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MARCH 1, 2000 | Prospectus
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J.P. MORGAN TAX AWARE ENHANCED INCOME FUND
-----------------------------------------
Seeking high current after tax income
consistent with principal preservation by
investing in tax exempt and taxable fixed
income securities.
This prospectus contains essential information for anyone investing in the fund.
Please read it carefully and keep it for reference.
As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them or guarantees that the information in this prospectus is correct or
adequate. It is a criminal offense to state or suggest otherwise.
Distributed by Funds Distributor, Inc. JPMORGAN
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CONTENTS
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2 | The fund's goal, principal strategies, principal risks, performance and
expenses
J.P. MORGAN TAX AWARE ENHANCED INCOME FUND
Fund description ............................................................ 2
Investor expenses ........................................................... 3
4 | FIXED INCOME MANAGEMENT APPROACH
J.P. Morgan ................................................................. 4
Who may want to invest ...................................................... 4
Fixed income investment process ............................................. 5
6 | Investing in the J.P. Morgan Tax Aware Enhanced Income Fund
YOUR INVESTMENT
Investing through a financial professional .................................. 6
Investing directly .......................................................... 6
Opening your account ........................................................ 6
Adding to your account ...................................................... 6
Selling shares .............................................................. 7
Account and transaction policies ............................................ 7
Dividends and distributions ................................................. 8
Tax considerations .......................................................... 8
9 | More about risk and the fund's business operations FUND DETAILS
Business structure .......................................................... 9
Management and administration ............................................... 9
Risk and reward elements .................................................... 10
Investments ................................................................. 12
Financial highlights ........................................................ 13
FOR MORE INFORMATION .................................................back cover
<PAGE>
J.P. MORGAN
TAX AWARE ENHANCED INCOME FUND | TICKER SYMBOL: JPTEX
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RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 10-13.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high current after tax income consistent with
principal preservation. This goal can be changed without shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests in municipal securities that J.P. Morgan believes have the
potential to provide high current income that is free from federal income tax.
The fund also may invest in taxable fixed income securities, including U.S.
government and agency securities, domestic and foreign corporate bonds,
asset-backed and mortgage-related securities, and money market instruments, that
J.P. Morgan believes have the potential to provide higher current after tax
income. These securities may be of any maturity, but under normal market
conditions the fund's duration will range between three and eighteen months. The
fund's tax aware investment strategies are described on page 4. For a
description of duration, please see fixed income investment process on page 5.
Up to 25% of the fund's assets may be invested in foreign securities. All of the
securities purchased by the fund, at the time of purchase, must be rated
investment grade (BBB/Baa or better) by a nationally recognized statistical
rating organization or the unrated equivalent, including at least 75% in
securities rated A or better.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 5.
Although any rise in interest rates is likely to cause a fall in the price of
fixed income securities, the fund's comparatively short duration is designed to
help keep its share price within a relatively narrow range. Because it seeks to
minimize risk, the fund will generally offer less income and, during periods of
declining interest rates, may offer lower total returns than funds with longer
durations. Because of the sensitivity of the fund's mortgage related securities
to changes in interest rates, the performance and duration of the fund may be
more volatile than if it did not hold these securities. The fund may use
interest rate swaps, futures contracts and options to help manage duration. The
fund's tax aware strategies may reduce your taxable income but will not
eliminate it. Maximizing after tax income may require trade-offs that reduce
pre-tax income. To the extent the fund invests in foreign securities, it could
lose money because of foreign government actions, political instability,
currency fluctuations or lack of adequate and accurate information.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN TAX AWARE ENHANCED INCOME FUND: SELECT SHARES)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $349 billion, including more than $3.5 billion using similar
strategies as the fund.
The portfolio management team is led by Richard W. Oswald, vice president, who
joined J.P. Morgan from CBS Inc. in 1996 where he served as treasurer, and,
Benjamin Thompson, vice president, who joined the team in 1996. Prior to joining
J.P. Morgan, Mr. Thompson was a senior fixed income portfolio manager at Goldman
Sachs.
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Before you invest
Investors considering the fund should understand that:
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
2 | J.P. MORGAN TAX AWARE ENHANCED INCOME FUND
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INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no sales, redemption, exchange, or account fees, although some
institutions may charge you a fee for shares you buy through them. The annual
fund expenses after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(1) (%)
(expenses that are deducted from fund assets)
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Management fees 0.25
Marketing (12b-1) fees none
Other expenses(2) 0.47
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Total operating expenses 0.72
Fee waiver and
expense reimbursement(2) 0.22
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Net expenses(2) 0.50
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Expense example(2)
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The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/00 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
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1 yr. 3 yrs.
Your cost($) 51 208
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(1) This table shows the fund's expenses for the past fiscal period, expressed
as a percentage of the fund's average net assets.
(2) Reflects an agreement dated 3/1/00 by Morgan guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
expenses (excluding extraordinary expenses) exceed 0.50% of the fund's
average daily net assets through 2/28/01.
J.P. MORGAN TAX AWARE ENHANCED INCOME FUND | 3
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FIXED INCOME MANAGEMENT APPROACH
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J.P. MORGAN
Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments, and
individuals. Today, J.P. Morgan employs over 380 analysts and portfolio managers
around the world and has approximately $349 billion in assets under management,
including assets managed by the fund's advisor, J.P. Morgan Investment
Management Inc.
J.P. MORGAN TAX AWARE ENHANCED INCOME FUND
The fund is designed to provide a high level of after tax current income, price
stability and liquidity. The fund's strategy may therefore include purchasing
both municipal obligations that are exempt from federal income tax as well as
taxable securities, depending on which opportunity J.P. Morgan determines will
generate the highest after tax income (although the fund intends to invest at
least 50% of its assets in tax exempt securities). It seeks to capitalize on
fundamental and technical opportunities in the different markets to enhance
return.
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Who may want to invest The fund is designed for investors who:
o are in a high tax bracket and want to add a tax sensitive income
investment to further diversify a portfolio
o want an investment whose risk/return potential is higher than that of money
market funds but generally less than that of longer duration bond funds
o want to emphasize after tax return
The fund is not designed for investors who:
o are investing for aggressive long-term growth
o are investing through a tax-deferred account such as an IRA
o are in a low tax bracket
4 | FIXED INCOME MANAGEMENT APPROACH
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FIXED INCOME INVESTMENT PROCESS
J.P. Morgan seeks to generate an information advantage through the depth of its
global fixed-income research and the sophistication of its analytical systems.
Using a team-oriented approach, J.P. Morgan seeks to gain insights in a broad
range of distinct areas and takes positions in many different areas, helping the
fund to limit exposure to concentrated sources of risk.
In managing the fund, J.P. Morgan employs a three-step process that combines
sector allocation, fundamental research for identifying portfolio securities,
and duration management.
[GRAPHIC OMITTED]
The fund invests across a range
of different types of securities
Sector allocation The sector allocation team meets monthly, analyzing the
fundamentals of a broad range of sectors in which the fund may invest. The team
seeks to enhance performance and manage risk by underweighting or overweighting
sectors.
[GRAPHIC OMITTED]
The fund makes its portfolio decisions as
described earlier in this prospectus
Security selection Relying on the insights of different specialists, including
credit analysts, quantitative researchers, and dedicated fixed income traders,
the portfolio managers make buy and sell decisions according to the fund's goal
and strategy.
[GRAPHIC OMITTED]
J.P. Morgan uses a disciplined process
to control the fund's sensitivity
to interest rates
Duration management Forecasting teams use fundamental economic factors to
develop strategic forecasts of the direction of interest rates. Based on these
forecasts, strategists establish the fund's target duration, a common
measurement of a security's sensitivity to interest rate movements. For
securities owned by the fund, duration measures the average time needed to
receive the present value of all principal and interest payments by analyzing
cash flows and interest rate movements. The fund's duration may be shorter than
the fund's average maturity because the maturity of a security only measures the
time until final payment is due. The fund's target duration typically remains
relatively short, between three and eighteen months. The strategists closely
monitor the fund and make tactical adjustments as necessary.
FIXED INCOME MANAGEMENT APPROACH | 5
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YOUR INVESTMENT
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For your convenience, the J.P. Morgan Funds offer several ways to start and add
to fund investments.
INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions, and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.
INVESTING DIRECTLY
Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:
o Determine the amount you are investing. The minimum amount for initial
investments is $2,500 and for additional investments $500, although these
minimums may be less for some investors. For more information on minimum
investments, call 1-800-521-5411.
o Complete the application, indicating how much of your investment you want to
allocate to which fund(s). Please apply now for any account privileges you may
want to use in the future, in order to avoid the delays associated with adding
them later on.
o Mail in your application, making your initial investment as shown at right.
For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-521-5411.
OPENING YOUR ACCOUNT
By wire
o Mail your completed application to the Shareholder Services Agent.
o Call the Shareholder Services Agent to obtain an account number and to place a
purchase order. Funds that are wired without a purchase order will be returned
uninvested.
o After placing your purchase order, instruct your bank to wire the amount of
your investment to:
State Street Bank & Trust Company
Routing number: 011-000-028
Credit: J.P. Morgan Funds
Account number: 9904-226-9
FFC: your account number, name of registered owner(s) and fund name
By check
o Make out a check for the investment amount payable to J.P. Morgan Funds.
o Mail the check with your completed application to the Shareholder Services
Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
ADDING TO YOUR ACCOUNT
By wire
o Call the Shareholder Services Agent to place a purchase order. Funds that are
wired without a purchase order will be returned uninvested.
o Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.
By check
o Make out a check for the investment amount payable to J.P. Morgan Funds.
o Mail the check with a completed investment slip to the Transfer Agent. If you
do not have an investment slip, attach a note indicating your account number
and how much you wish to invest in which fund(s).
By exchange
o Call the Shareholder Services Agent to effect an exchange.
6 | YOUR INVESTMENT
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SELLING SHARES
By phone -- wire payment
o Call the Shareholder Services Agent to verify that the wire redemption
privilege is in place on your account. If it is not, a representative can help
you add it.
o Place your wire request. If you are transferring money to a non-Morgan
account, you will need to provide the representative with the personal
identification number (PIN) that was provided to you when you opened your fund
account.
By phone-- check payment
o Call the Shareholder Services Agent and place your request. Once your request
has been verified, a check for the net amount, payable to the registered
owner(s), will be mailed to the address of record. For checks payable to any
other party or mailed to any other address, please make your request in
writing (see below).
In writing
o Write a letter of instruction that includes the following information: The
name of the registered owner(s) of the account; the account number; the fund
name; the amount you want to sell; and the recipient's name and address or
wire information, if different from those of the account registration.
o Indicate whether you want the proceeds sent by check or by wire.
o Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.
o Mail the letter to the Shareholder Services Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
Redemption in kind
o The Fund reserves the right to make redemptions of over $250,000 in securities
rather than in cash.
ACCOUNT AND TRANSACTION POLICIES
Telephone orders The fund accepts telephone orders from all shareholders. To
guard against fraud, the fund requires shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if the fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.
Exchanges You may exchange shares in this fund for shares in any other J.P.
Morgan or J.P. Morgan Institutional mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.
The fund may alter, limit, or suspend its exchange policy at any time.
Business hours and NAV calculations The fund's regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). The fund calculates
its net asset value per share (NAV) every business day as of the close of
trading on the NYSE (normally 4:00 p.m. eastern time). The fund's securities are
typically priced using pricing services or market quotes. When these methods are
not available or do not represent a security's value at the time of pricing
(e.g. when an event occurs after the close of trading that would materially
impact a security's value), the security is valued in accordance with the fund's
fair valuation procedures.
Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. The fund has the right to suspend redemption of shares as
permitted by law and to postpone payment of proceeds for up to seven days.
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Transfer Agent
State Street Bank and Trust Company
P.O. Box 8411
Boston, MA 02266-8411
Attention; J.P. Morgan Funds Services
Shareholder Services Agent
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
1-800-521-5411
Representatives are available 8:00 a.m. to 5:00 p.m. eastern time on fund
business days.
YOUR INVESTMENT | 7
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Timing of settlements When you buy shares, you will become the owner of record
when the fund receives your payment, generally the day following execution. When
you sell shares, proceeds are generally available the day following execution
and will be forwarded according to your instructions. When you sell shares that
you recently purchased by check, your order will be executed at the next NAV but
the proceeds will not be available until your check clears. This may take up to
15 days.
Statements and reports The fund sends monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months the fund sends out an annual or semi-annual report containing
information on the fund's holdings and a discussion of recent and anticipated
market conditions and fund performance.
Accounts with below-minimum balances If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), the fund reserves the right to request that you buy more shares or
close your account. If your account balance is still below the minimum 60 days
after notification, the fund may close out your account and send the proceeds to
the address of record.
DIVIDENDS AND DISTRIBUTIONS
The fund typically declares income dividends daily and pays them monthly. If an
investor's shares are redeemed during the month, accrued but unpaid dividends
are paid with the redemption proceeds. Shares of the fund earn dividends on the
business day the purchase is effective, but not on the business day the
redemption is effective. The fund distributes capital gains, if any, once a
year. However, the fund may make more or fewer payments in a given year,
depending on its investment results and its tax compliance situation. These
dividends and distributions consist of most or all of the fund's net investment
income and net realized capital gains.
Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account, or
invested in another J.P. Morgan Fund.
TAX CONSIDERATIONS
In general, selling shares, exchanging shares, and receiving distributions
(whether reinvested or taken in cash) are all taxable events. These transactions
typically create the following tax liabilities:
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Transaction | Tax status
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Income dividends on Generally tax exempt
municipal obligations
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Income dividends on Ordinary income
taxable securities
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Short-term capital gains Ordinary income
distributions
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Long-term capital gains Capital gains
distributions
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Sales or exchanges of Capital gains or
shares owned for more losses
than one year
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Sales or exchanges of Gains are treated as ordinary
shares owned for one year income; losses are subject
or less to special rules
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Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when the fund is about to declare a long-term capital
gains distribution. A portion of the fund's returns may be subject to federal,
state, or local tax, or the alternative minimum tax.
Every January, the fund issues tax information on its distributions for the
previous year.
Any investor for whom the fund does not have a valid taxpayer identification
number will be subject to backup withholding for taxes.
The tax considerations described in this section do not apply to tax-deferred
accounts or other non-taxable entities.
Because each investor's tax circumstances are unique, please consult your tax
professional about your fund investment.
8 | YOUR INVESTMENT
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FUND DETAILS
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BUSINESS STRUCTURE
The fund is a series of J.P. Morgan Series Trust, a Massachusetts business
trust. Information about other series or classes is available by calling
1-800-521-5411. In the future, the trustees could create other series or share
classes, which would have different expenses.
MANAGEMENT AND ADMINISTRATION
The fund and the other series of J.P. Morgan Series Trust are governed by the
same trustees. The trustees are responsible for overseeing all business
activities. The trustees are assisted by Pierpont Group, Inc., which they own
and operate on a cost basis; costs are shared by all funds governed by these
trustees. Funds Distributor, Inc., as co-administrator, along with J.P. Morgan,
provides fund officers. J.P. Morgan, as co-administrator, oversees the fund's
other service providers.
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Advisory services 0.25% of the fund's average net
assets
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Administrative services Fund's prorata portion of
(fee shared with Funds 0.09% of the first $7 billion
Distributor, Inc.) of average net assets in
J.P. Morgan-advised portfolios,
plus 0.04% of average net assets
over $7 billion
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Shareholder services 0.25% of the fund's average
net assets
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J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in the fund.
PERFORMANCE OF PRIVATE ACCOUNTS
The fund's investment objective and policies are substantially similar to those
used by J.P. Morgan in managing certain discretionary investment management
accounts. The chart below shows the historical investment performance for a
composite of these private accounts (the "Tax Aware Composite") and for the
fund's benchmark index.
The performance of the Tax Aware Composite does not represent the fund's
performance nor should it be interpreted as indicative of the fund's future
performance. The accounts in the Tax Aware Composite are not subject to the same
regulatory requirements and limitations imposed on mutual funds. If the accounts
included in the Tax Aware Composite had been subject to these regulatory
requirements and limitations, their performance might have been lower.
Additionally, although it is anticipated that the fund and the Tax Aware
Composite will hold similar securities, their investment results are expected to
differ. In particular, difference in asset size and cash flow resulting from
purchases and redemptions of fund shares may result in different securities
selections, differences in the relative weightings of securities or differences
in the prices paid for particular fund holdings.
The performance of the Tax Aware Composite reflects the deductions of the fund's
total operating expenses, after expense reimbursement, and the reinvestment of
dividends and other distributions. The taxable-equivalent return is a measure of
what a fully taxable fund would have to return in order to generate equivalent
after-tax return using a 39.6% income tax rate. The performance information is
the average annual total return of the Tax Aware Composite for the periods
indicated.
Average Annual Total Returns for the Year Ended December 31,
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1998 1999
Tax Aware Composite 3.88 2.72
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Tax Aware Private Account Composite - Taxable-Equivalent @ 39.6% 6.02 5.07
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Merrill Lynch 3-month U.S. Treasury Bill Index (no expenses) 5.23 4.85
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The fund's total return since commencement of operations(1) through 12/31/99 was
2.11%. The fund's tax equivalent total return @ 39.6% since commencement of
operations1 through 12/31/99 was 3.45%.
The Tax Aware Composite currently includes all discretionary accounts managed by
J.P. Morgan using substantially similar investment strategy as the fund. The
inception date for the Tax Aware Composite was July 1, 1996.
(1) The fund commenced operations on 5/6/99. For the period 4/30/99 through
5/30/99 returns reflect the performance of J.P. Morgan Institutional Tax
Aware Enhanced Income Fund (a separate class of shares). Performance during
this period reflects operating expenses which are 0.25% of net assets lower
than those of the fund. Accordingly, performance for the fund would have
been lower if an investment had been made in the fund during the same time
period.
FUND DETAILS | 9
<PAGE>
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RISK AND REWARD ELEMENTS
This table discusses the main elements that make up the fund's overall risk and
reward characteristics. It also outlines the fund's policies toward various
investments, including those that are designed to help the fund manage risk.
<TABLE>
<CAPTION>
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Potential risks Potential rewards Policies to balance risk and reward
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Market conditions
<S> <C> <C>
o The fund's share o Bonds have generally o Under normal circumstances the
price, yield, and outperformed money fund plans to remain fully
total return will market investments invested in bonds and other fixed
fluctuate in over the long term, income securities as noted in the
response to bond with less risk than table on pages 12-13
market movements stocks
o The fund seeks to limit risk and
o The value of most o Most bonds will rise enhance after tax yields through
bonds will fall when in value when careful management, sector
interest rates rise; interest rates fall allocation, individual securities
the longer a bond's selection, and duration management
maturity and the o Mortgage-backed and
lower its credit asset-backed o During severe market downturns,
quality, the more securities can offer the fund has the option of
its value typically attractive returns investing up to 100% of assets in
falls investment-grade short-term
securities
o Adverse market
conditions may from o J.P. Morgan monitors interest rate
time to time cause trends, as well as geographic and
the fund to take demographic information related to
temporary defensive mortgage-backed securities and
positions that are mortgage prepayments
inconsistent with
its principal
investment
strategies and may
hinder the fund from
achieving its
investment objective
o Mortgage-backed and asset-backed securities (securities representing an
interest in, or secured by, a pool of mortgages or other assets such as
receivables) could generate capital losses or periods of low yields if they
are paid off substantially earlier or later than anticipated
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MANAGEMENT CHOICES
o The fund could o The fund could o J.P. Morgan focuses its active
underperform its outperform its management on those areas where it
benchmark due to its benchmark due to believes its commitment to
sector, securities, these same choices research can most enhance after
or duration choices tax income and manage risks in a
o An optimal consistent way
o The fund could allocation could
generate lower after enhance after tax
tax income if its income
taxable/tax exempt
allocation is not
optimal
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CREDIT QUALITY
o The default of an o Investment-grade o The fund maintains its own
issuer would leave bonds have a lower policies for balancing credit
the fund with unpaid risk of default quality against potential yields
interest or and gains in light of its
principal investment goals
o J.P. Morgan develops its own
ratings of unrated securities and
makes a credit quality
determination for unrated
securities
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SHORT-TERM TRADING
o Increased trading o The fund could o The fund generally avoids
would raise the realize gains in a short-term trading, except to take
fund's transaction short period of time advantage of attractive or
costs unexpected opportunities or to
o The fund could meet demands generated by
o Increased short-term protect against shareholder activity
capital gains losses if a bond is
distributions would overvalued and its
raise shareholders' value later falls
income tax liability
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</TABLE>
10 | FUND DETAILS
<PAGE>
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<TABLE>
<CAPTION>
==========================================================================================
Potential risks Potential rewards Policies to balance risk and reward
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Foreign investments
<S> <C> <C>
o The fund could lose o Foreign bonds, which o Foreign bonds may be a
significant money because of represent a major investment (25% of assets) for
the foreign government portion of the fund actions, political world's fixed
income instability, or lack securities, offer o To the extent that the fund of
adequate and attractive potential invests in foreign bonds, it will accurate
information performance and hedge its currency exposure into
opportunities for the U.S. dollar (see also
o Currency exchange diversification "Derivatives")
rate movements could
reduce gains or o Favorable exchange
create losses rate movements could
generate gains or
reduce losses
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Derivatives
o Derivatives such as o Hedges that o The fund uses derivatives such as
futures, options, correlate well with futures, options, swaps and forward
swaps and forward underlying positions foreign currency contracts for
foreign currency can reduce or hedging and for risk management
contracts that are eliminate losses at (i.e., to adjust duration or to
used for hedging the low cost establish or adjust exposure to
portfolio or particular securities, markets, or
specific securities o The fund could make currencies)
may not fully offset money and protect
the underlying against losses if o The fund only establishes hedges
positions1 and this management's that it expects will be highly
could result in analysis proves correlated with underlying
losses to the fund correct positions
that would not have
otherwise occurred o Derivatives that o While the fund may use derivatives
involve leverage that incidentally involve leverage,
o Derivatives used for could generate it does not use them for the
risk management may substantial gains at specific purpose of leveraging the
not have the low cost portfolio
intended effects and
may result in losses
or missed
opportunities
o The counterparty to
a derivatives
contract could
default
o Certain types of derivatives involve costs to the fund which can reduce
returns lDerivatives that involve leverage could magnify losses
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Securities lending
o When a fund lends a o A fund may enhance o J.P. Morgan maintains a list of
security, there is a income through the approved borrowers risk that the
loaned investment of the securities may not collateral received o The fund
receives collateral equal be returned if the from the borrower to at least
100% of the current borrower defaults value of securities loaned
o The collateral will o The lending agents indemnify a
be subject to the fund against borrower default
risks of the
securities in which o J.P. Morgan's collateral
it is invested investment guidelines limit the
quality and duration of collateral
investment to minimize losses
oUpon recall, the
borrower must return the
securities loaned within
the normal settlement
period
- ------------------------------------------------------------------------------------------
Illiquid holdings
o The fund could have o These holdings may o The fund may not invest more than
difficulty valuing offer more 15% of net assets in illiquid
these holdings attractive yields or holdings
precisely lThe fund potential growth
could be unable to than comparable o To maintain adequate liquidity to
sell these holdings widely traded meet redemptions, the fund may hold
at the time or price securities investment-grade short-term
desired securities (including repurchase
agreements) and, for temporary or
extraordinary purposes, may borrow
from banks up to 331/3% of the
value of its total assets
- ------------------------------------------------------------------------------------------
When-issued and
delayed delivery securities
o When the fund buys o The fund can take o The fund uses segregated accounts
securities before advantage of to offset leverage risk
issue or for delayed attractive
delivery, it could transaction
be exposed to opportunities
leverage risk if it
does not use
segregated accounts
- ------------------------------------------------------------------------------------------
</TABLE>
(1) A futures contract is an agreement to buy or sell a set quantity of an
underlying instrument at a future date, or to make or receive a cash payment
based on the value of a securities index. An option is the right to buy or
sell a set quantity of an underlying instrument at a predetermined price. A
swap is a privately negotiated agreement to exchange one stream of payments
for another. A forward foreign currency contract is an obligation to buy or
sell a given currency on a future date and at a set price.
FUND DETAILS | 11
<PAGE>
- --------------------------------------------------------------------------------
Investments
This table discusses the customary types of investments which can be held by the
fund. In each case the principal types of risk are listed on the following page
(see below for definitions).This table reads across two pages.
- --------------------------------------------------------------------------------
Asset-backed securities Interests in a stream of payments from specific assets,
such as auto or credit card receivables.
- --------------------------------------------------------------------------------
Bank obligations Negotiable certificates of deposit, time deposits and bankers'
acceptances of domestic and foreign issuers.
- --------------------------------------------------------------------------------
Commercial paper Unsecured short term debt issued by domestic and foreign banks
or corporations. These securities are usually discounted and are rated by S&P or
Moody's.
- --------------------------------------------------------------------------------
Convertible securities Domestic and foreign debt securities that can be
converted into equity securities at a future time and price.
- --------------------------------------------------------------------------------
Corporate bonds Debt securities of domestic and foreign industrial, utility,
banking, and other financial institutions.
- --------------------------------------------------------------------------------
Mortgages (directly held) Domestic debt instrument which gives the lender a lien
on property as security for the loan payment.
- --------------------------------------------------------------------------------
Mortgage-backed securities Domestic and foreign securities (such as Ginnie Maes,
Freddie Macs, Fannie Maes) which represent interests in pools of mortgages,
whereby the principal and interest paid every month is passed through to the
holder of the securities.
- --------------------------------------------------------------------------------
Mortgage dollar rolls The sale of domestic and foreign mortgage-backed
securities with the promise to purchase similar securities at a later date.
Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Participation interests Interests that represent a share of bank debt or similar
securities or obligations.
- --------------------------------------------------------------------------------
Private placements Bonds or other investments that are sold directly to an
institutional investor.
- --------------------------------------------------------------------------------
REITs and other real-estate related instruments Securities of issuers that
invest in real estate or are secured by real estate.
- --------------------------------------------------------------------------------
Repurchase agreements Contracts whereby the fund agrees to purchase a security
and resell it to to the seller on a particular date and at a specific price.
- --------------------------------------------------------------------------------
Reverse repurchase agreements Contracts whereby the fund sells a security and
agrees to repurchase it from the buyer on a particular date and at a specific
price. Considered a form of borrowing.
- --------------------------------------------------------------------------------
Sovereign debt, Brady bonds, and debt of supranational organizations Dollar- or
non-dollar-denominated securities issued by foreign governments or supranational
organizations. Brady bonds are issued in connection with debt restructurings.
- --------------------------------------------------------------------------------
Swaps Contractual agreement whereby a party agrees to exchange periodic payments
with a counterparty. Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Tax exempt municipal securities Securities, generally issued as general
obligation and revenue bonds, whose interest is exempt from federal taxation and
state and/or local taxes in the state where the securities were issued.
- --------------------------------------------------------------------------------
U.S. government securities Debt instruments (Treasury bills, notes, and bonds)
guaranteed by the U.S. government for the timely payment of principal and
interest.
- --------------------------------------------------------------------------------
Zero coupon, pay-in-kind, and deferred payment securities Domestic and foreign
securities offering non-cash or delayed-cash payment. Their prices are typically
more volatile than those of some other debt instruments and involve certain
special tax considerations.
- --------------------------------------------------------------------------------
Risk related to certain investments held by J.P. Morgan fixed income funds:
Credit risk The risk a financial obligation will not be met by the issuer of a
security or the counterparty to a contract, resulting in a loss to the
purchaser.
Currency risk The risk currency exchange rate fluctuations may reduce gains or
increase losses on foreign investments.
Environmental risk The risk that an owner or operator of real estate may be
liable for the costs associated with hazardous or toxic substances located on
the property.
Extension risk The risk a rise in interest rates will extend the life of a
mortgage-backed security to a date later than the anticipated prepayment date,
causing the value of the investment to fall.
Interest rate risk The risk a change in interest rates will adversely affect the
value of an investment. The value of fixed income securities generally moves in
the opposite direction of interest rates (decreases when interest rates rise and
increases when interest rates fall).
Leverage risk The risk of gains or losses disproportionately higher than the
amount invested.
12 | FUND DETAILS
<PAGE>
================================================================================
o Permitted - bold
O Permitted, but not typically used
Principal Types of Risk
- --------------------------------------------------------------------------------
credit, interest rate, market, prepayment o
- --------------------------------------------------------------------------------
credit, currency, liquidity, political o(1)
- --------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political o(1)
- --------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, o(1)
valuation
- --------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, o(1)
valuation
- --------------------------------------------------------------------------------
credit, environmental, extension, interest rate, liquidity, O
market, natural event, political, prepayment, valuation
- --------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, o(1)
political, prepayment
- --------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, liquidity, O(1)
market, political, prepayment
- --------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, o
political, prepayment
- --------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation o
- --------------------------------------------------------------------------------
credit, environmental, interest rate, liquidity, market, natural o
event, prepayment, valuation
- --------------------------------------------------------------------------------
credit o
- --------------------------------------------------------------------------------
credit O(2)
- --------------------------------------------------------------------------------
credit, currency, interest rate, market, political o(1)
- --------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political o
- --------------------------------------------------------------------------------
credit, interest rate, market, natural event, political o
- --------------------------------------------------------------------------------
interest rate o
- --------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, o(1)
valuation
- --------------------------------------------------------------------------------
Liquidity risk The risk the holder may not be able to sell the security at the
time or price it desires.
Market risk The risk that when the market as a whole declines, the value of a
specific investment will decline proportionately. This systematic risk is common
to all investments and the mutual funds that purchase them.
Natural event risk The risk a natural disaster, such as a hurricane or similar
event, will cause severe economic losses and default in payments by the issuer
of the security.
Political risk The risk governmental policies or other political actions will
negatively impact the value of the investment.
Prepayment risk The risk declining interest rates will result in unexpected
prepayments, causing the value of the investment to fall.
Valuation risk The risk the estimated value of a security does not match the
actual amount that can be realized if the security is sold.
(1) All foreign securities in the aggregate may not exceed 25% of the fund's
assets.
(2) All forms of borrowing (including securities lending, mortgage dollar rolls
and reverse repurchase agreements) are limited in the aggregate and may not
exceed 331/3% of the fund's total assets.
FUND DETAILS | 13
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial table is intended to help you understand the fund's financial
performance for the past fiscal period. Certain information reflects financial
results for a single fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statements, are included in the fund's annual report, which is
available upon request.
J.P. MORGAN TAX AWARE ENHANCED INCOME FUND
- ----------------------------------------------
Per-share data For fiscal period ended October 31
- --------------------------------------------------------------------------------
1999(1,2)
Net asset value, beginning of period ($) 2.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.04
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment ($) (0.01)
Total from investment operations ($) 0.03
- --------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income (0.04)
- --------------------------------------------------------------------------------
Net asset value, end of period ($) 1.99
- --------------------------------------------------------------------------------
- ----------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------
Total return (%) 1.29(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 27,723
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net expenses (%) 0.50(4)
- --------------------------------------------------------------------------------
Net investment income (%) 3.75(4)
- --------------------------------------------------------------------------------
Expenses without reimbursement (%) 0.72(4)
- --------------------------------------------------------------------------------
Portfolio turnover (%) 69(3)
- --------------------------------------------------------------------------------
(1) The fund commenced operations on 5/6/99.
(2) The figures have been adjusted to reflect a stock split that occurred on
7/27/99 (7.51256281 to 1).
(3) Not annualized.
(4) Annualized.
14 | FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE>
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
For investors who want more information on the fund, the following documents are
available free upon request:
Annual/Semi-annual Reports Contain financial statements, performance data,
information on portfolio holdings, and a written analysis of market conditions
and fund performance for the fund's most recently completed fiscal year or
half-year.
Statement of Additional Information (SAI) Provides a fuller technical and legal
description of the fund's policies, investment restrictions, and business
structure. This prospectus incorporates the fund's SAI by reference.
Copies of the current versions of these documents, along with other information
about the fund, may be obtained by contacting:
J.P. Morgan Tax Aware Enhanced Income Fund
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
Telephone: 1-800-521-5411
Hearing impaired: 1-888-468-4015
Email: [email protected]
Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-800-SEC-0330) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. The
fund's investment company and 1933 Act registration numbers are 811-07795 and
333-11125.
J.P. MORGAN FUNDS AND THE MORGAN TRADITION
The J.P. Morgan Funds combine a heritage of integrity and financial leadership
with comprehensive, sophisticated analysis and management techniques. Drawing on
J.P. Morgan's extensive experience and depth as an investment manager, the J.P.
Morgan Funds offer a broad array of distinctive opportunities for mutual fund
investors.
JPMORGAN
- --------------------------------------------------------------------------------
J.P. Morgan Funds
Advisor Distributor
J.P. Morgan Investment Management Inc. Funds Distributor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-521-5411 1-800-221-7930
<PAGE>
- --------------------------------------------------------------------------------
MARCH 1, 2000 | PROSPECTUS
- --------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL
TAX AWARE ENHANCED INCOME FUND
-----------------------------------------
Seeking high current after tax income
consistent with principal preservation by
investing in tax exempt and taxable fixed
income securities.
This prospectus contains essential information for anyone investing in the fund.
Please read it carefully and keep it for reference.
As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them or guarantees that the information in this prospectus is correct or
adequate. It is a criminal offense to state or suggest otherwise.
Distributed by Funds Distributor, Inc. JPMorgan
<PAGE>
- --------------------------------------------------------------------------------
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
2 | The fund's goal, principal strategies, principal risks, performance and
expenses
J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND
Fund description............................................................. 2
Investor expenses............................................................ 3
4 |
FIXED INCOME MANAGEMENT APPROACH
J.P. Morgan.................................................................. 4
Who may want to invest....................................................... 4
Fixed income investment process.............................................. 5
6 | Investing in the J.P. Morgan Institutional Tax Aware Enhanced Income Fund
YOUR INVESTMENT
Investing through a financial professional................................... 6
Investing directly........................................................... 6
Opening your account......................................................... 6
Adding to your account....................................................... 6
Selling shares............................................................... 7
Account and transaction policies............................................. 7
Dividends and distributions.................................................. 8
Tax considerations........................................................... 8
9 | More about risk and the fund's business operations
FUND DETAILS
Business structure........................................................... 9
Management and administration................................................ 9
Risk and reward elements..................................................... 10
Investments.................................................................. 12
Financial highlights......................................................... 13
For more information................................................. back cover
| 1
<PAGE>
J.P. MORGAN INSTITUTIONAL
TAX AWARE ENHANCED INCOME FUND | TICKER SYMBOL: JPAEX
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 10-13.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high current after tax current income consistent
with principal preservation. This goal can be changed without shareholder
approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests in municipal securities that J.P. Morgan believes have the
potential to provide high current income that is free from federal income tax.
The fund also may invest in taxable fixed income securities, including U.S.
government and agency securities, domestic and foreign corporate bonds,
asset-backed and mortgage-related securities, and money market instruments, that
J.P. Morgan believes have the potential to provide higher current after tax
income. These securities may be of any maturity, but under normal market
conditions the fund's duration will range between three and eighteen months. The
fund's tax aware investment strategies are described on page 4. For a
description of duration, please see Fixed Income Investment Process on page 5.
Up to 25% of the fund's assets may be invested in foreign securities. All of the
securities purchased by the fund, at the time of purchase, must be rated
investment grade (BBB/Baa or better) by a nationally recognized statistical
rating organization or the unrated equivalent, including at least 75% in
securities rated A or better.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 5.
Although any rise in interest rates is likely to cause a fall in the price of
fixed income securities, the fund's comparatively short duration is designed to
help keep its share price within a relatively narrow range. Because it seeks to
minimize risk, the fund will generally offer less income and, during periods of
declining interest rates, may offer lower total returns than funds with longer
durations. Because of the sensitivity of the fund's mortgage related securities
to changes in interest rates, the performance and duration of the fund may be
more volatile than if it did not hold these securities. The fund may use
interest rate swaps, futures contracts and options to help manage duration. The
fund's tax aware strategies may reduce your taxable income but will not
eliminate it. Maximizing after tax income may require trade-offs that reduce
pre-tax income. To the extent the fund invests in foreign securities, it could
lose money because of foreign government actions, political instability,
currency fluctuations or lack of adequate and accurate information.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN TAX AWARE ENHANCED INCOME FUND:
INSTITUTIONAL SHARES)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $349 billion, including more than $3.5 billion using similar
strategies as the fund.
The portfolio management team is led by Richard W. Oswald, vice president, who
joined J.P. Morgan from CBS Inc. in 1996 where he served as treasurer, and
Benjamin Thompson, vice president, who joined the team in June of 1999. Prior to
joining J.P. Morgan, Mr. Thompson was a senior fixed income portfolio manager at
Goldman Sachs.
- --------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
2 | J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no sales, redemption, exchange, or account fees, although some
institutions may charge you a fee for shares you buy through them. The annual
fund expenses after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(1) (%)
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Management fees 0.25
Marketing (12b-1) fees none
Other expenses(2) 0.32
- --------------------------------------------------------------------------------
Total operating expenses 0.57
Fee waiver and
expense reimbursement(2) 0.32
- --------------------------------------------------------------------------------
Net expenses(2) 0.25
- --------------------------------------------------------------------------------
Expense example(2)
- --------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/00 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
- --------------------------------------------------------------------------------
1 yr. 3 yrs.
Your cost($) 26 150
- --------------------------------------------------------------------------------
(1) This table shows the fund's expenses for the past fiscal period, expressed
as a percentage of the fund's average net assets.
(2) Reflects an agreement dated 3/1/00 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
expenses (excluding extraordinary expenses) exceed 0.25% of the fund's
average daily net assets through 2/28/01.
J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND | 3
<PAGE>
FIXED INCOME MANAGEMENT APPROACH
- --------------------------------------------------------------------------------
J.P. MORGAN
Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments, and
individuals. Today, J.P. Morgan employs over 380 analysts and portfolio managers
around the world and has approximately $349 billion in assets under management,
including assets managed by the fund's advisor, J.P. Morgan Investment
Management Inc.
J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND
The fund is designed to provide a high level of after tax current income, price
stability and liquidity. The fund's strategy may therefore include purchasing
both municipal obligations that are exempt from federal income tax as well as
taxable securities, depending on which opportunity J.P. Morgan determines will
generate the highest after tax income (although the fund intends to invest at
least 50% of its assets in tax exempt securities). It seeks to capitalize on
fundamental and technical opportunities in the different markets to enhance
return.
- --------------------------------------------------------------------------------
Who may want to invest
The fund is designed for investors who:
o are in a high tax bracket and want to add a tax sensitive income investment to
further diversify a portfolio
o want an investment whose risk/return potential is higher than that of money
market funds but generally less than that of longer duration bond funds
o want to emphasize after tax return
The fund is not designed for investors who:
o are investing for aggressive long-term growth
o are investing through a tax-deferred account such as an IRA
o are in a low tax bracket
4 | FIXED INCOME MANAGEMENT APPROACH
<PAGE>
- --------------------------------------------------------------------------------
FIXED INCOME INVESTMENT PROCESS
J.P. Morgan seeks to generate an information advantage through the depth of its
global fixed-income research and the sophistication of its analytical systems.
Using a team-oriented approach, J.P. Morgan seeks to gain insights in a broad
range of distinct areas and takes positions in many different areas, helping the
fund to limit exposure to concentrated sources of risk.
In managing the fund, J.P. Morgan employs a three-step process that combines
sector allocation, fundamental research for identifying portfolio securities,
and duration management.
[GRAPHIC OMITTED]
The fund invests across a range
of different types of securities
Sector allocation The sector allocation team meets regularly, analyzing the
fundamentals of a broad range of sectors in which the fund may invest. The team
seeks to enhance performance and manage risk by underweighting or overweighting
sectors.
[GRAPHIC OMITTED]
The fund makes its portfolio decisions as
described earlier in this prospectus
Security selection Relying on the insights of different specialists, including
credit analysts, quantitative researchers, and dedicated fixed income traders,
the portfolio managers make buy and sell decisions according to the fund's goal
and strategy.
[GRAPHIC OMITTED]
J.P. Morgan uses a disciplined process
to control the fund's sensitivity
to interest rates
Duration management Forecasting teams use fundamental economic factors to
develop strategic forecasts of the direction of interest rates. Based on these
forecasts, strategists establish the fund's target duration, a common
measurement of a security's sensitivity to interest rate movements. For
securities owned by the fund, duration measures the average time needed to
receive the present value of all principal and interest payments by analyzing
cash flows and interest rate movements. The fund's duration may be shorter than
the fund's average maturity because the maturity of a security only measures the
time until final payment is due. The fund's target duration typically remains
relatively short, between three and eighteen months. The strategists closely
monitor the fund and make tactical adjustments as necessary.
FIXED INCOME MANAGEMENT APPROACH | 5
<PAGE>
YOUR INVESTMENT
- --------------------------------------------------------------------------------
For your convenience, the J.P. Morgan Institutional Funds offer several ways to
start and add to fund investments.
INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions, and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.
INVESTING DIRECTLY
Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:
o Determine the amount you are investing. The minimum amount for initial
investments is $5,000,000 and for additional investments $25,000, although
these minimums may be less for some investors. For more information on minimum
investments, call 1-800-766-7722.
o Complete the application, indicating how much of your investment you want to
allocate to which fund(s). Please apply now for any account privileges you may
want to use in the future, in order to avoid the delays associated with adding
them later on.
o Mail in your application, making your initial investment as shown at right.
For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-766-7722.
OPENING YOUR ACCOUNT
By wire
o Mail your completed application to the Shareholder Services Agent.
o Call the Shareholder Services Agent to obtain an account number and to place a
purchase order. Funds that are wired without a purchase order will be returned
uninvested.
o After placing your purchase order, instruct your bank to wire the amount of
your investment to:
Morgan Guaranty Trust Company of New York-Delaware
Routing number: 031-100-238
Credit: J.P. Morgan Institutional Funds
Account number: 001-57-689
FFC: your account number, name of registered owner(s) and fund name
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with your completed application to the Shareholder Services
Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
ADDING TO YOUR ACCOUNT
By wire
o Call the Shareholder Services Agent to place a purchase order. Funds that are
wired without a purchase order will be returned uninvested.
o Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with a completed investment slip to the Shareholder Services
Agent. If you do not have an investment slip, attach a note indicating your
account number and how much you wish to invest in which fund(s).
By exchange
o Call the Shareholder Services Agent to effect an exchange.
6 | YOUR INVESTMENT
<PAGE>
- --------------------------------------------------------------------------------
SELLING SHARES
By phone -- wire payment
o Call the Shareholder Services Agent to verify that the wire redemption
privilege is in place on your account. If it is not, a representative can help
you add it.
o Place your wire request. If you are transferring money to a non-Morgan
account, you will need to provide the representative with the personal
identification number (PIN) that was provided to you when you opened your fund
account.
By phone -- check payment
o Call the Shareholder Services Agent and place your request. Once your request
has been verified, a check for the net amount, payable to the registered
owner(s), will be mailed to the address of record. For checks payable to any
other party or mailed to any other address, please make your request in
writing (see below).
In writing
o Write a letter of instruction that includes the following information: The
name of the registered owner(s) of the account; the account number; the fund
name; the amount you want to sell; and the recipient's name and address or
wire information, if different from those of the account registration.
o Indicate whether you want the proceeds sent by check or by wire.
o Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.
o Mail the letter to the Shareholder Services Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
Redemption in kind
o The fund reserves the right to make redemptions of over $250,000 in securities
rather than in cash.
ACCOUNT AND TRANSACTION POLICIES
Telephone orders The fund accepts telephone orders from all shareholders. To
guard against fraud, the fund requires shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if the fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.
Exchanges You may exchange shares in this fund for shares in any other J.P.
Morgan Institutional or J.P. Morgan mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.
The fund may alter, limit, or suspend its exchange policy at any time.
Business hours and NAV calculations The fund's regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). The fund calculates
its net asset value per share (NAV) every business day as of the close of
trading on the NYSE (normally 4:00 p.m. eastern time). The fund's securities are
typically priced using pricing services or market quotes. When these methods are
not available or do not represent a security's value at the time of pricing
(e.g. when an event occurs after the close of trading that would materially
impact a security's value), the security is valued in accordance with the fund's
fair valuation procedures.
Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. The fund has the right to suspend redemption of shares as
permitted by law and to postpone payment of proceeds for up to seven days.
- --------------------------------------------------------------------------------
Transfer Agent Shareholder Services Agent
State Street Bank and Trust Company J.P. Morgan Funds Services
P.O. Box 8411 522 Fifth Avenue
Boston, MA 02266-8411 New York, NY 10036
Attention: J.P. Morgan Funds Services 1-800-766-7722
Representatives are available
8:00 a.m. to 5:00 p.m. eastern
time on fund business days.
YOUR INVESTMENT | 7
<PAGE>
- --------------------------------------------------------------------------------
Timing of settlements When you buy shares, you will become the owner of record
when the fund receives your payment, generally the day following execution. When
you sell shares, proceeds are generally available the day following execution
and will be forwarded according to your instructions.
When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.
Statements and reports The fund sends monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months the fund sends out an annual or semi-annual report containing
information on the fund's holdings and a discussion of recent and anticipated
market conditions and fund performance.
Accounts with below-minimum balances If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), the fund reserves the right to request that you buy more shares or
close your account. If your account balance is still below the minimum 60 days
after notification, the fund may close out your account and send the proceeds to
the address of record.
DIVIDENDS AND DISTRIBUTIONS
The fund typically declares income dividends daily and pays them monthly. If an
investor's shares are redeemed during the month, accrued but unpaid dividends
are paid with the redemption proceeds. Shares of the fund earn dividends on the
business day the purchase is effective, but not on the business day the
redemption is effective. The fund distributes capital gains, if any, once a
year. However, the fund may make more or fewer payments in a given year,
depending on its investment results and its tax compliance situation. These
dividends and distributions consist of most or all of the fund's net investment
income and net realized capital gains.
Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account, or
invested in another J.P. Morgan Institutional Fund.
TAX CONSIDERATIONS
In general, selling shares, exchanging shares, and receiving distributions
(whether reinvested or taken in cash) are all taxable events. These transactions
typically create the following tax liabilities:
- --------------------------------------------------------------------------------
Transaction Tax status
- --------------------------------------------------------------------------------
Income dividends on Generally tax exempt
municipal obligations
- --------------------------------------------------------------------------------
Income dividends on Ordinary income
taxable securities
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income
distributions
- --------------------------------------------------------------------------------
Long-term capital gains Capital gains
distributions
- --------------------------------------------------------------------------------
Sales or exchanges of Capital gains or
shares owned for more losses
than one year
- --------------------------------------------------------------------------------
Sales or exchanges of Gains are treated as ordinary
shares owned for one year income; losses are subject
or less to special rules
- --------------------------------------------------------------------------------
Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when the fund is about to declare a long-term capital
gains distribution. A portion of the fund's returns may be subject to federal,
state, or local tax, or the alternative minimum tax.
Every January, the fund issues tax information on its distributions for the
previous year.
Any investor for whom the fund does not have a valid taxpayer identification
number will be subject to backup withholding for taxes.
The tax considerations described in this section do not apply to tax-deferred
accounts or other non-taxable entities.
Because each investor's tax circumstances are unique, please consult your tax
professional about your fund investment.
8 | YOUR INVESTMENT
<PAGE>
FUND DETAILS
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
The fund is a series of J.P. Morgan Series Trust, a Massachusetts business
trust. Information about other series or classes is available by calling
1-800-766-7722. In the future, the trustees could create other series or share
classes, which would have different expenses.
MANAGEMENT AND ADMINISTRATION
The fund and the other series of J.P. Morgan Series Trust are governed by the
same trustees. The trustees are responsible for overseeing all business
activities. The trustees are assisted by Pierpont Group, Inc., which they own
and operate on a cost basis; costs are shared by all funds governed by these
trustees. Funds Distributor, Inc., as co-administrator, along with J.P. Morgan,
provides fund officers. J.P. Morgan, as co-administrator, oversees the fund's
other service providers.
- --------------------------------------------------------------------------------
Advisory services 0.25% of the fund's average net
assets
- --------------------------------------------------------------------------------
Administrative services Fund's prorata portion of
(fee shared with Funds 0.09% of the first $7 billion
Distributor, Inc.) of average net assets in
J.P. Morgan-advised portfolios,
plus 0.04% of average net assets
over $7 billion
- --------------------------------------------------------------------------------
Shareholder services 0.10% of the fund's average
net assets
- --------------------------------------------------------------------------------
J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in the fund.
PERFORMANCE OF PRIVATE ACCOUNTS The fund's investment objective and
policies are substantially similar to those used by J.P. Morgan in managing
certain discretionary investment management accounts. The chart below shows the
historical investment performance for a composite of these private accounts
("Tax Aware Composite") and for the fund's benchmark index.
The performance of the Tax Aware Composite does not represent the fund's
performance nor should it be interpreted as indicative of the fund's future
performance. The accounts in the Tax Aware Composite are not subject to the same
regulatory requirements and limitations imposed on mutual funds. If the accounts
included in the Tax Aware Composite had been subject to these regulatory
requirements and limitations, their performance might have been lower.
Additionally, although it is anticipated that the fund and the Tax Aware
Composite will hold similar securities, their investment results are expected to
differ. In particular, difference in asset size and cash flow resulting from
purchases and redemptions of fund shares may result in different securities
selections, differences in the relative weightings of securities or differences
in the prices paid for particular fund holdings.
The performance of the Tax Aware Composite reflects the deductions of the
fund's total operating expenses, after expense reimbursement, and the
reinvestment of dividends and other distributions. The taxable-equivalent return
is a measure of what a fully taxable fund would have to return in order to
generate equivalent after-tax return using a 39.6% income tax rate. The
performance information is the average annual total return of the Composite for
the periods indicated.
<TABLE>
<CAPTION>
Average annual total returns for the year ended December 31, 1998 1999
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Tax Aware Private Account Composite 4.14 2.98
- ------------------------------------------------------------------------------------------
Tax Aware Private Account Composite - Taxable-Equivalent @ 39.6% 6.46 5.50
- ------------------------------------------------------------------------------------------
Merrill Lynch 3-month U.S. Treasury Bill Index (no expenses) 5.23 4.85
- ------------------------------------------------------------------------------------------
</TABLE>
The fund's total return for the period 4/19/99 (commencement of operations)
through 12/31/99 was 2.28%. The fund's tax equivalent total return @ 39.6% for
the period 4/19/99 (commencement of operations) through 12/31/99 was 3.71%.
The Composite currently includes all discretionary accounts managed by J.P.
Morgan using substantially similar investment strategy as the fund. The
inception date for the Composite was July 1, 1996.
FUND DETAILS | 9
<PAGE>
RISK AND REWARD ELEMENTS
This table discusses the main elements that make up the fund's overall risk and
reward characteristics. It also outlines the fund's policies toward various
investments, including those that are designed to help the fund manage risk.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Potential risks | Potential rewards | Policies to balance risk and reward
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Market conditions
o The fund's share price, o Bonds have generally o Under normal circumstances
the fund plans to remain yield, and total return will outperformed money
market fully invested in bonds and other fixed income fluctuate in response to
investments over the long securities as noted in the table on pages 12-13 bond
market movements term, with less risk than
stocks o The fund seeks to limit risk and enhance after tax
o The value of most bonds will yields through careful management, sector allocation,
fall when interest rates o Most bonds will rise in individual securities selection, and duration management
rise; the longer a bond's value when interest rates
maturity and the lower its fall o During severe market downturns, the fund has the option
credit quality, the more its of investing up to 100% of assets in investment-grade
value typically falls o Mortgage-backed and short-term securities
asset-backed securities can
o Adverse market conditions offer attractive returns o J.P. Morgan monitors interest rate trends, as well as
may from time to time cause geographic and demographic information related to
the fund to take temporary mortgage-backed securities and mortgage prepayments
defensive positions that are
inconsistent with its
principal investment
strategies and may hinder
the fund from achieving its
investment objective
o Mortgage-backed and asset-backed securities (securities representing an
interest in, or secured by, a pool of mortgages or other assets such as
receivables) could generate capital losses or periods of low yields if they
are paid off substantially earlier or later than anticipated
Management choices
o The fund could underperform o The fund could outperform o J.P. Morgan focuses its active management on those areas
its benchmark due to its its benchmark due to these where it believes its commitment to research can most
sector, securities, or same choices enhance after tax income and manage risks in a
duration choices consistent way
o An optimal allocation could
o The fund could generate enhance after tax income lower after tax income if its
taxable/tax exempt allocation is not optimal
Credit quality
o The default of an issuer o Investment-grade bonds have o The fund maintains
its own policies for balancing credit would leave the fund with a lower risk
of default quality against potential yields and gains in light of unpaid
interest or principal its investment goals
o J.P. Morgan develops its own ratings of unrated
securities and makes a credit quality determination for
unrated securities
Short-term trading
o Increased trading would o The fund could realize gains o The fund generally
avoids short-term trading, except to raise the fund's transaction in a short
period of time take advantage of attractive or unexpected opportunities costs
or to meet demands generated by shareholder activity
o The fund could protect
o Increased short-term capital against losses if a bond is
gains distributions would overvalued and its value
raise shareholders' income later falls
tax liability
</TABLE>
10 | FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Potential risks | Potential rewards | Policies to balance risk and reward
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign investments
o The fund could lose money o Foreign bonds, which o Foreign bonds may be a
significant investment (25% of because of foreign represent a major portion of
assets) for the fund government actions, the world's fixed income political
instability, or securities, offer attractive o To the extent that the fund
invests in foreign bonds, it lack of adequate and potential performance and
will hedge its currency exposure into the U.S. dollar accurate information
opportunities for (see also "Derivatives")
diversification
o Currency exchange rate
movements could reduce gains o Favorable exchange rate
or create losses movements could generate
gains or reduce losses
Derivatives
o Derivatives such as futures, o Hedges that correlate well o The fund uses derivatives such as futures, options,
options, swaps and forward with underlying positions swaps and forward foreign currency contracts for hedging
foreign currency contracts can reduce or eliminate and for risk management (i.e., to adjust duration or to
that are used for hedging losses at low cost establish or adjust exposure to particular securities,
the portfolio or specific markets, or currencies)
securities may not fully o The fund could make money
offset the underlying and protect against losses o The fund only establishes hedges that it expects will be
positions(1) and this could if management's analysis highly correlated with underlying positions
result in losses to the fund proves correct
that would not have o While the fund may use derivatives that incidentally
otherwise occurred o Derivatives that involve involve leverage, it does not use them for the specific
leverage could generate purpose of leveraging the portfolio
o Derivatives used for risk substantial gains at low
management may not have the cost
intended effects and may
result in losses or missed
opportunities
o The counterparty to a
derivatives contract could
default
o Certain types of derivatives
involve costs to the fund
which can reduce returns
o Derivatives that involve
leverage could magnify
losses
Securities lending
o When a fund lends a o A fund may enhance income o J.P. Morgan maintains a list
of approved borrowers security, there is a risk through the investment of that
the loaned securities the collateral received from o The fund receives
collateral equal to at least 100% of may not be returned if the the borrower
the current value of securities loaned borrower defaults
o The lending agents indemnify a fund against borrower
o The collateral will be default
subject to the risks of the
securities in which it is o J.P. Morgan's collateral investment guidelines limit the
invested quality and duration of collateral investment to
minimize losses
o Upon
recall,
the
borrower
must
return
the
securities
loaned
within
the
normal
settlement
period
Illiquid holdings
o The fund could have o These holdings may offer o The fund may not invest more than 15% of net assets in
difficulty valuing these more attractive yields or illiquid holdings
holdings precisely potential growth than
comparable widely traded o To maintain adequate liquidity to meet redemptions, the
o The fund could be unable to securities fund may hold investment-grade
short-term securities sell these holdings at the (including repurchase
agreements) and, for temporary or time or price desired extraordinary
purposes, may borrow from banks up to
33 1/3% of the value of its total assets
When-issued and delayed
delivery securities
o When the fund buys o The fund can take advantage o The fund uses segregated accounts to offset leverage
securities before issue or of attractive transaction risk
for delayed delivery, it opportunities
could be exposed to leverage
risk if it does not use
segregated accounts
</TABLE>
(1) A futures contract is an agreement to buy or sell a set quantity of an
underlying instrument at a future date, or to make or receive a cash payment
based on the value of a securities index. An option is the right to buy or
sell a set quantity of an underlying instrument at a predetermined price. A
swap is a privately negotiated agreement to exchange one stream of payments
for another. A forward foreign currency contract is an obligation to buy or
sell a given currency on a future date and at a set price.
FUND DETAILS | 11
<PAGE>
- --------------------------------------------------------------------------------
Investments
This table discusses the customary types of investments which can be held by the
fund. In each case the principal types of risk are listed on the following page
(see below for definitions).This table reads across two pages.
- --------------------------------------------------------------------------------
Asset-backed securities Interests in a stream of payments from specific assets,
such as auto or credit card receivables.
- --------------------------------------------------------------------------------
Bank obligations Negotiable certificates of deposit, time deposits and bankers'
acceptances of domestic and foreign issuers.
- --------------------------------------------------------------------------------
Commercial paper Unsecured short term debt issued by domestic and foreign banks
or corporations. These securities are usually discounted and are rated by S&P or
Moody's.
- --------------------------------------------------------------------------------
Convertible securities Domestic and foreign debt securities that can be
converted into equity securities at a future time and price.
- --------------------------------------------------------------------------------
Corporate bonds Debt securities of domestic and foreign industrial, utility,
banking, and other financial institutions.
- --------------------------------------------------------------------------------
Mortgages (directly held) Domestic debt instrument which gives the lender a lien
on property as security for the loan payment.
- --------------------------------------------------------------------------------
Mortgage-backed securities Domestic and foreign securities (such as Ginnie Maes,
Freddie Macs, Fannie Maes) which represent interests in pools of mortgages,
whereby the principal and interest paid every month is passed through to the
holder of the securities.
- --------------------------------------------------------------------------------
Mortgage dollar rolls The sale of domestic and foreign mortgage-backed
securities with the promise to purchase similar securities at a later date.
Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Participation interests Interests that represent a share of bank debt or similar
securities or obligations.
- --------------------------------------------------------------------------------
Private placements Bonds or other investments that are sold directly to an
institutional investor.
- --------------------------------------------------------------------------------
REITs and other real-estate related instruments Securities of issuers that
invest in real estate or are secured by real estate.
- --------------------------------------------------------------------------------
Repurchase agreements Contracts whereby the fund agrees to purchase a security
and resell it to to the seller on a particular date and at a specific price.
- --------------------------------------------------------------------------------
Reverse repurchase agreements Contracts whereby the fund sells a security and
agrees to repurchase it from the buyer on a particular date and at a specific
price. Considered a form of borrowing.
- --------------------------------------------------------------------------------
Sovereign debt, Brady bonds, and debt of supranational organizations Dollar- or
non-dollar-denominated securities issued by foreign governments or supranational
organizations. Brady bonds are issued in connection with debt restructurings.
- --------------------------------------------------------------------------------
Swaps Contractual agreement whereby a party agrees to exchange periodic payments
with a counterparty. Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Tax exempt municipal securities Securities, generally issued as general
obligation and revenue bonds, whose interest is exempt from federal taxation and
state and/or local taxes in the state where the securities were issued.
- --------------------------------------------------------------------------------
U.S. government securities Debt instruments (Treasury bills, notes, and bonds)
guaranteed by the U.S. government for the timely payment of principal and
interest.
- --------------------------------------------------------------------------------
Zero coupon, pay-in-kind, and deferred payment securities Domestic and foreign
securities offering non-cash or delayed-cash payment. Their prices are typically
more volatile than those of some other debt instruments and involve certain
special tax considerations.
- --------------------------------------------------------------------------------
Risk related to certain investments held by J.P. Morgan fixed income funds:
Credit risk The risk a financial obligation will not be met by the issuer of a
security or the counterparty to a contract, resulting in a loss to the
purchaser.
Currency risk The risk currency exchange rate fluctuations may reduce gains or
increase losses on foreign investments.
Environmental risk The risk that an owner or operator of real estate may be
liable for the costs associated with hazardous or toxic substances located on
the property.
Extension risk The risk a rise in interest rates will extend the life of a
mortgage-backed security to a date later than the anticipated prepayment date,
causing the value of the investment to fall.
Interest rate risk The risk a change in interest rates will adversely affect the
value of an investment. The value of fixed income securities generally moves in
the opposite direction of interest rates (decreases when interest rates rise and
increases when interest rates fall).
Leverage risk The risk of gains or losses disproportionately higher than the
amount invested.
12 | FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial table is intended to help you understand the fund's financial
performance for the past fiscal period. Certain information reflects financial
results for a single fund share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose reports, along with the fund's
financial statements, are included in the fund's annual report, which is
available upon request.
- --------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL TAX AWARE ENHANCED INCOME FUND
Per-share data For fiscal period ended October 31
- --------------------------------------------------------------------------------
1999(1,2)
Net asset value, beginning of period ($) 2.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.04
Net realized and unrealized gain (loss)
on investment ($) (0.01)
- --------------------------------------------------------------------------------
Total from investment operations ($) 0.03
- --------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income (0.04)
- --------------------------------------------------------------------------------
Net asset value, end of period ($) 1.99
- --------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------
Total return (%) 1.57(3)
- --------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 354,823
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net expenses (%) 0.25(4)
- --------------------------------------------------------------------------------
Net investment income (%) 4.01(4)
- --------------------------------------------------------------------------------
Expenses without reimbursement (%) 0.57(4)
- --------------------------------------------------------------------------------
Portfolio turnover (%) 69(3)
- --------------------------------------------------------------------------------
(1) The fund commenced operations on 4/19/99.
(2) The figures have been adjusted to reflect a stock split that occurred on
7/27/99 (7.50251256 to 1).
(3) Not annualized. (4) Annualized.
14 | FUND DETAILS
<PAGE>
- --------------------------------------------------------------------------------
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE>
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
For investors who want more information on the fund, the following documents are
available free upon request:
Annual/Semi-annual Reports Contain financial statements, performance data,
information on portfolio holdings, and a written analysis of market conditions
and fund performance for the fund's most recently completed fiscal year or
half-year.
Statement of Additional Information (SAI) Provides a fuller technical and legal
description of the fund's policies, investment restrictions, and business
structure. This prospectus incorporates the fund's SAI by reference.
Copies of the current versions of these documents, along with other information
about the fund, may be obtained by contacting:
J.P. Morgan Institutional Tax Aware Enhanced Income Fund
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
Telephone: 1-800-766-7722
Hearing impaired: 1-888-468-4015
Email: [email protected]
Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-800-SEC-0330) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. The
fund's investment company and 1933 Act registration numbers are 811-07795 and
333-11125.
J.P. MORGAN INSTITUTIONAL FUNDS AND THE MORGAN TRADITION
The J.P. Morgan Institutional Funds combine a heritage of integrity and
financial leadership with comprehensive, sophisticated analysis and management
techniques. Drawing on J.P. Morgan's extensive experience and depth as an
investment manager, the J.P. Morgan Institutional Funds offer a broad array of
distinctive opportunities for mutual fund investors.
JPMorgan
- --------------------------------------------------------------------------------
J.P. Morgan Institutional Funds
Advisor Distributor
J.P. Morgan Investment Management Inc. Funds Distributor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-766-7722 1-800-221-7930
IMPR06