TAX EXEMPT BOND PORTFOLIO, POS AMI, 1996-12-24

TAX EXEMPT BOND PORTFOLIO
POS AMI, 1996-12-24

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As Filed with the Securities and Exchange Commission on December 24, 1996

File No. 811-7848

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 5

THE TAX EXEMPT BOND PORTFOLIO
(Exact Name of Registrant as Specified in Charter)

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

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

John E. Pelletier, c/o Funds Distributor, Inc.,
60 State Stre et, Suite 1300, Boston, Massachusetts 02109
(Name and Add ress of Agent for Service)

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

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EXPLANATORY NOTE

This Registration Statement has been filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended. However,
beneficial interests in the Registrant are not being registered under the
Securities Act of 1933, as amended (the "1933 Act"), because such interests will
be issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Registrant may only be made by other investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any beneficial
interests in the Registrant.

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PART A

Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.

Item 4. GENERAL DESCRIPTION OF REGISTRANT.

The Tax Exempt Bond Portfolio (the "Portfolio") is a no-load diversified
open-end management investment company which was organized as a trust under the
laws of the State of New York on January 29, 1993. Beneficial interests in the
Portfolio are issued solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.

The Portfolio is advised by Morgan Guaranty Trust Company of New York
("Morgan" or the "Advisor").

Investments in the Portfolio are not deposits or obligations of, or
guaranteed or endorsed by, Morgan or any other bank. Interests in the Portfolio
are not federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency. An investment in the
Portfolio is subject to risk, as the net asset value of the Portfolio will
fluctuate with changes in the value of the Portfolio's holdings. There can be no
assurance that the investment objective of the Portfolio will be achieved.

Part B contains more detailed information about the Portfolio, including
information related to (i) the investment policies and restrictions of the
Portfolio, (ii) the Trustees, officers, Advisor and administrators of the
Portfolio, (iii) portfolio transactions, (iv) rights and liabilities of
investors and (v) the audited financial statements of the Portfolio at August
31, 1996.

The investment objective of the Portfolio is described below, together
with the policies employed to attempt to achieve this objective. Additional
information about the investment policies of the Portfolio appears in Part B
under Item 13.

The Portfolio's investment objective is to provide a high level of current
income exempt from federal income tax consistent with moderate risk of capital
and maintenance of liquidity.

The Portfolio is designed for investors who seek tax exempt yields greater
than those generally available from a portfolio of short term tax exempt
obligations and who are willing to incur the greater price fluctuation of
longer-term instruments.

The Portfolio attempts to achieve its investment objective by investing
primarily in municipal securities which earn interest exempt from federal income
tax in the opinion of bond counsel for the issuer. During normal market
conditions, the Portfolio will invest at least 80% of its net assets in tax
exempt obligations. Interest on these securities may be subject to state

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and local taxes.

The Advisor believes that based upon current market conditions, the
Portfolio will consist of a portfolio of securities with a duration of four to
seven years. In view of the duration of the Portfolio, under normal market
conditions, the yield of an investment company investing in the Portfolio can be
expected to be higher and its net asset value less stable than those of a money
market fund. Duration is a measure of the weighted average maturity of the bonds
held in the Portfolio and can be used as a measure of the sensitivity of the
Portfolio's market value to changes in interest rates. The maturities of the
individual securities in the Portfolio may vary widely, however, as the Advisor
adjusts the Portfolio's holdings of long-term and short-term debt securities to
reflect its assessment of prospective changes in interest rates, which may
adversely affect current income.

The Advisor intends to manage its portfolio actively in pursuit of its
investment objective. Portfolio transactions are undertaken principally to
accomplish the Portfolio's objective in relation to expected movements in the
general level of interest rates, but the Portfolio may also engage in short-term
trading consistent with its objective. To the extent the Portfolio engages in
short-term trading, it may incur increased transaction costs. The portfolio
turnover rates for the Portfolio for the fiscal years ended August 31, 1995 and
1996 were 47% and 25%, respectively.

The value of the Portfolio's investments will generally fluctuate
inversely with changes in prevailing interest rates. The value of the
Portfolio's investments will also be affected by changes in the creditworthiness
of issuers and other market factors. The quality criteria applied in the
selection of portfolio securities are intended to minimize adverse price changes
due to credit considerations. The value of the Portfolio's municipal securities
can also be affected by market reaction to legislative consideration of various
tax reform proposals. Although the net asset value of the Portfolio fluctuates,
the Portfolio attempts to preserve the value of its investments to the extent
consistent with its objective.

MUNICIPAL BONDS. The Portfolio may invest in bonds issued by or on behalf
of states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies, authorities and
instrumentalities. These obligations may be general obligation bonds secured by
the issuer's pledge of its full faith, credit and taxing power for the payment
of principal and interest, or they may be revenue bonds payable from specific
revenue sources, but not generally backed by the issuer's taxing power. These
include industrial development bonds where payment is the responsibility of the
private industrial user of the facility financed by the bonds. The Portfolio may
invest more than 25% of its assets in industrial development bonds, but may not
invest more than 25% of its assets in industrial development bonds in projects
of similar type or in the same state.

MUNICIPAL NOTES. The Portfolio may also invest in municipal notes of
various types, including notes issued in anticipation of receipt of taxes, the
proceeds of the sale of bonds, other revenues or grant proceeds, as well as
municipal commercial paper and municipal demand obligations such as variable
rate demand notes and master demand obligations. The interest rate on variable
rate demand notes is adjustable at periodic intervals as specified in the notes.
Master demand obligations permit the investment of fluctuating amounts at
periodically adjusted interest rates. They are governed by agreements between
the municipal issuer and Morgan acting as agent, for no additional fee, in its
capacity as Advisor to the Portfolio and as fiduciary for other clients.
Although master demand obligations are not marketable to third parties, the

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Portfolio considers them to be liquid because they are payable on demand. For
more information about municipal notes, see Item 13 in Part B.

MONEY MARKET INSTRUMENTS. The Portfolio will invest in money market
instruments that meet the quality requirements described below except that
short-term municipal obligations of New York State issuers may be rated MIG-2 by
Moody's Investors Service, Inc. ("Moody's") or SP-2 by Standard & Poor's Ratings
Group ("Standard & Poor's"). Under normal circumstances, the Portfolio will
purchase these securities to invest temporary cash balances or to maintain
liquidity to meet withdrawals. However, the Portfolio may also invest in money
market instruments as a temporary defensive measure taken during, or in
anticipation of, adverse market conditions.

QUALITY INFORMATION. The Portfolio will not purchase any municipal
obligation unless it is rated at least A, MIG-1 or Prime-1 by Moody's or A, SP-1
or A1 by Standard & Poor's (except for short-term obligations of New York State
issuers as described above) or it is unrated and in the Advisor's opinion it is
of comparable quality. These standards must be satisfied at the time an
investment is made. If the quality of the investment later declines, the
Portfolio may continue to hold the investment.

In certain circumstances, the Portfolio may also invest up to 20% of the
value of its total assets in taxable securities. In addition, the Portfolio may
purchase municipal obligations together with puts, purchase municipal
obligations on a when-issued or delayed delivery basis, enter into repurchase
and reverse repurchase agreements, purchase synthetic variable rate instruments,
lend its portfolio securities and purchase certain privately placed securities.
For a discussion of these transactions, see "Additional Investment Information
and Risk Factors."

ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and for fixed income securities no interest
accrues to the Portfolio until settlement. At the time of settlement a
when-issued security may be valued at less than its purchase price. The
Portfolio maintains with the custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. When
entering into a when-issued or delayed delivery transaction, the Portfolio will
rely on the other party to consummate the transaction; if the other party fails
to do so, the Portfolio may be disadvantaged. It is the current policy of the
Portfolio not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the Portfolio's total assets less liabilities other
than the obligations created by these commitments.

REPURCHASE AGREEMENTS. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Portfolio's Trustees. In a repurchase agreement, the
Portfolio buys a security from a seller that has agreed to repurchase it at a
mutually agreed upon date and price, reflecting the interest rate effective for
the term of the agreement. The term of these agreements is usually from
overnight to one week. A repurchase agreement may be viewed as a fully
collateralized loan of money by the Portfolio to the seller. The Portfolio
always receives securities as collateral with a market value at least equal to
the purchase price plus accrued interest and this value is maintained during the
term of the agreement. If the seller defaults and the collateral value declines,
the Portfolio might incur a loss. If bankruptcy proceedings are commenced with

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respect to the seller, the Portfolio's realization upon the disposition of
collateral may be delayed or limited. Investments in certain repurchase
agreements and certain other investments which may be considered illiquid are
limited. See "Illiquid Investments; Privately Placed and other Unregistered
Securities" below.

LOANS OF PORTFOLIO SECURITIES. Subject to applicable investment
restrictions, the Portfolio is permitted to lend its securities in an amount up
to 33 1/3% of the value of the Portfolio's net assets. The Portfolio may lend
its securities if such loans are secured continuously by cash or equivalent
collateral or by a letter of credit in favor of the Portfolio at least equal at
all times to 100% of the market value of the securities loaned, plus accrued
interest. While such securities are on loan, the borrower will pay the Portfolio
any income accruing thereon. Loans will be subject to termination by the
Portfolio 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 the
Portfolio and its investors. The Portfolio may pay reasonable finders' and
custodial fees in connection with a loan. In addition, the Portfolio will
consider all facts and circumstances, including the creditworthiness of the
borrowing financial institution, and the Portfolio will not make any loans in
excess of one year.

Loans of portfolio securities may be considered extensions of credit by
the Portfolio. The risks to the Portfolio with respect to borrowers of its
portfolio securities are similar to the risks to the Portfolio with respect to
sellers in repurchase agreement transactions. See "Repurchase Agreements" above.
The Portfolio will not lend its securities to any officer, Trustee, Director,
employee, or other affiliate of the Portfolio, the Advisor or placement agent
unless otherwise permitted by applicable law.

REVERSE REPURCHASE AGREEMENTS. The Portfolio is permitted to enter into
reverse repurchase agreements. In a reverse repurchase agreement, the Portfolio
sells a security and agrees to repurchase it at a mutually agreed upon date and
price, reflecting the interest rate effective for the term of the agreement. For
purposes of the Investment Company Act of 1940, as amended (the "1940 Act"), it
is considered a form of borrowing by the Portfolio and, therefore, is a form of
leverage. Leverage may cause any gains or losses of the Portfolio to be
magnified. For more information, see Item 13 in Part B.

TAXABLE INVESTMENTS. The Portfolio attempts to invest its assets in tax
exempt municipal securities; however, the Portfolio is permitted to invest up to
20% of the value of its total assets in securities, the interest income on which
may be subject to federal, state or local income taxes. The Portfolio may make
taxable investments pending investment of proceeds from sales of its interests
or portfolio securities, pending settlement of purchases of portfolio
securities, to maintain liquidity, or when it is advisable in the Advisor's
opinion because of adverse market conditions. The Portfolio will invest in
taxable securities only if there are no tax exempt securities available for
purchase or if the expected return from an investment in taxable securities
exceeds the expected return on available tax exempt securities. In abnormal
market conditions, if, in the judgment of the Advisor, tax exempt securities
satisfying the Portfolio's investment objective may not be purchased, the
Portfolio may, for defensive purposes only, temporarily invest more than 20% of
its net assets in debt securities the interest on which is subject to federal,
state or local income taxes. The taxable investments permitted for the Portfolio
include obligations of the U.S. Government and its agencies and
instrumentalities, bank obligations, commercial paper and repurchase agreements
and other debt securities which meet the Portfolio's quality requirements.

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PUTS. The Portfolio may purchase without limit municipal bonds or notes
together with the right to resell them at an agreed price or yield within a
specified period prior to maturity. This right to resell is known as a put. The
aggregate price paid for securities with puts may be higher than the price
which otherwise would be paid. Consistent with the investment objective of the
Portfolio and subject to the supervision of the Trustees, the purpose of this
practice is to permit the Portfolio to be fully invested in tax exempt
securities while maintaining the necessary liquidity to purchase securities on a
when-issued basis, to meet unusually large withdrawals, to purchase at a later
date securities other than those subject to the put and to facilitate the
Advisor's ability to manage the Portfolio actively. The principal risk of puts
is that the put writer may default on its obligation to repurchase. The Advisor
will monitor each writer's ability to meet its obligations under puts.

The amortized cost method is used by the Portfolio to value all municipal
securities with maturities of less than 60 days; when these securities are
subject to puts separate from the underlying securities, no value is assigned to
the puts. The cost of any such put is carried as an unrealized loss from the
time of purchase until it is exercised or expires. See Part B for the valuation
procedure if the Portfolio were to invest in municipal securities with
maturities of 60 days or more that are subject to separate puts.

SYNTHETIC VARIABLE RATE INSTRUMENTS. The Portfolio may invest in certain
synthetic variable rate instruments. Such instruments generally involve the
deposit of a long-term tax exempt bond in a custody or trust arrangement and the
creation of a mechanism to adjust the long-term interest rate on the bond to a
variable short-term rate and a right (subject to certain conditions) on the part
of the purchaser to tender it periodically to a third party at par. The Advisor
will review the structure of synthetic variable rate instruments to identify
credit and liquidity risks (including the conditions under which the right to
tender the instrument would no longer be available) and will monitor those
risks. In the event that the right to tender the instrument is no longer
available, the risk to the Portfolio will be that of holding the long-term bond.

ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED SECURITIES.
The Portfolio may not acquire any illiquid securities if, as a result thereof,
more than 15% of the market value of the Portfolio's net assets would be in
illiquid investments. Subject to this non-fundamental policy limitation, the
Portfolio may acquire investments that are illiquid or have limited liquidity,
such as private placements or investments that are not registered under the 1933
Act and cannot be offered for public sale in the United States without first
being registered under the 1933 Act. An illiquid investment is any investment
that cannot be disposed of within seven days in the normal course of business at
approximately the amount at which it is valued by the Portfolio. The price the
Portfolio 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.

The Portfolio 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.

FUTURES AND OPTIONS TRANSACTIONS. The Portfolio is permitted to enter into
the futures and options transactions described below for hedging purposes,
although not for speculation. For a more detailed description of these
transactions see "Futures and Options Transactions" in Item 13 in Part B.

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

The Portfolio may use futures contracts and options for hedging purposes.
The Portfolio may not use futures and options for speculation.

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

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

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

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Portfolio
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 Portfolio pays the
current market price for the option (known as the option premium). Options have
various types of underlying instruments, including specific securities, indexes
of securities, indexes of securities prices, and futures contracts. The
Portfolio may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. The Portfolio 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, the Portfolio will
lose the entire premium it paid. If the Portfolio exercises a put option on a

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security, it will sell the instrument underlying the option at the strike price.
If the Portfolio exercises an option on an index, settlement is in cash and does
not involve the actual sale of securities. An option may be exercised on any day
up to its expiration date.

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

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

SELLING (WRITING) PUT AND CALL OPTIONS. When the Portfolio 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 Portfolio assumes the
obligation to pay the strike price for the instrument underlying the option if
the other party to the option chooses to exercise it. The Portfolio 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 Portfolio has written, however, the Portfolio must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to post margin as discussed
below.

If the price of the underlying instrument rises, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received. If security prices remain the same over time, it is
likely that the writer 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 the Portfolio 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. The Portfolio may purchase and sell (write) put and
call options on any securities index based on securities in which the Portfolio
may invest. Options on securities indexes are similar to options on securities,
except that the exercise of securities index options are 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

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rather than price fluctuations in a single security. The Portfolio, 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
Portfolio's investments generally will not match the composition of an index.

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

FUTURES CONTRACTS. When the Portfolio purchases a futures contract, it
agrees to purchase a specified quantity of an underlying instrument at a
specified future date or to make a cash payment based on the value of a
securities index. When the Portfolio sells a futures contract, it agrees to sell
a specified quantity of the underlying instrument at a specified future date or
to receive a cash payment based on the value of a securities index. The price at
which the purchase and sale will take place is fixed when the Portfolio enters
into the contract. Futures can be held until their delivery dates or the
position can be (and normally is) closed out before then. There is no assurance,
however, that a liquid market will exist when the Portfolio wishes to close out
a particular position.

When the Portfolio purchases a futures contract, the value of the futures
contract tends to increase and decrease in tandem with the value of its
underlying instrument. Therefore, purchasing futures contracts will tend to
increase the Portfolio's exposure to positive and negative price fluctuations in
the underlying instrument, much as if it had purchased the underlying instrument
directly. When the Portfolio sells a futures contract, by contrast, the value of
its futures position will tend to move in a direction contrary to the value of
the underlying instrument. Selling futures contracts, therefore, will tend to
offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

The purchaser or seller of a futures contract is not required to deliver
or pay for the underlying instrument unless the contract is held until the
delivery date. However, when the Portfolio buys or sells a futures contract it
will be required to deposit "initial margin" with its Custodian in a segregated
account in the name of its futures broker, known as a futures commission
merchant (FCM). Initial margin deposits are typically equal to a small
percentage of the contract's value. If the value of either party's position
declines, that party will be required to make additional "variation margin"
payments equal to the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. The Portfolio
may be obligated to make payments of variation margin at a time when it is
disadvantageous to do so. Furthermore, it may not always be possible for the
Portfolio to close out its futures positions. Until it closes out a futures
position, the Portfolio will be obligated to continue to pay variation margin.
Initial and variation margin payments do not constitute purchasing on margin for
purposes of the Portfolio's investment restrictions. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Portfolio, the Portfolio
may be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to the
Portfolio.

The Portfolio will segregate liquid assets in connection with its use of
options and futures contracts to the extent required by the staff of the
Securities and Exchange Commission. Securities held in a segregated account
cannot be sold while the futures contract or option is outstanding, unless they

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are replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of the Portfolio's assets could impede
portfolio management or the Portfolio's ability to meet redemption requests or
other current obligations. For more detailed information about these money
market instruments, see Item 13 in Part B.

For further information about the Portfolio's use of futures and options
and a more detailed discussion of associated risks, see Item 13 in Part B.

INVESTMENT RESTRICTIONS

As a diversified investment company, 75% of the assets of the Portfolio
are subject to the following fundamental limitations: (a) the Portfolio may not
invest more than 5% of its total assets in the securities of any one issuer,
except U.S. Government securities, and (b) the Portfolio may not own more than
10% of the outstanding voting securities of any one issuer.

The investment objective of the Portfolio, together with the investment
restrictions described below and in Part B, except as noted, are deemed
fundamental policies, i.e., they may be changed only with the approval of a
majority of the outstanding voting securities of the Portfolio, as defined in
the 1940 Act.

The Portfolio may not (i) borrow money, except from banks for
extraordinary or emergency purposes and then only in amounts up to 10% of the
value of the Portfolio's total assets, taken at cost at the time of borrowing,
or purchase securities while borrowings exceed 5% of its total assets, or
mortgage, pledge or hypothecate any assets except in connection with any such
borrowings in amounts up to 10% of the value of the Portfolio's net assets at
the time of borrowing, or (ii) acquire industrial revenue bonds if as a result
more than 5% of the Portfolio's total assets would be invested in industrial
revenue bonds where payment of principal and interest is the responsibility of
companies with fewer than three years of operating history.

For a more detailed discussion of the above investment restrictions, as
well as a description of certain other investment restrictions, see Item 13 in
Part B.

Item 5. MANAGEMENT OF THE PORTFOLIO.

The Board of Trustees provides broad supervision over the affairs of the
Portfolio. The Portfolio has retained the services of Morgan as investment
adviser and administrative services agent. The Portfolio has retained the
services of Funds Distributor, Inc. ("FDI") as co-administrator (the
"Co-Administrator").

The Portfolio has not retained the services of a principal underwriter or
distributor, since interests in the Portfolio are offered solely in private
placement transactions. FDI, acting as agent for the Portfolio, serves as
exclusive placement agent of interests in the Portfolio. FDI receives no
additional compensation for serving in this capacity.

The Portfolio has entered into an Amended and Restated Portfolio Fund
Services Agreement, dated July 11, 1996, with Pierpont Group, Inc. ("Pierpont
Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio. The fees to be paid under the agreement
approximate the reasonable cost of Pierpont Group in providing these services.
Pierpont Group was organized in 1989 at the request of the Trustees of the
Pierpont Family of Funds for the purpose of providing these services at cost to
those funds. See Item 14 in Part B. The principal offices of Pierpont Group are
located at 461 Fifth Avenue, New York, New York 10017.

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INVESTMENT ADVISOR. The Portfolio has retained the services of Morgan
as investment advisor. Morgan, with principal offices at 60 Wall Street, New
York, New York 10260, is a New York trust company which conducts a general
banking and trust business. Morgan Guaranty is a wholly owned subsidiary of J.P.
Morgan & Co. Incorporated ("J.P. Morgan"), a bank holding company organized
under the laws of Delaware. Through offices in New York City and abroad, J.P.
Morgan, through the Advisor and other subsidiaries, offers a wide range of
services to governmental, institutional, corporate and individual customers and
acts as investment adviser to individual and institutional clients with combined
assets under management of over $197 billion (of which the Advisor advises over
$30 billion). Morgan provides investment advice and portfolio management
services to the Portfolio. Subject to the supervision of the Portfolio's
Trustees, Morgan, as Advisor, makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments. See Item 16 in Part B.

The Advisor uses a sophisticated, disciplined, collaborative process for
managing all asset classes. For fixed income portfolios, this process focuses on
the systematic analysis of real interest rates, sector diversification and
quantitative and credit analysis. Morgan has managed portfolios of domestic
fixed income securities on behalf of its clients for over fifty years. The
Portfolio managers making investments in domestic fixed income securities work
in conjunction with fixed income, credit, capital market and economic research
analysts, as well as traders and administrative officers.

The following persons are primarily responsible for the day-to-day
management and implementation of Morgan's process for the Portfolio (the
inception date of each person's responsibility for the Portfolio and his or her
business experience for the past five years is indicated parenthetically):
Elizabeth A. Augustin, Vice President (since January, 1992; employed by Morgan
since prior to 1991) and Gregory J. Harris, Vice President (since January, 1996;
employed by Morgan since prior to 1991).

As compensation for the services rendered and related expenses borne by
Morgan under the Investment Advisory Agreement with the Portfolio, the Portfolio
has agreed to pay Morgan a fee, which is computed daily and may be paid monthly,
at the annual rate of 0.30% of the Portfolio's average daily net assets.

Under a separate agreement, Morgan also provides administrative and
related services to the Portfolio. See "Administrative Services Agent" below.

CO-ADMINISTRATOR. Pursuant to a Co-Administration Agreement with the
Portfolio, FDI serves as the Co-Administrator for the Portfolio. FDI (i)
provides office space, equipment and clerical personnel for maintaining the
organization and books and records of the Portfolio; (ii) provides officers for
the Portfolio; (iii) files Portfolio regulatory documents and mails Portfolio
communications to Trustees and investors; and (iv) maintains related books and
records. See "Administrative Services Agent" below.

For its services under the Co-Administration Agreement, the 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
the Portfolio is based on the ratio of its net assets to the aggregate net
assets of the Portfolio and certain other registered investment companies
subject to similar agreements with FDI.

ADMINISTRATIVE SERVICES AGENT. Pursuant to the Administrative Services
Agreement with the Portfolio, Morgan provides administrative and related
services to the Portfolio, including services related to tax compliance,

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preparation of financial statements, calculation of performance data, oversight
of service providers and certain regulatory and Board of Trustees matters.

Under the Administrative Services Agreement, the Portfolio 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
Portfolio and certain other registered investment companies managed by the
Advisor in accordance with the following annual schedule: 0.09% on 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.

PLACEMENT AGENT. FDI, a registered broker-dealer, also serves as exclusive
placement agent for the Portfolio. FDI is a wholly owned indirect subsidiary of
Boston Institutional Group, Inc. FDI's principal business address is 60 State
Street, Suite 1300, Boston, Massachusetts 02109.

CUSTODIAN. State Street Bank and Trust Company ("State Street"), 225
Franklin Street, Boston, Massachusetts 02110, serves as the Portfolio's
custodian and fund accounting and transfer agent. State Street keeps the books
of account for the Portfolio.

Morgan has agreed that it will reimburse the Portfolio through at least
December 31, 1997 to the extent necessary to maintain the Portfolio's total
operating expenses at the annual rate of 0.50% of the Portfolio's average daily
net assets. This limit does not cover extraordinary expenses during the period.
These is no assurance that Morgan will continue this waiver beyond the specified
period. For the fiscal year ended August 31, 1996, the Portfolio's total
expenses were 0.38% of its average net assets.

Item 6. CAPITAL STOCK AND OTHER SECURITIES.

The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value. Investors in the
Portfolio (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds) will each be liable for all obligations
of the Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations.

Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and nonassessable, except as set forth below. The Portfolio is
not required and has no current intention of holding annual meetings of
investors, but the Portfolio will hold special meetings of investors when in the
judgment of the Trustees it is necessary or desirable to submit matters for an
investor vote. Changes in fundamental policies will be submitted to investors
for approval. Investors have under certain circumstances (e.g., upon application
and submission of certain specified documents to the Trustees

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by a specified percentage of the outstanding interests in the Portfolio) the
right to communicate with other investors in connection with requesting a
meeting of investors for the purpose of removing one or more Trustees. Investors
also have the right to remove one or more Trustees without a meeting by a
writing by a specified percentage of the outstanding interests in the Portfolio.
Upon liquidation of the Portfolio, investors would be entitled to share pro rata
in the net assets of the Portfolio available for distribution to investors. The
net asset value of the Portfolio is determined each business day other than the
holidays listed in Part B ("Portfolio Business Day"). This determination is made
once each Portfolio Business Day as of 4:15 p.m. New York time (the "Valuation
Time").

The "net income" of the Portfolio will consist of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less (ii)
all actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) on discount paper
accrued ratably to the date of maturity and any net realized gains or losses on
the assets of the Portfolio. All the net income of the Portfolio is allocated
pro rata among the investors in the Portfolio.

The end of the Portfolio's fiscal year is August 31.

Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any income tax. However, each investor in the Portfolio
will be taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's ordinary income and capital
gain in determining its income tax liability. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.

It is intended that the Portfolio's assets, income and distributions will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.

Investor inquiries may be directed to FDI at 60 State Street, Suite 1300,
Boston, Massachusetts 02109, (617) 557-0700.

Item 7. PURCHASE OF SECURITIES.

Beneficial interests in the Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by other investment companies, insurance company separate accounts,
common or commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.

An investment in the Portfolio may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by the Portfolio. The net asset value of the Portfolio
is determined on each Portfolio Business Day.

There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,

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investments must be made in federal funds (i.e., monies credited to the account
of the Custodian by a Federal Reserve Bank).

The Portfolio may, at its own option, accept securities in payment for
investments in its beneficial interest. The securities delivered in kind are
valued by the method described in Item 19 as of the business day prior to the
day the Portfolio receives the securities. Securities may be accepted in payment
for beneficial interests only if they are, in the judgment of Morgan,
appropriate investments for the Portfolio. In addition, securities accepted in
payment for beneficial interests must: (i) meet the investment objective and
policies of the Portfolio; (ii) be acquired by the Portfolio for investment and
not for resale; (iii) be liquid securities which are not restricted as to
transfer either by law or liquidity of market; and (iv) if stock, have a value
which is readily ascertainable as evidenced by a listing on a stock exchange,
over-the-counter market or by readily available market quotations from a dealer
in such securities. The Portfolio reserves the right to accept or reject at its
own option any and all securities offered in payment for beneficial interests.

The Portfolio and FDI reserve the right to cease accepting investments at
any time or to reject any investment order.

Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Portfolio Business Day. At the Valuation Time on each such
day, the value of each investor's beneficial interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
reductions, which are to be effected at the Valuation Time on such day, will
then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage equal to
the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of the Valuation Time on such day plus or minus,
as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio at the Valuation Time, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
Valuation Time on such day, plus or minus, as the case may be, the amount of net
additions to or reductions in the aggregate investments in the Portfolio by all
investors in the Portfolio. The percentage so determined will then be applied to
determine the value of the investor's interest in the Portfolio as of the
Valuation Time on the following Portfolio Business Day.

Item 8. REDEMPTION OR REPURCHASE.

An investor in the Portfolio may reduce all or any portion of its
investment at the net asset value next determined after a request in "good
order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
Portfolio Business Day after the reduction is effected, but in any event within
seven days. Investments in the Portfolio may not be transferred.

The right of any investor to receive payment with respect to any reduction
may be suspended or the payment of the proceeds therefrom postponed during any
period in which the New York Stock Exchange (the "NYSE") is closed (other than
weekends or holidays) or trading on the NYSE is restricted or, to the extent
otherwise permitted by the 1940 Act, if an emergency exists.

The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In

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addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio or the investor's
portfolio, as the case may be.

Item 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

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PART B

Item 10. COVER PAGE.

Not applicable.

Item 11. TABLE OF CONTENTS. Page

General Information and History . . . . . . . . . . . B-1
Investment Objective and Policies . . . . . . . . . . B-1
Management of the Fund . . . . . . . . . . . . . . . B-13
Control Persons and Principal Holder
of Securities . . . . . . . . . . . . . . . . . . . . B-16
Investment Advisory and Other Services . . . . . . . B-16
Brokerage Allocation and Other Practices . . . . . . B-20
Capital Stock and Other Securities . . . . . . . . . B-22
Purchase, Redemption and Pricing of
Securities . . . . . . . . . . . . . . . . . . . . . B-23
Tax Status . . . . . . . . . . . . . . . . . . . . . B-24
Underwriters . . . . . . . . . . . . . . . . . . . . B-25
Calculations of Performance Data . . . . . . . . . . B-25
Financial Statements . . . . . . . . . . . . . . . . B-25
Appendix A . . . . . . . . . . . . . . . . . . . . . Appendix-1

Item 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

Item 13. INVESTMENT OBJECTIVE AND POLICIES.

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

The Portfolio is advised by Morgan Guaranty Trust Company of New York
("Morgan" or the "Advisor").

The following discussion supplements the information regarding the
investment objective of the Portfolio and the policies to be employed to achieve
this objective as set forth above and in Part A.

MONEY MARKET INSTRUMENTS

As discussed in Part A, the Portfolio may invest in money market
instruments to the extent consistent with its investment objective and policies.
A description of the various types of money market instruments that may be
purchased by the Portfolio appears below. Also see "Quality and Diversification
Requirements" below.

<PAGE>

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

ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. The Portfolio 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. In the case of securities not backed by the
full faith and credit of the United States, the Portfolio must look principally
to the federal agency issuing or guaranteeing the obligation for ultimate
repayment and may not be able to assert a claim against the United States itself
in the event the agency or instrumentality does not meet its commitments.
Securities in which the Portfolio may invest that are not backed by the full
faith and credit of the United States include, but are not limited to,
obligations of the Tennessee Valley Authority, the Federal Home Loan Mortgage
Corporation, and the U.S. Postal Service, each of which has the right to borrow
from the U.S. Treasury to meet its obligations, and obligations of the Federal
Farm Credit System and the Federal Home Loan Banks, both of whose obligations
may be satisfied only by the individual credits of each issuing agency.
Securities which are backed by the full faith and credit of the United States
include obligations of the Government National Mortgage Association, the Farmers
Home Administration, and the Export-Import Bank.

BANK OBLIGATIONS. The Portfolio, unless otherwise noted in Part A or
below, may invest in negotiable certificates of deposit, time deposits and
bankers' acceptances of (i) banks, savings and loan associations and savings
banks which have more than $2 billion in total assets and are organized under
the laws of the United States or any state, (ii) foreign branches of these banks
of equivalent size (Euros) and (iii) U.S. branches of foreign banks of
equivalent size (Yankees). The Portfolio may not invest in obligations of
foreign branches of foreign banks. The Portfolio will not invest in obligations
for which the Advisor, or any of its affiliated persons, is the ultimate obligor
or accepting bank.

COMMERCIAL PAPER. The Portfolio 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 acting as agent, for no additional fee,
in its capacity as investment advisor to the Portfolio and as fiduciary for
other clients for whom it exercises investment discretion. The monies loaned to
the borrower come from accounts managed by the Advisor or its affiliates,
pursuant to arrangements with such accounts. Interest and principal payments are
credited to such accounts. The Advisor, acting as a fiduciary on behalf of its
clients, has the right to increase or decrease the amount provided to the
borrower under an obligation. The borrower has the right to pay without penalty
all or any part of the principal amount then outstanding on an obligation
together with interest to the date of payment. Since these obligations typically
provide that the interest rate is tied to the Federal Reserve commercial paper
composite rate, the rate on master demand obligations is subject to change.
Repayment of a master demand obligation to participating accounts depends on the
ability of the borrower to pay the accrued interest and principal of the
obligation on demand which is continuously monitored by the Portfolio's Advisor.
Since master demand obligations typically are not rated by credit rating
agencies, the Portfolio 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 Portfolio's quality restrictions. See
"Quality and Diversification Requirements." Although there is no secondary
market for master demand obligations, such obligations are considered by the
Portfolio to be liquid because they are payable upon demand. The Portfolio does

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not have any specific percentage limitation on investments in master demand
obligations.

REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements
with brokers, dealers or banks that meet the credit guidelines approved by the
Trustees. In a repurchase agreement, the Portfolio 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 Portfolio 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 the Portfolio to the seller.
The period of these repurchase agreements will usually be short, from overnight
to one week, and at no time will the Portfolio invest in repurchase agreements
for more than 13 months. The securities which are subject to repurchase
agreements, however, may have maturity dates in excess of 13 months from the
effective date of the repurchase agreement. The Portfolio 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 Portfolio in each agreement plus accrued interest, and the Portfolio will
make payment for such securities only upon physical delivery or upon evidence of
book entry transfer to the account of the Portfolio's custodian (the
"Custodian"). If the seller defaults, the Portfolio might incur a loss if the
value of the collateral securing the repurchase agreement declines and might
incur disposition costs in connection with liquidating the collateral. In
addition, if bankruptcy proceedings are commenced with respect to the seller of
the security, realization upon disposal of the collateral by the Portfolio may
be delayed or limited.

The Portfolio may make investments in other debt securities with remaining
effective maturities of not more than 13 months, including without limitation
corporate and foreign bonds, asset-backed securities and other obligations
described in Part A or this Part B. The Portfolio may not invest in foreign
bonds or asset-backed securities.

TAX EXEMPT OBLIGATIONS

As discussed in Part A, the Portfolio may invest in tax exempt
obligations to the extent consistent with the Portfolio's investment objective
and policies. A description of the various types of tax exempt obligations
which may be purchased by the Portfolio appears in Part A and below. See
"Quality and Diversification Requirements."

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

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

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

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

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

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

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

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

PUTS. The Portfolio may purchase without limit municipal bonds or notes
together with the right to resell the bonds or notes to the seller at an agreed
price or yield within a specified period prior to the maturity date of the bonds
or notes. Such a right to resell is commonly known as a "put." The aggregate
price for bonds or notes with puts may be higher than the price for bonds or
notes without puts. Consistent with the Portfolio's investment objective and
subject to the supervision of the Trustees, the purpose of this practice is to
permit the Portfolio to be fully invested in tax exempt securities while
preserving the necessary liquidity to purchase securities on a when-issued
basis, to meet unusually large redemptions, and to purchase at a later date
securities other than those subject to the put. The principal risk

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of puts is that the writer of the put may default on its obligation to
repurchase. The Advisor will monitor each writer's ability to meet its
obligations under puts.

Puts may be exercised prior to the expiration date in order to fund
obligations to purchase other securities or to meet redemption requests. These
obligations may arise during periods in which proceeds from sales of interests
in the Portfolio and from recent sales of portfolio securities are insufficient
to meet obligations or when the funds available are otherwise allocated for
investment. In addition, puts may be exercised prior to the expiration date in
order to take advantage of alternative investment opportunities or in the event
the Advisor revises its evaluation of the creditworthiness of the issuer of the
underlying security. In determining whether to exercise puts prior to their
expiration date and in selecting which puts to exercise, the Advisor considers
the amount of cash available to the Portfolio, the expiration dates of the
available puts, any future commitments for securities purchases, alternative
investment opportunities, the desirability of retaining the underlying
securities in the Portfolio and the yield, quality and maturity dates of the
underlying securities.

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

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

B-5

<PAGE>

The Portfolio has been advised by counsel that it will be considered the
owner of the securities subject to the puts so that the interest on the
securities is tax exempt income to the Portfolio. Such advice of counsel is
based on certain assumptions concerning the terms of the puts and the attendant
circumstances.

FOREIGN INVESTMENTS

To the extent that the Portfolio invests in municipal bonds and notes
backed by credit support arrangements with foreign financial institutions, the
risks associated with investing in foreign securities may be relevant to the
Portfolio.

ADDITIONAL INVESTMENTS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio 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 fixed income securities no interest accrues to the Portfolio
until settlement takes place. At the time the Portfolio makes the commitment to
purchase securities on a when-issued or delayed delivery basis, it will record
the transaction, reflect the value each day of such securities in determining
its net asset value and, if applicable, calculate the maturity for the purposes
of average maturity from that date. At the time of settlement a when-issued
security may be valued at less than the purchase price. To facilitate such
acquisitions, the Portfolio will maintain with the Custodian a segregated
account with liquid assets, consisting of cash, U.S. Government securities or
other appropriate securities, in an amount at least equal to such commitments.
On delivery dates for such transactions, the Portfolio will meet its obligations
from maturities or sales of the securities held in the segregated account and/or
from cash flow. If the Portfolio chooses to dispose of the right to acquire a
when-issued security prior to its acquisition, it could, as with the disposition
of any other portfolio obligation, incur a gain or loss due to market
fluctuation. It is the current policy of the Portfolio not to enter into
when-issued commitments exceeding in the aggregate 15% of the market value of
the Portfolio's total assets, less liabilities other than the obligations
created by when-issued commitments.

INVESTMENT COMPANY SECURITIES. Securities of other investment companies
may be acquired by the Portfolio to the extent permitted under the Investment
Company Act of 1940, as amended (the "1940 Act"). These limits require that, as
determined immediately after a purchase is made, (i) not more than 5% of the
value of the Portfolio'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 Portfolio. As a shareholder of another
investment company, the 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 the Portfolio bears directly in connection with its own operations.

REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse
repurchase agreements. In a reverse repurchase agreement, the Portfolio sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price. For purposes of the 1940 Act, a reverse repurchase agreement is
also considered as the borrowing of money by the Portfolio and,

B-6

<PAGE>

therefore, a form of leverage. The Portfolio will invest the proceeds of
borrowings under reverse repurchase agreements. In addition, the Portfolio will
enter into a reverse repurchase agreement only when the interest income to be
earned from the investment of the proceeds is greater than the interest expense
of the transaction. The Portfolio will not invest the proceeds of a reverse
repurchase agreement for a period which exceeds the duration of the reverse
repurchase agreement. The Portfolio will establish and maintain with the
Custodian a separate account with a segregated portfolio of securities in an
amount at least equal to its purchase obligations under its reverse repurchase
agreements.

LOANS OF PORTFOLIO SECURITIES. The Portfolio may lend its securities if
such loans are secured continuously by cash or equivalent collateral or by a
letter of credit in favor of the Portfolio at least equal at all times to 100%
of the market value of the securities loaned, plus accrued interest. While such
securities are on loan, the borrower will pay the Portfolio any income accruing
thereon. Loans will be subject to termination by the Portfolio 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 the Portfolio and its
investors. The Portfolio may pay reasonable finders' and custodial fees in
connection with a loan. In addition, the Portfolio will consider all facts and
circumstances including the creditworthiness of the borrowing financial
institution, and the Portfolio will not make any loans in excess of one year.
The Portfolio will not lend its securities to any officer, Trustee, Director,
employee or other affiliate of the Portfolio, the Advisor or placement agent,
unless otherwise permitted by applicable law.

PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. The Portfolio may
invest in privately placed, restricted, Rule 144A or other unregistered
securities as described in Part A.

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

SYNTHETIC VARIABLE RATE INSTRUMENTS. The Portfolio may invest in certain
synthetic variable rate instruments as described in Part A. In the case of some
types of instruments credit enhancement is not provided, and if certain events,
which may include (a) default in the payment of principal or interest on the
underlying bond, (b) downgrading of the bond below investment grade or (c) a
loss of the bond's tax exempt status, occur, then (i) the put will terminate,
and (ii) the risk to the Portfolio will be that of holding a long-term bond.

QUALITY AND DIVERSIFICATION REQUIREMENTS

The Portfolio intends to meet the diversification requirements of the 1940
Act. To meet these requirements, 75% of the assets of the Portfolio are subject
to the following fundamental limitations: (1) the Portfolio 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 Portfolio may not own more than 10% of the outstanding voting

B-7

<PAGE>

securities of any one issuer. As for the other 25% of the Portfolio's assets not
subject to the limitation described above, there is no limitation on investment
of these assets under the 1940 Act, so that all of such assets may be invested
in securities of any one issuer, subject to the limitation of any applicable
state securities laws. Investments not subject to the limitations described
above could involve an increased risk to the Portfolio 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.

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

The Portfolio invests principally in a diversified portfolio of "high
grade" and "investment grade" tax exempt securities. On the date of investment
(i) municipal bonds must be rated within the three highest ratings of Moody's,
currently Aaa, Aa and A, or of Standard & Poor's, currently AAA, AA, and A, (ii)
municipal notes must be rated MIG-1 by Moody's or SP-1 by Standard & Poor's (or,
in the case of New York State municipal notes, MIG-1 or MIG-2 by Moody's or SP-1
or SP-2 by Standard & Poor's) and (iii) municipal commercial paper must be rated
Prime-1 by Moody's or A-1 by Standard & Poor's or, if not rated by either
Moody's or Standard & Poor's, issued by an issuer either (a) having an
outstanding debt issue rated A or higher by Moody's or Standard & Poor's or (b)
having comparable quality in the opinion of the Advisor. The Portfolio may
invest in other tax exempt securities which are not rated if, in the opinion of
the Advisor, such securities are of comparable quality to the rated securities
discussed above. In addition, at the time the Portfolio 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. A description
of illustrative credit ratings is set forth in Appendix A attached to this Part
B.

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.

B-8

<PAGE>

OPTIONS AND FUTURES TRANSACTIONS

EXCHANGE TRADED AND OVER-THE-COUNTER OPTIONS. All options purchased or
sold by the Portfolio 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 Board of Trustees. While exchange-traded options are
obligations of the Options Clearing Corporation, in the case of OTC options, the
Portfolio relies on the dealer from which it purchased the option to perform if
the option is exercised. Thus, when the Portfolio purchases an OTC option, it
relies on the dealer from which it purchased the option to make or take delivery
of the underlying securities. Failure by the dealer to do so would result in the
loss of the premium paid by the Portfolio as well as loss of the expected
benefit of the transaction.

Provided that the Portfolio has arrangements with certain qualified
dealers who agree that the Portfolio may repurchase any option it writes for a
maximum price to be calculated by a predetermined formula, the Portfolio 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. In entering into
futures and options transactions the Portfolio may purchase or sell (write)
futures contracts and purchase 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 the Portfolio are paid by the Portfolio into a segregated
account, in the name of the Futures Commission Merchant, as required by the 1940
Act and the SEC's interpretations thereunder.

COMBINED POSITIONS. The Portfolio may 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, the Portfolio 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

B-9

<PAGE>

substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.

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

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

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

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

ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS. The Portfolio
intends to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which the Portfolio can commit assets
to initial margin deposits and option premiums. In addition, the Portfolio will
comply with guidelines established by the SEC with respect to coverage of
options and futures contracts by mutual funds, and if the

B-10

<PAGE>

guidelines so require, will set aside appropriate liquid assets in a segregated
custodial account in the amount prescribed. Securities held in a segregated
account cannot be sold while the futures contract or option is outstanding,
unless they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Portfolio's assets
could impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.

INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the 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" (as defined in the 1940 Act) of
the Portfolio. 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 security holders 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.

The Portfolio may not:

1. Borrow money, except from banks for extraordinary or emergency purposes
and then only in amounts up to 10% of the value of the Portfolio's total
assets, taken at cost at the time of such borrowing; or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing in amounts up to 10% of the value of the Portfolio's net
assets at the time of such borrowing. The Portfolio will not purchase
securities while borrowings exceed 5% of the Portfolio's total assets.
This borrowing provision facilitates the orderly sale of portfolio
securities, for example, in the event of abnormally heavy redemption
requests. This provision is not for investment purposes. Collateral
arrangements for premium and margin payments in connection with the
Portfolio's hedging activities are not deemed to be a pledge of assets;

2. Purchase securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of the
Portfolio's total assets would be invested in securities or other
obligations of any one such issuer. Each state and each political
subdivision, agency or instrumentality of such state and each
multi-state agency of which such state is a member will be a separate
issuer if the security is backed only by the assets and revenue of that
issuer. If the security is guaranteed by another entity, the guarantor
will be deemed to be the issuer.1 This limitation shall not apply to
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or to permitted investments of up to 25% of the
Portfolio's total assets;

3. Invest more than 25% of its total assets in securities of governmental
units located in any one state, territory, or possession of the United
States. The Portfolio may invest more than 25% of its total assets in
industrial developments and pollution control obligations whether or not

- ------------------
1For purposes of interpretation of Investment Restriction No. 2 "guaranteed
by another entity" includes credit substitutions, such as letters of credit or
insurance, unless the Advisor determines that the security meets the Portfolio's
credit standards without regard to the credit substitution.

B-11

<PAGE>

the users of facilities financed by such obligations are in that same
industry;2

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

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

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

7. Purchase securities on margin, make short sales of securities, or
maintain a short position, except in the course of the Portfolio's
hedging activities, unless at all times when a short position is open
the Portfolio owns an equal amount of such securities or owns securities
which, without payment of any further consideration, are convertible
into or exchangeable for securities of the same issue as, and equal in
amount to, the securities sold short; provided that this restriction
shall not be deemed to be applicable to the purchase or sale of
when-issued or delayed delivery securities;

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

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

10. Act as an underwriter of securities.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The investment restriction
described below is not a fundamental policy of the Portfolio and may be changed
by the Trustees. This non-fundamental investment policy requires that the
Portfolio may not:

(i) acquire any illiquid securities, such as repurchase agreements with
more than seven days to maturity or fixed time deposits with a duration of over

- ------------------
2Pursuant to an interpretation of the staff of the Securities and Exchange
Commission, the Portfolio may not invest more than 25% of its assets in
industrial development bonds in projects of similar type or in the same state.
The Portfolio shall comply with this interpretation until such time as it may be
modified by the staff or the Securities and Exchange Commssion.

B-12

<PAGE>
seven calendar days, if as a result thereof, more than 15% of the market value
of the Portfolio's total assets would be in investments that are illiquid.

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.

Item 14. MANAGEMENT OF THE FUND.

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

Frederick S. Addy -- Trustee; Retired; Executive Vice President and Chief
Financial Officer from January 1990 to April 1994, Amoco Corporation. His
address is 5300 Arbutus Cove, Austin, TX 78746, and his date of birth is January
1, 1932.

William G. Burns -- Trustee; Retired; Former Vice Chairman and Chief
Financial Officer, NYNEX. His address is 2200 Alaqua Drive, Longwood, FL 32779,
and his date of birth is November 2, 1932.

Arthur C. Eschenlauer -- Trustee; Retired; Senior Vice President, Morgan
Guaranty Trust Company of New York until 1987. His address is 14 Alta Vista
Drive, RD #2, Princeton, NJ 08540, and his date of birth is August 23, 1934.

Matthew Healy(*) -- Trustee; Chairman and Chief Executive Officer;
Chairman, Pierpont Group, Inc. ("Pierpont Group") since 1989. His address is
Pine Tree Club Estates, 10286 Saint Andrews Road, Boynton Beach, FL 33436, and
his date of birth is August 23, 1937.

Michael P. Mallardi -- Trustee; Retired; Senior Vice President, Capital
Cities/ABC, Inc. and President, Broadcast Group prior to April 1996. His address
is 10 Charnwood Drive, Suffern, NY 10910, and his date of birth is March 17,
1934.

Each Trustee is paid an annual fee as follows for serving as Trustee of
the Master Portfolios (as defined below), The JPM Pierpont Funds and The JPM
Institutional Funds and is reimbursed for expenses incurred in connection with
service as a Trustee. The compensation paid to the Trustees for calendar year
1995 is set forth below. The Trustees may hold various other directorships
unrelated to the Portfolio.

- ------------
*Mr. Healy is an "interested person" of the Portfolio as that term is
defined in the 1940 Act.

Each Trustee is currently paid an annual fee of $65,000 (adjusted as of
April 1, 1995) for serving as Trustee of the Master Portfolios (as defined
below), The JPM Pierpont Funds, The JPM Institutional Funds and JPM Series Trust
and is reimbursed for expenses incurred in connection with service as a Trustee.
The Trustees may hold various other directorships unrelated to the Portfolio.

B-13

<PAGE>

The compensation paid to the Trustees for the calendar year ended December
31, 1995 is set forth below.

<TABLE>
<CAPTION>
NAME OF TRUSTEE AGGREGATE PENSION OR ESTIMATED ANNUAL TOTAL COMPENSATION FROM THE
COMPENSATION RETIREMENT BENEFITS BENEFITS MASTER PORTFOLIOS(*), THE JPM
FROM THE ACCRUED AS PART OF UPON RETIREMENT INSTITUTIONAL FUNDS AND THE
PORTFOLIO DURING PORTFOLIO EXPENSES JPM PIERPONT FUNDS PAID TO
1995 TRUSTEES DURING 1995

<S> <C> <C> <C> <C>
Frederick S. Addy,
Trustee $7,942 None None $62,500

William G. Burns, $7,942 None None $62,500
Trustee

Arthur C. Eschenlauer, $7,942 None None $62,500
Trustee

Matthew Healey, $7,942 None None $62,500
Trustee(**),
Chairman and Chief
Executive Officer

Michael P. Mallardi, $7,942 None None $62,500
Trustee
</TABLE>

(*)Includes the Portfolio and 17 other portfolios (collectively, the "Master
Portfolios") for which Morgan acts as investment adviser.

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

Currently, there are 17 investment companies (14 investment companies
comprising the Master Portfolios, The JPM Pierpont Funds, The JPM Institutional
Funds and JPM Series Trust) in the fund complex.

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

The Trustees of the Portfolio, in addition to reviewing actions of the
Portfolio's various service providers, decide upon matters of general policy.
The Portfolio has entered into a Portfolio Fund Services Agreement with Pierpont
Group to assist the Trustees in exercising their overall supervisory
responsibilities over the affairs of the Portfolio. Pierpont Group was organized
in July 1989 to provide services for The Pierpont Family of Funds (currently an
investor in the Portfolio). The Portfolio has agreed to pay Pierpont Group a fee
in an amount representing its reasonable costs in performing these services.
These costs are periodically reviewed by the Trustees. The aggregate fees paid
to Pierpont Group by the Portfolio during the fiscal years ended August 31,
1994, 1995 and 1996 were $35,243, $38,804 and $24,602, respectively. The
Portfolio has no employees; its executive officers (listed below), other than
the Chief Executive Officer, are provided and compensated by Funds Distributor,
Inc. ("FDI"), a wholly owned indirect subsidiary of Boston Institutional Group,
Inc. The Portfolio's officers conduct and supervise the business operations of
the Portfolio.

The officers of the Portfolio, 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 60 State Street, Suite 1300, Boston,
Massachusetts 02109.

B-14

<PAGE>

MATTHEW HEALEY; Chief Executive Officer; Chairman, Pierpont Group, since 1989;
Chairman and Chief Executive Officer, Execution Services, Inc. until October
1991. His address is Pine Tree Club Estates, 10286 Saint Andrew Road, Boynton
Beach, FL 33436. His date of birth is August 23, 1937.

ELIZABETH A. KEELEY; Vice President and Assistant Secretary. Counsel,
FDI and Premier Mutual Fund Services, Inc. ("Premier Mutual") and an officer
of RCM Capital Funds, Inc., RCM Equity Funds, Inc., Waterhouse Investors Cash
Management Fund, Inc. and certain investment companies advised or administered
by the Dreyfus Corporation ("Dreyfus"). Prior to September 1995, Ms. Keeley
was enrolled at Fordham University School of Law and received her JD in May
1995. Prior to September 1992, Ms. Keeley was an assistant at the National
Association for Public Interest Law. Address: FDI, 200 Park Avenue, New York,
New York 10166. Her date of birth is September 14, 1969.

MARIE E. CONNOLLY; Vice President and Assistant Treasurer. President
and Chief Executive Officer and Director of FDI, Premier Mutual and an officer
of RCM Capital Funds, Inc., RCM Equity Funds, Inc. and certain investment
companies advised or administered by Dreyfus. From December 1991 to July
1994, she was President and Chief Compliance Officer of FDI. Prior to
December 1991, she served as Vice President and Controller, and later as
Senior Vice President of The Boston Company Advisors, Inc. ("TBCA"). Her date
of birth is August 1, 1957.

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

RICHARD W. INGRAM; President and Treasurer. Senior Vice President and Director
of Client Services and Treasury Administration of FDI, Senior Vice President of
Premier Mutual and an officer of RCM Capital Funds, Inc., RCM Equity Funds,
Inc., Waterhouse Investors Cash Management Fund, Inc. and certain investment
companies advised or administered by Dreyfus. From March 1994 to November 1995,
Mr. Ingram was Vice President and Division Manager of First Data Investor
Services Group, Inc. From 1989 to 1994, Mr. Ingram was Vice President, Assistant
Treasurer and Tax Director - Mutual Funds of The Boston Company. His date of
birth is September 15, 1955.

KAREN JACOPPO-WOOD; Vice President and Assistant Secretary. Assistant
Vice President of FDI and an officer of RCM Capital Funds, Inc. and RCM Equity
Funds, Inc. From June 1994 to January 1996, Ms. Jacoppo was a Manager, SEC
Registration, Scudder, Stevens & Clark, Inc. From 1988 to May 1994, Ms.
Jacoppo was a senior paralegal at TBCA. Her date of birth is December 29,
1966.

CHRISTOPHER J. KELLEY; Vice President and Assistant Secretary. Vice
President and Associate General Counsel of FDI. From April 1994 to July 1996,
Mr. Kelley was Assistant Counsel at Forum Financial Group. From 1992 to 1994,
Mr. Kelley was employed by Putnam Investments in legal and compliance
capacities. Prior to September 1992, Mr. Kelley was enrolled at Boston
College Law School and received his J.D. in May 1992. His date of birth is
December 24, 1964.

MARY A. NELSON; Vice President and Assistant Treasurer. Vice President
and Manager of Treasury Services and Administration of FDI, an officer of RCM
Capital Funds, Inc., RCM Equity Funds, Inc. and certain investment companies
advised or administered by Dreyfus. From 1989 to 1994, Ms. Nelson was an
Assistant Vice President and client manager for The Boston Company. Her date
of birth is April 22, 1964.

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JOHN E. PELLETIER; Vice President and Secretary. Senior Vice President
and General Counsel of FDI and Premier Mutual and an officer of RCM Capital
Funds, Inc., RCM Equity Funds, Inc., Waterhouse Investors Cash Management
Fund, Inc. and certain investment companies advised or administered by
Dreyfus. From February 1992 to April 1994, Mr. Pelletier served as Counsel
for TBCA. From August 1990 to February 1992, Mr. Pelletier was employed as an
Associate at Ropes & Gray. His date of birth is June 24, 1964.

JOSEPH F. TOWER III; Vice President and Assistant Treasurer. Senior
Vice President, Treasurer and Chief Financial Officer of FDI and Premier
Mutual and an officer of Waterhouse Investors Cash Management Fund, Inc. and
certain investment companies advised or administered by Dreyfus. From July
1988 to November 1993, Mr. Tower was Financial Manager of The Boston Company.
His date of birth is June 13, 1962.

The Portfolio's Declaration of Trust provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Portfolio, unless, as to liability to the Portfolio or its investors, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices, or
unless with respect to any other matter it is finally adjudicated that they did
not act in good faith in the reasonable belief that their actions were in the
best interests of the Portfolio. In the case of settlement, such indemnification
will not be provided unless it has been determined by a court or other body
approving the settlement or other disposition, or by a reasonable determination,
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that such
officers or Trustees have not engaged in wilful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.

Item 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of November 30, 1996, The JPM Institutional Tax Exempt Bond Fund and The
JPM Pierpont Tax Exempt Bond Fund, series of The JPM Institutional Funds and The
JPM Pierpont Funds, respectively, owned 30.19% and 69.81%, respectively, of the
outstanding beneficial interests in the Portfolio. So long as The JPM Pierpont
Tax Exempt Bond Fund controls the Portfolio, it may take actions without the
approval of any other holder of beneficial interests in the Portfolio.

Each of the Funds has informed the Portfolio that whenever it is requested to
vote on matters pertaining to the Portfolio (other than a vote by a Portfolio to
continue the operation of the Portfolio upon the withdrawal of another investor
in the Portfolio), it will hold a meeting of its shareholders and will cast its
vote as instructed by those shareholders.

The officers and Trustees of the Portfolio own none of the outstanding
beneficial interests in the Portfolio.

Item 16. INVESTMENT ADVISORY AND OTHER SERVICES.

INVESTMENT ADVISOR. The investment advisor to the Portfolio is Morgan Guaranty
Trust Company of New York, a wholly-owned subsidiary of J.P. Morgan & Co.
Incorporated ("J.P. Morgan"), a bank holding company organized under the laws of
the State of Delaware. The Advisor, 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. The Advisor 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, the Advisor offers a wide

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range of services, primarily to governmental, institutional, corporate and high
net worth individual customers in the U.S. and throughout the world.

J.P. Morgan, through the Advisor and other subsidiaries, acts as investment
advisor to individuals, governments, corporations, employee benefit plans,
mutual funds and other institutional investors with combined assets under
management of $197 billion (of which the Advisor advises over $30 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, Melbourne and Singapore to cover companies, industries and
countries on site. In addition, the investment management divisions employ
approximately 300 capital market researchers, portfolio managers and traders.
The conclusions of the equity analysts' fundamental research is quantified into
a set of projected returns for individual companies through the use of a
dividend discount model. These returns are projected for 2 to 5 years to enable
analysts to take a longer term view. These returns, or normalized earnings, are
used to establish relative values among stocks in each industrial sector. These
values may not be the same as the markets' current valuations of these
companies. This provides the basis for ranking the attractiveness of the
companies in an industry according to five distinct quintiles or rankings. This
ranking is one of the factors considered in determining the stocks purchased and
sold in each sector. The Advisor's fixed income investment process is based on
analysis of real rates, sector diversification and quantitative and credit
analysis.

The investment advisory services the Advisor provides to the Portfolio are not
exclusive under the terms of the 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
Portfolio. Such accounts are supervised by officers and employees of the Advisor
who may also be acting in similar capacities for the Portfolio. See Item 17
below.

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 benchmark for the Portfolio is currently Lehman Brothers
Quality Intermediate Municipal Bond Index.

J.P. Morgan Investment Management Inc., a wholly-owned subsidiary of J.P.
Morgan, is a registered investment adviser under the Investment Advisers Act of
1940, as amended, which manages employee benefit funds of corporations, labor
unions and state and local governments and the accounts of other institutional
investors, including investment companies. Certain of the assets of employee
benefit accounts under its management are invested in commingled pension trust

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funds for which the Advisor serves as trustee. J.P. Morgan Investment Management
Inc. advises the Advisor on investment of the commingled pension trust funds.

The Portfolio is managed by officers of the Advisor who, in acting for their
customers, including the Portfolio, do not discuss their investment decisions
with any personnel of J.P. Morgan or any personnel of other divisions of the
Advisor or with any of its affiliated persons, with the exception of J.P. Morgan
Investment Management Inc.

As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Advisor under the Investment
Advisory Agreement, the Portfolio has agreed to pay the Advisor a fee, which is
computed daily and may be paid monthly, equal to the annual rate of 0.30% of the
Portfolio's average daily net assets. For the fiscal years ended August 31,
1994, 1995 and 1996, the Portfolio paid $1,383,986, $1,178,720 and $1,354,145,
respectively, in advisory fees.

The Investment Advisory Agreement provides that it will continue in effect for
a period of two years after execution only if specifically approved annually
thereafter (i) by a vote of the holders of a majority of the Portfolio's
outstanding securities or by its Trustees and (ii) by a vote of a majority of
the Trustees who are not parties to the Advisory Agreement or "interested
persons" as defined by the 1940 Act cast in person at a meeting called for the
purpose of voting on such approval. The Investment Advisory Agreement will
terminate automatically if assigned and is terminable at any time without
penalty by a vote of a majority of the Trustees of the Portfolio or by a vote of
the holders of a majority of the Portfolio's voting securities on 60 days'
written notice to the Advisor and by the Advisor on 90 days' written notice to
the Portfolio.

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

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

Under a separate agreement, Morgan also provides administrative and
related services to the Portfolio. See "Administrative Services Agent" in
Part A above.

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CO-ADMINISTRATOR. Under the Portfolio's Co-Administration Agreement dated
August 1, 1996, FDI serves as the Portfolio's Co-Administrator. The
Co-Administration Agreement may be renewed or amended by the Trustees without an
investor vote. The Co-Administration Agreement is terminable at any time
without penalty by a vote of a majority of the Trustees of the Portfolio on not
more than 60 days' written notice nor less, subject to the consent of the
Trustees of the Portfolio, than 30 days' written notice to the other party. The
Co-Administrator may, subject to the consent of the Trustees of the Portfolio,
subcontract for the performance of its obligations, provided, however, that
unless the Portfolio 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 "Administrative Services Agent" below.

For its services under the Co-Administration Agreement, the 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
the Portfolio is based on the ratio of its net assets to the aggregate net
assets of The JPM Pierpont Funds, The JPM Institutional Funds, the Master
Portfolios and JPM Series Trust. For the period from August 1, 1996 through
August 31, 1996, administrative fees of $920 were paid by the Portfolio to FDI.

The following administrative fees were paid by the Portfolio to
Signature Broker-Dealer Services, Inc. ("SBDS") (which provided placement
agent and administrative services to the Portfolio prior to August 1, 1996):
For the fiscal year ended August 31, 1994: $28,345. For the fiscal year ended
August 31, 1995: $28,290. For the period from September 1, 1995 through July
31, 1996: $43,154.

ADMINISTRATIVE SERVICES AGENT. The Portfolio has entered into a
Restated Administrative Services Agreement (the "Services Agreement") with
Morgan, pursuant to which Morgan is responsible for certain administrative and
related services provided to the Portfolio.

Under the Services Agreement, effective August 1, 1996, the Portfolio 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
Master Portfolios and JPM Series Trust in accordance with the following annual
schedule: 0.09% on the first $7 billion of their aggregate average daily net
assets and 0.04% of their average daily net assets in excess of $7 billion, less
the complex-wide fees payable to FDI. The portion of this charge payable by the
Portfolio is determined by the proportionate share that its net assets bear to
the total net assets of The JPM Pierpont Funds, The JPM Institutional Funds, the
Master Portfolios, the other investors in the Master Portfolios for which Morgan
provides similar services and JPM Series Trust.

Under administrative services agreements in effect with Morgan from December
29, 1995 through July 31, 1996, the Portfolio paid Morgan a fee equal to its
proportionate share of an annual complex-wide charge. This charge was calculated
daily based on the aggregate net assets of the Master Portfolios in accordance
with the following schedule: 0.06% of the first $7 billion of the Master
Portfolios' aggregate average daily net assets and 0.03% of the Master
Portfolios' aggregate average daily net assets in excess of $7 billion. Prior to
December 29, 1995, the Portfolio had entered into a financial and fund
accounting services agreement with Morgan, the provisions of which included
certain of the activities described above and, prior to September 1, 1995, also
included reimbursement of usual and customary expenses.

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For the fiscal years ended August 31, 1994, 1995 and 1996, the Portfolio paid
Morgan $210,795, $189,892 and $80,281, respectively, in administrative services
fees.

See "Expenses" below for applicable expense limitations.

CUSTODIAN. State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, Massachusetts 02110, serves as the Portfolio's Custodian and
Transfer Agent. Pursuant to the Custodian Contract, State Street is responsible
for maintaining the books of account and records of portfolio transactions and
holding portfolio securities and cash. In addition, the Custodian has entered
into subcustodian agreements with Bankers Trust Company for the purpose of
holding TENR Notes and with Bank of New York and Chemical Bank, N.A. for the
purpose of holding certain variable rate demand notes. In the case of foreign
assets held outside the United States, the Custodian employs various
sub-custodians, who were approved by the Trustees of the Portfolio in accordance
with the regulations of the SEC. The Custodian maintains portfolio transaction
records, calculates book and tax allocations for the Portfolio, and computes the
value of the interest of each investor.

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

EXPENSES. In addition to the fees payable to the service providers identified
above, the Portfolio is responsible for usual and customary expenses associated
with its operations. Such expenses include organization expenses, legal fees,
accounting and audit expenses, insurance costs, the compensation and expenses of
the Trustees, registration fees under federal securities laws, and extraordinary
expenses, applicable to the Portfolio. Such expenses also include brokerage
expenses. Under fee arrangements prior to September 1, 1995, that included
higher fees for financial and fund accounting services, Morgan as service agent
was responsible for reimbursements to the Portfolio for SBDS's fees as
Administrator and the usual and customary expenses described above (excluding
organization and extraordinary expenses, custodian fees and brokerage expenses).

Morgan has agreed that it will reimburse the Portfolio through December 31,
1997 to the extent necessary to maintain the Portfolio's total operating
expenses at the annual rate of 0.50% of the Portfolio's average daily net
assets. This limit does not cover extraordinary expenses during the period.
There is no assurance that Morgan will continue this waiver beyond the specified
period.

Item 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

The Advisor places orders for the Portfolio for all purchases and sales of
portfolio securities, enters into repurchase agreements, and may enter into
reverse repurchase agreements and execute loans of portfolio securities on
behalf of the Portfolio. See Item 13 above.

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

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securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid.

In connection with portfolio transactions for the Portfolio, the Advisor
intends to seek the best price and execution on a competitive basis for both
purchases and sales of securities. For the fiscal years ended August 31, 1995
and 1996, the portfolio turnover was 47% and 25%, respectively.

Portfolio transactions for the Portfolio will be undertaken principally to
accomplish the Portfolio's objective in relation to expected movements in the
general level of interest rates. The Portfolio may engage in short term trading
consistent with its objective.

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 possible execution.
The Advisor monitors the reasonableness of the brokerage commissions paid in
light of the execution received. The Trustees of the Portfolio review regularly
the reasonableness of commissions and other transaction costs incurred by the
Portfolio 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 the
Portfolio. The Advisor believes that the value of research services received is
not determinable and does not significantly reduce its expenses. The Portfolio
does not reduce its fee to the Advisor by any amount that might be attributable
to the value of such services.

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

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

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On those occasions when the Advisor deems the purchase or sale of a security
to be in the best interests of the 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 the 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 the Portfolio. In some
instances, this procedure might adversely affect the Portfolio.

If the Portfolio 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 the
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 the 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.

Item 18. CAPITAL STOCK AND OTHER SECURITIES.

Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no reference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.

Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees if they choose to do so
and in such event the other investors in the Portfolio would not be able to
elect any Trustee. The Portfolio is not required and has no current intention to
hold annual meetings of investors but the Portfolio will hold special meetings
of investors when in the judgment of the Portfolio's Trustees it is necessary or
desirable to submit matters for an investor vote. No material amendment may be
made to the Portfolio's Declaration of Trust without the affirmative majority
vote of investors (with the vote of each being in proportion to the amount of
its investment).

The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to its percentage of the
beneficial interests in the Portfolio), except that if the Trustees recommend
such sale of assets, the approval by vote of a majority of the investors (with
the vote of each being in proportion to its percentage of the beneficial
interests of the Portfolio) will be sufficient. The Portfolio may also be
terminated (i) upon liquidation and distribution of its assets if approved by
the vote of two thirds of its investors (with the vote of each being in

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proportion to the amount of its investment) or (ii) by the Trustees by written
notice to its investors.

The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.

The Portfolio's Declaration of Trust further provides that obligations of the
Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.

Item 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.

Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act.

Portfolio securities with a maturity of 60 days or more, including securities
that are listed on an exchange or traded over-the-counter, are valued using
prices supplied daily by an independent pricing service or services that (i) are
based on the last sale price on a national securities exchange, or in the
absence of recorded sales, at the readily available closing bid price on such
exchange or at the quoted bid price in the OTC market, if such exchange or
market constitutes the broadest and most representative market for the security
and (ii) in other cases, take into account various factors affecting market
value, including yields and prices of comparable securities, indication as to
value from dealers and general market conditions. If such prices are not
supplied by the Portfolio's independent pricing service, such securities are
priced in accordance with procedures adopted by the Trustees. All portfolio
securities with a remaining maturity of less than 60 days are valued by the
amortized cost method. Because of the large number of municipal bond issues
outstanding and the varying maturity dates, coupons and risk factors applicable
to each issuer's books, no readily available market quotations exist for most
municipal securities.

If the Portfolio determines that it would be detrimental to the best interest
of the remaining investors in the Portfolio to make payment wholly or partly in
cash, payment of the redemption price may be made in whole or in part by a
distribution in kind of securities from the Portfolio, in lieu of cash, in
conformity with the applicable rule of the SEC. If interests are redeemed in
kind, the redeeming investor might incur transaction costs in converting the
assets into cash. The method of valuing portfolio securities is described above
and such valuation will be made as of the same time the redemption price is
determined. The Portfolio has elected to be governed by Rule 18f-1 under the
1940 Act pursuant to which the Portfolio is obligated to redeem interests solely
in cash up to the lesser of $250,000 or 1% of the net asset value of the
Portfolio during any 90 day period for any one investor. The Portfolio will not

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redeem in kind except in circumstances in which an investor is permitted to
redeem in kind. The net asset value of the Portfolio will not be computed on a
day in which no orders to purchase or withdraw beneficial interests in the
Portfolio has been received or on the days the following legal holidays are
observed: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. On days when
U.S. trading markets close early in observance of these holidays, the Portfolio
would expect to close for purchases and withdrawals at the same time. The days
on which net asset value is determined are the Portfolio's business days.

Item 20. TAX STATUS.

The Portfolio is organized as a New York trust. The Portfolio is not subject
to any income or franchise tax in the State of New York or the Commonwealth of
Massachusetts. However, each investor in the Portfolio will be subject to U.S.
Federal income tax in the manner described below on its share (as determined in
accordance with the governing instruments of the Portfolio) of the Portfolio's
ordinary income and capital gain in determining its income tax liability. The
determination of such share will be made in accordance with the Internal Revenue
Service Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder.

Although, as described above, the Portfolio will not be subject to federal
income tax, it will file appropriate income tax returns.

It is intended that the Portfolio's assets will be managed in such a way that
an investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Code. To ensure that investors will be able to satisfy the
requirements of subchapter M, the Portfolio must satisfy certain gross income
and diversification requirements, including, among other things, a requirement
that the Portfolio derive less than 30% of its gross income from the sale of
stock, securities, options, futures or forward contracts held less than three
months.

The Portfolio intends to qualify to allocate tax exempt interest to its
investors by having, at the close of each quarter of its taxable year, at least
50% of the value of its total assets consist of tax exempt securities. Tax
exempt interest is that part of income earned by the Portfolio which consists of
interest received by the Portfolio on tax exempt securities. In view of the
Portfolio's investment policies, it is expected that a substantial portion of
all income will be tax exempt income, although the Portfolio may from time to
time realize net short-term capital gains and may invest limited amounts in
taxable securities under certain circumstances.

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

Forward currency contracts, options and futures contracts entered into by the
Portfolio may create "straddles" for U.S. federal income tax purposes and this

B-24

<PAGE>

may affect the character and timing of gains or losses realized by the Portfolio
on forward currency contracts, options and futures contracts or on the
underlying securities. Straddles may also result in the loss of the holding
period of underlying securities for purposes of the 30% of gross income test
described above, and therefore, the Portfolio's ability to enter into forward
currency contracts, options and futures contracts may be limited.

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

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

OTHER TAXATION. The investment by an investor in the Portfolio does not cause
the investor to be liable for any income or franchise tax in the State of New
York. Investors are advised to consult their own tax advisors with respect to
the particular tax consequences to them of an investment in the Portfolio.

Item 21. UNDERWRITERS.

The exclusive placement agent for the Portfolio is FDI, which receives no
additional compensation for serving in this capacity. Investment companies,
insurance company separate accounts, common and commingled trust funds and
similar organizations and entities may continuously invest in the Portfolio.

Item 22. CALCULATIONS OF PERFORMANCE DATA.

Not applicable.

Item 23. FINANCIAL STATEMENTS.

The Portfolio's current annual report to investors filed with the SEC pursuant
to Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder is incorporated
herein by reference.

B-25

<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 debts
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 debts in this
category than for debts in higher rated categories.

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

Commercial Paper, including Tax Exempt

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

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

Short-Term Tax-Exempt Notes

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

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

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

<PAGE>

principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

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

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

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

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

Commercial Paper, including Tax Exempt

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

- Leading market positions in well established industries.
- 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.

Appendix-2

<PAGE>

PART C

Item 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS

The audited financial statements included in Part B, Item 23 of this
registration statement are as follows:

Schedule of Investments at August 31, 1996 Statement of Assets and Liabilities
at August 31, 1996 Statement of Operations for the fiscal year ended August
31, 1996
Statement of Changes in Net Assets for the fiscal year ended August 31, 1996
Supplementary Data Notes to Financial Statements at August 31, 1996

(b) EXHIBITS

1 Declaration of Trust, as amended, of the Registrant.2

2 Restated By-Laws of the Registrant.2

5 Investment Advisory Agreement between the Registrant and Morgan Guaranty
Trust Company of New York ("Morgan").2

8 Custodian Contract between the Registrant and State Street Bank and
Trust Company ("State Street").2

9(a) Co-Administration Agreement between the Registrant and Funds
Distributor, Inc. dated August 1, 1996 ("Co-Administration Agreement").1

9(a)(1) Amended Exhibit I to Co-Administration Agreement.2

9(b) Transfer Agency and Service Agreement between the Registrant and State
Street.2

9(c) Restated Administrative Services Agreement between the Registrant and
Morgan dated August 1, 1996 ("Administrative Services Agreement").1

9(c)(1) Amended Exhibit I to Administrative Services Agreement.2

9(d) Amended and Restated Portfolio Fund Services Agreement between the
Registrant and Pierpont Group, Inc. dated July 11, 1996.1

13 Investment representation letters of initial investors.2

27 Financial Data Schedule.2

1Incorporated herein by reference from Amendment No. 4 to Registrant's
Registration Statement on Form N-1A as filed with the Securities and Exchange
Commission on October 7, 1996 (Accession Number 0000912057-96-022171).

2Filed herewith.

<PAGE>

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

Not applicable.

Item 26. NUMBER OF HOLDERS OF SECURITIES.

(1) (2)
Title of Class Number of Record Holders
Beneficial Interests 2 (as of November 30, 1996)

Item 27. INDEMNIFICATION.

Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as an Exhibit hereto.

The Trustees and officers of the Registrant and the personnel of the
Registrant's co-administrator are insured under an errors and omissions
liability insurance policy. The Registrant and its officers are also insured
under the fidelity bond required by Rule 17g-1 under the Investment Company Act
of 1940, as amended.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Morgan is a New York trust company which is a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated. Morgan conducts a general banking and trust
business.

To the knowledge of the Registrant, none of the directors, except those set
forth below, or executive officers of Morgan is or has been during the past two
fiscal years engaged in any other business, profession, vocation or employment
of a substantial nature, except that certain officers and directors of Morgan
also hold various positions with, and engage in business for, J.P. Morgan & Co.
Incorporated, which owns all the outstanding stock of Morgan. Set forth below
are the names, addresses, and principal business of each director of Morgan who
is engaged in another business, profession, vocation or employment of a
substantial nature.

Riley P. Bechtel: Chairman and Chief Executive Officer, Bechtel Group,
Inc. (architectural design and construction). His address is Bechtel Group,
Inc., P.O. Box 193965, San Francisco, CA 94119-3965.

Martin Feldstein: President and Chief Executive Officer, National Bureau
of Economic Research, Inc. (national research institution). His address is
National Bureau of Economic Research, Inc., 1050 Massachusetts Avenue,
Cambridge, MA 02138-5398.

Hanna H. Gray: President Emeritus, The University of Chicago (academic
institution). Her address is Department of History, The University of
Chicago, 1126 East 59th Street, Chicago, IL 60637.

James R. Houghton: Retired Chairman, Corning Incorporated (glass
products). His address is R.D.#2 Spencer Hill Road, Corning, NY 14830.

James L. Ketelsen: Retired Chairman and Chief Executive Officer, Tenneco
Inc. (oil, pipe-lines, and manufacturing). His address is Tenneco, Inc., P.O.
Box 2511, Houston, TX 77252-2511.

Lee R. Raymond: Chairman and Chief Executive Officer, Exxon Corporation
(oil, natural gas, and other petroleum products). His address is Exxon
Corporation, 5959 Las Colinas Boulevard, Irving, TX 75039-2298.

C-2

<PAGE>

Richard D. Simmons: Former President, The Washington Post Company and
International Herald Tribune (newspapers). His address is P.O. Box 242,
Sperryville, VA 22740.

Douglas C. Yearley: Chairman, President and Chief Executive Officer,
Phelps Dodge Corporation (chemicals). His address is Phelps Dodge
Corporation, 2600 N. Central Avenue, Phoenix, AZ 85004-3014.

Item 29. PRINCIPAL UNDERWRITERS.

Not applicable.

Item 30. LOCATION OF ACCOUNTS AND RECORDS.

The accounts and records of the Registrant are located, in whole or in part,
at the office of the Registrant and the following locations:

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, NY
10260-0060 or 522 Fifth Avenue, New York, NY 10036. (records relating to its
functions as investment adviser and services agent).

State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110. (records relating to its functions as custodian and
transfer agent).

Funds Distributor, Inc., 60 State Street, Boston, MA 02109. (records
relating to its functions as co-administrator and exclusive placement agent).

Item 31. MANAGEMENT SERVICES.

Not applicable.

Item 32. UNDERTAKINGS.

Not applicable.

C-3

<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, as
amended, The Tax Exempt Bond Portfolio has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on the
20th day of December, 1996.

THE TAX EXEMPT BOND PORTFOLIO

By: /S/ RICHARD W. INGRAM
-----------------------------
Richard W. Ingram
President and Treasurer

C-4

<PAGE>

INDEX TO EXHIBIT

EXHIBIT NO: DESCRIPTION OF EXHIBITS

EX-99.B1 Declaration of Trust, as amended, of the Registrant

EX-99.B2 Restated By-Laws of the Registrant

EX-99.B5 Investment Advisory Agreement between the Registrant and Morgan
Guaranty Trust Company of New York

EX-99.B8 Custodian Contract between the Registrant and State Street Bank
and Trust Company

EX-99.B9a1 Amended Exhibit I to Co-Administration Agreement between the
Registrant and Funds Distributor, Inc.

EX-99.B9b Transfer Agency and Service Agreement between the Registrant and
State Street Bank and Trust Company

EX-99.B9c1 Amended Exhibit I to Restated Administrative Services Agreement
between the Registrant and Morgan Guaranty Trust Company of New
York

EX-99.B13 Investment representation letters of initial investors

EX-27 Financial Data Schedule

C-5

JPM408

AMENDMENT NO. 1 TO DECLARATION OF TRUST OF
THE TAX EXEMPT BOND PORTFOLIO

DATED AS OF APRIL 13, 1995

The undersigned, being all the Trustees of The Tax Exempt Bond
Portfolio, a trust organized under the laws of the State of New York (the
"Trust["]), acting pursuant to the last paragraph of Section 10.4 of the
Declaration of Trust dated as of January 29, 1993, hereby amend in its
entirety paragraph Section 6.2 of the Trust's Declaration of Trust as follows:

6.2. NON-TRANSFERABILITY. A Holder may not transfer, sell or exchange
its Interest except as part of a merger or similar plan of reorganization of a
Holder that qualifies under Section 368 of the Code as permitted by the
Trustees.

IN WITNESS WHEREOF, the undersigned have executed this instrument as
of the 13th day of April, 1995. This instrument may be executed by the
Trustees on separate counterparts but shall be effective only when signed by
all of the Trustees.

/s/ F.S. Addy /s/ William G. Burns
Frederick S. Addy William G. Burns

/s/ A.C. Eschenlauer /s/ Matthew Healey
Arthur C. Eschenlauer Matthew Healey

/s/ Michael P. Mallardi
Michael P. Mallardi

<PAGE>

JPM08

THE TAX EXEMPT BOND PORTFOLIO

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

DECLARATION OF TRUST

Dated as of January 29, 1993

<PAGE>

TABLE OF CONTENTS
PAGE

ARTICLE I--THE TRUST 1

Section 1.1 Name 1
Section 1.2 Definitions 1

ARTICLE II--TRUSTEES 3

Section 2.1 Number and Qualification 3
Section 2.2 Term and Election 4
Section 2.3 Resignation, Removal and Retirement 4
Section 2.4 Vacancies 5
Section 2.5 Meetings 5
Section 2.6 Officers; Chairman of the Board 6
Section 2.7 By-Laws 6

ARTICLE III--POWERS OF TRUSTEES 6

Section 3.1 General 6
Section 3.2 Investments 6
Section 3.3 Legal Title 7
Section 3.4 Sale and Increases of Interests 7
Section 3.5 Decreases and Redemptions of Interests 8
Section 3.6 Borrow Money 8
Section 3.7 Delegation; Committees 8
Section 3.8 Collection and Payment 8
Section 3.9 Expenses 8
Section 3.10 Miscellaneous Powers 9
Section 3.11 Further Powers 9

ARTICLE IV--INVESTMENT MANAGEMENT AND ADMINISTRATION AND PLACEMENT
AGENT ARRANGEMENTS 9

Section 4.1 Investment Management and Other Arrangements 10
Section 4.2 Parties to Contract 10

ARTICLE V--LIABILITY OF HOLDERS; LIMITATIONS OF LIABILITY OF TRUSTEES,
OFFICERS. ETC. 10

Section 5.1 Liability of Holders; Indemnification 11
Section 5.2 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Third Parties 11
Section 5.3 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Trust, Holders, etc. 11
Section 5.4 Mandatory Indemnification 11
i

<PAGE>

PAGE

Section 5.5 No Bond Required of Trustees 12
Section 5.6 No Duty of Investigation; Notice in
Trust Instruments, etc. 12
Section 5.7 Reliance on Experts, etc. 13

ARTICLE VI--INTERESTS 14

Section 6.1 Interests 14
Section 6.2 Non-Transferability 14
Section 6.3 Register of Interests 14

ARTICLE VII--INCREASES, DECREASES, AND REDEMPTIONS OF INTERESTS 14

ARTICLE VIII--DETERMINATION OF BOOK CAPITAL ACCOUNT BALANCES,
AND DISTRIBUTIONS 15

Section 8.1 Book Capital Account Balances 15
Section 8.2 Allocations and Distributions to Holders 15
Section 8.3 Power to Modify Foregoing Procedures 15

ARTICLE IX--HOLDERS 15

Section 9.1 Rights of Holders 15
Section 9.2 Meetings of Holders 16
Section 9.3 Notice of Meetings 16
Section 9.4 Record Date for Meetings, Distributions, etc. 16
Section 9.5 Proxies, etc. 17
Section 9.6 Reports 17
Section 9.7 Inspection of Records 17
Section 9.8 Holder Action by Written Consent 17
Section 9.9 Notices 18

ARTICLE X--DURATION; TERMINATION; AMENDMENT; MERGERS; ETC. 18

Section 10.1 Duration 18
Section 10.2 Termination 19
Section 10.3 Dissolution 20
Section 10.4 Amendment Procedure 20
Section 10.5 Merger, Consolidation and Sale of Assets 21
Section 10.6 Incorporation 21

<PAGE>

PAGE
ARTICLE XI--MISCELLANEOUS 22

Section 11.1 Certificate of Designation; Agent for
Service of Process 22
Section 11.2 Governing Law 22
Section 11.3 Counterparts 22
Section 11.4 Reliance by Third Parties 22
Section 11.5 Provisions in Conflict With Law or Regulations 23

iii

<PAGE>

JPM08
DECLARATION OF TRUST

OF
THE TAX EXEMPT BOND PORTFOLIO
---------------------
This DECLARATION OF TRUST of [the] The Tax Exempt Bond
Portfolio is made as of the 29th day of January, 1993 by the parties signatory
hereto, as Trustees (as defined in Section 1.2 hereof).

W I T N E S S E T H:

WHEREAS, the Trustees desire to form a trust fund under the
law of the State of New York for the investment and reinvestment of its
assets; and

WHEREAS, it is proposed that the trust assets be composed of
money and property contributed thereto by the holders of interests in the
trust entitled to ownership rights in the trust;

NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust all money and property contributed to the trust fund and will
manage and dispose of the same for the benefit of the holders of interests in
the Trust and subject to the provisions hereof, to wit:

ARTICLE I

THE TRUST

1.1. NAME. The name of the trust created hereby (the
"Trust") shall be The Tax Exempt Bond Portfolio and so far as may be
practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word "Trust"
wherever hereinafter used) shall refer to the Trustees as Trustees, and not
individually, and shall not refer to the officers, employees, agents or
independent contractors of the Trust or holders of interests in the Trust.

1.2. DEFINITIONS. As used in this Declaration, the
following terms shall have the following meanings:

The term "Interested Person" shall have the meaning given it
in the 1940 Act.

"BOOK CAPITAL ACCOUNT" shall mean, for any Holder at any
time, the Book Capital Account of the Holder for such day, determined in
accordance with Section 8.1 hereof.

<PAGE>

"CODE" shall mean the United States Internal Revenue Code of
1986, as amended from time to time, as well as any non-superseded provisions
of the Internal Revenue Code of 1954, as amended (or any corresponding
provision or provisions of succeeding law).

"COMMISSION" shall mean the United States Securities and
Exchange Commission.

"DECLARATION" shall mean this Declaration of Trust as
amended from time to time. References in this Declaration to "DECLARATION",
"HEREOF", "HEREIN" and "HEREUNDER" shall be deemed to refer to this
Declaration rather than the article or section in which any such word appears.

"FISCAL YEAR" shall mean an annual period determined by the
Trustees which ends on December 31 of each year or on such other day as is
permitted or required by the Code.

"HOLDERS" shall mean as of any particular time all holders
of record of Interests in the Trust.

"INSTITUTIONAL INVESTOR(S)" shall mean any regulated
investment company, segregated asset account, foreign investment company,
common trust fund, group trust or other investment arrangement, whether
organized within or without the United States of America, other than an
individual, S corporation, partnership or grantor trust beneficially owned by
any individual, S corporation or partnership.

"INTEREST(S)" shall mean the interest of a Holder in the
Trust, including all rights, powers and privileges accorded to Holders by this
Declaration, which interest may be expressed as a percentage, determined by
calculating, at such times and on such basis as the Trustees shall from time
to time determine, the ratio of each Holder's Book Capital Account balance to
the total of all Holders' Book Capital Account balances. Reference herein to a
specified percentage of, or fraction of, Interests, means Holders whose
combined Book Capital Account balances represent such specified percentage or
fraction of the combined Book Capital Account balances of all, or a specified
group of, Holders.

"INVESTMENT MANAGER AND ADMINISTRATOR" shall mean any party
furnishing services to the Trust pursuant to any investment management or
administration contract described in Section 4.1 hereof.

"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting
of Holders, of (A) 67% or more of the Interests present or represented at such
meeting, if Holders of more than 50% of all Interests are present or
represented by proxy, or (B) more than 50% of all Interests, whichever is
less.

<PAGE>

"PERSON" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.

"REDEMPTION" shall mean the complete withdrawal of an
Interest of a Holder the result of which is to reduce the Book Capital Account
balance of that Holder to zero, and the term "REDEEM" shall mean to effect a
Redemption.

"TRUSTEES" shall mean each signatory to this Declaration, so
long as such signatory shall continue in office in accordance with the terms
hereof, and all other individuals who at the time in question have been duly
elected or appointed and have qualified as Trustees in accordance with the
provisions hereof and are then in office, and reference in this Declaration to
a Trustee or Trustees shall refer to such individual or individuals in their
capacity as Trustees hereunder.

"TRUST PROPERTY" shall mean as of any particular time any
and all property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of the Trust or the Trustees.

The "1940 ACT" shall mean the United States Investment
Company Act of 1940, as amended from time to time, and the rules and
regulations thereunder.

ARTICLE II

TRUSTEES
2.1. NUMBER AND QUALIFICATION. The number of Trustees shall
be fixed from time to time by action of the Trustees taken as provided in
Section 2.5 hereof; provided, however, that the number of Trustees so fixed
shall in no event be less than three or more than 15. Any vacancy created by
an increase in the number of Trustees may be filled by the appointment of an
individual having the qualifications described in this Section 2.1 made by
action of the Trustees taken as provided in Section 2.5 hereof. Any such
appointment shall not become effective, however, until the individual named in
the written instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of this
Declaration. No reduction in the number of Trustees shall have the effect of
removing any Trustee from office. Whenever a vacancy occurs, until such
vacancy is filled as provided in Section 2.4 hereof, the Trustees continuing
in office, regardless of their number, shall have all the powers granted to
the Trustees and shall discharge all the duties imposed upon the Trustees by
this Declaration. A Trustee shall be an individual at least 21 years of age
who is not under legal disability.

<PAGE>

2.2. TERM AND ELECTION. Each Trustee named herein, or
elected or appointed prior to the first meeting of Holders, shall (except in
the event of resignations, retirements, removals or vacancies pursuant to
Section 2.3 or Section 2.4 hereof) hold office until a successor to such
Trustee has been elected at such meeting and has qualified to serve as
Trustee, as required under the 1940 Act. Subject to the provisions of Section
16(a) of the 1940 Act and except as provided in Section 2.3 hereof, each
Trustee shall hold office during the lifetime of the Trust and until its
termination as hereinafter provided.

2.3. RESIGNATION. REMOVAL AND RETIREMENT. Any Trustee may
resign his or her trust (without need for prior or subsequent accounting) by
an instrument in writing executed by such Trustee and delivered or mailed to
the Chairman, if any, the President or the Secretary of the Trust and such
resignation shall be effective upon such delivery, or at a later date
according to the terms of the instrument. Any Trustee may be removed by the
affirmative vote of Holders of two-thirds of the Interests or (provided the
aggregate number of Trustees, after such removal and after giving effect to
any appointment made to fill the vacancy created by such removal, shall not be
less than the number required by Section 2.1 hereof) with cause, by the action
of two-thirds of the remaining Trustees. Removal with cause includes, but is
not limited to, the removal of a Trustee due to physical or mental incapacity
or failure to comply with such written policies as from time to time may be
adopted by at least two-thirds of the Trustees with respect to the conduct of
the Trustees and attendance at meetings. Any Trustee who has attained a
mandatory retirement age, if any, established pursuant to any written policy
adopted from time to time by at least two-thirds of the Trustees shall,
automatically and without action by such Trustee or the remaining Trustees, be
deemed to have retired in accordance with the terms of such policy, effective
as of the date determined in accordance with such policy. Any Trustee who has
become incapacitated by illness or injury as determined by a majority of the
other Trustees, may be retired by written instrument executed by a majority of
the other Trustees, specifying the date of such Trustee's retirement. Upon the
resignation, retirement or removal of a Trustee, or a Trustee otherwise
ceasing to be a Trustee, such resigning, retired, removed or former Trustee
shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees
any Trust Property held in the name of such resigning, retired, removed or
former Trustee. Upon the death of any Trustee or upon removal, retirement or
resignation due to any Trustee's incapacity to serve as Trustee, the legal
representative of such deceased, removed, retired or resigning Trustee shall
execute and deliver on behalf of such deceased, removed, retired or resigning
Trustee such documents as the remaining Trustees shall require for the purpose
set forth in the preceding sentence.

<PAGE>

2.4. VACANCIES. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
retirement, adjudicated incompetence or other incapacity to perform the duties
of the office, or removal, of a Trustee. No such vacancy shall operate to
annul this Declaration or to revoke any existing agency created pursuant to
the terms of this Declaration. In the case of a vacancy, Holders of at least a
majority of the Interests entitled to vote, acting at any meeting of Holders
held in accordance with Section 9.2 hereof, or, to the extent permitted by the
1940 Act, a majority vote of the Trustees continuing in office acting by
written instrument or instruments, may fill such vacancy, and any Trustee so
elected by the Trustees or the Holders shall hold office as provided in this
Declaration.

2.5. MEETINGS. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President, the
Secretary, an Assistant Secretary or any two Trustees. Regular meetings of the
Trustees may be held without call or notice at a time and place fixed by the
By-Laws or by resolution of the Trustees. Notice of any other meeting shall be
mailed or otherwise given not less than 24 hours before the meeting but may be
waived in writing by any Trustee either before or after such meeting. The
attendance of a Trustee at a meeting shall constitute a waiver of notice of
such meeting except in the situation in which a Trustee attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting was not lawfully called or convened. The Trustees may
act with or without a meeting. A quorum for all meetings of the Trustees shall
be a majority of the Trustees. Unless provided otherwise in this Declaration,
any action of the Trustees may be taken at a meeting by vote of a majority of
the Trustees present (a quorum being present) or without a meeting by written
consent of a majority of the Trustees.

Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all
meetings of any such committee shall be a majority of the members thereof.
Unless provided otherwise in this Declaration, any action of any such
committee may be taken at a meeting by vote of a majority of the members
present (a quorum being present) or without a meeting by written consent of a
majority of the members.

With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5 and shall be entitled to vote to the extent permitted by the
1940 Act.

All or any one or more Trustees may participate in a meeting
of the Trustees or any committee thereof by means of a conference telephone or
similar communications equipment by means of which all individuals
participating in the meeting can hear each

<PAGE>

other and participation in a meeting by means of such communications equipment
shall constitute presence in person at such meeting.

2.6. OFFICERS; CHAIRMAN OF THE BOARD. The Trustees shall,
from time to time, elect a President, a Secretary and a Treasurer. The
Trustees may elect or appoint, from time to time, a Chairman of the Board who
shall preside at all meetings of the Trustees and carry out such other duties
as the Trustees may designate. The Trustees may elect or appoint or authorize
the President to appoint such other officers, agents or independent
contractors with such powers as the Trustees may deem to be advisable. The
Chairman, if any, shall be and each other officer may, but need not, be a
Trustee.

2.7. BY-LAWS. The Trustees may adopt and, from time to
time, amend or repeal By-Laws for the conduct of the business of the Trust.

ARTICLE III

POWERS OF TRUSTEES

3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and such
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees may perform such acts as in their
sole discretion they deem proper for conducting the business of the Trust. The
enumeration of or failure to mention any specific power herein shall not be
construed as limiting such exclusive and absolute control. The powers of the
Trustees may be exercised without order of or resort to any court.

3.2. INVESTMENTS. The Trustees shall have power to:

(a) conduct, operate and carry on the business of an investment company;

(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire,
hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal
in or dispose of United States and foreign currencies and related instruments
including forward contracts, and securities, including common and preferred
stock, warrants, bonds, debentures, time notes and all other evidences of
indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including,
without limitation, those issued, guaranteed or sponsored by any state,

<PAGE>

territory or possession of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, or by the United
States Government, any foreign government, or any agency, instrumentality or
political subdivision of the United States Government or any foreign
government, or any international instrumentality, or by any bank, savings
institution, corporation or other business entity organized under the laws of
the United States or under any foreign laws; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any and
all such investments of any kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto, with
power to designate one or more Persons to exercise any of such rights, powers
and privileges in respect of any of such investments; and the Trustees shall
be deemed to have the foregoing powers with respect to any additional
instruments in which the Trustees may determine to invest.

The Trustees shall not be limited to investing in
obligations maturing before the possible termination of the Trust, nor shall
the Trustees be limited by any law limiting the investments which may be made
by fiduciaries.

3.3. LEGAL TITLE. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
the power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust, or in the
name or nominee name of any other Person on behalf of the Trust, on such terms
as the Trustees may determine.

The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each individual who may hereafter become
a Trustee upon his due election and qualification. Upon the resignation,
removal or death of a Trustee, such resigning, removed or deceased Trustee
shall automatically cease to have any right, title or interest in any Trust
Property, and the right, title and interest of such resigning, removed or
deceased Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.

3.4. SALE AND INCREASES OF INTERESTS. The Trustees, in
their discretion, may, from time to time, without a vote of the Holders, permit
any Institutional Investor to purchase an Interest, or increase its Interest,
for such type of consideration, including cash or property, at such time or
times (including, without limitation, each business day), and on such terms as
the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. Individuals,
7

<PAGE>

S corporations, partnerships and grantor trusts that are beneficially owned by
any individual, S corporation or partnership may not purchase Interests. A
Holder which has redeemed its Interest may not be permitted to purchase an
Interest until the later of 60 calendar days after the date of such Redemption
or the first day of the Fiscal Year next succeeding the Fiscal Year during
which such Redemption occurred.

3.5 DECREASES AND REDEMPTIONS OF INTERESTS. Subject to
Article VII hereof, the Trustees, in their discretion, may, from time to time,
without a vote of the Holders, permit a Holder to redeem its Interest, or
decrease its Interest, for either cash or property, at such time or times
(including, without limitation, each business day), and on such terms as the
Trustees may deem best.

3.6. BORROW MONEY. The Trustees shall have power to borrow
money or otherwise obtain credit and to secure the same by mortgaging,
pledging or otherwise subjecting as security the assets of the Trust,
including the lending of portfolio securities, and to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement of any
other Person.

3.7. DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive and absolute control over the Trust
Property and over the business of the Trust, to delegate from time to time to
such of their number or to officers, employees, agents or independent
contractors of the Trust the doing of such things and the execution of such
instruments in either the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.

3.8. Collection and Payment. The Trustees shall have power
to collect all property due to the Trust; and to pay all claims, including
taxes, against the Trust Property; to prosecute, defend, compromise or abandon
any claims relating to the Trust or the Trust Property; to foreclose any
security interest securing any obligation, by virtue of which any property is
owed to the Trust; and to enter into releases, agreements and other
instruments.

3.9. Expenses. The Trustees shall have power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the Trust Property to themselves as Trustees. The
Trustees shall fix the compensation of all officers, employees and Trustees.
The Trustees may pay themselves such compensation for special services,
including legal and brokerage services, as they in good faith may deem
reasonable, and reimbursement for expenses reasonably incurred by themselves
on behalf of the Trust.

<PAGE>

3.10. MISCELLANEOUS POWERS. The Trustees shall have power
to: (a) employ or contract with such Persons as the Trustees may deem
appropriate for the transaction of the business of the Trust and terminate
such employees or contractual relationships as they consider appropriate; (b)
enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Investment Manager and Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors of
the Trust against all claims arising by reason of holding any such position or
by reason of any action taken or omitted by any such Person in such capacity,
whether or not the Trust would have the power to indemnify such Person against
such liability; (d) establish pension, profit-sharing and other retirement,
incentive and benefit plans for the Trustees, officers, employees or agents of
the Trust; (e) make donations, irrespective of benefit to the Trust, for
charitable, religious, educational, scientific, civic or similar purposes; (f)
to the extent permitted by law, indemnify any Person with whom the Trust has
dealings, including the Investment Manager and Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors of
the Trust, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change
the Fiscal Year of the Trust and the method by which its accounts shall be
kept; and (i) adopt a seal for the Trust, but the absence of such a seal shall
not impair the validity of any instrument executed on behalf of the Trust.

3.11. FURTHER POWERS. The Trustees shall have power to
conduct the business of the Trust and carry on its operations in any and all
of its branches and maintain offices, whether within or without the State of
New York, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such other
things and execute all such instruments as they deem necessary, proper,
appropriate or desirable in order to promote the interests of the Trust
although such things are not herein specifically mentioned. Any determination
as to what is in the interests of the Trust which is made by the Trustees in
good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees. The Trustees shall not be required to obtain any court order in
order to deal with Trust Property.

<PAGE>

ARTICLE IV

INVESTMENT MANAGEMENT AND ADMINISTRATION
AND PLACEMENT AGENT ARRANGEMENTS

4.1. INVESTMENT MANAGEMENT AND OTHER ARRANGEMENTS. The
Trustees may in their discretion, from time to time, enter into investment
management and administration contracts or placement agent agreements whereby
the other party to such contract or agreement shall undertake to furnish the
Trustees such investment management and administration, placement agent and/or
other services as the Trustees shall, from time to time, consider appropriate
or desirable and all upon such terms and conditions as the Trustees may in
their sole discretion determine. Notwithstanding any provision of this
Declaration, the Trustees may authorize any Investment Manager and
Administrator (subject to such general or specific instructions as the
Trustees may, from time to time, adopt) to effect purchases, sales, loans or
exchanges of Trust Property on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of any such Investment Manager and
Administrator (all without any further action by the Trustees). Any such
purchase, sale, loan or exchange shall be deemed to have been authorized by
the Trustees.

4.2. PARTIES TO CONTRACT. Any contract of the character
described in Section 4.1 hereof or in the By-Laws of the Trust may be entered
into with any corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence
of any such relationship, nor shall any individual holding such relationship
be liable merely by reason of such relationship for any loss or expense to the
Trust under or by reason of any such contract or accountable for any profit
realized directly or indirectly therefrom, provided that the contract when
entered into was reasonable and fair and not inconsistent with the provisions
of this Article IV or the By-Laws of the Trust. The same Person may be the
other party to one or more contracts entered into pursuant to Section 4.1
hereof or the By-Laws of the Trust, and any individual may be financially
interested or otherwise affiliated with Persons who are parties to any or all
of the contracts mentioned in this Section 4.2 or in the By-Laws of the Trust.

<PAGE>

ARTICLE V

LIABILITY OF HOLDERS; LIMITATIONS OF
LIABILITY OF TRUSTEES OFFICERS ETC.

5.1. LIABILITY OF HOLDERS; INDEMNIFICATION. Each Holder
shall be jointly and severally liable (with rights of contribution inter se in
proportion to their respective Interests in the Trust) for the liabilities and
obligations of the Trust in the event that the Trust fails to satisfy such
liabilities and obligations; provided, however, that, to the extent assets are
available in the Trust, the Trust shall indemnify and hold each Holder
harmless from and against any claim or liability to which such Holder may
become subject by reason of being or having been a Holder to the extent that
such claim or liability imposes on the Holder an obligation or liability
which, when compared to the obligations and liabilities imposed on other
Holders, is greater than such Holder's Interest (proportionate share), and
shall reimburse such Holder for all legal and other expenses reasonably
incurred by such Holder in connection with any such claim or liability. The
rights accruing to a Holder under this Section 5.1 shall not exclude any other
right to which such Holder may be lawfully entitled, nor shall anything
contained herein restrict the right of the Trust to indemnify or reimburse a
Holder in any appropriate situation even though not specifically provided
herein. Notwithstanding the indemnification procedure described above, it is
intended that each Holder shall remain jointly and severally liable to the
Trust's creditors as a legal matter.

5.2. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS,
EMPLOYEES AGENTS, INDEPENDENT CONTRACTORS TO THIRD PARTIES. No Trustee,
officer, employee, agent or independent contractor (except in the case of an
agent or independent contractor to the extent expressly provided by written
contract) of the Trust shall be subject to any personal liability whatsoever
to any Person, other than the Trust or the Holders, in connection with Trust
Property or the affairs of the Trust; and all such Persons shall look solely
to the Trust Property for satisfaction of claims of any nature against a
Trustee, officer, employee, agent or independent contractor (except in the
case of an agent or independent contractor to the extent expressly provided by
written contract) of the Trust arising in connection with the affairs of the
Trust.

5.3. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS,
EMPLOYEES, AGENTS, INDEPENDENT CONTRACTORS TO TRUST, HOLDERS, ETC. No Trustee,
officer, employee, agent or independent contractor (except in the case of an
agent or independent contractor to the extent expressly provided by written
contract) of the Trust shall be liable to the Trust or the Holders for any
action or failure to act (including, without limitation, the failure to compel
in any way any former or acting Trustee to redress any breach of trust)

<PAGE>

except for such Person's own bad faith, willful misfeasance, gross negligence
or reckless disregard of such Person's duties.

5.4. MANDATORY INDEMNIFICATION. The Trust shall indemnify,
to the fullest extent permitted by law (including the 1940 Act), each Trustee,
officer, employee, agent or independent contractor (except in the case of an
agent or independent contractor to the extent expressly provided by written
contract) of the Trust (including any Person who serves at the Trust's request
as a director, officer or trustee of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably
incurred by such Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which such
Person may be involved or with which such Person may be threatened, while in
office or thereafter, by reason of such Person being or having been such a
Trustee, officer, employee, agent or independent contractor, except with
respect to any matter as to which such Person shall have been adjudicated to
have acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of such Person's duties; provided, however, that as to any matter
disposed of by a compromise payment by such Person, pursuant to a consent
decree or otherwise, no indemnification either for such payment or for any
other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Person's
office by the court or other body approving the settlement or other
disposition or by a reasonable determination, based upon a review of readily
available facts (as opposed to a full trial-type inquiry), that such Person
did not engage in such conduct by written opinion from independent legal
counsel approved by the Trustees. The rights accruing to any Person under
these provisions shall not exclude any other right to which such Person may be
lawfully entitled; provided that no Person may satisfy any right of indemnity
or reimbursement granted in this Section 5.4 or in Section 5.2 hereof or to
which such Person may be otherwise entitled except out of the Trust Property.
The Trustees may make advance payments in connection with indemnification
under this Section 5.4, provided that the indemnified Person shall have given
a written undertaking to reimburse the Trust in the event it is subsequently
determined that such Person is not entitled to such indemnification.

5.5. NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as
such, be obligated to give any bond or surety or other security for the
performance of any of such Trustee's duties hereunder.

5.6. NO DUTY OF INVESTIGATION; NOTICE IN TRUST
INSTRUMENTS, ETC. No purchaser, lender or other Person dealing with any Trustee,
officer, employee, agent or independent

<PAGE>

contractor of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by such Trustee, officer,
employee, agent or independent contractor or be liable for the application of
money or property paid, loaned or delivered to or on the order of such
Trustee, officer, employee, agent or independent contractor. Every obligation,
contract, instrument, certificate or other interest or undertaking of the
Trust, and every other act or thing whatsoever executed in connection with the
Trust shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees, officers, employees,
agents or independent contractors of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the
Trust made or sold by any Trustee, officer, employee, agent or independent
contractor of the Trust, in such capacity, shall contain an appropriate
recital to the effect that the Trustee, officer, employee, agent or
independent contractor of the Trust shall not personally be bound by or liable
thereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim thereunder, and appropriate references
shall be made therein to the Declaration, and may contain any further recital
which they may deem appropriate, but the omission of such recital shall not
operate to impose personal liability on any Trustee, officer, employee, agent
or independent contractor of the Trust. Subject to the provisions of the 1940
Act, the Trust may maintain insurance for the protection of the Trust
Property, the Holders, and the Trustees, officers, employees, agents and
independent contractors of the Trust in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.

5.7. RELIANCE ON EXPERTS, ETC. Each Trustee, officer,
employee, agent or independent contractor of the Trust shall, in the
performance of such Person's duties, be fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust (whether
or not the Trust would have the power to indemnify such Persons against such
liability), upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by any Investment Manager and
Administrator, accountant, appraiser or other experts or consultants selected
with reasonable care by the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be a Trustee.

<PAGE>

ARTICLE VI

INTERESTS

6.1. INTERESTS. The beneficial interest in the Trust
Property shall consist of non-transferable Interests except as provided in
Section 6.2 hereof. The Interests shall be personal property giving only the
rights in this Declaration specifically set forth. The value of an Interest
shall be equal to the Book Capital Account balance of the Holder of the
Interest.

6.2. NON-TRANSFERABILITY. A Holder may not transfer, sell
or exchange its Interest except as part of a merger or similar plan of
reorganization of a Holder as permitted by the Trustees.

6.3. REGISTER OF INTERESTS. A register shall be kept at the
Trust under the direction of the Trustees which shall contain the name,
address and Book Capital Account balance of each Holder. Such register shall
be conclusive as to the identity of the Holders. No Holder shall be entitled
to receive payment of any distribution, nor to have notice given to it as
herein provided, until it has given its address to such officer or agent of
the Trust as is keeping such register for entry thereon.

ARTICLE VII

INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS

Subject to applicable law, to the provisions of this
Declaration and to such restrictions as may from time to time be adopted by
the Trustees, each Holder shall have the right to vary its investment in the
Trust at any time without limitation by increasing (through a capital
contribution) or decreasing (through a capital withdrawal) or by a Redemption
of its Interest. An increase in the investment of a Holder in the Trust shall
be reflected as an increase in the Book Capital Account balance of that Holder
and a decrease in the investment of a Holder in the Trust or the Redemption of
the Interest of a Holder shall be reflected as a decrease in the Book Capital
Account balance of that Holder. The Trust shall, upon appropriate and adequate
notice from any Holder increase, decrease or redeem such Holder's Interest for
an amount determined by the application of a formula adopted for such purpose
by resolution of the Trustees; provided that (a) the amount received by the
Holder upon any such decrease or Redemption shall not exceed the decrease in
the Holder's Book Capital Account balance effected by such decrease or
Redemption of its Interest, and (b) if so authorized by the Trustees, the
Trust may, at any time and from time to time, charge fees for effecting any
such decrease or Redemption, at such rates as the Trustees may establish, and
may, at any time and from time to time, suspend such right of decrease or
Redemption. The procedures for effecting

<PAGE>

decreases or Redemptions shall be as determined by the Trustees from time to
time.

ARTICLE VIII

DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS

8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account
balance of each Holder shall be determined on such days and at such time or
times as the Trustees may determine. The Trustees shall adopt resolutions
setting forth the method of determining the Book Capital Account balance of
each Holder. The power and duty to make calculations pursuant to such
resolutions may be delegated by the Trustees to the Investment Manager and
Administrator, custodian, or such other Person as the Trustees may determine.
Upon the Redemption of an Interest, the Holder of that Interest shall be
entitled to receive the balance of its Book Capital Account in cash or in
kind. Except as provided in Section 6.2, a holder may not transfer, sell or
exchange its Book Capital Account balance.

8.2. ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees
shall, in compliance with the Code, the 1940 Act and generally accepted
accounting principles, establish the procedures by which the Trust shall make
(i) the allocation of unrealized gains and losses, taxable income and tax
loss, and profit and loss, or any item or items thereof, to each Holder, (ii)
the payment of distributions, if any, to Holders, and (iii) upon liquidation,
the final distribution of items of taxable income and expense. Such procedures
shall be set forth in writing and be furnished to the Trust's accountants. The
Trustees may amend the procedures adopted pursuant to this Section 8.2 from
time to time. The Trustees may retain from the net profits such amount as they
may deem necessary to pay the liabilities and expenses of the Trust, to meet
obligations of the Trust, and as they may deem desirable to use in the conduct
of the affairs of the Trust or to retain for future requirements or extensions
of the business.

8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding
any of the foregoing provisions of this Article VIII, the Trustees may
prescribe, in their absolute discretion, such other bases and times for
determining the net income of the Trust, the allocation of income of the
Trust, the Book Capital Account balance of each Holder, or the payment of
distributions to the Holders as they may deem necessary or desirable to enable
the Trust to comply with any provision of the 1940 Act or any order of
exemption issued by the Commission or with the Code.

<PAGE>

ARTICLE IX

HOLDERS

9.1. RIGHTS OF HOLDERS. The ownership of the Trust Property
and the right to conduct any business described herein are vested exclusively
in the Trustees, and the Holders shall have no right or title therein other
than the beneficial interest conferred by their Interests and they shall have
no power or right to call for any partition or division of any Trust Property.

9.2. MEETINGS OF HOLDERS. Meetings of Holders may be called
at any time by a majority of the Trustees and shall be called by any Trustee
upon written request of Holders holding, in the aggregate, not less than 10`
of the Interests, such request specifying the purpose or purposes for which
such meeting is to be called. Any such meeting shall be held within or without
the State of New York and within or without the United States of America on
such day and at such time as the Trustees shall designate. Holders of
one-third of the Interests, present in person or by proxy, shall constitute a
quorum for the transaction of any business, except as may otherwise be
required by the 1940 Act, other applicable law, this Declaration or the
By-Laws of the Trust. If a quorum is present at a meeting, an affirmative vote
of the Holders present, in person or by proxy, holding more than 50` of the
total Interests of the Holders present, either in person or by proxy, at such
meeting constitutes the action of the Holders, unless a greater number of
affirmative votes is required by the 1940 Act, other applicable law, this
Declaration or the By-Laws of the Trust. All or any one of more Holders may
participate in a meeting of Holders by means of a conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other and participation in a meeting by means of
such communications equipment shall constitute presence in person at such
meeting.

9.3. NOTICE OF MEETINGS. Notice of each meeting of Holders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Holder, at its registered address, mailed at least 10
days and not more than 60 days before the meeting. Notice of any meeting may
be waived in writing by any Holder either before or after such meeting. The
attendance of a Holder at a meeting shall constitute a waiver of notice of
such meeting except in the situation in which a Holder attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting was not lawfully called or convened. At any meeting,
any business properly before the meeting may be considered whether or not
stated in the notice of the meeting. Any adjourned meeting may be held as
adjourned without further notice.

<PAGE>

9.4. RECORD DATE FOR MEETINGS, DISTRIBUTIONS, ETC. For the
purpose of determining the Holders who are entitled to notice of and to vote
at any meeting, or to participate in any distribution, or for the purpose of
any other action, the Trustees may from time to time fix a date, not more than
90 days prior to the date of any meeting of Holders or the payment of any
distribution or the taking of any other action, as the case may be, as a
record date for the determination of the Persons to be treated as Holders for
such purpose.

9.5. PROXIES, ETC. At any meeting of Holders, any Holder
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary
may direct, for verification prior to the time at which such vote is to be
taken. A proxy may be revoked by a Holder at any time before it has been
exercised by placing on file with the Secretary, or with such other officer or
agent of the Trust as the Secretary may direct, a later dated proxy or written
revocation. Pursuant to a resolution of a majority of the Trustees, proxies
may be solicited in the name of the Trust or of one or more Trustees or of one
or more officers of the Trust. Only Holders on the record date shall be
entitled to vote. Each such Holder shall be entitled to a vote proportionate
to its Interest. When an Interest is held jointly by several Persons, any one
of them may vote at any meeting in person or by proxy in respect of such
Interest, but if more than one of them is present at such meeting in person or
by proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Interest.
A proxy purporting to be executed by or on behalf of a Holder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger.

9.6. REPORTS. The Trustees shall cause to be prepared and
furnished to each Holder, at least annually as of the end of each Fiscal Year,
a report of operations containing a balance sheet and a statement of income of
the Trust prepared in conformity with generally accepted accounting principles
and an opinion of an independent public accountant on such financial
statements. The Trustees shall, in addition, furnish to each Holder at least
semi-annually interim reports of operations containing an unaudited balance
sheet as of the end of such period and an unaudited statement of income for
the period from the beginning of the then-current Fiscal Year to the end of
such period.

9.7. INSPECTION OF RECORDS. The records of the Trust shal
be open to inspection by Holders during normal business hours for any purpose
not harmful to the Trust.

9.8. HOLDER ACTION BY WRITTEN CONSENT. Any action which
may be taken by Holders may be taken without a meeting if Holders

<PAGE>

of all Interests entitled to vote consent to the action in writing and the
written consents are filed with the records of the meetings of Holders. Such
consents shall be treated for all purposes as a vote taken at a meeting of
Holders. Each such written consent shall be executed by or on behalf of the
Holder delivering such consent and shall bear the date of such execution. No
such written consent shall be effective to take the action referred to therein
unless, within one year of the earliest dated consent, written consents
executed by a sufficient number of Holders to take such action are filed with
the records of the meetings of Holders.

9.9. NOTICES. Any and all communications, including any and all notices to which
any Holder may be entitled, shall be deemed duly served or given if mailed,
postage prepaid, addressed to a Holder at its last known address as recorded on
the register of the Trust.

ARTICLE X

DURATION; TERMINATION;
AMENDMENT; MERGERS; ETC.

10.1. DURATION. Subject to possible termination or
dissolution in accordance with the provisions of Section 10.2 and Section 10.3
hereof, respectively, the Trust created hereby shall continue until the
expiration of 20 years after the death of the last survivor of the initial
Trustees named herein and the following named persons:

NAME ADDRESS DATE OF BIRTH

Nicole Catherine 18 Rio Vista Street 12/21/91
Rumery North Billerica, MA 01862

Nelson Stewart Ruble 65 Duck Pond Road 04/10/91
Glen Cove, NY 11542

Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566

Amanda Jehan 400 South Pointe Drive, #803 08/16/89
Sher Coolidge Miami Beach FL 33139

David Cornelius Johnson 752 West End Avenue, Apt. 10J 05/02/89

Conner Leahy McCabe 100 Parkway Road, Apt. 3C 02/22/89
Bronxville, NY 10708

Andrea Hellegers 530 East 84th Street, Apt. 5H 12/22/88

<PAGE>

New York, NY 10028

Emilie Blair Ruble 65 Duck Pond Road 02/24/89
Glen Cove, NY 11542

Brian Patrick Lyons 152-48 Jewel Avenue 01/20/89
Flushing, NY 11367

Caroline Bolger Cima 11 Beechwood Lane 12/23/88
Scarsdale, NY 10583
Katherine Driscoll Cima 11 Beechwood Lane 04/05/92
Scarsdale, NY 10583

10.2. TERMINATION.
(a) The Trust may be terminated (i) by the affirmative
vote of Holders of not less than two-thirds of all Interests at any meeting of
Holders or by an instrument in writing without a meeting, executed by a
majority of the Trustees and consented to by Holders of not less than
two-thirds of all Interests, or (ii) by the Trustees by written notice to the
Holders. Upon any such termination,

(i) the Trust shall carry on no business except for the
purpose of winding up its affairs;

(ii) the Trustees shall proceed to wind up the
affairs of the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust have been
wound up, including the power to fulfill or discharge the contracts
of the Trust, collect the assets of the Trust, sell, convey, assign,
exchange or otherwise dispose of all or any part of the Trust
Property to one or more Persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay the
liabilities of the Trust, and do all other acts appropriate to
liquidate the business of the Trust; provided that any sale,
conveyance, assignment, exchange or other disposition of all or
substantially all the Trust Property shall require approval of the
principal terms of the transaction and the nature and amount of the
consideration by the vote of Holders holding more than 50% of all
Interests; and

(iii) after paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements as they deem necessary for their
protection, the Trustees shall distribute the remaining Trust
Property, in cash or in kind or partly each, among the Holders
according to their

<PAGE>

respective rights as set forth in the procedures established pursuant
to Section 8.2 hereof.

(b) Upon termination of the Trust and distribution to
the Holders as herein provided, a majority of the Trustees shall execute and
file with the records of the Trust an instrument in writing setting forth the
fact of such termination and distribution. Upon termination of the Trust, the
Trustees shall thereupon be discharged from all further liabilities and duties
hereunder, and the rights and interests of all Holders shall thereupon cease.

10.3. DISSOLUTION. Upon the bankruptcy of any Holder, or
upon the Redemption of any Interest, the Trust shall be dissolved effective
120 days after the event. However, the Holders (other than such bankrupt or
redeeming Holder) may, by a unanimous affirmative vote at any meeting of such
Holders or by an instrument in writing without a meeting executed by a
majority of the Trustees and consented to by all such Holders, agree to
continue the business of the Trust even if there has been such a dissolution.

10.4. AMENDMENT PROCEDURE.

(a) This Declaration may be amended by the vote of Holders of more than 50%
of all Interests at any meeting of Holders or by an instrument in writing
without a meeting, executed by a majority of the Trustees and consented to by
the Holders of more than 50` of all Interests. Notwithstanding any other
provision hereof, this Declaration may be amended by an instrument in writing
executed by a majority of the Trustees, and without the vote or consent of
Holders, for any one or more of the following purposes: (i) to change the name
of the Trust, (ii) to supply any omission, or to cure, correct or supplement
any ambiguous, defective or inconsistent provision hereof, (iii) to conform
this Declaration to the requirements of applicable federal law or regulations
or the requirements of the applicable provisions of the Code, (iv) to change
the state or other jurisdiction designated herein as the state or other
jurisdiction whose law shall be the governing law hereof, (v) to effect such
changes herein as the Trustees find to be necessary or appropriate (A) to
permit the filing of this Declaration under the law of such state or other
jurisdiction applicable to trusts or voluntary associations, (B) to permit the
Trust to elect to be treated as a "regulated investment company" under the
applicable provisions of the Code, or (C) to permit the transfer of Interests
(or to permit the transfer of any other beneficial interest in or share of the
Trust, however denominated), and (vi) in conjunction with any amendment
contemplated by the foregoing clause (iv) or the foregoing clause (v) to make
any and all such further changes or modifications to this Declaration as the
Trustees find to be necessary or appropriate, any finding of the Trustees
referred to in the foregoing clause (v) or the foregoing clause (vi) to be
conclusively evidenced by the execution

<PAGE>

of any such amendment by a majority of the Trustees; provided, however, that
unless effected in compliance with the provisions of Section 10.4(b) hereof,
no amendment otherwise authorized by this sentence may be made which would
reduce the amount payable with respect to any Interest upon liquidation of the
Trust and; provided, further, that the Trustees shall not be liable for
failing to make any amendment permitted by this Section 10.4(a).

(b) No amendment may be made under Section 10.4(a)
hereof which would change any rights with respect to any Interest by reducing
the amount payable thereon upon liquidation of the Trust or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of Holders of two-thirds of all Interests.

(c) A certification in recordable form executed by
a majority of the Trustees setting forth an amendment and reciting that it was
duly adopted by the Holders or by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed by a majority of the
Trustees, shall be conclusive evidence of such amendment when filed with the
records of the Trust.

Notwithstanding any other provision hereof, until such time
as Interests are first sold, this Declaration may be terminated or amended in
any respect by the affirmative vote of a majority of the Trustees at any
meeting of Trustees or by an instrument executed by a majority of the
Trustees.

10.5. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust
may merge or consolidate with any other corporation, association, trust or
other organization or may sell, lease or exchange all or substantially all of
the Trust Property, including good will, upon such terms and conditions and
for such consideration when and as authorized at any meeting of Holders called
for such purpose by the affirmative vote of Holders of not less than
two-thirds of all Interests, or by an instrument in writing without a meeting,
consented to by Holders of not less than two-thirds of all Interests, and any
such merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of the
State of New York.
10.6. INCORPORATION. Upon a Majority Interests Vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the law of any jurisdiction or a trust, partnership,
association or other organization to take over the Trust Property or to carry
on any business in which the Trust directly or indirectly has any interest,
and to sell, convey and transfer the Trust Property to any such corporation,
trust, partnership, association or other organization in exchange for the
equity interests thereof or otherwise, and to lend money to,

<PAGE>

subscribe for the equity interests of, and enter into any contract with any
such corporation, trust, partnership, association or other organization, or
any corporation, trust, partnership, association or other organization in
which the Trust holds or is about to acquire equity interests. The Trustees
may also cause a merger or consolidation between the Trust or any successor
thereto and any such corporation, trust, partnership, association or other
organization if and to the extent permitted by law. Nothing contained herein
shall be construed as requiring approval of the Holders for the Trustees to
organize or assist in organizing one or more corporations, trusts,
partnerships, associations or other organizations and selling, conveying or
transferring a portion of the Trust Property to one or more of such
organizations or entities.

ARTICLE XI

MISCELLANEOUS

11.1. CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF
PROCESS. The Trust shall file, with the Department of State of the State of
New York, a certificate, in the name of the Trust and executed by an officer
of the Trust, designating the Secretary of State of the State of New York as
an agent upon whom process in any action or proceeding against the Trust may
be served.

11.2. GOVERNING LAW. This Declaration is executed by the
Trustees and delivered in the State of New York and with reference to the law
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed in accordance with
the law of the State of New York and reference shall be specifically made to
the trust law of the State of New York as to the construction of matters not
specifically covered herein or as to which an ambiguity exists

11.3. COUNTERPARTS. This Declaration may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any one such original
counterpart.

11.4. Reliance by Third Parties. Any certificate executed by
an individual who, according to the records of the Trust or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or Holders,
(b) the due authorization of the execution of any instrument or writing, (c)
the form of any vote passed at a meeting of Trustees or Holders, (d) the fact
that the number of Trustees or Holders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration, (e) the
form of any By-Laws adopted by or the identity of any officer elected by the

<PAGE>

Trustees, or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees.

11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.

(a) The provisions of this Declaration are severable,
and if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, or with other applicable law
and regulations, the conflicting provision shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.

(b) If any provision of this Declaration shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.

IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the day and year first above written.

/s/ Matthew Healey /s/ A.C. Eschenlauer
Matthew Healey Arthur C. Eschenlauer
As Trustee and not individually As Trustee and not individually

/s/ F.S. Addy /s/ Michael P. Mallardi
Frederick S. Addy Michael P. Mallardi
As Trustee and not individually As Trustee and not individually

/s/ William G. Burns
William B. Burns
As Trustee and not individually

JPM345A

AMENDED AND RESTATED BY-LAWS
OF
EACH MASTER TRUST LISTED ON SCHEDULE I
AND
EACH FEEDER TRUST LISTED ON SCHEDULE II
AND
EACH STAND ALONE TRUST LISTED ON SCHEDULE III

ARTICLE I

DEFINITIONS

Each Trust listed on Schedule I is referred to in these By-Laws as a
"Master Trust". Each Trust listed on Schedule II is referred to in these
By-Laws as a "Feeder Trust". Each Trust listed on Schedule III is referred to
in these By-Laws as a "Stand Alone Trust".

In the case of each Trust, unless otherwise specified, capitalized
terms have the respective meanings given them in the Declaration of Trust of
such Trust dated as of the date set forth in Schedule I, II or III, as amended
from time to time. In the case of each Feeder Trust and each Stand Alone
Trust, the term "Holder" has the meaning given the term "Shareholder" in the
respective Declarations of Trust.

ARTICLE II

OFFICES

Section 1. Principal Office. In the case of each Master Trust, the
principal office of the Trust shall be in such place as the Trustees may
determine from time to time, provided that the principal office shall be
outside the United States of America if the Trustees determine that the Trust
is intended to be operated so that it is not engaged in United States trade or
business for United States federal income tax purposes. In the case of each
Feeder Trust and each Stand Alone Trust, until changed by the Trustees, the
principal office of the Trust in the Commonwealth of Massachusetts shall be in
the City of Boston, County of Suffolk.

Section 2. Other Offices. The Trust may have offices in such other
places without as well as within the state of its organization and the United
States of America as the Trustees may from time to time determine.

ARTICLE III

HOLDERS

Section 1. Meetings of Holders. Meetings of Holders may be called at
any time by a majority of the Trustees and shall be called by any Trustee upon
written request of Holders holding, in the aggregate, not less than 10% of the
Interests in the case of each Master Trust or 10% of the voting securities
entitled to vote thereat in the case of each Feeder Trust and each Stand Alone
Trust, such request specifying the purpose or purposes for which such meeting
is to be called.

Any such meeting shall be held within or without the state of
organization of the Trust and within, or, if applicable, in the case of a
Master Trust only without, the United States of America on such day

<PAGE>
and at such time as
the Trustees shall designate. Holders of one third of the Interests in the
case of each Master Trust or one third of the voting securities entitled to
vote thereat in the case of each Feeder Trust and each Stand Alone Trust,
present in person or by proxy, shall constitute a quorum for the transaction
of any business, except as may otherwise be required by the 1940 Act, other
applicable law, the Declaration or these By-Laws. If a quorum is present at a
meeting, an affirmative vote of the Holders present in person or by proxy,
holding more than 50% of the total Interests in the case of each Master Trust,
or 50% of the voting securities entitled to vote thereat in the case of each
Feeder Trust and each Stand Alone Trust, present, either in person or by
proxy, at such meeting constitutes the action of the Holders, unless a greater
number of affirmative votes is required by the 1940 Act, other applicable law,
the Declaration or these By-Laws.

All or any one or more Holders may participate in a meeting of
Holders by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participation in a meeting by means of such communications
equipment shall constitute presence in person at such meeting.

In the case of The Series Portfolio or any Feeder Trust or any Stand
Alone Trust, whenever a matter is required to be voted by Holders of the Trust
in the aggregate under Section 9.1 and Section 9.2 of the Declaration of The
Series Portfolio or Section 6.8 and Section 6.9 and Section 6.9(g) of the
Declaration of the Feeder Trust and the Stand Alone Trust, the Trust may
either hold a meeting of Holders of all series, as defined in Section 1.2 of
the Declaration of The Series Portfolio or Section 6.9 of the Declaration of
the Feeder Trust and the Stand Alone Trust, to vote on such matter, or hold
separate meetings of Holders of each of the individual series to vote on such
matter, provided that (i) such separate meetings shall be held within one year
of each other, (ii) a quorum consisting of the Holders of one third of the
voting securities of the individual series entitled to vote shall be present
at each such separate meeting except as may otherwise be required by the 1940
Act, other applicable law, the Declaration or these By-Laws and (iii) a quorum
consisting of the Holders of one third of all voting securities of the Trust
entitled to vote, except as may otherwise be required by the 1940 Act, other
applicable law, the Declaration or these By-Laws, shall be present in the
aggregate at such separate meetings, and the votes of Holders at all such
separate meetings shall be aggregated in order to determine if sufficient
votes have been cast for such matter to be voted.

Section 2. Notice of Meetings. Notice of each meeting of Holders,
stating the time, place and purpose of the meeting, shall be given by the
Trustees by mail to each Holder, at its registered address, mailed at least 10
days and not more than 60 days before the meeting. Notice of any meeting may
be waived in writing by any Holder either before or after such meeting. The
attendance of a Holder at a meeting shall constitute a waiver of notice of
such meeting except in the situation in which a Holder attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting was not lawfully called or convened. At any meeting,
any business properly before the meeting may be considered whether or not
stated in the notice of the meeting. Any adjourned meeting may be held as
adjourned without further notice.

2
<PAGE>
Holders of the
Trust in the aggregate, as provided in Article III, Section 1 above, notice of
each such separate meeting shall be provided in the manner described above in
this Section 2.

Section 3. Record Date for Meetings. For the purpose of determining
the Holders who are entitled to notice of and to vote at any meeting, the
Trustees may from time to time fix a date, not more than 90 days prior to the
date of any meeting of Holders as a record date for the determination of the
Persons to be treated as Holders for such purpose.

In the case of The Series Portfolio and each Feeder Trust and each
Stand Alone Trust, where separate meetings are held for Holders of each of the
individual series to vote on a matter required to be voted on by Holders of
the Trust in the aggregate, as provided in Article III, Section 1 above, the
record date of each such separate meeting shall be determined in the manner
described above in this Section 3.

Section 4. Voting, Proxies, Inspectors of Election. At any meeting of
Holders, any Holder entitled to vote thereat may vote by proxy, provided that
no proxy shall be voted at any meeting unless it shall have been placed on
file with the Secretary, or with such other officer or agent of the Trust as
the Secretary may direct, for verification prior to the time at which such
vote is to be taken. A proxy may be revoked by a Holder at any time before it
has been exercised by placing on file with the Secretary, or with such other
officer or agent of the Trust as the Secretary may direct, a later dated proxy
or written revocation. Pursuant to a resolution of a majority of the Trustees,
proxies may be solicited in the name of the Trust or of one or more Trustees
or of one or more officers of the Trust. No proxy shall be valid after one
year from the date of its execution, unless a longer period is expressly
stated in the proxy.

In the case of each Master Trust, only Holders on the record date
shall be entitled to vote and each such Holder shall be entitled to a vote
proportionate to its Interest. In the case of each Feeder Trust, (i) only
Holders on the record date shall be entitled to vote, and (ii) each whole
Share shall be entitled to vote as to any matter on which it is entitled to
vote and each fractional Share shall be entitled to a proportionate fractional
vote, except that Shares held in the treasury of the Trust shall not be voted.
In the case of each Stand Alone Trust, unless the Trustees determine that each
Share will entitle Holders to one vote per Share, on any matter submitted to a
vote of Holders of Shares of any series or class thereof, if any, each dollar
of net asset value (number of Shares owned times net asset value per Share of
such series or class, as applicable) shall be entitled to one vote on any
matter on which such shares are entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote, except that
Shares held in the treasury of the Trust shall not be voted. In the case of
each Feeder Trust and each Stand Alone Trust, (i) Shares shall be voted by
individual series or classes thereof, if any, on any matter submitted to a
vote of the Holders of the Trust except as provided in Section 6.9(g) of the
Declaration, and (ii) at any meeting of Holders of the Trust or of any series
or class thereof, if any, a Shareholder Servicing Agent may vote any Shares as
to which such Shareholder Servicing Agent is the agent of record.

The Chairman of the meeting may, and upon the request of the Holders
of 10% of the Interests or Shares, as the case may be, entitled to vote at
such election shall, appoint one or three inspectors of election who shall
first subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability, and shall after

3
<PAGE>
the election certify the result of the vote taken. No
candidate for Trustee shall be appointed such inspector. If there are three
inspectors of election, the decision, act or certification of a majority is
effective in all respects as the decision, act or certificate of all.

At every meeting of the Holders, all proxies shall be required and
taken in charge of and all ballots shall be required and canvassed by the
Secretary of the meeting, who shall decide all questions touching the
qualification of voters, the validity of the proxies, the acceptance or
rejection of votes and any other questions related to the conduct of the vote
with fairness to all Holders, unless inspectors of election shall have been
appointed, in which event the inspectors of election shall decide all such
questions. On request of the Chairman of the meeting, or of any Holder or his
proxy, the Secretary shall make a report in writing of any question determined
and shall execute a certificate of facts found, unless inspectors of election
shall have been appointed, in which event the inspectors of election shall do
so.

When an Interest is held or Shares are held jointly by several
Persons, any one of them may vote at any meeting in person or by proxy in
respect of such Interest or Shares, but if more than one of them is present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Interest or Shares. A proxy purporting to be executed by or on
behalf of a Holder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger.

Section 5. Holder Action by Written Consent. In the case of each
Master Trust, any action which may be taken by Holders may be taken without a
meeting if Holders of all Interests entitled to vote consent to the action in
writing and the written consents are filed with the records of the meetings of
Holders. In the case of each Feeder Trust and each Stand Alone Trust, any
action which may be taken by Holders may be taken without a meeting if Holders
holding a majority of Shares entitled to vote on the matter (or such larger
proportion thereof as shall be required by law, the Declaration or these
By-Laws for approval of such matter) consent to the action in writing and the
written consents are filed with the records of the meetings of Holders.

Such consents shall be treated for all purposes as a vote taken at a
meeting of Holders. Each such written consent shall be executed by or on
behalf of the Holder delivering such consent and shall bear the date of such
execution. No such written consent shall be effective to take the action
referred to therein unless, within one year of the earliest dated consent,
written consents executed by a sufficient number of Holders to take such
action are filed with the records of the meetings of Holders.

Section 6. Conduct of Meetings. The meetings of the Holders shall be
presided over by the Chairman, or if he is not present, by a Chairman to be
elected at the meeting. The Secretary of the Trust, if present, shall act as
secretary of such meetings, or if he is not present, an Assistant Secretary
shall so act; if neither the Secretary nor any Assistant Secretary is present,
then the meeting shall elect its secretary

<PAGE>
ARTICLE IV

TRUSTEES

Section 1. Place of Meeting, etc. The Trustees may hold their
meetings, have one or more offices, and keep the books of the Trust, inside or
outside the state of organization of the Trust or the United States of
America, at any office of the Trust or at any other place as they may from
time to time determine, or in the case of meetings, as they may from time to
time determine or as shall be specified or fixed in the respective notices or
waivers of notice thereof.

Section 2. Meetings. Meetings of the Trustees shall be held from time
to time upon the call of the Chairman or any two Trustees. The President, the
Secretary or an Assistant Secretary may call meetings only upon the written
direction of the Chairman or two Trustees. The Trustees shall hold an annual
meeting for the election of officers and transaction of other business which
may come before such meeting. Regular meetings of the Trustees may be held
without call or notice at a time and place fixed by resolution of the
Trustees. Notice of any other meeting shall be mailed or otherwise given not
less than 24 hours before the meeting but may be waived in writing by any
Trustee either before or after such meeting. Notice shall be given of any
proposed action to be taken by written consent. Notice of a meeting or
proposed action to be taken by written consent may be given by telegram (which
term shall include a cablegram), by telecopier or delivered personally (which
term shall include by telephone), as well as by mail. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting
except in the situation in which a Trustee attends a meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the Trustees need be stated
in the notice or waiver of notice of such meeting.

Section 3. Quorum. A quorum for all meetings of the Trustees shall be
a majority of the Trustees. Unless provided otherwise in the Declaration, the
1940 Act or other applicable law, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (a quorum being
present). In the absence of a quorum, a majority of the Trustees present may
adjourn the meeting from time to time until a quorum shall be present. Notice
of an adjourned meeting need not be given.

With respect to actions of the Trustees, Trustees who are Interested
Persons of the Trust or otherwise interested in any action to be taken may be
counted for quorum purposes and shall be entitled to vote to the extent
permitted by the 1940 Act.

Section 4. Committees. The Trustees, by the majority vote of all the
Trustees then in office, may appoint from the Trustees committees which shall
in each case consist of such number of Trustees (not less than two) and shall
have and may exercise such powers as the Trustees may determine in the
resolution appointing them. Unless provided otherwise in the Declaration or by
the Trustees, a majority of all the members of any such committee may
determine its actions and fix the time and place of its meetings. With respect
to actions of any committee, Trustees who are Interested Persons of the Trust
or otherwise interested in any action to be taken may be counted for quorum
purposes and shall be entitled to vote to the extent permitted by the 1940
Act. The Trustees shall have power at any time to change the members and
powers of any such committee, to fill vacancies and to discharge any such
committee. Each committee

5
<PAGE>
shall keep regular minutes of its meetings and cause them to be filed with the
minutes of the proceedings of the Trustees.

Section 5. Telephone Meetings. All or any one or more Trustees may
participate in a meeting of the Trustees or any committee thereof by means of
a conference telephone or similar communications equipment by means of which
all individuals participating in the meeting can hear each other, and
participating in a meeting by means of such communications equipment shall
constitute presence in person at such meeting. Any conference telephone
meeting shall be deemed to have been held at a place designated by the
Trustees at the meeting.

Section 6. Action without a Meeting. Any action required or permitted
to be taken at any meeting of the Trustees or any committee thereof may be
taken without a meeting, if a written consent to such action is signed either
by all the Trustees or all members of such committee then in office or by an
80% majority of the Trustees or an 80% majority of members of such committee,
provided that no action by 80% majority consent shall be effective unless and
until (i) each Trustee or committee member signing such consent shall have
been advised in writing of the following information: the identity of any
Trustee or committee member not signing such consent and the reasons for his
not signing; and (ii) after receiving such information signing Trustees or
committee members who represent an 80% majority then in office indicate in
writing that the consent shall become effective by 80% majority, rather than
unanimous, consent. All such effective written consents shall be filed with
the minutes of the proceedings of the Trustees and treated as a vote for all
purposes.

Section 7. Compensation. The Trustees shall be entitled to receive
such compensation from the Trust for their services as may from time to time
be voted by the Trustees.

Section 8. Chairman. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman, to serve until his successor
shall have been duly elected and qualified; the Chairman may serve on
committees of the Trustees. The Chairman shall not be an officer of the Trust
solely by virtue of his serving as Chairman. The Chairman shall preside at all
meetings of the Trustees at which he is present, shall serve as the liaison
between the Trustees and the officers of the Trust and between the Trustees
and their staff and shall have such other duties as from time to time may be
assigned to him by the Trustees.

Section 9. Trustees' Staff; Counsel for the Trust and Trustees, etc.
The Trustees may employ or contract with one or more Persons to serve as their
staff and to provide such services related thereto as may be determined from
time to time. The Trustees may employ attorneys as counsel for the Trust
and/or the Trustees and may engage such other experts or consultants as may be
determined from time to time.

ARTICLE V

OFFICERS

Section 1. General Provisions. The Trustees may elect or appoint such
officers or agents as the business of the Trust may require, including without
limitation a Chief Executive Officer, a President, one or more Vice
Presidents, a Treasurer, a Secretary, one or more Assistant Treasurers and one
or more Assistant Secretaries. The Trustees may delegate to any officer or
committee the power to appoint any subordinate officers or agents.

6
<PAGE>

Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these ByLaws, each of the principal
executive officer described in Section 4 below, the Treasurer and the
Secretary shall hold office until a successor shall have been duly elected and
qualified, and any other officers shall hold office at the pleasure of the
Trustees. Any two or more offices may be held by the same Person, provided
that at least two different individuals shall serve as officers. Any officer
may be, but does not need be, a Trustee.

Section 3. Removal. The Trustees may remove any officer with or
without cause by a vote of a majority of the Trustees. Any subordinate officer
or agent appointed by any officer or committee may be removed with or without
cause by such appointing officer or committee.

Section 4. Powers and Duties of the Chief Executive Officer;
President. The Chief Executive Officer, if any, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees, the
Chief Executive Officer shall (i) at all times exercise general supervision
and direction over the affairs of the Trust, (ii) have the power to grant,
issue, execute or sign such documents as may be deemed advisable or necessary
in the ordinary course of the Trust's business and (iii) have such other
powers and duties as from time to time may be assigned by the Trustees.

If there is no Chief Executive Officer, the President shall be the
principal executive officer of the Trust and shall have the powers and duties
set forth above in this Section 4. If there is a Chief Executive Officer and a
President, the President shall have such powers and duties as from time to
time may be assigned by the Trustees or the Chief Executive Officer.

Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, any Vice President designated by the Trustees or
the President shall perform all the duties, and may exercise any of the
powers, of the President. Each Vice President shall perform such other duties
as from time to time may be assigned to him by the Trustees or the Chief
Executive Officer.

Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer
shall deliver all funds of the Trust which may come into his hands to the
Trust's custodian. The Treasurer shall render a statement of condition of the
finances of the Trust to the Trustees as often as they shall require the same
and shall in general perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the Trustees.

Section 7. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Holders in proper books provided for
that purpose; shall keep the minutes of all meetings of the Trustees; shall
have custody of the seal of the Trust, if any; and shall have charge of the
Holder lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of notices by the
Trust in accordance with the provisions of these By-Laws and as required by
law; and subject to these By-Laws, shall in general perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Trustees.

Section 8. Powers and Duties of Assistant Treasurers. In the absence
or disability of the Treasurer, any Assistant Treasurer designated by the
Trustees shall perform all the duties, and may exercise

<PAGE>
any of the powers, of the Treasurer. Each Assistant Treasurer shall perform
such other duties as from time to time may be assigned to him by the Trustees.

Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers,
of the Secretary. Each Assistant Secretary shall perform such other duties as
from time to time may be assigned to him by the Trustees.

Section 10. Compensation of Officers. Subject to any applicable law
or provision of the Declaration, any compensation of any officer may be fixed
from time to time by the Trustees. No officer shall be prevented from
receiving any such compensation as such officer by reason of the fact that he
is also a Trustee. If no such compensation is fixed for any officer, such
officer shall not be entitled to receive any compensation from the Trust.

Section 11. Bond and Surety. As provided in the Declaration, any
officer may be required by the Trustees to be bonded for the faithful
performance of his duties in the amount and with such sureties as the Trustees
may determine.

ARTICLE VI

SEAL

The Trustees may adopt a seal which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time prescribe.

ARTICLE VII

FISCAL YEAR

The Trust may have different fiscal years for its separate and
distinct series, if applicable. The fiscal year(s) of the Trust shall be
determined by the Trustees, provided that the Trustees (or the Treasurer
subject to ratification by the Trustees) may from time to time change any
fiscal year.

ARTICLE VIII

CUSTODIAN

Section 1. Appointment and Duties. The Trustees shall at all times
employ one or more banks or trust companies having a capital, surplus and
undivided profits of at least $50,000,000 as custodian with authority as the
Trust's agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Declaration, these By-Laws
and the 1940 Act:

(i) to hold the securities owned by the Trust and deliver the same
upon written order; (ii) to receive and receipt for any monies due to
the Trust and deposit the same in its own banking department or
elsewhere as the Trustees may direct; (iii) to disburse such funds
upon orders or vouchers; (iv) if authorized by the Trustees, to keep
the books and accounts of the Trust and furnish clerical and
accounting services; and (v) if authorized by the Trustees, to
compute the net income of

8
<PAGE>

the
Trust and the net asset value of the Trust or, in the case of each
Feeder Trust and each Stand Alone Trust, Shares; all upon such basis
of compensation as may be agreed upon between the Trustees and the
custodian.

The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of
the custodian and upon such terms and conditions as may be agreed upon between
the custodian and such sub-custodian and approved by the Trustees. Subject to
the approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act and the rules and regulations promulgated thereunder.

Section 2. Successor Custodian. The Trust shall upon the resignation
or inability to serve of its custodian or upon change of the custodian:

(i) in case of such resignation or inability to serve, use its best
efforts to obtain a successor custodian; (ii) require that the cash
and securities owned by the Trust be delivered directly to the
successor custodian; and (iii) in the event that no successor
custodian can be found, submit to the Holders before permitting
delivery of the cash and securities owned by the Trust otherwise than
to a successor custodian, the question whether the Trust shall be
liquidated or shall function without a custodian.

ARTICLE IX

INDEMNIFICATION

In the case of each Master Trust, insofar as the conditional
advancing of indemnification monies under Section 5.4 of the Declaration for
actions based upon the 1940 Act may be concerned, such payments will be made
only on the following conditions:

(i) the advances must be limited to amounts used, or to be used, for
the preparation or presentation of a defense to the action, including
costs connected with the preparation of a settlement; (ii) advances
may be made only upon receipt of a written promise by, or on behalf
of, the recipient to repay the amount of the advance which exceeds
the amount to which it is ultimately determined that he is entitled
to receive from the Trust by reason of indemnification; and (iii) (a)
such promise must be secured by a surety bond, other suitable
insurance or an equivalent form of security which assures that any
repayment may be obtained by the Trust without delay or litigation,
which bond, insurance or other form of security must be provided by
the recipient of the advance, or (b) a majority of a quorum of the
Trust's disinterested, nonparty Trustees, or an independent legal
counsel in a written opinion, shall determine, based upon a review of
readily available facts, that the recipient of the advance ultimately
will be found entitled to indemnification.

9
<PAGE>
ARTICLE X

AMENDMENTS, ADDITIONAL TRUSTS, ETC.

The Trustees shall have the power to alter, amend or repeal
these By-Laws or adopt new By-Laws at any time to the extent such power is not
reserved to the Holders by the 1940 Act, other applicable law or the
Declaration. Action by the Trustees with respect to these By-Laws shall be
taken by an affirmative vote of a majority of the Trustees. The Trustees shall
in no event adopt By-Laws which are in conflict with the Declaration.

One or more additional trusts may be added to Schedule I or Schedule
II by resolution of the trustees of such trust(s), provided that the trustees
of such trust(s) are identical to the Trustees of the Master Trusts, the
Feeder Trusts and the Stand Alone Trusts immediately prior to such addition.

In the case of each Master Trust, the Declaration refers to the
Trustees as Trustees, but not as individuals or personally; and no Trustee,
officer, employee or agent of the Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust. In the case of each Feeder Trust and each Stand Alone
Trust, the Declaration refers to the Trustees not individually, but as
Trustees under the Declaration, and no Trustee, officer, employee or agent of
the Trust shall be subject to any personal liability whatsoever to any Person,
other than the Trust or its Holders, in connection with Trust Property or the
affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust.

JPM345A

<PAGE>

SCHEDULE I
MASTER TRUSTS

State of Date of Date
Organiza- Declara- By-Laws
Trust tion tion Adopted

The Treasury Money Market New York 11/4/92 10/10/96
Portfolio
The Money Market Portfolio New York 1/29/93 10/10/96
The Tax Exempt Money Market New York 1/29/93 10/10/96
Portfolio
The Short Term Bond Portfolio New York 1/29/93 10/10/96
The U.S. Fixed Income Portfolio New York 1/29/93 10/10/96
The Tax Exempt Bond Portfolio New York 1/29/93 10/10/96
The Selected U.S. Equity Portfolio New York 1/29/93 10/10/96
The U.S. Small Company Portfolio New York 1/29/93 10/10/96
The Non-U.S. Equity Portfolio New York 1/29/93 10/10/96
The Diversified Portfolio New York 1/29/93 10/10/96
The Non-U.S. Fixed Income New York 6/13/93 10/10/96
Portfolio
The Emerging Markets Equity New York 6/13/93 10/10/96
Portfolio
The New York Total Return Bond New York 6/13/93 10/10/96
Portfolio
The Series Portfolio New York 6/14/94 10/10/96

<PAGE>

SCHEDULE II
FEEDER TRUSTS

State of Date of Date
Organization Declara- By-Laws
Trust tion Adopted

The JPM Pierpont Funds Massachusetts 11/4/92 10/10/96
The JPM Institutional
Funds Massachusetts 11/4/92 10/10/96

<PAGE>

SCHEDULE III
STAND ALONE TRUSTS

State of Date of Date
Organization Declara- By-Laws
Trust tion Adopted

JPM Series Trust Massachusetts 8/15/96 10/10/96

THE TAX EXEMPT BOND PORTFOLIO
INVESTMENT ADVISORY AGREEMENT

Agreement, made this 30th day of June, 1993, between The Tax Exempt
Bond Portfolio, a trust organized under the law of the State of New York (the
"Portfolio") and Morgan Guaranty Trust Company of New York, a New York trust
company authorized to conduct a general banking business (the "Advisor"),

WHEREAS, the Portfolio is an open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and

WHEREAS, the Portfolio desires to retain the Advisor to render
investment advisory services to the Portfolio, and the Advisor is willing to
render such services;

NOW, THEREFORE, this Agreement

W I T N E S S E T H:

that in consideration of the premises and mutual promises hereinafter set
forth, the parties hereto agree as follows:

1. The Portfolio hereby appoints the Advisor to act as
investment adviser to the Portfolio for the period and on the terms set forth
in this Agreement. The Advisor accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.

2. Subject to the general supervision of the Trustees of the
Portfolio, the Advisor shall manage the investment operations of the Portfolio
and the composition of the Portfolio's holdings of securities and investments,
including cash, the purchase, retention and disposition thereof and agreements
relating thereto, in accordance with the Portfolio's investment objectives and
policies as stated in the Registration Statement (as defined in paragraph 3(d)
of this Agreement) and subject to the following understandings:

(a) the Advisor shall furnish a continuous investment
program for the Portfolio and determine from time to time what
investments or securities will be purchased, retained, sold or lent
by the Portfolio, and what portion of the assets will be invested or
held uninvested as cash;

(b) the Advisor shall use the same skill and care in the
management of the Portfolio's investments as it uses in the
administration of other accounts for which it has investment
responsibility as agent;

<PAGE>

(c) the Advisor, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust, By-Laws and Registration Statement of the
Portfolio and with the instructions and directions of the Trustees of
the Portfolio and will conform to and comply with the requirements of
the 1940 Act and all other applicable federal and state laws and
regulations;

(d) the Advisor shall determine the securities to be
purchased, sold or lent by the Portfolio and as agent for the
Portfolio will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker
and/or dealer in such securities; in placing orders with brokers
and/or dealers the Advisor intends to seek best price and execution
for purchases and sales; the Advisor shall also determine whether or
not the Portfolio shall enter into repurchase or reverse repurchase
agreements;

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

(e) the Advisor shall maintain books and records with
respect to the Portfolio's securities transactions and shall render
to the Portfolio's Trustees such periodic and special reports as the
Trustees may reasonably request; and

(f) the investment management services of the Advisor to the
Portfolio under this Agreement are not to be deemed exclusive, and
the Advisor shall be free to render similar services to others.

3. The Portfolio has delivered copies of each of the
following documents to the Advisor and will promptly notify and deliver to it
all future amendments and supplements, if any:

(a) Declaration of Trust of the Portfolio (such Declaration
of Trust, as presently in effect and as amended from time to time, is
herein called the "Declaration of Trust");

(b) By-Laws of the Portfolio (such By-Laws, as presently in
effect and as amended from time to time, are herein called the "By-Laws");

<PAGE>

(c) Certified resolutions of the Trustees of the Portfolio
authorizing the appointment of the Advisor and approving the form of
this Agreement;

(d) The Portfolio's Notification of Registration on Form
N-8A and Registration Statement on Form N-1A (No. 811-7848) each
under the 1940 Act (the "Registration Statement") as filed with the
Securities and Exchange Commission (the "Commission") on July 6,
1993, all amendments thereto.

4. The Advisor shall keep the Portfolio's books and records
required to be maintained by it pursuant to paragraph 2(e). The Advisor agrees
that all records which it maintains for the Portfolio are the property of the
Portfolio and it will promptly surrender any of such records to the Portfolio
upon the Portfolio's request. The Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 of the Commission under the 1940 Act any such
records as are required to be maintained by the Advisor with respect to the
Portfolio by Rule 31a-1 of the Commission under the 1940 Act.

5. During the term of this Agreement the Advisor will pay
all expenses incurred by it in connection with its activities under this
Agreement, other than the cost of securities and investments purchased for the
Portfolio (including taxes and brokerage commissions, if any).

6. For the services provided and the expenses borne pursuant
to this Agreement, the Portfolio will pay to the Advisor as full compensation
therefor a fee at an annual rate equal to .30% of the Portfolio's average
daily net assets. This fee will be computed daily and payable as agreed by the
Portfolio and the Advisor, but no more frequently than monthly.

7. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Portfolio in connection with
the matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to the period
and the amount set forth in Section 36(b)(3) of the 1940 Act) or a loss
resulting from willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.

8. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Portfolio at any time,

<PAGE>

without the payment of any penalty, by vote of a majority of all the Trustees
of the Portfolio or by vote of a majority of the outstanding voting securities
of the Portfolio on 60 days' written notice to the Advisor, or by the Advisor
at any time, without the payment of any penalty, on 90 days' written notice to
the Portfolio. This Agreement will automatically and immediately terminate in
the event of its assignment (as defined in the 1940 Act).

9. The Advisor shall for all purposes herein be deemed to
be an independent contractor and shall, unless otherwise expressly provided
herein or authorized by the Trustees of the Portfolio from time to time, have
no authority to act for or represent the Portfolio in any way or otherwise be
deemed an agent of the Portfolio.

10. This Agreement may be amended by mutual consent, but the
consent of the Portfolio must be approved (a) by vote of a majority of those
Trustees of the Portfolio who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such amendment, and (b) by vote of a majority of the outstanding
voting securities of the Portfolio.

11. Notices of any kind to be given to the Advisor by the
Portfolio shall be in writing and shall be duly given if mailed or delivered
to the Advisor at 9 West 57th Street, New York, New York 10019, Attention:
Managing Director, Funds Management Division, or at such other address or to
such other individual as shall be specified by the Advisor to the Portfolio.
Notices of any kind to be given to the Portfolio by the Advisor shall be in
writing and shall be duly given if mailed or delivered to the Portfolio at 6
St. James Avenue, Suite 900, Boston, Massachusetts 02116 or at such other
address or to such other individual as shall be specified by the Portfolio to
the Advisor.

12. The Trustees have authorized the execution of this
Agreement in their capacity as Trustees and not individually and the Advisor
agrees that neither the shareholders nor the Trustees nor any officer,
employee, representative or agent of the Portfolio shall be personally liable
upon, or shall resort be had to their private property for the satisfaction
of, obligations given, executed or delivered on behalf of or by the Portfolio,
that the shareholders, trustees, officers, employees, representatives and
agents of the Portfolio shall not be personally liable hereunder, and that it
shall look solely to the property of the Portfolio for the satisfaction of any
claim hereunder.

13. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.

14. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the 30th
day of June, 1993.

THE TAX EXEMPT BOND PORTFOLIO

By: /s/ Philip Coolidge
Philip W. Coolidge
President

MORGAN GUARANTY TRUST
COMPANY OF NEW YORK

By: /s/ Kathleen H. Tripp
Kathleen H. Tripp
Vice President

TEBIAAHU

CUSTODIAN CONTRACT
Between
TAX EXEMPT BOND PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY

21E593

<PAGE>

TABLE OF CONTENTS

Page

1. Employment of Custodian and Property to be
Held By It............................................................1

2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States................2

2.1 Holding Securities...........................................2
2.2 Delivery of Securities.......................................3
2.3 Registration of Securities...................................7
2.4 Bank Accounts................................................8
2.5 Availability of Federal Funds................................9
2.6 Collection of Income.........................................9
2.7 Payment of Fund Monies......................................10
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased...................................................13
2.9 Appointment of Agents.......................................13
2.10 Deposit of Fund Assets in Securities System.................14
2.10A Fund Assets Held in the Custodian's Direct Paper
System.............................................17
2.11 Segregated Account..........................................18
2.12 Ownership Certificates for Tax Purposes.....................19
2.13 Proxies.....................................................20
2.14 Communications Relating to Fund Securities..................20

3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States...........................21

3.1 Appointment of Foreign Sub-Custodians.......................21
3.2 Assets to be Held...........................................21
3.3 Foreign Securities Depositories.............................22
3.4 Agreements with Foreign Banking Institutions................22
3.5 Access of Independent Accountants of the Fund...............23
3.6 Reports by Custodian........................................23
3.7 Transactions in Foreign Custody Account.....................24
3.8 Liability of Foreign Sub-Custodians.........................25
3.9 Liability of Custodian......................................25
3.10 Reimbursement for Advances..................................26
3.11 Monitoring Responsibilities.................................27
3.13 Branches of U.S. Banks......................................28
3.13 Tax Law.....................................................28

4. Payments for Sales or Repurchase or Redemptions of Shares of
the Fund.............................................................29

5. Proper Instructions..................................................30

<PAGE>

TABLE OF CONTENTS continued

Page

6. Actions Permitted Without Express Authority..........................31

7. Evidence of Authority................................................32

8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income........................32

9. Records..............................................................33

10. Opinion of Fund's Independent Accountants............................34

11. Reports to Fund by Independent Public Accountants....................34

12. Compensation of Custodian............................................35

13. Responsibility of Custodian..........................................35

14. Effective Period, Termination and Amendment..........................37

15. Successor Custodian..................................................39

16. Interpretive and Additional Provisions...............................41

17. Massachusetts Law to Apply...........................................41

18. Prior Contracts......................................................41

19. Shareholder Communications Election..................................41

20. Limitation of Liability..............................................42

<PAGE>

CUSTODIAN CONTRACT

This Contract between Tax Exempt Bond Portfolio, a business

trust organized and existing under the laws of the State of New York, having its

principal place of business at 6 St. James Avenue, Boston, Massachusetts 02116,

hereinafter called the "Fund", and State Street Bank and Trust Company, a

Massachusetts trust company, having its principal place of business at 225

Franklin Street, Boston, Massachusetts, 02110, hereinafter called the

"Custodian",

WITNESSETH, in consideration of the mutual covenants and agreements

hereinafter contained, the parties hereto agree as follows:

1. Employment of Custodian and Property to be Held by It

The Fund hereby employs the Custodian as the custodian of the assets of

the Fund, including securities which the Fund desires to be held in places

within the United States ("domestic securities") and securities it desires to be

held outside the United States ("foreign securities") pursuant to the provisions

of the Declaration of Trust. The Fund agrees to deliver to the Custodian all

securities and cash of the Fund, and all payments of income, payments of

principal or capital distributions received by it with respect to all securities

owned by the Fund from time to time, and the cash consideration received by it

for such new or treasury shares of beneficial interest of the Fund ("Shares") as

may be issued or sold from time to time. The

<PAGE>

Custodian shall not be responsible for any property of the Fund held or

received by the Fund and not delivered to the Custodian.

Upon receipt of "Proper Instructions" (within the meaning of

Article 5), the Custodian shall on behalf of the applicable Fund(s)

from time to time employ one or more sub-custodians, located in the

United States but only in accordance with an applicable vote by the

Board of Trustees of the Fund and provided that the Custodian shall

have no more or less responsibility or liability to the Fund on account

of any actions or omissions of any sub-custodian so employed than any

such sub-custodian has to the Custodian.

The Custodian may employ as sub-custodian for the Fund's foreign

securities foreign banking institutions and foreign securities

depositories designated in Schedule A hereto but only in accordance

with the provisions of Article 3.

2. Duties of the Custodian with Respect to Property of the Fund Held By

the Custodian in the United States

2.1 Holding Securities. The Custodian shall hold and physically segregate

for the account of the Fund all non-cash property, to be held by it in

the United States including all domestic securities owned by the Fund,

other than (a) securities which are maintained pursuant to Section

2.10 in a clearing agency which acts as a securities depository

or in a book-entry system authorized by the U.S. Department of the

Treasury, collectively

<PAGE>

referred to herein as "Securities System" and (b) commercial paper of

an issuer for which State Street Bank and Trust Company acts as issuing

and paying agent ("Direct Paper") which is deposited and/or maintained

in the Direct Paper System of the Custodian pursuant to Section 2.10A.

2.2 Deliveries of Securities. The Custodian shall release and deliver

domestic securities owned by the Fund held by the Custodian or in

a Securities System account of the Custodian or in the Custodian's

Direct Paper book entry system account ("Direct Paper System

Account") only upon receipt of Proper Instructions from the Fund,

which may be continuing instructions when deemed appropriate by

the parties, and only in the following cases:

1) Upon sale of such securities for the account of

the Fund and receipt of payment therefor;

2) Upon the receipt of payment in connection with

any repurchase agreement related to such

securities entered into by the Fund;

3) In the case of a sale effected through a

Securities System, in accordance with the

provisions of Section 2.10 hereof;

4) To the depository agent in connection with

tender or other similar offers for securities of

the Fund;

5) To the issuer thereof or its agent when such

securities are called, redeemed, retired or

<PAGE>

otherwise become payable; provided that, in any

such case, the cash or other consideration is to

be delivered to the Custodian;

6) To the issuer thereof, or its agent, for transfer

into the name of the Fund or into the name of any

nominee or nominees of the Custodian or into the

name or nominee name of any agent appointed

pursuant to Section 2.9 or into the name or

nominee name of any sub-custodian appointed

pursuant to Article 1; or for exchange for a

different number of bonds, certificates or other

evidence representing the same aggregate face

amount or number of units; provided that, in any

such case, the new securities are to be delivered

to the Custodian;

7) Upon the sale of such securities for the account

of the Fund, to the broker or its clearing agent,

against a receipt, for examination in accordance

with "street delivery" custom; provided that in

any such case, the Custodian shall have no

responsibility or liability for any loss arising

from the delivery of such securities prior to

receiving payment for such securities except as

may arise from the Custodian's own negligence or

willful misconduct;

8) For exchange or conversion pursuant to any plan

<PAGE>

merger, consolidation, recapitalization,

reorganization or readjustment of the securities

of the issuer of such securities, or pursuant to

provisions for conversion contained in such

securities, or pursuant to any deposit agreement;

provided that, in any such case, the new

securities and cash, if any, are to be delivered

to the Custodian;

9) In the case of warrants, rights or similar

securities, the surrender thereof in the exercise

of such warrants, rights or similar securities or

the surrender of interim receipts or temporary

securities for definitive securities; provided

that, in any such case, the new securities and

cash, if any, are to be delivered to the

Custodian;

10) For delivery in connection with any loans of

securities made by the Fund, but only against

receipt of adequate collateral as agreed upon

from time to time by the Custodian and the Fund

on behalf of the Portfolio, which may be in the

form of cash or obligations issued by the United

States government, its agencies or

instrumentalities, except that in connection with

any loans for which collateral is to be credited

to the Custodian's account in the book-entry

system authorized by the

<PAGE>

U.S. Department of the Treasury, the Custodian

will not be held liable or responsible for the

delivery of securities owned by the Fund prior

to the receipt of such collateral;

11) For delivery as security in connection with any

borrowings by the Fund requiring a pledge of

assets by the Fund, but only against receipt of

amounts borrowed;

12) For delivery in accordance with the provisions of

any agreement among the Fund, the Custodian and a

broker-dealer registered under the Securities

Exchange Act of 1934 (the "Exchange Act") and a

member of The National Association of Securities

Dealers, Inc. ("NASD"), relating to compliance

with the rules of The Options Clearing

Corporation and of any registered national

securities exchange, or of any similar

organization or organizations, regarding escrow

or other arrangements in connection with

transactions by the Fund;

13) For delivery in accordance with the provisions of

any agreement among the Fund, the Custodian, and

a Futures Commission Merchant registered under

the Commodity Exchange Act, relating to

compliance with the rules of the Commodity

Futures Trading Commission and/or any Contract

Market, or any

<PAGE>

similar organization or organizations, regarding

account deposits in connection with transactions

by the Fund;

14) Upon receipt of instructions from the transfer

agent ("Transfer Agent") for the Fund, for

delivery to such Transfer Agent or to the holders

of shares in connection with distributions in

kind, as may be described from time to time in

the currently effective prospectus and statement

of additional information of the Fund, related to

the Fund ("Prospectus"), in satisfaction of

requests by holders of Shares for repurchase or

redemption; and

15) For any other proper corporate purpose, but only

upon receipt of, in addition to Proper

Instructions from the Fund, a certified copy of a

resolution of the Board of Trustees or of the

Executive Committee signed by an officer of the

Fund and certified by the Secretary or an

Assistant Secretary, specifying the securities of

the Fund to be delivered, setting forth the

purpose for which such delivery is to be made,

declaring such purpose to be a proper corporate

purpose, and naming the person or persons to whom

delivery of such securities shall be made.

2.3 Registration of Securities. Domestic securities held

<PAGE>

the Custodian (other than bearer securities) shall be

registered in the name of the Fund or in the name of any

nominee of the Fund or of any nominee of the Custodian

which nominee shall be assigned exclusively to the Fund,

unless the Fund has authorized in writing the appointment

of a nominee to be used in common with other registered

investment companies having the same investment adviser as

the Fund, or in the name or nominee name of any agent

appointed pursuant to Section 2.9 or in the name or

nominee name of any sub-custodian appointed pursuant to

Article 1. All securities accepted by the Custodian under

the terms of this Contract shall be in "street name" or

other good delivery form. If, however, the Fund directs

the Custodian to maintain securities in "street name", the

Custodian shall utilize its best efforts only to timely

collect income due the Fund on such securities and to

notify the Fund on a best efforts basis only of relevant

corporate actions including, without limitation, pendency

of calls, maturities, tender or exchange offers.

2.4 Bank Accounts. The Custodian shall open and maintain a

separate bank account or accounts in the United States in

the name of the Fund, subject only to draft or order by

the Custodian acting pursuant to the terms of this

Contract, and shall hold in such account or accounts,

subject to the provisions hereof, all cash received by it

from or for the account of the Fund, other than cash

maintained by the Fund

<PAGE>

in a bank account established and used in accordance with

Rule 17f-3 under the Investment Company Act of 1940. Funds

held by the Custodian for a Fund may be deposited by it to

its credit as Custodian in the Banking Department of the

Custodian or in such other banks or trust companies as it

may in its discretion deem necessary or desirable;

provided, however, that every such bank or trust company

shall be qualified to act as a custodian under the

Investment Company Act of 1940 and that each such bank or

trust company and the funds to be deposited with each such

bank or trust company shall be approved by vote of a

majority of the Board of Trustees of the Fund. Such funds

shall be deposited by the Custodian in its capacity as

Custodian and shall be withdrawable by the Custodian only

in that capacity.

2.5 Availability of Federal Funds. Upon mutual agreement

between the Fund and the Custodian, the Custodian shall,

upon the receipt of Proper Instructions from the Fund,

make federal funds available to such Fund as of specified

times agreed upon from time to time by the Fund and the

Custodian in the amount of checks received in payment for

Shares of such Fund which are deposited into the Fund's

account.

2.6 Collection of Income. Subject to the provisions of Section

2.3, the Custodian shall collect on a timely basis all

income and other payments with respect to registered

domestic securities held hereunder to which the Fund shall

<PAGE>

be entitled either by law or pursuant to custom in

the securities business, and shall collect on a timely

basis all income and other payments with respect to bearer

domestic securities if, on the date of payment by the

issuer, such securities are held by the Custodian or its

agent thereof and shall credit such income, as collected,

to such Fund's custodian account. Without limiting the

generality of the foregoing, the Custodian shall detach

and present for payment all coupons and other income items

requiring presentation as and when they become due and

shall collect interest when due on securities held

hereunder. Income due the Fund on securities loaned

pursuant to the provisions of Section 2.2 (10) shall be

the responsibility of the Fund. The Custodian will have no

duty or responsibility in connection therewith, other than

to provide the Fund with such information or data as may

be necessary to assist the Fund in arranging for the

timely delivery to the Custodian of the income to which

the Fund is properly entitled.

2.7 Payment of Fund Monies. Upon receipt of Proper

Instructions from the Fund, which may be continuing

instructions when deemed appropriate by the parties, the

Custodian shall pay out monies of the Fund in the

following cases only:

1) Upon the purchase of domestic securities, options,

options, futures contracts or options on futures

contracts

<PAGE>

for the account of the Fund but only (a) against

the delivery of such securities or evidence of

title to such options, futures contracts or

options on futures contracts to the Custodian (or

any bank, banking firm or trust company doing

business in the United States or abroad which is

qualified under the Investment Company Act of

1940, as amended, to act as a custodian and has

been designated by the Custodian as its agent for

this purpose) registered in the name of the Fund

or in the name of a nominee of the Custodian

referred to in Section 2.3 hereof or in proper

form for transfer; (b) in the case of a purchase

effected through a Securities System, in

accordance with the conditions set forth in

Section 2.10 hereof; (c) in the case of a

purchase involving the Direct Paper System, in

accordance with the conditions set forth in

Section 2.10A; (d) in the case of repurchase

agreements entered into between the Fund and the

Custodian, or another bank, or a broker-dealer

which is a member of NASD, (i) against delivery

of the securities either in certificate form or

through an entry crediting the Custodian's

account at the Federal Reserve Bank with such

securities or (ii) against delivery of the

receipt evidencing purchase by the

<PAGE>

Fund of securities owned by the Custodian along

with written evidence of the agreement by the

Custodian to repurchase such securities from the

Fund or(e)for transfer to a time deposit account

of the Fund in any bank, whether domestic or

foreign; such transfer may be effected prior to

receipt of a confirmation from a broker and/or

the applicable bank pursuant to Proper

Instructions from the Fund as defined in Article

2) In connection with conversion, exchange or

surrender of securities owned by the Fund as set

forth in Section 2.2 hereof;

3) For the redemption or repurchase of Shares

issued by the Fund as set forth in Article 4

hereof;

4) For the payment of any expense or liability

incurred by the Fund, including but not limited

to the following payments for the account of the

Fund: interest, taxes, management, accounting,

transfer agent and legal fees, and operating

expenses of the Fund whether or not such expenses

are to be in whole or part capitalized or treated

as deferred expenses;

5) For the payment of any dividends on Shares of the

Fund declared pursuant to the governing documents

of the Fund;

6) For payment of the amount of dividends received

<PAGE>

respect of securities sold short;

7) For any other proper purpose, but only upon

receipt of, in addition to Proper Instructions

from the Fund, a certified copy of a resolution

of the Board of Trustees or of the Executive

Committee of the Fund signed by an officer of the

Fund and certified by its Secretary or an

Assistant Secretary, specifying the amount of

such payment, setting forth the purpose for which

such payment is to be made, declaring such

purpose to be a proper purpose, and naming the

person or persons to whom such payment is to be

made.

2.8 Liability for Payment in Advance of Receipt of Securities

Purchased. Except as specifically stated otherwise in this

Contract, in any and every case where payment for purchase of

domestic securities for the account of a Fund is made by the

Custodian in advance of receipt of the securities purchased in the

absence of specific written instructions from the Fund so pay in

advance, the Custodian shall be absolutely liable to the Fund for

such securities to the same extent as if the securities had been

received by the Custodian.

2.9 Appointment of Agents. The Custodian may at any time or times in

its discretion appoint (and may at any time remove) any other bank

or trust company which is itself qualified under the Investment

Company Act of 1940, as

<PAGE>

amended, to act as a custodian, as its agent to carry out such of

the provisions of this Article 2 as the Custodian may from time to

time direct; provided, however, that the appointment of any agent

shall not relieve the Custodian of its responsibilities or

liabilities hereunder.

2.10 Deposit of Fund Assets in Securities Systems. The Custodian may

deposit and/or maintain securities owned by the Fund in a clearing

agency registered with the Securities and Exchange Commission

under Section 17A of the Securities Exchange Act of 1934, which

acts as a securities depository, or in the book-entry system

authorized by the U.S. Department of the Treasury and certain

federal agencies, collectively referred to herein as "Securities

System" in accordance with applicable Federal Reserve Board and

Securities and Exchange Commission rules and regulations, if any,

and subject to the following provisions:

1) The Custodian may keep securities of the Fund

in a Securities System provided that such

securities are represented in an account

("Account") of the Custodian in the Securities

System which shall not include any assets of the

Custodian other than assets held as a fiduciary,

custodian or otherwise for customers;

2) The records of the Custodian with respect to

securities of the Fund which are maintained in a

<PAGE>

Securities System shall identify by book-entry

those securities belonging to the Fund; 3) The

Custodian shall pay for securities purchased for

the account of the Fund upon (i) receipt of

advice from the Securities System that such

securities have been transferred to the Account,

and (ii) the making of an entry on the records of

the Custodian to reflect such payment and

transfer for the account of the Fund. The

Custodian shall transfer securities sold for the

account of the Fund upon (i) receipt of advice

from the Securities System that payment for such

securities has been transferred to the Account,

and (ii) the making of an entry on the records of

the Custodian to reflect such transfer and

payment for the account of the Fund. Copies of

all advices from the Securities System of

transfers of securities for the account of the

Fund shall identify the Fund, be maintained for

the Fund by the Custodian and be provided to the

Fund at its request. Upon request, the Custodian

shall furnish the Fund on behalf of the Fund

confirmation of each transfer to or from the

account of the Fund in the form of a written

advice or notice and shall furnish to the Fund on

behalf of the Fund copies of daily transaction

sheets reflecting each day's

<PAGE>

transactions in the Securities System for the

account of the Fund;

4) The Custodian shall provide the Fund with any

report obtained by the Custodian on the

Securities System's accounting system, internal

accounting control and procedures for

safeguarding securities deposited in the

Securities System;

5) The Custodian shall have received from the Fund

initial or annual certificate, as the case may

be, required by Article 14 hereof;

6) Anything to the contrary in this Contract

notwithstanding, the Custodian shall be liable to

the Fund for any loss or damage to the Fund

resulting from use of the Securities System by

reason of any negligence, misfeasance or

misconduct of the Custodian or any of its agents

or of any of its or their employees or from

failure of the Custodian or any such agent to

enforce effectively such rights as it may have

against the Securities System; at the election of

the Fund, it shall be entitled to be subrogated

to the rights of the Custodian with respect to

any claim against the Securities System or any

other person which the Custodian may have as a

consequence of any such loss or damage if and to

the extent that the Fund has not been made whole

<PAGE>

for any such loss or damage.

2.10A Fund Assets Held in the Custodian's Direct Paper System The

Custodian may deposit and/or maintain securities owned by the Fund

in the Direct Paper System of the Custodian subject to the

following provisions:

1) No transaction relating to securities in the

Direct Paper System will be effected in the

absence of Proper Instructions from the Fund;

2) The Custodian may keep securities of the Fund in

the Direct Paper System only if such securities

are represented in an account ("Account") of the

Custodian in the Direct Paper System which shall

not include any assets of the Custodian other

than assets held as a fiduciary, custodian or

otherwise for customers;

3) The records of the Custodian with respect to

securities of the Fund which are maintained in

the Direct Paper System shall identify by book-

entry those securities belonging to the Fund;

4) The Custodian shall pay for securities purchased

for the account of the Fund upon the making of an

entry on the records of the Custodian to reflect

such payment and transfer of securities to the

account of the Fund. The Custodian shall transfer

securities sold for the account of the Fund upon

<PAGE>

the making of an entry on the records of the

Custodian to reflect such transfer and

receipt of payment for the account of the Fund;

5) The Custodian shall furnish the Fund confirmation

of each transfer to or from the account of the

Fund, in the form of a written advice or notice,

of Direct Paper on the next business day

following such transfer and shall furnish to the

Fund copies of daily transaction sheets

reflecting each day's transaction in the

Securities System for the account of the Fund;

6) The Custodian shall provide the Fund on behalf of

the Fund with any report on its system of

internal accounting control as the Fund may

reasonably request from time to time.

2.11 Segregated Account. The Custodian shall upon receipt of Proper

Instructions from the Fund establish and maintain a segregated

account or accounts for and on behalf of the Fund, into which

account or accounts may be transferred cash and/or securities,

including securities maintained in an account by the Custodian

pursuant to Section 2.10 hereof, (i) in accordance with the

provisions of any agreement among the Fund, the Custodian and a

broker-dealer registered under the Exchange Act and a member of

the NASD (or any futures commission merchant registered under the

Commodity Exchange Act), relating to compliance with the

<PAGE>

rules of The Options Clearing Corporation and of any registered

national securities exchange (or the Commodity Futures Trading

Commission or any registered contract market), or of any similar

organization or organizations, regarding escrow or other

arrangements in connection with transactions by the Fund, (ii) for

purposes of segregating cash or government securities in

connection with options purchased, sold or written by the Fund or

commodity futures contracts or options thereon purchased or sold

by the Fund, (iii) for the purposes of compliance by the Fund with

the procedures required by Investment Company Act Release No.

10666, or any subsequent release or releases of the Securities and

Exchange Commission relating to the maintenance of segregated

accounts by registered investment companies and (iv) for other

proper corporate purposes, but only, in the case of clause (iv),

upon receipt of, in addition to Proper Instructions from the Fund,

a certified copy of a resolution of the Board of Trustees or of

the Executive Committee signed by an officer of the Fund and

certified by the Secretary or an Assistant Secretary, setting

forth the purpose or purposes of such segregated account and

declaring such purposes to be proper corporate purposes.

2.12 Ownership Certificates for Tax Purposes. The Custodian

<PAGE>

shall execute ownership and other certificates and affidavits for

all federal and state tax purposes in connection with receipt of

income or other payments with respect to domestic securities of

the Fund held by it and in connection with transfers of

securities.

2.13 Proxies. The Custodian shall, with respect to the domestic

securities held hereunder, cause to be promptly executed by the

registered holder of such securities, if the securities are

registered otherwise than in the name of the Fund or a nominee of

the Fund, all proxies, without indication of the manner in which

such proxies are to be voted, and shall promptly deliver to the

Fund such proxies, all proxy soliciting materials and all notices

relating to such securities.

2.14 Communications Relating to Fund Securities. Subject to the

provisions of Section 2.3, the Custodian shall transmit promptly

to the Fund all written information (including, without

limitation, pendency of calls and maturities of domestic

securities and expirations of rights in connection therewith and

notices of exercise of call and put options written by the Fund

and the maturity of futures contracts purchased or sold by the

Fund) received by the Custodian from issuers of the securities

being held for the Fund. With respect to tender or exchange

offers, the Custodian shall transmit promptly to the Fund all

written information received by the Custodian from issuers of the

securities

<PAGE>

whose tender or exchange is sought and from the party

(or his agents) making the tender or exchange offer. If the Fund

desires to take action with respect to any tender offer, exchange

offer or any other similar transaction, the Fund shall notify the

Custodian at least three business days prior to the date on which

the Custodian is to take such action.

3. Duties of the Custodian with Respect to Property of the Fund Held

Outside of the United States.

3.1 Appointment of Foreign Sub-Custodians. The Fund hereby

authorizes and instructs the Custodian to

employ as sub-custodians for the Fund's securities and other

assets maintained outside the United States the foreign banking

institutions and foreign securities depositories designated on

Schedule A hereto ("foreign sub-custodians"). Upon receipt of

"Proper Instructions", as defined in Section 5 of this Contract,

together with a certified resolution of the Fund's Board of

Trustees, the Custodian and the Fund may agree to amend Schedule A

hereto from time to time to designate additional foreign banking

institutions and foreign securities depositories to act as

sub-custodian. Upon receipt of Proper Instructions, the Fund may

instruct the Custodian to cease the employment of any one or more

such sub-custodians for maintaining custody of the Fund's assets.

3.2 Assets to be Held. The Custodian shall limit the

<PAGE>

securities and other assets maintained in the custody of the

foreign sub-custodians to: (a) "foreign securities", as defined in

paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of

1940, and (b) cash and cash equivalents in such amounts as the

Custodian or the Fund may determine to be reasonably necessary to

effect the Fund's foreign securities transactions. The Custodian

shall identify on its books as belonging to the Fund, the foreign

securities of the Fund held by each foreign sub-custodian.

3.3 Foreign Securities Depositories. Except as may otherwise be agreed

upon in writing by the Custodian and the Fund, assets of the Funds

shall be maintained in foreign securities depositories only

through arrangements implemented by the foreign banking

institutions serving as sub-custodians pursuant to the terms

hereof. Where possible, such arrangements shall include entry into

agreements containing the provisions set forth in Section 3.4

hereof.

3.4 Agreements with Foreign Banking Institutions. Each agreement with

a foreign banking institution shall be substantially in the form

set forth in Exhibit 1 hereto and shall provide that: (a) the

assets of the Fund will not be subject to any right, charge,

security interest, lien or claim of any kind in favor of the

foreign banking institution or its creditors or agent, except a

claim of

<PAGE>

payment for their safe custody or administration; (b) beneficial

ownership for the assets of the Fund will be freely transferable

without the payment of money or value other than for custody or

administration; (c) adequate records will be maintained

identifying the assets as belonging to the Fund; (d) officers of

or auditors employed by, or other representatives of the

Custodian, including to the extent permitted under applicable law

the independent public accountants for the Fund, will be given

access to the books and records of the foreign banking institution

relating to its actions under its agreement with the Custodian;

and (e) assets of the Fund held by the foreign sub-custodian will

be subject only to the instructions of the Custodian or its

agents.

3.5 Access of Independent Accountants of the Fund. Upon request of the

Fund, the Custodian will use its best efforts to arrange for the

independent accountants of the Fund to be afforded access to the

books and records of any foreign banking institution employed as a

foreign sub-custodian insofar as such books and records relate to

the performance of such foreign banking institution under its

agreement with the Custodian.

3.6 Reports by Custodian. The Custodian will supply to the Fund from

time to time, as mutually agreed upon, statements in respect of

the securities and other assets of the Fund(s) held by foreign

sub-custodians, including but not

<PAGE>

limited to an identification of entities having possession of the

Fund's securities and other assets and advices or notifications of

any transfers of securities to or from each custodial account

maintained by a foreign banking institution for the Custodian on

behalf of the Fund indicating, as to securities acquired for the

Fund, the identity of the entity having physical possession of

such securities.

3.7 Transactions in Foreign Custody Account

(a) Except as otherwise provided in paragraph (b) of this Section

3.7, the provision of Sections 2.2 and 2.7 of this Contract shall

apply, mutatis mutandis to the foreign securities of the Fund held

outside the United States by foreign sub-custodians. (b)

Notwithstanding any provision of this Contract to the contrary,

settlement and payment for securities received for the account of

the Fund and delivery of securities maintained for the account of

Fund may be effected in accordance with the customary established

securities trading or securities processing practices and

procedures in the jurisdiction or market in which the transaction

occurs, including, without limitation, delivering securities to

the purchaser thereof or to a dealer therefor (or an agent for

such purchaser or dealer) against a receipt with the expectation

of receiving later payment for such securities from such purchaser

or dealer.

<PAGE>

sub-custodian may be maintained in the name of such entity's

nominee to the same extent as set forth in Section 2.3 of this

Contract, and the Fund agrees to hold any such nominee harmless

from any liability as a holder of record of such securities.

3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to

which the Custodian employs a foreign banking institution as a

foreign sub-custodian shall require the institution to exercise

reasonable care in the performance of its duties and to indemnify,

and hold harmless, the Custodian and the Fund from and against any

loss, damage, cost, expense, liability or claim arising out of or

in connection with the institution's performance of such

obligations. At the election of the Fund, it shall be entitled to

be subrogated to the rights of the Custodian with respect to any

claims against a foreign banking institution as a consequence of

any such loss, damage, cost, expense, liability or claim if and to

the extent that the Fund has not been made whole for any such

loss, damage, cost, expense, liability or claim.

3.9 Liability of Custodian. The Custodian shall be liable for the acts

or omissions of a foreign banking institution to he same extent as

set forth with respect to sub-custodians generally in this

Contract and, regardless of whether assets are maintained in the

custody of a foreign banking

<PAGE>

institution, a foreign securities depository or a branch of a U.S.

bank as contemplated by paragraph 3.12 hereof, the Custodian shall

not be liable for any loss, damage, cost, expense, liability or

claim resulting from nationalization, expropriation, currency

restrictions, or acts of war or terrorism or any loss where the

sub-custodian has otherwise exercised reasonable care.

Notwithstanding the foregoing provisions of this paragraph 3.9, in

delegating custody duties to State Street London Ltd., the

Custodian shall not be relieved of any responsibility to the Fund

for any loss due to such delegation, except such loss as may

result from (a) political risk (including, but not limited to,

exchange control restrictions, confiscation, expropriation,

nationalization, insurrection, civil strife or armed hostilities)

or (b) other losses (excluding a bankruptcy or insolvency of State

Street London Ltd. not caused by political risk) due to Acts of

God, nuclear incident or other losses under circumstances where

the Custodian and State Street London Ltd. have exercised

reasonable care.

3.10 Reimbursement for Advances. If the Fund requires the Custodian to

advance cash or securities for any purpose including the purchase

or sale of foreign exchange or of contracts for foreign exchange,

or in the event that the Custodian or its nominee shall incur or

be assessed any taxes, charges, expenses, assessments, claims or

liabilities in connection with the performance of this

<PAGE>

Contract, except such as may arise from its or its nominee's own

negligent action, negligent failure to act or willful misconduct,

any property at any time held for the account of the Fund shall be

security therefor and should the Fund fail to repay the Custodian

promptly, the Custodian shall be entitled to utilize available

cash and to dispose of the Fund's assets to the extent necessary

to obtain reimbursement.

3.11 Monitoring Responsibilities. The Custodian shall furnish annually

to the Fund, during the month of June, information concerning the

foreign sub-custodians employed by the Custodian. Such information

shall be similar in kind and scope to that furnished to the Fund

in connection with the initial approval of this Contract. In

addition, the Custodian will promptly inform the Fund in the event

that the Custodian learns of a material adverse change in the

financial condition of a foreign sub-custodian or any material

loss of the assets of the Fund or in the case of any foreign

sub-custodian not the subject of an exemptive order from the

Securities and Exchange Commission is notified by such foreign

sub-custodian that there appears to be a substantial likelihood

that its shareholders' equity will decline below $200 million

(U.S. dollars or the equivalent thereof) or that its shareholders'

equity has declined below $200 million (in each case computed in

accordance with generally accepted U.S. accounting

<PAGE>

principles).

3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this

Contract, the provisions hereof shall not apply where the custody

of the Fund's assets are maintained in a foreign branch of a

banking institution which is a "bank" as defined by Section

2(a)(5) of the Investment Company Act of 1940 meeting the

qualification set forth in Section 26(a) of said Act. The

appointment of any such branch as a sub-custodian shall be

governed by paragraph 1 of this Contract. (b) Cash held for the

Fund in the United Kingdom shall be maintained in an interest

bearing account established for the Fund with the Custodian's

London branch, which account shall be subject to the direction of

the Custodian, State Street London Ltd. or both.

3.13 Tax Law.

(a) United States Taxes

The Custodian shall have no responsibility or liability for any

obligations now or hereafter imposed on the Fund or the Custodian

as custodian of the Fund by the tax law of the United States of

America or any state or political subdivision thereof. The

Custodian will be responsible for informing the Fund of the income

received by the Fund which is United States source income and

which is non-United States source income.

(b) Claiming for Exemption or Refunds under the Tax Laws of

<PAGE>

Non-United States Jurisdictions

The sole responsibility of the Custodian with regard to the tax

laws of non-United States jurisdictions shall be to identify the

income of the Fund which has been subject to withholding and other

tax assessments or other governmental charges by such

jurisdictions and, on the basis of information furnished to it by

the Fund as to the allocated amount of such income that is

attributable to each of its investors, to use reasonable efforts

to assist the Fund or its investors with respect to any claim for

exemption or refund of such charges that can be made on behalf of

such Fund or such investors.

4. Payments for Sales or Repurchases or Redemptions of Interests in

the Fund. The Custodian shall receive and deposit into the account

of the Fund such payments as are received for interests in the

Fund issued or sold from time to time by the Fund. The Custodian

will provide notification to the Fund of any receipt by it of

payments for interests in the Fund.

From such funds as may be available for the purpose but

subject to the limitations of the Declaration of Trust and

any applicable votes of the Board of Trustees of the Fund

pursuant thereto, the Custodian shall, upon receipt of

instructions from the Fund, make funds available to an

account designated by the Fund for payment to holders of

interests in the Fund who have delivered to the Fund a

<PAGE>

request for redemption or repurchase of their interests.

5. Proper Instructions. Proper Instructions as used through-

out this Contract means a writing signed or initialled by

one or more person or persons as the Board of Trustees

shall have from time to time authorized. Each such writing

shall set forth the specific transaction or type of trans-

action involved, including a specific statement of the

purpose for which such action is requested. Oral

instructions will be considered Proper Instructions if the

Custodian reasonably believes them to have been given by a

person authorized to give such instructions with respect

to the transaction involved. The Fund shall cause all oral

instructions to be confirmed in writing. It is understood

and agreed that the Board of Directors has authorized

Morgan Guaranty Trust Company of New York ("Morgan

Guaranty"), as Advisor of the Fund pursuant to an

Investment Advisory Agreement, dated as of May 30, 1990

between Morgan Guaranty and the Fund, to deliver Proper

Instructions with respect to all matters for which Proper

Instructions are required by paragraphs 2.2(1) through

2.2(14), 2.5 , 2.7(1) and 2.7(2), 2.7(6), 2.11(i) through

2.11(iii) and 3.7(a). The Custodian may rely upon the

certificate of an officer of Morgan Guaranty with respect

to the person or persons authorized on behalf of Morgan

Guaranty to sign, initial or give Proper Instructions for

the purposes of such paragraphs. Upon

<PAGE>

receipt of a certificate of the Secretary or an Assistant

Secretary as to the authorization by the Board of Trustees

of the Fund accompanied by a detailed description of

procedures approved by the Board of Trustees, Proper

Instructions may include communications effected directly

between electro-mechanical or electronic devices provided

that the Board of Trustees and the Custodian are satisfied

that such procedures afford adequate safeguards for the

Fund's assets. For purposes of this Section, Proper

Instructions shall include instructions received by the

Custodian pursuant to any three - party agreement which

requires a segregated asset account in accordance with

Section 2.11.

6. Actions Permitted without Express Authority. The Custodian

may in its discretion, without express authority from the

Fund:

1) make payments to itself or others for

minor expenses of handling securities or

or other similar items relating to its

duties under this Contract, provided that

all such payments shall be accounted for to

the Fund;

2) surrender securities in temporary form for

securities in definitive form;

3) endorse for collection, in the name of the

Fund, checks, drafts end other negotiable

instruments; and

<PAGE>

4) in general, attend to all

non-discretionary details in connection

with the sale, exchange, substitution,

purchase, transfer and other dealings

with the securities and property of the

Fund except as otherwise directed by the

Board of Trustees of the Fund.

7. Evidence of Authority. The Custodian shall be protected

in acting upon any instructions, notice, request, consent,

certificate or other instrument or paper believed by it to

be genuine and to have been properly executed by or on

behalf of the Fund. The Custodian may receive and accept

a certified copy of a vote of the Board of Trustees of

the Fund as conclusive evidence (a) of the authority of

any person to act in accordance with such vote or (b) of

any determination or of any action by the Board of

Trustees pursuant to the Declaration of Trust as described

in such vote, and such vote may be considered as in full

force and effect until receipt by the Custodian of written

notice to the contrary.

8. Duties of Custodian with Respect to the Books of Account

and Calculation of Net Income.

The Custodian shall keep the books of account of the

Fund. Until otherwise directed by Proper Instructions,

the Custodian shall calculate daily the net income of the

Fund as described in Part A of its Registration Statement

under the 1940 Act and shall advise

<PAGE>

the Fund daily of the total amounts of such net income,

including the categorization of such net income by source.

The calculation of the Fund's net income and it components

shall include, but may not be limited to, accounting for

purchases and sales of portfolio securities, calculation

of realized and unrealized gains and losses, accruals of

income on portfolio investments, hub level expense

accruals and calculations of market value of portfolio

securities. The Custodian will transmit accounting

information produced by the Custodian to the Fund or an

agent designated by the Fund in such format and by such

means as the Fund and the Custodian shall agree in order

that the Fund or such agent may calculate the net asset

value and SEC yield of the Fund and the allocation of its

various components to investors in the Fund. The Custodian

shall in no event be responsible for the calculation or

publication of the net asset value or yields of the Fund.

9. Records. The Custodian shall with respect to the Fund

create and maintain all records relating to its activities

and obligations under this Contract in such manner as the

Fund and the Custodian may agree from time to time. All

such records shall be the property of the Fund and shall

at all times during the regular business hours of the

Custodian be open for inspection by duly authorized

officers, employees or agents of the Fund and employees

and

<PAGE>

agents of the Securities and Exchange Commission. The

Custodian shall, at the Fund's request, supply the Fund

with a tabulation of securities owned by the Fund and held

by the Custodian and shall, when requested to do so by the

Fund and for such compensation as shall be agreed upon

between the Fund and the Custodian, include certificate

numbers in such tabulations.

10. Opinion of Fund's Independent Accountant. The Custodian

shall take all reasonable action, as the Fund may from

time to time request, to assist the Fund in obtaining from

year to year favorable opinions from the Fund's

independent accountants with respect to its activities

hereunder in connection with the preparation of the Fund's

Form N-1A, and Form N-SAR or other periodic reports to the

Securities and Exchange Commission and with respect to any

other requirements of such Commission.

11. Reports to Fund by Independent Public Accountants. The

Custodian shall provide the Fund, at such times as the

Fund may reasonably require, with reports by independent

public accountants on the accounting system, internal

accounting control and procedures for safeguarding

securities, futures contracts and options on futures

contracts, including securities deposited and/or

maintained in a Securities System, relating to the

services provided by the Custodian under this Contract;

such reports, shall be of sufficient scope and in

sufficient detail, as may reasonably be

<PAGE>

required by the Fund to provide reasonable assurance that

any material inadequacies would be disclosed by such

examination, and, if there are no such inadequacies, the

reports shall so state.

12. Compensation of Custodian. The Custodian shall be entitled

to reasonable compensation for its services and expenses

as Custodian, as agreed upon from time to time between

the Fund and the Custodian.

13. Responsibility of Custodian. So long as and to the extent

that it is in the exercise of reasonable care, the

Custodian shall not be responsible for the title,

validity or genuineness of any property or evidence

of title thereto received by it or delivered by it

pursuant to this Contract and shall be held harmless in

acting upon any notice, request, consent, certificate or

other instrument reasonably believed by it to be genuine

and to be signed by the proper party or parties, including

any futures commission merchant acting pursuant to the

terms of a three-party futures or options agreement. The

Custodian shall be held to the exercise of reasonable care

in carrying out the provisions of this Contract, but shall

be kept indemnified by and shall be without liability to

the Fund for any action taken or omitted by it in good

faith without negligence. It shall be entitled to rely on

and may act upon advice of counsel (who may be counsel for

the Fund) on all matters, and shall be without liability

for

<PAGE>

any action reasonably taken or omitted pursuant to such advice.

The Custodian shall be liable for the acts or omissions of a

foreign banking institution appointed pursuant to the provisions

of Article 3 to the same extent as set forth in Article 1 hereof

with respect to sub-custodians located in the United States

(except as specifically provided in Article 3.9) and, regardless

of whether assets are maintained in the custody of a foreign

banking institution, a foreign securities depository or a branch

of a U.S. bank as contemplated by paragraph 3.12 hereof, the

Custodian shall not be liable for any loss, damage, cost, expense,

liability or claim resulting from, or caused by, the direction of

or authorization by the Fund to maintain custody or any securities

or cash of the Fund in a foreign country including, but not

limited to, losses resulting from nationalization, expropriation,

currency restrictions, or acts of war or terrorism. If the Fund

requires the Custodian to take any action with respect to

securities, which action involves the payment of money or which

action may, in the opinion of the Custodian, result in the

Custodian or its nominee assigned to the Fund or the Fund being

liable for the payment of money or incurring liability of some

other form, the Fund, as a prerequisite to requiring the Custodian

to take such action, shall provide indemnity to the Custodian in

<PAGE>

amount and form satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries

or agents, to advance cash or securities for any purpose

(including but not limited to securities settlements, foreign

exchange contracts and assumed settlement) for the benefit of the

Fund including the purchase or sale of foreign exchange or of

contracts for foreign exchange or in the event that the Custodian

or its nominee shall incur or be assessed any taxes, charges,

expenses, assessments, claims or liabilities in connection with

the performance of this Contract, except such as may arise from

its or its nominee's own negligent action, negligent failure to

act or willful misconduct, any property at any time held for the

account of the Fund shall be security therefor and should the Fund

fail to repay the Custodian promptly, the Custodian shall be

entitled to utilize available cash and to dispose of the Fund's

assets to the extent necessary to obtain reimbursement.

14. Effective Period, Termination and Amendment. This Contract shall

become effective as of its execution, shall continue in full force

and effect until terminated as hereinafter provided, may be

amended at any time by mutual agreement of the parties hereto and

may be terminated by either party by an instrument in writing

delivered or mailed, postage prepaid to the other party, such

termination to take effect

<PAGE>

not sooner than thirty (30) days after the date of such delivery

or mailing; provided, however that the Custodian shall not with

respect to the Fund act under Section 2.10 hereof in the absence

of receipt of an initial certificate of the Secretary or an

Assistant Secretary that the Board of Trustees of the Fund has

approved the initial use of a particular Securities System by such

Fund and the receipt of an annual certificate of the Secretary or

an Assistant Secretary that the Board of Trustees has reviewed the

use by such Fund of such Securities System, as required in each

case by Rule 17f-4 under the Investment Company Act of 1940, as

amended and that the Custodian shall not with respect to a Fund

act under Section 2.10A hereof in the absence of receipt of an

initial certificate of the Secretary or an Assistant Secretary

that the Board of Trustees has approved the initial use of the

Direct Paper System by such Fund and the receipt of an annual

certificate of the Secretary or an Assistant Secretary that the

Board of Trustees has reviewed the use by such Fund of the Direct

Paper System; provided further, however, that the Fund shall not

amend or terminate this Contract in contravention of any

applicable federal or state regulations, or any provision of the

Declaration of Trust, and further provided, that the Fund may at

any time by action of its Board of Trustees (i) substitute another

bank or trust company for the Custodian by giving notice as

<PAGE>

described above to the Custodian, or (ii) immediately terminate

this Contract in the event of the appointment of a conservator or

receiver for the Custodian by the Comptroller of the Currency or

upon the happening of a like event at the direction of an

appropriate regulatory agency or court of competent jurisdiction.

Upon termination of the Contract, the Fund shall pay to the

Custodian such compensation as may be due as of the date of such

termination and shall likewise reimburse the Custodian for its

costs, expenses and disbursements.

15. Successor Custodian. If a successor custodian for the Fund shall

be appointed by the Board of Trustees of the Fund, the Custodian

shall, upon termination, deliver to such successor custodian at

the office of the Custodian, duly endorsed and in the form for

transfer, all securities of the Fund then held by it hereunder and

shall transfer to an account of the successor custodian all of the

securities of the Fund held in a Securities System.

If no such successor custodian shall be appointed, the Custodian

shall, in like manner, upon receipt of a certified copy of a vote

of the Board of Trustees of the Fund, deliver at the office of

the Custodian and transfer such securities, funds and other

properties in accordance with such vote.

In the event that no written order designating a successor

custodian or certified copy of a vote of the

<PAGE>

Board of Trustees shall have been delivered to the Custodian on or

before the date when such termination shall become effective, then

the Custodian shall have the right to deliver to a bank or trust

company, which is a "bank" as defined in the Investment Company

Act of 1940, doing business in Boston, Massachusetts, of its own

selection, having an aggregate capital, surplus, and undivided

profits, as shown by its last published report, of not less than

$50,000,000, all securities, funds and other properties held by

the Custodian on behalf of the Fund and all instruments held by

the Custodian relative thereto and all other property held by it

under this Contract on behalf of the Fund and to transfer to an

account of such successor custodian all of the securities of the

Fund held in any Securities System. Thereafter, such bank or trust

company shall be the successor of the Custodian under this

Contract.

In the event that securities, funds and other properties

remain in the possession of the Custodian after the date of

termination hereof owing to failure of the Fund to procure the

certified copy of the vote referred to or of the Board of Trustees

to appoint a successor custodian, the Custodian shall be entitled

to fair compensation for its services during such period as the

Custodian retains possession of such securities, funds and other

properties and the provisions of this Contract relating to the

duties

<PAGE>

and obligations of the Custodian shall remain in full force and

effect.

16. Interpretive and Additional Provisions. In connection with the

operation of this Contract, the Custodian and the Fund, may from

time to time agree on such provisions interpretive of or in

addition to the provisions of this Contract as may in their joint

opinion be consistent with the general tenor of this Contract.

Any such interpretive or additional provisions shall be in a

writing signed by both parties and shall be annexed hereto,

provided that no such interpretive or additional provisions shall

contravene any applicable federal or state regulations or any

provision of the Declaration of Trust of the Fund. No interpretive

or additional provisions made as provided in the preceding

sentence shall be deemed to be an amendment of this Contract.

17. Massachusetts Law to Apply. This Contract shall be construed

and the provisions thereof interpreted under and in accordance

with laws of The Commonwealth of Massachusetts.

18. Prior Contracts. This Contract supersedes and terminates, as of

the date hereof, all prior contracts between the Fund and the

Custodian relating to the custody of the Fund's assets.

19. Shareholder Communications Election. Securities and Exchange

Commission Rule 14b-2 requires banks which hold

<PAGE>

securities for the account of customers to respond to requests by

issuers of securities for the names, addresses and holdings of

beneficial owners of securities of that issuer held by the bank

unless the beneficial owner has expressly objected to disclosure

of this information. In order to comply with the rule, the

Custodian need~ the Fund to indicate whether it authorizes the

Custodian to provide the Fund's name, address, and share position

to requesting companies whose securities the Fund owns. If the

Fund tells the Custodian "no", the Custodian will not provide this

information to requesting companies. If the Fund tells the

Custodian "yes" or does not check either "yes" or "no" below, the

Custodian is required by the rule to treat the Fund as consenting

to disclosure of this information for all securities owned by the

Fund or any funds or accounts established by the Fund. For the

Fund's protection, the Rule prohibits the requesting company from

using the Fund's name and address for any purpose other than

corporate communications. Please indicate below whether the Fund

consents or objects by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name, address,

and share positions.

NO [X] The Custodian is not authorized to release the Fund's name,

address, and share positions.

20. Limitation of Liability

<PAGE>

The references herein to the Trustees of the Fund are to the

Trustees of the Fund as trustees and not individually or

personally. The obligations of the Fund entered into in the name

of or on behalf of the Fund by any of the Trustees are not made

individually but in their capacity as trustees and are not binding

on any of the trustees personally. All persons dealing with the

Fund must look solely to the assets of the Fund for the

enforcement of any claims against the Fund.

<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to

be executed in its name and behalf by its duly authorized representative as of

the 9th day of July, 1993.

TAX EXEMPT BOND PORTFOLIO

By /s/ James B. Craver
James B. Craver
Treasurer

STATE STREET BANK AND TRUST COMPANY

By /s/ Ronald E. Logue
Executive Vice President

<PAGE>

AMENDMENT TO CUSTODIAN CONTRACT

Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and The Tax Exempt Bond Portfolio (the "Fund").

WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated July 9, 1993 (the "Custodian Contract");

WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions Custodian Contract pursuant to which the custodian provides services
to the Fund;

NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the Custodian and the Fund hereby agree as follows:

1. The existing Section 3.13 of the Custodian Contract shall be amended
and restated in its entirety to read as follows:

3.13 Tax Law.

(a) United States Taxes. The Custodian shall have no
responsibility or liability for any obligations now or
hereafter imposed on the Fund or the Custodian as custodian of
the Fund by the tax law of the United States of America or any
state or political subdivision thereof. The Custodian will be
responsible for informing the Fund of the income received by
the Fund which is United States source income and which is not
United States source income.

(b) Claiming for Exemption or Refund under the Tax Laws of
Non-United States Jurisdictions. The sole responsibility of
the Custodian with regard to the tax laws of non-United States
jurisdictions shall be to identify the income of the Fund
which has been subject to withholding and other tax
assessments or other governmental charges by such
jurisdictions and the amount thereof and to use reasonable
efforts to assist the Fund or its investors with respect to
any claim for exemption or refund of such charges that can be
made on behalf of the Fund or its investors.

2. The existing Article 8 of the Custodian Contract shall be amended and
restated in its entirety to read as follows:

8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Income. The Custodian shall keep the books
of account of the Fund and shall perform the following duties
as described in Part A of its Registration Statement under the
1940 Act and in accordance with written procedures as may be
agreed upon by the Fund and the Custodian from time to time:

<PAGE>

(a) record general ledger entries;
(b) calculate daily net income;
(c) reconcile activity to the trial balance;
(d) calculate book capital account balances;
(e) calculate and provide to the Fund the daily net asset
value of the Fund and the SEC yield of the Fund and
the allocation of its various components to investors
of the Fund;
(f) prepare capital allocation reports in accordance with
Regulation 1.704-3(e)(3) (special aggregation rule
for securities partnerships) under the U.S. Internal
Revenue Code, based upon tax adjustments supplied by
the Fund; and
(g) prepare account balances.

The Custodian shall advise the Fund daily of the total amounts
of such net income, including the categorization of such net
income by source. The calculation of the Fund's net income and
its components shall include, but may not be limited to,
accounting for purchases and sales of portfolio securities,
calculation of realized and unrealized gains and losses,
accruals of income on portfolio investments, expense accruals
and calculations of market value of portfolio securities.

3. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian contract shall continue to apply with full force and
effect.

IN WITNESS WHEREOF, each of the parties has caused this amendment to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative as of this first day of July, 1996.

STATE STREET BANK AND TRUST COMPANY

By: /s/ Ronald E. Logue
Name: Ronald E. Logue
Title: Executive Vice President

THE TAX EXEMPT BOND PORTFOLIO

By: /s/ Matthew Healey
Matthew Healey, Chairman and
Chief Executive Officer

JPM507

<PAGE>

INTERPRETATIVE PROVISIONS REGARDING CUSTODIAN CONTRACT

Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and The Tax Exempt Bond Portfolio (the "Fund")

The Custodian and the Fund are parties to a custodian contract dated
July 9, 1993 (the "Custodian Contract"). As contemplated by Article 16 of the
Custodian Contract, the Custodian and the Fund desire to agree upon provisions
interpretative of the provisions of the Custodian Contract. ACCORDINGLY, the
Custodian and the Fund agree to the following provision interpretative of the
provisions of the Custodian Contract:

The Custodian and the Fund shall adopt written procedures as shall be
agreed upon from time to time regarding the books of account,
allocations for book and tax purposes and calculation of net income in
accordance with Article 8 of the Custodian Contract.

This Agreement shall not supersede or amend the terms of the Custodian
Contract which shall continue to apply with full force and effect.

Each of the parties has caused this agreement to be executed in its
name and behalf by its duly authorized representative as of this first day of
July, 1996.

STATE STREET BANK AND TRUST COMPANY

By: /s/ Ronald E. Logue
Name: Ronald E. Logue
Title: Executive Vice President

THE TAX EXEMPT BOND PORTFOLIO

By: /s/ Matthew Healey
Matthew Healey, Chairman and
Chief Executive Officer

JPM507

10/10/96 Exhibit I

Date of Declaration
Portfolio of Trust Address Effective Date

<S> <C> <C> <C>
The Treasury Money Market Portfolio.11/4/92 60 State Street, Boston, MA 02109 8/1/96

The Money Market Portfolio..........1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Tax Exempt Money Market
Portfolio...........................1/29/93 60 State Street, Boston, MA 02109 8/1/96

The Short Term Bond Portfolio.......1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The U.S. Fixed Income Portfolio.....1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Tax Exempt Bond Portfolio.......1/29/93 60 State Street, Boston, MA 02109 8/1/96

The Selected U.S. Equity Portfolio..1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The U.S. Small Company Portfolio....1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Non-U.S. Equity Portfolio.......1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Diversified Portfolio...........1/29/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Non-U.S. Fixed Income Portfolio.6/16/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Emerging Markets Equity
Portfolio...........................6/16/93 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The New York Total Return
Bond Portfolio......................6/16/93 60 State Street, Boston, MA 02109 8/1/96

The Series Portfolio--
The Asia Growth Portfolio*..........6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--
The Japan Equity Portfolio*.........6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--
The European Equity Portfolio*......6/24/94 P.O. Box 2508 GT 8/1/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--
The Disciplined Equity Portfolio*...6/24/94 P.O. Box 2508 GT 12/27/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--The Inter-
national Opportunities Portfolio*...6/24/94 P.O. Box 2508 GT 12/27/96
Grand Cayman, Cayman Islands, BWI

The Series Portfolio--The Global
Strategic Income Portfolio*.........6/24/94 P.O. Box 2508 GT 12/27/96
Grand Cayman, Cayman Islands, BWI
*In the case of The Series Portfolio, references to the "Portfolio" refer to
its individual series as the context requires.
</TABLE>

TRANSFER AGENCY AND SERVICE AGREEMENT

between

THE PORTFOLIOS NAMED HEREIN

and

STATE STREET BANK AND TRUST COMPANY

JPM259A1

<PAGE>

TABLE OF CONTENTS

Page

Article 1 Terms of Appointment; Duties of the Bank 1

Article 2 Fees and Expenses 3

Article 3 Representations and Warranties of the Bank 4

Article 4 Representations and Warranties of
the Portfolio(s) 5

Article 5 Data Access and Proprietary Information 5

Article 6 Indemnification 8

Article 7 Standard of Care 11

Article 8 Covenants of the Portfolios and the Bank 11

Article 9 Termination of Agreement 13

Article 10 Additional Parties to Agreement 14

Article 11 Assignment 14

Article 12 Amendment 15

Article 13 Massachusetts Law to Apply 15

Article 14 Merger of Agreement 15

Article 15 Limitations of Liability of the Trustees
and the Investors 15

Article 16 Counterparts 16

<PAGE>

TRANSFER AGENCY AND SERVICE AGREEMENT

AGREEMENT made as of the 23rd day of December, 1992, by and between

each of the New York trusts executing this Agreement on the signature pages

hereto or becoming a party to this Agreement subsequent to the date hereof as

provided in Article 10 (each a "Portfolio"), and STATE STREET BANK AND TRUST

COMPANY, a Massachusetts trust company having its principal office and place of

business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").

WHEREAS, each Portfolio's assets are composed of money and property

contributed thereto by the holders of interests in the Portfolio ("Interest(s)")

entitled to ownership rights in the Portfolio ("Investors");

WHEREAS, each Portfolio desires to appoint the Bank as its transfer

agent and agent in connection with certain other activities, and the Bank

desires to accept such appointment;

WHEREAS, additional Portfolios may become subject to this Agreement in

accordance with Article 10; and

NOW, THEREFORE, in consideration of the mutual covenants herein

contained, the parties hereto agree as follows:

Article 1 Terms of Appointment; Duties of the Bank

1.01 Subject to the terms and conditions set forth in this

Agreement, each Portfolio hereby employs and appoints the Bank to act as, and

the Bank agrees to act, as its transfer agent for the authorized Interests.

<PAGE>

1.02 The Bank agrees that it will perform the following

services:

(a) In accordance with procedures established from time to

time by agreement between the Portfolios and the Bank, the Bank shall:

(i) Receive orders for the purchase of

Interests and promptly deliver payment and

appropriate documentation thereof to the custodian of

the applicable Portfolio authorized pursuant to the

Declaration of Trust of the Portfolio (the

"Custodian");

(ii) Pursuant to purchase orders, hold each

Interest in the appropriate Investor account;

(iii) Receive requests for purchases and

withdrawals and directions associated therewith and

deliver the appropriate documentation thereof to the

Custodian;

(iv) At the appropriate time as and when it

receives monies paid to it by the Custodian with

respect to any withdrawal, pay over or cause to be

paid over in the appropriate manner such monies as

instructed by the withdrawing Investor; and

(v) Maintain records of account for and

advise the Portfolios and their respective Investors

as to the foregoing; and

(vi) Record the Interest of each Investor

and maintain pursuant to SEC Rule 17Ad-lO(e) a record

of the

-2-

<PAGE>

total number and value of Interests which have been

established, based upon data provided to it by the

applicable Portfolio.

(b) In addition to and neither in lieu nor in contravention of

the services set forth in the above paragraph (a), the Bank shall perform the

customary services of a transfer agent, including but not limited to:

maintaining all Investor accounts and withholding taxes, as applicable, on

non-resident alien Investors.

services in Article 1 may be established from time to time by agreement between

the Portfolios and the Bank per the attached service responsibility schedule.

The Bank may at times perform only a portion of these services and the

Portfolios or their agents may perform these services on the Portfolios' behalf.

Article 2 Fees and Expenses

2.01 For performance by the Bank pursuant to this Agreement,

each Portfolio agrees to pay the Bank an annual fee as agreed to from time to

time by the Bank and the Portfolios. Such fees and out-of-pocket expenses and

advances identified under Section 2.02 below may be changed from time to time

subject to mutual written agreement between the Portfolios and the Bank.

2.02 In addition to the fee paid under Section 2.01 above,

each Portfolio agrees to reimburse the Bank for out-of-pocket expenses,

including but not limited to confirmation production, postage, forms, telephone,

microfilm, microfiche,

-3-

<PAGE>

tabulating information statements and/or proxies, records storage or advances

incurred by the Bank. In addition, any other expenses incurred by the Bank at

the request or with the consent of a Portfolio, will be reimbursed by such

Portfolio.

2.03 Each Portfolio agrees to pay all fees and reimbursable

expenses promptly following the receipt of the respective billing notice.

Procedures applicable to advance payment by the Portfolios to the Bank of

postage for mailing information statements and/or proxies, reports and other

mailings to Investor accounts may be established from time to time by agreement

between the Portfolios and the Bank.

Article 3 Representations and Warranties of the Bank

The Bank represents and warrants to each Portfolio that:

3.01 It is a trust company duly organized and existing and in

good standing under the laws of the Commonwealth of Massachusetts.

3.02 It is duly qualified to carry on its business in the

Commonwealth of Massachusetts.

3.03 It is empowered under applicable laws and by its Charter

and By-Laws to enter into and perform this Agreement.

3.04 All requisite corporate proceedings have been taken to

authorize it to enter into and perform this Agreement.

3.05 It has and will continue to have access to the necessary

facilities, equipment and personnel to perform its duties and obligations under

this Agreement.

-4-

<PAGE>

Article 4 Representations and Warranties of the Portfolio(s)

Each Portfolio represents and warrants to the Bank that:

4.01 It is a common law trust duly organized and existing

under the laws of the State of New York.

4.02 It is empowered under applicable laws and by its

Declaration of Trust and By-Laws to enter into and perform this Agreement.

4.03 All corporate proceedings required by said Declaration of

Trust and By-Laws have been taken to authorize it to enter into and perform this

Agreement.

4.04 It is an open - end management investment company

registered under the Investment Company Act of 1940, as amended (the "1940

Act").

Article 5 Data Access and Proprietary Information

5.01 Each Portfolio acknowledges that the data bases, computer

programs, screen format, report formats, interactive design techniques, and

documentation manuals (collectively, "Proprietary Information") furnished to the

Portfolio by the Bank as part of the Portfolio's ability to access certain

Portfolio-related data ("Customer Data") maintained by the Bank on data bases

under the control and ownership of the Bank or other third party ("Data Access

Services") constitute copyrighted, trade secret, or other proprietary

information of substantial value to the Bank or other third party. In no event

shall Proprietary Information be deemed Customer Data. Each Portfolio agrees to

treat all Proprietary Information as proprietary to the Bank and further

-5-

<PAGE>

agrees that it shall not divulge any Proprietary Information to any person or

organization except as may be provided hereunder. Without limiting the

foregoing, each Portfolio agrees for itself and its employees and agents:

(a) to access Customer Data solely from

locations as may be designated in writing by the Bank

and solely in accordance with the Bank's applicable

user documentation;

(b) to refrain from copying or duplicating

in any way the Proprietary Information;

access to any portion of the Proprietary Information,

and if such access is inadvertently obtained, to

inform in a timely manner of such fact and dispose of

such information in accordance with the Bank's

instructions;

(d) to refrain from causing or allowing

third-party data required hereunder from being

retransmitted to any other computer facility or other

location, except with the prior written consent of

the Bank;
(e) that the Portfolio shall have access

only to those authorized transactions agreed upon

by the parties;

(f) to honor all reasonable written

requests made by the Bank to protect at the Bank's

expense the rights of the Bank in Proprietary

Information at

-6-

<PAGE>

common law, under federal copyright law and under

other federal or state law.

Each party shall take reasonable efforts to advise its

employees of their obligations pursuant to this Article 5. The obligations of

this Article shall survive any earlier termination of this Agreement.

5.02 If a Portfolio notifies the Bank that any of the Data

Access Services do not operate in material compliance with the most recently

issued user documentation for such services, the Bank shall use its best efforts

to promptly correct such failure. Organizations from which the Bank may obtain

certain data included in the Data Access Services are solely responsible for the

contents of such data and each Portfolio agrees to make no claim against the

Bank arising out of the contents of such third-party data, including, but not

limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS

AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS

IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT

THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED

WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

5.03 If the transactions available to the Portfolios include

the ability to originate electronic instructions to the Bank in order to (i)

effect the transfer or movement of cash or (ii) transmit Investor information or

other information (such transactions are known as "Customer Originated

Electronic Financial Instructions" or "COEFI"), then in such event the Bank

shall be

-7-

<PAGE>

entitled to rely on the validity and authenticity of such instruction without

undertaking any further inquiry as long as such instruction is undertaken in

conformity with security procedures established by the Bank from time to time.

Article 6 Indemnification

6.01 The Bank shall not be responsible for, and each Portfolio

shall indemnify and hold the Bank harmless from and against, any and all losses,

damages, costs, charges, reasonable counsel fees, payments, expenses and

liability arising out of or attributable to any claim, demand, action or suit in

connection with:

(a) All actions of the Bank or its agent or subcontractors

required to be taken pursuant to this Agreement, provided that such actions are

taken in good faith and without negligence or willful misconduct.

(b) The Portfolio's lack of good faith, negligence or willful

misconduct which arise out of the breach of any representation or warranty of

the Portfolio hereunder.

subcontractors of information, records, documents or services which (i) are

received by the Bank or its agents or subcontractors, and (ii) have been

prepared, maintained or performed by the Portfolio or any other person or firm

on behalf of the Portfolio.

(d) The reliance on, or the carrying out by the Bank or its

agents or subcontractors of any instructions or requests of the Portfolio.

-8-

<PAGE>

(e) The offer or sale of Interests in violation of any

requirement under the federal securities laws or regulations or the securities

laws or regulations of any state that such Interests be registered in such state

or in violation of any stop order or other determination or ruling by any

federal agency or any state with respect to the offer of Interests in such

state.

6.02 The Bank shall indemnify and hold each Portfolio harmless

from and against any and all losses, damages, costs, charges, reasonable counsel

fees, payments, expenses and liability arising out of or attributable to any

action or failure or omission to act by the Bank as a result of the Bank's lack

of good faith, negligence or willful misconduct.

6.03 At any time the Bank may apply to any officer of a

Portfolio for instructions, and may consult with legal counsel with respect to

any matter arising in connection with the services to be performed by the Bank

under this Agreement, and the Bank and its agents or subcontractors shall not be

liable and shall be indemnified by the applicable Portfolio for any action taken

or omitted by it in reliance upon such instructions or upon the opinion of such

counsel. The Bank, its agents and subcontractors shall be protected and

indemnified in acting upon any paper or document furnished by or on behalf of a

Portfolio, reasonably believed to be genuine and to have been signed by the

proper person or persons, or upon any instruction, information, data, records or

documents provided the Bank or its agents or subcontractors by machine readable

input, telex, CRT data entry or other similar

-9-

<PAGE>

means authorized by the Portfolio, and shall not be held to have notice of any

change of authority of any person, until receipt of written notice thereof from

the Portfolio. The Bank, its agents and subcontractors shall also be protected

and indemnified in recognizing stock certificates which are reasonably believed

to bear the proper manual or facsimile signatures of the officers of a

Portfolio, and the proper countersignature of any former transfer agent or

former registrar, or of a co-transfer agent or co-registrar.

6.04 In the event either party is unable to perform its

obligations under the terms of this Agreement because of acts of God, strikes,

equipment or transmission failure or damage reasonably beyond its control, or

other causes reasonably beyond its control, such party shall not be liable for

damages to the other for any damages resulting from such failure to perform or

otherwise from such causes, provided that the Bank shall use its best efforts to

minimize the likelihood of all damage, loss of data, delays and errors resulting

from uncontrollable events, and if such damage, loss of data, delays or errors

occur, the Bank shall use its best efforts to mitigate the effects of such

occurrence.

6.05 Neither party to this Agreement shall be liable to the

other party for consequential damages under any provision of this Agreement or

for any consequential damages arising out of any act or failure to act

hereunder.

-10-

<PAGE>

6.06 In order that the indemnification provisions contained in

this Article 6 shall apply, upon the assertion of a claim for which either party

may be required to indemnify the other, the party seeking indemnification shall

promptly notify the other party of such assertion, and shall keep the other

party advised with respect to all developments concerning such claim. The party

who may be required to indemnify shall have the option to participate with the

party seeking indemnification in the defense of such claim. The party seeking

indemnification shall in no case confess any claim or make any compromise in any

case in which the other party may be required to indemnify it except with the

other party's prior written consent.

Article 7 Standard of Care

7.01 The Bank shall at all times act in good faith and agrees

to use its best efforts within reasonable limits to insure the accuracy of all

services performed under this Agreement, but assumes no responsibility and shall

not be liable for loss or damage due to errors unless said errors are caused by

its negligence, bad faith, or willful misconduct or that of its employees.

Article 8 Covenants of the Portfolios and the Bank

8.01 Each of the Portfolios shall promptly furnish to the Bank

the following:

(a) A certified copy of the resolution of the Trustees of the

Portfolio authorizing the appointment of the Bank and the execution and delivery

of this Agreement.

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<PAGE>

(b) A copy of the Declaration of Trust and By-Laws of the

Portfolio and all amendments thereto.

8.02 The Bank hereby agrees to establish and maintain

facilities and procedures reasonably acceptable to the Portfolios for safe-

keeping of stock certificates, check forms and facsimile signature imprinting

devices, if any, and for the preparation or use, and for keeping account of,

such certificates, forms and devices. The forms and documents used for a

Portfolio or its Investors shall be acceptable to the Portfolio.

8.03 The Bank shall keep records relating to the services to

be performed hereunder, in the form and manner as it may deem advisable and as

may be reasonably acceptable to the Portfolios. To the extent required by

Section 31 of the 1940 Act and the Rules thereunder, the Bank agrees that all

such records prepared or maintained by the Bank relating to the services to be

performed by the Bank hereunder are the property of the Portfolios and will be

preserved, maintained and made available in accordance with such Section and

Rules, and will be surrendered promptly to each Portfolio on and in accordance

with its request.

8.04 The Bank and the Portfolios agree that all books,

records, information and data pertaining to the business of the other party

which are exchanged or received pursuant to the negotiation or the carrying out

of this Agreement shall remain confidential, and shall not be voluntarily

disclosed to any other person, except as may be required by law. Notice shall be

given to the other party a reasonable time in advance of any such

-12-

<PAGE>

disclosure. In addition, in the case of any request or demand for the inspection

of the Investor records of a Portfolio, the Bank will notify the Portfolio

promptly of receipt of such request or demand and request instructions from an

authorized officer of the Portfolio as to such inspection. The Portfolio will

within two business days furnish instructions to the Bank. Pending receipt of

such instructions, the Bank will not disclose such Investor records and upon

receipt the Bank will abide by such instructions. Notwithstanding any other

provision of this Agreement, in the event that (a) the Portfolio instructs the

Bank not to disclose such Investor records and the Bank has furnished the

Portfolio with an opinion of counsel that the Bank may be held liable for the

failure to disclose such Investor records, the Portfolio will indemnify the Bank

for any such liability, or (b) the Bank discloses such Investor records without

proper instructions from the Portfolio, the Bank shall indemnify and hold the

Portfolio harmless from and against any and all losses, damages, costs, charges,

reasonable counsel fees, payments, expenses and liability arising out of or

attributable to such disclosure. The provision of Section 6.06 shall govern such

indemnification.

Article 9 Termination of Agreement

9.01 This Agreement may be terminated by either party upon one

hundred twenty (120) days written notice to the other.

9.02 Should a Portfolio exercise its right to terminate,

all out-of-pocket expenses associated with the movement of records and material

will be borne by the Portfolio. Additionally, the

-13-

<PAGE>

Bank reserves the right to charge for any other reasonable expenses associated

with such termination.

Article 10 Additional Parties to Agreement

10.01 In the event that the Board of Trustees of the

Portfolio(s) organizes one or more separate New York trusts in addition to the

Portfolio executing this Agreement on the date hereof with respect to which it

desires to have the Bank render services as transfer agent under the terms

hereof, the Bank shall be so notified in writing by the officers of such trust,

and if the Bank agrees in writing to provide such services, such trust shall

become a party to this Agreement and shall be referred to as a Portfolio

hereunder.

Article 11 Assignment

11.01 Except as provided in Section 11.03 below, neither this

Agreement nor any rights or obligations hereunder may be assigned by either

party without the written consent of the other party.

11.02 This Agreement shall inure to the benefit of and be

binding upon the parties and their respective permitted successors and assigns.

11.03 The Bank may, without further consent on the part of any

Portfolio, subcontract for the performance hereof with (i) Boston Financial Data

Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as

a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of

1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly

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<PAGE>

registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS

affiliate; provided, however, that the Bank shall be as fully responsible to

the Portfolio for the acts and omissions of any subcontractor as it is for its

own acts and omissions.

Article 12 Amendment

12.01 This Agreement may be amended or modified by a written

agreement executed by both parties and authorized or approved by a resolution of

the Trustees of the Portfolio(s).

Article 13 Massachusetts Law to Apply

13.01 This Agreement shall be construed and the provisions

thereof interpreted under and in accordance with the laws of the Commonwealth

of Massachusetts.

Article 14 Merger of Agreement

14.01 This Agreement constitutes the entire agreement between

the parties hereto and supersedes any prior agreement with respect to the

subject matter hereof whether oral or written.

Article 15 Limitations of Liability of the Trustees and the Investors

15.01 A copy of the Declaration of Trust of each Portfolio is

on file at the principal business address of the Portfolio, and notice is hereby

given that this instrument is executed on behalf of the Trustees of the

Portfolio(s) as Trustees and not individually and that the obligations of this

instrument are not binding upon any of the Trustees or Investors individually

but are binding only upon the assets and property of the Portfolio(s).

-15-

<PAGE>

Article 16 Counterparts

16.01 This Agreement may be executed by the parties hereto on

any number of counterparts, and all of said counterparts taken together shall be

deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this

Agreement to be executed in their names and on their behalf by and through their

duly authorized officers, as of the day and year first above written.

THE TREASURY MONEY MARKET PORTFOLIO

BY: /s/ James B. Craver
Secretary and Treasurer

STATE STREET BANK AND TRUST COMPANY

BY: /s/ Ronald E. Logue
Executive Vice President

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<PAGE>

STATE STREET BANK AND TRUST COMPANY
SERVICE RESPONSIBILITIES*

Responsibility
Service Performed Bank Portfolio

1. Receives orders for the purchase of Interests. X

2. Hold Interests in Investor Accounts. X

3. Receive requests for withdrawals. X

4. Effect transactions 1-3 above directly
with broker-dealers. N/A

5. Pay over monies to withdrawing investors. X

6. Effect transfers of Interests. N/A

7. Prepare and transmit distributions. N/A

8. Issue Replacement Certificates. N/A

9. Reporting of abandoned property. N/A

10. Maintain records of account. X

11. Maintain and keep a current and accurate
control book for each issue of securities. X

12. Mail information statements and/or proxies. X

13. Mail Investor reports. X

14. Mail offering documents to prospective Investors. X

15. Withhold taxes on non-resident alien accounts. X

16. Prepare and file U.S. Treasury Department forms. X

17. Prepare and mail account and confirmation
statements for Investors. X

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<PAGE>

Responsibility
Service Performed Bank Portfolio

18. Provide Investor account information. X

19. Blue sky reporting. X

* Such services are more fully described in Article 1.02 (a), (b) and (c)
of the Agreement.

THE TREASURY MONEY MARKET PORTFOLIO

BY: /s/ James B. Craver
James B. Craver
Secretary and Treasurer

STATE STREET BANK AND TRUST COMPANY

BY: /s/ Ronald E. Logue
Executive Vice President

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<PAGE>

The Treasury Money Market Portfolio
The Tax Exempt Money Market Portfolio
The Tax Exempt Bond Portfolio
6 St. James Avenue
Boston, Massachusetts 02116
(617) 423-0800

The Money Market Portfolio
The U.S. Fixed Income Portfolio
The Selected U.S. Equity Portfolio
The U.S. Small Company Portfolio
The Non-U.S. Equity Portfolio
The Short Term Bond Portfolio
The U.S. Stock Portfolio
The Diversified Portfolio
P.O. Box 268, George Town
Grand Cayman, Cayman Islands, BWI
(809) 945-1824

February 1, 1993

State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 0[2]171

Ladies and Gentlemen:

Re: Transfer Agency and Service Agreement

This is to advise you that the Board of Trustees of The Treasury Money Market
Portfolio has organized the following ten additional New York trusts:

The Money Market Portfolio The Selected U.S. Equity Portfolio
The Tax Exempt Money Market Portfolio The U.S. Stock Portfolio
The Short Term Bond Portfolio The U.S. Small Company Portfolio
The U.S. Fixed Income Portfolio The Non-U.S. Equity Portfolio
The Tax Exempt Bond Portfolio The Diversified Portfolio

In accordance with Article 10 (Additional Parties to Agreement) of the Transfer
Agency and Service Agreement dated December 23, 1992 between The Treasury Money
Market Portfolio and State Street Bank and Trust Company, each of the ten
Portfolios hereby requests that you act as Transfer Agent of the Portfolio under
the terms of the agreement.

Please indicate your acceptance of the foregoing by executing two copies of this
letter agreement, returning one to the Portfolios and retaining one copy for
your records.

Very truly yours,

THE TREASURY MONEY MARKET PORTFOLIO
THE MONEY MARKET PORTFOLIO
THE TAX EXEMPT MONEY MARKET PORTFOLIO
THE SHORT TERM BOND PORTFOLIO
THE U.S. FIXED INCOME PORTFOLIO
THE TAX EXEMPT BOND PORTFOLIO
THE SELECTED U.S. EQUITY PORTFOLIO
THE U.S. STOCK PORTFOLIO
THE U.S. SMALL COMPANY PORTFOLIO
THE NON-U.S. EQUITY PORTFOLIO
THE DIVERSIFIED PORTFOLIO

By /s/ Cheri J. Baumann
Assistant Treasurer

<PAGE>

State Street Bank and Trust Company
February 1, 1993
Page 2

Agreed to this 2nd day of February,
1993

STATE STREET BANK AND TRUST COMPANY

By /s/ Ronald E. Logue
Executive Vice President

<PAGE>

The Treasury Money Market Portfolio
The Tax Exempt Money Market Portfolio
The Tax Exempt Bond Portfolio
6 St. James Avenue
Boston, Massachusetts 02116
(617) 423-0800

The Money Market Portfolio
The U.S. Fixed Income Portfolio
The Selected U.S. Equity Portfolio
The U.S. Small Company Portfolio
The Non-U.S. Equity Portfolio
The Short Term Bond Portfolio
The U.S. Stock Portfolio
The Diversified Portfolio
The Emerging Markets Equity Portfolio
The Non-U.S. Fixed Income Portfolio
P.O. Box 268, George Town
Grand Cayman, Cayman Islands, BWI
(809) 945-1824

September 27, 1993

State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 0[2]171

Ladies and Gentlemen:

Re: Transfer Agency and Service Agreement

This is to advise you that the Board of Trustees of The Treasury Money Market
Portfolio has organized the following two additional New York trusts:

The Emerging Markets Equity Portfolio The Non-U.S. Fixed Income Portfolio

In accordance with Article 10 (Additional Parties to Agreement) of the Transfer
Agency and Service Agreement dated December 23, 1992 between The Treasury Money
Market Portfolio and State Street Bank and Trust Company as amended, each of the
two Portfolios hereby requests that you act as Transfer Agent of the Portfolio
under the terms of the agreement.

Please indicate your acceptance of the foregoing by executing two copies of this
letter agreement, returning one to the Portfolios and retaining one copy for
your records.

Very truly yours,

By /s/ Cheri J. Baumann
Assistant Treasurer

<PAGE>

State Street Bank and Trust Company
September 27, 1993
Page 2

Agreed to this 27th day of September,
1993

STATE STREET BANK AND TRUST COMPANY

By /s/ Ronald E. Logue
Executive Vice President

<PAGE>

The Treasury Money Market Portfolio
The Tax Exempt Money Market Portfolio
The Tax Exempt Bond Portfolio
The New York Total Return Bond Portfolio
6 St. James Avenue
Boston, Massachusetts 02116
(617) 423-0800

The Money Market Portfolio
The U.S. Fixed Income Portfolio
The Selected U.S. Equity Portfolio
The U.S. Small Company Portfolio
The Non-U.S. Equity Portfolio
The Short Term Bond Portfolio
The U.S. Stock Portfolio
The Diversified Portfolio
The Emerging Markets Equity Portfolio
The Non-U.S. Fixed Income Portfolio
P.O. Box 268, George Town
Grand Cayman, Cayman Islands, BWI
(809) 945-1824

March 10, 1994

State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171

Ladies and Gentlemen:

Re: Transfer Agency and Service Agreement

This is to advise you that the Board of Trustees [of] has organized the
following additional New York trust: The New York Total Return Bond Portfolio
(the "Trust").

In accordance with Article 10 (Additional Parties to Agreement) of the Transfer
Agency and Service Agreement dated December 23, 1992 as amended between the
other Portfolios referenced above and State Street Bank and Trust Company, the
Trust hereby requests that you act as its Transfer Agent under the terms of the
agreement.

Please indicate your acceptance of the foregoing by executing the four originals
of this letter agreement, returning two the Portfolios and the Trust and
retaining two for your records.

Very truly yours,

By /s/ Laura R. Young
Assistant Treasurer

<PAGE>

State Street Bank and Trust Company
March 10, 1994
Page 2

Agreed to this 10th day of March,
1994

STATE STREET BANK AND TRUST COMPANY

By /s/ Ronald E. Logue
Executive Vice President

<PAGE>

The Money Market Portfolio
The U.S. Fixed Income Portfolio
The Selected U.S. Equity Portfolio
The U.S. Small Company Portfolio
The Non-U.S. Equity Portfolio
The Short Term Bond Portfolio
The U.S. Stock Portfolio
The Diversified Portfolio
The Emerging Markets Equity Portfolio
The Non-U.S. Fixed Income Portfolio
The Series Portfolio
P.O. Box 268, George Town
Grand Cayman, Cayman Islands, BWI
(809) 945-1824

July 8, 1994

State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171

Ladies and Gentlemen:

Re: Transfer Agency and Service Agreement

This is to advise you that the Board of Trustees has organized the following
additional New York trust: The Series Portfolio (the "Trust") (the Trust is
comprised initially of three separate and distinct investment portfolios--The
Asia Growth Portfolio, The European Equity Portfolio and The Japan Equity
Portfolio (each a "Series")).

In accordance with Article 10 (Additional Parties to Agreement) of the Transfer
Agency and Service Agreement dated December 23, 1992 as amended between the
other Portfolios referenced above and State Street Bank and Trust Company, the
Trust hereby requests that you act as Transfer Agent for each Series under the
terms of the agreement.

Please indicate your acceptance of the foregoing by executing the four originals
of this letter agreement, returning two the Portfolios and the Trust and
retaining two for your records.

Very truly yours,

By /s/ Laura R. Young
Assistant Treasurer

<PAGE>

State Street Bank and Trust Company
July 8, 1994
Page 2

Agreed to this 8th day of July,
1994

STATE STREET BANK AND TRUST COMPANY

By /s/ Ronald E. Logue
Executive Vice President

Schedule A
Administrative Services Fees
Portfolios listed on Exhibit I

The annual administrative services fee charged to and
payable by each Portfolio listed on Exhibit I, as amended from time to time
(the "Master Portfolios"), is equal to its proportionate share of an annual
complex-wide charge. This charge is calculated daily based on the aggregate
net assets of the Master Portfolios and in accordance with the following
annual schedule:

0.09% on the first $7 billion of the Master Portfolios'
aggregate average daily net assets; and 0.04% of the Master
Portfolios' aggregate average daily net assets in excess of
$7 billion less the complex-wide charge of the
Co-Administrator.

The portion of this charge payable by each Master Portfolio is determined by
the proportionate share that its net assets bear to the total of the net
assets of the Master Portfolios, The JPM Pierpont Funds, The JPM Institutional
Funds, The JPM Advisor Funds, JPM Series Trust and other investors in the
Master Portfolios for which Morgan provides similar services.

Approved: October 10, 1996
Effective: November 4, 1996

RMMFFAS5

<PAGE>

Exhibit I

Date of Effective
Portfolio Declaration of Trust Date

The Treasury Money Market Portfolio 11/4/92 8/1/96
The Money Market Portfolio 1/29/93 8/1/96
The Tax Exempt Money Market Portfolio 1/29/93 8/1/96
The Short Term Bond Portfolio 1/29/93 8/1/96
The U.S. Fixed Income Portfolio 1/29/93 8/1/96
The Tax Exempt Bond Portfolio 1/29/93 8/1/96
The Selected U.S. Equity Portfolio 1/29/93 8/1/96
The U.S. Small Company Portfolio 1/29/93 8/1/96
The Non-U.S. Equity Portfolio 1/29/93 8/1/96
The Diversified Portfolio 1/29/93 8/1/96
The Non-U.S. Fixed Income Portfolio 6/16/93 8/1/96
The Emerging Markets Equity Portfolio 6/16/93 8/1/96
The New York Total Return Bond Portfolio 6/16/93 8/1/96
The Series Portfolio* 6/24/94
The Asia Growth Portfolio 8/1/96
The Japan Equity Portfolio 8/1/96
The European Equity Portfolio 8/1/96
The Disciplined Equity Portfolio 12/27/96
The Global Strategic Income Portfolio 12/27/96
The International Opportunities Portfolio 12/27/96
JPM Series Trust* 8/15/96
Tax Aware Equity Fund 11/4/96
Tax Aware Disciplined Equity Fund 11/4/96
California Bond Fund 11/4/96

*In the cases of The Series Portfolio and JPM Series Trust, references to
"Portfolio" or "Fund" refer to their respective individual series as the
context requires.

The JPM Institutional Funds
6 St. James Avenue, 9th Floor
Boston, Massachusetts 02116
(617) 423-0800

June 30, 1993

The Tax Exempt Bond Portfolio
6 St. James Avenue, 9th Floor
Boston, MA 02116

Ladies and Gentlemen:

With respect to our purchase from you, for the account of The JPM
Institutional Tax Exempt Bond Fund, at the purchase price of $100, of a
beneficial interest (an "Initial Interest") in The Tax Exempt Bond Portfolio
(the "Portfolio"), we hereby advise you that we are purchasing such Initial
Interest for investment purposes without any present intention of withdrawing
or reselling.

The amount paid by the Portfolio on any decrease or withdrawal by us
of any portion of such Initial Interest will be reduced by a portion of any
unamortized organization expenses, determined by the proportion of the amount
of such Initial Interest withdrawn to the aggregate Initial Interests of all
holders of similar Initial Interests then outstanding after taking into
account any prior withdrawals of any such Initial Interest.

Very truly yours,

THE JPM INSTITUTIONAL FUNDS

/s/ James B. Craver
James B. Craver
Secretary and Treasurer

JPM104

[176]

<PAGE>

The Pierpont Funds
461 Fifth Avenue
New York, New York 10017
(212) 685-2547

June 30, 1993

The Tax Exempt Bond Portfolio
6 St. James Avenue, 9th Floor
Boston, MA 02116

Ladies and Gentlemen:

With respect to our purchase from you, for the account of The
Pierpont Tax Exempt Bond Fund, at the purchase price of $100,000, of a
beneficial interest (an "Initial Interest") in The Tax Exempt Bond Portfolio
(the "Portfolio"), we hereby advise you that we are purchasing such Initial
Interest for investment purposes without any present intention of withdrawing
or reselling.

Very truly yours,

THE PIERPONT FUNDS

/s/ Carol R. Schepp
Carol R. Schepp
Secretary
JPM104

[177]

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the report on
Form N-SAR dated August 31, 1996 for The Tax Exempt Bond Portfolio and is
qualified in its entirety by reference to such report.
</LEGEND>
<CIK> 0000909010
<NAME> THE TAX EXEMPT BOND PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 474218
<INVESTMENTS-AT-VALUE> 487527
<RECEIVABLES> 5890
<ASSETS-OTHER> 18
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 493435
<PAYABLE-FOR-SECURITIES> 1803
<SENIOR-LONG-TERM-DEBT> 248
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 2051
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 491384
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23902
<OTHER-INCOME> 0
<EXPENSES-NET> 1704
<NET-INVESTMENT-INCOME> 22198
<REALIZED-GAINS-CURRENT> 606
<APPREC-INCREASE-CURRENT> (4888)
<NET-CHANGE-FROM-OPS> 17916
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1354
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1704
<AVERAGE-NET-ASSETS> 450991
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .380
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>