JP MORGAN SERIES TRUST
497, 2000-08-04
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<PAGE>

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                                                     AUGUST 1, 2000 | PROSPECTUS
--------------------------------------------------------------------------------

J.P. MORGAN INSTITUTIONAL
TAX AWARE U.S. EQUITY FUND



                                  ----------------------------------------------
                                  Seeking to provide high after tax total return
                                  through a disciplined management approach

This prospectus contains essential information for anyone investing in this
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
<PAGE>

CONTENTS
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1 | The fund's goal, principal strategies, principal risks, expenses and
    performance

J.P. MORGAN INSTITUTIONAL TAX AWARE U.S. EQUITY FUND
Fund description ............................................................  1
Performance. ................................................................  2
Investor expenses ...........................................................  3

3 |

U.S. EQUITY MANAGEMENT APPROACH
J.P. Morgan .................................................................  4
J.P. Morgan Institutional Tax Aware U.S. Equity Fund ........................  4
Who may want to invest ......................................................  4
Investment process ..........................................................  5
Tax aware investing at J.P. Morgan ..........................................  5

5 | Investing in the J.P. Morgan Institutional Tax Aware U.S. Equity 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
Risk and reward elements .................................................... 10

FOR MORE INFORMATION ...............................................  back cover
<PAGE>

J.P. MORGAN INSTITUTIONAL
TAX AWARE U.S. EQUITY FUND
--------------------------------------------------------------------------------

[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 9-10.

[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high after tax total return from a portfolio of
selected equity securities. This goal can be changed without shareholder
approval.

[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in large- and medium-capitalization U.S. companies.
Industry by industry, the fund's weightings are similar to those of the Standard
& Poor's 500 Stock Index (S&P 500). The fund can moderately underweight or
overweight industries when it believes it will benefit performance.

Within each industry, the fund focuses on those stocks that are ranked as most
undervalued according to the investment process described on page 4. The fund
generally considers selling stocks that appear overvalued.

To this investment approach the fund adds the element of tax aware investing.
The fund's tax aware investment strategies are described on page 4.

Principal Risks
The value of your investment in the fund will fluctuate in response to movements
in the stock market. Fund performance will also depend on the effectiveness of
J.P. Morgan's research and the management team's stock picking decisions.

By emphasizing undervalued stocks, the fund seeks to produce returns that exceed
those of the S&P 500. At the same time, by controlling the industry weightings
of the fund so that they differ only moderately from the industry weightings of
the S&P 500, the fund seeks to limit its volatility to that of the overall
market, as represented by this index. The fund's tax aware strategies may reduce
your capital gains but will not eliminate them. Maximizing after-tax returns may
require trade-offs that reduce pre-tax returns.

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.
<PAGE>

--------------------------------------------------------------------------------
                                        REGISTRANT: J.P. MORGAN SERIES TRUST
                                        (J.P. MORGAN TAX AWARE U.S. EQUITY FUND:
                                        INSTITUTIONAL SHARES)

PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $2,869 million using similar
strategies as the fund.

The portfolio management team is led by Terry E. Banet, vice president, and
Louise Sclafani, vice president. Ms. Banet has been on the team since the fund's
inception in December 1996, and has been at J.P. Morgan since 1985. Prior to
managing this fund, Ms. Banet managed tax aware accounts and helped develop
Morgan's tax aware equity process. Ms. Sclafani has been at J.P. Morgan since
1994. Prior to managing this fund, Ms. Sclafani was an equity analyst and
portfolio manager at Brundage, Story and Rose.

--------------------------------------------------------------------------------
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.

1 | J.P. MORGAN INSTITUTIONAL TAX AWARE U.S. EQUITY FUND
<PAGE>

--------------------------------------------------------------------------------
PERFORMANCE OF A RELATED FUND(unaudited)
Shares of the fund have not previously been offered. Accordingly, the bar chart
and table shown below provide some indication of the risks of investing in the
fund because returns reflect performance of the J.P. Morgan Tax Aware U.S.
Equity Fund (Select shares), a related class of shares.

The bar chart indicates some of the risks by showing changes in the performance
of the Select shares from year to year for each of the Select shares' last 3
calendar years.


The table indicates some of the risks by showing how the Select shares' average
annual returns for the past year and the life of the fund compare to those of
the S&P 500 Index. This is a widely recognized, unmanaged index of U.S. stocks
used as a measure of overall U.S. stock performance.

     The Select shares' past performance does not necessarily  indicate how they
or the Institutional shares will perform in the future.


Year-by-year total return      (%)Shows changes in returns by calendar year(1,2)
--------------------------------------------------------------------------------
                                            1997      1998        1999

40%
                                            30.32     31.18
20%                                                              18.31

0%
--------------------------------------------------------------------------------

[ ] J.P. Morgan Tax Aware U.S. Equity Fund (Select shares)


The Select shares' year-to-date total return as of 6/30/00 was 0.05%. For the
period covered by this year-by-year total return chart, the Select shares'
highest quarterly return was 21.64% (for the quarter ended 12/31/98) and the
lowest quarterly return was -8.86% (for the quarter ended 9/30/98).


<TABLE>
<CAPTION>
Average annual total return (%)         Shows performance over time, for periods ended December 31, 1999(1)
-----------------------------------------------------------------------------------------------------------
                                                                          Past 1 yr.        Life of fund
<S>                                                                         <C>                 <C>
J.P. Morgan Tax Aware U.S. Equity Fund (Select shares) (after expenses)     18.31               26.46
-----------------------------------------------------------------------------------------------------------
S&P 500 Index (no expenses)                                                 21.04               27.56
-----------------------------------------------------------------------------------------------------------
</TABLE>
<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 (%)
(expenses that are deducted from fund assets)

Management fees                                                            0.45
Distribution (Rule 12b-1) fees                                             none
Other expenses                                                             0.26
--------------------------------------------------------------------------------
Total operating expenses                                                   0.71

Fee waiver and expense
reimbursement(3)                                                          (0.01)
--------------------------------------------------------------------------------
Net expenses(3)                                                            0.70
--------------------------------------------------------------------------------


Expense example(3)
--------------------------------------------------------------------------------
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
8/1/00 through 2/28/02 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.     5 yrs.        10 yrs.
Your cost($)                     72           226       394           882
--------------------------------------------------------------------------------


(1) The The J.P. Morgan Tax Aware U.S. Equity Fund (Select shares) commenced
    operations on 12/18/96, and returns reflect performance of the fund from
    12/31/96.

(2) The fund's fiscal year end is 10/31.


     (3) Reflects an agreement  dated 8/1/00 by Morgan Guaranty Trust Company of
New York,  an affiliate  of J.P.  Morgan,  to  reimburse  the fund to the extent
operating  expenses (which exclude  dividend  expenses on securities sold short,
interest,  taxes and extraordinary  expenses) exceed 0.70% of the fund's average
daily net assets through 2/28/02.


                        J.P. MORGAN INSTITUTIONAL TAX AWARE U.S. EQUITY FUND | 2

<PAGE>
U.S. EQUITY 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 approximately 420 analysts and portfolio
managers around the world and has approximately $369 billion in assets under
management, including assets managed by the funds' advisor, J.P. Morgan
Investment Management Inc.

J.P. MORGAN INSTITUTIONAL U.S. EQUITY FUND
The fund invests primarily in U.S. stocks directly. As a shareholder, you should
anticipate risks and rewards beyond those of a typical bond fund or a typical
balanced fund.


WHO MAY WANT TO INVEST
--------------------------------------------------------------------------------
The fund is designed for investors who:

o  are pursuing a long-term goal such as retirement

o  want to add an investment with growth potential to further diversify a
   portfolio

o  want a fund that seeks to outperform the markets in which it invests over the
   long term

o  are individuals that could benefit from a strategy that pursues returns from
   an after-tax perspective

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 investing through a tax-deferred account such as an IRA.


3 | U.S. EQUITY MANAGEMENT APPROACH


<PAGE>

[GRAPHIC OMITTED]
J.P. Morgan analysts develop proprietary
fundamental research

[GRAPHIC OMITTED]
Stocks in each industry are ranked
with the help of models

[GRAPHIC OMITTED]
Using research and valuations,
the fund's management team
chooses stocks for the fund


<PAGE>

U.S. EQUITY INVESTMENT PROCESS
The J.P. Morgan U.S. equity funds invest primarily in U.S. stocks. The Tax Aware
Fund does so while seeking to enhance after-tax returns.

While the fund follows its own strategy, the fund has a single investment
philosophy. This philosophy, developed by the fund's advisor, focuses on stock
picking while largely avoiding sector or market-timing strategies.

In managing the fund, J.P. Morgan employs a three-step process:

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 125 career equity analysts. The team of
analysts dedicated to U.S. equities includes more than 20 members, with an
average of over ten years of experience.

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.

Stock selection The fund buys and sells stocks according to its own 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 rise in a stock's price

o  high potential reward compared to potential risk

o  temporary mispricings caused by market overreactions


--------------------------------------------------------------------------------
TAX AWARE INVESTING AT J.P. MORGAN
The J.P. Morgan Institutional Tax Aware U.S. Equity Fund is designed to reduce,
but not eliminate, capital gains distributions to shareholders. In doing so, the
fund sells securities when the anticipated performance benefit justifies the
resulting tax liability. This strategy often includes holding securities long
enough to avoid higher, short-term capital gains taxes, selling shares with a
higher cost basis first, and offsetting gains realized in one security by
selling another security at a capital loss. The fund is aided in this process by
a tax-sensitive optimization model developed by J.P. Morgan.

The J.P. Morgan Institutional Tax Aware U.S. Equity Fund generally intends to
pay redemption proceeds in cash; however it reserves the right at its sole
discretion to pay redemptions over $250,000 in-kind as a portfolio of
representative stocks rather than cash. An in-kind redemption payment can shield
the fund -- and other shareholders -- from tax liabilities that might otherwise
be incurred.

                                             U.S. EQUITY MANAGEMENT APPROACH | 4


<PAGE>

YOUR INVESTMENT
--------------------------------------------------------------------------------
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.


<PAGE>

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.M. Institutional Shareholder Services
   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.


5 | 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 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 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.


<PAGE>

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 days 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 on a foreign exchange after the close of trading on
that exchange that would materially impact a security's value at the time the
fund calculates its NAV), 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.


--------------------------------------------------------------------------------
Shareholder Services Agent
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713
1-800-766-7722

Representatives are available 8:00 a.m. to 6:00 p.m. eastern
time on fund business days.

                                                            YOUR  INVESTMENT | 6


<PAGE>

--------------------------------------------------------------------------------
Timing of settlements When you buy shares, you will become the owner of record
when a 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. In-kind
redemptions (described on page 6) will be available as promptly as is feasible.

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
The fund typically pays income dividends four times a year and 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. 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.


<PAGE>

--------------------------------------------------------------------------------
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:

--------------------------------------------------------------------------------
Transaction                               Tax status
--------------------------------------------------------------------------------
Income dividends                          Ordinary income
--------------------------------------------------------------------------------
Short-term capital gains                  Ordinary income
distributions
--------------------------------------------------------------------------------
Long-term capital gains                   Capital gains
distributions
--------------------------------------------------------------------------------
Sales or exchanges of shares              Capital gains or losses
owned for more than one year
--------------------------------------------------------------------------------
Sales or exchanges of shares              Gains are treated as ordinary
owned for one year or less                income; 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 a 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.

7 | 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 all 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
each fund's other service providers. J.P. Morgan, subject to the expense
reimbursements described earlier in this prospectus, receives the following fees
for investment advisory and other services:

--------------------------------------------------------------------------------
Advisory services                            0.45% of the fund's average
                                             net assets
--------------------------------------------------------------------------------
Administrative services                      Fund's pro-rata portion of
(fee shared with Funds                       0.09% of the first $7 billion
Distributor, Inc.)                           of average net assets in J.P.
                                             Morgan-advised portfo- lios, 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 a fund.



                                                                FUND DETAILS | 8

<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 certain funds 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 and             o Stocks have generally                o Under normal circumstances thefund plans to
  performance will fluctuate               outperformed more stable               remain fully invested, with atleast 65% in
  in response to stock market              investments (such as bonds             stocks; stock investments mayinclude U.S. and
  movements                                and cash equivalents) over             foreign common stocks,convertible securities,
                                           the long term                          preferred stocks, trust orpartnership
o Adverse market conditions                                                       interests, warrants, rights, and investment
  may from time to time cause                                                     company securities
  the fund to take temporary
  defensive positions that are                                                  o The fund seeks to limit risk through
  inconsistent with its                                                              diversification
  principal investment
  strategies and may hinder a                                                   o During severe market downturns, the fund has the
  fund from achieving its                                                         option of investing up to 100% of assets in
  investment objective                                                            investment-grade short-term securities
-----------------------------------------------------------------------------------------------------------------------------------
Management choices

o The fund could underperform            o The fund could outperform            o J.P. Morgan focuses its active management on
  its benchmark due to its                 its benchmark due to these             securities selection, the area where it believes
  securities and asset                     same choices                           its commitment to research can most enhance
  allocation choices                                                                 returns
-----------------------------------------------------------------------------------------------------------------------------------
Foreign investments

o Currency exchange rate                 o Favorable exchange rate              o The fund anticipates that its total foreign
  movements could reduce gains             movements could generate               investments will not exceed 20% of assets
  or create losses                         gains or reduce losses
                                                                                o The fund actively manages the currency exposure
o The fund could lose money              o Foreign investments, which             of its foreign investments relative to its
  because of foreign                       represent a major portion of           benchmark, and may hedge back into the U.S.
  government actions,                      the world's securities,                dollar from time to time (see also
  political instability, or                offer attractive potential                "Derivatives")
  lack of adequate and                     performance and
  accurate information                     opportunities for
                                           diversification
-----------------------------------------------------------------------------------------------------------------------------------
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
  securities before issue or               of attractive transaction              leverage risk
  for delayed delivery, it                 opportunities
  could be exposed to leverage
  risk if it does not use
  segregated accounts
-----------------------------------------------------------------------------------------------------------------------------------
Short-term trading

o Increased trading would                o The fund could realize gains         o The fund generally avoids short-term trading,
  raise the fund's brokerage               in a short period of time              except to take advantage of attractive or
  and related costs                                                               unexpected opportunities or to meet demands
                                         o The fund could protect                 generated by shareholder activity. The portfolio
o Increased short-term capital             against losses if a stock is           turnover rate for the Select shares of the fund
  gains distributions would                overvalued and its value               for the fiscal year ended 10/31/99 was 29%.
  raise shareholders' income               later falls
  tax liability
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

9 | FUND DETAILS

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Potential risks                          Potential rewards                      Policies to balance risk and
reward
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                    <C>
Derivatives

o Derivatives such as futures,           o Hedges that correlate well           o The fund uses derivatives for hedging and for
  options, swaps, and forward              with underlying positions              risk management (i.e., to establish or adjust
  foreign currency contracts               can reduce or eliminate                exposure to particular securities, markets or
  that are used for hedging                losses at low cost                     currencies); risk management may include
  the portfolio or specific                                                       management of the fund's exposure relative to
  securities may not fully               o The fund could make money              its benchmark
  offset the underlying                    and protect against losses
  positions1 and this could                if management's analysis             o The fund only establishes hedges that it expects
  result in losses to the fund             proves correct                         will be highly correlated with underlying
  that would not have                                                                positions
  otherwise occurred                     o Derivatives that involve
                                           leverage could generate              o While the fund may use derivatives that
o Derivatives used for risk                substantial gains at low               incidentally involve leverage, it does not use
  management may not have the              cost                                   them for the specific purpose of leveraging its
  intended effects and may                                                           portfolio
  result in losses or missed
  opportunities

o The counterparty to a
  derivatives contract could
  default

o Derivatives that involve
  leverage could magnify
  losses

o Certain types of derivatives
  involve costs to the fund
  which can reduce returns
-----------------------------------------------------------------------------------------------------------------------------------
Securities lending

o When the fund lends a                  o The fund may enhance income          o J.P. Morgan maintains a list of approved
  security, there is a risk                through the investment of            borrowers
  that the loaned securities               the collateral received from
  may not be returned if the               the borrower                         o The fund receives collateral equal to at least
  borrower defaults                                                               100% of the current value of securities loaned

o The collateral will be                                                        o The lending agents indemnify a fund against
  subject to the risks of the                                                     borrower default
  securities in which it is
  invested                                                                      o J.P. Morgan's collateral investment guidelines
                                                                                  limit the 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
  difficulty valuing these                 more attractive yields or              assets in illiquid holdings
  holdings precisely                       potential growth than
                                           comparable widely traded             o To maintain adequate liquidity to meet
o The fund could be unable to              securities                             redemptions, the fund may hold investment-grade
  sell these holdings at the                                                      short-term securities (including repurchase
  time or price it desires                                                        agreements and reverse repurchase agreements)
                                                                                  and, for temporary or extraordinary purposes,
                                                                                  may borrow from banks up to 331/3% of the value
                                                                                  of its total assets
-----------------------------------------------------------------------------------------------------------------------------------
</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 changes in the value of a securities index. An option is the right
    to buy or sell a set quantity of an underlying instrument at a
    pre-determined 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 | 10
<PAGE>
--------------------------------------------------------------------------------
FOR MORE INFORMATION
--------------------------------------------------------------------------------

For investors who want more information on these funds, 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 a fund's most recently completed fiscal year or
half-year.

Statement of Additional Information (SAI) Provides a fuller technical and legal
description of a fund's policies, investment restrictions, and business
structure. This prospectus incorporates each fund's SAI by reference.

Copies of the current versions of these documents, along with other information
about the funds, may be obtained by contacting:

J.P. Morgan Funds
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713

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. (1-202-942-8090) 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 MUTUAL FUNDS AND THE MORGAN TRADITION
J.P. Morgan mutual funds combine a heritage of integrity and financial
leadership with comprehensive, sophisticated analysis and techniques. Drawing on
J.P. Morgan's extensive experience and depth as an investment manager, J.P.
Morgan mutual funds offer a broad array of distinctive opportunities for mutual
fund investors.

JPMorgan
--------------------------------------------------------------------------------
J.P. Morgan Series Trust

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

<PAGE>

--------------------------------------------------------------------------------
                                                     AUGUST 1, 2000 | PROSPECTUS
--------------------------------------------------------------------------------

J.P. MORGAN
MARKET NEUTRAL FUND
                                        -------------------------------------
                                        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


<PAGE>

CONTENTS
--------------------------------------------------------------------------------

2 | The fund's goal, investment approach, risks and expenses

J.P. MORGAN MARKET NEUTRAL FUND
Fund description ..........................................................  2
Performance ...............................................................  2
Investor expenses .........................................................  3

4 |

U.S. EQUITY MANAGEMENT APPROACH
J.P. Morgan ...............................................................  4
J.P. Morgan Market Neutral Fund ...........................................  4
Who may want to invest ....................................................  4
U.S. equity investment process ............................................  5

6 | Investing in the J.P. Morgan 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

FOR MORE INFORMATION .............................................  back cover

<PAGE>

J.P. MORGAN MARKET NEUTRAL FUND

[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 10-11.

[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 appreciation, 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.

<PAGE>

REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN MARKET NEUTRAL FUND: SELECT SHARES)

PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including approximately $229 million using a similar
strategy as the fund.

The portfolio management team is led by Bernard A. Kroll, managing director,
Timothy J. Devlin, vice president, and Nanette Buziak, vice president. Mr. Kroll
has been at J.P. Morgan since August of 1996 and prior to managing this fund was
an equity derivatives specialist at Goldman Sachs & Co. 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. Ms. Buziak has been at J.P.
Morgan since March of 1997 and prior to that time was an index arbitrage trader
and convertible bond portfolio manager at First Marathon America Inc.

--------------------------------------------------------------------------------
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 MARKET NEUTRAL FUND

<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE OF A RELATED FUND (unaudited)
Shares of the fund have not previously been offered. Accordingly, the bar chart
and table shown below provide some indication of the risks of investing in the
fund by providing the below returns which reflect the performance of the J.P.
Morgan Market Neutral Fund (Institutional shares), a related class of shares.

The bar chart indicates some of the risks by showing changes in the performance
of the Institutional shares from year to year for the last calendar year.

The table indicates some of the risks by showing how the Institutional shares'
average annual returns for the past year and for the life of the fund compare to
the fund's benchmark. The fund's benchmark is the Merrill Lynch 91-Day T-Bill, a
one-security index which rolls over every month. The Merrill Lynch 91-Day T-Bill
is used to measure short-term fixed income market performance.

The Institutional shares' past performance does not necessarily indicate how the
Select shares will perform in the future.
<TABLE>
<CAPTION>
Year-by-year total return (%)   Shows changes in returns by calendar year(1,2)
------------------------------------------------------------------------------
                                                               1999
<S>                                                            <C>
 10%

  0%
------------------------------------------------------------------------------
-10%                                                          -0.05
</TABLE>

[ ] J.P. Morgan Institutional Market Neutral Fund

     The  Institutional  shares'  year-to-date  total  return as of 6/30/00  was
2.45%.  For the period  covered by this  year-by-year  total return  chart,  the
Institutional  shares' highest quarterly return was 4.51% (for the quarter ended
6/30/99);  and the lowest  quarterly  return was -3.04% (for the  quarter  ended
12/31/99).

<TABLE>
<CAPTION>
Average annual total return (%)    Shows performance over time, for periods ended December 31, 1999(1)
------------------------------------------------------------------------------------------------------------
                                                                          Past 1 yr.          Life of fund
<S>                                                                        <C>                 <C>
J.P. Morgan Market Neutral Fund (Institutional shares) (after expenses)   -0.05               -0.05
------------------------------------------------------------------------------------------------------------
Merrill Lynch 91-Day T-Bill (no expenses)                                  4.85                4.85
------------------------------------------------------------------------------------------------------------
</TABLE>

<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 (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees                                                             1.50
Distribution (Rule 12b-1) fees                                              none
Other expenses
     Dividend expenses on securities sold short                             0.60
     Remainder of other expenses                                            1.74
                                                                            ----
Total other expenses                                                        2.34
--------------------------------------------------------------------------------
Total operating expenses                                                    3.84
Fee waiver and
expense reimbursement(3)                                                  (1.84)
--------------------------------------------------------------------------------
Net expenses(3)                                                             2.00
--------------------------------------------------------------------------------


Expense example(3)
--------------------------------------------------------------------------------
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
8/1/00 through 9/30/01 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.    5 yrs.            10 yrs.
Your cost($)                203         943      1,767              3,912
--------------------------------------------------------------------------------

(1) The J.P. Morgan Institutional Market Neutral Fund commenced operations on
    12/31/98. These returns reflect lower operating expenses than those of the
    fund. Therefore, the fund's returns would have been lower had it existed
    during the same period.


(2)  The fund's fiscal year end 5/31.


     (3) Reflects an agreement  dated 8/1/00 by Morgan Guaranty Trust Company of
New York ("Morgan Guaranty"), an affiliate of J.P. Morgan, to reimburse the fund
to  the  extent   operating   expenses  (which  exclude   interest,   taxes  and
extraordinary  expenses)  exceed  1.45% of the fund's  average  daily net assets
through 9/30/01.


                                             J.P. MORGAN MARKET NEUTRAL FUND | 3
<PAGE>

U.S. EQUITY 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 approximately 420 analysts and portfolio
managers around the world and has approximately $369 billion in assets under
management, including assets managed by the fund's advisor, J.P. Morgan
Investment Management Inc.

J.P. MORGAN 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


<PAGE>

[GRAPHIC OMITTED]
J.P. Morgan analysts develop proprietary
fundamental research

[GRAPHIC OMITTED]
Stocks in each industry are ranked
with the help of models

[GRAPHIC OMITTED]
Using research and valuations,
the fund's management team
chooses stocks for the fund


<PAGE>

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:

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 125 career equity analysts. The team of
analysts dedicated to U.S. equities includes more than 20 members, with an
average of over ten years of experience.

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.

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
<PAGE>

YOUR INVESTMENT
--------------------------------------------------------------------------------
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 $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 on the
  right.

For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-521-5411.


<PAGE>

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: Morgan Guaranty Trust Shareholder Services
  Account number: 000-73-836
  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 Transfer 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


<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 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.

o 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.

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 on a foreign exchange after the close of trading on
that exchange that would materially impact a security's value at the time the
fund calculates its NAV), 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.

--------------------------------------------------------------------------------
Shareholder Services Agent             Transfer Agent
Morgan Christiana Center               State Street Bank and Trust Company
J.P. Morgan Funds Services - 2/OPS3    P.O. Box 8411
500 Stanton Christiana Road            Boston, MA 02266-8411
Newark, DE 19713                       Attention: J.P. Morgan Funds Services
1-800-521-5411

Representatives are available 8:00 a.m. to 6:00 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, 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.

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.


<PAGE>
--------------------------------------------------------------------------------
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:

--------------------------------------------------------------------------------
Transaction                                     Tax status
--------------------------------------------------------------------------------
Income dividends                                Ordinary income
--------------------------------------------------------------------------------
Short-term capital gains                        Ordinary income
distributions
--------------------------------------------------------------------------------
Long-term capital gains                         Capital gains
distributions
--------------------------------------------------------------------------------
Sales or exchanges of shares                    Capital gains or losses
owned for more than one year
--------------------------------------------------------------------------------
Sales or exchanges of shares                    Gains are treated as ordinary
owned for one year or less                      income; 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


<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
1-800-521-5411. 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.

J.P. Morgan, subject to the expense reimbursements described earlier in this
prospectus, receives the following fees for investment advisory and other
services:

--------------------------------------------------------------------------------
Advisory services                              1.50% of the fund's
                                               average net assets
--------------------------------------------------------------------------------
Administrative services                        Fund's pro-rata portion of
(fee shared with Funds                         0.09% of the first $7 billion of
Distributor, Inc.)                             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.


<PAGE>

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.

<TABLE>
<CAPTION>
                   Annual Total Returns for the Year Ended December 31,
                          1991    1992      1993    1994    1995   1996    1997    1998    1999
<S>                       <C>     <C>       <C>     <C>     <C>    <C>     <C>     <C>      <C>

Private Account Composite 4.73%   15.80%   -1.11%  2.41%   5.61%  13.35%  3.96%   11.33%   0.43%
---------------------------------------------------------------------------------------------------
U.S. Treasury Bill        5.60%   3.51%    2.87%   3.90%   5.60%   5.21%  5.26%    4.86%   4.68%
---------------------------------------------------------------------------------------------------
</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

<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
securities, 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 and            o Stocks have generally                 o Under normal circumstances the fund plans to
  performance will fluctuate              outperformed more stable                remain fully invested, with at least 65% in
  in response to stock market             investments (such as bonds              stocks; stock investments may include U.S. and
  movements                               and cash equivalents) over              foreign common stocks, convertible securities,
                                          the long term                           preferred stocks, trust or partnership
o Adverse market conditions                                                       interests, warrants, rights, and investment
  may from time to time cause                                                     company securities
  the fund to take temporary
  defensive positions that are                                                  o The fund seeks to limit risk through
  inconsistent with its                                                              diversification
  principal investment
  strategies and may hinder                                                     o During periods of adverse market conditions, the
  the fund from achieving its                                                     fund has the option of investing up to 100% of
  investment objective                                                            assets in investment-grade short-term securities
-----------------------------------------------------------------------------------------------------------------------------------
Management choices

o The fund could underperform           o The fund could outperform             o J.P. Morgan focuses its active management on
  its benchmark due to its                its benchmark due to these              securities selection, the area where it believes
  securities and asset                    same choices                            its commitment to research can most enhance
  allocation choices                                                                 returns
-----------------------------------------------------------------------------------------------------------------------------------
Foreign investments

o Currency exchange rate                o Favorable exchange rate               o The fund anticipates that its total foreign
  movements could reduce gains            movements could generate                investments will not exceed 20% of assets
  or create losses                        gains or reduce losses
                                                                                o The fund actively manages the currency exposure
o The fund could lose money             o Foreign investments, which              of its foreign investments relative to its
  because of foreign                      represent a major portion of            benchmark, and may hedge back into the U.S.
  government actions,                     the world's securities,                 dollar from time to time (see also
  political instability, or               offer attractive potential                 "Derivatives")
  lack of adequate and                    performance and
  accurate information                    opportunities for
                                          diversification
-----------------------------------------------------------------------------------------------------------------------------------
Derivatives

o Derivatives such as futures,          o Hedges that correlate well            o The fund uses derivatives for hedging and for
  options, swaps and forward              with underlying positions               risk management (i.e., to establish or adjust
  foreign currency contracts              can reduce or eliminate                 exposure to particular securities, markets or
  that are used for hedging               losses at low cost                      currencies); risk management may include
  the portfolio or specific                                                       management of the fund's exposure relative to
  securities may not fully              o The fund could make money               its benchmark
  offset the underlying                   and protect against losses
  positions1 and this could               if management's analysis              o The fund only establishes hedges that it expects
  result in losses to the fund            proves correct                          will be highly correlated with underlying
  that would not otherwise                                                           positions
  have occurred                         o Derivatives that involve
                                          leverage could generate               o While the fund may use derivatives that
o Derivatives used for risk               substantial gains at low                incidentally involve leverage, it does not use
  management may not have the             cost                                    them for the specific purpose of leveraging its
  intended effects and may                                                           portfolio
  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
-----------------------------------------------------------------------------------------------------------------------------------
</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 changes in the value of a securities index. An option is the right
    to buy or sell a set quantity of an underlying instrument at a
    pre-determined 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.

10 | FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Potential risks                         Potential rewards                       Policies to balance risk and
reward
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                     <C>
Illiquid holdings

o The fund could have                   o These holdings may offer              o The fund may not invest more than 15% of net
  difficulty valuing these                more attractive yields or               assets in illiquid holdings
  holdings precisely                      potential growth than
                                          comparable widely traded              o To maintain adequate liquidity to meet
o The fund could be unable to             securities                              redemptions, the fund may hold investment-grade
  sell these holdings at the                                                      short-term securities (including repurchase
  time or price it desires                                                        agreements and reverse 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 advantage           o The fund uses segregated accounts to offset
  securities before issue or              of attractive transaction               leverage risk
  for delayed delivery, it                opportunities
  could be exposed to leverage
  risk if it does not use
  segregated accounts
-----------------------------------------------------------------------------------------------------------------------------------
Short-term trading

o Increased trading would               o The fund could realize gains          o The fund generally avoids short-term trading,
  raise the fund's brokerage              in a short period of time               except to take advantage of attractive or
  and related costs                                                               unexpected opportunities or to meet demands
                                        o A fund could protect against            generated by shareholder activity. The portfolio
o Increased short-term capital            losses if a stock is                    turnover rate for the Institutional shares of
  gains distributions would               overvalued and its value                the fund for the fiscal year ended 5/31/00 was
  raise shareholders' income              later falls                             165%
  tax liability
-----------------------------------------------------------------------------------------------------------------------------------
Short selling

o Short sales may not have the          o The fund could make money             o The fund will not engage in short selling if the
  intended effects and may                and protect against losses              total market value of all securities sold short
  result in losses                        if management's analysis                would exceed 100% of the fund's net assets
                                          proves correct
o The fund may not be able to                                                   o The fund sets aside liquid assets in segregated
  close out a short position            o Short selling may allow the             or broker accounts to cover short positions and
  at a particular time or at              fund to generate positive               offset a portion of the leverage risk
  an acceptable price                     returns in declining markets
                                                                                o The fund makes short sales through a broker that
o The fund may not be able to                                                     Morgan has determined to be highly creditworthy
  borrow certain securities to
  sell short, resulting in
  missed opportunities

o Segregated accounts with
  respect to short sales may
  limit the fund's investment
  flexibility

o Short sales involve leverage
  risk, credit exposure to the
  brokers that execute the
  short sale and retain the
  proceeds, have no cap on
  maximum losses, and gains
  are limited to the price of
  the stock at the time of the
  short sale

o If the SEC staff changed its
  current policy of permitting
  brokers executing the fund's
  short sales to hold the
  proceeds of such short
  sales, the cost of such
  transactions would increase
  significantly and the fund
  may be required to cease
  operations or change its
  investment objective
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                               FUND DETAILS | 11
<PAGE>

                    (THIS PAGE IS INTENTIONALLY LEFT BLANK)



<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 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 Funds
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713

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. (1-202-942-8090) 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 MUTUAL FUNDS AND THE MORGAN TRADITION
J.P. Morgan mutual funds combine a heritage of integrity and financial
leadership with comprehensive, sophisticated analysis and techniques. Drawing on
J.P. Morgan's extensive experience and depth as an investment manager, J.P.
Morgan mutual funds offer a broad array of distinctive opportunities for mutual
fund investors.

JPMorgan
--------------------------------------------------------------------------------
J.P. Morgan Series Trust

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

<PAGE>








                            J.P. MORGAN SERIES TRUST


                         J.P. MORGAN MARKET NEUTRAL FUND
                              INSTITUTIONAL SHARES
                                  SELECT SHARES

                       STATEMENT OF ADDITIONAL INFORMATION





                                 AUGUST 1, 2000












THIS  STATEMENT OF  ADDITIONAL  INFORMATION  IS NOT A  PROSPECTUS,  BUT CONTAINS
ADDITIONAL  INFORMATION  WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
OF THE J.P.  MORGAN MARKET NEUTRAL FUND (SELECT SHARES) DATED AUGUST 1, 2000 AND
J.P.  MORGAN  INSTITUTIONAL  MARKET  NEUTRAL  FUND:  INSTITUTIONAL  SHARES DATED
OCTOBER 1, 1999 AS REVISED  MARCH 3, 2000,  AS  SUPPLEMENTED  FROM TIME TO TIME.
ADDITIONALLY, THIS STATEMENT OF ADDITIONAL INFORMATION INCORPORATES BY REFERENCE
THE FINANCIAL  STATEMENTS  INCLUDED IN THE  SHAREHOLDER  REPORT  RELATING TO THE
INSTITUTIONAL SHARES DATED MAY 31, 2000. THESE FINANCIAL  STATEMENTS,  INCLUDING
THE INDEPENDENT ACCOUNTANTS' REPORT THEREON, ARE AVAILABLE,  WITHOUT CHARGE UPON
REQUEST FROM FUNDS DISTRIBUTOR,  INC., ATTENTION: J.P. MORGAN SERIES TRUST (800)
221-7930.


<PAGE>


                            TABLE OF CONTENTS
                                                                        PAGE

GENERAL-----------------------------------------------------------------------1
INVESTMENT OBJECTIVES AND
POLICIES----------------------------------------------------------------------1
INVESTMENT
RESTRICTIONS------------------------------------------------------------------17
TRUSTEES, ADVISORY BOARD MEMBERS AND
OFFICERS--------------------------------------------------------------------19
CODE OF
ETHICS------------------------------------------------------------------------23
INVESTMENT
ADVISOR-----------------------------------------------------------------------24
DISTRIBUTOR-------------------------------------------------------------------26
CO-ADMINISTRATOR--------------------------------------------------------------26
SERVICES
AGENT-------------------------------------------------------------------------27
CUSTODIAN AND TRANSFER
AGENT-------------------------------------------------------------------------27
SHAREHOLDER
SERVICING--------------------------------------------------------------------28
INDEPENDENT
ACCOUNTANTS-------------------------------------------------------------------28
EXPENSES----------------------------------------------------------------------29
PURCHASE OF
SHARES------------------------------------------------------------------------29
REDEMPTION OF
SHARES------------------------------------------------------------------------30
EXCHANGE OF
SHARES------------------------------------------------------------------------31
DIVIDENDS AND
DISTRIBUTIONS----------------------------------------------------------------32
NET ASSET
VALUE-------------------------------------------------------------------------32
PERFORMANCE
DATA--------------------------------------------------------------------------33
PORTFOLIO
TRANSACTIONS------------------------------------------------------------------34
MASSACHUSETTS
TRUST-------------------------------------------------------------------------36
DESCRIPTION OF
SHARES------------------------------------------------------------------------36
TAXES-------------------------------------------------------------------------38
ADDITIONAL
INFORMATION-------------------------------------------------------------------41
FINANCIAL
STATEMENTS--------------------------------------------------------------------42
APPENDIX
A-----------------------------------------------------------------------------1



<PAGE>

         J.P. Morgan Market Neutral Fund (the "Fund") is a series of J.P. Morgan
Series  Trust,  an  open-end  management   investment  company  organized  as  a
Massachusetts  business trust (the "Trust").  To date, the Trustees of the Trust
have authorized the issuance of two classes of shares--Institutional  Shares and
Select Shares.

         This  Statement  of  Additional  Information  describes  the  financial
history, investment objective and policies, management and operation of the Fund
and provides additional  information with respect to the Fund and should be read
in  conjunction   with  the  Fund's  current   Prospectus  (the   "Prospectus").
Capitalized  terms not otherwise  defined  herein have the meanings  assigned to
them in the Prospectus.  The Trust's  executive  offices are located at 60 State
Street, Suite 1300, Boston, Massachusetts 02109.

     The Fund is advised by J.P. Morgan  Investment  Management Inc. ("JPMIM" or
the "Advisor").

         Shares of the Fund are not deposits or obligations of, or guaranteed or
  endorsed  by any bank.  Shares of the Fund are not  federally  insured  by the
  Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
  governmental  agency.  An  investment  in the Fund is subject to risk that may
  cause  the  value  of the  investment  to  fluctuate,  and at the  time  it is
  redeemed, be higher or lower than the amount originally invested.

INVESTMENT OBJECTIVES AND POLICIES

         The following discussion  supplements the information in the Prospectus
regarding the investment objective and policies of the Fund.

         The  Fund  is  designed  for   investors   seeking  long  term  capital
appreciation, while seeking to neutralize the risks of stock market investing.

         The  various  types of  securities  in which  the Fund may  invest  are
described below.

Investment Process for the Fund

         Duration  Management.  Duration  will  be  actively  managed  based  on
internal  economic  research,  forecasts of interest rates and their volatility,
and the shape of the yield curve. The portfolio's  duration will generally range
between 90 days to 18 months.

         Sector  Allocation.  The Advisor's Fixed Income Group recommends sector
allocation strategies.  Within each sector, the Advisor utilizes option adjusted
spread  analysis as one measure of sector  attractiveness.  Current spreads also
are judged against their historical norm. The Advisor utilizes market and credit
research to assess fair value and the likelihood of sector  spreads  widening or
narrowing.

         Security  Selection.  The Advisor  utilizes  its  extensive  credit and
quantitative research,  portfolio management and trading capabilities across all
fixed income  markets to select  securities.  Securities  will be selected based
upon the issuer's  ability to return  principal at a rate offering an attractive
return when compared to similar securities available in the marketplace.

         The  various  types of  securities  in which  the Fund may  invest  are
described below.

Equity Investments

---------The Fund invests primarily in equity securities consisting of U.S. and,
to a lesser  extent,  foreign  common  stocks and other  securities  with equity
characteristics  which are  comprised  of  preferred  stock,  warrants,  rights,
convertible securities, trust certifications,  limited partnership interests and
investment company securities  (collectively,  "Equity Securities").  The Equity
Securities   in   which   the  Fund   invests   may   include   exchange-traded,
over-the-counter  ("OTC") and unlisted common and preferred stocks. A discussion
of the various  types of equity  investments  that may be  purchased by the Fund
appears below. See also "Quality and Diversification Requirements."

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

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

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

Common Stock Warrants

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

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

Foreign Investments

         The  Fund  may  invest  up to 20% of its  total  assets  at the time of
purchase,  in  securities  of foreign  issuers.  This 20% limit is  designed  to
accommodate   the   increased   globalization   of  companies  as  well  as  the
re-domiciling  of companies  for tax  treatment  purposes.  It is not  currently
expected to be used to increase direct non-U.S. exposure.

         Investors  should  realize that the value of the Fund's  investments in
foreign  securities may be adversely  affected by changes in political or social
conditions,   diplomatic  relations,   confiscatory   taxation,   expropriation,
nationalization,  limitation on the removal of funds or assets, or imposition of
(or change in) exchange  control or tax regulations in those foreign  countries.
In  addition,  changes in  government  administrations  or  economic or monetary
policies  in the  United  States  or abroad  could  result  in  appreciation  or
depreciation of portfolio  securities and could favorably or unfavorably  affect
the Fund's operations.  Furthermore, the economies of individual foreign nations
may differ from the U.S.  economy,  whether  favorably or unfavorably,  in areas
such  as  growth  of  gross  national  product,   rate  of  inflation,   capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more  difficult  to  obtain  and  enforce a  judgment  against a foreign
issuer. Any foreign investments made by the Fund must be made in compliance with
U.S. and foreign currency  restrictions and tax laws restricting the amounts and
types of foreign investments.

         Foreign  investments  may be made  directly  in  securities  of foreign
issuers  or in the  form of  American  Depository  Receipts  ("ADRs"),  European
Depository  Receipts ("EDRs") and Global  Depository  Receipts ("GDRs") or other
similar securities of foreign issuers. ADRs are securities typically issued by a
U.S. financial institution (a "depository") that evidence ownership interests in
a security or a pool of securities issued by a foreign issuer and deposited with
the depository.  ADRs include  American  Depository  Shares and New York Shares.
EDRs are receipts issued by a European  financial  institution.  GDRs (sometimes
referred  to  as  Continental   Depository  Receipts  ("CDRs"))  are  securities
typically issued by a non-U.S.  financial  institution  that evidence  ownership
interests  in a  security  or a pool of  securities  issued by either a U.S.  or
foreign  issuer.  ADRs,  EDRs,  GDRs and CDRs may be  available  for  investment
through  "sponsored"  or  "unsponsored"  facilities.  A  sponsored  facility  is
established  jointly by the issuer of the security  underlying the receipt and a
depository,  whereas an unsponsored  facility may be established by a depository
without  participation  by the  issuer  of the  receipt's  underlying  security.
Generally, ADRs, in registered form, are designed for use in the U.S. securities
markets,  and EDRs, in bearer form, are designed for use in European  securities
markets.

     Holders of an unsponsored  depository  receipt  generally bear all costs of
the unsponsored  facility.  The depository of an unsponsored facility frequently
is under no obligation to distribute  shareholder  communications  received from
the issuer of the  deposited  security or to pass through  voting  rights to the
holders of the receipts with respect to the deposited securities. Short Selling

         The Fund will engage heavily in short selling.  In these  transactions,
the Fund sells a security  it does not own in  anticipation  of a decline in the
market value of the security. To complete the transaction,  the Fund must borrow
the security to make delivery to the buyer. The Fund is obligated to replace the
security  borrowed by purchasing it subsequently at the market price at the time
of  replacement.  The  price at such  time may be more or less than the price at
which the  security  was sold by the Fund,  which may  result in a loss or gain,
respectively.  Unlike purchasing a stock,  where potential losses are limited to
the purchase  price,  short sales have no cap on maximum  losses,  and gains are
limited to the price of the stock at the time of the short sale.

         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.  The fund
will not sell securities short if, after effect is given to any such short sale,
the total  market  value of all  securities  sold short would exceed 100% of the
Fund's net  assets.  The fund also may make short  sales  "against  the box," in
which the Fund enters  into a short sale of a security  which it owns or has the
right to obtain at no additional cost.

Additional Investments

         When-Issued  and Delayed  Delivery  Securities.  The Fund may  purchase
securities on a when-issued or delayed delivery basis. For example,  delivery of
and payment for these  securities  can take place a month or more after the date
of the purchase commitment. The purchase price and the interest rate payable, if
any, on the securities are fixed on the purchase  commitment date or at the time
the settlement date is fixed.  The value of such securities is subject to market
fluctuation  and no  interest  will  accrue to the Fund until  settlement  takes
place.  At the time the Fund makes the  commitment  to purchase  securities on a
when-issued  or delayed  delivery  basis,  it will  record the  transaction  and
reflect  the value  each day of such  securities  in  determining  its net asset
value. At the time of settlement,  a when-issued  security may be valued at less
than the purchase price. To facilitate such acquisitions, the Fund will maintain
with the custodian a segregated  account with liquid assets,  consisting of cash
or other liquid assets, in an amount at least equal to such commitments.  If the
Fund chooses to dispose of the right to acquire a when-issued  security prior to
its acquisition, it could (as with the disposition of any other fund obligation)
incur  a  gain  or  loss  due to  market  fluctuation.  Also,  the  Fund  may be
disadvantaged if the other party to the transaction defaults.

         Investment Company Securities. Securities of other investment companies
may be  acquired by the Fund to the extent  permitted  under the 1940 Act or any
order  pursuant  thereto.  These limits  currently  require  that, as determined
immediately  after a purchase is made,  (i) not more than 5% of the value of the
Fund's total  assets will be invested in the  securities  of any one  investment
company,  (ii)  not more  than 10% of the  value  of its  total  assets  will be
invested in the aggregate in securities of investment  companies as a group, and
(iii) not more than 3% of the  outstanding  voting  stock of any one  investment
company will be owned by the Fund,  provided  however,  that the Fund may invest
all of its investable assets in an open-end investment company that has the same
investment  objective  as the  Fund.  As a  shareholder  of  another  investment
company,  the Fund  would  bear,  along with  other  shareholders,  its pro rata
portion of the other investment  company's  expenses,  including  advisory fees.
These  expenses would be in addition to the advisory and other expenses that the
Fund bears directly in connection with its own operations.  The Fund has applied
for  exemptive  relief  from the SEC to permit the Fund to invest in  affiliated
investment companies. If the requested relief is granted, the Fund would then be
permitted to invest in affiliated funds, subject to certain conditions specified
in the applicable order.

     The  Securities  and  Exchange  Commission  ("SEC") has granted the Fund an
exemptive  order  permitting  it to  invest  its  uninvested  cash in any of the
following  affiliated money market funds: J.P. Morgan  Institutional Prime Money
Market Fund, J.P. Morgan Institutional Tax Exempt Money Market Fund, J.P. Morgan
Institutional  Federal Money Market Fund and J.P. Morgan Institutional  Treasury
Money Market Fund.  The order sets the  following  conditions:  (1) the Fund may
invest in one or more of the  permitted  money  market  funds up to an aggregate
limit of 25% of its assets;  and (2) the Advisor will waive and/or reimburse its
advisory fee from the Fund in an amount  sufficient to offset any doubling up of
investment advisory and shareholder servicing fees.

         Reverse  Repurchase  Agreements.   The  Fund  may  enter  into  reverse
repurchase  agreements.  In a reverse  repurchase  agreement,  the Fund  sells a
security and agrees to repurchase  the same  security at a mutually  agreed upon
date and  price  reflecting  the  interest  rate  effective  for the term of the
agreement.  For purposes of the 1940 Act a reverse repurchase  agreement is also
considered  as the  borrowing  of money by the Fund  and,  therefore,  a form of
leverage.  Leverage may cause any gains or losses for the Fund to be  magnified.
The Fund will  invest  the  proceeds  of  borrowings  under  reverse  repurchase
agreements. In addition, except for liquidity purposes, the Fund will enter into
a reverse repurchase agreement only when the expected return from the investment
of the  proceeds is greater than the expense of the  transaction.  The Fund will
not invest the  proceeds of a reverse  repurchase  agreement  for a period which
exceeds  the  duration  of the  reverse  repurchase  agreement.  The  Fund  will
establish and maintain  with the custodian a separate  account with a segregated
portfolio of securities in an amount at least equal to its purchase  obligations
under its  reverse  repurchase  agreements.  All forms of  borrowing  (including
reverse repurchase agreements, securities lending and mortgage dollar rolls) are
limited in the aggregate and may not exceed  33-1/3% of the Fund's total assets.
See "Investment Restrictions".

         Loans  of  Portfolio  Securities.  The  Fund is  permitted  to lend its
securities in an amount up to 33-1/3% of the value of the Fund's net assets. The
Fund may lend its securities if such loans are secured  continuously  by cash or
equivalent  collateral  or by a letter  of  credit in favor of the Fund at least
equal at all times to 100% of the market value of the  securities  loaned,  plus
accrued  interest.  While such securities are on loan, the borrower will pay the
Fund any income  accruing  thereon.  Loans will be subject to termination by the
Fund in the normal settlement time, (generally three business days after notice)
or by the borrower on one day's  notice.  Borrowed  securities  must be returned
when  the  loan is  terminated.  Any  gain or loss in the  market  price  of the
borrowed  securities  that occurs during the term of the loan inures to the Fund
and its  respective  shareholders.  The Fund  may pay  reasonable  finders'  and
custodial  fees in connection  with a loan. In addition,  the Fund will consider
all facts and  circumstances  before entering into such an agreement,  including
the creditworthiness of the borrowing financial  institution,  and the Fund will
not make any loans in excess of one year.  The Fund will not lend its securities
to any  officer,  Trustee,  Member of Advisory of Board,  Director,  employee or
other  affiliate  of the Fund,  the  Advisor or the Fund's  distributor,  unless
otherwise permitted by applicable law. All forms of borrowing (including reverse
repurchase agreement, securities lending aand mortgage dollar rolls) are limited
in the aggregate and must not exceed 33-1/3% of the fund's total assets.

         Illiquid   Investments;   Privately   Placed  and  Other   Unregistered
Securities.  The Fund may not acquire any  illiquid  securities  if, as a result
thereof,  more  than 15% of its net  assets  would be in  illiquid  investments.
Subject  to  this  non-fundamental  policy  limitation,  the  Fund  may  acquire
investments that are illiquid or have limited liquidity, such as certain private
placements or investments  that are not  registered  under the Securities Act of
1933, as amended (the "1933 Act"),  and cannot be offered for public sale in the
United  States  without first being  registered  under the 1933 Act. An illiquid
investment is any investment that cannot be disposed of within seven days in the
normal course of business at  approximately  the amount at which it is valued by
the Fund.  The price the Fund pays for  illiquid  securities  or  receives  upon
resale may be lower than the price paid or received for similar  securities with
a more liquid  market.  Accordingly,  the  valuation  of these  securities  will
reflect any limitations on their liquidity.

         As to illiquid  investments,  these restricted  holdings are subject to
the risk that the Fund  will not be able to sell them at a price the Fund  deems
representative of their value. If a restricted  holding must be registered under
the 1933 Act,  before it may be sold,  the Fund may be  obligated  to pay all or
part of the  registration  expenses.  Also,  a  considerable  period  may elapse
between the time of the  decision to sell and the time the Fund is  permitted to
sell a holding  under an  effective  registration  statement.  If during  such a
period adverse market  conditions were to develop,  the Fund might obtain a less
favorable price than prevailed when it decided to sell.

Money Market Instruments

         Although the Fund intends, under normal circumstances and to the extent
practicable,  to be fully invested in equity securities,  the Fund may invest in
money  market  instruments  to  invest  temporary  cash  balances,  to  maintain
liquidity  to  meet  redemptions  or  as  a  defensive  measure  during,  or  in
anticipation of, adverse market  conditions.  A description of the various types
of money market instruments that may be purchased by the Fund appears below. See
"Quality and Diversification Requirements."

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

         Additional  U.S.  Government  Obligations.   The  Fund  may  invest  in
obligations   issued   or   guaranteed   by   U.S.    Government   agencies   or
instrumentalities. These obligations may or may not be backed by the "full faith
and credit" of the United States.  Securities which are backed by the full faith
and credit of the United States include  obligations of the Government  National
Mortgage  Association,  the Farmers Home  Administration  and the  Export-Import
Bank. In the case of  securities  not backed by the full faith and credit of the
United States,  the Fund must look  principally to the federal agency issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a  claim   against  the  United  States  itself  in  the  event  the  agency  or
instrumentality does not meet its commitments.  Securities in which the Fund may
invest  that are not backed by the full  faith and  credit of the United  States
include,  but are not  limited  to:  (i)  obligations  of the  Tennessee  Valley
Authority,  the Federal Home Loan  Mortgage  Corporation,  the Federal Home Loan
Banks and the U.S.  Postal  Service,  each of which has the right to borrow from
the U.S. Treasury to meet its obligations; (ii) securities issued by the Federal
National  Mortgage  Association,   which  are  supported  by  the  discretionary
authority of the U.S. Government to purchase the agency's obligations; and (iii)
obligations  of the Federal Farm Credit  System and the Student  Loan  Marketing
Association,  each of whose  obligations may be satisfied only by the individual
credit of the issuing agency.

         Bank Obligations.  Unless otherwise noted below, the Fund may invest in
negotiable  certificates of deposit,  time deposits and bankers'  acceptances of
(i) banks,  savings and loan associations and savings banks which have more than
$2 billion in total assets and are organized under the laws of the United States
or any state,  (ii)  foreign  branches  of these  banks or of  foreign  banks of
equivalent  size (Euros) and (iii) U.S.  branches of foreign banks of equivalent
size  (Yankees).  The Fund will not invest in obligations for which the Advisor,
or any of its affiliated persons, is the ultimate obligor or accepting bank. The
Fund may also  invest  in  obligations  of  international  banking  institutions
designated   or  supported   by  national   governments   to  promote   economic
reconstruction,  development  or  trade  between  nations  (e.g.,  the  European
Investment Bank, the Inter-American Development Bank, or the World Bank).

         Commercial  Paper. The Fund may invest in commercial  paper,  including
master  demand  obligations.  Master demand  obligations  are  obligations  that
provide for a periodic  adjustment  in the  interest  rate paid and permit daily
changes in the amount  borrowed.  Master  demand  obligations  are  governed  by
agreements  between  the issuer and Morgan  Guaranty  Trust  Company of New York
("Morgan"),  an affiliate of the Advisor acting as agent, for no additional fee.
The monies loaned to the borrower  come from  accounts  managed by Morgan or its
affiliates,  pursuant to arrangements with such accounts. Interest and principal
payments  are  credited  to such  accounts.  Morgan has the right to increase or
decrease the amount  provided to the borrower under an obligation.  The borrower
has the right to pay  without  penalty all or any part of the  principal  amount
then outstanding on an obligation together with interest to the date of payment.
Since these obligations  typically provide that the interest rate is tied to the
Federal  Reserve  commercial  paper  composite  rate,  the rate on master demand
obligations  is subject to change.  Repayment of a master  demand  obligation to
participating accounts depends on the ability of the borrower to pay the accrued
interest  and  principal  of the  obligation  on demand,  which is  continuously
monitored by Morgan. Since master demand obligations  typically are not rated by
credit rating agencies, the Fund may invest in such unrated obligations only if,
at the time of investment, the obligation is determined by the Advisor to have a
credit quality which satisfies the Fund's quality restrictions. See "Quality and
Diversification  Requirements." Although there is no secondary market for master
demand  obligations,  such  obligations  are considered by the Fund to be liquid
because  they are  payable  upon  demand.  The Fund  does not have any  specific
percentage  limitation  on  investments  in  master  demand  obligations.  It is
possible  that the  issuer of a master  demand  obligation  could be a client of
Morgan to whom Morgan, in its capacity as a commercial bank, has made a loan.

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

Quality and Diversification Requirements

         The Fund intends to meet the  diversification  requirements of the 1940
Act. Current 1940 Act diversification  requirements require that with respect to
75% of the assets of the Fund:  (1) the Fund may not invest  more than 5% of its
total assets in the securities of any one issuer, except obligations of the U.S.
Government,  its  agencies and  instrumentalities,  and (2) the Fund may not own
more than 10% of the outstanding voting securities of any one issuer. As for the
other 25% of the Fund's assets not subject to the  limitation  described  above,
there is no limitation on investment of these assets under the 1940 Act, so that
all of such assets may be invested in securities of any one issuer.  Investments
not subject to the  limitations  described above could involve an increased risk
to the Fund should an issuer, or a state or its related  entities,  be unable to
make  interest  or  principal  payments  or  should  the  market  value  of such
securities decline.

     The Fund will also comply with the diversification  requirements imposed by
the Internal Revenue Code of 1986, as amended (the "Code"), for qualification as
a regulated investment company. See "Taxes."

         The Fund may invest in convertible debt securities, for which there are
no specific quality  requirements.  In addition, at the time the Fund invests in
any commercial paper, bank obligation or repurchase  agreement,  the issuer must
have  outstanding  debt rated A or higher by  Moody's  Investors  Service,  Inc.
("Moody's")  or Standard & Poor's  Ratings Group  ("S&P"),  the issuer's  parent
corporation,  if any, must have  outstanding  commercial  paper rated Prime-1 by
Moody's or A-1 by S&P, or if no such ratings are available,  the investment must
be of comparable quality in the Advisor's opinion.  At the time the Fund invests
in any  other  short-term  debt  securities,  they  must be rated A or higher by
Moody's or S&P, or if unrated,  the investment must be of comparable  quality in
the Advisor's opinion.

         In  determining  suitability  of  investment  in a  particular  unrated
security,  the Advisor takes into consideration asset and debt service coverage,
the purpose of the  financing,  history of the issuer,  existence of other rated
securities of the issuer, and other relevant  conditions,  such as comparability
to other issuers.

Options and Futures Transactions

     The Fund  may use  futures  contracts  and  options  for  hedging  and risk
management  purposes.  See "Risk Management" below. The Fund may not use futures
contracts and options for speculation.

         The Fund may use options and futures  contracts  to manage its exposure
to changing  security  prices.  Some options and futures  strategies,  including
selling futures contracts and buying puts, tend to hedge the Fund's  investments
against  price   fluctuations.   Other  strategies,   including  buying  futures
contracts,  writing puts and calls,  and buying calls,  tend to increase  market
exposure.  Options and futures contracts may be combined with each other or with
forward contracts in order to adjust the risk and return  characteristics of the
Fund's  overall  strategy  in a manner  deemed  appropriate  to the  Advisor and
consistent  with the Fund's  objective and policies.  Because  combined  options
positions involve multiple trades,  they result in higher  transaction costs and
may be more difficult to open and close out.

         The use of options and futures is a highly  specialized  activity which
involves  investment  strategies and risks different from those  associated with
ordinary portfolio securities  transactions,  and there can be no guarantee that
their use will increase the Fund's return. While the use of these instruments by
the  Fund  may  reduce  certain  risks  associated  with  owning  its  portfolio
securities,  these  techniques  themselves  entail  certain other risks.  If the
Advisor applies a strategy at an inappropriate  time or judges market conditions
or trends  incorrectly,  options  and  futures  strategies  may lower the Fund's
return.  Certain  strategies limit the Fund's  possibilities to realize gains as
well as limiting its exposure to losses.  The Fund could also experience  losses
if the prices of its options and futures  positions were poorly  correlated with
its other investments,  or if it could not close out its positions because of an
illiquid  secondary market. In addition,  the Fund will incur transaction costs,
including  trading  commissions  and option  premiums,  in  connection  with its
futures and options  transactions  and these  transactions  could  significantly
increase the Fund's turnover rate.

         The Fund may purchase put and call  options on  securities,  indexes of
securities and futures contracts,  or purchase and sell futures contracts,  only
if such options are written by other persons and if (i) the  aggregate  premiums
paid on all such  options  which are held at any time do not  exceed  20% of the
Fund's net assets,  and (ii) the aggregate margin deposits  required on all such
futures or options thereon held at any time do not exceed 5% of the Fund's total
assets.

Options

         Purchasing Put and Call Options.  By purchasing a put option,  the Fund
obtains the right (but not the obligation) to sell the instrument underlying the
option at a fixed  strike  price.  In return for this  right,  the Fund pays the
current market price for the option (known as the option premium).  Options have
various types of underlying instruments,  including specific securities, indexes
of securities, indexes of securities prices, and futures contracts. The Fund may
terminate its position in a put option it has purchased by allowing it to expire
or by exercising the option.  The Fund also may close out a put option  position
by entering into an offsetting  transaction,  if a liquid market exists.  If the
option is allowed to expire,  the Fund will lose the entire  premium it paid. If
the Fund  exercises  a put  option on a  security,  it will sell the  instrument
underlying the option at the strike price. If the Fund exercises an option on an
index, settlement is in cash and does not involve the actual sale of securities.
If an  option  is  American  style,  it may be  exercised  on any  day up to its
expiration  date. A European  style  option may be  exercised on its  expiration
date.

         The buyer of a typical  put  option can expect to realize a gain if the
price of the underlying instrument falls substantially. However, if the price of
the instrument  underlying the option does not fall enough to offset the cost of
purchasing  the option,  a put buyer can expect to suffer a loss (limited to the
amount of the premium paid, plus related transaction costs).

         The features of call options are  essentially  the same as those of put
options,  except  that the  purchaser  of a call  option  obtains  the  right to
purchase, rather than sell, the instrument underlying the option at the option's
strike price. A call buyer typically  attempts to participate in potential price
increases of the instrument  underlying the option with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise  sufficiently to offset the cost of
the option.

         Selling  (Writing)  Put and Call  Options.  When the Fund  writes a put
option,  it  takes  the  opposite  side of the  transaction  from  the  option's
purchaser. In return for receipt of the premium, the Fund assumes the obligation
to pay the strike price for the  instrument  underlying  the option if the other
party to the option  chooses to exercise it. The Fund may seek to terminate  its
position in a put option it writes  before  exercise by purchasing an offsetting
option in the market at its current price. If the market is not liquid for a put
option the Fund has written,  however,  the Fund must continue to be prepared to
pay the  strike  price  while the  option is  outstanding,  regardless  of price
changes, and must continue to post margin as discussed below.

         If the price of the  underlying  instrument  rises,  a put writer would
generally expect to profit,  although its gain would be limited to the amount of
the premium it received.  If security  prices  remain the same over time,  it is
likely that the writer also will profit,  because it should be able to close out
the option at a lower  price.  If security  prices  fall,  the put writer  would
expect to suffer a loss.  This loss should be less than the loss from purchasing
and holding the underlying  instrument  directly,  however,  because the premium
received for writing the option should offset a portion of the decline.

         Writing  a call  option  obligates  the  Fund to sell  or  deliver  the
option's  underlying  instrument in return for the strike price upon exercise of
the option. The  characteristics of writing call options are similar to those of
writing put  options,  except  that  writing  calls  generally  is a  profitable
strategy  if prices  remain  the same or fall.  Through  receipt  of the  option
premium,  a call writer  offsets part of the effect of a price  decline.  At the
same time,  because a call writer  must be  prepared  to deliver the  underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

         The writer of an exchange  traded put or call option on a security,  an
index of  securities  or a futures  contract  is  required  to  deposit  cash or
securities  or a letter of credit as margin and to make mark to market  payments
of variation margin as the position becomes unprofitable.

         Options  on  Indexes.  Options on  securities  indexes  are  similar to
options on securities,  except that the exercise of securities  index options is
settled by cash  payment  and does not  involve  the actual  purchase or sale of
securities.   In  addition,   these   options  are  designed  to  reflect  price
fluctuations in a group of securities or segment of the securities market rather
than price fluctuations in a single security. The Fund, in purchasing or selling
index options, is subject to the risk that the value of its portfolio securities
may not change as much as an index because the Fund's investments generally will
not match the composition of an index.

         For a number of  reasons,  a liquid  market  may not exist and thus the
Fund  may not be  able  to  close  out an  option  position  into  which  it has
previously entered. When the Fund purchases an OTC option (as defined below), it
will be relying on its counterparty to perform its obligations, and the Fund may
incur additional losses if the counterparty is unable to perform.

         Exchange Traded and OTC Options.  All options  purchased or sold by the
Funds will be traded on a  securities  exchange or will be  purchased or sold by
securities  dealers ("OTC  options")  that meet the  Advisor's  creditworthiness
standards  credit  guidelines  approved by the Advisor.  While  exchange  traded
options are obligations of the Options Clearing Corporation,  in the case of OTC
options,  the Fund  relies on the dealer from which it  purchased  the option to
perform if the option is exercised. Thus, when the Fund purchases an OTC option,
it relies on the  dealer  from  which it  purchased  the  option to make or take
delivery  of the  underlying  securities.  Failure  by the dealer to do so would
result  in the loss of the  premium  paid by the Fund as well as the loss of the
expected benefit of the transaction.

         Provided that the Fund has arrangements  with certain qualified dealers
who agree that the Fund may  repurchase any option it writes for a maximum price
to be calculated by a predetermined  formula,  the Fund may treat the underlying
securities used to cover written OTC options as liquid.  In these cases, the OTC
option itself would only be  considered  illiquid to the extent that the maximum
repurchase price under the formula exceeds the intrinsic value of the option.

        Futures  Contracts  and  Options  on  Futures  Contracts.  The Fund may
purchase or sell  (write)  futures  contracts  and purchase or sell put and call
options,  including put and call options on futures contracts.  In addition, the
Fund may sell  (write)  put and call  options,  including  options  on  futures.
Futures contracts  obligate the buyer to take and the seller to make delivery at
a future date of a specified quantity of a financial  instrument or an amount of
cash based on the value of a securities index. Currently,  futures contracts are
available  on  various  types of fixed  income  securities,  including,  but not
limited to, U.S.  Treasury bonds,  notes and bills,  Eurodollar  certificates of
deposit  and on  indexes  of fixed  income  securities  and  indexes  of  equity
securities.

         Unlike a futures contract, which requires the parties to buy and sell a
security  or make a cash  settlement  payment  based on changes  in a  financial
instrument  or  securities  index on an  agreed  date,  an  option  on a futures
contract  entitles  its holder to decide on or before a future  date  whether to
enter into such a contract.  If the holder  decides not to exercise  its option,
the holder may close out the option  position  by  entering  into an  offsetting
transaction  or may decide to let the  option  expire and  forfeit  the  premium
thereon. The purchaser of an option on a futures contract pays a premium for the
option but makes no initial  margin  payments  or daily  payments of cash in the
nature of "variation"  margin payments to reflect the change in the value of the
underlying contract as does a purchaser or seller of a futures contract.

         The seller of an option on a futures contract receives the premium paid
by the purchaser and may be required to pay initial margin. Amounts equal to the
initial margin and any additional  collateral required on any options on futures
contracts  sold by the Fund are paid by the Fund into a segregated  account,  in
the name of the Futures Commission Merchant, as required by the 1940 Act and the
interpretations of the SEC thereunder.

         Combined Positions. The Fund is permitted to purchase and write options
in combination with other series of the Trust, or in combination with futures or
forward contracts,  to adjust the risk and return characteristics of the overall
position.  For  example,  the Fund may  purchase  a put  option and write a call
option on the same  underlying  instrument,  in order to  construct  a  combined
position whose risk and return  characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call option
at one  strike  price and  buying a call  option at a lower  price,  in order to
reduce the risk of the written call option in the event of a  substantial  price
increase.  Because combined  options  positions  involve  multiple trades,  they
result in higher  transaction  costs and may be more difficult to open and close
out.

         Correlation  of Price  Changes.  Because there are a limited  number of
types of exchange  traded options and futures  contracts,  it is likely that the
standardized  options and futures contracts  available will not match the Fund's
current or anticipated  investments  exactly. The Fund may invest in options and
futures  contracts based on securities with different  issuers,  maturities,  or
other  characteristics from the securities in which it typically invests,  which
involves  a risk  that the  options  or  futures  position  will not  track  the
performance of the Fund's other investments.

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

         Liquidity  of Options and Futures  Contracts.  There is no  assurance a
liquid market will exist for any  particular  option or futures  contract at any
particular  time even if the  contract is traded on an  exchange.  In  addition,
exchanges may establish daily price  fluctuation  limits for options and futures
contracts and may halt trading if a contract's  price moves up or down more than
the limit in a given day. On volatile  trading  days when the price  fluctuation
limit is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the market for a
contract is not liquid  because of price  fluctuation  limits or  otherwise,  it
could prevent prompt liquidation of unfavorable positions, and could potentially
require  the Fund to continue to hold a position  until  delivery or  expiration
regardless  of  changes in its value.  As a result,  the Fund's  access to other
assets held to cover its options or futures  positions  also could be  impaired.
See "Exchange Traded and OTC Options" above for a discussion of the liquidity of
options not traded on an exchange.

         Position Limits.  Futures exchanges can limit the number of futures and
options on futures  contracts that can be held or controlled by an entity. If an
adequate  exemption cannot be obtained,  the Fund or the Advisor may be required
to reduce the size of its futures and  options  positions  or may not be able to
trade a certain  futures or options  contract in order to avoid  exceeding  such
limits.

         Asset Coverage for Futures  Contracts and Options  Positions.  Although
the Fund will not be commodity pools,  certain  derivatives  subject the Fund to
the rules of the Commodity Futures Trading  Commission which limit the extent to
which the Fund can  invest in such  derivatives.  The Fund may invest in futures
contracts and options with respect thereto for hedging  purposes  without limit.
However,  the Fund may not  invest  in such  contracts  and  options  for  other
purposes if the sum of the amount of initial  margin  deposits and premiums paid
for unexpired  options with respect to such contracts,  other than for bona fide
hedging  purposes,  exceeds 5% of the  liquidation  value of the Fund's  assets,
after  taking into  account  unrealized  profits and  unrealized  losses on such
contracts and options; provided,  however, that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the 5% limitation.

         In addition,  the Fund will comply with  guidelines  established by the
SEC with respect to coverage of options and futures  contracts by mutual  funds,
and if the guidelines so require,  will set aside appropriate liquid assets in a
segregated  custodial  account in the amount  prescribed.  Securities  held in a
segregated  account  cannot be sold  while  the  futures  contract  or option is
outstanding,  unless they are replaced with other suitable assets.  As a result,
there is a  possibility  that  segregation  of a large  percentage of the Fund's
assets  could  impede  portfolio  management  or  the  Fund's  ability  to  meet
redemption requests or other current obligations.

Swaps and Related Swap Products

         The Fund may engage in swap  transactions,  including,  but not limited
to, interest rate,  currency,  securities index,  basket,  specific security and
commodity swaps,  interest rate caps, floors and collars and options on interest
rate swaps (collectively defined as "swap transactions").

         The Fund  may  enter  into  swap  transactions  for any  legal  purpose
consistent with its investment  objective and policies,  such as for the purpose
of  attempting  to obtain or preserve a  particular  return or spread at a lower
cost than  obtaining  that return or spread  through  purchases  and/or sales of
instruments in cash markets,  to protect  against  currency  fluctuations,  as a
duration management  technique,  to protect against any increase in the price of
securities the Fund anticipates  purchasing at a later date, or to gain exposure
to certain matters in the most  economical way possible.  The Fund will not sell
interest rate caps, floors or collars if it does not own securities with coupons
which provide the interest that the Fund may be required to pay.

         Swap  agreements  are  two-party  contracts  entered into  primarily by
institutional  counterparties  for periods  ranging  from a few weeks to several
years. In a standard swap transaction, two parties agree to exchange the returns
(or  differentials  in rates of  return)  that  would be earned or  realized  on
specified notional investments or instruments. The gross returns to be exchanged
or  "swapped"  between the parties are  calculated  by  reference to a "notional
amount," i.e., the return on or increase in value of a particular  dollar amount
invested at a particular  interest  rate,  in a particular  foreign  currency or
commodity,  or in a "basket" of securities  representing a particular index. The
purchaser of an interest rate cap or floor, upon payment of a fee, has the right
to receive payments (and the seller of the cap is obligated to make payments) to
the extent a specified  interest  rate exceeds (in the case of a cap) or is less
than (in the case of a floor) a specified level over a specified  period of time
or at specified dates. The purchaser of an interest rate collar, upon payment of
a fee,  has the right to  receive  payments  (and the  seller  of the  collar is
obligated to make  payments) to the extent that  specified  interest  rate falls
outside an agreed  upon range over a  specified  period of time or at  specified
dates. The purchase of an option on an interest rate swap, upon payment of a fee
(either  at the time of  purchase  or in the form of  higher  payments  or lower
receipts within an interest rate swap  transaction)  has the right,  but not the
obligation,  to  initiate a new swap  transaction  of a  pre-specified  notional
amount  with  pre-specified   terms  with  the  seller  of  the  option  as  the
counterparty.

         The "notional  amount" of a swap  transaction  is the agreed upon basis
for  calculating  the payments  that the parties  have agreed to  exchange.  For
example,  one swap  counterparty  may agree to pay a floating  rate of  interest
(e.g., three month LIBOR) calculated based on a $10 million notional amount on a
quarterly basis in exchange for receipt of payments calculated based on the same
notional  amount and a fixed rate of interest  on a  semi-annual  basis.  In the
event the Fund is obligated to make  payments more  frequently  than it receives
payments from the other party, it will incur incremental credit exposure to that
swap  counterparty.  This  risk  may be  mitigated  somewhat  by the use of swap
agreements  which call for a net payment to be made by the party with the larger
payment  obligation  when the  obligations  of the parties  fall due on the same
date.  Under most swap  agreements  entered  into by the Fund,  payments  by the
parties will be exchanged on a "net basis," and the Fund will receive or pay, as
the case may be, only the net amount of the two payments.

         The amount of the Fund's potential gain or loss on any swap transaction
is not  subject to any fixed  limit.  Nor is there any fixed limit on the Fund's
potential loss if it sells a cap or collar.  If the Fund buys a cap,  floor,  or
collar,  however,  the Fund's potential loss is limited to the amount of the fee
that it has paid.  When measured  against the initial amount of cash required to
initiate  the  transaction,  which  is  typically  zero  in  the  case  of  most
conventional swap transactions,  swaps, caps, floors and collars tend to be more
volatile than many other types of instruments.

         The  use of  swap  transactions,  caps,  floors  and  collars  involves
investment  techniques and risks which are different from those  associated with
portfolio security transactions. If the Advisor is incorrect in its forecasts of
market values,  interest rates,  and other  applicable  factors,  the investment
performance of the Fund will be less favorable than if these  techniques had not
been used. These instruments typically are not traded on exchanges. Accordingly,
there is a risk that the other  party to certain of these  instruments  will not
perform its obligations to the Fund or that the Fund may be unable to enter into
offsetting  positions to terminate its exposure or liquidate its position  under
certain of these  instruments  when it wishes to do so. Such  occurrences  could
result in losses to the Fund.

         The Advisor will, however, consider such risks and will enter into swap
and other derivative  transactions  only when it believes that the risks are not
unreasonable.

         The Fund will maintain  cash or liquid  assets in a segregated  account
with its  custodian  in an amount  sufficient  at all times to cover its current
obligations under its swap transactions,  caps, floors and collars.  If the Fund
enters into a swap agreement on a net basis, it will segregate assets with daily
value at least equal to the excess,  if any, of the Fund's  accrued  obligations
under the swap agreement over the accrued amount the Fund is entitled to receive
under the  agreement.  If the Fund enters into a swap  agreement on other than a
net basis,  or sells a cap,  floor or collar,  it will  segregate  assets with a
daily value at least equal to the full  amount of a Fund's  accrued  obligations
under the agreement.

         The Fund will not  enter  into any swap  transaction,  cap,  floor,  or
collar, unless the counterparty to the transaction is deemed creditworthy by the
Advisor.  If a counterparty  defaults,  the Fund may have  contractual  remedies
pursuant to the agreements related to the transaction. The swap markets in which
many types of swap  transactions  are traded have grown  substantially in recent
years, with a large number of banks and investment  banking firms acting both as
principals and as agents using standardized swap documentation. As a result, the
markets  for  certain  types of swaps  (e.g.,  interest  rate swaps) have become
relatively  liquid.  The markets for some types of caps,  floors and collars are
less liquid.

         The liquidity of swap transactions, caps, floors and collars will be as
set forth in guidelines  established by the Advisor and approved by the Trustees
which are based on various  factors,  including (1) the  availability  of dealer
quotations  and the estimated  transaction  volume for the  instrument,  (2) the
number of dealers and end users for the instrument in the  marketplace,  (3) the
level of market making by dealers in the type of  instrument,  (4) the nature of
the  instrument  (including  any right of a party to terminate it on demand) and
(5) the nature of the marketplace for trades (including the ability to assign or
offset the Fund's  rights and  obligations  relating  to the  instrument).  Such
determination  will govern whether the instrument  will be deemed within the 15%
restriction on investments in securities that are not readily marketable.

         During the term of a swap,  cap, floor or collar,  changes in the value
of the  instrument  are  recognized as unrealized  gains or losses by marking to
market to reflect the market value of the  instrument.  When the  instrument  is
terminated,  the  Fund  will  record  a  realized  gain  or  loss  equal  to the
difference,  if any,  between  the  proceeds  from  (or  cost  of)  the  closing
transaction and the Fund's basis in the contract.

         The federal  income tax  treatment  with respect to swap  transactions,
caps, floors, and collars may impose limitations on the extent to which the Fund
may engage in such transactions.

Risk Management

         The  Fund may  employ  non-hedging  risk  management  techniques.  Risk
management strategies are used to keep the Fund fully invested and to reduce the
transaction  costs  associated  with cash  flows  into and out of the Fund.  The
objective  where  equity  futures  are used to  "equitize"  cash is to match the
notional value of all futures contracts to the Fund's cash balance. The notional
value of futures and of the cash is monitored  daily. As the cash is invested in
securities  and/or  paid  out  to  participants  in  redemptions,   the  Advisor
simultaneously adjusts the futures positions.  Through such procedures, the Fund
not only gains equity  exposure from the use of futures,  but also benefits from
increased  flexibility  in responding  to client cash flow needs.  Additionally,
because it can be less  expensive to trade a list of  securities as a package or
program trade rather than as a group of  individual  orders,  futures  provide a
means through which  transaction  costs can be reduced.  Such  non-hedging  risk
management  techniques are not  speculative,  but because they involve  leverage
include, as do all leveraged transactions,  the possibility of losses as well as
gains that are greater than if these  techniques  involved the purchase and sale
of the securities themselves rather than their synthetic derivatives.

Portfolio Turnover

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


     Institutional  Shares:  For the period December 31, 1998  (commencement  of
operations)  through May 31,  1999 and for the fiscal  year ended May 31,  2000:
195% and 165%.


INVESTMENT RESTRICTIONS

         The  investment  restrictions  set forth below have been adopted by the
Trust with respect to the Fund.  Except as  otherwise  noted,  these  investment
restrictions are  "fundamental"  policies which,  under the 1940 Act, may not be
changed without the vote of a majority of the outstanding  voting  securities of
the Fund. A "majority of the  outstanding  voting  securities" is defined in the
1940 Act as the lesser of (a) 67% or more of the voting securities  present at a
meeting if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, or (b) more than 50% of the outstanding  voting
securities. The percentage limitations contained in the restrictions below apply
at the time of purchasing securities to the market value of the Fund's assets.

         The Fund:

     1. May not make any investments inconsistent with the Fund's classification
as a diversified investment company under the 1940 Act;

         2.  May not  purchase  any  security  which  would  cause  the  Fund to
concentrate  its investments in the securities of issuers  primarily  engaged in
any particular industry, except as permitted by the SEC;

     3. May not issue senior securities,  except as permitted under the 1940 Act
or any rule, order or interpretation thereunder;

4. May not borrow money, except to the extent permitted by applicable law;

         5. May not underwrite securities of other issuers, except to the extent
that  the  Fund,  in  disposing  of  portfolio  securities,  may  be  deemed  an
underwriter within the meaning of the 1933 Act;

         6. May not  purchase or sell real estate,  except  that,  to the extent
permitted  by  applicable  law, the Fund may (a) invest in  securities  or other
instruments  directly or  indirectly  secured by real estate,  and (b) invest in
securities or other instruments issued by issuers that invest in real estate;

         7. May not purchase or sell  commodities or commodity  contracts unless
acquired as a result of ownership of securities or other  instruments  issued by
persons that purchase or sell  commodities  or commodities  contracts;  but this
shall not prevent the Fund from purchasing,  selling and entering into financial
futures  contracts  (including  futures  contracts  on  indices  of  securities,
interest  rates  and  currencies),   options  on  financial   futures  contracts
(including  futures  contracts  on indices  of  securities,  interest  rates and
currencies),  warrants,  swaps,  forward  contracts,  foreign  currency spot and
forward  contracts  or other  derivative  instruments  that are not  related  to
physical commodities; and

         8. May make  loans to other  persons,  in  accordance  with the  Fund's
investment  objectives  and policies and to the extent  permitted by  applicable
law.

     Non-Fundamental   Investment  Restrictions.   The  investment  restrictions
described below are not  fundamental  policies of the Fund and may be changed by
the Trustees. These non-fundamental investment policies require that the Fund:

         (i)  May not  acquire  any  illiquid  securities,  such  as  repurchase
agreements  with more than seven days to maturity or fixed time  deposits with a
duration of over seven calendar days, if as a result  thereof,  more than 15% of
the market  value of the Fund's net  assets  would be in  investments  which are
illiquid; and

     (ii) May not acquire  securities of other investment  companies,  except as
permitted by the 1940 Act or any order pursuant thereto.

         If any percentage restriction described above is adhered to at the time
of investment,  a subsequent  increase or decrease in the  percentage  resulting
from a change in the value of the Fund's assets will not  constitute a violation
of the restriction.

         For purposes of fundamental investment  restrictions regarding industry
concentration,  the Advisor may classify  issuers by industry in accordance with
classifications  set forth in the Directory of Companies  Filing Annual  Reports
With The Securities and Exchange  Commission or other sources. In the absence of
such  classification or if the Advisor determines in good faith based on its own
information that the economic characteristics affecting a particular issuer make
it more  appropriately  considered  to be engaged in a different  industry,  the
Advisor may  classify  an issuer  accordingly.  For  instance,  personal  credit
finance  companies  and  business  credit  finance  companies  are  deemed to be
separate  industries and wholly owned finance  companies are considered to be in
the  industry of their  parents if their  activities  are  primarily  related to
financing the activities of their parents.
TRUSTEES, ADVISORY BOARD MEMBERS AND OFFICERS

Trustees

         The Trustees of the Trust, their principal  occupations during the past
five  years,  business  addresses  and dates of birth are set forth  below.  The
mailing address of the Trustees is c/o Pierpont Group Inc. 461 Fifth Avenue, New
York , NY 10017.

     FREDERICK S.  ADDY-Trustee;  Retired,  Former  Executive Vice President and
Chief  Financial  Officer,  Amoco  Corporation.  His date of birth is January 1,
1932.

     WILLIAM G. BURNS-Trustee; Retired; Former Vice Chairman and Chief Financial
Officer, NYNEX. His date of birth is November 2, 1932.

     ARTHUR C.  ESCHENLAUER-Trustee;  Retired;  Former  Senior  Vice  President,
Morgan Guaranty Trust Company of New York. His date of birth is May 23, 1934.

         MATTHEW   HEALEY1-Trustee,   Chairman  and  Chief  Executive   Officer;
Chairman, Pierpont Group, Inc., since prior to 1995. His date of birth is August
23, 1937.

     MICHAEL P.  MALLARDI-Trustee;  Retired;  Prior to April  1996,  Senior Vice
President, Capital Cities/ABC, Inc. and President,  Broadcast Group. His date of
birth is March 17, 1934.

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



<PAGE>


         Trustee  compensation  expenses paid by the Trust for the calendar year
ended December 31, 1999 is set forth below.



<PAGE>







<TABLE>
<CAPTION>
<S>                                                         <C>                                <C>



NAME OF TRUSTEE AND TITLE                            AGGREGATE TRUSTEE            TOTAL TRUSTEE COMPENSATION
                                                            ACCRUED BY THE
                                                   COMPENSATION PAID BY THE             MASTER PORTFOLIOS(*),
J.P. MORGAN
                                                   TRUST DURING 1999                INSTITUTIONAL FUNDS, J.P.
MORGAN FUNDS AND
                                                                                              THE TRUST DURING
1999(**)

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

Frederick S. Addy, Trustee                                  $1,018                           $75,000

William G. Burns, Trustee                                   $1,018                           $75,000

Arthur C. Eschenlauer, Trustee                              $1,018                           $75,000

Matthew Healey, Trustee (***)                               $1,018                           $75,000
  Chairman and Chief Executive Officer

Michael P. Mallardi, Trustee                                $1,018                           $75,000
</TABLE>


(*) The  J.P.  Morgan  Funds  and  J.P.  Morgan  Institutional  Funds  are  each
multi-series  registered  investment  companies  that  are  part  of a  two-tier
(master-feeder)  investment fund structure. Each series of the J.P. Morgan Funds
and J.P.  Morgan  Institutional  Funds is a feeder fund that  invests all of its
investable  assets in one of 19 separate  master  portfolios  (collectively  the
"Master Portfolios") for which JPMIM acts as investment adviser, 14 of which are
registered investment companies.

     (**) No  investment  company  within  the fund  complex  has a  pension  or
retirement  plan.  Currently  there are 17 investment  companies (14  investment
companies comprising the Master Portfolios, the Trust, the J.P. Morgan Funds and
the J.P. Morgan Institutional Funds) in the fund complex.

     (***) During 1999,  Pierpont  Group,  Inc. paid Mr. Healey,  in his role as
Chairman  of  Pierpont  Group,  Inc.,  compensation  in the amount of  $153,800,
contributed  $23,100  to a  defined  contribution  plan on his  behalf  and paid
$17,300 in insurance premiums for his benefit.

         The Trustees  decide upon  general  policies  and are  responsible  for
overseeing  the Trust's  business  affairs.  The Trust has  entered  into a Fund
Services  Agreement  with  Pierpont  Group,  Inc.  to  assist  the  Trustees  in
exercising their overall  supervisory  responsibilities  over the affairs of the
Trust.  Pierpont Group,  Inc. was organized in July 1989 to provide services for
the J.P. Morgan Family of Funds  (formerly,  The Pierpont Family of Funds),  and
the Trustees are the equal and sole  shareholders  of Pierpont  Group,  Inc. The
Trust has agreed to pay Pierpont Group, Inc. a fee in an amount representing its
reasonable  costs in  performing  these  services to the Trust and certain other
registered  investment  companies  subject to similar  agreements  with Pierpont
Group, Inc. These costs are periodically reviewed by the Trustees. The principal
offices of Pierpont Group,  Inc. are located at 461 Fifth Avenue,  New York, New
York 10017.

     The aggregate fee paid to Pierpont  Group,  Inc. by the Fund for the period
December 31, 1998 (commencement of operations) through May 31, 2000 was $176.

Advisory Board

         The Trustees determined as of January 26, 2000 to establish an advisory
board and appoint four members  ("Members of the Advisory Board") thereto.  Each
Member  serves at the pleasure of the Trustees.  The Advisory  Board is distinct
from  the  Trustees  and  provides  advice  to the  Trustees  as to  investment,
management and operations of the Trust; but has no power to vote upon any matter
put to a vote of the Trustees.  The Advisory Board and the Members  thereof also
serve  each of the  Trusts and the  Master  Portfolios.  It is also the  current
intention  of the  Trustees  that the  Members  of the  Advisory  Board  will be
proposed at the next  shareholders'  meeting,  expected to be held within a year
from the date  hereof,  for  election  as Trustees of each of the Trusts and the
Master Portfolios. The creation of the Advisory Board and the appointment of the
Members  thereof was  designed so that the Board of Trustees  will  continuously
have  available to it persons able to assume the duties of Trustees and be fully
familiar  with the  business  and  affairs  of each of the Trusts and the Master
Portfolios,  in  anticipation  of the current  Trustees  reaching the  mandatory
retirement  age of seventy.  Each Member of the Advisory Board is paid an annual
fee of $75,000 for serving in this  capacity  for the Trust,  each of the Master
Portfolios,  the J.P.  Morgan  Funds  and the J.P.  Morgan  Series  Trust and is
reimbursed for expenses incurred in connection for such service.  The Members of
the Advisory Board may hold various directorships  unrelated to these funds. The
mailing  address of the Members of the  Advisory  Board is c/o  Pierpont  Group,
Inc.,  461 Fifth  Avenue,  New York,  New York  10017.  Their  names,  principal
occupations during the past five years and dates of birth are set forth below:

         Ann Maynard Gray -- Former President,  Diversified Publishing Group and
Vice President, Capital Cities/ABC, Inc. Her date of birth is August 22, 1945.

         John R. Laird -- Retired;  Former  Chief  Executive  Officer,  Shearson
Lehman Brothers and The Boston Company. His date of birth is June 21, 1942.

         Gerard P. Lynch -- Retired;  Former Managing  Director,  Morgan Stanley
Group and President and Chief Operating Officer,  Morgan Stanley Services,  Inc.
His date of birth is October 5, 1936.

         James J. Schonbachler -- Retired;  Prior to September,  1998,  Managing
Director,  Bankers  Trust  Company and Chief  Executive  Officer  and  Director,
Bankers Trust A.G.,  Zurich and BT Brokerage  Corp. His date of birth is January
26, 1943.



Officers

         The Trust's  executive  officers  (listed below),  other than the Chief
Executive  Officer  and the  officers  who are  employees  of the  Advisor,  are
provided and  compensated by Funds  Distributor,  Inc.  ("FDI"),  a wholly owned
indirect  subsidiary of Boston  Institutional  Group,  Inc. The Chief  Executive
Officer receives no compensation in his capacity as an officer of the Trust. The
officers  conduct and supervise the business  operations of the Trust. The Trust
has no employees.

         The officers of the Trust, their principal  occupations during the past
five years and dates of birth are set forth below.  The business address of each
of the officers  unless  otherwise  noted is Funds  Distributor,  Inc., 60 State
Street, Suite 1300, Boston, Massachusetts 02109.

     MATTHEW  HEALEY-Chief  Executive Officer;  Chairman,  Pierpont Group, since
prior to 1993. His address is c/o Pierpont Group Inc. 461 Fifth Avenue, New York
, NY 10017.

     MARGARET W.  CHAMBERS-Vice  President and Secretary.  Senior Vice President
and General  Counsel of FDI since April,  1998.  From August 1996 to March 1998,
Ms. Chambers was Vice President and Assistant General Counsel for Loomis, Sayles
& Company,  L.P. From January 1986 to July 1996,  she was an associate  with the
law firm of Ropes & Gray. Her date of birth is October 12, 1959.

     MARIE E. CONNOLLY-Vice President and Assistant Treasurer.  President, Chief
Executive Officer,  Chief Compliance Officer and Director of FDI, Premier Mutual
Fund Services,  Inc., an affiliate of FDI ("Premier Mutual"),  and an officer of
certain  investment  companies  distributed or  administered by FDI. Her date of
birth is August 1, 1957.

     DOUGLAS C. CONROY-Vice  President and Assistant  Treasurer.  Assistant Vice
President   and   Assistant   Department   Manager  of  Treasury   Services  and
Administration of FDI and an officer of certain investment companies distributed
or  administered  by FDI.  Prior to April 1997,  Mr.  Conroy was  Supervisor  of
Treasury  Services and  Administration  of FDI. From April 1993 to January 1995,
Mr. Conroy was a Senior Fund Accountant for Investors Bank & Trust Company.  His
date of birth is March 31, 1969.

         KAREN  JACOPPO  WOOD-Vice  President  and  Assistant  Secretary.   Vice
President  and  Senior  Counsel  of FDI and an  officer  of  certain  investment
companies  distributed or  administered  by FDI. From June 1994 to January 1996,
Ms. Jacoppo-Wood was a Manager of SEC Registration at Scudder,  Stevens & Clark,
Inc. Her date of birth is December 29, 1966.

     CHRISTOPHER  J.  KELLEY-Vice   President  and  Assistant  Secretary.   Vice
President and Senior Associate  General Counsel of FDI and Premier Mutual and an
officer of certain investment companies distributed or administered by FDI. From
April 1994 to July 1996,  Mr.  Kelley was Assistant  Counsel at Forum  Financial
Group. His date of birth is December 24, 1964.

     KATHLEEN K. MORRISEY-Vice President and Assistant Secretary. Vice President
and Assistant Secretary of FDI. Manager of Treasury Services  Administration and
an officer of certain investment companies advised or administered by Montgomery
Asset  Management,  L.P.  and  Dresdner RCM Global  Investors,  Inc.,  and their
respective affiliates.  From July 1994 to November 1995, Ms. Morrisey was a Fund
Accountant  for  Investors  Bank & Trust  Company.  Her date of birth is July 5,
1972.

     MARY A. NELSON-Vice  President and Assistant Treasurer.  Vice President and
Manager of Treasury Services and Administration of FDI and Premier Mutual and an
officer of certain investment companies  distributed or administered by FDI. Her
date of birth is April 22, 1964.

     MARY JO  PACE-Assistant  Treasurer.  Vice President,  Morgan Guaranty Trust
Company of New York.  Ms.  Pace  serves in the Funds  Administration  group as a
Manager for the Budgeting and Expense Processing Group. Prior to September 1995,
Ms. Pace served as a Fund Administrator for Morgan Guaranty Trust Company of New
York. Her address is 60 Wall Street, New York, New York 10260. Her date of birth
is March 13, 1966.

     GEORGE A. RIO-President and Assistant  Treasurer.  Executive Vice President
and Client  Service  Director of FDI since  April 1998.  From June 1995 to March
1998,  Mr. Rio was Senior  Vice  President  and Senior Key  Account  Manager for
Putnam  Mutual  Funds.  From May 1994 to June  1995,  Mr.  Rio was  Director  of
Business  Development  for First Data  Corporation.  From  September 1983 to May
1994,  Mr. Rio was  Senior  Vice  President  & Manager  of Client  Services  and
Director of Internal Audit at The Boston  Company.  His date of birth is January
2, 1955.

     CHRISTINE  ROTUNDO-Assistant  Treasurer.  Vice  President,  Morgan Guaranty
Trust Company of New York. Ms.  Rotundo serves as Manager of the  Infrastructure
group.  Prior to  January  2000,  she  served as Manager of the Tax Group in the
Funds Administration group and was responsible for U.S. mutual fund tax matters.
Prior to  September  1995,  Ms.  Rotundo  served as a Senior Tax  Manager in the
Investment  Company  Services  Group of Deloitte & Touche LLP. Her address is 60
Wall Street, New York, New York 10260. Her date of birth is September 26, 1965.

         ELBA  VASQUEZ-Vice  President and Assistant  Secretary.  Vice President
since  February  1999,  Assistant  Vice  President(Since  June 1997),  and Sales
Associate (since May 1996) of FDI. Formerly (March 1990- May 1996),  employed in
various  mutual fund sales and marketing  positions by the U.S. Trust Company of
New York. Her date of birth is December 14, 1961.

CODE OF ETHICS

         The Trust and the Advisor and FDI have adopted codes of ethics pursuant
to Rule 17j-1 under the 1940 Act. Each of these codes permits  personnel subject
to such code to invest in securities, including securities that may be purchased
or held by the Portfolio.  Such  purchases,  however,  are subject to procedures
reasonably  necessary to prevent  access  persons from  engaging in any unlawful
conduct set forth in Rule 17j-1.

INVESTMENT ADVISOR

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

         JPMIM,  a wholly owned  subsidiary  of J.P.  Morgan & Co.  Incorporated
("J.P.  Morgan"),  is a  registered  investment  adviser  under  the  Investment
Advisers  Act of  1940,  as  amended,  and  manages  employee  benefit  funds of
corporations,  labor unions and state and local  governments and the accounts of
other institutional  investors,  including investment companies.  Certain of the
assets of  employee  benefit  accounts  under its  management  are  invested  in
commingled pension trust funds for which Morgan serves as trustee.

         J.P.  Morgan,  through  the  Advisor  and other  subsidiaries,  acts as
investment advisor to individuals,  governments,  corporations, employee benefit
plans, mutual funds and other institutional investors with combined assets under
management of approximately $369 billion.

         J.P.  Morgan has a long  history of service as an advisor,  underwriter
and lender to an extensive roster of major companies and as a financial  advisor
to national  governments.  The firm,  through its predecessor firms, has been in
business for over a century and has been managing investments since 1913.

         The basis of the Advisor's investment process is fundamental investment
research because the firm believes that fundamentals should determine an asset's
value  over the long term.  The  Advisor  currently  employs  approximately  420
research analysts, capital market researchers,  portfolio managers, and traders,
and has one of the largest research staffs in the money management industry. The
Advisor has investment  management divisions located in New York, London, Tokyo,
Frankfurt,  and Singapore to cover companies,  industries and countries on site.
The conclusions of the equity analysts' fundamental research are quantified into
a set of  projected  returns  for  individual  companies  through  the  use of a
dividend  discount  model.  These returns are projected for two to five years to
enable  analysts  to take a longer  term  view.  These  returns,  or  normalized
earnings,  are used to establish relative values among stocks in each industrial
sector.  These values may not be the same as the markets' current  valuations of
these companies.  This provides the basis for ranking the  attractiveness of the
companies in an industry according to five distinct quintiles or rankings.  This
ranking is one of the factors considered in determining the stocks purchased and
sold in each sector.

         The investment  advisory  services the Advisor provides to the Fund are
not exclusive under the terms of the Investment Advisory Agreement.  The Advisor
is free to and does render similar  investment  advisory services to others. The
Advisor serves as investment  advisor to personal investors and other investment
companies and acts as fiduciary for trusts,  estates and employee benefit plans.
Certain of the assets of trusts and estates  under  management  are  invested in
common trust funds for which the Advisor  serves as trustee.  The accounts which
are managed or advised by the Advisor have varying investment objectives and the
Advisor invests assets of such accounts in investments substantially similar to,
or the same as, those which are expected to constitute the principal investments
of the Fund.  Such  accounts are  supervised  by officers  and  employees of the
Advisor  who may  also be  acting  in  similar  capacities  for  the  Fund.  See
"Portfolio Transactions."

         Morgan,  whose principal  offices are at 60 Wall Street,  New York, New
York 10260,  is a New York trust  company which  conducts a general  banking and
trust  business.  Morgan is subject to  regulation by the New York State Banking
Department and is a member bank of the Federal Reserve  System.  Through offices
in New York City and abroad,  Morgan offers a wide range of services,  primarily
to  governmental,   institutional,  corporate  and  high  net  worth  individual
customers in the United States and throughout the world. Morgan is also a wholly
owned subsidiary of J.P. Morgan, which is a bank holding company organized under
the laws of the State of Delaware.

         The Fund is managed by  employees  of the  Advisor  who,  in acting for
their  clients,  including the Fund, do not discuss their  investment  decisions
with any personnel of J.P. Morgan with any of its affiliated  persons,  with the
exception of certain investment  management  affiliates of J.P. Morgan or broker
dealer  affiliates of J.P.  Morgan which execute  transactions  on behalf of the
Fund.

         As compensation for the services  rendered and related expenses such as
salaries  of  advisory  personnel  borne by the  Advisor  under  the  Investment
Advisory  Agreements,  the Fund has  agreed to pay the  Advisor a fee,  which is
computed  daily and may be paid  monthly,  equal to 1.25% of the Fund's  average
daily net assets.

         For the period December 31, 1998  (commencement of operations)  through
May 31, 2000, the Fund paid to paid the Advisor  $154,107 in advisory fees under
the prior Investment Advisory Agreement described above.

         The Investment Advisory Agreement between the Advisor and the Trust, on
behalf of the Fund, provides that it will continue in effect for a period of two
years after execution only if specifically  approved  thereafter annually in the
same  manner  as  the  Distribution  Agreement.  See  "Distributor"  below.  The
Investment  Advisory  Agreement will terminate  automatically if assigned and is
terminable  at any time with respect to the Fund without  penalty by a vote of a
majority  of the  Trust's  Trustees or by a vote of the holders of a majority of
the Fund's  outstanding  voting  securities  on 60 days'  written  notice to the
Advisor  and by the  Advisor  on 90  days'  written  notice  to  the  Fund.  See
"Additional Information."

         Under separate  agreements,  Morgan provides  certain  financial,  fund
accounting,  administrative and shareholder services to the Trust. See "Services
Agent" and "Shareholder Servicing" below.

DISTRIBUTOR

         FDI  serves as the  Trust's  exclusive  distributor  and  holds  itself
available to receive  purchase  orders for the Fund's shares.  In that capacity,
FDI has been  granted  the right,  as agent of the Trust,  to solicit and accept
orders for the purchase of the Fund's shares in accordance with the terms of the
Distribution  Agreement  between  the  Trust  and FDI.  Under  the  terms of the
Distribution  Agreement  between FDI and the Trust, FDI receives no compensation
in its capacity as the Fund's distributor.

         The Distribution  Agreement will continue in effect with respect to the
Fund for a period of two years after execution and will continue thereafter only
if it is approved at least  annually  (i) by a vote of the holders of a majority
of the Fund's  outstanding  voting  securities  or by its Trustees and (ii) by a
vote of a majority of the Trustees of the Trust who are not "interested persons"
(as defined by the 1940 Act) of the parties to the Distribution Agreement,  cast
in person at a meeting  called for the purpose of voting on such  approval  (see
"Trustees"  and  "Advisory  Board  Members" and  "Officers").  The  Distribution
Agreement  will  terminate  automatically  if  assigned  by  either  party.  The
Distribution  Agreement is also  terminable with respect to the Fund at any time
without  penalty by a vote of a majority of the Trustees of the Trust, a vote of
a majority of the Trustees who are not "interested  persons" of the Trust, or by
a vote of (i) 67% or more of the Fund's outstanding voting securities present at
a meeting  if the  holders  of more than 50% of the  Fund's  outstanding  voting
securities  are present or  represented  by proxy,  or (ii) more than 50% of the
Fund's outstanding  voting securities,  whichever is less. FDI is a wholly owned
indirect subsidiary of Boston Institutional Group, Inc. The principal offices of
FDI are located at 60 State Street, Suite 1300, Boston, Massachusetts 02109.

CO-ADMINISTRATOR

         Under a  Co-Administration  Agreement  with the Trust  dated  August 1,
1996,  FDI also serves as the Trust's  Co-Administrator.  The  Co-Administration
Agreement may be renewed or amended by the Trustees without a shareholder  vote.
The  Co-Administration  Agreement is terminable at any time without penalty by a
vote of a  majority  of the  Trustees  of the  Trust on not  more  than 60 days'
written  notice nor less than 30 days'  written  notice to the other party.  The
Co-Administrator  may  subcontract  for  the  performance  of  its  obligations,
provided,  however,  that  unless the Trust  expressly  agrees in  writing,  the
Co-Administrator  shall be fully  responsible  for the acts and omissions of any
subcontractor  as it would for its own acts or omissions.  See "Services  Agent"
below.

         FDI (i) provides  office space,  equipment  and clerical  personnel for
maintaining  the  organization  and books and records of the Fund; (ii) provides
officers  for the  Trust;  (iii)  prepares  and  files  documents  required  for
notification  of  state  securities  administrators;   (iv)  reviews  and  files
marketing  and  sales  literature;  (v)  files  regulatory  documents  and mails
communications  to Trustees and investors;  and (vi) maintains related books and
records.

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

     For the period December 31, 1998  (commencement of operations)  through May
31, 2000, the Fund paid to FDI $192 in administrative fees.

         See "Expenses" below for applicable expense limitations.

  SERVICES AGENT

         The Trust,  on behalf of the Fund,  has entered into an  Administrative
Services  Agreement (the  "Services  Agreement")  with Morgan  pursuant to which
Morgan is responsible for certain  administrative  and related services provided
to the Fund.  The Services  Agreement  may be  terminated  at any time,  without
penalty,  by the Trustees or Morgan,  in each case on not more than 60 days' nor
less than 30 days' written notice to the other party.

         Under the Services  Agreement,  Morgan provides certain  administrative
and related services to the Fund,  including services related to tax compliance,
preparation of financial statements,  calculation of performance data, oversight
of service providers and certain regulatory and Board of Trustee matters.

         Under the  Services  Agreement,  the Fund has agreed to pay Morgan fees
equal to its allocable share of an annual  complex-wide  charge.  This charge is
calculated  daily  based on the  aggregate  net assets of the Fund,  the Trust's
other series and the Master  Portfolios in accordance with the following  annual
schedule:  0.09% of the first $7 billion of their  aggregate  average  daily net
assets,  and 0.04% of their  aggregate  average daily net assets in excess of $7
billion,  less the complex-wide  fees payable to FDI. The portion of this charge
payable by the Fund is determined by the proportionate share that its net assets
bear to the total net assets of the Trust and the other investment companies for
which Morgan provides administrative services.

     For the period December 31, 1998  (commencement of operations)  through May
31, 2000, the Fund paid to Morgan, as Services Agent, $5,117.

CUSTODIAN AND TRANSFER AGENT

         The Bank of New York  ("BONY"),  One Wall  Street,  New York,  New York
10286,  serves as the Trust's custodian and fund accounting  agent.  Pursuant to
the Custodian  Contract and Fund  Accounting  Agreement with the Trust,  BONY is
responsible for holding portfolio securities and cash, and maintaining the books
of account and records of portfolio transactions.

         State  Street Bank and Trust  Company  ("State  Street"),  225 Franklin
Street, Boston, Massachusetts 02110, serves as the Trust's transfer and dividend
disbursing agent. As transfer agent and dividend  disbursing agent, State Street
is responsible for maintaining  account records  detailing the ownership of Fund
shares  and for  crediting  income,  capital  gains and other  changes  in share
ownership to shareholder accounts.

SHAREHOLDER SERVICING

         The  Trust,  on behalf  of the Fund,  has  entered  into a  Shareholder
Servicing  Agreement  with Morgan  pursuant to which Morgan acts as  shareholder
servicing  agent  for  Fund  shareholders.   Under  this  agreement,  Morgan  is
responsible for performing,  directly or through an agent,  shareholder  account
administrative  and  servicing  functions,  which include but are not limited to
answering  inquiries  regarding account status and history,  the manner in which
purchases  and  redemptions  of Fund shares may be effected,  and certain  other
matters pertaining to the Fund;  assisting customers in designating and changing
dividend  options,  account  designations  and  addresses;  providing  necessary
personnel and  facilities to coordinate  the  establishment  and  maintenance of
shareholder  accounts and records with the Fund's transfer  agent;  transmitting
purchase and  redemption  orders to the Fund's  transfer agent and arranging for
the  wiring  or  other  transfer  of  funds to and  from  customer  accounts  in
connection with orders to purchase or redeem Fund shares; verifying purchase and
redemption orders, transfers among and changes in accounts; informing FDI of the
gross amount of purchase  orders for Fund shares;  and  providing  other related
services.

         Under the Shareholder  Servicing Agreement,  the Fund has agreed to pay
Morgan  for  these  services,  the  Select  Shares  pay a fee of  0.25%  and the
Institutional  Shares  pay a fee of  0.10%  (expressed  as a  percentage  of the
average  daily net asset value of Fund shares owned by or for  shareholders  for
whom  Morgan  is  acting  as  shareholder   servicing  agent).  Morgan  acts  as
Shareholder Servicing Agent for all shareholders.

         The table below sets forth for the Fund, the shareholder  servicing fee
paid by the series of the Fund to Morgan for the periods indicated:

     Institutional  Shares:  For the period December 31, 1998  (commencement  of
operations) through May 31, 2000: $10,274.

         The Fund's  shares may be sold to or through  financial  intermediaries
who  are  customers  of  J.P.  Morgan  ("financial  professionals"),   including
financial institutions and broker-dealers,  that may be paid fees by J.P. Morgan
or its  affiliates  for  services  provided to their  clients that invest in the
Fund.  See  "Financial   Professionals"   below.   Organizations   that  provide
recordkeeping  or other services to certain employee benefit or retirement plans
that include the Fund as an investment alternative may also be paid a fee.

INDEPENDENT ACCOUNTANTS

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

EXPENSES

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

         J.P.  Morgan has agreed that it will reimburse the Fund as described in
the prospectus,  to the extent  necessary to maintain the Fund's total operating
expenses at the following  annual rate of the Fund's average daily assets.  This
limit does not cover extraordinary expenses.

Select Shares              1.40% until September 30, 2001
Institutional Shares       1.25% until September 30, 2000

         The table below sets forth for the class of the Fund  listed  below the
fees and other expenses J.P. Morgan  reimbursed under the expense  reimbursement
arrangements   described  above  or  pursuant  to  prior  expense  reimbursement
arrangements for the periods indicated:

     Institutional  Shares:  For the period December 31, 1998  (commencement  of
operations) to May 31, 2000 $161,240.

PURCHASE OF SHARES

         Additional Minimum Balance  Information.  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.

         Method of  Purchase.  Investors  may open  accounts  with the Fund only
through  the  Distributor.  All  purchase  transactions  in  Fund  accounts  are
processed by Morgan as shareholder servicing agent and the Fund is authorized to
accept any  instructions  relating to a Fund account from Morgan as  shareholder
servicing  agent for the customer.  All purchase  orders must be accepted by the
Distributor.  Prospective  investors who are not already customers of Morgan may
apply to become  customers of Morgan for the sole purpose of Fund  transactions.
There  are no  charges  associated  with  becoming  a Morgan  customer  for this
purpose.  Morgan  reserves the right to  determine  the  customers  that it will
accept,  and the Fund reserves the right to determine  the purchase  orders that
they will accept.

         References  in  the   Prospectus   and  this  Statement  of  Additional
Information  to customers  of J.P.  Morgan or a financial  professional  include
customers of their affiliates,  and references to transactions by customers with
J.P.  Morgan  or  a  financial  professional  include  transactions  with  their
affiliates.  Only  Fund  investors  who are using the  services  of a  financial
institution acting as shareholder  servicing agent pursuant to an agreement with
the Trust on behalf of the Fund may make transactions in shares of the Fund.

         The Fund may,  at its own  option,  accept  securities  in payment  for
shares.  The  securities so delivered are valued by the method  described  under
"Net Asset  Value" as of the day the Fund  receives  the  securities.  This is a
taxable  transaction to the  shareholder.  Securities may be accepted in payment
for  shares  only if they  are,  in the  judgment  of the  Advisor,  appropriate
investments for the Fund. In addition, securities accepted in payment for shares
must:  (i) meet the  investment  objective  and  policies  of the Fund;  (ii) be
acquired  by the  Fund  for  investment  and not for  resale;  (iii)  be  liquid
securities  which are not restricted as to transfer;  and (iv) if stock,  have a
value  which is  readily  ascertainable  as  evidenced  by a listing  on a stock
exchange,  OTC market or by readily available market quotations from a dealer in
such  securities.  The Fund  reserves  the  right to accept or reject at its own
option any and all securities offered in payment for its shares.

     Prospective  investors  may  purchase  shares  with  the  assistance  of  a
financial  professional and the financial professional may charge the investor a
fee for this  service and other  services it  provides  to its  customers.  J.P.
Morgan may pay fees to financial  professionals  for services in connection with
fund investments. See "Financial Professionals" above.

REDEMPTION OF SHARES

         Investors may redeem shares of the Fund as described in the Prospectus.
The Fund  generally  intends to pay  redemption  proceeds in cash;  however,  it
reserves  the right at its sole  discretion  to pay  redemptions  over  $250,000
in-kind as a portfolio of representative  stocks rather than cash. See below and
"Exchange of Shares."

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

         If the  Trust  determines  that it  would  be  detrimental  to the best
interests of the remaining  shareholders  of the Fund to make payment  wholly or
partly in cash,  payment of the redemption price may be made in whole or in part
by a  distribution  in kind of  securities  from the Fund,  in lieu of cash.  If
shares are redeemed  in-kind,  the  redeeming  shareholder  might incur costs in
converting  the assets into cash.  The Trust has been granted  exemptive  relief
from the SEC with  respect  to  redemptions  in-kind  by the  Fund.  The Fund is
permitted to pay  redemptions  to greater than 5%  shareholders  in  securities,
rather than in cash,  to the extent  permitted by the SEC. The method of valuing
portfolio  securities is described  under "Net Asset Value," and such  valuation
will be made as of the same time the redemption price is determined.

         In  general,  the Fund will  attempt to select  securities  for in-kind
redemptions  that  approximate  the  overall   characteristics   of  the  Fund's
portfolio.  The Fund will not distribute  illiquid securities to satisfy in-kind
redemptions.  For purposes of effecting in-kind redemptions,  securities will be
valued in the manner  regularly used to value the Fund's  portfolio  securities.
The Fund will not redeem its shares in-kind in a manner that after giving effect
to the  redemption  would cause it to violate  its  investment  restrictions  or
policies.

         Other Redemption Processing Information. Redemption requests may not be
processed  if the  redemption  request  is  not  submitted  in  proper  form.  A
redemption  request  is not in proper  form  unless  the Fund has  received  the
shareholder's certified taxpayer identification number and address. In addition,
if shares were paid for by check and the check has not yet  cleared,  redemption
proceeds will not be transmitted until the check has cleared,  which may take up
to 15 days.  The Fund  reserves the right to suspend the right of  redemption or
postpone the payment of redemption  proceeds to the extent permitted by the SEC.
Shareholders may realize taxable gains upon redeeming shares.

EXCHANGE OF SHARES

         Subject to the limitations  below, an investor may exchange shares from
the Fund into any other  J.P.  Morgan  Fund or J.P.  Morgan  Institutional  Fund
without  charge.  An  exchange  may be made so long as after  the  exchange  the
investor has shares, in each fund in which he or she remains an investor, with a
value of at least that fund's minimum  investment  amount.  Shareholders  should
read the  prospectus  of the fund into  which they are  exchanging  and may only
exchange between fund accounts that are registered in the same name, address and
taxpayer  identification  number.  Shares are exchanged on the basis of relative
net asset value per share. Exchanges are in effect redemptions from one fund and
purchases of another fund and the usual purchase and  redemption  procedures and
requirements  are  applicable to exchanges.  The Fund  generally  intends to pay
redemption  proceeds in cash,  however,  since it reserves the right at its sole
discretion  to  pay  redemptions   over  $250,000  in-kind  as  a  portfolio  of
representative  stocks rather than in cash,  the fund reserves the right to deny
an  exchange  request in excess of that  amount.  See  "Redemption  of  Shares."
Shareholders  subject to federal income tax who exchange  shares in one fund for
shares in another fund may recognize capital gain or loss for federal income tax
purposes.  Shares of a fund to be acquired are purchased for settlement when the
proceeds from redemption become  available.  In the case of investors in certain
states,  state  securities  laws may restrict the  availability  of the exchange
privilege.  The  Trust  reserves  the right to  discontinue,  alter or limit the
exchange privilege at any time.


DIVIDENDS AND DISTRIBUTIONS

         The Fund  declares and pays  dividends and  distributions  as described
under "Dividends and Distributions" in the Prospectus.

         Dividends  and  capital  gains  distributions  paid  by  the  Fund  are
automatically reinvested in additional shares of the Fund unless the shareholder
has elected to have them paid in cash. Dividends and distributions to be paid in
cash are  credited to the  shareholder's  account at Morgan or at his  financial
professional or, in the case of certain Morgan customers, are mailed by check in
accordance  with the  customer's  instructions.  The Fund  reserves the right to
discontinue, alter or limit the automatic reinvestment privilege at any time.

         If a shareholder has elected to receive  dividends and/or capital gains
distributions  in cash and the  postal or other  delivery  service  is unable to
deliver  checks to the  shareholder's  address  of  record,  such  shareholder's
distribution  option will  automatically be converted to having all dividend and
other distributions  reinvested in additional shares. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.

NET ASSET VALUE

         Each of the Funds  computes  its net asset  value  separately  for each
class of shares  outstanding  once  daily as of the close of  trading on the New
York Stock Exchange  (normally  4:00 p.m.  eastern time) on each business day as
described in the Prospectus. The net asset value will not be computed on the day
the following  legal holidays are observed:  New Year's Day,  Martin Luther King
Jr. Day,  Presidents' Day, Good Friday,  Memorial Day,  Independence  Day, Labor
Day, Thanksgiving Day and Christmas Day. On days when U.S. trading markets close
early  in  observance  of these  holidays,  each of the  Funds  will  close  for
purchases and redemptions at the same time. Each of the Funds also may close for
purchases and  redemptions at such other times as may be determined by the Board
of Trustees to the extent  permitted  by  applicable  law. The days on which net
asset value is determined are the Funds' business days.


         The value of  investments  listed on a domestic  or foreign  securities
exchange,   including  National  Association  of  Securities  Dealers  Automated
Quotations ("NASDAQ"), other than options on stock indexes, is based on the last
sale prices on the  exchange on which the  security is  principally  traded (the
"primary  exchange").  If there has been no sale on the primary  exchange on the
valuation  date, and the spread between bid and asked  quotations on the primary
exchange  is less than or equal to 10% of the bid price  for the  security,  the
security shall be valued at the average of the closing bid and asked  quotations
on the primary exchange.  Under all other  circumstances  (e.g. there is no last
sale on the  primary  exchange,  there  are no bid and asked  quotations  on the
primary exchange, or the spread between bid and asked quotations is greater than
10% of the bid price), the value of the security shall be the last sale price on
the primary  exchange up to ten days prior to the valuation date unless,  in the
judgment of the portfolio manager, material events or conditions since such last
sale necessitate fair valuation of the security.  The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest  and most  representative  market for such  security.  For  purposes of
calculating  net asset value all assets and liabilities  initially  expressed in
foreign  currencies  will be  converted  into  U.S.  dollars  at the  prevailing
currency rate average on the valuation date.

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

         Trading in  securities  on most foreign  markets is normally  completed
before the close of trading in U.S.  markets  and may also take place on days on
which the U.S. markets are closed. If events  materially  affecting the value of
securities  occur  between  the time when the  market in which  they are  traded
closes  and the time  when  each  Fund's  net asset  value is  calculated,  such
securities   will  be  valued  at  fair  value  in  accordance  with  procedures
established by and under the general supervision of the Trustees.


PERFORMANCE DATA

         From time to time,  the Fund may quote  performance  in terms of actual
distributions, total return or capital appreciation for the various Fund classes
in reports, sales literature and advertisements  published by the Trust. Current
performance information for the different class may be obtained by calling JPMIM
at (800)  531-5411 for Select  Shares and at (800)  766-7722  for  Institutional
Shares.

         The  classes  of  shares  of the Fund may  bear  different  shareholder
servicing fees and other expenses, which may cause the performance of a class to
differ from the  performance of another class.  Performance  quotations  will be
computed  separately for each class of the Fund's shares. Any fees charged by an
institution  directly to its customers'  accounts in connection with investments
in the Funds will not be included in calculations of total return.

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

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

         Below is set forth historical  return  information for the class of the
Fund listed below for the periods indicated:

     Institutional  Shares: (May 31, 2000): Average annual total return, 1 year:
-0.99;  average annual total return, 5 years:  N/A; average annual total return,
commencement of operations  (December 31, 1998) to period end: 0.24%;  aggregate
total return,  1 year:  -0.99 aggregate total return,  5 years:  N/A;  aggregate
total  return,  commencement  of  operations  (December 31, 1998) to period end:
0.34%.

         General.  Performance will vary from time to time depending upon market
conditions,   the   composition   of  the  portfolio  and  operating   expenses.
Consequently,   any  given  performance   quotation  should  not  be  considered
representative of the Fund's performance for any specified period in the future.
In addition,  because performance will fluctuate, it may not provide a basis for
comparing  an  investment  in the  Fund  with  certain  bank  deposits  or other
investments that pay a fixed yield or return for a stated period of time.

         Comparative  performance  information  may be used from time to time in
advertising the Fund's shares,  including  appropriate  market indices including
the benchmarks  indicated under  "Investment  Advisor" above or data from Lipper
Analytical  Services,  Inc., Micropal,  Inc., Ibbotson  Associates,  Morningstar
Inc., the Dow Jones Industrial Average and other industry publications.

         From time to time,  the Fund may, in addition to any other  permissible
information,  include the  following  types of  information  in  advertisements,
supplemental  sales literature and reports to  shareholders:  (1) discussions of
general economic or financial principles (such as the effects of compounding and
the benefits of dollar-cost  averaging);  (2)  discussions  of general  economic
trends;  (3)  presentations of statistical data to supplement such  discussions;
(4)  descriptions  of past or anticipated  portfolio  holdings for the Fund; (5)
descriptions  of  investment  strategies  for  the  Fund;  (6)  descriptions  or
comparisons  of various  savings and  investment  products  (including,  but not
limited to, qualified  retirement plans and individual stocks and bonds),  which
may or may  not  include  the  Fund;  (7)  comparisons  of  investment  products
(including  the  Fund)  with  relevant  markets  or  industry  indices  or other
appropriate  benchmarks;   (8)  discussions  of  Fund  rankings  or  ratings  by
recognized  rating  organizations;  and (9)  discussions of various  statistical
methods  quantifying the Fund's volatility  relative to its benchmark or to past
performance,  including  risk  adjusted  measures.  The Fund  may  also  include
calculations,   such  as  hypothetical   compounding  examples,  which  describe
hypothetical  investment  results  in  such  communications.   Such  performance
examples will be based on an express set of  assumptions  and are not indicative
of the performance of the Fund.

PORTFOLIO TRANSACTIONS

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

         In  selecting  a broker,  the  Advisor  considers  a number of  factors
including:  the price per unit of the  security;  the broker's  reliability  for
prompt, accurate confirmations and on-time delivery of securities;  the broker's
financial  condition;  and  the  commissions  charged.  A  broker  may be paid a
brokerage  commission in excess of that which another  broker might have charged
for effecting the same transaction if, after considering the foregoing  factors,
the Advisor decides that the broker chosen will provide the best execution.  The
Advisor monitors the  reasonableness of the brokerage  commissions paid in light
of  the  execution   received.   The  Trust's   Trustees  review  regularly  the
reasonableness  of commissions and other  transaction costs incurred by the Fund
in light of facts and  circumstances  deemed  relevant from time to time and, in
that connection,  will receive reports from Morgan and published data concerning
transaction costs incurred by institutional investors generally.

         Research  services  provided  by  brokers  to  which  the  Advisor  has
allocated  brokerage  business  in the  past  include  economic  statistics  and
forecasting  services,   industry  and  company  analyses,   portfolio  strategy
services,   quantitative  data  and  consulting  services  from  economists  and
political  analysts.  Research  services  furnished  by brokers are used for the
benefit of all of the Advisor's  clients and not solely or  necessarily  for the
benefit of the Fund.  The Advisor  believes that the value of research  services
received is not determinable and does not significantly reduce its expenses. The
Fund  does  not  reduce  its fee to the  Advisor  by any  amount  that  might be
attributable to the value of such services.

         Subject to the overriding  objective of obtaining the best execution of
orders, the Advisor may allocate a portion of the Fund's brokerage  transactions
to affiliates of the Advisor.  In order for  affiliates of the Advisor to effect
any  portfolio  transactions  for the  Fund,  the  commissions,  fees  or  other
remuneration received by such affiliates must be reasonable and fair compared to
the commissions, fees, or other remuneration paid to other brokers in connection
with comparable  transactions  involving  similar  securities being purchased or
sold on a securities  exchange during a comparable period of time.  Furthermore,
the  Trust's  Trustees,  including  a  majority  of the  Trustees  who  are  not
"interested  persons," have adopted procedures which are reasonably  designed to
provide  that  any  commissions,  fees,  or  other  remuneration  paid  to  such
affiliates are consistent with the foregoing standard.

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

         Portfolio  securities  will not be purchased from or through or sold to
or through the Advisor or FDI or any "affiliated person" (as defined in the 1940
Act) thereof when such entities are acting as  principals,  except to the extent
permitted by law. In addition,  the Fund will not purchase  securities  from any
underwriting  group of which the  Advisor or an  affiliate  of the  Advisor is a
member, except to the extent permitted by law.

         Investment  decisions  made  by the  Advisor  are the  product  of many
factors  in  addition  to basic  suitability  for the Fund or  other  client  in
question.  Thus, a particular security may be bought or sold for certain clients
even  though it could  have been  bought or sold for other  clients  at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the same security.  The Fund only may sell
a security to another  series of the Trust or to other  accounts  managed by the
Advisor or its affiliates in accordance with procedures adopted by the Trustees.

         It also  sometimes  happens  that  two or more  clients  simultaneously
purchase or sell the same  security.  On those  occasions when the Advisor deems
the purchase or sale of a security to be in the best  interests of the Fund,  as
well as other  clients  including  other  clients,  the  Advisor  to the  extent
permitted by  applicable  laws and  regulations,  may, but is not  obligated to,
aggregate  the  securities to be sold or purchased for the Fund with those to be
sold or purchased for other clients in order to obtain best execution, including
lower  brokerage  commissions if appropriate.  In such event,  allocation of the
securities  so  purchased  or  sold  as well  as any  expenses  incurred  in the
transaction  will be made by the Advisor in the manner it  considers  to be most
equitable and consistent with the Advisor's  fiduciary  obligations to the Fund.
In some instances, this procedure might adversely affect the Fund.


     The Fund  paid the  following  approximate  brokerage  commissions  for the
period  December 31, 1998  (commencement  of  operations)  through May 31, 2000:
$8,482.


MASSACHUSETTS TRUST

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

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

DESCRIPTION OF SHARES

     The Fund represents a separate  series of shares of beneficial  interest of
the  Trust.  Fund  shares  are  further  divided  into  separate  classes.   See
"Massachusetts Trust."

         The  Declaration  of Trust  permits the  Trustees to issue an unlimited
number of full and  fractional  shares  ($0.001 par value) of one or more series
and classes  within any series and to divide or combine the shares of any series
without changing the  proportionate  beneficial  interest of each shareholder in
the Fund.  To date,  the Fund is authorized  to issue  Institutional  Shares and
Select Shares, but only Institutional Shares are currently offered.

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

         The  shareholders  of the Trust are entitled to one full or  fractional
vote for each dollar or fraction of a dollar invested in shares.  Subject to the
1940 Act,  the  Trustees  have the power to alter  the  number  and the terms of
office of the Trustees,  to lengthen their own terms,  or to make their terms of
unlimited duration,  subject to certain removal procedures, and to appoint their
own  successors.  However,  immediately  after such  appointment,  the requisite
majority  of the  Trustees  must have been  elected by the  shareholders  of the
Trust. The voting rights of shareholders are not cumulative.  The Trust does not
intend to hold annual meetings of  shareholders.  The Trustees may call meetings
of  shareholders  for action by shareholder  vote if required by either the 1940
Act or the Trust's Declaration of Trust.

         Shareholders  of the Trust  have the  right,  upon the  declaration  in
writing or vote of  shareholders  whose shares  represent  two-thirds of the net
asset value of the Trust, to remove a Trustee.  The Trustees will call a meeting
of  shareholders to vote on removal of a Trustee upon the written request of the
shareholders whose shares represent 10% of the net asset value of the Trust. The
Trustees also are required, under certain circumstances,  to assist shareholders
in communicating with other shareholders.

         For  information  relating to  mandatory  redemption  of Fund shares or
their  redemption  at the option of the Trust under certain  circumstances,  see
"Redemption of Shares".

     As of June 30, 2000, the following  owned of record or, to the knowledge of
management,  beneficially  owned more than 5% of the  outstanding  shares of the
Fund

     Institutional  Shares:  Morgan  Guaranty  Trust  Co. of NY as agent for the
Hogan Family (33.11%) and JPMIM (66.85%).

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

TAXES

         The following  discussion of tax  consequences is based on U.S. federal
tax laws in effect on the date of the Statement of Additional Information. These
laws and  regulations  are subject to change by  legislative  or  administrative
action, possibly on a retroactive basis.

         The Fund  intends  to  qualify  and  remain  qualified  as a  regulated
investment  company under  Subchapter M of the Code.  As a regulated  investment
company, the Fund must, among other things, (a) derive at least 90% of its gross
income from  dividends,  interest,  payments  with respect to loans of stock and
securities,  gains from the sale or other disposition of stock or securities and
other  income  (including  but not  limited to gains from  options  and  futures
contracts)  derived  with  respect to its business of investing in such stock or
securities;  and (b)  diversify  its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the value of the Fund's total assets is represented
by cash, U.S. Government  securities,  investments in other regulated investment
companies  and other  securities  limited,  in respect of any one issuer,  to an
amount  not  greater  than  5% of  the  Fund's  total  assets,  and  10%  of the
outstanding  voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government  securities or the securities of other regulated investment
companies).

         As a  regulated  investment  company,  the  Fund  (as  opposed  to  its
shareholders)  will not be subject to federal income taxes on the net investment
income and capital gains that it distributes to its shareholders,  provided that
at least 90% of its net investment  income and realized net  short-term  capital
gains  in  excess  of net  long-term  capital  losses  for the  taxable  year is
distributed in accordance with the Code's requirements.

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

         For federal  income tax  purposes,  dividends  that are declared by the
Fund in  October,  November  or  December  as of a record date in such month and
actually paid in January of the  following  year will be treated as if they were
paid on  December  31 of the  year  declared.  Therefore,  such  dividends  will
generally be taxable to a shareholder in the year declared  rather than the year
paid.

         Distributions of net investment income,  certain foreign currency gain,
and realized net short-term capital gain in excess of net long-term capital loss
are generally  taxable to  shareholders  of the Fund as ordinary  income whether
such  distributions  are taken in cash or reinvested in additional  shares.  The
Fund expects  that a portion of these  distributions  to corporate  shareholders
will be eligible for the  dividends-received  deduction,  subject to  applicable
limitations  under the Code.  If dividend  payments  exceed income earned by the
Fund, the over distribution  would be considered a return of capital rather than
a dividend payment.  The Fund intends to pay dividends in such a manner so as to
minimize the possibility of a return of capital.  Distributions of net long-term
capital  gain (i.e.,  net  long-term  capital  gain in excess of net  short-term
capital loss) are taxable to shareholders of the Fund as long-term capital gain,
regardless  of whether such  distributions  are taken in cash or  reinvested  in
additional  shares and  regardless of how long a shareholder  has held shares in
the Fund. In general,  long-term capital gain of an individual  shareholder will
be subject to a 20% rate of tax.  Investors  should  consult  their tax advisors
concerning the treatment of capital gains and losses.

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

         Any  distribution  of net investment  income or capital gains will have
the effect of reducing the net asset value of Fund shares held by a  shareholder
by the same amount as the distribution.  If the net asset value of the shares is
reduced  below a  shareholder's  cost as a result  of such a  distribution,  the
distribution, although constituting a return of capital to the shareholder, will
be taxable as described  above.  Investors  should consider the  consequences at
purchasing  shares  in the Fund  shortly  before  the Fund  declares  a  sizable
individual distribution.

         Any gain or loss realized on the  redemption or exchange of Fund shares
by a shareholder  who is not a dealer in securities will be treated as long-term
capital  gain or loss if the shares  have been held for more than one year,  and
otherwise  as  short-term  capital  gain or loss.  Long-term  capital gain of an
individual  holder is  subject  to maximum  tax rate of 20%.  However,  any loss
realized by a shareholder  upon the redemption or exchange of shares in the Fund
held for six months or less will be treated as a long-term  capital  loss to the
extent of any long-term capital gain  distributions  received by the shareholder
with  respect  to such  shares.  In  addition,  no loss will be  allowed  on the
redemption  or exchange of shares of the Fund,  if within a period  beginning 30
days before the date of such  redemption  or  exchange  and ending 30 days after
such date,  the  shareholder  acquires (such as through  dividend  reinvestment)
securities that are substantially identical to shares of the Fund. Investors are
urged  to  consult  their  tax  advisors   concerning  the  limitations  on  the
deductibility of capital losses.

         Under the Code, gains or losses  attributable to disposition of foreign
currency  or to  certain  foreign  currency  contracts,  or to  fluctuations  in
exchange  rates  between  the time the Fund  accrues  income or  receivables  or
expenses or other liabilities denominated in a foreign currency and the time the
Fund  actually  collects  such income or pays such  liabilities,  are  generally
treated as ordinary income or ordinary loss.  Similarly,  gains or losses on the
disposition of debt securities held by the Fund, if any,  denominated in foreign
currency,  to the extent  attributable to fluctuations in exchange rates between
the  acquisition  and  disposition  dates are also treated as ordinary income or
loss.

          Forward currency contracts, options and futures contracts entered into
by the Fund may create "straddles" for U.S. federal income tax purposes and this
may affect the character  and timing of gains or losses  realized by the Fund on
forward currency  contracts,  options and futures contracts or on the underlying
securities.

          Certain options,  futures and foreign  currency  contracts held by the
Fund at the end of each  taxable  year will be required to be "marked to market"
for federal  income tax purposes -- i.e.,  treated as having been sold at market
value. For options and futures contracts,  60% of any gain or loss recognized on
these  deemed  sales and on actual  dispositions  will be treated  as  long-term
capital gain or loss,  and the remainder  will be treated as short-term  capital
gain or loss  regardless  of how long the Fund has held such options or futures.
However,  gain or loss recognized on certain foreign currency  contracts will be
treated as ordinary income or loss.

         The Fund may invest in Equity  Securities  of foreign  issuers.  If the
Fund purchases  shares in certain foreign  corporations  (referred to as passive
foreign investment  companies ("PFICs") under the Code), the Fund may be subject
to federal income tax on a portion of an "excess distribution" from such foreign
corporation, including any gain from the disposition of such shares, even though
a portion of such income may have to be distributed as a taxable dividend by the
Fund to its shareholders.  In addition,  certain interest charges may be imposed
on the Fund as a result of such  distributions.  Alternatively,  the Fund may in
some cases be  permitted to include  each year in its income and  distribute  to
shareholders a pro rata portion of the foreign investment fund's income, whether
or not distributed to the Fund.

         The Fund will be  permitted  to "mark to market" any  marketable  stock
held by it in a PFIC.  If the Fund made such an  election,  it would  include in
income each year an amount equal to its share of the excess, if any, of the fair
market  value of the PFIC  stock as of the  close of the  taxable  year over the
adjusted  basis of such  stock.  The Fund would be allowed a  deduction  for its
share of the excess,  if any, of the  adjusted  basis of the PFIC stock over its
fair market value as of the close of the taxable year, but only to the extent of
any net mark-to-market  gains with respect to the stock included by the Fund for
prior taxable years.

         If a correct and  certified  taxpayer  identification  number is not on
file, the Fund is required,  subject to certain  exemptions,  to withhold 31% of
certain payments made or distributions declared to non-corporate shareholders.

         Foreign   Shareholders.   Dividends  of  net   investment   income  and
distributions of realized net short-term gain in excess of net long-term loss to
a shareholder who, as to the United States,  is a nonresident  alien individual,
fiduciary  of  a  foreign  trust  or  estate,  foreign  corporation  or  foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax at
the rate of 30% (or lower  treaty  rate) unless the  dividends  are  effectively
connected  with a U.S. trade or business of the  shareholder,  in which case the
dividends  will be subject to tax on a net income basis at the  graduated  rates
applicable to U.S. individuals or domestic  corporations.  Distributions treated
as long term capital gains to foreign  shareholders  will not be subject to U.S.
tax unless the  distributions  are effectively  connected with the shareholder's
trade or business in the United States or, in the case of a shareholder who is a
nonresident alien  individual,  the shareholder was present in the United States
for more than 182 days during the taxable year and certain other  conditions are
met.

         In  the  case  of a  foreign  shareholder  who is a  nonresident  alien
individual or foreign entity,  the Fund may be required to withhold U.S. federal
income tax as "backup withholding" at the rate of 31% from distributions treated
as long-term capital gains from the proceeds of redemptions,  exchanges or other
dispositions  of Fund shares unless IRS Form W-8BEN (or any  successor  form) is
provided.  Transfers by gift of shares of the Fund by a foreign  shareholder who
is a nonresident  alien individual will not be subject to U.S. federal gift tax,
but the value of shares  of the Fund  held by such a  shareholder  at his or her
death will be includible in his or her gross estate for U.S.  federal estate tax
purposes.

         Foreign  Taxes.  It is expected that the Fund may be subject to foreign
withholding  taxes or other  foreign  taxes  with  respect  to income  (possibly
including,  in some cases,  capital gains)  received from sources within foreign
countries.

         State and Local Taxes.  The Fund may be subject to state or local taxes
in jurisdictions in which the Fund is deemed to be doing business.  In addition,
the treatment of the Fund and its  shareholders in those states that have income
tax laws  might  differ  from  treatment  under  the  federal  income  tax laws.
Shareholders  should consult their own tax advisors with respect to any state or
local taxes.

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

ADDITIONAL INFORMATION

         Telephone  calls to the Fund,  J.P.  Morgan or State Street may be tape
recorded.  With respect to the  securities  offered  hereby,  this  Statement of
Additional  Information  and the  Prospectus do not contain all the  information
included in the Trust's  registration  statement filed with the SEC. Pursuant to
the rules and regulations of the SEC,  certain  portions have been omitted.  The
registration statement,  including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.

         Statements  contained in this Statement of Additional  Information  and
the Prospectus concerning the contents of any contract or other document are not
necessarily  complete,  and, in each instance,  reference is made to the copy of
such  contract  or  other  document  filed  as  an  exhibit  to  the  applicable
Registration  Statements.  Each such  statement  is qualified in all respects by
such reference.
         No dealer, salesman or any other person has been authorized to give any
information or to make any  representations,  other than those  contained in the
Prospectus and this Statement of Additional Information,  in connection with the
offer  contained  therein  and,  if given or made,  such  other  information  or
representations  must not be relied upon as having been authorized by any of the
Trust,  the  Funds or FDI.  The  Prospectus  and this  Statement  of  Additional
Information  do not constitute an offer by the Fund or by FDI to sell or solicit
any offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is  unlawful  for the Fund or FDI to make  such  offer in such
jurisdictions.

FINANCIAL STATEMENTS

         The following financial  statements of each Fund and the report thereon
of  PricewaterhouseCoopers  LLP are incorporated  herein by reference from their
respective  annual report filings made with the SEC pursuant to Section 30(b) of
the 1940 Act and Rule 30b2-1 thereunder.  Additionally, the financial statements
of each  Fund  are  incorporated  herein  by  reference  from  their  respective
semi-annual  report  filings made with the SEC pursuant to Section  30(b) of the
1940 Act and Rule 30b2-1 thereunder.  Any of the following financial reports are
available  without  charge upon request by calling J.P.  Morgan Fund Services at
(800) 766-7722 for Institutional Shares and (800) 521-5411 Select Shares.

--------------------------- -------------------------------------------
                            Date of Annual Report; Date Annual
Name of Fund                Report Filed; and Accession Number
--------------------------- -------------------------------------------
--------------------------- -------------------------------------------
J.P. Morgan Institution     05/31/00; 07/26/00
Market Neutral Fund         0000912057-00-033199
--------------------------- -------------------------------------------


<PAGE>


APPENDIX A

Description of Securities Ratings

STANDARD & POOR'S

Corporate and Municipal Bonds

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

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

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

BBB           - Debt rated BBB is regarded as having an adequate capacity to pay
              interest  and  repay  principal.   Whereas  it  normally  exhibits
              adequate  protection  parameters,  adverse economic  conditions or
              changing  circumstances  are  more  likely  to lead to a  weakened
              capacity  to pay  interest  and repay  principal  for debt in this
              category than for debt in higher rated categories.

BB-B          - Debt rated BB and B is regarded,  on balance,  as  predominantly
              speculative with respect to the issuer's  capacity to pay interest
              and  repay   principal  in  accordance   with  the  terms  of  the
              obligation.  BB indicates the lowest degree of speculation.  While
              such  debt  will   likely  have  some   quality   and   protective
              characteristics,  these are outweighed by large  uncertainties  or
              major risk exposures to adverse conditions.

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax-Exempt Notes

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

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

MOODY'S

Corporate and Municipal Bonds

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

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

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

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

Ba            -  Bonds  which  are  rated  Ba are  judged  to  have  speculative
              elements; their future cannot be considered as well-assured. Often
              the  protection  of interest  and  principal  payments may be very
              moderate,  and thereby not well  safeguarded  during both good and
              bad times over the future.  Uncertainty of position  characterizes
              bonds in this class.

     B - Bonds which are rated B generally lack  characteristics  of a desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.



Commercial Paper, including Tax Exempt

         Prime-1 Issuers rated Prime-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory obligations.  Prime-1
repayment capacity will normally be evidenced by the following characteristics:

     - Leading market positions in well established industries.  - High rates of
return on funds employed. - Conservative capitalization structures with moderate
reliance  on debt and  ample  asset  protection.  - Broad  margins  in  earnings
coverage of fixed financial  charges and high internal cash  generation.  - Well
established  access to a range of  financial  markets  and  assured  sources  of
alternate liquidity.

Short-Term Tax Exempt Notes

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

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


--------
1 Mr.  Healey is an  "interested  person"  (as  defined  in the 1940 Act) of the
Trust.





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