistance in placing an order for shares.  If the Fund or its agent  receives a
purchase  order  prior to 4:00  P.M.  New York  time on any  business  day,  the
purchase  of Fund  shares  is  effective  and is made  at the  net  asset  value
determined  that day, and the  purchaser  becomes a holder of record on the next
business day upon the Fund's receipt of payment in immediately  available funds.
If the Fund or its agent  receives a  purchase  order  after 4:00 P.M.  New York
time, the purchase is effective and is made at the net asset value determined on
the next  business  day,  and the  purchase  becomes  a holder  of record on the
following business day upon the Fund's receipt of payment.
 
ELIGIBLE  INSTITUTIONS.  Shares may be sold to or through Eligible Institutions,
including financial  institutions and  broker-dealers,  that may be paid fees by
Morgan or its affiliates for services provided to their clients that invest in a
Fund.  Organizations  that provide  recordkeeping  or other  services to certain
employee  benefit  or  retirement  plans  that  include a Fund as an  investment
alternative may also be paid a fee. 
 
The services  provided by Eligible  Institutions  may include  establishing  and
maintaining   shareholder   accounts,   processing   purchase   and   redemption
transactions,  arranging for bank wires,  performing shareholder  subaccounting,
answering client inquiries  regarding the Trust,  assisting  clients in changing
dividend  options,  account  designations  and  addresses,   providing  periodic
statements showing the client's account balance and integrating these statements
with those of other  transactions  and balances in the client's  other  accounts
serviced by the Eligible  Institution,  transmitting proxy statements,  periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings  of  shareholders,  collecting,  tabulating  and  forwarding
executed proxies and obtaining such other  information and performing such other
services as Morgan or the Eligible  Institution's clients may reasonably request
and agree upon with the Eligible Institution. 


                                       9
<PAGE>
Although  there  is no sales  charge  levied  directly  by the  Funds,  Eligible
Institutions  may establish  their own terms and conditions for providing  their
services  and may charge  investors a  transaction-based  or other fee for their
services.  Such charges may vary among  Eligible  Institutions  but in all cases
will be retained by the  Eligible  Institution  and not remitted to the Funds or
Morgan.

REDEMPTION OF SHARES
 
METHOD OF REDEMPTION.  To redeem JPM Pierpont Shares, an investor  may  instruct
Morgan  or  his  or her Eligible Institution,   as   appropriate, to  submit  a 
redemption  request to the Fund or may  telephone  J.P.  Morgan   Funds Services
directly at (800) 521-5411 and give the  Shareholder  Service  Representative  a
preassigned  shareholder  Personal Identification  Number and the amount of  the
redemption.  The Funds  execute  effective   redemption   requests  at  the next
determined net asset value per share.  See Net Asset Value. 
 
A redemption request received by a Fund or its agent prior to 4:00 P.M. New York
time is  effective on that day. A redemption  request  received  after that time
becomes  effective  on the next  business  day.  Cash  proceeds of an  effective
redemption  are  generally  deposited  the  next  business  day  in  immediately
available  funds to the  shareholder's  account  at Morgan  or at his  Eligible
Institution or, in the case of certain Morgan customers,  are mailed by check or
wire transferred in accordance with the customer's instructions, and, subject to
Further  Redemption  Information below, in any event are paid within seven days.
The cash proceeds of any  redemption  will be reduced by the applicable 2% or 1%
redemption fee for shares held less than five years. 
 
REDEMPTION FEE. A redemption fee will be imposed by and paid to each Fund on the
gross dollar amount of shares redeemed for cash in accordance with the following
schedule.
 
                                                      REDEMPTION FEE RATE
                                                    AS A PERCENTAGE OF GROSS
YEAR SINCE PURCHASE                                   REDEMPTION PROCEEDS

SHARES  HELD  LESS  THAN 1 YEAR                             2% 
SHARES  HELD AT LEAST 1 YEAR
BUT LESS THAN 5 YEARS                                       1%
SHARES HELD 5 YEARS OR MORE                                NONE
 
 
The redemption  fees help cover  transaction  costs and the tax costs  long-term
investors  may bear when a Fund  realizes  capital  gains as a result of selling
securities to meet  redemptions.  by being paid directly to the Funds,  the fees
tend to be more  advantageous  to long-term  investors and less  advantageous to
short-term investors. 

There will be no  redemption  fee  charged on the cash  redemption  of i) shares
acquired through reinvested dividends and distributions,  ii) shares redeemed in
connection  with the  settlement  of an  estate,  or iii)  shares  subject  to a
mandatory redemption.

For federal  income tax purposes,  the  redemption  fee will reduce the proceeds
paid to the shareholder upon the redemption of shares. 
 
REDEMPTION  IN-KIND.  Each Fund  intends  whenever  feasible  to pay  redemption
proceeds by an in-kind  distribution of portfolio  securities to the extent that
the amount of the redemption  exceeds,  for the Equity Fund $250,000 and for the
Disciplined  Equity Fund,  $500,000.  Although the Funds generally intend to pay
redemptions equal to or less than these respective amounts in cash, they reserve
the right to pay such redemptions  in-kind.  The Funds are not permitted to make
in-kind distributions of redemption proceeds to shareholders who hold more than

                                       10
<PAGE>
5% of the  outstanding  shares of the Fund in the absence of an exemptive  order
from the SEC. Each Fund intends to apply to the SEC for such an order, but there
can be no  assurance  that the order will be granted.  In  general,  a Fund will
attempt to select  securities  for  in-kind  redemptions  that  approximate  the
overall  characteristics  of the Fund's  portfolio.  A Fund will not  distribute
illiquid  securities to satisfy in-kind  redemptions.  For purposes of effecting
in-kind  redemptions,  securities will be valued in the manner regularly used to
value a Fund's portfolio securities. The Fund will not redeem its shares in-kind
in a manner that after giving effect to the redemption would cause it to violate
its investment  restrictions or policies.  A shareholder who receives an in-kind
distribution  of redemption  proceeds may incur  brokerage or other  transaction
costs in liquidating the distributed  securities.  There is also a risk that the
securities  distributed  in-kind may decline in value before they can be sold by
the redeeming shareholder.  Although an in-kind redemption will not cause a Fund
to realize capital gains or losses  redeeming  shareholders may realize taxable
capital  gains or losses  based on the  difference  between  the cost  basis and
redemption  price of their  shares.  NO  REDEMPTION  FEE WILL BE  IMPOSED ON THE
AMOUNT OF ANY SHARES REDEEMED IN-KIND.
 
OTHER  REDEMPTION  PROCESSING  INFORMATION.   Redemption  requests  may  not  be
processed  if the  redemption  request  is  not  submitted  in  proper  form.  A
redemption  request  is not in proper  form  unless  the Fund has  received  the
shareholder's certified taxpayer identification number and address. In addition,
if shares were paid for by check and the check has not yet  cleared,  redemption
proceeds will not be transmitted until the check has cleared,  which may take up
to 15 days.  Each Fund  reserves the right to suspend the right of redemption or
postpone the payment of redemption  proceeds to the extent permitted by the SEC.
Shareholders may realize taxable capital gains upon redeeming shares. 
 
MANDATORY  REDEMPTION.  If a redemption of JPM Pierpont Shares reduces the value
of  a  shareholder's   account  balance  below  the  required   initial  minimum
investment,  the Fund may redeem  the  remaining  shares in the  account 60 days
after providing  written notice to the shareholder of the mandatory  redemption.
An account  will not be  subject  to  mandatory  redemption  if the  shareholder
purchases  sufficient  shares  during the 60-day  period to increase the account
balance to the required  minimum  investment  amount.  NO REDEMPTION FEE WILL BE
IMPOSED ON THE AMOUNT OF ANY MANDATORY REDEMPTION. 

DIVIDENDS AND DISTRIBUTIONS
 
Each Fund's net investment  income and realized net capital gains,  if any, will
be distributed at least annually. Dividends and distributions will be payable to
shareholders  of record on the record date.  If investors  purchase JPM Pierpont
Shares shortly before the record date of a dividend or distribution, they may be
subject to adverse tax consequences as described under Taxes. 
 
A Fund's dividends and  distributions are paid in additional JPM Pierpont Shares
unless  the  shareholder  elects to have them paid in cash.  The tax  effects of
dividends  and  distributions  are the same  whether  they are paid in shares or
cash.  Cash  dividends  and   distributions  either  (1)  are  credited  to  the
shareholder's account at Morgan or the shareholder's Eligible Institution or (2)
in the case of certain Morgan clients,  are paid by a check mailed in accordance
with the client's instructions.


                                       11
<PAGE>
NET ASSET VALUE 
 
Each Fund  computes  the net asset value per share  ("NAV") of the JPM  Pierpont
Shares at 4:15 p.m. New York time on each  weekday that is not a holiday  listed
in the Statement of Additional  Information (a "business  day").  The NAV of JPM
Pierpont  Shares is  calculated by dividing the net assets  attributable  to JPM
Pierpont Shares by the number of JPM Pierpont Shares outstanding. 

TAXES
 
Each Fund is treated as a separate entity for tax purposes. Each Fund intends to
elect to be treated as a regulated  investment company under Subchapter M of the
Internal  Revenue Code (the "Code").  To qualify as such, each Fund must satisfy
certain requirements  relating to the sources of its income,  diversification of
its  assets  and  distribution  of its income to  shareholders.  As a  regulated
investment  company,  each Fund will not be subject to federal  income or excise
tax on any net  investment  income  and net  realized  capital  gains  that  are
distributed to shareholders  in accordance  with certain timing  requirements of
the Code.

Dividends paid by a Fund from net investment income and the excess of short-term
capital gain over net long term capital loss will be taxable to its shareholders
as  ordinary  income.  Distributions  paid  by a Fund  from  the  excess  of net
long-term  capital  gain over net  short-term  capital  loss will be  taxable as
long-term  capital  gains  regardless of how long  shareholders  have held their
shares. These tax consequences will apply whether  distributions are received in
additional  shares or in cash. A Fund's dividends that are paid to its corporate
shareholders and are attributable to qualifying  dividends  received by the Fund
from U.S. domestic corporations may be eligible, in the hands of these corporate
shareholders, for the corporate dividends-received deduction, subject to certain
holding  period  requirements  and debt  financing  limitations  under the Code.
Shareholders  will be  informed  annually  about the amount and  character,  for
federal income tax purposes, of distributions received from the Funds.

The  Funds are  managed to minimize  the amount of capital  gains  realized  and
distributed during a particular year.  Nevertheless,  the realization of capital
gains may be affected by shareholder redemption transactions,  economic,  market
or issuer-specific developments or other investment considerations.

Investors  should  consider  the  adverse  tax  implications  of  buying  shares
immediately before a distribution.  Investors who purchase shares shortly before
the record date for a distribution  will pay a per share price that includes the
value of the anticipated distribution and will be taxed on the distribution even
though the distribution represents a return of a portion of the purchase price.

Redemptions of shares,  whether for cash or in-kind, are taxable events on which
a  shareholder  may  recognize a gain or loss.  Individuals  and  certain  other
shareholders  may be subject to 31% backup  withholding of federal income tax on
distributions  and  redemptions  if they fail to furnish their correct  taxpayer
identification  number  and  certain  certifications  or if they  are  otherwise
subject to backup withholding.

In addition to federal  taxes,  a  shareholder  may be subject to state or local
taxes on  income  and  gains  derived  with  respect  to  shares  in the  Funds.
Shareholders  are urged to consult  their own tax advisors  concerning  specific
questions about federal, state and local taxes.


                                       12
<PAGE>
ADDITIONAL INFORMATION
 
SHAREHOLDER  REPORTS  AND  CONFIRMATIONS.  Each Fund  sends to its  shareholders
annual and  semiannual  reports.  The financial  statements  appearing in annual
reports are audited by independent  accountants.  Shareholders will also be sent
confirmations of each purchase and redemption transaction and monthly statements
reflecting all account activity. 

TELEPHONE  TRANSACTIONS.  All shareholders are entitled to initiate  redemptions
and other  transactions  by  telephone.  However,  a  transaction  authorized by
telephone and reasonably believed by a Fund, Morgan, an Eligible  Institution or
the  Distributor  to be  genuine  may  result in a loss to the  investor  if the
transaction is not in fact genuine. The Funds will employ reasonable  procedures
to confirm that  investor  instructions  communicated  by telephone are genuine.
These include requiring investors to give their personal  identification numbers
and tape recording telephone instructions. If these procedures are not followed,
the Fund, Morgan, the investor's Eligible  Institution or the Distributor may be
liable for any losses resulting from unauthorized or fraudulent instructions.

PERFORMANCE   ADVERTISING.   Each  Fund  may  advertise  historical  performance
information  and  compare  its  performance  to other  investments  or  relevant
indexes.  An advertisement  may also include data supplied by Lipper  Analytical
Services,  Inc., Micropal Inc.,  Morningstar Inc., Ibbotson Associates and other
industry publications.
 
The Funds may  advertise  average  annual  total return and other forms of total
return data.  Average annual total return is determined by computing the average
annual  percentage  change  in value of  $1,000  invested  at NAV for  specified
periods  ending  with  the  most  recent  calendar  quarter.  The  total  return
calculation  assumes a complete  redemption of the  investment at the end of the
relevant  period and reflects the deduction of any  applicable  redemption  fee.
Each Fund may also advertise total return on a cumulative, average, year-by-year
or other basis for specified  periods.  The  investment  results of JPM Pierpont
Shares will fluctuate over time and should not be considered a representation of
performance in the future. 
 
In addition,  the Funds may advertise their yield.  Yield reflects a Fund's rate
of income on portfolio  investments as a percentage of its NAV. The yield on JPM
Pierpont  Shares is  computed  by  annualizing  the result of  dividing  the net
investment  income per share over a 30-day  period by the NAV on the last day of
that period. Yield is calculated by accounting methods that are standardized for
all stock and bond funds and differ from the methods  used for other  accounting
purposes.  Therefore,  the yield on JPM Pierpont Shares may not equal the income
paid on these shares or the income reported in a Fund's financial statements.
  
Performance information may be obtained by calling Morgan at (800) 521-5411. 

ORGANIZATION
 
The Trust was organized on August 15, 1996 as a  Massachusetts  business  trust.
The  Trust  currently  has  three  series  of  shares,  including  the two Funds
described in this  Prospectus.  The Trustees have authorized one class of shares
of each Fund: the JPM Pierpont Shares offered by this  Prospectus.  Other future
classes of shares of the Funds will be subject to different expenses,  which may
affect  the  performance  of each  class.  The  Trustees  reserve  the  right to
authorize and issue additional series and classes of shares. 
 
Shareholders  of each Fund are entitled to one full or fractional  vote for each
dollar or fraction  of a dollar  invested in JPM  Pierpont  Shares.  There is no
cumulative voting and shares have no preemption or conversion  rights. The Trust
does not intend to hold  meetings of  shareholders  annually.  The Trustees will
call  special  meetings of  shareholders  to the extent  required by the Trust's
Declaration of Trust or the 1940 Act. The 1940 Act requires the Trustees,  under
certain  circumstances,  to call a meeting to allow  shareholders to vote on the
removal  of a Trustee  and to assist  shareholders  in  communicating  with each
other. 



                                       13
<PAGE>





 
JPM PIERPONT SHARES:
TAX AWARE EQUITY FUND
TAX AWARE DISCIPLINED EQUITY FUND
 



























  

NO  DEALER,  SALESMAN  OR ANY  OTHER  PERSON  HAS  BEEN  AUTHORIZED  TO GIVE ANY
INFORMATION OR TO MAKE ANY  REPRESENTATIONS,  OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS,  IN CONNECTION  WITH THE OFFER  CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR.  THIS PROSPECTUS DOES
NOT  CONSTITUTE  AN  OFFER  BY THE  TRUST  OR BY THE  DISTRIBUTOR  TO  SELL OR A
SOLICITATION  OF ANY OFFER TO BUY ANY OF THE  SECURITIES  OFFERED  HEREBY IN ANY
JURISDICTION  TO ANY  PERSON  TO  WHOM  IT IS  UNLAWFUL  FOR  THE  TRUST  OR THE
DISTRIBUTOR TO MAKE SUCH AN OFFER IN SUCH JURISDICTION.


PROSPECTUS
 
NOVEMBER 18, 1996 

236/237PRO1196

<PAGE>


PROSPECTUS

JPM SERIES TRUST
JPM INSTITUTIONAL SHARES: CALIFORNIA BOND FUND
 
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
FOR INFORMATION CALL (800) 766-7722 

 
California Bond Fund (the "Fund") seeks to provide a high after tax total return
for California  residents  consistent with moderate risk of capital. The Fund is
designed for investors  subject to federal and California  personal income taxes
who are  seeking a high after tax total  return that may  include  some  taxable
income and gains. 

The Fund is a series of JPM Series Trust (the  "Trust") and is advised by Morgan
Guaranty Trust Company of New York ("Morgan" or the "Advisor").

 
This Prospectus sets forth concisely the information about the JPM Institutional
Shares of the Fund that a prospective  investor should know before investing and
should be retained for future reference.  Additional  information has been filed
with the  Securities  and  Exchange  Commission  in a  Statement  of  Additional
Information  dated  November 18, 1996, as amended or  supplemented  from time to
time.  This  information  is  incorporated  herein by reference and is available
without  charge upon written  request from the Fund's  Distributor or by calling
(800)  221-7930.  The Fund's  Distributor is Funds  Distributor,  Inc., 60 State
Street, Suite 1300, Boston,  Massachusetts 02109, Attention:  JPM Series Trust -
California Bond Fund.
 

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, MORGAN  GUARANTY TRUST COMPANY OF NEW YORK OR ANY OTHER BANK.  SHARES OF THE
FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. THE VALUE OF AN INVESTMENT
IN THE FUND MAY  FLUCTUATE  AND MAY,  AT THE TIME IT IS  REDEEMED,  BE HIGHER OR
LOWER THAN THE AMOUNT ORIGINALLY INVESTED.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

 
THE DATE OF THIS PROSPECTUS IS NOVEMBER 18, 1996
 


<PAGE>


TABLE OF CONTENTS

 
                                                            Page
Expense Table                                                 1
Investment Objective and Policies                             2
Additional Investment Practices and Risks                     3
Management of the Fund                                        6
Shareholder Inquiries and Services                            8
Purchase of Shares                                            8
Redemption of Shares                                          9
Exchange of Shares                                           10
Dividends and Distributions                                  10
Net Asset Value                                              10
Taxes                                                        11
Additional Information                                       12
Organization                                                 13
 


<PAGE>

JPM Institutional Shares: California Bond Fund
 
EXPENSE TABLE

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
  Purchases(1) . . . . . . . . . . . . .             None
Sales Charge Imposed on
  Reinvested Distributions . . . . . . .             None
Deferred Sales Load  . . . . . . . . . .             None
Redemption Fee . . . . . . . . . . . . .             None
Exchange Fee . . . . . . . . . . . . . .             None

ANNUAL OPERATING EXPENSES(2)
Advisory Fees  . . . . . . . . . . . . .             .30%
Rule 12b-1 Fees  . . . . . . . . . . . .             None
Other Expenses (after expense
 reimbursement)  . . . . . . . . . . . .             .15%
                                                     ----

Total Operating Expenses (after
 expense reimbursement) . . . . . . . .              .45%

1 Certain Eligible  Institutions may charge customers fees of varying amounts in
connection  with the  purchase  of  shares  of the Fund  through  such  Eligible
Institutions.

2 These expenses are based on the estimated  expenses and estimated  average net
assets for the Fund's first  fiscal year and through  July 31,  1997,  after any
applicable  expense  reimbursement.  Without  such  expense  reimbursement,  the
estimated Other Expenses and Total Operating  Expenses for its first fiscal year
would be equal on an annual basis to 0.49% and 0.79%,  respectively,  of average
daily net assets of the Fund's JPM Institutional Shares.

EXAMPLE
An  investor  would  pay  the  following  expenses  on  a  hypothetical   $1,000
investment,  assuming a 5% annual return and  redemption at the end of each time
period. (However, the Fund's minimum initial investment is greater than $1,000.)

1 Year . . . . . . . . . . . . . . . . . . . . . .   $ 7
3 Years  . . . . . . . . . . . . . . . . . . . . .   $22

The above expense  table is designed to assist  investors in  understanding  the
various  estimated  direct and indirect costs and expenses that investors in JPM
Institutional Shares of the Fund bear. For a complete description of contractual
arrangements  and other  expenses  applicable to the Fund, see Management of the
Fund and  Shareholder  Inquiries  and  Services --  Shareholder  Servicing.  THE
EXAMPLE  IS  INCLUDED  SOLELY  FOR  ILLUSTRATIVE  PURPOSES  AND  SHOULD  NOT  BE
CONSIDERED A REPRESENTATION OF FUTURE  PERFORMANCE OR EXPENSES.  ACTUAL EXPENSES
MAY BE MORE OR LESS THAN THOSE SHOWN. 


                                       1
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES

The investment  objective of California Bond Fund is to provide a high after tax
total return for California  residents consistent with moderate risk of capital.
The Fund invests primarily in California  Municipal  Securities  (defined below)
the income from which is exempt  from  federal and  California  personal  income
taxes.  It may also invest in other  municipal  securities  that generate income
exempt from federal income tax but not from California  income tax. In addition,
in order to maximize after tax total return, the Fund may invest in taxable debt
obligations to the extent consistent with its objective.

WHO MAY BE A SUITABLE  INVESTOR IN THE FUND.  The Fund is designed for investors
subject to federal and  California  personal  income  taxes who are seeking high
after tax return but are not adverse to receiving some taxable income and gains.
The Fund is not suitable for tax-deferred retirement or pension plans, including
Individual  Retirement Accounts (IRAs),  401(k) plans and 403(b) plans. The Fund
is not a complete  investment  program and there is no  assurance  that the Fund
will achieve its investment objective.

PRIMARY INVESTMENTS.  Under normal circumstances,  the Fund invests at least 65%
of its total assets in California  municipal bonds. For purposes of this policy,
"California  municipal  bonds"  has the same  meaning as  "California  Municipal
Securities,"  which are  obligations  of any  duration (or  maturity)  issued by
California,  its political  subdivisions  and their  agencies,  authorities  and
instrumentalities  and any other obligations,  the interest from which is exempt
from  California  personal  income  tax.  The  interest  from  many  but not all
California Municipal Securities is also exempt from federal income tax. The Fund
may also invest in debt  obligations of state and municipal  issuers  outside of
California.  In general,  the interest on such securities is exempt from federal
income  tax but  subject  to  California  income  tax.  A portion  of the Fund's
distributions  from  interest  on  California  Municipal  Securities  and  other
municipal  securities in which the Fund invests may under certain  circumstances
be subject to federal alternative minimum tax. See Taxes.

MUNICIPAL  SECURITIES.  The Fund  may  invest  in  municipal  securities  of any
maturity and type.  These include both general  obligation  bonds secured by the
issuer's pledge of its full faith, credit and taxing authority and revenue bonds
payable from specific revenue sources,  but generally not backed by the issuer's
taxing  authority.  In  addition,  the Fund may invest in all types of municipal
notes, including tax, revenue and grant anticipation notes, municipal commercial
paper, and municipal  demand  obligations such as variable rate demand notes and
master demand obligations.  There is no specific percentage  limitation on these
investments.

NON-MUNICIPAL  SECURITIES.  The Fund may  invest  in U.S.  Government,  bank and
corporate debt obligations, as well as asset- and mortgage-backed securities and
repurchase  agreements.  The Fund will purchase such securities only when Morgan
believes that they would enhance the after tax total return of a shareholder  of
the Fund in the highest federal and California income tax brackets. Under normal
circumstances, the Fund's holdings of non-municipal securities and securities of
municipal issuers outside California will not exceed 35% of its total assets.
 

CREDIT QUALITY.  The Fund will invest primarily in investment grade  securities,
which are  obligations  rated at the time of  purchase  at least Baa by  Moody's
Investors  Service,  Inc. or BBB by Standard & Poor's Ratings Group.  Securities
rated Baa or BBB are considered to have certain speculative characteristics.

The Fund may also invest up to 10% of its total assets in below investment grade
municipal and taxable securities rated at least B. Such securities are sometimes
referred to as "junk bonds." Below  investment  grade  securities  typically are
subject  to  greater  fluctuations  in price  and yield  resulting  in a greater
volatility of total return than investment grade bonds.  These  fluctuations may
be sharp  and  unanticipated.  Issuers  of  below  investment  grade  securities
typically are weak in financial  health and their  ability to repay  interest or
principal is uncertain.  Compared to issuers of investment grade bonds, they are
more likely to encounter financial difficulties and to be materially affected by
those  difficulties when they


                                       2
<PAGE>
do encounter them. As a result,  markets for below  investment  grade securities
may react  strongly  to adverse  news  about an issuer or the  economy or to the
perception or expectation  of adverse news. If a security  purchased by the Fund
is later downgraded below B, the Fund may continue to hold the security.

HOW THE FUND IS  MANAGED.  Morgan  actively  manages  the Fund's  duration,  the
allocation of securities  across market  sectors and the selection of securities
to maximize  after tax total return.  Morgan  adjusts the Fund's  duration based
upon  fundamental  economic and capital markets  research and Morgan's  interest
rate outlook.

Under normal  market  conditions,  the Fund will have a duration of three to ten
years,  although the  maturities of  individual  portfolio  securities  may vary
widely.  Duration  measures  the  price  sensitivity  of the  Fund's  portfolio,
including  expected cash flow under a wide range of interest rate  scenarios.  A
longer duration generally results in greater price volatility. As a result, when
interest rates increase,  the prices of longer duration securities decrease more
than the prices of comparable quality  securities with a shorter duration.  When
interest rates decrease,  the prices of longer duration securities increase more
than the prices of comparable quality securities with a shorter duration.

Morgan also seeks to enhance  after tax total  return by  allocating  the Fund's
assets among  market  sectors.  Specific  securities  which Morgan  believes are
undervalued  are  selected  for  purchase  using  advanced  quantitative  tools,
analysis of credit  risk,  the  expertise  of a dedicated  trading  desk and the
judgment of fixed income portfolio managers and analysts.

The Fund may engage in  short-term  trading to the  extent  consistent  with its
objective.  The annual  portfolio  turnover  rate of the Fund is  generally  not
expected to exceed 100%.  Portfolio  transactions  may generate  taxable capital
gains and result in increased transaction costs.

TAX  MANAGEMENT  TECHNIQUES.   In  seeking  to  achieve  the  Fund's  investment
objective,  Morgan attempts to consider the tax consequences to investors of all
portfolio transactions. The success of this strategy depends on Morgan's ability
to forecast  accurately  changes in interest rates and assess the value of fixed
income securities.


ADDITIONAL INVESTMENT PRACTICES AND RISKS

NON-DIVERSIFICATION.  Because the Fund is a non-diversified  investment company,
the  Investment  Company  Act of 1940  (the  "1940  Act")  does  not  limit  the
percentage  of the Fund's  assets that may be invested  in the  securities  of a
single issuer.  To the extent that the Fund invests a greater  percentage of its
assets in a smaller  number of issuers,  its  portfolio  will be subject to more
concentrated  credit and liquidity risk than a more diversified  portfolio.  The
Fund must still comply with the quarterly diversification requirements under the
Internal  Revenue Code of 1986 (the "Code") under which,  with respect to 50% of
its total assets,  the Fund  generally may not invest more than 5% of its assets
in any one issuer.  With respect to the other 50% of total assets,  the Fund may
invest up to 25% of its assets in the securities of each of any two issuers.

LIQUIDITY.  The  secondary  market for municipal  securities  is generally  less
liquid than for taxable fixed income securities.  These risks are accentuated to
the extent that the Fund, by itself or together with other  accounts  managed by
Morgan or its affiliates,  owns all or a substantial  portion of an issue of
municipal  securities.  In addition, if the issuer of certain types of municipal
securities such as industrial revenue bonds defaults, the Fund could be required
to seize and manage, or dispose of under adverse market conditions,  collateral,
which could increase the Fund's operating  expenses,  lower the Fund's net asset
value and generate taxable income.

CONCENTRATION. The Fund will not invest more than 25% of its total assets in any
one industry.  Governmental  issuers of municipal  securities are not considered
part of any industry for this purpose.  However,  taxable  municipal  securities


                                       3
<PAGE>
backed only by the assets or revenues of nongovernmental  users may be deemed to
be issued by such  nongovernmental  users, and the 25% limitation would apply to
obligations  backed by the assets or  revenues of  nongovernmental  users in the
same industry.

The Fund may  invest  more than 25% of its  assets  in  certain  sectors  of the
municipal  securities market, such as revenue obligations of hospitals and other
health care  facilities,  housing  agency  obligations,  transportation  related
obligations and utilities  related  obligations.  The Fund will concentrate in a
particular  market sector only if Morgan  determines  that the returns available
from issuers in the sector justify the additional  risks. To the extent that the
Fund  concentrates  in a particular  market  sector,  its portfolio will be more
exposed  to  adverse  economic,   business,  political  and  other  developments
affecting issuers or users within that sector.

CALL RISK. The Fund may invest in municipal securities that permit the issuer to
"call" or redeem the  securities.  If the issuer  calls  these  securities  when
interest rates are falling, the Fund may not be able to reinvest the proceeds in
securities providing a comparable return.

ZERO COUPON  BONDS.  The Fund may invest in zero coupon  bonds that pay interest
only  upon  maturity.  Zero  coupon  bonds may  present a greater  risk of price
volatility and credit  problems than other bonds and involve certain special tax
considerations. See Taxes.

CALIFORNIA MUNICIPAL SECURITIES.  Since the Fund invests primarily in California
Municipal  Securities,  its performance and the ability of California issuers to
meet their  obligations may be affected by economic,  political,  demographic or
other conditions in California.  As a result, the value of the Fund's shares may
fluctuate more widely than the value of shares of a fund investing in securities
of issuers in multiple states. The ability of state, county or local governments
to meet their  obligations  will depend primarily on the availability of tax and
other  revenues to those  governments  and on their general  fiscal  conditions.
Constitutional or statutory restrictions may limit a municipal issuer's power to
raise revenues or increase taxes. The  availability of federal,  state and local
aid to issuers of California  Municipal Securities may also affect their ability
to meet their  obligations.  Payments of principal and interest on revenue bonds
will depend on the economic condition of the facility or specific revenue source
from whose  revenues the payments  will be made.  Any reduction in the actual or
perceived  ability of an issuer of California  Municipal  Securities to meet its
obligations (including a reduction in the rating of its outstanding  securities)
would probably reduce the market value and marketability of the Fund's portfolio
securities.

SECURITIES  LOANS,  REPURCHASE  AGREEMENTS AND WHEN-ISSUED AND DELAYED  DELIVERY
SECURITIES.  The Fund may lend portfolio securities with a value up to one third
of its total assets and may enter into repurchase agreements. These transactions
must be fully collateralized at all times. The Fund may also purchase securities
on a  when-issued  or delayed  delivery  basis,  which may  increase its overall
investment  exposure and involves a risk of loss if the value of the  securities
declines  prior  to the  settlement  date.  Lending,  repurchase  agreement  and
when-issued  transactions  involve  the risk that the other party may default on
its obligation and the Fund could be delayed in or prevented from recovering the
collateral or completing the transaction.

PUTS. The Fund may purchase municipal securities together with a right to resell
or "put" the  securities  back to the seller on agreed upon terms.  The Fund may
pay a premium to purchase securities with a put feature. A put involves the risk
that  the  counterparty  will  default  on its  obligations  to  repurchase  the
underlying securities.

STRUCTURED  DEBT  SECURITIES.  The Fund may invest in structured debt securities
which may include  various types of derivative  securities such as tender option
bonds,  floating  rate  securities  that are subject to a maximum  interest rate
(capped  floaters),  leveraged  floating rate  securities  (super  floaters) and
leveraged inverse floating rate securities (inverse floaters). The interest rate
or, in some cases,  the principal  payable at the maturity of a structured  debt
security may change  positively or inversely in relation to one or more interest
rates,  financial indices or other financial indicators.  In


                                       4
<PAGE>
addition,  the  yield on a  structured  security  may fail to track the yield on
conventional  securities of comparable  maturity. A structured debt security may
be leveraged to the extent that the magnitude of any change in the interest rate
or principal  payable on an indexed  security is a multiple of the change in the
underlying  interest rate or index. Thus,  leveraged  structured  securities may
experience  greater  price  volatility  than  conventional  debt  securities  in
response to changes in interest rates or other reference prices.

RESTRICTED  AND  ILLIQUID  SECURITIES.  The Fund may invest up to 15% of its net
assets  in  illiquid  securities,   including  certain  restricted  and  private
placement  securities.  The  price  the Fund  pays for  illiquid  securities  or
receives  upon resale may be lower than the price paid or  received  for similar
securities  with a more  liquid  market.  Accordingly,  the  valuation  of these
securities  will reflect any limitations on their  liquidity.  The Fund may also
purchase Rule 144A  securities  eligible for resale to  institutional  investors
without  registration  under the Securities Act of 1933. These securities may be
determined to be liquid in accordance with guidelines  established by Morgan and
approved by the Trustees.  The Trustees will monitor Morgan's  implementation of
these guidelines on a periodic basis.

FUTURES AND OPTIONS  TRANSACTIONS.  The Fund may enter into derivative contracts
to hedge against  fluctuations  in securities  prices or as a substitute for the
purchase or sale of securities.  The Fund may also use derivative  contracts for
risk  management  purposes.  See Risk  Management in the Statement of Additional
Information.  The Fund  may  purchase  and  sell  (write)  exchange  traded  and
over-the-counter  ("OTC")  put and call  options on  securities  and  securities
indexes,  purchase  and sell  futures  contracts on  securities  and  securities
indexes and purchase and sell (write) put and call options on futures  contracts
on  securities  and  securities  indexes.  Some options and futures  strategies,
including  selling  futures  contracts,  buying puts and writing calls,  tend to
hedge the Fund's  investments  against  price  fluctuations.  Other  strategies,
including  buying  futures  contracts,  writing puts and buying  calls,  tend to
increase  market  exposure.  Options and futures  contracts may be combined with
each other in order to adjust the risk and return  characteristics of the Fund's
overall strategy in a manner  consistent with the Fund's objective and policies.
Because transactions in derivative instruments result in taxable gains or losses
it is expected that the Fund will utilize derivative contracts infrequently.

Transactions   in  derivative   contracts  often  involve  a  risk  of  loss  or
depreciation due to unanticipated adverse changes in securities prices. The Fund
incurs  liability to a counterparty in connection  with  transactions in futures
contracts and the writing of options.  As a result, the loss on these derivative
contracts may exceed the Fund's initial  investment.  The Fund may also lose the
entire  premium  paid for  purchased  options  that  expire  before  they can be
profitably exercised by the Fund. In addition, the Fund incurs transaction costs
in opening and closing positions in derivative contracts.

Derivative contracts may sometimes increase or leverage the Fund's exposure to a
particular  market risk.  Leverage  magnifies the price volatility of derivative
contracts held by the Fund. The Fund is required to offset the leverage inherent
in derivative  contracts by maintaining a segregated  account consisting of cash
or liquid securities, by holding offsetting portfolio securities or contracts or
by covering written options.

The Fund's success in using derivative contracts to hedge portfolio assets or as
a substitute  for the purchase or sale of assets  depends on the degree of price
correlation  between the derivative  contract and the hedged or simulated asset.
Imperfect  correlation  may be caused by several  factors,  including  temporary
price  disparities  among the trading markets for the derivative  contract,  the
assets underlying the derivative contract and the Fund's portfolio assets.

During periods of extreme market volatility, a commodity or options exchange may
suspend or limit trading in an exchange-traded  derivative  contract,  which may
make the contract  temporarily illiquid and difficult to price. The staff of the
Securities and Exchange  Commission  (the "SEC") takes the position that certain
OTC options are  subject to the Fund's 15% limit on  illiquid  investments.  The
Fund's  ability  to  terminate  OTC  derivative  contracts  may  depend  on  the
cooperation  of  the  counterparties  to  such  contracts.   For  thinly  traded
derivative  contracts,  the only source of price


                                       5
<PAGE>
quotations may be the selling dealer or  counterparty.  In addition,  derivative
securities  and OTC  derivative  contracts  involve  a risk  that the  issuer or
counterparty will fail to perform its contractual obligations.

The Fund will not engage in a  transaction  in futures or options on futures for
risk management purposes if, immediately  thereafter,  the sum of initial margin
deposits and premiums required to establish risk management positions in futures
contracts and options on futures would exceed 5% of the Fund's net assets.

BORROWING AND REVERSE REPURCHASE AGREEMENTS.  The Fund may (1) borrow money from
banks solely for temporary or emergency (but not for leverage)  purposes and (2)
may enter into reverse  repurchase  agreements  for any purpose.  The  aggregate
amount of such  borrowings  and  reverse  repurchase  agreements  may not exceed
one-third of the Fund's total assets less liabilities  (other than  borrowings).
For the purposes of the 1940 Act, reverse repurchase agreements are considered a
form of borrowing by the Fund and, therefore,  a form of leverage.  Leverage may
cause any gains or losses of the Fund to be magnified.

INVESTMENT  POLICIES  AND  RESTRICTIONS.  Except  as  otherwise  stated  in this
Prospectus  or the  Fund's  Statement  of  Additional  Information,  the  Fund's
investment  objective,  policies and restrictions are not fundamental and may be
changed without shareholder approval.


MANAGEMENT OF THE FUND

TRUSTEES.  The Fund is a series of the Trust.  The  Trustees of the Trust decide
upon  matters of general  policy and review the actions of the Advisor and other
service providers. The Trustees of the Trust are identified below.

Frederick S. Addy . . . .    Former Executive Vice President and Chief Financial
                             Officer, Amoco Corporation
 
William G. Burns  . . . .    Former  Vice  Chairman  of  the   Board  and  Chief
                             Financial Officer, NYNEX Corporation

Arthur C. Eschenlauer . .    Former Senior Vice President, Morgan Guaranty Trust
                             Company of New York

Matthew Healey  . . . . .    Chairman and Chief Executive Officer of  the Trust;
                             Chairman, Pierpont Group, Inc.

Michael P. Mallardi . . .    Former Senior  Vice President,  Capital Cities/ABC,
                             Inc. and President, Broadcast Group

ADVISOR.  The  Fund  has  retained  Morgan  as  Investment  Advisor  to  provide
investment advice and portfolio  management services to the Fund. Subject to the
supervision  of the  Trustees,  Morgan  makes the Fund's  day-to-day  investment
decisions,  arranges for the execution of portfolio  transactions  and generally
manages the Fund's investments.

Morgan, with principal offices at 60 Wall Street, New York, New York 10260, is a
New York trust  company  that  conducts a general  banking  and trust  business.
Morgan is a wholly owned  subsidiary of J.P.  Morgan & Co.  Incorporated  ("J.P.
Morgan"),  a bank holding company organized under the laws of Delaware.  Through
offices in New York City and abroad, J.P. Morgan,  through the Advisor and other
subsidiaries,  offers a wide range of services to  governmental,  institutional,
corporate and individual  customers and acts as investment advisor to individual
and  institutional  clients with combined  assets under  management of over $197
billion (of which the Advisor advises over $30 billion).


                                       6
<PAGE>
Morgan uses a sophisticated, disciplined, collaborative process for managing all
asset  classes.  For  fixed-income  portfolios,  this  process  focuses  on  the
systematic  analysis  of  real  interest  rates,   sector   diversification  and
quantitative  and credit  analysis.  Morgan has managed  portfolios  of domestic
fixed-income  securities  on  behalf  of its  clients  for  over 50  years.  The
portfolio managers making investments in domestic  fixed-income  securities work
in conjunction with fixed-income,  credit,  capital market and economic research
analysts, as well as traders and administrative officers.

Elizabeth A. Augustin and Robert W. Meiselas have been primarily responsible for
the day-to-day  management and implementation of Morgan's processes for the Fund
since its November,  1996 inception (they are Vice Presidents of Morgan and have
been employed by Morgan since prior to 1991).

As compensation  for the services  rendered and related expenses borne by Morgan
under its investment  advisory  agreement with the Trust, the Fund has agreed to
pay Morgan a fee which is calculated daily and may be paid monthly at the annual
rate of 0.30% of the Fund's average daily net assets.

INVESTMENTS  IN THE FUND ARE NOT DEPOSITS OR  OBLIGATIONS  OF, OR  GUARANTEED OR
ENDORSED BY, MORGAN GUARANTY TRUST COMPANY OF NEW YORK OR ANY OTHER BANK.

CO-ADMINISTRATOR.  Pursuant  to a  Co-Administration  Agreement  with the Trust,
Funds Distributor, Inc. ("FDI") serves as the Co-Administrator for the Fund. FDI
(i) provides office space,  equipment and clerical personnel for maintaining the
organization  and books and records of the Fund; (ii) provides  officers for the
Trust;  (iii) prepares and files  documents  required for  notification of state
securities   administrators;   (iv)  reviews  and  files   marketing  and  sales
literature; and (v) maintains related books and records.

For its services under the Co-Administration  Agreement,  the Fund has agreed to
pay FDI fees equal to its allocable share of an annual complex-wide charge of
$425,000 plus FDI's out-of-pocket  expenses. The amount allocable to the Fund is
based on the ratio of the Fund's net assets to the  aggregate  net assets of the
Fund,  the other  funds in the Trust and  certain  other  registered  investment
companies subject to similar agreements with FDI.

ADMINISTRATIVE  SERVICES AGENT. Pursuant to an Administrative Services Agreement
with the Trust, Morgan provides administrative and related services to the Fund,
including   services  related  to  tax  compliance,   preparation  of  financial
statements,  calculation of performance data, oversight of service providers and
certain regulatory and Board of Trustees matters.

Under the Administrative  Services Agreement,  the Fund has agreed to pay Morgan
fees equal to its allocable share of an annual complex-wide  charge. This charge
is calculated  daily based on the  aggregate  net assets of the Fund,  the other
funds in the Trust and certain other registered  investment companies managed by
the Advisor in accordance with the following annual schedule: 0.09% on the first
$7  billion  of their  aggregate  average  daily net  assets  and 0.04% of their
aggregate  average  daily  net  assets  in  excess  of  $7  billion,   less  the
complex-wide fees payable to FDI.

DISTRIBUTOR. FDI, a registered broker-dealer,  also serves as the Distributor of
shares  of the  Fund.  FDI is a  wholly  owned  indirect  subsidiary  of  Boston
Institutional  Group, Inc. FDI's principal  business address is 60 State Street,
Suite 1300, Boston, Massachusetts 02109.

FUND SERVICES  AGREEMENT.  Pursuant to a Fund Services Agreement with the Trust,
Pierpont  Group,  Inc.  ("PGI"),  461 Fifth  Avenue,  New York,  New York 10017,
assists the Trustees in exercising  their overall  supervisory  responsibilities
for the  affairs of the Trust and other  funds for which the  Trustees  serve as
trustees.  PGI provides  these services for a fee  approximating  its reasonable
cost.


                                       7
<PAGE>
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company,  225 Franklin
Street,  Boston,  Massachusetts  02110,  serves as the Fund's custodian and fund
accounting, transfer and dividend disbursing agent.

EXPENSES.  In addition to the fees payable to the service  providers  identified
above, the Fund is responsible for usual and customary expenses  associated with
its operation.  These include, among other things,  organization expenses, legal
fees,  audit and accounting  expenses,  insurance  costs,  the  compensation and
expenses of the Trustees, the expenses of printing and mailing reports,  notices
and proxy statements to Fund  shareholders,  registration fees under federal and
state securities laws, interest,  taxes and extraordinary  expenses (such as for
litigation).

Morgan has agreed that it will reimburse the Fund through at least July 31, 1997
to the extent  necessary  to  maintain  the Fund's  operating  expenses  for JPM
Institutional Shares at the annual rate of 0.45% of the average daily net assets
of the Fund's JPM  Institutional  Shares.  This expense  reimbursement  does not
apply to taxes, interest, litigation costs and other extraordinary expenses.


SHAREHOLDER INQUIRIES AND SERVICES

Shareholders  may  call  J.P.  Morgan  Funds  Services  at  (800)  766-7722  for
information about the Fund and assistance with shareholder transactions.

SHAREHOLDER  SERVICING.  Under a shareholder servicing agreement with the Trust,
Morgan,  acting  directly  or  through  an  agent  (designated  as  an  Eligible
Institution)   provides   account   administration   and  personal  and  account
maintenance  services to Fund shareholders.  These services include assisting in
the maintenance of accurate account records,  processing  orders to purchase and
redeem shares of the Fund, and responding to shareholder inquiries. The Fund has
agreed to pay Morgan a fee for these  services at an annual rate of 0.05% of the
average daily net assets of JPM Institutional Shares.


PURCHASE OF SHARES

METHOD OF PURCHASE.  Investors  may open accounts with the Fund only through the
Distributor.  All purchase transactions in Fund accounts are processed by Morgan
as shareholder servicing agent and the Fund is authorized to accept instructions
relating to a Fund account from Morgan as  shareholder  servicing  agent for the
customer.  All  purchase  orders  must be  accepted  by the Fund's  Distributor.
Investors must be customers of Morgan or an Eligible Institution.  Investors may
also be employer-sponsored  retirement plans that have designated the Fund as an
investment  option  for the plans.  Prospective  investors  who are not  already
customers  of Morgan may apply to become  customers of Morgan for the purpose of
Fund  transactions.  There are no  charges  associated  with  becoming  a Morgan
customer for this purpose.  Morgan reserves the right to determine the customers
that it will accept,  and the Fund  reserves the right to determine the purchase
orders that it will accept.

MINIMUM INVESTMENT REQUIREMENTS.  The Fund requires a minimum initial investment
in JPM Institutional Shares of $5,000,000.  The minimum subsequent investment is
$25,000.  These  minimum  investment  requirements  may be  waived  for  certain
investors, including investors for whom the Advisor is a fiduciary, who maintain
related accounts with the Fund, The JPM Institutional Funds or the Advisor,  who
make  investments  for a group of clients,  such as  financial  advisors,  trust
companies and investment advisors,  or who maintain retirement accounts with the
Fund.

PURCHASE PRICE AND SETTLEMENT.  The Fund's shares are sold on a continuous basis
without a sales charge at the net asset value next  determined  after receipt of
an order.  Prospective  investors may purchase  shares with the assistance of an
Eligible Institution that may establish its own terms, conditions and charges.

To purchase JPM  Institutional  Shares,  investors  should  request their Morgan
representative  (or a  representative  of their Eligible  Institution) to assist
them in placing a purchase  order with the Fund's  Distributor  and to  transfer
immediately


                                       8
<PAGE>
available  funds  to  the  Fund's   Distributor  on  the  settlement  date.  Any
shareholder  may also call J.P.  Morgan  Funds  Services at (800)  766-7722  for
assistance in placing an order for shares.  If the Fund or its agent  receives a
purchase  order  prior to 4:00  P.M.  New York  time on any  business  day,  the
purchase  of Fund  shares  is  effective  and is made  at the  net  asset  value
determined  that  day,  and the  purchaser  becomes  a holder  of  record on the
following  business  day upon the  Fund's  receipt  of  payment  in  immediately
available  funds.  If the Fund or its agent receives a purchase order after 4:00
P.M. New York time, the purchase is effective and is made at the net asset value
determined  on the next  business  day. The  settlement  date is  generally  the
business  day after the  purchase  is  effective.  The  purchaser  will begin to
receive  the  daily  dividends  on  the  settlement   date.  See  Dividends  and
Distributions.

ELIGIBLE  INSTITUTIONS.  Shares may be sold to or through Eligible Institutions,
including financial  institutions and  broker-dealers,  that may be paid fees by
Morgan or its affiliates  for services  provided to their clients that invest in
the Fund.  Organizations that provide recordkeeping or other services to certain
employee  benefit or  retirement  plans that  include the Fund as an  investment
alternative may also be paid a fee.

The services  provided by Eligible  Institutions  may include  establishing  and
maintaining   shareholder   accounts,   processing   purchase   and   redemption
transactions,  arranging for bank wires,  performing shareholder  subaccounting,
answering client inquiries  regarding the Trust,  assisting  clients in changing
dividend  options,  account  designations  and  addresses,   providing  periodic
statements showing the client's account balance and integrating these statements
with those of other  transactions  and balances in the client's  other  accounts
serviced by the Eligible  Institution,  transmitting proxy statements,  periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings  of  shareholders,  collecting,  tabulating  and  forwarding
executed proxies and obtaining such other  information and performing such other
services as Morgan or the Eligible  Institution's clients may reasonably request
and agree upon with the Eligible Institution.

Although  there  is no  sales  charge  levied  directly  by the  Fund,  Eligible
Institutions  may establish  their own terms and conditions for providing  their
services  and may charge  investors a  transaction-based  or other fee for their
services.  Such charges may vary among  Eligible  Institutions  but in all cases
will be retained by the  Eligible  Institution  and not  remitted to the Fund or
Morgan.


REDEMPTION OF SHARES

METHOD OF  REDEMPTION.  To redeem JPM  Institutional  Shares,  an  investor  may
instruct Morgan or his or her Eligible Institution,  as appropriate, to submit a
redemption  request to the Fund or may  telephone  J.P.  Morgan  Funds  Services
directly at (800) 766-7722 and give the  Shareholder  Service  Representative  a
preassigned  shareholder  Personal  Identification  Number and the amount of the
redemption.  The  Fund  executes  effective  redemption  requests  at  the  next
determined net asset value per share. See Net Asset Value.

A  redemption  request  received by the Fund or its agent prior to 4:00 P.M. New
York time is  effective on that day. A redemption  request  received  after that
time  becomes  effective  on the next  business  day.  Proceeds of an  effective
redemption are deposited on the settlement  date in immediately  available funds
to the  shareholder's  account at Morgan or at his Eligible  Institution or, in
the case of certain Morgan customers, are mailed by check or wire transferred in
accordance  with the  customer's  instructions.  The redeemer  will  continue to
receive  dividends on these shares through the day before the  settlement  date.
The  settlement  date is generally  the next  business day after a redemption is
effective and, subject to Further  Redemption  Information below, in any even is
within seven days. See Dividends and Distributions.

OTHER  REDEMPTION  PROCESSING  INFORMATION.   Redemption  requests  may  not  be
processed  if the  redemption  request  is  not  submitted  in  proper  form.  A
redemption  request  is not in proper  form  unless  the Fund has  received  the
shareholder's certified taxpayer identification number and address. In addition,
if shares were paid for by check and the check has not


                                       9
<PAGE>
yet cleared,  redemption  proceeds will not be  transmitted  until the check has
cleared,  which may take up to 15 days.  The Fund  reserves the right to suspend
the right of redemption  or postpone the payment of  redemption  proceeds to the
extent permitted by the SEC.  Shareholders may be required to recognize  taxable
gains or losses upon redeeming shares.

MANDATORY  REDEMPTION.  If a redemption of JPM Institutional  Shares reduces the
value of a  shareholder's  account  balance below the required  initial  minimum
investment,  the Fund may redeem  the  remaining  shares in the  account 60 days
after providing  written notice to the shareholder of the mandatory  redemption.
An account  will not be  subject  to  mandatory  redemption  if the  shareholder
purchases  sufficient  shares  during the 60-day  period to increase the account
balance to the required minimum investment amount.


EXCHANGE OF SHARES

An investor may exchange JPM Institutional  Shares for shares of any fund in The
JPM Pierpont Funds or The JPM Institutional  Funds without charge subject to the
same minimum  investment  requirements  as are  applicable to purchases of
shares of such funds. An exchange is in effect a redemption from one fund
followed by a purchase of another fund and is therefore subject to the
requirements applicable to share purchases and redemptions. Exchanges may result
in the recognition of taxable  gains or losses.  The Fund reserves the right to
terminate or alter the terms of the exchange privilege at any time.


DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute  substantially all of its net investment income.
The net  investment  income of the Fund is declared as a dividend daily for each
class of shares  outstanding  immediately  prior to the determination of the net
asset value per share ("NAV") of each class on that day and paid monthly.  If an
investor's shares are redeemed during a month,  accrued but unpaid dividends are
paid with the redemption  proceeds.  Net investment income for dividend purposes
consists of the income of the Fund less certain of the Fund's expenses and other
expenses directly attributable to such class. Fund expenses,  including the fees
payable to Morgan,  are accrued daily.  Shares will accrue  dividends as long as
they are issued and  outstanding.  Shares are issued and  outstanding  as of the
settlement  date of a  purchase  order to the  settlement  date of a  redemption
order.

Substantially  all the  realized  net  capital  gains,  if any,  of the Fund are
declared and paid on an annual basis,  except that an  additional  capital gains
distribution  may be made in a given year to the extent  necessary  to avoid the
imposition of federal excise tax on the Fund.

The Fund's dividends and  distributions are paid in additional shares unless the
shareholder  elects to have them paid in cash.  The tax effects of dividends and
distributions  are the  same  whether  they  are paid in  shares  or cash.  Cash
dividends and distributions either (1) are credited to the shareholder's account
at  Morgan  or the  shareholder's  Eligible  Institution  or (2) in the  case of
certain  Morgan  clients,  are paid by a check  mailed  in  accordance  with the
client's instructions.


NET ASSET VALUE

The Fund computes the NAV of the JPM Institutional  Shares at 4:15 p.m. New York
time on each weekday that is not a holiday listed in the Statement of Additional
Information  (a  "business  day").  The  NAV  of  JPM  Institutional  Shares  is
calculated by dividing the net assets  attributable to JPM Institutional  Shares
by the number of JPM Institutional Shares outstanding.


                                       10
<PAGE>
TAXES

The  Fund  is  treated  as  a separate entity for tax purposes. The Fund intends
to elect to be treated and qualify each year as a regulated  investment  company
under  Subchapter M of the Code. To qualify as such,  the Fund must, in addition
to other  requirements,  limit its  investments  so that at the close of
each  quarter of its taxable  year (a) no more than 25% of its total  assets are
invested  in the  securities  of any one  issuer  (other  than  U.S.  Government
securities or the securities of other regulated investment  companies),  and (b)
with regard to 50% of its total assets,  no more than 5% of its total assets are
invested  in the  securities  of a  single  issuer.  As a  regulated  investment
company, the Fund will not be subject to federal income or excise tax on any net
investment  income  and net  realized  capital  gains  that are  distributed  to
shareholders in accordance with certain timing requirements of the Code. 
 
The Fund intends to qualify to pay exempt-interest dividends to its shareholders
by having, at the close of each quarter of its taxable year, at least 50% of the
value of its total assets consist of tax exempt  securities.  An exempt-interest
dividend is that part of dividend  distributions made by the Fund which consists
of  interest  received  by the Fund on tax  exempt  securities.  Exempt-interest
dividends received from the Fund will be treated for federal income tax purposes
as tax exempt interest income. However, an investor receiving Social Security or
railroad  retirement  benefits should consult his tax adviser to determine if an
investment  in the Fund may  affect  the  federal  taxation  of these  benefits.
California  does  not tax any  portion  of such  benefits.  To the  extent  that
exempt-interest dividends are derived from interest on California Municipal 
Securities,  such  distributions  will also be exempt from  California  personal
income tax. However, these exempt-interest dividends may result in liability for
state and local taxes for individual  shareholders  subject to taxation by other
states and municipalities outside of California.

For federal income tax purposes,  dividends other than exempt interest dividends
paid by the Fund from net  investment  income and the  excess of net  short-term
capital gain over net long-term capital loss will be taxable to its shareholders
as ordinary income.  Dividends paid by the Fund from the excess of net long-term
capital  gain over net  short-term  capital loss and  designated  by the Fund as
"capital gain dividends" will be taxable as long-term  capital gains  regardless
of how long  shareholders  have held their shares.  These tax consequences  will
apply  whether  distributions  are  received  in  additional  shares or in cash.
Shareholders  will be  informed  annually  about the amount and  character,  for
federal and California personal income tax purposes,  of distributions  received
from the Fund.

For  California  personal  income  tax  purposes,   distributions  derived  from
investments  other than  California  Municipal  Securities  and U.S.  Government
securities that pay interest exempt from state personal income taxation, as well
as distributions  from any net realized  capital gains,  will be taxable whether
taken in cash or reinvested in additional shares.

Interest on certain tax exempt municipal obligations issued after August 7, 1986
is a preference item for purposes of the  alternative  minimum tax applicable to
individuals and corporations. Under tax regulations to be issued, the portion of
the exempt-interest dividend of a regulated investment company that is allocable
to these  obligations  will be treated as a preference  item for purposes of the
alternative minimum tax.  To the extent that the Fund invests in California 
Municipal Securities or other municipal  securities the interest from which is
subject to federal  alternative minimum tax, individual shareholders,  depending
on their own tax status, may be subject to federal but not California 
alternative minimum tax on that portion of the Fund's distributions attributable
to such income. An investment in the Fund may cause  corporate  investors to be
subject to (or increase  their  liability under) California corporate taxation.

Corporations should also be aware that interest on all municipal securities will
be included in  calculating  (i) adjusted  current  earnings for purposes of the
alternative  minimum tax applicable to them,  (ii) the additional tax imposed on
certain corporations by the Superfund Revenue Act of 1986, and (iii) the foreign
branch profits tax imposed on certain effectively connected earnings and profits
of U.S. branches of foreign  corporations.  Furthermore,  special tax provisions
may apply to certain financial  institutions and property and casualty insurance
companies,  and they should consult their tax advisors before  purchasing shares
of the Fund. 


                                       11
<PAGE>
Interest on  indebtedness  incurred or  continued  by a  shareholder  (whether a
corporation  or an  individual)  to  purchase  or  carry  shares  of the Fund is
generally  not  deductible.  Investors  who are, or are related to, "substantial
users" of  bond-financed  facilities  should consult their tax advisors prior to
purchasing shares of the Fund.

The  Fund  generally  will  be  required  to  recognize  accrued  income  on its
investments in zero coupon bonds each taxable year, even though no corresponding
amount of cash may be  received  during  that year,  and may have to obtain cash
from  other  sources  to  enable  it  to  satisfy  certain  income  distribution
requirements applicable to the Fund under the Code.

Redemptions  or  exchanges of shares,  whether for cash or in-kind,  are taxable
events on which a  shareholder  may  recognize a gain or loss.  Any gain or loss
realized by a shareholder  who is not a dealer in  securities  will be
treated as long-term  capital gain or loss if the shares have been held for more
than one year and otherwise a short-term capital gain or loss. However, any loss
realized by a shareholder  upon the redemption or exchange of shares in the Fund
held for six  months or less will be treated as  long-term  capital  loss to the
extent of any long-term capital gain  distributions  received by the shareholder
with respect to such shares.  In addition,  any loss  realized by a  shareholder
upon the  redemption  or  exchange of shares in the Fund held six months or less
will be disallowed to the extent of any exempt-interest  dividends  received by
the shareholder with respect to these shares. 
 
Individuals  and  certain  other  shareholders  may be  subject  to  31%  backup
withholding of federal income tax on taxable  distributions  and the proceeds of
redemptions if they fail to furnish their correct taxpayer identification number
and  certain   certifications  or  if  they  are  otherwise  subject  to  backup
withholding. 

The foregoing  summarizes certain federal and California income tax consequences
of  investing  in the  Fund.  Shareholders  are urged to  consult  their own tax
advisors concerning specific questions about federal, state and local taxes.


ADDITIONAL INFORMATION

SHAREHOLDER REPORTS AND CONFIRMATIONS. The Fund sends to its shareholders annual
and semiannual reports. The financial statements appearing in annual reports are
audited by independent accountants. Shareholders will also be sent confirmations
of each purchase and redemption  transaction and monthly  statements  reflecting
all account activity.

TELEPHONE  TRANSACTIONS.  All shareholders are entitled to initiate  redemptions
and other  transactions  by  telephone.  However,  a  transaction  authorized by
telephone and reasonably  believed by the Fund, Morgan, an Eligible  Institution
or the  Distributor  to be genuine  may result in a loss to the  investor if the
transaction is not in fact genuine.  The Fund will employ reasonable  procedures
to confirm that  investor  instructions  communicated  by telephone are genuine.
These include requiring investors to give their personal  identification numbers
and tape recording telephone instructions. If these procedures are not followed,
the Fund, Morgan, the investor's Eligible  Institution or the Distributor may be
liable for any losses resulting from unauthorized or fraudulent instructions.

PERFORMANCE   ADVERTISING.   The  Fund  may  advertise  historical   performance
information  and  compare  its  performance  to other  investments  or  relevant
indexes.  An advertisement  may also include data supplied by Lipper  Analytical
Services,  Inc., Micropal Inc.,  Morningstar Inc., Ibbotson Associates and other
industry publications.

The Fund may  advertise  average  annual  total  return and other forms of total
return data.  Average annual total return is determined by computing the average
annual  percentage  change  in value of  $1,000  invested  at NAV for  specified
periods  ending  with  the  most  recent  calendar  quarter.  The  total  return
calculation  assumes a complete  redemption of the  investment at the end of the
relevant  period.  The Fund may also  advertise  total  return on a  cumulative,
average,  year-by-year  or other basis for  specified  periods.  The  investment
results of JPM  Institutional  Shares will fluctuate over time and should not be
considered a representation of performance in the future.


                                       12
<PAGE>
In addition,  the Fund may  advertise  yield and  "tax-equivalent  yield." Yield
reflects the Fund's rate of income on portfolio  investments  as a percentage of
its NAV. The yield on JPM  Institutional  Shares is computed by annualizing  the
result of dividing the net  investment  income per share over a 30-day period by
the NAV on the  last  day of that  period.  Yield is  calculated  by  accounting
methods that are  standardized  for all stock and bond funds and differ from the
methods  used  for  other  accounting  purposes.  Therefore,  the  yield  on JPM
Institutional Shares may not equal the income paid on these shares or the income
reported  in the Fund's  financial  statements.  Tax-equivalent  yield shows the
effect on performance of the tax-exempt status of distributions  received by the
Fund. It reflects the approximate yield that a taxable  investment must earn for
shareholders at stated income levels to produce an after tax yield equivalent to
the Fund's tax-exempt yield.

Performance information may be obtained by calling Morgan at (800) 766-7722.


ORGANIZATION

The Trust was organized on August 15, 1996 as a  Massachusetts  business  trust.
The Trust currently has three series of shares,  including the Fund described in
this  Prospectus.  The Trustees have authorized one class of shares of the Fund:
the JPM Institutional Shares offered by this Prospectus. Other future classes of
shares of the Fund will be subject to different  expenses,  which may affect the
performance of each class. The Trustees reserve the right to authorize and issue
additional series and classes of shares.

Shareholders  of the Fund are entitled to one full or  fractional  vote for each
dollar or fraction of a dollar invested in JPM Institutional Shares. There is no
cumulative voting and shares have no preemption or conversion  rights. The Trust
does not intend to hold  meetings of  shareholders  annually.  The Trustees will
call  special  meetings of  shareholders  to the extent  required by the Trust's
Declaration of Trust or the 1940 Act. The 1940 Act requires the Trustees,  under
certain  circumstances,  to call a meeting to allow  shareholders to vote on the
removal  of a Trustee  and to assist  shareholders  in  communicating  with each
other.


                                       13
<PAGE>

JPM INSTITUTIONAL SHARES:
CALIFORNIA BOND FUND
































NO  DEALER,  SALESMAN  OR ANY  OTHER  PERSON  HAS  BEEN  AUTHORIZED  TO GIVE ANY
INFORMATION OR TO MAKE ANY  REPRESENTATIONS,  OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS,  IN CONNECTION  WITH THE OFFER  CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR.  THIS PROSPECTUS DOES
NOT  CONSTITUTE  AN  OFFER  BY THE  TRUST  OR BY THE  DISTRIBUTOR  TO  SELL OR A
SOLICITATION  OF ANY OFFER TO BUY ANY OF THE  SECURITIES  OFFERED  HEREBY IN ANY
JURISDICTION  TO ANY  PERSON  TO  WHOM  IT IS  UNLAWFUL  FOR  THE  TRUST  OR THE
DISTRIBUTOR TO MAKE SUCH AN OFFER IN SUCH JURISDICTION.


PROSPECTUS
 
NOVEMBER 18, 1996 

332PRO1196
<PAGE>

SAI5.WPF
 

                                JPM SERIES TRUST

                                       
                              TAX AWARE EQUITY FUND
                        TAX AWARE DISCIPLINED EQUITY FUND
                                       

                              CALIFORNIA BOND FUND

                       STATEMENT OF ADDITIONAL INFORMATION

                                       
                                NOVEMBER 18, 1996

THIS  STATEMENT  OF  ADDITIONAL  INFORMATION  IS NOT A  PROSPECTUS  BUT CONTAINS
ADDITIONAL  INFORMATION  WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
FOR THE FUND OR FUNDS DATED NOVEMBER 11, 1996 AS SUPPLEMENTED FROM TIME TO TIME,
WHICH MAY BE  OBTAINED  UPON  REQUEST  FROM FUNDS  DISTRIBUTOR,  INC.,  60 STATE
STREET,  SUITE 1300, BOSTON,  MASSACHUSETTS 02109,  ATTENTION:  JPM SERIES TRUST
(800) 221-7930.
 


<PAGE>






Table of Contents

 
                                                        PAGE

General.................................                   1
Investment Objectives and Policies......                   1
Investment Restrictions.................                  11
Trustees and Officers...................                  13
Investment Advisor......................                  16
Distributor.............................                  18
Co-Administrator........................                  18
Services Agent..........................                  18
Custodian and Transfer Agent............                  19
Shareholder Servicing...................                  19
Independent Accountants.................                  19
Expenses................................                  19
Purchase of Shares......................                  20
Redemption of Shares....................                  20
Exchange of Shares......................                  21
Net Asset Value.........................                  21
Performance Data........................                  22
Portfolio Transactions..................                  23
Massachusetts Trust.....................                  24
Description of Shares...................                  25
Taxes...................................                  25
Additional Information..................                  28
Financial Statements....................                  28
Appendix A - Description of Securities
Ratings.................................                 A-1
Appendix B - Additional Information
Concerning California Municipal
Securities..............................                 B-1
 


<PAGE>






                                    GENERAL

 
         Each  of  Tax  Aware  Equity  Fund  (the  "Equity  Fund"),   Tax  Aware
Disciplined  Equity Fund (the " Disciplined  Equity Fund," and together with the
Equity  Fund,  the "Equity  Funds") and  California  Bond Fund (the  "California
Fund")  is a series of JPM  Series  Trust,  an  open-end  management  investment
company  organized as a Massachusetts  business trust (the "Trust").  The Equity
Funds and  California  Fund are  referred to  collectively  as the  "Funds." The
Trustees  of  the Trust  have authorized  the issuance and sale of shares of one
class of each Equity  Fund (JPM  Pierpont Shares) and shares of one class of the
California Fund (JPM Institutional Shares). 
 
         This   Statement  of   Additional   Information   provides   additional
information with respect to the Funds and should be read in conjunction with the
applicable  current  prospectus  (the   "Prospectus").   Capitalized  terms  not
otherwise  defined herein have the meanings  assigned to them in the Prospectus.
The  Trust's  executive  offices  are  located at 60 State  Street,  Suite 1300,
Boston, Massachusetts 02109. 

INVESTMENT OBJECTIVES AND POLICIES
 
         The  investment  objectives  and policies of each Fund are described in
the  Prospectus.  The following  discussion  supplements  the information in the
Prospectus regarding the investment policies of the Funds. 

MONEY MARKET INSTRUMENTS

       Each Fund may invest in money market instruments to the extent consistent
with its investment  objective and policies.  A description of the various types
of money market  instruments  that may be purchased by the Funds appears  below.
See "Quality and Diversification Requirements."

         U.S.  TREASURY  SECURITIES.  Each of the  Funds  may  invest  in direct
obligations of the U.S. Treasury, including Treasury bills, notes and bonds, all
of which are backed as to principal and interest  payments by the full faith and
credit of the United States.

         ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in
obligations   issued   or   guaranteed   by   U.S.    Government   agencies   or
instrumentalities. These obligations may or may not be backed by the "full faith
and credit" of the United  States.  In the case of securities  not backed by the
full faith and credit of the United States,  a Fund must look principally to the
federal agency issuing or guaranteeing the obligation for ultimate repayment and
may not be able to assert a claim  against the United States itself in the event
the agency or instrumentality does not meet its commitments. Securities in which
each Fund may  invest  that are not  backed by the full  faith and credit of the
United  States  include,  but are not limited to,  obligations  of the Tennessee
Valley Authority, the Federal Home Loan Mortgage Corporation and the U.S. Postal
Service,  each of which has the right to borrow  from the U.S.  Treasury to meet
its  obligations,  and  obligations  of the Federal  Farm Credit  System and the
Federal  Home  Loan  Banks,  whose  obligations  may be  satisfied  only  by the
individual  credits of each issuing agency.  Securities  which are backed by the
full faith and credit of the United States include obligations of the Government
National  Mortgage  Association,  the  Farmers  Home  Administration,   and  the
Export-Import Bank.

         BANK  OBLIGATIONS.  Unless otherwise noted below, each of the Funds may
invest in  negotiable  certificates  of  deposit,  time  deposits  and  bankers'
acceptances of (i) banks,  savings and loan associations and savings banks which
have more than $2 billion in total  assets and are  organized  under the laws of
the


                                       1
<PAGE>
 
United   States  or  any  state,  (ii)  foreign  branches  of these  banks or of
foreign  banks of  equivalent  size  (Euros) and (iii) U.S.  branches of foreign
banks of  equivalent  size  (Yankees).  The  California  Fund may not  invest in
obligations of foreign branches of foreign banks. See "Foreign Investments." The
Funds will not invest in obligations  for which Morgan Guaranty Trust Company of
New York, the Funds' investment  advisor ("Morgan" or the "Advisor"),  or any of
its affiliated  persons,  is the ultimate obligor or accepting bank. Each of the
Equity  Funds  may  also  invest  in   obligations  of   international   banking
institutions designated or supported by national governments to promote economic
reconstruction,  development  or  trade  between  nations  (e.g.,  the  European
Investment Bank, the Inter-American Development Bank, or the World Bank). 
 
         COMMERCIAL PAPER.  Each of the Funds may invest  in  commercial  paper,
including master demand  obligations.  Master demand obligations are obligations
that  provide for a periodic  adjustment  in the  interest  rate paid and permit
daily changes in the amount borrowed.  Master demand obligations are governed by
agreements between the issuer and Morgan acting as agent, for no additional fee,
in its capacity as  investment  advisor to the Funds and as fiduciary  for other
clients for whom it exercises  investment  discretion.  The monies loaned to the
borrower come from  accounts  managed by Morgan or its  affiliates,  pursuant to
arrangements with such accounts. Interest and principal payments are credited to
such accounts.  Morgan,  acting as a fiduciary on behalf of its clients, has the
right to increase  or decrease  the amount  provided  to the  borrower  under an
obligation. The borrower has the right to pay without penalty all or any part of
the principal amount then outstanding on an obligation together with interest to
the date of payment. Since these obligations typically provide that the interest
rate is tied to the Federal Reserve commercial paper composite rate, the rate on
master demand obligations is subject to change. 

         Repayment  of a master  demand  obligation  to  participating  accounts
depends on the ability of the borrower to pay the accrued interest and principal
of the obligation on demand,  which is continuously  monitored by Morgan.  Since
master demand obligations typically are not rated by credit rating agencies, the
Funds may invest in such unrated obligations only if, at the time of investment,
the obligation is determined by Morgan to have a credit quality which  satisfies
the Fund's quality restrictions. See "Quality and Diversification Requirements."
Although  there is no  secondary  market for  master  demand  obligations,  such
obligations  are  considered by the Funds to be liquid  because they are payable
upon  demand.  The  Funds do not  have any  specific  percentage  limitation  on
investments in master demand obligations.    It is possible  that the issuer
of a master demand obligation could be a client of Morgan to whom Morgan, in its
capacity as a commercial bank, has made a loan.

         REPURCHASE  AGREEMENTS.  Each of the Funds may  enter  into  repurchase
agreements  with  brokers,  dealers  or banks  that meet the  credit  guidelines
approved by the  Trust's  Trustees.  In a  repurchase  agreement,  a Fund buys a
security  from a seller  that has agreed to  repurchase  the same  security at a
mutually  agreed upon date and price.  The resale price normally is in excess of
the purchase price,  reflecting an agreed upon interest rate. This interest rate
is  effective  for the  period of time the  agreement  is in  effect  and is not
related to the coupon rate on the underlying  security.  A repurchase  agreement
may  also be  viewed  as a fully  collateralized  loan of money by a Fund to the
seller.  The period of these repurchase  agreements will usually be short,  from
overnight  to one  week,  and at no time will the  Funds  invest  in  repurchase
agreements for more than thirteen  months.  The securities  which are subject to
repurchase  agreements,  however,  may have maturity dates in excess of thirteen
months  from the  effective  date of the  repurchase  agreement.  The Funds will
always  receive  securities as collateral  whose market value is, and during the
entire  term of the  agreement  remains,  at least  equal to 100% of the  dollar
amount  invested by the Funds in each agreement plus accrued  interest,  and the
Funds will make payment for such securities only upon physical  delivery or upon
evidence of book entry transfer to the account of the  Custodian.  If the seller
defaults,  a Fund might incur a loss if the value of the collateral securing the
repurchase  agreement  declines and might incur  disposition costs in connection
with  liquidating the  collateral.


                                       2
<PAGE>
In  addition,  if  bankruptcy  proceedings  are commenced  with  respect  to the
seller of the security,  realization  upon disposal of the  collateral by a Fund
may be delayed or limited.
 
         OTHER  DEBT  SECURITIES.  Each of the  Funds may  invest in other  debt
securities with remaining effective maturities of not more than thirteen months,
including without limitation corporate bonds,  asset-backed securities and other
obligations  described  in  the  Prospectus  or  this  Statement  of  Additional
Information. 

CORPORATE BONDS AND OTHER DEBT SECURITIES

         As discussed in the Prospectus, the California Fund may invest in bonds
and other debt  securities  of U.S.  issuers to the extent  consistent  with its
investment objective and policies. A description of these investments appears in
the Prospectus and below. See "Quality and  Diversification  Requirements."  For
information  on short-term  investments in these  securities,  see "Money Market
Instruments."
 
         ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a  participation  interest  in, or are secured by and payable  from, a
stream of payments  generated  by  particular  assets  such as motor  vehicle or
credit card receivables. Payments of principal and interest may be guaranteed up
to certain amounts and for a certain time period by a letter of credit issued by
a financial  institution  unaffiliated with the entities issuing the securities.
The asset-backed securities in which a Fund may invest are subject to the Fund's
overall credit requirements.  However,  asset-backed securities, in general, are
subject  to  certain  risks.  For  example,  credit  card debt  receivables  are
generally  unsecured and the debtors are entitled to the  protection of a number
of state and federal  consumer  credit laws, many of which give such debtors the
right to set off  certain  amounts on credit  card debt,  thereby  reducing  the
balance  due.  Additionally,  if the letter of credit is  exhausted,  holders of
asset-backed  securities may also experience delays in payments or losses if the
full amounts due on the underlying debt are not realized.  Because  asset-backed
securities  are  relatively  new, the market  experience in these  securities is
limited and the market's ability to sustain  liquidity through all phases of the
market cycle has not been tested. 

TAX EXEMPT OBLIGATIONS

         As  discussed  in the  Prospectus,  the  California  Fund may invest in
California Municipal Securities and other obligations exempt from federal income
taxes  to the  extent  consistent  with  the  Fund's  investment  objective  and
policies. A description of the various types of tax exempt obligations which may
be purchased by the Fund appears in the Prospectus  and below.  See "Quality and
Diversification Requirements."

         MUNICIPAL  BONDS.  Municipal bonds are debt  obligations  issued by the
states,  territories  and  possessions  of the United States and the District of
Columbia,  by their political  subdivisions and by duly constituted  authorities
and   corporations.   For  example,   states,   territories,   possessions   and
municipalities  may issue  municipal  bonds to raise  funds for  various  public
purposes such as airports,  housing,  hospitals,  mass transportation,  schools,
water and sewer works. They may also issue municipal bonds to refund outstanding
obligations and to meet general  operating  expenses.  Public  authorities issue
municipal  bonds to obtain funding for privately  operated  facilities,  such as
housing and pollution control facilities, for industrial facilities or for water
supply, gas, electricity or waste disposal facilities.

         Municipal  bonds may be general  obligation or revenue  bonds.  General
obligation  bonds are secured by the issuer's  pledge of its full faith,  credit
and taxing power for the payment of principal  and  interest.  Revenue bonds are


                                       3
<PAGE>
payable from revenues derived from particular facilities, from the proceeds of a
special  excise  tax or  from  other  specific  revenue  sources.  They  are not
generally payable from the general taxing power of a municipality.

         MUNICIPAL  NOTES.  Municipal notes are subdivided into three categories
of short-term  obligations:  municipal  notes,  municipal  commercial  paper and
municipal demand obligations.

         Municipal notes are short-term  obligations with a maturity at the time
of  issuance  ranging  from six months to five  years.  The  principal  types of
municipal notes include tax anticipation notes, bond anticipation notes, revenue
anticipation  notes,  grant  anticipation notes and project notes. Notes sold in
anticipation  of collection of taxes,  a bond sale, or receipt of other revenues
are usually general obligations of the issuing municipality or agency.

         Municipal  commercial  paper  typically  consists  of  very  short-term
unsecured  negotiable  promissory  notes that are sold to meet seasonal  working
capital or interim  construction  financing  needs of a municipality  or agency.
While  these  obligations  are  intended  to be paid from  general  revenues  or
refinanced with long-term debt, they frequently are backed by letters of credit,
lending  agreements,   note  repurchase  agreements  or  other  credit  facility
agreements offered by banks or financial institutions.

       Municipal demand obligations are subdivided into two types: variable rate
demand notes and master demand obligations.
 
       Variable rate demand  notes  are  tax  exempt  municipal  obligations  or
participation  interests that provide for a periodic  adjustment in the interest
rate paid on the notes. They permit the holder to demand payment of the notes or
to  demand  purchase  of the  notes at a  purchase  price  equal  to the  unpaid
principal  balance,  plus accrued  interest  either directly by the issuer or by
drawing on a bank letter of credit or guaranty issued with respect to such note.
The issuer of the municipal  obligation may have a corresponding right to prepay
at its discretion the  outstanding  principal of the note plus accrued  interest
upon notice  comparable to that required for the holder to demand  payment.  The
variable  rate  demand  notes in which the Fund may invest are  payable,  or are
subject to purchase,  on demand  usually upon notice of seven  calendar  days or
less.  The terms of the notes  provide that  interest  rates are  adjustable  at
intervals  ranging from daily to six months,  and the adjustments are based upon
the prime rate of a bank or other  appropriate  interest rate index specified in
the respective  notes.  Variable rate demand notes are valued at amortized cost;
no value is  assigned  to the right of the Fund to receive  the par value of the
obligation upon demand or notice. 

         Master demand  obligations are tax exempt  municipal  obligations  that
provide for a periodic  adjustment  in the  interest  rate paid and permit daily
changes in the amount  borrowed.  For a description  of the attributes of master
demand obligations,  see "Money Market Instruments" above.  Although there is no
secondary market for master demand obligations,  such obligations are considered
by the Fund to be liquid  because they are payable upon demand.  The Fund has no
specific percentage limitations on investments in master demand obligations.
 
         The interest on many such obligations is, in the opinion of counsel for
the borrower,  exempt from federal income tax.  However,  the interest  received
with  respect to certain tax exempt notes that are issued on or after August 13,
1996 and provide for interest  payments  that are  periodically  adjusted may be
taxable as capital gain. 

         PREMIUM  SECURITIES.  During a period of declining interest rates, many
municipal  securities  in which the  California  Fund  invests  likely will bear
coupon  rates  higher  than  current  market  rates,  regardless  of whether the
securities were initially  purchased at a premium.  In general,  such securities
have market values


                                       4
<PAGE>

greater  than  the  principal  amounts  payable  on  maturity,  which  would  be
reflected  in the net  asset  value of the  Fund's  shares.  The  values of such
"premium"  securities  tend to  approach  the  principal  amount  as  they  near
maturity.
  
     PUTS. The California  Fund may purchase  without limit  municipal  bonds or
notes  together  with the right to resell the bonds or notes to the seller at an
agreed  price or yield within a specified  period prior to the maturity  date of
the bonds or notes.  Such a right to resell is  commonly  known as a "put."  The
aggregate  price for bonds or notes  with puts may be higher  than the price for
bonds or notes without puts. Consistent with the Fund's investment objective and
subject to the  supervision of the Trustees,  the purpose of this practice is to
permit the Fund to be fully invested in tax exempt  securities  while preserving
the necessary  liquidity to purchase  securities on a when-issued basis, to meet
unusually large  redemptions,  and to purchase at a later date securities  other
than those subject to the put. The principal  risk of puts is that the writer of
the put may default on its  obligation to  repurchase.  Morgan will monitor each
writer's ability to meet its obligations under puts.

         Puts may be  exercised  prior to the  expiration  date in order to fund
obligations to purchase other securities or to meet redemption  requests.  These
obligations may arise during periods in which proceeds from sales of Fund shares
and  from  recent  sales  of  portfolio  securities  are  insufficient  to  meet
obligations or when the funds available are otherwise  allocated for investment.
In addition, puts may be exercised prior to the expiration date in order to take
advantage of alternative investment opportunities or in the event Morgan revises
its evaluation of the creditworthiness of the issuer of the underlying security.
In determining  whether to exercise puts prior to their  expiration  date and in
selecting which puts to exercise,  Morgan considers the amount of cash available
to the Fund, the expiration dates of the available puts, any future  commitments
for securities purchases, alternative investment opportunities, the desirability
of retaining the  underlying  securities in the Fund's  portfolio and the yield,
quality and maturity dates of the underlying securities.

         The Fund  values  any  municipal  bonds and notes  subject to puts with
remaining  maturities of less than 60 days by the amortized cost method.  If the
Fund were to invest in municipal  bonds and notes with  maturities of 60 days or
more that are subject to puts separate from the underlying securities,  the puts
and the  underlying  securities  would be valued at fair value as  determined in
accordance with procedures  established by the Board of Trustees.  In connection
with determining the value of a put, the factors to be considered would include,
among other factors, the creditworthiness of the writer of the put, the duration
of the  put,  the  dates on which or the  periods  during  which  the put may be
exercised and the applicable rules and regulations of the SEC.

     Since the value of the put is partly  dependent  on the  ability of the put
writer to meet its obligation to repurchase,  the Fund's policy is to enter into
put  transactions  only with  municipal  securities  dealers who are approved by
Morgan.  Each dealer  will be  approved on its own merits,  and it is the Fund's
general policy to enter into put transactions  only with those dealers which are
determined to present  minimal credit risks.  Commercial  bank dealers  normally
will be members of the Federal Reserve System, and other dealers will be members
of the National Association of Securities Dealers, Inc. or members of a national
securities  exchange.  Other put writers will have  outstanding debt rated Aa or
better  by  Moody's  Investors  Service,  Inc.  ("Moody's")  or AA or  better by
Standard & Poor's  Corporation  ("Standard  &  Poor's"),  will be of  comparable
quality  in  Morgan's   opinion  or  such  put  writers'   obligations  will  be
collateralized and of comparable quality in Morgan's opinion.  In the event that
a dealer  defaults on its obligation to repurchase an underlying  security,  the
Fund may not be able to recover all or any portion of any loss from such dealer.
 
         Entering  into a put  with  respect  to a tax  exempt  security  may be
treated,  depending  upon the  terms of the put,  as a  taxable  sale of the tax
exempt security 


                                       6
<PAGE>
by  the  Fund  with  the  result that,  while the put is  outstanding,  the Fund
will no longer be treated as the owner of the security  and the interest  income
derived with respect to the  security  will be treated as taxable  income to the
Fund.

 
EQUITY INVESTMENTS 
 
         As discussed in the  Prospectus,  the Equity Funds invest  primarily in
equity  securities  consisting of  exchange-traded,  OTC and unlisted common and
preferred stocks, warrants, rights, convertible securities,  trust certificates,
limited partnership  interests and equity  participations of U.S. companies and,
to a lesser extent, foreign companies ("Equity Securities"). A discussion of the
various types of equity  investments  which may be purchased by the Equity Funds
appears  in  the  Prospectus  and  below.   See  "Quality  and   Diversification
Requirements." 

         EQUITY SECURITIES.  The Equity Securities in which the Equity Funds may
invest  may or may not pay  dividends  and may or may not carry  voting  rights.
Common stock occupies the most junior position in a company's capital structure.

         The convertible securities in which the Equity Funds may invest include
any debt  securities or preferred stock which may be converted into common stock
or which  carry the  right to  purchase  common  stock.  Convertible  securities
entitle the holder to exchange the securities  for a specified  number of shares
of common  stock,  usually of the same  company,  at specified  prices  within a
certain period of time.

     The terms of any convertible  security determine its ranking in a company's
capital  structure.  In the case of  subordinated  convertible  debentures,  the
holders'  claims on assets and earnings are  subordinated to the claims of other
creditors and are senior to the claims of preferred and common shareholders.  In
the case of  convertible  preferred  stock,  the  holders'  claims on assets and
earnings are  subordinated  to the claims of all creditors and are senior to the
claims of common shareholders.

COMMON STOCK WARRANTS

         The Equity Funds may invest in common stock  warrants  that entitle the
holder to buy  common  stock from the  issuer at a  specific  price (the  strike
price)  for a  specific  period of time.  The market  price of  warrants  may be
substantially  lower than the  current  market  price of the  underlying  common
stock,  yet warrants  are subject to similar  price  fluctuations.  As a result,
warrants may be more volatile investments than the underlying common stock.

         Warrants  generally  do not entitle the holder to  dividends  or voting
rights with  respect to the  underlying  common stock and do not  represent  any
rights in the assets of the issuer company.  A warrant will expire  worthless if
it is not exercised prior to the expiration date.

ADDITIONAL INVESTMENTS

         WHEN-ISSUED  AND  DELAYED  DELIVERY  SECURITIES.  Each of the Funds may
purchase  securities on a when-issued or delayed  delivery  basis.  For example,
delivery  of and  payment  for these  securities  can take place a month or more
after the date of the purchase  commitment.  The purchase price and the interest
rate payable,  if any, on the  securities  are fixed on the purchase  commitment
date or at the time the settlement  date is fixed.  The value of such securities
is  subject  to market  fluctuation  and no  interest  accrues  to a Fund  until
settlement  takes  place.  At the time a Fund makes the  commitment  to purchase
securities  on a  when-issued  or delayed  delivery  basis,  it will  record the
transaction,  reflect the value each day of such  securities in determining  its
net asset value and, if  applicable,  calculate the maturity for the purposes of
average  maturity  from  that  date.  At the time of  settlement  a  when-issued
security  may be valued at less


                                       6
<PAGE>
 
than  the  purchase  price. To  facilitate  such  acquisitions,  each  Fund will
maintain with the Custodian a segregated account with liquid assets,  consisting
of cash or other liquid assets, in an amount at least equal to such commitments.
If a Fund  chooses to dispose  of the right to  acquire a  when-issued  security
prior to its  acquisition,  it  could,  as with  the  disposition  of any  other
portfolio obligation, incur a gain or loss due to market fluctuation. 
 
     REVERSE  REPURCHASE  AGREEMENTS.  Each of the Funds may enter into  reverse
repurchase  agreements.  In a  reverse  repurchase  agreement,  a Fund  sells  a
security and agrees to repurchase  the same  security at a mutually  agreed upon
date and price. For purposes of the 1940 Act, a reverse repurchase agreement may
be  deemed to be a  borrowing  of money by the Fund  and,  therefore,  a form of
leverage.  The Funds will  invest  the  proceeds  of  borrowings  under  reverse
repurchase agreements.  In addition, a Fund will enter into a reverse repurchase
agreement only when the expected  return to be earned from the investment of the
proceeds is greater than the interest expense of the transaction. A Fund may not
enter into reverse repurchase agreements exceeding in the aggregate one-third of
the  market  value  of  its   total  assets less liabilities (other than reverse
repurchase agreements and other borrowings). See "Investment Restrictions." 
 
     LOANS OF PORTFOLIO SECURITIES. Each of the Funds may lend its securities if
such loans are secured  continuously  by cash or  equivalent  collateral or by a
letter of credit in favor of the Fund at least equal at all times to 100% of the
market  value of the  securities  loaned,  plus  accrued  interest.  While  such
securities  are on loan,  the  borrower  will pay the Fund any  income  accruing
thereon.  Loans  will be  subject  to  termination  by the  Funds in the  normal
settlement time,  generally three business days after notice, or by the borrower
on one day's  notice.  Borrowed  securities  must be  returned  when the loan is
terminated.  Any gain or loss in the  market  price of the  borrowed  securities
which  occurs  during the term of the loan  inures to a Fund and its  respective
shareholders.  The Funds  may pay  reasonable  finders'  and  custodial  fees in
connection  with a loan.  In  addition,  a Fund  will  consider  all  facts  and
circumstances   including  the   creditworthiness  of  the  borrowing  financial
institution,  and no Fund will  make any loans in excess of one year.  The Funds
will not lend their securities to any officer,  Trustee,  Director,  employee or
other affiliate of the Funds, Morgan or the Funds' distributor, unless otherwise
permitted by applicable law. 

         PRIVATELY  PLACED AND CERTAIN  UNREGISTERED  SECURITIES.  The Funds may
invest  in  privately  placed,  restricted,  Rule  144A  or  other  unregistered
securities  as described in the  Prospectus.  These  restricted  securities  are
subject  to the risk  that the Fund will not be able to sell them at a price the
Fund deems  representative  of their  value.  If a restricted  security  must be
registered under the Securities Act of 1933, as amended (the "1933 Act"), before
it may be sold, a Fund may be  obligated to pay all or part of the  registration
expenses.  Also,  a  considerable  period  may  elapse  between  the time of the
decision to sell and the time the Fund is permitted to sell a security  under an
effective  registration  statement.  If,  during such a period,  adverse  market
conditions  were to develop,  a Fund might  obtain a less  favorable  price than
prevailed when it decided to sell.

 
QUALITY AND DIVERSIFICATION REQUIREMENTS 
 
         For purposes of diversification  under the Code and concentration under
the 1940 Act as described in the California Fund's Prospectus, identification of
the issuer of municipal  bonds or notes in which the Fund invests depends on the
terms and conditions of the obligation. If the assets and revenues of an agency,
authority,   instrumentality  or  other  political  subdivision   are   separate
from those of the  government  creating the  subdivision  and the  obligation is
backed only by the assets and revenues of the  subdivision,  such subdivision is
regarded as the sole issuer. Similarly, in the case of an industrial development
revenue bond or pollution  control  revenue  bond, if the bond is backed only by
the assets and revenues of the nongovernmental user, the nongovernmental user is
regarded  as the 


                                       7
<PAGE>

sole  issuer.  If  in  either  case  the creating  government or another  entity
guarantees an  obligation,  the guaranty is regarded as a separate  security and
treated as an issue of such guarantor.
 
          As  described  in  the   Prospectus,   the  California   Fund  invests
principally in investment  grade municipal  securities and may also invest up to
10% of its  total  assets  in  below  investment  grade  municipal  and  taxable
securities rated at least B by Moody's or by Standard & Poor's. In addition, the
California Fund may invest in debt securities  which are not rated or other debt
securities  to which  these  ratings  are not  applicable,  if in the opinion of
Morgan,  such  securities are of comparable  quality to rated  securities in the
applicable category. 
 
         At the time any of the Funds  invest in any taxable  commercial  paper,
master demand obligations,  bank obligation or repurchase agreement,  the issuer
must have  outstanding  debt rated A or higher by Moody's or  Standard & Poor's,
the issuer's parent corporation,  if any, must have outstanding commercial paper
rated Prime-1 by Moody's or A-1 by Standard & Poor's,  or if no such ratings are
available, the investment must be of comparable quality in Morgan's opinion. 
 
         In  determining  suitability  of  investment  in a  particular  unrated
security,  Morgan takes into consideration asset and debt service coverage,  the
purpose  of the  financing,  history of the  issuer,  existence  of other  rated
securities of the issuer, and other relevant  conditions,  such as comparability
to other issuers.  A Fund may only invest in unrated  master demand  obligations
that Morgan has determined are comparable in credit quality to obligations rated
A or higher by Moody's or Standard & Poor's. 

OPTIONS AND FUTURES TRANSACTIONS
 
         EXCHANGE TRADED AND OTC OPTIONS.  All options  purchased or sold by the
Funds will be traded on a  securities  exchange or will be  purchased or sold by
securities  dealers  ( OTC  options)  that  meet the  Funds'  credit  standards.
Exchange-traded  options are  obligations of the Options  Clearing  Corporation.
However, when a Fund purchases an OTC option, it relies on the dealer from which
it purchased the option to make or take delivery of the  underlying  securities.
Failure by the dealer  to do so  would result in the loss of the premium paid by
the Fund as well as loss of the expected benefit of the transaction. 
 
         The staff of the SEC has taken the position that certain  purchased OTC
options and the underlying  securities used to cover certain written OTC options
are  illiquid  securities.  However,  a Fund may treat as liquid  purchased  OTC
options and underlying  securities used to cover written OTC options  determined
by Morgan to be liquid on a case-by-case  basis pursuant to procedures  approved
by the Trustees of the Trust. 
 
         FUTURES  CONTRACTS  AND  OPTIONS  ON FUTURES  CONTRACTS.  The Funds may
purchase or sell (write)  futures  contracts  and purchase put and call options,
including put and call options on futures contracts.  In addition, the Funds may
sell  (write)  put and call  options,  including  options  on  futures.  Futures
contracts obligate the buyer to take and the seller to make delivery at a future
date of a  specified  quantity of a  financial  instrument  or an amount of cash
based on the value of a  securities  index.  Currently,  futures  contracts  are
available on various types of fixed-income securities, including but not limited
to U.S. Treasury bonds, notes and bills,  Eurodollar certificates of deposit and
on indices of fixed  income  securities  (including  municipal  securities)  and
indices composed of equity securities. 

         A futures  contract  requires the parties to buy and sell a security or
make a cash  settlement  payment  based on changes in a financial  instrument or
securities index on an agreed date. Each party to an open futures contract makes
daily  payments of  "variation"  margin to the other party in an amount equal to
the


                                       8
<PAGE>
decrease.   In  contrast,  an option  on a  futures contract entitles its holder
to  decide  on or  before  the  expiration  date  whether  to enter  into such a
contract. If the holder decides not to exercise its option, the holder may close
out the option position by entering into an offsetting transaction or may decide
to let the option  expire and forfeit the premium  thereon.  The purchaser of an
option on a futures  contract pays a premium for the option but makes no initial
margin  payments  or daily cash  payments of  "variation"  margin to reflect the
change in the value of the underlying contract.
 
         The seller of an option on a futures contract receives the premium paid
by the purchaser and may be required to pay initial margin. Amounts equal to the
initial margin and any additional  collateral required on any options on futures
contracts  sold  by a Fund  are  paid  by the  Fund  into a  segregated  account
maintained by the   Fund's  custodian  in the  name  of the  futures  commission
merchant.  In  connection  with such  transactions,  a Fund will also  segregate
cash  or  other liquid assets  in   a  separate   account  in   accordance  with
applicable  SEC requirements. 
 
         COMBINED  POSITIONS.  The Funds may engage in options  transactions  in
combination with other options,  futures or forward  contracts.  For example,  a
Fund may  purchase a put option and write a call  option on the same  underlying
instrument,  in order to  construct  a combined  position  whose risk and return
characteristics  are  similar to selling a futures  contract.  Another  possible
combined  position  would involve  writing a call option at one strike price and
buying a call option at a lower strike price, in order to reduce the risk of the
written  call  option  in the event of a  substantial  price  increase.  Because
combined  options  positions  involve  multiple  trades,  they  result in higher
transaction costs and may be more difficult to open and close out. 

         CORRELATION  OF PRICE  CHANGES.  Because there are a limited  number of
types of exchange-traded  options and futures  contracts,  it is likely that the
standardized  options and futures  contracts  available  will not match a Fund's
current or anticipated  investments  exactly.  A Fund may enter into options and
futures  contracts based on securities with different  issuers,  maturities,  or
other  characteristics  from the securities in which it typically invests.  This
practice involves a risk that the options or futures position will not track the
performance of the Fund's other investments in securities.

         Options and futures  contracts  prices can also diverge from the prices
of their underlying  instruments,  even if the underlying  instruments correlate
well with the Fund's  investments.  Options  and  futures  contracts  prices are
affected by such factors as current and anticipated  interest rates,  changes in
the price volatility of the underlying instrument,  and the time remaining until
expiration of the contract,  which may not affect  security prices the same way.
Imperfect  correlation  may also result from  differing  levels of demand in the
options  and  futures  markets  and  the  securities  markets,  from  structural
differences in how options and futures and  securities  are traded,  or from the
imposition  of daily  price  fluctuation  limits or  trading  halts.  A Fund may
purchase or sell  options and futures  contracts  with a greater or lesser value
than the  securities  it  wishes to hedge or  intends  to  purchase  in order to
attempt to compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases.   If price changes
in a Fund's options or futures positions are poorly correlated  with  its  other
investments,  the positions may fail to produce anticipated gains  or  result in
losses that are not offset by gains in other investments.

        LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS.  There is no  assurance that
a  liquid  market will exist for any  particular  option or futures  contract at
any particular time even if the contract is traded on an  exchange. In addition,
exchanges may establish daily price  fluctuation  limits for options and futures
contracts and may halt trading if a contract's  price moves up or down more than
the limit in a given day. On volatile  trading  days when the price  fluctuation


                                       9
<PAGE>
limit is reached or a trading halt is imposed,  it may be impossible  for a Fund
to enter into new positions or close out existing positions. If the market for a
contract is not liquid  because of price  fluctuation  limits or  otherwise,  it
could prevent prompt liquidation of unfavorable positions, and could potentially
require a Fund to  continue  to hold a position  until  delivery  or  expiration
regardless  of  changes in its value.  As a result,  the Fund's  access to other
assets held to cover its options or futures positions could also be impaired.

         POSITION LIMITS.  Futures exchanges can limit the number of futures and
options on futures  contracts that can be held or controlled by an entity. If an
adequate  exemption  cannot be  obtained,  a Fund or Morgan may be  required  to
reduce the size of its futures and options positions or may not be able to trade
a certain futures or options contract in order to avoid exceeding such limits.
 
         ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS  POSITIONS.  The Funds
intend to comply with Rule 4.5 under the Commodity  Exchange  Act,  which limits
the extent to which a Fund can  commit  assets to initial  margin  deposits  and
option premiums. In addition,  the Funds will comply with guidelines established
by the SEC with  respect to coverage of options and futures  contracts by mutual
funds. If the guidelines so require,  a Fund will set aside  appropriate  liquid
assets in a segregated  custodial account in the amount  prescribed.  Securities
held in a segregated account cannot be sold while the futures contract or option
is  outstanding,  unless they are  replaced  with other  suitable  assets.  As a
result,  there is a  possibility  that  segregation  of a large  percentage of a
Fund's assets could impede  portfolio  management or the Fund's  ability to meet
redemption requests or other current obligations. 
 
         RISK  MANAGEMENT.  The Funds may  employ  non-hedging  risk  management
techniques.  Examples of such  strategies  include  using futures and options to
alter the duration or beta of a Fund's  portfolio or the mix of  securities in a
Fund's  portfolio.  For example,  if Morgan  wishes to extend  maturities in the
California Fund's portfolio in order to take advantage of an anticipated decline
in  interest  rates,  but does not wish to  purchase  the  underlying  long-term
securities,  it might cause the Fund to purchase futures  contracts on long-term
debt  securities.  Similarly,  if Morgan  wishes to reduce a Fund's  exposure to
fixed income securities and purchase  equities,  it could cause the Fund to sell
futures  contracts on debt securities and purchase futures  contracts on a stock
index. Such non-hedging  risk  management  techniques are not  speculative,  but
may involve  leverage.  Leverage  magnifies the  gains and losses experienced by
the Fund as a result of market fluctuations. 

SPECIAL FACTORS AFFECTING THE CALIFORNIA FUND

         The California  Fund intends to invest a high  proportion of its assets
in municipal obligations in California Municipal Securities. As discussed in the
Prospectus,  payment of interest and preservation of principal is dependent upon
the  continuing  ability of  California  issuers  and/or  obligors of California
Municipal Securities to meet their obligations thereunder.
 
         The fiscal stability of California is related, at least in part, to the
fiscal stability of its localities and authorities. Various California agencies,
authorities  and localities  have issued large amounts of bonds and notes either
guaranteed or supported by California through lease-purchase arrangements, other
contractual  arrangements or moral obligation provisions.  While debt service is
normally paid out of revenues generated by projects of such California agencies,
authorities and localities,  the State has  occasionally  had to provide special
assistance  , in some cases of a  recurring  nature,  to enable  such  agencies,
authorities  and  localities to meet their  financial  obligations  and, in some
cases, to prevent or cure defaults.  To the extent that California  agencies and
local governments require State assistance to meet their financial  obligations,
the ability of California to meet its own  obligations  as they become due or to
obtain additional financing could be adversely affected. 


                                       10
<PAGE>
         For further information  concerning  California Municipal  Obligations,
see Appendix B to this  Statement  of  Additional  Information.  The summary set
forth above and in Appendix B is based on information from an official statement
of California general obligation  municipal  obligations and does not purport to
be complete.

PORTFOLIO TURNOVER
 
         The  Fund's  expected  portfolio  turnover  rates  are set forth in the
Prospectus.  A rate of 100%  indicates  that the  equivalent  of all of a Fund's
assets have been sold and  reinvested  in a year.  High  portfolio  turnover may
result in the  realization  of substantial  net capital gains or losses.  To the
extent  that net short  term  capital  gains  are  realized,  any  distributions
resulting from such gains are considered  ordinary income for federal income tax
purposes. See "Taxes" below. 

INVESTMENT RESTRICTIONS

     The  investment  restrictions  set forth below have been  otherwise  noted,
these investment  restrictions are "fundamental"  policies which, under the 1940
Act, may not be changed without the vote of a majority of the outstanding voting
securities of the Fund. A "majority of the  outstanding  voting  securities"  is
defined  in the  1940  Act as  the  lesser  of (a)  67% or  more  of the  voting
securities  present  at a  meeting  if  the  holders  of  more  than  50% of the
outstanding  voting  securities are present or represented by proxy, or (b) more
than  50% of the  outstanding  voting  securities.  The  percentage  limitations
contained in the restrictions  below apply at the time of purchasing  securities
to the market value of a Fund's assets.
 
         Unless  Sections  8(b)(1)  and  13(a) of the 1940 Act or any SEC or SEC
staff interpretations thereof are amended or modified, each Fund may not: 
 
         1.       Purchase any security if, as a result, more than
                  25% of its total assets would be invested in the
                  securities of issuers in any single industry.
                  This limitation shall not apply to securities issued or
                  guaranteed as to principal or interest by the U.S.
                  Government, its agencies or instrumentalities. 
 
         2.       Issue senior securities.  For purposes of this
                  restriction, borrowing money in accordance with
                  paragraph 3 below, making loans in accordance with
                  paragraph 8 below, the issuance of shares of beneficial
                  interest in multiple classes or series, the purchase
                  or sale of options, futures contracts, forward
                  commitments, swaps and transactions in repurchase
                  agreements are not deemed to be senior securities. 

         3.       Borrow money, except in amounts not to exceed one third
                  of the Fund's total assets (including the amount
                  borrowed) (i) from banks for temporary or short-term
                  purposes or for the clearance of transactions, (ii) in
                  connection with the redemption of Fund shares or to
                  finance failed settlements of portfolio trades without
                  immediately liquidating portfolio securities or other
                  assets, (iii) in order to fulfill commitments or plans
                  to purchase additional securities pending the
                  anticipated sale of other portfolio securities or
                  assets and (iv) pursuant to reverse repurchase
                  agreements entered into by the Fund.

         4.       Underwrite  the  securities  of other  issuers,  except to the
                  extent that, in connection  with the  disposition of portfolio
                  securities,  the Fund may be deemed to be an underwriter under
                  the 1933 Act.


                                       11
<PAGE>
         5.       Purchase or sell real estate except that the Fund may
                  (i) acquire or lease office space for its own use, (ii)
                  invest in  securities of issuers that invest in real estate or
                  interests therein, (iii) invest in securities that are secured
                  by real estate or interests  therein,  (iv)  purchase and sell
                  mortgage-related  securities and (v) hold and sell real estate
                  acquired  by  the  Fund  as  a  result  of  the  ownership  of
                  securities.

         6.       Purchase securities on margin (except that the Fund may
                  obtain such short-term credits as may be necessary for
                  the clearance of purchases and sales of securities).
 
         7.       Purchase or sell  commodities or commodity  contracts,  except
                  the Fund may purchase and sell  financial  futures  contracts,
                  options on financial  futures  contracts  and warrants and may
                  enter into swap and forward commitment transactions. 
 
         8.       Make loans, except that the Fund (1) may lend portfolio
                  securities with a value not exceeding one-third of the
                  Fund's total assets, (2) enter into repurchase
                  agreements, and (3) purchase all or a portion of an
                  issue of debt securities (including privately issued
                  debt securities), bank loan participation interests,
                  bank certificates of deposit, bankers' acceptances,
                  debentures or other securities, whether or not the
                  purchase is made upon the original issuance of the
                  securities. 
 
         9.       In the case of each Equity Fund, with respect to 75% of its
                  total assets, purchase securities of an
                  issuer (other than the U.S. Government, its agencies,
                  instrumentalities or authorities or repurchase agreements
                  collateralized by U.S. Government securities), if: 

                  a.       such purchase would cause more than 5% of the
                           Fund's total assets to be invested in the
                           securities of such issuer; or

                  b.       such purchase would cause the Fund to hold more
                           than 10% of the outstanding voting securities of
                           such issuer.
 
         For  purposes  of  fundamental  investment  restriction  (1)  regarding
industry  concentration,  Morgan may classify  issuers by industry in accordance
with  classifications  set forth in the  DIRECTORY  OF COMPANIES  FILING  ANNUAL
REPORTS WITH THE  SECURITIES AND EXCHANGE  COMMISSION or other  sources.  In the
absence of such  classification  or if Morgan  determines in good faith based on
its own  information  that the economic  characteristics  affecting a particular
issuer  make it more  appropriately  considered  to be  engaged  in a  different
industry,  Morgan may classify an issuer  accordingly.  For  instance,  personal
credit finance companies and business  credit  finance  companies  are deemed to
be  separate  industries  and wholly  owned  finance  companies  are  considered
to be in the industry of their parents if their activities are primarily related
to financing the activities of their parents. 

         As a matter of  non-fundamental  policy,  which may be  changed  by the
Trustees without shareholder approval, each Fund may not:

         A.       Make short sales of securities unless either (a) after
                  giving effect to any such short sale, the total market
                  value of all securities sold short would not exceed 25%
                  of the Fund's net assets or (b) at all times during
                  which a short position is open the Fund owns (or has
                  the right to obtain through the conversion or exchange
                  of other securities) an equal amount of such
                  securities.


                                            12
<PAGE>
 
                  B. Acquire securities of other investment companies, except as
                  permitted by the 1940 Act or any rule, order or interpretation
                  thereunder,  or in  connection  with a merger,  consolidation,
                  reorganization, acquisition of assets or an offer of exchange.
 
 
                  C.  Acquire  any  illiquid  securities,   such  as  repurchase
                  agreements with more than seven days to maturity or fixed time
                  deposits with a duration of over seven  calendar days, if as a
                  result  thereof,  more  than  15% of the  market  value of the
                  Fund's total assets would be in investments that are illiquid.
 
 
         Notwithstanding  any other  fundamental or  non-fundamental  investment
restriction  or policy,  each Fund  reserves the right,  without the approval of
shareholders,  to  invest  all of its  assets  in  another  open-end  registered
investment company with substantially the same fundamental investment objective,
restrictions and policies as the Fund. 
 
         If any percentage restriction described above is adhered to at the time
of investment,  a subsequent  increase or decrease in the  percentage  resulting
from a change in the value of a Fund's assets will not constitute a violation of
the restriction. 

TRUSTEES AND OFFICERS

Trustees
 
         The Trustees of the Trust, their principal  occupations during the past
five years, business addresses and dates of birth are set forth below. 
 
         FREDERICK S. ADDY Trustee; Retired;  Executive Vice President and Chief
Financial  Officer  from  January  1990 to April 1994,  Amoco  Corporation.  His
address is 5300 Arbutus  Cove,  Austin,  Texas  78746,  and his date of birth is
January 1, 1932. 
 
     WILLIAM G. BURNS Trustee; Retired, Former Vice Chairman and Chief Financial
Officer,  NYNEX. His address is 2200 Alaqua Drive, Longwood,  Florida 32779, and
his date of birth is November 2, 1932. 
 
         ARTHUR C. ESCHENLAUER Trustee;  Retired; Senior Vice President,  Morgan
Guaranty  Trust  Company of New York until  1987.  His  address is 14 Alta Vista
Drive,  RD #2,  Princeton,  New Jersey  08540,  and his date of birth is May 23,
1934. 
 
         MATTHEW  HEALEY (*)  Trustee,  Chairman  and Chief  Executive  Officer;
Chairman,  Pierpont  Group,  Inc.,  since  1989.  His  address is Pine Tree Club
Estates, 10286 Saint Andrews Road, Boynton Beach, Florida 33436, and his date of
birth is August 23, 1937. 
 
     MICHAEL P.  MALLARDI  Trustee;  Retired;  Senior  Vice  President,  Capital
Cities/ABC, Inc. and President, Broadcast Group prior to April 1996. His address
is 10 Charnwood Drive,  Suffern,  New York 10910, and his date of birth is March
17, 1934. 
 
- ------------------------

     (*) Mr.  Healey  is an  "interested  person"  of the  Trust as that term is
defined in the 1940 Act. 
 
     Each Trustee is paid an annual fee as follows for serving as Trustee of the
Trust,  The JPM  Pierpont  Funds,  The JPM  Institutional  Funds and each of the
Master  Portfolios (as defined below) and is reimbursed for expenses incurred in
connection with service as a Trustee.  The compensation paid to the Trustees for
the calendar year ended  December 31, 1995 is set forth below.  The Trustees may
hold various other directorships unrelated to these funds. 


                                       13
<PAGE>
<TABLE>
 
                                                                                                 TOTAL COMPENSATION FROM
                                                                                                 THE JPM PIERPONT FUNDS,
                                      AGGREGATE          PENSION OR                              THE JPM INSTITUTIONAL
                                      COMPENSATION       RETIREMENT BENEFITS  ESTIMATED ANNUAL   FUNDS AND MASTER
                                      FROM THE TRUST     ACCRUED AS PART      BENEFITS           PORTFOLIOS(**) PAID
NAME OF TRUSTEE                       DURING 1995        OF FUND EXPENSES     UPON RETIREMENT    TO TRUSTTES DURING 1995
                                      -----------        ----------------     ---------------    -----------------------
<S>                                  <C>                 <C>                 <C>                 <C>
Frederick S. Addy, Trustee            $0                 None                 None               $62,500
William G. Burns, Trustee             $0                 None                 None               $62,500
Arthur C. Eschenlauer, Trustee        $0                 None                 None               $62,500
Matthew Healey, Trustee(*),           $0                 None                 None               $62,500
  Chairman and Chief Executive
  Officer
Michael P. Mallardi, Trustee          $0                 None                 None               $62,500
</TABLE>
 
 
(*)  During  1995,  Pierpont  Group,  Inc.  paid  Mr.  Healey,  in  his  role as
Chairman  of  Pierpont  Group,  Inc.,  compensation  in the amount of  $140,000,
contributed  $21,000  to a  defined  contribution  plan on his  behalf  and paid
$20,000 in insurance premiums for his benefit. 
 
(**)  The  JPM  Pierpont  Funds  and  The  JPM  Institutional   Funds  are  each
multi-series  registered  investment  companies  that  are  part  of a  two-tier
(master-feeder) investment fund structure. Each series of The JPM Pierpont Funds
and The JPM  Institutional  Funds  is a  feeder  fund  that  invests  all of its
investable  assets in one of 16 separate  master  portfolios  (collectively  the
"Master  Portfolios"),  13 of which are registered investment companies and 3 of
which are series of a registered investment company. 
 
         As of April 1, 1995 the annual fee paid to each Trustee was adjusted to
$65,000.  As of the date of this Statement of Additional  Information there were
17  investment   companies  (the  Trust,   The  JPM  Pierpont  Funds,   The  JPM
Institutional  Funds  and the 14  investment  companies  comprising  the  Master
Portfolios) in the fund complex. 
 
         The Trustees,  in addition to reviewing  actions of the Trust's various
service providers,  decide upon matters of general policy. The Trust has entered
into a Fund Services  Agreement with Pierpont Group, Inc. to assist the Trustees
in exercising their overall supervisory responsibilities over the affairs of the
Trust.  Pierpont Group,  Inc. was organized in July 1989 to provide services for
The  Pierpont  Family  of  Funds,  and the  Trustees  are  the  equal  and  sole
shareholders of Pierpont Group, Inc. The Trust has agreed to pay Pierpont Group,
Inc. a fee in an amount  representing  its reasonable  costs in performing these
services. These costs are periodically reviewed by the Trustees. 

Officers
 

         The Trust's  executive  officers  (listed below),  other than the Chief
Executive  Officer,  are provided and  compensated  by Funds  Distributor,  Inc.
("FDI"), a wholly owned indirect subsidiary of Boston  Institutional Group, Inc.
The Chief  Executive  Officer  receives no  compensation  in his  capacity as an
officer of the Trust. The officers conduct and supervise the business operations
of the Trust. The Trust has no employees. 
 
         The officers of the Trust, their principal  occupations during the past
five years and dates of birth are set forth below.  The business address of each
of the officers  unless  otherwise  noted is Funds  Distributor,  Inc., 60 State
Street, Suite 1300, Boston, Massachusetts 02109. 
 
         MATTHEW HEALEY;  Chief  Executive  Officer;  Chairman,  Pierpont Group,
Inc.,  since 1989.  His address is Pine Tree Club  Estates,  10286 Saint Andrews
Road, Boynton Beach, Florida 33436. His date of birth is August 23, 1937. 


                                       14
<PAGE>
 
     ELIZABETH A. BACHMAN; Vice President and Assistant Secretary.  Counsel, FDI
and Premier Mutual Fund Services,  Inc. ("Premier Mutual") and an officer of RCM
Capital  Funds,  Inc.,  RCM  Equity  Funds,  Inc.,   Waterhouse  Investors  Cash
Management Fund, Inc. and certain  investment  companies advised or administered
by the Dreyfus Corporation ("Dreyfus"). Prior to September 1995, Ms. Bachman was
enrolled at Fordham  University  School of Law and  received her JD in May 1995.
Prior  to  September  1992,  Ms.  Bachman  was  an  assistant  at  the  National
Association for Public Interest Law.  Address:  FDI, 200 Park Avenue,  New York,
New York 10166. Her date of birth is September 14, 1969. 
 
     MARIE E. CONNOLLY;  Vice President and Assistant  Treasurer.  President and
Chief  Executive  Officer and Director of FDI,  Premier Mutual and an officer of
RCM Capital Funds, Inc., RCM Equity Funds, Inc. and certain investment companies
advised or  administered  by Dreyfus.  From December 1991 to July 1994,  she was
President  and Chief  Compliance  Officer of FDI.  Prior to December  1991,  she
served as Vice President and  Controller,  and later as Senior Vice President of
The Boston Company Advisors, Inc. ("TBCA"). Her date of birth is August 1, 1957.
 
 
     DOUGLAS C. CONROY;  Vice President and Assistant  Treasurer.  Supervisor of
Treasury Services and Administration of FDI and an officer of certain investment
companies  advised or administered by Dreyfus.  From April 1993 to January 1995,
Mr.  Conroy was a Senior Fund  Accountant  for Investors  Bank & Trust  Company.
Prior to March 1993, Mr. Conroy was employed as a fund  accountant at The Boston
Company. His date of birth is March 31, 1969. 
 
         RICHARD W. INGRAM;  President and Treasurer.  Senior Vice President and
Director of Client  Services and  Treasury  Administration  of FDI,  Senior Vice
President  of Premier  Mutual and an officer of RCM  Capital  Funds,  Inc.,  RCM
Equity Funds, Inc.,  Waterhouse Investors Cash Management Fund, Inc. and certain
investment  companies  advised or  administered  by Dreyfus.  From March 1994 to
November 1995, Mr. Ingram was Vice President and Division  Manager of First Data
Investor  Services Group, Inc. From 1989 to 1994, Mr. Ingram was Vice President,
Assistant  Treasurer and Tax Director - Mutual Funds of The Boston Company.  His
date of birth is September 15, 1955. 
 
     KAREN JACOPPO-WOOD;  Vice President and Assistant Secretary. Assistant Vice
President of FDI and an officer of RCM Capital Funds, Inc. and RCM Equity Funds,
Inc.  From  June  1994  to  January  1996,  Ms.  Jacoppo  was  a  Manager,   SEC
Registration,  Scudder, Stevens & Clark, Inc. From 1988 to May 1994, Ms. Jacoppo
was a senior paralegal at TBCA. Her date of birth is December 29, 1966. 
 
     CHRISTOPHER  J.  KELLEY;  Vice  President  and  Assistant  Secretary.  Vice
President  and Associate  General  Counsel of FDI. From April 1994 to July 1996,
Mr. Kelley was Assistant  Counsel at Forum Financial  Group.  From 1992 to 1994,
Mr.  Kelley  was  employed  by  Putnam   Investments  in  legal  and  compliance
capacities.  Prior to September  1992, Mr. Kelley was enrolled at Boston College
Law School and  received  his JD in May 1992.  His date of birth is December 24,
1964. 
 
     MARY A. NELSON; Vice President and Assistant Treasurer.  Vice President and
Manager  of  Treasury  Services  and  Administration  of FDI,  an officer of RCM
Capital Funds,  Inc., RCM Equity Funds,  Inc. and certain  investment  companies
advised  or  administered  by  Dreyfus.  From  1989 to 1994,  Ms.  Nelson  as an
Assistant Vice President and client manager for The Boston Company.  Her date of
birth is April 22, 1964. 
 
     JOHN E. PELLETIER; Vice President and Secretary.  Senior Vice President and
General  Counsel of FDI and Premier  Mutual and an officer of RCM Capital Funds,
Inc., RCM Equity Funds,  Inc.,  Waterhouse  Investors Cash Management Fund, Inc.
and certain  investment  companies  advised or  administered  by  Dreyfus.  From
February 1992 to April 1994, Mr. Pelletier served as Counsel for TBCA.  From 

                                       15
<PAGE>
 
August 1990 to February  1992,  Mr.  Pelletier  was  employed as an Associate at
Ropes & Gray. His date of birth is June 24, 1964. 
 
     JOSEPH F. TOWER III; Vice  President and Assistant  Treasurer.  Senior Vice
President,  Treasurer and Chief Financial  Officer of FDI and Premier Mutual and
an officer of  Waterhouse  Investors  Cash  Management  Fund,  Inc.  and certain
investment  companies  advised or  administered  by  Dreyfus.  From July 1988 to
November 1993, Mr. Tower was Financial  Manager of The Boston Company.  His date
of birth is June 13, 1962. 

INVESTMENT ADVISOR
 
         The investment  advisor to the Funds is Morgan  (Morgan  Guaranty Trust
Company  of  New  York),  a  wholly  owned  subsidiary  of  J.P.  Morgan  &  Co.
Incorporated ("J.P. Morgan"), a bank holding company organized under the laws of
the State of Delaware.  Morgan,  whose principal  offices are at 60 Wall Street,
New York,  New York 10260,  is a New York trust company which conducts a general
banking and trust business. The Advisor is subject to regulation by the New York
State Banking  Department  and is a member bank of the Federal  Reserve  System.
Through  offices  in New York City and  abroad,  Morgan  offers a wide  range of
services, primarily to governmental, institutional, corporate and high net worth
individual customers in the United States and throughout the world. 
 
         J.P. Morgan, through Morgan and other subsidiaries,  acts as investment
advisor to  individuals,  governments,  corporations,  employee  benefit  plans,
mutual  funds and other  institutional  investors  with  combined  assets  under
management of $197 billion (of which Morgan advises over $30 billion). 

         J.P.  Morgan has a long  history of service as an advisor,  underwriter
and lender to an extensive roster of major companies and as a financial  advisor
to national  governments.  The firm,  through its predecessor firms, has been in
business for over a century and has been managing investments since 1913.
 
         The basis of  Morgan's  investment  process is  fundamental  investment
research because the firm believes that fundamentals should determine an asset's
value over the long term.  Morgan currently  employs over 100 full time research
analysts, among the largest research staffs in the money management industry, in
its  investment  management  divisions  located  in  New  York,  London,  Tokyo,
Frankfurt, Melbourne and Singapore to cover companies,  industries and countries
on site. In addition,  the investment  management divisions employ approximately
300 capital market researchers,  portfolio managers and traders. The conclusions
of  the  equity  analysts'  fundamental  research  is  quantified  into a set of
projected  returns  for  individual  companies  through  the  use of a  dividend
discount model.  These returns are projected for 2 to 5 years to enable analysts
to take a longer term view. These returns, or normalized  earnings,  are used to
establish relative values among stocks in each industrial  sector.  These values
may not be the same as the markets' current valuations of these companies.  This
provides  the  basis for  ranking  the  attractiveness  of the  companies  in an
industry according to five distinct  quintiles or rankings.  This ranking is one
of the factors  considered in determining the stocks  purchased and sold in each
sector.  Morgan's fixed income  investment  process is based on analysis of real
rates, sector diversification and quantitative and credit analysis. 
 
         The investment  advisory  services Morgan provides to the Funds are not
exclusive under the terms of the Investment Advisory  Agreement.  Morgan is free
to and does render similar investment advisory services to others. Morgan serves
as investment advisor to personal  investors and other investment  companies and
acts as fiduciary for trusts, estates and employee benefit plans. Certain of the
assets of trusts and estates under management are invested in common trust funds
for which Morgan serves as trustee. The accounts which are managed or advised by
Morgan have varying  investment  objectives  and Morgan  invests  assets of such
accounts in  investments  substantially  similar to, or the same as, those which
are 


                                       16
<PAGE>
expected  to  constitute the  principal investments  of the Funds. Such accounts
are  supervised  by officers  and  employees of Morgan who may also be acting in
similar capacities for the Funds. See "Portfolio Transactions."
 
         Sector  weightings  are  generally  similar  to a  benchmark  with  the
emphasis on security selection as the method to achieve  investment  performance
superior to the benchmark.  The  benchmarks for the Funds are currently:  Equity
Fund -- S&P 500;  Disciplined  Equity Fund -- S&P 500;  and  California  Fund --
Lehman Brothers 1- to 16-Year Municipal Bond Index. 
 
         J.P. Morgan Investment  Management Inc., also a wholly owned subsidiary
of J.P. Morgan, is a registered investment adviser under the Investment Advisers
Act of 1940 and manages employee benefit funds of corporations, labor unions and
state and local governments and the accounts of other  institutional  investors,
including  investment  companies.  Certain  of the  assets of  employee  benefit
accounts under its management are invested in commingled pension trust funds for
which Morgan serves as trustee.  J.P. Morgan Investment  Management Inc. advises
Morgan on investment of the commingled pension trust funds. 
 
         The Funds are  managed by  officers  of Morgan who, in acting for their
clients, including the Funds, do not discuss their investment decisions with any
personnel of J.P.  Morgan or any personnel of other  divisions of Morgan or with
any of its  affiliated  persons,  with the exception of J.P.  Morgan  Investment
Management Inc. 
 
         The Investment  Advisory  Agreement  between  Morgan and the Trust,  on
behalf of each Fund,  provides  that it will  continue in effect for a period of
two years after execution only if specifically  approved  thereafter annually in
the same manner as the  Distribution  Agreement.  See  "Distributor"  below. The
Investment  Advisory  Agreement will terminate  automatically if assigned and is
terminable  at any time with  respect to a Fund  without  penalty by a vote of a
majority  of the  Trust's  Trustees or by a vote of the holders of a majority of
the Fund's  outstanding  voting  securities on 60 days' written notice to Morgan
and  by  Morgan  on 90  days'  written  notice  to  the  Fund.  See  "Additional
Information." 
 
         The  Glass-Steagall  Act and other  applicable laws generally  prohibit
banks  such  as  Morgan  from  engaging  in  the  business  of  underwriting  or
distributing  securities.  The Board of Governors of the Federal  Reserve System
has issued an  interpretation to the effect that under these laws a bank holding
company  registered  under the  federal  Bank  Holding  Company  Act or  certain
subsidiaries thereof may not sponsor, organize, or control a registered open-end
investment  company that  continuously  issues  shares,  such as the Trust.  The
interpretation  does not prohibit a holding company or a subsidiary thereof from
acting as investment  advisor,  administrator,  shareholder  servicing  agent or
custodian to such an investment company. Morgan believes that it may perform the
services for the Funds contemplated by the Investment Advisory Agreement without
violation  of the  Glass-Steagall  Act  or  other  applicable  banking  laws  or
regulations.  State  laws on this issue may differ  from the  interpretation  of
relevant  federal law, and banks and financial  institutions  may be required to
register as dealers pursuant to state securities laws.  However,  it is possible
that  future  changes  in  either  federal  or state  statutes  and  regulations
concerning the permissible  activities of banks or trust  companies,  as well as
further judicial or administrative  decisions and interpretations of present and
future statutes and regulations, might prevent Morgan from continuing to perform
such services for the Funds. 
 
         If Morgan  were  prohibited  from acting as  investment  advisor to any
Fund,  it is  expected  that  the  Trustees  of the  Trust  would  recommend  to
shareholders  that  they  approve  the  Fund's  entering  into a new  investment
advisory  agreement with another  qualified  investment  advisor selected by the
Trustees. 


                                       17
<PAGE>
         Under separate agreements, Morgan also provides certain financial, fund
accounting,  administrative and shareholder services to the Trust. See "Services
Agent" and "Shareholder Servicing" below.
 
DISTRIBUTOR 
 
         FDI  serves as the  Trust's  exclusive  distributor  and  holds  itself
available to receive  purchase orders for each Fund's shares.  In that capacity,
FDI has been  granted  the right,  as agent of the Trust,  to solicit and accept
orders for the purchase of each Fund's  shares in  accordance  with the terms of
the  Distribution  Agreement  between the Trust and FDI.  Under the terms of the
Distribution  Agreement  between FDI and the Trust, FDI receives no compensation
in its capacity as the Funds' distributor. 
 
         The Distribution Agreement will continue in effect with respect to each
Fund for a period of two years after  execution  only if it is approved at least
annually  thereafter  (i) by a vote of the  holders of a majority  of the Fund's
outstanding  voting  securities  or by its  Trustees  and  (ii)  by a vote  of a
majority  of the  Trustees  of the Trust who are not  "interested  persons"  (as
defined by the 1940 Act) of the parties to the Distribution  Agreement,  cast in
person at a meeting  called  for the  purpose  of voting on such  approval  (see
"Trustees  and   Officers").   The   Distribution   Agreement   will   terminate
automatically if assigned by either party.  The  Distribution  Agreement is also
terminable  with  respect to a Fund at any time  without  penalty by a vote of a
majority of the Trustees of the Trust,  a vote of a majority of the Trustees who
are not  "interested  persons" of the Trust,  or by a vote of (i) 67% or more of
the Fund's  outstanding voting securities present at a meeting if the holders of
more  than 50% of the  Fund's  outstanding  voting  securities  are  present  or
represented  by proxy,  or (ii) more than 50% of the Fund's  outstanding  voting
securities,  whichever is less.  The principal  offices of FDI are located at 60
State Street, Suite 1300, Boston, Massachusetts 02109. 
 
CO-ADMINISTRATOR 
 
         Under a Co-Administration  Agreement with the Trust, FDI also serves as
the Trust's Co-Administrator.  The Co-Administration Agreement may be renewed or
amended  by the  Trustees  without a  shareholder  vote.  The  Co-Administration
Agreement is terminable  at any time without  penalty by a vote of a majority of
the Trustees of the Trust on not more than 60 days' written notice nor less than
30 days' written notice to the other party. The Co-Administrator may subcontract
for the performance of its obligations, provided, however, that unless the Trust
expressly agrees in writing, the Co-Administrator shall be fully responsible for
the acts and  omissions  of any  subcontractor  as it would  for its own acts or
omissions. See "Services Agent" below. 
 
         For its services under the Co-Administration  Agreement,  each Fund has
agreed to pay FDI fees equal to its  allocable  share of an annual  complex-wide
charge of $425,000 plus FDI's  out-of-pocket  expenses.  The amount allocable to
each Fund is based on the ratio of the Fund's  net  assets  to the aggregate net
assets of the Funds and the Master Portfolios. 

SERVICES AGENT
 
         The Trust,  on behalf of each Fund, has entered into an  Administrative
Services  Agreement (the  "Services  Agreement")  with Morgan  pursuant to which
Morgan is responsible for certain  administrative  and related services provided
to each Fund.  The Services  Agreement may be  terminated  at any time,  without
penalty,  by the Trustees or Morgan,  in each case on not more than 60 days' nor
less than 30 days' written notice to the other party. 
 
         Under the Services  Agreement,  each Fund has agreed to pay Morgan fees
equal to its allocable share of an annual  complex-wide  charge.  This charge is
calculated  daily  based  on  the  aggregate  net  assets  of  the Funds and the
Master 


                                       18
<PAGE>
Portfolios in accordance with the following annual  schedule:  0.09% of the
first $7 billion of their aggregate average daily net assets,  and 0.04% of
their aggregate average daily net assets in excess of $7 billion,  less the
complex-wide  fees  payable to FDI.  The portion of this charge  payable by
each Fund is determined by the proportionate share that its net assets bear
to the total net assets of The JPM Pierpont  Funds,  The JPM  Institutional
Funds, the Master Portfolios,  the other investors in the Master Portfolios
for which Morgan provides similar services and the Trust.

CUSTODIAN AND TRANSFER AGENT
 
     State Street Bank and Trust Company ("State Street"),  225 Franklin Street,
Boston,   Massachusetts   02110,  serves  as  the  Trust's  custodian  and  fund
accounting,  transfer and dividend  disbursing agent.  Pursuant to the Custodian
Contract with the Trust,  State Street is responsible  for maintaining the books
and  records  of  each  Fund's  portfolio  transactions  and  holding  portfolio
securities and cash. The Custodian maintains portfolio  transaction  records. As
transfer agent and dividend  disbursing  agent,  State Street is responsible for
maintaining  account  records  detailing  the  ownership  of Fund shares and for
crediting  income,  capital  gains  and  other  changes  in share  ownership  to
shareholder accounts. 

SHAREHOLDER SERVICING
 
         The Trust on behalf of each of the Funds has entered into a Shareholder
Servicing  Agreement  with Morgan  pursuant to which Morgan acts as  shareholder
servicing  agent  for  Fund  shareholders.   Under  this  agreement,  Morgan  is
responsible for performing,  directly or through an agent,  shareholder  account
administrative  and  servicing  functions,  which include but are not limited to
answering  inquiries  regarding account status and history,  the manner in which
purchases  and  redemptions  of Fund shares may be effected,  and certain  other
matters  pertaining to a Fund;  assisting  customers in designating and changing
dividend  options,  account  designations  and  addresses;  providing  necessary
personnel and  facilities to coordinate  the  establishment  and  maintenance of
shareholder  accounts and records with the Funds' transfer  agent;  transmitting
purchase and  redemption  orders to the Funds'  transfer agent and arranging for
the  wiring  or  other  transfer  of  funds to and  from  customer  accounts  in
connection with orders to purchase or redeem Fund shares; verifying purchase and
redemption orders, transfers among and changes in accounts; informing FDI of the
gross amount of purchase  orders for Fund shares;  and  providing  other related
services. 
 
         As discussed under  "Investment  Advisor," the  Glass-Steagall  Act and
other  applicable  laws and  regulations  limit the  activities  of bank holding
companies  and  certain of their  subsidiaries  in  connection  with  registered
open-end investment companies. The activities of Morgan in acting as shareholder
servicing agent for Fund shareholders under the Shareholder  Servicing Agreement
and for  providing  administrative  services  to the Funds  under  the  Services
Agreement,  may raise issues under these laws. However,  Morgan believes that it
may properly  perform these services and the other  activities  described in the
Prospectus  without violating the Glass-Steagall Act or other applicable banking
laws or regulations. 
 
         If Morgan were  prohibited from providing any of the services under the
Shareholder  Servicing Agreement and the Services Agreement,  the Trustees would
seek an  alternative  provider of such services.  In such event,  changes in the
operation of the Funds might occur and a shareholder  might no longer be able to
avail himself or herself of any services then being provided to  shareholders by
Morgan. 

INDEPENDENT ACCOUNTANTS
 
         The independent accountants of the Trust are Price Waterhouse LLP, 1177
Avenue of the Americas,  New York, New York 10036. Price Waterhouse LLP conducts
an annual audit of the financial statements of each of the Funds, assists in the
preparation  and/or  review of each of the Fund's  federal and state  income tax
returns and consults with the Funds as to matters of accounting  and federal and
state income taxation. 


                                       19
<PAGE>
EXPENSES
 
         In addition to the fees payable to Pierpont Group, Inc., Morgan and FDI
under various  agreements  discussed under "Trustees and Officers,"  "Investment
Advisor," "Co-Administrator" "Services Agent" and "Shareholder Servicing" above,
the Funds are responsible for usual and customary  expenses  associated with the
Trust's operations.  Such expenses include  organization  expenses,  legal fees,
accounting and audit expenses, insurance costs, the compensation and expenses of
the Trustees,  registration  fees under federal  securities laws,  extraordinary
expenses,  transfer,  registrar and dividend  disbursing  costs, the expenses of
printing and mailing reports, notices and proxy statements to Fund shareholders,
fees under state securities laws, custodian fees and brokerage expenses. 

         Morgan  has  agreed  that if in any  fiscal  year the sum of any Fund's
expenses  exceeds the limits set by applicable  regulations of state  securities
commissions,  the fees  payable  by the Fund to  Morgan  for that  year  will be
reduced  as  specified  by  agreement  with the  Trust on  behalf  of the  Fund.
Currently, Morgan believes that the most restrictive expense limitation of state
securities  commissions  limits  expenses  to 2.5% of the first $30  million  of
average  net  assets,  2% of the next $70 million of such net assets and 1.5% of
such net assets in excess of $100 million for any fiscal year.
   
PURCHASE OF SHARES
 
         Investors  may open Fund  accounts and purchase JPM Pierpont  Shares of
the  Equity  Funds  and  JPM  Institutional  Shares  of the  California  Fund as
described in the Prospectus under "Purchase of Shares." 
 
         Each Fund may,  at its own  option,  accept  securities  in payment for
shares.  The  securities so delivered are valued by the method  described  under
"Net Asset  Value" as of the day the Fund  receives  the  securities.  This is a
taxable  transaction to the  shareholder.  Securities may be accepted in payment
for shares only if they are, in the judgment of Morgan,  appropriate investments
for the Fund. In addition,  securities  accepted in payment for shares must: (i)
meet the  investment  objective  and  policies of the  acquiring  Fund;  (ii) be
acquired by the  applicable  Fund for  investment  and not for resale;  (iii) be
liquid  securities  which are not restricted as to transfer;  and (iv) if stock,
have a value which is readily ascertainable as evidenced by a listing on a stock
exchange,  OTC market or by readily available market quotations from a dealer in
such  securities.  Each Fund  reserves  the right to accept or reject at its own
option any and all securities offered in payment for its shares. 

         Prospective  investors  may purchase  shares with the  assistance of an
Eligible Institution, and the Eligible Institution may charge the investor a fee
for this service and other services it provides to its customers.

REDEMPTION OF SHARES
 
         Investors  may redeem JPM  Pierpont  Shares of the Equity Funds and JPM
Institutional Shares of the California Fund as described in the Prospectus under
"Redemption of Shares." 

         The Trust,  on behalf of each Fund,  reserves  the right to suspend the
right of  redemption  and to postpone  the date of payment  upon  redemption  as
follows:  (i) for up to seven days,  (ii) during periods when the New York Stock
Exchange is closed for other than weekends and holidays or when trading  thereon
is  restricted  as  determined  by the SEC by rule or  regulation,  (iii) during
periods in which an  emergency,  as  determined  by the SEC,  exists that causes
disposal by the Fund of, or  evaluation of the net asset value of, its portfolio
securities to be unreasonable or  impracticable,  or (iv) for such other periods
as the SEC may permit.


                                       20
<PAGE>
 
         If the  Trust  determines  that it  would  be  detrimental  to the best
interest of the remaining  shareholders  of the California  Fund to make payment
wholly or partly in cash,  payment of the redemption  price may be made in whole
or in part by a  distribution  in kind of  securities  from the Fund, in lieu of
cash.  If shares are redeemed in kind,  the  redeeming  shareholder  might incur
costs in  converting  the  assets  into cash.  The  method of valuing  portfolio
securities is described under "Net Asset Value," and such valuation will be made
as of the same time the redemption  price is determined.  See the Prospectus for
information on redemptions in kind for the Equity Funds. 

EXCHANGE OF SHARES
 
         An investor  may exchange JPM  Institutional  Shares of the  California
Fund for shares of any fund in The JPM Pierpont  Funds or The JPM  Institutional
Funds, as described  under "Exchange of Shares" in the Prospectus.  For complete
information,  the  Prospectus as it relates to the fund into which a transfer is
being made should be read prior to the  transfer.  Orders for the  purchases  of
shares to be acquired  and orders for shares to be redeemed  are timed to settle
on the same day. In the case of investors in certain  states,  state  securities
laws may restrict the availability of the exchange privilege. 

NET ASSET VALUE
 
         Each of the Funds  computes its net asset value once daily at 4:15 P.M.
New York time on Monday through  Friday as described  under "Net Asset Value" in
the  Prospectus.  The  net  asset  value  will  not be  computed  on the day the
following  legal holidays are observed:  New Year's Day,  Presidents'  Day, Good
Friday,  Memorial  Day,  Independence  Day,  Labor Day,  Thanksgiving  Day,  and
Christmas  Day. On days when U.S.  trading  markets close early in observance of
these  holidays,  the Funds will close for purchases and redemptions at the same
time.  The days on which net asset value is determined  are the Funds'  business
days. 
 
         California Fund.  Portfolio  securities with a maturity of more than 60
days,  including  securities  that are listed on an  exchange or traded over the
counter,  are valued  using  prices  supplied  daily by an  independent  pricing
service  or  services  that (i) are based on the last sale  price on a  national
securities  exchange  or, in the  absence  of  recorded  sales,  at the  readily
available  closing bid price on such  exchange or at the quoted bid price in the
OTC  market,  if such  exchange  or market  constitutes  the  broadest  and most
representative  market  for the  security  and (ii) in other  cases,  take  into
account various factors  affecting market value,  including yields and prices of
comparable  securities,  indications as to value from dealers and general market
conditions.  If such prices are not supplied by the Fund's  independent  pricing
service, such securities are priced in accordance with procedures adopted by the
Trustees.  All portfolio securities with a remaining maturity of 60 days or less
are  valued  by the  amortized  cost  method.  Because  of the  large  number of
municipal bond issues  outstanding and the varying  maturity dates,  coupons and
risk factors  applicable to each issuer's  books,  no readily  available  market
quotations exist for most municipal securities. 
 
         Equity Funds. The value of investments listed on a domestic  securities
exchange,  other than options on stock indices, is based on the last sale prices
at the close of regular  trading on the New York Stock  Exchange  (normally 4:00
P.M.,  New York time) or, in the  absence of recorded  sales,  at the average of
readily  available  closing  bid and  asked  prices on such  exchange.  Unlisted
securities  are valued at the average of the quoted bid and asked  prices in the
OTC  market.  The value of each  security  for which  readily  available  market
quotations   exist  is  based  on  a  decision  as  to  the  broadest  and  most
representative  market for such security.  For purposes of calculating net asset
value all assets and liabilities  initially expressed in foreign currencies will
be converted into U.S.  dollars at the prevailing  market rates available at the
time of valuation. 


                                       21
<PAGE>
         Options on stock indexes  traded on national  securities  exchanges are
valued at the close of options trading on such exchanges which is currently 4:10
P.M., New York time. Stock index futures and related  options,  which are traded
on commodities  exchanges,  are valued at their last sales price as of the close
of such  commodities  exchanges  which is  currently  4:15 P.M.,  New York time.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures  established by and under
the general  supervision  and  responsibility  of the Trustees.  Such procedures
include the use of  independent  pricing  services  which use prices  based upon
yields or prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. Short-term
investments  which  mature in 60 days or less are  valued at  amortized  cost if
their original maturity was 60 days or less, or by amortizing their value on the
61st day prior to maturity, if their original maturity when acquired by the Fund
was more than 60 days,  unless this is determined not to represent fair value by
the Trustees.

PERFORMANCE DATA
 
         From time to time,  the Funds may quote  performance in terms of yield,
tax equivalent yield (in the case of the California Fund), actual distributions,
total  return or capital  appreciation  for the various Fund classes in reports,
sales literature and advertisements  published by the Trust. Current performance
information may be obtained by calling Morgan at (800) 766-7722. See "Additional
Information" in the Prospectus. 

         The  classes  of  shares of each  Fund may bear  different  shareholder
servicing fees and other expenses, which may cause the performance of a class to
differ from the  performance of another class.  Performance  quotations  will be
computed  separately for each class of a Fund's  shares.  Any fees charged by an
institution  directly to its customers'  accounts in connection with investments
in the Funds will not be included in calculations of total return or yield.
 
         Yield  Quotations.  The  annualized  yield for the  California  Fund is
computed by dividing  net  investment  income per share  earned  during a 30-day
period by the net asset value on the last day of the period.  The average  daily
number of shares  outstanding  during the period  that are  eligible  to receive
dividends is used in determining the net investment income per share.  Income is
computed by totaling  the  interest  earned on all debt  obligations  during the
period and  subtracting  from that  amount the total of all  recurring  expenses
incurred  during  the  period.   The  30-day  yield  is  then  annualized  on  a
bond-equivalent  basis assuming semi-annual  reinvestment and compounding of net
investment  income.  Annualized  tax-equivalent  yield reflects the  approximate
annualized  yield  that a  taxable  investment  must  earn for  shareholders  at
specified federal and California income tax levels to produce an after-tax yield
equivalent to the annualized tax-exempt yield. 

         Total Return Quotations. The average annual total return of each Fund's
class(es) for a period is computed by assuming a hypothetical initial payment of
$1,000.  It is then assumed that all of the dividends and  distributions  by the
Fund over the period are  reinvested.  It is then assumed that at the end of the
period,  the entire amount is redeemed.  The average annual total return is then
calculated by  determining  the annual rate required for the initial  payment to
grow to the amount which would have been received upon redemption.

         Aggregate total returns,  reflecting the cumulative  percentage  change
over a measuring period, may also be calculated.

         General.  Fund  performance  will vary from time to time depending upon
market  conditions,  the composition of the portfolio,  and operating  expenses.
Consequently,   any  given  performance   quotation  should  not  be  considered
representative  of a Fund's  performance for any specified period in the future.


                                       22
<PAGE>
In addition,  because performance will fluctuate, it may not provide a basis for
comparing  an  investment  in  a  Fund  with  certain  bank  deposits  or  other
investments that pay a fixed yield or return for a stated period of time.
 
         Comparative  performance  information  may be used from time to time in
advertising shares of the Funds, including data from Lipper Analytical Services,
Inc., Micropal, Inc., Ibbotson Associates, Morningstar Inc., the S&P 500, Lehman
Brothers 1- to 16-Year  Municipal Bond Index, the Dow Jones Industrial  Average,
the Frank Russell Indexes and other industry publications. 

PORTFOLIO TRANSACTIONS
 
         Morgan  places  orders for all Funds for all  purchases  and  sales  of
portfolio  securities,  enters  into  repurchase  agreements  and may enter into
reverse  repurchase  agreements  and execute  loans of portfolio  securities  on
behalf of all the Funds. See "Investment Objectives and Policies." 

         Fixed  income and debt  securities  and  municipal  bonds and notes are
generally  traded at a net price with dealers  acting as principal for their own
accounts without a stated commission. The price of the security usually includes
profit to the dealers. In underwritten offerings,  securities are purchased at a
fixed  price  which  includes  an amount  of  compensation  to the  underwriter,
generally referred to as the underwriter's  concession or discount. On occasion,
certain  securities may be purchased  directly from an issuer,  in which case no
commissions or discounts are paid.
 
         In connection  with portfolio  transactions  for the  California  Fund,
Morgan intends to seek best price and execution on a competitive  basis for both
purchases and sales of securities. 

         In connection  with portfolio  transactions  for the Equity Funds,  the
overriding  objective is to obtain the best  possible  execution of purchase and
sale orders.
 
         In selecting a broker,  Morgan considers a number of factors including:
the  price  per unit of the  security;  the  broker's  reliability  for  prompt,
accurate  confirmations  and  on-time  delivery  of  securities;   the  broker's
financial  condition;  and  the  commissions  charged.  A  broker  may be paid a
brokerage  commission in excess of that which another  broker might have charged
for effecting the same transaction if, after considering the foregoing  factors,
Morgan decides that the broker chosen will provide the best possible  execution.
Morgan monitors the reasonableness of the brokerage commissions paid in light of
the execution received. The Trust's Trustees review regularly the reasonableness
of  commissions  and other  transaction  costs incurred by the Funds in light of
facts  and  circumstances  deemed  relevant  from  time  to  time  and,  in that
connection,  will receive  reports  from Morgan and  published  data  concerning
transaction costs incurred by institutional investors generally. 
 
         Research  services  provided by brokers to which  Morgan has  allocated
brokerage  business in the past  include  economic  statistics  and  forecasting
services,   industry  and  company  analyses,   portfolio   strategy   services,
quantitative  data,  and  consulting  services  from  economists  and  political
analysts. Research services furnished by brokers are used for the benefit of all
of  Morgan's  clients  and not  solely  or  necessarily  for the  benefit  of an
individual Fund. Morgan believes that the value of research services received is
not determinable and does not  significantly  reduce its expenses.  The Funds do
not reduce their fee to Morgan by any amount that might be  attributable  to the
value of such services. 
 
         Subject to the  overriding  objective  of obtaining  the best  possible
execution  of  orders,  Morgan  may  allocate  a portion  of a Fund's  brokerage
transactions  to  affiliates  of Morgan.  In order for  affiliates  of Morgan to
 

                                       23
<PAGE>
effect any portfolio  transactions  for a Fund, the  commissions,  fees or other
remuneration received by such affiliates must be reasonable and fair compared to
the commissions, fees, or other remuneration paid to other brokers in connection
with comparable  transactions  involving  similar  securities being purchased or
sold on a securities  exchange during a comparable period of time.  Furthermore,
the  Trust's  Trustees,  including  a  majority  of the  Trustees  who  are  not
"interested  persons," have adopted procedures which are reasonably  designed to
provide  that  any  commissions,  fees,  or  other  remuneration  paid  to  such
affiliates are consistent with the foregoing standard.
 
         Portfolio  securities  will not be purchased from or through or sold to
or through Morgan or FDI or any "affiliated person" (as defined in the 1940 Act)
thereof  when such  entities  are  acting as  principals,  except to the  extent
permitted by law. In addition,  the Funds will not purchase  securities from any
underwriting group of which Morgan or an affiliate of Morgan is a member, except
to the extent permitted by law. 
 
         Investment  decisions made by Morgan are the product of many factors in
addition  to  basic  suitability  for the  particular  Fund or other  client  in
question. Thus, a particular  security may be bought or sold for certain clients
even though it could  have been  bought or sold for other  clients  at the  same
time.  Likewise,  a  particular  security may be  bought for one or more clients
when one or more other clients are selling the same security. The Funds may only
sell a security  to  each  other  or to other accounts  managed by Morgan or its
affiliates in accordance with procedures adopted by the Trustees. 
 
         It also  sometimes  happens  that  two or more  clients  simultaneously
purchase or sell the same  security.  On those  occasions  when Morgan deems the
purchase or sale of a security to be in the best interests of a Fund, as well as
other  clients  including  other  Funds,  Morgan  to  the  extent  permitted  by
applicable  laws and  regulations,  may, but is not obligated to,  aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for other clients in order to obtain best  execution,  including lower brokerage
commissions  if  appropriate.  In such event,  allocation  of the  securities so
purchased or sold as well as any expenses  incurred in the  transaction  will be
made by Morgan in the manner it considers to be most  equitable  and  consistent
with Morgan's fiduciary obligations to a Fund. In some instances, this procedure
might adversely affect a Fund. 

MASSACHUSETTS TRUST

         The Trust is a  "Massachusetts  business trust" of which each Fund is a
separate and distinct  series.  A copy of the Declaration of Trust for the Trust
is on file in the office of the Secretary of The Commonwealth of  Massachusetts.
Under  Massachusetts  law,  shareholders  of such a  trust  may,  under  certain
circumstances,  be held personally liable as partners for the obligations of the
trust.  However, the Trust's Declaration of Trust provides that the shareholders
will not be subject to any personal liability for the acts or obligations of any
Fund and that every written  agreement,  obligation,  instrument or  undertaking
made on behalf  of any Fund will  contain a  provision  to the  effect  that the
shareholders are not personally liable thereunder.

         The Trust's  Declaration  of Trust  further  provides  that no Trustee,
officer,  employee,  or  agent  of  the  Trust  is  liable  to a  Fund  or  to a
shareholder,  and that no Trustee, officer,  employee, or agent is liable to any
third persons in connection with the affairs of a Fund, except as such liability
may arise from his or its own bad faith, willful  misfeasance,  gross negligence
or reckless  disregard  of his or its duties to such third  persons  ("disabling
conduct").  It also  provides  that all third  persons  must look solely to Fund
property for  satisfaction of claims arising in connection with the affairs of a
Fund.  The  Trust's  Declaration  of Trust  provides  that a  Trustee,  officer,
employee,  or agent


                                       24
<PAGE>
is  entitled to be  indemnified  against  all  liability  in connection with th
affairs of a Fund, except liabilities arising from disabling conduct.

DESCRIPTION OF SHARES

         Each  Fund  represents   a  separate  series  of  shares of  beneficial
interest of  the Trust.  Fund shares are  further divided into separate classes.
See "Massachusetts Trust."
 
         The  Declaration  of Trust  permits the  Trustees to issue an unlimited
number of full and  fractional  shares  ($0.001 par value) of one or more series
and classes  within any series and to divide or combine the shares of any series
without changing the proportionate  beneficial interest of each shareholder in a
Fund.  To date,  JPM Pierpont  Shares of each Equity Fund and JPM  Institutional
Shares  of the  California  Fund  described  in  this  Statement  of  Additional
Information  have been  authorized  and are currently  available for sale to the
public. 

         Each share  represents  an equal  proportional  interest in a Fund with
each other  share of the same class.  Upon  liquidation  of a Fund,  holders are
entitled  to  share  pro  rata  in  the  net  assets  of a  Fund  available  for
distribution  to such  shareholders.  Shares  of a Fund  have no  preemptive  or
conversion rights.

         The  shareholders  of the Trust are entitled to one full or  fractional
vote for each dollar or fraction of a dollar invested in shares.  Subject to the
1940 Act,  the  Trustees  have the power to alter  the  number  and the terms of
office of the Trustees,  to lengthen their own terms,  or to make their terms of
unlimited duration,  subject to certain removal procedures, and to appoint their
own  successors.  However,  immediately  after such  appointment,  the requisite
majority  of the  Trustees  must have been  elected by the  shareholders  of the
Trust. The voting rights of shareholders are not cumulative.  The Trust does not
intend to hold annual meetings of  shareholders.  The Trustees may call meetings
of  shareholders  for action by shareholder  vote if required by either the 1940
Act or the Trust's Declaration of Trust.
 
         Shareholders  of the Trust  have the  right,  upon the  declaration  in
writing or vote of  shareholders  whose shares  represent  two-thirds of the net
asset value of the Trust, to remove a Trustee.  The Trustees will call a meeting
of  shareholders to vote on removal of a Trustee upon the written request of the
shareholders whose shares represent 10% of the net asset value of the Trust. The
Trustees are also required, under certain circumstances,  to assist shareholders
in communicating with other shareholders. 

TAXES

 
         Each Fund  intends  to  qualify  and remain  qualified  as a  regulated
investment  company under  Subchapter M of the Code.  As a regulated  investment
company,  a Fund must, among other things,  (a) derive at least 90% of its gross
income from  dividends,  interest,  payments  with respect to loans of stock and
securities,  gains from the sale or other  disposition  of stock,  securities or
foreign  currency  and other  income  (including  but not  limited to gains from
options, futures, and forward contracts) derived with respect to its business of
investing in such stock,  securities or foreign  currency;  (b) derive less than
30% of its gross income from the sale or other disposition of stock, securities,
options,  futures or forward  contracts (other than options,  futures or forward
contracts  on  foreign  currencies)  held less than  three  months,  or  foreign
currencies (or options, futures or forward contracts on foreign currencies) held
less than three months, but  only if such  currencies  (or  options,  futures or
forward  contracts on foreign  currencies)  are not directly related to a Fund's
principal  business  of  investing  in stocks  or  securities  (or  options  and
futures  with  respect to stocks or securities);  and (c) diversify its holdings
so that, at the end of each fiscal quarter, (i) at least 50% of the value of the
Fund's total assets is represented by cash, U.S. Government 


                                       25
<PAGE>
 
securities,  investments  in other  regulated  investment  companies  and  other
securities  limited, in respect of any one issuer, to an amount not greater than
5% of the Fund's total assets,  and 10% of the outstanding  voting securities of
such  issuer,  and (ii) not more than 25% of the  value of its  total  assets is
invested  in the  securities  of any one  issuer  (other  than  U.S.  Government
securities or the  securities of other  regulated  investment  companies).  As a
regulated  investment  company, a Fund (as opposed to its shareholders) will not
be subject to federal  income  taxes on the net  investment  income and  capital
gains that it distributes to its shareholders, provided that at least 90% of its
net investment income and realized net short-term capital gains in excess of net
long-term capital losses for the taxable year is distributed. 

         Under the Code,  a Fund will be subject to a 4% excise tax on a portion
of  its  undistributed   income  if  it  fails  to  meet  certain   distribution
requirements  by the  end of the  calendar  year.  Each  Fund  intends  to  make
distributions  in a timely manner and accordingly  does not expect to be subject
to the excise tax.

         For federal income tax purposes,  dividends that are declared by a Fund
in October,  November or December as of a record date in such month and actually
paid in  January of the  following  year will be treated as if they were paid on
December 31 of the year  declared.  Therefore,  such dividends will generally be
taxable to a shareholder in the year declared rather than the year paid.
 
         The California Fund intends to qualify to pay exempt-interest dividends
to its shareholders by having, at the close of each quarter of its taxable year,
at least 50% of the value of its total assets consist of tax exempt  securities.
An exempt-interest  dividend is that part of dividend  distributions made by the
Fund which consists of interest received by the Funds on tax exempt  securities.
Shareholders   will  not  incur  any  federal   income  tax  on  the  amount  of
exempt-interest  dividends received by them from the Fund. In view of the Fund's
investment policies,  it is expected that a substantial portion of all dividends
will be  exempt-interest  dividends,  although  the Fund  may from  time to time
realize and  distribute  net  short-term  capital  gains and may invest  limited
amounts in taxable securities under certain circumstances. 

     Distributions  of net  investment  income (other  than  exempt-interest 
dividends) and realized net short-term capital gains in excess of net  long-term
capital losses are generally  taxable to  shareholders  of the Funds as ordinary
income whether such  distributions are taken in cash or reinvested in additional
shares.  Distributions  of net  long-term  capital  gains (i.e.,  net  long-term
capital  gains in  excess of net  short-term  capital  losses)  are  taxable  to
shareholders  of a Fund as long-term  capital gains,  regardless of whether such
distributions  are  taken  in  cash  or  reinvested  in  additional  shares  and
regardless of how long a shareholder has held shares in the Fund. See "Taxes" in
the  Prospectus for a discussion of the federal income tax treatment of any gain
or loss realized on the redemption or exchange of a Fund's shares. Additionally,
any loss  realized  on a  redemption  or  exchange  of  shares of a Fund will be
disallowed to the extent the shares  disposed of are replaced within a period of
61  days  beginning  30 days  before  such  disposition,  such  as  pursuant  to
reinvestment of a dividend in shares of the Fund.

     Gains  or  losses on  sales  of  portfolio  securities  will be treated  as
long-term capital gains or losses if the securities  have  been  held  for more 
than one year except in certain cases where, if applicable, a put is acquired or
a call option   is  written   thereon.  Other  gains  or  losses on the sale of 
securities  will be short-term capital gains or losses. Gains and losses on  the
sale, lapse or other termination  of options on  securities  will be treated  as
gains and losses from the sale of  securities.  If an option  written by a  Fund
lapses or is terminated through a closing  transaction,  such as a repurchase by
the Fund of the option from its  holder,  the  Fund will  realize  a  short-term
capital  gain or loss, depending  on  whether the premium  income is greater  or
less than the amount paid by the Fund in the closing  transaction. If securities
are purchased by a Fund
 

                                       26
<PAGE>
pursuant  to  the  exercise  of  a  put  option  written  by  it,  the Fund will
subtract the premium received from its cost basis in the securities purchased.
   
         Options  and  futures  contracts  entered  into  by a Fund  may  create
"straddles"  for U.S.  federal  income  tax  purposes  and this may  affect  the
character  and timing of gains or losses  realized  by the Fund on  options  and
futures contracts or on the underlying securities.  Straddles may also result in
the loss of the holding period of underlying  securities for purposes of the 30%
of gross income test described above,  and therefore,  a Fund's ability to enter
into options and futures contracts may be limited.

         Certain  options and  futures  held by a Fund at the end of each fiscal
year will be required to be "marked to market" for federal  income tax  purposes
- -- i.e.,  treated as having been sold at market  value.  For options and futures
contracts,  60% of any gain or loss  recognized  on these  deemed  sales  and on
actual  dispositions  will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term  capital gain or loss  regardless of how
long the Fund has held such options or futures.  Any gain or loss  recognized on
foreign currency contracts will be treated as ordinary income.
 
         The Equity Funds may invest in Equity Securities of foreign issuers. If
a Fund purchases  shares in certain  foreign  investment  funds  (referred to as
passive foreign investment  companies ("PFICs") under the Code), the Fund may be
subject to federal income tax on a portion of an "excess distribution" from such
foreign investment fund or gain from the disposition of such shares, even though
such income may have to be distributed as a taxable  dividend by the Fund to its
shareholders.  In addition, certain interest charges may be imposed on a Fund or
its  shareholders in respect of unpaid taxes arising from such  distributions or
gains.  Alternatively,  a Fund may in certain circumstances include each year in
its income  and  distribute  to  shareholders  a pro rata  portion of the PFIC's
income, whether or not distributed to the Fund. 
 
         Foreign   Shareholders.   Dividends  of  net   investment   income  and
distributions of realized net short-term gains in excess of net long-term losses
to  a  shareholder  who,  as  to  the  United  States,  is a  nonresident  alien
individual,  fiduciary  of a foreign  trust or estate,  foreign  corporation  or
foreign   partnership  (a  "foreign   shareholder")  will  be  subject  to  U.S.
withholding  tax at the rate of 30% (or lower treaty rate) unless the  dividends
are effectively  connected with a U.S. trade or business of the shareholder,  in
which case the  dividends  will be  subject to tax on a net income  basis at the
graduated  rates  applicable  to  U.S.  individuals  or  domestic  corporations.
Distributions of net long term capital gains to foreign shareholders will not be
subject to U.S. tax unless the distributions are effectively  connected with the
shareholder's  trade or  business  in the  United  States  or,  in the case of a
shareholder who is a nonresident alien  individual,  the shareholder was present
in the United  States for more than 182 days during the taxable year and certain
other conditions are met. 

         In  the  case  of a  foreign  shareholder  who is a  nonresident  alien
individual and who is not otherwise subject to withholding as described above, a
Fund may be  required  to withhold  U.S.  federal  income tax at the rate of 31%
unless  IRS Form W-8 is  provided.  Transfers  by gift of  shares of a Fund by a
foreign shareholder who is a nonresident alien individual will not be subject to
U.S.  federal  gift  tax,  but the  value of  shares  of the Fund held by such a
shareholder  at his or her death will be  includible  in his or her gross estate
for U.S. federal estate tax purposes.

         State and Local Taxes. Each Fund may be subject to state or local taxes
in jurisdictions in which the Fund is deemed to be doing business.  In addition,
the treatment of a Fund and its  shareholders  in those states which have income
tax laws  might  differ  from  treatment  under  the  federal  income  tax laws.


                                       27
<PAGE>
Shareholders  should consult their own tax advisors with respect to any state or
local taxes.

         Other  Taxation.  Under current law,  neither the Trust nor any Fund is
liable for any income or franchise  tax in The  Commonwealth  of  Massachusetts,
provided that each Fund continues to qualify as a regulated  investment  company
under Subchapter M of the Code.

ADDITIONAL INFORMATION
 
         Telephone  calls  to the  Funds,  Morgan  or State  Street  may be tape
recorded.  With respect to the  securities  offered  hereby,  this  Statement of
Additional  Information  and the  Prospectus do not contain all the  information
included in the Trust's registration statement filed with the SEC under the 1933
Act and the Trust's registration statement filed under the 1940 Act. Pursuant to
the rules and regulations of the SEC,  certain  portions have been omitted.  The
registration statement including the exhibits filed therewith may be examined at
the office of the SEC in Washington, D.C. 
 
         Statements  contained in this Statement of Additional  Information  and
the Prospectus concerning the contents of any contract or other document are not
necessarily  complete,  and in each  instance,  reference is made to the copy of
such  contract  or  other  document  filed  as  an  exhibit  to  the  applicable
Registration  Statements.  Each such  statement  is qualified in all respects by
such reference. 
 
         No dealer, salesman or any other person has been authorized to give any
information or to make any  representations,  other than those  contained in the
Prospectus and this Statement of Additional Information,  in connection with the
offer  contained  therein  and,  if given or made,  such  other  information  or
representations  must not be relied upon as having been authorized by any of the
Trust,  the  Funds or FDI.  The  Prospectus  and this  Statement  of  Additional
Information  do not constitute an offer by any Fund or by FDI to sell or solicit
any offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is  unlawful  for the Fund or FDI to make  such  offer in such
jurisdictions. 

FINANCIAL STATEMENTS
 
         Attached are the audited  statement of assets and  liabilities  and the
reports  thereon of Price  Waterhouse LLP for the Equity Fund,  the  Disciplined
Equity Fund and the California Fund as of November 4, 1996. 


                                       28
<PAGE>
 

TAX AWARE EQUITY FUND
Statement of Assets and Liabilities
November 4, 1996
- ------------------------------------------------------------------------------

ASSETS

Cash                                                 $25,000
Deferred Organization Expenses                        47,567
                                                     -------


         Total Assets                                 72,567
                                                      ------
LIABILITIES

Organization Expenses Payable                         47,567
                                                     -------


         Total Liabilities                            47,567
                                                     -------

NET ASSETS                                           $25,000
                                                     =======
Shares Outstanding (par value $0.001, unlimited
         shares authorized for each class):
         JPM Pierpont Shares                           2,500
                                                     =======

Net Asset Value, Offering and Redemption Price
          Per Share                                  $ 10.00
                                                    ========


The Accompanying Notes are an Integral Part of the Financial Statement.
 


                                       29
<PAGE>
 

TAX AWARE EQUITY FUND
Notes to Financial Statement
November 4, 1996
- ------------------------------------------------------------------------------

1.  ORGANIZATION

Tax  Aware  Equity  Fund  (the  "Fund")  is a  series  of JPM  Series  Trust,  a
Massachusetts business trust (the "Trust"). The investment objective of the Fund
is to provide high total  return while being  sensitive to the impact of capital
gains taxes on  investors'  returns.  The Trustees of the Trust have divided the
beneficial  interests in the Fund into two classes of shares (JPM  Institutional
Shares and JPM Pierpont Shares, respectively). The Trust was organized on August
15, 1996, and has been inactive  since that date except for matters  relating to
its organization and registration as an investment  company under the Investment
Company Act of 1940, as amended,  and the sale of 2,500 JPM Pierpont Shares (the
"initial shares") of the Fund to FDI Distribution  Services,  Inc.  ("FDSI"),  a
wholly owned indirect subsidiary of Boston Institutional Group, Inc.

The Fund has incurred  $47,567 in  organization  expenses based on its allocable
pro rata  share of total  organization  expenses  for the Fund and the other two
initial  series  in the  Trust.  These  costs  are  being  deferred  and will be
amortized  on a  straight-line  basis  over a period  not to exceed  five  years
beginning with the  commencement  of operations of the Fund. FDSI agrees that if
it or any direct or indirect transferee of any of the initial shares redeems any
of such shares  prior to the fifth  anniversary  of the date the Fund  commenced
operations,  FDSI will pay to the Fund an amount  equal to the number  resulting
from  multiplying  the Fund's  total  unamortized  organizational  expenses by a
fraction,  the  numerator  of which is equal to the  number  of  initial  shares
redeemed by FDSI or such transferee and the denominator of which is equal to the
number  of  such  shares  held  by  FDSI  outstanding  as of the  date  of  such
redemption,  as  long  as  the  administrative  position  of  the  staff  of the
Securities and Exchange Commission requires such reimbursement.

2.  SERVICE AGREEMENTS WITH AFFILIATES

The Trust has entered into an Investment Advisory Agreement with Morgan Guaranty
Trust Company of New York ("Morgan") to provide  investment advice and portfolio
management services to the Fund and the other series of the Trust. The Trust has
also  entered  into (i) an  Administrative  Services  Agreement  with  Morgan to
provide  administrative and related services to the Trust and (ii) a Shareholder
Servicing   Agreement  with  Morgan   pursuant  to  which  Morgan  will  provide
shareholder  servicing to shareholders of each class of the Fund. The Trust is a
party to a  Co-Administration  Agreement and  Distribution  Agreement with Funds
Distributor,  Inc. ("FDI"), a wholly owned subsidiary of FDSI, pursuant to which
FDI provides co-administration and distribution services,  respectively, for the
Trust.  The  officers of the Trust are  employees  of FDI. The Trust has entered
into a Fund Services  Agreement with Pierpont Group, Inc. to assist the Trustees
in exercising their overall  responsibilities  for the affairs of the Trust. The
Trustees of the Trust represent all the existing shareholders of Pierpont Group,
Inc. 


                                       30
<PAGE>










 
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Trustees of
Tax Aware Equity Fund

In our opinion,  the  accompanying  statement of assets and liabilities  present
fairly,  in all material  respects,  the financial  position of Tax Aware Equity
Fund, (one of three funds comprising JPM Series Trust,  hereafter referred to as
the  "Fund")  at  November  4,  1996,  in  conformity  with  generally  accepted
accounting  principles.  This financial  statement is the  responsibility of the
Fund's management;  our responsibility is to express an opinion on the financial
statement based on our audit. We conducted our audit of this financial statement
in accordance with generally  accepted auditing  standards which require that we
plan and  perform the audit to obtain  reasonable  assurance  about  whether the
financial  statement  is  free  of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statement,   assessing  the  accounting   principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion expressed above.


/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York  10036
November 4, 1996
 
                                       31


<PAGE>
 

TAX AWARE DISCIPLINED EQUITY FUND
Statement of Assets and Liabilities
November 4, 1996
- ------------------------------------------------------------------------------

ASSETS

Cash                                                 $50,000
Deferred Organization Expenses                        47,567
                                                    --------


         Total Assets                                 97,567
                                                     -------

LIABILITIES

Organization Expenses Payable                         47,567
                                                     -------


         Total Liabilities                            47,567
                                                     -------

NET ASSETS                                           $50,000
                                                     =======
Shares Outstanding (par value $0.001, unlimited
         shares authorized for each class):
         JPM Pierpont Shares                           5,000
                                                     =======

Net Asset Value, Offering and Redemption Price
          Per Share                                  $ 10.00
                                                     =======
 
 
The Accompanying Notes are an Integral Part of the Financial Statement.
 


                                       32
<PAGE>
 

TAX AWARE DISCIPLINED EQUITY FUND
Notes to Financial Statement
November 4, 1996
- ------------------------------------------------------------------------------

1.  ORGANIZATION

Tax Aware Disciplined  Equity Fund (the "Fund") is a series of JPM Series Trust,
a Massachusetts  business trust (the "Trust").  The investment  objective of the
Fund is to provide  high total  return  while being  sensitive  to the impact of
capital  gains  taxes on  investors'  returns.  The  Trustees  of the Trust have
divided  the  beneficial  interests  in the Fund into two classes of shares (JPM
Institutional  Shares  and JPM  Pierpont  Shares,  respectively).  The Trust was
organized on August 15, 1996,  and has been inactive  since that date except for
matters relating to its  organization and registration as an investment  company
under the Investment Company Act of 1940, as amended,  and the sale of 5,000 JPM
Pierpont Shares (the "initial shares") of the Fund to FDI Distribution Services,
Inc. ("FDSI"), a wholly owned indirect subsidiary of Boston Institutional Group,
Inc.

The Fund has incurred  $47,567 in  organization  expenses based on its allocable
pro rata  share of total  organization  expenses  for the Fund and the other two
initial  series  in the  Trust.  These  costs  are  being  deferred  and will be
amortized  on a  straight-line  basis  over a period  not to exceed  five  years
beginning with the  commencement  of operations of the Fund. FDSI agrees that if
it or any direct or indirect transferee of any of the initial shares redeems any
of such shares  prior to the fifth  anniversary  of the date the Fund  commenced
operations,  FDSI will pay to the Fund an amount  equal to the number  resulting
from  multiplying  the Fund's  total  unamortized  organizational  expenses by a
fraction,  the  numerator  of which is equal to the  number  of  initial  shares
redeemed by FDSI or such transferee and the denominator of which is equal to the
number  of  such  shares  held  by  FDSI  outstanding  as of the  date  of  such
redemption,  as  long  as  the  administrative  position  of  the  staff  of the
Securities and Exchange Commission requires such reimbursement.

2.  SERVICE AGREEMENTS WITH AFFILIATES

The Trust has entered into an Investment Advisory Agreement with Morgan Guaranty
Trust Company of New York ("Morgan") to provide  investment advice and portfolio
management services to the Fund and the other series of the Trust. The Trust has
also  entered  into (i) an  Administrative  Services  Agreement  with  Morgan to
provide  administrative and related services to the Trust and (ii) a Shareholder
Servicing   Agreement  with  Morgan   pursuant  to  which  Morgan  will  provide
shareholder  servicing to shareholders of each class of the Fund. The Trust is a
party to a  Co-Administration  Agreement and  Distribution  Agreement with Funds
Distributor,  Inc. ("FDI"), a wholly owned subsidiary of FDSI, pursuant to which
FDI provides co-administration and distribution services,  respectively, for the
Trust.  The  officers of the Trust are  employees  of FDI. The Trust has entered
into a Fund Services  Agreement with Pierpont Group, Inc. to assist the Trustees
in exercising their overall  responsibilities  for the affairs of the Trust. The
Trustees of the Trust represent all the existing shareholders of Pierpont Group,
Inc. 


                                       33
<PAGE>










 
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Trustees of
Tax Aware Disciplined Equity Fund

In our opinion,  the  accompanying  statement of assets and liabilities  present
fairly,  in  all  material  respects,   the  financial  position  of  Tax  Aware
Disciplined  Equity  Fund,  (one of three  funds  comprising  JPM Series  Trust,
hereafter  referred to as the "Fund") at November 4, 1996,  in  conformity  with
generally  accepted  accounting  principles.  This  financial  statement  is the
responsibility  of the Fund's  management;  our  responsibility is to express an
opinion on the financial statement based on our audit. We conducted our audit of
this  financial   statement  in  accordance  with  generally  accepted  auditing
standards which require that we plan and perform the audit to obtain  reasonable
assurance   about   whether  the   financial   statement  is  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement  presentation.  We believe that our audit provides a
reasonable basis for our opinion expressed above.


/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York  10036
November 4, 1996
 


<PAGE>

 
CALIFORNIA BOND FUND
Statement of Assets and Liabilities
November 4, 1996
- ------------------------------------------------------------------------------

ASSETS

Cash                                                 $25,000
Deferred Organization Expenses                        47,567
                                                    --------


         Total Assets                                 72,567
                                                     -------

LIABILITIES

Organization Expenses Payable                         47,567
                                                     -------


         Total Liabilities                            47,567
                                                     -------

NET ASSETS                                           $25,000
                                                     =======
Shares Outstanding (par value $0.001, unlimited
         shares authorized for each class):
         JPM Institutional Shares                      2,500
                                                     =======

Net Asset Value, Offering and Redemption Price
          Per Share                                  $ 10.00
                                                     =======


The Accompanying Notes are an Integral Part of the Financial Statement.
 


                                       35
<PAGE>
 

CALIFORNIA BOND FUND
Notes to Financial Statement
November 4, 1996
- ------------------------------------------------------------------------------

1.  ORGANIZATION

California  Bond  Fund  (the  "Fund")  is  a  series  of  JPM  Series  Trust,  a
Massachusetts business trust (the "Trust"). The investment objective of the Fund
is to provide a high after tax total return to investors  subject to  California
personal income taxes consistent with moderate risk of capital.  The Trustees of
the Trust have divided the beneficial  interests in the Fund into two classes of
shares (JPM  Institutional  Shares and JPM Pierpont Shares,  respectively).  The
Trust was organized on August 15, 1996,  and has been  inactive  since that date
except  for  matters  relating  to  its  organization  and  registration  as  an
investment company under the Investment Company Act of 1940, as amended, and the
sale of 2,500 JPM Institutional Shares (the "initial shares") of the Fund to FDI
Distribution  Services,  Inc.  ("FDSI"),  a wholly owned indirect  subsidiary of
Boston Institutional Group, Inc.

The Fund has incurred  $47,567 in  organization  expenses based on its allocable
pro rata  share of total  organization  expenses  for the Fund and the other two
initial  series  in the  Trust.  These  costs  are  being  deferred  and will be
amortized  on a  straight-line  basis  over a period  not to exceed  five  years
beginning with the  commencement  of operations of the Fund. FDSI agrees that if
it or any direct or indirect transferee of any of the initial shares redeems any
of such shares  prior to the fifth  anniversary  of the date the Fund  commenced
operations,  FDSI will pay to the Fund an amount  equal to the number  resulting
from  multiplying  the Fund's  total  unamortized  organizational  expenses by a
fraction,  the  numerator  of which is equal to the  number  of  initial  shares
redeemed by FDSI or such transferee and the denominator of which is equal to the
number  of  such  shares  held  by  FDSI  outstanding  as of the  date  of  such
redemption,  as  long  as  the  administrative  position  of  the  staff  of the
Securities and Exchange Commission requires such reimbursement.

2.  SERVICE AGREEMENTS WITH AFFILIATES

The Trust has entered into an Investment Advisory Agreement with Morgan Guaranty
Trust Company of New York ("Morgan") to provide  investment advice and portfolio
management services to the Fund and the other series of the Trust. The Trust has
also  entered  into (i) an  Administrative  Services  Agreement  with  Morgan to
provide  administrative and related services to the Trust and (ii) a Shareholder
Servicing   Agreement  with  Morgan   pursuant  to  which  Morgan  will  provide
shareholder  servicing to shareholders of each class of the Fund. The Trust is a
party to a  Co-Administration  Agreement and  Distribution  Agreement with Funds
Distributor,  Inc. ("FDI"), a wholly owned subsidiary of FDSI, pursuant to which
FDI provides co-administration and distribution services,  respectively, for the
Trust.  The  officers of the Trust are  employees  of FDI. The Trust has entered
into a Fund Services  Agreement with Pierpont Group, Inc. to assist the Trustees
in exercising their overall  responsibilities  for the affairs of the Trust. The
Trustees of the Trust represent all the existing shareholders of Pierpont Group,
Inc.
 


                                       36
<PAGE>










 
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Trustees of
California Bond Fund

In our opinion,  the  accompanying  statement of assets and liabilities  present
fairly,  in all material  respects,  the financial  position of California  Bond
Fund, (one of three funds comprising JPM Series Trust,  hereafter referred to as
the  "Fund")  at  November  4,  1996,  in  conformity  with  generally  accepted
accounting  principles.  This financial  statement is the  responsibility of the
Fund's management;  our responsibility is to express an opinion on the financial
statement based on our audit. We conducted our audit of this financial statement
in accordance with generally  accepted auditing  standards which require that we
plan and  perform the audit to obtain  reasonable  assurance  about  whether the
financial  statement  is  free  of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statement,   assessing  the  accounting   principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion expressed above.


/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York  10036
November 4, 1996
 


                                       37
<PAGE>


APPENDIX A
DESCRIPTION OF SECURITY RATINGS

STANDARD & POOR'S

CORPORATE AND MUNICIPAL BONDS

AAA - Debt rated AAA has the highest ratings  assigned by Standard & Poor's to a
debt  obligation.  Capacity to pay  interest  and repay  principal  is extremely
strong.

AA - Debt  rated  AA has a very  strong  capacity  to  pay  interest  and  repay
principal and differs from the highest rated issues only in a small degree.

A - Debt  rated A has a strong  capacity  to pay  interest  and repay  principal
although it is somewhat more  susceptible  to the adverse  effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate  capacity to pay interest
and  repay  principal.   Whereas  it  normally  exhibits   adequate   protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened  capacity to pay interest and repay  principal  for
debt in this category than for debt in higher rated categories.
 
BB-B - Debt rated BB and B is regarded, on balance, as predominantly speculative
with  respect to the issuer's  capacity to pay  interest and repay  principal in
accordance with the terms of the  obligation.  BB indicates the lowest degree of
speculation.  While  such debt will  likely  have some  quality  and  protective
characteristics,  these are  outweighed  by large  uncertainties  or major  risk
exposures to adverse conditions.
 
COMMERCIAL PAPER, INCLUDING TAX EXEMPT

A - Issues  assigned  this  highest  rating are  regarded as having the greatest
capacity for timely  payment.  Issues in this category are further  refined with
the designations 1, 2, and 3 to indicate the relative degree of safety.

A-1 - This  designation  indicates  that the degree of safety  regarding  timely
payment is very strong.

SHORT-TERM TAX-EXEMPT NOTES

SP-1 - The  short-term  tax-exempt  note  rating of SP-1 is the  highest  rating
assigned by  Standard & Poor's and has a very  strong or strong  capacity to pay
principal and interest.  Those issues determined to possess  overwhelming safety
characteristics are given a "plus" (+) designation.

SP-2 - The short-term tax-exempt note rating of SP-2 has a satisfactory capacity
to pay principal and interest.

MOODY'S

CORPORATE AND MUNICIPAL BONDS

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest  degree of investment  risk and are generally  referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally  stable
margin and principal is secure. While the various protective elements are likely
to change,  such changes as can be  visualized  are most  unlikely to impair the
fundamentally strong position of such issues.


                                      A-1
<PAGE>
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long term risks appear somewhat larger than in Aa securities.

A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade  obligations.  Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds  which are rated Baa are  considered  as medium  grade  obligations,
i.e., they are neither highly  protected nor poorly secured.  Interest  payments
and principal  security appear  adequate for the present but certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics  and in
fact have speculative characteristics as well.

Ba - Bonds  which are rated Ba are judged to have  speculative  elements;  their
future cannot be considered as  well-assured.  Often the  protection of interest
and principal  payments may be very moderate,  and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.
 
B - Bonds  which are  rated B  generally  lack  characteristics  of a  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small. 

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

Prime-1 - Issuers  rated  Prime-1 (or related  supporting  institutions)  have a
superior capacity for repayment of short-term  promissory  obligations.  Prime-1
repayment capacity will normally be evidenced by the following characteristics:
 
- - Leading market positions in well established industries.
- - High rates of return on funds employed.
- -  Conservative  capitalization  structures  with moderate  reliance on debt and
ample asset protection.  - Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.  - Well established access to a range
of financial markets and assured sources of alternate liquidity. 

SHORT-TERM TAX EXEMPT NOTES

MIG-1 - The  short-term  tax-exempt  note  rating  MIG-1 is the  highest  rating
assigned by Moody's  for notes  judged to be the best  quality.  Notes with this
rating enjoy strong  protection from  established  cash flows of funds for their
servicing  or  from  established  and  broad-based  access  to  the  market  for
refinancing, or both.

MIG-2 - MIG-2 rated notes are of high quality but with margins of protection not
as large as MIG-1.


                                      A-2
<PAGE>


APPENDIX B

ADDITIONAL INFORMATION CONCERNING CALIFORNIA MUNICIPAL SECURITIES

         The following  information  is a summary of special  factors  affecting
investments in California Municipal Securities.  The sources of payment for such
obligations and the marketability  thereof may be affected by financial or other
difficulties  experienced  by  the  State  of  California  and  certain  of  its
municipalities  and  public  authorities.  It does not  purport to be a complete
description  and is based on information  from official  statements  relating to
securities offerings of California issuers.

ECONOMIC FACTORS
 
         FISCAL YEARS PRIOR TO 1996-97. By the close of the 1989-90 fiscal year,
California's  revenues had fallen below  projections  so that the state's budget
reserve,  the Special Fund for Economic  Uncertainties (the "Special Fund"), was
fully  depleted  by June 30,  1990.  A  recession  which had begun in  mid-1990,
combined  with higher  health and  welfare  costs  driven by the  state's  rapid
population   growth,   adversely  affected  General  Fund  revenues  and  raised
expenditures above initial budget appropriations .
 
         As a result of these factors and others,  the state confronted a period
of budget  imbalance.  Beginning  with the  1990-91  fiscal year and for several
years  thereafter,  the budget  required  multi-billion  dollar actions to bring
projected   revenues  and  expenditures   into  balance.   During  this  period,
expenditures  exceeded  revenues  in  four  out  of six  years,  and  the  state
accumulated  and  sustained a budget  deficit in the Special Fund -  approaching
$2.8 billion at its peak on June 30, 1993. 
 
         By the 1993-94 fiscal year, the accumulated deficit was too large to be
prudently  retired in one year,  and a two-year  program was  implemented.  This
program  used  revenue  anticipation  warrants to carry a portion of the deficit
over to the end of the fiscal year. 
 
         The 1994-95 Budget Act projected General Fund revenues and transfers of
$41.9 billion.  Expenditures were projected to be $40.9 billion - an increase of
$1.6 billion over the prior year. As a result of the improving economy, however,
the fiscal year  ultimately  produced  revenues and transfers of $42.7  billion,
which more than offset  expenditures  of $42.0  billion and thereby  reduced the
accumulated budget deficit. 
 
         With  strengthening  revenues and reduced  caseload growth driven by an
improving economy, the state entered the 1995-96 fiscal year budget negotiations
with the smallest  nominal "budget gap" to be closed in many years.  The 1995-96
Budget Act projected General Fund revenues and transfers of $44.1 billion, a 3.5
percent  increase from the prior year, and  expenditures  were budgeted at $43.4
billion.  In addition,  the Department of Finance  projected that after repaying
the last of the carry over budget deficit,  there would be a positive balance of
$28 million in the budget reserve as of June 30, 1996. 
 
         1996-97 FISCAL YEAR. Reflecting the belief shared by many analysts that
the California economy would remain strong, the 1996-1997 Budget Act established
a  state  budget  of  some  $63  billion.  Relying  on  the  optimistic  revenue
projections released by the Department of Finance, the Budget Act granted a $230
million tax cut to corporations  while  simultaneously  providing an increase in
funding for education and prisons.  However,  only a relatively  modest  amount,
$287 million,  was allocated to the reserve fund available for emergencies  such
as earthquakes.  The ultimate impact of these and other budgetary allocations is
impossible to predict.  Indeed, constant fluctuations in other factors affecting
the state - including  changes in welfare 


                                      B-1
<PAGE>
 
caseloads,  property tax receipts and  federal funding - will undoubtedly create
new budget challenges. 
 
         THE ORANGE  COUNTY  BANKRUPTCY.  On  December 6, 1994,  Orange  County,
California  and its  Investment  Pool (the "Pool")  filed for  bankruptcy  under
Chapter 9 of the United States Bankruptcy Code. The subsequent restructuring led
to the sale of substantially  all of the Pool's portfolio and resulted in losses
estimated  to be  approximately  $1.7 billion (or  approximately  22% of amounts
deposited by the Pool investors).  Approximately  187 California public entities
substantially  all of which are public  agencies within the county - had various
bonds, notes or other forms of indebtedness  outstanding.  In some instances the
proceeds of such indebtedness  were outstanding.  In some instances the proceeds
of such indebtedness were invested in the Pool. 
 
         In April 1996,  the county emerged from  bankruptcy  after closing on a
$900 million  recovery  bond deal.  At that time,  the county and its  financial
advisors  stated that the county had  emerged  from the  bankruptcy  without any
structural  fiscal problems and assured that the county would not slip back into
bankruptcy.  However, for many of the cities, schools and special districts that
lost money in the county portfolio,  repayment remains contingent on the outcome
of  litigation  which is  pending  against  investment  firms and other  finance
professionals.  Thus, it is  impossible to determine the ultimate  impact of the
bankruptcy and its after math of these various agencies and their claims. 

CONSTITUTIONAL, LEGISLATIVE AND OTHER FACTORS

         Certain California  constitutional  amendments,  legislative  measures,
executive orders, administrative regulations and voter initiatives could produce
the adverse effects described below, among others.
 
         REVENUE  DISTRIBUTION.  Certain California Municipal Securities held by
the California Fund may be obligations of issuers which rely in whole or in part
on  California  state  revenues for payment of these  obligations.  Property tax
revenues and a portion of the State's  General Fund surplus are  distributed  to
counties,  cities  and their  various  taxing  entities,  and the state  assumes
certain  obligations  therefore  paid out of local  funds.  Whether  and to what
extent a portion of the state's  General Fund will be  distributed in the future
to counties, cities and their various entities is unclear. 

         HEALTH CARE LEGISLATION.  Certain California  Municipal Securities held
by the  California  Fund may be  obligations  which are payable  solely from the
revenues of health care  institutions.  Certain  provisions under California law
may  adversely  affect  these  revenues  and,  consequently,  payment  on  those
California Municipal Securities.

         The federally  sponsored  Medicaid  program for health care services to
eligible welfare  beneficiaries in California is known as the Medi-Cal  program.
Historically,  the Medi-Cal  program has  provided  for a  cost-based  system of
reimbursement  for inpatient  care  furnished to Medi-Cal  beneficiaries  by any
hospital wanting to participate in the Medi-Cal program,  provided such hospital
met applicable requirements for participation.  California law now provides that
the State of California  shall  selectively  contract with  hospitals to provide
acute inpatient  services to Medi-Cal  patients.  Medi-Cal  contracts  currently
apply only to acute inpatient services. Generally, such selective contracting is
made  on  a  flat  per  diem   payment   basis  for  all  services  to  Medi-Cal
beneficiaries,  and  generally  such  payment has not  increased  in relation to
inflation,  costs or other  factors.  Other  reductions  or  limitations  may be
imposed on payment of services rendered to Medi-Cal beneficiaries in the future.


                                      B-2
<PAGE>
 
         Under this approach,  in most  geographical  areas of California,  only
those  hospitals  which  enter  into a  Medi-Cal  contract  with  the  State  of
California will be paid for non-emergency  acute inpatient  services rendered to
Medi-Cal  beneficiaries.  The state may also terminate these  contracts  without
notice under certain circumstances and is obligated to make contractual payments
only to the extent the  California  legislature  appropriates  adequate  funding
therefor. 
 
         California  enacted  legislation in 1982 that authorizes private health
plans  and  insurers  to  contract  directly  with  hospitals  for  services  to
beneficiaries on negotiated  terms. Some insurers have introduced plans known as
"preferred provider  organizations"  ("PPOs"),  which offer financial incentives
for subscribers  who use only the hospitals which contract with the plan.  Under
an exclusive provider plan, which includes most health maintenance organizations
("HMOs"),  private payors limit coverage to those services  provided by selected
hospitals.  Discounts  offered  to HMOs and PPOs may  result in  payment  to the
contracting  hospital  of less than  actual  cost,  and the  volume of  patients
directed to a hospital under an HMO or PPO contract may vary  significantly from
projections.  Often,  HMO or PPO  contracts are  enforceable  for a stated term,
regardless of provider  losses or of bankruptcy of the respective HMO or PPO. It
is expected  that  failure to execute and  maintain  such PPO and HMO  contracts
would  reduce  a  hospital's   patient  base  or  gross  revenues.   Conversely,
participation  may  maintain or increase  the  patient  base,  but may result in
reduce payment and lower the income to the contracting hospitals. 
 
         These California  Municipal Securities may also be insured by the State
of  California  pursuant to an insurance  program  implemented  by the Office of
Statewide  Health  Planning and  Development  for health  facility  construction
loans. If a default occurs on insured California Municipal Securities, the state
treasurer will issue debentures  payable out of a reserve fund established under
the insurance  program or will pay  principal  and interest on an  unaccelerated
basis from unappropriated state funds. At the request of the Office of Statewide
Health  Planning and  Development,  Arthur D. Little,  Inc.  prepared a study in
December  1983, to evaluate the adequacy of the reserve fund  established  under
the insurance program and, based on certain formulations and assumptions,  found
the reserve fund  substantially  underfunded.  In  September of 1986,  Arthur D.
Little,  Inc.  prepared an update of the study and concluded  that an additional
10% reserve be established for "multi-level" facilities.  For the balance of the
reserve fund, the update recommended maintaining the current reserve calculation
method. In March 1990,  Arthur D. Little,  Inc. prepared a further review of the
study and  recommended  that separate  reserves  continue to be established  for
"multi-level"  facilities at a reserve level consistent with those that would be
required by an insurance company. 
 
         MORTGAGES AND DEEDS.  Certain California  Municipal  Securities held by
the California Fund may be obligations  which are secured in whole or in part by
a mortgage  or deed of trust on real  property.  California  has five  principal
statutory  provisions  which  limit the  remedies  of a  creditor  secured  by a
mortgage or deed of trust.  Two statutes limit the creditor's  right to obtain a
deficiency judgment, one limitation being based on the method of foreclosure and
the other on the type of debt secured.  Under the former, a deficiency  judgment
is barred when the foreclosed mortgage or deed of trust secures certain purchase
money obligations.  Another California statute,  commonly known as the "one form
of action" rule,  requires  creditors  secured by real property to exhaust their
real property security by foreclosure  before bringing a personal action against
the  debtor.  The fourth  statutory  provision  limits any  deficiency  judgment
obtained by a creditor  secured by real  property  following a judicial  sale of
such property to the excess of the  outstanding  debt over the fair value of the
property at the time of the sale,  thus preventing the creditor from obtaining a
large  deficiency  judgment  against  the 


                                      B-3
<PAGE>
debtor as  the  result  of  low  bids at a judicial  sale.  The fifth  statutory
provision  gives the  debtor the right to redeem  the real  property  from  any 
judicial  foreclosure  sale  as  to  which   a  deficiency   judgment   may  be
ordered against the debtor.
 
         Upon the  default  of a  mortgage  or deed of  trust  with  respect  to
California real property,  the creditor's  nonjudicial  foreclosure rights under
the power of sale  contained in the mortgage or deed of trust are subject to the
constraints  imposed by California  law upon transfers of title to real property
by private  power of sale.  During the  three-month  period  beginning  with the
filing of a formal  notice of default,  the debtor is entitled to reinstate  the
mortgage  by  making  any  overdue  payments.   Under  standard  loan  servicing
procedures,  the filing of the formal notice of default does not occur unless at
least three full monthly  payments have become due and remain unpaid.  The power
of sale is exercised by posting and  publishing a notice of sale for at least 20
days after expiration of the three-month  reinstatement  period.  The debtor may
reinstate the mortgage,  in the manner described above, up to five business days
prior to the scheduled sale date.  Therefore,  the effective  minimum period for
foreclosing  on a mortgage  could be in excess of seven months after the initial
default.  Such time  delays in  collections  could  disrupt the flow of revenues
available  to an issuer  for the  payment  of debt  service  on the  outstanding
obligations  if such  defaults  occur with  respect to a  substantial  number of
mortgages or deeds of trust securing an issuer's obligations.
 
         In  addition,   a  court  could  not  find  that  there  is  sufficient
involvement  of the  issuer  in the  nonjudicial  sale of  property  securing  a
mortgage for such private sale to constitute "state action," and could hold that
the  private-right-of-sale  proceedings violate the due process  requirements of
the federal or state constitutions, consequently preventing an issuer from using
the nonjudicial foreclosure remedy described above. 
 
         Certain California Municipal Securities held by the California Fund may
be obligations which finance the acquisition of single family home mortgages for
low and moderate income mortgagors. These obligations may be payable solely from
revenues  derived  from the  home  mortgages  and are  subject  to  California's
statutory  limitations described above applicable to obligations secured by real
property.  Under  California  antideficiency  legislation,  there is no personal
recourse  against a mortgagor of a  single-family  residence  purchased with the
loan  secured by the  mortgage,  regardless  of  whether  the  creditor  chooses
judicial or nonjudicial foreclosure. 
 
         Under   California  law,   mortgage  loans  secured  by   single-family
owner-occupied  dwellings may be prepaid at any time. Prepayment charges on such
mortgage  loans may be imposed only with respect to voluntary  prepayments  made
during the first five years during the term of the  mortgage  loan and then only
if the  borrower  prepays in amount in excess of 20% of the  original  principal
amount of the mortgage loan in a 12-month period. A prepayment  charge cannot in
any event exceed six months'  advance  interest on the amount prepaid during the
12-month period in excess of 20% of the original  principal  amount of the loan.
This  limitation  could  affect the flow of revenues  available to an issuer for
debt  services on the  outstanding  debt  obligations  which  financed such home
mortgages. 
 
         PROPOSITION  13. Certain  California  Municipal  Securities held by the
California Fund may be obligations of issuers who rely in whole or in part on ad
valorem real property taxes as a source of revenue. On June 6, 1978,  California
voters approved an amendment to the California Constitution known as Proposition
13, which added  Article  XIIIA to the  California  Constitution.  The effect of
Article XIIIA was to limit ad valorem taxes on real property and to restrict the
ability of taxing entities to increase real property tax revenues. 


                                      B-4
<PAGE>
 
         Section 1 of Article XIIIA,  as amended,  limits the maximum ad valorem
tax on real  property to 1% of full cash value to be  collected  by the counties
and apportioned according to law. The 1% limitation does not apply to ad valorem
taxes or special  assessments to pay the interest and redemption  charges on (a)
any indebtedness  approved by the voters prior to July 1, 1978 or (b) any bonded
indebtedness for the acquisition or improvement of real property  approved on or
after  July 1,  1978 by  two-thirds  of the  votes  cast  by the  voters  on the
proposition.  Section 2 of Article  XIIIA defines "full cash value" to mean "the
County  Assessor's  valuation of real  property as shown on the 1975/76 tax bill
under 'full cash value' or,  thereafter,  the  appraised  value of real property
when purchased,  newly constructed,  or a change in ownership has occurred after
the 1975  assessment."  The full cash value may be adjusted  annually to reflect
inflation  at a rate not to exceed 2% per year,  or  reduction  in the  consumer
price  index or  comparable  local  data,  or reduced in the event of  declining
property value caused by damage, destruction or other factors. 
 
         Legislation enacted by the California  legislature to implement Article
XIIIA provides that  notwithstanding  any other law, local agencies may not levy
any ad valorem property tax except to pay debt service on indebtedness  approved
by the voters  prior to July 1, 1978 and that each  county will levy the maximum
tax permitted by Article XIIIA. 
 
         PROPOSITION 9. On November 6, 1979, an initiative known as "Proposition
0" or the "Gann Initiative" was approved by the California  voters,  which added
Article XIIIB to the California  Constitution.  Under Article  XIIIB,  state and
local governmental  entities have an annual  "appropriations  limit" and are not
allowed to spend certain moneys called "appropriations subject to limitation" in
an amount higher than the "appropriations  limit." Article XIIIB does not affect
the   appropriation  of  moneys  which  are  excluded  form  the  definition  of
"appropriations  subject to limitation,"  including debt service on indebtedness
existing or authorized as of January 1, 1979 or bonded indebtedness subsequently
approved by the voters. In general terms, the "appropriations limit" is required
to be based on certain 1978/79  expenditures  and is to be adjusted  annually to
reflect changes in consumer prices, population, and certain services provided by
these entities.  Article XIIIB also provides that if these entities' revenues in
any year exceed the amounts  permitted to be spent, the excess is to be returned
by revising tax rates or fee schedules over the subsequent two years. 
 
         PROPOSITION  98. On November 8, 1988,  the California  voters  approved
Proposition  98, a combined  initiative  constitutional  amendment  and  statute
called  the  "Classroom  Instructional   Improvement  and  Accountability  Act."
Proposition  98 changed state funding of public  education  below the university
level  and  the  operation  of the  state  appropriations  limit,  primarily  by
guaranteeing  K-14  schools a minimum  share of  General  Fund  revenues.  Under
Proposition 98 (modified by Proposition  111 as discussed  below),  K-14 schools
are  guaranteed  the greater of (a) in general,  a fixed percent of General Fund
revenues  ("Test 1"), (b) the amount  appropriated  to K-14 schools in the prior
year,  adjusted for changes in the cost of living  (measured as in Article XIIIB
by reference to state per capita personal income) and enrollment  ("Test 2"), or
(c) a third test,  which would  replace  Test 2 in any year when the  percentage
growth in per capita  General Fund revenues from the prior year plus one half of
one percent is less than the  percentage  growth in state per  capital  personal
income ("Test 3").  Under Test 3, schools would receive the amount  appropriated
in the prior year  adjusted for changes in  enrollment  and per capital  General
Fund revenues,  plus an additional small adjustment factor. If Test 3 is used in
any year,  the  difference  between Test 3 and Test 2 would become a "credit" to
schools  which would be the basis of  payments  in future  years when per capita
general fund revenue growth exceeds per capital personal income growth. 


                                      B-5
<PAGE>
 
         Proposition  98 permits the  legislature - by  two-thirds  vote of both
houses,  with the Governor's  concurrence - to suspend the K-14 schools' minimum
funding formula for a one-year period.  Proposition 98 also contains  provisions
transferring  certain state tax revenues in excess of the Article XIIIB limit to
K-14 schools. 
 
         During the  recession  years of the early 1990s,  General Fund revenues
for several  years were less than  originally  projected,  so that the  original
Proposition  98  appropriations  turned  out  to  be  higher  than  the  minimum
percentage provided in the law. The legislature  responded to these developments
by designating the "extra"  Proposition 98 payments in one year as a "loan" from
future years'  Proposition  98  entitlements  and also intended that the "extra"
payments  would not be included  in the  Proposition  98 "base" for  calculating
future years' entitlements.  In 1992, a lawsuit was filed,  California Teachers'
Association v. Gould,  which challenged the validity of these off-budget  loans.
During the course of this  litigation,  a trial court  determined that almost $2
billion  in  "loans"  which had been  provided  to school  districts  during the
recession  violated  the   constitutional   protection  of  support  for  public
education.  A settlement was reached on April 12, 1996 which ensures that future
school finding will not be in jeopardy over repayment of these so-called loans.
 
 
         PROPOSITION 111. On June 30, 1989, the California  legislature  enacted
Senate  Constitutional  Amendment 1, a proposed  modification  of the California
Constitution to alter the spending limit and the education funding provisions of
Proposition 98. Senate  Constitutional  Amendment 1 - on the June 5, 1990 ballot
as Proposition 111 - was approved by the voters and took effect on July 1, 1990.
Among a number of important  provisions,  Proposition 111 recalculated  spending
limits for the state and for local governments, allowed greater annual increases
in the limits, allowed the averaging of two years' tax revenues before requiring
action  regarding  excess  tax  revenues,  reduced  the  amount  of the  funding
guarantee  in  recession  years  for  school  districts  and  community  college
districts (but with a floor of 40.9 percent of state General Fund tax revenues),
removed the provision of Proposition 98 which included excess moneys transferred
to school districts and community  college districts in the base calculation for
the next  year,  limited  the amount of state  school  districts  and  community
college districts in the base calculation for the next year,  limited the amount
of state  tax  revenue  over the  limit  which  would be  transferred  to school
districts and community college districts, and exempted increased gasoline taxes
and  truck  weight  fees  from the  state  appropriations  limit.  Additionally,
Proposition 111 exempted from the state appropriations limit funding for capital
outlays. 

         PROPOSITION  62. On November  4, 1986,  California  voters  approved an
initiative  statute  known  a  Proposition  62.  This  initiative  provided  the
following:

         1.     Requires  that any tax for general governmental purposes imposed
by  local  governments  be  approved  by  resolution or ordinance adopted  by  a
two-thirds vote of the governmental entity's legislative body and by a  majority
vote of the electorate of the governmental entity;

         2.     Requires that any special tax (defined as taxes levied for other
than general governmental purposes) imposed by  a local  governmental entity  be
approved by a two-thirds vote of the voters within that jurisdiction;
 
         3.     Restricts the use of revenues from a special tax to the purposes
or for the service for which the special tax was imposed. 

         4.     Prohibits the imposition of ad valorem taxes on real property by
local governmental entities except as permitted by Article XIIA;


                                      B-6
<PAGE>
         5.     Prohibits the imposition of transaction taxes and sales taxes on
the sale of real property by local governments;
 
         6.     Requires  that any tax imposed by a local government on or after
August 1, 1985 be ratified by a majority vote of the electorate within two years
of the adoption of the initiative; 

         7. Requires that, in the event a local  government fails to comply with
the provision of this measure, a reduction in the amount of property tax revenue
allocated  to such local  government  occurs in an amount  equal to the revenues
received  by such  entity  attributable  to the tax levied in  violation  of the
initiative; and
 
         8.     Permits these provisions to be amended exclusively by the voters
of the State of California. 
 
         In  September  1988,  the  California   Court  of  Appeal  in  City  of
WESTMINSTER  V.  COUNTY OF  ORANGE,  204  Cal.App.  3d 623,  215  Cal.Rptr.  511
(Cal.Ct.App.  1988), held that Proposition 62 is  unconstitutional to the extent
that it requires a general tax by a general law city, enacted on or after August
1, 1985 and prior to the  effective  date of  Proposition  62, to be  subject to
approval  by  a  majority  of  voters.   The  court  held  that  the  California
Constitution  prohibits the imposition of a requirement  that local tax measures
be  submitted  to the  electorate  by either  referendum  or  initiative.  It is
impossible to predict the impact of this decision on charter cities,  on special
taxes or on new taxes imposed after the effective  date of  Proposition  62. The
California  Court of Appeal in CITY OF WOODLAKE V. LOGAN,  (1991) 230 Cal.App.3d
1058,  subsequently  held that  Proposition  62's popular vote  requirements for
future  local  taxes  also  provided  for  an  unconstitutional  referenda.  The
California Supreme Court declined to review bote the City of Westminster and the
City of Woodlake decisions. 
 
         In SANTA CLARA LOCAL TRANSPORTATION  AUTHORITY V. GUARDINO,  (Sept. 28,
1995) Cal.4th 220,  reh'g denied,  modified (Dec. 14, 1995) 12 Cal.4th 344e, the
California  Supreme  Court  upheld the  constitutionality  of  Proposition  62's
popular vote  requirements for future taxes and specifically  disapproved of the
City of  Woodlake  decision  as  erroneous.  The  court  did not  determine  the
correctness  of the CITY OF  WESTMINSTER  decision,  because that case  appeared
distinguishable,  was not relied on by the  parties in  GUARDINO,  and  involved
taxes not likely to still be at issue. It is impossible to predict the impact of
the court's  decision on charter  cities or on taxes  imposed in reliance on the
CITY OF WOODLAKE case. 
 
         Senate Bill 1590 (O'Connell),  introduced February 16, 1996, would make
the GUARDINO  decision  inapplicable to any tax first imposed or increased by an
ordinance or resolution  adopted before December 14, 1995. The California Senate
passed the bill on May 16, 1996,  and it is currently  pending in the California
State  Assembly.  It is  not  clear  whether  the  bill,  if  enacted  would  be
constitutional  as a non-voted  amendment  to  Proposition  62 or as a non-voted
change to Proposition 62's operative date. 
 
         The  voters  will be  presented  with a new  initiative  constitutional
amendment on the November 1996 ballot. The Right to Vote on Taxes Act, sponsored
by the Howard Jarvis Taxpayers  Association,  seeks to strengthen Proposition 62
by  requiring  majority  voter  approval  for general  taxes,  two-thirds  voter
approval for special taxes  (including  taxes imposed for specific  purposes but
placed in the General  Fund),  voter  approval of existing  local taxes  enacted
after January 1, 1995, and placing other  restrictions on fees and  assessments.
As a  constitutional  amendment,  the provisions  would clearly apply to charter
cities. 


                                      B-7
<PAGE>
 
         Another initiative on the November 1996 ballot, a statutory  initiative
sponsored by the California Tax Reform Association, would reimpose the temporary
10 and 11 percent tax brackets and use the revenues from the increase to replace
a portion of the property tax revenue shifted from cities,  counties and special
districts to schools on an ongoing basis since 1992. 
 
         PROPOSITION  87.  On  November  8,  1988,  California  voters  approved
Proposition 87.  Proposition 87 amended Article XVI Section 16 of the California
Constitution by authorizing the California legislature to prohibit redevelopment
agencies  from  receiving  any of the property  tax revenue  raised by increased
property  tax rates  levied to repay bonded  indebtedness  of local  governments
which is approved by voters on or after January 1, 1989. 

SAI5.WPF



























                                      B-8


<PAGE>

                                     PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements:

The following financial statements are included in Part A:

Not applicable.

The following financial statements are included in Part B:
 
Tax Aware Equity Fund:  Statement of Assets and Liabilities at November 4,
1996
Report of Independent Accountants

Tax Aware Disciplined Equity Fund:  Statement of Assets and Liabilities at
November 4, 1996
Report of Independent Accountants

California Bond Fund:  Statement of Assets and Liabilities at November 4, 1996
Report of Independent Accountants 

(b) Exhibits
 
1    Declaration of Trust.(1) 
 
1(a) Amendment No. 1 to Declaration of Trust, Amended and Restated
     Establishment and Designation of Series and Classes of Shares.(2) 
 
2    Restated By-Laws.(2) 
 
5    Form of Investment Advisory Agreement between Registrant and Morgan
     Guaranty Trust Company of New York ("Morgan").(2) 
 
6    Form of Distribution Agreement between Registrant and Funds Distributor,
     Inc. ("FDI").(2) 
 
8    Form of Custodian Contract between Registrant and State Street Bank and
     Trust Company ("State Street").(2) 
 
9(a) Form of Co-Administration  Agreement between Registrant and FDI.(2) 
 
9(b) Form of Administrative Services Agreement between Registrant and
     Morgan.(2) 
 
9(c) Form of Transfer Agency and Service Agreement between Registrant and
     State Street.(2) 
 
9(d) Form of Shareholder Servicing Agreement between Registrant and
     Morgan.(2) 
 
11   Consent of independent accountants.(2) 
 
13   Purchase agreement with respect to Registrant's initial shares.(2) 
 
16   Schedule for computation of performance quotations.(2) 
 
17   Financial data schedules.(2) 
 
19   Powers of attorney.(2) 
- ------------------
 
(1) Incorporated herein from Registrant's registration statement on
    Form N-1A as filed on August 29, 1996 (Accession No. 0000912057-96-
    019242).
(2) Filed herewith. 

<PAGE>


ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

Not applicable.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

Title of Class:  Shares of Beneficial Interest (par value $0.001)
 
As of November 4, 1996

Tax Aware Equity Fund:  JPM Pierpont Shares:              1
Tax Aware Disciplined Equity Fund:  JPM Pierpont Shares:  1
California Bond Fund:  JPM Institutional Shares:          1
 
ITEM 27. INDEMNIFICATION.

Reference  is made to  Section  5.3 of  Registrant's  Declaration  of Trust  and
Section 5 of Registrant's Distribution Agreement.

Registrant,  its Trustees and officers are insured against  certain  expenses in
connection with the defense of claims, demands,  actions, suits, or proceedings,
and certain liabilities that might be imposed as a result of such actions, suits
or proceedings.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933,  as amended (the "1933 Act"),  may be  permitted to  directors,  trustees,
officers and controlling persons of the Registrant and the principal underwriter
pursuant to the  foregoing  provisions  or otherwise,  the  Registrant  has been
advised that in the opinion of the SEC such  indemnification  is against  public
policy as expressed  in the 1933 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 director,  trustee,
officer,  or controlling person of the Registrant and the principal  underwriter
in connection with the successful defense of any action, suite or proceeding) is
asserted  against  the  Registrant  by  such  director,   trustee,   officer  or
controlling person or principal  underwriter in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy  as  expressed  in the  1933  Act  and  will  be  governed  by the  final
adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.


<PAGE>

     Morgan is a New York trust company which is a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated. Morgan conducts a general banking and trust
business.

     To the knowledge of the Registrant, none of the directors, except those set
forth below, or executive  officers of Morgan is or has been during the past two
fiscal years engaged in any other business,  profession,  vocation or employment
of a substantial  nature,  except that certain  officers and directors of Morgan
also hold various  positions with, and engage in business for, J.P. Morgan & Co.
Incorporated,  which owns all the outstanding  stock of Morgan.  Set forth below
are the names, addresses,  and principal business of each director of Morgan who
is  engaged  in  another  business,  profession,  vocation  or  employment  of a
substantial nature.

     Riley P. Bechtel: Chairman and Chief Executive Officer, Bechtel Group,
Inc.  (architectural design and construction).  His address is Bechtel Group,
Inc., P.O. Box 193965, San Francisco, CA 94119-3965.

     Martin Feldstein: President and Chief Executive Officer, National Bureau
of Economic Research, Inc.(national research institution). His address is
National Bureau of Economic Research, Inc., 1050 Massachusetts Avenue,
Cambridge, MA 02138-5398.

     Hanna H. Gray: President Emeritus, The University of Chicago (academic
institution). Her address is Department of History, The University of Chicago,
1126 East 59th Street, Chicago, IL 60637.

     James R. Houghton: Retired Chairman, Corning Incorporated (glass
products).  His address is R.D.#2 Spencer Hill Road, Corning, NY 14830.

     James L. Ketelsen: Retired Chairman and Chief Executive Officer, Tenneco
Inc. (oil, pipe-lines, and manufacturing). His address is Tenneco, Inc., P.O.
Box 2511, Houston, TX 77252-2511.
 
 
     Lee R. Raymond: Chairman and Chief Executive Officer, Exxon Corporation
(oil, natural gas, and other petroleum products). His address is Exxon
Corporation, 5959 Las Colinas Boulevard, Irving, TX 75039-2298.

     Richard D. Simmons: Former President, The Washington Post Company and
International Herald Tribune (newspapers). His address is P.O. Box 242,
Sperryville, VA 22740.

     Douglas C. Yearley: Chairman, President and Chief Executive Officer,
Phelps Dodge Corporation (chemicals). His address is Phelps Dodge Corporation,
2600 N. Central Avenue, Phoenix, AZ 85004-3014.

<PAGE>

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) FDI, located at 60 State Street, Suite 1300, Boston, Massachusetts 02109, is
the  principal  underwriter  of the  Registrant's  shares.  FDI is an indirectly
wholly owned subsidiary of Boston  Institutional Group, Inc., a holding company,
all  of  whose  outstanding  shares  are  owned  by  key  employees.  FDI  is  a
broker-dealer registered under the Securities Exchange Act of 1934, as amended.

FDI acts as principal  underwriter of the following  investment  companies other
than the Registrant:

BJB Investment Funds
Foreign Fund, Inc.
Fremont Mutual Funds
H.T. Insight Funds, Inc.
The Harris Insight Funds Trust
LKCM Fund
The Munder Funds, Inc.
The Munder Funds Trust
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
Skyline Funds
St. Clair Funds, Inc.
Waterhouse Investors Cash Management Fund, Inc.
 
The JPM Pierpont Funds
The JPM Institutional Funds
 
FDI does not act as depositor or investment adviser of any investment companies.

(b) The  following  is a list of  officers,  directors  and partners of FDI. The
principal address of all officers and directors is 60 State Street,  Suite 1300,
Boston, Massachusetts 02109.

Name; Positions and Offices with Underwriter; Position and Offices with
Registrant:

Marie E. Connolly; Director, President and Chief Executive Officer; Vice
President and Assistant Treasurer

Richard W. Ingram; Senior Vice President; President and Treasurer

John E. Pelletier; Senior Vice President and General Counsel; Vice President
and Secretary

Donald R. Roberson; Senior Vice President; None

John F. Tower III; Senior Vice President, Chief Financial Officer and
Treasurer; Vice President and Assistant Treasurer

Rui M. Moura; First Vice President; None

<PAGE>

Bernard A. Whalen; First Vice President; None

John W. Gomez; Chairman and Director; None

William J. Nutt; Director; None

The  information  required  by this Item 29 with  respect to each  director  and
officer of FDI is  incorporated  herein by  reference  to  Schedule A of Form BD
filed by FDI  pursuant  to the  Securities  Exchange  Act of 1934  (SEC File No.
20518).

(c) Not applicable.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

All  accounts,  books and other  documents  required to be maintained by Section
31(a) of the  Investment  Company Act of 1940, as amended (the "1940 Act"),  and
the Rules thereunder will be maintained at the offices of:
 
Morgan  Guaranty  Trust Company of New York: 60 Wall Street,  New York, New York
10260-0060,  9 West 57th Street,  New York,  New York 10019 or 522 Fifth Avenue,
New York,  New York 10036  (records  relating  to its  functions  as  investment
advisor, shareholder servicing agent and administrative services agent).
 
State Street Bank and Trust Company:  1776 Heritage Drive, North Quincy,
Massachusetts 02171 (records relating to its functions as custodian, transfer
agent and dividend disbursing agent).

Funds Distributor, Inc.:  60 State Street, Suite 1300, Boston, Massachusetts
02109 (records relating to its functions as distributor and co-administrator).
 
Pierpont Group, Inc.:  461 Fifth Avenue, New York, New York 10017 (records
relating to its assisting the Trustees in carrying out their duties in
supervising the Registrant's affairs). 

ITEM 31. MANAGEMENT SERVICES.

Not applicable.

ITEM 32. UNDERTAKINGS.

(a)  If the  information  called for by Item 5A of Form N-1A is contained in the
     latest annual report to  shareholders,  the  Registrant  shall furnish each
     person to whom a prospectus  is delivered  with a copy of the  Registrant's
     latest annual report to shareholders upon request and without charge.

(b)  The  Registrant  undertakes  to  file  a  post-effective  amendment,  using
     financials which need not be certified, within four to six months following
     the  commencement  of  public  investment  operations  of  each  Fund.  The
     financial  statements  included in such amendment will be as of and for the
     time period ended on a date  reasonably  close or as soon as practicable to
     the date of the filing of the amendment.

<PAGE>
 
(c)  The  Registrant  undertakes to comply with Section 16(c) of the 1940 Act as
     though such  provisions of the 1940 Act were  applicable to the Registrant,
     except that the request  referred to in the second full  paragraph  thereof
     may only be made by shareholders  who hold in the aggregate at least 10% of
     the outstanding shares of the Registrant, regardless of the net asset value
     of shares held by such requesting shareholders.
 
<PAGE>

                                   SIGNATURES

 
Pursuant to the  requirements  of the  Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration  statement
on Form  N-1A to be  signed  on its  behalf  by the  undersigned,  thereto  duly
authorized in the City of Boston and  Commonwealth of  Massachusetts on the 7th
day of November, 1996.  

JPM SERIES TRUST


By /s/RICHARD W. INGRAM
   -------------------------
   Richard W. Ingram
   President and Treasurer

 
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on November 7, 1996. 
 
/s/RICHARD W. INGRAM
- --------------------------
Richard W. Ingram
President and Treasurer
(Principal Financial
and Accounting Officer) 
 
MATTHEW HEALEY*
- --------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer

FREDERICK S. ADDY*
- --------------------------
Frederick S. Addy
Trustee

WILLIAM G. BURNS*
- --------------------------
William G. Burns
Trustee

ARTHUR C. ESCHENLAUER*
- --------------------------
Arthur C. Eschenlauer
Trustee

MICHAEL P. MALLARDI*
- --------------------------
Michael P. Mallardi
Trustee


*By /s/RICHARD W. INGRAM
    --------------------------
    Richard W. Ingram,
    as attorney-in-fact pursuant to a power of attorney filed herewith. 

<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT NO.         DESCRIPTION OF EXHIBIT
 
   1(a)             Amendment No. 1 to Declaration of Trust, Amended and
                    Restated Establishment and Designation of Series and
                    Classes of Shares.

   2                Restated By-Laws.

   5                Form of Investment Advisory Agreement between Registrant
                    and Morgan Guaranty Trust Company of New York.

   6                Form of Distribution Agreement between Registrant and
                    Funds Distributor, Inc.

   8                Form of Custodian Contract between Registrant and State
                    Street Bank and Trust Company.

   9(a)             Form of Co-Administration Agreement between Registrant and
                    Funds Distributor, Inc.

   9(b)             Form of Administrative Services Agreement between
                    Registrant and Morgan Guaranty Trust Company of New York.

   9(c)             Form of Transfer Agency and Service Agreement between
                    Registrant and State Street Bank and Trust Company.

   9(d)             Form of Shareholder Servicing Agreement with Morgan
                    Guaranty Trust Company of New York.

   11               Consent of independent accountants.

   13               Purchase agreement with respect to Registrant's initial
                    shares.

   16               Schedule for computation of performance quotations.

   17               Financial data schedules.

   19               Powers of attorney.
 


                                                     Exhibit 1(a)


JPMSDT2.DOC
                                                                 Appendix I

[RECEIVED OCT 25 1996 SECRETARY OF THE COMMONWEALTH CORPORATIONS DIVISION]
[City of Boston Office of the City Clerk Received OCT 25 1996 City Clerk]

                                JPM SERIES TRUST
                     AMENDMENT NO. 1 TO DECLARATION OF TRUST

                     Amended and Restated Establishment and
                 Designation of Series and Classes of Shares of
                Beneficial Interest (par value $0.001 per share)


         Pursuant to Sections 6.9 and 9.3 of the Declaration of Trust, dated as
of August 15, 1996 (the "Declaration of Trust"), of JPM Series Trust (the
"Trust"), the Trustees of the Trust hereby amend and restate the Establishment
and Designation of Series and Classes appended to the Declaration of Trust to
change the names of Tax Aware Active Equity Fund and Tax Aware Research Enhanced
Index Fund, two of the three initial series of Shares (as defined in the
Declaration of Trust) (each a "Fund" and collectively the "Funds") of the Trust.

         1.  The Funds shall be renamed and/or redesignated as follows:

                  Tax Aware Equity Fund
                  Tax Aware Disciplined Equity Fund
                  California Bond Fund

         Each Fund and, as applicable, each class into which the Shares of each
Fund are divided shall have the following special and relative rights:

         2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933. Each Share of a Fund shall be redeemable,
shall be entitled to one vote for each dollar of net asset value (or a
proportionate fractional vote in respect of a fractional dollar amount) on
matters on which Shares of the Fund shall be entitled to vote, shall represent a
pro rata beneficial interest in the assets allocated or belonging to the Fund,
and shall be entitled to receive its pro rata share of the net assets of the
Fund upon liquidation of the Fund, all as provided in Section 6.9 of the
Declaration of Trust. The proceeds of sales of Shares of a Fund, together with
any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to that Fund, unless otherwise required by law.

         3. Tax Aware Equity Fund, Tax Aware Disciplined Equity Fund and
California Bond Fund shall each be divided into two classes of Shares designated
"JPM Pierpont Shares" and "JPM Institutional Shares", respectively.

         4.  Shares of each class shall be entitled to all the rights and
preferences accorded to Shares under the Declaration of Trust.

         5.  The number of Shares of each class designated hereby shall be
unlimited.


<PAGE>


         6. Shareholders of each class shall vote separately on any matter to
the extent required by, and any matter shall be deemed to have been effectively
acted upon with respect to that class as provided in, Rule 18f-2 or Rule 18f-3,
as from time to time in effect, under the Investment Company Act of 1940, as
amended (the 1940 Act ), or any successor rule, and by the Declaration of Trust.
Shareholders of any class may vote together with shareholders of any other class
on any matter for which the interests of the classes do not materially differ,
and shareholders of all classes of all Funds may vote together on Trust-wide
matters.

         7. The Trust's assets and liabilities shall be allocated among the
Funds and the classes thereof as set forth in Section 6.9 of the Declaration of
Trust.

         8. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses,
to change the designation of any Fund or class previously, now or hereafter
created, or otherwise to change the special and relative rights of any Fund or
class or any such other series of Shares or class thereof.

         IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 9th day of October, 1996. This instrument may be executed by the Trustees on
separate counterparts but shall be effective only when signed by a majority of
the Trustees.


                                                  /s/ Christopher J. Kelley
                                                      Christopher J. Kelley

                                                  /s/ Richard W. Ingram
                                                      Richard W. Ingram

                                                  /s/ John E. Pelletier
                                                      John E. Pelletier

JPMSDT2.DOC


                                                                   Exhibit 2

JPM345A


                          AMENDED AND RESTATED BY-LAWS
                                       OF
                     EACH MASTER TRUST LISTED ON SCHEDULE I
                                       AND
                     EACH FEEDER TRUST LISTED ON SCHEDULE II
                                       AND
                   EACH STAND ALONE TRUST LISTED ON SCHEDULE III


                                    ARTICLE I

                                   DEFINITIONS

         Each Trust  listed on Schedule I is  referred to in these  By-Laws as a
"Master Trust". Each Trust listed on Schedule II is referred to in these By-Laws
as a "Feeder  Trust".  Each Trust listed on Schedule III is referred to in these
By-Laws as a "Stand Alone Trust".

         In the case of each  Trust,  unless  otherwise  specified,  capitalized
terms have the  respective  meanings  given them in the  Declaration of Trust of
such Trust  dated as of the date set forth in  Schedule I, II or III, as amended
from time to time.  In the case of each Feeder Trust and each Stand Alone Trust,
the term "Holder" has the meaning given the term "Shareholder" in the respective
Declarations of Trust.

                                   ARTICLE II

                                     OFFICES

         Section 1.  Principal  Office.  In the case of each Master  Trust,  the
principal  office  of the  Trust  shall  be in such  place as the  Trustees  may
determine from time to time, provided that the principal office shall be outside
the  United  States  of  America  if the  Trustees  determine  that the Trust is
intended  to be operated  so that it is not  engaged in United  States  trade or
business for United  States  federal  income tax  purposes.  In the case of each
Feeder  Trust and each Stand Alone Trust,  until  changed by the  Trustees,  the
principal office of the Trust in the  Commonwealth of Massachusetts  shall be in
the City of Boston, County of Suffolk.

         Section  2.  Other  Offices.  The Trust may have  offices in such other
places  without as well as within the state of its  organization  and the United
States of America as the Trustees may from time to time determine.

                                   ARTICLE III

                                     HOLDERS

         Section 1.  Meetings of  Holders.  Meetings of Holders may be called at
any time by a majority of the  Trustees  and shall be called by any Trustee upon
written request of Holders holding,  in the aggregate,  not less than 10% of the
Interests  in the  case of each  Master  Trust or 10% of the  voting  securities
entitled to vote  thereat in the case of each Feeder  Trust and each Stand Alone
Trust, such request specifying the purpose or purposes for which such meeting is
to be called.

         Any  such  meeting  shall  be held  within  or  without  the  state  of
organization of the Trust and within, or, if applicable, in the case of a Master
Trust only without, the United States of America on such day

<PAGE>
and at such time as
the Trustees shall designate.  Holders of one third of the Interests in the case
of each  Master  Trust or one third of the voting  securities  entitled  to vote
thereat in the case of each Feeder Trust and each Stand Alone Trust,  present in
person  or by  proxy,  shall  constitute  a quorum  for the  transaction  of any
business,  except as may otherwise be required by the 1940 Act, other applicable
law, the Declaration or these By-Laws.  If a quorum is present at a meeting,  an
affirmative vote of the Holders present in person or by proxy, holding more than
50% of the  total  Interests  in the case of each  Master  Trust,  or 50% of the
voting securities  entitled to vote thereat in the case of each Feeder Trust and
each Stand Alone Trust,  present,  either in person or by proxy, at such meeting
constitutes  the action of the Holders,  unless a greater  number of affirmative
votes is required by the 1940 Act,  other  applicable  law, the  Declaration  or
these By-Laws.

         All or any one or more Holders may  participate in a meeting of Holders
by means of a conference telephone or similar communications  equipment by means
of which all persons  participating  in the  meeting  can hear each  other,  and
participation  in a  meeting  by means of such  communications  equipment  shall
constitute presence in person at such meeting.

         In the case of The Series  Portfolio  or any Feeder  Trust or any Stand
Alone  Trust,  whenever a matter is required to be voted by Holders of the Trust
in the  aggregate  under Section 9.1 and Section 9.2 of the  Declaration  of The
Series  Portfolio  or Section  6.8 and  Section  6.9 and  Section  6.9(g) of the
Declaration of the Feeder Trust and the Stand Alone Trust,  the Trust may either
hold a meeting  of  Holders of all  series,  as  defined  in Section  1.2 of the
Declaration  of The Series  Portfolio or Section 6.9 of the  Declaration  of the
Feeder Trust and the Stand Alone Trust, to vote on such matter, or hold separate
meetings  of Holders of each of the  individual  series to vote on such  matter,
provided that (i) such separate  meetings  shall be held within one year of each
other,  (ii) a quorum  consisting  of the  Holders  of one  third of the  voting
securities of the  individual  series  entitled to vote shall be present at each
such separate meeting except as may otherwise be required by the 1940 Act, other
applicable law, the  Declaration or these By-Laws and (iii) a quorum  consisting
of the Holders of one third of all voting  securities  of the Trust  entitled to
vote, except as may otherwise be required by the 1940 Act, other applicable law,
the  Declaration  or these  By-Laws,  shall be present in the  aggregate at such
separate meetings,  and the votes of Holders at all such separate meetings shall
be aggregated in order to determine if sufficient  votes have been cast for such
matter to be voted.

         Section 2.  Notice of  Meetings.  Notice of each  meeting  of  Holders,
stating  the  time,  place and  purpose  of the  meeting,  shall be given by the
Trustees by mail to each Holder, at its registered  address,  mailed at least 10
days and not more than 60 days before the meeting.  Notice of any meeting may be
waived in  writing  by any  Holder  either  before or after  such  meeting.  The
attendance of a Holder at a meeting shall  constitute a waiver of notice of such
meeting  except in the  situation  in which a Holder  attends a meeting  for the
express  purpose of objecting to the  transaction  of any business on the ground
that the  meeting was not  lawfully  called or  convened.  At any  meeting,  any
business properly before the meeting may be considered  whether or not stated in
the  notice of the  meeting.  Any  adjourned  meeting  may be held as  adjourned
without further notice.

         In the case of The  Series  Portfolio  and each  Feeder  Trust and each
Stand Alone Trust,  where separate  meetings are held for Holders of each of the
individual  series to vote on a matter required to be voted on by

                                     2
<PAGE>
Holders of the
Trust in the aggregate,  as provided in Article III, Section 1 above,  notice of
each such separate  meeting shall be provided in the manner  described  above in
this Section 2.

         Section 3. Record Date for Meetings. For the purpose of determining the
Holders who are entitled to notice of and to vote at any  meeting,  the Trustees
may from time to time fix a date, not more than 90 days prior to the date of any
meeting of Holders as a record date for the  determination  of the Persons to be
treated as Holders for such purpose.

         In the case of The  Series  Portfolio  and each  Feeder  Trust and each
Stand Alone Trust,  where separate  meetings are held for Holders of each of the
individual  series to vote on a matter required to be voted on by Holders of the
Trust in the aggregate,  as provided in Article III, Section 1 above, the record
date of each such separate  meeting shall be determined in the manner  described
above in this Section 3.

         Section 4. Voting,  Proxies,  Inspectors of Election. At any meeting of
Holders, any Holder entitled to vote thereat may vote by proxy, provided that no
proxy  shall be voted at any  meeting  unless it shall have been  placed on file
with the  Secretary,  or with such  other  officer  or agent of the Trust as the
Secretary may direct,  for verification  prior to the time at which such vote is
to be taken.  A proxy may be revoked by a Holder at any time  before it has been
exercised by placing on file with the  Secretary,  or with such other officer or
agent of the Trust as the Secretary  may direct,  a later dated proxy or written
revocation.  Pursuant to a resolution of a majority of the Trustees, proxies may
be  solicited  in the name of the Trust or of one or more  Trustees or of one or
more officers of the Trust. No proxy shall be valid after one year from the date
of its execution, unless a longer period is expressly stated in the proxy.

         In the case of each Master Trust, only Holders on the record date shall
be  entitled  to  vote  and  each  such  Holder  shall  be  entitled  to a  vote
proportionate  to its  Interest.  In the  case of each  Feeder  Trust,  (i) only
Holders on the record date shall be entitled to vote,  and (ii) each whole Share
shall be  entitled  to vote as to any matter on which it is entitled to vote and
each  fractional  Share shall be entitled to a  proportionate  fractional  vote,
except that Shares held in the treasury of the Trust shall not be voted.  In the
case of each Stand Alone Trust,  unless the Trustees  determine  that each Share
will entitle Holders to one vote per Share, on any matter submitted to a vote of
Holders of Shares of any series or class  thereof,  if any,  each  dollar of net
asset  value  (number of Shares  owned  times net asset  value per Share of such
series or class,  as applicable)  shall be entitled to one vote on any matter on
which such shares are entitled to vote and each  fractional  dollar amount shall
be entitled to a proportionate  fractional vote,  except that Shares held in the
treasury of the Trust shall not be voted.  In the case of each Feeder  Trust and
each Stand  Alone  Trust,  (i)  Shares  shall be voted by  individual  series or
classes thereof, if any, on any matter submitted to a vote of the Holders of the
Trust except as provided in Section 6.9(g) of the  Declaration,  and (ii) at any
meeting of Holders  of the Trust or of any  series or class  thereof,  if any, a
Shareholder  Servicing  Agent may vote any Shares as to which  such  Shareholder
Servicing Agent is the agent of record.

         The Chairman of the meeting may, and upon the request of the Holders of
10% of the  Interests  or Shares,  as the case may be,  entitled to vote at such
election  shall,  appoint one or three  inspectors  of election  who shall first
subscribe an oath or affirmation to execute  faithfully the duties of inspectors
at such  election  with strict  impartiality  and according to the best of their
ability,  and shall after

                                        3
<PAGE>

the election  certify the result of the vote taken. No
candidate  for Trustee  shall be appointed  such  inspector.  If there are three
inspectors of election,  the  decision,  act or  certification  of a majority is
effective in all respects as the decision, act or certificate of all.

         At every  meeting of the  Holders,  all proxies  shall be required  and
taken in  charge of and all  ballots  shall be  required  and  canvassed  by the
Secretary  of  the  meeting,   who  shall  decide  all  questions  touching  the
qualification  of  voters,  the  validity  of the  proxies,  the  acceptance  or
rejection  of votes and any other  questions  related to the conduct of the vote
with  fairness to all Holders,  unless  inspectors  of election  shall have been
appointed,  in which  event the  inspectors  of election  shall  decide all such
questions.  On request of the Chairman of the  meeting,  or of any Holder or his
proxy,  the Secretary shall make a report in writing of any question  determined
and shall execute a certificate  of facts found,  unless  inspectors of election
shall have been  appointed,  in which event the  inspectors of election shall do
so.

         When an Interest is held or Shares are held jointly by several Persons,
any one of them may vote at any meeting in person or by proxy in respect of such
Interest or Shares,  but if more than one of them is present at such  meeting in
person or by proxy,  and such joint owners or their proxies so present  disagree
as to any vote to be cast,  such vote shall not be  received  in respect of such
Interest  or Shares.  A proxy  purporting  to be  executed  by or on behalf of a
Holder shall be deemed valid unless challenged at or prior to its exercise,  and
the burden of proving invalidity shall rest on the challenger.

         Section 5. Holder Action by Written Consent. In the case of each Master
Trust,  any action which may be taken by Holders may be taken  without a meeting
if Holders of all  Interests  entitled to vote  consent to the action in writing
and the written  consents are filed with the records of the meetings of Holders.
In the case of each Feeder  Trust and each Stand Alone  Trust,  any action which
may be taken by Holders  may be taken  without a meeting  if  Holders  holding a
majority of Shares  entitled  to vote on the matter (or such  larger  proportion
thereof as shall be  required  by law,  the  Declaration  or these  By-Laws  for
approval  of such  matter)  consent  to the action in  writing  and the  written
consents are filed with the records of the meetings of Holders.

         Such  consents  shall be treated for all  purposes as a vote taken at a
meeting of Holders.  Each such written consent shall be executed by or on behalf
of the Holder delivering such consent and shall bear the date of such execution.
No such  written  consent  shall be  effective  to take the action  referred  to
therein unless, within one year of the earliest dated consent,  written consents
executed  by a  sufficient  number of Holders to take such action are filed with
the records of the meetings of Holders.

         Section 6.  Conduct of Meetings.  The meetings of the Holders  shall be
presided  over by the  Chairman,  or if he is not  present,  by a Chairman to be
elected at the meeting.  The  Secretary of the Trust,  if present,  shall act as
secretary  of such  meetings,  or if he is not present,  an Assistant  Secretary
shall so act; if neither the Secretary  nor any Assistant  Secretary is present,
then the meeting shall elect its secretary

                                        4

<PAGE>
                                   ARTICLE IV

                                    TRUSTEES

         Section 1. Place of Meeting, etc. The Trustees may hold their meetings,
have one or more offices, and keep the books of the Trust, inside or outside the
state of  organization  of the Trust or the  United  States of  America,  at any
office  of the  Trust  or at any  other  place  as they  may  from  time to time
determine,  or in the case of meetings,  as they may from time to time determine
or as shall be specified or fixed in the respective notices or waivers of notice
thereof.

         Section 2.  Meetings.  Meetings of the Trustees shall be held from time
to time upon the call of the Chairman or any two Trustees.  The  President,  the
Secretary  or an Assistant  Secretary  may call  meetings  only upon the written
direction of the  Chairman or two  Trustees.  The Trustees  shall hold an annual
meeting for the election of officers and transaction of other business which may
come before such meeting.  Regular  meetings of the Trustees may be held without
call or notice at a time and place fixed by resolution  of the Trustees.  Notice
of any other meeting  shall be mailed or otherwise  given not less than 24 hours
before the meeting but may be waived in writing by any Trustee  either before or
after such meeting.  Notice shall be given of any proposed action to be taken by
written  consent.  Notice of a meeting or proposed action to be taken by written
consent may be given by  telegram  (which term shall  include a  cablegram),  by
telecopier or delivered  personally (which term shall include by telephone),  as
well as by mail.  The  attendance of a Trustee at a meeting  shall  constitute a
waiver of  notice of such  meeting  except in the  situation  in which a Trustee
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting  was not  lawfully  called or  convened.
Neither the business to be transacted at, nor the purpose of, any meeting of the
Trustees need be stated in the notice or waiver of notice of such meeting.

         Section 3. Quorum. A quorum for all meetings of the Trustees shall be a
majority of the Trustees. Unless provided otherwise in the Declaration, the 1940
Act or other  applicable  law,  any  action  of the  Trustees  may be taken at a
meeting by vote of a majority of the Trustees  present (a quorum being present).
In the absence of a quorum,  a majority of the Trustees  present may adjourn the
meeting  from  time to time  until a  quorum  shall  be  present.  Notice  of an
adjourned meeting need not be given.

         With respect to actions of the  Trustees,  Trustees who are  Interested
Persons of the Trust or  otherwise  interested  in any action to be taken may be
counted  for  quorum  purposes  and  shall  be  entitled  to vote to the  extent
permitted by the 1940 Act.

         Section 4.  Committees.  The Trustees,  by the majority vote of all the
Trustees then in office, may appoint from the Trustees committees which shall in
each case consist of such number of Trustees  (not less than two) and shall have
and may exercise  such powers as the Trustees  may  determine in the  resolution
appointing  them.  Unless  provided  otherwise  in  the  Declaration  or by  the
Trustees,  a majority of all the members of any such committee may determine its
actions and fix the time and place of its  meetings.  With respect to actions of
any  committee,  Trustees who are  Interested  Persons of the Trust or otherwise
interested  in any action to be taken may be counted  for  quorum  purposes  and
shall be entitled to vote to the extent  permitted by the 1940 Act. The Trustees
shall  have  power at any time to  change  the  members  and  powers of any such
committee, to fill vacancies and to discharge any such committee. Each committee

                                         5
<PAGE>
shall keep  regular  minutes of its meetings and cause them to be filed with the
minutes of the proceedings of the Trustees.

         Section 5.  Telephone  Meetings.  All or any one or more  Trustees  may
participate in a meeting of the Trustees or any committee  thereof by means of a
conference telephone or similar  communications  equipment by means of which all
individuals  participating in the meeting can hear each other, and participating
in a meeting by means of such communications equipment shall constitute presence
in person at such meeting.  Any conference  telephone meeting shall be deemed to
have been held at a place designated by the Trustees at the meeting.

         Section 6. Action without a Meeting.  Any action  required or permitted
to be taken at any meeting of the Trustees or any committee thereof may be taken
without a meeting,  if a written  consent to such action is signed either by all
the  Trustees  or all  members  of such  committee  then in  office or by an 80%
majority  of the  Trustees  or an 80%  majority  of members  of such  committee,
provided that no action by 80% majority  consent  shall be effective  unless and
until (i) each Trustee or committee  member signing such consent shall have been
advised in writing of the following information:  the identity of any Trustee or
committee  member not signing  such consent and the reasons for his not signing;
and (ii) after receiving such information  signing Trustees or committee members
who  represent  an 80%  majority  then in office  indicate  in writing  that the
consent shall become effective by 80% majority, rather than unanimous,  consent.
All such  effective  written  consents  shall be filed  with the  minutes of the
proceedings of the Trustees and treated as a vote for all purposes.

         Section 7.  Compensation.  The  Trustees  shall be entitled to receive
such  compensation  from the Trust for their services as may from time to time
be voted by the Trustees.

         Section 8.  Chairman.  The Trustees  may, by a majority vote of all the
Trustees,  elect from their own number a Chairman,  to serve until his successor
shall have been duly elected and qualified; the Chairman may serve on committees
of the  Trustees.  The  Chairman  shall not be an officer of the Trust solely by
virtue of his serving as Chairman. The Chairman shall preside at all meetings of
the  Trustees  at which he is present,  shall  serve as the liaison  between the
Trustees  and the officers of the Trust and between the Trustees and their staff
and shall have such other  duties as from time to time may be assigned to him by
the Trustees.

         Section 9. Trustees'  Staff;  Counsel for the Trust and Trustees,  etc.
The Trustees  may employ or contract  with one or more Persons to serve as their
staff and to provide such services  related  thereto as may be  determined  from
time to time. The Trustees may employ  attorneys as counsel for the Trust and/or
the  Trustees  and may  engage  such  other  experts  or  consultants  as may be
determined from time to time.

                                    ARTICLE V

                                    OFFICERS

         Section 1. General  Provisions.  The Trustees may elect or appoint such
officers or agents as the business of the Trust may require,  including  without
limitation a Chief Executive Officer, a President,  one or more Vice Presidents,
a  Treasurer,  a Secretary,  one or more  Assistant  Treasurers  and one or more
Assistant Secretaries. The Trustees may delegate to any officer or committee the
power to appoint any subordinate officers or agents.

                                        6
<PAGE>

         Section  2.  Term of Office  and  Qualifications.  Except as  otherwise
provided  by law,  the  Declaration  or  these  ByLaws,  each  of the  principal
executive  officer described in Section 4 below, the Treasurer and the Secretary
shall hold office until a successor  shall have been duly elected and qualified,
and any other  officers  shall hold office at the pleasure of the Trustees.  Any
two or more offices may be held by the same Person,  provided  that at least two
different individuals shall serve as officers.  Any officer may be, but does not
need be, a Trustee.

         Section 3. Removal. The Trustees may remove any officer with or without
cause by a vote of a majority of the Trustees.  Any subordinate officer or agent
appointed  by any officer or committee  may be removed with or without  cause by
such appointing officer or committee.

         Section 4. Powers and Duties of the Chief Executive Officer; President.
The Chief Executive Officer, if any, shall be the principal executive officer of
the Trust.  Subject to the control of the Trustees,  the Chief Executive Officer
shall (i) at all times  exercise  general  supervision  and  direction  over the
affairs of the Trust, (ii) have the power to grant, issue,  execute or sign such
documents as may be deemed  advisable or necessary in the ordinary course of the
Trust's  business  and (iii) have such  other  powers and duties as from time to
time may be assigned by the Trustees.

         If there is no Chief  Executive  Officer,  the  President  shall be the
principal  executive  officer  of the Trust and shall have the powers and duties
set forth above in this Section 4. If there is a Chief  Executive  Officer and a
President,  the President shall have such powers and duties as from time to time
may be assigned by the Trustees or the Chief Executive Officer.

         Section  5.  Powers and Duties of Vice  Presidents.  In the  absence or
disability of the President,  any Vice  President  designated by the Trustees or
the President shall perform all the duties,  and may exercise any of the powers,
of the President.  Each Vice  President  shall perform such other duties as from
time to time may be  assigned  to him by the  Trustees  or the  Chief  Executive
Officer.

         Section 6. Powers and Duties of the Treasurer.  The Treasurer  shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver  all  funds of the Trust  which  may come into his hands to the  Trust's
custodian.  The Treasurer  shall render a statement of condition of the finances
of the Trust to the  Trustees as often as they shall  require the same and shall
in general  perform all the duties  incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Trustees.

         Section 7. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all  meetings of the Holders in proper  books  provided  for that
purpose;  shall keep the  minutes of all  meetings of the  Trustees;  shall have
custody of the seal of the Trust,  if any;  and shall have  charge of the Holder
lists and records unless the same are in the charge of the Transfer  Agent.  The
Secretary  shall  attend to the  giving  and  serving of notices by the Trust in
accordance  with the  provisions  of these  By-Laws and as required by law;  and
subject to these By-Laws,  shall in general  perform all the duties  incident to
the  office  of  Secretary  and such  other  duties  as from time to time may be
assigned to him by the Trustees.

         Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer,  any Assistant Treasurer designated by the Trustees
shall  perform  all the  duties,  and may  exercise

                                        7

<PAGE>
any of the  powers,  of the Treasurer. Each Assistant Treasurer shall perform
such other duties as from time to time may be assigned to him by the Trustees.

         Section 9. Powers and Duties of Assistant  Secretaries.  In the absence
or  disability  of the  Secretary,  any  Assistant  Secretary  designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary.  Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.

         Section 10. Compensation of Officers.  Subject to any applicable law or
provision of the Declaration,  any compensation of any officer may be fixed from
time to time by the Trustees.  No officer shall be prevented  from receiving any
such  compensation  as such  officer  by  reason  of the fact  that he is also a
Trustee.  If no such  compensation is fixed for any officer,  such officer shall
not be entitled to receive any compensation from the Trust.

         Section  11.  Bond and Surety.  As  provided  in the  Declaration,  any
officer  may  be  required  by  the  Trustees  to be  bonded  for  the  faithful
performance  of his duties in the amount and with such  sureties as the Trustees
may determine.

                                   ARTICLE VI

                                      SEAL

         The  Trustees  may adopt a seal  which  shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.

                                   ARTICLE VII

                                   FISCAL YEAR

         The Trust may have different fiscal years for its separate and distinct
series,  if  applicable.  The fiscal year(s) of the Trust shall be determined by
the  Trustees,   provided  that  the  Trustees  (or  the  Treasurer  subject  to
ratification by the Trustees) may from time to time change any fiscal year.

                                  ARTICLE VIII

                                    CUSTODIAN

         Section 1.  Appointment  and Duties.  The  Trustees  shall at all times
employ  one or more  banks or trust  companies  having a  capital,  surplus  and
undivided  profits of at least  $50,000,000  as custodian  with authority as the
Trust's  agent,  but  subject  to  such  restrictions,   limitations  and  other
requirements, if any, as may be contained in the Declaration,  these By-Laws and
the 1940 Act:

         (i) to hold the securities owned by the Trust and deliver the same upon
         written  order;  (ii) to receive  and receipt for any monies due to the
         Trust and deposit the same in its own banking  department  or elsewhere
         as the Trustees may direct; (iii) to disburse such funds upon orders or
         vouchers;  (iv) if authorized  by the  Trustees,  to keep the books and
         accounts of the Trust and furnish clerical and accounting services; and
         (v) if  authorized  by the  Trustees,  to compute the net income of

                                           8
<PAGE>

         the
         Trust  and the net  asset  value of the  Trust  or, in the case of each
         Feeder Trust and each Stand Alone Trust, Shares; all upon such basis of
         compensation  as may be  agreed  upon  between  the  Trustees  and  the
         custodian.

         The Trustees  may also  authorize  the  custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian  and upon such terms and  conditions as may be agreed upon between the
custodian and such  sub-custodian  and approved by the Trustees.  Subject to the
approval  of the  Trustees,  the  custodian  may enter  into  arrangements  with
securities  depositories.  All  such  custodial,  sub-custodial  and  depository
arrangements  shall be subject to, and comply with,  the  provisions of the 1940
Act and the rules and regulations promulgated thereunder.

         Section 2.  Successor  Custodian.  The Trust shall upon the resignation
or inability to serve of its custodian or upon change of the custodian:

         (i) in case of such  resignation  or inability  to serve,  use its best
         efforts to obtain a successor custodian; (ii) require that the cash and
         securities  owned by the Trust be delivered  directly to the  successor
         custodian;  and (iii) in the event that no successor  custodian  can be
         found, submit to the Holders before permitting delivery of the cash and
         securities owned by the Trust otherwise than to a successor  custodian,
         the question  whether the Trust shall be liquidated  or shall  function
         without a custodian.

                                   ARTICLE IX

                                 INDEMNIFICATION

         In the case of each Master Trust, insofar as the conditional  advancing
of indemnification monies under Section 5.4 of the Declaration for actions based
upon the 1940  Act may be  concerned,  such  payments  will be made  only on the
following conditions:

         (i) the advances must be limited to amounts  used,  or to be used,  for
         the preparation or  presentation of a defense to the action,  including
         costs connected with the preparation of a settlement; (ii) advances may
         be made only upon receipt of a written promise by, or on behalf of, the
         recipient to repay the amount of the advance  which  exceeds the amount
         to which it is  ultimately  determined  that he is  entitled to receive
         from the Trust by reason of indemnification; and (iii) (a) such promise
         must be  secured  by a surety  bond,  other  suitable  insurance  or an
         equivalent  form of security  which  assures that any  repayment may be
         obtained  by  the  Trust  without  delay  or  litigation,  which  bond,
         insurance or other form of security  must be provided by the  recipient
         of  the  advance,  or  (b)  a  majority  of a  quorum  of  the  Trust's
         disinterested,  nonparty Trustees, or an independent legal counsel in a
         written  opinion,  shall  determine,  based  upon a review  of  readily
         available facts,  that the recipient of the advance  ultimately will be
         found entitled to indemnification.

                                        9
<PAGE>
                                  ARTICLE X

                       AMENDMENTS, ADDITIONAL TRUSTS, ETC.

                 
                  The  Trustees  shall have the power to alter,  amend or repeal
these  By-Laws or adopt new  By-Laws at any time to the extent such power is not
reserved  to  the  Holders  by  the  1940  Act,  other  applicable  law  or  the
Declaration. Action by the Trustees with respect to these By-Laws shall be taken
by an affirmative  vote of a majority of the Trustees.  The Trustees shall in no
event adopt By-Laws which are in conflict with the Declaration.

         One or more additional trusts may be added to Schedule I or Schedule II
by  resolution of the trustees of such  trust(s),  provided that the trustees of
such  trust(s) are  identical to the Trustees of the Master  Trusts,  the Feeder
Trusts and the Stand Alone Trusts immediately prior to such addition.

         In the  case  of each  Master  Trust,  the  Declaration  refers  to the
Trustees as Trustees,  but not as  individuals  or  personally;  and no Trustee,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private  property for the  satisfaction  of any
obligation or claim or otherwise in connection with the affairs of the Trust. In
the case of each Feeder Trust and each Stand Alone Trust, the Declaration refers
to the Trustees not individually,  but as Trustees under the Declaration, and no
Trustee,  officer,  employee  or agent of the  Trust  shall  be  subject  to any
personal  liability  whatsoever  to any  Person,  other  than  the  Trust or its
Holders,  in connection  with Trust  Property or the affairs of the Trust,  save
only that arising  from bad faith,  willful  misfeasance,  gross  negligence  or
reckless  disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust.

JPM345A

                                        10

<PAGE>


                                    SCHEDULE I
                                   MASTER TRUSTS



                                    State of         Date of    Date
                                    Organiza-        Declara-   By-Laws
Trust                               tion             tion       Adopted

The Treasury Money Market           New York         11/4/92    10/10/96
  Portfolio
The Money Market Portfolio          New York          1/29/93   10/10/96
The Tax Exempt Money Market         New York          1/29/93   10/10/96
  Portfolio
The Short Term Bond Portfolio       New York          1/29/93   10/10/96
The U.S. Fixed Income Portfolio     New York          1/29/93   10/10/96
The Tax Exempt Bond Portfolio       New York          1/29/93   10/10/96
The Selected U.S. Equity Portfolio  New York          1/29/93   10/10/96
The U.S. Small Company Portfolio    New York          1/29/93   10/10/96
The Non-U.S. Equity Portfolio       New York          1/29/93   10/10/96
The Diversified Portfolio           New York          1/29/93   10/10/96
The Non-U.S. Fixed Income           New York          6/13/93   10/10/96
  Portfolio
The Emerging Markets Equity         New York          6/13/93   10/10/96
  Portfolio
The New York Total Return Bond      New York          6/13/93   10/10/96
  Portfolio
The Series Portfolio                New York          6/14/94   10/10/96

                                        11

<PAGE>


                                 SCHEDULE II
                                FEEDER TRUSTS



                                State of          Date of      Date
                                Organization      Declara-     By-Laws
Trust                                             tion         Adopted

The JPM Pierpont Funds          Massachusetts     11/4/92      10/10/96
The JPM Institutional
         Funds                  Massachusetts     11/4/92      10/10/96

                                       12

<PAGE>


                                   SCHEDULE III
                                STAND ALONE TRUSTS



                                  State of          Date of     Date
                                  Organization      Declara-    By-Laws
Trust                                               tion        Adopted

JPM Series Trust                  Massachusetts     8/15/96      10/10/96

                                         13


                                                       Exhibit 5

                                JPM SERIES TRUST
                          INVESTMENT ADVISORY AGREEMENT


         Agreement, made this 10th day of October, 1996, between JPM Series
Trust, an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust") and Morgan Guaranty Trust Company of
New York, a New York trust company authorized to conduct a general banking
business (the "Advisor"),

         WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

         WHEREAS, the Trust desires to retain the Advisor to render investment
advisory services to the Trust's existing separate and distinct series (each, a
"Fund") and other future Funds as agreed to from time to time between the Trust
and the Advisor, and the Advisor is willing to render such services;

         NOW, THEREFORE, this Agreement

                              W I T N E S S E T H:

that in consideration of the premises and mutual promises hereinafter set forth,
the parties hereto agree as follows:

                  1. The Trust hereby appoints the Advisor to act as investment
adviser to the Funds for the period and on the terms set forth in this
Agreement. The Advisor accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.

                  2. Subject to the general supervision of the Trustees of the
Trust, the Advisor shall manage the investment operations of each Fund and the
composition of the Fund's holdings of securities and investments, including
cash, the purchase, retention and disposition thereof and agreements relating
thereto, in accordance with the Fund's investment objectives and policies as
stated in the Trust's registration statement on Form N-1A, as such may be
amended from time to time (the "Registration Statement"), with respect to the
Fund, under the 1940 Act, as amended and subject to the following
understandings:

                  (a) the Advisor shall furnish a continuous investment program
         for each Fund and determine from time to time what investments or
         securities will be


<PAGE>


         purchased, retained, sold or
         lent by the Fund, and what portion of the assets will be invested or
         held uninvested as cash;

                  (b) the Advisor shall use the same skill and care in the
         management of each Fund's investments as it uses in the administration
         of other accounts for which it has investment responsibility as agent;

                  (c) the Advisor, in the performance of its duties and
         obligations under this Agreement, shall act in conformity with the
         Trust's Declaration of Trust (such Declaration of Trust, as presently
         in effect and as amended from time to time, is herein called the
         "Declaration of Trust"), the Trust's By-Laws (such By-Laws, as
         presently in effect and as amended from time to time, are herein called
         the "By-Laws") and the Registration Statement and with the instructions
         and directions of the Trustees of the Trust and will conform to and
         comply with the requirements of the 1940 Act and all other applicable
         federal and state laws and regulations;

                  (d) the Advisor shall determine the securities to be
         purchased, sold or lent by each Fund and as agent for the Fund will
         effect portfolio transactions pursuant to its determinations either
         directly with the issuer or with any broker and/or dealer in such
         securities; in placing orders with brokers and/or dealers the Advisor
         intends to seek best price and execution for purchases and sales; the
         Advisor shall also determine whether the Fund shall enter into
         repurchase or reverse repurchase agreements;

                  On occasions when the Advisor deems the purchase or sale of a
         security to be in the best interest of one of the Funds as well as
         other customers of the Advisor, including any other of the Funds, the
         Advisor may, to the extent permitted by applicable laws and
         regulations, but shall not be obligated to, aggregate the securities to
         be so sold or purchased in order to obtain best execution, including
         lower brokerage commissions, if applicable. In such event, allocation
         of the securities so purchased or sold, as well as the expenses
         incurred in the transaction, will be made by the Advisor in the manner
         it considers to be the most equitable and consistent with its fiduciary
         obligations to the Fund;

                  (e) the Advisor shall maintain books and records with respect
         to each Fund's securities transactions and shall render to the Trust's
         Trustees such periodic and special reports as the Trustees may
         reasonably request; and

                  (f) the investment management services of the Advisor to any
         of the Funds under this Agreement are not to be deemed exclusive, and
         the Advisor shall be free to render similar services to others.

                                          2

<PAGE>




                  3. The Trust has delivered copies of each of the following
documents to the Advisor and will promptly notify and deliver to it all future
amendments and supplements, if any:

                  (a) The Declaration of Trust;

                  (b) The By-Laws;

                  (c) Certified resolutions of the Trustees of the Trust
         authorizing the appointment of
         the Advisor and approving the form of this Agreement;

                  (d) The Trust's Notification of Registration on Form N-8A and
         Registration Statement as filed with the Securities and Exchange
         Commission (the "Commission").

                  4. The Advisor shall keep each Fund's books and records
required to be maintained by it pursuant to paragraph 2(e). The Advisor agrees
that all records which it maintains for any Fund are the property of the Trust
and it will promptly surrender any of such records to the Trust upon the Trust's
request. The Advisor further agrees to preserve for the periods prescribed by
Rule 31a-2 of the Commission under the 1940 Act any such records as are required
to be maintained by the Advisor with respect to any Fund by Rule 31a-1 of the
Commission under the 1940 Act.

                  5. During the term of this Agreement the Advisor will pay all
expenses incurred by it in connection with its activities under this Agreement,
other than the cost of securities and investments purchased for a Fund
(including taxes and brokerage commissions, if any).

                  6. For the services provided and the expenses borne pursuant
to this Agreement, each Fund will pay to the Advisor as full compensation
therefor a fee at an annual rate set forth on Schedule A attached hereto. Such
fee will be computed daily and payable as agreed by the Trust and the Advisor,
but no more frequently than monthly.

                  7. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.

                  8. This Agreement shall continue in effect with respect to
each Fund for a period of more than two years from the Fund's commencement of
investment operations only so long as such continuance is specifically approved
at least annually in

                                        3

<PAGE>


conformity with the requirements of the
1940 Act; provided, however, that this Agreement may be terminated with respect
to each Fund at any time, without the payment of any penalty, by vote of a
majority of all the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of that Fund on 60 days' written notice to the
Advisor, or by the Advisor at any time, without the payment of any penalty, on
90 days' written notice to the Trust. This Agreement will automatically and
immediately terminate in the event of its "assignment" (as defined in the 1940
Act).

                  9. The Advisor shall for all purposes herein be deemed to be
an independent contractor and shall, unless otherwise expressly provided herein
or authorized by the Trustees of the Trust from time to time, have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent of
the Funds.

                  10. This Agreement may be amended, with respect to any Fund,
by mutual consent, but the consent of the Trust must be approved (a) by vote of
a majority of those Trustees of the Trust who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such amendment, and (b) by vote of a majority of the
outstanding voting securities of the Fund.

                  11. Notices of any kind to be given to the Advisor by the
Trust shall be in writing and shall be duly given if mailed or delivered to the
Advisor at 522 Fifth Avenue, New York, New York 10036, Attention: Funds
Management, or at such other address or to such other individual as shall be
specified by the Advisor to the Trust. Notices of any kind to be given to the
Trust by the Advisor shall be in writing and shall be duly given if mailed or
delivered to the Trust c/o Funds Distributor, Inc., 60 State Street, Suite 1300,
Boston, MA 02109 or at such other address or to such other individual as shall
be specified by the Trust to the Advisor.

                  12. The Trustees of the Trust have authorized the execution of
this Agreement in their capacity as Trustees and not individually, and the
Advisor agrees that neither the Trustees nor any officer or employee of the
Trust nor any Fund's shareholders nor any representative or agent of the Trust
or of the Fund(s) shall be personally liable upon, or shall resort be had to
their private property for the satisfaction of, obligations given, executed or
delivered on behalf of or by the Trust or the Fund(s), that such Trustees,
officers, employees, shareholders, representatives and agents shall not be
personally liable hereunder, and that it shall look solely to the trust property
for the satisfaction of any claim hereunder.

                  13.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.

                  14.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

                                    4

<PAGE>




                  IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the __ day of
_______, 1996.

                                  JPM SERIES TRUST



                                  By:
                                     Name:
                                     Title:

                                   MORGAN GUARANTY TRUST
                                   COMPANY OF NEW YORK



                                   By:
                                      Name:
                                      Title:

JPM268B
                                 5

<PAGE>



                                                                 SCHEDULE A

                          JPM Series Trust

                      Investment Advisory Fees


California Bond Fund

 .30% of the average daily net assets of the Fund


Tax Aware Equity Fund

 .45% of the average daily net assets of the Fund


Tax Aware Disciplined Equity Fund

 .35% of the average daily net assets of the Fund























Approved October __, 1996


                                              Exhibit 6




                                JPM SERIES TRUST
                             DISTRIBUTION AGREEMENT


         DISTRIBUTION AGREEMENT, made as of this 10th day of October, 1996,
between JPM SERIES TRUST, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (the Trust ), and FUNDS DISTRIBUTOR,
INC., a Massachusetts corporation (the Distributor ).

                                   WITNESSETH:

         WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act ), as an open-end management investment company;

         WHEREAS, the Shares of Beneficial Interest (par value $0.001 per share)
of the Trust (the Shares ) are divided into multiple series (such series
together with any other series which may in the future be established, the
Funds) and, as applicable, classes thereof;

         WHEREAS, it is in the interest of the Trust to be able to offer Shares
of each Fund for sale continuously and to appoint a broker registered under the
Securities Exchange Act of 1934 and various state broker registration statutes
for the purpose of facilitating such offers and sales;

         WHEREAS, the Trust and the Distributor wish to enter into an agreement
with each other with respect to the continuous offering of Shares of the Funds;

         NOW, THEREFORE, the parties agree as follows:

         Section 1. Appointment of the Distributor. The Trust hereby appoints
the Distributor its exclusive agent in connection with the offering and sale of
the Shares on the terms set forth in this Agreement and the Distributor hereby
accepts such appointment and agrees to act hereunder.

         Section 2.  Services and Duties of the Distributor.

         (a) The Distributor agrees to offer and sell, as agent for the Trust,
from time to time during the term of this Agreement, Shares upon the terms
described in the Prospectus relating to such Shares. As used in this Agreement,
the term Prospectus shall mean the prospectus, including any information
incorporated by reference therein, relating to such Shares included as part of
the Trust's Registration Statement, as such prospectus may be amended or
supplemented from time to time, and the term Registration Statement shall mean
the Registration Statement most recently filed from time to time by the Trust
with the Securities and Exchange Commission

<PAGE>


and effective under the Securities Act of 1933, as amended (the 1933 Act ), and
the 1940 Act, as such Registration Statement may be amended by any amendments
thereto at the time in effect.

         (b) The Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of Shares and will establish
procedures for the acceptance and transmission of orders on behalf of the Trust,
which procedures shall be reasonably acceptable to the Trust. The Distributor
shall promptly forward to the Trust's custodian funds received in respect of
purchases of Shares. Purchase orders shall be deemed effective at the time and
in the manner set forth in the Prospectus relating to such Shares.

         (c) The offering price of the Shares shall be the net asset value per
Share (as defined in or pursuant to the Declaration of Trust of the Trust and
determined as set forth in the Prospectus relating to such Shares) next
determined following receipt of an order. The Trust shall furnish the
Distributor, with all possible promptness, an advice of each computation of net
asset value of Shares of each Fund or class of Shares.

         (d) The Distributor shall not be obligated to sell any certain number
of Shares and nothing herein contained shall prevent the Distributor from
entering into like distribution arrangements with other investment companies.

         Section 3.  Duties of the Trust.

         (a) The Trust agrees to sell Shares of each Fund so long as it has
Shares available for sale and to cause the Trust's transfer agent to record on
its books the ownership of (or deliver certificates, if any, for) such Shares
registered in such names and amounts as the Distributor has requested in writing
or other means of data transmission, as promptly as practicable after receipt by
the Trust of the net asset value thereof and written request of the Distributor
therefor.

         (b) The Trust shall keep the Distributor fully informed with regard to
the Trust's affairs and shall furnish to the Distributor copies of all
information, financial statements and other papers which may be necessary for
use in connection with the sale of Shares of the Funds, and this shall include
one certified copy, upon request by the Distributor, of all financial statements
prepared for the Trust by independent accountants and such number of copies of
its most current Prospectuses as may be necessary to accompany confirmation of
sales and annual and interim reports and Prospectuses for delivery to existing
shareholders.

         (c) The Trust shall take, from time to time, such steps, including
payment of the related filing fee, as may be necessary to register its Shares
under the 1933 Act to the end that there will be available for sale such number
of Shares as the Distributor may be expected to sell. The Trust agrees to file
from time to time such amendments, reports and other documents as may be
necessary in order that there may be no untrue statement of a material fact in a
Registration Statement or Prospectuses, or necessary in order that there may be
no omission to state a material fact in the Registration Statement or
Prospectuses which omission would make the statements therein misleading.

                                    2

<PAGE>


         (d) The Trust, through Funds Distributor, Inc. as Co-Administrator,
shall use its best efforts to qualify and maintain the qualification of any
appropriate number of the Shares of each Fund for sale under the securities laws
of such states as the Distributor and the Trust may approve, and, if necessary
or appropriate in connection therewith, to qualify and maintain the
qualification of the Trust as a broker or dealer in such states; provided that
the Trust shall not be required to amend its Declaration of Trust or By-laws to
comply with the laws of any state, to maintain an office in any state, to change
the terms of the offering of the Shares in any state from the terms set forth in
its Registration Statement and Prospectuses, to qualify as a foreign corporation
in any state or to consent to service of process in any state other than with
respect to claims arising out of the offering of the Shares. The Distributor
shall furnish such information and other material relating to its affairs and
activities as may be required by such Co-Administrator in connection with such
qualifications.

         Section 4. Expenses. The Trust shall bear all costs and expenses
necessary for the continuous sale of the Shares such as: (i) fees and
disbursements of its counsel and independent accountants; (ii) the preparation,
filing and printing of any registration statements and/or prospectuses required
to be filed by and under the Federal and state securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses and proxy
materials to shareholders; and (iv) the qualifications of Shares for sale and of
the Trust as a broker or dealer under the securities laws of such states or
other jurisdictions as shall be selected by the Trust and the Distributor
pursuant to Section 3(d) hereof and the cost and expenses payable to each such
state for continuing qualification therein in connection with such sale. Since
the Trust has not adopted a plan under Rule 12b-1 of the 1940 Act, the
Distributor is directed and agrees that it will not incur any expenses which
would require the Trust to adopt a plan under Rule 12b-1.

         Section 5. Indemnification. The Trust agrees to indemnify, defend and
hold the Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any untrue statement of a material fact contained in the Registration
Statement or Prospectus or arising out of or based upon any alleged omission to
state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Trust for use in the Registration Statement or Prospectus;
provided, however, that this indemnity agreement, to the extent that it might
require indemnity of any person who is also an officer or Trustee of the Trust
or who controls the Trust within the meaning of Section 15 of the 1933 Act,
shall not inure to the benefit of such officer, Trustee or controlling person
unless a court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act; and further provided that in no
event

                                     3

<PAGE>


shall anything contained herein be so construed as to protect the Distributor
against any liability to the Trust or to its securities holders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations under this Agreement. The Trust's
agreement to indemnify the Distributor, its officers and directors and any such
controlling person, as aforesaid is expressly conditioned upon the Trust's being
promptly notified of any action brought against the Distributor, its officers or
directors, or any such controlling person, such notification to be given to the
Trust in accordance with Section 9, with a copy to Stephen K. West, Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004. The Trust agrees promptly
to notify the Distributor of the commencement of any litigation or proceedings
against it or any of its officers or Trustees in connection with the issue and
sale of any Shares.

         The Distributor agrees to indemnify, defend and hold the Trust, its
Trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its Trustees or
officers of any such controlling person may incur under the 1933 Act or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its Trustees or officers or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
alleged untrue statement of a material fact contained in information furnished
in writing by the Distributor to the Trust for use in the preparation of the
Registration Statement or Prospectus or shall arise out of or be based upon any
alleged omission to state a material fact in such information or a fact
necessary to make such information not misleading, it being understood that the
Trust will rely upon the information provided by the Distributor for use in the
preparation of the Registration Statement and Prospectus. The Distributor's
agreement to indemnify the Trust, its Trustees and officers, and any such
controlling person as aforesaid is expressly conditioned upon the Distributor's
being promptly notified of any action brought against the Trust, its Trustees or
officers or any such controlling person, such notification to be given to the
Distributor in accordance with Section 9.

         Section 6. Limitation of Liability. The Distributor shall not be liable
for any error of judgment or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or for reckless disregard by it of its obligations and
duties under this Agreement.

         Section 7. Compliance with Securities Laws. The Trust represents that
it is registered as an open-end management investment company under the 1940
Act, and agrees that it will comply with the provisions of the 1940 Act and of
the rules and regulations thereunder. The Trust and the Distributor each agree
to comply with the applicable terms and provisions of the 1940 Act, the 1933 Act
and, subject to the provisions of Section 3(d), applicable state securities

                                      4

<PAGE>


laws. The Distributor  agrees to comply with the applicable  terms and
provisions of the Securities Exchange Act of 1934.

         Section 8. Term of Agreement; Termination. This Agreement shall
commence on the date first set forth above. This Agreement shall continue in
effect for a period more than two years from the date hereof only so long as
such continuance is specifically approved at least annually in conformity with
the requirements of the 1940 Act.

         This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not less than sixty
(60) days' written notice to the other party.

         Section 9. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid: (1) to the Distributor at Funds Distributor, Inc., 60 State
Street, 13th Floor, Boston, Massachusetts 02109, Attention: President with a
copy to General Counsel; or (2) to the Trust at JPM Series Trust, at its address
as set forth in its Prospectuses, Attention: Treasurer, with a copy to Morgan
Guaranty Trust Company, 522 Fifth Avenue, New York, New York 10036, Attention:
Funds Management or at such other address as either party may from time to time
specify to the other party pursuant to this Section 9.

         Section 10. Confidentiality. The Distributor agrees on behalf of itself
and its employees to treat confidentially and as proprietary information of the
Trust all records and other information not otherwise publicly available
relative to the Trust and its prior, present or potential shareholders and not
to use such records and information for any purpose other than performance of
its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Distributor may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust.

         Section 11. No Liability of Shareholders, Trustees, etc. The Trustees
have authorized the execution of this Agreement in their capacity as Trustees
and not individually and the Distributor agrees that neither the shareholders
nor the Trustees nor any officer, employee, representative or agent of the Trust
shall be personally liable upon, nor shall resort be had to their private
property for the satisfaction of, obligations given, executed or delivered on
behalf of or by the Trust, that the shareholders, Trustees, officers, employees,
representatives and agents of the Trust shall not be personally liable
hereunder, and that it shall look solely to the property of the Trust for the
satisfaction of any claim hereunder.

         Section 12.  Governing  Law. This  Agreement  shall be governed and
construed in accordance  with the laws of the State of New York.

                                         5

<PAGE>




         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                     JPM SERIES TRUST


                                     By
                                        Name:
                                        Title:

                                     FUNDS DISTRIBUTOR, INC.


                                     By
                                        Name:
                                        Title:

PP272A.DOC
                                          6





                                                                 Exhibit 8





                                  CUSTODIAN CONTRACT
                                       Between
  
                                         and
                         STATE STREET BANK AND TRUST COMPANY


<PAGE>



                                  TABLE OF CONTENTS
                                  -----------------
                                                                            Page
                                                                            ----
1.  Employment of Custodian and Property to be
    Held By It................................................................2

2.  Duties of the Custodian with Respect to Property
    of the Fund Held by the Custodian
    in the United States......................................................3

    2.1  Holding Securities...................................................3
    2.2  Delivery of Securities...............................................4
    2.3  Registration of Securities..........................................10
    2.4  Bank Accounts.......................................................11
    2.5  Availability of Federal Funds.......................................12
    2.6  Collection of Income................................................13
    2.7  Payment of Fund Monies..............................................14
    2.8  Liability for Payment in Advance of Receipt of
         Securities Purchased................................................18
    2.9  Appointment of Agents...............................................19
    2.10 Deposit of Fund Assets in Securities System.........................19
    2.10AFund Assets Held in the Custodian's
         Direct Paper System.................................................23
    2.11 Segregated Account..................................................25
    2.12 Ownership Certificates for Tax Purposes.............................27
    2.13 Proxies.............................................................27
    2.14 Communications Relating to Portfolio Securities.....................28

3.  Duties of the Custodian with Respect to Property of
    the Fund Held Outside of the United States...............................29

    3.1  Appointment of Foreign Sub-Custodians...............................29
    3.2  Assets to be Held...................................................30
    3.3  Foreign Securities Depositories.....................................30
    3.4  Agreements with Foreign Banking Institutions........................31
    3.5  Access of Independent Accountants of the Fund.......................32
    3.6  Reports by Custodian................................................32
    3.7  Transactions in Foreign Custody Account.............................33
    3.8  Liability of Foreign Sub-Custodians.................................34
    3.9  Liability of Custodian..............................................34
    3.10 Reimbursement for Advances..........................................36
    3.11 Monitoring Responsibilities.........................................37
    3.13 Branches of U.S. Banks..............................................37
    3.13 Tax Law.............................................................38

4.  Payments for Sales or Repurchase or Redemptions of Shares of
    the Fund.................................................................39
<PAGE>

5.  Proper Instructions......................................................40

6.  Actions Permitted Without Express Authority..............................41

7.  Evidence of Authority....................................................41

8.  Duties of Custodian with Respect to the Books of
    Account and Calculation of Net Asset Value and Net Income................42

9.  Records..................................................................42

10. Reports to Fund by Independent Public Accountants........................43

11. Compensation of Custodian................................................44

12. Responsibility of Custodian..............................................44

13. Effective Period, Termination and Amendment..............................46

14. Successor Custodian......................................................48

15. Interpretive and Additional Provisions...................................50

16. Additional Funds.........................................................50

17. Massachusetts Law to Apply...............................................51

18. Prior Contracts..........................................................51

19. Shareholder Communications Election......................................51

20. Limitation of Liability..................................................53
<PAGE>

                                  CUSTODIAN CONTRACT



    This Contract between                                              a 
business trust organized and
existing under the laws of the Commonwealth of Massachusetts, having its
principal place of business at 
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
                                     WITNESSETH:

    WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and

    WHEREAS, the Fund offers shares in        series,  
    
    
    
    
    
    
    (such series together with all other series subsequently established
<PAGE>

by the Fund and made subject to this Contract in accordance with paragraph 17,
being herein referred to as the "Portfolio(s)");

    NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT

    The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the
Declaration of Trust.  The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities and cash of the Portfolio, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolio ("Shares") as
may be issued or sold from time to time.  The Custodian shall not be
responsible for any property


                                          2
<PAGE>

of a Portfolio held or received by the Portfolio and not delivered to the
Custodian.

    Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.  The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories
designated in Schedule A hereto but only in accordance with the provisions of
Article 3.

2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES

2.1      HOLDING SECURITIES.  The Custodian shall hold and physically segregate
         for the account of each Portfolio all non-cash property, to be held by
         it in the United States including all domestic securities owned by
         such Portfolio,


                                          3
<PAGE>

         other than (a) securities which are maintained pursuant to Section
         2.10 in a clearing agency which acts as a securities depository or in
         a book-entry system authorized by the U.S. Department of the Treasury,
         collectively referred to herein as "Securities System" and (b)
         commercial paper of an issuer for which State Street Bank and Trust
         Company acts as issuing and paying agent ("Direct Paper") which is
         deposited and/or maintained in the Direct Paper System of the
         Custodian pursuant to Section 2.10A.

2.2      DELIVERY OF SECURITIES.  The Custodian shall release and deliver
         domestic securities owned by a Portfolio held by the Custodian or in a
         Securities System account of the Custodian or in the Custodian's
         Direct Paper book entry system account ("Direct Paper System Account")
         only upon receipt of Proper Instructions from the Fund on behalf of
         the applicable Portfolio, which may be continuing instructions when
          deemed appropriate by the parties, and only in the following cases:

         1)   Upon sale of such securities for the account of the Portfolio and
              receipt of payment therefor;


                                          4
<PAGE>

         2)   Upon the receipt of payment in connection with any repurchase
              agreement related to such securities entered into by the
              Portfolio;

         3)   In the case of a sale effected through a Securities System, in
              accordance with the provisions of Section 2.10 hereof;

         4)   To the depository agent in connection with tender or other
              similar offers for securities of the Portfolio;

         5)   To the issuer thereof or its agent when such securities are
              called, redeemed, retired or otherwise become payable; provided
              that, in any such case, the cash or other consideration is to be
              delivered to the Custodian;

         6)   To the issuer thereof, or its agent, for transfer into the name
              of the Portfolio or into the name of any nominee or nominees of
              the Custodian or into the name or nominee name of any agent
              appointed pursuant to Section 2.9 or into the name or nominee
              name of any sub-custodian appointed pursuant to Article 1; or for
              exchange for a


                                          5
<PAGE>

              different number of bonds, certificates or other evidence
              representing the same aggregate face amount or number of units;
              PROVIDED that, in any such case, the new securities are to be
              delivered to the Custodian;

         7)   Upon the sale of such securities for the account of the
              Portfolio, to the broker or its clearing agent, against a
              receipt, for examination in accordance with "street delivery"
              custom; provided that in any such case, the Custodian shall have
              no responsibility or liability for any loss arising from the
              delivery of such securities prior to receiving payment for such
              securities except as may arise from the Custodian's own
              negligence or willful misconduct;

         8)   For exchange or conversion pursuant to any plan of merger,
              consolidation, recapitalization, reorganization or readjustment
              of the securities of the issuer of such securities, or pursuant
              to provisions for conversion contained in such securities, or
              pursuant to any


                                          6
<PAGE>

              deposit agreement; provided that, in any such case, the new
              securities and cash, if any, are to be delivered to the
              Custodian;

         9)   In the case of warrants, rights or similar securities, the
              surrender thereof in the exercise of such warrants, rights or
              similar securities or the surrender of interim receipts or
              temporary securities for definitive securities; provided that, in
              any such case, the new securities and cash, if any, are to be
              delivered to the Custodian;

         10)  For delivery in connection with any loans of securities made by
              the Portfolio, BUT ONLY against receipt of adequate collateral as
              agreed upon from time to time by the Custodian and the Fund on
              behalf of the Portfolio, which may be in the form of cash or
              equivalent collateral or by a letter of credit equal at all times
              to 100% of the market value of the securities loaned plus accrued
              income, except that in connection with any loans for which
              collateral is to be credited to


                                          7
<PAGE>

              the Custodian's account in the book-entry system authorized by
              the U.S. Department of the Treasury, the Custodian will not be
              held liable or responsible for the delivery of securities owned
              by the Portfolio prior to the receipt of such collateral;

         11)  For delivery as security in connection with any borrowings by the
              Fund on behalf of the Portfolio requiring a pledge of assets by
              the Fund on behalf of the Portfolio, BUT ONLY against receipt of
              amounts borrowed;

         12)  For delivery in accordance with the provisions of any agreement
              among the Fund on behalf of the Portfolio, the Custodian and a
              broker-dealer registered under the Securities Exchange Act of
              1934 (the "Exchange Act") and a member of the National
              Association of Securities Dealers, Inc. ("NASD"), relating to
              compliance with the rules of The Options Clearing Corporation and
              of any registered national securities exchange, or of any similar
              organization or


                                          8
<PAGE>

              organizations, regarding escrow or other arrangements in
              connection with transactions by the Portfolio of the Fund;

         13)  For delivery in accordance with the provisions of any agreement
              among the Fund on behalf of the Portfolio, the Custodian and a
              Futures Commission merchant registered under the Commodity
              Exchange Act, relating to compliance with the rules of the
              Commodity Futures Trading Commission and/or any Contract Market,
              or any similar organization or organizations, regarding account
              deposits in connection with transactions by the Portfolio of the 
              Fund;

         14)  Upon receipt of instructions from the transfer agent ("Transfer
              Agent") for the Fund, for delivery to such Transfer Agent or to
              the holders of shares in connection with distributions in kind, as
              may be described from time to time in the currently effective
              prospectus and statement of additional information of the
              Fund, related to the Portfolio (the "Prospectus"), in satisfaction
              of requests by holders of 


                                          9
<PAGE>

              Shares for repurchase or redemption; and

         15)  For any other proper corporate purpose, BUT ONLY upon receipt of,
              in addition to Proper Instructions from the Fund on behalf of the
              applicable Portfolio, a certified copy of a resolution of the
              Board of Trustees or of the Executive Committee signed by an
              officer of the Fund and certified by the Secretary or an Assistant
              Secretary, specifying the securities of the Portfolio to be
              delivered, setting forth the purpose for which such delivery is
              to be made, declaring such purpose to be a proper corporate
              purpose, and naming the person or persons to whom delivery of such
              securities shall be made.

2.3      REGISTRATION OF SECURITIES.  Domestic securities held by the Custodian
         (other than bearer securities) shall be registered in the name of the
         Portfolio or in the name of any nominee of the Fund on behalf of the
         Portfolio or of any nominee of the Custodian which nominee shall be
         assigned exclusively to the Portfolio, UNLESS the Fund has authorized
         in writing the appointment of a nominee to be used in common with other
         registered investment companies having the same investment adviser as
         the Portfolio, or in the name or nominee name of


                                          10
<PAGE>

         any agent appointed pursuant to Section 2.9 or in the name or nominee
         name of any sub-custodian appointed pursuant to Article 1.  All
         securities accepted by the Custodian on behalf of a Portfolio under
         the terms of this Contract shall be in "street name" or other good
         delivery form.  If, however, the Fund directs the Custodian to
         maintain securities in "street name", the Custodian shall utilize its
         best efforts only to collect timely income due the Fund on such
         securities and to notify the Fund on a best efforts basis only of
         relevant corporate actions including, without limitation, pendency of
         calls, maturities, tender or exchange offers.

2.4      BANK ACCOUNTS.  The Custodian shall open and maintain a separate bank
         account or accounts in the United States in the name of each
         Portfolio of the Fund, subject only to draft or order by the Custodian
         acting pursuant to the terms of this Contract, and shall hold in such
         account or accounts, subject to the provisions hereof, all cash
         received by it from or for the account of the Portfolio, other than
         cash maintained by the Portfolio in a bank account


                                          11
<PAGE>

         established and used in accordance with Rule 17f-3 under the
         Investment Company Act of 1940.  Funds held by the Custodian for a
         Portfolio may be deposited by it to its credit as Custodian in the
         Banking Department of the Custodian or in such other banks or trust
         companies as it may in its discretion deem necessary or desirable;
         PROVIDED, however, that every such bank or trust company shall be
         qualified to act as a custodian under the Investment Company Act of
         1940 and that each such bank or trust company and the funds to be
         deposited with each such bank or trust company shall on behalf of each 
         applicable Portfolio be approved by vote of a majority of the Board of
         Trustees of the Fund.  Such funds shall be deposited by the Custodian
         in its capacity as Custodian and shall be withdrawable by the Custodian
         only in that capacity.

2.5      AVAILABILITY OF FEDERAL FUNDS.  Upon mutual agreement between the Fund
         on behalf of each applicable Portfolio and the Custodian, the
         Custodian shall, upon the receipt of Proper Instructions from the Fund
         on behalf of a Portfolio (i) invest in such instruments as may be set
         forth in such instructions on the same day as received all federal
         funds


                                          12
<PAGE>

         received after a time agreed upon by the Custodian and the Fund and
         (ii) make federal funds available to such Portfolio as of specified
         times agreed upon from time to time by the Fund and the Custodian in
         the amount of funds received in respect of sales of securities by the
         Portfolio and of funds obtained through borrowings, in each case which
         are deposited into the Portfolio's account.

2.6      COLLECTION OF INCOME.  Subject to the provisions of Section 2.3, the
         Custodian shall collect on a timely basis all income and other
         payments with respect to registered domestic securities held hereunder
         to which each Portfolio shall be entitled either by law or pursuant
         to custom in the securities business, and shall collect on a timely
         basis all income and other payments with respect to bearer domestic
         securities if, on the date of payment by the issuer, such securities
         are held by the Custodian or its agent thereof and shall credit such
         income, as collected, to such Portfolio's custodian account.  Without
         limiting the generality of the foregoing, the Custodian shall detach
         and present for payment


                                          13
<PAGE>

         all coupons and other income items requiring presentation as and when
         they become due and shall collect interest when due on securities held
         hereunder.  Income due each Portfolio on securities loaned pursuant to
         the provisions of Section 2.2 (10) shall be the responsibility of the
         Fund.  The Custodian will have no duty or responsibility in connection
         therewith, other than to provide the Fund with such information or
         data as may be necessary to assist the Fund in arranging for the
         timely delivery to the Custodian of the income to which the Portfolio
         is properly entitled.

2.7      PAYMENT OF FUND MONIES.  Upon receipt of Proper Instructions from the
         Fund on behalf of the applicable Portfolio, which may be continuing
         instructions when deemed appropriate by the parties, the Custodian
         shall pay out monies of a Portfolio in the following cases only:

         1)   Upon the purchase of domestic securities, options, futures
              contracts or options on futures contracts for the account of the
              Portfolio but only (a) against the delivery of such securities or
              evidence of title to such options, futures


                                          14
<PAGE>

              contracts or options on futures contracts to the Custodian (or
              any bank, banking firm or trust company doing business in the
              United States or abroad which is qualified under the Investment
              Company Act of 1940, as amended, to act as a custodian and has
              been designated by the Custodian as its agent for this purpose)
              registered in the name of the Portfolio or in the name of a
              nominee of the Custodian referred to in Section 2.3 hereof or in
              proper form for transfer; (b) in the case of a purchase effected
              through a Securities System, in accordance with the conditions
              set forth in Section 2.10 hereof; (c) in the case of a purchase
              involving the Direct Paper System, in accordance with the
              conditions set forth in Section 2.10A; (d) in the case of
              repurchase agreements entered into between the Fund on behalf of
              the Portfolio and the Custodian, or another bank, or a
              broker-dealer which is a member of NASD, (i) against delivery of
              the securities either in certificate form


                                          15
<PAGE>

              or through an entry crediting the Custodian's account at the
              Federal Reserve Bank with such securities or (ii) against
              delivery of the receipt evidencing purchase by the Portfolio of
              securities owned by the Custodian along with written evidence of
              the agreement by the Custodian to repurchase such securities from
              the Portfolio or (e) for transfer to a time deposit account of
              the Fund in any bank, whether domestic or foreign; such
              transfer may be effected prior to receipt of a confirmation from
              a broker and/or the applicable bank pursuant to Proper
              Instructions from the Fund as defined in Article 5;

         2)   In connection with conversion, exchange or surrender of
              securities owned by the Portfolio as set forth in Section 2.2
              hereof;

         3)   For the redemption or repurchase of Shares issued by the
              Portfolio as set forth in Article 4 hereof;

         4)   From an account of the Portfolio located outside of the United
              States (except as


                                          16
<PAGE>

              otherwise specified by the Fund for a particular Portfolio),
              for the payment of any expense or liability incurred by the
              Portfolio, including but not limited to the following payments
              for the account of the Portfolio: interest, taxes, management,
              accounting, transfer agent and legal fees, and operating expenses
              of the Fund whether or not such expenses are to be in whole
              or part capitalized or treated as deferred expenses;

         5)   From an account of the Fund located outside of the United
              States (except as otherwise specified by the Fund for a particular
              Portfolio), for the payment of any dividends on Shares of the
              Portfolio declared pursuant to the governing documents of the
              Fund;

         6)   For payment of the amount of dividends received in respect of
              securities sold short;

         7)   For any other proper purpose, BUT ONLY upon receipt of, in
              addition to Proper Instructions from the Fund on behalf of


                                          17
<PAGE>

              the Portfolio, a certified copy of a resolution of the Board of
              Trustees or of the Executive Committee of the Fund signed by two
              officers of the Fund and certified by its Secretary or an
              Assistant Secretary, specifying the amount of such payment,
              setting forth the purpose for which such payment is to be made,
              declaring such purpose to be a proper purpose and naming the
              person or persons to whom such payment is to be made.

2.8      LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
         Except as specifically stated otherwise in this Contract, in any and
         every case where payment for purchase of domestic securities for the
         account of a Portfolio is made by the Custodian in advance of receipt
         of the securities purchased in the absence of specific written
         instructions from the Fund on behalf of such Portfolio to so pay in
         advance, the Custodian shall be absolutely liable to the Fund for such
         securities to the same extent as if the securities had been received
         by the Custodian.


                                          18
<PAGE>

2.9      APPOINTMENT OF AGENTS.  The Custodian may at any time or times in its
         discretion appoint (and may at any time remove) any other bank or
         trust company which is itself qualified under the Investment Company
         Act of 1940, as amended, to act as a custodian, as its agent to carry
         out such of the provisions of this Article 2 as the Custodian may from
         time to time direct; PROVIDED, however, that the appointment of any
         agent shall not relieve the Custodian of its responsibilities or
         liabilities hereunder.  In addition, the Custodian may appoint an
         affiliate of the Custodian located outside of the United States to
         perform such of its duties hereunder as are required to be performed
         outside of the United States.

2.10     DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS.  The Custodian
         may deposit and/or maintain securities owned by a Portfolio in a
         clearing agency registered with the Securities and Exchange Commission
         under Section 17A of the Securities Exchange Act of 1934, which acts
         as a securities depository, or in the book-entry system authorized by
         the U.S. Department of the Treasury and certain federal agencies,
         collectively referred to herein as Securities System in accordance with
         applicable Federal Reserve Board and Securities and Exchange Commission

                                          19
<PAGE>


    rules and regulations, if any, and subject to the following provisions:

         1)   The Custodian may keep securities of the Portfolio in a
              Securities System provided that such securities are represented
              in an account ("Account") of the Custodian in
              the Securities System which shall not include any assets of the
              Custodian other than assets held as a fiduciary, custodian or
              otherwise for customers;

         2)   The records of the Custodian with respect to securities of the
              Portfolio which are maintained in a Securities System shall
              identify by book-entry those securities belonging to the
              Portfolio;

         3)   The Custodian shall pay for securities purchased for the account
              of the Portfolio upon (i) receipt of advice from the Securities
              System that such securities have been transferred to the
              Account, and (ii) the making of an entry on the
              records of the Custodian to reflect such payment and transfer for
              the account of the


                                          20
<PAGE>

              Portfolio.  The Custodian shall transfer securities sold for the
              account of the Portfolio upon (i) receipt of advice from the
              Securities System that payment for such securities has been
              transferred to the Account, and (ii) the making
              of an entry on the records of the Custodian to reflect such
              transfer and payment for the account of the Portfolio.  Copies of
              all advices from the Securities System of transfers of securities
              for the account of the Portfolio shall identify the Portfolio, be
              maintained for the Portfolio by the Custodian and be provided to
              the Fund at its request.  Upon request, the Custodian shall
              furnish the Fund on behalf of the Portfolio confirmation of each
              transfer to or from the account of the Portfolio in the form of a
              written advice or notice and shall furnish to the Fund on behalf
              of the Portfolio copies of daily transaction sheets reflecting
              each day's transactions in the Securities System for the account
              of the Portfolio on the next


                                          21
<PAGE>

              business day;

         4)   The Custodian shall provide the Fund for the Portfolio with any
              report obtained by the Custodian on the Securities System's
              accounting system, internal accounting control and procedures for
              safeguarding securities deposited in the Securities System;

         5)   The Custodian shall have received from the Fund on behalf of the
              Portfolio the initial or annual certificate, as the case may be,
              required by Article 14 hereof;

         6)   Anything to the contrary in this Contract notwithstanding, the
              Custodian shall be liable to the Fund for the benefit of the
              Portfolio for any loss or damage to the Portfolio resulting from
              use of the Securities System by reason of any negligence,
              misfeasance or misconduct of the Custodian or any of its agents
              or of any of its or their employees or from failure of the
              Custodian or any such agent to enforce effectively such rights as
              it may have against the Securities System; at the election of the
              Fund, it shall be entitled to be subrogated to the


                                          22
<PAGE>

              rights of the Custodian with respect to any claim against the
              Securities System or any other person which the Custodian may
              have as a consequence of any such loss or damage if and to the
              extent that the Portfolio has not been made whole for any such
              loss or damage; provided, that the Custodian shall,
              notwithstanding such subrogation, reimburse the Portfolio for its
              reasonable expenses in connection with such claim.

2.10A         FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
              The Custodian may deposit and/or maintain securities owned by a
              Portfolio in the Direct Paper System of the Custodian subject to
              the following provisions:

         1)   No transaction relating to securities in the Direct Paper System
              will be effected in the absence of Proper Instructions from the
              Fund on behalf of the Portfolio;

         2)   The Custodian may keep securities of the Portfolio in the Direct
              Paper System only if such securities are represented in an
              account ("Account") of the Custodian in the Direct


                                          23
<PAGE>

              Paper System which shall not include any assets of the Custodian
              other than assets held as a fiduciary, custodian or otherwise for
              customers;

         3)   The records of the Custodian with respect to securities of the
              Portfolio which are maintained in the Direct Paper System shall
              identify by book-entry those securities belonging to the
              Portfolio;

         4)   The Custodian shall pay for securities purchased for the account
              of the Portfolio upon the making of an entry on the records of
              the Custodian to reflect such payment and transfer of securities
              to the account of the Portfolio.  The Custodian shall transfer
              securities sold for the account of the Portfolio upon the making
              of an entry on the records of the Custodian to reflect such
              transfer and receipt of payment for the account of the Portfolio;

         5)   The Custodian shall furnish the Fund on behalf of the Portfolio
              confirmation of each transfer to or from the account of the
              Portfolio, in the form of a written


                                          24
<PAGE>

              advice or notice, of Direct Paper on the next business day
              following such transfer and shall furnish to the Fund on behalf
              of the Portfolio copies of daily transaction sheets reflecting
              each day's transaction in the Securities System for the account
              of the Portfolio;

         6)   The Custodian shall provide the Fund on behalf of the Portfolio
              with any report on its system of internal accounting control as
              the Fund may reasonably request from time to time.

2.11     SEGREGATED ACCOUNT.  The Custodian shall upon receipt of Proper
         Instructions from the Fund on behalf of each applicable Portfolio
         establish and
         maintain a segregated account or accounts for and on behalf of each
         such Portfolio, into which account or accounts may be transferred cash
         and/or securities, including securities maintained in an account by
         the Custodian pursuant to Section 2.10 hereof, (i) in accordance with
         the provisions of any agreement among the Fund on behalf of the
         Portfolio, the Custodian and a broker-dealer registered under the
         Exchange Act and a member


                                          25
<PAGE>

         of the NASD (or any futures commission merchant registered under the
         Commodity Exchange Act), relating to compliance with the rules of The
         Options Clearing Corporation and of any registered national securities
         exchange (or the Commodity Futures Trading Commission or any
         registered contract market), or of any similar organization or
         organizations, regarding escrow or other arrangements in connection
         with transactions by the Portfolio, (ii) for purposes of segregating
         cash or government securities in connection with options purchased,
         sold or written by the Portfolio or commodity futures contracts or
         options thereon purchased or sold by the Portfolio, (iii) for the
         purposes of compliance by the Portfolio with the procedures required
         by Investment Company Act Release No. 10666, or any subsequent release
         or releases of the Securities and Exchange Commission relating to the
         maintenance of segregated accounts by registered investment companies
         and (iv) for other proper corporate purposes, BUT ONLY, in the case of
         clause (iv), upon receipt of, in addition to Proper Instructions from
         the Fund on behalf of the applicable


                                          26
<PAGE>

         Portfolio, a certified copy of a resolution of the Board of
         Trustees or of the Executive Committee signed by an officer of the
         Fund and certified by the Secretary or an Assistant Secretary, setting
         forth the purpose or purposes of such segregated account and declaring
         such purposes to be proper corporate purposes.

2.12     OWNERSHIP CERTIFICATES FOR TAX PURPOSES.  The Custodian shall execute
         ownership and other certificates and affidavits for all federal and
         state tax purposes in connection with receipt of income or other
         payments with respect to domestic securities of each Portfolio held by
         it and in connection with transfers of securities.

2.13     PROXIES.  The Custodian shall, with respect to the domestic securities
         held hereunder, cause to be promptly executed by the registered holder
         of such securities, if the securities are registered otherwise than in
         the name of the Portfolio or a nominee of the Portfolio, all proxies,
         without indication of the manner in which such proxies are to be
         voted, and shall promptly deliver to the Portfolio such

                                          27
<PAGE>

         proxies, all proxy soliciting materials and all notices relating to
         such securities.

2.14     COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES.  Subject to the
         provisions of Section 2.3, the Custodian shall transmit promptly to
         the Fund for each Portfolio all written information (including,
         without limitation, pendency of calls and maturities of domestic
         securities and expirations of rights in connection therewith and
         notices of exercise of call and put options written by the Fund on
         behalf of the Portfolio and the maturity of futures contracts
         purchased or sold by the Portfolio) received by the Custodian from
         issuers of the securities being held for the Portfolio.  With respect
         to tender or exchange offers, the Custodian shall transmit promptly to
         the Portfolio all written information received by the Custodian from
         issuers of the securities whose tender or exchange is sought and from
         the party (or his agents) making the tender or exchange offer.  If the
         Portfolio desires to take action with respect to any tender offer,
         exchange offer or any other similar transaction, the Portfolio shall


                                          28
<PAGE>

         notify the Custodian at least three business days prior to the date on
         which the Custodian is to take such action.

3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES

3.1      APPOINTMENT OF FOREIGN SUB-CUSTODIANS.  The Fund hereby authorizes and
         instructs the Custodian to employ as sub-custodians for the
         Portfolio's securities and other assets maintained outside
         the United States the foreign banking institutions and foreign
         securities depositories designated on Schedule A hereto ("foreign
         sub-custodians").  Upon receipt of "Proper Instructions", as defined
         in Section 5 of this Contract together with a certified resolution of
         the Fund's Board of Trustees, the Custodian and the Fund may agree to
         amend Schedule A hereto from time to time to designate additional
         foreign banking institutions and foreign securities depositories to
         act as sub-custodian.  Upon receipt of Proper Instructions, the Fund
         may instruct the Custodian to cease the employment of any one or more
         such sub-custodians for maintaining custody of a Portfolio's assets.


                                          29
<PAGE>

3.2      ASSETS TO BE HELD.  The Custodian shall limit the securities and other
         assets maintained in the custody of the foreign sub-custodians to: (a)
         "foreign securities", as defined in paragraph (c)(l) of Rule 17f-5
         under the Investment Company Act of 1940, and (b) cash and cash
         equivalents in such amounts as the Custodian or the Fund may determine
         to be reasonably necessary to effect the Portfolio's foreign securities
         transactions. The Custodian shall identify on its books as belonging
         to the Fund, the foreign securities of the Fund held by each
         foreign sub-custodian.

3.3      FOREIGN SECURITIES DEPOSITORIES.  Except as may otherwise be agreed
         upon in writing by the Custodian and the Fund, assets of the Portfolios
         shall be maintained in foreign securities depositories only through
         arrangements implemented by the foreign banking institutions serving
         as sub-custodians pursuant to the terms hereof.  Where possible, such
         arrangements shall include entry into agreements containing the
         provisions set forth in Section 3.4 hereof.

3.4      AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS.  Each agreement with a
         foreign banking


                                          30
<PAGE>

         institution shall be substantially in the form set forth in Exhibit 1
         hereto and shall provide that: (a) the assets of each Portfolio will
         not be subject to any right, charge, security interest, lien or claim
         of any kind in favor of the foreign banking institution or its
         creditors or agent, except a claim of payment for their safe custody
         or administration; (b) beneficial ownership for the assets of each
         Portfolio will be freely transferable without the payment of money or
         value other than for custody or administration; (c) adequate records
         will be maintained identifying the assets as belonging to each
         applicable Portfolio; (d) officers of or auditors employed by, or other
         representatives of the Custodian, including to the extent permitted
         under applicable law the independent public accountants for the Fund,
         will be given access to the books and records of the foreign banking
         institution relating to its actions under its agreement with the
         Custodian; and (e) assets of the Portfolios held by the foreign
         sub-custodian will be subject only to the instructions of the
         Custodian or its agents.

3.5      ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND.  Upon request of the
         Fund, the Custodian will


                                          31

<PAGE>

         use its best efforts to arrange for the independent accountants of the
         Fund to be afforded access to the books and records of any foreign
         banking institution employed as a foreign sub-custodian insofar as
         such books and records relate to the performance of such foreign
         banking institution under its agreement with the Custodian.

3.6      REPORTS BY CUSTODIAN.  The Custodian will supply to the Fund from time
         to time, as mutually agreed upon, statements in respect of the
         securities and other assets of the Portfolio(s) held by foreign
         sub-custodians, including but not limited to an identification of
         entities having possession of the Portfolio(s) securities and other
         assets and advices or notifications of any transfers of securities to
         or from each custodial account maintained by a foreign banking
         institution for the Custodian on behalf of each applicable Portfolio
         indicating, as to securities acquired for a Portfolio, the identity of
         the entity having physical possession of such securities
     

3.7      TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.  (a) Except as otherwise
         provided in paragraph


                                          32
<PAGE>

         (b) of this Section 3.7, the provision of Sections 2.2 and 2.7 of this
         Contract shall apply, MUTATIS MUTANDIS to the foreign securities of
         the Fund held outside the United States by foreign
         sub-custodians.  (b) Notwithstanding any provision of this Contract to
         the contrary, settlement and payment for securities received for the
         account of each applicable Portfolio and delivery of securities
         maintained for the account of each applicable Portfolio may be
         effected in accordance with the customary established securities
         trading or securities processing practices and procedures in the
         jurisdiction or market in which the transaction occurs, including,
         without limitation, delivering securities to the purchaser thereof or
         to a dealer therefor (or an agent for such purchaser or dealer)
         against a receipt with the expectation of receiving later payment for
         such securities from such purchaser or dealer.  (c) Securities
         maintained in the custody of a foreign sub-custodian may be maintained
         in the name of such entity's nominee to the same extent as set forth
         in Section 2.3 of this Contract, and the Fund agrees to hold any such
         nominee

                                          33

<PAGE>

         harmless from any liability as a holder of record of such securities.

3.8      LIABILITY OF FOREIGN SUB-CUSTODIANS.  Each agreement pursuant to which
         the Custodian employs a foreign banking institution as a foreign
         sub-custodian shall require the institution to exercise reasonable
         care in the performance of its duties and to indemnify, and hold
         harmless, the Custodian and the Fund from and against any loss,
         damage, cost, expense, liability or claim arising out of or in
         connection with the institution's performance of such obligations.  At
         the election of the Fund, it shall be entitled to be subrogated to the
         rights of the Custodian with respect to any claims against a foreign
         banking institution as a consequence of any such loss, damage, cost,
         expense, liability or claim if and to the extent that the Fund has not
         been made whole for any such loss, damage, cost, expense, liability or
         claim.

3.9      LIABILITY OF CUSTODIAN.  The Custodian shall be liable for the acts or
         omissions of a foreign banking institution to the same extent as set
         forth with respect to sub-custodians


                                          34
<PAGE>

         generally in this Contract and, regardless of whether assets are
         maintained in the custody of a foreign banking institution, a foreign
         securities depository or a branch of a U.S. bank as contemplated by
         paragraph 3.12 hereof, the Custodian shall not be liable for any loss,
         damage, cost, expense, liability or claim resulting from
         nationalization, expropriation, currency restrictions, or acts of war
         or terrorism or any loss where the sub-custodian has otherwise
         exercised reasonable care.  Notwithstanding the foregoing provisions
         of this paragraph 3.9, in delegating custody duties to State Street
         London Ltd., the Custodian shall not be relieved of any responsibility
         to the Fund for any loss due to such delegation, except such loss as
         may result from (a) political risk (including, but not limited to,
         exchange control restrictions, confiscation, expropriation,
         nationalization, insurrection, civil strife or armed hostilities) or
         (b) other losses (excluding a bankruptcy or insolvency of State Street
         London Ltd. not caused by political risk) due to acts of God, nuclear
         incident or other losses under


                                          35
<PAGE>

         circumstances where the Custodian and State Street London Ltd. have
         exercised reasonable care.

3.10     REIMBURSEMENT FOR ADVANCES.  If the Fund requires the Custodian to
         advance cash or securities for any purpose for the benefit of a
         Portfolio including the purchase or sale of foreign exchange or of
         contracts for foreign exchange, or in the event that the Custodian or
         its nominee shall incur or be assessed any taxes, charges, expenses,
         assessments, claims or liabilities in connection with the performance
         of this Contract, except such as may arise from its or its nominee's
         own negligent action, negligent failure to act or willful misconduct,
         any property at any time held for the account of the applicable 
         Portfolio shall be security therefor and should the Fund fail to repay
         the Custodian promptly, the Custodian shall be entitled to utilize
         available cash and to dispose of such Portfolios assets to the extent
         necessary to obtain reimbursement.

3.11     MONITORING RESPONSIBILITIES.  The Custodian shall furnish annually to
         the Fund, during the month of June, information


                                          36
<PAGE>

         concerning the foreign sub-custodians employed by the Custodian.  Such
         information shall be similar in kind and scope to that furnished to the
         Fund in connection with the initial approval of this Contract.  In
         addition, the Custodian will promptly inform the Fund
         in the event that the Custodian learns of a material adverse change in
         the financial condition of a foreign sub-custodian or any loss of the
         assets of the Fund or in the case of any foreign sub-custodian not
         the subject of an exemptive order from the Securities and Exchange
         Commission is notified by such foreign sub-custodian that there
         appears to be a substantial likelihood that its shareholders' equity
         will decline below $200 million (U.S. dollars or the equivalent
         thereof) or that its shareholders' equity has declined below $200
         million (in each case computed in accordance with generally accepted
         U.S. accounting principles).

3.12     BRANCHES OF U.S. BANKS.
         (a) Except as otherwise set forth in this Contract, the provisions
         hereof shall not apply where the custody of a Portfolio's assets is
         maintained in a foreign branch of a banking institution which is a
         "bank" as defined by Section 2(a)(5) of the Investment


                                          37
<PAGE>

         Company Act of 1940 meeting the qualification set forth in Section
         26(a) of said Act.  The appointment of any such branch as a
         sub-custodian shall be governed by paragraph 1 of this Contract.  (b)
         Cash held for each Portfolio of the Fund in the United Kingdom shall 
         be maintained in an interest bearing account established for the Fund
         with the Custodian's London branch, which account shall be subject to
         the direction of the Custodian, State Street London Ltd. or both.

3.13     TAX LAW.

         (a) UNITED STATES TAXES.  The Custodian shall have no responsibility
         or liability for any obligations now or hereafter imposed on the Fund 
         or the Custodian as custodian of the Fund by the tax law of
         the United States of America or any state or political subdivision
         thereof.  The Custodian will be responsible for informing the Fund of
         the income received by the Fund which is United States source income
         and which is not United States source income.

         (b) CLAIMING FOR EXEMPTION OR REFUND UNDER THE TAX LAWS OF NON-UNITED
         STATES JURISDICTIONS.  The sole responsibility of the Custodian with
         regard to the tax laws of non-United States jurisdictions shall be to
         identify the income of the Fund which has been subject to withholding
         and other tax asessments or other governmental charges by such
         jurisdictions and the amount thereof and to use reasonable efforts 
         to assist the Fund with respect to any claim for exemption or refund
         of such charges that can be made on behalf of the Fund.


                                          38
<PAGE>

         
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND

    The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund.  The Custodian will provide notification to
the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt
by it of payments for Shares of such Portfolio.

    From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the
Board of Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available to an
account maintained outside of the United States (except as specified by the
Fund for a particular Portfolio) for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase of their
Shares.

5.  PROPER INSTRUCTIONS

    Proper Instructions as used throughout this


                                          39
<PAGE>

Contract means a writing signed or initialled by one or more person or persons
as the Board of Trustees shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Fund accompanied by a detailed description of
procedures approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
such procedures afford adequate safeguards for the Portfolios' assets. For
purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.11.


                                          40
<PAGE>

6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY

    The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:

    1)   make payments to itself or others for minor expenses of handling
         securities or other similar items relating to its duties under this
         Contract, PROVIDED that all such payments shall be accounted for to
         the Fund on behalf of the Portfolio;

    2)   surrender securities in temporary form for securities in definitive
         form;

    3)   endorse for collection, in the name of the Portfolio, checks, drafts
         and other negotiable instruments; and

    4)   in general, attend to all non-discretionary details in connection with
         the sale, exchange, substitution, purchase, transfer and other
         dealings with the securities and property of the Portfolio except as
         otherwise directed by the Board of Trustees of the Fund.

7. EVIDENCE OF AUTHORITY

    The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of


                                          41
<PAGE>

the Fund.  The Custodian may receive and accept a certified copy of a vote
of the Board of Trustees of the Fund as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Declaration of Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of written
notice to the contrary.

8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME

    The Custodian shall keep the books of account of each Portfolio of the Fund.
Until otherwise directed by Proper Instructions, the Custodian shall compute
the net asset value per share of the outstanding shares of each Portfolio
of the Fund.  The Custodian shall also calculate daily the net income of
each Portfolio of the Fund as described in the Fund's currently effective
prospectus for such Portfolio and shall advise the Fund and the Transfer
Agent daily of the total amounts of such net income and, if instructed in
writing by an officer of the Fund to do so, shall advise the Transfer
Agent periodically of the division of such net income among its various
components.  The calculation of the net asset value per share and the
daily income of each Portfolio of the Fund shall be made at the time or
times described from time to time in the Fund's currently effective
prospectus for such Portfolio.

9. RECORDS

    The Custodian shall with respect to each Portfolio create and maintain
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereof.  All such records shall be the property


                                          42
<PAGE>

of the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission.  The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.

10. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS

    The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian under 
this Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such


                                          43
<PAGE>

inadequacies, the reports shall so state.

11. COMPENSATION OF CUSTODIAN

    The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.

12. RESPONSIBILITY OF CUSTODIAN

    So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement.  The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence.  It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be 


                                          44
<PAGE>

without liability for any action reasonably taken or omitted pursuant to such
advice.

    The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.

    If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in the Custodian
or its nominee assigned to the Fund or the Portfolio being liable for the
payment of money or incurring liability of some other form, the Fund, on behalf
of the Portfolio, as a


                                          45
<PAGE>

prerequisite to requiring the Custodian to take such action, shall provide
indemnity to the Custodian in an amount and form satisfactory to it.

    If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.

13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT

    This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at


                                          46

<PAGE>

any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System by such Portfolio and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has reviewed the use by such Portfolio of such Securities
System, as required in each case by Rule 17f-4 under
the Investment Company Act of 1940, as amended, and that the Custodian shall not
with respect to a Portfolio act under Section 2.10A hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has approved the initial use of the Direct Paper
System by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has reviewed the
use by such Portfolio of the Direct Paper System;
PROVIDED FURTHER, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, or any
provision of the Declaration of Trust, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its Board
of Trustees (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this


                                          47
<PAGE>

Contract in the event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.

    Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.

14. SUCCESSOR CUSTODIAN

    If a successor custodian for the Fund, or one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held
in a Securities System.

    If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in


                                          48
<PAGE>

accordance with such vote.

    In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the Investment Company Act of
1940, doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $50,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System.  Thereafter, such bank or trust
company shall be the successor of the Custodian under this Contract.

    In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to
or of the Board of Trustees to appoint a


                                          49
<PAGE>

successor custodian, the Custodian shall be entitled to fair compensation for
its services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall remain in full
force and effect.

15. INTERPRETIVE AND ADDITIONAL PROVISIONS

    In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract.  Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund.  No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.

16. ADDITIONAL SERIES

    In the event that the Fund establishes one or more series of Shares in
addition to 



                                          50
<PAGE>




                                                 with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.

17. MASSACHUSETTS LAW TO APPLY

    This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.

18. PRIOR CONTRACTS

    This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.

19. SHAREHOLDER COMMUNICATIONS ELECTION

    Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of


                                          51
<PAGE>

beneficial owners of securities of that issuer held by the bank unless the
beneficial owner has expressly objected to disclosure of this information.  In
order to comply with the rule, the Custodian needs the Fund to indicate whether
it authorizes the Custodian to provide the Fund's name, address and share
position to requesting companies whose securities the Fund owns.  If the
Fund tells the Custodian "no", the Custodian will not provide this information
to requesting companies.  If the Fund tells the Custodian "yes" or does not
check either "yes" or "no" below, the Custodian is required by the rule to treat
the Fund as consenting to disclosure of this information for all securities
owned by the Portfolio or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company
from using the Fund's name and address for any purpose other
than corporate communications.  Please indicate below whether the Fund consents
or objects by checking one of the alternatives below.

    YES [ ]   The Custodian is authorized to release the Fund's name,
              address, and share positions.


                                          52
<PAGE>

    NO  [X]   The Custodian is not authorized to release the Fund's name,
              address, and share positions.

20. LIMITATION OF LIABILITY

    The references herein to the Trustees of the Fund are to the Trustees of
the Fund as trustees and not individually or personally.  The obligations of the
Fund entered into on behalf of the Fund by any of the Trustees are not made
individually but in their capacity as trustees and are not binding on any of the
Trustees personally.  All persons dealing with the Fund must look solely to the
assets of the Fund for the enforcement of any claims against the Fund.


                                          53
<PAGE>

    IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of the
        day of           , 1996.

                   

                 
                 

                   STATE STREET BANK AND TRUST COMPANY

                 By 






                                          54
<PAGE>

[insert fee schedule]

                                                 Exhibit 9(a)



                                JPM SERIES TRUST
                           CO-ADMINISTRATION AGREEMENT


         CO-ADMINISTRATION AGREEMENT, dated as of October 10, 1996, by and
between JPM Series Trust, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), and Funds Distributor,
Inc., a Massachusetts corporation (the "Co-Administrator").

                              W I T N E S S E T H:

         WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");

         WHEREAS, the Shares of Beneficial Interest (par value $0.001 per share)
of the Trust (the "Shares") are divided into multiple series (together with any
series which may in the future be established, the "Series" or the "Fund"); and

         WHEREAS, the Trust wishes to engage the Co-Administrator to provide
certain administrative and management services, and the Co-Administrator is
willing to provide such administrative and management services to the Trust and
each Series, on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:

         1. Duties of the Co-Administrator. Subject to the general direction and
control of the Board of Trustees of the Trust, the Co-Administrator shall
perform the following administrative and management services: (a) providing or
obtaining office space, equipment and clerical personnel necessary for
maintaining the organization of the Trust, including a principal office in
Massachusetts, and for performing the administrative and management functions
herein set forth; (b) arranging for Directors, officers and employees of the
Co-Administrator or its agents, reasonably acceptable to the Trustees, to serve
as Trustees, officers or agents of the Trust and perform the duties incident to
their office, if duly elected or appointed to such positions and subject to
their individual consent and to any limitations imposed by law; (c) preparing
such reports, applications and documents (including reports regarding the sale
and redemption of Shares as reported by the Trust's transfer agent as may be
required in order to comply with state securities laws) as may be necessary or
desirable to register Shares with state securities authorities, monitoring the
sale of Shares as reported by the Trust's transfer agent for compliance with
state securities laws, and filing with the appropriate state securities
authorities the registration statements and reports for the Trust and the Shares
and all amendments thereto, as may be necessary or convenient to register and
keep effective the Trust and the Shares with


<PAGE>


state
securities authorities to enable the Trust to make a continuous offering of
Shares; (d) filing documents with regulatory authorities or mailing documents to
investors in or Trustees of the Trust to the extent requested by the Trust; (e)
reviewing and filing with the National Association of Securities Dealers all
marketing and sales literature provided to the Co-Administrator on behalf of the
Trust; and (f) maintaining books and records of the Trust related to the
foregoing. In the performance of its duties under this Agreement, the
Co-Administrator will comply with the provisions of the Declaration of Trust and
By-Laws of the Trust and the Trust's stated investment objectives, policies and
restrictions and will use its best efforts to safeguard and promote the welfare
of the Trust and to comply with other policies which the Board of Trustees may
from time to time determine. Notwithstanding the foregoing, the Co-Administrator
shall not be deemed to have assumed any duties with respect to this Agreement,
including, without limitation, any responsibility for the management of the
Trust's assets or the rendering of investment advice and supervision with
respect thereto, nor shall the Co-Administrator be deemed to have assumed or
have any responsibility with respect to functions specifically assumed by any
transfer agent, custodian or other administrative service provider of the Trust.
The Co-Administrator undertakes to comply with all applicable requirements of
the U.S. federal securities laws and any other laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by it hereunder.

         2. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Co-Administrator hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request.

         3. Allocation of Charges and Expenses. The Co-Administrator shall pay
the entire salaries and wages of all of the Trust's Trustees, officers and
agents who devote part or all of their time to the affairs of the
Co-Administrator or its affiliates, and the wages and salaries of such persons
shall not be deemed to be expenses incurred by the Trust for purposes of this
Section 3. Except as provided in the foregoing sentence, the Co-Administrator
shall not pay other expenses relating to the Trust including, without
limitation, compensation of Trustees not affiliated with the Co-Administrator;
governmental fees; interest charges; taxes; membership dues in the Investment
Company Institute allocable to the Trust; fees and expenses of the Trust's
independent auditors, of legal counsel and of any transfer agent, distributor,
shareholder servicing agent, registrar or dividend disbursing agent of the
Trust; expenses of distributing and redeeming Shares and servicing shareholder
accounts; expenses of preparing, printing and mailing prospectuses and
statements of additional information, reports, notices, proxy statements and
reports to shareholders and governmental officers and commissions; expenses of
preparing and mailing agendas and supporting documents for meetings of Trustees
and committees of Trustees; expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the Trust's custodian for all services to the Trust, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses of calculating the net asset value of the Shares; expenses of
shareholder meetings; and expenses relating to the issuance, registration and
qualification of Shares.

         4.  Compensation of  Co-Administrator.  For  the services to be
rendered and the facilities to be provided by the Co-Administrator  hereunder,
the Co-Administrator shall receive a fee from

                                        2

<PAGE>


each such Series of the Trust as
agreed by the Trust and the Co-Administrator from time to time as set forth on
Schedule A attached hereto. This fee will be payable as agreed by the Trust and
the Co-Administrator, but no more frequently than monthly.

         5. Limitation of Liability of the Co-Administrator. The
Co-Administrator shall not be liable for any error of judgment or mistake of law
or for any act or omission in the administration or management of the Trust or
the performance of its duties hereunder, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of the
reckless disregard of its obligations and duties hereunder. As used in this
Section 5, the term "Co-Administrator" shall include Funds Distributor, Inc.
and/or any of its affiliates and the Directors, officers and employees of Funds
Distributor, Inc. and/or of its affiliates.

         6. Activities of the Co-Administrator. The services of the
Co-Administrator to the Trust are not to be deemed to be exclusive, the
Co-Administrator being free to render administrative and/or other services to
other parties. It is understood that Trustees, officers, and shareholders of the
Trust are or may become interested in the Co-Administrator and/or any of its
affiliates, as Directors, officers, employees, or otherwise, and that Directors,
officers and employees of the Co-Administrator and/or any of its affiliates are
or may become similarly interested in the Trust and that the Co-Administrator
and/or any of its affiliates may be or become interested in the Trust as a
shareholder or otherwise.

         7. Termination. This Agreement may be terminated as to any Series at
any time, without the payment of any penalty, by the Board of Trustees of the
Trust or by the Co-Administrator, in each case on not more than 60 days' nor
less than 30 days' written notice to the other party.

         8. Subcontracting by the Co-Administrator. The Co-Administrator may
subcontract for the performance of its obligations hereunder with any one or
more persons; provided, however, that the Co-Administrator may subcontract
hereunder only with the prior consent of the Trustees of the Trust; and
provided, further, that, unless the Trust otherwise expressly agrees in writing,
the Co-Administrator shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.

         9. Further  Actions.  Each party  agrees to perform  such further acts
and execute such further  documents as are necessary to effectuate the purposes
hereof.

         10.  Amendments.  This Agreement may be amended by only mutual written
consent.

         11. Confidentiality. The Co-Administrator agrees on behalf of itself
and its employees to treat confidentially and as proprietary information of the
Trust all records and other information not otherwise publicly available
relative to the Trust and its prior, present or potential shareholders and not
to use such records and information for any purpose other than performance of
its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Co-Administrator may be exposed to
civil or criminal contempt

                                         3

<PAGE>



proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.

         12. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. Should any part of this Agreement be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.

         13. Notice. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Co-Administrator at 60 State
Street, 13th Floor, Boston, Massachusetts 02109, Attention: President with a
copy to General Counsel; or (2) to the Trust at 60 State Street, Suite 1300,
Boston, Massachusetts 02109, Attention: Treasurer, or at such other address as
either party may from time to time specify to the other party pursuant to this
section, with a copy to Morgan Guaranty Trust Company of New York, 522 Fifth
Avenue, New York, New York 10036, Attention: Funds Management.

         14.  Governing  Law. This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned officer of the Trust has executed this Agreement not individually,
but as an officer of the Trust under the Trust's Declaration of Trust, dated
August 15, 1996, and the obligations of this Agreement are not binding upon any
of the Trustees or shareholders of the Trust individually, but bind only the
Trust estate.

                              JPM SERIES TRUST


                              By
                                 Name:
                                 Title:

                              FUNDS DISTRIBUTOR, INC.


                              By
                                 Name:
                                 Title:

PPADMI4
                                   4

<PAGE>





                                   Schedule A



         The Co-Administrator's annual fee charged to and payable by each
Covered Entity as defined below is its share of an annual complex-wide charge.
The annual complex-wide charge is:

   (a)   $425,000 for all Covered Entities, provided that such charge shall be
         increased by $5,000 for each Covered Entity in excess of 100, plus

    (b)  out-of-pocket charges for any services subcontracted pursuant to
         co-administration agreements with Covered Entities.

The portion of this charge payable by each Covered Entity is (i) in the case of
any charges described in paragraph (b) directly attributable to a particular
Covered Entity, the amount attributable to such Covered Entity, plus (ii) in the
case of all other amounts, the amount determined by the proportionate share that
such Covered Entity's net assets bear to the total net assets of the Covered
Entities.

A Covered Entity is any series of The JPM Pierpont Funds, The JPM Institutional
Funds, The JPM Advisor Funds, the Portfolios in which any series of the
foregoing invest, any series of JPM Series Trust and each other current or
future mutual fund (or series thereof) for which both (1) a tax return is filed
with the Internal Revenue Service under United States tax law and (2) Morgan
Guaranty Trust Company of New York provides investment advice and/or
administrative services and the Co-Administrator provides administration
services.

Approved:         _______ __, 1996
                  Effective _______ __, 1996


PPADMI4

                                                             Exhibit 9(b) 


                               JPM SERIES TRUST
                        ADMINISTRATIVE SERVICES AGREEMENT


          ADMINISTRATIVE SERVICES AGREEMENT, dated as of October 10, 1996, by
and between JPM Series Trust, an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts (the "Trust"), and Morgan Guaranty
Trust Company of New York, a New York trust company ("Morgan").

                              W I T N E S S E T H:

         WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");

         WHEREAS, the Shares of Beneficial Interest (par value $0.001 per share)
of the Trust (the "Shares") are divided into multiple series (such series
together with any other series which may in the future be established, the
"Funds"); and

         WHEREAS, the Trust wishes to engage Morgan to provide certain
administrative services for the Funds, and Morgan is willing to provide such
services for each Fund, on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:

         1.  Duties of Morgan.

         1.1. Subject to the general direction and control of the Board of
Trustees of the Trust, Morgan shall perform such administrative and related
services as may from time to time be reasonably requested by the Trust, which
shall include without limitation: a) arranging for the preparation and filing of
the Trust's tax returns and preparing financial statements and other financial
reports for review by the Trust's independent auditors; b) coordinating the
Trust's annual audits; c) developing the budget and establishing the rate of
expense accrual for each Fund; d) overseeing the preparation by the Trust's
transfer agent (the "Transfer Agent") of tax information for shareholders; e)
overseeing the Trust's custodian (the "Custodian") and the Transfer Agent and
other service providers, including expense disbursement; verifying the
calculation of performance data for the Trust and its reporting to the
appropriate tracking services; monitoring the pricing of portfolio securities
and compliance with amortized cost procedures, if applicable; computing the
amount and monitoring the frequency of distributing each Fund's dividends and
capital gains distributions and confirming that they have been properly
distributed to the shareholders of record; and monitoring calculation of net
asset value


<PAGE>


of Shares by the
Custodian; f) taking responsibility for compliance with all applicable federal
securities and other regulatory requirements (other than state securities
registration and filing requirements); g) taking responsibility for monitoring
each Fund's status as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the Code ); h) arranging for preparation of agendas
and supporting documents for and minutes of meetings of Trustees, committees of
Trustees, and shareholders; i) maintaining books and records relating to such
services; and j) providing such other related services as the Trust may
reasonably request, to the extent permitted by applicable law. Morgan shall
provide all personnel and facilities necessary in order for it to provide the
services contemplated by this paragraph.

         Morgan assumes no responsibilities under this Agreement other than to
render the services called for hereunder, on the terms and conditions provided
herein. In the performance of its duties under this Agreement, Morgan will
comply with the provisions of the Declaration of Trust and By-Laws of the Trust
and the stated investment objective, policies and restrictions of each Fund, and
will use its best efforts to safeguard and promote the welfare of the Trust, and
to comply with other policies which the Board of Trustees may from time to time
determine.

         2. Books and Records. Morgan shall with respect to each Fund create and
maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Trust under the
1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Trust and shall
at all times during the regular business hours of Morgan be open for inspection
by duly authorized officers, employees or agents of the Securities and Exchange
Commission. In compliance with the requirements of Rule 31a-3 under the 1940
Act, Morgan hereby agrees that all records which it maintains for the Funds are
the property of the Trust and further agrees to surrender promptly to the Trust
any such records upon the Trust's request.

         3. Opinion of the Trust's Independent Public Accountants. Morgan shall
take all reasonable action with respect to each Fund, as the Trust may from time
to time request, to obtain from year to year favorable opinions from the Trust's
independent public accountants with respect to its activities hereunder in
connection with the preparation of the Trust's registration statement on Form
N-1A, reports on Form N-SAR or other periodic reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.

         4. Liaison with Independent Public Accountants. Morgan shall act as
liaison with the Trust's independent public accountants and shall provide, upon
request, account analyses, fiscal year summaries and other audit-related
schedules. Morgan shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion as such
may be required by the Trust from time to time.

         5.  Allocation  of Charges and  Expenses.  Morgan  shall bear all of
the expenses  incurred in  connection with  carrying  out its duties  hereunder.
Each Fund  shall pay the usual,  customary  or  extraordinary  expenses
incurred  by the Fund or, as  appropriate,  the Trust and  allocable  to the 
Fund,  including  without  limitation compensation of Trustees;  federal and
state governmental

                                       2

<PAGE>


fees;  interest charges;  taxes;  membership dues in the
Investment Company Institute allocable to the Trust; fees and expenses of any
provider other than Morgan of services to the Trust under a co-administration
agreement (the Co-Administrator ), Morgan pursuant to the Shareholder Servicing
Agreement and this Agreement, Pierpont Group Inc. pursuant to the Fund Services
Agreement, independent auditors, legal counsel and of any transfer agent,
registrar or dividend disbursing agent of the Trust; expenses of preparing,
printing and mailing prospectuses and statements of additional information,
reports, notices, proxy statements and reports to shareholders and governmental
offices and commissions; expenses of preparing, printing and mailing agendas and
supporting documents for meetings of Trustees and committees of Trustees;
insurance premiums; fees and expenses of the Custodian for all services to the
Trust, including safekeeping of funds and securities and maintaining required
books and accounts; expenses of calculating the net asset value of Shares;
expenses of shareholder meetings; expenses relating to the issuance,
registration and qualification of Shares of the Trust; and litigation and
indemnification expenses.

         6. Compensation of Morgan. For the services to be rendered and the
expenses to be borne by Morgan hereunder, the Trust shall pay Morgan a fee at an
annual rate as set forth on Schedule A attached hereto from each Fund. This fee
will be computed daily and will be payable as agreed by the Trust and Morgan,
but no more frequently than monthly.

         7. Limitation of Liability of Morgan. Morgan shall not be liable for
any error of judgment or mistake of law or for any act or omission in the
performance of its duties hereunder, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of the
reckless disregard of its obligations and duties hereunder.

         8. Activities of Morgan. The services of Morgan to the Trust are not to
be deemed to be exclusive, Morgan being free to engage in any other business or
to render services of any kind to any other corporation, firm, individual or
association.

         9. Termination. This Agreement may be terminated as to any Fund at any
time, without the payment of any penalty, by the Board of Trustees of the Trust
or by Morgan, in each case on not more than 60 days' nor less than 30 days'
written notice to the other party.

         10. Subcontracting by Morgan. Morgan may subcontract for the
performance of its obligations hereunder with any one or more persons; provided,
however, that, unless the Trust otherwise expressly agrees in writing, Morgan
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as it would be for its own acts or omissions.

         11.  Further  Actions.  Each party agrees to perform such further acts
and execute such further  documents as are necessary to effectuate the purposes
hereof.

         12.  Amendments.  This Agreement may be amended only by mutual written
consent.

         13.  Miscellaneous.  This Agreement  embodies the entire agreement and 
understanding  between the parties hereto and supersedes all prior agreements,
terminations,  extensions or other

                                    3

<PAGE>


understandings relating to Morgan's
provision of financial, fund accounting or administrative services for the
Funds. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. Should any part of this Agreement be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors, to the extent permitted by law.

         14. Notice.  Any notice or other  communication  required to be given
pursuant to this Agreement  shall be deemed duly given if delivered or mailed by
registered  mail,  postage  prepaid (1) to  Morgan at Morgan  Guaranty
Trust Company of New York, 522 Fifth Avenue, New York, New York 10036, 
Attention:  Funds Management,  or (2) to the Trust at JPM Series Trust at 60
State Street, Suite 1300, Boston, Massachusetts 10009, Attention: Treasurer.

         15.  Governing  Law. This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written. The
undersigned officer of the Trust has executed this Agreement not individually,
but as an officer of the Trust under the Trust's Declaration of Trust, dated
August 15, 1996, and the obligations of this Agreement are not binding upon any
of the Trustees or shareholders of the Trust individually, but bind only the
Trust estate.

                               JPM SERIES TRUST



                               By___________________________
                                 Name:
                                 Title:

                               MORGAN  GUARANTY  TRUST  COMPANY OF
                                   NEW YORK



                                By___________________________
                                  Name:
                                  Title:

FFASKPP5.DOC
                                  4

<PAGE>


                                                                SCHEDULE A

                          ADMINISTRATIVE SERVICES FEES
                         JPM SERIES TRUST (THE "TRUST")


         The annual administrative services fee charged to and payable by each
Fund is equal to its proportionate share of an annual complex-wide charge. This
charge is calculated daily based on the aggregate net assets of the registered
investment companies listed on Exhibit I, as amended from time to time
(collectively the "Master Portfolios"), and in accordance with the following
annual schedule:

                  0.09% on the first $7 billion of the Master Portfolios'
                  aggregate average daily net assets; and 0.04% of the Master
                  Portfolios' aggregate average daily net assets in excess of $7
                  billion LESS the complex-wide charge of the Co-Administrator

         The portion of this charge payable by each Fund is determined by the
proportionate share that its net assets bear to the total of the net assets of
the Trust, The JPM Institutional Funds, The JPM Advisor Funds, The JPM Pierpont
Funds, the Master Portfolios and other investors in the Master Portfolios for
which Morgan provides similar services.

Approved:         _______ __, 1996
                  Effective _______ __, 1996



FFASKPP5.DOC



<PAGE>


                                                                  EXHIBIT I



                                                 DATE OF            EFFECTIVE
PORTFOLIO                                  DECLARATION OF TRUST        DATE

The Treasury Money Market Portfolio            11/4/92                 8/1/96
The Money Market Portfolio                     1/29/93                 8/1/96
The Tax Exempt Money Market Portfolio          1/29/93                 8/1/96
The Short Term Bond Portfolio                  1/29/93                 8/1/96
The U.S. Fixed Income Portfolio                1/29/93                 8/1/96
The Tax Exempt Bond Portfolio                  1/29/93                 8/1/96
The Selected U.S. Equity Portfolio             1/29/93                 8/1/96
The U.S. Small Company Portfolio               1/29/93                 8/1/96
The Non-U.S. Equity Portfolio                  1/29/93                 8/1/96
The Diversified Portfolio                      1/29/93                 8/1/96
The Non-U.S. Fixed Income Portfolio            6/16/93                 8/1/96
The Emerging Markets Equity Portfolio          6/16/93                 8/1/96
The New York Total Return Bond Portfolio       6/16/93                 8/1/96
The Series Portfolio*                          6/24/94
         The Asia Growth Portfolio                                     8/1/96
         The Japan Equity Portfolio                                    8/1/96
         The European Equity Portfolio                                 8/1/96
         The Disciplined Equity Portfolio                            __/__/96
         The Global Strategic Income Portfolio                       __/__/96
         The International Opportunities Portfolio                   __/__/96
JPM Series Trust*                               8/15/96
         Tax Aware Equity Fund                                       __/__/96
         Tax Aware Disciplined Equity Fund                           __/__/96
         California Bond Fund                                        __/__/96



*In the cases of The Series Portfolio and JPM Series Trust, references to
"Portfolio" or "Fund" refer to their respective individual series as the context
requires.


<PAGE>

                                                                 Exhibit 9(c)







                        TRANSFER AGENCY AND SERVICE AGREEMENT

                                       between



                                         and

                         STATE STREET BANK AND TRUST COMPANY


JPM259D
<PAGE>





                                  TABLE OF CONTENTS

                                                                           PAGE

Article 1 Terms of Appointment; Duties of the Bank........................   2

Article 2 Fees and Expenses ..............................................   5

Article 3 Representations and Warranties of the Bank......................   6

Article 4 Representations and Warranties of the Fund......................   7

Article 5 Data Access and Proprietary Information ........................   8

Article 6 Indemnification ................................................  10

Article 7 Standard of Care................................................  14

Article 8 Covenants of the Fund and the Bank..............................  14

Article 9 Termination of Agreement .......................................  16

Article 10 Additional Funds ..............................................  16

Article 11 Assignment ....................................................  17

Article 12 Amendment .....................................................  17

Article 13 Massachusetts Law to Apply.....................................  18

Article 14 Merger of Agreement............................................  18

Article 15 Limitations of Liability of the Trustees and the
           Shareholders ..................................................  18

Article 16 Counterparts ..................................................  18


<PAGE>


                        TRANSFER AGENCY AND SERVICE AGREEMENT


    AGREEMENT made as of the      day of        , 1996, by and
between                                      , a Massachusetts business trust,
having its principal office and place of business at
                                               (the "Fund"), and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").

    WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and

    WHEREAS, the Fund has established and will offer and continue to offer
shares in        series initially, 




(such series, together with all other series subsequently established by the
Fund and made subject to this Agreement in accordance with Article 10, being
herein referred to as a "Portfolio", and collectively as the "Portfolios");

    WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank
as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with


<PAGE>

certain other activities, and the Bank desires to accept such appointment;

    NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:

Article 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK

          1.01     Subject to the terms and conditions set forth in this
Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints
the Bank to act as, and the Bank agrees to act as its transfer agent for the
authorized and issued shares of beneficial interest of the Fund representing
interests in each of the respective Portfolios ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of each
of the respective Portfolios of the Fund ("Shareholders") and set out in the
currently effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic withdrawal program.

          1.02     The Bank agrees that it will perform the following services:

          (a) In accordance with procedures established from time to time
by agreement between the Fund on behalf of each of the Portfolios, as applicable
and the Bank, the Bank shall:

          (i) Receive orders for the purchase of Shares, and promptly
              deliver payment and appropriate documentation thereof to the
              Custodian of the Fund

                                         -2-

<PAGE>


                   authorized pursuant to the Declaration of Trust of the Fund
                   (the "Custodian");

          (ii)     Pursuant to purchase orders, issue the appropriate number of
                   Shares and hold such Shares in the appropriate Shareholder
                   account;

          (iii)    Receive redemption requests and redemption directions and
                   deliver the appropriate documentation thereof to the
                   Custodian;

          (iv)     At the appropriate time as and when it receives monies paid
                   to it by the Custodian with respect to any redemption, pay
                   over or cause to be paid over in the appropriate manner such
                   monies as instructed by the redeeming Shareholders;

          (v)      Effect transfers of Shares by the registered owners thereof
                   upon receipt of appropriate instructions;

          (vi)     Prepare and transmit payments for dividends and
                   distributions declared by the Fund on behalf of the
                   applicable Portfolio;

          (vii)    Report abandoned property to the various states as
                   authorized by the Fund per policies and principles agreed
                   upon by the Fund and the Bank;

          (viii)   Maintain records of account for and advise the Fund and its
                   Shareholders as to the foregoing; and

          (ix)     Record the issuance of Shares of the Fund and maintain
                   pursuant to SEC Rule 17Ad-10(e) a record of the total number
                   of Shares which are authorized,


                                         -3-
<PAGE>

                   based upon data provided to it by the Fund, and issued and
                   outstanding.  The Bank shall also provide the Fund on a
                   regular basis with the total number of Shares which are
                   authorized and issued and outstanding and shall have no
                   obligation, when recording the issuance of Shares, to
                   monitor the issuance of such Shares or to take cognizance of
                   any laws relating to the issue or sale of such Shares, which
                   functions shall be the sole responsibility of the Fund.

          (b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank shall:  (i) perform
the customary services of a transfer agent, dividend disbursing agent, custodian
of certain retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:  maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and


                                         -4-

<PAGE>

other confirmable transactions in Shareholder accounts, preparing and mailing
activity statements for Shareholders, and providing Shareholder account
information and (ii) provide a system which will enable the Fund to monitor the
total number of Shares sold in each State.

          (c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State.  The responsibility of the Bank for the Fund's blue sky
State registration status is solely limited to providing the system referred to
above, the initial establishment of transactions subject to blue sky compliance
by the Fund and the reporting of such transactions to the Fund as provided
above.

          (d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
on behalf of each Portfolio and the Bank per the attached service responsibility
schedule.  The Bank may at times perform only a portion of these services and
the Fund or its agent may perform these services on the Fund's behalf.

Article 2 FEES AND EXPENSES

          2.01     For performance by the Bank pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto.  Such fees


                                         -5-

<PAGE>

and out-of-pocket expenses and advances identified under Section 2.02 below may
be changed from time to time subject to mutual written agreement between the
Fund and the Bank.

          2.02     In addition to the fee paid under Section 2.01 above, the
Fund agrees on behalf of each of the Portfolios to reimburse the Bank for out-
of-pocket expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, tabulating proxies, records
storage or advances incurred by the Bank for the items set out in the fee
schedule attached hereto.  In addition, any other expenses incurred by the Bank
at the request or with the consent of the Fund, will be reimbursed by the Fund
on behalf of the applicable Portfolio.

          2.03     The Fund agrees on behalf of each of the Portfolios to pay
all fees and reimbursable expenses promptly following the receipt of the
respective billing notice.  Procedures applicable to advance payment by the Fund
to the Bank of postage for mailing dividends, proxies, Fund reports and other
mailings to Shareholder accounts may be established from time to time by
agreement between the Fund and the Bank.

Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK

          The Bank represents and warrants to the Fund that:

          3.01     It is a trust company duly organized and existing and in
good standing under the laws of the Commonwealth of Massachusetts.

          3.02     It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.


                                         -6-

<PAGE>

          3.03     It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.

          3.04     All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.

          3.05     It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.

Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND

          The Fund represents and warrants to the Bank that:

    4.01  It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.

    4.02  It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.

    4.03  All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.

    4.04  It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.

    4.05  A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have been made
and the Fund will use its best efforts to continue to make such filings with
respect to all Shares of the Fund being offered for sale.


                                         -7-

<PAGE>

Article 5 DATA ACCESS AND PROPRIETARY INFORMATION

          5.01     The Fund acknowledges that the data bases, computer
programs, screen format, report formats, interactive design techniques, and
documentation manuals (collectively, "Proprietary Information") furnished to the
Fund by the Bank as part of the Fund's ability to access certain Fund-related
data ("Customer Data") maintained by the Bank on data bases under the control
and ownership of the Bank or other third party ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary information of
substantial value to the Bank or other third party.  In no event shall
Proprietary Information be deemed Customer Data.  The Fund agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees that it
shall not divulge any Proprietary Information to any person or organization
except as may be provided hereunder.  Without limiting the foregoing, the Fund
agrees for itself and its employees and agents:

          (a) to access Customer Data solely from locations as may be
              designated in writing by the Bank and solely in accordance
              with the Bank's applicable user documentation;

          (b) to refrain from copying or duplicating in any way the
              Proprietary Information;

          (c) to refrain from obtaining unauthorized access to any portion
              of the Proprietary Information, and if such access is
              inadvertently obtained, to inform in a timely manner of such
              fact and dispose of such


                                         -8-

<PAGE>

              information in accordance with the Bank's instructions;

          (d) to refrain from causing or allowing third-party data
              required hereunder from being retransmitted to any other
              computer facility or other location, except with the prior
              written consent of the Bank;

          (e) that the Fund shall have access only to those authorized
              transactions agreed upon by the parties;

          (f) to honor all reasonable written requests made by the Bank to
              protect at the Bank's expense the rights of the Bank in
              Proprietary Information at common law, under federal
              copyright law and under other federal or state law.

          Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5.  The obligations of this Article
shall survive any earlier termination of this Agreement.

          5.02     If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall use its best efforts to
promptly correct such failure.  Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees to make no claim against the Bank
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof.  DATA ACCESS SERVICES AND


                                         -9-

<PAGE>

ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH
ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS.  THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

          5.03     If the transactions available to the Fund include the
ability to originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information (such transactions are known as "Customer
Originated Electronic Financial Instructions" or "COEFI"), then in such event
the Bank shall be entitled to rely on the validity and authenticity of such
instruction without undertaking any further inquiry as long as such instruction
is undertaken in conformity with security procedures established by the Bank
from time to time.

Article 6 INDEMNIFICATION

          6.01     The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to any claim,
demand, action or suit in connection with:

          (a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.


                                         -10-

<PAGE>

          (b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.

          (c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund.

          (d) The reliance on, or the carrying out by the Bank or its
agents or subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.

          (e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state unless any such violation results from failure of the system provided by
the Bank to Section 1.02 (b) to operate properly.

          6.02     The Bank shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to any action or
failure or omission to act by the Bank as a result of the Bank's lack of good
faith, negligence or willful misconduct.


                                         -11-

<PAGE>

          6.03     At any time the Bank may apply to any officer of the Fund
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund on behalf of the applicable Portfolio for any
action taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel.  The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document furnished by or
on behalf of the Fund, reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction, information, data,
records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means authorized
by the Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund.  The Bank,
its agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a co-
transfer agent or co-registrar.

          6.04     In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage

                                         -12-

<PAGE>


reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes, provided
that the Bank shall use its best efforts to minimize the likelihood of all
damage, loss of data, delays and errors resulting from uncontrollable events,
and if such damage, loss of data, delays or errors occur, the Bank shall use its
best efforts to mitigate the effects of such occurrence.

          6.05     Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.

          6.06     In order that the indemnification provisions contained in
this Article 6 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim.  The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim.  The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.


                                         -13-

<PAGE>

Article 7 STANDARD OF CARE

          7.01     The Bank shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.

Article 8 COVENANTS OF THE FUND AND THE BANK

          8.01     The Fund shall on behalf of each of the Portfolios promptly
furnish to the Bank the following:

          (a) A certified copy of the resolution of the Trustees of the
Fund authorizing the appointment of the Bank and the execution and delivery of
this Agreement.

          (b) A copy of the Declaration of Trust and By-Laws of the Fund
and all amendments thereto.

          8.02     The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.  The forms and documents used for the Fund or its
Shareholders shall be acceptable to the Fund.

          8.03     The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable and as may
be reasonably acceptable to the Fund.  To the


                                         -14-

<PAGE>

extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.

          8.04     The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.  Notice shall be given to
the other party a reasonable time in advance of any such disclosure.  In
addition, in the case of any request or demand for the inspection of the
Shareholder records of the Fund, the Bank will notify the Fund promptly of
receipt of such request or demand and request instructions from an authorized
officer of the Fund as to such inspection.  The Fund will, within two business
days, furnish instructions to the Bank.  Pending receipt of such instructions,
the Bank will not disclose such Shareholder records and upon receipt the Bank
will abide by such instructions.  Notwithstanding any other provision of this
Agreement, in the event that (i) the Fund instructs the Bank not to disclose
such Shareholder records and the Bank has furnished the Fund with an opinion of
counsel that the Bank may be held liable for the failure to disclose such


                                         -15-

<PAGE>

Shareholder records, the Fund will indemnify the Bank for any such liability, or
(ii) the Bank discloses such Shareholder records without proper instructions
from the Fund, the Bank shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, reasonable counsel fees,
payments, expenses and liability arising out of or attributable to such
disclosure.  The provision of Section 6.06 shall govern such indemnification.

Article 9 TERMINATION OF AGREEMENT

          9.01     This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.

          9.02     Should the Fund exercise its right to terminate, all out-of-
pocket expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s).  Additionally, the
Bank reserves the right to charge for any other reasonable expenses associated
with such termination.

Article 10 ADDITIONAL FUNDS

          10.01 In the event that the Fund establishes one or more series of
Shares in addition to 




     with respect to which it desires to have the Bank render services as
transfer agent under the terms hereof, it shall so


                                         -16-

<PAGE>

notify the Bank in writing, and if the Bank agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.

Article 11 ASSIGNMENT

          11.01 Except as provided in Section 11.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.

          11.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

          11.03 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.

Article 12 AMENDMENT

          12.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Trustees of the Fund.


                                         -17-

<PAGE>

Article 13 MASSACHUSETTS LAW TO APPLY

          13.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.

Article 14 MERGER OF AGREEMENT

          14.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.

Article 15 LIMITATIONS OF LIABILITY OF THE TRUSTEES AND THE
           SHAREHOLDERS

          15.01 A copy of the Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or Shareholders individually but are
binding only upon the assets and property of the Fund. Article 16 COUNTERPARTS

          16.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.


                                         -18-

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.

               



               
               
               

                                       STATE STREET BANK AND TRUST COMPANY



                                       BY:


                                         -19-

<PAGE>

                          STATE STREET BANK & TRUST COMPANY
                            FUND SERVICE RESPONSIBILITIES*

                                                              RESPONSIBILITY
SERVICE PERFORMED                                             BANK      FUND
- - -----------------                                           ----      ----
1.  Receives orders for the purchase of Shares.                           X

2.  Issue Shares and hold Shares in Shareholders accounts.      X

3.  Receive redemption requests.                                          X

4.  Effect transactions 1-3 above directly with broker-dealers.    N/A

5.  Pay over monies to redeeming Shareholders.                  X

6.  Effect transfers of Shares.                                           X

7.  Prepare and transmit dividends and distributions.           X

8.  Issue Replacement Certificates.                                N/A

9.  Reporting of abandoned property.                            X

10. Maintain records of account.                                X

11. Maintain and keep a current and accurate control book
    for each issue of securities.                               X

12. Mail proxies.                                                         X

13. Mail Shareholder reports.                                             X

14. Mail prospectuses to current Shareholders.                            X

15. Withhold taxes on U.S. resident and non-resident alien
    accounts.                                                   X

16. Prepare and file U.S. Treasury Department forms.            X

17. Prepare and mail account and confirmation statements for
    Shareholders.                                               X


                                         -20-

<PAGE>


                                                                  RESPONSIBILITY
SERVICE PERFORMED                                                 BANK      FUND
- - -----------------                                               ----      ----

18. Provide Shareholder account information.                                 X

19. Blue sky reporting.                                                      X

*   Such services are more fully described in Article 1.02 (a), (b) and (c) of
    the Agreement.

                                        



                                        
                                        
                                        

                                        STATE STREET BANK AND TRUST COMPANY



                                        BY:


                                         -21-

<PAGE>

[insert fee schedule]

                                                     Exhibit 9(d)            


                                   JPM SERIES TRUST
                            SHAREHOLDER SERVICING AGREEMENT


         THIS  AGREEMENT  made as of the 10th day of October,  1996  between JPM
SERIES TRUST, an  unincorporated  business trust organized under the laws of the
Commonwealth of Massachusetts  (the "Trust"),  and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, a New York trust company ("Morgan").

                              W I T N E S S E T H:

         WHEREAS,  the Trust is a  diversified  open-end  management  investment
company  registered  under the  Investment  Company Act of 1940, as amended (the
"1940 Act"); and

         WHEREAS,  transactions in shares of the Trust ("Shares") may be made by
investors who are using the services of a financial  institution which is acting
as shareholder servicing agent pursuant to an agreement with the Trust; and

         WHEREAS,  Morgan wishes to act as the  shareholder  servicing agent for
its  customers  and for other  investors  in the Trust who are  customers  of an
Eligible  Institution as contemplated by the currently  effective  prospectus of
the  respective  Series of the Trust (the  "Customers")  in  performing  certain
administrative  functions in connection with purchases and redemptions of Shares
from time to time upon the order and for the account of Customers and to provide
related services to Customers in connection with their investments in the Trust;
and

         WHEREAS,  it is in the  interest  of the Trust to make the  shareholder
services of Morgan available to Customers who are or may become  shareholders of
the Trust; and

         NOW, THEREFORE, the Trust and Morgan hereby agree as follows:

         1.  Appointment.  Morgan hereby agrees to perform  certain  shareholder
services  as agent for  Customers  with  respect to each Fund (as defined in the
next  sentence) as  hereinafter  set forth.  As used herein,  a "Fund" means the
assets and liabilities of the Trust  attributable to any series of Shares as may
be created from time to time by the Trustees of the Trust and to which the Trust
and Morgan agree this Agreement shall apply.

                                         1

<PAGE>



         2.  Services to be Performed.
         2.1.  Shareholder  Services.  Morgan shall be  responsible  for
performing  shareholder  account administrative and servicing functions,
which shall include without limitation:

         (a) answering Customer inquiries  regarding account status and history,
the manner in which purchases and redemptions of the Shares may be effected, and
certain  other  matters  pertaining  to the Trust;  (b)  assisting  Customers in
designating and changing dividend options,  account  designations and addresses;
(c) providing necessary personnel and facilities to coordinate the establishment
and  maintenance of shareholder  accounts and records with the Trust's  transfer
agent; (d) receiving Customers' purchase and redemption orders on behalf of, and
transmitting  such orders to the Trust's  transfer agent;  (e) arranging for the
wiring or other  transfer of funds to and from  Customer  accounts in connection
with Customer  orders to purchase or redeem Shares;  (f) verifying  purchase and
redemption orders, transfers among and changes in Customer-designated  accounts;
(g) informing the  distributor  of the Trust of the gross amount of purchase and
redemption  orders for Shares;  (h)  monitoring  the  activities  of the Trust's
transfer agent related to Customers' accounts, and to statements,  confirmations
or other reports  furnished to Customers by the Trust's  transfer agent; and (i)
providing such other related  services as the Trust or a Customer may reasonably
request,  to the extent  permitted by applicable  law.  Morgan shall provide all
personnel  and  facilities  necessary  in order for it to perform the  functions
contemplated by this paragraph with respect to Customers.

         2.2  Standard  of  Services.  All  services  to be  rendered  by Morgan
hereunder  shall be performed in a  professional,  competent  and timely  manner
subject to the  supervision  of the  Trustees  of the Trust.  The details of the
operating  standards and procedures to be followed by Morgan in the  performance
of the  services  described  above  shall  be  determined  from  time to time by
agreement between Morgan and the Trust.

         3. Fees. As full  compensation for the services  described in Section 2
hereof and expenses  incurred by Morgan,  the Trust shall pay Morgan a fee at an
annual rate of the daily net asset values of each Fund's  shares owned by or for
Customers  and  attributable  to the Trust as set forth on  Schedule  A attached
hereto.  This fee will be  computed  daily and will be  payable as agreed by the
Trust and Morgan, but no more frequently than monthly.

         4. Information  Pertaining to the Shares; Etc. Morgan and its officers,
employees and agents are not authorized to make any  representations  concerning
the Trust or the Shares except to  communicate to Customers  accurately  factual
information  contained in the Fund's  Prospectus  and  Statement  of  Additional
Information and objective historical performance  information.  Morgan shall act
as agent for Customers only in furnishing information regarding the Trust or the
Shares and shall have no authority to act as agent for the Trust in its capacity
as shareholder servicing agent hereunder.

         During the term of this  Agreement,  the Trust agrees to furnish Morgan
all  prospectuses,  statements  of  additional  information,  proxy  statements,
reports to  shareholders,  sales  literature,  or other  material the Trust will
distribute to shareholders of each Fund or the public, which refer in any way to
Morgan,  and  Morgan  agrees to  furnish  the Trust all  material  prepared  for
Customers,  in each case prior to use thereof,

                                        2
<PAGE>
and not to use such  material if the other party reasonably objects in writing
within five business days (or such other time as may be mutually agreed in
writing) after receipt  thereof.  In the event of  termination of this
Agreement,  the Trust will continue to furnish to Morgan copies of any of the
above-mentioned  materials which refer in any way to Morgan. The Trust shall
furnish or otherwise make available to Morgan such other information relating to
the business affairs of the Trust as Morgan at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.

         Nothing in this  Section 4 shall be  construed to make the Trust liable
for the use of any information about the Trust which is disseminated by Morgan.

         5. Use of Morgan's  Name. The Trust shall not use the name of Morgan in
any prospectus,  sales  literature or other material  relating to the Trust in a
manner not approved by Morgan prior thereto in writing; provided,  however, that
the  approval  of Morgan  shall not be  required  for any use of its name  which
merely refers in accurate and factual terms to its  appointment  hereunder or as
investment  advisor  to the Trust or which is  required  by the  Securities  and
Exchange  Commission or any state securities  authority or any other appropriate
regulatory,  governmental or judicial authority;  provided,  further, that in no
event shall such approval be unreasonably withheld or delayed.

         6. Use of the Fund's  Name.  Morgan shall not use the name of the Trust
on any checks, bank drafts, bank statements or forms for other than internal use
in a manner  not  approved  by the Trust  prior  thereto in  writing;  provided,
however, that the approval of the Trust shall not be required for the use of the
Trust's name in  connection  with  communications  permitted by Sections 2 and 4
hereof or for any use of the Trust's  name which  merely  refers in accurate and
factual terms to Morgan's role  hereunder or as investment  advisor to the Trust
or which is required by the  Securities  and  Exchange  Commission  or any state
securities  authority  or any  other  appropriate  regulatory,  governmental  or
judicial authority;  provided,  further, that in no event shall such approval be
unreasonably withheld or delayed.

         7. Security. Morgan represents and warrants that the various procedures
and systems which it has implemented  with regard to  safeguarding  from loss or
damage  attributable  to fire,  theft or any other  cause any Trust  records and
other data and Morgan's records, data, equipment,  facilities and other property
used in the  performance of its  obligations  hereunder are adequate and that it
will make such changes therein from time to time as in its judgment are required
for the secure  performance  of its  obligations  hereunder.  The parties  shall
review such systems and procedures on a periodic basis, and the Trust shall from
time to time  specify  the types of  records  and other  data of the Trust to be
safeguarded in accordance with this Section 7.

         8. Compliance with Laws; etc. Morgan assumes no responsibilities  under
this Agreement  other than to render the services  called for hereunder,  on the
terms and conditions  provided  herein.  Morgan shall comply with all applicable
federal and state

                                       3
<PAGE>
laws and  regulations.  Morgan  represents and warrants to the
Trust that the performance of all its obligations hereunder will comply with all
applicable  laws and  regulations,  the provisions of its charter  documents and
by-laws and all material  contractual  obligations  binding upon Morgan.  Morgan
furthermore  undertakes  that it will promptly inform the Trust of any change in
applicable laws or regulations (or interpretations  thereof) which would prevent
or impair full performance of any of its obligations hereunder.

         9. Force Majeure.  Morgan shall not be liable or responsible for delays
or errors by reason of  circumstances  beyond its  control,  including,  but not
limited to, acts of civil or military  authority,  national  emergencies,  labor
difficulties,  fire,  mechanical breakdown,  flood or catastrophe,  Acts of God,
insurrection, war, riots or failure of communication or power supply.

         10.  Indemnification.
         10.1.  Indemnification  of Morgan.  The Trust will  indemnify  and hold
Morgan  harmless,  from all losses,  claims,  damages,  liabilities  or expenses
(including reasonable fees and disbursements of counsel) from any claim, demand,
action  or  suit  (collectively,   "Claims")  (a)  arising  in  connection  with
misstatements  or omissions in each Fund's  Prospectus,  actions or inactions by
the Trust or any of its agents or  contractors  or the  performance  of Morgan's
obligations  hereunder and (b) not resulting from the willful  misfeasance,  bad
faith, or gross negligence of Morgan, its officers,  employees or agents, in the
performance  of  Morgan's  duties or from  reckless  disregard  by  Morgan,  its
officers,  employees  or agents of Morgan's  obligations  and duties  under this
Agreement.  Notwithstanding  anything  herein to the  contrary,  the Trust  will
indemnify  and hold Morgan  harmless from any and all losses,  claims,  damages,
liabilities  or  expenses  (including  reasonable  counsel  fees  and  expenses)
resulting from any Claim as a result of Morgan's  acting in accordance  with any
written instructions  reasonably believed by Morgan to have been executed by any
person duly  authorized by the Trust,  or as a result of acting in reliance upon
any instrument or stock certificate  reasonably  believed by Morgan to have been
genuine and signed, countersigned or executed by a person duly authorized by the
Trust, excepting only the gross negligence or bad faith of Morgan.

         In any case in which the Trust may be asked to indemnify or hold Morgan
harmless,  the Trust  shall be advised of all  pertinent  facts  concerning  the
situation  in question  and Morgan  shall use  reasonable  care to identify  and
notify the Trust  promptly  concerning  any situation  which presents or appears
likely to present a claim for indemnification against the Trust. The Trust shall
have the option to defend  Morgan  against any Claim which may be the subject of
indemnification  under this Section  10.1. In the event that the Trust elects to
defend  against such Claim,  the defense shall be conducted by counsel chosen by
the Trust and reasonably  satisfactory to Morgan.  Morgan may retain  additional
counsel at its  expense.  Except  with the prior  written  consent of the Trust,
Morgan shall not confess any Claim or make any  compromise  in any case in which
the Trust will be asked to indemnify Morgan.

                                        4
<PAGE>
         10.2.  Indemnification of the Trust. Without limiting the rights of the
Trust under  applicable  law,  Morgan will indemnify and hold the Trust harmless
from all losses, claims, damages,  liabilities or expenses (including reasonable
fees and disbursements of counsel) from any Claim (a) resulting from the willful
misfeasance,  bad faith or gross negligence of Morgan, its officers,  employees,
or agents,  in the performance of Morgan's duties or from reckless  disregard by
Morgan,  its officers,  employees or agents of Morgan's  obligations  and duties
under this Agreement,  and (b) not resulting from Morgan's actions in accordance
with written instructions reasonably believed by Morgan to have been executed by
any person duly  authorized by the Trust,  or in reliance upon any instrument or
stock certificate reasonably believed by Morgan to have been genuine and signed,
countersigned or executed by a person authorized by the Trust.

         In any case in which Morgan may be asked to indemnify or hold the Trust
harmless,  Morgan  shall  be  advised  of all  pertinent  facts  concerning  the
situation  in question and the Trust shall use  reasonable  care to identify and
notify Morgan promptly concerning any situation which presents or appears likely
to present a claim for  indemnification  against  Morgan.  Morgan shall have the
option to defend  the  Trust  against  any  Claim  which may be the  subject  of
indemnification  under this  Section  10.2.  In the event that Morgan  elects to
defend  against such Claim,  the defense shall be conducted by counsel chosen by
Morgan and reasonably satisfactory to the Trust. The Trust may retain additional
counsel at its expense.  Except with the prior  written  consent of Morgan,  the
Trust shall not confess  any Claim or make any  compromise  in any case in which
Morgan will be asked to indemnify the Trust.

         10.3.  Survival  of  Indemnities.  The  indemnities  granted by the
parties  in this  Section 10 shall survive the termination of this Agreement.

         11.  Insurance.  Morgan  shall  maintain  reasonable  insurance
coverage  against  any  and  all liabilities which may arise in connection with
the performance of its duties hereunder.

         12.  Further  Assurances.  Each party agrees to perform  such  further
acts and execute  further documents as are necessary to effectuate the purposes
hereof.

         13.  Termination.  This Agreement shall continue in effect for a period
of one  year  and may  thereafter  be  renewed  by the  Trustees  of the  Trust;
provided,  however,  that this  Agreement  may be terminated by the Trust at any
time without the payment of any penalty, by the Trustees of the Trust or by vote
of a majority of the outstanding  voting securities (as defined in the 1940 Act)
of the Trust,  upon not less than six (6) months' written notice to Morgan or by
Morgan at any time, without the payment of any penalty,  on not less than ninety
(90)  days'  written  notice  to  the  Trust.  This  Agreement  shall  terminate
automatically in the event of its assignment (as defined in the 1940 Act).

                                         5
<PAGE>
         14.   Subcontracting   by  Morgan.   Morgan  may  subcontract  for  the
performance of its obligations hereunder with any one or more persons, including
but not  limited to any one or more  persons  which is an  affiliate  of Morgan;
provided however, unless the Trust otherwise expressly agrees in writing, Morgan
shall be as fully  responsible  to the Trust for the acts and  omissions  of any
subcontractor as it would be for its own acts or omissions.

         15.  Nothing in this  Agreement  shall limit or  restrict  the right of
Morgan to engage in any other business or to render  services of any kind to any
other corporation, firm, individual or association.

         16.  Changes; Amendments.  This Agreement may be amended only by mutual
written consent.

         17.  Notices.  Any notice or other  communication  required to be given
pursuant to this Agreement  shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to Morgan at Morgan Guaranty Trust Company
of New York,  522 Fifth  Avenue,  New York,  New York  10036,  Attention:  Funds
Management, or (2) to the Trust at JPM Series Trust c/o Funds Distributor, Inc.,
60 State Street, Suite 1300, Boston, Massachusetts 02109, Attention:  Treasurer,
or at such other  address as either  party may  designate by notice to the other
party.

         18.  Governing  Law. This  Agreement  shall be governed by and
construed in accordance  with the laws of the State of New York.

         IN WITNESS  WHEREOF,  the parties hereto have caused this instrument to
be  executed  by their  officers  designated  below as of the day and year first
written.

                                JPM SERIES TRUST



                                By ________________________
                                Name:
                                Title:

                                MORGAN GUARANTY TRUST COMPANY
                                       OF NEW YORK


                                By ___________________________
                                   Name:
                                   Title:

                                6
<PAGE>








                                   Schedule A

                           Shareholder Servicing Fees




California Bond Fund - JPM Institutional Shares

0.05% the average daily net asset value of JPM Institutional Shares owned by or
for Customers


California Bond Fund - Pierpont Shares

_.__% of the average daily net asset value of Pierpont Shares owned by or for
Customers


Tax Aware Equity Fund - Pierpont Shares
Tax Aware Disciplined Equity Fund - Pierpont Shares

0.25% of the average daily net asset value of Pierpont Shares owned by or for
Customers



PFSSA2



Approved:         _______ __, 1996
                  Effective _______ __, 1996




                                                    Exhibit 11

CONSENT OF INDEPENDENT ACCOUNTANTS

We  hereby  consent  to the  use  in the  Statement  of  Additional  Information
constituting  part of this  Pre-Effective  Amendment  No. 1 to the  registration
statement  on Form N-1A (the  "Registration  Statement")  of our  reports  dated
November 4, 1996, relating to the financial statements of Tax Aware Equity Fund,
Tax Aware  Disciplined  Equity Fund and California Bond Fund  (constituting  JPM
Series Trust), which appear in such Statement of Additional Information,  and to
the  incorporation  by  reference  of our reports  into the  Prospectuses  which
constitute  part  of  this  Registration  Statement.  We  also  consent  to  the
references  to us under the headings  "Financial  Statements"  and  "Independent
Accountants" in such Statement of Additional Information.



/s/ Price  Waterhouse  LLP
PRICE  WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 4, 1996



                               PURCHASE AGREEMENT


With  respect to its purchase of initial  shares of Tax Aware  Equity Fund,  Tax
Aware  Disciplined  Equity  Fund and  California  Bond Fund  (each a "Fund"  and
collectively  the  "Funds"),  each a series of JPM Series Trust (the "Trust") (a
Massachusetts  business  trust),  FDI  Distribution  Services,  Inc. ("FDSI"), a
Delaware corporation, hereby represents and warrants to the Trust as follows:

         1. That this purchase agreement (the "Agreement") shall be entered into
for the benefit of the Trust and each Fund, such benefit to be evidenced  by the
Trust's acceptance of the terms of this Agreement by signature  inscribed at the
end hereof,

         2. That FDSI hereby  purchases the  following  shares (par value $0.001
per  shares) of the Funds  (the  "Shares")  by  deposit  of the sums  indicated,
determined at the net asset value of the Shares (the "Cash Deposit").

Fund                                 Shares            Cash Deposit


Tax Aware Equity Fund
(JPM Pierpont Shares)                2,500             $25,000
Tax Aware Disciplined Equity Fund
(JPM Pierpont Shares)                5,000             $50,000
California Bond Fund
(JPM Institutional Shares)           2,500             $25,000

         3. That  the Shares are being  acquired for investment purposes and not
with a view to the distribution thereof.

         4. FDSI agrees that if it or any direct or indirect  transferee  of any
of  the  Shares  of a Fund  redeems  any  of  such  Shares  prior  to the  fifth
anniversary of the commencement of investment operations of that Fund, FDSI will
pay to that Fund an amount equal to the number  resulting from  multiplying  the
Fund's total unamortized organizational expenses by a fraction, the numerator of
which is equal to the number of Shares  redeemed by FDSI or such  transferee and
the  denominator  of  which  is  equal  to the  number  of  Shares  held by FDSI
outstanding  as of the date of such  redemption,  as long as the  administrative
position of the staff of the  Securities and Exchange  Commission  requires such
reimbursement.

         5. That FDSI is authorized and otherwise duly qualified to purchase and
hold such Shares and to enter into this Agreement.

                         FDI Distribution Services, Inc.


                         By:  /s/ Joseph F. Tower
                              Joseph F. Tower, Senior Vice
                              President & Treasurer

                         Date: November 7, 1996

                              JPM Series Trust


                         By:/s/ Richard W. Ingram
                              Richard W. Ingram
                              President and Treasurer

                         Date: November 7, 1996
JPM515B

JPM260A                                          Exhibit 16


                                JPM SERIES TRUST
               SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS


                              CALIFORNIA BOND FUND

                                  30-Day Yield

         Quotations  of yield  will be  computed  separately  for each  class of
shares outstanding and will be based on income earned during a particular 30-day
period,  less the class  specific total expenses  directly  attributable  to the
class accrued during the period ("net  investment  income") and will be computed
by dividing net  investment  income by the average daily number of shares of the
class eligible to receive such income  multiplied by the maximum  offering price
per share of the class on the last day of the period, according to the following
formula:

30-DAY YIELD = 2[(a-b + 1)6[superscript]-1]
                  ---
                  cd
(where a = dividends and interest earned during the period, b = expenses accrued
for the period attributable to the share class (net of any reimbursements),  c =
the average  daily number of shares of the class  outstanding  during the period
that were entitled to receive  dividends and d = the maximum  offering price per
share of the class on the last day of the period).

                                    ALL FUNDS

                               Annual Total Return

         Quotations of average  annual total return will be computed  separately
for each of the Fund's  classes of shares and will be  expressed in terms of the
average annual  compounded  rate of return of a hypothetical  investment in such
shares  over  periods  of 1, 5 and 10  years  (up to  the  life  of the  class),
calculated pursuant to the following formula:

P (1 + T)n [superscript] + ERV

(where P = a  hypothetical  initial  payment of $1,000,  T = the average  annual
total return, n = the number of years and ERV = the ending redeemable value of a
hypothetical  $1,000  payment made at the  beginning  of the period).  All total
return  figures will reflect the  deduction of class  specific  expenses (net of
certain  expenses  reimbursed)  on an  annual  basis  and will  assume  that all
dividends and distributions are reinvested when paid.

                             Aggregate Total Return

         The aggregate total return, reflecting the cumulative percentage change
over a measuring period, is calculated  separately for each class of shares of a
Fund outstanding and according to the following formula:

P (1 + T) = ERV

(where P = a hypothetical initial payment of $1,000 and T = total return).

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL  INFORMATION EXTRACTED FROM THE AUDITED
STATEMENT  OF ASSETS  AND  LIABILITIES  DATED  NOVEMBER  4, 1996 FOR JPM  SERIES
TRUST'S TAX AWARE  EQUITY FUND AND IS  QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL  STATEMENT.  </LEGEND> 
<CIK>  0001016937 
<NAME> JPM SERIES TRUST
<SERIES>
   <NUMBER> 001
   <NAME> JPM PIERPONT SHARES OF TAX AWARE EQUITY FUND
<MULTIPLIER> 1,000
       
<S>                              <C>
<PERIOD-TYPE>                    OTHER
<FISCAL-YEAR-END>                          OCT-31-1997
<PERIOD-START>                             NOV-04-1996
<PERIOD-END>                               NOV-04-1996
<INVESTMENTS-AT-COST>                                0
<INVESTMENTS-AT-VALUE>                               0
<RECEIVABLES>                                        0
<ASSETS-OTHER>                                      73
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                      73
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                 48
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                            25
<SHARES-COMMON-STOCK>                                2
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                             0
<NET-ASSETS>                                        25
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                                    0
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                       0
<NET-INVESTMENT-INCOME>                              0
<REALIZED-GAINS-CURRENT>                             0
<APPREC-INCREASE-CURRENT>                            0
<NET-CHANGE-FROM-OPS>                                0
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                              2
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                               2
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                                0
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                      0
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                                0
<PER-SHARE-NII>                                      0
<PER-SHARE-GAIN-APPREC>                              0
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.00
<EXPENSE-RATIO>                                      0
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL  INFORMATION EXTRACTED FROM THE AUDITED
STATEMENT  OF ASSETS  AND  LIABILITIES  DATED  NOVEMBER  4, 1996 FOR JPM  SERIES
TRUST'S TAX AWARE  DISCIPLINED  EQUITY FUND AND IS  QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL  STATEMENT.  </LEGEND>
<CIK>  0001016937 
<NAME> JPM SERIES TRUST
<SERIES>
   <NUMBER> 002
   <NAME> JPM PIERPONT SHARES OF TAX AWARE DISCIPLINED EQUITY FUND
<MULTIPLIER> 1,000
       
<S>                              <C>
<PERIOD-TYPE>                    OTHER
<FISCAL-YEAR-END>                          OCT-31-1997
<PERIOD-START>                             NOV-04-1996
<PERIOD-END>                               NOV-04-1996
<INVESTMENTS-AT-COST>                                0
<INVESTMENTS-AT-VALUE>                               0
<RECEIVABLES>                                        0
<ASSETS-OTHER>                                      98
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                      98
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                 48
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                            50
<SHARES-COMMON-STOCK>                                5
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                             0
<NET-ASSETS>                                        50
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                                    0
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                       0
<NET-INVESTMENT-INCOME>                              0
<REALIZED-GAINS-CURRENT>                             0
<APPREC-INCREASE-CURRENT>                            0
<NET-CHANGE-FROM-OPS>                                0
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                              5
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                               5
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                                0
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                      0
<AVERAGE-NET-ASSETS>                                 0
<PER-SHARE-NAV-BEGIN>                                0
<PER-SHARE-NII>                                      0
<PER-SHARE-GAIN-APPREC>                              0
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.00
<EXPENSE-RATIO>                                      0
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
STATEMENT OF ASSETS AND LIABILITIES DATED NOVEMBER 4, 1996 FOR JPM SERIES 
TRUST'S  CALIFORNIA  BOND FUND AND IS  QUALIFIED  IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANICAL STATEMENT.
</LEGEND>
<CIK> 0001016937
<NAME> JPM SERIES TRUST
<SERIES>
   <NUMBER> 003
   <NAME> JPM INSTITUTIONAL SHARES OF CALIFORNIA BOND FUND
<MULTIPLIER> 1,000
       
<S>                              <C>
<PERIOD-TYPE>                    OTHER
<FISCAL-YEAR-END>                          MAR-31-1997
<PERIOD-START>                             NOV-04-1996
<PERIOD-END>                               NOV-04-1996
<INVESTMENTS-AT-COST>                                0
<INVESTMENTS-AT-VALUE>                               0
<RECEIVABLES>                                        0
<ASSETS-OTHER>                                      73
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                      73
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                 48
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                            25
<SHARES-COMMON-STOCK>                                2
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                             0
<NET-ASSETS>                                        25
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</TABLE>


                                                 Exhibit 19


                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Matthew Healey, Richard
W. Ingram, Marie E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth
A. Bachman, Karen Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher
J. Kelley, Jacqueline Henning and Lenore J. McCabe, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Pierpont Funds,
The JPM Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a
"Trust"), or the Registration Statement(s), and any and all amendments thereto,
filed by any other investor in any registered investment company in which any of
the Trusts invest, with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable each Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof.  Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ Frederick S. Addy
Frederick S. Addy



<PAGE>





                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Matthew Healey, Richard
W. Ingram, Marie E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth
A. Bachman, Karen Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher
J. Kelley, Jacqueline Henning and Lenore J. McCabe, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Pierpont Funds,
The JPM Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a
"Trust"), or the Registration Statement(s), and any and all amendments thereto,
filed by any other investor in any registered investment company in which any of
the Trusts invest, with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable each Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof.  Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ William G. Burns
William G. Burns



<PAGE>




                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Matthew Healey, Richard
W. Ingram, Marie E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth
A. Bachman, Karen Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher
J. Kelley, Jacqueline Henning and Lenore J. McCabe, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Pierpont Funds,
The JPM Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a
"Trust"), or the Registration Statement(s), and any and all amendments thereto,
filed by any other investor in any registered investment company in which any of
the Trusts invest, with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable each Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof.  Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ Arthur S. Eschenlauer
Arthur C. Eschenlauer



<PAGE>





                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Richard W. Ingram,
Marie E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth A. Bachman,
Karen Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a "Trust"),
or the Registration Statement(s), and any and all amendments thereto, filed by
any other investor in any registered investment company in which any of the
Trusts invest, with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended, and
any and all instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable each Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
acts that such attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof.  Any one of such attorneys and agents have, and may
exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ Matthew Healey
Matthew Healey



<PAGE>





                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Matthew Healey, Richard
W. Ingram, Marie E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth 
A. Bachman, Karen Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher
J. Kelley, Jacqueline Henning and Lenore J. McCabe, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statements
on Form N-1A, and any and all amendments thereto, filed by The Pierpont Funds,
The JPM Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a
"Trust"), or the Registration Statement(s), and any and all amendments thereto,
filed by any other investor in any registered investment company in which any of
the Trusts invest, with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and any and all instruments which such attorneys and agents, or any of
them, deem necessary or advisable to enable each Trust to comply with such Acts,
the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof.  Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ Michael P. Mallardi
Michael P. Mallardi



<PAGE>





                                POWER OF ATTORNEY


         The undersigned hereby constitutes and appoints Matthew Healey, Marie
E. Connolly, Joseph F. Tower III, John E. Pelletier, Elizabeth A. Bachman, Karen
Jacoppo-Wood, Mary A. Nelson, Douglas C. Conroy, Christopher J. Kelley,
Jacqueline Henning and Lenore J. McCabe, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statements on Form
N-1A, and any and all amendments thereto, filed by The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds or JPM Series Trust (each a "Trust"),
or the Registration Statement(s), and any and all amendments thereto, filed by
any other investor in any registered investment company in which any of the
Trusts invest, with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and the Securities Act of 1933, as amended, and
any and all instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable each Trust to comply with such Acts, the rules,
regulations and requirements of the Securities and Exchange Commission, and the
securities or Blue Sky laws of any state or other jurisdiction, and the
undersigned hereby ratifies and confirms as his own act and deed any and all
acts that such attorneys and agents, or any of them, shall do or cause to be
done by virtue hereof.  Any one of such attorneys and agents have, and may
exercise, all of the powers hereby conferred.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of October, 1996, in Hamilton, Bermuda.



/s/ Richard W. Ingram
Richard W. Ingram



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