JPM INSTITUTIONAL FUNDS, 485BPOS, 1996-05-01

JPM INSTITUTIONAL FUNDS
485BPOS, 1996-05-01

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As filed with the Securities and Exchange Commission on May 1, 1996
Registration Nos. 33-54642 and 811-7342

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 22

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 23

The JPM Institutional Funds
(Exact Name of Registrant as Specified in Charter)

6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code:
(617) 423-0800

Philip W. Coolidge
6 St. James Avenue, Boston, Massachusetts 02116
(Name and Address of Agent for Service)

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

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

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

If appropriate, check the following box:

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

The Registrant has previously registered an indefinite number of its shares
under the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. The Registrant has filed Rule 24f-2
notices with respect to its series as follows: Tax Exempt Money Market and Tax
Exempt Bond Funds (for their fiscal years ended August 31, 1995) on October 30,
1995; International Bond Fund (for its fiscal year ended September 30, 1995) on
November 17, 1995; Treasury Money Market, Short Term Bond, Bond, Emerging
Markets Equity and International Equity Funds (for their fiscal years ended
October 31, 1995) on November 17, 1995; Money Market Fund (for its fiscal year
ended November 30, 1995) on January 29, 1996; New York Total Return Bond Fund
(for its fiscal year ended March 31, 1995) on May 26, 1995; Selected U.S. Equity
and U.S. Small Company Funds (for their fiscal years ended May 31, 1995) on July
27, 1995; and Diversified Fund (for its fiscal year ended June 30, 1995) on
August 25, 1995. The Registrant has not filed Rule 24f-2 notices with respect to
Japan Equity, European Equity and Asia Growth Funds (for their fiscal years
ended December 31, 1995) because the Registrant has not sold any securities to
the public with respect to those series during the fiscal years indicated. The
Registrant expects to file Rule 24f-2 notices with respect to Japan Equity,
European Equity and Asia Growth Funds (for their fiscal years ending December
31, 1996) on or before February 28, 1997.

The Money Market Portfolio, The Tax Exempt Money Market Portfolio, The
Treasury Money Market Portfolio, The Short Term Bond Portfolio, The U.S. Fixed
Income Portfolio, The Tax Exempt Bond Portfolio, The Selected U.S. Equity
Portfolio, The U.S. Small Company Portfolio, The Non-U.S. Equity Portfolio, The
Diversified Portfolio, The Emerging Markets Equity Portfolio, The New York Total
Return Bond Portfolio, The Non-U.S. Fixed Income Portfolio and The Series
Portfolio have also executed this Registration Statement.

JPM583.EDG

<PAGE>
THE JPM INSTITUTIONAL FUNDS
CROSS-REFERENCE SHEET
(As Required by Rule 495)

PART A ITEM NUMBER: Prospectus Headings.

1. COVER PAGE: Cover Page.

2. SYNOPSIS: Investors for Whom the Funds are Designed.

3. CONDENSED FINANCIAL INFORMATION: Financial Highlights,
where applicable.

4. GENERAL DESCRIPTION OF REGISTRANT: Cover Page; Investors for Whom the
Funds are Designed; Investment Objectives and Policies; Additional
Investment Information; Investment Restrictions; Special Information
Concerning Hub and Spoke(R); Organization; Appendix.

5. MANAGEMENT OF THE FUND: Management of the Trust and the Portfolios;
Shareholder Servicing; Additional Information.

5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE: Not Applicable.

6. CAPITAL STOCK AND OTHER SECURITIES: Special Information Concerning Hub
and Spoke(R); Shareholder Servicing; Net Asset Value; Purchase of
Shares; Taxes; Dividends and Distributions; Organization.

7. PURCHASE OF SECURITIES BEING OFFERED: Purchase of Shares; Exchange of
Shares; Investors for Whom the Funds are Designed; Dividends and
Distributions; Net Asset Value.

8. REDEMPTION OR REPURCHASE: Redemption of Shares; Exchange of Shares; Net
Asset Value.

9. PENDING LEGAL PROCEEDINGS: Not Applicable.

PART B ITEM NUMBER: Statement of Additional Information Headings.

10. COVER PAGE: Cover Page.

11. TABLE OF CONTENTS: Table of Contents.

12. GENERAL INFORMATION AND HISTORY: General.

13. INVESTMENT OBJECTIVES AND POLICIES: Investment Objectives and Policies;
Additional Investments; Investment Restrictions; Quality and
Diversification Requirements; Appendices A, B and C.

14. MANAGEMENT OF THE FUND: Trustees and Officers.

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

16. INVESTMENT ADVISORY AND OTHER SERVICES: Investment Advisor;
Administrator and Distributor; Services Agent; Custodian; Shareholder
Servicing; Independent Accountants; Expenses.

17. BROKERAGE ALLOCATION AND OTHER PRACTICES: Portfolio Transactions.

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

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

20. TAX STATUS: Taxes.

21. UNDERWRITERS: Administrator and Distributor.

22. CALCULATION OF PERFORMANCE DATA: Performance Data.

23. FINANCIAL STATEMENTS: Financial Statements.

PART C. Information required to be included in Part C is set forth under the
appropriate items, so numbered, in Part C of this Registration Statement.
<PAGE>
EXPLANATORY NOTE

This post-effective amendment no. 22 (the "Amendment") to the Registrant's
registration statement on Form N-1A (File no. 33-54642) is being filed with
respect to The JPM Institutional Japan Equity Fund, The JPM Institutional
European Equity Fund and The JPM Institutional Asia Growth Fund, each a series
of shares of the Registrant (the "Funds"), to include updated financial and
other disclosure in (i) the Statement of Additional Information which describes
the Funds and (ii) the supplements to the prospectuses for The JPM Institutional
Japan Equity Fund and The JPM Institutional Asia Growth Fund. As a result, the
Amendment does not affect any of the Registrant's currently effective
prospectuses, each of which is hereby incorporated herein by reference as most
recently filed pursuant to Rule 497 under the Securities Act of 1933, as
amended.

<PAGE>
THE JPM INSTITUTIONAL ASIA GROWTH FUND
Supplement dated May 1, 1996 to the
Prospectus formerly dated December 29, 1995

1. The date of the Prospectus is amended to May 1, 1996.

2. The first four lines under the caption "Expense Table - Annual
Operating Expenses" on page 2 of the Prospectus are restated as
follows:

"Advisory Fees . . . . . . . . . . . . . . . . . . . . . . . .0.80%
Rule 12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (after expense reimbursement) . . . . . . . . .0.45%

Total Operating Expenses (after expense reimbursement). . . . 1.25%"

3. The three paragraphs under the subheading captioned "Investing in
Asian Growth Markets" on page 5 of the Prospectus are restated as
follows:

"The Portfolio invests primarily in equity securities of companies in
Asian growth markets. Investments in securities of issuers in Asian
growth markets may involve a high degree of risk and many may be
considered speculative. These investments carry all of the risks of
investing in securities of foreign issuers described below to a
heightened degree. These heightened risks include (i) greater risks of
expropriation, confiscatory taxation, nationalization, and less social,
political and economic stability; (ii) the small current size of the
markets for securities of Asian issuers and the currently low or
nonexistent volume of trading, resulting in lack of liquidity and in
price volatility; (iii) certain national policies which may restrict
the Portfolio's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant
national interests; and (iv) the absence of developed legal structures
governing private or foreign investment and private property.

Different combinations of the above risks exist in each Asian growth
market. For example, the People's Republic of China (the "PRC")
continues to exercise significant centralized control over the economy.
A delay in implementing, or a reversal of, economic reforms could
adversely affect economic growth, opportunities for foreign investment
and the prospects of private sector enterprises. Actions by the PRC
with respect to Hong Kong, both before and after the reversion to
Chinese rule, could have a negative effect on business confidence, the
performance of Hong Kong companies and the prices of Hong Kong stocks.

<PAGE>

The value of the Portfolio's investments could also be unfavorably
affected by limitations on the foreign ownership of stock imposed by
Indonesia, Malaysia, Thailand and Taiwan; by substantial delays in the
settlement (through physical delivery) of stock transactions in India;
and Thailand's border disputes with Laos and Cambodia. In addition, all
of these countries have experienced or may experience a significant
degree of political instability and volatility in the prices of their
respective currencies. For additional information, see Appendix
C--Investing in Japan and Asian Growth Markets in the Statement of
Additional Information."

4. The following is inserted after the first sentence of the third
paragraph under the caption "Purchase of Shares-- Method of Purchase"
on page 13 of the Prospectus:

"The Fund may permit an investor who is investing for a group of
clients to attain the $1 million minimum investment within a reasonable
period of time that will be no longer than thirteen months after
opening its account."

JPM575

<PAGE>

THE JPM INSTITUTIONAL JAPAN EQUITY FUND Supplement dated May 1, 1996 to the
Prospectus formerly dated December 29, 1995

1. The date of the Prospectus is amended to May 1, 1996.

2. The first four lines under the caption "Expense Table - Annual
Operating Expenses" on page 2 of the Prospectus are restated as
follows:

"Advisory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 0.65%
Rule 12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses (after expense reimbursement) . . . . . . . . . .0.35%"

Total Operating Expenses (after expense reimbursement). . . . . . 1.00%

3. The second paragraph under the subheading captioned "Investing in
Japan" on page 5 of the Prospectus is restated as follows:

"Despite recent increases, prices for exchange-listed and OTC stocks of
Japanese companies are currently depressed in comparison to their
historical peaks in 1989 and 1990. Nevertheless, Japanese stocks
continue to trade at high price earnings ratios relative to stocks of
U.S. companies. In addition, differences in accounting methods make it
difficult to compare the earnings of Japanese companies with those of
U.S. companies. Because most of the Portfolio's investments are
denominated in yen, changes in currency exchange rates will affect the
U.S. dollar value of the Portfolio's assets. The Japanese economy has
experienced a substantial reduction in its rate of growth. Economic
growth and the prices of Japanese stocks could be adversely affected by
a reversal of Japan's historical success in exporting its products and
maintaining low inflation and interest rates. Recent political
instability and any resulting delay in implementing regulatory reforms
could also have a negative effect on Japanese stock prices. For
additional information, see Appendix C--Investing in Japan and Asian
Growth Markets--Japan and its Securities Markets in the Statement of
Additional Information."

4. The following is inserted after the first sentence of the third
paragraph under the caption "Purchase of Shares-- Method of Purchase"
on page 13 of the Prospectus:

"The Fund may permit an investor who is investing for a group of
clients to attain the $2 million minimum investment within a reasonable
period of time that will be no longer than thirteen months after
opening its account."

JPM575

<PAGE>

JPM572

THE JPM INSTITUTIONAL MONEY MARKET FUND
THE JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
THE JPM INSTITUTIONAL TREASURY MONEY MARKET FUND
THE JPM INSTITUTIONAL SHORT TERM BOND FUND
THE JPM INSTITUTIONAL BOND FUND
THE JPM INSTITUTIONAL TAX EXEMPT BOND FUND
THE JPM INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
THE JPM INSTITUTIONAL DIVERSIFIED FUND
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
THE JPM INSTITUTIONAL U.S. SMALL COMPANY FUND
THE JPM INSTITUTIONAL INTERNATIONAL EQUITY FUND
THE JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND
THE JPM INSTITUTIONAL EUROPEAN EQUITY FUND
THE JPM INSTITUTIONAL JAPAN EQUITY FUND
THE JPM INSTITUTIONAL ASIA GROWTH FUND

STATEMENT OF ADDITIONAL INFORMATION

May 1, 1996

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, BUT CONTAINS
ADDITIONAL INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
FOR THE FUND OR FUNDS LISTED ABOVE, AS SUPPLEMENTED FROM TIME TO TIME, WHICH MAY
BE OBTAINED UPON REQUEST FROM SIGNATURE BROKER-DEALER SERVICES, INC.,
ATTENTION: THE JPM INSTITUTIONAL FUNDS; (800) 847-9487.

<PAGE>

Table of Contents

PAGE

General . . . . . . . . . . . . . . . . . . . 1
Investment Objectives and Policies . . . . . . 1
Investment Restrictions . . . . . . . . . . . 34
Trustees and Officers . . . . . . . . . . . . 55
Investment Advisor . . . . . . . . . . . . . . 60
Administrator and Distributor . . . . . . . . 64
Services Agent . . . . . . . . . . . . . . . . 68
Custodian . . . . . . . . . . . . . . . . . . 71
Shareholder Servicing . . . . . . . . . . . . 72
Independent Accountants . . . . . . . . . . . 74
Expenses . . . . . . . . . . . . . . . . . . . 74
Purchase of Shares . . . . . . . . . . . . . . 75
Redemption of Shares . . . . . . . . . . . . . 75
Exchange of Shares . . . . . . . . . . . . . . 76
Dividends and Distributions . . . . . . . . . 76
Net Asset Value . . . . . . . . . . . . . . . 77
Performance Data . . . . . . . . . . . . . . . 79
Portfolio Transactions . . . . . . . . . . . . 83
Massachusetts Trust . . . . . . . . . . . . . 86
Description of Shares . . . . . . . . . . . . 87
Taxes . . . . . . . . . . . . . . . . . . . . 89
Additional Information . . . . . . . . . . . 94
Financial Statements . . . . . . . . . . . . . 94
Appendix A - Description of Securities
Ratings . . . . . . . . . . . . . . . . . . . A-1
Appendix B - Additional Information
Concerning New York Municipal Obligations. . . B-1
Appendix C - Investing in Japan
and Asian Growth Markets. . . . . . . . . . . C-1

<PAGE>

GENERAL

The JPM Institutional Family of Funds is a family of open-end
investment companies, currently consisting of sixteen funds: The JPM
Institutional Money Market Fund, The JPM Institutional Treasury Money Market
Fund, The JPM Institutional Tax Exempt Money Market Fund, The JPM Institutional
Short Term Bond Fund, The JPM Institutional Bond Fund, The JPM Institutional Tax
Exempt Bond Fund, The JPM Institutional International Bond Fund, The JPM
Institutional Diversified Fund, The JPM Institutional New York Total Return Bond
Fund, The JPM Institutional Selected U.S. Equity Fund, The JPM Institutional
U.S. Small Company Fund, The JPM Institutional International Equity Fund, The
JPM Institutional Emerging Markets Equity Fund, The JPM Institutional European
Equity Fund, The JPM Institutional Japan Equity Fund and The JPM Institutional
Asia Growth Fund (collectively, the "Funds"). Each of the Funds is a series of
shares of beneficial interest of The JPM Institutional Funds, an open-end
management investment company formed as a Massachusetts business trust (the
"Trust").

This Statement of Additional Information describes the financial
history, investment objectives and policies, management and operation of each of
the Funds to enable investors to select the Funds which best suit their needs.
The Funds operate through Signature Financial Group, Inc.'s Hub and Spoke(R)
investment fund
structure.

This Statement of Additional Information provides additional
information with respect to the Funds and should be read in conjunction with the
current Prospectus. Capitalized terms not otherwise defined herein have the
meanings accorded to them in the Funds' Prospectus. The Funds' executive offices
are located at 6 St. James Avenue, Boston, Massachusetts 02116.

INVESTMENT OBJECTIVES AND POLICIES

THE JPM INSTITUTIONAL MONEY MARKET FUND (the "Money Market Fund") is
designed to be an economical and convenient means of making substantial
investments in money market instruments. The Money Market Fund's investment
objective is to maximize current income and maintain a high level of liquidity.
The Fund attempts to achieve this objective by investing all of its investable
assets in The Money Market Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as the Money
Market Fund.

The Portfolio seeks to achieve its investment objective by maintaining
a dollar-weighted average portfolio maturity of not more than 90 days and by
investing in U.S. dollar denominated securities described in the Prospectus and
this Statement of Additional Information that meet certain rating criteria,
present minimal credit risk and have effective maturities of not more than
thirteen months. The Portfolio's ability to achieve maximum

<PAGE>

current income is affected by its high quality standards. See "Quality and
Diversification Requirements."

THE JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND (the "Tax Exempt
Money Market Fund") is designed to be an economical and convenient means of
making substantial investments in instruments that are exempt from federal
income tax. The Tax Exempt Money Market Fund's investment objective is to
provide a high level of current income that is exempt from federal income tax
and maintain a high level of liquidity. See "Taxes." The Fund attempts to
achieve this objective by investing all of its investable assets in The Tax
Exempt Money Market Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as the Tax
Exempt Money Market Fund.

The Portfolio attempts to achieve its investment objective by
maintaining a dollar-weighted average portfolio maturity of not more than 90
days and by investing in U.S. dollar-denominated securities described in the
Prospectus and this Statement of Additional Information that meet certain rating
criteria, present minimal credit risks, have effective maturities of not more
than thirteen months and earn interest wholly exempt from federal income tax in
the opinion of bond counsel for the issuer, but it may invest up to 20% of its
total assets in taxable obligations. See "Quality and Diversification
Requirements." Interest on these securities may be subject to state and local
taxes. For more detailed information regarding tax matters, including the
applicability of the alternative minimum tax, see "Taxes."

THE JPM INSTITUTIONAL TREASURY MONEY MARKET FUND (the "Treasury Money
Market Fund") is designed to be an economical and convenient means of making
substantial investments primarily in short term direct obligations of the U.S.
Government. The Treasury Money Market Fund's investment objective is to provide
current income, maintain a high level of liquidity and preserve capital. The
Fund attempts to accomplish this objective by investing all of its investable
assets in The Treasury Money Market Portfolio (the "Portfolio"), a diversified
open-end management investment company having the same investment objective as
the Treasury Money Market Fund.

The Portfolio attempts to achieve its investment objective by
maintaining a dollar-weighted average portfolio maturity of not more than 90
days and by investing primarily in U.S. Treasury securities and by investing in
certain U.S. Treasury securities described in the Prospectus and in this
Statement of Additional Information that have effective maturities of not more
than thirteen months. See "Quality and Diversification Requirements."

THE JPM INSTITUTIONAL SHORT TERM BOND FUND (the "Short Term Bond Fund")
is designed for investors who place a strong emphasis on conservation of capital
but who also want a return greater than that of a money market fund or other
very low risk

<PAGE>

investment vehicles. It is appropriate for investors who do not require the
stable net asset value typical of a money market fund but who want less price
fluctuation than is typical of a longer-term bond fund. The Short Term Bond
Fund's investment objective is to provide a high total return while attempting
to limit the likelihood of negative quarterly returns. The Short Term Bond Fund
seeks to achieve this high total return to the extent consistent with modest
risk of capital and the maintenance of liquidity. The Short Term Bond Fund
attempts to achieve its investment objective by investing all of its investable
assets in The Short Term Bond Portfolio (the "Portfolio"), a diversified
open-end management investment company having the same investment objective as
the Short Term Bond Fund.

The Portfolio attempts to achieve its investment objective by investing
primarily in the corporate and government debt obligations and related
securities described in the Prospectus and this Statement of Additional
Information.

THE JPM INSTITUTIONAL BOND FUND (the "Bond Fund") is designed to be an
economical and convenient means of making substantial investments in a broad
range of corporate and government debt obligations and related investments of
domestic and foreign issuers, subject to certain quality and other restrictions.
See "Quality and Diversification Requirements." The Bond Fund's investment
objective is to provide a high total return consistent with moderate risk of
capital and maintenance of liquidity. Although the net asset value of the Bond
Fund will fluctuate, the Bond Fund attempts to conserve the value of its
investments to the extent consistent with its objective. The Bond Fund attempts
to achieve its objective by investing all of its investable assets in The U.S.
Fixed Income Portfolio (the "Portfolio"), a diversified open-end management
investment company having the same investment objective as the Bond Fund.

The Portfolio attempts to achieve its investment objective by investing
in high grade corporate and government debt obligations and related securities
of domestic and foreign issuers described in the Prospectus and this Statement
of Additional Information.

INVESTMENT PROCESS

Duration/yield curve management: Morgan's duration decision begins with
an analysis of real yields, which its research indicates are generally a
reliable indicator of longer term interest rate trends. Other factors Morgan
studies in regard to interest rates include economic growth and inflation,
capital flows and monetary policy. Based on this analysis, Morgan forms a view
of the most likely changes in the level and shape of the yield curve -- as well
as the timing of those changes -- and sets the Portfolio's duration and maturity
structure accordingly. Morgan typically limits the overall duration of the
Portfolio to a range between one year shorter and one year longer than that of
the Salomon Brothers Broad Investment Grade Bond Index, the benchmark index.

<PAGE>

Sector allocations: Sector allocations are driven by Morgan's
fundamental and quantitative analysis of the relative valuation of a broad array
of fixed income sectors. Specifically, Morgan utilizes market and credit
analysis to assess whether the current risk-adjusted yield spreads of various
sectors are likely to widen or narrow. Morgan then overweights (underweights)
those sectors its analysis indicates offer the most (least) relative value,
basing the speed and magnitude of these shifts on valuation considerations.

Security selection: Securities are selected by the portfolio manager,
with substantial input from Morgan's fixed income analysts and traders. Using
quantitative analysis as well as traditional valuation methods, Morgan's
applied-research analysts aim to optimize security selection within the bounds
of the Portfolio's investment objective. In addition, credit analysts --
supported by Morgan's equity analysts -- assess the creditworthiness of issuers
and counterparties. A dedicated trading desk contributes to security selection
by tracking new issuance, monitoring dealer inventories, and identifying
attractively priced bonds. The traders also handle all transactions for the
Portfolio.

THE JPM INSTITUTIONAL TAX EXEMPT BOND FUND (the "Tax Exempt Bond Fund")
is designed to be an economical and convenient means of making substantial
investments in debt obligations that are exempt from federal income tax. The Tax
Exempt Bond Fund's investment objective is to provide a high level of current
income exempt from federal income tax consistent with moderate risk of capital
and maintenance of liquidity. See "Taxes." The Fund attempts to achieve its
investment objective by investing all of its investable assets in The Tax Exempt
Bond Portfolio (the "Portfolio"), a diversified open-end management investment
company having the same investment objective as the Tax Exempt Bond Fund.

The Portfolio attempts to achieve its investment objective by investing
primarily in securities of states, territories and possessions of the United
States and their political subdivisions, agencies and instrumentalities, the
interest of which is exempt from federal income tax in the opinion of bond
counsel for the issuer, but it may invest up to 20% of its total assets in
taxable obligations. The Tax Exempt Bond Fund seeks to maintain a current yield
that is greater than that obtainable from a portfolio of short term tax exempt
obligations, subject to certain quality restrictions. See "Quality and
Diversification Requirements."

THE JPM INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND (the "New York
Total Return Bond Fund") is designed to be an economical and convenient means of
investing in a portfolio consisting primarily of debt obligations that are
exempt from

<PAGE>

federal and New York State income taxes. The New York Total Return Bond Fund's
investment objective is to provide a high after tax total return for New York
residents consistent with moderate risk of capital. Total return will consist of
income plus capital gains and losses. The Fund attempts to achieve its objective
by investing all of its investable assets in The New York Total Return Bond
Portfolio (the "Portfolio"), a non-diversified open-end management investment
company having the same investment objective as the Fund.

The Portfolio attempts to achieve its investment objective by investing
primarily in municipal securities issued by New York State and its political
subdivisions and by agencies, authorities and instrumentalities of New York and
its political subdivisions.
These securities earn income exempt from federal and New York State and local
income taxes but, in certain circumstances, may be subject to alternative
minimum tax. In addition, the Portfolio may invest in municipal securities
issued by states other than New York, by territories and possessions of the
United States and by the District of Columbia and their political subdivisions,
agencies and instrumentalities. These securities earn income exempt from federal
income taxes but, in certain circumstances, may be subject to alternative
minimum tax. In order to seek to enhance the Portfolio's after tax return, the
Portfolio may also invest in securities which earn income subject to New York
and/or federal income taxes. These securities include U.S. government
securities, corporate securities and municipal securities issued on a taxable
basis.

THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND (the "International Bond
Fund") is designed to be an economical and convenient means of making
substantial investments in a broad range of international fixed income
securities. The International Bond Fund's investment objective is to provide a
high total return, consistent with moderate risk of capital, from a portfolio of
international fixed income securities. The International Bond Fund attempts to
achieve its objective by investing all of its investable assets in The Non-U.S.
Fixed Income Portfolio (the "Portfolio"), a non-diversified open-end management
investment company having the same investment objective as the International
Bond Fund.

The Portfolio attempts to achieve its investment objective by investing
primarily in high grade, non-dollar-denominated corporate and government debt
obligations of foreign issuers described in the Prospectus and this Statement of
Additional Information.

INVESTMENT PROCESS

Duration management: The duration decision is central to Morgan's
investment process and begins with an analysis of economic conditions and real
yields in the countries that make up the Portfolio's universe. Based on this
analysis, fixed income

<PAGE>

portfolio managers forecast three potential paths (optimistic, pessimistic, and
most likely) that interest rates in each market could follow over the next three
and twelve months. These forecasts are converted into return curves that enable
Morgan to estimate the risk-return profile of different portfolio durations. In
each market, duration is set at its "optimal" level-that is, at the level that
Morgan believes will generate the highest excess return per unit of excess risk,
as measured against the Salomon Brothers World Government Bond Index.

Country allocation: Morgan allocates the Portfolio's assets primarily
among the developed countries of the world outside the United States. Country
allocations are determined through and optimization procedure that ranks markets
according to the risks and returns inherent in their "optimal" durations.
Country weightings also reflect liquidity and credit quality considerations. To
help contain risk, Morgan typically limits the country-weighted duration of the
Portfolio to a range between one year shorter and one year longer than that of
the benchmark.

Sector/security selection: Holdings primarily consist of government and
government-guaranteed bonds, but also include publicly and privately traded
corporates, debt obligations of banks and bank holding companies and of
supranational organizations, and convertible securities. Sectors are over- or
under-weighted when Morgan perceives significant valuation distortions in their
yield spreads. Securities are selected by the portfolio manager, with
substantial input from fixed income analysts and traders as well as from
Morgan's extended network of equity analysts. Credit analysts monitor the
quality of current and prospective holdings and, in conjunction with the credit
committee, recommend purchases and sales.

THE JPM INSTITUTIONAL DIVERSIFIED FUND (the "Diversified Fund") is
designed for investors who wish to invest for long term objectives such as
retirement and who seek to attain real appreciation in their investments over
the long term, but with somewhat less price fluctuation than a portfolio
consisting solely of equity securities. The Diversified Fund's investment
objective is to provide a high total return from a diversified portfolio of
equity and fixed income securities. The Fund attempts to achieve its investment
objective by investing all of its investable assets in The Diversified
Portfolio, a diversified open-end management investment company having the same
investment objective as the Diversified Fund.

THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND (the "Selected U.S.
Equity Fund") is designed for investors who want an actively managed portfolio
of selected equity securities that seeks to outperform the S&P 500 Index. The
Selected U.S. Equity Fund's investment objective is to provide a high total
return from a portfolio of selected equity securities. The Fund attempts to
achieve its investment objective by investing all of its investable assets in
The Selected U.S. Equity Portfolio (the "Portfolio"), a diversified open-end
management investment company having the same investment objective as the
Selected U.S. Equity Fund.

<PAGE>

its investable assets in The Selected U.S. Equity Portfolio (the "Portfolio"), a
diversified open-end management investment company having the same investment
objective as the Selected U.S.
Equity Fund.

In normal circumstances, at least 65% of the Portfolio's net assets
will be invested in equity securities consisting of common stocks and other
securities with equity characteristics comprised of preferred stock, warrants,
rights, convertible securities, trust certifications, limited partnership
interests and equity participations (collectively, "Equity Securities"). The
Portfolio's primary equity investments are the common stock of large and medium
sized U.S. corporations and, to a limited extent, similar securities of foreign
corporations.

INVESTMENT PROCESS

Fundamental research: Morgan's 20 domestic equity analysts, each an
industry specialist with an average of 13 years of experience, follow 700
predominantly large- and medium-sized U.S. companies -- 500 of which form the
universe for the Portfolio's investments. Their research goal is to forecast
normalized, longer term earnings and dividends for the most attractive companies
among those they cover. In doing this, they may work in concert with Morgan's
international equity analysts in order to gain a broader perspective for
evaluating industries and companies in today's global economy.

Systematic valuation: The analysts' forecasts are converted into
comparable expected returns by a dividend discount model, which calculates those
expected returns by comparing a company's current stock price with the "fair
value" price forecasted by its estimated long-term earnings power. Within each
sector, companies are ranked by their expected return and grouped into
quintiles: those with the highest expected returns (Quintile 1) are deemed the
most undervalued relative to their long-term earnings power, while those with
the lowest expected returns (Quintile 5) are deemed the most overvalued.

Disciplined portfolio construction: A diversified portfolio is
constructed using disciplined buy and sell rules. Purchases are concentrated
among first-quintile stocks; the specific names selected reflect the portfolio
manager's judgment concerning the soundness of the underlying forecasts, the
likelihood that the perceived misvaluation will be corrected within a reasonable
time frame, and the magnitude of the risks versus the rewards. Once a stock
falls into the third quintile -- because its price has risen or its fundamentals
have deteriorated -- it generally becomes a sale candidate. The portfolio
manager seeks to hold sector weightings close to those of the S&P 500 Index,
reflecting Morgan's belief that its research has the potential to add value at
the individual stock level, but not at the sector level. Sector neutrality is
also seen as a way to help protect the portfolio from macroeconomic risks, and
- --together with

<PAGE>

diversification -- represents an important element of Morgan's risk control
strategy. A dedicated trading desk handles all transactions for the Portfolio.

THE JPM INSTITUTIONAL U.S. SMALL COMPANY FUND (the "U.S. Small Company
Fund") is designed for investors who are willing to assume the somewhat higher
risk of investing in small companies in order to seek a higher return over time
than might be expected from a portfolio of stocks of large companies. The U.S.
Small Company Fund's investment objective is to provide a high total return from
portfolio of Equity Securities of small companies. The Fund attempts to achieve
its investment objective by investing all of its investable assets in The U.S.
Small Company Portfolio (the "Portfolio"), a diversified open-end management
investment company having the same investment objective as the U.S. Small
Company Fund.

The Portfolio attempts to achieve its investment objective by investing
primarily in the common stock of small U.S. companies included in the Russell
2500 Index, which is composed of 2,500 common stocks of U.S. companies with
market capitalizations ranging between $100 million and $1.5 billion.

INVESTMENT PROCESS

Fundamental research: Morgan's 20 domestic equity analysts -- each an
industry specialist with an average of 13 years of experience -- continuously
monitor the small cap stocks in their respective sectors with the aim of
identifying companies that exhibit superior financial strength and operating
returns. Meetings with management and on-site visits play a key role in shaping
their assessments. Their research goal is to forecast normalized, long-term
earnings and dividends for the most attractive small cap companies among those
they monitor -- a universe that generally contains a total of 300-350 names.
Because Morgan's analysts follow both the larger and smaller companies in their
industries -- in essence, covering their industries from top to bottom -- they
are able to bring broad perspective to the research they do on both.

Systematic valuation: The analysts' forecasts are converted into
comparable expected returns by Morgan's dividend discount model, which
calculates those returns by comparing a company's current stock price with the
"fair value" price forecasted by its estimated long-term earnings power. Within
each industry, companies are ranked by their expected returns and grouped into
quintiles: those with the highest expected returns (Quintile 1) are deemed the
most undervalued relative to their long-term earnings power, while those with
the lowest expected returns (Quintile 5) are deemed the most overvalued.

Disciplined portfolio construction: A diversified portfolio is constructed
using disciplined buy and sell rules. Purchases are concentrated among the
stocks in the top two quintiles of the

<PAGE>

rankings; the specific names selected reflect the portfolio manager's judgment
concerning the soundness of the underlying forecasts, the likelihood that the
perceived misevaluation will soon be corrected, and the magnitude of the risks
versus the rewards. Once a stock falls into the third quintile -- because its
price has risen or its fundamentals have deteriorated -- it generally becomes a
sale candidate. The portfolio manager seeks to hold sector weightings close to
those of the Russell 2500 Index, the Portfolio's benchmark, reflecting Morgan's
belief that its research has the potential to add value at the individual stock
level, but not at the sector level. Sector neutrality is also seen as a way to
help to protect the portfolio from macroeconomic risks, and -- together with
diversification -- represents an important element of Morgan's risk control
strategy.

THE JPM INSTITUTIONAL INTERNATIONAL EQUITY FUND (the "International
Equity Fund") is designed for investors with a long term investment horizon who
want to diversify their portfolios by investing in an actively managed portfolio
of non-U.S. securities that seeks to outperform the Morgan Stanley Capital
International ("MSCI") Europe, Australia and Far East Index (the "EAFE Index").
The International Equity Fund's investment objective is to provide a high total
return from a portfolio of Equity Securities of foreign corporations. The Fund
attempts to achieve its investment objective by investing all of its investable
assets in The Non-U.S. Equity Portfolio (the "Portfolio"), a diversified
open-end management investment company having the same investment objective as
the International Equity Fund.

The Portfolio seeks to achieve its investment objective by investing
primarily in the Equity Securities of foreign corporations. Under normal
circumstances, the Portfolio expects to invest at least 65% of its total assets
in such securities. The Portfolio does not intend to invest in U.S. securities
(other than money market instruments), except temporarily, when extraordinary
circumstances prevailing at the same time in a significant number of developed
foreign countries render investments in such countries inadvisable.

INVESTMENT PROCESS

<PAGE>

weightings, Morgan analyzes a variety of qualitative factors as well --
including the liquidity, earnings momentum and interest rate climate of the
market at hand. These qualitative assessments can change the magnitude but not
the direction of the country allocations called for by the risk premium
forecast. Morgan places limits on the total size of the Portfolio's country
over- and under-weightings relative to the EAFE Index.

Stock selection: Morgan's 44 international equity analysts, each an
industry and country specialist, forecast normalized earnings and dividend
payouts for roughly 1,000 non-U.S. companies -- taking a long-term perspective
rather than the short time frame common to consensus estimates. These forecasts
are converted into comparable expected returns by a dividend discount model, and
then companies are ranked from most to least attractive by industry and country.
A diversified portfolio is constructed using disciplined buy and sell rules. The
portfolio manager's objective is to concentrate the purchases in the top third
of the rankings, and to keep sector weightings close to those of the EAFE Index,
the Fund's benchmark. Once a stock falls into the bottom third of the rankings,
it generally becomes a sales candidate. Where available, warrants and
convertibles may be purchased instead of common stock if they are deemed a more
attractive means of investing in an undervalued company.

Currency management: Currency is actively managed, in conjunction with
country and stock allocation, with the goal of protecting and possibly enhancing
the Fund's return. Morgan's currency decisions are supported by a proprietary
tactical mode which forecasts currency movements based on an analysis of four
fundamental factors -- trade balance trends, purchasing power parity, real
short-term interest differentials, and real bond yields -- plus a technical
factor designed to improve the timing of transactions. Combining the output of
this model with a subjective assessment of economic, political and market
factors, Morgan's currency group recommends currency strategies that are
implemented in conjunction with the Portfolio's investment strategy.

THE JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND (the "Emerging
Markets Equity Fund") is designed for investors with a long term investment
horizon who want exposure to the rapidly growing emerging markets. The Emerging
Markets Equity Fund's investment objective is to provide a high total return
from a portfolio of Equity Securities of companies in emerging markets. The Fund
attempts to achieve its investment objective by investing all of its investable
assets in The Emerging Markets Equity Portfolio (the "Portfolio"), a diversified
open-end management investment company having the same investment objective as
the Emerging Markets Equity Fund.

The Portfolio seeks to achieve its investment objective by investing
primarily in Equity Securities of emerging markets issuers. Under normal
circumstances, the Portfolio expects to

<PAGE>

invest at least 65% of its total assets in such securities. The Portfolio does
not intend to invest in U.S. securities (other than money market instruments),
except temporarily, when extraordinary circumstances prevailing at the same time
in a significant number of emerging markets countries render investments in such
countries inadvisable.

INVESTMENT PROCESS

Country allocation: Morgan's country allocation decision begins with a
forecast of the expected return of each market in the Portfolio's universe.
These expected returns are calculated using a proprietary valuation method that
is forward looking in nature rather than based on historical data. Morgan then
evaluates these expected returns from two different perspectives: first, it
identifies those countries that have high real expected returns relative to
their own history and other nations in their universe. Second, it identifies
those countries that it expects will provide high returns relative to their
currency risk. Countries that rank highly on one or both of these scores are
overweighted relative to the Fund's benchmark, the MSCI Emerging Markets Free
Index, while those that rank poorly are underweighted. To help contain risk,
Morgan places limits on the total size of the Portfolio's country over- and
under-weightings.

Stock selection: Morgan's 12 emerging market equity analysts -- each an
industry specialist -- monitor a universe of approximately 900 companies in
these countries, developing forecasts of earnings and cash flows for the most
attractive among them. Companies are ranked from most to least attractive based
on this research, and then a diversified portfolio is constructed using
disciplined buy and sell rules. The portfolio manager's objective is to
concentrate the Portfolio's holdings in the stocks deemed most undervalued, and
to keep sector weightings relatively close to those of the index. Stocks are
generally held until they fall into the bottom half of Morgan's rankings.

THE JPM INSTITUTIONAL EUROPEAN EQUITY FUND (the "European Equity Fund")
is designed for investors who want an actively managed portfolio of European
Equity Securities that seeks to outperform the Morgan Stanley Capital
International Europe Index which is comprised of more than 500 companies in
fourteen European countries. The European Equity Fund's investment objective is
to provide a high total return from a portfolio of Equity Securities of European
companies. The European Equity Fund attempts to achieve its investment objective
by investing all of its investable assets in The European Equity Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objective as the European Equity Fund.

The Portfolio seeks to achieve its investment objective by investing
primarily in the Equity Securities of European companies. Under normal
circumstances, the Portfolio expects to

<PAGE>

invest at least 65% of its total assets in such securities. The Portfolio does
not intend to invest in U.S. securities (other than money market instruments),
except temporarily, when extraordinary circumstances prevailing at the same time
in a significant number of European countries render investments in such
countries inadvisable.

INVESTMENT PROCESS

Country allocation: Morgan's country allocation decision begins with a
forecast of equity risk premiums, which provide a valuation signal by measuring
the relative attractiveness of stocks versus bonds. Using a proprietary
approach, Morgan calculates this risk premium for each of the nations in the
Portfolio's universe, determines the extent of its deviation -- if any -- from
its historical norm, and then ranks countries according to the size of those
deviations. Countries with high (low) rankings are overweighted (underweighted)
in comparison to the Morgan Stanley Capital International Europe Index to
reflect the above-average (below-average) attractiveness of their stock markets.
In determining weightings, Morgan analyzes a variety of qualitative factors as
well -- including the liquidity, earnings momentum and interest rate climate of
the market at hand. These qualitative assessments can change the magnitude but
not the direction of the country allocations called for by the risk-premium
forecast. In an effort to contain risk, Morgan places limits on the total size
of the Portfolio's country over- and under-weightings.

Stock selection: Morgan's 15 European equity analysts, each an industry
and country specialist, forecast normalized earnings and dividend payouts for
roughly 600 companies, taking a long-term perspective rather than the short time
frame common to consensus estimates. The analysts' forecasts are converted into
comparable expected returns by a dividend discount model, and then companies are
ranked from most to least attractive by industry and country. A diversified
portfolio is constructed using disciplined buy and sell rules. The portfolio
manager's objective is to concentrate purchases in the top third of the
rankings, and to keep sector weightings close to those of the benchmark. Once a
stock falls into the bottom third of the rankings -- because its price has risen
or its fundamentals have deteriorated -- it generally becomes a sale candidate.

THE JPM INSTITUTIONAL JAPAN EQUITY FUND (the "Japan Equity Fund") is
designed for investors who want an actively managed portfolio of Japanese Equity
Securities that seeks to outperform the Tokyo Stock Price Index ("TOPIX"), a
composite market-capitalization weighted-index of all common stocks listed on
the First Section of the Tokyo Stock Exchange. The Japan Equity Fund's
investment objective is to provide a high total return from a portfolio of
Equity Securities of Japanese companies. The Japan Equity Fund attempts to
achieve its investment objective by investing all of its investable assets in

<PAGE>

The Japan Equity Portfolio (the "Portfolio"), a non-diversified open-end
management investment company having the same investment objective as the Japan
Equity Fund. For additional information, see "Appendix C - Investing in Japan
and Asian Growth Markets."

The Portfolio seeks to achieve its investment objective by investing
primarily in the Equity Securities of Japanese companies. Under normal
circumstances, the Portfolio expects to invest at least 65% of its total assets
in such securities. The Portfolio does not intend to invest in U.S. securities
(other than money market instruments), except temporarily, when extraordinary
circumstances prevailing in Japan render investments there inadvisable.

INVESTMENT PROCESS

Systematic valuation: Morgan's ten Japanese equity analysts in Tokyo
- -- each an industry specialist -- follow a total of over 300 Japanese companies.
The most attractive names in that universe are identified by a multifactor model
which screens for low price/earnings ratios, high earnings growth rates and high
sales/price ratios. Within each sector, this subset of the universe is ranked by
these three measures and broken into quintiles; the companies in the top
quintile are considered the most attractive ones from both a growth and
valuation viewpoint. To provide an additional check on the valuation of selected
companies, the analysts prepare normalized, long-term earnings and dividend
forecasts which are converted into comparable expected returns by a dividend
discount model.

Warrant/convertible strategy: Once a company has been identified as a
buy candidate, the portfolio manager analyzes the yields on the company's
available equity vehicles -- stocks, warrants and convertibles -- to determine
which appears the most attractive means of purchase. In an effort to enhance
potential returns, the Portfolio also trades among these vehicles -- a strategy
that seeks to capitalize on the inefficiencies that pervade the Japanese equity
market. If the Portfolio invests in a warrant, it will set aside cash in an
amount approximately equal to the difference in the price of the warrant and the
market value of the underlying common stock. The cash is invested in money
market instruments.

Disciplined portfolio construction: The Portfolio is constructed using
disciplined buy and sell rules. The portfolio manager's objective is to
concentrate purchases in the top 20% of the rankings; the specific companies
selected reflect the portfolio manager's judgment concerning the liquidity of an
issue, the soundness of the underlying forecasts, and the magnitude of the risks
versus the rewards. Once a stock falls into the third quintile -- because its
price has risen or its fundamentals have deteriorated -- it generally becomes a
sale candidate. The portfolio manager strives to hold sector weightings close to
those of the benchmark in an effort to contain risk.

<PAGE>

THE JPM INSTITUTIONAL ASIA GROWTH FUND (the "Asia Growth Fund") is
designed for long-term investors who want access to the rapidly growing Asian
markets. The Advisor considers Asian growth markets to be Bangladesh, China,
India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Sri Lanka,
Thailand, Taiwan, Hong Kong and Singapore. The Asia Growth Fund's investment
objective is to provide a high total return from a portfolio of Equity
Securities of companies in Asian growth markets. The Asia Growth Fund attempts
to achieve its investment objective by investing all its investable assets in
The Asia Growth Portfolio (the "Portfolio"), a diversified open-end management
investment company having the same investment objective as the Asia Growth Fund.
For additional information, see "Appendix C -Investing in Japan and Asian Growth
Markets."

The Portfolio seeks to achieve its investment objective by investing
primarily in the Equity Securities of companies in Asian growth markets. Under
normal circumstances, the Portfolio expects to invest at least 65% of its total
assets in such securities. The Portfolio does not intend to invest in U.S.
securities (other than money market instruments), except temporarily, when
extraordinary circumstances prevailing at the same time in a significant number
of countries considered to be Asian growth markets render investments in such
countries inadvisable.

INVESTMENT PROCESS

Country allocation: Morgan's country allocation decision begins with a
forecast of equity risk premiums, which provide a valuation signal by measuring
the relative attractiveness of stocks versus bonds. Using a proprietary
approach, Morgan calculates this risk premium for each of the nations in the
Portfolio's universe, determines the extent of its deviation -- if any -- from
its historical norm, and then ranks countries according to the size of these
deviations. Countries with high (low) rankings are overweighted (underweighted)
to reflect the above-average (below average) attractiveness of their stock
markets. In determining weightings, Morgan analyzes a variety of qualitative
factors as well -- including the liquidity, earnings momentum and interest rate
climate of the market at hand. These qualitative assessments can change the
magnitude but not the direction of the country allocations called for by the
risk-premium forecast. In an effort to contain risk, Morgan places limits on the
total size of the Portfolio's country over- and under-weightings.

Stock selection: Morgan's six Asian equity analysts focused on Asian
markets -- each an industry and country specialist -- forecast normalized,
long-term earnings and dividend payouts for approximately 250 companies in this
region. These forecasts are converted into comparable expected returns by a
dividend discount

<PAGE>

model, and then companies are ranked from most to least attractive by industry
and country, and are grouped into quintiles. A diversified portfolio is
constructed using disciplined buy and sell rules. The portfolio manager's
objective is to concentrate purchases in the top 20% of the rankings, and to
keep sector weightings close to those of the benchmark. Once a stock falls into
the third quintile -- because its price has risen or its fundamentals have
deteriorated -- it generally becomes a sale candidate. Where available, warrants
and convertibles are purchased when they appear to have the potential to add
value over common stock.

The following discussion supplements the information regarding the
investment objective of each of the Funds and the policies to be employed to
achieve this objective by their corresponding Portfolios as set forth above and
in the Prospectus. The investment objective of each Fund and its corresponding
Portfolio is identical. Accordingly, references below to a Fund also include the
Fund's corresponding Portfolio; similarly, references to a Portfolio also
include the corresponding Fund that invests in the Portfolio unless the context
requires otherwise.

MONEY MARKET INSTRUMENTS

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

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

ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in
obligations issued or guaranteed by U.S. Government agencies or
instrumentalities, except that the Treasury Money Market Fund may only invest in
certain of these obligations as noted below. These obligations may or may not be
backed by the "full faith and credit" of the United States. In the case of
securities not backed by the full faith and credit of the United States, each
Fund must look principally to the federal agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitments. Securities in which each Fund, except the Treasury Money
Market Fund, may invest that are not backed by the full faith and credit of the
United States include, but are not limited to, obligations of the Tennessee
Valley Authority, the

<PAGE>

Federal Home Loan Mortgage Corporation and the U.S. Postal Service, each of
which has the right to borrow from the U.S. Treasury to meet its obligations.
Securities in which each Fund, including the Treasury Money Market Fund, may
invest that are not backed by the full faith and credit of the United States
include, and only for the Treasury Money Market Fund are limited to, obligations
of the Federal Farm Credit System and the Federal Home Loan Banks, both of whose
obligations may be satisfied only by the individual credits of each issuing
agency. Securities which are backed by the full faith and credit of the United
States include obligations of the Government National Mortgage Association, the
Farmers Home Administration, and the Export-Import Bank.

FOREIGN GOVERNMENT OBLIGATIONS. Each of the Funds, except the Tax Exempt
Money Market Fund, the Treasury Money Market Fund, the Tax Exempt Bond Fund and
the New York Total Return Bond Fund, subject to its applicable investment
policies, may also invest in short-term obligations of foreign sovereign
governments or of their agencies, instrumentalities, authorities or political
subdivisions. These securities may be denominated in the U.S. dollar or, in the
case of the International Bond, Selected U.S. Equity, U.S. Small Company,
International Equity, Emerging Markets Equity, Diversified, European/Japan/
Asia Growth Funds, in another currency. See "Foreign Investments."

BANK OBLIGATIONS. Each of the Funds, except the Treasury Money Market
Fund, unless otherwise noted in the Prospectus or below, 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 (the "Asset Limitation") 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 Tax Exempt Money Market, Tax Exempt Bond
and New York Total Return Bond Funds may not invest in obligations of foreign
branches of foreign banks and the Asset Limitation is not applicable to the
International Bond, International Equity, Emerging Markets Equity, European
Equity, Japan Equity or Asia Growth Funds. See "Foreign Investments." The Funds
will not invest in obligations for which the Advisor, or any of its affiliated
persons, is the ultimate obligor or accepting bank. Each of the Funds, other
than the Tax Exempt Money Market, Treasury Money Market, Tax Exempt Bond and New
York Total Return Bond Funds, may also invest in obligations of international
banking institutions designated or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., the
European Investment Bank, the Inter-American Development Bank, or the World
Bank).

COMMERCIAL PAPER. Each of the Funds (except the Treasury Money Market
Fund) may invest in commercial paper, including master demand obligations.
Master demand obligations are

<PAGE>

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 acting as agent, for no additional fee, in its capacity as investment
advisor to the Portfolios and as fiduciary for other clients for whom it
exercises investment discretion. The monies loaned to the borrower come from
accounts managed by the Advisor or its affiliates, pursuant to arrangements with
such accounts. Interest and principal payments are credited to such accounts.
The Advisor, acting as a fiduciary on behalf of its clients, has the right to
increase or decrease the amount provided to the borrower under an obligation.
The borrower has the right to pay without penalty all or any part of the
principal amount then outstanding on an obligation together with interest to the
date of payment. Since these obligations typically provide that the interest
rate is tied to the Federal Reserve commercial paper composite rate, the rate on
master demand obligations is subject to change. Repayment of a master demand
obligation to participating accounts depends on the ability of the borrower to
pay the accrued interest and principal of the obligation on demand which is
continuously monitored by the Advisor. Since master demand obligations typically
are not rated by credit rating agencies, the Funds may invest in such unrated
obligations only if at the time of an 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 Funds to be liquid because they are payable upon demand. The
Funds do not have any specific percentage limitation on investments in master
demand obligations.

REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
approved by the Funds' Trustees. In a repurchase agreement, a Fund buys a
security from a seller that has agreed to repurchase the same security at a
mutually agreed upon date and price. The resale price normally is in excess of
the purchase price, reflecting an agreed upon interest rate. This interest rate
is effective for the period of time the Fund is invested in the agreement and is
not related to the coupon rate on the underlying security. A repurchase
agreement may also be viewed as a fully collateralized loan of money by a Fund
to the seller. The period of these repurchase agreements will usually be short,
from overnight to one week, and at no time will the Funds invest in repurchase
agreements for more than thirteen months. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess of thirteen
months from the effective date of the repurchase agreement. The Treasury Money
Market Fund will only enter into repurchase agreements involving U.S. Treasury
securities or permitted agency securities. The Funds will always receive
securities as collateral whose market value is, and during the

<PAGE>

entire term of the agreement remains, at least equal to 100% of the dollar
amount invested by the Funds in each agreement plus accrued interest, and the
Funds will make payment for such securities only upon physical delivery or upon
evidence of book entry transfer to the account of the Custodian. The Money
Market, Tax Exempt Money Market, and Treasury Money Markets Funds will be fully
collateralized within the meaning of paragraph (a)(3) of Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "1940 Act"). If the seller
defaults, a Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon disposal
of the collateral by a Fund may be delayed or limited.

Each of the Funds (other than the Treasury Money Market Fund) may make
investments in other debt securities with remaining effective maturities of not
more than thirteen months, including without limitation corporate and foreign
bonds, asset-backed securities and other obligations described in the Prospectus
or this Statement of Additional Information. The Tax Exempt Money Market and Tax
Exempt Bond Funds may not invest in foreign bonds or asset-backed securities.

CORPORATE BONDS AND OTHER DEBT SECURITIES

As discussed in the Prospectus, the Bond, Short Term Bond, New York
Total Return Bond, International Bond, Diversified and European Equity Funds may
invest in bonds and other debt securities of domestic and (except for the New
York Total Return Bond Fund) foreign issuers to the extent consistent with their
investment objectives and policies. A description of these investments appears
in the Prospectus and below. See "Quality and Diversification Requirements." For
information on short-term investments in these securities, see "Money Market
Instruments."

ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a participation interest in, or are secured by and payable from, a
stream of payments generated by particular assets such as motor vehicle or
credit card receivables. Payments of principal and interest may be guaranteed up
to certain amounts and for a certain time period by a letter of credit issued by
a financial institution unaffiliated with the entities issuing the securities.
The asset-backed securities in which a Fund may invest are subject to the Fund's
overall credit requirements. However, asset-backed securities, in general, are
subject to certain risks. Most of these risks are related to limited interests
in applicable collateral. For example, credit card debt receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts on credit card debt thereby reducing the
balance due. Additionally, if the letter of credit

<PAGE>

is exhausted, holders of asset-backed securities may also experience delays in
payments or losses if the full amounts due on underlying sales contracts are not
realized. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.

TAX EXEMPT OBLIGATIONS

As discussed in the Prospectus, the Tax Exempt Money Market, Tax Exempt
Bond and New York Total Return Bond Funds and, in certain circumstances, the
Bond and Short Term Bond Funds, may invest in tax exempt obligations to the
extent consistent with each Fund's investment objective and policies. A
description of the various types of tax exempt obligations which may be
purchased by the Funds appears in the Prospectus and below. See "Quality and
Diversification Requirements."

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

Municipal bonds may be general obligation or revenue bonds. General
obligation bonds are secured by the issuer's pledge of its full faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from revenues derived from particular facilities, from the proceeds of a
special excise tax or from other specific revenue sources. They are not
generally payable from the general taxing power of a municipality.

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

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

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

Municipal demand obligations are subdivided into two types:
variable rate demand notes and master demand obligations.

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

Master demand obligations are tax exempt municipal obligations that
provide for a periodic adjustment in the interest rate paid and permit daily
changes in the amount borrowed. The interest on such obligations is, in the
opinion of counsel for the borrower, exempt from federal income tax. For a
description of the attributes of master demand obligations, see "Money Market
Instruments" above. Although there is no secondary market for master demand
obligations, such obligations are considered by each Fund to be liquid because
they are payable upon demand. The Funds have no specific percentage limitations
on investments in master demand obligations.

The Tax Exempt Money Market Fund may purchase securities of the type
described above if they have effective maturities within thirteen months. As
required by regulation of the Securities and Exchange Commission (the "SEC"),
this means that on the date of acquisition the final stated maturity (or if
called for redemption, the redemption date) must be within thirteen months

<PAGE>

or the maturity must be deemed to be no more than thirteen months because of a
maturity shortening mechanism, such as a variable interest rate, coupled with a
conditional or unconditional right to resell the investment to the issuer or a
third party. See "Variable Rate Demand Notes" and "Puts." A substantial portion
of the Tax Exempt Money Market Fund's portfolio is subject to maturity
shortening mechanisms consisting of variable interest rates coupled with
unconditional rights to resell the securities to the issuers either directly or
by drawing on a domestic or foreign bank letter of credit or other credit
support arrangement. See "Foreign Investments."

PUTS. The Tax Exempt Money Market, Tax Exempt Bond and New York Total
Return Bond Funds may purchase without limit municipal bonds or notes together
with the right to resell the bonds or notes to the seller at an agreed price or
yield within a specified period prior to the maturity date of the bonds or
notes. Such a right to resell is commonly known as a "put." The aggregate price
for bonds or notes with puts may be higher than the price for bonds or notes
without puts. Consistent with each Fund's investment objective and subject to
the supervision of the Trustees, the purpose of this practice is to permit each
Fund to be fully invested in tax exempt securities while preserving the
necessary liquidity to purchase securities on a when-issued basis, to meet
unusually large redemptions, and to purchase at a later date securities other
than those subject to the put. The principal risk of puts is that the writer of
the put may default on its obligation to repurchase. The Advisor will monitor
each writer's ability to meet its obligations under puts.

Puts may be exercised prior to the expiration date in order to fund
obligations to purchase other securities or to meet redemption requests. These
obligations may arise during periods in which proceeds from sales of Fund shares
and from recent sales of portfolio securities are insufficient to meet
obligations or when the funds available are otherwise allocated for investment.
In addition, puts may be exercised prior to the expiration date in order to take
advantage of alternative investment opportunities or in the event the Advisor
revises its evaluation of the creditworthiness of the issuer of the underlying
security.

In determining whether to exercise puts prior to their expiration date
and in selecting which puts to exercise, the Advisor considers the amount of
cash available to each Fund, the expiration dates of the available puts, any
future commitments for securities purchases, alternative investment
opportunities, the desirability of retaining the underlying securities in each
Fund's portfolio and the yield, quality and maturity dates of the underlying
securities.

The Tax Exempt Money Market Fund values any municipal bonds and notes
which are subject to puts at amortized cost. No value is assigned to the put.
The cost of any such put is carried as an unrealized loss from the time of
purchase until it is exercised or expires. The Tax Exempt Bond and New York
Total Return Bond Funds value any municipal bonds and notes subject to puts with

<PAGE>

remaining maturities of less than 60 days by the amortized cost method. If the
Tax Exempt Bond and New York Total Return Bond Funds were to invest in municipal
bonds and notes with maturities of 60 days or more that are subject to puts
separate from the underlying securities, the puts and the underlying securities
would be valued at fair value as determined in accordance with procedures
established by the Board of Trustees. The Board of Trustees would, in connection
with the determination of the value of a put, consider, among other factors, the
creditworthiness of the writer of the put, the duration of the put, the dates on
which or the periods during which the put may be exercised and the applicable
rules and regulations of the SEC. Prior to investing in such securities, the Tax
Exempt Bond and New York Total Return Bond Funds, if deemed necessary based upon
the advice of counsel, will apply to the SEC for an exemptive order, which may
not be granted, relating to the valuation of such securities.

Since the value of the put is partly dependent on the ability of the
put writer to meet its obligation to repurchase, each Fund's policy is to enter
into put transactions only with municipal securities dealers who are approved by
the Advisor. Each dealer will be approved on its own merits, and it is each
Fund's general policy to enter into put transactions only with those dealers
which are determined to present minimal credit risks. In connection with such
determination, the Trustees will review regularly the Advisor's list of approved
dealers, taking into consideration, among other things, the ratings, if
available, of their equity and debt securities, their reputation in the
municipal securities markets, their net worth, their efficiency in consummating
transactions and any collateral arrangements, such as letters of credit,
securing the puts written by them. Commercial bank dealers normally will be
members of the Federal Reserve System, and other dealers will be members of the
National Association of Securities Dealers, Inc. or members of a national
securities exchange. In the case of the Tax Exempt Bond and New York Total
Return Bond Funds, other put writers will have outstanding debt rated Aa or
better by Moody's Investors Service, Inc. ("Moody's") or AA or better by
Standard & Poor's Ratings Group ("Standard & Poor's"), or will be of comparable
quality in the Advisor's opinion or such put writers' obligations will be
collateralized and of comparable quality in the Advisor's opinion. The Trustees
have directed the Advisor not to enter into put transactions with any dealer
which in the judgment of the Advisor becomes more than a minimal credit risk. In
the event that a dealer should default on its obligation to repurchase an
underlying security, the Funds are unable to predict whether all or any portion
of any loss sustained could subsequently be recovered from such dealer.

The Trust has been advised by counsel that the Funds will be considered
the owner of the securities subject to the puts so that the interest on the
securities is tax exempt income to the

<PAGE>

Funds. Such advice of counsel is based on certain assumptions concerning the
terms of the puts and the attendant circumstances.

EQUITY INVESTMENTS

As discussed in the Prospectus, the Portfolios for the Selected U.S.
Equity, U.S. Small Company, International Equity, Emerging Markets Equity,
European Equity, Japan Equity and Asia Growth Funds and the equity portion of
the Diversified Fund (collectively, the "Equity Portfolios") invest primarily in
Equity Securities. The Equity Securities in which the Equity Portfolios invest
include those listed on any domestic or foreign securities exchange or traded in
the over-the-counter market as well as certain restricted or unlisted
securities. A discussion of the various types of equity investments which may be
purchased by these Portfolios appears in the Prospectus and below. See "Quality
and Diversification Requirements."

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

The convertible securities in which the Equity Portfolios 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 Portfolios for The JPM Institutional Selected U.S. Equity, U.S.
Small Company, International Equity, Emerging Markets Equity , Diversified,
European Equity, Japan Equity, and Asia Growth Funds may invest in common stock
warrants that entitle the holder to buy common stock from the issuer of the
warrant 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.

<PAGE>

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 on or prior to the expiration date.

FOREIGN INVESTMENTS

The International Bond, International Equity, Emerging Markets Equity,
European Equity, Japan Equity and Asia Growth Funds make substantial investments
in foreign countries. The Money Market, Bond, Short Term Bond, Selected U.S.
Equity, U.S. Small Company and Diversified Funds may invest in certain foreign
securities. The Short Term Bond Fund and the Bond Fund may invest in
dollar-denominated fixed income securities of foreign issuers. The Selected U.S.
Equity Fund may invest in equity securities of foreign corporations included in
the S&P 500 Index or listed on a national securities exchange. The U.S. Small
Company Fund may invest in equity securities of foreign issuers that are listed
on a national securities exchange or denominated or principally traded in the
U.S. dollar. The Bond, Short Term Bond, Selected U.S. Equity, U.S. Small Company
and Diversified Funds do not expect to invest more than 25%, 25%, 5%, 5% and
30%, respectively, of their total assets at the time of purchase in securities
of foreign issuers. All investments of the Money Market Fund must be U.S.
dollar-denominated. In the case of the Money Market, Bond and Short Term Bond
Funds, any foreign commercial paper must not be subject to foreign withholding
tax at the time of purchase. Foreign investments may be made directly in
securities of foreign issuers or in the form of American Depositary Receipts
("ADRs") and European Depositary Receipts ("EDRs"). Generally, ADRs and EDRs are
receipts issued by a bank or trust company that evidence ownership of underlying
securities issued by a foreign corporation and that are designed for use in the
domestic, in the case of ADRs, or European, in the case of EDRs, securities
markets.

Since investments in foreign securities may involve foreign currencies,
the value of a Fund's assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, including currency blockage. The International Bond, Selected U.S.
Equity, U.S. Small Company, International Equity, Emerging Markets Equity,
Diversified, European Equity, Japan Equity and Asia Growth Funds may enter into
forward commitments for the purchase or sale of foreign currencies in connection
with the settlement of foreign securities transactions or to manage the Funds'
currency exposure related to foreign investments as described in the relevant
Prospectus. The Funds will not enter into such commitments for speculative
purposes.

For a description of the risks associated with investing in foreign
securities, see "Additional Investment Information and Risk Factors" in the
Prospectus. To the extent that the Tax Exempt Money Market, Tax Exempt Bond and

<PAGE>

New York Total Return Bond Funds invest in municipal bonds and notes backed by
credit support arrangements with foreign financial institutions, the risks
associated with investing in foreign securities may be relevant to these Funds.

INVESTING IN JAPAN. Investing in Japanese securities may involve the
risks associated with investing in foreign securities generally. In addition,
because the Japan Equity Portfolio and the International Equity Portfolio invest
in Japan, they will be subject to the general economic and political conditions
in Japan. It is not expected that the Asia Growth Portfolio will invest in Japan
(see "Investment Objective and Policies" in the Prospectus).

Share prices of companies listed on Japanese stock exchanges and on the
Japanese OTC market reached historical peaks (which were later referred to as
the "bubble") as well as historically high trading volumes in 1989 and 1990.
Since then, stock prices in both markets decreased significantly . There can be
no assurance that additional market corrections will not occur.

The common stocks of many Japanese companies continue to trade at high
price earnings ratios in comparison with those in the United States, even after
the recent market decline. Differences in accounting methods make it difficult
to compare the earnings of Japanese companies with those of companies in other
countries, especially the United States.

Since the Japan Equity and the International Equity Portfolios invest
in securities denominated in yen, changes in exchange rates between the U.S.
dollar and the yen affect the U.S. dollar value of their respective assets.
Although the Japanese economy has grown substantially over the past four
decades, recently the rate of growth had slowed substantially. See Foreign
Currency Exchange Transactions.

<PAGE>

Japan's success in exporting its products has generated a sizeable trade
surplus. Such trade surplus has caused tensions at times between Japan and some
of its trading partners. In particular, Japan's trade relations with the United
States have recently been the subject of discussion and negotiation between the
two nations. The United States has imposed certain measures designed to address
trade issues in specific industries. These measures and similar measures in the
future may adversely affect the performance of the Japan Equity and
International Equity Portfolios.

Japan's economy has typically exhibited low inflation and low interest
rates. There can be no assurance that low inflation and low interest rates will
continue, and it is likely that a reversal of such factors would adversely
affect the Japanese economy. Moreover, the Japanese economy may differ,
favorably or unfavorably, from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position.

Japan has a parliamentary form of government. In 1993 a coalition
government was formed which, for the first time since 1955, did not include the
Liberal Democratic Party. Since mid-1993, there have been several changes in
leadership in Japan. What, if any, effect the current political situation will
have on prospective regulatory reforms of the economy in Japan cannot be
predicted. Recent and future developments in Japan and neighboring Asian
countries may lead to changes in policy that might adversely affect these
Portfolios.

ADDITIONAL INVESTMENTS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each of the Portfolios 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 for money market instruments and other
fixed income investments no interest accrues to a Portfolio until settlement
takes place. At the time a Portfolio makes the commitment to purchase securities
on a when-issued or delayed delivery basis, it will record the transaction,
reflect the value each day of such securities in

<PAGE>

determining its net asset value and, if applicable, calculate the maturity for
the purposes of average maturity from that date. At the time of settlement a
when-issued security may be valued at less than the purchase price. To
facilitate such acquisitions, each Portfolio will maintain with the Custodian a
segregated account with liquid assets, consisting of cash, U.S. Government
securities or other appropriate securities, in an amount at least equal to such
commitments. On delivery dates for such transactions, each Portfolio will meet
its obligations from maturities or sales of the securities held in the
segregated account and/or from cash flow. If a Portfolio chooses to dispose of
the right to acquire a when-issued security prior to its acquisition, it could,
as with the disposition of any other portfolio obligation, incur a gain or loss
due to market fluctuation. It is the current policy of each Portfolio not to
enter into when-issued commitments exceeding in the aggregate 15% of the market
value of the Portfolio's total assets, less liabilities other than the
obligations created by when-issued commitments.

INVESTMENT COMPANY SECURITIES. Securities of other investment companies
may be acquired by each of the Funds and their corresponding Portfolios to the
extent permitted under the 1940 Act. These limits require that, as determined
immediately after a purchase is made, (i) not more than 5% of the value of a
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 a Fund, provided however, that a Fund may invest all of
its investable assets in an open-end investment company that has the same
investment objective as the Fund (its corresponding Portfolio). As a shareholder
of another investment company, a 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 a Fund bears directly in connection with its own operations.

REVERSE REPURCHASE AGREEMENTS. Each of the Portfolios may enter into
reverse repurchase agreements. In a reverse repurchase agreement, a Portfolio
sells a security and agrees to repurchase the same security at a mutually agreed
upon date and price. The Portfolio for the Treasury Money Market Fund will only
enter into reverse repurchase agreements involving Treasury securities. For
purposes of the 1940 Act it is also considered as the borrowing of money by the
Portfolio and, therefore, a form of leverage. The Portfolios will invest the
proceeds of borrowings under reverse repurchase agreements. In addition, a
Portfolio will enter into a reverse repurchase agreement only when the interest
income to be earned from the investment of the proceeds is greater than the
interest expense of the transaction.

<PAGE>

A Portfolio will not invest the proceeds of a reverse repurchase
agreement for a period which exceeds the duration of the reverse repurchase
agreement. A Portfolio may not enter into reverse repurchase agreements
exceeding in the aggregate one-third of the market value of its total assets,
less liabilities other than the obligations created by reverse repurchase
agreements. Each Portfolio 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. If
interest rates rise during the term of a reverse repurchase agreement, entering
into the reverse repurchase agreement may have a negative impact on the Money
Market, Tax Exempt Money Market and Treasury Money Market Funds' ability to
maintain a net asset value of $1.00 per share. See "Investment Restrictions."

MORTGAGE DOLLAR ROLL TRANSACTIONS. The Portfolios for the Short Term
Bond Fund and the Bond Fund may engage in mortgage dollar roll transactions with
respect to mortgage securities issued by the Government National Mortgage
Association, the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation. In a mortgage dollar roll transaction, the Portfolio sells
a mortgage backed security and simultaneously agrees to repurchase a similar
security on a specified future date at an agreed upon price. During the roll
period, the Portfolio will not be entitled to receive any interest or principal
paid on the securities sold. The Portfolio is compensated for the lost interest
on the securities sold by the difference between the sales price and the lower
price for the future repurchase as well as by the interest earned on the
reinvestment of the sales proceeds. The Portfolio may also be compensated by
receipt of a commitment fee. When the Portfolio enters into a mortgage dollar
roll transaction, liquid assets in an amount sufficient to pay for the future
repurchase are segregated with the Custodian. Mortgage dollar roll transactions
are considered reverse repurchase agreements for purposes of the Portfolio's
investment restrictions.

LOANS OF PORTFOLIO SECURITIES. Each of the Portfolios 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 Portfolio 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 Portfolio
any income accruing thereon. Loans will be subject to termination by the
Portfolios in the normal settlement time, generally three business days after
notice, or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities which occurs during the term of the loan inures to a
Portfolio and its respective investors. The Portfolios may pay reasonable
finders' and custodial fees in connection with a loan. In addition, a Portfolio
will consider all facts and circumstances including the creditworthiness of the
borrowing financial institution, and no Portfolio will make any

<PAGE>

loans in excess of one year. The Portfolios will not lend their securities to
any officer, Trustee, Director, employee or other affiliate of the Portfolios,
the Advisor or the Distributor, unless otherwise permitted by applicable law.

PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. The Portfolios
for each of the Funds (except the Treasury Money Market Fund) may invest in
privately placed, restricted, Rule 144A or other unregistered securities as
described in the Prospectus.

As to illiquid investments, a Portfolio is subject to a risk that
should the Portfolio decide to sell them when a ready buyer is not available at
a price the Portfolio deems representative of their value, the value of the
Portfolio's net assets could be adversely affected. Where an illiquid security
must be registered under the Securities Act of 1933, as amended (the "1933
Act"), before it may be sold, a Portfolio may be obligated to pay all or part of
the registration expenses, and a considerable period may elapse between the time
of the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, a Portfolio might obtain a less
favorable price than prevailed when it decided to sell.

SYNTHETIC VARIABLE RATE INSTRUMENTS. The Portfolios for the Tax Exempt
Money Market, Tax Exempt Bond and New York Total Return Bond Funds may invest in
certain synthetic variable rate instruments as described in the Prospectus. In
the case of some types of instruments credit enhancement is not provided, and if
certain events, which may include (a) default in the payment of principal or
interest on the underlying bond, (b) downgrading of the bond below investment
grade or (c) a loss of the bond's tax exempt status, occur, then (i) the put
will terminate, (ii) the risk to a Fund will be that of holding a long-term
bond, and (iii) in the case of the Tax Exempt Money Market Fund, the disposition
of the bond may be required which could be at a loss.

QUALITY AND DIVERSIFICATION REQUIREMENTS

Each of the Funds, except the New York Total Return Bond, International
Bond and Japan Equity Funds, intends to meet the diversification requirements of
the 1940 Act. To meet these requirements, 75% of the assets of these Funds is
subject to the following fundamental limitations: (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, subject to the

<PAGE>

limitation of any applicable state securities laws, or with respect to the Money
Market and Treasury Money Market Funds, as described below. Investments not
subject to the limitations described above could involve an increased risk to a
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.

Although the New York Total Return Bond, International Bond and Japan
Equity Funds are not limited by the diversification requirements of the 1940
Act, these Funds will comply with the diversification requirements imposed by
the Internal Revenue Code of 1986, as amended (the "Code"), for qualification as
a regulated investment company. To meet these requirements, each Fund must
diversify its holdings so that, with respect to 50% of the Fund's assets, no
more than 5% of its assets are invested in the securities of any one issuer
other than the U.S. Government at the close of each quarter of the Fund's
taxable year. The Fund may with respect to the remaining 50% of its assets,
invest up to 25% of its assets in the securities of any one issuer (except this
limitation does not apply to U.S. Government Securities).

With respect to the Tax Exempt Money Market and Tax Exempt Bond Funds,
for purposes of diversification and concentration under the 1940 Act,
identification of the issuer of municipal bonds or notes depends on the terms
and conditions of the obligation. With respect to the New York Total Return Bond
Fund, for purposes of diversification under the Code and concentration under the
1940 Act, identification of the issuer of municipal bonds or notes also depends
on the terms and conditions of the obligation. If the assets and revenues of an
agency, authority, instrumentality or other political subdivision are separate
from those of the government creating the subdivision and the obligation is
backed only by the assets and revenues of the subdivision, such subdivision is
regarded as the sole issuer. Similarly, in the case of an industrial development
revenue bond or pollution control revenue bond, if the bond is backed only by
the assets and revenues of the nongovernmental user, the nongovernmental user is
regarded as the sole issuer. If in either case the creating government or
another entity guarantees an obligation, the guaranty is regarded as a separate
security and treated as an issue of such guarantor. Since securities issued or
guaranteed by states or municipalities are not voting securities, there is no
limitation on the percentage of a single issuer's securities which a Fund may
own so long as it does not invest more than 5% of its total assets that are
subject to the diversification limitation in the securities of such issuer,
except obligations issued or guaranteed by the U.S. Government. Consequently,
the Funds may invest in a greater percentage of the outstanding securities of a
single issuer than would an investment company which invests in voting
securities. See "Investment Restrictions."

<PAGE>

MONEY MARKET FUND. In order to attain the Money Market Fund's objective
of maintaining a stable net asset value, the Portfolio for the Money Market Fund
will (i) limit its investment in the securities (other than U.S. Government
securities) of any one issuer to no more than 5% of its assets, measured at the
time of purchase, except for investments held for not more than three business
days (subject, however, to the investment restriction No. 4 set forth under
"Investment Restrictions" below); and (ii) limit investments to securities that
present minimal credit risks and securities (other than U.S. Government
securities) that are rated within the highest short-term rating category by at
least two nationally recognized statistical rating organizations ("NRSROs") or
by the only NRSRO that has rated the security. Securities which originally had a
maturity of over one year are subject to more complicated, but generally similar
rating requirements. A description of illustrative credit ratings is set forth
in Appendix A attached to this Statement of Additional Information. The
Portfolio may also purchase unrated securities that are of comparable quality to
the rated securities described above. Additionally, if the issuer of a
particular security has issued other securities of comparable priority and
security and which have been rated in accordance with (ii) above, that security
will be deemed to have the same rating as such other rated securities.

In addition, the Board of Trustees has adopted procedures which (i)
require the Board of Trustees to approve or ratify purchases by the Portfolio of
securities (other than U.S. Government securities) that are rated by only one
NRSRO or that are unrated; (ii) require the Portfolio to maintain a
dollar-weighted average portfolio maturity of not more than 90 days and to
invest only in securities with a remaining maturity of not more than thirteen
months; and (iii) require the Portfolio, in the event of certain downgradings of
or defaults on portfolio holdings, to dispose of the holding, subject in certain
circumstances to a finding by the Trustees that disposing of the holding would
not be in the Portfolio's best interest.

TAX EXEMPT MONEY MARKET FUND. In order to attain the Tax Exempt Money
Market Fund's objective of maintaining a stable net asset value, the Portfolio
for the Tax Exempt Money Market Fund will limit its investments to securities
that present minimal credit risks and securities (other than New York State
municipal notes) that are rated within the highest rating assigned to short-term
debt securities (or, in the case of New York State municipal notes, within one
of the two highest ratings assigned to short-term debt securities) by at least
two NRSROs or by the only NRSRO that has rated the security. Securities which
originally had a maturity of over one year are subject to more complicated, but
generally similar rating requirements. The Portfolio may also purchase unrated
securities that are of comparable quality to the rated securities described
above. Additionally, if the issuer of a particular security has issued other
securities of comparable priority and security and which

<PAGE>

have been rated in accordance with the criteria described above that security
will be deemed to have the same rating as such other rated securities.

In addition, the Board of Trustees has adopted procedures which (i)
require the Portfolio to maintain a dollar-weighted average portfolio maturity
of not more than 90 days and to invest only in securities with a remaining
maturity of not more than thirteen months and (ii) require the Portfolio, in the
event of certain downgrading of or defaults on portfolio holdings, to dispose of
the holding, subject in certain circumstances to a finding by the Trustees that
disposing of the holding would not be in the Portfolio's best interest.

The credit quality of variable rate demand notes and other municipal
obligations is frequently enhanced by various credit support arrangements with
domestic or foreign financial institutions, such as letters of credit,
guarantees and insurance, and these arrangements are considered when investment
quality is evaluated. The rating of credit-enhanced municipal obligations by a
NRSRO may be based primarily or exclusively on the credit support arrangement.

TREASURY MONEY MARKET FUND. In order to attain its objective of
maintaining a stable net asset value, the Treasury Money Market Fund will limit
its investments to direct obligations of the U.S. Treasury, including Treasury
bills, notes and bonds, and certain U.S. Government securities with remaining
maturities of thirteen months or less at the time of purchase and will maintain
a dollar-weighted average portfolio maturity of not more than 90 days.

SHORT TERM BOND, BOND, INTERNATIONAL BOND AND DIVERSIFIED FUNDS. The
Short Term Bond, Bond and International Bond Funds and the fixed income portion
of the Diversified Fund invest principally in a diversified portfolio of "high
grade" and "investment grade" securities. Investment grade debt is rated, on the
date of investment, within the four highest ratings of Moody's, currently Aaa,
Aa, A and Baa, or of Standard & Poor's, currently AAA, AA, A and BBB. High grade
debt is rated, on the date of the investment, within the two highest of such
ratings. The Bond Fund may also invest up to 5% of its total assets in
securities which are "below investment grade." Such securities must be rated, on
the date of investment, Ba by Moody's or BB by Standard & Poor's. The Funds may
invest in debt securities which are not rated or other debt securities to which
these ratings are not applicable, if in the opinion of the Advisor, such
securities are of comparable quality to the rated securities discussed above. In
addition, at the time the Funds invest in any commercial paper, bank obligation
or repurchase agreement, the issuer must have outstanding debt rated A or higher
by Moody's or Standard & Poor's, the issuer's parent corporation, if any, must
have outstanding commercial paper rated Prime-1 by Moody's or A-1 by Standard &
Poor's, or if no such ratings are available, the investment must be of
comparable quality in the Advisor's opinion.

<PAGE>

TAX EXEMPT BOND FUND. The Tax Exempt Bond Fund invests principally in a
diversified portfolio of "high grade" and "investment grade" tax exempt
securities. On the date of investment (i) municipal bonds must be rated within
the three highest ratings of Moody's, currently Aaa, Aa and A, or of Standard &
Poor's, currently AAA, AA, and A, (ii) municipal notes must be rated MIG-1 by
Moody's or SP-1 by Standard & Poor's (or, in the case of New York State
municipal notes, MIG-1 or MIG-2 by Moody's or SP-1 or SP-2 by Standard & Poor's)
and (iii) municipal commercial paper must be rated Prime-1 by Moody's or A-1 by
Standard & Poor's or, if not rated by either Moody's or Standard & Poor's,
issued by an issuer either (a) having an outstanding debt issue rated A or
higher by Moody's or Standard & Poor's or (b) having comparable quality in the
opinion of the Advisor. The Fund may invest in other tax exempt securities which
are not rated if, in the opinion of the Advisor, such securities are of
comparable quality to the rated securities discussed above. 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 or
Standard & Poor's, the issuer's parent corporation, if any, must have
outstanding commercial paper rated Prime-1 by Moody's or A-1 by Standard &
Poor's, or if no such ratings are available, the investment must be of
comparable quality in the Advisor's opinion.

NEW YORK TOTAL RETURN BOND FUND. The New York Total Return Bond Fund
invests principally in a diversified portfolio of "investment grade" tax exempt
securities. An investment grade bond is rated, on the date of investment within
the four highest ratings of Moody's, currently Aaa, Aa, A and Baa, or of
Standard & Poor's, currently AAA, AA, A and BBB, while high grade debt is rated,
on the date of the investment within the two highest of such ratings. Investment
grade municipal notes are rated, on the date of investment, MIG-1 or MIG-2 by
Standard & Poor's or SP-1 and SP-2 by Moody's. Investment grade municipal
commercial paper is rated, on the date of investment, Prime 1 or Prime 2 by
Moody's and A-1 or A-2 by Standard & Poor's. The New York Total Return Bond Fund
may also invest up to 5% of its total assets in securities which are "below
investment grade." Such securities must be rated, on the date of investment, Ba
by Moody's or BB by Standard & Poor's. The New York Total Return Bond Fund may
invest in debt securities which are not rated or other debt securities to which
these ratings are not applicable, if in the opinion of the Advisor, such
securities are of comparable quality to the rated securities discussed above. In
addition, at the time the Fund invests in any taxable commercial paper, bank
obligation or repurchase agreement, the issuer must have outstanding debt rated
A or higher by Moody's or Standard & Poor's, the issuer's parent corporation, if
any, must have outstanding commercial paper rated Prime-1 by Moody's or A-1 by

<PAGE>

Standard & Poor's, or if no such ratings are available, the investment must be
of comparable quality in the Advisor's opinion.

SELECTED U.S. EQUITY, U.S. SMALL COMPANY, INTERNATIONAL EQUITY,
EMERGING MARKETS EQUITY, DIVERSIFIED, EUROPEAN EQUITY, JAPAN EQUITY AND ASIA
GROWTH FUNDS. The Selected U.S. Equity, U.S. Small Company, International
Equity, Emerging Markets Equity, Diversified, European Equity, Japan Equity and
Asia Growth Funds may invest in convertible debt securities, for which there are
no specific quality requirements. In addition, at the time a Fund invests in any
commercial paper, bank obligation or repurchase agreement, the issuer must have
outstanding debt rated A or higher by Moody's or Standard & Poor's, the issuer's
parent corporation, if any, must have outstanding commercial paper rated Prime-1
by Moody's or A-1 by Standard & Poor's, or if no such ratings are available, the
investment must be of comparable quality in the Advisor's opinion. At the time a
Fund invests in any other short-term debt securities, they must be rated A or
higher by Moody's or Standard & Poor's, 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

EXCHANGE TRADED AND OVER-THE-COUNTER OPTIONS. All options purchased or
sold by the Portfolios will be traded on a securities exchange or will be
purchased or sold by securities dealers (over-the-counter or OTC options) that
meet creditworthiness standards approved by the Portfolio's Board of Trustees.
While exchange-traded options are obligations of the Options Clearing
Corporation, in the case of OTC options, a Portfolio relies on the dealer from
which it purchased the option to perform if the option is exercised. Thus, when
a Portfolio 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 Portfolio as well as loss of the expected benefit of the transaction.

The staff of the SEC has taken the position that, in general, purchased
OTC options and the underlying securities used to cover written OTC options are
illiquid securities. However, a Portfolio may treat as liquid the underlying
securities used to cover written OTC options, provided it has arrangements with
certain qualified dealers who agree that the Portfolio may repurchase any option
it writes for a maximum price to be

<PAGE>

calculated by a predetermined formula. 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 Portfolios
permitted to enter into futures and options transactions may purchase or sell
(write) futures contracts and purchase put and call options, including put and
call options on futures contracts. In addition, the Portfolios for the
International Bond, Diversified, Emerging Markets Equity, European Equity, Japan
Equity and Asia Growth Funds may sell (write) put and call options, including
options on futures. Futures contracts obligate the buyer to take and the seller
to make delivery at a future date of a specified quantity of a financial
instrument or an amount of cash based on the value of a securities index.
Currently, futures contracts are available on various types of fixed income
securities, including but not limited to U.S. Treasury bonds, notes and bills,
Eurodollar certificates of deposit and on 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 a Portfolio are paid by the Portfolio into a segregated
account, in the name of the Futures Commission Merchant, as required by the 1940
Act and the SEC's interpretations thereunder.

COMBINED POSITIONS. The Portfolios permitted to purchase and write
options may do so in combination with each other, or in combination with futures
or forward contracts, to adjust the risk and return characteristics of the
overall position. For example, certain Portfolios 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

<PAGE>

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 a
Portfolio's current or anticipated investments exactly. A Portfolio 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 Portfolio's other investments.

Options and futures contracts prices can also diverge from the prices
of their underlying instruments, even if the underlying instruments match the
Portfolio'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 may also result from differing levels of demand in the options and
futures markets and the securities markets, from structural differences in how
options and futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A Portfolio may purchase or sell options
and futures contracts with a greater or lesser value than the securities it
wishes to hedge or intends to purchase in order to attempt to compensate for
differences in volatility between the contract and the securities, although this
may not be successful in all cases. If price changes in a Portfolio'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 a
Portfolio to enter into new positions or close out existing positions. If the
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
could potentially require a Portfolio to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, the
Portfolio's access to other assets

<PAGE>

held to cover its options or futures positions could also be impaired. (See
"Exchange Traded and Over-the-Counter 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, a Portfolio 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. The
Portfolios intend to comply with Section 4.5 of the regulations under the
Commodity Exchange Act, which limits the extent to which a Portfolio can commit
assets to initial margin deposits and option premiums. In addition, the
Portfolios 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 a Portfolio's assets could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.

RISK MANAGEMENT

The Portfolios for the New York Total Return Bond, International Bond,
Diversified, Emerging Markets Equity, European Equity, Japan Equity and Asia
Growth Funds may employ non-hedging risk management techniques. Examples of such
strategies include synthetically altering the duration of a portfolio or the mix
of securities in a portfolio. For example, if the Advisor wishes to extend
maturities in a fixed income portfolio in order to take advantage of an
anticipated decline in interest rates, but does not wish to purchase the
underlying long term securities, it might cause the Portfolio to purchase
futures contracts on long term debt securities. Similarly, if the Advisor wishes
to decrease fixed income securities or purchase equities, it could cause the
Portfolio to sell futures contracts on debt securities and purchase futures
contracts on a stock index. Such non-hedging risk management techniques are not
speculative, but 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.

<PAGE>

SPECIAL FACTORS AFFECTING THE NEW YORK TOTAL RETURN BOND FUND. The New
York Total Return Bond Fund intends to invest a high proportion of its assets in
municipal obligations of the State of New York and its political subdivisions,
municipalities, agencies, instrumentalities and public authorities. Payment of
interest and preservation of principal is dependent upon the continuing ability
of New York issuers and/or obligators of state, municipal and public authority
debt obligations to meet their obligations thereunder.

The fiscal stability of New York State is related, at least in part, to
the fiscal stability of its localities and authorities. Various State agencies,
authorities and localities have issued large amounts of bonds and notes either
guaranteed or supported by the State through lease-purchase arrangements, other
contractual arrangements or moral obligation provisions. While debt service is
normally paid out of revenues generated by projects of such State agencies,
authorities and localities, the State has had to provide special assistance in
recent years, in some cases of a recurring nature, to enable such agencies,
authorities and localities to meet their financial obligations and, in some
cases, to prevent or cure defaults. To the extent State agencies and local
governments require State assistance to meet their financial obligations, the
ability of the State to meet its own obligations as they become due or to obtain
additional financing could be adversely affected.

On July 10, 1995, Standard & Poor's downgraded its rating on New York
city's outstanding general obligation bonds to BBB+ from A-, citing the city's
chronic structural budget problems and weak economic outlook. Other factors
contributing to Standard & Poor's downgrade include the city's reliance on
one-time revenue measures to close annual budget gaps, a dependence on
unrealized labor savings, overly optimistic estimates of revenues and of state
and federal aid, and the city's continued high debt levels.

For further information concerning New York municipal obligations, see
Appendix B to this Statement of Additional Information. The summary set forth
above and in Appendix B is included for the purpose of providing a general
description of New York State and New York City credit and financial conditions.
This summary is based on information from an official statement of New York
general obligation municipal obligations and does not purport to be complete.

PORTFOLIO TURNOVER

Set forth below are the portfolio turnover rates for the Portfolios
corresponding to the Funds. A rate of 100% indicates that the equivalent of all
of the Portfolio'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 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.

<PAGE>

THE SHORT TERM BOND PORTFOLIO (Short Term Bond Fund) -- For the fiscal
year ended October 31, 1994: 230%. For the fiscal year ended October 31,
1995: 177%.

THE TAX EXEMPT BOND PORTFOLIO (Tax Exempt Bond Fund) -- For the fiscal
year ended August 31, 1994: 33%. For the fiscal year ended August 31,
1995: 47%.

THE NEW YORK TOTAL RETURN BOND PORTFOLIO (New York Total Return Bond
Fund) -- For the period April 11, 1994 (commencement of operations)
through March 31, 1995: 63%.

THE NON-U.S. FIXED INCOME PORTFOLIO (International Bond Fund) -- For the
period October 11, 1994 (commencement of operations) through September
30, 1995: 288%.

THE U.S. FIXED INCOME PORTFOLIO (Bond Fund) -- For the fiscal year ended
October 31, 1994: 234%. For the fiscal year ended October 31, 1995: 293%.

THE SELECTED U.S. EQUITY PORTFOLIO (Selected U.S. Equity Fund) -- For the
period July 19, 1993 (commencement of operations) through May 31, 1994:
76%. For the fiscal year ended May 31, 1995: 71%.

THE U.S. SMALL COMPANY PORTFOLIO (U.S. Small Company Fund) -- For the
period July 19, 1993 (commencement of operations) through May 31, 1994:
97%. For the fiscal year ended May 31, 1995: 75%.

THE NON-U.S. EQUITY PORTFOLIO (International Equity Fund) -- For the
fiscal year ended October 31, 1994: 56%. For the fiscal year ended
October 31, 1995: 59%.

THE DIVERSIFIED PORTFOLIO (Diversified Fund) -- For the period July 8,
1993 (commencement of operations) through June 30, 1994: 115%. For the
fiscal year ended June 30, 1995: 136%

THE EMERGING MARKETS EQUITY PORTFOLIO (Emerging Markets Equity Fund) --
For the fiscal year ended October 31, 1994: 27.48%. For the fiscal year
ended October 31, 1995: 41.31%.

THE EUROPEAN EQUITY PORTFOLIO (European Equity Fund) -- For the period
March 28, 1995 (commencement of operations) through December 31, 1995:
36%.

THE JAPAN EQUITY PORTFOLIO (Japan Equity Fund) -- For the period March

28, 1995 (commencement of operations) through December 31,

1995: 60%.

THE ASIA GROWTH PORTFOLIO (Asia Growth Fund) -- For the period April 5,
1995 (commencement of operations) through December 31, 1995: 70%.

The estimated annual portfolio turnover rate for each of the European
Equity, Japan Equity and Asia Growth Portfolios

generally should not exceed 100%.

<PAGE>

INVESTMENT RESTRICTIONS

The investment restrictions of each Fund and its corresponding
Portfolio are identical, unless otherwise specified. Accordingly, references
below to a Fund also include the Fund's corresponding Portfolio unless the
context requires otherwise; similarly, references to a Portfolio also include
its corresponding Fund unless the context requires otherwise.

The investment restrictions below have been adopted by the Trust with
respect to each Fund and by each corresponding Portfolio. Except where 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 or Portfolio, as the case may be. 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 the
purchase of securities. Whenever a Fund is requested to vote on a change in the
fundamental investment restrictions of its corresponding Portfolio, the Trust
will hold a meeting of Fund shareholders and will cast its votes as instructed
by the Fund's shareholders.

The MONEY MARKET FUND and its corresponding PORTFOLIO may not:

1. 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 10% of the
market value of the Fund's total assets would be in investments which are
illiquid;

2. Enter into reverse repurchase agreements exceeding in the aggregate
one-third of the market value of the Fund's total assets, less
liabilities other than obligations created by reverse repurchase
agreements;

3. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of the
Fund's total assets, taken at cost, at the time of such

<PAGE>

borrowing. Mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not to exceed 10% of
the value of the Fund's net assets at the time of such borrowing. The
Fund will not purchase securities while borrowings exceed 5% of the
Fund's total assets; provided, however, that the Fund may increase its
interest in an open-end management investment company with the same
investment objective and restrictions as the Fund while such borrowings
are outstanding. This borrowing provision is included to facilitate the
orderly sale of portfolio securities, for example, in the event of
abnormally heavy redemption requests, and is not for investment purposes
and shall not apply to reverse repurchase agreements;

5. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately
after such purchase, the value of its investment in such industry would
exceed 25% of the value of the Fund's total assets; provided, however,
that the Fund may invest all or part of its investable assets in an
open-end management investment company with the same investment objective
and restrictions as the Fund. For purposes of industry concentration,
there is no percentage limitation with respect to investments in U.S.
Government securities, negotiable certificates of deposit, time deposits,
and bankers' acceptances of U.S. branches of U.S. banks;

6. Make loans, except through purchasing or holding debt obligations, or
entering into repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies (see
"Investment Objectives and Policies");

7. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts or interests in
oil, gas, or mineral exploration or development programs. However, the
Fund may purchase bonds or commercial paper issued by companies which
invest in real estate or interests therein including real estate
investment trusts;

8. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not be
deemed to be applicable to the purchase or sale of when-issued
securities or of securities for delivery at a future date;

<PAGE>

9. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or

10. Act as an underwriter of securities.

The TAX EXEMPT MONEY MARKET FUND and its corresponding PORTFOLIO may not:

1. Borrow money, except from banks for temporary, extraordinary or
emergency purposes and then only in amounts up to 10% of the value of the
Fund's total assets, taken at cost at the time of such borrowing; or
mortgage, pledge or hypothecate any assets except in connection with any
such borrowing in amounts up to 10% of the value of the Fund's net assets
at the time of such borrowing. The Fund will not purchase securities
while borrowings exceed 5% of the Fund's total assets, provided, however,
that the Fund may increase its interest in an open-end management
investment company with the same investment objective and restrictions as
the Fund's while such borrowings are outstanding. This borrowing
provision, for example, facilitates the orderly sale of portfolio
securities in the event of abnormally heavy redemption requests or in the
event of redemption requests during periods of tight market supply. This
provision is not for leveraging purposes;

2. Invest more than 25% of its total assets in securities of governmental
units located in any one state, territory, or possession of the United
States. The Fund may invest more then 25% of its total assets in
industrial development and pollution control obligations whether or not
the users of facilities financed by such obligations are in the same
industry;1

3. Purchase industrial revenue bonds if, as a result of such purchase,
more than 5% of total Fund assets would be invested in industrial revenue
bonds where payment of principal and interest are the responsibility of
companies with fewer than three years of operating history;

4. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any
one such issuer, provided, however, that the Fund may invest all or part
of its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's. Each
state and each political subdivision, agency or instrumentality of such
state and each multi-state agency of which such state is a member will be
a separate issuer if the security is backed only by the assets and
revenues of that issuer. If the security is guaranteed by another entity,
the guarantor will be deemed to be the issuer. This limitation shall not
apply to securities issued or -------- 1Pursuant to an interpretation of
the staff of the SEC, the Fund may not invest more than 25% of its assets
in industrial development bonds in projects of similar type or in the
same state. The Fund shall comply with this interpretation until such
time as it may be modified by the staff or the SEC.

<PAGE>

guaranteed by the U.S. Government, its agencies or instrumentalities or
to permitted investments of up to 25% of the Fund's total assets;2

5. Make loans, except through the purchase or holding of debt
obligations, repurchase agreements, or loans of portfolio securities in
accordance with the Fund's investment objective and policies (see
"Investment Objectives and Policies");

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof except to the extent that securities subject to a demand
obligation, stand-by commitments and puts may be purchased (see
"Investment Objectives and Policies"); real estate; commodities;
commodity contracts; or interests in oil, gas, or mineral exploration or
development programs. However, the Fund may purchase municipal bonds,
notes or commercial paper secured by interests in real estate;

7. Purchase securities on margin, make short sales of securities, or
maintain a short position, provided that this restriction shall not be
deemed to be applicable to the purchase or sale of when-issued securities
or of securities for delayed delivery;

8. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or

9. Act as an underwriter of securities.

The TREASURY MONEY MARKET FUND and its corresponding PORTFOLIO may not:

1. Enter into reverse repurchase agreements which together with any other
borrowing exceeds in the aggregate one-third of the market value of the
Fund's or the Portfolio's total assets, less liabilities other than the
obligations created by reverse repurchase agreements;

2. Borrow money (not including reverse repurchase agreements), except
from banks for temporary or extraordinary or emergency purposes and then
only in amounts up to 10% of the value of the Fund's or the Portfolio's
total assets, taken at cost at the time of such borrowing (and provided
that such borrowings and reverse repurchase agreements do not exceed in
the aggregate one-third of the market value of the Fund's and the
Portfolio's total assets less liabilities other than the obligations
represented by the bank borrowings and reverse repurchase agreements).
Mortgage, pledge, or hypothecate any assets except in connection with any
such borrowing and in amounts up to 10% of the value of the Fund's or the
Portfolio's net assets at the time of such borrowing. The Fund or the
Portfolio will not purchase securities while borrowings exceed 5% of the
Fund's or the Portfolio's total assets, respectively; provided, however,
that the Fund may increase its interest in an open-end management
investment company with the same investment objective and restrictions as
the Fund while such borrowings are outstanding. -------- 2For purposes of
interpretation of Investment Restriction No. 4 "guaranteed by another
entity" includes credit substitutions, such as letters of credit or
insurance, unless the Advisor determines that the security meets the
Fund's credit standards without regard to the credit substitution.

<PAGE>

This borrowing provision is included to facilitate the orderly sale of
portfolio securities, for example, in the event of abnormally heavy
redemption requests, and is not for investment purposes;

3. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
or the Portfolio's total assets would be invested in securities or other
obligations of any one such issuer; provided, however, that the Fund may
invest all or part of its investable assets in an open-end management
investment company with the same investment objective and restrictions as
the Fund. This limitation also shall not apply to issues of the U.S.
Government and repurchase agreements related thereto;

4. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately
after such purchase, the value of its investment in such industry would
exceed 25% of the value of the Fund's or the Portfolio's total assets;
provided, however, that the Fund may invest all or part of its assets in
an open-end management investment company with the same investment
objective and restrictions as the Fund. For purposes of industry
concentration, there is no percentage limitation with respect to
investments in U.S. Government securities and repurchase agreements
related thereto;

5. Make loans, except through purchasing or holding debt obligations,
repurchase agreements, or loans of portfolio securities in accordance
with the Fund's or the Portfolio's investment objective and policies (see
"Investment Objectives and Policies");

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts or interests in
oil, gas, or mineral exploration or development programs;

8. Acquire securities of other investment companies, except as permitted
by the 1940 Act or in connection with a merger, consolidation,
reorganization, acquisition of assets or an offer of exchange; provided,
however, that nothing in this investment restriction shall prevent the
Trust from investing all or part of the Fund's assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund; or

9. Act as an underwriter of securities.

<PAGE>

The SHORT TERM BOND FUND and its corresponding PORTFOLIO may
not:

1. Purchase securities or other obligations of issuers conducting their
principal business activity in the same industry if, immediately after
such purchase the value of its investments in such industry would exceed
25% of the value of the Fund's total assets; provided, however, that the
Fund may invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. For purposes of industry concentration, there
is no percentage limitation with respect to investments in U.S.
Government securities;

2. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any
one such issuer; provided, however, that the Fund may invest all or part
of its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's. This
limitation shall not apply to securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or to permitted investments
of up to 25% of the Fund's total assets;

3. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may invest
all or part of its investable assets in an open-end management investment
company with the same investment objective and restrictions as the
Fund's. This limitation shall not apply to permitted investments of up to
25% of the Fund's total assets;

4. Borrow money (not including reverse repurchase agreements), except
from banks for temporary or extraordinary or emergency purposes and then
only in amounts up to 30% of the value of the Fund's or the Portfolio's
total assets, taken at cost at the time of such borrowing (and provided
that such borrowings and reverse repurchase agreements do not exceed in
the aggregate one-third of the market value of the Fund's and the
Portfolio's total assets less liabilities other than the obligations
represented by the bank borrowings and reverse repurchase agreements).
The Fund will not mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not to exceed 30% of
the value of the Fund's or the Portfolio's net assets at the time of such
borrowing. The Fund or the Portfolio will not purchase securities while
borrowings exceed 5% of the Fund's total assets; provided, however, that
the Fund may increase its interest in an open-end management investment
company with the same investment objective and restrictions as the Fund's
while such borrowings are outstanding. Collateral arrangements for
premium and margin payments in connection with the Fund's hedging

<PAGE>

activities are not deemed to be a pledge of assets;

5. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is
permitted to incur pursuant to Investment Restriction No. 4 and except
that the Fund may enter into reverse repurchase agreements, provided that
the aggregate of senior securities, including reverse repurchase
agreements, shall not exceed one-third of the market value of the Fund's
total assets, less liabilities other than obligations created by reverse
repurchase agreements. The Fund's arrangements in connection with its
hedging activities as described in "Investment Objectives and Policies"
shall not be considered senior securities for purposes hereof;

6. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities) or the entering into of
repurchase agreements, or loans of portfolio securities in accordance
with the Fund's investment objective and policies;

7. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts, except for the
Fund's interests in hedging activities as described under "Investment
Objectives and Policies"; or interests in oil, gas, or mineral
exploration or development programs. However, the Fund may purchase
securities or commercial paper issued by companies which invest in real
estate or interests therein, including real estate investment trusts, and
purchase instruments secured by real estate or interests therein;

8. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such short-term
credit as necessary for the clearance of purchases and sales of
securities; provided that this restriction shall not be deemed to be
applicable to the purchase or sale of when-issued securities or delayed
delivery securities;

9. Acquire securities of other investment companies, except as permitted
by the 1940 Act or in connection with a merger, consolidation,
reorganization, acquisition of assets or an offer of exchange; provided,
however, that nothing in this investment restriction shall prevent the
Trust from investing all or part of the Fund's assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund; or

10. Act as an underwriter of securities.

The BOND FUND and its corresponding PORTFOLIO may not:

1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 30% of the value of the

<PAGE>

Fund's total assets, taken at cost at the time of such borrowing and
except in connection with reverse repurchase agreements permitted by
Investment Restriction No. 8. Mortgage, pledge, or hypothecate any assets
except in connection with any such borrowing in amounts up to 30% of the
value of the Fund's net assets at the time of such borrowing. The Fund
will not purchase securities while borrowings (including reverse
repurchase agreements) exceed 5% of the Fund's total assets; provided,
however, that the Fund may increase its interest in an open-end
management investment company with the same investment objective and
restrictions as the Fund's while such borrowings are outstanding. This
borrowing provision facilitates the orderly sale of portfolio securities,
for example, in the event of abnormally heavy redemption requests. This
provision is not for investment purposes. Collateral arrangements for
premium and margin payments in connection with the Fund's hedging
activities are not deemed to be a pledge of assets;

4. Purchase securities or other obligations of issuers conducting their
principal business activity in the same industry if, immediately after
such purchase the value of its investments in such industry would exceed
25% of the value of the Fund's total assets; provided, however, that the
Fund may invest all or part of its investable assets in an open-end
management investment company with the same investment objective and
restrictions as the Fund's. For purposes of industry concentration, there
is no percentage limitation with respect to investments in U.S.
Government securities;

5. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities) or the entering into of
repurchase agreements, or loans of portfolio securities in accordance
with the Fund's investment objective and policies;

<PAGE>

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, commodity contracts, except for the
Fund's interest in hedging activities as described under "Investment
Objectives and Policies"; or interests in oil, gas, or mineral
exploration or development programs. However, the Fund may purchase debt
obligations secured by interests in real estate or issued by companies
which invest in real estate or interests therein including real estate
investment trusts;

7. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except in the course of the
Fund's hedging activities, unless at all times when a short position is
open the Fund owns an equal amount of such securities, provided that this
restriction shall not be deemed to be applicable to the purchase or sale
of when-issued securities or delayed delivery securities;

8. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is
permitted to incur pursuant to Investment Restriction No. 1 and except
that the Fund may enter into reverse repurchase agreements, provided that
the aggregate of senior securities, including reverse repurchase
agreements, shall not exceed one-third of the market value of the Fund's
total assets, less liabilities other than obligations created by reverse
repurchase agreements. The Fund's arrangements in connection with its
hedging activities as described in "Investment Objectives and Policies"
shall not be considered senior securities for purposes hereof;

9. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or

10. Act as an underwriter of securities.

The TAX EXEMPT BOND FUND and its corresponding PORTFOLIO may not:

1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 10% of the value of the Fund's
total assets, taken at cost at the time of such borrowing; or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing in amounts up to 10% of the value of the Fund's net assets at
the time of such borrowing. The Fund will not purchase securities while
borrowings exceed 5% of the Fund's total assets; provided, however, that
the Fund may increase its interest in an open-end management investment
company with the same investment objective and restrictions as the Fund's
while such borrowings are outstanding. This borrowing provision
facilitates the orderly sale of portfolio securities, for example, in the
event of abnormally heavy redemption requests. This provision is not for
investment purposes.

<PAGE>

Collateral arrangements for premium and margin payments in connection
with the Fund's hedging activities are not deemed to be a pledge of
assets;

2. Purchase securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any
one such issuer; provided, however, that the Fund may invest all or part
of its investable assets in an open-end management investment company
with the same investment objective and restrictions as the Fund's. Each
state and each political subdivision, agency or instrumentality of such
state and each multi-state agency of which such state is a member will be
a separate issuer if the security is backed only by the assets and
revenue of that issuer. If the security is guaranteed by another entity,
the guarantor will be deemed to be the issuer.3 This limitation shall not
apply to securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or to permitted investments of up to 25% of
the Fund's total assets;

3. Invest more than 25% of its total assets in securities of governmental
units located in any one state, territory, or possession of the United
States. The Fund may invest more than 25% of its total assets in
industrial developments and pollution control obligations whether or not
the users of facilities financed by such obligations are in that same
industry;4

4. Purchase industrial revenue bonds if, as a result of such purchase,
more than 5% of total Fund assets would be invested in industrial revenue
bonds where payment of principal and interest are the responsibility of
companies with fewer than three years of operating history (including
predecessors);

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof except to the extent that securities subject to a demand
obligation, stand-by commitments and puts may be purchased (see
"Investment Objectives and Policies"); real estate; commodities;
commodity contracts, except for the Fund's interests in hedging
activities as described under "Investment Objectives and Policies"; or
interests in oil, gas, or mineral exploration or development programs.
However, the Fund may purchase municipal bonds, notes or commercial paper
secured by interests in real estate;

7. Purchase securities on margin, make short sales of securities, or
maintain a short position, except in the course of the Fund's hedging
activities, unless at all times when a short position is -------- 3 For
purposes of interpretation of Investment Restriction No. 2, "guaranteed
by another entity" includes credit substitutions, such as letters of
credit or insurance, unless the Advisor determines that the security
meets the Fund's credit standards without regard to the credit
substitution. 4Pursuant to an interpretation of the staff of the SEC, the
Fund may not invest more than 25% of its assets in industrial development
bonds in projects of similar type or in the same state. The Fund shall
comply with this interpretation until such time as it may be modified by
the staff of the SEC.

<PAGE>

open the Fund owns an equal amount of such securities or owns securities
which, without payment of any further consideration, are convertible into
or exchangeable for securities of the same issue as, and equal in amount
to, the securities sold short; provided that this restriction shall not
be deemed to be applicable to the purchase or sale of when-issued or
delayed delivery securities;

8. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to Investment
Restriction No. 1. The Fund's arrangements in connection with its hedging
activities as described in "Investment Objectives and Policies" shall not
be considered senior securities for purposes hereof;

9. Acquire securities of other investment companies, except as permitted
by the 1940 Act; or

10. Act as an underwriter of securities.

Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC staff
interpretations thereof, are amended or modified, the NEW YORK TOTAL
RETURN BOND FUND and its corresponding PORTFOLIO may not:

2. Borrow money, except that the Fund may (i) borrow money from banks for
temporary or emergency purposes (not for leveraging purposes) and (ii)
enter into reverse repurchase agreements for any purpose; provided that
(i) and (ii) in total do not exceed 33 1/3% of the value of the Fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings). If at any time any borrowings come to exceed 33 1/3% of the
value of the Fund's total assets, the Fund will reduce its borrowings
within three business days to the extent necessary to comply with the 33
1/3% limitation;

3. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;

4. Purchase or sell physical commodities or contracts thereon, unless
acquired as a result of the ownership of securities or instruments, but
the Fund may purchase or sell futures contracts or options (including
options on futures contracts, but excluding options or futures contracts
on physical commodities) and may enter into foreign currency forward
contracts;

<PAGE>

5. Purchase or sell real estate, but the Fund may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in real
estate;

6. Underwrite securities of other issuers, except to the extent the Fund,
in disposing of portfolio securities, may be deemed an underwriter within
the meaning of the 1933 Act;

7. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder; or

8. Notwithstanding any other investment restriction of the Fund, the Fund
may invest all of its investable assets in an open-end management
investment company having the same investment objective and restrictions
as the Fund.

The DIVERSIFIED FUND and its corresponding PORTFOLIO may not:

1. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately
after such purchase the value of its investments in such industry would
exceed 25% of the value of the Fund's total assets; provided, however,
that the Fund may invest all or part of its investable assets in an
open-end management investment company with the same investment objective
and restrictions as the Fund's. For purposes of industry concentration,
there is no percentage limitation with respect to investments in U.S.
Government securities;

<PAGE>

of such borrowing (and provided that such borrowings and reverse
repurchase agreements do not exceed in the aggregate one-third of the
market value of the Fund's and the Portfolio's total assets less
liabilities other than the obligations represented by the bank borrowings
and reverse repurchase agreements). The Fund will not mortgage, pledge,
or hypothecate any assets except in connection with any such borrowing
and in amounts not to exceed 30% of the value of the Fund's or the
Portfolio's net assets at the time of such borrowing. The Fund or the
Portfolio will not purchase securities while borrowings exceed 5% of the
Fund's total assets; provided, however, that the Fund may increase its
interest in an open-end management investment company with the same
investment objective and restrictions as the Fund's while such borrowings
are outstanding. This borrowing provision is included to facilitate the
orderly sale of portfolio securities, for example, in the event of
abnormally heavy redemption requests, and is not for investment purposes.
Collateral arrangements for premium and margin payments in connection
with the Fund's use of futures contracts and options are not deemed to be
a pledge of assets;

5. Issue any senior security, except as appropriate to evidence
indebtedness which constitutes a senior security and which the Fund is
permitted to incur pursuant to Investment Restriction No. 4 and except
that the Fund may enter into reverse repurchase agreements, provided that
the aggregate of senior securities, including reverse repurchase
agreements, shall not exceed one-third of the market value of the Fund's
total assets, less liabilities other than obligations created by reverse
repurchase agreements. The Fund's arrangements in connection with its use
of futures contracts and options shall not be considered senior
securities for purposes hereof;

6. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities), or the entering into of
repurchase agreements, or loans of portfolio securities in accordance
with the Fund's investment objective and policies (see "Investment
Objectives and Policies");

7. Purchase or sell commodities or commodity contracts, but this
restriction shall not prohibit the Fund from purchasing or selling
futures contracts or options (including options on futures contracts, but
excluding options or futures contracts on physical commodities) or
entering into foreign currency forward contracts; or purchase or sell
real estate or interests in oil, gas, or mineral exploration or
development programs. However, the Fund may purchase securities or
commercial paper issued by companies which invest in real estate or
interests therein, including real estate investment trusts, and purchase
instruments secured by real estate or interests therein;

8. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such short term
credit as necessary for the clearance of purchases and

<PAGE>

sales of securities, provided that this restriction shall not be deemed
to be applicable to the purchase or sale of when-issued securities or
delayed delivery securities or to restrict the Fund's use of futures
contracts or options;

10. Act as an underwriter of securities.

Each of the SELECTED U.S. EQUITY FUND and the U.S. SMALL COMPANY FUND
and their corresponding PORTFOLIOS may not:

2. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of the
Fund's total assets, taken at cost, at the time of such borrowing.
Mortgage, pledge, or hypothecate any assets except in connection with any
such borrowing and in amounts not to exceed 10% of the value of the
Fund's net assets at the time of such borrowing. The Fund will not
purchase securities while borrowings exceed 5% of the Fund's total
assets; provided, however, that the Fund may increase its interest in an
open-end management investment company with the same investment objective
and restrictions as the Fund's while such borrowings are outstanding.
This borrowing provision is included to facilitate the orderly sale of
portfolio securities, for example, in the event of abnormally heavy
redemption requests, and is not for investment purposes. Collateral
arrangements for premium and margin payments in connection with the
Fund's hedging activities are not deemed to be a pledge of assets;

3. Purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in securities or other obligations of any
one such issuer; provided, however, that the Fund may invest all or part
of its investable assets in an open-end management investment company
with the same investment

<PAGE>

objective and restrictions as the Fund's. This limitation shall not apply
to issues of the U.S. Government, its agencies or instrumentalities and
to permitted investments of up to 25% of the Fund's total assets;

4. Purchase the securities of an issuer if, immediately after such
purchase, the Fund owns more than 10% of the outstanding voting
securities of such issuer; provided, however, that the Fund may invest
all or part of its investable assets in an open-end management investment
company with the same investment objective and restrictions as the
Fund's;

5. Make loans, except through the purchase or holding of debt obligations
(including privately placed securities), or the entering into of
repurchase agreements, or loans of portfolio securities in accordance
with the Fund's investment objective and policies (see "Investment
Objectives and Policies");

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real estate, commodities, or commodity contracts, except for the
Fund's interests in hedging activities as described under "Investment
Objectives and Policies"; or interests in oil, gas, or mineral
exploration or development programs. However, the Fund may purchase
securities or commercial paper issued by companies which invest in real
estate or interests therein, including real estate investment trusts;

7. Purchase securities on margin, make short sales of securities, or
maintain a short position, except in the course of the Fund's hedging
activities, provided that this restriction shall not be deemed to be
applicable to the purchase or sale of when-issued securities or delayed
delivery securities;

8. Acquire securities of other investment companies, except as permitted
by the 1940 Act;

9. Act as an underwriter of securities;

10. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to Investment
Restriction No. 2. The Fund's arrangements in connection with its hedging
activities as described in "Investment Objectives and Policies" shall not
be considered senior securities for purposes hereof; or

11. Purchase any equity security if, as a result, the Fund would then
have more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer
than three years.

<PAGE>

The INTERNATIONAL EQUITY FUND and its corresponding PORTFOLIO may not:

1. Borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts up to 30% of the value of the Fund's
net assets at the time of borrowing, and except in connection with
reverse repurchase agreements and then only in amounts up to 33 1/3% of
the value of the Fund's net assets; or purchase securities while
borrowings, including reverse repurchase agreements, exceed 5% of the
Fund's total assets; provided, however, that the Fund may increase its
interest in an open-end management investment company with the same
investment objective and restrictions as the Fund's while such borrowings
are outstanding. The Fund will not mortgage, pledge, or hypothecate any
assets except in connection with any such borrowing and in amounts not to
exceed 30% of the value of the Fund's net assets at the time of such
borrowing;

4. Purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately
after such purchase, the value of its investments in such industry would
exceed 25% of the value of the Fund's total assets; provided, however,
that the Fund may invest all or part of its investable assets in an
open-end management investment company with the same investment objective
and restrictions as the Fund's. For purposes of industry concentration,
there is no percentage limitation with respect to investments in U.S.
Government securities;

5. Make loans, except through the purchase or holding of debt obligations
(including restricted securities), or the entering into of repurchase
agreements, or loans of portfolio securities in accordance with the
Fund's investment objective and policies, see "Additional Investment
Information" in the Prospectus and "Investment Objectives and Policies"
in this Statement of Additional Information;

<PAGE>

6. Purchase or sell puts, calls, straddles, spreads, or any combination
thereof, real property, including limited partnership interests,
commodities, or commodity contracts, except for the Fund's interests in
hedging and foreign exchange activities as described under "Additional
Investment Information" in the Prospectus; or interests in oil, gas,
mineral or other exploration or development programs or leases. However,
the Fund may purchase securities or commercial paper issued by companies
that invest in real estate or interests therein including real estate
investment trusts;

7. Purchase securities on margin, make short sales of securities, or
maintain a short position in securities, except to obtain such short-term
credit as necessary for the clearance of purchases and sales of
securities, provided that this restriction shall not be deemed to apply
to the purchase or sale of when-issued securities or delayed delivery
securities;

8. Acquire securities of other investment companies, except as permitted
by the 1940 Act;

9. Act as an underwriter of securities, except insofar as the Fund may be
deemed to be an underwriter under the 1933 Act by virtue of disposing of
portfolio securities; or

10. Issue any senior security, except as appropriate to evidence
indebtedness which the Fund is permitted to incur pursuant to Investment
Restriction No. 1. The Fund's arrangements in connection with its hedging
activities as described in "Additional Investment Information" in the
Prospectus shall not be considered senior securities for purposes hereof.

Unless Sections 8(b)(1) and 13(a) of the 1940 Act, or any SEC or SEC
staff interpretations thereof, are amended or modified, each of the EMERGING
MARKETS EQUITY, EUROPEAN EQUITY AND ASIA GROWTH FUNDS and their corresponding
PORTFOLIOS may not:

<PAGE>

3. With respect to 75% of its total assets, purchase any security if, as
a result, (a) more than 5% of the value of the Fund's total assets would
be invested in securities or other obligations of any one issuer; or (b)
the Fund would hold more than 10% of the outstanding voting securities of
that issuer. This limitation shall not apply to Government securities (as
defined in the 1940 Act);

4. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;

5. Purchase or sell physical commodities or contracts thereon, unless
acquired as a result of the ownership of securities or instruments, but
the Fund may purchase or sell futures contracts or options (including
options on futures contracts, but excluding options or futures contracts
on physical commodities) and may enter into foreign currency forward
contracts;

6. Purchase or sell real estate, but the Fund may purchase or sell
securities that are secured by real estate or issued by companies
(including real estate investment trusts) that invest or deal in real
estate;

7. Underwrite securities of other issuers, except to the extent the Fund,
in disposing of portfolio securities, may be deemed an underwriter within
the meaning of the 1933 Act;

8. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder; and

9. Notwithstanding any other investment restriction of the Fund, the Fund
may invest all of its investable assets in an open-end management
investment company having the same investment objective and restrictions
as the Fund.

Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC
staff interpretations thereof are amended or modified, each of the INTERNATIONAL
BOND AND JAPAN EQUITY FUNDS and their corresponding PORTFOLIOS may not:

1. Purchase any security if, as a result, more than 25% of the value of
the Fund's total assets would be invested in securities of issuers having
their principal business activities in the same industry. This limitation
shall not apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. In addition, and while
subject to changing interpretations, so long as a single foreign
government or supranational organization is considered to be an
"industry" for the purposes of this 25% limitation, the Portfolio will
comply therewith. The staff of the SEC considers all supranational
organizations (as a group) to be a single industry for concentration
purposes;

<PAGE>

3. Make loans to other persons, except through the purchase of debt
obligations, loans of portfolio securities, and participation in
repurchase agreements;

6. Underwrite securities of other issuers, except to the extent the Fund,
in disposing of portfolio securities, may be deemed an underwriter within
the meaning of the 1933 Act;

7. Issue senior securities, except as permitted under the 1940 Act or any
rule, order or interpretation thereunder; and

8. Notwithstanding any other investment restriction of the Fund, the Fund
may invest all of its investable assets in an open-end management
investment company having substantially the same investment objective and
restrictions as the Fund.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - MONEY MARKET FUND. The
investment restriction described below is not a fundamental policy of the Money
Market Fund or its corresponding Portfolio and may be changed by their
respective Trustees. This non-fundamental investment policy requires that the
Money Market Fund and its corresponding Portfolio may not:

(i) enter into reverse repurchase agreements or borrow money, except from
banks for extraordinary or emergency purposes, if such obligations exceed
in the aggregate one-third of the market value of the Fund's total
assets, less liabilities other than obligations created by reverse
repurchase agreements and borrowings.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - TAX EXEMPT MONEY

<PAGE>

MARKET FUND AND TREASURY MONEY MARKET FUND. The investment restriction
described below is not a fundamental policy of these Funds or their
corresponding Portfolios and may be changed by their respective Trustees. This
non-fundamental investment policy requires that each such Fund may not:

(i) 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 10% of the
market value of the Fund's total assets would be in investments that are
illiquid.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - SHORT TERM BOND FUND, TAX
EXEMPT BOND FUND, BOND FUND, SELECTED U.S. EQUITY FUND, U.S. SMALL COMPANY FUND,
INTERNATIONAL EQUITY FUND, DIVERSIFIED FUND, EMERGING MARKETS EQUITY FUND,
EUROPEAN EQUITY FUND, JAPAN EQUITY FUND AND ASIA GROWTH FUND. The investment
restriction described below is not a fundamental policy of these Funds or their
corresponding Portfolios and may be changed by their respective Trustees. This
non-fundamental investment policy requires that each such Fund may not:

(i) acquire any illiquid securities, such as repurchase agreements with
more than seven days to maturity or fixed time deposits with a duration
of over seven calendar days, if as a result thereof, more than 15% of the
market value of the Fund's total assets would be in investments that are
illiquid.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - INTERNATIONAL EQUITY FUND AND
DIVERSIFIED FUND. The investment restrictions described below are not
fundamental policies of these Funds or their corresponding Portfolios and may be
changed by their respective Trustees. These non-fundamental investment policies
require that each such Fund may not:

(i) purchase any equity security if, as a result, the Fund would then
have more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer
than three years;

(ii) invest in warrants (other than warrants acquired by the Fund as part
of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets or if, as a result, more
than 2% of the Fund's net assets would be invested in warrants not listed
on a recognized United States or foreign stock exchange, to the extent
permitted by applicable state securities laws; or

(iii) invest in any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the
Trust, or is an officer of the Investment Advisor, if after the
Portfolio's purchase of the securities of such issuer, one or more of
such persons owns beneficially more than 1/2 of 1% of the shares or
securities, or both, all taken at market value, of such issuer, and such
persons owning more than 1/2 of 1% of such shares or securities together
own beneficially more than 5% of such shares or securities, or both, all
taken at market value.

<PAGE>

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - NEW YORK TOTAL RETURN BOND
FUND. The investment restrictions described below are not fundamental policies
of the New York Total Return Bond Fund and its corresponding Portfolio and may
be changed by their Trustees. These non-fundamental investment policies require
that the New York Total Return Bond Fund and its corresponding Portfolio may
not:

(i) Acquire securities of other investment companies, except as permitted
by the 1940 Act or any rule, order or interpretation thereunder, or in
connection with a merger, consolidation, reorganization, acquisition of
assets or an offer of exchange;

(ii) Acquire any illiquid securities, such as repurchase agreements with
more than seven days to maturity or fixed time deposits with a duration
of over seven calendar days, if as a result thereof, more than 15% of the
market value of the Fund's total assets would be in investments that are
illiquid;

(iii) Sell any security short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold or unless
it covers such short sales as required by the current rules or positions
of the SEC or its staff. Transactions in futures contracts and options
shall not constitute selling securities short; or

(iv) Purchase securities on margin, but the Fund may obtain such short
term credits as may be necessary for the clearance of transactions.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - SELECTED U.S. EQUITY FUND AND
U.S. SMALL COMPANY FUND. The investment restrictions described below are not
fundamental policies of these Funds or their corresponding Portfolios and may be
changed by their respective Trustees. These non-fundamental investment policies
require that each such Fund may not:

(i) invest in warrants (other than warrants acquired by the Fund as part
of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets or if, as a result, more
than 2% of the Fund's net assets would be invested in warrants not listed
on a recognized U.S. or foreign stock exchange, to the extent permitted
by applicable state securities laws; or

(ii) invest in any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer

<PAGE>

or Trustee of the Trust, or is an officer of the Investment Advisor, if
after the Portfolio's purchase of the securities of such issuer, one or
more of such persons owns beneficially more than 1/2 of 1% of the shares
or securities, or both, all taken at market value, of such issuer, and
such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or
both, all taken at market value.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - SELECTED U.S. EQUITY FUND, U.S.
SMALL COMPANY FUND AND DIVERSIFIED FUND. The investment restrictions described
below are not fundamental policies of these Funds or their corresponding
Portfolios and may be changed by their respective Trustees. These
non-fundamental investment policies require that each such Fund may not:

(i) invest in real estate limited partnership interests; or

(ii) invest in oil, gas or other mineral leases.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - EMERGING MARKETS EQUITY FUND,
EUROPEAN EQUITY FUND AND ASIA GROWTH FUND. The investment restrictions described
below are not fundamental policies of these Funds or their corresponding
Portfolios and may be changed by their respective Trustees. These
non-fundamental investment policies require that each such Fund may not:

(iii) Purchase any security if, as a result, the Fund would then have
more than 5% of its total assets invested in securities of companies
(including predecessors) that have been in continuous operation for fewer
than three years;

(iv) Invest in warrants (other than warrants acquired by the Fund as part
of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets or if, as a result, more
than 2% of the Fund's net assets would be invested in warrants not listed
on a recognized U.S. or foreign stock exchange, to the extent permitted
by applicable state securities laws;

(v) Sell any security short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities

<PAGE>

sold or unless it covers such short sales as required by the current
rules or positions of the SEC or its staff. Transactions in futures
contracts and options shall not constitute selling securities short;

(vi) Purchase securities on margin, but the Fund may obtain such short
term credits as may be necessary for the clearance of transactions;

(vii) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, any of the Fund's officers or Trustees or any officer of the
Portfolio's investment adviser individually owns more than 1/2 of 1% of
the issuer's outstanding securities and such persons owning more than 1/2
of 1% of such securities together beneficially own more than 5% of such
securities, all taken at market; or

(viii) Invest in real estate limited partnerships or purchase interests
in oil, gas or mineral exploration or development programs or leases.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS - INTERNATIONAL BOND AND JAPAN
EQUITY FUNDS. The investment restrictions described below are not fundamental
policies of these Funds or their corresponding Portfolios and may be changed by
their respective Trustees. These non-fundamental investment policies require
that each such Fund may not:

(ii) Acquire any illiquid securities if as a result thereof, more than
15% of the market value of the Fund's total assets would be in
investments that are illiquid;

(iv) Sell any security short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold or unless
it covers such short sales as required by the current rules or positions
of the Securities and Exchange Commission or its staff. Transactions in
futures contracts and options shall not constitute selling securities
short;

(v) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, any of the Fund's officers or Trustees or any officer of the
Portfolio's investment adviser individually owns more than 1/2 of 1% of
the issuer's outstanding securities and such persons owning more than 1/2
of 1% of such securities together beneficially own more than 5% of such
securities, all taken at market;

<PAGE>

(vi) Purchase securities on margin, but the Fund may obtain such short
term credits as may be necessary for the clearance of transactions; or

(vii) Invest in real estate limited partnerships or purchase interests in
oil, gas or mineral exploration or development programs or leases.

ALL FUNDS. There will be no violation of any investment restriction if
that restriction is complied with at the time the relevant action is taken
notwithstanding a later change in market value of an investment, in net or total
assets, in the securities rating of the investment, or any other later change.

TRUSTEES AND OFFICERS

TRUSTEES

The Trustees of the Trust, who are also the Trustees of each of the
Portfolios, their business addresses, and their principal occupations during the
past five years are set forth below.

FREDERICK S. ADDY--Trustee; Retired; Executive Vice President and Chief
Financial Officer from January 1990 to April 1994, Amoco Corporation. His
address is 5300 Arbutus Cove, Austin, TX 78746.

WILLIAM G. BURNS--Trustee; Retired, Former Vice Chairman, Nynex. His
address is 2200 Alaqua Drive, Longwood, FL 32779.

ARTHUR C. ESCHENLAUER--Trustee; Retired; Senior Vice President, Morgan
Guaranty Trust Company of New York until 1987. His address is 14 Alta
Vista Drive, RD #2, Princeton, NJ 08540.

MATTHEW HEALEY (*)--Trustee, Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc., since 1989 . His address is Pine Tree
Club Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436.

MICHAEL P. MALLARDI--Trustee; Senior Vice President, Capital Cities/ABC,
Inc., President, Broadcast Group, since 1986. His address is 77 West 66th
Street, New York, NY 10017.
- ------------------------
(*) Mr. Healey is an "interested person" of the Trust and each Portfolio
as that term is defined in the 1940 Act.

<PAGE>

The Trustees of the Trust are the same as the Trustees of each of the
Portfolios. In accordance with applicable state requirements, a majority of the
disinterested Trustees have adopted written procedures reasonably appropriate to
deal with potential conflicts of interest arising from the fact that the same
individuals are Trustees of the Trust, each of the Portfolios and The Pierpont
Funds, up to and including creating a separate board of trustees.

Each Trustee is paid an annual fee as follows for serving as Trustee of
the Trust, each of the Portfolios and The Pierpont Funds, and is reimbursed for
expenses incurred in connection with service as a Trustee. The compensation paid
to the Trustees in calendar 1995 is set forth below. The Trustees may hold
various other directorships unrelated to these funds.
<TABLE>
<S> <C> <C> <C> <C>
PENSION OR TOTAL COMPENSATION FROM
AGGREGATE RETIREMENT THE TRUST, THE PIERPONT
COMPENSATION BENEFITS ESTIMATED FUNDS AND CORRESPONDING
FROM THE TRUST ACCRUED AS PART ANNUAL BENEIFTS PORTFOLIOS PAID TO
DURING 1995 OF FUND EXPENSES UPON RETIRMENT TRUSTEES DURING 1995

Frederick S. Addy, Trustee $8,727 None None $62,500

William G. Burns, Trustee $8,727 None None $62,500
Burns, Trustee

Arthur C. Eschenlauer, Trustee $8,727 None None $62,500

Matthew Healey, Trustee(*), $8,727 None None $62,500
Chairman and Chief Executive
Officer

Michael P. Mallardi, Trustee $8,727 None None $62,500

(*) During 1995, Pierpont Group, Inc. paid Mr. Healey, in his role as Chairman of Pierpont Group, Inc.,
compensation in the amount of $140,000, contributed $21,000 to a defined contribution plan on his behalf
and paid $20,000 in insurance premiums for his benefit.
</TABLE>

As of April 1, 1995 the annual fee paid to each Trustee for serving as
a Trustee of the Trust, each of the Portfolios and The Pierpont Funds was
adjusted to $65,000.

The Trustees, in addition to reviewing actions of the Trust's and the
Portfolios' various service providers, decide upon matters of general policy.
Each of the Portfolios and 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 Portfolios and the Trust.
Pierpont Group, Inc. was organized in July 1989 to provide services for The
Pierpont Family of Funds, and the Trustees are the equal and sole shareholders
of Pierpont Group, Inc. The Trust and the Portfolios have agreed to pay Pierpont
Group, Inc. a fee in an amount representing its reasonable costs in performing
these services. These costs are periodically reviewed by the Trustees.

<PAGE>

The aggregate fees paid to Pierpont Group, Inc. by each Fund and its
corresponding Portfolio during the indicated fiscal years are set forth below:

MONEY MARKET FUND -- For the fiscal year ended November 30, 1994:
$16,147. For the fiscal year ended November 30, 1995: $54,502.

THE MONEY MARKET PORTFOLIO -- For the fiscal year ended November 30,
1994: $246,089. For the fiscal year ended November 30, 1995: $261,045.

TAX EXEMPT MONEY MARKET FUND -- For the fiscal year ended August 31,
1994: $1,745. For the fiscal year ended August 31, 1995: $8,400.

THE TAX EXEMPT MONEY MARKET PORTFOLIO -- For the fiscal year ended August
31, 1994: $79,046. For the fiscal year ended August 31, 1995: $110,325.

TREASURY MONEY MARKET FUND -- For the fiscal year ended October 31, 1994:
$6,211. For the fiscal year ended October 31, 1995: $8,445.

THE TREASURY MONEY MARKET PORTFOLIO -- For the fiscal year ended October
31, 1994: $17,104. For the fiscal year ended October 31, 1995: $22,791.

SHORT TERM BOND -- For the fiscal year ended October 31, 1994: $3,935.
For the fiscal year ended October 31, 1995: $4,748.

THE SHORT TERM BOND PORTFOLIO -- For the fiscal year ended October 31,
1994: $4,545. For the fiscal year ended October 31, 1995: $5,573.

TAX EXEMPT BOND FUND -- For the fiscal year ended August 31, 1994: $686.
For the fiscal year ended August 31, 1995: $3,602.

THE TAX EXEMPT BOND PORTFOLIO -- For the fiscal year ended August 31,
1994: $35,243. For the fiscal year ended August 31, 1995: $38,804.

NEW YORK TOTAL RETURN BOND FUND -- For the period April 11, 1994
(commencement of operations) through March 31, 1995: $1,297.

THE NEW YORK TOTAL RETURN BOND PORTFOLIO -- For the period April 11, 1994
(commencement of operations) through March 31, 1995: $4,140.

INTERNATIONAL BOND FUND -- For the period December 1, 1994 (commencement
of operations) through September 30, 1995: $232.

THE NON-U.S. FIXED INCOME PORTFOLIO -- For the period October 11, 1994
(commencement of operations) through September 30, 1995: $20,446.

BOND FUND -- For the fiscal year ended October 31, 1994: $12,989. For the
fiscal year ended October 31, 1995: $29,276.

THE U.S. FIXED INCOME PORTFOLIO -- For the fiscal year ended October 31,
1994: $23,028. For the fiscal year ended October 31, 1995: $40,729.

<PAGE>

SELECTED U.S. EQUITY FUND -- For the period July 19, 1993 (commencement
of operations) through May 31, 1994: $1,564. For the fiscal year ended
May 31, 1995: $11,003.

THE SELECTED U.S. EQUITY PORTFOLIO -- For the period July 19, 1993
(commencement of operations) through May 31, 1994: $20,385. For the
fiscal year ended May 31, 1995: $52,948.

U.S. SMALL COMPANY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $3,005. For the fiscal year ended May
31, 1995: $10,158.

THE U.S. SMALL COMPANY PORTFOLIO -- For the period July 19, 1993
(commencement of operations) through May 31, 1994: $33,435. For the
fiscal year ended May 31, 1995: $66,256.

INTERNATIONAL EQUITY FUND -- For the fiscal year ended October 31, 1994:
$13,902. For the fiscal year ended October 31, 1995: $30,279.

THE NON-U.S. EQUITY PORTFOLIO -- For the fiscal year ended October 31,
1994: $32,512. For the fiscal year ended October 31, 1995: $48,442.

DIVERSIFIED FUND -- For the period July 8, 1993 (commencement of
operations) through June 30, 1994: $2,959. For the fiscal year ended June
30, 1995: $10,267.

THE DIVERSIFIED PORTFOLIO -- For the period July 8, 1993 (commencement of
operations) through June 30, 1994: $3,434. For the fiscal year ended June
30, 1995: $11,702.

EMERGING MARKETS EQUITY FUND -- For the fiscal year ended October 31,
1994: $8,326. For the fiscal year ended October 31, 1995: $14,527.

THE EMERGING MARKETS EQUITY PORTFOLIO -- For the fiscal year ended
October 31, 1994: $42,764. For the fiscal year ended October 31, 1995:
$53,162.

EUROPEAN EQUITY PORTFOLIO-- For the period March 28, 1995 (commencement
of operations) through December 31, 1995: $19,953.

JAPAN EQUITY PORTFOLIO -- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $21,727.

ASIA GROWTH PORTFOLIO -- For the period April 5, 1995 (commencement of
operations) through December 31, 1995: $4,788.

<PAGE>

OFFICERS

The Trust's and Portfolios' executive officers (listed below), other than
the Chief Executive Officer, are provided and compensated by Signature
Broker-Dealer Services, Inc. ("SBDS"), a wholly owned subsidiary of Signature
Financial Group, Inc. ("Signature"). The officers conduct and supervise the
business operations of the Trust and the Portfolios. The Trust and the
Portfolios have no employees.

The officers of the Trust and the Portfolios and their principal
occupations during the past five years are set forth below. Unless otherwise
specified, each officer holds the same position with the Trust and each
Portfolio. The business address of each of the officers unless otherwise noted
is Signature Broker-Dealer Services, Inc., 6 St. James Avenue, Boston,
Massachusetts 02116.

MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont Group,
Inc., since 1989 . His address is Pine Tree Club Estates, 10286 Saint Andrews
Road, Boynton Beach, FL 33436.

PHILIP W. COOLIDGE; President; Chairman, Chief Executive Officer and
President, Signature since December 1988 and SBDS since April 1989.

DAVID G. DANIELSON; Assistant Treasurer; Assistant Manager, Signature
since May 1991; Graduate Student, Northeastern University from April 1990 to
March 1991.

JOHN R. ELDER; Treasurer; Vice President, Signature (since April 1995);
Treasurer, Phoenix Family of Mutual Funds (Phoenix Home Life Mutual Insurance
Company) (from 1983 to March 1995).

LINDA T. GIBSON; Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature since June 1991; Assistant Secretary, SBDS since November
1992; law student, Boston University School of Law prior to May 1992.

JAMES E. HOOLAHAN; Vice President; Senior Vice President, Signature since
December 1989.

SUSAN JAKUBOSKI; Assistant Secretary and Assistant Treasurer of the
Portfolios only; Manager and Senior Fund Administrator, Signature and Signature
(Cayman) (since August 1994); Assistant Treasurer, SBDS (since September 1994);
Fund Compliance Administrator, Concord Financial Group, Inc. (from November 1990
to August 1994); Senior Fund Accountant, Neuberger & Berman Management
Incorporated (since prior to 1990). Her address is P.O. Box 2494, Elizabethan
Square, George Town, Grand Cayman, Cayman Islands, B.W.I.

<PAGE>

THOMAS M. LENZ; Secretary; Vice President and Associate General Counsel,
Signature since November 1989; Assistant Secretary, SBDS since February 1991.

MOLLY S. MUGLER; Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature since December 1988; Assistant Secretary, SBDS since April
1989.

ANDRES E. SALDANA; Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature since November 1992; Assistant Secretary, SBDS since
September 1993; Attorney, Ropes & Gray from September 1990 to November 1992.

DANIEL E. SHEA; Assistant Treasurer; Assistant Manager of Fund
Administration, Signature since November 1993; Supervisor and Senior Technical
Advisor, Putnam Investments since prior to 1990. Messrs. Coolidge, Danielson,
Elder, Hoolahan, Lenz, Saldana and Shea and Mss. Gibson, Mugler and Jakuboski
hold similar positions for other investment companies for which SBDS or an
affiliate serves as principal underwriter.

INVESTMENT ADVISOR

The investment advisor to the Portfolios is Morgan Guaranty Trust
Company of New York, a wholly owned subsidiary of J.P. Morgan & Co. Incorporated
("J.P. Morgan"), a bank holding company organized under the laws of the State of
Delaware. Morgan, whose principal offices are at 60 Wall Street, New York, New
York 10260, is a New York trust company which conducts a general banking and
trust business. 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.

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 $179 billion (of which the Advisor advises over $28 billion).

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

The basis of Morgan's investment process is fundamental investment
research as the firm believes that fundamentals should determine an asset's
value over the long term. J.P. Morgan

<PAGE>

currently employs over 100 full time research analysts, among the largest
research staffs in the money management industry, in its investment management
divisions located in New York, London, Tokyo, Frankfurt, Melbourne and Singapore
to cover companies, industries and countries on site. In addition, the
investment management divisions employ approximately 300 capital market
researchers, portfolio managers and traders. The conclusions of the equity
analysts' fundamental research is quantified into a set of projected returns for
individual companies through the use of a dividend discount model. These returns
are projected for 2 to 5 years to enable analysts to take a longer term view.
These returns, or normalized earnings, are used to establish relative values
among stocks in each industrial sector. These values may not be the same as the
markets' current valuations of these companies. This provides the basis for
ranking the attractiveness of the companies in an industry according to five
distinct quintiles or rankings. This ranking is one of the factors considered in
determining the stocks purchased and sold in each sector. The Advisor's fixed
income investment process is based on analysis of real rates, sector
diversification and quantitative and credit analysis.

The investment advisory services the Advisor provides to the Portfolios
are not exclusive under the terms of the Advisory Agreements. 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 Portfolios. Such accounts are supervised by officers and employees of the
Advisor who may also be acting in similar capacities for the Portfolios. See
"Portfolio Transactions."

Sector weightings are generally similar to a fund's benchmark with the
emphasis on security selection as the method to achieve investment performance
superior to the benchmark. The benchmarks for the Portfolios in which the Funds
invest are currently: The Money Market Portfolio--IBC/Donoghue's Tier-One Money
Fund Average; The Treasury Money Market Portfolio--IBC/Donoghue's Treasury and
Repo Money Fund Average; The Tax Exempt Money Market Portfolio--IBC/Donoghue's
Tax Exempt Money Fund Average; The Short Term Bond Portfolio--Merrill Lynch 1-3
Year Treasury Index; The U.S. Fixed Income Portfolio--Salomon Brothers Broad
Investment Grade Bond Index; The Tax Exempt Bond Portfolio--Lehman Brothers
Quality Intermediate Municipal Bond Index; The New York Total Return Bond
Portfolio--Lehman Brothers 1-15 Year Municipal Bond Index; The Selected U.S.
Equity

<PAGE>

Portfolio--S&P 500 Index; The U.S. Small Company Portfolio--Russell 2500 Index;
The Non-U.S. Equity Portfolio--EAFE Index; The Emerging Markets Equity
Portfolio--MSCI Emerging Markets Free Index; The Diversified
Portfolio--diversified benchmark (52% S&P 500, 35% Salomon Brothers Broad
Investment Grade Bond, 3% Russell 2000 and 10% EAFE indexes); The European
Equity Portfolio--the MSCI Europe Index; The Japan Equity Portfolio--the TOPIX;
and The Asia Growth Portfolio--the MSCI indexes for Hong Kong and Singapore and
the International Finance Corporation Investable indexes for China, Indonesia,
Malaysia, Philippines, South Korea, Taiwan and Thailand.

J.P. Morgan Investment Management Inc., a wholly owned subsidiary of
J.P. Morgan, is a registered investment adviser under the Investment Advisers
Act of 1940, as amended, which 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 the Advisor serves as trustee. J.P. Morgan
Investment Management Inc. advises the Advisor on investment of the commingled
pension trust funds.

The Portfolios are managed by officers of the Advisor who, in acting
for their customers, including the Portfolios, do not discuss their investment
decisions with any personnel of J.P. Morgan or any personnel of other divisions
of the Advisor or with any of its affiliated persons, with the exception of J.P.
Morgan Investment Management Inc. See "Portfolio Transactions" below for a
description of services provided to the Portfolios by J.P.
Morgan Investment Management Inc.

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

MONEY MARKET: 0.20% of net assets up to $1 billion and 0.10% of net
assets in excess of $1 billion

TAX EXEMPT MONEY MARKET: 0.20% of net assets up to $1 billion and 0.10%
of net assets in excess of $1 billion

TREASURY MONEY MARKET: 0.20% of net assets up to $1 billion and 0.10% of
net assets in excess of $1 billion

<PAGE>

SHORT TERM BOND: 0.25%

U.S. FIXED INCOME: 0.30%

TAX EXEMPT BOND: 0.30%

NEW YORK TOTAL RETURN BOND: 0.30%

NON-U.S. FIXED INCOME: 0.35%

SELECTED U.S. EQUITY: 0.40%

U.S. SMALL COMPANY: 0.60%

NON-U.S. EQUITY: 0.60%

DIVERSIFIED: 0.55%

EMERGING MARKETS EQUITY: 1.00%

EUROPEAN EQUITY: 0.65%

JAPAN EQUITY: 0.65%

ASIA GROWTH: 0.80%

Below are set forth for each Fund listed the advisory fees paid by its
corresponding Portfolio to Morgan for the fiscal periods indicated. See
"Expenses" in the Prospectus and below for applicable expense limitations.

THE MONEY MARKET PORTFOLIO (Money Market Fund) -- For the period July 12,
1993 (commencement of operations) through November 30, 1993: $1,370,552. For the
fiscal year ended November 30, 1994: $3,423,576. For the fiscal year ended
November 30, 1995: $3,913,479.

THE TAX EXEMPT MONEY MARKET PORTFOLIO (Tax Exempt Money Market Fund) --
For the period July 12, 1993 (commencement of operations) through August 31,
1993: $271,454. For the fiscal year ended August 31, 1994: $2,021,476. For the
fiscal year ended August 31, 1995: $2,150,291.

THE TREASURY MONEY MARKET PORTFOLIO (Treasury Money Market Fund) -- For
the period January 4, 1993 (commencement of operations) through October 31,
1993: $93,370. For the fiscal year ended October 31, 1994: $339,521. For the
fiscal year ended October 31, 1995: $492,941.

THE SHORT TERM BOND PORTFOLIO (Short Term Bond Fund) -- For the period
July 8, 1993 (commencement of operations) through October 31, 1993: $10,427. For
the fiscal year ended October 31, 1994: $113,379. For the fiscal year ended
October 31, 1995: $146,335.

<PAGE>

THE U.S. FIXED INCOME PORTFOLIO (Bond Fund) -- For the period July 12, 1993
(commencement of operations) through October 31, 1993: $119,488. For the fiscal
year ended October 31, 1994: $699,081. For the fiscal year ended October 31,
1995: $1,339,147.

THE TAX EXEMPT BOND PORTFOLIO (Tax Exempt Bond Fund) -- For the period July 12,
1993 (commencement of operations) through August 31, 1993: $200,272. For the
fiscal year ended August 31, 1994: $1,383,986. For the fiscal year ended August
31, 1995: $1,178,720.

THE NEW YORK TOTAL RETURN BOND PORTFOLIO (New York Total Return Bond Fund) --
For the period April 11, 1994 (commencement of operations) through March 31,
1995: $120,281.

THE NON-U.S. FIXED INCOME PORTFOLIO (International Bond Fund) -- For the period
April 11, 1994 (commencement of operations) through September 30, 1995:
$782,748.

THE SELECTED U.S. EQUITY PORTFOLIO (Selected U.S. Equity Fund) -- For the period
July 19, 1993 (commencement of operations) through May 31, 1994: $1,263,048. For
the fiscal year ended May 31, 1995: $2,025,936.

THE U.S. SMALL COMPANY PORTFOLIO (U.S. Small Company Fund) -- For the period
July 19, 1993 (commencement of operations) through May 31, 1994: $2,912,670. For
the fiscal year ended May 31, 1995: $3,514,331.

THE NON-U.S. EQUITY PORTFOLIO (International Equity Fund) -- For the
period October 4, 1993 (commencement of operations) through October 31, 1993:
$78,550. For the fiscal year ended October 31, 1994: $1,911,202. For the fiscal
year ended October 31, 1995: $3,174,965.

THE DIVERSIFIED PORTFOLIO (Diversified Fund) -- For the period July 8,
1993 (commencement of operations) through June 30, 1994: $197,026. For the
fiscal year ended June 30, 1995: $663,000.

THE EMERGING MARKETS EQUITY PORTFOLIO (Emerging Markets Equity Fund) --
For the period November 15, 1993 (commencement of operations) through October
31, 1994: $4,122,465. For the fiscal year ended October 31, 1995: $5,713,506.

EUROPEAN EQUITY PORTFOLIO (European Equity Fund) -- For the period March
28, 1995 (commencement of operations) through December 31, 1995: $1,675,355.

JAPAN EQUITY PORTFOLIO (Japan Equity Fund) -- For the period March 28,
1995 (commencement of operations) through

December 31, 1995: $1,777,126.

ASIA GROWTH PORTFOLIO (Asia Growth Fund) -- For the period April 5, 1995
(commencement of operations) through December 31, 1995: $528,956.

<PAGE>

The Investment Advisory Agreements provide that they 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
"Administrator and Distributor" below. Each of the Investment Advisory
Agreements will terminate automatically if assigned and is terminable at any
time without penalty by a vote of a majority of the Portfolio's Trustees, or by
a vote of the holders of a majority of the Portfolio's outstanding voting
securities, on 60 days' written notice to the Advisor and by the Advisor on 90
days' written notice to the Portfolio. See "Additional Information."

The Glass-Steagall Act and other applicable laws generally prohibit
banks such as Morgan from engaging in the business of underwriting or
distributing securities, and the Board of Governors of the Federal Reserve
System has issued an interpretation to the effect that under these laws a bank
holding company registered under the federal Bank Holding Company Act or certain
subsidiaries thereof may not sponsor, organize, or control a registered open-end
investment company continuously engaged in the issuance of its shares, such as
the Trust. The interpretation does not prohibit a holding company or a
subsidiary thereof from acting as investment advisor and custodian to such an
investment company. Morgan believes that it may perform the services for the
Portfolios contemplated by the Advisory Agreements without violation of the
Glass-Steagall Act or other applicable banking laws or regulations. State laws
on this issue may differ from the interpretation of relevant federal law, and
banks and financial institutions may be required to register as dealers pursuant
to state securities laws. However, it is possible that future changes in either
federal or state statutes and regulations concerning the permissible activities
of banks or trust companies, as well as further judicial or administrative
decisions and interpretations of present and future statutes and regulations,
might prevent Morgan from continuing to perform such services for the
Portfolios.

If Morgan were prohibited from acting as investment advisor to any
Portfolio, it is expected that the Trustees of the Portfolio would recommend to
investors that they approve the Portfolio's entering into a new investment
advisory agreement with another qualified investment advisor selected by the
Trustees.

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

<PAGE>

ADMINISTRATOR AND DISTRIBUTOR

SBDS serves as the Trust's exclusive Distributor and holds itself
available to receive purchase orders for each Fund's shares. In that capacity,
SBDS has been granted the right, as agent of the Trust, to solicit and accept
orders for the purchase of each Fund's shares in accordance with the terms of
the Distribution Agreement between the Trust and SBDS. The Distribution
Agreement shall continue in effect with respect to each Fund for a period of two
years after execution only if it is approved at least annually thereafter (i) by
a vote of the holders of a majority of the Fund's outstanding shares or by its
Trustees and (ii) by a vote of a majority of the Trustees of the Trust who are
not "interested persons" (as defined by the 1940 Act) of the parties to the
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on such approval (see "Trustees and Officers"). The Distribution
Agreement will terminate automatically if assigned by either party thereto and
is terminable 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 the holders of a majority of
the Fund's outstanding shares as defined under "Additional Information", in any
case without payment of any penalty on not more than 60 days' nor less than 30
days' written notice to the other party. The principal offices of SBDS are
located at 6 St. James Avenue, Boston, Massachusetts 02116.

SBDS also serves as the Trust's and the Portfolios' Administrator and
in that capacity administers and manages all aspects of the Funds' and the
Portfolios' day-to-day operations subject to the supervision of the Trustees,
except as set forth under Investment Advisor, Services Agent, Custodian, and
Shareholder Services. In connection with its responsibilities as Administrator,
SBDS (i) furnishes ordinary clerical and related services for day-to-day
operations including certain record keeping responsibilities; (ii) takes
responsibility for compliance with all applicable federal and state securities
and other regulatory requirements including, without limitation, preparing and
mailing and filing (but not paying for) registration statements, prospectuses,
statements of additional information, and proxy statements and all required
reports to the Trust's shareholders, the SEC, the Secretary of The Commonwealth
of Massachusetts, and state securities commissions; (iii) is responsible for the
registration of sufficient Fund shares under federal and state securities laws;
(iv) takes responsibility for monitoring each Fund's status as a regulated
investment company under the Code; and (v) performs such administrative and
managerial oversight of the activities of the Trust's and the Portfolios'
custodian and transfer agent as the Trustees may direct from time to time.

<PAGE>

Under the Trust's and the Portfolios' Administration Agreements, each
Fund and its corresponding Portfolio has agreed to pay SBDS a fee equal to its
proportionate share of an annual complex-wide charge. This charge is calculated
daily based on the aggregate net assets of the Master Portfolios in accordance
with the following schedule: 0.03% of the first $7 billion of the Master
Portfolios' aggregate average daily net assets, and 0.01% of the Master
Portfolios' average daily net assets in excess of $7 billion. The portion of
this charge payable by a Fund or its corresponding Portfolio is determined by
the proportionate share that its net assets bear to the total net assets of the
Trust, The Pierpont Funds, The JPM Advisor Funds and the Master Portfolios.

Below are set forth for each Fund listed and its corresponding
Portfolio the administrative fees paid to the Administrator for the fiscal
periods indicated. See "Expenses" in the Prospectus and below for applicable
expense limitations.

THE MONEY MARKET PORTFOLIO -- For the period July 12, 1993 (commencement
of operations) through November 30, 1993: $32,869. For the fiscal year ended
November 30, 1994: $165,519. For the fiscal year ended November 30, 1995:
$176,717.

MONEY MARKET FUND -- For the period July 12, 1993 (commencement of
operations) through November 30, 1993: $ 1,380. For the fiscal year ended
November 30, 1994: $52,168. For the fiscal year ended November 30, 1995:
$161,341.

THE TAX EXEMPT MONEY MARKET PORTFOLIO -- For the period July 12, 1993
(commencement of operations) through August 31, 1993: $0. For the fiscal year
ended August 31, 1994: $62,565. For the fiscal year ended August 31, 1995:
$72,729.

TAX EXEMPT MONEY MARKET FUND -- For the period July 12, 1993
(commencement of operations) through August 31, 1993: $982. For the fiscal year
ended August 31, 1994: $5,854. For the fiscal year ended August 31, 1995:
$22,290.

THE TREASURY MONEY MARKET PORTFOLIO -- For the period January 4, 1993
(commencement of operations) through October 31, 1993: $677. For the fiscal year
ended October 31, 1994: $11,777. For the fiscal year ended October 31, 1995:
$17,480.

TREASURY MONEY MARKET FUND -- For the period January 4, 1993
(commencement of operations) through October 31, 1993: $2,480. For the fiscal
year ended October 31, 1994: $17,006. For the fiscal year ended October 31,
1995: $23,920.

THE SHORT TERM BOND PORTFOLIO -- For the period July 8, 1993
(commencement of operations) through October 31, 1993: $210. For the fiscal year
ended October 31, 1994: $3,149. For the fiscal year ended October 31, 1995:
$4,485.

SHORT TERM BOND FUND -- For the period July 8, 1993 (commencement of
operations) through October 31, 1993: $1,077. For the fiscal year ended October
31, 1994: $12,264. For the fiscal year ended October 31, 1995: $13,185.

<PAGE>

THE U.S. FIXED INCOME PORTFOLIO -- For the period July 12, 1993
(commencement of operations) through October 31, 1993: $950. For the fiscal year
ended October 31, 1994: $16,107. For the fiscal year ended October 31, 1995:
$27,436.

BOND FUND -- For the period July 12, 1993 (commencement of operations)
through October 31, 1993: $3,625. For the fiscal year ended October 31, 1994:
$36,809. For the fiscal year ended October 31, 1995: $85,904.

THE TAX EXEMPT BOND PORTFOLIO -- For the period July 12, 1993
(commencement of operations) through August 31, 1993: $0. For the fiscal year
ended August 31, 1994: $28,345. For the fiscal year ended August 31, 1995:
$28,290.

TAX EXEMPT BOND FUND -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $0. For the fiscal year ended August 31,
1994: $1,859. For the fiscal year ended August 31, 1995: $10,309.

THE NEW YORK TOTAL RETURN BOND PORTFOLIO -- For the period April 11, 1994
(commencement of operations) through March 31, 1995: $2,563.

NEW YORK TOTAL RETURN BOND FUND -- For the period April 11, 1994
(commencement of operations) through March 31, 1995: $3,042.

THE NON-U.S. FIXED INCOME PORTFOLIO -- For the period October 11, 1994
(commencement of operations) through September 30, 1995: $13,862.

INTERNATIONAL BOND FUND -- For the period December 1, 1994 (commencement
of operations) through September 30, 1995: $460.

THE SELECTED U.S. EQUITY PORTFOLIO -- For the period July 19, 1993
(commencement of operations) through May 31, 1994: $19,348. For the fiscal year
ended May 31, 1995: $32,670.

SELECTED U.S. EQUITY FUND -- For the period July 19, 1993 (commencement
of operations) through May 31, 1994: $4,845. For the fiscal year ended May 31,
1995: $30,529.

THE U.S. SMALL COMPANY PORTFOLIO -- For the period July 19, 1993
(commencement of operations) through May 31, 1994: $30,420. For the fiscal year
ended May 31, 1995: $38,215.

U.S. SMALL COMPANY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $8,177. For the fiscal year ended May 31,
1995: $27,525.

<PAGE>

THE NON-U.S. EQUITY PORTFOLIO -- For the period October 4, 1993 (commencement of
operations) through October 31, 1993: $1,005. For the fiscal year ended October
31, 1994: $22,024. For the fiscal year ended October 31, 1995: $31,500.

INTERNATIONAL EQUITY FUND -- For the period October 4, 1993 (commencement of
operations) through October 31, 1993: $105. For the fiscal year ended October
31, 1994: $37,065. For the fiscal year ended October 31, 1995: $83,762.

THE DIVERSIFIED PORTFOLIO -- For the period July 8, 1993 (commencement of
operations) through June 30, 1994: $2,423. For the fiscal year ended June 30,
1995: $7,770.

DIVERSIFIED FUND -- For the period July 8, 1993 (commencement of operations)
through June 30, 1994: $10,086. For the fiscal year ended June 30, 1995:
$28,135.

THE EMERGING MARKETS EQUITY PORTFOLIO -- For the period November 15, 1993
(commencement of operations) through October 31, 1994: $30,828. For the fiscal
year ended October 31, 1995: $35,189.

EMERGING MARKETS EQUITY FUND -- For the period November 15, 1993 (commencement
of operations) through October 31, 1994: $22,572. For the fiscal year ended
October 31, 1995: $ 42,329.

EUROPEAN EQUITY PORTFOLIO-- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $15,623.

JAPAN EQUITY PORTFOLIO -- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $17,418.

ASIA GROWTH PORTFOLIO -- For the period April 5, 1995 (commencement of
operations) through December 31, 1995: $4,037.

The Administration Agreements may be renewed or amended by the
respective Trustees without a shareholder vote. The Administration Agreements
are terminable at any time without penalty by a vote of a majority of the
Trustees of the Trust or the Portfolios, as applicable, on not more than 60
days' written notice nor less than 30 days' written notice to the other party.
The Administrator may subcontract for the performance of its obligations under
the Administration Agreements only if the Trustees approve such subcontract and
find the subcontracting party to be qualified to perform the obligations sought
to be subcontracted, provided, however, that unless the Trust or the

<PAGE>

Portfolios, as applicable, expressly agrees in writing, the Administrator shall
be fully responsible for the acts and omissions of any subcontractor as it would
for its own acts or omissions.

SERVICES AGENT

The Trust, on behalf of each Fund, and the Portfolios have entered into
Administrative Services Agreements (the "Services Agreements") with Morgan
effective December 29, 1995, pursuant to which Morgan is responsible for certain
financial, fund accounting and administrative services provided to each Fund and
its corresponding Portfolio. The services to be provided by Morgan as Services
Agent under the Services Agreements include, but are not limited to, monitoring
the fund and shareholder accounting activities of the Custodian, assisting the
Administrator in preparing tax returns, reviewing financial reports,
coordinating annual audits, assisting in the development of budgets, overseeing
preparation of tax information for Fund shareholders, monitoring the fund
accounting activities and daily partnership allocation, and providing other
related services.

Under the Services Agreements, each Fund and its corresponding
Portfolio has agreed to pay Morgan a fee equal to its proportionate share of an
annual complex-wide charge. This charge is calculated daily based on the
aggregate net assets of the Master Portfolios in accordance with the following
schedule: 0.06% of the first $7 billion of the Master Portfolios' aggregate
average daily net assets, and 0.03% of the Master Portfolios' average daily net
assets in excess of $7 billion. The portion of this charge payable by a Fund or
its corresponding Portfolio is determined by the proportionate share that its
net assets bear to the total net assets of the Trust, The Pierpont Funds, The
JPM Advisor Funds, the Master Portfolios, and other investors in the Master
Portfolios for which Morgan provides similar services. Under the Services
Agreements, Morgan may delegate one or more of its responsibilities to other
entities, including SBDS, at Morgan's expense. The Services Agreements 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.

Prior to December 29, 1995, the Trust and each Portfolio had entered
into Financial and Fund Accounting Services Agreements (the "Prior Services
Agreements") with Morgan, the provisions of which included the activities
described above and, prior to September 1, 1995, also included reimbursement of
usual and customary expenses. Below are set forth for each Fund listed and its
corresponding Portfolio the fees paid to Morgan, net of fee waivers and
reimbursements, as Services Agent. See "Expenses" in the Prospectus and below
for applicable expense limitations.
78

<PAGE>

THE MONEY MARKET PORTFOLIO -- For the period July 12, 1993 (commencement of
operations) through November 30, 1993: $193,980. For the fiscal year ended
November 30, 1994: $385,012. For the fiscal year ended November 30, 1995:
$373,077.

MONEY MARKET FUND -- For the period July 12, 1993 (commencement of operations)
through November 30, 1993: $(41,186)*. For the fiscal year ended November 30,
1994: $(265,806)*. For the fiscal year ended November 30, 1995: $(967,889)*.

THE TAX EXEMPT MONEY MARKET PORTFOLIO -- For the period July 12, 1993
(commencement of operations) through August 31, 1993: $(5,756)*. For the fiscal
year ended August 31, 1994: $153,204. For the fiscal year ended August 31, 1995:
$169,754.

TAX EXEMPT MONEY MARKET FUND -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $(25,168)*. For the fiscal year ended
August 31, 1994: $(103,541)*. For the fiscal year ended August 31, 1995:
$(56,396)*.

THE TREASURY MONEY MARKET PORTFOLIO -- For the period January 4, 1993
(commencement of operations) through October 31, 1993: $(30,702)*. For the
fiscal year ended October 31, 1994: $(13,844)*. For the fiscal year ended
October 31, 1995: $(146,180)*.

TREASURY MONEY MARKET FUND -- For the period January 4, 1993 (commencement of
operations) through October 31, 1993: $(28,435)*. For the fiscal year ended
October 31, 1994: $(118,050)*. For the fiscal year ended November 30, 1995:
$(236,058)*.

THE SHORT TERM BOND PORTFOLIO -- For the period July 8, 1993 (commencement of
operations) through October 31, 1993: $(39,290)*. For the fiscal year ended
October 31, 1994: $(22,054)*. For the fiscal year ended October 31, 1995:
$(21,070)*.

SHORT TERM BOND FUND -- For the period July 8, 1993 (commencement of operations)
through October 31, 1993: $(24,299)*. For the fiscal year ended October 31,
1994: $(89,141)*. For the fiscal year ended November 30, 1995: $(91,382)*.

THE U.S. FIXED INCOME PORTFOLIO -- For the period July 12, 1993 (commencement of
operations) through October 31, 1993: $7,691. For the fiscal year ended October
31, 1994: $140,493. For the fiscal year ended October 31, 1995: $167,081.

BOND FUND -- For the period July 12, 1993 (commencement of operations) through
October 31, 1993: $(29,422)*. For the fiscal year ended October 31, 1994:
$(141,179)*. For the fiscal year ended November 30, 1995: $(146,399)*.

<PAGE>
THE TAX EXEMPT BOND PORTFOLIO -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $(1,816)*. For the fiscal year ended August
31, 1994: $210,795. For the fiscal year ended August 31, 1995: $189,892.

TAX EXEMPT BOND FUND -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $(9,011)*. For the fiscal year ended August
31, 1994: $(82,093)*. For the fiscal year ended August 31, 1995: $(61,012)*.

THE NEW YORK TOTAL RETURN BOND PORTFOLIO -- For the period April 11, 1994
(commencement of operations) through March 31, 1995:
$(11,830)*.

THE NEW YORK TOTAL RETURN BOND FUND -- For the Period April 11, 1994
(commencement of operations) through March 31, 1995: $(49,096)*.

THE NON-U.S. FIXED INCOME PORTFOLIO -- For the period October 11, 1994
(commencement of operations) through September 30, 1995: $156,367.

THE INTERNATIONAL BOND FUND -- For the period December 1, 1994 (commencement of
operations) through September 30, 1995: $(46,217)*.

THE SELECTED U.S. EQUITY PORTFOLIO-- For the period July 19, 1993 (commencement
of operations) through May 31, 1994: $155,348. For the fiscal year ended May 31,
1995: $236,537.

SELECTED U.S. EQUITY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $(56,520)*. For the fiscal year ended May 31,
1995: $(95,210)*.

THE U.S. SMALL COMPANY PORTFOLIO -- For the period July 19, 1993 (commencement
of operations) through May 31, 1994: $203,764. For the fiscal year ended May 31,
1995: $241,373.

U.S. SMALL COMPANY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $(55,233)*. For the fiscal year ended May 31,
1995: $(73,786)*.

THE NON-U.S. EQUITY PORTFOLIO -- For the period October 4, 1993 (commencement of
operations) through October 31, 1993: $(22,160)*. For the fiscal year ended
October 31, 1994: $327,569. For the fiscal year ended October 31, 1995:
$349,443.

INTERNATIONAL EQUITY FUND -- For the period October 4, 1993 (commencement of
operations) through October 31, 1993: $(7,383)*. For the fiscal year ended
October 31, 1994: $(118,900)*. For the fiscal year ended November 30, 1995:
$(63,230)*.

THE DIVERSIFIED PORTFOLIO -- For the period July 8, 1993 (commencement of
operations) through June 30, 1994: $(17,807)*.

For the fiscal year ended June 30, 1995: $63,153.

DIVERSIFIED FUND -- For the period July 8, 1993 (commencement of operations)
through June 30, 1994: $(100,039)*. For the fiscal year ended June 30, 1995:
$(96,795)*.

<PAGE>

THE EMERGING MARKETS EQUITY PORTFOLIO -- For the period November 15, 1993
(commencement of operations) through October 31, 1994: $347,925. For the fiscal
year ended October 31, 1995: $337,050.

EMERGING MARKETS EQUITY FUND -- For the period November 15, 1993 (commencement
of operations) through October 31, 1994: $(120,061)*. For the fiscal year ended
November 30, 1995:
$(26,975)*.

EUROPEAN EQUITY PORTFOLIO-- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $128,335.

JAPAN EQUITY PORTFOLIO -- For the period March 28, 1995 (commencement of
operations) through December 31, 1995: $147,974.

ASIA GROWTH PORTFOLIO -- For the period April 5, 1995 (commencement of
operations) through December 31, 1995: $21,823.

- ------------------------------------
(*) Indicates a reimbursement by Morgan for expenses in excess of its fees under
the Prior Services Agreements. No fees were paid for the fiscal period.

CUSTODIAN

State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, Massachusetts 02101, serves as the Trust's and each of the
Portfolio's Custodian and Transfer and Dividend Disbursing Agent. Pursuant to
the Custodian Contract with each of the Portfolios, it is responsible for
maintaining the books and records of portfolio transactions and holding
portfolio securities and cash. In addition, the Custodian has entered into
subcustodian agreements on behalf of the Portfolios for the Tax Exempt Money
Market, Tax Exempt Bond and New York Total Return Bond Funds with Bankers Trust
Company for the purpose of holding TENR Notes and with Bank of New York and
Chemical Bank, N.A. for the purpose of holding certain variable rate demand
notes. In the case of foreign assets held outside the United States, the
Custodian employs various subcustodians

<PAGE>

who were approved by the Trustees of the Portfolios in accordance with the
regulations of the SEC. The Custodian maintains portfolio transaction records.
As Transfer Agent and Dividend Disbursing Agent, State Street is responsible for
maintaining account records detailing the ownership of Fund shares and for
crediting income, capital gains and other changes in share ownership to
shareholder accounts.

SHAREHOLDER SERVICING

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

Under the Shareholder Servicing Agreement, each Fund has agreed to pay
Morgan for these services a fee at the following annual rates (expressed as a
percentage of the average daily net asset values of Fund shares owned by or for
shareholders for whom Morgan is acting as shareholder servicing agent): Money
Market, Treasury Money Market and Tax Exempt Money Market Funds, 0.05%; Short
Term Bond, Bond, Tax Exempt Bond and New York Total Return Bond Funds, 0.075%;
International Bond, Selected U.S. Equity, U.S. Small Company, International
Equity, Emerging Markets Equity, Diversified, European Equity, Japan Equity and
Asia Growth Funds, 0.10%. Morgan acts as shareholder servicing agent for all
shareholders.

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

MONEY MARKET FUND -- For the period July 12, 1993 (commencement of operations)
through November 30, 1993: $4,720. For the fiscal year ended November 30, 1994:
$200,287. For the fiscal year ended November 30, 1995: $697,914.

<PAGE>

TAX EXEMPT MONEY MARKET FUND -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $ 2,803. For the fiscal year ended August
31, 1994: $22,282. For the fiscal year ended August 31, 1995: $96,667.

TREASURY MONEY MARKET FUND -- For the period January 4, 1993 (commencement of
operations) through October 31, 1993: $4,147. For the fiscal year ended October
31, 1994: $64,191. For the fiscal year ended October 31, 1995: $101,100.

SHORT TERM BOND FUND -- For the period July 8, 1993 (commencement of operations)
through October 31, 1993: $1,642. For the fiscal year ended October 31, 1994:
$19,528. For the fiscal year ended October 31, 1995: $24,729.

BOND FUND -- For the period July 12, 1993 (commencement of operations) through
October 31, 1993: $4,942. For the fiscal year ended October 31, 1994: $63,383.
For the fiscal year ended October 31, 1995: $161,357.

TAX EXEMPT BOND FUND -- For the period July 12, 1993 (commencement of
operations) through August 31, 1993: $0. For the fiscal year ended August 31,
1994: $3,172. For the fiscal year ended August 31, 1995: $19,310.

NEW YORK TOTAL RETURN BOND FUND -- For the period April 11, 1994 (commencement
of operations) through March 31, 1995: $6,116.

INTERNATIONAL BOND FUND -- For the period December 1, 1994 (commencement of
operations) through September 30, 1995: $1,412.

SELECTED U.S. EQUITY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $8,191. For the fiscal year ended May 31,
1995: $55,090.

U.S. SMALL COMPANY FUND -- For the period July 19, 1993 (commencement of
operations) through May 31, 1994: $13,854. For the fiscal year ended May 31,
1995: $49,479.

INTERNATIONAL EQUITY FUND -- For the period October 4, 1993 (commencement of
operations) through October 31, 1993: $0. For the fiscal year ended October 31,
1994: $63,751. For the fiscal year ended October 31, 1995: $168,565.

DIVERSIFIED FUND -- For the period July 8, 1993 (commencement of operations)
through June 30, 1994: $16,798. For the fiscal year ended June 30, 1995:
$53,030.

EMERGING MARKETS EQUITY FUND -- For the period November 15, 1993 (commencement
of operations) through October 31, 1994: $39,124. For the fiscal year ended
October 31, 1995: $79,381.

<PAGE>

As discussed under "Investment Advisor", the Glass-Steagall Act and other
applicable laws and regulations limit the activities of bank holding companies
and certain of their subsidiaries in connection with registered open-end
investment companies. The activities of Morgan in acting as shareholder
servicing agent for Fund shareholders under the Shareholder Servicing Agreement
and providing financial and accounting services to the Funds and the Portfolios
under the Financial and Fund Accounting Services Agreements and in acting as
Advisor to the Portfolios under the Investment Advisory Agreements, may raise
issues under these laws. However, Morgan believes that it may properly perform
these services and the other activities described in the Prospectus without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations.

If Morgan were prohibited from providing any of the services under the
Shareholder Servicing and Financial and Fund Accounting Services Agreements, the
Trustees would seek an alternative provider of such services. In such event,
changes in the operation of the Funds or the Portfolios might occur and a
shareholder might no longer be able to avail himself or herself of any services
then being provided to shareholders by Morgan.

INDEPENDENT ACCOUNTANTS

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

EXPENSES

In addition to the fees payable to Pierpont Group, Inc., Morgan and
SBDS under various agreements discussed under Trustees and Officers, Investment
Advisor, Administrator and Distributor, Services Agent and Shareholder Servicing
above, the Fund and the Portfolio are responsible for usual and customary
expenses associated with their respective operations. Such expenses

<PAGE>

include organization expenses, legal fees, accounting expenses, insurance costs,
the compensation and expenses of the Trustees, registration fees under federal
securities laws, and extraordinary expenses applicable to the Fund or the
Portfolio. For the Fund, such expenses also include transfer, registrar and
dividend disbursing costs, the expenses of printing and mailing reports, notices
and proxy statements to Fund shareholders, and registration fees under state
securities laws. For the Portfolio, such expenses also include applicable
registration fees under foreign securities laws, custodian fees and brokerage
expenses. Under fee arrangements prior to September 1, 1995, Morgan as Services
Agent was responsible for reimbursements to the Trust and the Portfolio for
SBDS's fees as Administrator and the usual and customary expenses described
above (excluding organization and extraordinary expenses, custodian fees and
brokerage expenses).

Morgan has agreed that if in any fiscal year the sum of any Fund's
expenses exceeds the limits set by applicable regulations of state securities
commissions, the fees payable by the Fund to Morgan for that year shall be
reduced as specified by agreement with the Trust on behalf of the Fund.
Currently, Morgan believes that the most restrictive expense limitation of state
securities commissions limits expenses to 2.5% of the first $30 million of
average net assets, 2% of the next $70 million of such net assets and 1.5% of
such net assets in excess of $100 million for any fiscal year. For additional
information regarding waivers or expense subsidies, see "Management of the Trust
and the Portfolio(s)" in the Prospectus.

The Administrator paid the organization expenses and expenses incurred
in the initial offering of shares of the Trust.

PURCHASE OF SHARES

Investors may open Fund accounts and purchase shares as described in
the relevant Prospectus under "Purchase of Shares." References in the Prospectus
and this Statement of Additional Information to customers of Morgan or an
Eligible Institution include customers of their affiliates and references to
transactions by customers with Morgan or an Eligible Institution 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 a Fund may make
transactions in shares of a Fund.

Each Fund may, at its own option, accept securities in payment for
shares. The securities delivered in are valued by the method described in Net
Asset Value as of the day the Fund receives the securities. This is a taxable
transaction to the shareholder. Securities may be accepted in payment for shares
only if they are, in the judgment of Morgan, appropriate investments for the
Fund's corresponding Portfolio. In addition,

<PAGE>

securities accepted in payment for shares must: (i) meet the investment
objective and policies of the acquiring Fund's corresponding Portfolio; (ii) be
acquired by the applicable Fund for investment and not for resale (other than
for resale to the Fund's corresponding Portfolio); (iii) be liquid securities
which are not restricted as to transfer either by law or liquidity of market;
and (iv) if stock, have a value which is readily ascertainable as evidenced by a
listing on a stock exchange, over the counter market or by readily available
market quotations from a dealer in such securities. Each Fund reserves the right
to accept or reject at its own option any and all securities offered in payment
for its shares.

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

REDEMPTION OF SHARES

Investors may redeem shares as described in the relevant Prospectus
under "Redemption of Shares." Shareholders redeeming shares of the Money Market,
Tax Exempt Money Market or Treasury Money Market Funds should be aware that
these Funds attempt to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that they will be able to continue to do so,
and in that case the net asset value of the Funds' shares might deviate from
$1.00 per share. Accordingly, a redemption request might result in payment of a
dollar amount which differs from the number of shares redeemed. See "Net Asset
Value" in the Prospectus and below.

If the Trust on behalf of a Fund and its corresponding Portfolio
determine that it would be detrimental to the best interest of the remaining
shareholders of a 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 Portfolio, in lieu of cash, in conformity with the
applicable rule of the SEC. If shares are redeemed in kind, the redeeming
shareholder might incur transaction costs in converting the assets into cash.
The method of valuing portfolio securities is described under "Net Asset Value,"
and such valuation will be made as of the same time the redemption price is
determined. The Trust on behalf of all of the Funds and their corresponding
Portfolios (except the Non-U.S. Fixed Income, European Equity, Japan Equity and
Asia Growth Portfolios) have elected to be governed by Rule 18f-1 under the 1940
Act pursuant to which the Funds and the corresponding Portfolios are obligated
to redeem shares solely in cash up to the lesser of $250,000 or one percent of
the net asset value of the Fund during any 90 day period for any one
shareholder. The Trust will redeem Fund shares in kind only if it has received a
redemption in kind from the corresponding Portfolio and therefore shareholders
of the Fund that receive redemptions in kind will receive securities of the

<PAGE>

Portfolio. The Portfolios have advised the Trust that the Portfolios will not
redeem in kind except in circumstances in which a Fund is permitted to redeem in
kind.

FURTHER REDEMPTION INFORMATION. The Trust, on behalf of a Fund, and the
Portfolios reserve 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 on such Exchange 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
Portfolio 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.

EXCHANGE OF SHARES

An investor may exchange shares from any JPM Institutional Fund into
any other JPM Institutional Fund or Pierpont Fund, as described under "Exchange
of Shares" in the Prospectus. For complete information, the Prospectus as it
relates to the Fund into which a transfer is being made should be read prior to
the transfer. Requests for exchange are made in the same manner as requests for
redemptions. See "Redemption of Shares." Shares of the 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

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

Net investment income of the Money Market, Tax Exempt Money Market and
Treasury Money Market Funds consists of accrued interest or discount and
amortized premium, less the accrued expenses of the Fund applicable to that
dividend period including the fees payable to Morgan. See "Net Asset Value."

Determination of the net income for Money Market, Tax Exempt Money
Market, Treasury Money Market, Short Term Bond, Bond, Tax Exempt Bond,
International Bond and New York Total Return Bond Funds is made at the times
described in the Prospectus; in addition, net investment income for days other
than business days is determined at the time net asset value is determined on
the prior business day.

<PAGE>

NET ASSET VALUE

Each of the Funds computes its net asset value once daily on Monday
through Friday as described under "Net Asset Value" in the Prospectus. The net
asset value will not be computed on the day the following legal holidays are
observed: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. On days when
U.S. trading markets close early in observance of these holidays, the Funds and
the Portfolios would expect to close for purchases and redemptions at the same
time. The days on which net asset value is determined are the Funds' business
days.

The net asset value of each Fund is equal to the value of the Fund's
investment in its corresponding Portfolio (which is equal to the Fund's pro rata
share of the total investment of the Fund and of any other investors in the
Portfolio less the Fund's pro rata share of the Portfolio's liabilities) less
the Fund's liabilities. The following is a discussion of the procedures used by
the Portfolios corresponding to each Fund in valuing their assets.

MONEY MARKET, TAX EXEMPT MONEY MARKET AND TREASURY MONEY MARKET FUNDS.
In the case of the Portfolios for the Money Market, Tax Exempt Money Market and
Treasury Money Market Funds, all portfolio securities are valued by the
amortized cost method.

The purpose of this method of calculation is to attempt to maintain a
constant net asset value per share of the Fund of $1.00. No assurances can be
given that this goal can be attained. The amortized cost method of valuation
values a security at its cost at the time of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument. If a
difference of more than 1/2 of 1% occurs between valuation based on the
amortized cost method and valuation based on market value, the Trustees will
take steps necessary to reduce such deviation, such as changing the Fund's
dividend policy, shortening the average portfolio maturity, realizing gains or
losses, or reducing the number of outstanding Fund shares. Any reduction of
outstanding shares will be effected by having each shareholder contribute to a
Fund's capital the necessary shares on a pro rata basis. Each shareholder will
be deemed to have agreed to such contribution in these circumstances by his
investment in the Funds. See "Taxes."

BOND, TAX EXEMPT BOND, NEW YORK TOTAL RETURN BOND, SHORT TERM BOND,
INTERNATIONAL BOND AND DIVERSIFIED FUNDS. In the case of the Bond, Tax Exempt
Bond, New York Total Return Bond, International Bond and Short Term Bond Funds,
and the fixed income portion of the Diversified Fund, portfolio securities with
a maturity of 60 days or more, including securities that are listed on an
exchange or traded over the counter, are valued using prices supplied daily by
an independent pricing service or services that (i) are based on the last sale
price on a national securities exchange or, in the absence of recorded sales, at
the readily available closing bid price on such exchange or at the

<PAGE>

quoted bid price in the over-the-counter market, if such exchange or market
constitutes the broadest and most representative market for the security and
(ii) in other cases, take into account various factors affecting market value,
including yields and prices of comparable securities, indication as to value
from dealers and general market conditions. If such prices are not supplied by
the Portfolio's independent pricing service, such securities are priced in
accordance with procedures adopted by the Trustees. All portfolio securities
with a remaining maturity of less than 60 days are valued by the amortized cost
method. Securities listed on a foreign exchange are valued at the last quoted
sale price available before the time when net assets are valued. Because of the
large number of municipal bond issues outstanding and the varying maturity
dates, coupons and risk factors applicable to each issuer's books, no readily
available market quotations exist for most municipal securities. The Portfolio
values municipal securities on the basis of prices from a pricing service which
uses information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various relationships
between securities in determining values.

Trading in securities in most foreign markets is normally completed
before 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 a Portfolio'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.

SELECTED U.S. EQUITY, U.S. SMALL COMPANY, INTERNATIONAL EQUITY,
EMERGING MARKETS EQUITY, DIVERSIFIED, EUROPEAN EQUITY, JAPAN EQUITY AND ASIA
GROWTH FUNDS. In the case of the Equity Portfolios, the value of investments
listed on a domestic securities exchange, other than options on stock indexes,
is based on the last sale prices on the New York Stock Exchange at 4:00 P.M. or,
in the absence of recorded sales, at the average of readily available closing
bid and asked prices on such exchange. Securities listed on a foreign exchange
are valued at the last quoted sale price available before the time when net
assets are valued. Unlisted securities are valued at the average of the quoted
bid and asked prices in the over-the-counter market. The value of each security
for which readily available market quotations exist is based on a decision as to
the broadest and most representative market for such security. For purposes of
calculating net asset value all assets and liabilities initially expressed in
foreign currencies will be converted into U.S. dollars at the prevailing market
rates available at the time of valuation.

<PAGE>

Options on stock indexes traded on national securities exchanges are
valued at the close of options trading on such exchanges which is currently 4:10
P.M., New York time. Stock index futures and related options, which are traded
on commodities exchanges, are valued at their last sales price as of the close
of such commodities exchanges which is currently 4:15 P.M., New York time.
Securities or other assets for which market quotations are not readily available
(including certain restricted and 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 Portfolio was more
than 60 days, unless this is determined not to represent fair value by the
Trustees.

Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the New York Stock Exchange
and may also take place on days on which the New York Stock Exchange is closed.
If events materially affecting the value of securities occur between the time
when the exchange on which they are traded closes and the time when a
Portfolio'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 Funds may quote performance in terms of yield,
actual distributions, total return or capital appreciation in reports, sales
literature and advertisements published by the Trust. Current performance
information for the Funds may be obtained by calling the number provided on the
cover page of this Statement of Additional Information. See "Additional
Information" in the Prospectus.

YIELD QUOTATIONS. As required by regulations of the SEC, current yield
for the Money Market, Tax Exempt Money Market and Treasury Money Market Funds is
computed by determining the net change exclusive of capital changes in the value
of a hypothetical pre-existing account having a balance of one share at the
beginning of a seven-day calendar period, dividing the net change in account
value of the account at the beginning of the period, and multiplying the return
over the seven-day period by 365/7. For purposes of the calculation, net change
in account value reflects the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares, but does not reflect realized gains or
losses or unrealized appreciation or depreciation. Effective yield for the Money
Market, Tax Exempt

<PAGE>

Money Market and Treasury Money Market Funds is computed by annualizing the
seven-day return with all dividends reinvested in additional Fund shares. In the
case of the Tax Exempt Money Market Fund, the tax equivalent yield is computed
by first computing the yield as discussed above. Then the portion of the yield
attributable to securities the income of which was exempt for federal income tax
purposes is determined. This portion of the yield is then divided by one minus
the stated assumed federal income tax rate for individuals and then added to the
portion of the yield that is not attributable to securities, the income of which
was not tax exempt.

As required by regulations of the SEC, the annualized yield for the
Bond, Tax Exempt Bond, International Bond, New York Total Return Bond and Short
Term Bond Funds is computed by dividing each Fund's net investment income per
share earned during a 30-day period by the net asset value on the last day of
the period. The average daily number of shares outstanding during the period
that are eligible to receive dividends is used in determining the net investment
income per share. Income is computed by totaling the interest earned on all debt
obligations during the period and subtracting from that amount the total of all
recurring expenses incurred during the period. The 30-day yield is then
annualized on a bond-equivalent basis assuming semi-annual reinvestment and
compounding of net investment income, as described under "Additional
Information" in the Prospectus.

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

MONEY MARKET FUND (11/30/95): 7-day current yield: 5.71%; 7-day effective yield:
5.88%.

TAX EXEMPT MONEY MARKET FUND (8/31/95): 7-day current yield: 3.64%; 7-day Tax
equivalent yield at 39% tax rate: 5.97%; 7-day effective yield: 3.71%.

TREASURY MONEY MARKET FUND (10/31/95): 7-day current yield: 5.42%; 7-day
effective yield: 5.57%.

SHORT TERM BOND FUND (10/31/95): 30-day yield: 5.69%.

BOND FUND (10/31/95): 30-day yield: 6.28%.

INTERNATIONAL BOND (9/30/95): 30-day yield: 5.05%.

TAX EXEMPT BOND FUND (8/31/95): 30-day yield: 4.83%; 30-day tax equivalent yield
at 39% tax rate: 7.92%.

NEW YORK TOTAL RETURN BOND FUND (9/30/95): 30-day yield: 4.97%; 30-day tax
equivalent yield at 39% tax rate: 8.15%.

<PAGE>

TOTAL RETURN QUOTATIONS. As required by regulations of the SEC, the annualized
total return of the Bond, Tax Exempt Bond, New York Total Return Bond, Short
Term Bond, International Bond, Selected U.S. Equity, U.S. Small Company,
International Equity, Emerging Markets Equity, Diversified, European Equity,
Japan Equity and Asia Growth Funds 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
annualized total return is then calculated by determining the annual rate
required for the initial payment to grow to the amount which would have been
received upon redemption.

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

Historical performance information for any period or portion thereof
prior to the establishment of a Fund will be that of its corresponding
predecessor Pierpont Fund, as permitted by applicable SEC staff interpretations,
if the Pierpont Fund commenced operations before its corresponding JPM
Institutional Fund. The applicable financial information in the registration
statement for The Pierpont Funds (Registration Nos. 33-54632 and 811-7340) is
hereby incorporated by reference.

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

MONEY MARKET FUND (11/30/95): Average annual total return, 1 year: 5.93%;
average annual total return, 5 years: 4.57%; average annual total return, 10
years: 6.02%; aggregate total return, 1 year: 5.93%; aggregate total return, 5
years: 25.01%; aggregate total return, 10 years: 79.37%.

TAX EXEMPT MONEY MARKET FUND (8/31/95): Average annual total return, 1 year:
3.57%; Average annual total return, 5 years: 3.19%; average annual total return,
10 years: 4.10%; aggregate total return, 1 year: 3.57%; aggregate total return,
5 years: 17.01%; aggregate total return, 10 years: 49.45%.

TREASURY MONEY MARKET FUND (10/31/95): Average annual total return, 1 year:
5.69%; average annual total return, 5 years: N/A; average annual total return,
commencement of operations(*) to period end: 4.08%; aggregate total return, 1
year: 5.69%; aggregate total return, 5 years: N/A; aggregate total return,
commencement of operations(*) to period end: 11.95%.

SHORT TERM BOND FUND (10/31/95): Average annual total return, 1 year: 8.81%;
average annual total return, 5 years: N/A; average annual total return,
commencement of operations(*) to period end: 4.56%; aggregate total return, 1
year: 8.81%; aggregate total return, 5 years: N/A; aggregate total return,
commencement of operations(*) to period end: 10.87%.

<PAGE>

BOND FUND (10/31/95): Average annual total return, 1 year: 15.50%; average
annual total return, 5 years: 8.81%; average annual total return, commencement
of operations(*) to period end: 8.40%; aggregate total return, 1 year: 15.50%;
aggregate total return, 5 years: 52.52%; aggregate total return, commencement of
operations(*) to period end: 85.27%.

TAX EXEMPT BOND FUND (8/31/95): Average annual total return, 1 year: 8.00%;
average annual total return, 5 years: 7.82%; average annual total return, 10
years: 7.87%; aggregate total return, 1 year: 8.00%; aggregate total return, 5
years: 45.72%; aggregate total return, 10 years: 113.34%.

NEW YORK TOTAL RETURN BOND FUND (9/30/95): Average annual total return, 1 year:
9.24%; average annual total return, 5 years: N/A; average annual total return,
commencement of operations(*) to period end: 7.13%; aggregate total return, 1
year: 9.24%; aggregate total return, 5 years: N/A; aggregate total return,
commencement of operations(*) to period end: 10.82%.

INTERNATIONAL BOND FUND (9/30/95): Average annual total return, 1 year: N/A;
average annual total return, 5 years: N/A; average annual total return,
commencement of operations (*) to period end: 15.66%; aggregate total return, 1
year: N/A; aggregate total return, 5 years: N/A; aggregate total return
commencement of operations (*) to period end: 12.84%.

DIVERSIFIED FUND (12/31/95): Average annual total return, 1 year: 26.84%;
average annual total return, 5 years: N/A; average annual total return,
commencement of operations(*) to period end: 11.90%; aggregate total return, 1
year: 26.84%; aggregate total return, 5 years: N/A; aggregate total return,
commencement of operations(*) to period end: 29.62%.

SELECTED U.S. EQUITY FUND (11/30/95): Average annual total return, 1 year:
31.77%; average annual total return, 5 years: 16.73%; average annual total
return, ten years: 14.78%; aggregate total return, 1 year: 31.77%; aggregate
total return, 5 years: 116.69%; aggregate total return, ten years: 296.91%.

U.S. SMALL COMPANY FUND (11/30/95): Average annual total return, 1 year: 32.01%;
average annual total return, 5 years: 21.07%; average annual total return, 10
years, 12.53%; aggregate total return, 1 year: 32.01%; aggregate total return, 5
years: 160.15%; aggregate total return, 10 years; 225.46%.

INTERNATIONAL EQUITY FUND (10/31/95): Average annual total return, 1 year:
(2.46)%; average annual total return, 5 years: 5.06%; average annual total
return, commencement of operations(*) to period end: 3.33%; aggregate total
return, 1 year: (2.46)%; aggregate total return, 5 years: 27.98%; aggregate
total return, commencement of operations(*) to period end: 19.41%.

<PAGE>

EMERGING MARKETS EQUITY FUND (10/31/95): Average annual total return, 1 year:
(20.81)%; average annual total return, 5 years: N/A; average annual total
return, commencement of operations(*) to period end: (0.64)%; aggregate total
return, 1 year: (20.81)%; aggregate total return, 5 years: N/A; aggregate total
return, commencement of operations(*) to period end: (1.24)%.

- --------------------
(*) The Treasury Money Market, Short Term Bond, Diversified, Emerging Markets
Equity, New York Total Return Bond and International Bond Funds commenced
operations on January 4, 1993, July 8, 1993, July 8, 1993, November 15, 1993,
April 11, 1994 and December 1, 1994, respectively. The predecessor Pierpont
Bond, and International Equity Funds commenced operations on March 11, 1988, and
June 1, 1990, respectively.

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

Comparative performance information may be used from time to time in
advertising the Funds' 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.

In order to illustrate the benefits of balanced investing across asset
classes over longer periods of time, the Diversified Fund may use performance
data that will be based on the return of, as appropriate, the S&P 500 Index, the
Salomon Brothers Broad Investment Grade Bond Index, the Frank Russell 2000 and
2500 Indexes, and the EAFE Index. The quoted performance will illustrate what
results could have been achieved had the Fund invested specified percentages of
the Fund's assets in classes of securities that would have produced a return
equal to the relevant index over the time period at issue.

From time to time, the Funds may quote performance in terms of yield,
actual distributions, total return, or capital appreciation in reports, sales
literature, and advertisements published by the Funds. Current performance
information for the Funds may be obtained by calling the number provided on the
cover page of this Statement of Additional Information. See "Additional
Information" in the Prospectus.

<PAGE>

PORTFOLIO TRANSACTIONS

J.P. Morgan Investment Management Inc., acting as agent for Morgan,
places orders for all Portfolios for all purchases and sales of portfolio
securities. Morgan enters into repurchase agreements and reverse repurchase
agreements and executes loans of portfolio securities on behalf of all the
Portfolios. See "Investment Objectives and Policies."

Fixed income and debt securities and municipal bonds and notes are
generally traded at a net price with dealers acting as principal for their own
accounts without a stated commission. The price of the security usually includes
profit to the dealers.

In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain securities
may be purchased directly from an issuer, in which case no commissions or
discounts are paid.

MONEY MARKET, TAX EXEMPT MONEY MARKET, TREASURY MONEY MARKET, BOND,
SHORT TERM BOND, TAX EXEMPT BOND, NEW YORK TOTAL RETURN BOND AND INTERNATIONAL
BOND FUNDS. Portfolio transactions for the Portfolios corresponding to the Money
Market, Tax Exempt Money Market, Treasury Money Market, Bond, Short Term Bond,
Tax Exempt Bond, New York Total Return Bond and International Bond Funds will be
undertaken principally to accomplish a Portfolio's objective in relation to
expected movements in the general level of interest rates. The Portfolios
corresponding to the Money Market, Treasury Money Market, Bond, Tax Exempt Bond,
New York Total Return Bond, Short Term Bond and International Bond Funds may
engage in short-term trading consistent with their objectives. See "Investment
Objectives and Policies -- Portfolio Turnover." The Tax Exempt Money Market
Portfolio will not seek profits through short-term trading, but the Portfolio
may dispose of any portfolio security prior to its maturity if it believes such
disposition is appropriate even if this action realizes profits or losses.

In connection with portfolio transactions for the Portfolios, J.P. Morgan
Investment Management Inc. intends to seek best price and execution on a
competitive basis for both purchases and sales of securities.

The Portfolios corresponding to the Money Market, Tax Exempt Money
Market and Treasury Money Market Funds have a policy of investing only in
securities with maturities of less than thirteen months, which policy will
result in high portfolio turnovers. The Portfolio corresponding to the Short
Term Bond Fund has a policy of maintaining a short duration, which policy will
also result in a high portfolio turnover. Since brokerage commissions are not
normally paid on investments which the Portfolios make, turnover resulting from
such investments should not adversely affect the net asset value or net income
of the Portfolios.

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SELECTED U.S. EQUITY, U.S. SMALL COMPANY, INTERNATIONAL EQUITY,
EMERGING MARKETS EQUITY, DIVERSIFIED, EUROPEAN EQUITY, JAPAN EQUITY AND ASIA
GROWTH FUNDS. In connection with portfolio transactions for the Equity
Portfolios, the overriding objective is to obtain the best possible execution of
purchase and sale orders.

In selecting a broker, J.P. Morgan Investment Management Inc. 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 firm's financial condition; as well as 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, J.P. Morgan Investment Management Inc.
decides that the broker chosen will provide the best possible execution. J.P.
Morgan Investment Management Inc. and Morgan monitor the reasonableness of the
brokerage commissions paid in light of the execution received. The Trustees of
each Portfolio review regularly the reasonableness of commissions and other
transaction costs incurred by the Portfolios in light of facts and circumstances
deemed relevant from time to time, and, in that connection, will receive reports
from the Advisor and published data concerning transaction costs incurred by
institutional investors generally. Research services provided by brokers to
which J.P. Morgan Investment Management Inc. 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 the Advisor's clients and not solely or
necessarily for the benefit of an individual Portfolio. The Advisor believes
that the value of research services received is not determinable and does not
significantly reduce its expenses. The Portfolios do not reduce their fee to the
Advisor by any amount that might be attributable to the value of such services.

The Portfolios or their predecessors corresponding to the Selected U.S.
Equity, U.S. Small Company, International Equity, Emerging Markets Equity and
Diversified Funds paid the following approximate brokerage commissions for the
indicated fiscal years:

SELECTED U.S. EQUITY FUND (May): 1995: $1,179,132; 1994: $744,676; 1993:
$293,698.

U.S. SMALL COMPANY FUND (May): 1995: $1,217,016; 1994: $1,760,320; 1993:
$142,310.

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INTERNATIONAL EQUITY FUND (October): 1995: $1,691,642; 1994: $1,413,238; 1993:
$639,000.

DIVERSIFIED FUND (June): 1995: $145,589; 1994: $78,737; 1993: N/A.

EMERGING MARKETS EQUITY FUND (October): 1995: $1,475,147; 1994: $1,262,905;
1993: N/A.

EUROPEAN EQUITY FUND (December): 1995: $143,417.

JAPAN EQUITY FUND (December): 1995: $0.

ASIA GROWTH FUND (December): 1995: $27,322.

The increases in brokerage commissions reflected above were due to
increased portfolio activity and an increase in net investments by shareholders
in a Portfolio or its predecessor.

Subject to the overriding objective of obtaining the best possible
execution of orders, J.P. Morgan Investment Management Inc. may allocate a
portion of a Portfolio's brokerage transactions to affiliates of Morgan. In
order for affiliates of Morgan to effect any portfolio transactions for a
Portfolio, 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
Trustees of each Portfolio, including a majority of the Trustees who are not
"interested persons," have adopted procedures which are reasonably designed to
provide that any commissions, fees, or other remuneration paid to such
affiliates are consistent with the foregoing standard.

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

On those occasions when Morgan deems the purchase or sale of a security
to be in the best interests of a Portfolio as well as other customers including
other Portfolios, J.P. Morgan Investment Management Inc. to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for a Portfolio with those to be sold or
purchased for other customers in order to obtain best

<PAGE>

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 J.P. Morgan Investment Management
Inc. in the manner it considers to be most equitable and consistent with
Morgan's fiduciary obligations to a Portfolio. In some instances, this procedure
might adversely affect a Portfolio.

If a Portfolio that writes options effects a closing purchase
transaction with respect to an option written by it, normally such transaction
will be executed by the same broker-dealer who executed the sale of the option.
The writing of options by a Portfolio will be subject to limitations established
by each of the exchanges governing the maximum number of options in each class
which may be written by a single investor or group of investors acting in
concert, regardless of whether the options are written on the same or different
exchanges or are held or written in one or more accounts or through one or more
brokers. The number of options which a Portfolio may write may be affected by
options written by the Advisor for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.

MASSACHUSETTS TRUST

The Trust is a trust fund of the type commonly known as a
"Massachusetts business trust" of which each Fund is a separate and distinct
series. A copy of the Declaration of Trust for the Trust is on file in the
office of the Secretary of The Commonwealth of Massachusetts. The Declaration of
Trust and the By-Laws of the Trust are designed to make the Trust similar in
most respects to a Massachusetts business corporation. The principal distinction
between the two forms concerns shareholder liability described below.

Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable as partners for the obligations
of the trust which is not the case for a corporation. However, the Trust's
Declaration of Trust provides that the shareholders shall not be subject to any
personal liability for the acts or obligations of any Fund and that every
written agreement, obligation, instrument or undertaking made on behalf of any
Fund shall contain a provision to the effect that the shareholders are not
personally liable thereunder.

No personal liability will attach to the shareholders under any
undertaking containing such provision when adequate notice of such provision is
given, except possibly in a few jurisdictions. With respect to all types of
claims in the latter jurisdictions, (i) tort claims, (ii) contract claims where
the provision referred to is omitted from the undertaking, (iii) claims for
taxes, and (iv) certain statutory liabilities in other

<PAGE>

jurisdictions, a shareholder may be held personally liable to the extent that
claims are not satisfied by the Fund. However, upon payment of such liability,
the shareholder will be entitled to reimbursement from the general assets of the
Fund. The Trustees intend to conduct the operations of the Trust in such a way
so as to avoid, as far as possible, ultimate liability of the shareholders for
liabilities of the Funds.

The Trust's Declaration of Trust further provides that the name of the
Trust refers to the Trustees collectively as Trustees, not as individuals or
personally, that no Trustee, officer, employee or agent of a Fund is liable to a
Fund or to a shareholder, and that no Trustee, officer, employee, or agent is
liable to any third persons in connection with the affairs of a Fund, except as
such liability may arise from his or its own bad faith, willful misfeasance,
gross negligence or reckless disregard of his or its duties to such third
persons. It also provides that all third persons shall look solely to Fund
property for satisfaction of claims arising in connection with the affairs of a
Fund. With the exceptions stated, the Trust's Declaration of Trust provides that
a Trustee, officer, employee, or agent is entitled to be indemnified against all
liability in connection with the affairs of a Fund.

The Trust shall continue without limitation of time subject to the
provisions in the Declaration of Trust concerning termination by action of the
shareholders or by action of the Trustees upon notice to the shareholders.

DESCRIPTION OF SHARES

The Trust is an open-end management investment company organized as a
Massachusetts business trust in which each Fund represents a separate series of
shares of beneficial interest.
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, if applicable) without changing the proportionate beneficial interest of
each shareholder in a Fund (or in the assets of other series, if applicable). To
date shares of the sixteen series described in this Statement of Additional
Information have been authorized and are available for sale to the public. Each
share represents an equal proportional interest in a Fund with each other share.
Upon liquidation of a Fund, holders are entitled to share pro rata in the net
assets of a Fund available for distribution to such shareholders. See
"Massachusetts Trust." Shares of a Fund have no preemptive or conversion rights
and are fully paid and nonassessable. The rights of redemption and exchange are
described in the Prospectus and elsewhere in this Statement of Additional
Information.

<PAGE>

The shareholders of the Trust are entitled to a full vote for each full
share held and to a fractional vote for each fractional share. Subject to the
1940 Act, the Trustees themselves 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 appoint
their own successors, PROVIDED, HOWEVER, that immediately after such appointment
the requisite majority of the Trustees have been elected by the shareholders of
the Trust. The voting rights of shareholders are not cumulative so that holders
of more than 50% of the shares voting can, if they choose, elect all Trustees
being selected while the shareholders of the remaining shares would be unable to
elect any Trustees. It is the intention of the Trust not to hold meetings of
shareholders annually. The Trustees may call meetings of shareholders for action
by shareholder vote as may be 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 more than two-thirds of its outstanding shares, 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 record holders of 10% of the Trust's
shares. In addition, whenever ten or more shareholders of record who have been
such for at least six months preceding the date of application, and who hold in
the aggregate either shares having a net asset value of at least $25,000 or at
least 1% of the Trust's outstanding shares, whichever is less, shall apply to
the Trustees in writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request a meeting for the
purpose of voting upon the question of removal of any Trustee or Trustees and
accompanied by a form of communication and request which they wish to transmit,
the Trustees shall within five business days after receipt of such application
either: (1) afford to such applicants access to a list of the names and
addresses of all shareholders as recorded on the books of the Trust; or (2)
inform such applicants as to the approximate number of shareholders of record,
and the approximate cost of mailing to them the proposed communication and form
of request. If the Trustees elect to follow the latter course, the Trustees,
upon the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of record at their
addresses as recorded on the books, unless within five business days after such
tender the Trustees shall mail to such applicants and file with the SEC,
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion. After
opportunity for hearing upon the objections specified in the written statements

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<PAGE>

filed, the SEC may, and if demanded by the Trustees or by such applicants shall,
enter an order either sustaining one or more of such objections or refusing to
sustain any of them. If the SEC shall enter an order refusing to sustain any of
such objections, or if, after the entry of an order sustaining one or more of
such objections, the SEC shall find, after notice and opportunity for hearing,
that all objections so sustained have been met, and shall enter an order so
declaring, the Trustees shall mail copies of such material to all shareholders
with reasonable promptness after the entry of such order and the renewal of such
tender.

The Trustees have authorized the issuance and sale to the public of
shares of sixteen series of the Trust. The Trustees have no current intention to
create any classes within the initial series or any subsequent series. The
Trustees may, however, authorize the issuance of shares of additional series and
the creation of classes of shares within any series with such preferences,
privileges, limitations and voting and dividend rights as the Trustees may
determine. The proceeds from the issuance of any additional series would be
invested in separate, independently managed portfolios with distinct investment
objectives, policies and restrictions, and share purchase, redemption and net
asset valuation procedures. Any additional classes would be used to distinguish
among the rights of different categories of shareholders, as might be required
by future regulations or other unforeseen circumstances. All consideration
received by the Trust for shares of any additional series or class, and all
assets in which such consideration is invested, would belong to that series or
class, subject only to the rights of creditors of the Trust and would be subject
to the liabilities related thereto. Shareholders of any additional series or
class will approve the adoption of any management contract or distribution plan
relating to such series or class and of any changes in the investment policies
related thereto, to the extent required by the 1940 Act.

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" in the Prospectus.

As of March 29, 1996, the following owned of record or, to the
knowledge of management, beneficially owned more than 5% of the outstanding
shares of:

Money Market Fund-- Welsh Carson Anderson & Stowe VII LP (6.3%), K. O'Connell
(17%), Morgan as Agent for Estee Lauder Trust (13.3%);

Tax Exempt Money Market Fund-- Morgan as Agent for Susan R. Wexner (20.5%), E.H.
Skove (13.4%), M. Carey-Rye Songs (12.8%), Morgan as Agent for Estate of J. P.

Grace (9.2%), D. D. Durst (7.3%), W. B. Ruger Trustee REV TR (7.1%), Morgan as
Agent for M. S. Grace (7.0%);

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Treasury Money Market Fund-- Bank of New York AS Series 1993-3 (16.1%), Morgan
as Agent for One Penn Plaza Escrow (11.9%), Bank of New York AS Series 1992-1
(11.3%), Bank of New York AS Series 1993-2 (10.7%), Bank of New York AS Series
1993-1 (10.7%), Reuters America Inc. (10.3%), S. and/or I. Berson (8.6%), Kings
Highway Hospital Center Inc. (6.8%), Rhetta Felton (5.2%);

Bond Fund-- Nations Bank as Trust FBO Boy Scouts of America Retirement Benefits
Trust (6.0%), Morgan as Agent for Albany Medical Center Insurance Trust (5.2%);

Short Term Bond Fund--United Gaming, Inc. (10.2%), Morgan as Agent for G.C.
Bible Trust (19.4%), Morgan as Agent for R.W. Murray Trust (18.4%), Morgan as
Agent for H.G. Storr Trust (14%), Morgan as Agent for W. Campbell Trust (11%),
Morgan as Agent for Murray H. Bring Trust (7.4%), Morgan as Agent for W.
Campbell Trust (5.3%);

Tax Exempt Bond Fund--Morgan as Agent for E. Hanovia Inc. (12.2%), Wachovia Bank
NC Trustee for Newmont Gold Co. Employee Benefit Plan Trust (5.2%);

New York Total Return Bond Fund--Morgan as Agent for Trust FBO R. Klotz (23.1%),
Morgan as Agent for Shubert Organization (22.5%), Morgan as Agent for J. Corry
(8.5%), Morgan as Agent for L. Casseel (8.0%), Morgan as Agent for R. Weintraub
(7.6%);

International Bond Fund--Morgan as Agent for Albany Medical Center Insurance
Trust (50%), J.P. Morgan as Agent for General Motors Savings Plan (27.3%), J.P.
Morgan as Agent of Community Funds Inc. Dewitt Wallace Readers Digest (23.1%);

Selected U.S. Equity Fund--Morgan as Agent for Major League Baseball Master
Pension Trust (10%), Wachovia Bank NC Trustee for Newmont Gold Co. Master
Pension Trust (9.4%), Boston & Co. Mutual Funds Operations (7.8%), LaCross and
Company (7.1%), Harris Trust and Savings Bank as Trustee of CTS Emp. Benefit
Plans (5.4%), Lin Television Corp. Retirement Plan (7.0%), Morgan as Trustee for
Degussa Defined Benefit Trust (5.7%);

U.S. Small Company--Morgan as Agent for S. Lutz Trust (7.0%);

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Diversified Fund--Vanguard Fiduciary Trust Company (13%), Boston Foundation Inc,
(12.2%), Westinghouse Personal Investment Plan (9.3%), Morgan as Agent for UNIFI
Inc. Profit Sharing Plan (11.7%), Celtic Insurance Co. Ltd. (10.1%), BG Sulzle,
Inc. Employee Pension (6.3%);

Emerging Markets Equity--Morgan as Agent for Alfred P. Sloan Foundation (10%),
The Nature Conservancy (5.1%);

International Equity Fund--Blue Cross Blue Shield of North Carolina (6%);

European Equity Fund--Morgan as Agent for

John M. Watkins (12%), Morgan as Agent for Phil Ponzek Irrevocable Trust
(88.1%);

Japan Equity Fund--Morgan as Agent for John M. Watkins (25.4%), Morgan as Agent
for Phil Ponzek Irrevocable Trust (75%); and

Asia Growth Fund--Morgan as Agent for John M. Watkins (10.5%),
Morgan as Agent for Phil Ponzek Irrevocable Trust (90%).

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

TAXES

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

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

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

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

The Tax Exempt Money Market, Tax Exempt Bond and New York Total Return
Bond Funds intend to qualify to pay exempt-interest dividends to their
respective shareholders by having, at the close of each quarter of their
respective taxable years, at least 50% of the value of their respective total
assets consist of tax exempt securities. An exempt-interest dividend is that
part of dividend distributions made by the Funds which consists of interest
received by the Funds on tax exempt securities. Shareholders will not incur any
federal income tax on the amount of exempt-interest dividends received by them
from the Funds, other than the alternative minimum tax under certain
circumstances. In view of each Fund's investment policies, it is expected that a
substantial portion of all dividends will be exempt-interest dividends, although
the Funds may from time to time realize and distribute net short-term capital
gains and may invest limited amounts in taxable securities under certain
circumstances. See "Investment Objective(s) and Policies" in the Prospectus.

Distributions of net investment income and realized net short-term
capital gains in excess of net long-term capital losses (other than exempt
interest dividends) are generally taxable to shareholders of the Funds as
ordinary income whether such distributions are taken in cash or reinvested in
additional shares. The Selected U.S. Equity, U.S. Small Company and

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Diversified Funds expect that a portion of these distributions to corporate
shareholders will be eligible for the dividends-received deduction.
Distributions to corporate shareholders of the Money Market, Tax Exempt Money
Market, Treasury Money Market, Tax Exempt Bond, New York Total Return Bond,
Bond, Short Term Bond, International Bond, International Equity, Emerging
Markets Equity, European Equity, Japan Equity and Asia Growth Funds are not
eligible for the dividends received deduction. Distributions of net long-term
capital gains (i.e., net long-term capital gains in excess of net short-term
capital losses) are taxable to shareholders of a Fund as long-term capital
gains, regardless of whether such distributions are taken in cash or reinvested
in additional shares and regardless of how long a shareholder has held shares in
the Fund. See "Taxes" in the Prospectus for a discussion of the federal income
tax treatment of any gain or loss realized on the redemption or exchange of a
Fund's shares. Additionally, any loss realized on a redemption or exchange of
shares of a Fund will be disallowed to the extent the shares disposed of are
replaced within a period of 61 days beginning 30 days before such disposition,
such as pursuant to reinvestment of a dividend in shares of the Fund.

To maintain a constant $1.00 per share net asset value, the Trustees of
the Money Market, Tax Exempt Money Market and Treasury Money Market Funds may
direct that the number of outstanding shares be reduced pro rata. If this
adjustment is made, it will reflect the lower market value of portfolio
securities and not realized losses. The adjustment may result in a shareholder
having more dividend income than net income in his account for a period. When
the number of outstanding shares of a Fund is reduced, the shareholder's basis
in the shares of the Fund may be adjusted to reflect the difference between
taxable income and net dividends actually distributed. This difference may be
realized as a capital loss when the shares are liquidated.
See "Net Asset Value."

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

Under the Code, gains or losses attributable to disposition

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of foreign currency or to certain foreign currency contracts, or to fluctuations
in exchange rates between the time a Portfolio accrues income or receivables or
expenses or other liabilities denominated in a foreign currency and the time a
Portfolio actually collects such income or pays such liabilities, are treated as
ordinary income or ordinary loss. Similarly, gains or losses on the disposition
of debt securities held by a Portfolio, 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 a Portfolio 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
Portfolio on forward currency contracts, options and futures contracts or on the
underlying securities. Straddles may also result in the loss of the holding
period of underlying securities for purposes of the 30% of gross income test
described above, and therefore, a Portfolio's ability to enter into forward
currency contracts, options and futures contracts may be limited.

Certain options, futures and foreign currency contracts held by a
Portfolio at the end of each fiscal year will be required to be "marked to
market" for federal income tax purposes -- i.e., treated as having been sold at
market value. For options and futures contracts, 60% of any gain or loss
recognized on these deemed sales and on actual dispositions will be treated as
long-term capital gain or loss, and the remainder will be treated as short-term
capital gain or loss regardless of how long the Portfolio 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 Equity Portfolios may invest in Equity Securities of foreign
issuers. If a Portfolio purchases shares in certain foreign corporations
(referred to as passive foreign investment companies ("PFICs") under the Code),
the Portfolio may be subject to federal income tax on a portion of an "excess
distribution" from such foreign corporation or gain from the disposition of such
shares, even though such income may have to be distributed as a taxable dividend
by the Fund to its shareholders. In addition, certain interest charges may be
imposed on a Fund or its shareholders in respect of unpaid taxes arising from
such distributions or gains. Alternatively, a Fund may each year include 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.

Pursuant to proposed regulations, open-end regulated investment
companies such as the Portfolios would be entitled to elect to mark to market
their stock in certain PFICs. Marking to market in this context means
recognizing as gain for each

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taxable year the excess, as of the end of that year, of the fair market value of
each PFIC's stock over the owner's adjusted basis in that stock (including mark
to market gains of a prior year for which an election was in effect).

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

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

FOREIGN TAXES. It is expected that the International Bond, Selected
U.S. Equity, U.S. Small Company, International Equity, Emerging Markets Equity,
Diversified, European Equity, Japan Equity and Asia Growth Funds may be subject
to foreign withholding taxes with respect to income received from sources within
foreign countries. In the case of the International Bond, International Equity,
Emerging Markets Equity, European Equity, Japan Equity and Asia Growth Funds, so
long as more than 50% in value of the total assets of the Fund's corresponding
Portfolio at the close of any taxable year consists of stock or securities of
foreign corporations, the Fund may elect to treat any foreign income taxes paid
by it as paid directly by its shareholders. These Funds will make such an
election only if they deem it to be in the best interest of their respective
shareholders. The Funds will notify their respective shareholders in writing
each year if they make the election and of the amount of foreign income taxes,
if any, to be treated as paid by the shareholders. If a Fund makes the election,
each shareholder will be required to include in his income his proportionate
share of the amount of foreign

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income taxes paid by the Fund and will be entitled to claim either a credit
(subject to the limitations discussed below) or, if he itemizes deductions, a
deduction for his share of the foreign income taxes in computing federal income
tax liability. (No deduction will be permitted in computing an individual's
alternative minimum tax liability.) A shareholder who is a nonresident alien
individual or a foreign corporation may be subject to U.S. withholding tax on
the income resulting from the election described in this paragraph, but may not
be able to claim a credit or deduction against such U.S. tax for the foreign
taxes treated as having been paid by such shareholder. A tax-exempt shareholder
will not ordinarily benefit from this election. Shareholders who choose to
utilize a credit (rather than a deduction) for foreign taxes will be subject to
the limitation that the credit may not exceed the shareholder's U.S. tax
(determined without regard to the availability of the credit) attributable to
his or her total foreign source taxable income. For this purpose, the portion of
dividends and distributions paid by each of the International Bond,
International Equity, Emerging Markets Equity, European Equity, Japan Equity and
Asia Growth Funds from its foreign source net investment income will be treated
as foreign source income. Each of these Funds' gains and losses from the sale of
securities will generally be treated as derived from U.S. sources, however, and
certain foreign currency gains and losses likewise will be treated as derived
from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income," such as the portion of dividends
received from the Fund which qualifies as foreign source income. In addition,
the foreign tax credit is allowed to offset only 90% of the alternative minimum
tax imposed on corporations and individuals. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by the International Bond,
International Equity, Emerging Markets Equity, European Equity, Japan Equity and
Asia Growth Funds.

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

OTHER TAXATION. The Trust is organized as a Massachusetts business trust
and, under current law, neither the Trust nor any 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. The Portfolios are organized as New York trusts. The Portfolios are not
subject to any federal income taxation or income or franchise tax in the State
of New York or The Commonwealth of Massachusetts. The investment by a Fund in
its corresponding Portfolio does not cause the Fund to be liable for any income
or franchise tax in the State of New York.

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ADDITIONAL INFORMATION

As used in this Statement of Additional Information and the Prospectus,
the term "majority of the outstanding voting securities" means the vote of (i)
67% or more of the Fund's shares or the Portfolio's outstanding voting
securities present at a meeting, if the holders of more than 50% of the Fund's
outstanding shares are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares or the Portfolio's outstanding voting securities,
whichever is less.

Telephone calls to the Funds, Morgan or Eligible Institutions as
shareholder servicing agent may be tape recorded.

With respect to the securities offered hereby, this Statement of
Additional Information and the Prospectuses do not contain all the information
included in the Trust's Registration Statement filed with the SEC under the 1933
Act and the Trust's and the Portfolios' Registration Statements filed under the
1940 Act. Pursuant to the rules and regulations of the SEC, certain portions
have been omitted. The Registration Statements 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 Prospectuses 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
Prospectuses 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 the Distributor. The Prospectus and this Statement of
Additional Information do not constitute an offer by any Fund or by the
Distributor 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
the Distributor to make such offer in such jurisdictions.

FINANCIAL STATEMENTS

The current financial statements of The JPM Institutional Funds are
incorporated herein by reference from the Funds' annual reports and, if
applicable, semi-annual reports to shareholders as filed with the SEC pursuant
to Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder. A copy of each such
report will be provided, without charge, to each person receiving this Statement
of Additional Information.

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JPM572

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APPENDIX A

DESCRIPTION OF SECURITY RATINGS

STANDARD & POOR'S

CORPORATE AND MUNICIPAL BONDS

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

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

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

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

BB - Debt rated BB is regarded as having less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

COMMERCIAL PAPER, INCLUDING TAX EXEMPT

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

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

SHORT-TERM TAX-EXEMPT NOTES

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

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

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MOODY'S

CORPORATE AND MUNICIPAL BONDS

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

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

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.

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- 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.

JPM572

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APPENDIX B

ADDITIONAL INFORMATION CONCERNING NEW YORK MUNICIPAL OBLIGATIONS

The following information is a summary of special factors affecting
investments in New York municipal obligations. It does not purport to be a
complete description and is based on information from the Annual Information
Statement of the State of New York dated June 23, 1995.

GENERAL

New York (the "State") is the third most populous state in the nation
and has a relatively high level of personal wealth. The State's economy is
diverse with a comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a very small share
of the nation's farming and mining activity. The State's location, air transport
facilities and natural harbors have made it an important link in international
commerce. Travel and tourism constitute an important part of the economy. The
State has a declining proportion of its work force engaged in manufacturing and
an increasing proportion engaged in service industries. This transition reflects
a national trend.

The State has historically been one of the wealthiest states in the
nation. For decades, however, the State economy has grown more slowly than that
of the nation as a whole, resulting in the gradual erosion of its relative
economic affluence. Statewide, urban centers have experienced significant
changes involving migration of the more affluent to the suburbs and an influx of
generally less affluent residents. Regionally, the older Northeast cities have
suffered because of the relative success that the South and the West have had in
attracting people and business. New York City (the "City") has also had to face
greater competition as other major cities have developed financial and business
capabilities which make them less dependent on the specialized services
traditionally available almost exclusively in the City.

Although industry and commerce are broadly spread across the State,
particular activities are concentrated in the following areas: Westchester
County -- headquarters for several major corporations; Buffalo -- diverse
manufacturing base; Rochester -- manufacture of photographic and optical
equipment; Syracuse and Utica-Rome area -- production of machinery and
transportation equipment; Albany-Troy-Schenectady -- government and education
center and production of electrical products; Binghampton -- original site of
the International Business Machines Corporation and continued concentration of
employment in computer and other high technology manufacturing; and New York
City -- headquarters for the nation's securities business and for a major
portion of the nation's major commercial banks, diversified financial
institutions and life insurance companies. In addition, the City

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houses the home offices of three major radio and television broadcasting
networks, most of the national magazines and a substantial portion of the
nation's book publishers. The City also retains leadership in the design and
manufacture of men's and women's apparel.

ECONOMIC OUTLOOK

The economic and financial condition of the State may be affected by
various financial, social, economic and political factors. Those factors can be
very complex, may vary from fiscal year to fiscal year, and are frequently the
result of actions taken not only by the State and its agencies and
instrumentalities, but also by entities, such as the Federal government, that
are not under the control of the State. The State Financial Plan is based upon
forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in
the national and the State economies. Many uncertainties exist in forecasts of
both the national and State economies, including consumer attitudes toward
spending, the extent of corporate and governmental restructuring, Federal
financial and monetary policies, the availability of credit, the level of
interest rates, and the condition of the world economy, which would have an
adverse effect on the State. There can be no assurance that the State economy
will not experience results in the current fiscal year that are worse than
predicted, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.

The national economy began to expand in 1991, although the growth rate
for the first two years of the expansion was modest by historical standards. The
State economy remained in recession until 1993, when employment growth resumed.
Since November 1992, the State has added approximately 185,000 jobs. Employment
growth has been hindered during recent years by significant cutbacks in the
computer and instrument manufacturing, utility, and defense industries. Personal
income increased substantially in 1992 and 1993, aided significantly by large
bonus payments in banking and financial industries.

The national economy performed better in 1994 than in any year since
the recovery began in 1991. National job and income growth were substantial. In
response, the Federal Reserve Board shifted to a policy of monetary tightening
by raising interest rates throughout the year. As a result, the national
economic growth is expected to weaken, but not turn negative, during the course
of 1995 before beginning to rebound by the end of the year. This dynamic is
often described as a "soft landing." The overall rate of growth of the national
economy during calendar year 1995 will be slightly below the "consensus" of a
widely followed survey of national economic forecasters. Growth in the real
gross domestic product during 1995 is projected to be moderate (3.0 percent),
with declines in defense spending and net

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exports more than offset by increases in consumption and investment. Continuing
efforts by business and government to reduce costs are expected to exert a drag
on economic growth. Inflation, as measured by the Consumer Price Index, is
projected to remain about 3 percent due to moderate wage growth and foreign
competition. Personal income and wages are projected to increase by about 6
percent or more.

The State economy had a mixed performance during 1994. The moderate
employment growth that characterized 1993 continued into mid-1994, then
virtually ceased. New York's economy is expected to continue to expand modestly
during 1995, but there will be a pronounced slow-down during the course of the
year. Although industries that export goods and services abroad are expected to
benefit from the lower dollar, growth will be slowed by government cutbacks at
all levels. On an average annual basis, employment growth will be about the same
as 1994. Both personal income and wages are expected to record moderate gains in
1995. Bonus payments in the securities industry are expected to increase from
last year's depressed level. Personal income rose 4.0 percent in 1994.

The State has for many years had a very high State and local tax burden
relative to other States. The State and its localities have used these taxes to
develop and maintain their transportation networks, public schools and colleges,
public health systems, other social services and recreational facilities.
Despite these benefits, the burden of State and local taxation, in combination
with the many other causes of regional economic dislocation, may have
contributed to the decisions of some businesses and individuals to relocate
outside, or not locate within, the State.

To stimulate the State's economic growth, the State has developed
programs, including the provision of direct financial assistance, designed to
assist businesses to expand existing operations located within the State and to
attract new businesses to the State. Local industrial development agencies
raised an aggregate of approximately $7.8 billion in separate tax-exempt bond
issues through December 31, 1993. There are currently over 100 county, city,
town and village agencies. In addition, the New York State Urban Development
Corporation is empowered to issue, subject to certain State constitutional
restrictions and to approval by the Public Authorities Control Board, bonds and
notes on behalf of private corporations for economic development projects. The
State has also taken advantage of changes in Federal bank regulations to
establish a free international banking zone in the City.

In addition, the State has provided various tax incentives to encourage
business relocation and expansion. These programs include direct tax abatements
from local property taxes for new facilities (subject to locality approval) and
investment tax credits that are applied against the State corporation franchise

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tax. Furthermore, legislation passed in 1986 authorizes the creation of up to 40
"economic development zones" in economically distressed regions of the State.
Businesses in these zones are provided a variety of tax and other incentives to
create jobs and make investments in the zones.

STATE FINANCIAL PLAN

The State Constitution requires the Governor to submit to the
Legislature a balanced Executive Budget which contains a complete plan of
expenditures (the "State Financial Plan") for the ensuing fiscal year and all
moneys and revenues estimated to be available therefor, accompanied by bills
containing all proposed appropriations or reappropriations and any new or
modified revenue measures to be enacted in connection with the Executive Budget.
A final budget must be approved before the statutory deadline of April 1. The
State Financial Plan is updated quarterly pursuant to law.

The State's fiscal year, which commenced on April 1, 1995, and ends on
March 31, 1996, is referred to herein as the State's 1995-96 fiscal year.

The State's budget for the 1995-96 fiscal year was enacted by the
Legislature on June 7, 1995, more than two months after the start of the fiscal
year. Prior to adoption of the budget, the Legislature enacted appropriations
for disbursements considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt service. The State
Financial Plan for the 1995-96 fiscal year was formulated on June 20, 1995, and
is based on the State's budget as enacted by the Legislature and signed into law
by the Governor. The State Financial Plan will be updated quarterly pursuant to
law in July, October and January.

The 1995-96 budget is the first to be enacted in the administration of
the Governor, who assumed office on January 1. It is the first budget in over
half a century which proposed and, as enacted, projects an absolute
year-over-year decline in General Fund disbursements. Spending for State
operations is projected to drop even more sharply, by 4.6 percent. Nominal
spending from all State funding sources (I.E., excluding Federal aid) is
proposed to increase by only 2.5 percent from the prior fiscal year, in contrast
to the prior decade when such spending growth averaged more than 6.0 percent
annually.

In his Executive Budget, the Governor indicated that in the 1995-96
fiscal year, the State Financial Plan, based on then-current law governing
spending and revenues, would be out of balance by almost $4.7 billion, as a
result of the projected structural deficit resulting from the ongoing disparity
between sluggish growth in receipts, the effect of prior-year tax changes, and
the rapid acceleration of spending growth; the impact of unfunded 1994-95
initiatives, primarily for local aid

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programs; and the use of one-time solutions, primarily surplus funds from the
prior year, to fund recurring spending in the 1994-95 budget. The Governor
proposed additional tax cuts, to spur economic growth and provide relief for
low- and middle-income tax payers, which were larger than those ultimately
adopted, and which added $240 million to the then projected imbalance or budget
gap, bringing the total to approximately $5 billion.

This gap is projected to be closed in the 1995-96 State Financial Plan
based on the enacted budget, through a series of actions, mainly spending
reductions and cost containment measures and certain reestimates that are
expected to be recurring, but also through the use of one-time solutions. The
State Financial Plan projects (i) nearly $1.6 billion in savings from cost
containment, disbursement reestimates, and other savings in social welfare
programs, including Medicaid, income maintenance and various child and family
care programs; (ii) $2.2 billion in savings from State agency actions to reduce
spending on the State work force, SUNY and CUNY, mental hygiene programs,
capital projects, the prison system and fringe benefits; (iii) $300 million in
savings from local assistance reforms, including actions affecting school aid
and revenue sharing while proposing program legislation to provide relief from
certain mandates that increase local spending; (iv) over $400 million in revenue
measures, primarily a new Quick Draw Lottery game, changes to tax payment
schedules, and the sale of assets; and (v) $300 million from reestimates in
receipts.

The Executive Budget indicates that for years State revenues have grown
at a slower rate than State spending, producing an increasing structural
deficit, and that as the Executive Budget is enacted, the State will start to
eliminate the structural imbalance that has characterized the State's fiscal
record. There can, however, be no assurances that the tax and spending cuts will
eliminate potential imbalances in future fiscal years. The Governor's
recommended multi-year personal income tax cuts are designed to reduce the yield
on that tax by about one-third by 1998, and could require significant additional
spending cuts in those years, increased economic growth to provide additional
revenues, additional revenue measures, or a combination of those factors.

GOVERNMENT FUNDS

The four governmental fund types that comprise the State Financial Plan
are the General Fund, the Special Revenue Funds, the Capital Projects Funds, and
the Debt Service Funds.

GENERAL FUND RECEIPTS

The General Fund is the principal operating fund of the State and is
used to account for all financial transactions, except those required to be
accounted for in another fund. It is

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the State's largest fund and receives almost all State taxes and other resources
not dedicated to particular purposes. In the State's 1995-96 fiscal year, the
General Fund is expected to account for approximately 49 percent of total
governmental-funded disbursements and 71 percent of total State-funded
disbursements. General Fund moneys are also transferred to other funds,
primarily to support certain capital projects and debt service on long-term
bonds, where these costs are not funded from other sources.

The Financial Plan for the 1995-96 fiscal year released on February 1,
1995, projects General Fund receipts, including transfers from other funds, of
$33.110 billion, a reduction of $48 million from the total receipts in the
1994-95 fiscal year. Tax receipts are projected at $29.793 billion for the
1995-96 fiscal year. Although growth in the base for tax receipts is expected to
accelerate during the 1995-96 fiscal year, tax receipts are expected to fall by
3.5 percent, principally due to the combined effect of implementing during the
1995-96 fiscal year (1) a portion of the tax reductions originally enacted in
1987 and deferred each year since 1990, (2) additional tax cuts to prevent tax
increases also originally enacted in 1987 from taking effect and (3) the
proposed employer day care credit ($5 million), together with the incremental
cost of the tax reductions enacted in 1994 (more than $500 million), which
effectively negate the effect of projected growth in the recurring revenue base.
In addition, certain nonrecurring revenues in the 1994-95 receipts base,
including the 1993-94 surplus of $1.026 billion, additional earmarking to
dedicated funds (more than $210 million) and other miscellaneous one-time
receipts (more than $100 million) are not available in the 1995-96 fiscal year,
thereby reducing potential year-over-year growth by another 4 percentage points.

The projected yield of personal income tax in the 1995-96 fiscal year
of $17.285 billion is a decrease of $305 million from reported collections in
the State's 1994-95 fiscal year. The decrease reflects both the effects of the
tax reductions and the fact that reported collections in the preceding year were
affected by net refund reserve transactions that buoyed collections in that year
by $862 million that will be unavailable in the current year. Without these
changes, the yield of the tax would have grown by more than $1.0 billion (6
percent), reflecting liability growth for the 1995 tax year projected at
approximately the same rate. The income base for the tax is projected to rise
approximately 5 percent for the 1995 tax year. Personal income tax receipts
showed a sharp increase in 1994-95 and are expected to decline in 1995-96.
Personal income tax reductions recommended in the Executive Budget are projected
to produce taxpayer savings of $720 million in calendar year 1995 reflecting the
scheduled implementation of the 1987 tax reductions. The tax reductions
recommended by the Governor are part of a multi-year program designed to reduce
the yield of the income tax by about one-third by 1998.

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Receipts in user taxes and fees in the State's 1995-96 fiscal year are
expected to total $6.697 billion, an increase of $73 million from reported
1994-95 results. Growth in user taxes and fees is expected to slow to about 1
percent in 1995-96, reflecting nearly $70 million of additional tax relief in
this category in the coming year resulting from tax reductions enacted in 1994,
the absence of extraordinary audit collections received in 1994-95, and a
slowdown in the underlying growth rate of sales and use tax collections, offset
by a projected improvement of $41 million as a result of recommended legislation
to enhance sales tax collection procedures. Business tax receipts are projected
at $4.709 billion, a decline of $360 million from reported 1994-95 results. The
decline in the 1995-96 fiscal year largely reflecting the effect of tax
reductions enacted in 1994.

Total receipts from other taxes in the State's 1995-96 fiscal year are
projected at $1.102 billion, $6 million less than in the preceding year. The
estimates reflect 1994 and 1995 legislation reducing the burden of the real
property gains tax and the estate tax as well as diversion of a portion of the
real estate transfer tax proceeds to the Environmental Protection Fund.
Miscellaneous receipts in the State's 1995-96 fiscal year are expected to total
$1.596 billion, an increase of $335 million above the amount received in the
prior State fiscal year. Growth in overall collections from miscellaneous
receipts in the coming fiscal year is expected to result largely from several
discrete actions involving settlement of environmental litigation, the
recommended merger of public authorities, and transactions with the Power
Authority, which together account for over $200 million of projected
miscellaneous receipts anticipated in 1995-96. Transfers from other funds
continue at prior year levels, with the addition of the transfer of $220 million
in excess funds from the Metropolitan Mass Transportation Operating Assistance
Fund.

GENERAL FUND DISBURSEMENTS

General Fund disbursements are projected to total $33.055 billion in
1995-96, a decrease of $344 million from the total amount disbursed in the prior
fiscal year. This decline reflects a broad agenda of cost containment actions,
more than offsetting modest increases for fixed costs, such as pensions, debt
service on bonds sold during the current year and capital projects under
construction.

Disbursements from grants to local governments are projected to total
$22.910 billion in the 1995-96 State Financial Plan, a decrease of $392 million
from 1994-95 levels. Although spending in this category is reduced, direct
payments to local governments, including school aid and revenue sharing are
maintained largely at last year's levels. This category of the State Financial
Plan includes $10.823 billion in aid for elementary, secondary, and higher
education. Costs for social services, such as Medicaid, income maintenance and
child support

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services account for $8.706 billion. Remaining disbursements primarily support
community-based mental hygiene programs, community and public health programs,
local transportation programs, and revenue sharing.

Significant decreases from the prior year result largely from cost
containment initiatives in Medicaid and other social welfare programs. Payments
for Medicaid from the General Fund are projected to be $506 million lower than
in 1994-95. $128 Million in operating aid to the New York City Transit Authority
will be eliminated, matching the reduction in New York City support of the
Authority.

Spending for State operations is projected at $6.020 billion, a
decrease of $288 million. Recommendations in the Executive Budget reduce the
work force by approximately 3,200 positions (most of which reduce disbursements
in this category).

Spending for general State charges is projected at $2.080 billion in
the 1995-96 State Financial Plan, and are virtually unchanged from the 1994-95
level. The budgeted amount for general State charges assumes the use of $110
million from a special reserve for pension supplementation, established in 1970
and funded through State and local employer contributions in the early 1970's,
to offset the State's pension contribution. The Comptroller, as sole trustee of
the Common Retirement Fund and administrative head of the Retirement System, is
in the process of reviewing the legislation that directs the use of these
reserves to determine whether or not to commence legal proceedings to prevent
such proposed use in the enacted 1995-96 State budget as a violation of the
State Constitution, and there is a substantial likelihood that he will do so.
The Executive considers the proposed use of these reserves to be a credit for
prior-year supplementation payments and, therefore, in compliance with the State
Constitution.

Debt service in the General Fund for 1995-96 reflects only the $9
million interest cost of the State's commercial paper program. No cost is
included for a TRAN borrowing, since none is expected to be undertaken. General
Fund debt service on short-term obligations of the State reflects the
elimination of the State's spring borrowing. Transfers in support of debt
service are projected to total $1.583 billion, and increase of $157 million.
This increase is heightened by the use of one-time reimbursements from other
funds in the 1994-95 fiscal year. Transfers in support of capital projects are
projected to total $375 million, an increase of $169 million, which reflects
significant investments in both new and ongoing capital programs. All other
transfers are projected to total $78 million, an increase of $9 million from
1994-95 levels.

The 1995-96 opening fund balance of $158 million includes $157 million
which is reserved in the Tax Stabilization Reserve Fund, as well as $1 million
which is reserved in the Contingency

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Reserve Fund. The Contingency Reserve Fund was established in 1993-94 to set
aside moneys to address adverse judgments or settlements resulting from
litigation against the State. The closing fund balance in the General Fund of
$213 million reflects a balance of $172 million in the Tax Stabilization Reserve
Fund, following an additional payment of $15 million during the year, and a
balance of $41 million in the Contingency Reserve Fund.

The 1995-96 Financial Plan includes over $600 million in non-recurring
resources. These actions include items discussed above, as well as retroactive
Federal reimbursements and some non-recurring social welfare cost containment
actions. The Budget Division believes that recommendations included in the
Executive Budget will provide fully annualized savings in 1996-97 that more than
offset the non-recurring resources used in 1995-96.

SPECIAL REVENUE FUNDS

Special Revenue Funds are used to account for the proceeds of specific
revenue sources such as Federal grants that are legally restricted, either by
the Legislature or outside parties, to expenditures for specified purposes. For
1995-96, the State Financial Plan projects disbursements of $26.002 billion from
these funds, an increase of $1.641 billion over 1994-95 levels. Disbursements
from Federal funds, primarily the Federal share of Medicaid and other social
services programs, are projected to total $19.209 billion in the 1995-96 fiscal
year. Remaining projected spending of $6.793 billion primarily reflects aid to
SUNY supported by tuition and dormitory fees, education aid funded from lottery
receipts, operating aid payments to the Metropolitan Transportation Authority
funded from the proceeds of dedicated transportation taxes, and costs of a
variety of self-supporting programs which deliver services financed by user
fees.

CAPITAL PROJECTS FUNDS

Capital Projects Funds are used to account for the financial resources
used for the acquisition, construction, or rehabilitation of major state capital
facilities and for capital assistance grants to certain local government or
public authorities. This fund type consists of the Capital Projects Fund, which
is supported by tax dollars transferred from the General Fund, and 37 other
capital funds established to distinguish specific capital construction purposes
supported by other revenues.

Disbursements from the Capital Projects Funds in 1995-96 are projected
at $4.160 billion, an increase of $541 million over prior-year levels. Spending
for capital projects will be financed through a combination of sources: Federal
grants, public authority bond proceeds, general obligation bond proceeds, and
current revenues. Total receipts in this fund type are projected at $4.170
billion, not including $364 million expected to be

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available from the proceeds of general obligation bonds.

DEBT SERVICE FUNDS

Debt Service Funds are used to account for the payment of principal of,
and interest on, long-term debt of the State and to meet commitments under
lease-purchase and other contractual-obligation financing arrangements.
Disbursements are estimated at $2.506 billion in the 1995-96 fiscal year, an
increase of $303 million from 1994-95. The transfer from the General Fund of
$1.583 billion is expected to finance 63 percent of these payments. The
remaining payments are expected to be financed by pledged revenues, including
$1.794 billion in taxes, $228 million in dedicated fees, and $2.200 billion in
patient revenues, including transfers of Federal reimbursements. After
impoundment for debt service, as required, $3.481 billion is expected to be
transferred to the General Fund and other funds in support of State operations.
The largest transfer - $1.761 billion - is made to the Special Revenue Fund
type, in support of operations of the mental hygiene agencies. Another $1.341
billion in excess sales taxes is expected to be transferred to the General Fund,
following payment of projected debt service on bonds of LGAC.

The increase in debt service costs recommended in the Executive Budget
primarily reflects prior capital commitments financed by bonds issued by the
State and State-supported debt issued by its public authorities, and the
completion of the LGAC program. The increase has been moderated by the
reductions to bond-financed capital spending as discussed above, and reflects
debt issuances in 1994-95 and 1995-96 which are lower than they would have been,
absent the Governor's review of capital spending.

CASH FLOW

For the second time in many years, the State will meet its cash flow
needs without relying on a spring borrowing. However, this achievement is
predicated on two actions: the issuance of all remaining LGAC bonds authorized
in the 1990 statute; and the passage of proposed legislation permitting the
State to use, for cash flow purposes only, balances in the Lottery Fund.
Temporary transfers will be returned within five months so that all available
Lottery moneys as well as advances of additional aid can be paid to school
districts in September.

The lingering impact of the 1994-95 receipts shortfall -- as well as
the impact of the potential $5 billion 1995-96 imbalance on cash operations --
exerts substantial pressures on the State's cash balance position in the first
three months of the fiscal year. These pressures are expected to abate later in
the 1995-96 fiscal year, as cash outlays decline from previous levels consistent
with cost-savings initiatives proposed in the Executive Budget.

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PRIOR FISCAL YEARS

New York State's financial operations have improved during recent
fiscal years. During the period 1989-90 through 1991-92, the State incurred
General Fund operating deficits that were closed with receipts from the issuance
of tax and revenue anticipation notes ("TRANs"). First, the national recession,
and then the lingering economic slowdown in the New York and regional economy,
resulted in repeated shortfalls in receipts and three budget deficits. For its
1992-93 and 1993-94 fiscal years, the State recorded balanced budgets on a cash
basis, with substantial fund balances in each year as described below.

1994-95 FISCAL YEAR

The State's budget for the 1994-95 fiscal year was enacted by the
Legislature on June 7, 1994, more than two months after the start of the fiscal
year. Prior to adoption of the budget, the Legislature enacted appropriations
for disbursements considered to be necessary for State operations and other
purposes, including all necessary appropriations for debt service.

The 1994-95 budget contained a significant investment in efforts to
spur economic growth. The budget included provisions to reduce the level of
business taxation in New York, with cuts in the corporate tax surcharge, the
alternative minimum tax imposed on business and the petroleum business tax,
repeal of the State's hotel occupancy tax, and reductions in the real property
gains tax to stimulate construction and facilitate the real estate industry's
access to capital. Complementing the elimination of the hotel tax was a $10
million investment of State funds in the "I Love New York" program designed to
spur tourism activity throughout the State.

To help strengthen the State's economic recovery, the 1994-95 budget
also included more than $200 million in additional funding for economic
development programs. Special emphasis was placed on programs intended to enable
New York State to: (i) invest in high technology industries; (ii) expand access
to foreign markets; (iii) strengthen assistance to small businesses,
particularly those owned by women and minorities; (iv) retain and attract new
manufacturing jobs; (v) help companies and communities impacted by continued
cutbacks in Federal defense spending and ongoing corporate downsizings; and (vi)
bolster the tourism industry. In addition, the budget included increased levels
of support for programs to rebuild and maintain State infrastructure, and
provisions to create 21 new economic development zones.

New York State ended its 1994-95 fiscal year with the General Fund in
balance. The closing fund balance of $158 million reflects $157 million in the
Tax Stabilization Reserve Fund and

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$1 million in the Contingency Reserve Fund ("CRF"). The CRF was established in
State Fiscal year 1993-94, funded partly with surplus moneys, to assist the
State in financing the 1994-95 fiscal year costs of extraordinary litigation
known or anticipated at that time; the opening fund balance in State fiscal year
1994-95 was $265 million. The $241 million change in the fund balance reflects
the use of $264 million in the CRF as planned, as well as the required deposit
of $23 million to the Tax Stabilization Reserve Fund. In addition, $278 million
was on deposit in the tax refund reserve account, $250 million of which was
deposited at the end of the State's 1994-95 fiscal year to continue the process
of restructuring the State's cash flow as part of the LGAC program.

Compared to the State Financial Plan for 1994-95 as formulated on June
16, 1994, reported receipts fell short of original projections by $1.163
billion, primarily in the categories of personal income and business taxes. Of
this amount, the personal income tax accounts for $800 million, reflecting weak
estimated tax collections and lower withholding due to reduced wage and salary
growth, more severe reductions in brokerage industry bonuses than projected
earlier, and deferral of capital gains realizations in anticipation of potential
Federal tax changes. Business taxes fell short by $373 million, primarily
reflecting lower payments from banks as substantial overpayments of 1993
liability depressed net collections in the 1994-95 fiscal year. These shortfalls
were offset by better performance in the remaining taxes, particularly the user
taxes and fees, which exceeded projections by $210 million. Of this amount, $227
million was attributable to certain restatements for accounting treatment
purposes pertaining to the CRF and LGAC; these restatements had no impact on
balance in the General Fund.

Disbursements were also reduced from original projections by $848
million. After adjusting for the net impact of restatements relating to the CRF
and LGAC which raised disbursements by $38 million, the variance is $886
million. Well over two-thirds of this variance is in the category of grants to
local governments, primarily reflecting the conservative nature of the original
estimates of projected costs for social services and other programs. Lower
education costs are attributable to the availability of $110 million in
additional lottery proceeds and the use of LGAC bond proceeds.

The spending reductions also reflect $188 million in actions initiated
in January 1995 by the Governor to reduce spending to avert a potential gap in
the 1994-95 State Financial Plan. These actions included savings from a hiring
freeze, halting the development of certain services, and the suspension of
non-essential capital projects. These actions, together with $71 million in
other measures comprised the Governor's $259 million gap-closing plan, submitted
to the Legislature in connection with the 1995-96 Executive Budget.

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1993-94 FISCAL YEAR

The State ended its 1993-94 fiscal year with a balance of $1.140
billion in the tax refund reserve account, $265 million in its Contingency
Reserve Fund and $134 million in its Tax Stabilization Reserve Fund. These fund
balances were primarily the result of an improving national economy, State
employment growth, tax collections that exceeded earlier projections and
disbursements that were below expectations. Deposits to the personal income tax
refund reserve have the effect of reducing reported personal income tax receipts
in the fiscal year when made and withdrawals from such reserve increase receipts
in the fiscal year when made. The balance in the tax refund reserve account will
be used to pay taxpayer refunds, rather than drawing from 1994-95 receipts.

1992-93 FISCAL YEAR

The State ended its 1992-93 fiscal year with a balance of $671 million
in the tax refund reserve account and $67 million in the Tax Stabilization
Reserve Fund. The State's 1992-93 fiscal year was characterized by performance
that was better than projected for the national and regional economies. National
gross domestic product, State personal income, and State employment and
unemployment performed better than originally projected in April 1992. This
favorable economic performance, particularly at year end, combined with a
tax-induced acceleration of income into 1992, was the primary cause of the
General Fund surplus. Personal income tax collections were more than $700
million higher than originally projected (before reflecting the tax refund
reserve account transaction), primarily in the withholding and estimated payment
components of the tax. There were, however, large and mainly offsetting
variances in other categories of receipts.

CERTAIN LITIGATION

Certain litigation pending against New York or its officers or
employees could have a substantial or long-term adverse effect on New York
finances. Among the more significant of these cases are those that involve: (i)
the validity of agreements and treaties by which various Indian tribes
transferred to New York title to certain land in New York; (ii) certain aspects
of New York's Medicaid rates and regulations, including reimbursements to
providers of mandatory and optional Medicaid services, and the eligibility for
and nature of home care services; (iii) challenges to provisions of Section
2807-C of the Public Health Law, which impose a 13% surcharge on inpatient
hospital bills paid by commercial insurers and employee welfare benefit plans
and portions of Chapter 55 of the laws of 1992, which require hospitals to
impose and remit to the State an 11% surcharge on hospital bills paid by
commercial insurers and which require health maintenance organizations to remit
to the State a surcharge of up to 9%; (iv) an action against the State of New
York and New York City officials alleging that the present level

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of shelter allowance for public assistance recipients is inadequate under
statutory standards to maintain proper housing; (v) challenges to the practice
of reimbursing certain Office of Mental Health patient care expenses from the
client's Social Security benefits; (vi) alleged responsibility of New York
officials to assist in remedying racial segregation in the City of Yonkers;
(vii) a challenge to the constitutionality of financing programs of the Thruway
Authority authorized by Chapters 166 and 410 of the Laws of 1991; and (viii) a
claim that the State's Department of Environmental Conservation prevented the
completion of a cogeneration facility by the projected date by failing to
provide data in a timely manner and that the plaintiff thereby suffered damages.
In addition, aspects of petroleum business taxes are the subject of
administrative claims and litigation.

THE CITY OF NEW YORK

The fiscal health of the State of New York is closely related to the
fiscal health of its localities, particularly the City, which has required and
continues to require significant financial assistance from New York. The City's
independently audited operating results for each of its 1981 through 1993 fiscal
years showed a General Fund surplus reported in accordance with GAAP. In
addition, the City's financial statements for the 1993 fiscal year received an
unqualified opinion from the City's independent auditors, the eleventh
consecutive year the City received such an opinion.

The 1996-1999 Financial Plan reflects a program of proposed actions by
the City to close the gaps between projected revenues and expenditures of $888
million, $1.5 billion and $1.4 billion for the 1997, 1998 and 1999 fiscal years,
respectively. These actions, a substantial number of which are not specified in
detail, include additional agency spending reductions, reduction in
entitlements, government procurement initiatives, revenue initiatives and the
availability of the general reserve.

The Office of the State Deputy Comptroller for the City of New York
(the "OSDC") and the State Financial Control Board continue their respective
budgetary oversight activities.

In response to the City's fiscal crisis in 1975, the State took action
to assist the City in returning to fiscal stability. Among those actions, the
State established the Municipal Assistance Corporation for the City of New York
(the "MAC") to provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the City's financial
affairs; the Office of the State Deputy Comptroller for the City of New York to
assist the Control Board in exercising its powers and responsibilities; and a
"Control Period" from 1975 to 1986 during which the City was subject to certain
statutorily-prescribed fiscal-monitoring arrangements. Although the Control
Board terminated the Control Period in 1986

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when certain statutory conditions were met, thus suspending certain Control
Board powers, the Control Board, MAC and OSDC continue to exercise various
fiscal-monitoring functions over the City, and upon the occurrence or
"substantial likelihood and imminence" of the occurrence of certain events,
including, but not limited to a City operating budget deficit of more than $100
million, the Control Board is required by law to reimpose a Control Period.
Currently, the City and its Covered Organizations (I.E., those which receive or
may receive monies from the City directly, indirectly or contingently) operate
under a four-year financial plan which the City prepares annually and
periodically updates.

The staffs of the OSDC and the Control Board issue periodic reports on
the City's financial plans, as modified, analyzing forecasts of revenues and
expenditures, cash flow, and debt service requirements, as well as compliance
with the financial plan, as modified, by the City and its Covered Organizations.
OSDC staff reports issued during the mid-1980's noted that the City's budgets
benefitted from a rapid rise in the City's economy, which boosted the City's
collection of property, business and income taxes. These resources were used to
increase the City's work force and the scope of discretionary and mandated City
services. Subsequent OSDC staff reports examined the 1987 stock market crash and
the 1989-92 recession, which affected the New York City region more severely
than the nation, and attributed an erosion of City revenues and increasing
strain on City expenditures to that recession. According to a recent OSDC staff
report, the City's economy is now slowly recovering, but the scope of that
recovery is uncertain and unlikely, in the foreseeable future, to match the
expansion of the mid-1980's. Also, staff reports of OSDC and the Control Board
have indicated that the City's recent balanced budgets have been accomplished,
in part, through the use of non-recurring resources, tax increases and
additional State assistance; that the City has not yet brought its long-term
expenditures in line with recurring revenues; and that the City is therefore
likely to continue to face future projected budget gaps requiring the City to
increase revenues and/or reduce expenditures. According to the most recent staff
reports of OSDC and the Control Board, during the four-year period covered by
the current financial plan, the City is relying on obtaining substantial
resources from initiatives needing approval and cooperation of its municipal
labor unions, Covered Organizations, and City Council, as well as the State and
Federal governments, among others.

The City requires significant amounts of financing for seasonal and
capital purposes. The City issued $1.75 billion of notes for seasonal financing
purposes during its fiscal year ending June 30, 1994. The City's capital
financing program projects long-term financing requirements of approximately $17
billion for the City's fiscal years 1995 through 1998. The major capital
requirements include expenditures for the City's water supply and sewage
disposal systems, roads, bridges, mass transit, schools, hospitals and housing.

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OTHER LOCALITIES

In addition to the City, certain localities, including the City of
Yonkers, could have financial problems leading to requests for additional State
assistance during the State's 1995-96 fiscal year and thereafter..
Municipalities and school districts have engaged in substantial short-term and
long-term borrowings. In 1993, the total indebtedness of all localities in the
State other than New York City was approximately $17.7 billion.

From time to time, Federal expenditure reductions could reduce, or in
some cases, eliminate, Federal funding of some local programs, and, accordingly,
might impose substantial increased expenditure requirements on affected
localities. If the State, the City or any of the public authorities were to
suffer serious financial difficulties jeopardizing their respective access to
the public credit markets, the marketability of notes and bonds issued by
localities within the State could be adversely affected. Localities also face
anticipated and potential problems resulting from certain pending litigation,
judicial decisions and long-range economic trends. Long-range potential problems
of declining urban population, increasing expenditures and other economic trends
could adversely affect localities and require increasing State assistance in the
future.

AUTHORITIES

The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities. Public authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the State
itself and may issue bonds and notes within the amounts, and as otherwise
restricted by, their legislative authorization. As of September 30, 1994, there
were 18 public authorities that had aggregate outstanding debt of $70.3 billion.
Some authorities also receive moneys from State appropriations to pay for the
operating costs of certain of their programs.

The Metropolitan Transit Authority (the "MTA"), which receives the bulk
of the appropriated moneys from the State, oversees the operation of the City's
bus and subway system by its affiliates, the New York City Transit Authority and
Manhattan and Bronx Surface Transit Operating Authority (collectively, the
"TA"). The MTA has depended and will continue to depend upon Federal, state and
local government support to operate the transit system because fare revenues are
insufficient.

Over the past several years, the State has enacted several taxes
(including a surcharge on the profits of banks, insurance corporations and
general business corporations doing business in the 12-county region served by
the MTA and a special one-quarter

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of one percent regional sales and use tax) that provide additional revenues for
mass transit purposes, including assistance to the MTA. In addition, a
one-quarter of one percent regional mortgages recording tax paid on certain
mortgages creates an additional source of recurring revenues for the MTA.
Further, in 1993, the State dedicated a portion of the State petroleum business
tax to assist the MTA. For the 1995-96 State fiscal year, total State assistance
to the MTA is estimated at approximately $1.1 billion.

In 1993, State legislation authorized the funding of a five-year $9.56
billion MTA capital plan for the five-year period, 1992 through 1996 (the
"1992-96 Capital Program"). The MTA has received approval of the 1992-96 Capital
Program based on this legislation from the 1992-96 Capital Program Review Board,
as State law requires. This is the third five-year plan since the Legislature
authorized procedures for the adoption, approval and amendment of a five-year
plan in 1981 for a capital program designed to upgrade the performance of the
MTA's transportation systems and to supplement, replace and rehabilitate
facilities and equipment. The MTA, the Triborough Bridge and Tunnel Authority,
and the TA are collectively authorized to issue an aggregate of $3.1 billion of
bonds (net of certain statutory exclusions) to finance a portion of the 1992-96
Capital Program. The 1992-96 Capital Program is expected to be financed in
significant part through dedication of State petroleum business taxes referred
to above.

There can be no assurance that all the necessary governmental actions
for the Capital Program will be taken, that funding sources currently identified
will not be decreased or eliminated, or that the 1992-96 Capital Program, or
parts thereof, will not be delayed or reduced. Furthermore, the power of the MTA
to issue certain bonds expected to be supported by the appropriation of State
petroleum business taxes is currently the subject of a court challenge. If the
Capital Program is delayed or reduced, ridership and fare revenues may decline,
which could, among other things, impair the MTA's ability to meet its operating
expenses without additional State assistance.

JPM572

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APPENDIX C
INVESTING IN JAPAN AND ASIAN GROWTH MARKETS

JAPAN AND ITS SECURITIES MARKETS

The Japan Equity Portfolio will be subject to general economic and
political conditions in Japan. These include future political and economic
developments, the possible imposition of, or changes in, exchange controls or
other Japanese governmental laws or restrictions applicable to such investments,
diplomatic developments, political or social unrest and natural disasters.

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Japan is largely dependent upon foreign economies for raw materials. For
instance, almost all of its oil is imported, the majority from the Middle East.
Oil prices therefore have a major impact on the domestic economy, as is
evidenced by the current account deficits triggered by the two oil crises of the
1970s. While Japan is working to reduce its dependence on foreign materials, its
lack of natural resources poses a significant obstacle to this effort.

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GEOLOGICAL FACTORS. The islands of Japan lie in the western Pacific
Ocean, off the eastern coast of the continent of Asia. Japan has in the past
experienced earthquakes and tidal waves of varying degrees of severity, and the
risks of such phenomena, and damage resulting therefrom, continue to exist.

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ASIAN GROWTH MARKETS

The Asia Growth Portfolio will be subject to certain risks and special
considerations, including those set forth below, which are not typically
associated with investing in securities of U.S. companies. In particular,
securities markets in Asian growth markets have been subject to substantial
price volatility, often without warning. This potential for sudden market
declines should be weighed and balanced against the potential for rapid growth
in Asian growth markets. Further, certain securities that the Portfolio may
purchase, and investment techniques in which the Portfolio may engage, involve
risks, including those set forth below.

INVESTMENT AND REPATRIATION RESTRICTIONS

Foreign investment in the securities markets of several Asian growth
markets is restricted or controlled to varying degrees. These restrictions may
limit investment in certain of the Asian growth markets and may increase
expenses of the Portfolio. For example, certain countries may require
governmental approval prior to investments by foreign persons in a particular
company or industry sector or limit investment by foreign persons to only a
specific class of securities of a company which may have less advantageous terms
(including price) than securities of the company available for purchase by
nationals. Certain countries may restrict or prohibit investment opportunities
in issuers or industries deemed important to national interests. In addition,
the repatriation of both investment income and capital from several of the Asian
growth markets is subject to restrictions such as the need for certain
government consents. Even where there is no outright restriction on repatriation
of capital, the mechanics of repatriation may affect certain aspects of the
operation of the Portfolio. For example, Taiwan imposes a waiting period on the
repatriation of investment capital for certain foreign investors. Although these
restrictions may in the future make it undesirable to invest in the countries to
which they apply, the Advisor does not believe that any current repatriation
restrictions would preclude the Portfolio from effectively managing its assets.

If, because of restrictions on repatriation or conversion, the
Portfolio were unable to distribute substantially all of its net investment
income and long-term capital gains within applicable time periods, the Portfolio
could be subject to U.S. Federal income and excise taxes which would not
otherwise be

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incurred and may cease to qualify for the favorable tax treatment afforded to
regulated investment companies under the Code, in which case it would become
subject to U.S. federal income tax on all of its income and gains.

Generally, there are restrictions on foreign investment in certain
Asian growth markets, although these restrictions vary in form and content. In
India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand, the
Portfolio may be limited by government regulation or a company's charter to a
maximum percentage of equity ownership in any one company.

The Advisor intends to apply for approval from Indian governmental
authorities to invest in India on behalf of the Portfolio as a foreign
institutional investor (an "FII"). Under the guidelines that apply currently for
FIIs, no FII (or members of an affiliated group investing through one or more
FIIs) may hold more than 5% of the total issued capital of any Indian company.
In addition, all non-resident portfolio investments, including those of all FIIs
and their clients, may not exceed 24% of the issued share capital of any Indian
company; however, the 24% limit does not apply to investments by FIIs through
authorized offshore funds and offshore equity issues. Further, at least 70% of
the total investments made by an FII pursuant to its FII authorization must be
in equity and equity related instruments such as convertible debentures and
tradeable warrants. Under a recently adopted policy, FIIs may purchase new
issues of equity securities directly from an Indian company, subject to certain
conditions. The procedures for such direct subscription by FIIs of such equity
securities are unclear and it is likely that a further limit, in addition to the
24% limit referred to above, may be imposed. The guidelines that apply for FIIs
are relatively recent and thus experience as to their application has been
limited. At present, FII authorizations are granted for five years and may be
renewed with the approval of India governmental authorities.

Korea generally prohibits foreign investment in Won-denominated debt
securities and Sri Lanka prohibits foreign investment in government debt
securities. In the Philippines, the Portfolio may generally invest in "B" shares
of Philippine issuers engaged in partly nationalized business activities, which
shares are made available to foreigners, and the market prices, liquidity and
rights of which may vary from shares owned by nationals. Similarly, in the
People's Republic of China (the "PRC"), the Portfolio may only invest in "B"
shares of securities traded on The Shanghai Securities Exchange and The Shenzhen
Stock Exchange, currently the two officially recognized securities exchanges in
the PRC. "B" shares traded on The Shanghai Securities Exchange are settled in
U.S. dollars and those traded on The Shenzhen Stock Exchange are generally
settled in Hong Kong dollars.

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In Hong Kong, Korea, the Philippines, Taiwan and Thailand, there are
restrictions on the percentage of permitted foreign investment in shares of
certain companies, mainly those in highly regulated industries, although in
Taiwan there are limitations on foreign ownership of shares of any listed
company. In addition, Korea also prohibits foreign investment in specified
telecommunications companies and the Philippines prohibits foreign investment in
mass media companies and companies providing certain professional services.
MARKET CHARACTERISTICS

DIFFERENCES BETWEEN THE U.S. AND ASIAN SECURITIES MARKETS. The
securities markets of Asian growth markets have substantially less volume than
the New York Stock Exchange, and equity and debt securities of most companies in
Asian growth markets are less liquid and more volatile than equity and debt
securities of U.S. companies of comparable size. Some of the stock exchanges in
Asian growth markets, such as those in the PRC, are in the earliest stages of
their development. Many companies traded on securities markets in Asian growth
markets are smaller, newer and less seasoned than companies whose securities are
traded on securities markets in the United States. Investments in smaller
companies involve greater risk than is customarily associated with investing in
larger companies. Smaller companies may have limited product lines, markets or
financial or managerial resources and may be more susceptible to losses and
risks of bankruptcy. Additionally, market making and arbitrage activities are
generally less extensive in such markets, which may contribute to increased
volatility and reduced liquidity of such markets. Accordingly, each of these
markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States. To the extent that any Asian
growth market experiences rapid increases in its money supply and investment in
equity securities for speculative purposes, the equity securities traded in any
such country may trade at price-earnings multiples higher than those of
comparable companies trading on securities markets in the United States, which
may not be sustainable. Securities markets in Asian growth

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markets may also be subject to substantial governmental control, which may cause
sudden or prolonged disruptions in market prices unrelated to supply and demand
considerations. This may also be true of currency markets.

Brokerage commissions and other transaction costs on securities
exchanges in Asian growth markets are generally higher than in the United
States. In addition, security settlements may in some instance be subject to
delays and related administrative uncertainties, including risk of loss
associated with the credit of local brokers.

GOVERNMENT SUPERVISION OF ASIAN SECURITIES MARKETS; LEGAL SYSTEMS.
There is less government supervision and regulation of foreign securities
exchanges, listed companies and brokers in Asian growth markets than exists in
the United States. Less information, therefore, may be available to the Fund
than in respect of investments in the United States. Further, in certain Asian
growth markets, less information may be available to the Fund than to local
market participants. Brokers in Asian growth markets may not be as well
capitalized as those in the United States, so that they are more susceptible to
financial failure in times of market, political, or economic stress. In
addition, existing laws and regulations are often inconsistently applied. As
legal systems in some of the Asian growth markets develop, foreign investors may
be adversely affected by new laws and regulations, changes to existing laws and
regulations and preemption of local laws and regulations by national laws. In
circumstances where adequate laws exist, it may not be possible to obtain swift
and equitable enforcement of the law. Currently a mixture of legal and
structural restrictions affect the securities markets of certain Asian growth
markets.

Korea, in an attempt to avoid market manipulation, requires
institutional investors to deposit in their broker's account a percentage of the
amount to be invested prior to execution of a purchase order. That deposit
requirement will expose the Fund to the broker's credit risk. These examples
demonstrate that legal and structural developments can be expected to affect the
Portfolio, potentially affecting liquidity of positions held by the Portfolio,
in unexpected and significant ways from time to time.

FINANCIAL INFORMATION AND STANDARDS. Issuers in Asian growth markets
generally are subject to accounting, auditing and financial standards and
requirements that differ, in some cases significantly, from those applicable to
U.S. issuers. In particular, the assets and profits appearing on the financial
statements of an Asian growth market issuer may not reflect its financial
position or results of operations in accordance with U.S. generally accepted
accounting principles. In addition, for

C-7

<PAGE>

an issuer that keeps accounting records in local currency, inflation accounting
rules may require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the issuer's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, financial data may be
materially affected by restatements for inflation and may not accurately reflect
the real condition of those issuers and securities markets. Moreover,
substantially less information may be publicly available about issuers in Asian
growth markets than is available about U.S. issuers.

SOCIAL, POLITICAL AND ECONOMIC FACTORS

Asian growth markets may be subject to a greater degree of social,
political and economic instability than is the case in the United States and
Western European countries. Such instability may result from, among other
things, the following: (i) authoritarian governments or military involvement in
political and economic decision-making, and changes in government through
extra-constitutional means; (ii) popular unrest associated with demand for
improved political, economic and social conditions; (iii) internal insurgencies,
(iv) war or hostile relations with neighboring countries; and (v) ethnic,
religious and racial disaffection. Such social, political and economic
instability could significantly disrupt the principal financial markets in which
the Portfolio invests and adversely affect the value of the Portfolio's assets.
In addition, there may be the possibility of asset expropriations or future
confiscatory levels of taxation affecting the Portfolio.

Few Asian growth markets have western-style or fully democratic
governments. Some governments in the region are authoritarian and influenced by
security forces. During the course of the last 25 years, governments in the
region have been installed or removed as a result of military coups, while
others have periodically demonstrated repressive police state characteristics.
Disparities of wealth, among other factors, have also led to social unrest in
some Asian growth markets, accompanied, in certain cases, by violence and labor
unrest. Ethnic, religious and racial disaffection, as evidenced in India,
Pakistan and Sri Lanka, have created social, economic and political problems.

Several Asian growth markets have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including the PRC and
Pakistan. Tension between the Tamil and Sinhalese communities in Sri Lanka has
resulted in periodic outbreaks of violence. An uneasy truce exists between North
Korea and South Korea, and the recurrence of hostilities remains possible.
Reunification of

C-8

<PAGE>

North Korea and South Korea could have a detrimental effect on the economy of
South Korea. Also, the PRC continues to claim sovereignty over Taiwan. The PRC
is acknowledged to possess nuclear weapons capability; North Korea is alleged to
possess or be in the process of developing such a capability.

The economies of most Asian growth markets are heavily dependent upon
international trade and are accordingly affected by protective barriers and the
economic conditions of their trading partners, principally, the United States,
Japan, the PRC and the European Community. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
the securities markets of the Asian growth markets. In addition, the economies
of some Asian growth markets, Indonesia and Malaysia, for example, are
vulnerable to weakness in world prices for their commodity exports, including
crude oil.

Governments in certain Asian growth markets participate to a
significant degree, through ownership interest or regulation, in their
respective economies. Action by these governments could have a significant
adverse effect on market prices of securities and payment of dividends.

The PRC has only recently permitted private economic activities and the
PRC government has exercised and continues to exercise substantial control over
virtually every sector of the PRC economy through regulation and state
ownership. Continued economic growth and development in the PRC, as well as
opportunities for foreign investment, and prospects of private sector
enterprises, in the PRC, will depend in many respects on the implementation of
the PRC's current program of economic reform, which cannot be assured.

In Hong Kong, British proposals to extend limited democracy have caused
a political rift with the PRC, which is scheduled to assume sovereignty over the
colony in 1997. Although the PRC has committed by treaty to preserve the
economic and social freedoms enjoyed in Hong Kong for 50 years after regaining
control of Hong Kong, the continuation of the current form of the economic
system in Hong Kong after the reversion will depend on the actions of the
government of the PRC. In addition, such reversion has increased sensitivity in
Hong Kong to political developments and statements by public figures in the PRC.
Business confidence in Hong Kong, therefore, can be significantly affected by
such developments and statements, which in turn can affect markets and business
performance.

C-9

<PAGE>

With respect to investments in Taiwan, it should be noted that Taiwan
lacks formal diplomatic relations with many nations, although it conducts trade
and financial relations with most major economic powers. Both the government of
the PRC and the government of the Republic of China in Taiwan claim sovereignty
over all of China. Although relations between Taiwan and the PRC are currently
peaceful, renewed frictions or hostility could interrupt operations of Taiwanese
companies in which the Portfolio invests and create uncertainty that could
adversely affect the value and marketability of its Taiwan investments.

With regard to India, agriculture occupies a more prominent position in
the Indian economy than in the United States, and the Indian economy therefore
is more susceptible to adverse changes in weather. The government of India has
exercised and continues to exercise significant influence over many aspects of
the economy, and the number of public sector enterprises in India is
substantial. Accordingly government actions in the future could have a
significant effect on the Indian economy which could affect private sector
companies, market conditions and prices and yields of securities held by the
Portfolio. Religious and ethnic unrest persists in India. The long standing
grievances between the Hindu and Muslim populations resulted in communal
violence during 1993 in the aftermath of the destruction of a mosque in Ayodhya
by radical elements of the Hindu population. The Indian government is also
confronted by separatist movements in several states and the long standing
border dispute with Pakistan over the State of Jammu and Kashmir, a majority of
whose population is Muslim, remains unsolved. In addition, Indian stock
exchanges have in the past been subject to repeated closure including for ten
days in December 1993 due to a broker's strike, and there can be no assurance
that this will not recur.

THINLY TRADED MARKETS

Compared to securities traded in the United States, all securities of
Asian growth market issuers may generally be considered to be thinly traded.
Even relatively widely held securities in such countries may not be able to
absorb trades of a size customarily transacted by institutional investors,
without price disruptions. Accordingly, the Portfolio's ability to reposition
itself will be more constrained than would be the case for a typical equity
mutual fund.

SETTLEMENT PROCEDURES AND DELAYS

Settlement procedures in Asian growth markets are less developed and
reliable than those in the United States and in other developed markets, and the
Portfolio may experience settlement delays or other material difficulties. This
problem is particularly severe in India where settlement is through physical
delivery and, where currently, a severe shortage of vault capacity exists among
custodial banks, although efforts are being undertaken to alleviate the
shortage. In addition, significant delays are common in registering transfers of

C-10

<PAGE>

securities, and the Portfolio may be unable to sell such securities until the
registration process is completed and may experience delays in receipt of
dividends and other entitlement. The recent and anticipated inflow of funds into
the Indian securities market has placed added strains on the settlement system
and transfer process. In addition, the Portfolio may be subject to significant
limitations in the future on the volume of trading during any particular period,
imposed by its sub-custodian in India or otherwise as a result of such physical
or other operational constraints.

JPM572

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<PAGE>
PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

The following financial statements are included in Part A:

Financial Highlights: The JPM Institutional Money Market Fund, The JPM
Institutional Tax Exempt Money Market Fund, The JPM Institutional Treasury
Money Market Fund, The JPM Institutional Short Term Bond Fund, The JPM
Institutional Bond Fund, The JPM Institutional Tax Exempt Bond Fund, The JPM
Institutional International Bond Fund, The JPM Institutional Selected U.S.
Equity Fund, The JPM Institutional U.S. Small Company Fund, The JPM
Institutional International Equity Fund, The JPM Institutional Diversified
Fund, The JPM Institutional Emerging Markets Equity Fund, and The JPM
Institutional New York Total Return Bond Fund.

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

The JPM Institutional Money Market Fund
Statement of Assets and Liabilities at November 30, 1995
Statement of Operations for the fiscal year ended November 30, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements November 30, 1995

The Money Market Portfolio
Schedule of Investments at November 30, 1995
Statement of Assets and Liabilities at November 30, 1995
Statement of Operations for the fiscal year ended November 30, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements November 30, 1995

The JPM Institutional Tax Exempt Money Market Fund
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements August 31, 1995

The Tax Exempt Money Market Portfolio
Schedule of Investments at August 31, 1995
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements August 31, 1995

The JPM Institutional Treasury Money Market Fund
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements October 31, 1995

The Treasury Money Market Portfolio
Schedule of Investments at October 31, 1995
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements October 31, 1995

The JPM Institutional Short Term Bond Fund
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements October 31, 1995

The Short Term Bond Portfolio
Schedule of Investments at October 31, 1995
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements October 31, 1995

The JPM Institutional Bond Fund
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements October 31, 1995

The U.S. Fixed Income Portfolio
Schedule of Investments at October 31, 1995
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements October 31, 1995

The JPM Institutional Tax Exempt Bond Fund
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements August 31, 1995

The Tax Exempt Bond Portfolio
Schedule of Investments at August 31, 1995
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements August 31, 1995

The JPM Institutional Selected U.S. Equity Fund
Statement of Assets and Liabilities at May 31, 1995
Statement of Operations for the Fiscal Year Ended May 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements May 31, 1995
Statement of Assets and Liabilities at November 30, 1995 (unaudited)
Statement of Operations for the six months ended November 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements November 30, 1995 (unaudited)

The Selected U.S. Equity Portfolio
Schedule of Investments at May 31, 1995
Statement of Assets and Liabilities at May 31, 1995
Statement of Operations for the Fiscal Year Ended May 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements May 31, 1995
Schedule of Investments at November 30, 1995 (unaudited)
Statement of Assets and Liabilities at November 30, 1995 (unaudited)
Statement of Operations for the six months ended November 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Supplementary Data (unaudited)
Notes to Financial Statements November 30, 1995 (unaudited)

The JPM Institutional U.S. Small Company Fund
Statement of Assets and Liabilities at May 31, 1995
Statement of Operations for the Fiscal Year Ended May 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements May 31, 1995
Statement of Assets and Liabilities at November 30, 1995 (unaudited)
Statement of Operations for the six months ended November 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements November 30, 1995 (unaudited)

The U.S. Small Company Portfolio
Schedule of Investments at May 31, 1995
Statement of Assets and Liabilities at May 31, 1995
Statement of Operations for the Fiscal Year Ended May 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements May 31, 1995
Schedule of Investments at November 30, 1995 (unaudited)
Statement of Assets and Liabilities at November 30, 1995 (unaudited)
Statement of Operations for the six months ended November 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Supplementary Data (unaudited)
Notes to Financial Statements November 30, 1995 (unaudited)

The JPM Institutional International Equity Fund
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements October 31, 1995

The Non-U.S. Equity Portfolio
Schedule of Investments at October 31, 1995
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Supplemantary Data
Notes to Financial Statements October 31, 1995

The JPM Institutional Diversified Fund
Statement of Assets and Liabilities at June 30, 1995
Statement of Operations for the Fiscal Year Ended June 30, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements June 30, 1995
Statement of Assets and Liabilities at December 31, 1995 (unaudited)
Statement of Operations for the six months ended December 31, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements December 31, 1995 (unaudited)

The Diversified Portfolio
Schedule of Investments at June 30, 1995
Statement of Assets and Liabilities at June 30, 1995
Statement of Operations for the Fiscal Year Ended June 30, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements June 30, 1995
Schedule of Investments at December 31, 1995 (unaudited)
Statement of Assets and Liabilities at December 31, 1995 (unaudited)
Statement of Operations for the six months ended December 31, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Supplementary Data (unaudited)
Notes to Financial Statements December 31, 1995 (unaudited)

The JPM Institutional Emerging Markets Equity Fund
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements October 31, 1995

The Emerging Markets Equity Portfolio
Schedule of Investments at October 31, 1995
Statement of Assets and Liabilities at October 31, 1995
Statement of Operations for the fiscal year ended October 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statement October 31, 1995

The JPM Institutional New York Total Return Bond Fund
Statement of Assets and Liabilities at March 31, 1995
Statement of Operations for the fiscal year ended March 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements March 31, 1995
Statement of Assets and Liabilities at September 30, 1995 (unaudited)
Statement of Operations for the six months ended September 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Financial Highlights (unaudited)
Notes to Financial Statements September 30, 1995 (unaudited)

The New York Total Return Bond Portfolio
Schedule of Investments at March 31, 1995
Statement of Assets and Liabilities at March 31, 1995
Statement of Operations for the fiscal year ended March 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements March 31, 1995
Schedule of Investments at September 30, 1995 (unaudited)
Statement of Assets and Liabilities at September 30, 1995 (unaudited)
Statement of Operations for the six months ended September 30, 1995 (unaudited)
Statement of Changes in Net Assets (unaudited)
Supplementary Data (unaudited)
Notes to Financial Statements September 30, 1995 (unaudited)

The JPM Institutional International Bond Fund
Statement of Assets and Liabilities at September 30, 1995
Statement of Operations For the period ended September 30, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements September 30, 1995

The Non-U.S. Fixed Income Portfolio
Schedule of Investments at September 30, 1995
Statement of Assets and Liabilities at September 30, 1995
Statement of Operations For the six period ended September 30, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements September 30, 1995

The Japan Equity Portfolio
Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the period March 28, 1995 (commencement of
operations) through December 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements December 31, 1995

The European Equity Portfolio
Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the period March 28, 1995 (commencement of
operations) through December 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements December 31, 1995

The Asia Growth Portfolio
Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the period April 4, 1995 (commencement of
operations) through December 31, 1995
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements December 31, 1995

(b) Exhibits

1. Declaration of Trust, as amended, was filed as Exhibit 1 to Registrant's
Post-Effective Amendment No. 16 to the Registration Statement (the "Registration
Statement") filed on June 15, 1995 ("Post-Effective Amendment No. 16").

2. Restated By-Laws of the Registrant were filed as Exhibit 2 to Post-Effective
Amendment No. 16.

4. Form of Share Certificate was filed as Exhibit 4 to Registrant's
Post-Effective Amendment No. 13 to the Registration Statement filed on November
1, 1994 ("Post-Effective Amendment No. 13").

6. Distribution Agreement between Registrant and Signature Broker-Dealer
Services, Inc. ("SBDS") was filed as Exhibit 6 to Post-Effective Amendment
No. 13.

8. Custodian Contract between Registrant and State Street Bank and Trust
Company ("State Street") was filed as Exhibit 8 to Post-Effective Amendment No.
13.

9(a). Administration Agreement between Registrant and SBDS was filed as Exhibit
9(a) to Registrant's Post-Effective Amendment No. 21 to the Registration
Statement filed on February 27, 1996 ("Post-Effective Amendment No. 21").

9(b). Restated Shareholder Servicing Agreement between Registrant and Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") was filed as Exhibit
9(b) to Post-Effective Amendment No. 21.

9(c). Transfer Agency and Service Agreement between Registrant and State Street
was filed as Exhibit 9(c) to Post-Effective Amendment No. 13.

9(d). Administrative Services Agreement between Registrant and Morgan Guaranty
was filed as Exhibit 9(d) to Post-Effective Amendment No. 21.

9(e). Fund Services Agreement between Registrant and Pierpont Group, Inc. was
filed as Exhibit 9(e) to Registrant's Post-Effective Amendment No. 10 to the
Registration Statement filed June 10, 1994 ("Post-Effective Amendment No. 10").

10. Opinion and consent of Sullivan & Cromwell was filed as Exhibit No. 10 to
Registrant's Pre-Effective Amendment No. 1 to the Registration Statement filed
on December 30, 1992.

11. Consents of independent accountants.*

13. Purchase Agreement was filed as Exhibit No. 13 to Pre-Effective Amendment
No. 1.

16. Schedule for computation of performance quotations was filed as Exhibit 16
to Post-Effective Amendment No. 10.

17. Financial Data Schedules.*

18. Powers of Attorney.*

___________________
* Filed herewith.

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

Not applicable.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

Shares of Beneficial Interest ($0.001 par value).

Title of Class: Number of record holders as of February 2, 1996.

The JPM Institutional Money Market Fund: 226
The JPM Institutional Treasury Money Market Fund: 53
The JPM Institutional Bond Fund: 132
The JPM Institutional Diversified Fund: 47
The JPM Institutional U.S. Small Company Fund: 383
The JPM Institutional International Equity Fund: 439
The JPM Institutional Emerging Markets Equity Fund: 518
The JPM Institutional International Bond Fund: 36
The JPM Institutional Short Term Bond Fund: 38
The JPM Institutional Selected U.S. Equity Fund: 105
The JPM Institutional Tax Exempt Money Market Fund: 81
The JPM Institutional Tax Exempt Bond Fund: 100
The JPM Institutional New York Total Return Bond Fund: 57
The JPM Institutional European Equity Fund: none
The JPM Institutional Japan Equity Fund: none
The JPM Institutional Asia Growth Fund: none

ITEM 27. INDEMNIFICATION.

Reference is made to Section 5.3 of Registrant's Declaration of Trust
and Article 4 of Registrant's Distribution Agreement.

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

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

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Not Applicable.

ITEM 29. PRINCIPAL UNDERWRITERS.

(a) SBDS is the Distributor (the "Distributor") for the shares of the
Registrant. SBDS also serves as the principal underwriter or placement agent for
numerous other registered investment companies.

(b) The following are the directors and officers of the Distributor.
The principal business address of these individuals is 6 St. James Avenue, Suite
900, Boston, Massachusetts 02116 unless otherwise noted. Their respective
position and offices with the Registrant, if any, are also indicated.

PHILIP W. COOLIDGE: President, Chief Executive Officer and Director of SBDS.
President of Registrant.

JOHN R. ELDER: Assistant Treasurer of SBDS. Treasurer of the Registrant.

BARBARA M. O'DETTE: Assistant Treasurer of SBDS.

LINWOOD C. DOWNS: Treasurer of SBDS.

THOMAS M. LENZ: Assistant Secretary of SBDS. Secretary of Registrant.

MOLLY S. MUGLER: Assistant Secretary of SBDS. Assistant Secretary of Registrant.

LINDA T. GIBSON: Assistant Secretary of SBDS. Assistant Secretary of Registrant.

BETH A. REMY: Assistant Treasurer of SBDS.

ANDRES E. SALDANA: Assistant Secretary of SBDS. Assistant Secretary of
Registrant.

SUSAN JAKUBOSKI: Assistant Treasurer of SBDS.

JULIE J. WYETZNER: Product Management Officer of SBDS.

KATE B.M. BOLSOVER: Director of SBDS; Signature Financial Group (Europe), Ltd.,
49 St. James's Street, London SW1A 1JT.

ROBERT G. DAVIDOFF: Director of SBDS; CMNY Capital, L.P., 135 East 57th Street,
New York, NY 10022.

LEEDS HACKETT: Director of SBDS; Hackett Associates Limited, 1260 Avenue of the
Americas, 12th Floor, New York, NY 10020

LAURENCE B. LEVINE: Director of SBDS; Blair Corporation, 250 Royal Palm Way,
Palm Beach, FL 33480

DONALD S. CHADWICK: Director of SBDS; 4609 Bayard Street, Apartment 411,
Pittsburgh, PA 15213.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.

PIERPONT GROUP, INC.: 461 Fifth Avenue, New York, New York 10017
(records relating to its assisting the Trustees in carrying out
their duties in supervising the Registrant's affairs).

MORGAN GUARANTY TRUST COMPANY OF NEW YORK: 60 Wall Street, New York, New York
10260-0060, 522 Fifth Avenue, New York, New York 10036 or 9 West 57th Street,
New York, New York 10019 (records relating to its functions as shareholder
servicing agent, and services agent).

STATE STREET BANK AND TRUST COMPANY: 1776 Heritage Drive, North
Quincy, Massachusetts 02171 (records relating to its functions as
custodian, transfer agent and dividend disbursing agent).

SIGNATURE BROKER-DEALER SERVICES, INC.: 6 St. James Avenue,
Boston, Massachusetts 02116 (records relating to its functions as
distributor and administrator).

INVESTORS BANK AND TRUST COMPANY: 1 First Canadian Place, Suite
5820, P.O. Box 231, Toronto, Ontario M5X1C8 (accounting records).

ITEM 31. MANAGEMENT SERVICES.

Not Applicable.

ITEM 32. UNDERTAKINGS.

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

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Boston, and Commonwealth of Massachusetts on
the 30th day of April, 1996.

THE JPM INSTITUTIONAL FUNDS

By /S/THOMAS M. LENZ
---------------------------
Thomas M. Lenz, Secretary

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on April 30, 1996.

MATTHEW HEALEY*
- --------------------------
Matthew Healey
Chairman and Chief Executive Officer

JOHN R. ELDER*
- --------------------------
John R. Elder
Treasurer and Principal Accounting and Financial Officer

F.S. ADDY*
- --------------------------
F.S. Addy
Trustee

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

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

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

*By /S/THOMAS M. LENZ
--------------------------
Thomas M. Lenz,

as attorney-in-fact pursuant to a power of attorney filed herewith.

<PAGE>

SIGNATURES

Each Portfolio has duly caused this Post-Effective Amendment to the
Registration Statement on Form N-1A ("Registration Statement") of The JPM
Institutional Funds (the "Trust") (File No. 33-54642) to be signed on its behalf
by the undersigned, thereto duly authorized in George Town, Grand Cayman, Cayman
Islands, B.W.I. on the 30th day of April, 1996.

THE MONEY MARKET PORTFOLIO, THE TAX EXEMPT MONEY MARKET PORTFOLIO, THE TREASURY
MONEY MARKET PORTFOLIO, THE SHORT TERM BOND PORTFOLIO, THE U.S. FIXED INCOME
PORTFOLIO, THE TAX EXEMPT BOND PORTFOLIO, THE SELECTED U.S. EQUITY PORTFOLIO,
THE U.S. SMALL COMPANY PORTFOLIO, THE NON-U.S. EQUITY PORTFOLIO, THE DIVERSIFIED
PORTFOLIO, THE EMERGING MARKETS EQUITY PORTFOLIO, THE NEW YORK TOTAL RETURN BOND
PORTFOLIO, THE NON-U.S. FIXED INCOME PORTFOLIO AND THE SERIES PORTFOLIO

By /S/SUSAN JAKUBOSKI
--------------------------
Susan Jakuboski, Assistant Treasurer

Pursuant to the requirements of the Securities Act of 1933, the Trust's
Registration Statement has been signed below by the following persons in the
capacities indicated on April 30, 1996.

MATTHEW HEALEY*
- --------------------------
Matthew Healey
Chairman and Chief Executive Officer of the Portfolios

JOHN R. ELDER*
- --------------------------
John R. Elder
Treasurer and Principal Accounting and Financial Officer of the Portfolios

F.S. ADDY*
- --------------------------
F.S. Addy
Trustee of the Portfolios

WILLIAM G. BURNS*
- --------------------------
William G. Burns
Trustee of the Portfolios

ARTHUR C. ESCHENLAUER*
- --------------------------
Arthur C. Eschenlauer
Trustee of the Portfolios

MICHAEL P. MALLARDI*
- --------------------------
Michael P. Mallardi
Trustee of the Portfolios

/S/SUSAN JAKUBOSKI
--------------------------
Susan Jakuboski,

as attorney-in-fact pursuant to a power of attorney filed herewith.

INDEX TO EXHIBITS

Exhibit No. Description of Exhibit
- ----------- ----------------------

EX-99.B11. Consents of independent accountants.

EX-99.B18. Powers of Attorney.

EX-27.1 through
EX-27.13 Financial Data Schedules.

CONSENTS OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated May 23, 1995, relating to the financial
statements and financial highlights of The JPM Institutional New York Total
Return Bond Fund and the financial statements and supplementary data of The
New York Total Return Bond Portfolio appearing in the March 31,
1995 Annual Report, which is also incorporated by reference into the
Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated July 26, 1995, relating to the financial
statements and financial highlights of The JPM Institutional Selected U.S.
Equity Fund and The JPM Institutional U.S. Small Company Fund and the financial
statements and supplementary data of The Selected U.S. Equity Portfolio and The
U.S. Small Company Portfolio appearing in the May 31, 1995 Annual Reports,
which are also incorporated by reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated August 28, 1995, relating to the financial
statements and financial highlights of The JPM Institutional Diversified Fund
and the financial statements and supplementary data of The Diversified Poftfolio
appearing in the June 30, 1995, Annual Report, which is also incorporated by
reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated October 24, 1995, relating to the financial
statements and financial highlights of The JPM Institutional Tax Exempt Money
Market Fund and the JPM Institutional Tax Exempt bond Fund and the financial
statements and supplementary data of The Tax Exempt Money Market Portfolio and
The Tax Exempt Bond Portfolio appearing in the August 31, 1995 Annual Reports,
which are also incorporated by reference into the Registration Statement.
<PAGE>
Consents of Independent Accountants
Page 2

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated November 20, 1995, relating to the financial
statements and financial highlights of The JPM Institutional International Bond
Fund and the financial statements and supplementary data of The Non-U.S. Fixed
Income Portfolio appearing in the September 30, 1995 Annual Report, which is
also incorporated by reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated December 15, 1995, relating to the financial
statements and financial highlights of The JPM Institutional Treasury Money
Market Fund and the JPM Institutional Short Term Bond Fund and the financial
statements and supplementary data of The Treasury Money Market Portfolio and the
Short Term Bond Portfolio appearing in the October 31, 1995 Annual Reports,
which are also incorporated by reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our reports dated December 22, 1995, relating to the financial
statements and financial highlights of The JPM Institutional Emerging Markets
Equity Fund and The JPM institutional Bond Fund and the JPM Institutional
International Equity Fund and the financial statements and supplementary data of
The Emerging Markets Equity Portfolio and The U.S. Fixed Income Portfolio, and
the Non-U.S. Equity Portfolio appearing in the October 31, 1995 Annual Reports,
which are also incorporated by reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of the Registration
Statement of our report dated January 23, 1996, relating to the financial
statements and financial highlights of The JPM Institutional Money Market Fund
and the financial statements and supplementary data of the Money Market
Portfolio appearing in the November 30, 1995 Annual Report, which is also
incorporated by reference into the Registration Statement.

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of Registration Statement
of our reports dated February 23, 1996, relating to the financial statements
and supplementary data of The Asia Growth Portfolio, The Japan Equity Portfolio,
and The European Equity Portfolio at December 31, 1995, which are also
incorporated by reference into the Registration Statement.

We also consent to the references to us under the heading "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information.

/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
April 29, 1996

POWER OF ATTORNEY

The undersigned hereby constitutes and appoints Philip W. Coolidge,
John R. Elder, James E. Hoolahan, Susan Jakuboski, Thomas M. Lenz, Molly S.
Mugler, Linda T. Gibson, Andres E. Saldana, David G. Danielson and Daniel E.
Shea, and each of them, with full powers of substitution as his true and lawful
attorneys and agents to execute in his name and on his behalf in any and all
capacities the Registration Statements on Form N-1A, and any and all amendments
thereto, filed by The Pierpont Funds, The JPM Institutional Funds or The JPM
Advisor Funds (each a "Trust"), or the Registration Statement(s), and any and
all amendments thereto, filed by any other investor in any registered investment
company in which any of the Trusts invest, with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended, and any and all instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable each
Trust to comply with such Acts, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction, and the undersigned hereby ratifies and confirms as
his own act and deed any and all acts that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of April, 1996, in Paget, Bermuda.

/s/ FREDERICK S. ADDY
______________________
Frederick S. Addy
JPM451B

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of April, 1996, in Paget, Bermuda.

/s/ WILLIAM G. BURNS
______________________
William G. Burns

JPM451B

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th
day of April, 1996, in Paget, Bermuda.

/s/ ARTHUR C. ESCHENLAUER
________________________
Arthur C. Eschenlauer

JPM451B

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of April, 1996, in Paget, Bermuda.

/s/ MATTHEW HEALEY
_______________________
Matthew Healey

JPM451B

<PAGE>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
10th day of April, 1996, in Paget, Bermuda.

/s/ MICHAEL P. MALLARDI
_________________________
Michael P. Mallardi

JPM451B

<PAGE>

POWER OF ATTORNEY

The undersigned hereby constitutes and appoints Philip W. Coolidge,
James E. Hoolahan, Susan Jakuboski, Thomas M. Lenz, Molly S. Mugler, Linda T.
Gibson, Andres E. Saldana, David G. Danielson and Daniel E. Shea, and each of
them, with full powers of substitution as his true and lawful attorneys and
agents to execute in his name and on his behalf in any and all capacities the
Registration Statements on Form N-1A, and any and all amendments thereto, filed
by The Pierpont Funds, The JPM Institutional Funds or The JPM Advisor Funds
(each a "Trust"), or the Registration Statement(s), and any and all amendments
thereto, filed by any other investor in any registered investment company in
which any of the Trusts invest, with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended, and any and all instruments which such attorneys and agents,
or any of them, deem necessary or advisable to enable each Trust to comply with
such Acts, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all acts that such attorneys and agents, or any of them, shall
do or cause to be done by virtue hereof. Any one of such attorneys and agents
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th
day of February, 1996, in Nassau, Bahamas.

/s/ JOHN R. ELDER
_________________________
John R. Elder

JPM451B

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the Nov. 30, 1995
Annual Report for The JPM Institutional Money Market Fund and is qualified
in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 013
<NAME> THE JPM INSTITUTIONAL MONEY MARKET FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1,003,756,983
<INVESTMENTS-AT-VALUE> 1,003,756,983
<RECEIVABLES> 93,947
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 32,036
<TOTAL-ASSETS> 1,003,882,966
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,137,194
<TOTAL-LIABILITIES> 4,137,194
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 999,411,576
<SHARES-COMMON-STOCK> 999,411,576
<SHARES-COMMON-PRIOR> 584,869,781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 334,196
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 999,745,772
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,864,364
<OTHER-INCOME> 0
<EXPENSES-NET> 1,269,181
<NET-INVESTMENT-INCOME> 36,595,183
<REALIZED-GAINS-CURRENT> 336,813
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 36,931,996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 36,595,183
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,338,446,485
<NUMBER-OF-SHARES-REDEEMED> 3,007,260,903
<SHARES-REINVESTED> 33,356,213
<NET-CHANGE-IN-ASSETS> 414,878,608
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,617)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,243,162
<AVERAGE-NET-ASSETS> 634,467,649
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the August
31, 1995 JPM Institutional Tax Exempt Money Market Fund Annual Report and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 007
<NAME> THE JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 100,418,334
<INVESTMENTS-AT-VALUE> 100,418,334
<RECEIVABLES> 83,247
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 32,233
<TOTAL-ASSETS> 100,533,814
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 391,892
<TOTAL-LIABILITIES> 391,892
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,164,382
<SHARES-COMMON-STOCK> 100,164,716
<SHARES-COMMON-PRIOR> 46,084,794
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (22,460)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,141,922
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,373,322
<OTHER-INCOME> 0
<EXPENSES-NET> 303,579
<NET-INVESTMENT-INCOME> 3,069,743
<REALIZED-GAINS-CURRENT> (21,359)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,048,384
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,069,743
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 302,212,433
<NUMBER-OF-SHARES-REDEEMED> 250,850,852
<SHARES-REINVESTED> 2,718,341
<NET-CHANGE-IN-ASSETS> 54,058,563
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,101)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 334
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 435,814
<AVERAGE-NET-ASSETS> 87,885,045
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> (0.000)
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the Oct. 31, 1995
Annual Report for The JPM Institutional Treasury Money Market Fund and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 001
<NAME> THE JPM INSTITUTIONAL TREASURY MONEY MARKET FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 145,780,547
<INVESTMENTS-AT-VALUE> 145,780,547
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 47,384
<TOTAL-ASSETS> 145,827,931
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 720,222
<TOTAL-LIABILITIES> 720,222
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145,071,925
<SHARES-COMMON-STOCK> 145,071,925
<SHARES-COMMON-PRIOR> 80,148,692
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35,784
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 145,107,709
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,405,117
<OTHER-INCOME> 0
<EXPENSES-NET> 187,771
<NET-INVESTMENT-INCOME> 5,217,346
<REALIZED-GAINS-CURRENT> 38,279
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,255,625
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,217,346
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 438,967,460
<NUMBER-OF-SHARES-REDEEMED> 376,090,767
<SHARES-REINVESTED> 2,046,540
<NET-CHANGE-IN-ASSETS> 64,961,512
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,495)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 93,833,839
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .055
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .055
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the Oct. 31, 1995
Annual Report for The JPM Institutional Short Term Bond Fund and is qualified in
its entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 002
<NAME> THE JPM INSTITUTIONAL SHORT TERM BOND FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 18,784,794
<INVESTMENTS-AT-VALUE> 18,927,251
<RECEIVABLES> 15,767
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29,393
<TOTAL-ASSETS> 18,972,411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56,801
<TOTAL-LIABILITIES> 56,801
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,230,298
<SHARES-COMMON-STOCK> 1,923,840
<SHARES-COMMON-PRIOR> 4,965,521
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (446,429)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 142,457
<NET-ASSETS> 18,915,610
<DIVIDEND-INCOME> 52,321
<INTEREST-INCOME> 3,180,772
<OTHER-INCOME> 0
<EXPENSES-NET> 222,557
<NET-INVESTMENT-INCOME> 3,010,536
<REALIZED-GAINS-CURRENT> 331,910
<APPREC-INCREASE-CURRENT> 917,422
<NET-CHANGE-FROM-OPS> 4,259,868
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,024,230
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,447,762
<NUMBER-OF-SHARES-REDEEMED> 5,796,583
<SHARES-REINVESTED> 307,140
<NET-CHANGE-IN-ASSETS> (28,763,038)
<ACCUMULATED-NII-PRIOR> 2,978
<ACCUMULATED-GAINS-PRIOR> (777,305)
<OVERDISTRIB-NII-PRIOR> 10,716
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 313,939
<AVERAGE-NET-ASSETS> 49,457,080
<PER-SHARE-NAV-BEGIN> 9.60
<PER-SHARE-NII> .58
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> .59
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.83
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This Schedule contains summary financial data extracted from the Oct. 31, 1995
Annual Report for The JPM Institutional Bond Fund and is qualified in its
entirety by reference to such Annual Report.
</LEGEND>
<CIK>0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 003
<NAME> THE JPM INSTITUTIONAL BOND FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 425,700,278
<INVESTMENTS-AT-VALUE> 438,784,743
<RECEIVABLES> 1,222,527
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 30,576
<TOTAL-ASSETS> 440,037,846
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,427,411
<TOTAL-LIABILITIES> 1,427,411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 423,830,946
<SHARES-COMMON-STOCK> 43,963,712
<SHARES-COMMON-PRIOR> 27,417,659
<ACCUMULATED-NII-CURRENT> 432,830
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,262,194
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,084,465
<NET-ASSETS> 438,610,435
<DIVIDEND-INCOME> 97,142
<INTEREST-INCOME> 22,691,163
<OTHER-INCOME> 0
<EXPENSES-NET> 1,507,386
<NET-INVESTMENT-INCOME> 21,280,919
<REALIZED-GAINS-CURRENT> 6,128,348
<APPREC-INCREASE-CURRENT> 18,701,915
<NET-CHANGE-FROM-OPS> 46,111,182
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,287,883
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,689,217
<NUMBER-OF-SHARES-REDEEMED> 5,143,975
<SHARES-REINVESTED> 1,000,811
<NET-CHANGE-IN-ASSETS> 185,436,849
<ACCUMULATED-NII-PRIOR> 1,943
<ACCUMULATED-GAINS-PRIOR> (4,402,509)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,653,785
<AVERAGE-NET-ASSETS> 322,023,901
<PER-SHARE-NAV-BEGIN> 9.23
<PER-SHARE-NII> .63
<PER-SHARE-GAIN-APPREC> .75
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .63
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.98
<EXPENSE-RATIO> .47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE AUGUST 31, 1995
ANNUAL REPORT FOR THE JPM INSTITUTIONAL TAX EXEMPT BOND FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER>006
<NAME> THE JPM INSTITUTIONAL TAX EXEMPT BOND FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 58,254,745
<INVESTMENTS-AT-VALUE> 59,966,936
<RECEIVABLES> 27,113
<ASSETS-OTHER> 27,874
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60,021,923
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 155,196
<TOTAL-LIABILITIES> 155,196
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,113,145
<SHARES-COMMON-STOCK> 5,981,643
<SHARES-COMMON-PRIOR> 1,682,747
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 41,391
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,712,191
<NET-ASSETS> 59,866,727
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,156,141
<OTHER-INCOME> 0
<EXPENSES-NET> 191,730
<NET-INVESTMENT-INCOME> 1,964,411
<REALIZED-GAINS-CURRENT> 84,801
<APPREC-INCREASE-CURRENT> 1,865,868
<NET-CHANGE-FROM-OPS> 3,915,080
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,964,411
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,046,378
<NUMBER-OF-SHARES-REDEEMED> 1,893,023
<SHARES-REINVESTED> 145,541
<NET-CHANGE-IN-ASSETS> 43,452,118
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (64,769)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 274,736
<AVERAGE-NET-ASSETS> 38,619,677
<PER-SHARE-NAV-BEGIN> 9.75
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> .49
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.01
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE NOV. 30, 1995
SEMIANNUAL REPORT FOR JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH SEMIANNUAL REPORT
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 011
<NAME> THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 185,593,680
<INVESTMENTS-AT-VALUE> 206,390,889
<RECEIVABLES> 7,050
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 37,504
<TOTAL-ASSETS> 206,435,443
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47,706
<TOTAL-LIABILITIES> 47,706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 173,092,306
<SHARES-COMMON-STOCK> 15,684,149
<SHARES-COMMON-PRIOR> 14,250,601
<ACCUMULATED-NII-CURRENT> 1,785,527
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,712,695
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,797,209
<NET-ASSETS> 206,387,737
<DIVIDEND-INCOME> 2,011,422
<INTEREST-INCOME> 327,983
<OTHER-INCOME> 0
<EXPENSES-NET> 553,883
<NET-INVESTMENT-INCOME> 1,785,522
<REALIZED-GAINS-CURRENT> 10,917,877
<APPREC-INCREASE-CURRENT> 8,090,857
<NET-CHANGE-FROM-OPS> 20,794,256
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,132,500
<DISTRIBUTIONS-OF-GAINS> 3,625,361
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,092,127
<NUMBER-OF-SHARES-REDEEMED> 2,990,740
<SHARES-REINVESTED> 332,161
<NET-CHANGE-IN-ASSETS> 33,890,516
<ACCUMULATED-NII-PRIOR> 1,132,505
<ACCUMULATED-GAINS-PRIOR> 3,420,179
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 561,488
<AVERAGE-NET-ASSETS> 193,552,801
<PER-SHARE-NAV-BEGIN> 12.10
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 1.26
<PER-SHARE-DIVIDEND> 0.07
<PER-SHARE-DISTRIBUTIONS> 0.24
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.16
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FIANACIAL DATA EXTRACTED FROM THE NOV. 30, 1995
SEMIANNUAL REPORT FOR THE JPM INSTITUTIONAL U.S. SMALL COMPANY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH SEMIANNUAL REPORT.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 010
<NAME> THE JPM INSTITUTIONAL U.S. SMALL COMPANY FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 205,048,208
<INVESTMENTS-AT-VALUE> 223,611,353
<RECEIVABLES> 93,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29,112
<TOTAL-ASSETS> 223,733,465
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,211
<TOTAL-LIABILITIES> 66,211
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 194,036,573
<SHARES-COMMON-STOCK> 17,826,626
<SHARES-COMMON-PRIOR> 13,375,086
<ACCUMULATED-NII-CURRENT> 1,168,618
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,898,918
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,563,145
<NET-ASSETS> 223,667,254
<DIVIDEND-INCOME> 1,494,989
<INTEREST-INCOME> 403,158
<OTHER-INCOME> 0
<EXPENSES-NET> 729,584
<NET-INVESTMENT-INCOME> 1,168,563
<REALIZED-GAINS-CURRENT> 9,980,649
<APPREC-INCREASE-CURRENT> 15,171,194
<NET-CHANGE-FROM-OPS> 26,320,406
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 575,331
<DISTRIBUTIONS-OF-GAINS> 4,488,709
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,949,878
<NUMBER-OF-SHARES-REDEEMED> 879,351
<SHARES-REINVESTED> 381,013
<NET-CHANGE-IN-ASSETS> 74,388,259
<ACCUMULATED-NII-PRIOR> 575,386
<ACCUMULATED-GAINS-PRIOR> 4,406,978
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 734,516
<AVERAGE-NET-ASSETS> 190,604,187
<PER-SHARE-NAV-BEGIN> 11.16
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0.30
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.55
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Data extracted from the Oct. 31, 1995
Annual Report for The JPM Institutional International Equity Fund and is
qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 004
<NAME> THE JPM INSTITUTIONAL INTERNATIONAL EQUITY FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 473,141,873
<INVESTMENTS-AT-VALUE> 466,666,552
<RECEIVABLES> 951,356
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 35,074
<TOTAL-ASSETS> 467,652,982
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 141,807
<TOTAL-LIABILITIES> 141,807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 461,392,950
<SHARES-COMMON-STOCK> 44,764,901
<SHARES-COMMON-PRIOR> 19,681,492
<ACCUMULATED-NII-CURRENT> 10,103,133
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,490,413
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (6,475,321)
<NET-ASSETS> 467,511,175
<DIVIDEND-INCOME> 6,139,947
<INTEREST-INCOME> 1,144,100
<OTHER-INCOME> 0
<EXPENSES-NET> 3,117,442
<NET-INVESTMENT-INCOME> 4,166,605
<REALIZED-GAINS-CURRENT> 8,133,955
<APPREC-INCREASE-CURRENT> (13,848,328)
<NET-CHANGE-FROM-OPS> (1,547,768)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,540,846
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,753,019
<NUMBER-OF-SHARES-REDEEMED> 5,897,843
<SHARES-REINVESTED> 228,233
<NET-CHANGE-IN-ASSETS> 254,392,613
<ACCUMULATED-NII-PRIOR> 1,207,925
<ACCUMULATED-GAINS-PRIOR> 3,755,129
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,180,672
<AVERAGE-NET-ASSETS> 337,131,000
<PER-SHARE-NAV-BEGIN> 10.83
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> (.33)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .12
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> .92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA DERIVED FROM THE DECEMBER 31, 1995
SEMIANNUAL REPORT FOR THE JPM INSTITUTIONAL DIVERSIFIED FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH SEMIANNUAL REPORT.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 009
<NAME>THE JPM INSTITUTIONAL DIVERSIFIED FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 130,782,372
<INVESTMENTS-AT-VALUE> 147,524,320
<RECEIVABLES> 403,253
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 27,139
<TOTAL-ASSETS> 147,954,712
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 921,496
<TOTAL-LIABILITIES> 921,496
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 127,120,711
<SHARES-COMMON-STOCK> 12,878,397
<SHARES-COMMON-PRIOR> 14,642,108
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 543,263
<ACCUMULATED-NET-GAINS> 3,713,820
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,741,948
<NET-ASSETS> 147,033,216
<DIVIDEND-INCOME> 1,124,542
<INTEREST-INCOME> 2,150,734
<OTHER-INCOME> 0
<EXPENSES-NET> 537,418
<NET-INVESTMENT-INCOME> 2,737,858
<REALIZED-GAINS-CURRENT> 9,052,569
<APPREC-INCREASE-CURRENT> 5,656,913
<NET-CHANGE-FROM-OPS> 17,447,340
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,652,711
<DISTRIBUTIONS-OF-GAINS> 8,398,968
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,304,413
<NUMBER-OF-SHARES-REDEEMED> 5,292,571
<SHARES-REINVESTED> 1,224,447
<NET-CHANGE-IN-ASSETS> (17,821,635)
<ACCUMULATED-NII-PRIOR> 2,371,590
<ACCUMULATED-GAINS-PRIOR> 3,060,219
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 658,303
<AVERAGE-NET-ASSETS> 164,011,169
<PER-SHARE-NAV-BEGIN> 11.26
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> 0.60
<PER-SHARE-DIVIDEND> 0.42
<PER-SHARE-DISTRIBUTIONS> 0.64
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.42
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE NOV. 31, 1995
ANNUAL REPORT FOR THE JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 005
<NAME> THE JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 185,698,314
<RECEIVABLES> 450,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 31,867
<TOTAL-ASSETS> 186,180,181
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 157,562
<TOTAL-LIABILITIES> 157,562
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209,055,570
<SHARES-COMMON-STOCK> 19,161,873
<SHARES-COMMON-PRIOR> 11,761,789
<ACCUMULATED-NII-CURRENT> 1,136,295
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,214,679)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (15,954,567)
<NET-ASSETS> 186,022,619
<DIVIDEND-INCOME> 3,123,164
<INTEREST-INCOME> 660,992
<OTHER-INCOME> 0
<EXPENSES-NET> 2,262,362
<NET-INVESTMENT-INCOME> 1,521,794
<REALIZED-GAINS-CURRENT> (8,856,845)
<APPREC-INCREASE-CURRENT> (24,707,764)
<NET-CHANGE-FROM-OPS> (32,042,815)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 646,000
<DISTRIBUTIONS-OF-GAINS> 1,584,864
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,620,349
<NUMBER-OF-SHARES-REDEEMED> 4,409,531
<SHARES-REINVESTED> 189,266
<NET-CHANGE-IN-ASSETS> 39,355,995
<ACCUMULATED-NII-PRIOR> 444,354
<ACCUMULATED-GAINS-PRIOR> 1,584,921
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,289,337
<AVERAGE-NET-ASSETS> 158,762,034
<PER-SHARE-NAV-BEGIN> 12.47
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> (2.66)
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> .13
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.71
<EXPENSE-RATIO> 1.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE SEPTEMBER 30,
1995 SEMIANNUAL REPORT FOR THE JPM INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH SEMIANNUAL REPORT.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 008
<NAME> THE JPM INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 38,912,914
<INVESTMENTS-AT-VALUE> 39,859,720
<RECEIVABLES> 35,690
<ASSETS-OTHER> 8,376
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,903,786
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82,483
<TOTAL-LIABILITIES> 82,483
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,783,943
<SHARES-COMMON-STOCK> 3,840,141
<SHARES-COMMON-PRIOR> 2,039,700
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90,554
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 946,806
<NET-ASSETS> 39,821,303
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 784,865
<OTHER-INCOME> 0
<EXPENSES-NET> 74,307
<NET-INVESTMENT-INCOME> 710,558
<REALIZED-GAINS-CURRENT> 113,605
<APPREC-INCREASE-CURRENT> 564,430
<NET-CHANGE-FROM-OPS> 1,388,593
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 710,558
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,817,178
<NUMBER-OF-SHARES-REDEEMED> 75,194
<SHARES-REINVESTED> 58,457
<NET-CHANGE-IN-ASSETS> 19,200,363
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (25,257)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 106,478
<AVERAGE-NET-ASSETS> 29,641,509
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> .26
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.37
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This Schedule contains Summary Financial Information extracted from the JPM
Institutional International Bond Fund Annual Report dated September 30, 1995 and
is qualified in its entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000894088
<NAME> THE JPM INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 014
<NAME> THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 3,827,709
<INVESTMENTS-AT-VALUE> 4,280,811
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 58,837
<TOTAL-ASSETS> 4,339,648
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106,648
<TOTAL-LIABILITIES> 106,648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,742,814
<SHARES-COMMON-STOCK> 380,544
<SHARES-COMMON-PRIOR> 100
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37,084
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 453,102
<NET-ASSETS> 4,233,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 181,305
<OTHER-INCOME> 0
<EXPENSES-NET> 16,960
<NET-INVESTMENT-INCOME> 164,345
<REALIZED-GAINS-CURRENT> (28,335)
<APPREC-INCREASE-CURRENT> 453,102
<NET-CHANGE-FROM-OPS> 589,112
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 35,969
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,648,390
<NUMBER-OF-SHARES-REDEEMED> 1,270,878
<SHARES-REINVESTED> 3,022
<NET-CHANGE-IN-ASSETS> 4,232,900
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 81,885
<AVERAGE-NET-ASSETS> 3,390,843
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0.78
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.15
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.12
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>