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OCTOBER 1, 1999
AS REVISED
MARCH 3, 2000 | PROSPECTUS
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J.P. MORGAN INSTITUTIONAL
MARKET NEUTRAL FUND
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Seeking to provide long term capital
appreciation while neutralizing the risks
associated with stock market investing
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 for anyone 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, investment approach, risks and expenses
J.P. MORGAN INSTITUTIONAL MARKET NEUTRAL FUND
Fund description ........................................................... 2
Investor expenses .......................................................... 3
4 | U.S. EQUITY MANAGEMENT APPROACH
J.P. Morgan ................................................................ 4
J.P. Morgan Institutional Market Neutral Fund .............................. 4
Who may want to invest ..................................................... 4
U.S. equity investment process ............................................. 5
6 | Investing in the J.P. Morgan Institutional Market Neutral Fund
YOUR INVESTMENT
Investing through a financial professional ................................. 6
Investing through an employer-sponsored retirement plan .................... 6
Investing through an IRA or rollover IRA ................................... 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
Performance of private accounts ............................................ 9
Risk and reward elements ................................................... 10
Financial Highlights ....................................................... 12
FOR MORE INFORMATION .............................................. back cover
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J.P. MORGAN INSTITUTIONAL
MARKET NEUTRAL FUND
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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 10-11.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide long-term capital appreciation from a broadly
diversified portfolio of U.S. stocks while neutralizing the general risks
associated with stock market investing. This goal can be changed without
shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund takes long and short positions in different stocks, selecting from
a universe of mid to large cap stocks with characteristics similar to those of
the Russell 1000 and/or Standard & Poor's 500 (S&P 500) Indexes, in an effort to
insulate the fund's performance from the effects of general stock market
movements. In rising markets, the fund expects that the long positions will
appreciate more rapidly than the short positions, and in declining markets, that
the short positions will decline faster than the long positions. The fund
expects that this difference in rates of apprecia tion, along with any returns
on cash generated by short sales, will generate a positive return; the fund
pursues returns exceeding those of 90-day U.S. Treasury Bills.
The fund purchases securities that it believes are undervalued and sells short
securities that it believes are overvalued. The long and short portfolios are
matched on a variety of risk characteristics in order to limit exposure to
macroeconomic factors. In each sector in which the fund invests, it balances the
dollars invested in long and short positions to remain sector neutral. In
attempting to neutralize market and sector risks, the fund emphasizes stock
picking as the primary means of generating returns.
PRINCIPAL RISKS
While the fund's market neutral approach seeks to minimize the risks of
investing in the overall stock market, it may involve more risk than other funds
that do not engage in short selling. The fund's long positions could decline in
value while the value of the securities sold short increases, thereby increasing
the potential for loss. It also is possible that the combination of securities
held long and sold short will fail to protect the fund from overall stock market
risk as anticipated.
The fund will have substantial short positions and must borrow the security to
make delivery to the buyer. The fund may not always be able to borrow a security
it wants to sell short. The fund also may be unable to close out an established
short position at an acceptable price, and may have to sell long positions at
disadvantageous times to cover its short positions.
The value of your investment in the fund will fluctuate in response to movements
in the stock market. fund performance also will depend on the effectiveness of
J.P. morgan's research and the management team's stock picking decisions.
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.
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REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN MARKET NEUTRAL FUND: INSTITUTIONAL
SHARES)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $349 billion, including approximately $331 million using the same
strategy as the fund.
The portfolio management team is led by James C. Wiess, vice president, Timothy
J. Devlin, vice president, and Bernard A. Kroll, vice president. Mr. Wiess has
been at J.P. Morgan since 1992, and prior to managing this fund managed other
structured equity portfolios for J.P. Morgan. Mr. Devlin has been at J.P. Morgan
since July 1996, and prior to that time was an equity portfolio manager at
Mitchell Hutchins Asset Management Inc. Mr. Kroll has been at J.P. Morgan since
1996 and prior to managing this fund was an equity derivatives specialist at
Goldman Sachs & Co.
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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 INSTITUTIONAL MARKET NEUTRAL FUND
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INVESTOR EXPENSES
The estimated 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 1.50
Marketing (12b-1) fees none
Other expenses 4.16
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Total operating expenses 5.66
Fee waiver and
expense reimbursement(2) 4.41
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Net expenses(2) 1.25
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Expense example
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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:
$10,000 initial investment, 5% return each year, net expenses for the first 12
months and total operating expenses thereafter, and all shares sold at the end
of each time period. The example is for comparison only; the fund's actual
return and your actual costs may be higher or lower.
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1 yr. 3 yrs.
Your cost($) 127 1,294
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(1) This table shows the fund's estimated expenses expressed as a percentage of
the funds estimated average net assets.
(2) Reflects an agreement dated 10/1/99 by Morgan Guaranty Trust Company of New
York ("Morgan Guaranty"), an affiliate of J.P. Morgan, to reimburse the fund
to the extent expenses (excluding extraordinary expenses) exceed 1.25% of
the fund's average daily net assets through 9/30/00.
J.P. MORGAN INSTITUTIONAL MARKET NEUTRAL FUND | 3
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U.S. EQUITY 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 INSTITUTIONAL MARKET NEUTRAL FUND
The fund takes long and short positions in U.S. stocks, selecting from a
universe of mid to large cap stocks with characteristics similar to those of the
Russell 1000 and/or S&P 500 Indexes. As a shareholder, you should anticipate
risks and rewards beyond those of 90-day U.S. Treasury Bills.
Who may want to invest
The fund is designed for investors who:
o are pursuing long-term capital appreciation but want to minimize exposure to
general stock market risk
o want returns that exceed those of 90-day U.S. Treasury Bills with controlled
risk
The fund is not designed for investors who:
o want a fund that pursues market trends or focuses only on particular
industries or sectors
o require regular income or stability of principal
o are pursuing a short-term goal or investing emergency reserves
o are seeking returns similar to those of typical stock funds
4 | U.S. EQUITY MANAGEMENT APPROACH
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The fund invests primarily in U.S. stocks. The fund's investment philosophy,
developed by the advisor, focuses on stock picking while largely avoiding sector
or market-timing strategies.
U.S. EQUITY INVESTMENT PROCESS
In managing the fund, J.P. Morgan employs a three-step process:
[GRAPHIC OMITTED]
J.P. Morgan analysts develop proprietary fundamental research
Research J.P. Morgan takes an in-depth look at company prospects over a
relatively long period -- often as much as five years -- rather than focusing on
near-term expectations. This approach is designed to provide insight into a
company's real growth potential. J.P. Morgan's in-house research is developed by
an extensive worldwide network of over 120 career analysts. The team of analysts
dedicated to U.S. equities includes more than 20 members, with an average of
over ten years of experience.
[GRAPHIC OMITTED]
Stocks in each industry are ranked with the help of models
Valuation The research findings allow J.P. Morgan to rank the companies in each
industry group according to their relative value. The greater a company's
estimated worth compared to the current market price of its stock, the more
undervalued the company. The valuation rankings are produced with the help of a
variety of models that quantify the research team's findings.
[GRAPHIC OMITTED]
Using research and valuations, the fund's management team chooses stocks for the
fund
Stock selection The fund buys and sells stocks according to its policies, using
the research and valuation rankings as a basis. In general, the management team
buys stocks that are identified as undervalued and considers selling them when
they appear overvalued. Along with attractive valuation, the fund's managers
often consider a number of other criteria:
o catalysts that could trigger a significant change in a stock's price
o high potential reward compared to potential risk
o temporary mispricings caused by market overreactions
U.S. EQUITY MANAGEMENT APPROACH | 5
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YOUR INVESTMENT
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For your convenience, the fund offers 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 THROUGH AN EMPLOYER-SPONSORED RETIREMENT PLAN
Your fund investments are handled through your plan. Refer to your plan
materials or contact your benefits office for information on buying, selling, or
exchanging fund shares.
INVESTING THROUGH AN IRA OR ROLLOVER IRA
Please contact a J.P. Morgan Retirement Services Specialist at 1-888-576-4472
for information on J.P. Morgan's comprehensive IRA services, including lower
minimum investments.
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
investment is $3,000,000 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 on the
right.
For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-766-7722.
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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
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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 cash 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 any cash 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 cash.
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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 market quotes or pricing services. 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 and to
postpone payment of proceeds for up to seven days or as permitted by law.
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Shareholder Services Agent
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
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
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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, cash 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 its 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 reserves the right to close out your account and
send the proceeds to the address of record.
DIVIDENDS AND DISTRIBUTIONS
Income dividends are typically paid four times a year. The fund typically makes
capital gains distributions, if any, once per year. However, the fund may make
more or fewer payments in a given year, depending on its investment results and
its tax compliance situation. The fund's dividends and distributions consist of
most or all of its net investment income and net realized capital gains.
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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 for cash, exchanging shares, and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:
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Transaction | Tax status
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Income dividends Ordinary income
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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 shares Capital gains or losses
owned for more than one year
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Sales or exchanges of shares Gains are treated as ordinary income;
owned for one year or less losses are subject
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.
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
1-800-766-7722. In the future, the trustees could create other series or share
classes, which would have different expenses. Fund shareholders are entitled to
one full or fractional vote for each dollar or fraction of a dollar invested.
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 business activities.
The trustees are assisted by Pierpont Group, Inc., which they own and operate on
a cost basis. Costs of the trust are shared by all funds governed by these
trustees. Funds Distributor, Inc., as co-administrator, along with J.P. Morgan,
provides trust officers. J.P. Morgan, as co-administrator, oversees the fund's
other service providers.
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J.P. Morgan, subject to the expense reimbursements described earlier in this
prospectus, receives the following fees for investment advisory and other
services:
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Advisory services 1.50% of the fund's
average net assets
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Administrative services Fund's pro-rata portion of
(fee shared with Funds 0.09% of the first $7
Distributor, Inc.) billion 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 0.10% 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 goal 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 "Private Account Composite").
The performance of the Private Account 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 Private Account Composite are not subject to
the same limitations imposed on mutual funds. If the accounts included in the
Private Account Composite had been subject to these limitations, their
performance might have been lower.
The performance of the Private Account Composite reflect the deductions of the
fund's total annual operating expenses, after expense reimbursements.
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<CAPTION>
Annual Total Returns for the Year Ended December 31,
1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Private Account Composite 3.02% 4.88% 15.89% -0.96% 2.56% 5.77% 13.52% 4.12% 11.50%
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U.S. Treasury Bill 7.21% 5.60% 3.51% 2.87% 3.90% 5.60% 5.21% 5.26% 4.86%
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</TABLE>
The Private Account Composite currently includes all discretionary accounts
managed by J.P. Morgan using substantially similar investment strategy as the
fund. The inception date for the Private Account Composite was January 31, 1990.
Prior to January 1, 1993, the Composite may not have included all discretionary
accounts.
FUND DETAILS | 9
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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
securities, 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 price and performance o Stocks have generally outperformed o Under normal circumstances the fund plans
will fluctuate in response to stock more stable investments (such as to remain fully invested, with at least 65%
market movements bonds and cash equivalents) over the in stocks; stock investments may inc
</TABLE>
