JP MORGAN FUNDS, 485BPOS, 2000-09-29

JP MORGAN FUNDS
485BPOS, 2000-09-29

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<PAGE>

As filed with the Securities and Exchange Commission on September 28, 2000
Registration Nos. 033-54632 and 811-07340

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. 68

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 69

J.P. MORGAN FUNDS
(formerly The JPM Pierpont Funds)
(Exact Name of Registrant as Specified in Charter)

60 State Street, Suite 1300, Boston, Massachusetts 02109
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code:
(617) 557-0700

Margaret W. Chambers, c/o Funds Distributor, Inc.
60 State Street, Suite 1300, Boston, Massachusetts 02109
(Name and Address of Agent for Service)

Copy to: John E. Baumgardner, Jr., 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.

<PAGE>

EXPLANATORY NOTE

This post-effective amendment No. 68 to the registration statement of J.P.
Morgan Funds (the "Registrant") on Form N-1A is being filed to update the
Registrant's disclosure in the Prospectus and Statements of Additional
Information relating to J.P. Morgan U.S. Equity Fund, J.P. Morgan Disciplined
Equity Fund, J.P. Morgan U.S. Small Company Fund, J.P. Morgan Small Company
Opportunities Fund and Tax Aware US Equity Fund with financial information for
the fiscal year ended May 31, 2000 and to update other information in the
registration statement.

<PAGE>

--------------------------------------------------------------------------------
October 1, 2000 | Prospectus
--------------------------------------------------------------------------------

J.P. MORGAN U.S. EQUITY FUNDS

Disciplined Equity Fund

U.S. Equity Fund

U.S. Small Company Fund

U.S. Small Company Opportunities Fund

Tax Aware U.S. Equity Fund

----------------------------------------
Seeking to outperform U.S. stock markets
over the long term through a disciplined
management approach

This prospectus contains essential information for anyone investing in these
funds. Please read it carefully and keep it for reference.

As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them or guarantees that the information in this prospectus is correct or
adequate. It is a criminal offense for anyone to state or suggest otherwise.

Distributed by Funds Distributor, Inc. JPMorgan

<PAGE>

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

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

J.P. MORGAN U.S. EQUITY FUNDS
J.P. Morgan Disciplined Equity Fund .........................................1
J.P. Morgan U.S. Equity Fund ................................................3
J.P. Morgan U.S. Small Company Fund .........................................5
J.P. Morgan U.S. Small Company Opportunities Fund ...........................7
J.P. Morgan Tax Aware U.S. Equity Fund ......................................9

11 | Principles and techniques common to the funds in this prospectus

U.S. EQUITY MANAGEMENT APPROACH
J.P. Morgan ................................................................11
J.P. Morgan U.S. equity funds ..............................................11
The spectrum of U.S. equity funds ..........................................11
Who may want to invest .....................................................11
U.S. equity investment process .............................................12
Tax aware investing at J.P. Morgan .........................................12

13 | Investing in the J.P. Morgan U.S. Equity Funds

YOUR INVESTMENT
Investing through a financial professional .................................13
Investing through an employer-sponsored retirement plan ....................13
Investing through an IRA or rollover IRA ...................................13
Investing directly .........................................................13
Opening your account .......................................................13
Adding to your account .....................................................13
Selling shares .............................................................14
Account and transaction policies ...........................................14
Dividends and distributions ................................................15
Tax considerations .........................................................15

16 | More about risk and the funds' business operations

FUND DETAILS
Business structure .........................................................16
Management and administration ..............................................16
Performance of private accounts ............................................17
Risk and reward elements ...................................................19
Financial highlights .......................................................21

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

<PAGE>

J.P. MORGAN DISCIPLINED EQUITY FUND
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 19-20.

[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide a consistently high total return from a broadly
diversified portfolio of equity securities with risk characteristics similar to
the Standard & Poor's 500 Stock Index (S&P 500). This goal can be changed
without shareholder approval.

[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in large- and medium-capitalization U.S. companies.
Industry by industry, the fund's weightings are similar to those of the S&P 500.
The fund does not look to overweight or underweight industries.

Within each industry, the fund modestly overweights stocks that are ranked as
undervalued or fairly valued while modestly underweighting or not holding stocks
that appear overvalued. (The process used to rank stocks according to their
relative valuations is described on page 12.) Therefore, the fund tends to own a
larger number of stocks within the S&P 500 than the U.S. Equity Fund or the Tax
Aware U.S. Equity Fund.

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

By owning a large number of stocks within the S&P 500, with an emphasis on those
that appear undervalued or fairly valued, and by tracking the industry
weightings of that index, the fund seeks returns that modestly exceed those of
the S&P 500 over the long term with virtually the same level of volatility.

<PAGE>

TICKER SYMBOL: JPEQX
--------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN DISCIPLINED EQUITY FUND)

PORTFOLIO MANAGEMENT
The fund's assets are managed by
J.P. Morgan, which currently manages approximately $369 billion, including more
than $27 billion using similar strategies as the fund.

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

--------------------------------------------------------------------------------
Before you invest

Investors considering the fund should understand that:

o There is no assurance that the fund will meet its investment goal.

o The fund does not represent a complete investment program.

1 | J.P. MORGAN DISCIPLINED EQUITY FUND

<PAGE>

--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Disciplined Equity Fund.

The bar chart indicates some of the risks by showing the performance of the
fund's shares from year to year for each of the last two calendar years.

The table indicates some of the risks by showing how the fund's average annual
returns from 1/31/97 through 12/31/99 and, prior to that, the performance of a
related fund, compare to those of the S&P 500 Index. This is a widely
recognized, unmanaged index of U.S. stocks used as a measure of overall U.S.
stock market performance.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

Total return (%) Shows changes in returns by calendar year(1,3)
--------------------------------------------------------------------------
1998 1999
40%
31.98
30%

20%
18.02
10%

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

[ ] J.P. Morgan Disciplined Equity Fund

The fund's year-to-date total return as of 6/30/00 was -1.90%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 22.83% (for the quarter ended 12/31/98); and the lowest quarterly
return was -9.96% (for the quarter ended 9/30/98).

<TABLE>
<CAPTION>
Average annual total return(%) Shows performance over time, for periods ended December 31, 1999
---------------------------------------------------------------------------------------------------
Past 1 yr. Life of fund(2)
<S> <C> <C>
J.P. Morgan Disciplined Equity Fund (after expenses) 18.02 25.94
---------------------------------------------------------------------------------------------------
S&P 500 Index (no expenses) 21.04 25.81
---------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund are shown at right. The fund has no sales, redemption,
exchange, or account fees, although some institutions may charge you a fee for
shares you buy through them. The annual fund expenses are deducted from fund
assets prior to performance calculations.

Annual fund operating expenses(4) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.35
Marketing (12b-1) fees none
Other expenses 0.43
--------------------------------------------------------------------------------
Total operating expenses 0.78
--------------------------------------------------------------------------------

Expense example
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
10/1/00 through 9/30/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.

--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 80 249 433 966
--------------------------------------------------------------------------------

(1) The fund commenced operations on 12/31/97.

(2) Life of the fund performance is calculated commencing 1/31/97 as follows:
all performance data from 12/31/97 is that of the fund, and for the period
1/31/97 through 12/31/97, returns reflect performance of J.P. Morgan
Institutional Disciplined Equity Fund (a separate feeder fund investing in
the same master portfolio). These returns reflect lower operating expenses
thanthose of the fund. Therefore, the fund's returns would have been lower
had it existed during the same period.

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

(4) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.

J.P. MORGAN DISCIPLINED EQUITY FUND | 2

<PAGE>

J.P. MORGAN U.S. EQUITY FUND
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 19-20.

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

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

Within each industry, the fund focuses on those stocks that are ranked as most
undervalued according to the investment process described on page 12. The fund
generally considers selling stocks that appear overvalued.

By emphasizing undervalued stocks, the fund seeks to produce returns that exceed
those of the S&P 500. At the same time, by controlling the industry weightings
of the fund so they can differ only moderately from the industry weightings of
the S&P 500, the fund seeks to limit its volatility to that of the overall
market, as represented by this index.

An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: PPEQX
--------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN U.S. EQUITY FUND)

PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $16 billion using similar
strategies as the fund.

The portfolio management team is comprised of 23 research analysts, who select
stocks in their respective sectors using the investment process described on
page 12. Henry D. Cavanna, managing director, and Bradford L. Frishberg, vice
president, oversee the portfolio and manage its cash flows. Mr. Cavanna joined
the team in February of 1998, and has been at J.P. Morgan since 1971. He served
as manager of U.S. equity portfolios prior to managing the fund. Mr. Frishberg
has been at J.P. Morgan since 1996 and is a portfolio manager in the equity and
balanced groups. Prior to joining J.P. Morgan, he managed portfolios for Aetna
Investment Management in Hong Kong.

--------------------------------------------------------------------------------
Before you invest

Investors considering the fund should understand that:

o There is no assurance that the fund will meet its investment goal.

o The fund does not represent a complete investment program.

3 | J.P. MORGAN U.S. EQUITY FUND

<PAGE>

The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the fund's last 10 calendar
years.

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

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

<TABLE>
<CAPTION>
Year-by-year total return(%) Shows changes in returns by calendar year(1)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

40%
34.12 32.48
30%
21.06 28.41 24.45
20%
11.02 14.69
10%
1.38 8.73
0%
---------------------------------------------------------------------------------------------------------------------------------
(0.61)
(10%)
</TABLE>

[ ] J.P. Morgan U.S. Equity Fund

The fund's year-to-date total return as of 6/30/00 was -1.02%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 21.33% (for the quarter ended 12/31/98); and the lowest quarterly
return was -11.83% (for the quarter ended 9/30/90).

<TABLE>
<CAPTION>
Average annual total return(%) Shows performance over time, for periods ended December 31, 1999(1)
------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Past 10 yrs.
<S> <C> <C> <C>
J.P. Morgan U.S. Equity Fund (after expenses) 14.69 24.07 16.97
------------------------------------------------------------------------------------------------------
S&P 500 Index (no expenses) 21.04 28.55 18.21
------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Annual fund operating expenses(2) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.40
Marketing (12b-1) fees none
Other expenses 0.38
--------------------------------------------------------------------------------
Total annual fund
operating expenses 0.78
--------------------------------------------------------------------------------

Expense example
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, total operating expenses
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.

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

(2) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for the
past fiscal year, expressed as a percentage of the fund's average net
assets.

J.P. MORGAN U.S. EQUITY FUND | 4
<PAGE>

J.P. MORGAN U.S. SMALL COMPANY FUND
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 19-20.

[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high total return from a portfolio of small
company stocks. This goal can be changed without shareholder approval.

[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in small and medium sized U.S. companies whose market
capitalizations are greater than $100 million and less than $2 billion. Industry
by industry, the fund's weightings are similar to those of the Russell 2000
Index. The fund can moderately underweight or overweight industries when it
believes it will benefit performance.

Within each industry, the fund focuses on those stocks that are ranked as most
undervalued according to the process described on page 12. The fund generally
considers selling stocks that appear overvalued or have grown into large-cap
stocks.

Small-cap stocks have historically offered higher long-term growth than
large-cap stocks, and have also involved higher risks. The fund's small-cap
emphasis means it is likely to be more sensitive to economic news and is likely
to fall further in value during broad market downturns. The fund pursues returns
that exceed those of the Russell 2000 Index while seeking to limit its
volatility relative to this index.

<PAGE>

TICKER SYMBOL: PPCAX
--------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN U.S. SMALL COMPANY FUND)

PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $3.2 billion using similar
strategies as the fund.

The portfolio management team is led by Marian U. Pardo, managing director,
Alexandra F. Wells, vice president, and Daniel J. Anniello, vice president. Ms.
Pardo has been at J.P. Morgan since 1968, except for five months in 1998 when
she was president of a small investment management firm. Prior to managing the
fund, Ms. Pardo managed small and large cap equity portfolios, equity and
convertible funds, and several institutional portfolios. Ms. Wells joined the
team in March 1998 and has been with J.P. Morgan since 1992. Prior to managing
the fund, Ms. Wells managed large cap equity portfolios, and prior to that
served as an equity research analyst. Mr. Anniello has been a small company
portfolio manager since 2000 and employed by J.P. Morgan since 1997. Prior to
joining J.P. Morgan, Mr. Anniello worked at Warburg Pincus Asset Management and
the U.S. Securities and Exchange Commission.

--------------------------------------------------------------------------------
Before you invest

Investors considering the fund should understand that:

o There is no assurance that the fund will meet its investment goal.

o The fund does not represent a complete investment program.

5 | J.P. MORGAN U.S. SMALL COMPANY FUND

<PAGE>

The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the fund's last 10 calendar
years.

The table indicates some of the risks by showing how the fund's average annual
returns for the past one, five and ten years compare to those of the Russell
2000 Index. This is a widely recognized, unmanaged index of small cap U.S.
stocks used as a measure of overall U.S. small company stock performance.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

<TABLE>
<CAPTION>
Year-by-year total return(%) Shows changes in returns by calendar year(1,2)
---------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60%
59.59 44.00
31.86
30%
18.98 20.75 22.75
8.58
0%
---------------------------------------------------------------------------------------------------
(5.89) (5.49)
(24.34)
(30%)
</TABLE>

[ ] J.P. Morgan U.S. Small Company Fund

The fund's year-to-date total return as of 6/30/00 was 0.48%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 34.68% (for the quarter ended 12/31/99); and the lowest quarterly
return was -30.03% (for the quarter ended 9/30/90).

<TABLE>
<CAPTION>
Average annual total return(%) Shows performance over time, for periods ended December 31, 1999(1)
-----------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Past 10 yrs.
<S> <C> <C> <C>
J.P. Morgan U.S. Small Company Fund (after expenses) 44.00 21.61 14.59
-----------------------------------------------------------------------------------------------------------
Russell 2000 Index (no expenses) 21.50 18.92 15.39
-----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.60
Marketing (12b-1) fees none
Other expenses 0.40
--------------------------------------------------------------------------------
Total annual fund
operating expenses 1.00
--------------------------------------------------------------------------------

Expense example
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, total operating expenses
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.

--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 102 318 552 1,225
--------------------------------------------------------------------------------

(1) The fund commenced operations on 7/19/93. For the period 1/1/89 through
7/31/93 returns reflect performance of The Pierpont Capital Appreciation
Fund, the predecessor of the fund.

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

(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for the
past fiscal year, expressed as a percentage of the fund's average net
assets.

J.P. MORGAN U.S. SMALL COMPANY FUND | 6

<PAGE>

J.P. MORGAN U.S. SMALL COMPANY OPPORTUNITIES FUND
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 19-20.

[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide long-term growth from a portfolio of small company
growth stocks. This goal can be changed without shareholder approval.

[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in stocks of small U.S. companies whose market
capitalization is greater than $150 million and less than $1.25 billion when
purchased. While the fund holds stocks in many industries to reduce the impact
of poor performance in any one sector, it tends to emphasize industries with
higher growth potential and does not track the sector weightings of the overall
small company stock market.

In searching for companies, the fund combines the approach described on page 12
with a growth-oriented approach that focuses on each company's business
strategies and its competitive environment. The fund seeks to buy stocks when
they are undervalued or fairly valued and are poised for long-term growth.
Stocks become candidates for sale when they appear overvalued or when the
company is no longer a small-cap company, but the fund may also continue to hold
them if it believes further substantial growth is possible.

Small-cap stocks have historically offered higher long-term growth than medium-
or large-cap stocks, and have also involved higher risks. The fund's small-cap
emphasis means it is likely to be more sensitive to economic news and is likely
to fall further in value during broad market downturns. Because the fund seeks
to outperform the Russell 2000 Growth Index while not tracking its industry
weightings, investors should expect higher volatility compared to this index or
to more conservatively managed small-cap funds.

<PAGE>

TICKER SYMBOL: JPSOX
--------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN U.S. SMALL COMPANY
OPPORTUNITIES FUND)

PORTFOLIO MANAGEMENT
The fund's assets are managed by
J.P. Morgan, which currently manages approximately $369 billion, including more
than $1.2 billion using similar strategies as the fund.

The portfolio management team is led by Marian U. Pardo, managing director,
Saira Durcanin, vice president and CFA, and Carolyn Jones, associate. Ms. Pardo
has been at J.P. Morgan since 1968, except for five months in 1998 when she was
president of a small investment management firm. Prior to managing the fund, Ms.
Pardo managed small and large cap equity portfolios, equity and convertible
funds, and several institutional portfolios. Ms. Durcanin has been with J.P.
Morgan since July 1995 as a small company equity analyst and portfolio manager
after graduating from the University of Wisconsin with an M.S. in finance. Ms.
Jones has been with J.P. Morgan since July 1998. Prior to managing this fund,
Ms. Jones served as a portfolio manager in J.P. Morgan's private banking group
and as a product specialist at Merrill Lynch Asset Management.

--------------------------------------------------------------------------------
Before you invest

Investors considering the fund should understand that:

o There is no assurance that the fund will meet its investment goal.

o The fund does not represent a complete investment program.

7 | J.P. MORGAN U.S. SMALL COMPANY OPPORTUNITIES FUND
<PAGE>

The bar chart indicates some of the risks by showing the performance of the
fund's shares from year to year for each of the last two calendar years.

The table indicates some of the risks by showing how the fund's average annual
returns for the past year and for the life of the fund compare to those of the
Russell 2000 Growth Index. This is a widely recognized, unmanaged index of small
cap U.S. growth stocks used as a measure of overall U.S. small cap growth stock
performance.

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

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

80%
61.63
60%

40%

20%
5.21
0%
--------------------------------------------------------------------------------

[ ] J.P. Morgan U.S. Small Company Opportunities Fund

The fund's year-to-date total return as of 6/30/00 was 1.43%. For the period
covered by this total return chart, the fund's highest quarterly return was
42.58% (for the quarter ended 12/31/99); and the lowest quarterly return was
-20.19% (for the quarter ended 9/30/98).

<TABLE>
<CAPTION>
Average annual total return(%) Shows performance over time, for periods ended December 31, 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Past 1 yr. Life of fund(1)
J.P. Morgan U.S. Small Company Opportunities Fund (after expenses) 61.63 30.85
---------------------------------------------------------------------------------------------------------------------
Russell 2000 Growth Index (no expenses) 43.09 19.31
---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.60
Marketing (12b-1) fees none
Other expenses 0.39
--------------------------------------------------------------------------------
Total annual fund
operating expenses 0.99
--------------------------------------------------------------------------------

Expense example
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, total operating expenses
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.

--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 101 315 547 1,213
--------------------------------------------------------------------------------
(1) The fund commenced operations on 6/16/97 and returns reflect performance of
the fund from 6/30/97.

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

J.P. MORGAN U.S. SMALL COMPANY OPPORTUNITIES FUND | 8

<PAGE>

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

[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 19-20.

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

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

To this investment approach the fund adds the element of tax aware investing.
The fund's tax aware investment strategies are described on page 12.

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

<PAGE>

TICKER SYMBOL: JPTAX
--------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN TAX AWARE U.S. EQUITY FUND: SELECT SHARES)

PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $17 million using similar
strategies as the fund.

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

--------------------------------------------------------------------------------
Before you invest

Investors considering the fund should understand that:

o There is no assurance that the fund will meet its investment goal.

o The fund does not represent a complete investment program.

9 | J.P. MORGAN TAX AWARE U.S. EQUITY FUND

<PAGE>

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

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

The fund's past performance does not necessarily indicate how the fund will
perform in the future.

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

40%
30.32 31.18
20%
18.31
0%
--------------------------------------------------------------------------------

[ ] J.P. Morgan Tax Aware U.S. Equity Fund

The fund's year-to-date total return as of 4/30/00 was 0.55%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 21.64% (for the quarter ended 12/31/98) and the lowest quarterly
return was -8.86% (for the quarter ended 9/30/98).

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

<PAGE>

--------------------------------------------------------------------------------
Investor Expenses
The expenses of the fund are shown at right. The fund has no sales, redemption,
exchange, or account fees, although some institutions may charge you a fee for
shares you buy through them.

Shareholder transaction expenses(3)
Annual expenses (% of fund assets)
--------------------------------------------------------------------------------
Management fees 0.45
Distribution (12b-1) fees none
Other expenses 0.45
--------------------------------------------------------------------------------
Total operating expenses 0.90
Fee waiver and expense
reimbursement(3) 0.05
--------------------------------------------------------------------------------
Net expenses(3) 0.85
--------------------------------------------------------------------------------

Expense example(3)
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/00 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.

--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 87 282 494 1,103
--------------------------------------------------------------------------------

(1) The fund commenced operations on 12/18/96, and returns reflect performance
of the fund from 12/31/96.

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

(3) Reflects an agreement dated 3/1/00 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent total
operating expenses (excluding interest, taxes and extraordinary expenses)
exceed 0.85% of the fund's average daily net assets through 2/28/01.

J.P. MORGAN TAX AWARE U.S. EQUITY FUND | 10

<PAGE>

U.S. EQUITY MANAGEMENT APPROACH
--------------------------------------------------------------------------------
J.P. MORGAN
Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments, and
individuals. Today, J.P. Morgan employs approximately 420 analysts and portfolio
managers around the world and has approximately $369 billion in assets under
management, including assets managed by the funds' advisor, J.P. Morgan
Investment Management Inc.

J.P. MORGAN U.S. EQUITY FUNDS
These funds invest primarily in U.S. stocks either directly or through another
fund. As a shareholder, you should anticipate risks and rewards beyond those of
a typical bond fund or a typical balanced fund.

THE SPECTRUM OF U.S. EQUITY FUNDS
The funds described in this prospectus pursue a range of goals and offer varying
degrees of risk and potential reward. Differences between these funds include:

o how much emphasis they give to the most undervalued stocks

o how closely they follow the industry weightings of their benchmarks

o how many securities they typically maintain in their portfolios

o the size or market capitalization of the companies in which they invest

o whether they focus on before-tax or after-tax returns

The table below shows degrees of the relative risk and return that these funds
potentially offer. These and other distinguishing features of each U.S. equity
fund are described on the following pages.

Potential risk and return
The positions of the funds in this graph reflect long-term performance goals
only and are relative, not absolute.

Return
--------------------------------------------------------------------------------
U.S. Small Company Opportunities Fund o

U.S. Small Company Fund o

o Tax Aware U.S. Equity Fund
U.S. Equity Fund

o Disciplined Equity Fund
--------------------------------------------------------------------------------
Risk

--------------------------------------------------------------------------------
Who May Want To Invest

The funds are designed for investors who:

o are pursuing a long-term goal such as retirement

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

o want funds that seek to outperform the markets in which they each invest over
the long term

o with regard to the Tax Aware Fund, are individuals that could benefit from a
strategy that pursues returns from an after-tax perspective

The funds are not designed for investors who:

o want funds that pursue market trends or focus only on particular industries or
sectors

o require regular income or stability of principal

o are pursuing a short-term goal or investing emergency reserves

o with regard to the Tax Aware Fund, are investing through a tax-deferred
account such as an IRA.

11 | U.S. EQUITY MANAGEMENT APPROACH
<PAGE>
[GRAPHIC OMITTED]
J.P. Morgan analysts develop proprietary
fundamental research

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

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

<PAGE>

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

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

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

Research J.P. Morgan takes an in-depth look at company prospects over a
relatively long period -- often as much as five years -- rather than focusing on
near-term expectations. This approach is designed to provide insight into a
company's real growth potential. J.P. Morgan's in-house research is developed by
an extensive worldwide network of over 125 career equity analysts. The team of
analysts dedicated to U.S. equities includes more than 20 members, with an
average of over ten years of experience.

Valuation The research findings allow J.P. Morgan to rank the companies in each
industry group according to their relative value. The greater a company's
estimated worth compared to the current market price of its stock, the more
undervalued the company. The valuation rankings are produced with the help of a
variety of models that quantify the research team's findings.

Stock selection Each fund buys and sells stocks according to its own policies,
using the research and valuation rankings as a basis. In general, each
management team buys stocks that are identified as undervalued and considers
selling them when they appear overvalued. Along with attractive valuation, the
funds' managers often consider a number of other criteria:

o catalysts that could trigger a rise in a stock's price

o high potential reward compared to potential risk

o temporary mispricings caused by market overreactions.

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

The Tax Aware U.S. Equity Fund generally intends to pay redemption proceeds in
cash; however it reserves the right at its sole discretion to pay redemptions
over $250,000 in-kind as a portfolio of representative stocks rather than cash.
An in-kind redemption payment can shield the fund -- and other shareholders --
from tax liabilities that might otherwise be incurred. However, the stocks
received will continue to fluctuate in value after redemption and will be
subject to brokerage or other transaction costs when liquidated.

U.S. EQUITY MANAGEMENT APPROACH | 12

<PAGE>

YOUR INVESTMENT
--------------------------------------------------------------------------------
For your convenience, the J.P. Morgan Funds offer several ways to start and add
to fund investments.

INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions, and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.

INVESTING THROUGH AN EMPLOYER-SPONSORED RETIREMENT PLAN
Your fund investments are handled through your plan. Refer to your plan
materials or contact your benefits office for information on buying, selling, or
exchanging fund shares.

INVESTING THROUGH AN IRA OR ROLLOVER IRA
Please contact a J.P. Morgan Retirement Services Specialist at 1-888-576-4472
for information on J.P. Morgan's comprehensive IRA services, including lower
minimum investments.

INVESTING DIRECTLY
Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:

o Choose a fund (or funds) and determine the amount you are investing. The
minimum amount for initial investments in a fund is $2,500 and for additional
investments $500, although these minimums may be less for some investors. For
more information on minimum investments, call 1-800-521-5411.

o Complete the application, indicating how much of your investment you want to
allocate to which fund(s). Please apply now for any account privileges you may
want to use in the future, in order to avoid the delays associated with adding
them later on.

o Mail in your application, making your initial investment as shown on the
right.

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

<PAGE>

OPENING YOUR ACCOUNT
By wire
o Mail your completed application to the Shareholder Services Agent.

o Call the Shareholder Services Agent to obtain an account number and to place a
purchase order. Funds that are wired without a purchase order will be returned
uninvested.

o After placing your purchase order, instruct your bank to wire the amount of
your investment to:

Morgan Guaranty Trust Company of New York - Delaware
Routing number: 031-100-238
Credit: Morgan Guaranty Trust shareholder services
Account number: 00073836
FFC: your account number, name of registered owner(s) and fund name.

By check
o Make out a check for the investment amount payable to J.P. Morgan Funds

o Mail the check with your completed application to the Transfer Agent.

By exchange
o Call the Shareholder Services Agent to effect an exchange.

ADDING TO YOUR ACCOUNT
By wire
o Call the Shareholder Services Agent to place a purchase order. Funds that are
wired without a purchase order will be returned uninvested.

o Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above. By check

o Make out a check for the investment amount payable to J.P. Morgan Funds.

o Mail the check with a completed investment slip to the Transfer Agent. If you
do not have an investment slip, attach a note indicating your account number
and how much you wish to invest in which fund(s).

By exchange

o Call the Shareholder Services Agent to effect an exchange.

13 | YOUR INVESTMENT
<PAGE>

SELLING SHARES
By phone -- wire payment
o Call the Shareholder Services Agent to verify that the wire redemption
privilege is in place on your account. If it is not, a representative can help
you add it.

o Place your wire request. If you are transferring money to a
non-Morgan account, you will need to provide the representative with the
personal identification number (PIN) that was provided to you when you opened
your fund account.

By phone -- check payment
o Call the Shareholder Services
Agent and place your request. Once your request has been verified, a check for
the net cash amount, payable to the registered owner(s), will be mailed to the
address of record. For checks payable to any other party or mailed to any
other address, please make your request in writing (see below).

In writing
o Write a letter of instruction that includes the following information: The
name of the registered owner(s) of the account; the account number; the fund
name; the amount you want to sell; and the recipient's name and address or
wire information, if different from those of the account registration.

o Indicate whether you want the proceeds sent by check or by wire.

o Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.

o Mail the letter to the Shareholder Services Agent.

By exchange
o Call the Shareholder Services Agent to effect an exchange.

Redemption in kind
o Each fund reserves the right to make redemptions of over $250,000 in
securities rather than in cash.

<PAGE>

ACCOUNT AND TRANSACTION POLICIES
Telephone orders The funds accept telephone orders from all shareholders. To
guard against fraud, the funds require shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if a fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.

Exchanges You may exchange shares in these funds for shares in any other J.P.
Morgan or J.P. Morgan Institutional mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.

A fund may alter, limit, or suspend its exchange policy at any time.

Business days and NAV calculations The funds' regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). Each fund
calculates its net asset value per share (NAV) every business day as of the
close of trading on the NYSE (normally 4:00 p.m. eastern time). Each fund's
securities are typically priced using market quotes or pricing services. When
these methods are not available or do not represent a security's value at the
time of pricing (e.g., when an event occurs on a foreign exchange after the
close of trading on that exchange that would materially impact a security's
value at the time the fund calculates its NAV), the security is valued in
accordance with the fund's fair valuation procedures.

Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. A fund has the right to suspend redemption of shares, as
permitted by law, and to postpone payment of proceeds for up to seven days.

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

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

YOUR INVESTMENT | 14

<PAGE>

Timing of settlements When you buy shares, you will become the owner of record
when a fund receives your payment, generally the day following execution. When
you sell shares, cash proceeds are generally available the day following
execution and will be forwarded according to your instructions. In-kind
redemptions (described on page 12) will be available as promptly as is feasible.

When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.

Statements and reports The funds send monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months each fund sends out an annual or semi-annual report containing
information on its holdings and a discussion of recent and anticipated market
conditions and fund performance.

Accounts with below-minimum balances If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), each fund reserves the right to request that you buy more shares
or close your account. If your account balance is still below the minimum 60
days after notification, each fund reserves the right to close out your account
and send the proceeds to the address of record.

DIVIDENDS AND DISTRIBUTIONS
Income dividends are typically paid four times a year for the Disciplined
Equity, U.S. Equity and Tax Aware U.S. Equity funds; and twice a year for the
U.S. Small Company and U.S. Small Company Opportunities funds. Each fund
typically makes capital gains distributions, if any, once per year. However, a
fund may make more or fewer payments in a given year, depending on its
investment results and its tax compliance situation. Each fund's dividends and
distributions consist of most or all of its net investment income and net
realized capital gains.

Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account, or
invested in another J.P. Morgan Fund.

<PAGE>

--------------------------------------------------------------------------------
TAX CONSIDERATIONS
In general, selling shares for cash, exchanging shares, and receiving
distributions (whether reinvested or taken in cash) are all taxable events.
These transactions typically create the following tax liabilities for taxable
accounts:

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

Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when a fund is about to declare a long-term capital
gains distribution. Every January, each fund issues tax information on its
distributions for the previous year. Any investor for whom a fund does not have
a valid taxpayer identification number will be subject to backup withholding for
taxes. The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult your tax professional about your fund
investment.

15 | YOUR INVESTMENT

<PAGE>

FUND DETAILS
--------------------------------------------------------------------------------

BUSINESS STRUCTURE
As noted earlier, each fund (except the Tax Aware U.S. Equity Fund) is a series
of J.P. Morgan Funds, a Massachusetts business trust, and is a "feeder" fund
that invests in a master portfolio. (Except where indicated, this prospectus
uses the term "the fund" to mean the feeder fund and its master portfolio taken
together.)

Each master portfolio accepts investments from other feeder funds, and all the
feeders of a given master portfolio bear the portfolio's expenses in proportion
to their assets. However, each feeder can set its own transaction minimums,
fund-specific expenses and other conditions. This means that one feeder could
offer access to the same master portfolio on more attractive terms, or could
experience better performance, than another feeder. Information about other
feeders is available by calling 1-800-521-5411. Generally, when a master
portfolio seeks a vote, its feeder fund will hold a shareholder meeting and cast
its vote proportionately, as instructed by its shareholders. Fund shareholders
are entitled to one full or fractional vote for each dollar or fraction of a
dollar invested.

Each feeder fund and its master portfolio expect to maintain consistent goals,
but if they do not, the feeder fund will withdraw from the master portfolio,
receiving its assets either in cash or securities. Each feeder fund's trustees
would then consider whether a fund should hire its own investment adviser,
invest in a different master portfolio, or take other action.

The Tax Aware U.S. Equity Fund is a series of J.P. Morgan Series Trust, a
Massachusetts business trust. Information about other series or classes is
available by calling 1-800-521-5411. In the future, the trustees could create
other series or share classes, which would have different expenses.

MANAGEMENT AND ADMINISTRATION

The feeder funds described in this prospectus, their corresponding master
portfolios, and J.P. Morgan Series Trust are all governed by the same trustees.
The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees.

<PAGE>

Funds Distributor, Inc., as co-administrator, along with J.P. Morgan, provides
fund officers. J.P. Morgan, as co-administrator, oversees each fund's other
service providers.

J.P. Morgan receives the following fees for investment advisory and other
services:

--------------------------------------------------------------------------------
Advisory services Percentage of the master
portfolio's average net assets
--------------------------------------------------------------------------------
Disciplined Equity 0.35%
U.S. Equity 0.40%
U.S. Small Company 0.60%
U.S. Small Company 0.60%
Opportunities
--------------------------------------------------------------------------------
Administrative services Master portfolio's and fund's
(fee shared with Funds pro-rata portions of 0.09%
Distributor, Inc.) of the first $7 billion in
J.P. Morgan-advised portfolios,
plus 0.04% of averagenet assets
over $7 billion
--------------------------------------------------------------------------------
Shareholder services 0.25% of the fund's average
net assets
--------------------------------------------------------------------------------

The Tax Aware U.S. Equity Fund, subject to the expense reimbursements described
earlier in this prospectus, pays J.P. Morgan the following fees for investment
advisory and other services:

--------------------------------------------------------------------------------
Advisory services 0.45% of the fund's average
net assets
--------------------------------------------------------------------------------
Administrative services Fund's pro-rata portion of
(fee shared with Funds 0.09% of the first $7 billion
Distributor, Inc.) of average net assets in
J.P. Morgan-advised portfolios,
plus 0.04% of average
net assets over $7 billion
--------------------------------------------------------------------------------
Shareholder services 0.25% of the fund's average
net assets
--------------------------------------------------------------------------------

J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in a fund.

FUND DETAILS | 16
<PAGE>

--------------------------------------------------------------------------------
PERFORMANCE OF PRIVATE ACCOUNTS

The Disciplined Equity Fund's investment objective and policies are
substantially similar to those used by J.P. Morgan in managing certain
discretionary investment management accounts. The chart below shows the
historical investment performance for a composite of these private accounts (the
"Disciplined Equity Composite") and for the fund's benchmark index.

The performance of the Disciplined Equity Composite does not represent the
fund's performance nor should it be interpreted as indicative of the fund's
future performance. The accounts in the Disciplined Equity Composite are not
subject to the same regulatory requirements and limitations imposed on mutual
funds. If the accounts included in the Disciplined Equity Composite had been
subject to these regulatory requirements and limitations, their performance
might have been lower.

Additionally, although it is anticipated that the fund and the Disciplined
Equity Composite will hold similar securities, their investment results are
expected to differ. In particular, difference in asset size and cash flow
resulting from purchases and redemptions of fund shares may result in different
securities selections, differences in the relative weightings of securities or
differences in the prices paid for particular fund holdings.

The performance of the Disciplined Equity Composite reflects the deductions of
the fund's total operating expenses, after expense reimbursement, and the
reinvestment of dividends and other distributions. The performance information
is the annual total return of the Disciplined Equity Composite for each of the
periods indicated.

<TABLE>
<CAPTION>
Annual Total Returns for the Year Ended December 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Disciplined Equity
Composite -3.24% 30.01% 11.42% 9.87% 1.90% 37.47% 22.90% 32.97% 31.52% 18.47%
-----------------------------------------------------------------------------------------------------------------------------------
S&P 500 -3.11% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96% 33.36% 28.58% 21.04%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Disciplined Equity Composite currently includes all discretionary accounts
managed by J.P. Morgan using substantially similar investment strategy as the
Disciplined Equity Fund. The inception date for the Disciplined Equity Composite
was October 31, 1989. Prior to January 1, 1993 the composite may not have
included all discretionary accounts.

17 | YOUR INVESTMENT

<PAGE>

(THIS PAGE IS INTENTIONALLY LEFT BLANK)

| 18

<PAGE>
--------------------------------------------------------------------------------
RISK AND REWARD ELEMENTS

This table discusses the main elements that make up each fund's overall risk and
reward characteristics. It also outlines each fund's policies toward various
investments, including those that are designed to help certain funds manage
risk.

o During severe market downturns, the
funds have the option of investing up
to 100% of assets in investment-grade
short-term securities
------------------------------------------------------------------------------------------------------------------------------------
Management choices

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

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

o When a fund buys securities before o A fund can take advantage of o Each fund uses segregated accounts to
issue or for delayed delivery, it attractive transaction opportunities offset leverage risk
could be exposed to leverage risk if
it does not use segregated accounts
------------------------------------------------------------------------------------------------------------------------------------
Short-term trading

o Increased trading would raise a o A fund could realize gains in a short o The funds generally avoid short-term
fund's brokerage and related costs period of time trading, except to take advantage of
attractive or unexpected
o Increased short-term capital gains o A fund could protect against losses opportunities or to meet demands
distributions would raise if a stock is overvalued and its generated by shareholder activity.
shareholders' income tax liability value later falls The turnover rate for each fund for
its most recent fiscal year end is as
follows: Disciplined Equity (56%),
U.S. Equity (89%), U.S. Small Company
(104%), U.S. Small Company
Opportunities (132%), and Tax Aware
U.S. Equity (29%)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

19 | FUND DETAILS

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Potential risks Potential rewards Policies to balance risk and reward
------------------------------------------------------------------------------------------------------------------------------------
Derivatives
<S> <C> <C>
o Derivatives such as futures, options, o Hedges that correlate well with o The funds use derivatives for hedging
swaps, and forward foreign currency underlying positions can reduce or and for risk management (i.e., to
contracts that are used for hedging eliminate losses at low cost establish or adjust exposure to
the portfolio or specific securities particular securities, markets or
may not fully offset the underlying o A fund could make money and protect currencies); risk management may
positions1 and this could result in against losses if management's include management of a fund's
losses to the fund that would not analysis proves correct exposure relative to its benchmark
have otherwise occurred (the U.S. Small Company Opportunities
o Derivatives that involve leverage Fund is permitted to use derivatives,
o Derivatives used for risk management could generate substantial gains at however, it has no current intention
may not have the intended effects and low cost to do so)
may result in losses or missed
opportunities o The funds only establish hedges that
they expect will be highly correlated
o The counterparty to a derivatives with underlying positions
contract could default
o While the funds may use derivatives
o Derivatives that involve leverage that incidentally involve leverage,
could magnify losses they do not use them for the specific
purpose of leveraging their
o Certain types of derivatives involve portfolios
costs to the funds which can reduce
returns
------------------------------------------------------------------------------------------------------------------------------------
Securities lending

o When a fund lends a security, there o A fund may enhance income through the o J.P. Morgan maintains a list of
is a risk that the loaned securities investment of the collateral received approved borrowers
may not be returned if the borrower from the borrower
defaults o The fund receives collateral equal to
at least 100% of the current value of
o The collateral will be subject to the securities loaned
risks of the securities in which it
is invested o The lending agents indemnify a fund
against borrower default

o J.P. Morgan's collateral investment
guidelines limit the quality and
duration of collateral investment to
minimize losses

o Upon recall, the borrower must return
the securities loaned within the
normal settlement period
------------------------------------------------------------------------------------------------------------------------------------
Illiquid holdings

o A fund could have difficulty valuing o These holdings may offer more o No fund may invest more than 15% of
these holdings precisely attractive yields or potential growth net assets in illiquid holdings
than comparable widely traded
o A fund could be unable to sell these securities o To maintain adequate liquidity to
holdings at the time or price it meet redemptions, each fund may hold
desires investment-grade short-term
securities (including repurchase
agreements and reverse repurchase
agreements) and, for temporary or
extraordinary purposes, may borrow
from banks up to 33 1/3% of the value
of its total assets
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) A futures contract is an agreement to buy or sell a set quantity of an
underlying instrument at a future date, or to make or receive a cash
payment based on changes in the value of a securities index. An option is
the right to buy or sell a set quantity of an underlying instrument at a
pre-determined price. A swap is a privately negotiated agreement to
exchange one stream of payments for another. A forward foreign currency
contract is an obligation to buy or sell a given currency on a future date
and at a set price.

FUND DETAILS | 20

<PAGE>

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The financial tables are intended to help you understand each fund's financial
performance for the past one through five fiscal years or periods, as
applicable. Certain information reflects financial results for a single fund
share. The total returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in a fund (assuming reinvestment of all
dividends are distributions). Except where noted, this information has been
audited by PricewaterhouseCoopers LLP, whose reports, along with each fund's
financial statements, are included in the respective fund's annual report which
are available upon request.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
J.P. MORGAN DISCIPLINED EQUITY FUND

Per-share data For fiscal periods ended
-------------------------------------------------------------------------------------
5/31/98(1) 5/31/99 5/31/00
<S> <C> <C> <C>
Net asset value, beginning of period ($) 12.98 14.95 18.22
Income from investment operations:
Net investment income ($) 0.03 0.12 0.13
Net realized and unrealized gain
on investment ($) 1.96 3.28 0.82
-------------------------------------------------------------------------------------
Total from investment operations ($) 1.99 3.40 0.95
-------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.02) (0.09) (0.13)
Net realized gains ($) -- (0.04) (0.37)
-------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.02) (0.13) (0.50)
-------------------------------------------------------------------------------------
Net asset value, end of period ($) 14.95 18.22 18.67
-------------------------------------------------------------------------------------

Ratios and supplemental data
-------------------------------------------------------------------------------------
Total return (%) 15.33(2) 22.86 5.19
-------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 18,037 120,592 160,455
-------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.75(3) 0.75 0.75
-------------------------------------------------------------------------------------
Net investment income (%) 1.00(3) 0.89 0.76
-------------------------------------------------------------------------------------
Expenses without reimbursement (%) 3.28(3) 0.86 0.78
-------------------------------------------------------------------------------------
</TABLE>

(1) The fund commenced operations on 12/31/97.
(2) Not annualized.
(3) Annualized.

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
J.P. MORGAN U.S. EQUITY FUND

Per-share data For fiscal years ended
-----------------------------------------------------------------------------------------------------------------
5/31/96 5/31/97 5/31/98 5/31/99 5/31/00
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 19.42 22.15 24.63 25.66 25.09
-----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.38 0.25 0.18 0.18 0.15
Net realized and unrealized gain
on investment ($) 4.23 4.72 5.92 3.91 0.41
-----------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 4.61 4.97 6.10 4.09 0.56
-----------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.29) (0.36) (0.23) (0.19) (0.16)
Net realized gains ($) (1.59) (2.13) (4.84) (4.47) (3.78)
-----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (1.88) (2.49) (5.07) (4.66) (3.94)
-----------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 22.15 24.63 25.66 25.09 21.71
-----------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
-----------------------------------------------------------------------------------------------------------------
Total return (%) 25.18 25.00 28.35 18.39 2.20
-----------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 330,014 362,603 448,144 440,965 386,689
-----------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.81 0.80 0.78 0.79 0.78
-----------------------------------------------------------------------------------------------------------------
Net investment income (%) 1.87 1.13 0.71 0.70 0.59
-----------------------------------------------------------------------------------------------------------------
</TABLE>

21 | FUND DETAILS
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
J.P. MORGAN U.S. SMALL COMPANY FUND

Per-share data For fiscal periods ended
------------------------------------------------------------------------------------------------------------------
5/31/96 5/31/97 5/31/98 5/31/99 5/31/00

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 22.02 26.20 26.04 27.68 21.54
------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.26 0.18 0.11 0.08 0.00
Net realized and unrealized gain (loss)
on investment ($) 6.96 2.00 5.58 (3.30) 5.58
------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 7.22 2.18 5.69 (3.22) 5.58
------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.26) (0.21) (0.14) (0.08) (0.02)
Net realized gain ($) (2.78) (2.13) (3.91) (2.84) --
------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (3.04) (2.34) (4.05) (2.92) (0.02)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 26.20 26.04 27.68 21.54 27.10
------------------------------------------------------------------------------------------------------------------

Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Total return (%) 35.48 9.49 23.37 (10.95) 25.90
------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 220,917 237,985 261,804 186,879 284,572
------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
------------------------------------------------------------------------------------------------------------------
Net expenses (%) 0.90 0.90 0.97 1.02 1.00
------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (%) 1.10 0.71 0.39 0.34 0.05
------------------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 1.03 1.03 1.03 1.02 1.00
------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
J.P. MORGAN U.S. SMALL COMPANY OPPORTUNITIES FUND

Per-share data For fiscal periods ended
-------------------------------------------------------------------------------------------
5/31/98(1) 5/31/99 5/31/00
<S> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 12.57 12.17
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss ($) (0.02) (0.01) --
Net realized and unrealized gain (loss)
on investment ($) 2.59 (0.08) 3.73
-------------------------------------------------------------------------------------------
Total from investment operations ($) 2.57 (0.09) 3.73
-------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net realized gain ($) -- (0.31) --
-------------------------------------------------------------------------------------------
Total distributions to shareholders ($) -- (0.31) --
-------------------------------------------------------------------------------------------
Net asset value, end of period ($) 12.57 12.17 15.90
-------------------------------------------------------------------------------------------

Ratios and supplemental data
-------------------------------------------------------------------------------------------
Total return (%) 25.70(2) (0.49) 30.65
-------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 188,932 286,082 528,678
-------------------------------------------------------------------------------------------
Ratio to average net assets:
-------------------------------------------------------------------------------------------
Net expenses (%) 1.19(3) 1.07 0.99
-------------------------------------------------------------------------------------------
Net investment loss (%) (0.37)(3) (0.42) (0.47)
-------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 1.25 1.07 0.99
-------------------------------------------------------------------------------------------
</TABLE>

(1) The fund commenced operations on 6/16/97.
(2) Not annualized.
(3) Annualized.

FUND DETAILS | 22

<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
J.P. MORGAN TAX AWARE U.S. EQUITY FUND

Per-share data For fiscal periods ended
--------------------------------------------------------------------------------------------------------
For the six
months ended
4/30/00
10/31/97(1) 10/31/98 10/31/99 (unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 12.57 15.19 18.73
--------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.06 0.08 0.10 0.03
Net realized and unrealized gain
on investment ($) 2.52 2.65 3.55 1.49
--------------------------------------------------------------------------------------------------------
Total from investment operations ($) 2.58 2.73 3.65 1.52
--------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.01) (0.11) (0.11) (0.04)
--------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 12.57 15.19 18.73 20.21
--------------------------------------------------------------------------------------------------------

Ratios and supplemental data
--------------------------------------------------------------------------------------------------------
Total return (%) 25.83(2) 21.81 24.05 8.14(2)
--------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 25,649 76,924 163,075 206,888
--------------------------------------------------------------------------------------------------------
Ratio to average net assets:
--------------------------------------------------------------------------------------------------------
Net expenses (%) 0.85(3) 0.85 0.85 0.85(3)
--------------------------------------------------------------------------------------------------------
Net investment income (%) 0.70(3) 0.63 0.58 0.41(3)
--------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 2.16(3) 1.09 0.90 0.86(3)
--------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 23 44 29 8
--------------------------------------------------------------------------------------------------------
</TABLE>

(1) The fund commenced operations on 12/18/96.
(2) Not annualized.
(3) Annualized.

23 | FUND DETAILS

<PAGE>

FOR MORE INFORMATION

For investors who want more information on these funds, the following documents
are available free upon request:

Annual/Semi-annual Reports Contain financial statements, performance data,
information on portfolio holdings, and a written analysis of market conditions
and fund performance for a fund's most recently completed fiscal year or
half-year.

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

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

J.P. Morgan Funds
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036

Telephone: 1-800-521-5411

Hearing impaired: 1-888-468-4015

Email: [email protected]

Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-202-942-8090) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. Each
fund's investment company and 1933 Act registration numbers are:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
J.P. Morgan Disciplined Equity Fund ..........................811-07340 and 033-54632
J.P. Morgan U.S. Equity Fund .................................811-07340 and 033-54632
J.P. Morgan U.S. Small Company Fund ..........................811-07340 and 033-54632
J.P. Morgan U.S. Small Company Opportunities Fund ............811-07340 and 033-54632
J.P. Morgan Tax Aware U.S. Equity Fund .......................811-07795 and 333-11125
</TABLE>

J.P. MORGAN FUNDS AND
THE MORGAN TRADITION
The J.P. Morgan Funds combine a heritage of integrity and financial leadership
with comprehensive, sophisticated analysis and management techniques. Drawing on
J.P. Morgan's extensive experience and depth as an investment manager, the J.P.
Morgan Funds offer a broad array of distinctive opportunities for mutual fund
investors.

JPMorgan
--------------------------------------------------------------------------------
J.P. Morgan Funds

Advisor Distributor
J.P. Morgan Investment Management Inc. Funds Distributor, Inc.
522 fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 021109
1-800-521-5411 1-800-221-7930

IMPR08 10/00
<PAGE>

J.P. MORGAN FUNDS

J.P. MORGAN DISCIPLINED EQUITY FUND
J.P. MORGAN U.S. EQUITY FUND
J.P. MORGAN U.S. SMALL COMPANY FUND
J.P. MORGAN U.S. SMALL COMPANY OPPORTUNITIES FUND

STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 1, 2000

<PAGE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, BUT CONTAINS
ADDITIONAL INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
DATED OCTOBER 1, 2000 FOR EACH OF THE FUNDS LISTED ABOVE, AS SUPPLEMENTED FROM
TIME TO TIME. ADDITIONALLY, THIS STATEMENT OF ADDITIONAL INFORMATION
INCORPORATES BY REFERENCE THE FINANCIAL STATEMENTS INCLUDED IN THE SHAREHOLDER
REPORTS RELATING TO EACH OF THE FUNDS LISTED ABOVE DATED MAY 31, 2000. THE
PROSPECTUS AND THESE FINANCIAL STATEMENTS, INCLUDING THE INDEPENDENT
ACCOUNTANTS' REPORT ON THE ANNUAL FINANCIAL STATEMENTS, ARE AVAILABLE, WITHOUT
CHARGE, UPON REQUEST FROM FUNDS DISTRIBUTOR, INC., ATTENTION: J.P. MORGAN FUNDS
(800) 221-7930.

<PAGE>

Table of Contents

Page

GENERAL........................................................................1
INVESTMENT OBJECTIVES AND POLICIES.............................................3
INVESTMENT RESTRICTIONS.......................................................23
TRUSTEES AND MEMBERS OF THE ADVISORY BOARD....................................25
OFFICERS......................................................................29
CODES OF ETHICS...............................................................31
INVESTMENT ADVISOR............................................................32
DISTRIBUTOR...................................................................35
CO-ADMINISTRATOR..............................................................35
SERVICES AGENT................................................................37
CUSTODIAN AND TRANSFER AGENT..................................................38
SHAREHOLDER SERVICING.........................................................39
FINANCIAL PROFESSIONALS.......................................................40
INDEPENDENT ACCOUNTANTS.......................................................41
EXPENSES......................................................................41
PURCHASE OF SHARES............................................................42
REDEMPTION OF SHARES..........................................................43
EXCHANGE OF SHARES............................................................44
DIVIDENDS AND DISTRIBUTIONS...................................................45
NET ASSET VALUE...............................................................45
PERFORMANCE DATA..............................................................47
PORTFOLIO TRANSACTIONS........................................................48
MASSACHUSETTS TRUST...........................................................50
DESCRIPTION OF SHARES.........................................................52
TAXES.........................................................................55
ADDITIONAL INFORMATION........................................................59
FINANCIAL STATEMENTS..........................................................60
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS...............................A-1

<PAGE>

GENERAL

This Statement of Additional Information relates only to J.P. Morgan
Disciplined Equity Fund, J.P. Morgan U.S. Equity Fund, J.P. Morgan U.S. Small
Company Fund and J.P. Morgan U.S. Small Company Opportunities Fund
(collectively, the "Funds"). Each of the Funds is a series of shares of
beneficial interest of J.P. Morgan Funds, an open-end management investment
company formed as a Massachusetts business trust (the "Trust"). In addition to
the Funds, the Trust consists of other series representing separate investment
funds (each a "J.P. Morgan Fund"). The other J.P. Morgan Funds are covered by
separate Statements of Additional Information.

This Statement of Additional Information describes the financial
history, investment objectives and policies, management and operation of each of
the Funds in order to enable investors to select the Fund or Funds which best
suit their needs. The Funds operate through a two-tier master-feeder investment
fund structure. Formerly, J.P. Morgan U.S. Equity Fund and J.P. Morgan U.S.
Small Company Fund operated as freestanding mutual funds and not through the
master-feeder structure. Where indicated in this Statement of Additional
Information, historical information for each of these Funds includes information
for their respective predecessor entities.

This Statement of Additional Information provides additional
information with respect to the Funds and should be read in conjunction with the
relevant Fund's current Prospectus (the "Prospectus"). Capitalized terms not
otherwise defined herein have the meanings accorded to them in the Prospectus.
The Funds' executive offices are located at 60 State Street, Suite 1300, Boston,
Massachusetts 02109.

Unlike other mutual funds which directly acquire and manage their own
portfolio of securities, the Funds seek to achieve their investment objectives
by investing all of their investable assets in separate Master Portfolios (each
a "Portfolio"), a corresponding diversified open-end management investment
company having the same investment objective as the corresponding Fund. Each
Fund invests in a Portfolio through a two-tier master-feeder investment fund
structure. See "Special Information Concerning Investment Structure."

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

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

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The following discussion supplements the information regarding the
investment objective of each Fund and the policies to be employed to achieve
this objective by its corresponding Portfolio 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.

J.P. Morgan Disciplined Equity Fund (the "Disciplined Equity Fund") is
designed for investors seeking enhanced total return relative to that of large
and medium sized companies, typically represented by the S&P 500 Index. The
Disciplined Equity Fund's investment objective is to provide a consistently high
total return from a broadly diversified portfolio of equity securities with risk
characteristics similar to the S&P 500 Index. This investment objective can be
changed without shareholder approval. The Disciplined Equity Fund attempts to
achieve its investment objective by investing all of its investable assets in
The Disciplined Equity Portfolio, a diversified open-end management investment
company having the same investment objective as the Disciplined Equity Fund.

The Disciplined Equity Fund invests primarily in a diversified
portfolio of common stocks and other equity securities. Under normal
circumstances, the Disciplined Equity Fund expects to invest at least 65% of its
total assets in such securities.

Investment Process for The Disciplined Equity Fund

Research: The Advisor's more than 20 domestic equity analysts, each an
industry specialist with an average of over 10 years of experience, follow
approximately 600 medium and large capitalization U.S. companies. Their research
goal is to forecast intermediate-term earnings and prospective dividend growth
rates for the companies that they cover.

Valuation: The analysts' forecasts are converted into comparable
expected returns using a proprietary dividend discount model, which calculates
the intermediate-term earnings by comparing a company's current stock price with
its forecasted dividends and earnings. Within each sector, companies are ranked
according to their relative value 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.

Stock Selection: A broadly diversified portfolio is constructed using
disciplined buy and sell rules. Purchases are allocated among stocks in the
first three quintiles. Once a stock falls into the fourth and fifth quintiles
either because its price has risen or its fundamentals have deteriorated -- it
generally becomes a candidate for sale. The Disciplined Equity Fund's sector
weightings are matched to those of the S&P 500 Index, the Disciplined Equity
Fund's benchmark. The Advisor, also controls the Disciplined Equity Fund's
exposure to style and theme bets and maintains near-market security weightings
in individual security holdings. This process results in an investment portfolio
containing approximately 300 stocks.

<PAGE>

J.P. Morgan U.S. Equity Fund (the "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 U.S. Equity Fund's investment
objective is to provide a high total return from a portfolio of selected equity
securities. This investment objective can be changed without shareholder
approval. The U.S. Equity Fund attempts to achieve its investment objective by
investing all of its investable assets in The U.S. Equity Portfolio, a
diversified open-end management investment company having the same investment
objective as the U.S. Equity Fund.

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

Investment Process for The U.S. Equity Fund

Research: The Advisor's more than 20 domestic equity analysts, each an
industry specialist with an average of over 10 years of experience, follow
approximately 700 predominantly large- and medium-sized U.S. companies --
approximately 500 of which form the universe for the U.S. Equity Fund's
investments. Their research goal is to forecast normalized, longer-term earnings
and dividends for the companies that they cover. In doing this, they may work in
concert with the Advisor's international equity analysts in order to gain a
broader perspective for evaluating industries and companies in today's global
economy.

Valuation: The analysts' forecasts are converted into comparable
expected returns using a proprietary dividend discount model, which calculates
the long-term earnings by comparing a company's current stock price with its
forecasted dividends and earnings. Within each sector, companies are ranked
according to their relative value 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.

Stock Selection: 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 candidate for sale. The portfolio manager seeks to hold
sector weightings close to those of the S&P 500 Index, the U.S. Equity Fund's
benchmark.

<PAGE>

J.P. Morgan 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 high total return from a
portfolio of small company stocks. This investment objective can be changed
without shareholder approval. The U.S. Small Company Fund attempts to achieve
its investment objective by investing all of its investable assets in The U.S.
Small Company Portfolio, a diversified open-end management investment company
having the same investment objective as the U.S. Small Company Fund.

The U.S. Small Company Fund attempts to achieve its investment
objective by investing primarily in the common stock of small sized U.S.
companies that are included in the Russell 2000 Index, which is composed of
2,000 common stocks of U.S. small-cap companies with market capitalizations
ranging from $100 million to $2 billion.

Investment Process for The U.S. Small Company Fund

Research: The Advisor's more than 20 domestic equity analysts, each an
industry specialist with an average of over 10 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 contains a total of approximately 600 names.
Because the Advisor'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.

Valuation: The analysts' forecasts are converted into comparable
expected returns using a proprietary dividend discount model, which calculates
the long-term earnings by comparing a company's current stock price with the its
forecasted dividends and earnings. Within each industry, companies are ranked
according to their relative value 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.

Stock Selection: A diversified portfolio is constructed using
disciplined buy and sell rules. Purchases are concentrated among the stocks in
the top two quintiles of the rankings; the specific names selected reflect the
portfolio manager's judgment concerning the soundness of the underlying
forecasts, the likelihood that the perceived misvaluation 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 candidate for sale. The portfolio manager
seeks to hold sector weightings close to those of the Russell 2000 Index, the
U.S. Small Company Fund's benchmark.

<PAGE>

J.P. Morgan U.S. Small Company Opportunities Fund (the "U.S. Small
Company Opportunities Fund") is designed for investors seeking an actively
managed portfolio of equity securities of companies with high growth potential,
emphasizing growth sectors of the market without undue emphasis on a specific
sector and encompassing a higher degree of risk than some small company stock
portfolios. The U.S. Small Company Opportunities Fund's investment objective is
to provide long-term growth from a portfolio of small company growth stocks.
This investment objective can be changed without shareholder approval. The U.S.
Small Company Opportunities Fund attempts to achieve its investment objective by
investing all of its investable assets in The U.S. Small Company Opportunities
Portfolio, a diversified open-end management investment company having the same
investment objective as the U.S. Small Company Opportunities Fund.

The U.S. Small Company Opportunities Fund attempts to achieve its
investment objective by investing in a diversified portfolio of common stocks
issued by small companies with above average long-term earnings growth potential
that are included in the Russell 2000 Growth Index, an index composed of 2000
equity securities of companies with market capitalizations ranging from $150
billion to $2 billion. The U.S. Small Company Opportunities Fund emphasizes
stocks of U.S. small companies with market capitalizations of less than $1.25
billion when purchased.

Investment Process for The U.S. Small Company Opportunities Fund

Research: The Advisor's more than 20 domestic equity analysts, each an
industry specialist with an average of over 10 years of experience, continuously
monitor stocks in the small company universe with the aim of identifying
companies that participate in expanding markets or have a competitive advantage
that is sustainable over the long term, exhibit superior potential, sound
financial and operating characteristics and can be purchased at a reasonable
price. Frequent reviews of individual companies focus on the forecasted growth
and profitability inputs to the proprietary valuation analyses. The research
goal is to forecast normalized, long-term earnings and dividends for the most
attractive small capitalization growth companies among those they monitor.

Valuation: The analysts' forecasts are converted into comparable
expected returns using a proprietary dividend discount model, which calculates
the long-term earnings by comparing a company's current stock price with its
forecasted dividends and earnings. Within each industry, companies are ranked
according to their relative value 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.

Stock Selection: A diversified portfolio is constructed using
disciplined buy and sell rules. Purchases are concentrated among the stocks in
the top two quintiles of the 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 candidate for sale. While the U.S. Small
Company Opportunities Fund holds stocks in many industries to reduce the impact
of poor performance in any one sector, it tends to emphasize industries with
higher growth potential and does not track the sector weightings of the overall
small company stock market.

<PAGE>

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

Equity Investments

The Funds invest primarily in Equity Securities. The Equity Securities
in which the Funds invest include those listed on any domestic or foreign
securities exchange or traded in the over-the-counter (OTC) market as well as
certain restricted or unlisted securities.

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

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

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

Common Stock Warrants

The 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.

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

<PAGE>

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

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of domestic security exchanges. Accordingly, a Fund's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. In buying and selling
securities on foreign exchanges, purchasers normally pay fixed commissions that
are generally higher than the negotiated commissions charged in the United
States. In addition, there is generally less government supervision and
regulation of securities exchanges, brokers and issuers located in foreign
countries than in the United States.

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

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

<PAGE>

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 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.

Foreign Currency Exchange Transactions

Because each Fund may buy and sell securities and receive interest and
dividends in currencies other than the U.S. dollar, a Fund may enter from time
to time into foreign currency exchange transactions. Each Fund either enters
into these transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market or uses forward contracts to purchase or
sell foreign currencies. The cost of a Fund's spot currency exchange
transactions is generally the difference between the bid and offer spot rate of
the currency being purchased or sold.

A forward foreign currency exchange contract is an obligation by the
Fund to purchase or sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are derivative instruments, as their value derives from the spot exchange rates
of the currencies underlying the contract. These contracts are entered into in
the interbank market directly between currency traders (usually large commercial
banks) and their customers. A forward foreign currency exchange contract
generally has no deposit requirement and is traded at a net price without
commission. Neither spot transactions nor forward foreign currency exchange
contracts eliminate fluctuations in the prices of a Fund's securities or in
foreign exchange rates, or prevent loss if the prices of these securities should
decline.

Each Fund may enter into foreign currency exchange transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or
anticipated securities transactions. Each Fund may also enter into forward
contracts to hedge against a change in foreign currency exchange rates that
would cause a decline in the value of existing investments denominated or
principally traded in a foreign currency. To do this, a Fund would enter into a
forward contract to sell the foreign currency in which the investment is
denominated or principally traded in exchange for U.S. dollars or in exchange
for another foreign currency. The Funds will only enter into forward contracts
to sell a foreign currency in exchange for another foreign currency if the
Advisor expects the foreign currency purchased to appreciate against the U.S.
dollar.

Although these transactions are intended to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they
limit any potential gain that might be realized should the value of the hedged
currency increase. In addition, forward contracts that convert a foreign
currency into another foreign currency will cause a Fund to assume the risk of
fluctuations in the value of the currency purchased vis a vis the hedged
currency and the U.S. dollar. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

<PAGE>

Additional Investments

When-Issued and Delayed Delivery Securities. Each of the Funds may
purchase securities on a when-issued or delayed delivery basis. For example,
delivery of and payment for these securities can take place a month or more
after the date of the purchase commitment. The purchase price and the interest
rate payable, if any, on the securities are fixed on the purchase commitment
date or at the time the settlement date is fixed. The value of such securities
is subject to market fluctuation and for money market instruments and other
fixed income securities no interest accrues to a Fund until settlement takes
place. At the time a Fund makes the commitment to purchase securities on a
when-issued or delayed delivery basis, it will record the transaction, reflect
the value each day of such securities in determining its net asset value, and
calculate the maturity for the purposes of average maturity from that date. At
the time of settlement a when-issued security may be valued at less than the
purchase price. To facilitate such acquisitions, each Fund will maintain with
the custodian a segregated account with liquid assets, consisting of cash, U.S.
Government securities or other appropriate securities, in an amount at least
equal to such commitments. On delivery dates for such transactions, each Fund
will meet its obligations from maturities or sales of the securities held in the
segregated account and/or from cash flow. If a Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition, it could, as
with the disposition of any other portfolio obligation, incur a gain or loss due
to market fluctuation. Also, a Fund may be disadvantaged if the other party to
the transaction defaults.

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 or Portfolio 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 or Portfolio bears directly in connection with its
own operations.

The Securities and Exchange Commission ("SEC") has granted the
Portfolios an exemptive order permitting it to invest its uninvested cash in any
of the following affiliated money market funds: J.P. Morgan Institutional Prime
Money Market Fund, J.P. Morgan Institutional Tax Exempt Money Market Fund, J.P.
Morgan Institutional Federal Money Market Fund and J.P. Morgan Institutional
Treasury Money Market Fund. The order sets the following conditions: (1) the
Portfolio may invest in one or more of the permitted money market funds up to an
aggregate limit of 25% of its assets; and (2) the Advisor will waive and/or
reimburse its advisory fee from the Portfolio in an amount sufficient to offset
any doubling up of investment advisory and shareholder servicing fees. The
Portfolio has applied for additional exemptive relief from the SEC to permit the
Portfolio to invest in additional affiliated investment companies. If the
requested relief is granted, the Portfolio would then be permitted to invest in
non-money market affiliated funds, subject to certain conditions specified in
the applicable order.

<PAGE>

Reverse Repurchase Agreements. Each of the Funds may enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Fund sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price reflecting the interest rate effective for the term of the
agreement. For purposes of the 1940 Act a reverse repurchase agreement is also
considered as the borrowing of money by the Fund and, therefore, a form of
leverage. Leverage may cause any gains or losses for a Fund to be magnified. The
Funds will invest the proceeds of borrowings under reverse repurchase
agreements. In addition, except for liquidity purposes, a Fund will enter into a
reverse repurchase agreement only when the expected return from the investment
of the proceeds is greater than the expense of the transaction. A Fund will not
invest the proceeds of a reverse repurchase agreement for a period which exceeds
the duration of the reverse repurchase agreement. Each Fund will establish and
maintain with the custodian a separate account with a segregated portfolio of
securities in an amount at least equal to its purchase obligations under its
reverse repurchase agreements. See "Investment Restrictions" for each Fund's
limitations on reverse repurchase agreements and bank borrowings.

Loans of Portfolio Securities. Each Fund is permitted to lend its
securities in an amount up to 33 1/3% of the value of such Fund's net assets.
Each of the Funds may lend its securities if such loans are secured continuously
by cash or equivalent collateral or by a letter of credit in favor of the Fund
at least equal at all times to 100% of the market value of the securities
loaned, plus accrued interest. While such securities are on loan, the borrower
will pay the Fund any income accruing thereon. Loans will be subject to
termination by the Funds in the normal settlement time, generally three business
days after notice, or by the borrower on one day's notice. Borrowed securities
must be returned when the loan is terminated. Any gain or loss in the market
price of the borrowed securities which occurs during the term of the loan inures
to a Fund and its respective investors. The Funds may pay reasonable finders'
and custodial fees in connection with a loan. In addition, a Fund will consider
all facts and circumstances before entering into such an agreement, including
the creditworthiness of the borrowing financial institution, and no Fund will
make any loans in excess of one year. The Funds will not lend their securities
to any officer, Trustee, Member of the Advisory Board, Director, employee or
other affiliate of the Funds, the Advisor or the Distributor, unless otherwise
permitted by applicable law.

Illiquid Investments; Privately Placed and Other Unregistered
Securities. No Fund may acquire any illiquid securities if, as a result thereof,
more than 15% of its net assets would be in illiquid investments. Subject to
this non-fundamental policy limitation, each Fund may acquire investments that
are illiquid or have limited liquidity, such as private placements or
investments that are not registered under the Securities Act of 1933, as amended
(the "1933 Act"), and cannot be offered for public sale in the United States
without first being registered under the 1933 Act. An illiquid investment is any
investment that cannot be disposed of within seven days in the normal course of
business at approximately the amount at which it is valued by a Fund. The price
a Fund pays for illiquid securities or receives upon resale may be lower than
the price paid or received for similar securities with a more liquid market.
Accordingly the valuation of these securities will reflect any limitations on
their liquidity.

<PAGE>

Each Fund may also purchase Rule 144A securities sold to institutional
investors without registration under the 1933 Act. These securities may be
determined to be liquid in accordance with guidelines established by the Advisor
and approved by the Trustees. The Trustees will monitor the Advisor's
implementation of these guidelines on a periodic basis.

As to illiquid investments, a Fund is subject to a risk that should a
Fund decide to sell them when a ready buyer is not available at a price the Fund
deems representative of their value, the value of the Fund's net assets could be
adversely affected. Where an illiquid security must be registered under the 1933
Act, before it may be sold, a Fund 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 a Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, a Fund might obtain a less favorable price
than prevailed when it decided to sell.

Money Market Instruments

Although the Funds intend, under normal circumstances and to the extent
practicable, to be fully invested in equity securities, each Fund may invest in
money market instruments to the extent consistent with its respective investment
objective and policies. The Funds may make money market investments pending
other investment or settlement, for liquidity or in adverse market conditions. A
description of the various types of money market instruments that may be
purchased by the Funds appears below. Also see "Quality and Diversification
Requirements."

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

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

<PAGE>

Foreign Government Obligations. Each of the Funds, 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 another currency. See "Foreign Investments."

Bank Obligations. Each of the Funds may invest in negotiable
certificates of deposit, time deposits and bankers' acceptances of (i) banks,
savings and loan associations and savings banks which have more than $2 billion
in total assets (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). 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 may also invest in
obligations of international banking institutions designated or supported by
national governments to promote economic reconstruction, development or trade
between nations (e.g., the European Investment Bank, the Inter-American
Development Bank, or the World Bank).

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

13
<PAGE>

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 Funds will
always receive securities as collateral whose market value is, and during the
entire term of the agreement remains, at least equal to 100% of the dollar
amount invested by the Funds in each agreement plus accrued interest, and the
Funds will make payment for such securities only upon physical delivery or upon
evidence of book entry transfer to the account of the custodian. If the seller
defaults, a Fund might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the security, realization upon disposal
of the collateral by a Fund may be delayed or limited.

Each of the Funds 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 this Statement of Additional Information.

Quality and Diversification Requirements

Each of the Funds intends to meet the diversification requirements of
the 1940 Act. To meet these requirements, 75% of the assets of each Fund is
subject to the following fundamental limitations: (1) a 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)
a Fund may not own more than 10% of the outstanding voting securities of any one
issuer. As for the other 25% of a Fund's assets not subject to the limitation
described above, there is no limitation on investment of these assets under the
1940 Act, so that all of such assets may be invested in securities of any one
issuer. Investments not subject to the limitations described above could involve
an increased risk to 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.

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

<PAGE>

The 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

Each of the Funds may (a) purchase and sell exchange traded and
over-the-counter (OTC) put and call options on equity securities or indexes of
equity securities, (b) purchase and sell futures contracts on indexes of equity
securities and (c) purchase and sell put and call options on futures contracts
on indexes of equity securities. Each of these instruments is a derivative
instrument as its value derives from the underlying asset or index.

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

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

<PAGE>

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

Options

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

17
<PAGE>

Futures Contracts and Options on Futures Contracts. The Funds may
purchase or sell (write) futures contracts and purchase or sell put and call
options, including put and call options on futures contracts. 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 Fund are paid by a Fund 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 Funds are permitted to purchase and write
options 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, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs and may be more difficult to open and close out.

Correlation of Price Changes. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized options and futures contracts available will not match a Fund's
current or anticipated investments exactly. A Fund may 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 a Fund's other investments.

18
<PAGE>

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

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

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

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

19
<PAGE>

In addition, the Funds 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 Fund's assets
could impede portfolio management or a Fund's ability to meet redemption
requests or other current obligations.

Swaps and Related Swap Products

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

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

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

20
<PAGE>

The "notional amount" of a swap transaction is the agreed upon basis
for calculating the payments that the parties have agreed to exchange. For
example, one swap counterparty may agree to pay a floating rate of interest
(e.g., 3 month LIBOR) calculated based on a $10 million notional amount on a
quarterly basis in exchange for receipt of payments calculated based on the same
notional amount and a fixed rate of interest on a semi-annual basis. In the
event a Fund is obligated to make payments more frequently than it receives
payments from the other party, it will incur incremental credit exposure to that
swap counterparty. This risk may be mitigated somewhat by the use of swap
agreements which call for a net payment to be made by the party with the larger
payment obligation when the obligations of the parties fall due on the same
date. Under most swap agreements entered into by a Fund, payments by the parties
will be exchanged on a "net basis", and a Fund will receive or pay, as the case
may be, only the net amount of the two payments.

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

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

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

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

21
<PAGE>

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

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

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

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

<PAGE>

Risk Management

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

Portfolio Turnover

The table below sets forth the portfolio turnover rates for the Funds.
A rate of 100% indicates that the equivalent of all of the Fund's assets have
been sold and reinvested in a year. High portfolio turnover may result in the
realization of substantial net capital gains or losses. To the extent 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.

The Disciplined Equity Portfolio (Disciplined Equity Fund) -- For the fiscal
years ended May 31, 1998, 1999 and 2000: 61%, 51% and 56%, respectively.

The U.S. Equity Portfolio (U.S. Equity Fund) -- For the fiscal years ended May
31, 1998, 1999 and 2000: 106%, 84% and 89%, respectively.

The U.S. Small Company Portfolio (U.S. Small Company Fund) -- For the fiscal
years ended May 31, 1998, 1999 and 2000: 96%, 104% and 104%, respectively.

The U.S. Small Company Opportunities Portfolio (U.S. Small Company Opportunities
Fund) -- For the period June 16, 1997 (commencement of operations) through May
31, 1998: 73%. For the fiscal years ended May 31, 1999 and 2000: 116% and 132%.

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.

<PAGE>

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 Funds and their corresponding Portfolios:

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

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

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

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

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

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

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

<PAGE>

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

Non-Fundamental Investment Restrictions - The investment restrictions
described below are not fundamental policies of these Funds and their
corresponding Portfolios and may be changed by their respective Trustees.

These non-fundamental investment policies require that the Funds:

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

(ii) May not 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 or delayed delivery
securities, or to short sales that are covered in accordance with SEC rules; and

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

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.

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

TRUSTEES AND MEMBERS OF THE ADVISORY BOARD

Trustees

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

<PAGE>

FREDERICK S. ADDY -- Trustee; Retired; Prior to April 1994, Executive
Vice President and Chief Financial Officer, Amoco Corporation. His address is
c/o Pierpont Group, Inc., 461 Fifth Avenue, New York, New York 10017. His date
of birth is January 1, 1932.

WILLIAM G. BURNS -- Trustee; Retired, Former Vice Chairman and Chief
Financial Officer, NYNEX. His address is c/o Pierpont Group, Inc., 461 Fifth
Avenue, New York, New York 10017. His date of birth is November 2, 1932.

ARTHUR C. ESCHENLAUER -- Trustee; Retired; Former Senior Vice
President, Morgan Guaranty Trust Company of New York. His address is
c/o Pierpont Group, Inc., 461 Fifth Avenue, New York, New York 10017.
His date of birth is May 23, 1934.

MATTHEW HEALEY(1) -- Trustee, Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc., since prior to 1993. His address is c/o Pierpont
Group, Inc., 461 Fifth Avenue, New York, New York 10017. His date of birth is
August 23, 1937.

MICHAEL P. MALLARDI -- Trustee; Retired; Prior to April 1996, Senior
Vice President, Capital Cities/ABC, Inc. and President, Broadcast Group. His
address is c/o Pierpont Group, Inc., 461 Fifth Avenue, New York, New York 10017.
His date of birth is March 17, 1934.

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 J.P. Morgan Institutional Funds, up to and including
creating a separate board of trustees.

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

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

------------------------
(1) Mr. Healey is an "interested person" (as defined in the 1940 Act) of the
Trust. Mr. Healey is also an "interested person" (as defined in the 1940 Act)
of the Advisor due to his son's affiliation with JPMIM.

<PAGE>

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

<S> <C> <C>
Frederick S. Addy, Trustee $12,720 $75,000

William G. Burns, Trustee $12,720 $75,000

Arthur C. Eschenlauer, Trustee $12,720 $75,000

Matthew Healey, Trustee (***), $12,720 $75,000
Chairman and Chief Executive
Officer

Michael P. Mallardi, Trustee $12,720 $75,000
</TABLE>

(*) Includes the Portfolios and 15 other Portfolios (collectively the "Master
Portfolios") for which JPMIM acts as investment advisor.

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

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

The Trustees decide upon general policies and are responsible for
overseeing the Trust's and Portfolio's business affairs. 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 (now the J.P. Morgan 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 to the Trust, the Portfolios and
certain other registered investment companies subject to similar agreements with
Pierpont Group, Inc. These costs are periodically reviewed by the Trustees. The
principal offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New
York, New York 10017.

<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:

Disciplined Equity Fund -- For the period December 31, 1997 (commencement of
operations) through May 31, 1998: $58. For the fiscal years ended May 31, 1999
and 2000: $1,234 and $2,772.

The Disciplined Equity Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $5,818, $14,804 and $24,487 respectively.

U.S. Equity Fund -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$14,143, $10,353 and $7,362, respectively.

The U.S. Equity Portfolio -- For the fiscal years ended May 31, 1998, 1999 and
2000: $30,613 $18,019 and $12,016, respectively.

U.S. Small Company Fund -- For the fiscal years ended May 31, 1998 1999 and
2000: $9,146, $5,130 and $4,374, respectively.

The U.S. Small Company Portfolio -- For the fiscal years ended May 31, 1998
1999, and 2000, $36,011, $13,942 and $11,170, respectively.

U.S. Small Company Opportunities Fund -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $3,084. For the fiscal years
ended May 31, 1999 and 2000: $5,042 and $8,040.

The U.S. Small Company Opportunities Portfolio -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $3,088. For the fiscal years
ended May 31, 1999 and 2000: $5,046 and $8,042.

Advisory Board

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

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

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

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

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

Officers

The Trust's and Portfolios' executive officers (listed below), other
than the Chief Executive Officer and the officers who are employees of the
Advisor, are provided and compensated by Funds Distributor, Inc. ("FDI"), a
wholly owned indirect subsidiary of Boston Institutional Group, Inc. The
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, their principal
occupations during the past five years and dates of birth are set forth below.
Unless otherwise specified, each officer holds the same position with the Trust,
each Portfolio and the other Master Portfolios. The business address of each of
the officers unless otherwise noted is Funds Distributor, Inc., 60 State Street,
Suite 1300, Boston, Massachusetts 02109.

MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont Group,
since prior to 1993. His address is Pine Tree Country Club Estates, 10286 Saint
Andrews Road, Boynton Beach, Florida 33436. His date of birth is August 23,
1937.

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

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

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

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

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

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

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<PAGE>

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

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

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

GEORGE A. RIO; President and Treasurer. Executive Vice President and
Client Service Director of FDI since April 1998. From June 1995 to March 1998,
Mr. Rio was Senior Vice President and Senior Key Account Manager for Putnam
Mutual Funds. From May 1994 to June 1995, Mr. Rio was Director of Business
Development for First Data Corporation. His date of birth is January 2, 1955.

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

CODE OF ETHICS

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

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<PAGE>

INVESTMENT ADVISOR

The Funds have not retained the services of an investment adviser
because each Fund seeks to achieve its investment objective by investing all of
its investable assets in a corresponding Portfolio. Subject to the supervision
of each Portfolio's Trustees, the Advisor makes each Portfolio's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages each Portfolio's investments. Effective October 1, 1998 each
Portfolio's Investment Advisor is JPMIM. Prior to that date, Morgan was the
Investment Advisor.

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

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

J.P. Morgan has a long history of service as 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 the Advisor'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 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 and Singapore to cover companies, industries and countries on
site. In addition, the investment management divisions employ approximately 420
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 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."

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<PAGE>

Sector weightings are generally similar to a benchmark with the
emphasis on security selection as the method to achieve investment performance
superior to the benchmark. The benchmarks for the Portfolios in which the Funds
invest are currently: The Disciplined Equity Portfolio and The U.S. Equity
Portfolio -- S&P 500 Index; The U.S. Small Company Portfolio -- Russell 2000
Index; and The U.S. Small Company Opportunities Portfolio -- Russell 2000 Growth
Index.

Morgan, also a wholly owned subsidiary of J.P. Morgan, is 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.

The Portfolios are managed by employees 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
certain investment management affiliates of J.P. Morgan.

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.

Disciplined Equity: 0.35%

U.S. Equity: 0.40%

U.S. Small Company: 0.60%

U.S. Small Company Opportunities : 0.60%

The table below sets forth for each Fund listed the advisory fees paid
by its corresponding Portfolio to Morgan and JPMIM, as applicable, for the
fiscal periods indicated. See also the Fund's financial statements which are
incorporated herein by reference.

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<PAGE>

The Disciplined Equity Portfolio (Disciplined Equity Fund) -- For the fiscal
years ended May 31, 1998, 1999 and 2000: $628,965, $2,310,525 and $5,016,217,
respectively.

The U.S. Equity Portfolio (U.S. Equity Fund) -- For the fiscal years ended May
31, 1998, 1999 and 2000: $3,534,791, $2,911,314 and $2,748,787, respectively.

The U.S. Small Company Portfolio (U.S. Small Company Fund) -- For the fiscal
years ended May 31, 1998, 1999 and 2000: $6,161,868, $3,367,503 and $3,870,586,
respectively.

The U.S. Small Company Opportunities Portfolio (U.S. Small Company Opportunities
Fund) -- For the period June 16, 1997 (commencement of operations) through May
31, 1998: $596,695. For the fiscal years ended May 31, 1999 and 2000: $1,260,259
and $2,833,187.

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
"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."

<PAGE>

Under separate agreements, Morgan 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.

DISTRIBUTOR

FDI serves as the Trust's exclusive Distributor and holds itself
available to receive purchase orders for each of the Fund's shares. In that
capacity, FDI has been granted the right, as agent of the Trust, to solicit and
accept orders for the purchase of each of the Fund's shares in accordance with
the terms of the Distribution Agreement between the Trust and FDI. Under the
terms of the Distribution Agreement between FDI and the Trust, FDI receives no
compensation in its capacity as the Trust's distributor. FDI is a wholly owned
indirect subsidiary of Boston Institutional Group, Inc. FDI also serves as
exclusive placement agent for each Portfolio. FDI currently provides
administration and distribution services for a number of other investment
companies.

The Distribution Agreement shall continue in effect with respect to
each of the Funds 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 each 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 Members of the Advisory Board" 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 60 days' written notice to the other
party. The principal offices of FDI are located at 60 State Street, Suite 1300,
Boston, Massachusetts 02109.

CO-ADMINISTRATOR

Under Co-Administration Agreements with the Trust and the Portfolios
dated August 1, 1996, FDI also serves as the Trust's and the Portfolios'
Co-Administrator. The Co-Administration Agreements may be renewed or amended by
the respective Trustees without a shareholder vote. The Co-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 Co-Administrator may subcontract for the performance of its obligations,
provided, however, that unless the Trust or the Portfolios, as applicable,
expressly agrees in writing, the Co-Administrator shall be fully responsible for
the acts and omissions of any subcontractor as it would for its own acts or
omissions. See "Services Agent" below.

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<PAGE>

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

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

The table below sets forth for each Fund listed and its corresponding
Portfolio the administrative fees paid to FDI for the fiscal periods indicated.

Disciplined Equity Fund -- For the period December 31, 1997 (commencement of
operations) through May 31, 1998: $47. For the fiscal years ended May 31, 1999
and 2000: $902 and $2,157.

The Disciplined Equity Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $3,742, $9,294 and $13,826, respectively.

U.S. Equity Fund -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$10,661, $7,329 and $5,449, respectively.

The U.S. Equity Portfolio -- For the fiscal years ended May 31, 1998, 1999 and
2000: $18,971, $11,075 and $6,803, respectively.

U.S. Small Company Fund -- For the fiscal years ended May 31, 1998, 1999 and
2000: $6,881, $3,605 and $3,239, respectively.

<PAGE>

The U.S. Small Company Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $22,248, $8,564 and $6,159, respectively.

U.S. Small Company Opportunities Fund -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $2,410. For the fiscal years
ended May 31, 1999 and 2000: $3,581 and $5,913.

The U.S. Small Company Opportunities Portfolio -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $2,036. For the fiscal years
ended May 31, 1999 and 2000: $3,103 and $4,343.

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, as amended August 1, 1996, pursuant to which Morgan
is responsible for certain administrative and related services provided to each
Fund and its corresponding Portfolio. 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.

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

Under the amended Services Agreements, the Funds and the Portfolios
have agreed to pay Morgan fees equal to its allocable share of an annual
complex-wide charge. This charge is calculated daily based on the aggregate net
assets of the Master Portfolios and J.P. Morgan Series Trust in accordance with
the following annual schedule: 0.09% of the first $7 billion of their aggregate
average daily net assets and 0.04% of their aggregate average daily net assets
in excess of $7 billion, less the complex-wide fees payable to FDI. The portion
of this charge payable by each Fund and Portfolio is determined by the
proportionate share that its net assets bear to the total net assets of the
Trust, the Master Portfolios, the other investors in the Master Portfolios for
which Morgan provides similar services and J.P. Morgan Series Trust.

<PAGE>

Disciplined Equity Fund - For the period December 31, 1997 (commencement of
operations) through May 31, 1998: $626. For the fiscal years ended May 31, 1999
and 2000: $14,823 and $40,561.

The Disciplined Equity Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $53,654, $176,331 and $359,899, respectively.

U.S. Equity Fund -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$123,735, $114,563 and $105,687, respectively.

The U.S. Equity Portfolio -- For the fiscal years ended May 31, 1998, 1999 and
2000: $265,956, $198,407 and $172,419, respectively.

U.S. Small Company Fund -- For the fiscal years ended May 31, 1998, 1999 and
2000: $79,620, $55,836 and $64,184, respectively.

The U.S. Small Company Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $309,695, $153,123 $162,199, respectively.

U.S. Small Company Opportunities Fund -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $29,555. For the fiscal years
ended May 31, 1999 and 2000: $56,775 and $118,266.

The U.S. Small Company Opportunities Portfolio -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $29,566. For the fiscal years
ended May 31, 1999 and 2000: $56,809 and $118,303.

CUSTODIAN AND TRANSFER AGENT

The Bank of New York ("BONY"), One Wall Street, New York, New York
10286, serves as the Trust's and each of the Portfolio's custodian and fund
accounting agent. Pursuant to the Custodian Contracts, BONY is responsible for
holding portfolio securities and cash and maintaining the books of account and
records of portfolio transactions. In the case of foreign assets held outside
the United States, the custodian employs various subcustodians in accordance
with the regulations of the SEC.

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<PAGE>

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

SHAREHOLDER SERVICING

The Trust on behalf of 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 a financial professional. Under this agreement, Morgan is responsible for
performing shareholder account, administrative and servicing functions, which
include but are not limited to, answering inquiries regarding account status and
history, the manner in which purchases and redemptions of Fund shares may be
effected, and certain other matters pertaining to a Fund; assisting customers in
designating and changing dividend options, account designations and addresses;
providing necessary personnel and facilities to coordinate the establishment and
maintenance of shareholder accounts and records with the Funds' transfer agent;
transmitting purchase and redemption orders to the Funds' transfer agent and
arranging for the wiring or other transfer of funds to and from customer
accounts in connection with orders to purchase or redeem Fund shares; verifying
purchase and redemption orders, transfers among and changes in accounts;
informing 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 at an annual rate of 0.25% (expressed as a percentage
of the average daily net assets of Fund shares owned by or for shareholders for
whom Morgan is acting as Shareholder Servicing Agent). Morgan acts as
Shareholder Servicing Agent for all shareholders.

The table below sets forth for each Fund listed the shareholder
servicing fees paid by each Fund to Morgan for the fiscal periods indicated.

Disciplined Equity Fund -- For the period December 31, 1997 (commencement of
operations) through May 31, 1998: $5,379. For the fiscal years ended May 31,
1999 and 2000: $139,070 and $407,701.

U.S. Equity Fund -- For the fiscal years ended May 31, 1998, 1999 and 2000:
$1,030,062, $1,052,598 and $1,060,020, respectively.

U.S. Small Company Fund -- For the fiscal years ended May 31, 1998, 1999 and
2000: $662,385, $510,994 and $646,933, respectively.

<PAGE>

U.S. Small Company Opportunities Fund -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $248,525. For the fiscal
years ended May 31, 1999 and 2000: $524,790 and $1,194,085.

If Morgan were prohibited from providing any of the services under the
Shareholder Servicing Agreement and the 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.

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

FINANCIAL PROFESSIONALS

The services provided by financial professionals may include
establishing and maintaining shareholder accounts, processing purchase and
redemption transactions, arranging for bank wires, performing shareholder
subaccounting, answering client inquiries regarding the Trust, assisting clients
in changing dividend options, account designations and addresses, providing
periodic statements showing the client's account balance and integrating these
statements with those of other transactions and balances in the client's other
accounts serviced by the financial professional, transmitting proxy statements,
periodic reports, updated prospectuses and other communications to shareholders
and, with respect to meetings of shareholders, collecting, tabulating and
forwarding executed proxies and obtaining such other information and performing
such other services as J.P. Morgan or the financial professional's clients may
reasonably request and agree upon with the financial professional.

<PAGE>

Although there is no sales charge levied directly by a Fund, financial
professionals may establish their own terms and conditions for providing their
services and may charge investors a transaction-based or other fee for their
services. Such charges may vary among financial professionals but in all cases
will be retained by the financial professional and not be remitted to a Fund or
J.P. Morgan.

Each Fund has authorized one or more brokers to accept purchase and
redemption orders on its behalf. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on a Fund's behalf. A
Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. These orders will be priced at the Fund's net asset value next calculated
after they are so accepted.

INDEPENDENT ACCOUNTANTS

The independent accountants of the Trust and the Portfolios are
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036. PricewaterhouseCoopers 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., JPMIM, Morgan
and FDI under various agreements discussed under "Trustees and Members of the
Advisory Board," "Officers," "Investment Advisor," "Co-Administrator,"
"Distributor," "Services Agent" and "Shareholder Servicing" above, the Funds and
the Portfolios are responsible for usual and customary expenses associated with
their respective operations. Such expenses include organization expenses, legal
fees, accounting and audit expenses, insurance costs, the compensation and
expenses of the Trustees and Members of the Advisory Board, registration fees
under federal securities laws and extraordinary expenses applicable to the Funds
or the Portfolios. For the Funds, 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 filing fees under state
securities laws. For the Portfolios, 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 certain Portfolios
and the usual and customary expenses described above (excluding organization and
extraordinary expenses, custodian fees and brokerage expenses).

<PAGE>

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

Disciplined Equity Fund - For the period December 31, 1997 (commencement of
operations) through May 31, 1998: $54,178. For the fiscal years ended May 31,
1999 and 2000: $58,761 and $45,434.

The Disciplined Equity Portfolio -- For the fiscal years ended May 31, 1998,
1999 and 2000: $110,241, N/A, and N/A respectively.

U.S. Equity Fund -- For the fiscal years ended May 31, 1998, 1999 and 2000: N/A,
N/A and N/A, respectively.

U.S. Equity Portfolio -- For the fiscal years ended May 31, 1998, 1999 and 2000:
N/A, N/A, and N/A, respectively.

U.S. Small Company Fund -- For the fiscal years ended May 31, 1998, 1999 and
2000: $164,771, N/A, and N/A, respectively.

U.S. Small Company Portfolio -- For the fiscal years ended May 31, 1998, 1999
and 2000: N/A, N/A, and N/A, respectively.

U.S. Small Company Opportunities Fund -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $55,593. For the fiscal years
ended May 31, 1999 and 2000: N/A and N/A.

The U.S. Small Company Opportunities Portfolio -- For the period June 16, 1997
(commencement of operations) through May 31, 1998: $3,597. For the fiscal years
ended May 31, 1999 and 2000: N/A and N/A.

PURCHASE OF SHARES

Additional Minimum Balance Information. If your account balance falls
below the minimum for 30 days as a result of selling shares (and not because of
performance), the Fund reserves the right to request that you buy more shares or
close your account. If your account balance is still below the minimum 60 days
after notification, the Fund reserves the right to close out your account and
send the proceeds to the address of record.

<PAGE>

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

References in the Prospectus and this Statement of Additional
Information to customers of Morgan or a financial professional include customers
of their affiliates and references to transactions by customers with Morgan or a
financial professional include transactions with their affiliates. Only Fund
investors who are using the services of a financial institution acting as
shareholder servicing agent pursuant to an agreement with the Trust on behalf of
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 such a transaction 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 the Advisor, appropriate
investments for a Fund's corresponding Portfolio. In addition, 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, OTC market or by readily available market quotations from a
dealer in such securities. Each Fund reserves the right to accept or reject at
its own option any and all securities offered in payment for its shares.

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

REDEMPTION OF SHARES

If the Trust determines that it would be detrimental to the best
interest of the remaining shareholders of the Fund to make payment wholly or
partly in cash, payment of the redemption price may be made in whole or in part
by a distribution in kind of securities from the Fund, in lieu of cash. If
shares are redeemed in kind, the redeeming shareholder might incur costs in
converting the assets into cash. The Trust has received exemptive relief from
the SEC with respect to redemptions in kind by the Fund. The Fund is permitted
to pay redemptions to greater than 5% shareholders in securities, rather than in
cash, to the extent permitted by the SEC and applicable law. 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 the Fund and the Portfolio has elected to be governed by
Rule 18f-1 under the 1940 Act pursuant to which the Fund and the Portfolio 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 an 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 Portfolio and therefore shareholders of the Fund
that receive redemptions in-kind will receive securities of the Portfolio. The
Portfolio has advised the Trust the Portfolio will not redeem in-kind except in
circumstances in which the Fund is permitted to redeem in-kind.

<PAGE>

Further Redemption Information. Investors should be aware that
redemptions from a Fund may not be processed if a redemption request is not
submitted in proper form. To be in proper form, a Fund must have received the
shareholder's taxpayer identification number and address. In addition, if a
shareholder sends a check for the purchase of fund shares and shares are
purchased before the check has cleared, the transmittal of redemption proceeds
from the shares will occur upon clearance of the check which may take up to 15
days. 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 a 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.

For information regarding redemption orders placed through a financial
professional, please see "Financial Professionals" above.

EXCHANGE OF SHARES

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

<PAGE>

DIVIDENDS AND DISTRIBUTIONS

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

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

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

NET ASSET VALUE

Each of the Funds computes its net asset value once daily on Monday
through Friday at the time described in the prospectus. The net asset value will
not be computed on the day the following legal holidays are observed: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. On days when
U.S. trading markets close early in observance of these holidays, the Fund will
close for purchases and redemptions at the same time. The Funds and the
Portfolios may also close for purchases and redemptions at such other times as
may be determined by the Board of Trustees to the extent permitted by applicable
law. The days on which net asset value is determined are the Funds' business
days.

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

<PAGE>

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

Options on stock indexes traded on national securities exchanges are
valued at the close of options trading on such exchanges which is currently 4:10
p.m. New York time. Stock index futures and related options, which are traded on
commodities exchanges, are valued at their last sales price as of the close of
such commodities exchanges which is currently 4:15 p.m., New York time. Options
and futures traded on foreign exchanges are valued at the last sale price
available prior to the calculation of the Fund's net asset value. 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 markets is normally completed
before the close of trading in U.S. markets and may also take place on days on
which the U.S. markets are closed. If events materially affecting the value of
securities occur between the time when the market in which they are traded
closes and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Trustees.

<PAGE>

PERFORMANCE DATA

From time to time, the Funds may quote performance in terms of actual
distributions, total return or capital appreciation in reports, sales literature
and advertisements published by the Trust. Shareholders may obtain current
performance information by calling the number provided on the cover page of this
Statement of Additional Information. See also the Prospectus.

Composite performance information shown in the prospectus has been
calculated in accordance with Performance Presentation Standards of the
Association for Investment Management and Research ("AIMR").

Total Return Quotations. As required by regulations of the SEC, the
annualized total return of the 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 periods prior to the
establishment of the U.S. Equity, U.S. Small Company and Disciplined Equity
funds will be that of their respective predecessor free-standing and/or
corresponding feeder funds and will be presented in accordance with applicable
SEC staff interpretations.

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

Disciplined Equity Fund (5/31/00): Average annual total return, 1 year: 5.19%;
average annual total return, 5 years: N/A; average annual total return,
commencement of operations (January 3, 1997)* to period end: 19.98%; aggregate
total return, 1 year: 5.19%; aggregate total return, 5 years: N/A; aggregate
total return, commencement of operations (January 3, 1997)* to period end:
96.87%.

U.S. Equity Fund (5/31/00): Average annual total return, 1 year: 2.20%; average
annual total return, 5 years: N/A; average annual total return, 10 years:
19.42%; aggregate total return, 1 year: 2.20%; aggregate total return, 5 years:
142.92%; aggregate total return, 10 years: 339.34%.

U.S. Small Company Fund (5/31/00): Average annual total return, 1 year:
(25.90%); average annual total return, 5 years: 15.46%; average annual total
return, 10 years: 12.31%; aggregate total return, 1 year: 25.90%; aggregate
total return, 5 years: 15.46%; aggregate total return, 10 years: 219.36%.

--------------------
* Performance for the period 1/3/97 through 12/31/97 is of the J.P. Morgan
Institutional Disciplined Equity Fund, a separate investor in The Disciplined
Equity Portfolio. The J.P. Morgan Institutional Disciplined Equity Fund has a
lower expense ratio the Disciplined Equity Fund and therefore the performance
shown would have been less had an investment been made in the Disciplined Equity
Fund for this period.

<PAGE>

U.S. Small Company Opportunities Fund (5/31/00): Average annual total return, 1
year: 30.65%; average annual total return, 5 years: N/A; average annual total
return, commencement of operations (June 16, 1997) to period end: 17.22%;
aggregate total return, 1 year: 30.56%; aggregate total return, 5 years: N/A;
aggregate total return, commencement of operations (June 16, 1997) to period
end: 63.42%.

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.

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

PORTFOLIO TRANSACTIONS

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

48
<PAGE>

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. The Advisor intends to seek best execution on
a competitive basis for both purchases and sales of securities.

In selecting a broker, the Advisor considers a number of factors
including: the price per unit of the security; the broker's reliability for
prompt, accurate confirmations and on-time delivery of securities; the 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,
the Advisor decides that the broker chosen will provide the best execution. he
Advisor monitors 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 the Advisor has
allocated brokerage business in the past include economic statistics and
forecasting services, industry and company analyses, portfolio strategy
services, quantitative data, and consulting services from economists and
political analysts. Research services furnished by brokers are used for the
benefit of all 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 corresponding to the Funds paid the following
approximate brokerage commissions for the indicated periods:

Disciplined Equity For the fiscal years ended May 31, 1998, 1999 and 2000:
$175,629, $504,145 and $833,195, respectively.

U.S. Equity - For the fiscal years ended May 31, 1998, 1999 and 2000:
$1,614,293, $1,163,432 and $1,148,804, respectively.

U.S. Small Company for the fiscal years ended May 31, 1998, 1999 and 2000:
$1,662,968, $979,033 and $410,368, respectively.

U.S. Small Company Opportunities For the period June 16, 1997 (commencement of
operations) through May 31, 1998: $126,261. For the fiscal years ended May 31,
1999 and 2000: $93,960 and $242,461.

<PAGE>

Subject to the overriding objective of obtaining the best execution of
orders, the Advisor may allocate a portion of a Portfolio's brokerage
transactions to affiliates of the Advisor. Under the 1940 Act, persons
affiliated with the Portfolio and persons who are affiliated with such persons
are prohibited from dealing with the Portfolio as principal in the purchase and
sale of securities unless a permissive order allowing such transactions is
obtained from the SEC. However, affiliated persons of the Portfolio may serve as
its broker in listed or over-the-counter transactions conducted on an agency
basis provided that, among other things, the fee or commission received by such
affiliated broker is reasonable and fair compared to the fee or commission
received by non-affiliated brokers in connection with comparable transactions.
In addition, the Portfolio may no purchase securities during the existence of
any underwriting syndicate for such securities of which Morgan or an affiliate
is a member or in a private placement in which Morgan or an affiliate serves as
placement agent except pursuant to procedures adopted by the Board of Trustees
of the Portfolio that either comply with rules adopted by the SEC or with
interpretations of the SEC's staff.

On those occasions when the Advisor 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, the Advisor to the extent permitted by applicable
laws and regulations, may, but is not obligated to, aggregate the securities to
be sold or purchased for a Portfolio with those to be sold or purchased for
other customers in order to obtain best execution, including lower brokerage
commissions if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction will be
made by the Advisor in the manner it considers to be most equitable and
consistent with its 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.

50
<PAGE>

Effective October 10, 1996, the name of the Trust was changed from "The
Pierpont Funds" to "The JPM Pierpont Funds," and each Fund's name changed
accordingly. Effective May 12, 1997, the name of the U.S. Equity Fund was
changed from "The JPM Pierpont Equity Fund" to "The JPM Pierpont U.S. Equity
Fund", and the Fund's corresponding Portfolio changed its name accordingly.
Effective May 12, 1997, the name of the U.S. Small Company Fund was changed from
"The JPM Pierpont Capital Appreciation Fund" to "The JPM Pierpont U.S. Small
Company Fund". Effective January 1, 1998, the name of the Trust was changed from
"The JPM Pierpont Funds" to "J.P. Morgan Funds", and each Fund's name changed
accordingly.

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 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, Member of the Advisory Board, officer, employee or
agent of a Fund is liable to a Fund or to a shareholder, and that no Trustee,
Member of the Advisory Board, officer, employee, or agent is liable to any third
persons in connection with the affairs of 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, Member of the
Advisory Board, 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.

51
<PAGE>

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).
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.

The shareholders of the Trust are entitled to one full or fractional
vote for each dollar or fraction of a dollar invested. 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

<PAGE>

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
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 33 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".

As of August 31, 2000, the following owned of record more than 5% of
the outstanding shares of:

Disciplined Equity Fund -Charles Schwab & Co. Inc. Special Custody Account for
Benefit of Customers (17.79%); National Financial Services Corp. for the
exclusive benefit of Customers (28.83%); Gardner Denver Inc. (11.41%).

U.S. Equity Fund -- Forest Laboratories Inc. Savings and Profit Sharing Plan
(10.44%).

U.S. Small Company Fund -Smith Barney Inc. Book Entry Account (11.44%); Forest
Laboratories Inc Savings and Profit Sharing Plan (8.22%).

53
<PAGE>

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

SPECIAL INFORMATION CONCERNING INVESTMENT STRUCTURE

Unlike other mutual funds which directly acquire and manage their own
portfolio of securities, each Fund is an open-end management investment company
which seeks to achieve its investment objective by investing all of its
investable assets in a corresponding Master Portfolio, a separate registered
investment company with the same investment objective and policies as the Fund.
Generally when a corresponding Master Portfolio seeks a vote to change a
fundamental investment restriction, its feeder fund(s) will hold a shareholder
meeting and cast its vote proportionately, as instructed by its shareholders.
The shareholders of the Trust are entitled to a full or fractional vote for each
dollar or fraction of a dollar invested.

In addition to selling a beneficial interest to a Fund, a Portfolio may
sell beneficial interests to other mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
bear a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio may sell shares of their own fund using a
different pricing structure than the Fund. Such different pricing structures may
result in differences in returns experienced by investors in other funds that
invest in the Portfolio. Such differences in returns are not uncommon and are
present in other mutual fund structures. Information concerning other holders of
interests in the Portfolio is available from Morgan at (800) 521-5411.

The Trust may withdraw the investment of a Fund from a Portfolio at any
time if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Board of Trustees
would consider what action might be taken, including the investment of all the
assets of the Fund in another pooled investment entity having the same
investment objective and restrictions in accordance with the investment policies
with respect to the Portfolio described above and in each Fund's Prospectus.

Certain changes in a Portfolio's fundamental investment policies or
restrictions, or a failure by a Fund's shareholders to approve such change in a
Portfolio's investment restriction, may require withdrawal of a Fund's interest
in the Portfolio. Any such withdrawal could result in a distribution in-kind of
portfolio securities (as opposed to a cash distribution) from a Portfolio which
may or may not be readily marketable. The distribution in-kind may result in a
Fund having a less diversified portfolio of investments or adversely affect a
Fund's liquidity, and a Fund could incur brokerage, tax or other charges in
converting the securities to cash. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.

54
<PAGE>

Smaller funds investing in a Portfolio may be materially affected by
the actions of larger funds investing in a Portfolio. For example, if a large
fund withdraws from a Portfolio, the remaining funds may subsequently experience
higher pro rata operating expenses, thereby producing lower returns.

Additionally, because a Portfolio would become smaller, it may become
less diversified, resulting in potentially increased portfolio risk (however,
these possibilities also exist for traditionally structured funds which have
large or institutional investors who may withdraw from a fund). Also, funds with
a greater pro rata ownership in a Portfolio could have effective voting control
of the operations of a Portfolio. Whenever a Fund is requested to vote on
matters pertaining to its corresponding Portfolio (other than a vote by a Fund
to continue the operation of its corresponding Portfolio upon the withdrawal of
another investor in a Portfolio), the Trust will hold a meeting of shareholders
of a Fund and will cast all of its votes proportionately as instructed by a
Fund's shareholders. The Trust will vote the shares held by Fund shareholders
who do not give voting instructions in the same proportion as the shares of Fund
shareholders who do give voting instructions. Shareholders of a Fund who do not
vote will have no effect on the outcome of such matters.

TAXES

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

Each Fund intends to continue 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; and (b) diversify its
holdings so that, at the end of each quarter of its taxable year, (i) at least
50% of the value of the Fund's total assets is represented by cash, cash items,
U.S. Government securities, securities of other regulated investment companies,
and other securities limited, in respect of any one issuer, to an amount not
greater than 5% of the Fund's total assets, and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies).

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

<PAGE>

Under the Code, a Fund will be subject to a 4% excise tax on a portion
of its undistributed taxable income and capital gains if it fails to meet
certain distribution requirements by the end of the calendar year. 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 be taxable to a
shareholder in the year declared rather than the year paid.

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

Gains or losses on sales of portfolio securities will be treated as
long-term capital gains or losses if the securities have been held for more than
one year except in certain cases where a put option is acquired or a call option
is written thereon or the straddle rules described below are otherwise
applicable. Other gains or losses on the sale of securities will be short-term
capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities will be treated as gains and losses from
the sale of securities. Except as described below, if an option written by 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.

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

56
<PAGE>

For federal income tax purposes, the U.S. Small Company Fund had no
capital loss carryforward at May 31, 2000. The U.S. Small Company Opportunities
Fund had no capital loss carryforward at May 31, 2000.

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

Under the Code, gains or losses attributable to disposition of foreign
currency or to certain foreign currency contracts, or to fluctuations in
exchange rates between the time 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 generally
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.

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

57
<PAGE>

The Funds 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
corresponding fund may be subject to federal income tax on a portion of an
"excess distribution" from such foreign corporation, including any gain from the
disposition of such shares, even though a portion of such income may have to be
distributed as a taxable dividend by the Fund to its shareholders. In addition,
certain interest charges may be imposed on a Fund as a result of such
distributions. Alternatively, a Fund may in some cases be permitted to include
each year in its income and distribute to shareholders a pro rata portion of the
foreign investment fund's income, whether or not distributed to the Fund.

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

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

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

In the case of a foreign shareholder who is a nonresident alien
individual or foreign entity, a Fund may be required to withhold U.S. federal
income tax as "backup withholding" at the rate of 31% from distributions treated
as long-term capital gains and from the proceeds of redemptions, exchanges or
other dispositions of Fund shares unless IRS Form W-8BEN (or any successor form)
is provided. Transfers by gift of shares of 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 Funds may be subject to foreign
withholding taxes or other foreign taxes with respect to income (possibly
including, in some cases, capital gains) received from sources within foreign
countries.

<PAGE>

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 each
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.

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 a Fund's
outstanding shares or the Portfolio's outstanding voting securities are present
or represented by proxy, or (ii) more than 50% of a Fund's outstanding shares or
the Portfolio's outstanding voting securities, whichever is less.

Telephone calls to the Funds, J.P. Morgan or Financial Professionals as
shareholder servicing agent may be tape recorded. With respect to the securities
offered hereby, this Statement of Additional Information and the Prospectus do
not contain all the information included in the Trust's registration statement
filed with the SEC under the 1933 Act and the 1940 Act 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 Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the applicable
Registration Statements. Each such statement is qualified in all respects by
such reference.

No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in the
Prospectus and this Statement of Additional Information, in connection with the
offer contained therein and, if given or made, such other information or
representations must not be relied upon as having been authorized by any of the
Trust, the Funds or 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.

59
<PAGE>

FINANCIAL STATEMENTS

The following financial statements of the Funds and the report thereon
of PricewaterhouseCoopers LLP are incorporated herein by reference from their
respective annual report filings made with the SEC pursuant to Section 30(b) of
the 1940 Act and Rule 30b2-1 thereunder. Any of the following financial reports
are available without charge upon request by calling J.P. Morgan Funds Services
at (800) 521-5411. Each Fund's financial statements include the financial
statements of the Fund's corresponding Portfolio.

--------------------------------------------------------------------------------------------------------------------
Name of Fund Date of Annual Report; Date Annual Report Filed;
and Accession Number
---------------------------------------------------------------- ---------------------------------------------------
<S> <C>
J.P. Morgan Disciplined Equity Fund 5/31/00; 7/26/00;
0000912057-00-033208
---------------------------------------------------------------- ---------------------------------------------------
J.P. Morgan U.S. Equity Fund 5/31/00;7/26/00;
0000912057-00-033179
---------------------------------------------------------------- ---------------------------------------------------
J.P. Morgan U.S. Small Company Fund 5/31/00; 7/26/00
0000912057-00-033200
---------------------------------------------------------------- ---------------------------------------------------
J.P. Morgan U.S. Small Company Opportunities Fund 5/31/00; 7/26/00
0000912057-00-033184
--------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

APPENDIX A
Description of Security Ratings

STANDARD & POOR'S

Corporate and Municipal Bonds

AAA - Debt rated AAA have 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 have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.

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

BBB - Debt rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit 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 are regarded as having less near-term vulnerability to
default than other speculative issues. However, they face 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.

B - An obligation rated B is more vulnerable to nonpayment than obligations
rated BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to
meet its financial commitment on the obligation.

CCC - An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor
is not likely to have the capacity to meet its financial commitment on the
obligation.

CC - An obligation rated CC is currently highly vulnerable to nonpayment.

C - The C rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this
obligation are being continued.

A-1

<PAGE>

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax-Exempt Notes

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

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

MOODY'S

Corporate and Municipal Bonds

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

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

A-2

<PAGE>

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

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.

Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax Exempt Notes

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

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

A-3
<PAGE>

J.P. MORGAN SERIES TRUST

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

STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 1, 2000

2
<PAGE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS BUT CONTAINS
ADDITIONAL INFORMATION WHICH SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS
DATED OCTOBER 1, 2000 FOR EACH OF THE FUNDS LISTED ABOVE, AS SUPPLEMENTED FROM
TIME TO TIME. ADDITIONALLY, THIS STATEMENT OF ADDITIONAL INFORMATION
INCORPORATES BY REFERENCE THE FINANCIAL STATEMENTS INCLUDED IN THE SHAREHOLDER
REPORTS RELATING TO EACH OF THE FUNDS LISTED ABOVE DATED OCTOBER 1, 2000. THE
PROSPECTUSES AND THESE FINANCIAL STATEMENTS, INCLUDING THE INDEPENDENT
ACCOUNTANTS' REPORT IN THE ANNUAL FINANCIAL STATEMENTS, ARE AVAILABLE, WITHOUT
CHARGE, UPON REQUEST FROM FUNDS DISTRIBUTOR, INC., 60 STATE STREET, SUITE 1300,
BOSTON, MASSACHUSETTS 02109, ATTENTION: J.P. MORGAN SERIES TRUST (800) 221-7930.

3
<PAGE>

Table of Contents

Page
----

GENERAL----------------------------------------------------------------------1
INVESTMENT OBJECTIVES AND POLICIES-------------------------------------------1
INVESTMENT RESTRICTIONS-----------------------------------------------------16
TRUSTEES AND MEMBERS OF THE ADVISORY BOARD----------------------------------18
OFFICERS--------------------------------------------------------------------22
CODES OF ETHICS-------------------------------------------------------------23
INVESTMENT ADVISOR----------------------------------------------------------24
DISTRIBUTOR-----------------------------------------------------------------26
CO-ADMINISTRATOR------------------------------------------------------------27
SERVICES AGENT--------------------------------------------------------------27
CUSTODIAN AND TRANSFER AGENT------------------------------------------------28
SHAREHOLDER SERVICING-------------------------------------------------------28
FINANCIAL PROFESSIONALS-----------------------------------------------------30
INDEPENDENT ACCOUNTANTS-----------------------------------------------------30
EXPENSES--------------------------------------------------------------------30
PURCHASE OF SHARES----------------------------------------------------------31
REDEMPTION OF SHARES--------------------------------------------------------32
EXCHANGE OF SHARES----------------------------------------------------------33
DIVIDENDS AND DISTRIBUTIONS-------------------------------------------------34
NET ASSET VALUE-------------------------------------------------------------34
PERFORMANCE DATA------------------------------------------------------------35
PORTFOLIO TRANSACTIONS------------------------------------------------------37
MASSACHUSETTS TRUST---------------------------------------------------------39
DESCRIPTION OF SHARES-------------------------------------------------------39
TAXES-----------------------------------------------------------------------41
ADDITIONAL INFORMATION------------------------------------------------------44
FINANCIAL STATEMENTS--------------------------------------------------------45
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS-----------------------------A-1

2
<PAGE>

GENERAL

Each of J.P. Morgan Tax Aware Disciplined Equity Fund (the "Disciplined
Equity Fund") and J.P. Morgan Tax Aware U.S. Equity Fund (the " U.S. Equity
Fund", and together with the Disciplined Equity Fund, the "Funds") is a series
of J.P. Morgan Series Trust, an open-end management investment company organized
as a Massachusetts business trust (the "Trust"). The Trustees of the Trust have
authorized the issuance and sale of shares of one class of the Disciplined
Equity Fund (Institutional Shares) and one class of the U.S. Equity Fund (Select
Shares).

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

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

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

INVESTMENT OBJECTIVES AND POLICIES

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

Tax Aware Disciplined Equity Fund is designed for investors seeking
enhanced total return relative to that of large and medium sized companies,
typically represented by the S&P 500 Index. The Disciplined Equity Fund's
investment objective is to provide a consistently high after tax total return
from a broadly diversified portfolio of equity securities with risk
characteristics similar to the S&P 500 Index. This investment objective can be
changed without shareholder approval.

The Disciplined Equity Fund invests primarily in large- and
medium-capitalization U.S. companies. Under normal circumstances, the
Disciplined Equity Fund expects to be fully invested.

Investment Process for the Tax Aware Disciplined Equity Fund

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Valuation: The analysts' forecasts are converted into comparable expected
returns using a proprietary dividend discount model, which calculates the
intermediate-term earnings by comparing a company's current stock price with its
forecasted dividends and earnings. Within each sector, companies are ranked
according to their relative value 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.

Stock Selection: A broadly diversified portfolio is constructed using
disciplined buy and sell rules. Purchases are allocated among stocks in the
first three quintiles. Once a stock falls into the fourth and fifth quintiles
either because its price has risen or its fundamentals have deteriorated -- it
generally becomes a candidate for sale. The Disciplined Equity Fund's sector
weightings are matched to those of the S&P 500 Index, the Fund's benchmark. The
Advisor also controls the Disciplined Equity Fund's exposure to style and theme
bets and maintains near-market security weightings in individual security
holdings. This process results in an investment portfolio containing
approximately 300 stocks.

Tax Aware 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 U.S. Equity Fund's investment objective is to provide high after
tax total return from a portfolio of selected equity securities. This investment
objective can be changed without shareholder approval.

Under normal circumstances, the U.S. Equity Fund expects to be fully
invested in equity securities consisting of U.S. and foreign common stocks and
other securities with equity characteristics which are comprised of preferred
stock, warrants, rights, convertible securities, trust certifications, limited
partnership interests and investment company securities (collectively, "Equity
Securities"). The U.S. Equity Fund's primary equity investments are the common
stock of large- and medium-capitalization U.S. corporations and, to a limited
extent, similar securities of foreign corporations.

Investment Process for the Tax Aware U.S. Equity Fund

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work in concert with the Advisor's international equity analysts in order to
gain a broader perspective for evaluating industries and companies in today's
global economy.

Valuation: The analysts' forecasts are converted into comparable expected
returns using a proprietary dividend discount model, which calculates the
long-term earnings by comparing a company's current stock price with its
forecasted dividends and earnings. Within each sector, companies are ranked
according to their relative value 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.

Stock Selection: 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 candidate for sale. The portfolio manager seeks to hold
sector weightings close to those of the S&P 500 Index, the U.S. Equity Fund's
benchmark.

Tax Management Techniques

The Funds use the Advisor's proprietary tax sensitive optimization model
which is designed to reduce, but not eliminate, the impact of capital gains
taxes on shareholders' after tax total returns. Each Fund will try to minimize
the realization of net short-term and long-term capital gains by matching
securities sold at a gain with those sold at a loss to the extent practicable.
In addition, when selling a portfolio security, each Fund will generally select
the highest cost basis shares of the security to reduce the amount of realized
capital gains. Because the gain on securities that have been held for more than
one year is subject to a lower federal income tax rate, these securities will
generally be sold before securities held less than one year. The use of these
tax management techniques will not necessarily reduce a Fund's portfolio
turnover rate or prevent the Funds from selling securities to the extent
warranted by shareholder transactions, actual or anticipated economic, market or
issuer-specific developments or other investment considerations. However, the
annual portfolio turnover rate of each Fund is generally not expected to exceed
100%.

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

Equity Investments

The Funds invest primarily in Equity Securities consisting of
exchange-traded, OTC and unlisted common and preferred stocks. A discussion of
the various types of equity investments which may be purchased by the Funds
appears below. See also "Quality and Diversification Requirements."

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

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

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

Common Stock Warrants

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

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

Foreign Investments

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

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States or abroad could result in appreciation or depreciation of portfolio
securities and could favorably or unfavorably affect the Funds' operations.
Furthermore, the economies of individual foreign nations may differ from the
U.S. economy, whether favorably or unfavorably, in areas such as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position; it may also be more difficult
to obtain and enforce a judgment against a foreign issuer. Any foreign
investments made by the Funds must be made in compliance with U.S. and foreign
currency restrictions and tax laws restricting the amounts and types of foreign
investments.

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

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

Additional Investments

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less than the purchase price. To facilitate such acquisitions, each Fund will
maintain with the custodian a segregated account with liquid assets, consisting
of cash or other liquid assets, in an amount at least equal to such commitments.
If a Fund chooses to dispose of the right to acquire a when-issued security
prior to its acquisition, it could, as with the disposition of any other fund
obligation, incur a gain or loss due to market fluctuation. Also, a Fund may be
disadvantaged if the other party to the transaction defaults.

Investment Company Securities. Securities of other investment companies
may be acquired by each of the Funds to the extent permitted under the 1940 Act
or any order pursuant thereto. These limits currently require that, as
determined immediately after a purchase is made, (i) not more than 5% of the
value of 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 the 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. As a shareholder of another investment
company, a Fund or Portfolio 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. Each Fund has
applied for exemptive relief from the SEC to permit the Fund to invest in
affiliated investment companies. If the requested relief is granted, the Fund
would then be permitted to invest in affiliated funds, subject to certain
conditions specified in the applicable order.

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

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<PAGE>

duration of the reverse repurchase agreement. Each Fund will establish and
maintain with the custodian a separate account with a segregated portfolio of
securities in an amount at least equal to its purchase obligations under its
reverse repurchase agreements. See "Investment Restrictions" for each Fund's
limitations on reverse repurchase agreements and bank borrowings.

Loans of Portfolio Securities. Each Fund is permitted to lend its
securities in an amount up to 33 1/3% of the value of such Fund's net assets.
Each of the Funds may lend its securities if such loans are secured continuously
by cash or equivalent collateral or by a letter of credit in favor of the Fund
at least equal at all times to 100% of the market value of the securities
loaned, plus accrued interest. While such securities are on loan, the borrower
will pay the Fund any income accruing thereon. Loans will be subject to
termination by the Funds in the normal settlement time, generally three business
days after notice, or by the borrower on one day's notice. Borrowed securities
must be returned when the loan is terminated. Any gain or loss in the market
price of the borrowed securities which occurs during the term of the loan inures
to a Fund and its respective shareholders. The Funds may pay reasonable finders'
and custodial fees in connection with a loan. In addition, a Fund will consider
all facts and circumstances before entering into such an agreement including the
creditworthiness of the borrowing financial institution, and no Fund will make
any loans in excess of one year. The Funds will not lend their securities to any
officer, Trustee, Member of the Advisory Board, Director, employee or other
affiliate of the Funds, the Advisor or the Funds' distributor, unless otherwise
permitted by applicable law.

Illiquid Investments; Privately Placed and Other Unregistered Securities.
No Fund may acquire any illiquid securities if, as a result thereof, more than
15% of its net assets would be in illiquid investments. Subject to this
non-fundamental policy limitation, each Fund may acquire investments that are
illiquid or have limited liquidity, such as private placements or investments
that are not registered under the Securities Act of 1933, as amended (the "1933
Act"), and cannot be offered for public sale in the United States without first
being registered under the 1933 Act. An illiquid investment is any investment
that cannot be disposed of within seven days in the normal course of business at
approximately the amount at which it is valued by a Fund. The price a Fund pays
for illiquid securities or receives upon resale may be lower than the price paid
or received for similar securities with a more liquid market. Accordingly the
valuation of these securities will reflect any limitations on their liquidity.

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

Money Market Instruments

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<PAGE>

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

Bank Obligations. Unless otherwise noted below, each of the Funds may
invest in negotiable certificates of deposit, time deposits and bankers'
acceptances of (i) banks, savings and loan associations and savings banks which
have more than $2 billion in total assets and are organized under the laws of
the United States or any state, (ii) foreign branches of these banks or of
foreign banks of equivalent size (Euros) and (iii) U.S. branches of foreign
banks of equivalent size (Yankees). The 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 may also invest in obligations of
international banking institutions designated or supported by national
governments to promote economic reconstruction, development or trade between
nations (e.g., the European Investment Bank, the Inter-American Development
Bank, or the World Bank).

Commercial Paper. Each of the Funds may invest in commercial paper,
including master demand obligations. Master demand obligations are obligations
that provide for a

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

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

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Quality and Diversification Requirements

Each of the Funds intends to meet the diversification requirements of the
1940 Act. To meet these requirements, 75% of the assets of each Fund 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.
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.

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

The 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

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

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

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

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

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

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

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

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

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

Futures Contracts and Options on Futures Contracts. The Funds may purchase
or sell (write) futures contracts and purchase or sell put and call options,
including put and call options on futures contracts. In addition, the 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.

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<PAGE>

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 Fund are paid by the Fund into a segregated account, in the
name of the Futures Commission Merchant, as required by the 1940 Act and the
SEC's interpretations thereunder.

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

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

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

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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 Fund
to enter into new positions or close out existing positions. If the market for a
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable positions, and could potentially
require a Fund to continue to hold a position until delivery or expiration
regardless of changes in its value. As a result, a Fund's access to other assets
held to cover its options or futures positions could also be impaired. (See
"Exchange Traded and OTC Options" above for a discussion of the liquidity of
options not traded on an exchange.)

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

In addition, each of the Funds 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
Fund's assets could impede portfolio management or a Fund's ability to meet
redemption requests or other current obligations.

Risk Management

The Funds may employ non-hedging risk management techniques. Risk
management strategies are used to keep the Funds fully invested and to reduce
the transaction costs associated

17
<PAGE>

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

Portfolio Turnover

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

Tax Aware Disciplined Equity Fund -- For the period January 30, 1997
(commencement of operations) through October 31, 1997, and the for the fiscal
years ended October 31, 1998 and 1999: 35%, 57% and 40%, respectively. For the
six months ended April 30, 2000: 26%.

Tax Aware U.S. Equity Fund -- For the period December 18, 1996 (commencement of
operations) through October 31, 1997, and for the fiscal years ended October 31,
1998 and 1999: 23%, 44% and 29%, respectively. For the six months ended April
30, 2000: 8%.

INVESTMENT RESTRICTIONS

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

The Funds:

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<PAGE>

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

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

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

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

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

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

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

(ii) May not 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

19
<PAGE>

sale of when-issued or delayed delivery securities, or to short sales that are
covered in accordance with SEC rules; and

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

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

TRUSTEES AND MEMBERS OF THE ADVISORY BOARD

Trustees

The Trustees of the Trust, their principal occupations during the past
five years, business addresses and dates of birth are set forth below.

FREDERICK S. ADDY--Trustee; Retired; Prior to April 1994, Executive Vice
President and Chief Financial Officer, Amoco Corporation. His address is c/o
Pierpont Group, Inc. 461 Fifth Avenue, New York, N.Y. 10017. His date of birth
is January 1, 1932.

WILLIAM G. BURNS--Trustee; Retired, Former Vice Chairman and Chief
Financial Officer, NYNEX. His address is c/o Pierpont Group, Inc. 461 Fifth
Avenue, New York, N.Y. 10017 his date of birth is November 2, 1932.

ARTHUR C. ESCHENLAUER--Trustee; Retired; Former Senior Vice President,
Morgan Guaranty Trust Company of New York. His address is c/o Pierpont Group,
Inc. 461 Fifth Avenue, New York, N.Y. 10017. His date of birth is May 23, 1934.

20
<PAGE>

MATTHEW HEALEY(1)--Trustee, Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc., since prior to 1993. His address is c/o Pierpont
Group, Inc. 461 Fifth Avenue, New York, N.Y. 10017. His date of birth is August
23, 1937.

MICHAEL P. MALLARDI--Trustee; Retired; Prior to April 1996, Senior Vice
President, Capital Cities/ABC, Inc. and President, Broadcast Group. His address
is c/o Pierpont Group, Inc. 461 Fifth Avenue, New York, N.Y. 10017. His date of
birth is March 17, 1934.

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

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

21
<PAGE>

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

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

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

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

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

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

Michael P. Mallardi, Trustee $1,018 $75,000

(*) Includes each portfolio in which a series of J.P. Morgan Funds or J.P.
Morgan Institutional Funds invests.

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

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

22
<PAGE>

Group, Inc. These costs are periodically reviewed by the Trustees. The principal
offices of Pierpont Group, Inc. are located at 461 Fifth Avenue, New York, New
York 10017.

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

Tax Aware Disciplined Equity Fund -- For the fiscal years ended October 31, 1998
and 1999: $1,578 and $4,110, respectively. For the six months ended April 30,
2000: $3,309

Tax Aware U.S. Equity Fund -- For the fiscal years ended October 31, 1998 and
1999: $1,552 and $2,425, respectively. For the six months ended April 30, 2000:
$1,527

Advisory Board

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

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

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

23
<PAGE>

Officers

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

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

MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont Group, since
prior to 1993. His address is Pine Tree Country Club Estates, 10286 Saint
Andrews Road, Boynton Beach, Florida 33436. His date of birth is August 23,
1937.

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

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

24
<PAGE>

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

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

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

25
<PAGE>

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

CODES OF ETHICS

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

INVESTMENT ADVISOR

The Trust has retained JPMIM as Investment Advisor to provide investment
advice and portfolio management services to the Funds. Subject to the
supervision of the Fund's Trustees, the Advisor makes each Fund's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages each Fund's investments. Effective October 1, 1998 each Fund's
Investment Advisor is JPMIM. Prior to that date, Morgan was the Investment
Advisor.

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

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

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

26
<PAGE>

The Advisor 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 and Singapore
to cover companies, industries and countries on site. In addition, the
investment management divisions employ approximately 420 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 investment advisory services the Advisor provides to the Funds are not
exclusive under the terms of the Investment Advisory Agreement. The Advisor is
free to and does render similar investment advisory services to others. The
Advisor serves as investment advisor to personal investors and other investment
companies and acts as fiduciary for trusts, estates and employee benefit plans.
Certain of the assets of trusts and estates under management are invested in
common trust funds for which the Advisor serves as trustee. The accounts which
are managed or advised by the Advisor have varying investment objectives and the
Advisor invests assets of such accounts in investments substantially similar to,
or the same as, those which are expected to constitute the principal investments
of the Funds. Such accounts are supervised by officers and employees of the
Advisor who may also be acting in similar capacities for the Funds. See
"Portfolio Transactions."

Morgan, also a wholly owned subsidiary of J.P. Morgan, is 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.

The Funds are managed by officers of the Advisor who, in acting for their
clients, including the Funds, do not discuss their investment decisions with any
personnel of J.P. Morgan or any personnel of other divisions of J.P. Morgan or
with any of its affiliated persons, with the exception of certain investment
management affiliates of J.P. Morgan.

27
<PAGE>

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

Tax Aware Disciplined Equity Fund: 0.35%

Tax Aware U.S. Equity Fund: 0.45%

The table below sets forth the advisory fees paid by each Fund to the
Advisor for the fiscal periods indicated.

Tax Aware Disciplined Equity Fund -- For the period January 30, 1997
commencement of operations through October 31, 1997 and for the fiscal years
ended October 31, 1998 and 1999: $16,524, $195,083, $754,945, respectively. For
the six-months period ended April 30, 2000: $699,308.

Tax Aware U.S. Equity Fund -- For the period January 30, 1997 commencement of
operations through October 31, 1997 and for the fiscal years ended October 31,
1998 and 1999: $62,523,$243,124 and $554,907, respectively. For the six-months
period ended April 30, 2000: $410,129.

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

28
<PAGE>

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

DISTRIBUTOR

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

The Distribution Agreement will continue in effect with respect to each
Fund for a period of two years after execution only if it is approved at least
annually thereafter (i) by a vote of the holders of a majority of the Fund's
outstanding voting securities or by its Trustees and (ii) by a vote of a
majority of the Trustees of the Trust who are not "interested persons" (as
defined by the 1940 Act) of the parties to the Distribution Agreement, cast in
person at a meeting called for the purpose of voting on such approval (see
"Trustees and Members of the Advisory Board" and "Officers"). The Distribution
Agreement will terminate automatically if assigned by either party. The
Distribution Agreement is also terminable with respect to a Fund at any time
without penalty by a vote of a majority of the Trustees of the Trust, a vote of
a majority of the Trustees who are not "interested persons" of the Trust, or by
a vote of (i) 67% or more of the Fund's outstanding

29
<PAGE>

voting securities present at a meeting if the holders of more than 50% of the
Fund's outstanding voting securities are present or represented by proxy, or
(ii) more than 50% of the Fund's outstanding voting securities, whichever is
less. FDI is a wholly owned indirect subsidiary of Boston Institutional Group,
Inc. The principal offices of FDI are located at 60 State Street, Suite 1300,
Boston, Massachusetts 02109.

CO-ADMINISTRATOR

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

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

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

The table below sets forth for each Fund listed the administrative fees
paid to FDI for the fiscal periods indicated.

Tax Aware Disciplined Equity Fund: -- For the period January 30, 1997
commencement of operations through October 31, 1997 and for the fiscal years
ended October 31, 1998 and 1999: $84,$744 and $1,911, respectively. For the six
month period ended April 30, 2000:
$1,396

Tax Aware U.S. Equity Fund: -- For the period January 30, 1997 commencement of
operations through October 31, 1997 and for the fiscal years ended October 31,
1998 and 1999: $252, $734 and $1,108, respectively. For the six month period
ended April 30, 2000: $641

30
<PAGE>

SERVICES AGENT

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

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

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

The table below sets forth for each Fund listed the fees paid to Morgan as
Services Agent.

Tax Aware Disciplined Equity Fund: -- For the fiscal years ended October 31,
1998 and 1999: $32,142 and $111,033, respectively. For the six month period
ended April 30, 2000: $98,494.

Tax Aware U.S. Equity Fund: -- For the fiscal years ended October 31, 1998 and
1999: $31,306 and $63,722, respectively. For the six month period ended April
30, 2000: $45,305.

CUSTODIAN AND TRANSFER AGENT

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

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<PAGE>

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

SHAREHOLDER SERVICING

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

Under the Shareholder Servicing Agreement, the Tax Aware U.S. Equity Fund
has agreed to pay Morgan for these services a fee of 0.25% (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); and
effective October 1, 1998, the Tax Aware Disciplined Equity Fund has agreed to
pay Morgan for these services a fee of 0.10% (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). Morgan acts as
Shareholder Servicing Agent for all shareholders.

The table below sets forth for each Fund listed the shareholder servicing
fees paid by each Fund to Morgan for the fiscal periods indicated.

Tax Aware Disciplined Equity Fund: -- For the period January 30, 1997
commencement of operations through October 31, 1997 and for the fiscal years
ended October 31, 1998 and 1999: $11,803,$108,894 and $215,699, respectively.
For the six month period ended April 30, 2000: $200,629

Tax Aware U.S. Equity Fund: -- For the period January 30, 1997 commencement of
operations through October 31, 1997 and for the fiscal years ended October 31,
1998 and 1999: $34,735, $135,069 and $308,281, respectively. For the six month
period ended April 30, 2000: $230,766

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<PAGE>

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

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

FINANCIAL PROFESSIONALS

The services provided by financial professionals may include establishing
and maintaining shareholder accounts, processing purchase and redemption
transactions, arranging for bank wires, performing shareholder subaccounting,
answering client inquiries regarding the Trust, assisting clients in changing
dividend options, account designations and addresses, providing periodic
statements showing the client's account balance and integrating these statements
with those of other transactions and balances in the client's other accounts
serviced by the financial professional, transmitting proxy statements, periodic
reports, updated prospectuses and other communications to shareholders and, with
respect to meetings of shareholders, collecting, tabulating and forwarding
executed proxies and obtaining such other information and performing such other
services as J.P. Morgan or the financial professional's clients may reasonably
request and agree upon with the financial professional.

Although there is no sales charge levied directly by the Funds, financial
professionals may establish their own terms and conditions for providing their
services and may charge investors a transaction-based or other fee for their
services. Such charges may vary among

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financial professionals but in all cases will be retained by the financial
professional and not be remitted to the Fund or J.P. Morgan.

Each Fund has authorized one or more brokers to accept purchase and
redemption orders on its behalf. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on a Fund's behalf. A
Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, it applicable, a broker's authorized designee, accepts the
order. These orders will be priced at the Fund's net asset value next calculated
after they are so accepted.

INDEPENDENT ACCOUNTANTS

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

EXPENSES

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

J.P. Morgan has agreed that it will reimburse the Funds noted below as described
in the Prospectuses until February 28, 2001 to the extent necessary to maintain
each Fund's total operating expenses at the following annual rates of each
Fund's average daily net assets. These limits do not cover extraordinary
expenses.

Tax Aware Disciplined Equity Fund 0.55%
Tax Aware U.S. Equity Fund 0.85%

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Tax Aware Disciplined Equity Fund: -- For the period January 30, 1997
commencement of operations through October 31, 1997 and for the fiscal years
ended October 31, 1998 and 1999:$190,599, $261,143 and $207,236, respectively.
For the six month period ended April 30, 2000: $34,234

Tax Aware U.S. Equity Fund: -- For the period January 30, 1997 commencement of
operations through October 31, 1997 and for the fiscal years ended October 31,
1998 and 1999: $182,588, $130,293 and $67,977, respectively. For the six month
period ended April 30, 2000: $11,624

PURCHASE OF SHARES

Additional Minimum Balance Information. For investors who purchased shares
of the Disciplined Equity Fund prior to January 2, 1998, the minimum account
balance will remain $100,000 and the minimum subsequent investment remains
$5,000.

If your account balance falls below the minimum for 30 days as a result of
selling shares (and not because of performance), the Fund reserves the right to
request that you buy more shares or close your account. If your account balance
is still below the minimum 60 days after notification, the Fund reserves the
right to close out your account and send the proceeds to the address of record.

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

References in the Prospectuses and this Statement of Additional
Information to customers of J.P. Morgan or a financial professional include
customers of their affiliates and references to transactions by customers with
J.P. Morgan or a financial professional include transactions with their
affiliates. Only Fund investors who are using the services of a financial
institution acting as shareholder servicing agent pursuant to an agreement with
the Trust on behalf of 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 so delivered are valued by the method described under "Net Asset
Value" as of the day a Fund receives the securities. This is a taxable
transaction to the shareholder. Securities may be accepted in payment for shares
only if they are, in the judgment of the Advisor, appropriate investments for a
Fund. In addition, securities accepted in payment for shares must: (i) meet the

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<PAGE>

investment objective and policies of the acquiring Fund; (ii) be acquired by the
applicable Fund for investment and not for resale; (iii) be liquid securities
which are not restricted as to transfer; and (iv) if stock, have a value which
is readily ascertainable as evidenced by a listing on a stock exchange, OTC
market or by readily available market quotations from a dealer in such
securities. Each Fund reserves the right to accept or reject at its own option
any and all securities offered in payment for its shares.

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

REDEMPTION OF SHARES

Investors may redeem shares of the Funds as described in the Prospectus.
The Funds generally intend to pay redemption proceeds in cash; however, they
reserve the right at their sole discretion to pay redemption over $500,000 (in
the case of the Tax Aware Disciplined Equity Fund) or $250,000 (in the case of
the Tax Aware U.S. Equity Fund) in-kind as a portfolio of representative stocks
rather than cash. See below and "Exchange of Shares".

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

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

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

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<PAGE>

would cause it to violate its investment restrictions or policies. See the
Prospectuses for information on redemptions in-kind.

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

For information regarding redemption orders placed through a financial
professional, please see "Financial Professionals" above.

EXCHANGE OF SHARES

Subject to the limitations below, an investor may exchange shares from a
Fund into any other J.P. Morgan Fund or J.P. Morgan Institutional Fund without
charge. An exchange may be made so long as after the exchange the investor has
shares, in each fund in which he or she remains an investor, with a value of at
least that fund's minimum investment amount. Shareholders should read the
prospectus of the fund into which they are exchanging and may only exchange
between fund accounts that are registered in the same name, address and taxpayer
identification number. Shares are exchanged on the basis of relative net asset
value per share. Exchanges are in effect redemptions from one fund and purchases
of another fund and the usual purchase and redemption procedures and
requirements are applicable to exchanges. The Funds generally intend to pay
redemption proceeds in cash; however, since they reserve the right at their sole
discretion to pay redemptions over $500,000 (in the case of the Tax Aware
Disciplined Equity Fund) or $250,000 (in the case of the Tax Aware U.S. Equity
Fund) in-kind as a portfolio

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<PAGE>

of representative stocks rather than cash, each Fund reserves the right to deny
an exchange request in excess of those amounts. See "Redemption of Shares".
Shareholders subject to federal income tax who exchange shares in one fund for
shares in another fund may recognize capital gain or loss for federal income tax
purposes. Shares of a fund to be acquired are purchased for settlement when the
proceeds from redemption become available. In the case of investors in certain
states, state securities laws may restrict the availability of the exchange
privilege. The Trust reserves the right to discontinue, alter or limit the
exchange privilege at any time.

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares and pays dividends and distributions as described in
the Prospectus.

A Fund's dividends and distributions are paid in additional shares unless
the shareholder elects to have them paid in cash. The tax effects of dividends
and distributions are the same whether they are paid in shares or cash. Cash
dividends and distributions either (1) are credited to the shareholder's account
at J.P. Morgan or at his financial professional or (2) in the case of certain
J.P. Morgan clients, are paid by a check mailed in accordance with the client's
instructions.

NET ASSET VALUE

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

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<PAGE>

manager, material events or conditions since such last sale necessitate fair
valuation of the security. The value of each security for which readily
available market quotations exist is based on a decision as to the broadest and
most representative market for such security. For purposes of calculating net
asset value all assets and liabilities initially expressed in foreign currencies
will be converted into U.S. dollars at the prevailing currency rate average on
the valuation date.

Options on stock indexes traded on national securities exchanges are
valued at the close of options trading on such exchanges which is currently 4:10
p.m. New York time. Stock index futures and related options, which are traded on
commodities exchanges, are valued at their last sales price as of the close of
such commodities exchanges which is currently 4:15 p.m., New York time. Options
and futures traded on foreign exchanges are valued at the last sale price
available prior to the calculation each of the Fund's net asset value.
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 Fund was more than
60 days, unless this is determined not to represent fair value by the Trustees.

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

PERFORMANCE DATA

From time to time, the Funds may quote performance in terms of actual
distributions, total return or capital appreciation for the various Fund classes
in reports, sales literature and advertisements published by the Trust. Current
performance information may be obtained by calling Morgan at (800) 766-7722 for
J.P. Morgan Tax Aware Disciplined Equity Fund: Institutional Shares and (800)
521-5411 for J.P. Morgan Tax Aware U.S. Equity Fund: Select Shares.

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

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<PAGE>

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

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

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

Tax Aware Disciplined Equity Fund (4/30/00): Average annual total return, 1
year: 5.27%; average annual total return, 5 years: N/A; average annual total
return, commencement of operations (January 30, 1997) to period end: 22.81%;
aggregate total return, 1 year: 5.27%; aggregate total return, 5 years: N/A;
aggregate total return, commencement of operations (January 30, 1997) to period
end: 94.85%.

Tax Aware U.S. Equity Fund (4/30/00): Average annual total return, 1 year:
8.16%; average annual total return, 5 years: N/A; average annual total return,
commencement of operations (December 18, 1996) to period end: 22.13%; aggregate
total return, 1 year: 8.16%; aggregate total return, 5 years: N/A; aggregate
total return, commencement of operations (December 18, 1996) to period end:
99.31%.

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

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<PAGE>

economic trends; (3) presentations of statistical data to supplement such
discussions; (4) descriptions of past or anticipated portfolio holdings for one
or more of the Funds; (5) descriptions of investment strategies for one or more
of the Funds; (6) descriptions or comparisons of various savings and investment
products (including, but not limited to, qualified retirement plans and
individual stocks and bonds), which may or may not include the Funds; (7)
comparisons of investment products (including the Funds) with relevant markets
or industry indices or other appropriate benchmarks; (8) discussions of Fund
rankings or ratings by recognized rating organizations; and (9) discussions of
various statistical methods quantifying a Fund's volatility relative to its
benchmark or to past performance, including risk adjusted measures. The Funds
may also include calculations, such as hypothetical compounding examples, which
describe hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions and are not
indicative of the performance of any of the Funds.

PORTFOLIO TRANSACTIONS

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

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

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

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<PAGE>

the Advisor's clients and not solely or necessarily for the benefit of an
individual Fund. the Advisor believes that the value of research services
received is not determinable and does not significantly reduce its expenses. The
Funds do not reduce their fee to the Advisor by any amount that might be
attributable to the value of such services.

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

Tax Aware Disciplined Equity Fund: For the period January 30, 1997 commencement
of operations through October 31, 1997 and for the fiscal years ended October
31, 1998 and 1999: $2,800, $59,170 and $188,634, respectively. For the six month
period ended April 30, 2000: $152,277

Tax Aware U.S. Equity Fund: For the period January 30, 1997 commencement of
operations through October 31, 1997 and for the fiscal years ended October 31,
1998 and 1999: $4,971, $48,738 and $76,033, respectively. For the six month
period ended April 30, 2000: $34,203

Subject to the overriding objective of obtaining the best execution of
orders, the Advisor may allocate a portion of a Fund's brokerage transactions to
affiliates of the Advisor. Under the 1940 Act, persons affiliated with the Fund
and persons who are affiliated with such persons are prohibited from dealing
with the Fund as principal in the purchase and sale of securities unless a
permissive order allowing such transactions is obtained from the SEC. However,
affiliated persons of the Fund may serve as its broker in listed or
over-the-counter transactions conducted on an agency basis provided that, among
other things, the fee or commission received by such affiliated broker is
reasonable and fair compared to the fee or commission received by non-affiliated
brokers in connection with comparable transactions. In addition, the Fund may no
purchase securities during the existence of any underwriting syndicate for such
securities of which the Advisor or an affiliate is a member or in a private
placement in which the Advisor or an affiliate serves as placement agent except
pursuant to procedures adopted by the Board of Trustees of the Fund that either
comply with rules adopted by the SEC or with interpretations of the SEC's staff.

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

It also sometimes happens that two or more clients simultaneously purchase
or sell the same security. On those occasions when the Advisor deems the
purchase or sale of a security to be in the best interests of a Fund, as well as
other clients including other Funds, the Advisor to

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<PAGE>

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

MASSACHUSETTS TRUST

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

Effective May 12, 1997, the name of the U.S. Equity Fund was changed from
"Tax Aware Equity Fund" to "Tax Aware U.S. Equity Fund". Effective January 1,
1998, the name of the Trust was changed from "JPM Series Trust" to "J.P. Morgan
Series Trust", the name of the U.S. Equity Fund was changed from "Tax Aware U.S.
Equity Fund" to "J.P. Morgan Tax Aware U.S. Equity Fund", the name of the
Disciplined Equity Fund was changed from "Tax Aware Disciplined Equity Fund" to
"J.P. Morgan Tax Aware Disciplined Equity Fund", the "JPM Pierpont Shares" were
renamed "Select Shares", and "JPM Pierpont Shares" of "Tax Aware Disciplined
Equity Fund" were renamed "Institutional Shares" of "J.P. Morgan Tax Aware
Disciplined Equity Fund".

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

DESCRIPTION OF SHARES

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<PAGE>

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

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

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

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

As of August 31, 2000, the following owned of record more than 5% of the
outstanding shares of:

Tax Aware U.S. Equity Fund - Charles Schwab & Co. Inc. Special Custody Account
for the benefit of Customers (10.28%).

Tax Aware Disciplined Equity Fund - Charles Schwab & Co. Inc. Special Custody
Account for the benefit of Customers (33.94%).

The address of each owner listed above is c/o JPMIM, 522 Fifth Avenue, New
York, New York 10036. As of the date of this Statement of Additional Information
the officers,

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<PAGE>

Trustees and Members of the Advisory Board as a group owned less than 1% of the
beneficial shares of each Fund.

TAXES

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

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

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

Under the Code, a Fund will be subject to a 4% excise tax on a portion of
its undistributed taxable income and capital gains if it fails to meet certain
distribution requirements by the end of the calendar year. 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.

For federal income tax purposes, the Tax Aware U.S. Equity Fund had a
capital loss carryforward of $5,184,197 at October 31, 1999, of which $81,365
will expire in the year 2005 and $498,314 will expire in the year 2006, and
$4,604,518 will expire in the year 2007. In

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<PAGE>

addition, the Tax Aware Disciplined Equity had a capital loss carryforward of
$802,394 at October 31, 1999, which will expire in the year 2006. To the extent
that this capital loss is used to offset future capital gains, it is probable
that the gains so offset will not be distributed to shareholders.

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

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

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

46
<PAGE>

months or less will be treated as a long-term capital loss to the extent of any
long-term capital gain distributions received by the shareholder with respect to
such shares. In addition, no loss will be allowed on the redemption or exchange
of shares of a Fund, if within a period beginning 30 days before the date of
such redemption or exchange and ending 30 days after such date, the shareholder
acquires (such as through dividend reinvestment) securities that are
substantially identical to shares of the Fund. Investors are urged to consult
their tax advisors concerning the limitations on the deductibility of capital
losses.

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

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

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

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

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

47
<PAGE>

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

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

In the case of a foreign shareholder who is a nonresident alien individual
or foreign entity, a Fund may be required to withhold U.S. federal income tax as
"backup withholding" at the rate of 31% from distributions treated as long-term
capital gains from the proceeds of redemptions, exchanges or other dispositions
of Fund shares unless IRS Form W-8BEN 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 a Fund held
by such a shareholder at his or her death will be includible in his or her gross
estate for U.S. federal estate tax purposes.

State and Local Taxes. Each Fund may be subject to state or local taxes in
jurisdictions in which a 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 each Fund
continues to qualify as a regulated investment company under Subchapter M of the
Code.

ADDITIONAL INFORMATION

Telephone calls to the Funds, J.P. Morgan or State Street may be tape
recorded. With respect to the securities offered hereby, this Statement of
Additional Information and the Prospectus do not contain all the information
included in the Trust's registration statement filed with the SEC under the 1933
Act and the Trust's registration statement filed under the 1940 Act.

48
<PAGE>

Pursuant to the rules and regulations of the SEC, certain portions have been
omitted. The registration statement including the exhibits filed therewith may
be examined at the office of the SEC in Washington, D.C.

Statements contained in this Statement of Additional Information and the
Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the applicable
Registration Statements. Each such statement is qualified in all respects by
such reference.

No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in the
Prospectus and this Statement of Additional Information, in connection with the
offer contained therein and, if given or made, such other information or
representations must not be relied upon as having been authorized by any of the
Trust, the Funds or FDI. The Prospectus and this Statement of Additional
Information do not constitute an offer by any Fund or by FDI to sell or solicit
any offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful for the Fund or FDI to make such offer in such
jurisdictions.

FINANCIAL STATEMENTS

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

--------------------------------------------------------------------------------
Date of Annual and Semi-Annual
Report; Date of Annual and
Semi-Annual Report Filed; and
Name of Fund Accession Numbers
--------------------------------------------------------------------------------
Tax Aware Disciplined Equity Fund 10/31/99; 1/05/00;
0000912057-00-000267; 4/30/00; 7/7/00;
0000912057-00-031186
--------------------------------------------------------------------------------
Tax Aware U.S. Equity Fund 10/31/99;
1/05/00;0000912057-00-000266;
4/30/00; 7/6/00;
0000912057-00-030911
--------------------------------------------------------------------------------

49
<PAGE>

APPENDIX A

Description of Securities Ratings

STANDARD & POOR'S

Corporate and Municipal Bonds

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

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

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

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

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

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax-Exempt Notes

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

A-1
<PAGE>

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

MOODY'S

Corporate and Municipal Bonds

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

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

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

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

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

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

A-2
<PAGE>

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax Exempt Notes

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

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

A-3

<PAGE>

PART C

ITEM 23. EXHIBITS.

(a) Declaration of Trust, as amended, was filed as Exhibit No. 1 to
Post-Effective Amendment No. 26 to the Registration Statement filed on September
27, 1996 (Accession Number 0000912057-96-021331).

(a)1 Amendment No. 5 to Declaration of Trust; Amendment and Fifth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest.*

(a)2 Amendment No. 6 to Declaration of Trust; Amendment and Sixth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(b) to Post-Effective Amendment No. 32 to the
Registration Statement on February 28, 1997 (Accession Number
0001016964-97-000038).

(a)3 Amendment No. 7 to Declaration of Trust; Amendment and Seventh Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(c) to Post-Effective Amendment No. 34 to the
Registration Statement on April 30, 1997 (Accession Number
0001019694-97-000063).

(a)4 Amendment No. 8 to Declaration of Trust; Amendment and Eighth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(d) to Post-Effective Amendment No. 41 to the
Registration Statement on October 21, 1997 (Accession Number
0001042058-97-000006).

(a)5 Amendment No. 9 to Declaration of Trust; Amendment and Ninth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(e) to Post-Effective Amendment No. 45 to the
Registration Statement on December 29, 1997 (Accession Number
0001041455-97-000013).

(a)6 Amendment No. 10 to Declaration of Trust; Amendment and Tenth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest and change voting procedures to dollar-based voting was filed as
Exhibit No. (a)6 to Post-Effective Amendment No. 59 to the Registration
Statement on December 31, 1998 (Accession Number 0001041455-98-000098).

(b) Restated By-Laws of Registrant.*

(b)(1) Amendment to Restated By-Laws of Registrant filed as Exhibit No. (b) 1 to
Post Effective Amendment No. 67 to the Registration Statement on February 28,
2000 (Accession Number 0001041455-00-000057)

(e) Distribution Agreement between Registrant and Funds Distributor, Inc.
("FDI").*

(g)1 Custodian Contract between Registrant and State Street Bank and Trust
Company ("State Street").*

<PAGE>

(g)2 Custodian Contract between Registrant and The Bank of New York incorporated
by reference to Post Effective Amendment No. 67 to Registrant's registration
statement on February 28, 2000 (Accession number 0001041455-00-000057)

(h)1 Co-Administration Agreement between Registrant and FDI.*

(h)2 Restated Shareholder Servicing Agreement between Registrant and Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") filed as Exhibit (h)2 to
Post-Effective Amendment No. 53 to the Registration Statement on August 25, 1998
(Accession No. 0001041455-98-000052).

(h)3 Transfer Agency and Service Agreement between Registrant and State Street.*

(h)4 Restated Administrative Services Agreement between Registrant and Morgan
Guaranty.*

(h)5 Fund Services Agreement, as amended, between Registrant and Pierpont Group,
Inc.*

(i) Opinion and consent of Sullivan & Cromwell.*

(j) Consent of independent accountants (filed herewith).

(l) Purchase agreements with respect to Registrant's initial shares.*

(n) Financial Data Schedules (not applicable).

(p) Code of Ethics for Funds Distributor, Inc, (FDI) JP Morgan Funds and JP
Morgan Investment Management Inc. (JPMIM) filed herewith.

------------------------
* Incorporated herein by reference to Post-Effective Amendment No. 30 to the
Registration Statement filed on December 27, 1996 (Accession Number
0001016964-96-000066).

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

Not applicable.

ITEM 25. INDEMNIFICATION.

Reference is made to Section 5.3 of Registrant's Declaration of Trust and
Section 5 of Registrant's Distribution Agreement.

Registrant, its Trustees and officers are insured against certain expenses in
connection with the defense of claims, demands, actions, suits, or proceedings,
and certain liabilities that might be imposed as a result of such actions, suits
or proceedings.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "1933 Act"), may be permitted to directors, trustees,
officers and controlling persons of the Registrant and the principal underwriter
pursuant to the foregoing provisions or otherwise, the Registrant has been

<PAGE>

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 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.

Not Applicable.

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) Funds Distributor, Inc. (the "Distributor") is the principal
underwriter of the Registrant's shares.

Funds Distributor, Inc. acts as principal underwriter for the following
investment companies other than the Registrant:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Series Trust
J.P. Morgan Series Trust II
LaSalle Partners Funds, Inc.
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.

<PAGE>

Orbitex Group of Funds
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.

Funds Distributor, Inc. does not act as depositor or investment adviser to
any of the investment companies.

Funds Distributor, Inc. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor, Inc. is located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. Funds Distributor, Inc. is an indirect
wholly-owned subsidiary of Boston Institutional Group, Inc., a holding company
all of whose outstanding shares are owned by key employees.

(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.:

Director, President and Chief Executive Officer: Marie E. Connolly
Executive Vice President: George Rio
Executive Vice President: Donald R. Roberson
Executive Vice President: William S. Nichols
Senior Vice President: Michael S. Petrucelli
Director, Senior Vice President, Treasurer and
Chief Financial Officer: Joseph F. Tower, III
Senior Vice President: Paula R. David
Senior Vice President: Allen B. Closser
Senior Vice President: Bernard A. Whalen
Director: William J. Nutt

ITEM 28. 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 administrative services agent).

STATE STREET BANK AND TRUST COMPANY: 1776 Heritage Drive, North Quincy,
Massachusetts 02171 and 40 King Street West, Toronto, Ontario, Canada M5H 3Y8
(records relating to its functions as fund accountant, custodian, transfer agent
and dividend disbursing agent).

THE BANK OF NEW YORK: 1 Wall Street New York, New York 10086, (records
relating to its functions as fund accountant and custodian).

FUNDS DISTRIBUTOR, INC.: 60 State Street, Suite 1300, Boston, Massachusetts
02109 (records relating to its functions as distributor and co-administrator).

<PAGE>

ITEM 29. MANAGEMENT SERVICES.

Not Applicable.

ITEM 30. 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 has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of New York and State of New York on the 28th day of September, 2000.

By /s/ Christopher Kelley
---------------------------------------
Christopher Kelley
Vice President and Assistant 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 September 28, 2000.

George Rio*
------------------------------
George Rio
President and Treasurer
Officer of the Portfolios

Matthew Healey*
------------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer)

Frederick S. Addy*
------------------------------
Frederick S. Addy
Trustee

William G. Burns*
------------------------------
William G. Burns
Trustee

Arthur C. Eschenlauer*
------------------------------
Arthur C. Eschenlauer
Trustee

Michael P. Mallardi*
------------------------------
Michael P. Mallardi
Trustee

*By /s/ Christopher Kelley
----------------------------
Christopher Kelley
as attorney-in-fact pursuant to a power of attorney.

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Description of Exhibit
------------- ------------------------
EX-99.(j) Consent of Independent Accountants
Ex-99. Codes of Ethics