JPM SERIES TRUST
485BPOS, 1997-06-19
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   As filed with the U.S. Securities and Exchange Commission on June 19, 1997.
    
                    Registration Nos. 333-11125 and 811-07795


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

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

   
                         POST-EFFECTIVE AMENDMENT NO. 3
    

                                       AND

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

   
                                 AMENDMENT NO. 4
    


                                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, c/o Funds Distributor, Inc.
            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


It is proposed that this filing will become effective (check appropriate box):

   
[ ]  Immediately  upon  filing  pursuant to  paragraph  (b)
[X] on June 23, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph  (a)(i)
[ ] on (date) pursuant to paragraph  (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii) 
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
    

If appropriate, check the following box:

[ ]  this  post-effective  amendment  designates  a  new  effective  date  for a
previously filed post-effective amendment.

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<PAGE>




   
The Registrant has previously elected to register an indefinite number of shares
of Registrant  and any series thereof  hereinafter  created under the Securities
Act of 1933, as amended, pursuant to Rule 24f-2 under the Investment Company Act
of  1940,  as  amended.  (Incorporated  herein  from  Registrant's  registration
statement   on  Form  N-1A  as  filed  on  August  29,   1996,   Accession   No.
0000912057-96-019242.) The Registrant has filed a Rule 24f-2 notice with respect
to  California  Bond Fund (for its fiscal year ended April 30,  1997) on June 6,
1997.  The  Registrant  expects to file a Rule 24f-2  notice with respect to its
other series as follows:  Tax Aware U.S.  Equity Fund and Tax Aware  Disciplined
Equity  Fund (for their  fiscal  years  ending  October  31,  1997) on or before
December 30, 1997.
    




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<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: Financial Highlights.
    

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.


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<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.



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<PAGE>



                                EXPLANATORY NOTE

   
This post-effective  amendment no. 3 to the Registrant's  registration statement
on Form N-1A (File no.  333-11125) is being filed  pursuant to the  Registrant's
undertaking to file a post-effective  amendment to the  Registration  Statement,
using  financials  which  need  not be  certified,  within  four  to six  months
following  the date of  commencement  of  public  investment  operations  of the
Registrant's three series of shares of beneficial interest.
    

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<PAGE>
- --------------------------------------------------------------------------------
 
   
PROSPECTUS
JPM Series Trust
JPM Pierpont Shares: Tax Aware U.S. Equity Fund
JPM Pierpont Shares: Tax Aware Disciplined Equity Fund
60 State Street
Boston, Massachusetts 02109
For information call (800) 521-5411
    
 
   
Tax Aware U.S. 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 June 25, 1997, 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 JUNE 25, 1997.
    
<PAGE>
TABLE OF CONTENTS
   
<TABLE>
<CAPTION>
                                                           PAGE
<S>                                                      <C>
Expense Table..........................................          1
Financial Highlights...................................          3
Investment Objective and Policies......................          4
Additional Investment Practices and Risks..............          5
Management of the Funds................................          8
Shareholder Inquiries and Services.....................         10
Purchase of Shares.....................................         10
 
<CAPTION>
                                                           PAGE
<S>                                                      <C>
 
Redemption of Shares...................................         11
Dividends and Distributions............................         13
Net Asset Value........................................         13
Taxes..................................................         13
Additional Information.................................         14
Organization...........................................         15
</TABLE>
    
<PAGE>
EXPENSE TABLE
 
   
<TABLE>
<CAPTION>
                                                               JPM PIERPONT     JPM PIERPONT
                                                               SHARES: TAX      SHARES: TAX
                                                                AWARE U.S.         AWARE
                                                                  EQUITY        DISCIPLINED
                                                                   FUND         EQUITY FUND
                                                              --------------   --------------
<S>                                                           <C>              <C>
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.............................................       0.45%            0.35%
  Rule 12b-1 Fees...........................................       None             None
  Other Expenses (after expense reimbursement)..............       0.40%            0.20%
                                                                    ---              ---
      Total Operating Expenses (after expense
       reimbursement).......................................       0.85%            0.55%
</TABLE>
    
 
- ---------
 
 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 U.S.
    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 expressed as a percentage of average net assets for each
    Fund after expense reimbursement for the fiscal period indicated in
    Financial Highlights below and through February 28, 1998. See Management of
    the Funds--Expenses. Without such reimbursement, Other Expenses and Total
    Operating Expenses were 2.60% and 3.05%, respectively, of Tax Aware U.S.
    Equity Fund on an annualized basis and 7.70% and 8.05%, respectively, of Tax
    Aware Disciplined Equity Fund on an annualized basis.
    
 
                                                                               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.)
 
   
<TABLE>
<CAPTION>
                                                               JPM PIERPONT    JPM PIERPONT
                                                               SHARES: TAX      SHARES: TAX
                                                                AWARE U.S.         AWARE
                                                                  EQUITY        DISCIPLINED
                                                                   FUND         EQUITY FUND
                                                              --------------   -------------
<S>                                                           <C>              <C>
Assuming No Redemption
  1 Year....................................................       $  9             $ 6
  3 Years...................................................       $ 27             $18
  5 Years...................................................       $ 47             $31
  10 Years..................................................       $105             $69
Assuming Redemption at the End of Each Period
  1 Year....................................................       $ 29             $26
  3 Years...................................................       $ 37             $28
  5 Years...................................................       $ 57             $41
  10 Years..................................................       $105             $69
</TABLE>
    
 
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.
 
2
<PAGE>
   
FINANCIAL HIGHLIGHTS
    
 
   
The following selected data for a share outstanding for each Fund for the
indicated periods should be read in conjunction with the financial statements
and related notes which are contained in the Fund's semi-annual report and are
incorporated by reference into the Statement of Additional Information. The
Fund's semi-annual report includes a discussion of those factors, strategies and
techniques that materially affected the Fund's performance during the period of
the report, as well as certain related information. A copy of the Fund's
semi-annual report will be made available without charge upon request.
    
 
   
<TABLE>
<CAPTION>
                                                                                       JPM PIERPONT
                                                                 JPM PIERPONT             SHARES:
                                                                    SHARES:              TAX AWARE
                                                                TAX AWARE U.S.      DISCIPLINED EQUITY
                                                                  EQUITY FUND              FUND
                                                              FOR THE PERIOD FROM   FOR THE PERIOD FROM
                                                               DECEMBER 18, 1996     JANUARY 30, 1997
                                                               (COMMENCEMENT OF      (COMMENCEMENT OF
                                                                OPERATIONS) TO        OPERATIONS) TO
                                                                APRIL 30, 1997        APRIL 30, 1997
                                                                  (UNAUDITED)           (UNAUDITED)
                                                              -------------------   -------------------
<S>                                                           <C>                   <C>
Net Asset Value, Beginning of Period........................        $ 10.00               $ 10.00
                                                                    -------              --------
Income from Investment Operations
  Net Investment Income.....................................           0.03                  0.03
  Net Realized and Unrealized Gain on Investments...........           0.87                  0.22
                                                                    -------              --------
 
Total from Investment Operations............................           0.90                  0.25
                                                                    -------              --------
Less Distributions to Shareholders from
 Net Investment Income......................................          (0.01)                   --
                                                                    -------              --------
 
Net Asset Value, End of Period..............................        $ 10.89               $ 10.25
                                                                    -------              --------
                                                                    -------              --------
Total Return................................................           9.02%(b)              2.50%(b)
                                                                    -------              --------
                                                                    -------              --------
Ratios and Supplemental Data
  Net Assets, End of Period (in thousands)..................        $13,763               $ 4,450
  Ratios to Average Net Assets..............................
    Expenses................................................           0.85%(a)              0.55%(a)
    Net Investment Income...................................           0.81%(a)              1.48%(a)
    Decrease Reflected in Expense Ratio due to Expense
     Reimbursement..........................................           2.20%(a)              7.50%(a)
  Portfolio Turnover Rate...................................             16%                   12%
  Average Broker Commissions................................        $0.0300               $0.0283
</TABLE>
    
 
- ---------
   
(a) Annualized.
    
 
   
(b) Not annualized.
    
 
                                                                               3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
 
   
The investment  objective of Tax Aware U.S. Equity Fund (the "U.S. 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 U.S. 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.
 
   
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 U.S. 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
U.S. 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
U.S. 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.
    
 
4
<PAGE>
   
The following chart summarizes the principal differences between the investment
policies of the U.S. Equity Fund and the Disciplined Equity Fund:
    
 
<TABLE>
<CAPTION>
                                                                                                       NUMBER OF SECURITY
                                                        MORGAN RANKING         SECTOR WEIGHTINGS            POSITIONS
                                                       -----------------  ---------------------------  -------------------
 
<S>                                                    <C>                <C>                          <C>
   
U.S. Equity Fund.....................................  Concentrated in    May modestly over- or              50-100
                                                       Top 2 Quintiles    underweight vs. S&P 500
Disciplined Equity Fund..............................  Concentrated in    Generally, seeks to                250-300
                                                       Top 3 Quintiles    maintain weightings
                                                                          comparable to S&P 500
</TABLE>
    
 
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
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.
 
                                                                               5
<PAGE>
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
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.
 
6
<PAGE>
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.
 
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.
 
                                                                               7
<PAGE>
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.
 
<TABLE>
<S>                                                  <C>
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
</TABLE>
 
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 $208 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.
 
   
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):  U.S. Equity Fund:  Terry E.
Banet, Vice President (since November,  1996,  employed by Morgan since prior to
1992) and Gordon B. Fowler, Managing Director (since November, 1996, employed by
Morgan  since prior to 1992);  Disciplined  Equity Fund:  Robin B. Chance,  Vice
President  (since  November,  1996,  employed by Morgan since prior to 1992) and
Frederic A. Nelson, Managing Director (since November,  1996, employed by Morgan
since May, 1994, previously portfolio manager, Bankers Trust Company).
    
 
8
<PAGE>
   
As compensation  for the services  rendered and related expenses borne by Morgan
under its investment advisory agreement with the Trust, the U.S. 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.
 
   
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 in providing these services to the Trust and certain other registered
investment companies subject to similar agreements with PGI.
    
 
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,
 
                                                                               9
<PAGE>
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.
 
   
<TABLE>
<CAPTION>
JPM PIERPONT SHARES                       EXPENSE CAP           DATE
- ----------------------------------------  -----------   --------------------
<S>                                       <C>           <C>
U.S. Equity Fund........................       0.85%     February 28, 1998
Disciplined Equity Fund.................       0.55%     February 28, 1998
</TABLE>
    
 
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.
 
   
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 business days of the Funds are the days the New York Stock Exchange is open.
    
 
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 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.
 
10
<PAGE>
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 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 purchaser becomes a holder of record on the
following business day upon the Fund's receipt of payment.
    
 
   
ELIGIBLE INSTITUTIONS. 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 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.
 
                                                                              11
<PAGE>
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.
 
<TABLE>
<CAPTION>
                                           REDEMPTION FEE
                                              RATE AS A
                                            PERCENTAGE OF
                                          GROSS REDEMPTION
YEAR SINCE PURCHASE                           PROCEEDS
- ----------------------------------------  -----------------
<S>                                       <C>
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
</TABLE>
 
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 U.S. 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  5% of the  outstanding  shares  of the  Fund  in the  absence  of an
exemptive  order  from the SEC.  Each  Fund has  applied  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.
    
 
12
<PAGE>
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.
 
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
 
                                                                              13
<PAGE>
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.
 
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
 
14
<PAGE>
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.
 
                                                                              15
<PAGE>
 
                                            ------------------------------------
 
   
                                         JPM Pierpont Shares:
                                         Tax Aware U.S.
                                         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               PROSPECTUS
JURISDICTION.                            JUNE 25, 1997
 
PROS236/237-976
    

<PAGE>
- --------------------------------------------------------------------------------
 
PROSPECTUS
JPM Series Trust
JPM Pierpont Shares: California Bond Fund
60 State Street
Boston, Massachusetts 02109
For information call (800) 521-5411
 
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 Pierpont
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 June 25, 1997, 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 JUNE 25, 1997
    
<PAGE>
TABLE OF CONTENTS
   
<TABLE>
<CAPTION>
                                                           PAGE
<S>                                                      <C>
Expense Table..........................................          1
Financial Highlights...................................          2
Investment Objective and Policies......................          2
Additional Investment Practices and Risks..............          4
Management of the Fund.................................          7
Shareholder Inquiries and Services.....................          9
Purchase of Shares.....................................         10
 
<CAPTION>
                                                           PAGE
<S>                                                      <C>
 
Redemption of Shares...................................         11
Exchange of Shares.....................................         11
Dividends and Distributions............................         12
Net Asset Value........................................         12
Taxes..................................................         12
Additional Information.................................         14
Organization...........................................         15
</TABLE>
    
<PAGE>
EXPENSE TABLE
 
   
<TABLE>
<CAPTION>
JPM PIERPONT SHARES: CALIFORNIA BOND FUND


<S>                                                               <C>
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.............................................      0.30%
  Rule 12b-1 Fees...........................................      None
  Other Expenses (after expense reimbursement)..............      0.35%
                                                                   ---
      Total Operating Expenses (after expense
      reimbursement)........................................      0.65%
                                                                   ---
                                                                   ---
</TABLE>
    
 
- ---------
(1) Certain Eligible Institutions (defined below) may impose fees in connection
    with the purchase of the Fund's shares through such institutions.
 
   
(2) These expenses are expressed as a percentage of average net assets for the
    Fund after expense reimbursement for the fiscal period indicated in
    Financial Highlights below and through August 31, 1998. See Management of
    the Fund--Expenses. Without such reimbursement, Other Expenses and Total
    Operating Expenses were 0.87% and 1.17%, respectively, for JPM Pierpont
    Shares on an annualized basis.
    
 
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.)
 
   
<TABLE>
<S>                                                           <C>
1 Year......................................................  $  7
3 Years.....................................................  $ 21
5 Years.....................................................  $ 36
10 Years....................................................  $ 81
</TABLE>
    
 
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 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>
   
FINANCIAL HIGHLIGHTS
    
 
   
The following selected data for a share outstanding for the Fund for the
indicated period should be read in conjunction with the financial statements and
related notes which are contained in the Fund's annual report and are
incorporated by reference into the Statement of Additional Information. The
following selected data have been audited by independent accountants. The Fund's
annual report includes a discussion of those factors, strategies and techniques
that materially affected the Fund's performance during the period of the report,
as well as certain related information. A copy of the Fund's annual report will
be made available without charge upon request.
    
 
   
<TABLE>
<CAPTION>
                                                               JPM PIERPONT SHARES
                                                                  FOR THE PERIOD
                                                                  APRIL 21, 1997
                                                                 (COMMENCEMENT OF
                                                                  OPERATIONS) TO
                                                                  APRIL 30, 1997
                                                              ----------------------
<S>                                                           <C>
Net Asset Value, Beginning of Period........................          $10.00
                                                                      ------
  Income from Investment Operations.........................
  Net Investment Income.....................................            0.01
  Net Realized and Unrealized Gain (Loss) on Investments....            0.04
                                                                      ------
  Total from Investment Operations..........................            0.05
                                                                      ------
 
Less Distributions to Shareholders from
  Net Investment Income.....................................           (0.01)
                                                                      ------
Net Asset Value, End of Period..............................          $10.04
                                                                      ------
                                                                      ------
Total Return................................................            0.51%(a)
                                                                      ------
                                                                      ------
 
Ratios and Supplemental Data
  Net Assets, End of Period (in thousands)..................            $302
  Ratios to Average Net Assets..............................
    Expenses................................................            0.62%(b)
    Net Investment Income...................................            4.52%(b)
    Decrease Reflected in Expense Ratio due to Expense
     Reimbursement..........................................            0.55%(b)
Portfolio Turnover Rate.....................................              40%
</TABLE>
    
 
- ---------
 
   
(a) Not annualized.
    
 
   
(b) Annualized.
    
 
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.
 
2
<PAGE>
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 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.
 
                                                                               3
<PAGE>
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
 
4
<PAGE>
securities 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 or fiscal condition of the issuer 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
 
                                                                               5
<PAGE>
(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 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
depends on the degree of price correlation between the derivative contract and
the hedged 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.
 
6
<PAGE>
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 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 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.
 
<TABLE>
<S>                                                  <C>
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
</TABLE>
 
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.
 
                                                                               7
<PAGE>
   
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
$208 billion.
    
 
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 1992).
 
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.
 
8
<PAGE>
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. PGI provides these services for a fee
approximating its reasonable cost in providing these services to the Trust and
certain other registred investment companies subject to similar agreements with
PGI.
    
 
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. State Street keeps the books
of account for the Fund.
 
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 August 31,
1998 to the extent necessary to maintain the Fund's operating expenses for JPM
Pierpont Shares at the annual rate of 0.65% of the average daily net assets of
the Fund's JPM Pierpont 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) 521-5411 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 0.25% of the
average daily net assets of JPM Pierpont Shares.
 
   
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. See
Eligible Institutions. 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 business days of the Fund are the days the New York Stock Exchange is open.
    
 
                                                                               9
<PAGE>
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 Pierpont Shares of $100,000, except for investors who were shareholders
of a fund in The JPM Pierpont Funds as of September 29, 1995, for whom the
minimum initial investment is $10,000. The minimum subsequent investment for all
investors is $5,000. 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 other funds in
the Trust, 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 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 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 settlement date.
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
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. 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.
    
 
10
<PAGE>
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 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 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 shareholders'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 event 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 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 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.
 
EXCHANGE OF SHARES
 
An investor may exchange JPM Pierpont Shares for JPM Institutional shares or
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. Shareholders should read the
prospectus of the fund into which they are exchanging and may only exchange
between fund accounts that are registered in the same name, address and taxpayer
identification number. An exchange is in effect a redemption from one fund or
class 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.
 
                                                                              11
<PAGE>
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 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.
 
NET ASSET VALUE
 
The Fund computes the NAV of the JPM Pierpont Shares at 4:15 p.m. New York time
on each 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
 
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
 
12
<PAGE>
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.
 
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
 
                                                                              13
<PAGE>
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 Pierpont Shares will fluctuate over time and should not be
considered a representation of performance in the future.
 
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 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 the Fund's
financial statements. Tax-equivalent yield shows
 
14
<PAGE>
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) 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 Fund described in
this Prospectus. The Trustees have authorized two classes of shares of the Fund:
JPM Pierpont Shares offered by this Prospectus and JPM Institutional
Shares offered by a separate Prospectus.  JPM Pierpont Shares and JPM
Institutional Shares are subject to different expenses, which may affect the
performance of each class. More information about the JPM Institutional Shares
may be obtained by calling (800) 766-7722. 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 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.
 
                                                                              15
<PAGE>
 
                                            ------------------------------------
 
   
                                         JPM
                                         Pierpont 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               PROSPECTUS
JURISDICTION.                            JUNE 25, 1997
 
PROS238-976
    



<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 June 25, 1997, 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 JUNE 25, 1997     
<PAGE>
 
TABLE OF CONTENTS
 
<TABLE>
   
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Expense Table..............................................................   1
Financial Highlights.......................................................   2
Investment Objective and Policies..........................................   3
Additional Investment Practices and Risks..................................   4
Management of the Fund.....................................................   7
Shareholder Inquiries and Services.........................................   9
Purchase of Shares.........................................................   9
</TABLE>
    
<TABLE>
   
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
Redemption of Shares.......................................................  10
Exchange of Shares.........................................................  11
Dividends and Distributions................................................  11
Net Asset Value............................................................  11
Taxes......................................................................  12
Additional Information.....................................................  13
Organization...............................................................  14
</TABLE>
    
<PAGE>
 
JPM Institutional Shares: California Bond Fund
 
 
EXPENSE TABLE
 
<TABLE>
   
<S>                                                                        <C>
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............................................................. 0.30%
Rule 12b-1 Fees...........................................................  None
Other Expenses (after expense reimbursement).............................. 0.15%
                                                                           -----
Total Operating Expenses (after expense reimbursement).................... 0.45%
                                                                           =====
</TABLE>
    
- -------
(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 expressed as a percentage of average net assets for the
    Fund after expense reimbursement for the fiscal period indicated in Finan-
    cial Highlights below and through August 31, 1998. See Management of the
    Fund--Expenses. Without such reimbursement, Other Expenses and Total Oper-
    ating Expenses were 3.16% and 3.46%, respectively, for JPM Institutional
    Shares on an annualized basis.     
 
EXAMPLE
 
An investor would pay the following expenses on a hypothetical $1,000 invest-
ment, assuming a 5% annual return and redemption at the end of each time peri-
od. (However, the Fund's minimum initial investment is greater than $1,000.)
 
<TABLE>
   
<S>                                                                          <C>
 1 Year..................................................................... $ 5
 3 Years.................................................................... $14
 5 Years.................................................................... $25
10 Years.................................................................... $57
</TABLE>
    
 
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 contrac-
tual arrangements and other expenses applicable to the Fund, see Management of
the Fund and Shareholder Inquiries and Services--Shareholder Servicing. THE EX-
AMPLE 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>
 
   
FINANCIAL HIGHLIGHTS     
   
The following selected data for a share outstanding for the Fund for the indi-
cated period should be read in conjunction with the financial statements and
related notes which are contained in the Fund's annual report and are incorpo-
rated by reference into the Statement of Additional Information. The following
selected data have been audited by independent accountants. The Fund's annual
report includes a discussion of those factors, strategies and techniques that
materially affected the Fund's performance during the period of the report, as
well as certain related information. A copy of the Fund's annual report will be
made available without charge upon request.     
 
<TABLE>
   
<CAPTION>
                                                       JPM INSTITUTIONAL SHARES
                                                            FOR THE PERIOD
                                                          DECEMBER 23, 1996
                                                           (COMMENCEMENT OF
                                                            OPERATIONS) TO
                                                            APRIL 30, 1997
                                                       ------------------------
<S>                                                    <C>
Net Asset Value, Beginning of Period..................         $ 10.00
                                                               -------
Income from Investment Operations
  Net Investment Income...............................            0.16
  Net Realized and Unrealized Gain (Loss) on Invest-
   ments..............................................           (0.10)
                                                               -------
  Total from Investment Operations....................            0.06
                                                               -------
Less Distributions to Shareholders from
  Net Investment Income...............................           (0.16)
                                                               -------
Net Asset Value, End of Period........................         $  9.90
                                                               =======
Total Return..........................................            0.56%(a)
                                                               =======
Ratios and Supplemental Data
  Net Assets, End of Period (in thousands)............         $14,793
  Ratios to Average Net Assets........................
    Expenses..........................................            0.45%(b)
    Net Investment Income.............................            4.43%(b)
    Decrease Reflected in Expense Ratio due to Expense
     Reimbursement....................................            3.01%(b)
Portfolio Turnover Rate...............................              40%
</TABLE>
    
- -------
   
(a) Not annualized.     
   
(b) Annualized.     
 
2
<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 Se-
curities," which are obligations of any duration (or maturity) issued by Cali-
fornia, its political subdivisions and their agencies, authorities and instru-
mentalities 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 Califor-
nia. 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 matu-
rity and type. These include both general obligation bonds secured by the is-
suer'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 commer-
cial 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 cor-
porate 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 nor-
mal circumstances, the Fund's holdings of non-municipal securities and securi-
ties 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 In-
vestors 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 typi-
cally are subject to greater fluctuations in price and yield resulting in a
greater volatility of total return than investment grade bonds. These fluctua-
tions may be sharp and unanticipated. Issuers of below investment grade securi-
ties 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 af-
fected by those difficulties when they
 
                                                                               3
<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 allo-
cation 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, in-
cluding 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 un-
dervalued 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 ob-
jective. The annual portfolio turnover rate of the Fund is generally not ex-
pected 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 objec-
tive, Morgan attempts to consider the tax consequences to investors of all
portfolio transactions. The success of this strategy depends on Morgan's abil-
ity 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 percent-
age of the Fund's assets that may be invested in the securities of a single is-
suer. 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 liq-
uid 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 mu-
nicipal securities. In addition, if the issuer of certain types of municipal
securities such as industrial revenue bonds defaults, the Fund could be re-
quired to seize and manage, or dispose of under adverse market conditions, col-
lateral, 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 consid-
ered part of any industry for this purpose. However, taxable municipal securi-
ties
 
4
<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 mu-
nicipal securities market, such as revenue obligations of hospitals and other
health care facilities, housing agency obligations, transportation related ob-
ligations 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 ex-
posed 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 vola-
tility 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 securi-
ties of issuers in multiple states. The ability of state, county or local gov-
ernments to meet their obligations will depend primarily on the availability of
tax and other revenues to those governments and on their general fiscal condi-
tions. 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 or fiscal condition of the issuer or
specific revenue source from whose revenues the payments will be made. Any re-
duction 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 marketabil-
ity 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 transac-
tions must be fully collateralized at all times. The Fund may also purchase se-
curities 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 se-
curities 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 re-
sell 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 in-
terest rates, financial indices or other financial indicators. In
 
                                                                               5
<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 place-
ment 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 regis-
tration 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 guide-
lines 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 securi-
ties 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 buy-
ing futures contracts, writing puts and buying calls, tend to increase market
exposure. Options and futures contracts may be combined with each other in or-
der to adjust the risk and return characteristics of the Fund's overall strat-
egy 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 deprecia-
tion due to unanticipated adverse changes in securities prices. The Fund incurs
liability to a counterparty in connection with transactions in futures con-
tracts 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 prof-
itably 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 inher-
ent in derivative contracts by maintaining a segregated account consisting of
cash or liquid securities, by holding offsetting portfolio securities or con-
tracts 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 tempo-
rary 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 cer-
tain 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 co-
operation of the counterparties to such contracts. For thinly traded derivative
contracts, the only source of price
 
6
<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 as-
sets.
 
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 Pro-
spectus or the Fund's Statement of Additional Information, the Fund's invest-
ment 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.
 
<TABLE>
<S>                                  <C>
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
</TABLE>
 
ADVISOR. The Fund has retained Morgan as Investment Advisor to provide invest-
ment advice and portfolio management services to the Fund. Subject to the su-
pervision of the Trustees, Morgan makes the Fund's day-to-day investment deci-
sions, arranges for the execution of portfolio transactions and generally man-
ages 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 $208 bil-
lion.     
 
                                                                               7
<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 quanti-
tative 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 con-
junction with fixed-income, credit, capital market and economic research ana-
lysts, 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 1992).     
 
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 an-
nual 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 maintain-
ing 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 Agree-
ment with the Trust, Morgan provides administrative and related services to
the Fund, including services related to tax compliance, preparation of finan-
cial statements, calculation of performance data, oversight of service provid-
ers 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 In-
stitutional 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, as-
sists 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 in providing these services to the Trust and certain other registered in-
vestment companies subject to similar agreements with PGI.     
 
8
<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 ex-
penses 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 August 31,
1998 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 as-
sets of the Fund's JPM Institutional Shares. This expense reimbursement does
not apply to taxes, interest, litigation costs and other extraordinary ex-
penses.     
 
SHAREHOLDER INQUIRIES AND SERVICES
 
Shareholders may call J.P. Morgan Funds Services at (800) 766-7722 for informa-
tion 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 Institu-
tion) provides account administration and personal and account maintenance
services to Fund shareholders. These services include assisting in the mainte-
nance 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.
   
Shares may be sold to or through Eligible Institutions, including financial in-
stitutions and broker-dealers, that may be paid fees by Morgan or its affili-
ates for services provided to their clients that invest in the Fund. Organiza-
tions 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 business days of the Fund are the days the New York Stock Exchange is open.
    
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 instruc-
tions 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 cus-
tomers of Morgan may apply to become customers of Morgan for the purpose of
Fund transactions. There are no charges associated with becoming a Morgan cus-
tomer 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 in-
vestors, 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 com-
panies and investment advisors, or who maintain retirement accounts with the
Fund.
 
                                                                               9
<PAGE>
 
PURCHASE PRICE AND SETTLEMENT. The Fund's shares are sold on a continuous ba-
sis without a sales charge at the net asset value next determined after re-
ceipt of an order. Prospective investors may purchase shares with the assis-
tance 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 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 pur-
chase of Fund shares is effective and is made at the net asset value deter-
mined 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 deter-
mined 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. The services provided by Eligible Institutions may in-
clude establishing and maintaining shareholder accounts, processing purchase
and redemption transactions, arranging for bank wires, performing shareholder
subaccounting, answering client inquiries regarding the Trust, assisting cli-
ents in changing dividend options, account designations and addresses, provid-
ing 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 state-
ments, periodic reports, updated prospectuses and other communications to
shareholders and, with respect to meetings of shareholders, collecting, tabu-
lating 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 Insti-
tutions may establish their own terms and conditions for providing their serv-
ices and may charge investors a transaction-based or other fee for their serv-
ices. 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 Mor-
gan.
 
REDEMPTION OF SHARES
 
METHOD OF REDEMPTION. To redeem JPM Institutional Shares, an investor may in-
struct 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 di-
rectly 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 deter-
mined 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 re-
demption 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 event
is within seven days. See Dividends and Distributions.     
 
OTHER REDEMPTION PROCESSING INFORMATION. Redemption requests may not be proc-
essed 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
 
10
<PAGE>
 
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. The Fund reserves the right to suspend the right of redemption or post-
pone the payment of redemption proceeds to the extent permitted by the SEC.
Shareholders may be required to recognize taxable gains or losses upon redeem-
ing shares.
 
MANDATORY REDEMPTION. If a redemption of JPM Institutional Shares reduces the
value of a shareholder's account balance below the required initial minimum in-
vestment, the Fund may redeem the remaining shares in the account 60 days after
providing written notice to the shareholder of the mandatory redemption. An ac-
count 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 appli-
cable to share purchases and redemptions. Exchanges may result in the recogni-
tion 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 redemp-
tion order.
 
Substantially all the realized net capital gains, if any, of the Fund are de-
clared 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 divi-
dends 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 in-
structions.
 
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 Addi-
tional 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.
 
                                                                              11
<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 in-
vested in the securities of any one issuer (other than U.S. Government securi-
ties 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 in-
vested in the securities of a single issuer. As a regulated investment compa-
ny, 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 sharehold-
ers 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. Ex-
empt-interest dividends received from the Fund will be treated for federal in-
come tax purposes as tax exempt interest income. However, an investor receiv-
ing Social Security or railroad retirement benefits should consult his tax ad-
viser to determine if an investment in the Fund may affect the federal taxa-
tion of these benefits. California does not tax any portion of such benefits.
To the extent that exempt-interest dividends are derived from interest on Cal-
ifornia Municipal Securities, such distributions will also be exempt from Cal-
ifornia personal income tax. However, these exempt-interest dividends may re-
sult in liability for state and local taxes for individual shareholders sub-
ject to taxation by other states and municipalities outside of California.
 
For federal income tax purposes, dividends other than exempt interest divi-
dends 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 distri-
butions received from the Fund.
 
For California personal income tax purposes, distributions derived from in-
vestments other than California Municipal Securities and U.S. Government secu-
rities 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 applica-
ble 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 share-
holders, 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 in-
vestors to be subject to (or increase their liability under) California corpo-
rate 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 im-
posed on certain corporations by the Superfund Revenue Act of 1986, and (iii)
the foreign branch profits tax imposed on certain effectively connected earn-
ings and profits of U.S. branches of foreign corporations. Furthermore, spe-
cial 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.
 
12
<PAGE>
 
Interest on indebtedness incurred or continued by a shareholder (whether a cor-
poration 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 invest-
ments 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 require-
ments 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 real-
ized 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 with-
holding of federal income tax on taxable distributions and the proceeds of re-
demptions if they fail to furnish their correct taxpayer identification number
and certain certifications or if they are otherwise subject to backup withhold-
ing.
 
The foregoing summarizes certain federal and California income tax consequences
of investing in the Fund. Shareholders are urged to consult their own tax advi-
sors concerning specific questions about federal, state and local taxes.
 
ADDITIONAL INFORMATION
 
SHAREHOLDER REPORTS AND CONFIRMATIONS. The Fund sends to its shareholders an-
nual and semiannual reports. The financial statements appearing in annual re-
ports are audited by independent accountants. Shareholders will also be sent
confirmations of each purchase and redemption transaction and monthly state-
ments reflecting all account activity.
 
TELEPHONE TRANSACTIONS. All shareholders are entitled to initiate redemptions
and other transactions by telephone. However, a transaction authorized by tele-
phone 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 fol-
lowed, the Fund, Morgan, the investor's Eligible Institution or the Distributor
may be liable for any losses resulting from unauthorized or fraudulent instruc-
tions.
 
PERFORMANCE ADVERTISING. The Fund may advertise historical performance informa-
tion 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 re-
turn data. Average annual total return is determined by computing the average
annual percentage change in value of $1,000 invested at NAV for specified peri-
ods ending with the most recent calendar quarter. The total return calculation
assumes a complete redemption of the investment at the end of the relevant pe-
riod. 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 In-
stitutional Shares will fluctuate over time and should not be considered a rep-
resentation of performance in the future.
 
                                                                              13
<PAGE>
 
In addition, the Fund may advertise yield and "tax-equivalent yield." Yield re-
flects 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 meth-
ods that are standardized for all stock and bond funds and differ from the
methods used for other accounting purposes. Therefore, the yield on JPM Insti-
tutional Shares may not equal the income paid on these shares or the income re-
ported in the Fund's financial statements. Tax-equivalent yield shows the ef-
fect 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 two classes of shares of the Fund:
JPM Institutional  Shares offered by this Prospectus and JPM Pierpont Shares
offered by a separate  Prospectus.  JPM  Institutional  Shares and JPM  Pierpont
Shares are 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 Trust-
ees, 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.
 
14
<PAGE>
 
 
                                        ---------------------------------------
 
 
 
 
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.
   
  PROS332-976     
 
 
  JPM Institutional Shares: California Bond Fund
 
 
  PROSPECTUS
     
  June 25, 1997     


<PAGE>
                                JPM SERIES TRUST


   
                           TAX AWARE U.S. EQUITY FUND
                        TAX AWARE DISCIPLINED EQUITY FUND
                              CALIFORNIA BOND FUND
    


                       STATEMENT OF ADDITIONAL INFORMATION





   
                                  JUNE 25, 1997
    















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 LISTED ABOVE, 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.

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<PAGE>






Table of Contents

                                                                PAGE

   
General.................................                           1
Investment Objectives and Policies......                           1
Investment Restrictions.................                          13
Trustees and Officers...................                          16
Investment Advisor......................                          20
Distributor.............................                          23
Co-Administrator........................                          23
Services Agent..........................                          24
Custodian and Transfer Agent............                          25
Shareholder Servicing...................                          25
Independent Accountants.................                          26
Expenses................................                          26
Purchase of Shares......................                          27
Redemption of Shares....................                          27
Exchange of Shares......................                          28
Net Asset Value.........................                          28
Performance Data........................                          29
Portfolio Transactions..................                          31
Massachusetts Trust.....................                          33
Description of Shares...................                          34
Taxes...................................                          35
Additional Information..................                          38
Financial Statements....................                          38
Appendix A - Description of Securities
Ratings.................................                         A-1
Appendix B - Additional Information
Concerning California Municipal
Securities..............................                         B-1
    

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<PAGE>






GENERAL

   
         Each of Tax Aware U.S. Equity Fund (the " U.S. Equity Fund"), Tax Aware
Disciplined  Equity Fund (the  "Disciplined  Equity Fund," and together with the
U.S. 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 two classes of the
California Fund (JPM Pierpont Shares and 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.  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. In the case of  securities  not backed by the full faith and credit of the
United States,  each 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
    

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                                                         1

<PAGE>



include,  but are not  limited  to:  (i)  obligations  of the  Tennessee  Valley
Authority,  the Federal Home Loan  Mortgage  Corporation,  the Federal Home Loan
Banks and the U.S.  Postal  Service,  each of which has the right to borrow from
the U.S. Treasury to meet its obligations; (ii) securities issued by the Federal
National  Mortgage  Association,   which  are  supported  by  the  discretionary
authority of the U.S. Government to purchase the agency's obligations; and (iii)
obligations  of the Federal Farm Credit  System and the Student  Loan  Marketing
Association,  each of whose  obligations may be satisfied only by the individual
credits of the issuing agency.

         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 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

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                                                         2

<PAGE>



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.  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

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                                                         3

<PAGE>



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
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.

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         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 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.


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         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  Securities  and
Exchange Commission (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

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                                                         6

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& Poor's Ratings Group ("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 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.


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         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 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

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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 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

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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 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

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<PAGE>



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
limit is reached or a trading halt is imposed, it may be impossible for a Fund

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<PAGE>



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

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<PAGE>



   
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,  in the past the State has 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.  The  presence  of such aid in the future
should  not be  assumed.  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.
    

         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.

   
JPM PIERPONT SHARES:  TAX AWARE U.S. EQUITY FUND -- For the period December 18,
1996 (commencement of operations) through April 30, 1997 (unaudited): 16%.

JPM PIERPONT SHARES: TAX AWARE DISCIPLINED EQUITY FUND -- For the period January
30, 1997 (commencement of operations) through April 30, 1997 (unaudited): 12%.

JPM  PIERPONT  SHARES:CALIFORNIA  BOND FUND -- For the  period  April  21,  1997
(commencement of operations) through April 30, 1997: 40%.
    

JPM INSTITUTIONAL SHARES: CALIFORNIA BOND FUND -- For the period December 23,
1996 (commencement of operations) through April 30, 1997: 40%.

INVESTMENT RESTRICTIONS

         The  investment  restrictions  set forth below have been adopted by the
Trust with respect to each Fund.  Except as 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.

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         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.

         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 obtai
                  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

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                                                        14

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                  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.

         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.

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<PAGE>



         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 since prior to April 1994, Amoco Corporation.  His address is
5300 Arbutus Cove, Austin, TX 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, FL 32779,
and his date of birth is November 2, 1932.

         ARTHUR C. ESCHENLAUER--Trustee; Retired; Former Senior Vice President,
Morgan Guaranty Trust Company of New York.  His address is 14 Alta Vista Drive,
RD #2, Princeton, NJ 08540, and his date of birth is May 23, 1934.

         MATTHEW  HEALEY  (*)--Trustee,  Chairman and Chief  Executive  Officer;
Chairman,  Pierpont Group,  Inc.,  since prior to 1992. His address is Pine Tree
Club Estates, 10286 Saint Andrews Road, Boynton Beach, FL 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 since prior to April 1996.  His
address is 10 Charnwood Drive, Suffern, NY 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.


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<PAGE>



         Each Trustee is currently paid an annual fee of $75,000 (adjusted as of
April  1,  1997)  for  serving  as  Trustee  of the  Trust,  each of the  Master
Portfolios (as defined below), The JPM Institutional  Funds and The JPM Pierpont
Funds and is reimbursed  for expenses  incurred in connection  with service as a
Trustee.  The Trustees may hold various other  directorships  unrelated to these
funds.

         Trustee  compensation  expenses  accrued by the Trust for the  calendar
year ended December 31, 1996 is set forth below.
<TABLE>
<CAPTION>
   
                                                   AGGREGATE                  TOTAL TRUSTEE COMPENSATION
                                                   TRUSTEE                    ACCRUED BY THE MASTER
                                                   COMPENSATION               PORTFOLIOS (*), THE JPM
                                                   ACCRUED BY THE             INSTITUTIONAL FUNDS, THE JPM
                                                   TRUST DURING               PIERPONT FUNDS AND THE TRUST
NAME OF TRUSTEE                                    1996                       DURING 1996 (***)
<S>                                                <C>                        <C>
Frederick S. Addy, Trustee                         $0                         $65,000
William G. Burns, Trustee                          $0                         $65,000
Arthur C. Eschenlauer, Trustee                     $0                         $65,000
Matthew Healey, Trustee (**)                       $0                         $65,000
  Chairman and Chief Executive
  Officer
Michael P. Mallardi, Trustee                       $0                         $65,000
</TABLE>

(*) 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 23  separate  master  portfolios  (collectively  the  "Master
Portfolios"), 15 of which are registered investment companies.
    

(**)  During 1996, 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 $21,500 in
insurance premiums for his benefit.

   
(***) No investment  company within the fund complex has a pension or retirement
plan.

         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 to the Trust and certain other registered investment companies subject
    

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                                                        17

<PAGE>



   
to similar agreements with Pierpont Group, Inc.  These costs are periodically
reviewed by the Trustees.

         The aggregate fees paid to Pierpont Group, Inc. by each Fund during the
indicated fiscal periods are set forth below:

TAX AWARE U.S. EQUITY FUND -- For the period December 18, 1996 (commencement of
operations) through April 30, 1997 (unaudited): $100.

TAX  AWARE  DISCIPLINED   EQUITY  FUND  --  For  the  period  January  30,  1997
(commencement of operations) through April 30, 1997 (unaudited): $22.

CALIFORNIA  BOND FUND -- For the  period  December  23,  1996  (commencement  of
operations) through April 30, 1997: $90.
    

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,
since prior to 1992. His address is Pine Tree Club Estates,  10286 Saint Andrews
Road, Boynton Beach, FL 33436. His date of birth is August 23, 1937.

   
         MARIE E. CONNOLLY;  Vice President and Assistant Treasurer.  President,
Chief Executive  Officer,  Chief Compliance Officer and Director of FDI, Premier
Mutual Fund  Services,  Inc.,  an  affiliate  of FDI  ("Premier  Mutual") and an
officer of certain  investment  companies advised or administered by the Dreyfus
Corporation ("Dreyfus") or its affiliates.  From December 1991 to July 1994, she
was President and Chief  Compliance  Officer of FDI. Her date of birth is August
1, 1957.

         DOUGLAS C. CONROY; Vice President and Assistant Treasurer.  Assistant 
Vice President and Manager of Treasury Services and Administration of FDI and an
officer of certain  investment companies advised or administered by Dreyfus or
its affiliates. Prior to April 1997, Mr. Conroy was Supervisor of Treasury
Services and Administration of FDI.  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, Inc.
His date of birth is March 31, 1969.
    


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<PAGE>



   
         RICHARD W. INGRAM;  President and  Treasurer.  Executive Vice President
and Director of Client Services and Treasury  Administration of FDI, Senior Vice
President  of Premier  Mutual and an officer of RCM  Capital  Funds,  Inc.,  RCM
Equity Funds, Inc.,  Waterhouse Investors Cash Management Fund, Inc. and certain
investment  companies  advised or  administered  by Dreyfus or Harris  Trust and
Savings Bank ("Harris") or their respective affiliates. Prior to April 1997, Mr.
Ingram was Senior Vice  President  and  Director of Client  Service and Treasury
Administration  of FDI.  From March 1994 to November  1995,  Mr. Ingram was Vice
President and Division Manager of First Data Investor  Services Group, Inc. From
1989 to  1994,  Mr.  Ingram  was Vice  President,  Assistant  Treasurer  and Tax
Director  -  Mutual  Funds  of The  Boston  Company,  Inc.  His date of birth is
September 15, 1955.
    

         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., Waterhouse Investors Cash Management Fund, Inc. and Harris or their
respective affiliates.   From June 1994 to January 1996, Ms. Jacoppo-Wood was a
Manager, SEC Registration, Scudder, Stevens & Clark, Inc.  From 1988 to May
1994, Ms. Jacoppo-Wood was a senior paralegal at The Boston Company Advisors,
Inc. ("TBCA"). Her date of birth is December 29, 1966.

   
     ELIZABETH A. KEELEY; Vice President and Assistant Secretary. Vice President
and Senior  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 or
Harris or their  respective  affiliates.  Prior to August 1996,  Ms.  Keeley was
Assistant  Vice  President  and  Counsel  of FDI and  Premier  Mutual.  Prior to
September 1995, Ms. Keeley was enrolled at Fordham  University School of Law and
received  her JD in May  1995.  Prior  to  September  1992,  Ms.  Keeley  was an
assistant at the National Association for Public Interest Law. Address: 200 Park
Avenue, New York, New York 10166. Her date of birth is September 14, 1969.
    

         CHRISTOPHER J. KELLEY; Vice President and Assistant Secretary.  Vice
President and Associate General Counsel of FDI and Premier Mutual and an officer
of Waterhouse Investors Cash Management Fund, Inc. and certain investment
companies advised or administered by Harris or its affiliates.  From April 1994
to July  1996, Mr. Kelley was Assistant Counsel at Forum Financial Group.  From
1992 to 1994, Mr. Kelley was employed by Putnam Investments in legal and
compliance capacities.  Prior to September 1992, Mr. Kelley was enrolled at
Boston College Law School and received his JD in May 1992.  His date of birth is
December 24, 1964.

   
     MARY A. NELSON; Vice President and Assistant Treasurer.  Vice President and
Manager of Treasury  Services and  Administration  of FDI and Premier Mutual, 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 or Harris or their respective  affiliates.  From 1989 to
1994,  Ms. Nelson was an Assistant  Vice  President  and Client  Manager for The
Boston Company, Inc. Her date of birth is April 22, 1964.

     JOHN E.  PELLETIER;  Vice President and Secretary.  Senior Vice  President,
General Counsel, Secretary and Clerk of FDI and Premier Mutual and an officer of
    

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                                                        19

<PAGE>



RCM Capital Funds, Inc., RCM Equity Funds, Inc.,  Waterhouse Investors Cash
Management Fund, Inc. and certain  investment  companies advised or administered
by Dreyfus or Harris or their respective affiliates. From February 1992 to April
1994,  Mr.  Pelletier  served as Counsel for TBCA.  From August 1990 to February
1992,  Mr.  Pelletier was employed as an Associate at Ropes & Gray.  His date of
birth is June 24, 1964.

   
     MICHAEL S. PETRUCELLI;  Vice President and Assistant Secretary. Senior Vice
President and Director of Strategic  Client  Initiatives  for FDI since December
1996. From December 1989 through November 1996, Mr. Petrucelli was employed with
GE  Investments  where  he held  various  financial,  business  development  and
compliance  positions.  He also  served  as  Treasurer  of the GE  Funds  and as
Director of GE Investment  Services.  Address:  200 Park Avenue,  New York,  New
York, 10166. His date of birth is May 18, 1961.

     JOSEPH F. TOWER III; Vice President and Assistant Treasurer. Executive Vice
President,  Treasurer and Chief Financial Officer,  Chief Administrative Officer
and  Director  Of FDI.  Senior Vice  President,  Treasurer  and Chief  Financial
Officer,  Chief  Administrative  Officer and  Director of Premier  Mutual and an
officer  of  Waterhouse   Investors  Cash  Management  Fund,  Inc.  and  certain
investment companies advised or administered by Dreyfus or its Affiliates. Prior
to April  1997,  Mr.  Tower  was  Senior  Vice  President,  Treasurer  and Chief
Financial Officer,  Chief Administrative  Officer and Director of FDI. From July
1988 to November  1993, Mr. Tower was Financial  Manager of The Boston  Company,
Inc. 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 $208 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

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                                                        20

<PAGE>



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 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:  U.S.
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.


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<PAGE>



   
         As compensation for the services  rendered and related expenses such as
salaries  of  advisory  personnel  borne  by  the  Advisor  under  the  Advisory
Agreements,  the Funds have agreed to pay the  Advisor a fee,  which is computed
daily and may be paid monthly,  equal to the annual rates of each Fund's average
daily net assets shown below.

TAX AWARE U.S. EQUITY FUND:         0.45%

TAX AWARE DISCIPLINED EQUITY FUND:  0.35%

CALIFORNIA BOND FUND:               0.30%

         The table below sets forth for each Fund listed the advisory  fees paid
to  the  Advisor  for  the  fiscal  periods  indicated.  See  "Expenses"  in the
Prospectus and below for applicable expense limitations.

TAX AWARE U.S. EQUITY FUND -- For the period December 18, 1996 (commencement of
operations) through April 30, 1997 (unaudited): $16,337.

TAX  AWARE   DISCIPLINED   EQUITY  FUND  --For  the  period   January  30,  1997
(commencement of operations) through April 30, 1997 (unaudited): $3,028.

CALIFORNIA  BOND FUND -- For the  period  December  23,  1996  (commencement  of
operations) through April 30, 1997: $10,233.
    

         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.  The  Advisor  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
    

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                                                        22

<PAGE>



   
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 the Advisor from continuing to
perform such services for the Funds.

         If the Advisor 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.
    

         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

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<PAGE>



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 Trust and certain other registered investment companies subject to
similar arrangements with FDI.

         The table below sets forth for each Fund listed the administrative fees
paid to FDI for the fiscal periods  indicated.  See "Expenses" in the Prospectus
and below for applicable expense limitations.

TAX AWARE U.S. EQUITY FUND: -- For the period December 18, 1996 (commencement of
operations) through April 30, 1997 (unaudited): $73.

TAX AWARE DISCIPLINED EQUITY FUND: -- For the period January 30, 1997
(commencement of operations) through April 30, 1997 (unaudited): $17.

CALIFORNIA BOND FUND: -- For the period December 23, 1996 (commencement of
operations) through April 30, 1997: $68.
    

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
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 Trust  and the  other  investment  companies  provided
administrative services by Morgan.

         The  table  below  sets  forth for each  Fund  listed  the fees paid to
Morgan, net of fee waivers and reimbursements, as Services Agent. See "Expenses"
in the Prospectus and below for applicable expense limitations.

TAX AWARE U.S. EQUITY FUND: -- For the period December 18, 1996 (commencement of
operations) through April 30, 1997 (unaudited): $1,377.
    


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TAX AWARE DISCIPLINED EQUITY FUND: -- For the period January 30, 1997
(commencement of operations) through April 30, 1997 (unaudited): $341.

CALIFORNIA BOND FUND: -- For the period December 23, 1996 (commencement of
operations) through April 30, 1997: $1,332.
    

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.

   
         Under the Shareholder Servicing Agreement, each Fund has agreed to pay
Morgan for these services a fee at the following annual rates (expressed as a
percentage of the average daily net asset values of Fund shares owned by or for
shareholders for whom Morgan is acting as shareholder servicing agent): JPM
Pierpont Shares: Tax Aware U.S. Equity Fund:  0.25%; JPM Pierpont Shares: Tax
Aware Disciplined Equity Fund:  0.25% ; JPM Pierpont Shares:  California Bond
Fund: 0.25%;  JPM Institutional  Shares:  California Bond Fund: 0.05%.  Morgan
acts as shareholder servicing agent for all shareholders.

         The  table  below  sets  forth  for each Fund  listed  the  shareholder
servicing   fees  paid  by  each  Fund  to  Morgan,   net  of  fee  waivers  and
reimbursements,  for  the  fiscal  periods  indicated.  See  "Expenses"  in  the
Prospectus and below for applicable expense limitations.
    


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JPM PIERPONT SHARES: TAX AWARE U.S. EQUITY FUND: -- For the period December 18,
1996 (commencement of operations) through April 30, 1997 (unaudited): $9,076.

JPM PIERPONT SHARES:  TAX AWARE DISCIPLINED EQUITY FUND: -- For the period
January 30, 1997 (commencement of operations) through April 30, 1997 
(unaudited): $2,163.

JPM PIERPONT SHARES:  CALIFORNIA BOND FUND: -- For the period April 21, 1997
(commencement of operations) through April 30, 1997: $16.

JPM INSTITUTIONAL SHARES: CALIFORNIA BOND FUND: -- For the period December 23,
1996 (commencement of operations) through April 30, 1997: $1,543.
    

         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.

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.

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PURCHASE OF SHARES

         Investors  may open Fund  accounts and purchase JPM Pierpont  Shares of
the Equity  Funds and JPM  Pierpont  Shares or 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
Pierpont Shares or 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.

         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 Trust is in the process of seeking
exemptive  relief from the SEC with respect to redemptions in kind by the Funds.
If the  requested  relief is granted,  each Fund would then be  permitted to pay
redemptions to greater than 5% shareholders in securities,  rather than in cash,
to the extent  permitted  by the SEC and  applicable  law. The method of valuing
portfolio securities is described under "Net Asset Value," and such valuation

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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  Pierpont  Shares or 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  separately  for each
class of shares  outstanding  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 Funds may also close
for  purchases and  redemptions  at such other times as may be determined by the
Board of Trustees to the extent  permitted by applicable  law. 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

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<PAGE>



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.

         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's JPM
Pierpont and JPM  Institutional  shares 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

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shareholders at specified federal and California income tax levels to produce an
after-tax yield equivalent to the annualized tax-exempt yield.

   
         Below  is set  forth  historical  yield  information  for  the  periods
indicated:

JPM PIERPONT SHARES: CALIFORNIA BOND FUND (for the period April 21, 1997
(commencement of operations) through April 30, 1997): 30-day yield : N/A; 30-day
tax equivalent yield at 39.6% tax rate: N/A.

JPM INSTITUTIONAL SHARES: CALIFORNIA BOND FUND (for the period December 23, 1996
(commencement of operations) through April 30, 1997): 30-day yield: 4.68%; 
30-day tax equivalent yield at 39.6% tax rate: 7.75%.
    

         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.

   
         Historical  performance for periods prior to the  establishment  of JPM
Pierpont Shares of the California Fund may be that of JPM  Institutional  Shares
of that Fund and will be  presented  in  accordance  with  applicable  SEC staff
interpretations.  Such historical performance  information may reflect operating
expenses  which here  lower than those  associated  with  holding  JPM  Pierpont
Shares.  Accordingly,  the  historical  yield  and  historical  returns  for the
California  Fund's JPM Pierpont Shares may be higher than would have occurred if
an investment  had been made during the indicated  periods in JPM  Institutional
Shares of the Fund.

         Below is set forth historical return  information for the Funds for the
periods indicated:

JPM PIERPONT  SHARES:  TAX AWARE U.S.  EQUITY FUND (for the period  December 18,
1996 (commencement of operations) through April 30, 1997):  Average annual total
return, 1 year: N/A;  average annual total return, 5 years:  N/A; average annual
total return,  commencement of operations to period end: 9.02%;  aggregate total
return,  1 year: N/A;  aggregate  total return,  5 years:  N/A;  aggregate total
return, commencement of operations to period end: 9.02%.

JPM PIERPONT SHARES:  TAX AWARE DISCIPLINED  EQUITY FUND (for the period January
30, 1997  (commencement of operations)  through April 30, 1997):  Average annual
total return, 1 year: N/A;  average annual total return,  5 years:  N/A; average
annual total return,  commencement of operations to period end: 2.50%; aggregate
total return, 1 year: N/A; aggregate total return, 5 years: N/A; aggregate total
return, commencement of operations to period end: 2.50%.
    


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JPM  PIERPONT  SHARES:  CALIFORNIA  BOND FUND  (for the  period  April 21,  1997
(commencement  of  operations)  through  April 30, 1997):  Average  annual total
return, 1 year: N/A;  average annual total return, 5 years:  N/A; average annual
total return,  commencement of operations to period end: 0.51%;  aggregate total
return,  1 year: N/A;  aggregate  total return,  5 years:  N/A;  aggregate total
return, commencement of operations to period end: 0.51%.

JPM INSTITUTIONAL SHARES: CALIFORNIA BOND FUND (for the period December 23, 1996
(commencement  of  operations)  through  April 30, 1997):  Average  annual total
return, 1 year: N/A;  average annual total return, 5 years:  N/A; average annual
total return,  commencement of operations to period end: 0.56%;  aggregate total
return,  1 year: N/A;  aggregate  total return,  5 years:  N/A;  aggregate total
return, commencement of operations to period end: 0.56%.
    

         GENERAL.  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.
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.


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         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.

   
         The Equity Funds paid the following  approximate  brokerage commissions
for the indicated fiscal periods:

TAX AWARE U.S. EQUITY FUND (for the period December 18, 1996 (commencement of
operations) through April 30, 1997) (unaudited): $792.

TAX AWARE DISCIPLINED EQUITY FUND (for the period January 30, 1997 (commencement
of operations) through April 30, 1997) (unaudited): $878.
    

         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
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.


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         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.

   
         Effective  May 12, 1997,  the name of the U.S.  Equity Fund was changed
from "Tax Aware Equity Fund" to "Tax Aware U.S. Equity Fund".
    

         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

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                                                        33

<PAGE>



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 is entitled to be indemnified against all liability in connection with the
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 Pierpont  Shares
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.

   
         As of May 31, 1997, the following  owned of record or, to the knowledge
of management, beneficially owned more than 5% of the outstanding shares of:

JPM PIERPONT SHARES: TAX AWARE U.S. EQUITY FUND -- Morgan as Agent for J.K.
Volwieder (6.54%), Morgan as Agent for A. Kaufman (6.49%), Morgan as Agent for
The Cumming Family Providence 1991 Irrevocable Trust (6.08);
    


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                                                        34

<PAGE>



   
JPM PIERPONT  SHARES:  TAX AWARE  DISCIPLINED  EQUITY FUND -- J.E.  Young and M.
Young  (24.40%),  Morgan as Agent for T. Andrew  McWethy  Nordal and M.  McWethy
Asset  Allocation  (15.18%),  Morgan as Agent for H.R. Geary (7.38%),  Morgan as
Agent for H. Geary/G.  Skip Trust (7.01%),  Morgan as Agent for F.J.  Casagrande
Special Account (6.35%),  Morgan as Agent for J. Hyatt (5.78%),  Morgan as Agent
for W.J.  Brady  (5.43%),  Morgan as Agent  for D.R.  Seawell  and E.R.  Seawell
(5.19%);

JPM PIERPONT SHARES: CALIFORNIA BOND FUND -- Morgan as Agent for W.J. Brady
(100%); and

JPM  INSTITUTIONAL  SHARES:  CALIFORNIA  BOND  FUND --  Morgan as Agent for V.G.
Defelice (18.86%),  Morgan as Agent for N. Wright (15.32%),  Morgan as Agent for
Yeo Living  Trust  (11.40%),  Morgan as Agent for 1984 Geisel Trust - Survivor's
Trust  (9.08%),  Morgan as Agent for 1984 Geisel Trust - Marital Trust  (7.35%),
Morgan as Agent for  Shaklee  Trust  (5.69%),  Morgan as Agent for Carey  Family
Trust  (5.48%),  Morgan as Agent for R. Cort and R.S.  Cort  Community  Property
Account (5.46%).

         The address of each owner listed above is c/o Morgan, 522 Fifth Avenue,
New  York,  New York  10036.  As of the  date of this  Statement  of  Additional
Information  the  officers  and  Trustees  as a group  owned less than 1% of the
beneficial shares of each Fund.
    

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 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

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                                                        35

<PAGE>



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

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                                                        36

<PAGE>



by the Fund in the closing  transaction.  If securities  are purchased by a Fund
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

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                                                        37

<PAGE>



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. 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

   
     The  following  financial  statements and the  report  thereon of Price
Waterhouse LLP of the California Bond Fund are incorporated  herein by reference
from its  annual  report  dated  April 30,  1997 made with the SEC  pursuant  to
Section  30(b)  of the  1940  Act and  Rule  30b2-1  thereunder.  The  following
financial statements
    

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                                                        38


<PAGE>
   
of the Tax Aware  U.S.  Equity  Fund and the Tax  Aware  Disciplined
Equity  Fund  are  incorporated   herein  by  reference  from  their  respective
semi-annual  reports  dated April 30, 1997 made with the SEC pursuant to Section
30(b) of the 1940 Act and Rule 30b2-1 thereunder. Any of the following financial
reports are available  without  charge upon request by calling J.P.  Morgan Fund
Services at (800) 521-5411 for JPM Pierpont Shares:  Tax Aware U.S. Equity Fund,
JPM Pierpont Shares:  Tax Aware Disciplined Equity Fund and JPM Pierpont Shares:
California Bond Fund; or (800) 766-7722 for JPM Institutional Shares: California
Bond Fund.  The  audited  statement  of assets and  liabilities  and the reports
thereon of Price  Waterhouse  LLP for the U.S.  Equity Fund and the  Disciplined
Equity Fund as of November 4, 1996 are attached hereto.

<TABLE>
<CAPTION>

                                                 Date of Semi-Annual                Date of Annual
                                                 Report; Date Semi-                 Report; Date Annual
                                                 Annual Report Filed;               Report Filed; and
Name of Fund                                     and Accession Number               Accession Number
- ------------------------------------------------ ---------------------------------  --------------------------------
<S>                                              <C>                                <C>
Tax Aware U.S. Equity Fund                       04/30/97                           N/A
                                                 06/19/97
                                                 0000912057-97-020765
Tax Aware Disciplined Equity                     04/30/97                           N/A
Fund                                             06/19/97
                                                 0000912057-97-020764
California Bond Fund                             N/A                                04/30/97
                                                                                    06/13/97
                                                                                    0000912057-97-020343
- ------------------------------------------------ ---------------------------------  --------------------------------
</TABLE>
    







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                                                        39

<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.

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                                                        40

<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.

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                                                        41

<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

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                                                        42

<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.

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                                                        43

<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.

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                                                        44

<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

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                                                        45

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APPENDIX A

DESCRIPTION OF SECURITIES 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.


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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.

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.

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- -    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.

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<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

   
PRIOR FISCAL YEARS' FINANCIAL RESULTS

FISCAL YEARS PRIOR TO 1995-96

     The  state's  budget  problems  in  recent  years  have  been  caused  by a
combination of external economic  conditions and a structural  imbalance in that
the  largest  General  Fund  Programs--K-14   education,   health,  welfare  and
corrections--were increasing faster than the revenue base, driven by the state's
rapid population growth.  These pressures are expected to continue as population
trends maintain strong demand for health and welfare services, as the school age
population continues to grow, and as the state's corrections program responds to
a "Three  Strikes" law enacted in 1994,  which  requires  mandatory  life prison
terms for certain third-time felony offenders.

     As a result of these  factors  and others and  especially  because a severe
recession between 1990-94 reduced revenues and increased expenditures for social
welfare programs,  from the late 1980s until 1992-93,  the state had a period of
budget imbalance. During this period, expenditures exceeded revenues in four out
of six years,  and the state  accumulated  and sustained a budget deficit in its
budget reserve,  the Special Fund,  approaching $2.8 billion at its peak at June
30,  1993.  Starting  in the  1990-91  fiscal  year  and for  each  fiscal  year
thereafter,  each budget required multibillion dollar actions to bring projected
revenues and expenditures  into balance.  The legislature and Governor agreed on
the  following  principal  steps to produce  budget acts in the years 1991-92 to
1994-95, although not all these actions were taken in each year:

     significant cuts in health and welfare program expenditures;

     transfers of program  responsibilities  and funding from the state to local
     governments (referred to as "realignment"),  coupled with some reduction in
     mandates on local government;

     transfer of about $3.6 billion in local  property tax revenues from cities,
     counties,  redevelopment  agencies and some other districts to local school
     districts, thereby reducing state funding for schools under Proposition 98;
    


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     reduction in growth of support for higher education programs,  coupled with
     increases in student fees, through the 1994-95 fiscal year;

     maintenance  of the  minimum  Proposition  98  funding  guarantee  for K-14
     schools and the  disbursement of additional  funds to keep a constant level
     of about  $4,200  per K-12  pupil  through  the  1993-94  fiscal  year (see
     "Constitutional, Legislative and Other Factors--Proposition 98" below);

     revenue increases (particularly in the 1991-92 fiscal year budget), most of
     which were for a short duration;

     increased  reliance on aid from the federal  government to offset the costs
     of  incarcerating,  educating and providing  health and welfare services to
     illegal immigrants, although during this time frame, most of the additional
     aid requested by the administration was not received; and

     various one-time adjustments and accounting changes.

Despite  these budget  actions,  as noted,  the effects of the  recession led to
large,  unanticipated  deficits  in the budget  reserve,  the Special  Fund,  as
compared to  projected  positive  balances.  By the  1993-94  fiscal  year,  the
accumulated  deficit was so large that it was impractical to budget to retire it
in one year,  so a two-year  program  was  implemented,  using the  issuance  of
revenue anticipation  warrants to carry a portion of the deficit over the end of
the fiscal year. When the economy failed to recover  sufficiently in 1993-94,  a
second two-year plan was implemented in 1994-95,  again using  cross-fiscal year
revenue  anticipation  warrants to partly  finance the deficit  into the 1995-96
fiscal year.

     Another consequence of the accumulated budget deficits, together with other
factors such as disbursement of funds to local school districts  "borrowed" from
future  fiscal  years  and  hence  not  shown  in  the  annual  budget,  was  to
significantly  reduce the state's  cash  resources  available to pay its ongoing
obligations.  When the legislature and the Governor failed to adopt a budget for
the 1992-93  fiscal year by July 1, 1992,  which would have allowed the state to
carry out its normal annual cash flow  borrowing to replenish its cash reserves,
the state controller issued registered  warrants to pay a variety of obligations
representing prior years' or continuing appropriations,  and mandates from court
orders.  Available funds were used to make  constitutionally  mandated payments,
such as debt  service on bonds and  warrants.  Between  July 1 and  September 4,
1992,  when the  budget  was  adopted,  the state  controller  issued a total of
approximately $3.8 billion of registered warrants.

     During  the past  several  fiscal  years,  the  state  was  forced  to rely
increasingly on external debt markets to meet its cash needs, as a succession of
notes and revenue anticipation warrants were issued in the period from June 1992
to July 1994, often needed to pay previously  maturing notes or warrants.  These
borrowings were used also in part to spread out the repayment of the accumulated
budget  deficit over the end of a fiscal year,  as noted  earlier.  The last and
largest of these borrowings was $4.0 billion of revenue
    

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anticipation  warrants  which were  issued in July 1994 and matured on April 25,
1996.

1995-96 FISCAL YEAR

     The 1995-96  budget act was signed by the  Governor  on August 3, 1995,  34
days after the start of the fiscal year.  The budget act projected  General Fund
revenues and  transfers of $44.1  billion,  a 3.5% increase from the prior year.
Expenditures  were budgeted  $43.4 billion,  a 4% increase.  The budget act also
projected  Special Fund revenues of $12.7 billion and appropriated  Special Fund
expenditures of $13.0 billion.

     Final data for the 1995-96  fiscal year showed  revenues  and  transfers of
$46.1 billion, some $2 billion over the original fiscal year estimate, which was
attributed to the strong economic recovery.  Expenditures also increased,  to an
estimated  $45.4 billion,  as a result of the requirement to expend revenues for
schools under  Proposition  98 and,  among other things,  failure of the federal
government to enact welfare  reform during the fiscal year and to budget new aid
for  illegal  immigrant  costs,  both of  which  had  been  counted  on to allow
reductions  in state  costs.  The Special Fund had a small  negative  balance of
about $87 million at June 30, 1996, all but eliminating  the accumulated  budget
deficit from the early 1990s. Available internal borrowable resources (available
cash,  after  payment of all  obligations  due) on June 30,  1996 was about $3.8
billion, representing a significant improvement in the state's cash position and
ending  the need for  deficit  borrowing  over the end of the fiscal  year.  The
state's  improved  cash  position  allowed it to repay the $4.0 billion  Revenue
Anticipation  Warrant issue on April 25, 1996, and to issue only $2.0 billion of
revenue  anticipation  notes during the fiscal year,  which  matured on June 28,
1996.

     The  1995-96  budget act  included  substantial  additional  funding  under
Proposition 98 for schools and community  colleges  (about $1.0 billion  General
Fund and $1.2  billion  total  above  1994-95  levels).  Because of higher  than
projected revenues in 1994-95,  an additional $561 million ($92 per K-12 average
daily  attendance  ("ADA"))  was  appropriated  to the  1994-95  Proposition  98
entitlement.  A large part of this was a block  grant of about $50 per pupil for
any  one-time  purpose.  For  the  first  time in  several  years,  a full  2.7%
cost-of-living  allowance was funded.  The budget was based on the settlement of
the  CTA  V.  GOULD  litigation.  See  "Constitutional,  Legislative  and  Other
Factors--Proposition  98" below.  Cuts in health and welfare costs totaled about
$220 million, almost $700 million less than had been anticipated, because of the
failure  by the  federal  government  to approve  certain of these  actions in a
timely manner.  The federal  government  also failed to appropriate  all but $31
million of an anticipated $500 million in new federal aid for  incarceration and
health care costs of illegal  immigrants.  Funding from the General Fund for the
University  of California  was increased by $106 million and for the  California
State University system by $97 million, with no increases in student fees.
    


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CURRENT STATE BUDGET

     The  discussion  below of the 1996-97  fiscal  year  budget,  the  proposed
1997-98  fiscal year budget and the table under  "Summary of State  Revenues and
Expenditures"  below are based on  estimates  and  projections  of revenues  and
expenditures  for the current and upcoming fiscal year and must not be construed
as statements of fact.  These  estimates and  projections are based upon various
assumptions which may be affected by numerous factors, including future economic
conditions in the state and the nation,  and there can be no assurance  that the
estimates will be achieved.

     Periodic  reports on revenues and  expenditures  during the fiscal year are
issued by the administration,  the state controller's office and the legislative
analyst's  office.  The  Department of Finance  issues a monthly  bulletin which
reports the most recent revenue receipts,  comparing them to budget projections,
and  reports  on  other  current   developments   affecting   the  budget.   The
administration  also formally updates its budget  projections  twice during each
fiscal year, generally in January and May, respectively.
    

1996-97 FISCAL YEAR

   
     1996-97 BUDGET ACT

     The 1996-97  budget act was signed by the Governor on July 15, 1996,  along
with  various  implementing  bills.  The  Governor  vetoed  about $82 million of
appropriations  (both  General Fund and Special  Fund).  With the signing of the
budget act, the state  implemented its regular cash flow borrowing  program with
the issuance of $3.0 billion of revenue anticipation notes to mature on June 30,
1997. The budget act appropriated a modest budget reserve in the Special Fund of
$305 million,  as of June 30, 1997. The Department of Finance projected that, on
June 30, 1997, the state's available  internal  borrowable (cash) resources will
be $2.9 billion,  after payment of all  obligations due by that date, so that no
cross-fiscal year borrowing will be needed.

     Revenues - The  legislature  rejected  the  Governor's  proposed 15% cut in
personal  income  taxes (to be phased over three years) but did approve a 5% cut
in bank and  corporation  taxes,  to be effective  for income years  starting on
January 1, 1997.  As a result,  revenues  for the fiscal year were  estimated to
total  $47.643  billion,  a 3.3%  increase  over  the  final  estimated  1995-96
revenues. Special Fund revenues were estimated to be $13.3 billion.

     Expenditures  -  The  budget  act  contained  General  Fund  appropriations
totaling  $47.251  billion,  a 4%  increase  over the  final  estimated  1995-96
expenditures. Special Fund expenditures were budgeted at $12.6 billion.

     The following are principal features of the 1996-97 budget act:

     1.  Proposition 98 funding for schools and community college districts
increased by almost $1.6 billion (General Fund) and $1.65 billion total above
revised 1995-96 levels.  Almost half of this money was budgeted to fund
class-size reductions in kindergarten and grades 1-3.  Also, for the second
year in a row, the full cost-of-living allowance (3.2%) was funded.  The
    

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Proposition  98 increases  have brought K-12  expenditures  to almost $4,800 per
K-12 ADA, an almost 15% increase over the level prevailing  during the recession
years.  Community  colleges  will receive an increase in funding of $157 million
for 1996-97 out of this $1.6 billion total.

     Because of the higher than  projected  revenues in 1995-96,  an  additional
$1.1 billion  ($190 per K-12 ADA and $145 million for  community  colleges)  was
appropriated  and  retroactively  applied  towards  the 1995-96  Proposition  98
guarantee, bringing K-12 expenditures in that year to over $4,600 per ADA. These
new funds were  appropriated for a variety of purposes,  including block grants,
allocations  for each school site,  facilities  for class size  reduction  and a
reading initiative.  Similar retroactive increases totaling $230 million,  based
on final  figures on  revenues  and state  population  growth,  were made to the
1991-92 and the 1994-95  Proposition 98 guarantees,  most of which was allocated
to each school site.

     2. The budget act assumed savings of  approximately  $660 million in health
and welfare  costs which  required  changes in federal  law,  including  federal
welfare  reform.  The budget act further  assumed  federal law changes in August
1996 which would  allow  welfare  cash grant  levels to be reduced by October 1,
1996.  These cuts totaled  approximately  $163 million of the  anticipated  $660
million savings.

     3. A 4.9%  increase  in funding  for the  University  of  California  ($130
million General Fund) and the California State  University  system ($101 million
General Fund), with no increases in student fees, maintaining the second year of
the Governor's four-year "Compact" with the state's higher education units.

     4. The budget act assumed the federal government will provide approximately
$700  million  in new aid for  incarceration  and  health  care costs of illegal
immigrants.  These funds reduce  appropriations  in these  categories that would
otherwise  have to be paid from the  General  Fund.  (For  purposes of cash flow
projections, the Department of Finance expects $540 million of this amount to be
received during the 1996-97 fiscal year.)

     5. General Fund support for the Department of Corrections  was increased by
about  7%  over  the  prior  year,  reflecting  estimates  of  increased  prison
population.

     6. With respect to aid to local  governments,  the  principal  new programs
included in the budget act are $100 million in grants to cities and counties for
law  enforcement  purposes and $50 million  budgeted for  competitive  grants to
local governments for programs to combat juvenile crime.

     The budget act did not contain  any tax  increases.  As noted,  there was a
reduction in corporate  taxes.  In addition,  the legislature  approved  another
one-year  suspension  of  the  renters  tax  credit,   saving  $520  million  in
expenditures.

     Federal  Welfare  Reform - Following  enactment of the 1996-97  budget act,
Congress passed and the President signed (on August 22, 1996) the Personal
    

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Responsibility  and  Work  Opportunity  Act of  1996  (P.L.  104-193)  making  a
fundamental reform of the current welfare system. Among many provisions, the law
includes:  (i)  conversion  of Aid to Families with  Dependent  Children from an
entitlement  program to a block  grant  titled  Temporary  Assistance  for Needy
Families  ("TANF"),   with  lifetime  time  limits  on  TANF  recipients,   work
requirements and other changes;  (ii) provisions denying certain federal welfare
and  public  benefits  to legal  noncitizens,  allowing  states to elect to deny
additional benefits (including TANF) to legal noncitizens, and generally denying
almost all benefits to illegal  immigrants;  and (iii) changes in the food stamp
program, including reducing maximum benefits and imposing work requirements.

     The law requires  states to  implement  the new TANF program not later than
July 1, 1997 and provides  California  approximately $3.7 billion in block grant
funds for fiscal year 1996-97 for the provisions of the law.  States are allowed
to implement  TANF as soon as possible  and will receive a prorated  block grant
effective  the date of  application.  The  California  State  Plan was  approved
November 27, 1996 to allow grant reductions to be implemented  effective January
1,  1997 and to allow  the  state  to  capture  approximately  $267  million  in
additional  federal block grant funds over the currently budgeted level. None of
the other federal changes needed to achieve the balance of the $660 million cost
savings  were  enacted.  Thus,  in lieu of the $660  million  savings  initially
assumed, it is now projected that savings will total approximately $320 million.

     A  preliminary  analysis  of the law by the  legislative  analyst's  office
indicates  that an  overall  assessment  of how these  changes  will  affect the
state's General Fund will not be known for some time, and will depend on how the
state implements the law. There are many choices including how quickly the state
implements  the law; the degree to which the state elects to make up for cuts in
federal  aid,  provide  more aid to  counties,  or cut some of its own  existing
programs for  noncitizens;  and the state's  ability to avoid certain  penalties
written into the law.

     Other Subsequent Developments - With the continued strong economic recovery
in the state,  the Department of Finance has estimated,  in connection  with the
release of the Governor's 1997-98 budget proposal, that revenues for the 1996-97
fiscal year will exceed initial projections by about $760 million. This increase
will be  offset  by  higher  expenditures  for  K-14  school  aid  (pursuant  to
Proposition 98) and for health and welfare costs because federal law changes and
other  federal  actions did not provide as much  assistance  to the state as was
initially planned in the budget act. The department's updated projections show a
balance in the Special Fund of $197 million,  slightly  lower than  projected in
July 1996.  The  department  also  projects  the state's cash  position  will be
stronger than originally estimated, with unused internal borrowable resources at
June 30, 1997 of about $4.3 billion.

1997-98 FISCAL YEAR PROPOSED BUDGET

     On January 9, 1997,  the  Governor  released  his  proposed  budget for the
1997-98 fiscal year (the "Governor's  Budget").  The Governor's  Budget projects
General Fund revenues and transfers in 1997-98 of $50.7 billion, a 4.6%
    

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increase from revised 1996-97  figures.  The Governor  proposes  expenditures of
$50.3 billion,  a 3.9% increase from 1996-97.  The Governor's  Budget projects a
balance in the Special  Fund of $553 million on June 30,  1998.  The  Governor's
Budget also  anticipates  about $3 billion of external  borrowing  for cash flow
purposes during the year, with no requirement for cross-fiscal year borrowing.

     Among the major  initiatives and features of the Governor's  Budget are the
following:

     1.  A proposed 10% cut in the bank and corporation tax rate, to be phased
in over two years.

     2.  Proposition 98 funding for K-14 schools will be increased  again,  as a
result of  stronger  revenues.  Per-pupil  funding for K-12  schools  will reach
$5,010,  compared to $4,220 as recently as the 1993-94 fiscal year.  Part of the
new funding is proposed to be dedicated to the completion of the current program
to reduce class size to 20 pupils in lower  elementary  grades and to expand the
program by one grade, so that it will cover K-3rd grade.

     3.  Funding  for  higher  education  will be  increased  consistent  with a
four-year  "Compact"  established  in 1995-96.  There is not projected to be any
increase  in  student  fees  at any of the  three  levels  of the  state  higher
education system.

     4. The  1997-98  proposed  Governor's  Budget  assumes  approximately  $500
million in savings contingent upon federal action. The Governor's Budget assumes
that federal law will be enacted to remove the maintenance-of-effort requirement
for Supplemental Security Income ("SSI") payments, thereby enabling the state to
reduce grant levels pursuant to previously enacted state law ($279 million). The
Governor's Budget also assumes the federal  government will fund $216 million in
costs of health care for illegal immigrants.
    

     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

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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.

     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

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exclusive  provider plan, which includes most health  maintenance  organizations
("HMOs"),  private payers 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.
    

     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  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

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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.

     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

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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.

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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.

     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:


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     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;

     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

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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.

     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.

   
ARTICLES XIIIC AND XIIID OF THE CALIFORNIA CONSTITUTION (PROPOSITION 218)

     On November 5, 1996, the voters of the state approved Proposition 218 - the
"Right to Vote on Taxes Act."  Proposition  218 adds Articles XIIIC and XIIID to
the State Constitution,  which affect the ability of local government, including
charter cities, to levy and collect both existing and future taxes, assessments,
fees and charges. Proposition 218 became effective on November 6, 1996, although
application  of some of its  provisions is deferred  until July 1, 1997. At this
time the City of San  Francisco  (the  "City")  cannot  predict  the  impact  of
Proposition  218 on the finances of the City, and no assurance can be given that
Proposition 218 will not have a material adverse impact on the City's revenues.

     Article  XIIIC  requires  that  all new  local  taxes be  submitted  to the
electorate for approval before such taxes become effective. General taxes,
    

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imposed for general governmental  purposes of the City, require a majority vote,
and special  taxes,  imposed for  specific  purposes  (even if  deposited in the
General Fund),  require a two-thirds vote.  Under  Proposition 218, the City can
only  continue to collect  taxes that were imposed after January 1, 1995 if they
are approved by the voters by November 6, 1998. The voter approval  requirements
of Article XIIIC reduce the  flexibility to deal with fiscal problems by raising
revenue  through new or extended or increased  taxes,  and no  assurance  can be
given that the City will be able to raise taxes in the future to meet  increased
expenditure requirements.

     The City has reviewed the taxes it  currently  collects and has  determined
that a 2% increase in its hotel  occupancy  tax, a portion of the City's stadium
admissions tax and its existing firearm/ammunition tax must be approved by local
voters by November 6, 1998,  in order for the City to continue  collecting  such
taxes. The City has not yet determined  whether it will place these taxes before
local voters,  and the City can make no assurances  that, if placed before local
voters,  the voters will approve these taxes. For Fiscal Year 1995-96,  the City
expected to collect  $17.1  million in revenue from the 2% increase in the hotel
tax,  $1.2 million  from the stadium  admissions  tax and less than  $100,000 in
revenue from the firearm/ammunition tax.

     In addition,  Article XIIIC  clarifies the  initiative  power in matters of
local taxes, assessments, fees and charges. Consequently, the voters of the City
could, by initiative,  repeal or reduce any existing local tax, assessment,  fee
or  charge,  or limit the  future  imposition  or  increase  of any  local  tax,
assessment,  fee or charge.  "Assessment," "fee" and "charge" are not defined in
Article  XIIIC,  and it is not clear whether the  definitions  of these terms in
Article XIIID (which are generally property-related as described below) would be
applied to Article XIIIC.  No assurance can be given that the voters of the City
will not approve  initiatives that repeal,  reduce or prohibit the imposition or
increase of local taxes, assessments, fees or charges.

     Article XIIID  contains  several new  provisions  making it generally  more
difficult  for  local  agencies,   such  as  the  City,  to  levy  and  maintain
"assessments"  for local services and programs.  "Assessment" is defined to mean
any levy or charge upon real property for a special  benefit  conferred upon the
real  property  and  expressly  includes  standby  charges.  Article  XIIID also
includes new provisions  affecting "fees" and "charges," defined for purposes of
Article  XIIID to mean "any levy other than an ad valorem  tax, a special tax or
an assessment, imposed by a county upon a parcel or upon a person as an incident
of property  ownership,  including  a user fee or charge for a property  related
service." All new and existing property-related fees and charges must conform to
specific requirements and prohibitions set forth in the article. Further, before
any property-related  fee or charge may be imposed or increased,  written notice
must be given to the record owner of each parcel of land affected by such fee or
charge.  The City  must  then hold a hearing  upon the  proposed  imposition  or
increase,  and if written  protests  against the  proposal  are  presented  by a
majority  of the owners of the  identified  parcels,  the City may not impose or
increase  the fee or charge.  Moreover,  except  for fees or charges  for sewer,
water and refuse  collection  services (or fees for  electrical and gas service,
which are not treated as
    

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                                                       B-15

<PAGE>


   
"property-related"  for purposes of Article XIIID), no  property-related  fee or
charge may be imposed or  increased  without  majority  approval by the property
owners  subject  to the fee or  charge  or, at the  option of the local  agency,
two-thirds voter approval by the electorate residing in the affected area.

     The provisions of Proposition  218 have not been  interpreted by any court,
and the California legislature has not yet enacted any legislation  implementing
either Article XIIIC or Article  XIIID.  No assurance can be given that Articles
XIIIC and XIIID will not limit the  ability of the City to impose  taxes or levy
and  collect  assessments,  fees and  charges,  nor that the  City's  ability to
increase ad valorem  taxes in order to pay the  principal of and interest on the
California municipal obligations, will not be adversely affected.
    


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                                                       B-16

<PAGE>



                                     PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements:

         The following financial statements are included in Part A:

   
         Financial Highlights:
         JPM Pierpont Shares: Tax Aware U.S. Equity Fund (unaudited);
         JPM Pierpont Shares: Tax Aware Disciplned Equity Fund (unaudited);
         JPM Pierpont Shares: California Bond Fund; and
         JPM Institutional Shares: California Bond Fund
    

         The following financial statements are included in Part B:

   
         Tax Aware U.S. 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

   
         The following  financial  statements are incorporated by reference into
         Part B:

         Tax Aware U.S. Equity Fund:
         Schedule of  Investments  at April 30, 1997  (unaudited)
         Statement  of Assets and  Liabilities  at April 30,  1997  (unaudited)
         Statement  of Operations  for the fiscal  period  ended  April 30, 1997
         (unaudited)
         Statement of Changes in Net Assets (unaudited)
         Financial Highlights (unaudited)
         Notes to Financial Statements April 30, 1997 (unaudited)

         Tax Aware Disciplined Equity Fund:
         Schedule of Investments at April 30, 1997 (unaudited)
         Statement of Assets and Liabilities at April 30, 1997 (unaudited)
         Statement of Operations  for the fiscal period ended April 30, 199
         (unaudited)
         Statement  of Changes in Net Assets  (unaudited)
         Financial  Highlights  (unaudited)
         Notes to Financial  Statements April 30, 1997 (unaudited)

         California Bond Fund:
         Schedule of Investments at April 30, 1997
         Statement of Assets and Liabilities at April 30, 1997
         Statement  of  Operations  for the  fiscal  year ended  April 30,  1997
         Statement of Changes in Net Assets
    

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<PAGE>



         Financial Highlights
         Notes to Financial Statements April 30, 1997

(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)

   
1(b)     Amendment No. 2 to Declaration of Trust, Second Amended and Restated
         Establishment and Designation of Series and Classes of Shares.(4)
    

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       Consents of independent accountants.(4)
    

13       Purchase agreement with respect to Registrant's initial shares.(2)

16       Schedule for computation of performance quotations.(2)

19       Powers of attorney.(2)

20       18f-3 Plan.(3)

   
27.1     Financial data schedule.(4)

27.2     Financial data schedule.(4)

27.3     Financial data schedule.(4)

27.4     Financial data schedule.(4)
    

- -------------------

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<PAGE>




(1)      Incorporated herein from Registrant's registration statement on Form
         N-1A as filed on August 29, 1996 (Accession No. 0000912057-96-019242).


(2)      Incorporated herein from Registrant's registration statement on Form
         N-1A as filed on November 8, 1996 (Accession No. 0001016964-96-000034).
   
(3)      Incorporated herein from Registrant's registration statement on Form
         N-1A as filed on February 10, 1997 
         (Accession No. 0001016964-97-000014).

(4)      Filed herewith.
    

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 May 31, 1997
<TABLE>
<CAPTION>
         <S>                                         <C>                                         <C>
         Tax Aware U.S. Equity Fund:                 JPM Pierpont Shares:                        111
         Tax Aware Disciplined Equity Fund:          JPM Pierpont Shares:                        46
         California Bond Fund:                       JPM Pierpont Shares:                        19
         California Bond Fund:                       JPM Institutional Shares:                   48
</TABLE>
    

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

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<PAGE>



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.

        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 The University of Chicago, Department of History,
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 10 South
Briar Hollow 7, Houston, TX 77027.

         John A. Krol: President and Chief Executive Officer, E.I. Du Pont de
Nemours & Company (chemicals and energy company). His address is E.I. Du Pont
de Nemours & Company, 1007 Market Street, Wilmington, DE 19898.
    

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


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<PAGE>



         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.

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
Burridge Funds
Foreign Fund, Inc.
Fremont Mutual Funds, Inc.
Harris Insight Funds Trust
H.T. Insight Funds, Inc. d/b/a
Harris Insight Funds
LKCM Fund
Monetta Fund, Inc.
Monetta Trust
The Munder Framlington Funds Trust
The Munder Funds, Inc.
The Munder Funds Trust
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
The Skyline Funds
St. Clair Money Market Fund
Waterhouse Investors Cash Management Funds, Inc.
The JPM Institutional Funds
The JPM Pierpont Funds
JPM Series Trust II

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


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<PAGE>



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

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.

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<PAGE>



(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 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.
    



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<PAGE>




                                   SIGNATURES

   
Pursuant to the  requirements  of the  Securities Act of 1933 and the Investment
Company  Act  of  1940,  the  Registrant  certifies  that  it  meets  all of the
requirements for effectiveness of this registration  statement  pursuant to Rule
485(b) under the  Securities  Act of 1933 and has duly caused this  registration
statement  to  be  signed  on  its  behalf  by  the  undersigned,  thereto  duly
authorized,  in the City of Boston and Commonwealth of Massachusetts on the 19th
day of June, 1997.
    

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 June 19, 1997.
    

/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 previously filed.

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<PAGE>





                                INDEX TO EXHIBITS

EXHIBIT NO.   DESCRIPTION OF EXHIBIT

   
EX-99.B1b     Amendment No. 2 to Declaration of Trust, Second Amended and
              Restated Establishment and Designation of Series and
              Classes of Shares

EX-99.B11     Consents of independent accountants
    

EX-27.1
to EX-27.4    Financial Data Schedules



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[RECEIVED APR 30 1997                                   [OFFICE OF THE CLERK
SECRETARY OF THE COMMONWEALTH                              601 CITY HALL
CORPORATIONS DIVISION]                                     BOSTON, MA 02201
                                                              APR 29 1997]

JPMSDT2.DOC                                                     Appendix I


                                JPM SERIES TRUST
                     AMENDMENT NO. 2 TO DECLARATION OF TRUST

                  Second Amended and Restated Establishment and
                 Designation of Series and Classes of Shares of
                Beneficial Interest (par value $0.001 per share)
                              Dated April 10, 1997


         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 Amended and
Restated  Establishment  and  Designation of Series and Classes  appended to the
Declaration  of Trust to change the name of Tax Aware  Equity Fund to "Tax Aware
U.S.  Equity Fund" (such name change to become  effective May 12, 1997),  one 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 U.S. 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 U.S. 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.


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<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 10th day of April,  1997. 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/ Frederick S. Addy
Frederick S. Addy


/s/ William G. Burns
William G. Burns


/s/ Arthur C. Eschenlauer
Arthur C. Eschenlauer


/s/ Matthew Healey
Matthew Healey


/s/ Michael P. Mallardi
Michael P. Mallardi

JPMSDT2.DOC

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                                                                    EX-99.B11
CONSENTS OF INDEPENDENT ACCOUNTANTS

We  hereby  consent  to the  use  in the  Statement  of  Additional  Information
constituting  part of this  Post-Effective  Amendment No. 3 to the  Registration
Statement  on Form N-1A (the  "Registration  Statement")  of our  reports  dated
November 4, 1996,  relating to the  statements of assets and  liabilities of Tax
Aware  Equity  Fund and Tax  Aware  Disciplined  Equity  Fund  (two of the funds
constituting the JPM Series Trust), which appear in such Statement of Additional
Information,  and to the  incorporation  by  reference  of our reports  into the
Prospectus which constitutes part of this Registration Statement.

We hereby  consent to the  incorporation  by  reference  in the  Prospectus  and
Statement  of  Additional  Information  constituting  parts of the  Registration
Statement of our report dated June 5, 1997, relating to the financial statements
and financial  highlights of  California  Bond Fund,  appearing in the April 30,
1997  Annual  Report,   which  are  also  incorporated  by  reference  into  the
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
June 18, 1997


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<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the semi-annual
report dated April 30, 1997 for Tax Aware U.S. Equity Fund and is qualified in
its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1000
<CIK>             1016937
<NAME>            JPM Series Trust
<SERIES>
         <NUMBER>          1
         <NAME>            Tax Aware U.S. Equity Fund JPM Pierpont Shares

       
<S>                             <C>
<PERIOD-TYPE>                   4-MOS
<FISCAL-YEAR-END>                          OCT-31-1997
<PERIOD-START>                             DEC-18-1997
<PERIOD-END>                               APR-30-1997
<INVESTMENTS-AT-COST>                            13162
<INVESTMENTS-AT-VALUE>                           13793
<RECEIVABLES>                                       30
<ASSETS-OTHER>                                      44
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                   13867
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                104
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                         13205
<SHARES-COMMON-STOCK>                             1264
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                           23
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                            (96)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                           631
<NET-ASSETS>                                     13763
<DIVIDEND-INCOME>                                   53
<INTEREST-INCOME>                                    7
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                      31
<NET-INVESTMENT-INCOME>                             29
<REALIZED-GAINS-CURRENT>                           (96)
<APPREC-INCREASE-CURRENT>                          631
<NET-CHANGE-FROM-OPS>                              564
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            6
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                           1263
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                                  1
<NET-CHANGE-IN-ASSETS>                           13738
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                               16
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                    111
<AVERAGE-NET-ASSETS>                             10040
<PER-SHARE-NAV-BEGIN>                            10.00
<PER-SHARE-NII>                                    .03
<PER-SHARE-GAIN-APPREC>                            .87
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                              9.02
<PER-SHARE-NAV-END>                              10.89
<EXPENSE-RATIO>                                    .85
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the semi-annual
report dated April 30, 1997 for Tax Aware Disciplined Equity Fund and is
qualified in its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1000
<CIK>             1016937
<NAME>            JPM Series Trust
<SERIES>
         <NUMBER>          2
         <NAME>            Tax Aware Disciplined Equity Fund JPM Pierpont Shares

       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          OCT-31-1997
<PERIOD-START>                             JAN-30-1997
<PERIOD-END>                               APR-30-1997
<INVESTMENTS-AT-COST>                             4360
<INVESTMENTS-AT-VALUE>                            4472
<RECEIVABLES>                                       26
<ASSETS-OTHER>                                      45
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                    4543
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                            0
<TOTAL-LIABILITIES>                                 93
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                          4331
<SHARES-COMMON-STOCK>                              434
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                           13
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                             (7)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                           113
<NET-ASSETS>                                      4450
<DIVIDEND-INCOME>                                   15
<INTEREST-INCOME>                                    3
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                       5
<NET-INVESTMENT-INCOME>                             13
<REALIZED-GAINS-CURRENT>                            (6)
<APPREC-INCREASE-CURRENT>                          113
<NET-CHANGE-FROM-OPS>                              119
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                            434
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                            4400
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                                3
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                     70
<AVERAGE-NET-ASSETS>                              3510
<PER-SHARE-NAV-BEGIN>                            10.00
<PER-SHARE-NII>                                    .03
<PER-SHARE-GAIN-APPREC>                            .22
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                              2.50
<PER-SHARE-NAV-END>                              10.25
<EXPENSE-RATIO>                                    .55
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
This schedule  contains summary  financial data extracted from the annual report
on Form N-SAR dated April 30, 1997 for California  Bond Fund and is qualified in
its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1000
<CIK>             1016937
<NAME>            JPM Series Trust
<SERIES>
         <NUMBER>          3
         <NAME>            California Bond Fund JPM Pierpont Shares

       
<S>                            <C>
<PERIOD-TYPE>                  1-MO
<FISCAL-YEAR-END>                          APR-30-1997
<PERIOD-END>                               APR-30-1997
<INVESTMENTS-AT-COST>                           15,808
<INVESTMENTS-AT-VALUE>                          15,734
<RECEIVABLES>                                      393
<ASSETS-OTHER>                                      63
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  16,190
<PAYABLE-FOR-SECURITIES>                           928
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          168
<TOTAL-LIABILITIES>                              1,096
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                        15,226
<SHARES-COMMON-STOCK>                               30
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           (57)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                          (74)
<NET-ASSETS>                                       302
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                                  167
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                      15
<NET-INVESTMENT-INCOME>                            152
<REALIZED-GAINS-CURRENT>                          (57)
<APPREC-INCREASE-CURRENT>                         (74)
<NET-CHANGE-FROM-OPS>                               20
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                          151
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                             30
<NUMBER-OF-SHARES-REDEEMED>                          0
<SHARES-REINVESTED>                                  0
<NET-CHANGE-IN-ASSETS>                          15,069
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                               10
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                    118
<AVERAGE-NET-ASSETS>                               300
<PER-SHARE-NAV-BEGIN>                               10
<PER-SHARE-NII>                                  0.011
<PER-SHARE-GAIN-APPREC>                           0.04
<PER-SHARE-DIVIDEND>                             0.011
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.04
<EXPENSE-RATIO>                                   0.62
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 6
<LEGEND>
This schedule  contains summary  financial data extracted from the annual report
on Form N-SAR dated April 30, 1997 for California  Bond Fund and is qualified in
its entirety by reference to such report.
</LEGEND>
<MULTIPLIER> 1000
<CIK>             1016937
<NAME>            JPM Series Trust
<SERIES>
         <NUMBER>          4
         <NAME>            California Bond Fund JPM Institutional Shares

       
<S>                             <C>
<PERIOD-TYPE>                   5-MOS
<FISCAL-YEAR-END>                          APR-30-1997
<PERIOD-END>                               APR-30-1997
<INVESTMENTS-AT-COST>                           15,808
<INVESTMENTS-AT-VALUE>                          15,734
<RECEIVABLES>                                      393
<ASSETS-OTHER>                                      63
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                  16,190
<PAYABLE-FOR-SECURITIES>                           928
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          168
<TOTAL-LIABILITIES>                              1,096
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                        15,226
<SHARES-COMMON-STOCK>                            1,495
<SHARES-COMMON-PRIOR>                                0
<ACCUMULATED-NII-CURRENT>                            0
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                           (57)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                          (74)
<NET-ASSETS>                                    14,793
<DIVIDEND-INCOME>                                    0
<INTEREST-INCOME>                                  167
<OTHER-INCOME>                                       0
<EXPENSES-NET>                                      15
<NET-INVESTMENT-INCOME>                            152
<REALIZED-GAINS-CURRENT>                          (57)
<APPREC-INCREASE-CURRENT>                         (74)
<NET-CHANGE-FROM-OPS>                               20
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                          151
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                          1,532
<NUMBER-OF-SHARES-REDEEMED>                         45
<SHARES-REINVESTED>                                  5
<NET-CHANGE-IN-ASSETS>                          15,069
<ACCUMULATED-NII-PRIOR>                              0
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                               10
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                    118
<AVERAGE-NET-ASSETS>                             9,737
<PER-SHARE-NAV-BEGIN>                               10
<PER-SHARE-NII>                                  0.156
<PER-SHARE-GAIN-APPREC>                         (0.10)
<PER-SHARE-DIVIDEND>                             0.156
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                               9.90
<EXPENSE-RATIO>                                   0.45
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>


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