CHUBB SERIES TRUST, 497, 1997-01-02

CHUBB SERIES TRUST
497, 1997-01-02

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JPM SERIES TRUST II
Cross-Reference Sheet Pursuant to Rule 495(a)

Items in JPM Treasury Money JPM Bond
Part A of Market Portfolio Portfolio
FORM N-1A CAPTION PAGE PAGE
1 Cover Cover Page Cover Page
2 Synopsis 5 5
3 Condensed Financial Information 5 5
4 General Description of Registrant 7,8 7,8
5 Management of the Fund 26 26
5(a) Management's Discussion of Fund's
Performance * *
6 Capital Stock and Other Securities 30 30
7 Purchase of Securities Being Offered 32 32
8 Redemption or Repurchase 32 32
9 Pending Legal Proceedings * *

Items in JPM Equity JPM Small
Part A of Portfolio Company Portfolio
FORM N-1A CAPTION PAGE PAGE
1 Cover Cover Page Cover Page
2 Synopsis 5 5
3 Condensed Financial Information 5 5
4 General Description of Registrant 7,8 7,8
5 Management of the Fund 26 26
5(a) Management's Discussion of Fund's
Performance * *
6 Capital Stock and Other Securities 30 30
7 Purchase of Securities Being Offered 32 32
8 Redemption or Repurchase 32 32
9 Pending Legal Proceedings * *

Items in JPM International Equity
Part A of Portfolio
FORM N-1A CAPTION PAGE
1 Cover Cover Page
2 Synopsis 5
3 Condensed Financial Information 5
4 General Description of Registrant 7,8
5 Management of the Fund 26
5(a) Management's Discussion of Fund's
Performance *
6 Capital Stock and Other Securities 30
7 Purchase of Securities Being Offered 32
8 Redemption or Repurchase 32
9 Pending Legal Proceedings *

Items in
Part B of
FORM N-1A

10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-4
14 Management of the Fund B-22, B-26
15 Control Persons and Principal Holders
of Securities B-31
16 Investment Advisory and Other Services B-26
17 Brokerage Allocation B-29
18 Capital Stock and Other Securities B-31

JPM SERIES TRUST II
Cross-Reference Sheet Pursuant to Rule 495(a)

Items in
Part B of
FORM N-1A CAPTION PAGE

19 Purchase, Redemption and Pricing of
Securities Being Offered B-32, B-33
20 Tax Status B-34
21 Underwriters *
22 Calculations of Performance Data B-36
23 Financial Statements B-39

Items in
Part C of
FORM N-1A

24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-3
26 Number of Holders of Securities C-4
27 Indemnification C-4
28 Business and Other Connections of
Investment Adviser C-6
29 Principal Underwriters C-7
30 Location of Accounts and Records C-7
31 Management Services C-8
32 Undertakings C-8
- ---------
*Omitted since answer is negative or inapplicable.
<PAGE>

- ----------------------------------------------------------------------------
PROSPECTUS
JPM SERIES TRUST II
JPM TREASURY MONEY MARKET PORTFOLIO
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-521-5411
- -----------------------------------------------------------------------------

JPM Treasury Money Market Portfolio (the "Portfolio") is a separate
diversified portfolio of JPM Series Trust II, an open-end management investment
company organized as a Delaware Business Trust (the "Trust"). The Portfolio
seeks to provide current income, maintain a high level of liquidity and preserve
capital.

The Portfolio is advised by J.P. Morgan Investment Management, Inc.
("Morgan" or the "Adviser").

Shares of the Portfolio presently are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies to
fund variable annuity contracts and variable life insurance policies and
qualified pension and retirement plans outside the separate account context. For
offers to separate accounts, this Prospectus should be read in conjunction with
the prospectus of the separate accounts of the specific insurance product which
should precede or accompany this Prospectus.

This Prospectus sets forth concisely information about the Trust and the
Portfolio that a prospective investor should know before investing. This
Prospectus should be retained for future reference. A Statement of Additional
Information for the Trust, dated January 1, 1997 (as supplemented from time to
time), has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request from the Trust's Distributor,
Funds Distributor, Inc., 60 State Street, Suite 1300, Boston, Massachusetts
02109, Attention: JPM Series Trust II, or by calling 1-800-221-7930. Inquiries
about the Trust should be directed to the Trust at the same address or telephone
number.

AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE
UNITED STATES GOVERNMENT. INVESTMENTS IN THE PORTFOLIO ARE NOT BANK DEPOSITS AND
ARE NOT INSURED BY, GUARANTEED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE
FDIC OR ANY BANK. AN INVESTMENT IN THE PORTFOLIO IS SUBJECT TO RISK THAT MAY
CAUSE THE VALUE OF THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS
REDEEMED, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED
BY THE INVESTOR.

==============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
==============================================================================

The date of this Prospectus is January 1, 1997.

<PAGE>
TABLE OF CONTENTS
PAGE

ANNUAL OPERATING EXPENSES...................................................
FINANCIAL HIGHLIGHTS........................................................
YIELD INFORMATION...........................................................
THE PORTFOLIO...............................................................
INVESTMENT OBJECTIVE AND POLICIES...........................................
Investment Objective.....................................................
Investment Policies......................................................
Risk Factors.............................................................
ADDITIONAL INVESTMENT INFORMATION...........................................
When-Issued and Delayed Delivery Securities..............................
Repurchase Agreements....................................................
Loans and Portfolio Securities...........................................
Reverse Repurchase Agreements............................................
Illiquid Investments; Privately Placed and Other
Unregistered Securities..................................................
INVESTMENT RESTRICTIONS.....................................................
MANAGEMENT OF THE TRUST AND PORTFOLIO.......................................
CAPITAL SHARES..............................................................
TAXES AND DIVIDENDS.........................................................
OFFERING AND REDEMPTION OF SHARES...........................................
OTHER INFORMATION...........................................................

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THE PROSPECTUS.

<PAGE>
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees..................................................... .20%
Other Expenses...................................................... .40%
Total Portfolio Operating Expenses.................................. .60%

Example:

An investor would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period:

1 Year $ 6
3 Years $19
5 Years $33
10 Years $75

- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES OF THE PORTFOLIO AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- -----------------------------------------------------------------------------

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The information in the foregoing table has been
restated to reflect an agreement by Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), an affiliate of Morgan, to reimburse the Trust to the
extent certain expenses exceed in any fiscal year .60% of the Portfolio's
average daily net assets. The information in the foregoing table does not
reflect deduction of account fees and charges to separate accounts or related
insurance policies that may be imposed by participating insurance companies. For
a further description of the various costs and expenses incurred in the
operation of the Portfolio, as well as expense reimbursement or waiver
arrangements, see "Management of the Trust and Portfolio."

FINANCIAL HIGHLIGHTS

The following table includes selected data for a share of capital stock
outstanding for the Portfolio throughout the period from January 3, 1995
(commencement of operations) to December 31, 1995 (audited) and the six month
period ended June 30, 1996 (unaudited).1 The related financial statements and
report of Ernst & Young LLP, independent auditors, for the period ended December
31, 1995 are incorporated by reference into the Statement of Additional
Information and are available upon request and without charge by calling
1-800-221-7930.

January 3, Six Month Period
1995 Ended
through June 30, 1996
DECEMBER 31, 1995 (UNAUDITED)
<S> <C> <C>

Net asset value, beginning $10.00 $ 10.06
of period
INCOME FROM INVESTMENT
OPERATIONS 0.45 0.22
Net investment income
Net realized and unrealized gains
(losses) on securities & foreign currency 0.06 0.01
Total from investment operations 0.51 0.23
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.45)
Total distributions (0.45) 0.00
------ -----
Net asset value, end of period $10.06 $10.29
======= ======
Total Return2 5.09% 2.25%
Ratios to average net assets:
(Annualized) 0.60% 0.60%
Expenses3
Net investment income 4.95% 4.56%
Portfolio turnover rate N/A N/A
Average Commission Rate Paid N/A N/A
Net assets, at end of period $1,272,932 $1,283,398

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

1 From January 3, 1995 (commencement of operations) to
December 31, 1996, Chubb Investment Advisory
Corporation ("Chubb Investment Advisory"), a
wholly-owned subsidiary of Chubb Life Insurance Company of
America ("Chubb Life"), served as the Portfolio's
investment manager, and Morgan Guaranty served as the
Portfolio's sub-investment adviser. Effective
January 1, 1997, Morgan began serving as the
Portfolio's investment adviser. See "OTHER
INFORMATION."

2 Total return assumes reinvestment of all dividends
during the period and does not reflect deduction of
account fees and charges to separate accounts or
related insurance policies, which, if reflected,
would reduce the Portfolio's total return for the
period indicated. Investment returns and principal
values will fluctuate and shares, when redeemed, may
be worth more or less than their original cost.
Total returns for periods of less than one year have
not been annualized.

3 All related party fees have been waived and all other
expenses of the Portfolio have been assumed in part
for 1996 and 1995 by Chubb Life and Morgan Guaranty.
Had the fees not been waived and expenses not been
assumed, the ratios of the Portfolio's expenses to
average net assets would have been 2.28% in 1996 and
2.77% in 1995.
</TABLE>

YIELD INFORMATION

From time to time the Trust may advertise the Portfolio's yield, which
represents the Portfolio's investment income, less expenses, expressed as a
percentage of assets on an annualized basis for a seven-day period. The yield is
expressed as both a simple annualized yield and a compounded effective yield.
These figures are based on historical earnings and are not intended to indicate
future performance. Portfolio shares presently are offered only to variable
annuity and variable life insurance separate accounts established by affiliated
and unaffiliated life insurance companies ("Participating Insurance Companies")
to fund variable annuity contracts ("VA contracts") and variable life insurance
policies ("VLI policies" and, together with VA contracts, "Policies") and
qualified pension and retirement plans outside the separate account context.
None of these performance figures reflect fees and charges imposed by
Participating Insurance Companies, which fees and charges will reduce the yield
and total return to Policy owners; therefore, these performance figures may be
of limited use for comparative purposes. Policy owners should consult the
prospectus for such Policy.

THE PORTFOLIO

The Portfolio is offered as a funding vehicle for Policies to be offered by
the Participating Insurance Companies. The Policies are described in the
separate prospectuses and statements of additional information issued by the
Participating Insurance Companies over which the Trust assumes no
responsibility. Portfolio shares also are offered to qualified pension and
retirement plans outside of the separate account context (including, without
limitation, those trusts, plans, accounts, contracts or annuities described in
Sections 401(a), 403(a), 403(b), 408(a), 408(b), 408(k), 414(d), 457(b),
501(c)(18) of the Internal Revenue Code of 1986, as amended (the "Code"), and
any other trust, plan, account, contract or annuity that is determined to be
within the scope of Treasury Regulation ss.1.817.5(f)(3)(iii)) ("Eligible Plans"
or "Plans"). Differences in tax treatment or other considerations may cause the
interests of Policy owners and Eligible Plan participants to conflict, although
the Trust currently does not foresee any disadvantages to Policy owners or
Eligible Plan participants arising therefrom. Nevertheless, the Trust's Board of
Trustees (the "Board") intends to monitor events in order to identify any
material conflicts which may arise and to determine what action, if any, should
be taken in response thereto.

The Trust currently consists of five portfolios: JPM Treasury Money Market
Portfolio, JPM Bond Portfolio, JPM Equity Portfolio, JPM Small Company Portfolio
and JPM International Equity Portfolio. In the future, the Trust may add or
delete portfolios. By this Prospectus, shares of JPM Treasury Money Market
Portfolio are being offered.

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE: The Portfolio's investment objective is to provide
current income, maintain a high level of liquidity, and preserve capital. The
Portfolio's investment objective, and certain investment restrictions discussed
in the Statement of Additional Information, may be changed only with the
approval of the Portfolio's shareholders. The investment policies of the
Portfolio, used in furtherance of the Portfolio's objective, may be changed by
the Board without the approval of the Portfolio's shareholders.

The Portfolio seeks to achieve its investment objective by investing in
direct obligations of the United States (U.S.) Treasury and engaging in
repurchase agreement transactions with respect to those obligations. The
Portfolio maintains a dollar-weighted average portfolio maturity of not more
than 90 days and invests in Treasury Securities (as defined below) which have
effective maturities of not more than thirteen months.

INVESTMENT POLICIES: Treasury Securities. The Portfolio will invest in
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 of America
("Treasury Securities"). Each such obligation must have a remaining maturity of
397 days or less at the time of purchase by the Portfolio. Treasury Bills have
initial maturities of one year or less; Treasury Notes have initial maturities
of one to ten years; and Treasury Bonds generally have initial maturities of
greater than ten years. The Portfolio will not invest in obligations of U.S.
Government Agencies ("U.S. Government Agency Obligations").

The Portfolio also may purchase Treasury Securities on a when-issued or
delayed delivery basis, loan its portfolio securities and may engage in
repurchase and reverse repurchase agreement transactions involving Treasury
Securities. For a discussion of these transactions, see "ADDITIONAL INVESTMENT
INFORMATION."

RISK FACTORS: Obligations of the U.S. Treasury are guaranteed by the U.S.
Government as to the timely payment of principal and interest, but the market
value of such obligations is not guaranteed and may rise and fall in response to
changes in interest rates. Neither the shares of the Trust nor the interests in
the Portfolio are guaranteed or insured by the U.S. Government.

ADDITIONAL INVESTMENT INFORMATION

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 no interest or income 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 of the Trust (the "Custodian") a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. For
more information concerning the Custodian for the Trust, see "INVESTMENT
ADVISORY AND OTHER SERVICES" in the Statement of Additional Information. 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 Board. The Portfolio will only enter into repurchase
agreements involving U.S. Treasury securities. 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
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. 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 five 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 is for the
account of the Portfolio and its respective shareholders. 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 affiliate of the
Trust, the Adviser or Distributor, 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. It
also may be viewed as the borrowing of money by the Portfolio and, therefore, is
a form of leverage. Leverage may cause any gains or losses of the Portfolio to
be magnified.

Illiquid Investments, Privately Placed and Other Unregistered Securities.
Subject to the limitations described below, the Portfolio may acquire
investments that are illiquid or have limited liquidity, such as investments
that are not registered under the Securities Act of 1933, as amended (the "1933
Act"), and cannot be offered for public sale in the U.S. 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.

Acquisitions of illiquid investments by the Portfolio is subject to the
following non-fundamental policy. The Portfolio may not acquire any illiquid
securities if, as a result thereof, more than 10% of the market value of the
Portfolio's total assets would be in illiquid investments. The Portfolio also
may 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 Adviser and approved by the
Trustees. The Trustees will monitor the Adviser's implementation of these
guidelines on a periodic basis.

INVESTMENT RESTRICTIONS

Investments of the Portfolio are further restricted by certain policies
that may not be changed without the approval of the holders of the Portfolio's
outstanding shares. See "INVESTMENT RESTRICTIONS" in the Statement of Additional
Information.

MANAGEMENT OF THE TRUST AND PORTFOLIO

The Board is responsible for the administration of the affairs of the
Trust. Pursuant to the Declaration of Trust for the Trust, the Trustees of the
Trust decide upon matters of general policy and review the actions of the
Adviser and other service providers.

The Trust's investment adviser is Morgan, a registered investment adviser
which maintains its principal office at 522 Fifth Avenue, New York, New York
10036. Morgan 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 Morgan and its
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. As of September 30, 1996, J.P. Morgan
and its subsidiaries had total combined assets under management of approximately
$197 billion, of which Morgan advises over $167 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 adviser to national governments. The firm,
through its predecessor firms, has been in business for over a century and has
been managing investments since 1913.

Morgan supervises and assists in the overall management of the Trust's
affairs under an Investment Advisory Agreement with the Trust. Subject to the
supervision of the Trustees, Morgan makes the Portfolio's day-to-day investment
decisions, arranges for the execution of portfolio transactions and generally
manages the Portfolio's investments.

As compensation for Morgan's services under the Investment Advisory
Agreement, the Trust has agreed to pay Morgan a monthly fee at the annual rate
of .20% of the value of the Portfolio's average daily net assets.

Under the terms of an Administrative Services Agreement, Morgan Guaranty
provides or arranges for the provision of certain financial and administrative
services and oversees fund accounting for the Trust, including services related
to taxes, financial statements, calculation of Portfolio performance data,
oversight of service providers, certain regulatory and Board matters, and
shareholder services. Morgan Guaranty, a wholly-owned subsidiary of J.P. Morgan,
is a New York trust company which conducts a general banking and trust business
and maintains its principal office at 60 Wall Street, New York, New York 10260.

In addition, Morgan Guaranty is responsible for reimbursing the Trust for
certain usual and customary expenses incurred by the Trust including, without
limitation, transfer, registrar and dividend disbursing costs, custody fees,
legal and accounting expenses, fees of the Trust's co-administrator, insurance
premiums, compensation and expenses of the Trust's Trustees, expenses of
printing and mailing reports, notices and proxies to shareholders, and
registration fees under federal or state securities laws. The Trust will pay
these expenses directly and such amounts will be deducted from the fees payable
to Morgan Guaranty under the Administrative Services Agreement as set forth
below. If such amounts are more than the amount of Morgan Guaranty's fees under
the Administrative Services Agreement, Morgan Guaranty will reimburse the Trust
for such excess amounts.

The Trust pays all extraordinary expenses not incurred in the ordinary
course of the Trust's business including, but not limited to, litigation and
indemnification expenses; interest charges; material increases in Trust expenses
due to occurrences such as significant increases in the fee schedules of the
custodian or the transfer agent or a significant decrease in the Trust's asset
level due to changes in tax or other laws or regulations; or other such
extraordinary occurrences outside of the ordinary course of the Trust's
business.

As compensation for Morgan Guaranty's services under the Administrative
Services Agreement, the Trust has agreed to pay Morgan Guaranty a monthly fee at
the annual rate of .40% of the value of the Portfolio's average daily net
assets.

Under the terms of the Administrative Services Agreement, Morgan Guaranty
may delegate one or more of its responsibilities to other entities at Morgan
Guaranty's expense.

Morgan Guaranty or its affiliates may pay from its own assets Participating
Insurance Companies for providing certain administrative and account-related
services to owners of Policies for which Portfolio shares are the investment
vehicle.

From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory served as the Portfolio's investment manager and
Morgan Guaranty served as sub-investment adviser. The compensation to Morgan
Guaranty, as sub-investment adviser, was paid directly from the investment
management fees paid by the Trust to Chubb Investment Advisory. For the period
January 3, 1995 (commencement of operations) through December 31, 1995, all
investment management fees payable by the Portfolio to Chubb Investment Advisory
totaled .40% of the Portfolio's average daily net assets. For the period January
3, 1995 through December 31, 1995, sub-investment advisory fees payable by Chubb
Investment Advisory to Morgan Guaranty totaled .20% of the Portfolio's average
daily net assets. Because a portion of the Portfolio's fees and expenses were
reimbursed, the ratio of the Portfolio's operating expenses to average net
assets for such period was .60%. Had a portion of the Portfolio's fees and
expenses not been reimbursed, the ratio of the Portfolio's operating expenses to
average net assets for such period would have been 2.77%.

The Trust's distributor and co-administrator is Funds Distributor, Inc.
("FDI"), located at 60 State Street, Suite 1300, Boston, Massachusetts 02109.
Under a Co-Administration Agreement with the Trust, FDI is responsible for: (i)
providing office space, equipment and clerical personnel for maintaining the
organization and books and records of the Trust; (ii) providing officers for the
Trust; (iii) preparing and filing documents required in connection with the
Trust's state securities law registrations; (iv) reviewing and filing Trust
marketing and sales literature; (v) filing regulatory documents and mailing
communications to Trustees and investors; and (vi) maintaining related books and
records.

FDI is a wholly-owned indirect subsidiary of Boston Institutional Group,
Inc. FDI currently provides administration and distribution services for a
number of other registered investment companies.

State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101, acts as the Trust's custodian and transfer agent and
dividend paying agent and keeps the books of account for the Trust.

For more information concerning the payment of expenses of the Trust, see
"INVESTMENT ADVISORY AND OTHER SERVICES" in the Statement of Additional
Information.

CAPITAL SHARES

Each Portfolio share is entitled to one vote on all matters submitted to a
vote of all shareholders of the Trust, and fractional shares are entitled to a
corresponding fractional vote. Portfolio shares will be voted separately from
shares of the Trust's other portfolios on matters affecting only the Portfolio,
including approval of the Investment Advisory Agreement, and changes in
fundamental investment policies of the Portfolio. The assets of the Portfolio
are charged with the liabilities of the Portfolio and a proportionate share of
the general liabilities of the Trust. All shares may be redeemed at any time.

As a Delaware Business Trust, the Trust is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the Investment Company Act of 1940, as amended (the "1940 Act"); (ii) changing
fundamental investment objectives and restrictions of the Portfolio; and (iii)
filling vacancies on the Board in the event that less than a majority of the
Trustees were elected by shareholders. The Trust expects that there will be no
meetings of shareholders for the purpose of electing trustees unless and until
such time as less than a majority of the trustees holding office have been
elected by shareholders. At such time, the trustees then in office will call a
shareholder meeting for the election of trustees. In addition, holders of record
of not less than two-thirds of the outstanding shares of the Trust may remove a
Trustee from office by a vote cast in person or by proxy at a shareholder
meeting called for that purpose at the request of holders of 10% or more of the
outstanding shares of the Trust. The Trust has the obligation to assist in any
such shareholder communications. Except as set forth above, Trustees will
continue in office and may appoint successor Trustees.

In accordance with current law, the Trust anticipates that Portfolio shares
held in a separate account which are attributable to Policies will be voted by
the Participating Insurance Company in accordance with instructions received
from the owners of Policies. The Trust also anticipates that the shares held by
the Participating Insurance Company, including shares for which no voting
instructions have been received, shares held in the separate account
representing charges imposed by the Participating Insurance Company against the
separate account and shares held by the Participating Insurance Company that are
not otherwise attributable to Policies, also will be voted by the Participating
Insurance Company in proportion to instructions received from the owners of
Policies. For further information on voting rights, Policy owners should consult
the applicable prospectus of the separate account of the Participating Insurance
Company. Under current law, Eligible Plans are not required to provide Plan
participants with the right to give voting instructions. For information on
voting rights, Plan participants should consult their Plan's administrator or
trustee.

TAXES AND DIVIDENDS

The Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Code. It is the Trust's policy to comply with the provisions
of the Code regarding distribution of investment income. Under those provisions,
the Portfolio will not be subject to federal income tax on that portion of its
ordinary income and net capital gains distributed to shareholders.

The Trust expects that the Portfolio will declare and distribute by the end
of each calendar year all or substantially all ordinary income and net capital
gains, if any, from the sale of investments. Failure to distribute substantially
all ordinary and net capital gains, as described, may subject the Trust to an
excise tax.

Dividends from ordinary income will be declared and distributed at least
once each year. Ordinary income of the Portfolio is the investment company
taxable income as defined in Section 852(b) of the Code determined partly (1) by
excluding the amount of net capital gain, if any, and (2) with allowance of the
deduction for dividends paid. All dividends and distributions will be
automatically reinvested in additional Portfolio shares with respect to which
dividends have been declared, at net asset value, as of the ex-dividend date of
such dividends.

Section 817(h) of the Code and regulations thereunder set standards for
diversification of the investments underlying Policies in order for the Policies
to be treated as life insurance. These requirements, which are in addition to
diversification requirements applicable to the Portfolio under Subchapter M and
the 1940 Act, may affect the composition of the Portfolio's investments. Since
the shares of the Trust are currently sold to segregated asset accounts
underlying such Policies, the Trust intends to comply with the diversification
requirements as set forth in the regulations.

The Secretary of the Treasury may in the future issue additional
regulations or revenue rulings that will prescribe the circumstances in which a
policy owner's control of the investments of a separate account may cause the
policy owner, rather than the insurance company, to be treated as the owner of
assets of the separate account. Failure to comply with Section 817(h) of the
Code or any regulation thereunder, or with any regulations or revenue rulings on
policy owner control, if promulgated, would cause earnings regarding a policy
owner's interest in the separate account to be includable in the policy owner's
gross income in the year earned.

Dividends paid by the Trust to Eligible Plans ordinarily will not be
subject to taxation until the proceeds are distributed from the Plan. The Trust
will not report dividends paid to Plans to the Internal Revenue Service ("IRS").
Generally, distributions from Eligible Plans, except those representing returns
of non-deductible contributions thereto, will be taxable as ordinary income and,
if made prior to the time the participant reaches age 59-1/2, generally will be
subject to an additional tax equal to 10% of the taxable portion of the
distribution. If the distribution from an Eligible Plan (other than certain
governmental or church plans) for any taxable year following the year in which
the participant reaches age 70-1/2 is less than the "minimum required
distribution" for that taxable year, an excise tax equal to 50% of the
deficiency may be imposed by the IRS. The administrator, trustee or custodian of
such a Plan will be responsible for reporting distributions from the Plan to the
IRS. Participants in Eligible Plans will receive a disclosure statement
describing the consequences of a distribution from the Plan from the
administrator, trustee or custodian of the Plan prior to receiving the
distribution. Moreover, certain contributions to an Eligible Plan in excess of
the amounts permitted by law may be subject to an excise tax.

OFFERING AND REDEMPTION OF SHARES

Portfolio shares are currently offered only to separate accounts of
Participating Insurance Companies to which premiums have been allocated by
Policy owners and Eligible Plans. Shares are sold and redeemed at their net
asset value as next determined following receipt of an order or request by the
Trust or its agent. Policy owners should consult the applicable prospectus of
the separate account of the Participating Insurance Company and Plan
participants should consult the Plan's administrator or trustee for more
information on the purchase or redemption of Portfolio shares.

Should any conflict between VA contract holders, VLI policy holders and/or
Plan participants arise which would require that a substantial amount of the
Portfolio's net assets be withdrawn, orderly portfolio management could be
disrupted to the potential detriment of such contract and policy holders and/or
Plan participants.

Distributions from Eligible Plans, except distributions representing
returns of non-deductible contributions to the Plan, generally are taxable
income to the participant. Distributions from a Plan to a participant prior to
the time the participant reaches age 59-1/2 or becomes permanently disabled may
subject the participant to an additional 10% penalty tax imposed by the IRS.
Participants should consult their tax advisers concerning the timing and
consequences of distributions from an Eligible Plan.

OTHER INFORMATION

At a Special Meeting of Shareholders of the Trust held on December 12,
1996, the resignation of Chubb Investment Advisory as the Portfolio's investment
manager was accepted and Morgan was engaged to serve, effective January 1, 1997,
as the Portfolio's investment adviser pursuant to the Investment Advisory
Agreement. The Trust was organized on October 28, 1993. Prior to January 1,
1997, the Trust's name was The Chubb Series Trust and the Portfolio's name was
The Resolute Treasury Money Market Portfolio.

<PAGE>

- ---------------------------------------------------------------------------
PROSPECTUS
JPM SERIES TRUST II
JPM BOND PORTFOLIO
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-521-5411
- ------------------------------------------------------------------------------

JPM Bond Portfolio (the "Portfolio") is a separate diversified portfolio of
JPM Series Trust, an open-end management investment company organized as a
Delaware Business Trust (the "Trust"). The Portfolio seeks to provide a high
total return consistent with moderate risk of capital and maintenance of
liquidity.

The Portfolio is advised by J.P. Morgan Investment Management, Inc.
("Morgan" or the "Adviser").

INVESTMENTS IN THE PORTFOLIO ARE NOT BANK DEPOSITS AND ARE NOT INSURED BY,
GUARANTEED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE FDIC OR ANY BANK.
AN INVESTMENT IN THE PORTFOLIO IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF
THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED, THE VALUE MAY
BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE INVESTOR.

==============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
=============================================================================

The date of this Prospectus is January 1, 1997.

<PAGE>

TABLE OF CONTENTS
PAGE

ANNUAL OPERATING EXPENSES.................................................
FINANCIAL HIGHLIGHTS......................................................
PERFORMANCE AND YIELD INFORMATION.........................................
THE PORTFOLIO.............................................................
INVESTMENT OBJECTIVE AND POLICIES.........................................
Investment Objective..................................................
Investment Policies...................................................
Risk Factors..........................................................
ADDITIONAL INVESTMENT INFORMATION.........................................
Convertible Securities................................................
When-Issued and Delayed Delivery Securities...........................
Repurchase Agreements.................................................
Loans and Portfolio Securities........................................
Reverse Repurchase Agreements.........................................
Mortgage Dollar Roll Transactions.....................................
Foreign Investment Information........................................
Foreign Currency Exchange Transactions................................
Illiquid Investments; Privately Placed and Other
Unregistered Securities.........................................
Futures and Options Transactions......................................
Money Market Instruments..............................................
PORTFOLIO TURNOVER........................................................
INVESTMENT RESTRICTIONS...................................................
MANAGEMENT OF THE TRUST AND PORTFOLIO.....................................
CAPITAL SHARES............................................................
TAXES AND DIVIDENDS.......................................................
OFFERING AND REDEMPTION OF SHARES.........................................
OTHER INFORMATION.........................................................
APPENDIX..................................................................

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees.......................................... .30%
Other Expenses........................................... .45%
Total Portfolio Operating Expenses....................... .75%

Example:

An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end of each time
period:

1 Year $ 8
3 Years $24
5 Years $42
10 Years $93

- --------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
PAST OR FUTURE EXPENSES OF THE PORTFOLIO AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.

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

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The information in the foregoing table has been
restated to reflect an agreement by Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), an affiliate of Morgan, to reimburse the Trust to the
extent certain expenses exceed in any fiscal year .75% of the Portfolio's
average daily net assets. The information in the foregoing table does not
reflect deduction of account fees and charges to separate accounts or related
insurance policies that may be imposed by participating insurance companies. For
a further description of the various costs and expenses incurred in the
operation of the Portfolio, as well as expense reimbursement or waiver
arrangements, see "Management of the Trust and Portfolio."

FINANCIAL HIGHLIGHTS

January 3, Six Month Period
1995 through Ended
December 31, June 30, 1996
1995 (Unaudited)
<S> <C> <C>

Net asset value, beginning of period $10.00 $10.91
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.58 0.31
Net realized and unrealized gains (losses) on
securities & foreign currency 1.11 (0.58)
Total from investment operations 1.69 (0.27)
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.58)
Distributions from net capital gains (0.20) (0.01)
--------- -------
Total distributions (0.78) (0.01)
--------- -------
Net asset value, end of period $10.91 $ 10.63
=========== =========
Total Return2 16.85% (2.37%)
Ratios to average net assets:
(Annualized)
Expenses3 0.75% 0.75%
Net investment income 6.00% 5.87%
Portfolio turnover rate 238.96% 127.90%
Average Commission Rate Paid N/A N/A
Net assets, at end of period $1,416,694 $1,544,150
============ =============
- -------------------------------

1 From January 3, 1995 (commencement of operations) to
December 31, 1996, Chubb Investment Advisory Corporation
("Chubb Investment Advisory"), a wholly-owned subsidiary
of Chubb Life Insurance Company of America ("Chubb Life"),
served as the Portfolio's investment manager, and Morgan
Guaranty served as the Portfolio's sub-investment adviser.
Effective January 1, 1997, Morgan began serving as the
Portfolio's investment adviser. See "OTHER INFORMATION."

2 Total return assumes reinvestment of all dividends during
the period and does not reflect deduction of account fees
and charges to separate accounts or related insurance
policies, which, if reflected, would reduce the Portfolio's
total return for the period indicated. Investment returns
and principal values will fluctuate and shares, when
redeemed, may be worth more or less than their original
cost. Total returns for periods of less than one year have
not been annualized.

3 All related party fees have been waived and all other expenses of the
Portfolio have been assumed in part for 1996 and 1995 by Chubb Life and
Morgan Guaranty. Had the fees not been waived and expenses not been
assumed, the ratios of the Portfolio's expenses to average net assets
would have been 2.45% in 1996 and 2.90% in 1995.
</TABLE>

PERFORMANCE AND YIELD INFORMATION

From time to time the Trust may advertise the yield and/or the average
annual total return of the Portfolio. These figures are based on historical
earnings and are not intended to indicate future performance. Portfolio shares
presently are offered only to variable annuity and variable life insurance
separate accounts established by affiliated and unaffiliated life insurance
companies ("Participating Insurance Companies") to fund variable annuity
contracts ("VA contracts") and variable life insurance policies ("VLI policies"
and, together with VA contracts, "Policies") and qualified pension and
retirement plans outside the separate account context. None of these performance
figures reflect fees and charges imposed by Participating Insurance Companies,
which fees and charges will reduce the yield and total return to Policy owners;
therefore, these performance figures may be of limited use for comparative
purposes. Policy owners should consult the prospectus for such Policy.

The Portfolio's yield is calculated by dividing the Portfolio's net
investment income per share during a recent 30-day period by maximum offering
price per share (which is its net asset value) on the last day of the period.

The Portfolio's average annual total return is determined by computing the
average annual percentage change in value of a $10,000 investment, made at the
maximum public offering price (which is net asset value) for certain specified
periods. This computation assumes reinvestment of all dividends and
distributions.

Set forth below is historical performance information for the Portfolio and
for an appropriate securities index with respect to the Portfolio. In addition,
set forth below is hypothetical performance information derived from historical
composite performance of all Private Accounts managed by Morgan which have
investment objectives, policies and strategies substantially similar to those of
the Portfolio and, thus, is deemed relevant to Portfolio investors. THE
HYPOTHETICAL PERFORMANCE INFORMATION OF THE PRIVATE ACCOUNTS OF THE ACTIVE FIXED
INCOME COMPOSITE DOES NOT REPRESENT THE HISTORICAL PERFORMANCE OF THE PORTFOLIO
AND SHOULD NOT BE INTERPRETED AS INDICATIVE OF THE FUTURE PERFORMANCE OF THE
PORTFOLIO. Moreover, the Private Accounts are not registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and, therefore, are
not subject to certain investment restrictions, diversification requirements and
other restrictions that are imposed by the 1940 Act and the Internal Revenue
Service, which, if imposed, might have adversely affected the performance of the
Private Accounts. In addition, the Private Accounts may include a higher
allocation of investments in private placements of corporate and
mortgage-related securities than the Portfolio.

Average Annual Total Return

5 Years or 10 Years or
1 YEAR SINCE SINCE
INCEPTION INCEPTION
<S> <C> <C> <C>

JPM Bond Portfolio 3.68% 9.24% N/A
Active Fixed Income 18.38% 9.46% 9.75%
Composite 18.55% 9.57% 9.69%
Salomon Brothers Broad
Investment Grade Bond
Index**

- ---------------
* Commenced operations January 3, 1995.
** The Salomon Brothers Broad Investment Grade Bond Index is a market
capitalization-weighted index that includes U.S. Treasury, Government-sponsored,
mortgage and investment grade fixed rate corporate fixed income securities with
a maturity of one year or longer and a minimum of $50 million amount outstanding
at the time of inclusion in the Index.
</TABLE>

THE PORTFOLIO

Portfolio shares are both offered and redeemed at their net asset value
without the addition of any sales load or redemption charge. See "OFFERING AND
REDEMPTION OF SHARES."

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE: The Portfolio's investment objective is to provide a
high total return consistent with moderate risk of capital and maintenance of
liquidity. Total return will consist of realized and unrealized capital gains
and losses plus income less expenses. Although the net asset value of the
Portfolio will fluctuate, the Portfolio attempts to preserve the value of its
investments to the extent consistent with its objective.

The Portfolio is designed for investors who seek a total return over time
that is higher than that generally available from a portfolio of short-term
obligations while acknowledging greater price fluctuation of longer-term
instruments.

The Portfolio's investment objective, and certain investment restrictions
discussed in the Statement of Additional Information, may be changed only with
the approval of the Portfolio's shareholders. The investment policies of the
Portfolio, used in furtherance of the Portfolio's objective, may be changed by
the Board without the approval of the Portfolio's shareholders.

Because investment involves both opportunities for gain and risks of loss,
no assurance can be given that the Portfolio will achieve its objective.
Prospective purchasers of Policies and Plan participants should carefully review
the objective and policies of the Portfolio and consider their ability to assume
the risks involved before allocating amounts for investment therein.

INVESTMENT POLICIES: The Adviser actively manages the Portfolio's duration,
the allocation of securities across market sectors, and the selection of
specific securities within sectors. Based on fundamental, economic and capital
markets research, the Adviser adjusts the duration of the Portfolio in light of
market conditions and the Adviser's interest rate outlook. For example, if
interest rates are expected to fall, the duration may be lengthened to take
advantage of the expected associated increase in bond prices. The Adviser also
actively allocates the Portfolio's assets among the broad sectors of the fixed
income market including, but not limited to, U.S. Government Agency Obligations,
corporate securities, private placements, asset-backed and mortgage-related
securities. Specific securities which the Adviser believes to be undervalued are
selected for purchase within the sectors using advanced quantitative tools,
analysis of credit risk, the expertise of a dedicated trading desk, and the
judgment of fixed income portfolio managers and analysts. Under normal market
conditions, the Adviser intends to keep the Portfolio essentially fully invested
with at least 65% of the Portfolio's assets invested in bonds, debentures and
other debt instruments. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies, and may invest without limitation
in U.S. dollar-denominated securities of foreign issuers.

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. Under normal market conditions, the
Portfolio's duration will range between one year shorter and one year longer
than the duration of the U.S. investment grade fixed income universe, as
represented by Salomon Brothers Broad Investment Grade Bond Index. Currently,
such Index's duration is approximately 4.5 years. However, the maturities of the
individual securities in the Portfolio may vary widely.

The Adviser intends to manage the 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 also may 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.

Corporate Bonds, etc. The Portfolio may invest in a broad range of debt
securities of domestic and foreign issuers. These include debt securities of
various types and maturities, e.g., debentures, notes, mortgage-related
securities, equipment trust certificates and other collateralized securities and
zero coupon securities. Collateralized securities are backed by a pool of assets
such as loans or receivables which generate cash flow to cover the payments due
on the securities. Collateralized securities are subject to certain risks,
including a decline in the value of the collateral backing the security, failure
of the collateral to generate the anticipated cash flow or in certain cases more
rapid prepayment because of events affecting the collateral, such as accelerated
prepayment of mortgages or other loans backing these securities or destruction
of equipment subject to equipment trust certificates. In the event of any such
prepayment the Portfolio will be required to reinvest the proceeds of
prepayments at interest rates prevailing at the time of reinvestment, which may
be lower than at the time of purchase. In addition, the value of zero coupon
securities which do not pay interest is more volatile than that of interest
bearing debt securities with the same maturity. The Portfolio does not intend to
invest in common stock but may invest to a limited extent in convertible debt or
preferred stock. See "ADDITIONAL INVESTMENT INFORMATION" for further information
on foreign investment and convertible securities.

Government Obligations, etc. The Portfolio may invest in obligations issued
or guaranteed by the U.S. Government and backed by the full faith and credit of
the U.S. Government. These securities include Treasury Securities, obligations
of the Government National Mortgage Association ("GNMA"), the Farmers Home
Administration and the Export Import Bank. GNMA Certificates are mortgage-backed
securities which evidence an undivided interest in mortgage pools. These
securities are subject to more rapid repayment than their stated maturity would
indicate because prepayments of principal on mortgages in the pool are passed
through to the holder of the securities. During periods of declining interest
rates, prepayments of mortgages in the pool can be expected to increase. The
pass-through of these prepayments would have the effect of reducing the
Portfolio's positions in these securities and requiring the Portfolio to
reinvest the prepayments at interest rates prevailing at the time of
reinvestment. The Portfolio also may invest in obligations issued or guaranteed
by U.S. Government agencies or instrumentalities where the Portfolio must look
principally to the issuing or guaranteeing agency for ultimate repayment; some
examples of agencies or instrumentalities issuing these obligations are the
Federal Farm Credit System, the Federal Home Loan Banks and the Federal National
Mortgage Association. Although these governmental issuers are responsible for
payments on their obligations, they do not guarantee their market value. The
Portfolio also may invest in municipal obligations which may be general
obligations of the issuer or payable only from specific revenue sources.
However, the Portfolio will invest only in municipal obligations that have been
issued on a taxable basis or have an attractive yield excluding tax
considerations. In addition, the Portfolio may invest in debt securities of
foreign governments and governmental entities. See "ADDITIONAL INVESTMENT
INFORMATION" for further information on foreign investments.

Money Market Instruments. The Portfolio may invest in various types of
money market instruments subject to the quality requirements of the Portfolio.
See "Quality Information" below and "MONEY MARKET INSTRUMENTS" in the Statement
of Additional Information. Under normal circumstances, the Portfolio will
purchase these securities to invest temporary cash balances or to maintain
liquidity to meet redemptions. However, the Portfolio also may invest in money
market instruments as a temporary defensive measure taken during, or in
anticipation of, adverse market conditions.

United States Government Obligations. See "Government Obligations, etc."
above.

Bank Obligations. The Portfolio may invest in high quality 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 U.S. federal or state law, (ii) foreign
branches of these banks or of foreign banks of equivalent size (Euros) and (iii)
U.S. branches of foreign banks of equivalent size (Yankees). The Portfolio also
may invest in obligations of international banking institutions designated or
supported by national governments to promote economic reconstruction,
development or trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank). These obligations may be
supported by appropriated but unpaid commitments of their member countries, and
there is no assurance these commitments will be undertaken or met in the future.

Commercial Paper; Bonds. The Portfolio may invest in high quality
commercial paper and corporate bonds issued by U.S. corporations. The Portfolio
also may invest in bonds and commercial paper of foreign issuers if the
obligation is not subject to foreign withholding tax.

Asset-Backed Securities. The Portfolio also may invest in securities
generally referred to as asset-backed securities, which directly or indirectly
represent a participation interest in, or are secured by and payable from, a
stream of payments generated by particular assets such as motor vehicle or
credit card receivables. Asset-backed securities provide periodic payments that
generally consist of both interest and principal payments. Consequently, the
life of an asset-backed security varies with the prepayment experience of the
underlying debt instruments.

Quality Information. The Portfolio's current policy is that, under normal
circumstances, at least 65% of its total assets will consist of securities that
are rated at least A by Moody's Investors Service, Inc. ("Moody's") or Standard
& Poor's Ratings Group ("Standard & Poor's") or that are unrated and in the
Adviser's opinion are of comparable quality. The remainder of the Portfolio's
assets may be invested in debt securities that are rated Baa by Moody's and BBB
by Standard & Poor's or, with respect to no more than 10% of its assets, rated
Ba or B by Moody's and BB or B by Standard & Poor's or are unrated and in the
Adviser's opinion are of comparable quality. Securities rated Baa by Moody's or
BBB by Standard & Poor's are considered investment grade, but have some
speculative characteristics. Securities rated Ba or B by Moody's and BB or B by
Standard & Poor's are below investment grade (commonly known as "junk bonds")
and ordinarily provide higher yields but involve greater risk because of their
speculative characteristics. See "Risk Factors" below. These standards must be
satisfied at the time an investment is made. If the quality of the investment
later declines below the quality required for purchase, the Portfolio may
continue to hold the investment. See also "APPENDIX A" in the Statement of
Additional Information for more detailed information on these ratings, and "High
Yield/High Risk Bonds" in the Statement of Additional Information for a
discussion of risks associated with investing in junk bonds.

The Portfolio also may purchase obligations on a when-issued or delayed
delivery basis, enter into repurchase and reverse repurchase agreements, loan
its portfolio securities, purchase certain privately placed securities and use
options on securities and securities indices, futures contracts and options on
futures contracts for hedging and risk management purposes. For a discussion of
these investments and investment techniques, see "ADDITIONAL INVESTMENT
INFORMATION."

RISK FACTORS: If the Portfolio disposes of an obligation prior to maturity,
it may realize a loss or a gain. An increase in interest rates will generally
reduce the value of portfolio investments, and a decline in interest rates will
generally increase the value of portfolio investments. As a result, the level of
income under such circumstances may vary. In addition, portfolio investments
(other than Treasury Securities) are dependent upon the ability of the issuer to
make scheduled payments of principal and interest. Certain securities purchased
by the Portfolio, such as those rated Baa or as low as B by Moody's and BBB or
as low as B by S&P, may be subject to such risk with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. The retail secondary market for these securities
may be less liquid than that of higher rated securities; adverse conditions
could make it difficult at times for the Portfolio to sell certain lower rated
securities or could result in lower prices than those used in calculating the
Portfolio's net asset value.

ADDITIONAL INVESTMENT INFORMATION

Convertible Securities. The Portfolio may invest in convertible securities
of domestic and, subject to the Portfolio's restrictions, foreign issuers. The
convertible securities in which the Portfolio may invest include any debt
securities or preferred stock which may be converted into common stock or which
carry the right to purchase common stock. Convertible securities entitle the
holder to exchange the securities for a specified number of shares of common
stock, usually of the same company, at specified prices within a certain period
of time.

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Board. 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 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. 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 five 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 is for the
account of the Portfolio and its shareholders. 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 affiliate of the
Trust, the Adviser or Distributor, unless otherwise permitted by applicable law.

Mortgage Dollar Roll Transactions. The Portfolio may engage in mortgage
dollar roll transactions with respect to mortgage-related securities issued by
certain federal government agencies. In a mortgage dollar roll transaction, the
Portfolio sells a mortgage-related security and simultaneously agrees to
purchase a substantially similar security on a specified date at an agreed upon
price. Compensation is derived from the difference of the sales price and the
lower price for the future repurchase as well as by the interest earned on the
reinvestment of the sales proceeds, and in some cases by a commitment fee.

Foreign Investment Information. The Portfolio may invest in certain
securities of foreign issuers. Investment in securities of foreign issuers and
in obligations of foreign branches of domestic banks involves somewhat different
investment risks from those affecting securities of U.S. domestic issuers. There
may be limited publicly available information with respect to foreign issuers,
and foreign issuers are not generally subject to uniform accounting, auditing
and financial standards and requirements comparable to those applicable to
domestic companies. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes which may decrease the net return
on foreign investments as compared to dividends and interest paid to the
Portfolio by domestic companies.

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

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

The Portfolio may invest in securities of foreign issuers directly or in
the form of ADRs, European Depositary Receipts ("EDRs") or other similar
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing ownership
of the underlying foreign securities. Certain such institutions issuing ADRs may
not be sponsored by the issuer of the underlying foreign securities. A
non-sponsored depositary may not provide the same shareholder information that a
sponsored depositary is required to provide under its contractual arrangements
with the issuer of the underlying foreign securities. EDRs are receipts issued
by a European financial institution evidencing a similar arrangement. Generally,
ADRs, in registered form, are designed for use in the U.S. securities markets,
and EDRs, in bearer form, are designed for use in European securities markets.

Since investments in foreign securities involve foreign currencies, the
value of the Portfolio's assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, including currency blockage. See "Foreign Currency Exchange
Transactions" below.

Foreign Currency Exchange Transactions. Because the Portfolio buys and
sells securities denominated in currencies other than the U.S. dollar, and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, the Portfolio will, from time to time, enter into foreign currency
exchange transactions. The Portfolio either enters into these transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or uses forward contracts to purchase or sell foreign
currencies. The cost of the Portfolio's currency exchange transactions will
generally be the difference between the bid and offer spot rate of the currency
being purchased or sold.

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

The Portfolio may enter into foreign currency exchange transactions for a
variety of purposes, including: to fix in U.S. dollars, between trade and
settlement date, the value of a security the Portfolio has agreed to buy or
sell; to hedge the U.S. dollar value of securities the Portfolio already owns,
particularly if it expects a decrease in the value of the currency in which the
foreign security is denominated; or to gain or reduce exposure to the foreign
currency in an attempt to enhance return.

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

Acquisitions of illiquid investments by the Portfolio is subject to the
following non-fundamental policy. The Portfolio may not invest in illiquid
securities if, as a result more than 15% of the market value of its total assets
would be invested in illiquid securities. The Portfolio also may 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 Adviser and approved by the Trustees. The Trustees
will monitor the Adviser'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 in the "APPENDIX" to this
Prospectus for both hedging and risk management purposes, although not for
speculation. For more detailed information about these transactions, see the
"APPENDIX" to this Prospectus and "OPTIONS AND FUTURES TRANSACTIONS" in the
Statement of Additional Information.

Money Market Instruments. The Portfolio is permitted to invest in money
market instruments, although it intends to stay invested in long-term fixed
income securities to the extent practical in light of its investment objective
and long-term investment perspective. The Portfolio may make money market
investments pending other investment or settlement, for liquidity or in adverse
market conditions. The money market investments permitted for the Portfolio
include obligations of the U.S. Government and its agencies and
instrumentalities, other debt securities, commercial paper, bank obligations and
repurchase agreements. For more detailed information about these money market
instruments, see "INVESTMENT OBJECTIVES AND POLICIES" in the Statement of
Additional Information.

PORTFOLIO TURNOVER

Portfolio turnover for the Portfolio may vary from year to year or within a
year depending upon economic and business conditions. The annual portfolio
turnover rate for the Portfolio in 1995 was approximately 239%. A portfolio
having a turnover rate more than 100% may realize larger amounts of gains or
losses than it would with a lower portfolio turnover rate. A portfolio turnover
rate of greater than 100% may result in a portfolio paying more brokerage
commissions or other transaction related costs.

INVESTMENT RESTRICTIONS

MANAGEMENT OF THE TRUST AND PORTFOLIO

Morgan uses a sophisticated, disciplined, collaborative process for
managing all asset classes. 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 their business experience for the past five years are indicated
parenthetically): William G. Tenile, Vice President (since January, 1995,
employed by Morgan since March, 1992, previously Managing Director,
Manufacturers Hanover Trust Company) and Connie J. Plaehn, Managing Director
(since January, 1995, employed by Morgan since prior to 1989).

As compensation for Morgan's services under the Investment Advisory
Agreement, the Trust has agreed to pay Morgan a monthly fee at the annual rate
of .30% of the Portfolio's average daily net assets.

As compensation for Morgan Guaranty's services under the Administrative
Services Agreement, the Trust has agreed to pay Morgan Guaranty a monthly fee at
the annual rate of .45% of the Portfolio's average daily net assets.

Under the terms of the Administrative Services Agreement, Morgan Guaranty
may delegate one or more of its responsibilities to other entities at Morgan
Guaranty's expense.

From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory served as the Portfolio's investment manager and
Morgan Guaranty served as sub-investment adviser. The compensation to Morgan
Guaranty, as sub-investment adviser, was paid directly from the investment
management fees paid by the Trust to Chubb Investment Advisory. For the period
January 3, 1995 (commencement of operations) through December 31, 1995, all
investment management fees payable by the Portfolio to Chubb Investment Advisory
totaled .50% of the Portfolio's average daily net assets. For the period January
3, 1995 through December 31, 1995, sub-investment advisory fees payable by Chubb
Investment Advisory to Morgan Guaranty totaled .30% of the Portfolio's average
daily net assets. Because a portion of the Portfolio's fees and expenses were
reimbursed, the ratio of the Portfolio's operating expenses to average net
assets for such period was .75%. Had a portion of the Portfolio's fees and
expenses not been reimbursed, the ratio of the Portfolio's operating expenses to
average net assets for such period would have been 2.90%.

FDI is a wholly-owned indirect subsidiary of Boston Institutional Group,
Inc. FDI currently provides administration and distribution services for a
number of other registered investment companies.

For more information concerning the payment of expenses of the Trust, see
"INVESTMENT ADVISORY AND OTHER SERVICES" in the Statement of Additional
Information.

CAPITAL SHARES

As a Delaware Business Trust, the Trust is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the 1940 Act; (ii) changing fundamental investment objectives and restrictions
of the Portfolio; and (iii) filling vacancies on the Board in the event that
less than a majority of the Trustees were elected by shareholders. The Trust
expects that there will be no meetings of shareholders for the purpose of
electing trustees unless and until such time as less than a majority of the
trustees holding office have been elected by shareholders. At such time, the
trustees then in office will call a shareholder meeting for the election of
trustees. In addition, holders of record of not less than two-thirds of the
outstanding shares of the Trust may remove a Trustee from office by a vote cast
in person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the Trust. The
Trust has the obligation to assist in any such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.

TAXES AND DIVIDENDS

Dividends from ordinary income will be declared and distributed at least
once each year. Ordinary income is the investment company taxable income as
defined in Section 852(b) of the Code determined partly (1) by excluding the
amount of net capital gain, if any, and (2) with allowance of the deduction for
dividends paid. All dividends and distributions will be automatically reinvested
in additional Portfolio shares with respect to which dividends have been
declared, at net asset value, as of the ex-dividend date of such dividends.

The Secretary of the Treasury may in the future issue
additional regulations or revenue rulings that will prescribe the circumstances
in which a policy owner's control of the investments of a separate account may
cause the policy owner, rather than the insurance company, to be treated as the
owner of assets of the separate account. Failure to comply with Section 817(h)
of the Code or any regulation thereunder, or with any regulations or revenue
rulings on policy owner control, if promulgated, would cause earnings regarding
a policy owner's interest in the separate account to be includable in the policy
owner's gross income in the year earned.

OFFERING AND REDEMPTION OF SHARES

Net asset value is normally determined as of 4:15 p.m. (Eastern Standard
Time) on each day during which the New York Stock Exchange is open for trading.
Net asset value per share is computed by dividing the value of the Portfolio's
net assets (i.e., the value of its assets less liabilities) by the total number
of shares outstanding. Equity securities typically are valued based on market
value, or where market quotations are not readily available, based on fair value
as determined in good faith by the Board. Debt securities having remaining
maturities of 60 days or less are valued on an amortized cost basis unless the
Board determines that such method does not represent fair value. Other debt
securities are valued using available market quotations or at fair value which
may be determined by one or more pricing services. For further information
regarding the methods employed in valuing the Portfolio's investments, see
"Determination of Net Asset Value" in the Statement of Additional Information.

OTHER INFORMATION

<PAGE>
APPENDIX

The Portfolio may (a) purchase and sell exchange traded and over the
counter ("OTC") put and call options on fixed income securities or indices of
fixed income securities, (b) purchase and sell futures contracts on fixed income
securities and indices of fixed income securities, and (c) purchase and sell put
and call options on futures contracts on fixed income securities and indices of
fixed income securities.

The Portfolio may use futures contracts and options for hedging and risk
management purposes. See "RISK MANAGEMENT" in the Statement of Additional
Information. 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 Adviser 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 Adviser 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 limit its exposure to losses. The Portfolio also could
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 will not purchase or sell (write) futures contracts, options,
or futures contracts or commodity options for risk management purposes if, as a
result, the aggregate initial margin and options premiums required to establish
these positions exceed 5% of the Portfolio's net asset value.

OPTIONS

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 also may close
out a put option position by entering into an offsetting transaction, if a
liquid market exists. If the option is allowed to expire, the Portfolio will
lose the entire premium it paid. If the Portfolio exercises a put option on a
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 or securities. If an option is American Style, it
may be exercised on any day up to its expiration date. A European style option
may be exercised only on its expiration date.

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

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

Selling (Writing) Put and Call Options. When 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. However, if the market
is not liquid for a put option the Portfolio has written, 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. However, this loss should be less than the loss from
purchasing and holding the underlying instrument directly, 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 Indices. The Portfolio is permitted to enter into options
transactions 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 indices 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 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 has 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 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
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 further information about the Portfolio's use of futures and options
and a more detailed discussion of associated risks, see "INVESTMENT OBJECTIVES
AND POLICIES" in the Statement of Additional Information.

<PAGE>

- ------------------------------------------------------------------------------
PROSPECTUS
JPM SERIES TRUST II
JPM EQUITY PORTFOLIO
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-521-5411
- ------------------------------------------------------------------------------

JPM Equity Portfolio (the "Portfolio") is a separate diversified portfolio
of JPM Series Trust II, an open-end management investment company organized as a
Delaware Business Trust (the "Trust"). The Portfolio seeks to provide a high
total return from a portfolio comprised of selected equity securities.

The Portfolio is advised by J.P. Morgan Investment Management, Inc.
("Morgan" or the "Adviser").

The Portfolio permits investments in any nation, which involve special
considerations and risks.

The date of this Prospectus is January 1, 1997.

<PAGE>

TABLE OF CONTENTS
PAGE

ANNUAL OPERATING EXPENSES...............................................
FINANCIAL HIGHLIGHTS....................................................
PERFORMANCE AND YIELD INFORMATION.......................................
THE PORTFOLIO...........................................................
INVESTMENT OBJECTIVE AND POLICIES.......................................
Investment Objective................................................
Investment Policies.................................................
Risk Factors........................................................
ADDITIONAL INVESTMENT INFORMATION.......................................
Convertible Securities..............................................
When-Issued and Delayed Delivery Securities.........................
Repurchase Agreements...............................................
Loans and Portfolio Securities......................................
Reverse Repurchase Agreements.......................................
Foreign Investment Information......................................
Foreign Currency Exchange Transactions..............................
Illiquid Investments; Privately Placed and Other
Unregistered Securities......................................
Futures and Options Transactions....................................
Money Market Instruments............................................
PORTFOLIO TURNOVER......................................................
INVESTMENT RESTRICTIONS.................................................
MANAGEMENT OF THE TRUST AND PORTFOLIO...................................
CAPITAL SHARES..........................................................
TAXES AND DIVIDENDS.....................................................
OFFERING AND REDEMPTION OF SHARES.......................................
OTHER INFORMATION.......................................................
APPENDIX ......................................................

<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees............................................ .40%
Other Expenses............................................. .50%
Total Portfolio Operating Expenses......................... .90%

Example:

An investor would pay the following expenses
on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period:

1 Year $ 9
3 Years $ 29
5 Years $ 50
10 Years $111

- ------------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
PAST OR FUTURE EXPENSES OF THE PORTFOLIO AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL
RETURN GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The information in the foregoing table has been
restated to reflect an agreement by Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), an affiliate of Morgan, to reimburse the Trust to the
extent certain expenses exceed in any fiscal year .90% of the Portfolio's
average daily net assets. The information in the foregoing table does not
reflect deduction of account fees and charges to separate accounts or related
insurance policies that may be imposed by participating insurance companies. For
a further description of the various costs and expenses incurred in the
operation of the Portfolio, as well as expense reimbursement or waiver
arrangements, see "Management of the Trust and Portfolio."

<PAGE>
FINANCIAL HIGHLIGHTS

January 3, Six Month Period
1995 through Ended
December 31, June 30, 1996
1995 (Unaudited)
<S> <C> <C>
Net asset value, beginning of period $10.00 $12.63
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.12 0.13
Net realized and unrealized gains (losses) on
securities & foreign currency 3.26 1.03
Total from investment operations 3.38 1.16
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.12)
Distributions from net capital gains (0.63) (0.20)
---------- --------
Total distributions (0.75) (0.20)
---------- --------
Net asset value, end of period $12.63 $13.59
=========== ========
Total Return2 33.91% 9.15%
Ratios to average net assets:
(Annualized)
Expenses3 0.90% 0.90%
Net investment income 1.48% 2.05%
Portfolio turnover rate 65.60% 42.11%
Average Commission Rate Paid N/A $ 0.0553
Net assets, at end of period $4,144,458 $5,096,578
=========== =============
- -------------------------------

1 From January 3, 1995 (commencement of
operations) to December 31, 1996, Chubb Investment Advisory
Corporation ("Chubb Investment Advisory"), a wholly-owned
subsidiary of Chubb Life Insurance Company of America
("Chubb Life"), served as the Portfolio's investment
manager, and Morgan Guaranty served as the Portfolio's
sub-investment adviser. Effective January 1, 1997, Morgan
began serving as the Portfolio's investment adviser. See
"OTHER INFORMATION."

2 Total return assumes reinvestment of all
dividends during the period and does not reflect deduction
of account fees and charges to separate accounts or
related insurance policies, which, if reflected, would
reduce the Portfolio's total return for the period
indicated. Investment returns and principal values will
fluctuate and shares, when redeemed, may be worth more or
less than their original cost. Total returns for periods
of less than one year have not been annualized.

3 All related party fees have been waived and all other expenses of the
Portfolio have been assumed in part for 1996 and 1995 by Chubb Life and
Morgan Guaranty. Had the fees not been waived and expenses not been
assumed, the ratios of the Portfolio's expenses to average net assets
would have been 2.34% in 1996 and 2.70% in 1995.
</TABLE>
<PAGE>

PERFORMANCE AND YIELD INFORMATION

Set forth below is historical performance information for the Portfolio and
for an appropriate securities index with respect to the Portfolio. In addition,
set forth below is hypothetical performance information derived from historical
composite performance of all Private Accounts managed by Morgan which have
investment objectives, policies and strategies substantially similar to those of
the Portfolio and, thus, is deemed relevant to Portfolio investors. THE
HYPOTHETICAL PERFORMANCE INFORMATION OF THE PRIVATE ACCOUNTS OF THE ACTIVE
EQUITY COMPOSITE DOES NOT REPRESENT THE HISTORICAL PERFORMANCE OF THE PORTFOLIO
AND SHOULD NOT BE INTERPRETED AS INDICATIVE OF THE FUTURE PERFORMANCE OF THE
PORTFOLIO. Moreover, the Private Accounts are not registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and, therefore, are
not subject to certain investment restrictions, diversification requirements and
other restrictions that are imposed by the 1940 Act and the Internal Revenue
Service, which, if imposed, might have adversely affected the performance of the
Private Accounts.

Average Annual Total Return

5 Years or 10 Years or
1 YEAR SINCE SINCE INCEPTION
INCEPTION
<S> <C> <C> <C>

JPM Equity Portfolio 22.43% 29.00% N/A
Active Equity 32.47% 17.64% 15.45%
Composite 37.58% 16.59% 14.88%
Standard & Poor's 500
Index**

- ---------------
* Commenced operations January 3, 1995
** The Standard & Poor's 5007 Index is a market
capitalization-weighted index of 500 common stocks, designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of 500 stocks representing all major industries.
</TABLE>

THE PORTFOLIO

Portfolio shares are both offered and redeemed at their net asset value
without the addition of any sales load or redemption charge. See "OFFERING AND
REDEMPTION OF SHARES."

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE: The Portfolio's investment objective is to provide a
high total return from a portfolio comprised of selected equity securities.
Total return will consist of realized and unrealized capital gains and losses
plus income less expenses. The Portfolio invests primarily in the common stock
of U.S. corporations with market capitalizations above $1.5 billion.

The Portfolio is designed for investors who want an actively managed
portfolio of selected equity securities that seeks to outperform the S&P 500
Index.

INVESTMENT POLICIES: The Adviser seeks to enhance the Portfolio's total
return relative to that of the universe of large- and medium-sized U.S.
corporations, typically represented by the S&P 500 Index, through fundamental
analysis, systematic stock valuation and disciplined portfolio construction.
Based on internal fundamental research, the Adviser uses a systematic stock
selection process to rank companies within economic sectors according to their
relative value. From the universe of securities this model shows as undervalued,
the Adviser selects stocks for the Portfolio based on a variety of criteria
including the company's managerial strength, prospects for growth and
competitive position. The Adviser may under- or over-weight selected economic
sectors against the S&P 500 Index's sector weightings to seek to enhance the
Portfolio's total return or reduce the fluctuation in its market value relative
to the Index.

The Portfolio intends to manage its portfolio actively in pursuit of its
investment objective. The Portfolio does not intend to respond to short-term
market fluctuations or to acquire securities for the purpose of short-term
trading; however, it may take advantage of short-term trading opportunities
that are consistent with its objective. To the extent the Portfolio engages in
short term trading it may incur increased transaction costs.

Equity Investments. During normal market conditions, the Adviser intends to
keep the Portfolio essentially fully invested with at least 65% of the
Portfolio's assets invested in equity securities, consisting of common stocks
and other securities with equity characteristics such as preferred stocks,
warrants, rights and convertible securities. The Portfolio's primary equity
investments are the common stocks of large- and medium-sized U.S. corporations
and similar securities of foreign corporations. The common stock in which the
Portfolio may invest includes the common stock of any class or series or any
similar equity interest, such as trust or limited partnership interests. These
equity investments may or may not pay dividends and may or may not carry voting
rights. The Portfolio invests in securities listed on a securities exchange or
traded in an over-the-counter market, and may invest in certain restricted or
unlisted securities.

Foreign Investments. The Portfolio may invest in equity securities of
foreign corporations which may include American Depositary Receipts ("ADRs").
However, the Portfolio does not expect to invest more than 30% of its assets at
the time of purchase in securities of foreign issuers, nor does it expect more
than 10% of its assets to be invested in securities of foreign issuers not
listed on a national securities exchange or not denominated or principally
traded in U.S. dollars. For further information on foreign investments and
foreign currency exchange transactions, see "ADDITIONAL INVESTMENT INFORMATION."

The Portfolio also may invest in securities on a when-issued or delayed
delivery basis, enter into repurchase and reverse repurchase agreements, loan
its portfolio securities, purchase certain privately placed securities and money
market instruments (see "Money Market Instruments" for more information
concerning the types of money market instruments in which the Portfolio may
invest), and use options on securities and securities indices, futures contracts
and options on futures contracts for hedging and risk management purposes. For a
discussion of these investments and investment techniques, see "ADDITIONAL
INVESTMENT INFORMATION."

RISK FACTORS: The foreign securities and ADRs in which the Portfolio may
invest involve special considerations and risks. See "ADDITIONAL INVESTMENT
INFORMATION" below. The prices of the types of securities usually purchased by
the Portfolio will tend to fluctuate. As a result, the net asset value of the
Portfolio may experience greater short-term and long-term variations than funds
that invest primarily in fixed income securities.

ADDITIONAL INVESTMENT INFORMATION

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Board. 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 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. 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 five 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 is for the
account of the Portfolio and its shareholders. 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 affiliate of the
Trust, the Adviser or Distributor, unless otherwise permitted by applicable law.

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

Money Market Instruments. The Portfolio is permitted to invest in money
market instruments, although it intends to stay invested in equity securities to
the extent practical in light of its investment objective and long-term
investment perspective. The Portfolio may make money market investments pending
other investment or settlement, for liquidity or in adverse market conditions.
The money market investments permitted for the Portfolio include obligations of
the U.S. Government and its agencies and instrumentalities, other debt
securities, commercial paper, bank obligations and repurchase agreements. For
more detailed information about these money market instruments, see "INVESTMENT
OBJECTIVES AND POLICIES" in the Statement of Additional Information.

PORTFOLIO TURNOVER

Portfolio turnover for the Portfolio may vary from year to year or within a
year depending upon economic and business conditions. Under normal market
conditions, the Portfolio's annual portfolio turnover rate is not expected to
exceed 100%. The annual portfolio turnover rate for the Portfolio in 1995 was
approximately 66%.

INVESTMENT RESTRICTIONS

MANAGEMENT OF THE TRUST AND PORTFOLIO

Morgan uses a sophisticated, disciplined, collaborative process for
managing all asset classes. 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 their business experience for the past five years are indicated
parenthetically): William B. Petersen, Managing Director (since January, 1995,
employed by Morgan since prior to 1988) and William M. Riegel, Jr., Managing
Director (since January, 1995, employed by Morgan since prior to 1988).

As compensation for Morgan's services under the Investment Advisory
Agreement, the Trust has agreed to pay Morgan a monthly fee at the annual rate
of .40% of the Portfolio's average daily net assets.

As compensation for Morgan Guaranty's services under the Administrative
Services Agreement, the Trust has agreed to pay Morgan Guaranty a monthly fee at
the annual rate of .50% of the Portfolio's average daily net assets.

Under the terms of the Administrative Services Agreement, Morgan Guaranty
may delegate one or more of its responsibilities to other entities at Morgan
Guaranty's expense.

From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory served as the Portfolio's investment manager and
Morgan Guaranty served as sub-investment adviser. The compensation to Morgan
Guaranty, as sub-investment adviser, was paid directly from the investment
management fees paid by the Trust to Chubb Investment Advisory. For the period
January 3, 1995 (commencement of operations) through December 31, 1995, all
investment management fees payable by the Portfolio to Chubb Investment Advisory
totaled .60% of the Portfolio's average daily net assets. For the period January
3, 1995 through December 31, 1995, sub-investment advisory fees payable by Chubb
Investment Advisory to Morgan Guaranty totaled .40% of the Portfolio's average
daily net assets. Because a portion of the Portfolio's fees and expenses were
reimbursed, the ratio of the Portfolio's operating expenses to average net
assets for such period was .90%. Had a portion of the Portfolio's fees and
expenses not been reimbursed, the ratio of the Portfolio's operating expenses to
average net assets for such period would have been 2.70%.

FDI is a wholly-owned indirect subsidiary of Boston Institutional Group,
Inc. FDI currently provides administration and distribution services for a
number of other registered investment companies.

For more information concerning the payment of expenses of the Trust, see
"INVESTMENT ADVISORY AND OTHER SERVICES" in the Statement of Additional
Information.

CAPITAL SHARES

As a Delaware Business Trust, the Trust is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the 1940 Act; (ii) changing fundamental investment objectives and restrictions
of the Portfolio; and (iii) filling vacancies on the Board in the event that
less than a majority of the Trustees were elected by shareholders. The Trust
expects that there will be no meetings of shareholders for the purpose of
electing trustees unless and until such time as less than a majority of the
trustees holding office have been elected by shareholders. At such time, the
trustees then in office will call a shareholder meeting for the election of
trustees. In addition, holders of record of not less than two-thirds of the
outstanding shares of the Trust may remove a Trustee from office by a vote cast
in person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the Trust. The
Trust has the obligation to assist in any such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.

TAXES AND DIVIDENDS

Eligible Plan (other than certain governmental or church plans) for any
taxable year following the year in which the participant reaches age 70-1/2 is
less than the "minimum required distribution" for that taxable year, an excise
tax equal to 50% of the deficiency may be imposed by the IRS. The administrator,
trustee or custodian of such a Plan will be responsible for reporting
distributions from the Plan to the IRS. Participants in Eligible Plans will
receive a disclosure statement describing the consequences of a distribution
from the Plan from the administrator, trustee or custodian of the Plan prior to
receiving the distribution. Moreover, certain contributions to an Eligible Plan
in excess of the amounts permitted by law may be subject to an excise tax.

OFFERING AND REDEMPTION OF SHARES

Should any conflict between VA contract holders, VLI policy
holders and/or Plan participants arise which would require that a substantial
amount of the Portfolio's net assets be withdrawn, orderly portfolio management
could be disrupted to the potential detriment of such contract and policy
holders and/or Plan participants.

OTHER INFORMATION

<PAGE>

APPENDIX

The Portfolio may (a) purchase and sell exchange traded and over the
counter ("OTC") put and call options on equity securities or indices of equity
securities, (b) purchase and sell futures contracts on indices of equity
securities, and (c) purchase and sell put and call options on futures contracts
on indices of equity securities.

OPTIONS

FUTURES CONTRACTS

<PAGE>

- -----------------------------------------------------------------------------
PROSPECTUS
JPM SERIES TRUST II
JPM SMALL COMPANY PORTFOLIO
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-521-5411
------------------------------------------------------------------------------

JPM Small Company Portfolio (the "Portfolio") is a separate diversified
portfolio of JPM Series Trust II, an open-end management investment company
organized as a Delaware Business Trust (the "Trust"). The Portfolio seeks to
provide a high total return from a portfolio of equity securities of small
companies.

The Portfolio is advised by J.P. Morgan Investment Management, Inc.
("Morgan" or the "Adviser").

The Portfolio permits investments in any nation, which involve special
considerations and risks.

=============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
=============================================================================

The date of this Prospectus is January 1, 1997.

<PAGE>

TABLE OF CONTENTS
PAGE
ANNUAL OPERATING EXPENSES................................................
FINANCIAL HIGHLIGHTS.....................................................
PERFORMANCE AND YIELD INFORMATION........................................
THE PORTFOLIO............................................................
INVESTMENT OBJECTIVE AND POLICIES........................................
Investment Objective.................................................
Investment Policies..................................................
Risk Factors.........................................................
ADDITIONAL INVESTMENT INFORMATION........................................
Convertible Securities...............................................
When-Issued and Delayed Delivery Securities..........................
Repurchase Agreements................................................
Loans and Portfolio Securities.......................................
Reverse Repurchase Agreements........................................
Foreign Investment Information.......................................
Foreign Currency Exchange Transactions...............................
Illiquid Investments; Privately Placed and Other
Unregistered Securities.......................................
Futures and Options Transactions.....................................
Money Market Instruments.............................................
PORTFOLIO TURNOVER.......................................................
INVESTMENT RESTRICTIONS..................................................
MANAGEMENT OF THE TRUST AND PORTFOLIO....................................
CAPITAL SHARES...........................................................
TAXES AND DIVIDENDS......................................................
OFFERING AND REDEMPTION OF SHARES........................................
OTHER INFORMATION........................................................
APPENDIX ................................................................

<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees.................................. .60%
Other Expenses................................... .55%
Total Portfolio Operating Expenses.............. 1.15%

Example:

An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end of each time
period:

1 Year $ 12
3 Years $ 37
5 Years $ 63
10 Years $140

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

THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES OF THE PORTFOLIO AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.

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

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The information in the foregoing table has been
restated to reflect an agreement by Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), an affiliate of Morgan, to reimburse the Trust to the
extent certain expenses exceed in any fiscal year 1.15% of the Portfolio's
average daily net assets. The information in the foregoing table does not
reflect deduction of account fees and charges to separate accounts or related
insurance policies that may be imposed by participating insurance companies. For
a further description of the various costs and expenses incurred in the
operation of the Portfolio, as well as expense reimbursement or waiver
arrangements, see "Management of the Trust and Portfolio."

<PAGE>

FINANCIAL HIGHLIGHTS

The following table includes selected data for a share of
capital stock outstanding for the Portfolio throughout the period from January
3, 1995 (commencement of operations) to December 31, 1995 (audited) and the six
month period ended June 30, 1996 (unaudited).1 The related financial statements
and report of Ernst & Young LLP, independent auditors, for the period ended
December 31, 1995 are incorporated by reference into the Statement of Additional
Information and are available upon request and without charge by calling
1-800-221-7930.
<TABLE>
<CAPTION>

January 3, Six Month Period
1995 through Ended
December 31, June 30, 1996
1995 (Unaudited)
<S> <C> <C>

Net asset value, beginning of period $ 10.00 $ 11.83
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.11 0.04
Net realized and unrealized gains (losses) on
securities & foreign currency 3.18 1.27
Total from investment operations 3.29 1.31
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.11)
Distributions from net capital gains (1.35) (0.46)
----------- ---------
Total distributions (1.46) (0.46)
----------- ---------
Net asset value, end of period $ 11.83 12.68
============= ==========
Total Return2 32.91% 11.20%
Ratios to average net assets:
(Annualized)
Expenses3 1.15% 1.15%
Net investment income .99% .62%
Portfolio turnover rate 100.43% 54.99%
Average Commission Rate Paid N/A $ 0.0507
Net assets, at end of period $2,536,258 $3,434,837
- -------------------------------

1 From January 3, 1995 (commencement of operations) to
December 31, 1996, Chubb Investment Advisory Corporation
("Chubb Investment Advisory"), a wholly-owned subsidiary of
Chubb Life Insurance Company of America ("Chubb Life"),
served as the Portfolio's investment manager, and Morgan
Guaranty served as the Portfolio's sub-investment adviser.
Effective January 1, 1997, Morgan began serving as the
Portfolio's investment adviser. See "OTHER INFORMATION."

2 Total return assumes reinvestment of all dividends during
the period and does not reflect deduction of account fees
and charges to separate accounts or related insurance
policies, which, if reflected, would reduce the Portfolio's
total return for the period indicated. Investment returns
and principal values will fluctuate and shares, when
redeemed, may be worth more or less than their original
cost. Total returns for periods of less than one year have
not been annualized.

3 All related party fees have been waived and all other expenses of the
Portfolio have been assumed in part for 1996 and 1995 by Chubb Life and
Morgan Guaranty. Had the fees not been waived and expenses not been
assumed, the ratios of the Portfolio's expenses to average net assets
would have been 2.85% in 1996 and 3.22% in 1995.
</TABLE>
<PAGE>

PERFORMANCE AND YIELD INFORMATION

Set forth below is historical performance information for the Portfolio and
for an appropriate securities index with respect to the Portfolio. In addition,
set forth below is hypothetical performance information derived from historical
composite performance of all Private Accounts managed by Morgan which have
investment objectives, policies and strategies substantially similar to those of
the Portfolio and, thus, is deemed relevant to Portfolio investors. THE
HYPOTHETICAL PERFORMANCE INFORMATION OF THE PRIVATE ACCOUNTS OF THE SMALL
COMPANY COMPOSITE DOES NOT REPRESENT THE HISTORICAL PERFORMANCE OF THE PORTFOLIO
AND SHOULD NOT BE INTERPRETED AS INDICATIVE OF THE FUTURE PERFORMANCE OF THE
PORTFOLIO. Moreover, the Private Accounts are not registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and, therefore, are
not subject to certain investment restrictions, diversification requirements and
other restrictions that are imposed by the 1940 Act and the Internal Revenue
Service, which, if imposed, might have adversely affected the performance of the
Private Accounts.

Average Annual Total Return

5 Years or 10 Years or
1 YEAR SINCE SINCE INCEPTION
INCEPTION
<S> <C> <C> <C>
JPM Small Company Portfolio 25.70% 29.97%* N/A
Small Company Composite 35.05% 20.51% 11.78%
Russell 2000(R) Index** 28.44% 20.99% 11.32%

- ---------------
* Commenced operations January 3, 1995
** The Russell 20007 Index is composed of 2,000 common stocks of U.S.
companies with market capitalizations ranging between $23 million and $2.23
billion as of September 30, 1996.
</TABLE>

THE PORTFOLIO

Portfolio shares are both offered and redeemed at their net asset value
without the addition of any sales load or redemption charge. See "OFFERING AND
REDEMPTION OF SHARES."

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE: The Portfolio's investment objective is to provide a
high total return from a portfolio of equity securities of small companies.
Total return will consist of realized and unrealized capital gains and losses
plus income less expenses. The Portfolio invests at least 65% of the value of
its total assets in the common stock of small U.S. companies primarily with
market capitalizations less than $1 billion.

The Portfolio is designed for investors who are willing to assume the
somewhat higher risk of investing in small companies in order to seek a higher
return over time than might be expected from a portfolio of stocks of large
companies.

INVESTMENT POLICIES: The Adviser seeks to enhance the Portfolio's total
return relative to that of the U.S. small company universe. To do so, the
Adviser uses fundamental research, systematic stock valuation and a disciplined
portfolio construction process. The Adviser continually screens the universe of
small capitalization companies to identify for further analysis those companies
which exhibit favorable characteristics such as significant and predictable cash
flow and high quality management. Based on this investment process, as well as
fundamental research, the Adviser ranks these companies within economic sectors
according to their relative value. The Adviser then selects for purchase the
most attractive companies within each economic sector.

The Adviser uses a disciplined portfolio construction process to seek to
enhance returns and reduce volatility in the market value of the Portfolio
relative to that of the U.S. small company universe, typically represented by
the Russell 2000(R) Index. The disciplined portfolio construction process
involves continuously screening the small company universe and consists of three
basic steps: first, calculating each company's internal rate of return ("IRR")
based on projected cash flow; second, sorting those companies within twenty
economic sectors by IRR quintile rank; third, concentrating purchases in the top
three quintiles of each sector and selling fourth and fifth quintiles. Variance
in industry weights from the Russell 2000(R) are minimized to ensure that stock
selection is the principal source of excess return.

The Adviser believes that under normal market conditions the Portfolio will
have sector weightings comparable to that of the U.S. small company universe,
although it may under- or over-weight selected economic sectors. In addition, as
a company moves out of the market capitalization range of the small company
universe, it generally becomes a candidate for sale by the Portfolio.

The Portfolio intends to manage its investments actively to accomplish its
investment objective. Since the Portfolio has a long-term investment
perspective, it does not intend to respond to short-term market fluctuations or
to acquire securities for the purpose of short-term trading; however, it may
take advantage of short-term trading opportunities that are consistent with its
objective. To the extent the Portfolio engages in short-term trading it may
incur increased transaction costs.

ADDITIONAL INVESTMENT INFORMATION

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Board. 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 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. 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 five 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 is for the
account of the Portfolio and its shareholders. 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 affiliate of the
Trust, the Adviser or Distributor, unless otherwise permitted by applicable law.

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

PORTFOLIO TURNOVER

INVESTMENT RESTRICTIONS

MANAGEMENT OF THE TRUST AND PORTFOLIO

Morgan uses a sophisticated, disciplined, collaborative
process for managing all asset classes. 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 their business experience for the past five years are indicated
parenthetically): James B. Otness, Managing Director (since January, 1995,
employed by Morgan since prior to 1988) and Candice Eggerss, Vice President
(since May, 1996, employed by Weiss, Peck & Greer from June, 1993 to May, 1996
and Equitable Capital Management prior to June, 1993).

As compensation for Morgan's services under the Investment Advisory
Agreement, the Trust has agreed to pay Morgan a monthly fee at the annual rate
of .60% of the Portfolio's average daily net assets.

As compensation for Morgan Guaranty's services under the Administrative
Services Agreement, the Trust has agreed to pay Morgan Guaranty a monthly fee at
the annual rate of .55% of the Portfolio's average daily net assets.

Under the terms of the Administrative Services Agreement, Morgan Guaranty
may delegate one or more of its responsibilities to other entities at Morgan
Guaranty's expense.

Morgan Guaranty or its affiliates may pay from its own assets
Participating Insurance Companies for providing certain administrative and
account-related services to owners of Policies for which Portfolio shares are
the investment vehicle.

From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory served as the Portfolio's investment manager and
Morgan Guaranty served as sub-investment adviser. The compensation to Morgan
Guaranty, as sub-investment adviser, was paid directly from the investment
management fees paid by the Trust to Chubb Investment Advisory. For the period
January 3, 1995 (commencement of operations) through December 31, 1995, all
investment management fees payable by the Portfolio to Chubb Investment Advisory
totaled .80% of the Portfolio's average daily net assets. For the period January
3, 1995 through December 31, 1995, sub-investment advisory fees payable by Chubb
Investment Advisory to Morgan Guaranty totaled .60% of the Portfolio's average
daily net assets. Because a portion of the Portfolio's fees and expenses were
reimbursed, the ratio of the Portfolio's operating expenses to average net
assets for such period was 1.15%. Had a portion of the Portfolio's fees and
expenses not been reimbursed, the ratio of the Portfolio's operating expenses to
average net assets for such period would have been 3.22%.

FDI is a wholly-owned indirect subsidiary of Boston Institutional Group,
Inc. FDI currently provides administration and distribution services for a
number of other registered investment companies.

For more information concerning the payment of expenses of the Trust, see
"INVESTMENT ADVISORY AND OTHER SERVICES" in the Statement of Additional
Information.

CAPITAL SHARES

As a Delaware Business Trust, the Trust is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the 1940 Act; (ii) changing fundamental investment objectives and restrictions
of the Portfolio; and (iii) filling vacancies on the Board in the event that
less than a majority of the Trustees were elected by shareholders. The Trust
expects that there will be no meetings of shareholders for the purpose of
electing trustees unless and until such time as less than a majority of the
trustees holding office have been elected by shareholders. At such time, the
trustees then in office will call a shareholder meeting for the election of
trustees. In addition, holders of record of not less than two-thirds of the
outstanding shares of the Trust may remove a Trustee from office by a vote cast
in person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the Trust. The
Trust has the obligation to assist in any such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.

TAXES AND DIVIDENDS

OFFERING AND REDEMPTION OF SHARES

Distributions from Eligible Plans, except distributions representing
returns of non- deductible contributions to the Plan, generally are taxable
income to the participant. Distributions from a Plan to a participant prior to
the time the participant reaches age 59-1/2 or becomes permanently disabled may
subject the participant to an additional 10% penalty tax imposed by the IRS.
Participants should consult their tax advisers concerning the timing and
consequences of distributions from an Eligible Plan.

OTHER INFORMATION

<PAGE>

APPENDIX

OPTIONS

FUTURES CONTRACTS

<PAGE>

- ----------------------------------------------------------------------------
PROSPECTUS
JPM SERIES TRUST II
JPM INTERNATIONAL EQUITY PORTFOLIO
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
1-800-521-5411
- ----------------------------------------------------------------------------

JPM International Equity Portfolio (the "Portfolio") is a separate
diversified portfolio of JPM Series Trust II, an open-end management investment
company organized as a Delaware Business Trust (the "Trust"). The Portfolio
seeks to provide a high total return from a portfolio of equity securities of
foreign corporations.

The Portfolio is advised by J.P. Morgan Investment Management, Inc.
("Morgan" or the "Adviser").

The Portfolio permits investments in any nation, which involve special
considerations and risks.

==============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
===========================================================================

The date of this Prospectus is January 1, 1997.

<PAGE>

TABLE OF CONTENTS
PAGE

ANNUAL OPERATING EXPENSES................................................
FINANCIAL HIGHLIGHTS.....................................................
PERFORMANCE AND YIELD INFORMATION........................................
THE PORTFOLIO............................................................
INVESTMENT OBJECTIVE AND POLICIES........................................
Investment Objective.................................................
Investment Policies..................................................
Risk Factors.........................................................
ADDITIONAL INVESTMENT INFORMATION........................................
Convertible Securities...............................................
When-Issued and Delayed Delivery Securities..........................
Repurchase Agreements................................................
Loans and Portfolio Securities.......................................
Reverse Repurchase Agreements........................................
Foreign Investment Information.......................................
Foreign Currency Exchange Transactions...............................
Illiquid Investments; Privately Placed and Other
Unregistered Securities.......................................
Futures and Options Transactions.....................................
Money Market Instruments.............................................
PORTFOLIO TURNOVER.......................................................
INVESTMENT RESTRICTIONS..................................................
MANAGEMENT OF THE TRUST AND PORTFOLIO....................................
CAPITAL SHARES...........................................................
TAXES AND DIVIDENDS......................................................
OFFERING AND REDEMPTION OF SHARES........................................
OTHER INFORMATION........................................................
APPENDIX ................................................................

<PAGE>

ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)

Management Fees......................................... .60%
Other Expenses.......................................... .60%
Total Portfolio Operating Expenses..................... 1.20%

Example:

An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end of each time period:

1 Year $12
3 Years $38
5 Years $66
10 Years $145

- -----------------------------------------------------------------------------
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES OF THE PORTFOLIO AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES
A 5% ANNUAL RETURN, THE PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT
IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
- ------------------------------------------------------------------------------

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The information in the foregoing table has been
restated to reflect an agreement by Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), an affiliate of Morgan, to reimburse the Trust to the
extent certain expenses exceed in any fiscal year 1.20% of the Portfolio's
average daily net assets. The information in the foregoing table does not
reflect deduction of account fees and charges to separate accounts or related
insurance policies that may be imposed by participating insurance companies. For
a further description of the various costs and expenses incurred in the
operation of the Portfolio, as well as expense reimbursement or waiver
arrangements, see "Management of the Trust and Portfolio."

<PAGE>

FINANCIAL HIGHLIGHTS

January 3, Six Month Period
1995 through Ended
December 31, June 30, 1996
1995 (Unaudited)
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.86
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.15 0.01
Net realized and unrealized gains (losses) on
securities & foreign currency 1.08 0.73
Total from investment operations 1.23 0.74
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.09)
Dividends in excess of net investment income (0.10)
Distributions from net capital gains (0.18)
------------- --------
Total distributions (0.37) (0.00)
Net asset value, end of period $ 10.86 $ 11.60
============= ==========
Total Return2 12.38% 6.77%
Ratios to average net assets:
(Annualized)
Expenses3 1.20% 1.20%
Net investment income 1.06% 1.90%
Portfolio turnover rate 68.00% 47.55%
Average Commission Rate Paid N/A $ 0.0012
Net assets, at end of period $3,992,275 $4,770,701
============ ==========
- -------------------------------

1 From January 3, 1995 (commencement of operations) to
December 31, 1996, Chubb Investment Advisory Corporation
("Chubb Investment Advisory"), a wholly-owned subsidiary of
Chubb Life Insurance Company of America ("Chubb Life"),
served as the Portfolio's investment manager, and Morgan
Guaranty served as the Portfolio's sub-investment adviser.
Effective January 1, 1997, Morgan began serving as the
Portfolio's investment adviser. See "OTHER INFORMATION."

2 Total return assumes reinvestment of all dividends during
the period and does not reflect deduction of account fees
and charges to separate accounts or related insurance
policies, which, if reflected, would reduce the Portfolio's
total return for the period indicated. Investment returns
and principal values will fluctuate and shares, when
redeemed, may be worth more or less than their original
cost. Total returns for periods of less than one year have
not been annualized.

3 All related party fees have been waived and all other expenses of the
Portfolio have been assumed in part for 1996 and 1995 by Chubb Life and
Morgan Guaranty. Had the fees not been waived and expenses not been
assumed, the ratios of the Portfolio's expenses to average net assets
would have been 3.21% in 1996 and 3.16% in 1995.
</TABLE>
<PAGE>

PERFORMANCE AND YIELD INFORMATION

Set forth below is historical performance information for the Portfolio and
for an appropriate securities index with respect to the Portfolio. In addition,
set forth below is hypothetical performance information derived from historical
composite performance of all Private Accounts managed by Morgan which have
investment objectives, policies and strategies substantially similar to those of
the Portfolio and, thus, is deemed relevant to Portfolio investors. THE
HYPOTHETICAL PERFORMANCE INFORMATION OF THE PRIVATE ACCOUNTS OF THE
INTERNATIONAL EQUITY COMPOSITE DOES NOT REPRESENT THE HISTORICAL PERFORMANCE OF
THE PORTFOLIO AND SHOULD NOT BE INTERPRETED AS INDICATIVE OF THE FUTURE
PERFORMANCE OF THE PORTFOLIO. Moreover, the Private Accounts are not registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), and,
therefore, are not subject to certain investment restrictions, diversification
requirements and other restrictions that are imposed by the 1940 Act and the
Internal Revenue Service, which, if imposed, might have adversely affected the
performance of the Private Accounts. In addition, unlike the Portfolio, the
Private Accounts do not limit their country allocations to no more than 25% of
their assets and typically do not invest in emerging markets securities.

The hypothetical performance results of the Private Accounts set forth
below represent the audited actual performance results of the composite,
adjusted to reflect the deduction of the Portfolio's fees and expenses. These
results have been calculated in accordance with Performance Presentation
Standards of the Association for Investment Management and Research. The term
"average annual total return" signifies that cumulative total returns for a
stated time period have been annualized over such period. These returns are
time-weighted rates of return which include all accrued income and realized and
unrealized gains or losses, but do not reflect the deduction of investment
advisory fees actually charged to the Private Accounts.
<TABLE>
<CAPTION>
Average Annual Total Return
5 Years or 10 Years or
1 YEAR SINCE SINCE
INCEPTION INCEPTION
<S> <C> <C> <C>
JPM International Equity Portfolio 17.30% 13.01%* N/A
International Equity Composite 9.61% 9.43% 14.26%
Morgan Stanley Capital 11.21% 9.37% 13.62%
International Europe, Australia,
Far East (Free) Index**
- ---------------
* Commenced operations January 3, 1995.
** The Morgan Stanley Capital International Europe, Australia, Far East
(Free) Index is a broadly diversified international index composed of the equity
securities of approximately 1,000 companies located outside the United States.
</TABLE>

THE PORTFOLIO

Portfolio shares are both offered and redeemed at their net asset value
without the addition of any sales load or redemption charge. See "OFFERING AND
REDEMPTION OF SHARES."

INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE: The Portfolio's investment objective is to provide a
high total return from a portfolio of equity securities of foreign corporations.
Total return will consist of realized and unrealized capital gains and losses
plus income less expenses.

The Portfolio is designed for investors with a long-term investment horizon
who want to diversify their investments by adding international equities and
take advantage of investment opportunities outside the U.S.

INVESTMENT POLICIES: The Portfolio seeks to achieve its investment
objective through country allocation and stock valuation and selection. Based on
fundamental research, quantitative valuation techniques, and experienced
judgment, the Adviser uses a structured decision-making process to allocate the
Portfolio's investments across the countries of the world outside the United
States.

Under normal market conditions, the Portfolio will invest in a minimum of
three different foreign countries. However, when the Adviser determines that
adverse market conditions exist, the Portfolio may adopt a temporary defensive
position and invest in less than three different foreign countries.

Using a systematic stock selection process and analysts' industry
expertise, securities within each country are ranked within economic sectors
according to their relative value. Based on this valuation, the Adviser selects
the securities which appear the most attractive for the Portfolio. The Adviser
believes that, under normal market conditions, economic sector weightings
generally will be similar to those of one or more relevant equity indices.

Finally, the Adviser actively manages currency exposure, in conjunction
with country and stock allocation, in an attempt to protect and possibly enhance
the Portfolio's market value. Through the use of forward foreign currency
exchange contracts, the Adviser will adjust the Portfolio's foreign currency
weightings to reduce its exposure to currencies deemed unattractive and, in
certain circumstances, increase exposure to currencies deemed attractive, as
market conditions warrant, based on fundamental research, technical factors, and
the judgment of a team of experienced currency managers. For further information
on foreign currency exchange transactions, see "ADDITIONAL INVESTMENT
INFORMATION."

The Portfolio intends to manage its portfolio actively in pursuit of its
investment objective. The Portfolio does not expect to trade in securities for
short-term profits; however, when circumstances warrant, securities may be sold
without regard to the length of time held. To the extent the Portfolio engages
in short-term trading it may incur increased transaction costs.

Equity Investments. Under normal market conditions, the Adviser intends to
keep the Portfolio essentially fully invested with at least 65% of the value of
its total assets in equity securities of foreign issuers, consisting of common
stocks and other securities with equity characteristics such as preferred stock,
warrants, rights and convertible securities which may be held through American
Depositary Receipts ("ADRs"). The Portfolio's primary equity investments are the
common stock of companies based in developed countries outside the U.S. and in
developing countries. The common stock in which the Portfolio may invest
includes the common stock of any class or series or any similar equity interest
such as trust or limited partnership interests. See "ADDITIONAL INVESTMENT
INFORMATION." The Portfolio invests in securities listed on the foreign or
domestic securities exchanges and securities traded in foreign or domestic
over-the-counter markets, and may invest in certain restricted or unlisted
securities.

The Portfolio also may invest in dollar and non-dollar denominated money
market instruments (see "Money Market Instruments" for more information
concerning the types of money market instruments in which the Portfolio may
invest) and securities on a when-issued or delayed delivery basis, enter into
repurchase and reverse repurchase agreements, loan its portfolio securities,
purchase certain privately placed securities and enter into certain hedging
transactions, including options on equity securities, options on foreign stock
indices and forward foreign currency exchange contracts. For a discussion of
these investments and investment techniques, see "ADDITIONAL INVESTMENT
INFORMATION."

RISK FACTORS: All or a significant portion of the Portfolio may be invested
in foreign securities and ADRs, and investors should understand the special
considerations and risks related to such an investment emphasis, including
foreign currency risks. See "ADDITIONAL INVESTMENT INFORMATION." The prices of
the types of securities usually purchased by the Portfolio will tend to
fluctuate. As a result, the net asset value of the Portfolio may experience
greater short-term and long-term variations than funds that invest primarily in
fixed income securities.

ADDITIONAL INVESTMENT INFORMATION

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with brokers, dealers or banks that meet the credit guidelines
established by the Board. 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 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. 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 five 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 is for the
account of the Portfolio and its shareholders. 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 affiliate of the
Trust, the Adviser or Distributor, unless otherwise permitted by applicable law.

Foreign Investment Information. The Portfolio invests primarily in
securities of foreign issuers. Investment in securities of foreign issuers and
in obligations of foreign branches of domestic banks involves somewhat different
investment risks from those affecting securities of U.S. domestic issuers. There
may be limited publicly available information with respect to foreign issuers,
and foreign issuers are not generally subject to uniform accounting, auditing
and financial standards and requirements comparable to those applicable to
domestic companies. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes which may decrease the net return
on foreign investments as compared to dividends and interest paid to the
Portfolio by domestic companies.

The Portfolio may invest in securities of issuers in "emerging markets. "
Emerging markets include any country which in the opinion of the Adviser is
generally considered to be an emerging or developing country by the
international financial community. These countries generally include every
country in the world except the U.S., Canada, Japan, Australia, New Zealand and
most countries in Western Europe. Investments in securities of emerging markets
countries entails a high degree of risk. Investment in securities of issuers in
emerging markets carry all of the risks of investing in securities of foreign
issuers outlined in this section to a heightened degree. These heightened risks
include (i) greater risks of expropriation, confiscatory taxation,
nationalization, and less social, political and economic stability; (ii) the
small current size of the markets for securities of emerging markets issuers and
the currently low or non-existent volume of trading, resulting in lack of
liquidity and in price volatility; (iii) certain national policies which may
restrict the Portfolio's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) the absence of developed legal structures governing private
or foreign investment and private property.

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

Money Market Instruments. The Portfolio is permitted to invest in money
market instruments, although it intends to stay invested in equity securities to
the extent practical in light of its investment objective and long-term
investment perspective. The Portfolio may make money market investments pending
other investment or settlement, for liquidity or in adverse market conditions.
The money market investments permitted for the Portfolio include obligations of
the U.S. Government and its agencies and instrumentalities, other debt
securities, commercial paper, bank obligations and repurchase agreements. The
Porfolio also may invest in short-term obligations of sovereign foreign
governments, their agencies, instrumentalities and political subdivisions. For
more detailed information about these money market instruments, see "INVESTMENT
OBJECTIVES AND POLICIES" in the Statement of Additional Information.

PORTFOLIO TURNOVER

INVESTMENT RESTRICTIONS

MANAGEMENT OF THE TRUST AND PORTFOLIO

Morgan uses a sophisticated, disciplined, collaborative process for
managing all asset classes. 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 their business experience for the past five years are indicated
parenthetically): Paul A. Quinsee, Vice President (since January, 1995, employed
by Morgan since February, 1992, previously Vice President, Citibank), Thomas P.
Madsen, Managing Director (since January, 1995, employed by Morgan since prior
to 1988) and Anne H. Richards, Vice President (since January, 1997, employed by
Morgan since May, 1994, employed by Alliance Capital Ltd. from September, 1992
to April, 1994 and Cambridge Consultants Ltd. from January, 1989 to July, 1991).

As compensation for Morgan's services under the Investment Advisory
Agreement, the Trust has agreed to pay Morgan a monthly fee at the annual rate
of .60% of the Portfolio's average daily net assets.

As compensation for Morgan Guaranty's services under the Administrative
Services Agreement, the Trust has agreed to pay Morgan Guaranty a monthly fee at
the annual rate of .60% of the Portfolio's average daily net assets.

Under the terms of the Administrative Services Agreement, Morgan Guaranty
may delegate one or more of its responsibilities to other entities at Morgan
Guaranty's expense.

From January 3, 1995 (commencement of operations) to December 31, 1996,
Chubb Investment Advisory served as the Portfolio's investment manager and
Morgan Guaranty served as sub-investment adviser. The compensation to Morgan
Guaranty, as sub-investment adviser, was paid directly from the investment
management fees paid by the Trust to Chubb Investment Advisory. For the period
January 3, 1995 (commencement of operations) through December 31, 1995, all
investment management fees payable by the Portfolio to Chubb Investment Advisory
totaled .80% of the Portfolio's average daily net assets. For the period January
3, 1995 through December 31, 1995, sub-investment advisory fees payable by Chubb
Investment Advisory to Morgan Guaranty totaled .60% of the Portfolio's average
daily net assets. Because a portion of the Portfolio's fees and expenses were
reimbursed, the ratio of the Portfolio's operating expenses to average net
assets for such period was 1.20%. Had a portion of the Portfolio's fees and
expenses not been reimbursed, the ratio of the Portfolio's operating expenses to
average net assets for such period would have been 3.16%.

FDI is a wholly-owned indirect subsidiary of Boston Institutional Group,
Inc. FDI currently provides administration and distribution services for a
number of other registered investment companies.

For more information concerning the payment of expenses of the Trust, see
"INVESTMENT ADVISORY AND OTHER SERVICES" in the Statement of Additional
Information.

CAPITAL SHARES

As a Delaware Business Trust, the Trust is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust is, however, required to hold shareholder meetings for
such purposes as, for example: (i) approving certain agreements as required by
the 1940 Act; (ii) changing fundamental investment objectives and restrictions
of the Portfolio; and (iii) filling vacancies on the Board in the event that
less than a majority of the Trustees were elected by shareholders. The Trust
expects that there will be no meetings of shareholders for the purpose of
electing trustees unless and until such time as less than a majority of the
trustees holding office have been elected by shareholders. At such time, the
trustees then in office will call a shareholder meeting for the election of
trustees. In addition, holders of record of not less than two-thirds of the
outstanding shares of the Trust may remove a Trustee from office by a vote cast
in person or by proxy at a shareholder meeting called for that purpose at the
request of holders of 10% or more of the outstanding shares of the Trust. The
Trust has the obligation to assist in any such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.

TAXES AND DIVIDENDS

OFFERING AND REDEMPTION OF SHARES

OTHER INFORMATION

<PAGE>

APPENDIX

OPTIONS

FUTURES CONTRACTS

JPM SERIES TRUST II
60 State Street
Boston, Massachusetts 02109
1-800-521-5411

A SERIES TRUST WITH
JPM TREASURY MONEY MARKET PORTFOLIO
JPM BOND PORTFOLIO
JPM EQUITY PORTFOLIO
JPM SMALL COMPANY PORTFOLIO
JPM INTERNATIONAL EQUITY PORTFOLIO

STATEMENT OF ADDITIONAL INFORMATION
January 1, 1997

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS BUT
SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS OF THE TRUST.
IT IS INCORPORATED BY REFERENCE INTO THE PROSPECTUS. A COPY OF THE PROSPECTUS
MAY BE OBTAINED BY WRITING OR CALLING THE TRUST AT THE ADDRESS OR TELEPHONE
NUMBER ABOVE.

The date of the Prospectus to which this Statement of Additional
Information relates is January 1, 1997.

<PAGE>

<TABLE>
TABLE OF CONTENTS

Page
<S> <C>

BUSINESS HISTORY................................................................................................B-4
INVESTMENT OBJECTIVES AND POLICIES..............................................................................B-4
JPM Treasury Money Market Portfolio...........................................................B-4
JPM Bond Portfolio............................................................................B-4
JPM Equity Portfolio..........................................................................B-5
JPM Small Company Portfolio...................................................................B-5
JPM International Equity Portfolio............................................................B-5
Money Market Instruments......................................................................B-6
U.S. Treasury Securities.............................................................B-6
Additional U.S. Government Obligations...............................................B-6
Foreign Government Obligations.......................................................B-6
Bank Obligations.....................................................................B-6
Commercial Paper.....................................................................B-6
Repurchase Agreements................................................................B-7
Corporate Bonds and Other Debt Securities.....................................................B-8
High-Yield/High-Risk Bonds...........................................................B-8
Asset-Backed Securities.......................................................................B-8
Equity Investments............................................................................B-8
Equity Securities....................................................................B-9
Foreign Investments...........................................................................B-9
Additional Investments.......................................................................B-10
When-Issued and Delayed Delivery Securities.........................................B-10
Investment Company Securities.......................................................B-10
Reverse Repurchase Agreements.......................................................B-10
Mortgage Dollar Roll Transactions...................................................B-11
Loans of Portfolio Securities.......................................................B-11
Privately Placed and Certain Unregistered
Securities.................................................................................B-11
Quality and Diversification Requirements.....................................................B-12
JPM Treasury Money Market Portfolio.................................................B-12
JPM Bond Portfolio..................................................................B-12
JPM Equity, Small Company and
International Equity Portfolios...................................................B-12
Options and Futures Transactions.............................................................B-13
Exchange Traded and Over the Counter Options........................................B-13
Futures Contracts and Options on Futures
Contracts.........................................................................B-13
Combined Activities.................................................................B-14
Correlation of Price Changes........................................................B-14
Liquidity of Options and Futures Contracts..........................................B-14
Position Limits.....................................................................B-15
Asset Coverage for Futures Contracts and
Option Positions..................................................................B-15
Risk Management..............................................................................B-15

</TABLE>

<PAGE>

INVESTMENT RESTRICTIONS...................................................B-15
Fundamental Investment Restrictions.....................B-15
Non-Fundamental Investment Restrictions.................B-16
JPM Treasury Money Market
Portfolio....................................B-17
JPM Bond, Equity, Small Company
and International Equity Portfolios..........B-17
TRUSTEES AND OFFICERS.....................................................B-18
INVESTMENT ADVISORY AND OTHER SERVICES....................................B-21
Investment Advisory Agreement...........................B-21
Administrative Services Agreement.......................B-22
Prior Management Arrangements...........................B-23
Independent Auditors....................................B-24
Custodian...............................................B-24
Payment of Expenses.....................................B-24
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS......................... B-24
CAPITAL SHARES............................................................B-26
OFFERING AND REDEMPTION OF SHARES.........................................B-27
DETERMINATION OF NET ASSET VALUE..........................................B-28
TAXES.....................................................................B-29
PERFORMANCE AND YIELD INFORMATION.........................................B-30
Money Market Portfolio..................................B-30
Non-Money Market Portfolios.............................B-30
DELAWARE BUSINESS TRUST...................................................B-32
FINANCIAL STATEMENTS......................................................B-32
ADDITIONAL INFORMATION....................................................B-33
APPENDIX A................................................................B-34

<PAGE>

BUSINESS HISTORY

JPM Series Trust II (the "Trust"), a Delaware Business Trust, is an
open-end diversified management investment company established to provide for
the investment of assets of separate accounts of life insurance companies
("Participating Insurance Companies") and of qualified pension and retirement
plans outside of the separate account context ("Eligible Plans" or "Plans").
Separate accounts acquire such assets pursuant to the sale of variable annuity
contracts and variable life insurance policies (collectively, the "Policies").
The Trust is composed of five separate portfolios (each, a "Portfolio" and
collectively, the "Portfolios") which operate as distinct investment vehicles.
The Portfolios are JPM Treasury Money Market Portfolio, JPM Bond Portfolio, JPM
Equity Portfolio, JPM Small Company Portfolio and JPM International Equity
Portfolio.

The Trust was organized in Delaware on October 28, 1993 and had no business
history prior to that date. Prior to January 1, 1997, the Trust's name was The
Chubb Series Trust and the names of the corresponding Portfolios were The
Resolute Treasury Money Market Portfolio, The Resolute Bond Portfolio, The
Resolute Equity Portfolio, The Resolute Small Company Portfolio and The Resolute
International Equity Portfolio. In the future, the Trust may add or delete
portfolios.

Each Portfolio's investment adviser is J.P. Morgan Investment Management,
Inc. ("Morgan" or the "Adviser").

INVESTMENT OBJECTIVES AND POLICIES

JPM TREASURY MONEY MARKET PORTFOLIO is designed to be a convenient means of
making substantial investments in short-term direct obligations of the United
States Treasury. JPM Treasury Money Market Portfolio's investment objective is
to provide current income, maintain a high level of liquidity, and preserve
capital.

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

JPM BOND PORTFOLIO is designed to be a convenient means of making
substantial investments in a broad range of corporate and government debt
obligations and related investments, subject to certain quality and other
restrictions. JPM Bond Portfolio's investment objective is to provide a high
total return consistent with moderate risk of capital and maintenance of
liquidity. Although the net asset value of JPM Bond Portfolio will fluctuate,
the Portfolio attempts to preserve the value of its investments to the extent
consistent with its objective.

The Portfolio attempts to achieve its investment objective by investing
primarily in corporate and government debt obligations and related securities
described in the Prospectus and this Statement of Additional Information. The
Portfolio may purchase or sell financial futures contracts and options in order
to attempt to reduce the volatility of its portfolio, manage market risk and
minimize fluctuations in net asset value. For a discussion of these investments,
see "OPTIONS AND FUTURES TRANSACTIONS."

<PAGE>

JPM EQUITY PORTFOLIO is designed for investors who want an actively managed
portfolio of selected equity securities that seeks to outperform the S&P 500
Index. JPM Equity Portfolio's investment objective is to provide a high total
return from a portfolio comprised of selected equity securities.

During normal market conditions, at least 65% of the Portfolio's net assets
will be invested in equity securities, consisting of common stocks and other
securities with equity characteristics such as preferred stock, warrants, rights
and convertible securities. The Portfolio's primary investments are the common
stock of U.S. corporations with market capitalizations above $1.5 billion.

JPM SMALL COMPANY PORTFOLIO is designed for investors who are willing to
assume the somewhat higher risk of investing in small companies in order to seek
a higher return over time than might be expected from a portfolio of stocks of
large companies. JPM Small Company Portfolio's investment objective is to
provide a high total return from a portfolio of equity securities of small
companies.

The Portfolio may invest in the same types of securities as permitted for
the JPM Equity Portfolio.

JPM INTERNATIONAL EQUITY PORTFOLIO is designed for investors with a
long-term investment horizon who want to diversify their portfolios by adding
international equities and take advantage of investment opportunities outside
the U.S. JPM International Equity Portfolio's investment objective is to provide
a high total return from a portfolio of equity securities of foreign
corporations.

The Portfolio seeks to achieve its investment objective by investing
primarily in the equity securities of foreign corporations, consisting of common
stock and other securities with equity characteristics such as preferred stock,
warrants, rights and convertible securities. Under normal circumstances, the
Portfolio expects to invest at least 65% of its total assets in such securities.
The Portfolio does not intend to invest in U.S. securities (other than
short-term instruments), except temporarily when extraordinary circumstances
prevailing at the same time in a significant number of foreign countries render
investments in such countries inadvisable.

The following discussion supplements the information regarding the
investment objective of each Portfolio and the policies to be employed to
achieve its objective as set forth above and in the Prospectus.

MONEY MARKET INSTRUMENTS

As discussed in the Prospectus, each 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 Portfolios appears below. See "QUALITY AND DIVERSIFICATION
REQUIREMENTS."

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U.S. TREASURY SECURITIES. Each of the Portfolios 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 U.S.

ADDITIONAL U.S. GOVERNMENT OBLIGATIONS. Each of the Portfolios, except the
JPM Treasury Money Market 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 U.S. Government.
In the case of securities not backed by the full faith and credit of the U.S.,
each 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 U.S. Government itself in the event the agency or
instrumentality does not meet its commitments. Securities in which each
Portfolio, except the JPM Treasury Money Market Portfolio, may invest that are
not backed by the full faith and credit of the U.S. Government include, but are
not limited to, obligations of the Tennessee Valley Authority, the Federal
National Mortgage Association, and the United States 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 U.S. Government include obligations of the Government National Mortgage
Association, the Farmers Home Administration, and the Export-Import Bank.

FOREIGN GOVERNMENT OBLIGATIONS. Each of the Portfolios, except the JPM
Treasury Money Market Portfolio, subject to its applicable investment policies,
also may invest in short-term obligations of foreign sovereign governments or of
their agencies, instrumentalities, authorities or political subdivisions. These
securities may be denominated in U.S. dollars or in another currency. See
"FOREIGN INVESTMENTS."

BANK OBLIGATIONS. Each of the Portfolios, except the JPM Treasury Money
Market Portfolio, unless otherwise noted in the Prospectus or below, may invest
in negotiable certificates of deposit, time deposits and bankers' acceptances of
(i) banks, savings and loan associations and savings banks which have more than
$2 billion in total assets (the "Asset Limitation") and are organized under the
laws of the U.S. or any state, (ii) foreign branches of these banks or of
foreign banks of equivalent size (Euros) and (iii) U.S. branches of foreign
banks of equivalent size (Yankees). The Asset Limitation does not apply to the
JPM International Equity Portfolio. See "FOREIGN INVESTMENTS." The Portfolios
will not invest in bank obligations for which the Adviser, or any of its
affiliated persons, is the ultimate obligor or accepting bank. Each of the
Portfolios, other than JPM Treasury Money Market Portfolio, also may invest in
obligations of international banking institutions designated or supported by
national governments to promote economic reconstructions, development or trade
between nations (e.g., the European Investment Bank, the InterAmerican
Development Bank, or the World Bank).

COMMERCIAL PAPER. Each of the Portfolios, except the JPM Treasury Money
Market 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 the Adviser, acting as agent, for no additional fee. The monies
loaned to the borrower come from accounts maintained with or managed by the
Adviser or its affiliates, pursuant to arrangements with such accounts. Interest
and principal payments are credited to such accounts. The Adviser, 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
Adviser. Since master demand obligations typically are not rated by credit
rating agencies, the Portfolios may invest in such unrated obligations only if
at the time of an investment the obligation is determined by the Adviser to have
a credit quality which satisfies the particular 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 Portfolios to be liquid because they are payable upon demand.
The Portfolios do not have any specific percentage limitation on investments in
master demand obligations.

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REPURCHASE AGREEMENTS. Each of the Portfolios may enter into repurchase
agreements with brokers, dealers or banks that meet the credit guidelines
approved by the Trust's Board of Trustees (the "Board"). In a repurchase
agreement, a 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 also may be viewed as a fully
collateralized loan of money by a Portfolio to the seller. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will a Portfolio invest in repurchase agreements for more than thirteen
months. The securities which are subject to repurchase agreements, however, may
have maturity dates in excess of thirteen months from the effective date of the
repurchase agreement. JPM Treasury Money Market Portfolio will only enter into
repurchase agreements involving U.S. Treasury securities. The Portfolios 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 Portfolios in each agreement plus accrued interest, and
the Portfolios will make payment for such securities only upon physical delivery
or upon evidence of book entry transfer to the account of the Trust's custodian.
JPM Treasury Money Market Portfolio will be fully collateralized within the
meaning of Rule 2a-7 under the Investment Company Act of 1940, as amended (the
"1940 Act"). If the seller defaults, a 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 the collateral by a Portfolio may be delayed or limited. See
"INVESTMENT RESTRICTIONS."

Each of the Portfolios (other than JPM Treasury Money Market Portfolio) may
make investments in other debt securities with remaining effective maturities of
not more than thirteen months, including, without limitation, corporate bonds of
foreign and domestic issuers, asset-backed securities and other obligations
described in the Prospectus or this Statement of Additional Information.

<PAGE>

CORPORATE BONDS AND OTHER DEBT SECURITIES

As discussed in the Prospectus, JPM Bond Portfolio may invest in bonds and
other debt securities of domestic and foreign issuers to the extent consistent
with its investment objective and policies. A description of these investments
appears in the Prospectus and below. See "QUALITY AND DIVERSIFICATION
REQUIREMENTS." For information on short-term investments in these securities,
see "MONEY MARKET INSTRUMENTS."

HIGH YIELD/HIGH RISK BONDS. High yield/high risk, below investment grade
securities (commonly known as "junk bonds") involve significant credit and
liquidity concerns and fluctuating yields. Lower rated bonds also involve the
risk that the issuer will not make interest or principal payments when due. More
careful analysis of the financial condition of each issuer of lower rated
securities is therefore necessary. During an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service their
principal and interest payment obligations, to meet projected business goals to
obtain additional financing. The market prices of lower grade securities are
generally less sensitive to interest rate changes than higher rated investments,
but more sensitive to adverse economic or political changes or individual
developments specific to the issuer. Periods of economic or political
uncertainty and change can be expected to result in volatility of prices of
these securities. Lower rated securities also may have less liquid markets than
higher rated securities, and their liquidity as well as their value may be more
severely affected by adverse economic conditions. Adverse publicity and investor
perceptions as well as new proposed laws also may have a greater negative impact
on the market for lower rated bonds.

ASSET-BACKED SECURITIES. Asset-backed securities directly or indirectly
represent a participation interest in, or are secured by and payable from, a
stream of payments generated by particular assets such as motor vehicle or
credit card receivables. Payments of principal and interest may be guaranteed up
to certain amounts and for a certain time period by a letter of credit issued by
a financial institution unaffiliated with the entities issuing the securities.
The asset-backed securities in which a Portfolio may invest are subject to the
Portfolio's overall credit requirements. However, asset-backed securities, in
general, are subject to certain risks. Most of these risks are related to
limited interests in applicable collateral. For example, credit card debt
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts on credit card debt
thereby reducing the balance due. Additionally, if the letter of credit is
exhausted, holders of asset-backed securities also may experience delays in
payments or losses if the full amounts due on underlying sales contracts are not
realized. Because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of the market cycle has not been tested.

EQUITY INVESTMENTS

As discussed in the Prospectus, JPM Equity, Small Company and International
Equity Portfolios invest primarily in equity securities consisting of common
stock and other securities with equity characteristics. The securities in which
these Portfolios invest include those listed on any domestic or foreign
securities exchange or traded in the over-the-counter markets, as well as
certain restricted or unlisted securities. A discussion of the various types of
equity investments which may be purchased by these Portfolios appears in the
Prospectus and below. See "QUALITY AND DIVERSIFICATION REQUIREMENTS."

<PAGE>

EQUITY SECURITIES. The common stocks in which the Portfolios may invest
include the common stock of any class or series of a domestic or foreign
corporation or any similar equity interest, such as trust or partnership
interests. The Portfolios equity investments also may include preferred stock,
warrants, rights and convertible securities. These investments may or may not
pay dividends and may or may not carry voting rights. Common stock occupies the
most junior position in a company's capital structure.

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

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

FOREIGN INVESTMENTS

JPM International Equity Portfolio makes substantial investments in foreign
securities. JPM Bond, Equity and Small Company Portfolios may invest in certain
foreign securities. JPM Equity and Small Company Portfolios do not expect to
invest more than 30% and 30%, respectively, of their respective total assets at
the time of purchase in securities of foreign issuers. JPM Bond Portfolio does
not expect more than 20% of its foreign investments to be in securities which
are not U.S. dollar denominated. JPM Equity and Small Company Portfolios do not
expect more than 10% of their respective foreign investments to be in securities
which are not listed on a national securities exchange or which are not U.S.
dollar-denominated. In the case of JPM Bond Portfolio, any foreign commercial
paper must not be subject to foreign withholding tax at the time of purchase.
Foreign investments may be made directly in securities of foreign issuers or in
the form of American Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs").

Generally, ADRs and EDRs are receipts issued by a bank or trust company
that evidence ownership of underlying securities issued by a foreign corporation
and that are designed for use in the domestic, in the case of ADRs, or European,
in the case of EDRs, securities markets.

Since investments in foreign securities may involve foreign currencies, the
value of a Portfolio's assets as measured in U.S. dollars may be affected by
changes in currency rates and in exchange control regulations, including
currency blockage. JPM Bond, Equity, Small Company and International Equity
Portfolios may enter into forward commitments for the purchase or sale of
foreign currencies in connection with the settlement of foreign securities
transactions, to hedge the underlying currency exposure related to foreign
investments or to gain exposure to the foreign currency in an attempt to realize
gains. See "ADDITIONAL INVESTMENT INFORMATION" in the Prospectus.

<PAGE>

For a description of the risks associated with investing in foreign
securities, see "ADDITIONAL INVESTMENT INFORMATION" in the Prospectus.

ADDITIONAL INVESTMENTS

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities can take place a month or more after the date of the
purchase commitment. The purchase price and the interest rate payable, if any,
on the securities are fixed on the purchase commitment date or at the time the
settlement date is fixed. The value of such securities is subject to market
fluctuation and no interest accrues to a Portfolio until settlement takes place.
At the time a Portfolio makes the commitment to purchase securities on a when-
issued or delayed delivery basis, it will record the transaction, reflect the
value each day of such securities in determining its net asset value and, if
applicable, calculate the maturity for the purposes of average maturity from
that date. At the time of settlement, a when-issued security may be valued at
less than the purchase price. To facilitate such acquisitions, each Portfolio
will maintain with the Trust's 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. See "INVESTMENT
ADVISORY AND OTHER SERVICES" for more information concerning the Trust's
custodian. On delivery dates for such transactions, each Portfolio will meet its
obligations from maturities or sales of the securities held in the segregated
account and/or from cash flow. If a Portfolio chooses to dispose of the right to
acquire a when- issued security prior to its acquisition, it could, as with the
disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation. It is the current policy of each Portfolio not to enter into
when-issued commitments exceeding in the aggregate 15% of the market value of
the Portfolio's total assets, less liabilities other than the obligations
created by when-issued commitments.

INVESTMENT COMPANY SECURITIES. Securities of other investment companies may
be acquired by each Portfolio to the extent permitted under the 1940 Act. These
limits require that, as determined immediately after a purchase is made, (i) not
more than 5% of the value of 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 the Portfolio's 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, a 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. Each Portfolio may enter into reverse
repurchase agreements. In a reverse repurchase agreement, a Portfolio sells a
security and agrees to repurchase the same security at a mutually agreed upon
date and price (JPM Treasury Money Market Portfolio will only enter into reverse
repurchase agreements involving Treasury securities). Reverse repurchase
agreements also may be viewed as the borrowing of money by the Portfolio and,
therefore, is a form of leverage. The Portfolios will invest the proceeds of
borrowings under reverse repurchase agreements. In addition, the Portfolios 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 Portfolios will not invest the proceeds of a reverse
repurchase agreement for a period which exceeds the duration of the reverse
repurchase agreement. A Portfolio may not enter into reverse repurchase
agreements exceeding in the aggregate one-third of the market value of its total
assets less liabilities other than the obligations created by reverse repurchase
agreements. Each Portfolio will establish and maintain with the Trust's
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.

<PAGE>

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

LOANS OF PORTFOLIO SECURITIES. Each 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 Portfolios in the normal
settlement time, currently five business days after notice, or by the borrower
on one day's notice. Borrowed securities must be returned when the loan is
terminated. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to a Portfolio and its
respective shareholders. The Portfolio may pay reasonable finders' and custodial
fees in connection with a loan. In addition, the Portfolios will consider all
facts and circumstances including the creditworthiness of the borrowing
financial institution, and the Portfolios will not make any loans in excess of
one year. The Portfolios will not lend their securities to any officer, Trustee,
Director, employee, or affiliate of the Portfolios, the Adviser or the Trust's
distributor, unless otherwise permitted by applicable law.

PRIVATELY PLACED AND CERTAIN UNREGISTERED SECURITIES. Each Portfolio,
except JPM Treasury Money Market Portfolio, may invest in privately placed,
restricted, Rule 144A or other unregistered securities as described in the
Prospectus.

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QUALITY AND DIVERSIFICATION REQUIREMENTS

As a diversified investment company, each Portfolio is subject to the
following fundamental limitations with respect to 75% of its assets: (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 securities of any one issuer. As for the other 25% of a
Portfolio's assets not subject to the limitations 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, or with respect to JPM
Treasury Money Market Portfolio, as described below. Investments not subject to
the limitations described above could involve an increased risk to a 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.

JPM TREASURY MONEY MARKET PORTFOLIO. In order to attain its investment
objective, JPM Treasury Money Market Portfolio will limit its investments to
direct obligations of the U.S. Treasury including Treasury Bills, Notes and
Bonds with remaining maturities of thirteen months or less at the time of
purchase and will maintain a dollar-weighted average portfolio maturity of not
more than 90 days.

JPM BOND PORTFOLIO. JPM Bond Portfolio invests principally in a diversified
portfolio of "high quality" and "investment grade" securities. Investment grade
debt is rated, on the date of investment, within the four highest rating
categories of Moody's Investors Service, Inc. ("Moody's"), currently Aaa, Aa, A
and Baa, or of Standard & Poor's Ratings Group ("Standard & Poor's"), currently
AAA, AA, A and BBB, while high grade debt is rated on the date of the investment
within the three highest of such categories. The Portfolio also may invest up to
35% of its total assets in securities which are "below investment grade." The
Portfolio may invest in debt securities which are not rated or other debt
securities to which these ratings are not applicable if, in the Adviser's
opinion, 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 Adviser's opinion.

JPM EQUITY, SMALL COMPANY AND INTERNATIONAL EQUITY PORTFOLIOS. JPM Equity,
Small Company and International Equity Portfolios may invest in convertible debt
securities, for which there are no specific quality requirements. 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-l 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 Adviser's opinion. At the time the Portfolio invests in any other
short-term debt securities, they must be rated A or higher by Moody's or
Standard & Poor's, or if unrated, the investment must be of comparable quality
in the Adviser's opinion.

<PAGE>

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

OPTIONS AND FUTURES TRANSACTIONS

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

The staff of the Securities and Exchange Commission ("SEC") has taken the
position that, in general, purchased OTC options and the underlying securities
used to cover written OTC options are illiquid securities. However, a Portfolio
may treat as liquid the underlying securities used to cover written OTC options,
provided it has arrangements with certain qualified dealers who agree that the
Portfolio may repurchase any option it writes for a maximum price to be
calculated by a predetermined formula. In these cases, the OTC option itself
would only be considered illiquid to the extent that maximum repurchase price
under the formula exceeds the intrinsic value of the option.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Portfolios may
purchase or sell futures contracts and purchase put and call options and sell
(i.e., write) covered 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 indices of fixed income securities and indices of equity securities.

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

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

<PAGE>

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

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

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

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
market will exist for any particular options 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 on a given day. On volatile trading days when the price fluctuation
limit is reached or a trading halt is imposed, it may be impossible for a
Portfolio to enter into new positions or close out existing positions. If the
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions, and
could potentially require a Portfolio to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, the
Portfolio's access to other assets held to cover its options or futures
positions also could be impaired. (See "EXCHANGE TRADED AND OVER-THE-COUNTER
OPTIONS" above for a discussion of the liquidity of options not traded on an
exchange.)

<PAGE>

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

ASSET COVERAGE FOR FUTURES CONTRACTS AND OPTIONS POSITIONS. The Portfolios
intend to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which a Portfolio can commit assets to
initial margin deposits and option premiums. In addition, the Portfolios will
comply with guidelines established by the SEC with respect to coverage of
options and futures contracts by mutual funds, and if the guidelines so require,
will set aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot be sold
while the futures contract or option is outstanding, unless they are replaced
with other suitable assets. As a result, there is a possibility that segregation
of a large percentage of a Portfolio's assets could impede portfolio management
or the Portfolio's ability to meet redemption requests or other current
obligations.

RISK MANAGEMENT

The Portfolios may employ non-hedging risk management techniques. Examples
of such strategies include synthetically altering the duration of a portfolio or
the mix of securities in a portfolio. For example, if the Adviser wishes to
extend maturities in a fixed income portfolio in order to take advantage of an
anticipated decline in interest rates, but does not wish to purchase the
underlying long-term securities, it might cause the Portfolio to purchase
futures contracts on long-term debt securities. Similarly, if the Adviser wishes
to decrease fixed income securities or purchase equities, it could cause the
Portfolio to sell futures contracts on debt securities and purchase future
contracts on a stock index. Such non-hedging risk management techniques are not
speculative, but because they involve leverage include, as do all leveraged
transactions, the possibility of losses as well as gains that are greater than
if these techniques involved the purchase and sale of the securities themselves
rather than their synthetic derivatives.

INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the Trust with
respect to each Portfolio. Except where otherwise noted, these investment
restrictions are "fundamental" policies that, under the 1940 Act, may not be
changed without the vote of a majority of the outstanding voting securities of
the Portfolio to which it relates. A "majority of the outstanding voting
securities" is defined in the 1940 Act as the lesser of (a) 67% or more of the
shares present at a shareholders meeting if the holders of more than 50% of the
outstanding shares are present and represented by proxy, or (b) more than 50% of
the outstanding shares. The percentage limitations contained in the restrictions
below apply at the time of the purchase of securities.

<PAGE>

Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any SEC or SEC Staff
interpretations thereof are amended or modified, no Portfolio may:

1. Purchase any security if, as a result, more than 25% of the
value of the Portfolio's total assets would be invested in
securities of issuers having their principal business
activities in the same industry. This limitation shall not
apply to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities;

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

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

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

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

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

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

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

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

The investment restrictions that follow are not fundamental policies of the
respective Portfolios and may be changed by the Board.

<PAGE>

JPM TREASURY MONEY MARKET PORTFOLIO may not:

(i) Acquire any illiquid securities if as a result thereof, more than 10%
of the market value of the Portfolio's total assets would be in investments that
are illiquid.

JPM BOND, EQUITY, SMALL COMPANY AND INTERNATIONAL EQUITY PORTFOLIOS may
not:

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

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

(iii) Acquire any illiquid securities 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;

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

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

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

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

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

<PAGE>

TRUSTEES AND OFFICERS

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

Name, Address Position with Principal Occupations
and Age Trust During Past Five Years
<S> <C> <C>

John R. Rettberg Trustee Retired; Consultant, Northrop
79-165 Montego Bay Drive Bermuda Dunes, California 92201 (59) Grumman Corporation
("Northrop") (since January,
1995)Corporate Vice President
and Treasurer, Northrop (prior to
January, 1995); Director,
Independent Colleges of Southern
California (prior to 1994);
Director, Junior Achievement
(prior to 1993).

John F. Ruffle* Trustee Retired; Consultant, J.P. Morgan
2234 Oyster Catcher Court & Co. Incorporated (since June,
Seabrook Island, South Carolina 29455 (59) 1993); Director and Vice
Chairman of J.P. Morgan & Co.
Incorporated (prior to June, 1993);
Director, Trident Corporation
(since April, 1994); Director,
Bethlehem Steel Corporation
(since September, 1990); Trustee,
Johns Hopkins University (since
April, 1990); Trustee, Overlook
Hospital Foundation (since April,
1990); Director, Student Loan
Marketing Association (since
April, 1990).

Kenneth Whipple, Jr. Trustee Executive Vice President, Ford
1115 Country Club Drive Motor Company, President, Ford
Bloomfield Hills, Michigan 48304 (62) Financial Services Group, and
Director, Ford Motor Credit
Company (since 1988); Director
and President, Ford Holdings, Inc.
(since 1989); Director, CMS
Energy Corporation and
Consumers Power Company (since
January, 1993); Director, Detroit
Country Day School (since
January, 1993); Director, Granite
Management Corporation
(formerly First Nationwide
Financial Corporation) and Granite
Savings Bank (formerly First
Nationwide Bank) (since 1988);
Director, United Way of
Southeastern Michigan (since
1988); Director, USL Capital
Corporation (since 1988);
Chairman, Director and First Vice
President, WTVS-TV (since 1988).

John N. Bell Retired; Assistant Treasurer at
462 Lenox Avenue Consolidated Edison Company of
South Orange, New Jersey 07079 (65) New York, Inc.(since 1972).

Charles E. Clough Manager, Freedom Energy
507 Dolly Road Company LLC (since 1995);
Contoocock, New Hampshire 03229 (66) Chairman of the Board and Chief
Executive Officer of Nashua
Corporation (prior to 1995);
Director, Pinnichuck Western
Works (since 1960); Director,
Hitchinen Manufacturing
Company (since 1985).
</TABLE>
- --------
* "Interested person" within the meaning of Section 2(a)(19) of the 1940 Act.

<PAGE>

The Trust will pay its Trustees who are not interested persons of the Trust
an annual retainer of $20,000 and reimburse them for their expenses. Mr. Clough,
who will continue to serve as a Trustee of the Trust until the Trust's 1996
audit has been approved, will not receive an annual retainer but will be
reimbursed for his expenses. The estimated aggregate amount of compensation to
be paid to each Trustee by the Trust for the fiscal year ending December 31,
1997 is as follows:

Estimated
Compensation
Name of Trustee From Trust

John R. Rettberg $20,000

John F. Ruffle $20,000

Kenneth Whipple, Jr. $20,000

John N. Bell $20,000

Charles E. Clough 0

Officers of the Trust

RICHARD W. INGRAM; 40; President and Treasurer. Senior Vice President and
Director of Client Services and Treasury Administration of FDI, Senior Vice
President of Premier Mutual Fund Services, Inc., an affiliate of FDI ("Premier
Mutual"), and an officer of other investment companies advised or administered
by Morgan or its affiliates. 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, Inc.

MARIE E. CONNOLLY; 38; Vice President and Assistant Treasurer. President
and Chief Executive Officer and Director of FDI, Premier Mutual and an officer
of other investment companies advised or administered by Morgan or its
affiliates. 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").

JOHN E. PELLETIER; 32; Vice President and Secretary. Senior Vice President,
and General Counsel of FDI and Premier Mutual and an officer of other investment
companies , advised or administered by Morgan or its affiliates. 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.

JOSEPH F. TOWER III; 34; Vice President and Assistant Treasurer. Senior
Vice, President, Treasurer and Chief Financial Officer of FDI and Premier
Mutual and an officer of, other investment companies advised or administered by
Morgan or its affiliates. From July 1988, to November 1993, Mr. Tower was
Financial Manager of The Boston Company, Inc.

<PAGE>

CHRISTOPHER J. KELLEY; 31; Vice President and Assistant Secretary. Vice ,
President and Assistant General Counsel of FDI and an officer of other
investment companies, advised or administered by Morgan or its affiliates. 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 the
Global Fixed Income Group of the Legal Department. Prior to, 1992, Mr. Kelley
served as a law clerk for the firm of Murphy, DeMarco & O'Neill.

ELIZABETH A. BACHMAN; 27; Vice President and Assistant Secretary. ,
Assistant Vice President of FDI and Premier Mutual and an officer of other
investment companies, advised or administered by Morgan or its affiliates.

MARY A. NELSON; 32; Vice President and Assistant Treasurer. Vice President,
and Manager of Treasury Services and Administration of FDI and an officer of
other investment, companies advised or administered by Morgan or its affiliates.
From 1989 to 1994, Ms. Nelson, was an Assistant Vice President and client
manager for The Boston Company, Inc.

KAREN JACOPPO-WOOD; 29; Vice President and Assistant Secretary. Assistant
Vice President of FDI and an officer of other investment companies advised or ,
administered by Morgan or its affiliates. From June 1994 to January 1996, Ms.
Jacoppo-Wood , was a Manager, SEC Registration, Scudder, Stevens & Clark, Inc.
From 1988 to May 1994, Ms., Jacoppo-Wood was a senior paralegal at TBCA.

DOUGLAS C. CONROY; 27; Vice President and Assistant Treasurer. Supervisor
of Treasury Services and Administration of FDI and an officer of other
investment, companies advised or administered by Morgan or its affiliates. From
April 1993 to January 1995, Mr. Conroy was a Senior Fund Accountant for
Investors Bank & Trust Company. From, December 1993 to March 1993, Mr. Conroy
was employed as a fund accountant at The Boston , Company, Inc.

The business address of each of the officers is 60 State Street, Boston,
Massachusetts 02109.

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISORY AGREEMENT

The Trust has entered into an Investment Advisory Agreement with Morgan
with respect to each of the Portfolios. Morgan is a wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"). See "MANAGEMENT OF TRUST AND
PORTFOLIOS" in the Prospectus.

The Investment Advisory Agreement provides that Morgan, subject to control
and review by the Board, is responsible for the overall management and
supervision of each Portfolio. Morgan makes each Portfolio's day-to-day
investment decisions to buy, sell or hold any particular security or other
instrument.

<PAGE>

Morgan and its affiliates provide investment advice to other clients,
including, but not limited to, mutual funds, individuals, pension funds and
other institutional investors. Some of the advisory accounts of Morgan and its
affiliates may have investment objectives and investment programs similar to
those of the Portfolios. Accordingly, occasions may arise when securities that
are held by other advisory accounts, or that are currently being purchased or
sold for other advisory accounts, are also being selected for purchase or sale
for a Portfolio. It is the practice of Morgan and its affiliates to allocate
such purchases or sales insofar as feasible among their several clients in a
manner they deem equitable, to all accounts involved. While in some cases this
procedure may adversely affect the price or number of shares involved in the
Trust's transaction, it is believed that the equitable allocation of purchases
and sales generally contributes to better overall execution of the Trust's
portfolio transactions. It also is the policy of Morgan and its affiliates not
to favor any one account over the other.

For providing investment advisory and management services to the Trust,
Morgan receives monthly compensation from the Trust at annual rates computed as
described under "MANAGEMENT OF THE TRUST AND PORTFOLIOS" in the Prospectus.

The Investment Advisory Agreement was approved by the Board on October 25,
1996 and by shareholders on December 12, 1996. Unless earlier terminated, the
Agreement will remain in effect as to the applicable Portfolio until December
31, 1997 and thereafter from year to year with respect to each such Portfolio,
if approved annually (1) by the Board or by a majority of the outstanding shares
of the Portfolio, and (2) by a majority of members of the Board who are not
interested persons, within the meaning of the 1940 Act, of any party to such
Agreement. The Agreement is not assignable and may be terminated without
penalty, with respect to any Portfolio, by vote of a majority of the Trust's
Trustees or by the requisite vote of the shareholders of that Portfolio on 60
days' written notice to Morgan, or by Morgan on 90 days' written notice to the
Trust. See "CAPITAL SHARES" in this Statement of Additional Information.

ADMINISTRATIVE SERVICES AGREEMENT

The Trust has entered into an Administrative Services Agreement with Morgan
Guaranty Trust Company of New York ("Morgan Guaranty"), an affiliate of Morgan,
effective January 1, 1997. Pursuant to the Administrative Services Agreement,
Morgan Guaranty provides or arranges for the provision of certain financial and
administrative services and oversees fund accounting for the Trust. The services
to be provided by Morgan Guaranty under the Administrative Services Agreement
include, but are not limited to, services related to taxes, financial
statements, calculation of Portfolio performance data, oversight of service
providers, certain regulatory and Board of Trustees matters, and shareholder
services. In addition, Morgan Guaranty is responsible for reimbursing the Trust
for certain usual and customary expenses incurred by the Trust including,
without limitation, transfer, registrar and dividend disbursing costs, custody
fees, legal and accounting expenses, fees of the Trust's co-administrator,
insurance premiums, compensation and expenses of the Trust's Trustees, expenses
of printing and mailing reports, notices and proxies to shareholders, and
registration fees under federal and state securities laws. See "MANAGEMENT OF
TRUST AND PORTFOLIOS" in the Prospectus.

For providing its services under the Administrative Services Agreement,
Morgan Guaranty receives monthly compensation from the Trust at annual rates
computed as described under "MANAGEMENT OF THE TRUST AND PORTFOLIOS" in the
Prospectus. However, the Administrative Services Agreement also provides that
until December 31, 1998, the aggregate fees, expressed in dollars, paid by a
Portfolio under the Administrative Services Agreement and the Investment
Advisory Agreement will not exceed the expenses (excluding extraordinary
expenses) that would be payable by such Portfolio assuming (i) the prior
management agreement remained in effect in accordance with its terms, (ii) the
asset levels were the same, (iii) no effect was given to the voluntary expense
reimbursement arrangements or other limitation on expenses under such prior
agreement and (iv) the expenses the Portfolio would have been charged were
adjusted to reflect differences in services provided under the prior management
agreement, on the one hand, and the Administrative Services Agreement and
Investment Advisory Agreement, on the other.

The Administrative Services Agreement may be amended only by mutual written
consent; provided, however, that until December 31, 1998, no amendment shall be
made to (a) increase the fees payable by the Trust, on behalf of a Portfolio, to
Morgan Guaranty or (b) change the types of services to be rendered or expenses
to be borne under the Agreement by Morgan Guaranty without the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
the relevant Portfolio(s). See "CAPITAL SHARES" in this Statement of Additional
Information.

The Administrative Services Agreement was approved by the Board on October
25, 1996. The Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty, by the Board or, after December 31, 1998, by
Morgan Guaranty on not more than 60 days' nor less than 30 days' written notice
to the other party.

PRIOR MANAGEMENT ARRANGEMENTS

Prior to January 1, 1997, Chubb Investment Advisory Corporation ("Chubb
Investment Advisory") provided investment advisory and management services to
the Trust pursuant to separate management agreements with each Portfolio. Chubb
Investment Advisory engaged Morgan Guaranty to provide sub-investment advisory
services to the Portfolios pursuant to separate Sub-Investment Advisory
Agreements with each Portfolio. The fees payable to Morgan Guaranty for its
sub-advisory services were paid by Chubb Investment Advisory.

For the period January 3, 1995 (commencement of operations) through
December 31, 1995, the management fees payable to Chubb Investment Advisory for
JPM Treasury Money Market Portfolio, JPM Bond Portfolio, JPM Equity Portfolio,
JPM Small Company Portfolio and JPM International Equity Portfolio amounted to
$4,520, $6,224, $16,451, $19,131 and $24,543, respectively, which amounts were
reduced pursuant to an undertaking by Chubb Investment Advisory.

For the period January 3, 1995 (commencement of operations) through
December 31, 1995, the sub-advisory fees payable by Chubb Investment Advisory to
Morgan Guaranty for JPM Treasury Money Market Portfolio, JPM Bond Portfolio, JPM
Equity Portfolio, JPM Small Company Portfolio and JPM International Equity
Portfolio amounted to $2,260, $3,734, $10,967, $14,348 and $18,407,
respectively, which amounts were reduced pursuant to an undertaking by Morgan
Guaranty.

<PAGE>

INDEPENDENT AUDITORS

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116,
currently serves as the independent auditors of the Trust. Price Waterhouse LLP
has been selected as the independent auditors of the Trust for the fiscal year
commencing January 1, 1997. The financial statements of the Trust incorporated
by reference in this Statement of Additional Information and the related
financial highlights included in the Prospectus for the period January 3, 1995
(commencement of operations) to December 31, 1995 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon, which
also is incorporated by reference herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

CUSTODIAN

State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02101, serves as the Trust's Custodian and Transfer and
Dividend Disbursing Agent. Pursuant to the Custodian Contract with the Trust,
State Street is responsible for maintaining the books and records of portfolio
transactions and holding portfolio securities and cash. State Street also keeps
the books of account for the Trust.

The Trust has also appointed, with the approval of the Board, and in the
future may appoint from time to time, sub-custodians, qualified under Rule 17f-5
of the 1940 Act, with respect to certain foreign securities. The Trust may
authorize State Street to enter into an agreement with any U.S. banking
institution or trust company to act as a sub-custodian pursuant to a resolution
of the Board. Securities owned by the Trust subject to repurchase agreements may
be held in the custody of other U.S. banks.

PAYMENT OF EXPENSES

Morgan Guaranty is obligated to assume the cost of certain administrative
expenses for the Trust, as described in the Prospectus under the heading
"MANAGEMENT OF THE TRUST AND PORTFOLIOS." The Trust is responsible for Morgan's
fees as investment adviser pursuant to the Investment Advisory Agreement and for
Morgan Guaranty's services pursuant to the Administrative Services Agreement. In
addition, the Trust pays all extraordinary expenses not incurred in the ordinary
course of the Trust's business including, but not limited to, litigation and
indemnification expenses; interest charges; material increases in Trust expenses
due to occurrences such as significant increases in the fee schedules of the
Custodian or the Transfer Agent or a significant decrease in the Trust's asset
level due to changes in tax or other laws or regulations; or other such
extraordinary occurrences outside of the ordinary course of the Trust's
business. See "OFFERING AND REDEMPTION OF SHARES" below.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS

Under the Investment Advisory Agreement, Morgan has ultimate authority to
select broker-dealers through which securities are to be purchased and sold,
subject to the general control of the Board.

<PAGE>

Money market instruments usually will be purchased on a principal basis
directly from issuers, underwriters or dealers. Accordingly, minimal brokerage
charges are expected to be paid on such transactions. Purchases from an
underwriter generally include a commission or concession paid by the issuer, and
transactions with a dealer usually include the dealer's mark-up.

Insofar as known to management, no trustee, director or officer of the
Trust, Morgan or any person affiliated with any of them has any material direct
or indirect interest in any broker-dealer employed by or on behalf of the Trust.

In selecting broker-dealers to execute transactions for the Trust, Morgan
is obligated to use its best effort to obtain for each Portfolio the most
favorable overall price and execution available, considering all the
circumstances. Such circumstances include the price of the security, the size of
the broker-dealer's "spread" or commission, the willingness of the broker-
dealer to position the trade, the reliability, financial strength and stability
and operational capabilities of the broker-dealer, the ability to effect the
transaction at all where a large block is involved, the availability of the
broker-dealer to stand ready to execute possibly difficult transactions in the
future, including broker-dealers who specialize in any Canadian or foreign
securities held by the Portfolios. Such considerations are judgmental and are
weighed by Morgan in seeking the most favorable overall economic result for the
Trust, including past experience as to choosing qualified broker-dealers.

Notwithstanding the foregoing, however, and subject to appropriate policies
and procedures as then approved by the Board, Morgan is authorized to allocate
portfolio transactions to broker-dealers who have provided brokerage and
research services, as such services are defined in Section 28(e) of the
Securities and Exchange Act of 1934, for the Portfolios or other advisory
accounts as to which Morgan may cause the Portfolios to pay a broker-dealer a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting the same transaction, if
Morgan determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services, as defined above,
provided by such broker-dealer viewed in terms of either that particular
transaction or the overall responsibilities of Morgan with respect to the
Portfolios or their other advisory accounts. Such brokerage and research
services may include, among other things, analyses and reports concerning
issuers, industries, securities, economic factors and trends, and, portfolio
strategy. Such brokerage and research services may be used by Morgan in
connection with any other advisory accounts managed by it. Conversely, research
services for any other advisory accounts may be used by Morgan in managing the
investments of a Portfolio. Morgan also may receive from such broker-dealers
quotations for Portfolio valuation purposes, provided that this results in no
additional cost to the Trust.

As of December 31, 1995, JPM Equity Portfolio held 1,200 shares of Dean
Witter Discover & Co. with a value of $56,400; JPM Small Company Portfolio held
100 shares of Donaldson, Lufkin, Jenrette with a value of $3,125; and JPM
International Equity Portfolio held 500 shares of Deutsche Bank with a value of
$23,791; 4,000 shares of Daiwa Bank with a value of $31,740; 2,000 shares of
Nomura Securities Corp. Ltd. with a value of $43,625; 2,750 shares of HSBC
Holdings with a value of $42,372 and 1,000 shares of Barclays Bank with a value
of $11,475, all of which are regular brokers of the Trust.

<PAGE>

For the year ended December 31, 1995, the Trust paid in the aggregate
$39,294 as brokerage commissions. No commissions were allocated for research.

Portfolio turnover for each Portfolio may vary from year to year or within
a year depending upon economic and business conditions. The annual portfolio
turnover rates for the Portfolios in 1995 were approximately as follows: 239%
for JPM Bond Portfolio, 66% for JPM Equity Portfolio, 100% for JPM Small Company
Portfolio and 68% for JPM International Equity Portfolio. A Portfolio having a
turnover rate in excess of 100% may realize larger amounts of gains or losses
than it would with a lower portfolio turnover rate. A Portfolio turnover rate in
excess of 100% may result in a Portfolio paying more brokerage commissions or
other transaction related costs. A Portfolio turnover in excess of 100% may be
considered high due to the following factors: (1) the need to restructure the
Portfolio due to changing market and/or economic conditions; (2) the need to
rebalance the Portfolio as securities age down the yield curve; (3) the need to
trade securities whose characteristics are affected by moderate to large changes
in interest rates and (4) value added to trading opportunities.

CAPITAL SHARES

The authorized capital of the Trust consists of an unlimited number of
outstanding shares which are divided into five series: JPM Treasury Money Market
Portfolio, JPM Bond Portfolio, JPM Equity Portfolio, JPM Small Company Portfolio
and JPM International Equity Portfolio. The Trust has the right to issue
additional shares without the consent of shareholders, and may allocate its
additional shares to new series or to one or more of the five existing series.

The assets received by the Trust for the issuance or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof are
specifically allocated to each Portfolio. They constitute the underlying assets
of each Portfolio, are required to be segregated on the books of accounts and
are to be charged with the expenses of such Portfolio. Any assets which are not
clearly allocable to a particular Portfolio or Portfolios are allocated in a
manner determined by the Board. Accrued liabilities which are not clearly
allocable to one or more Portfolios would generally be allocated among the
Portfolios in proportion to their relative net assets before adjustment for such
unallocated liabilities. Each issued and outstanding share in a Portfolio is
entitled to participate equally in dividends and distributions declared with
respect to such Portfolio and in the net assets of such Portfolio upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities.

The shares of each Portfolio are fully paid and non-assessable, will have
no preference, preemptive, conversion, exchange or similar rights, and will be
freely transferable. Shares do not have cumulative voting rights.

As of December 26, 1996, Chubb Life owned as of record and beneficially the
following percentages of the Trust's Portfolios in its General Account: 76.02%
of JPM Treasury Money Market Portfolio, 41.06% of JPM Bond Portfolio, 27.56% of
JPM Equity Portfolio, 51.27% of JPM Small Company Portfolio, and 38.83% of JPM
International Equity Portfolio. Chubb Life's ownership of more than 25% of the
shares of each of the Trust's Portfolios may result in Chubb Life being deemed
to be a controlling entity of each Portfolio. Chubb Separate Account C, a
separate account established by Chubb Life, owned of record as of December 26,
1996 the following percentages of the Trust's Portfolios: 23.98% of JPM Treasury
Money Market Portfolio, 58.94% of JPM Bond Portfolio, 72.44% of JPM Equity
Portfolio, 48.73% of JPM Small Company Portfolio, and 61.17% of JPM
International Equity Portfolio.

The shares held by Chubb Life or its affiliated insurance companies,
including shares for which no voting instructions have been received, shares
held in a separate account representing charges imposed by Chubb Life or its
affiliates and shares held by Chubb Life that are not otherwise attributable to
Policies, will be voted by Chubb Life or its affiliated insurance companies in
proportion to instructions received from the owners of Policies. Chubb Life and
its affiliated insurance companies reserve the right to vote any or all such
shares at their discretion to the extent consistent with then current
interpretations of the 1940 Act and rules thereunder.

The officers and Trustees cannot directly own shares of the Trust without
purchasing a Policy or investing as a participant in an Eligible Plan. As of
December 26, 1996, the amount of shares owned by the officers and Trustees as a
group was less than 1% of each Portfolio.

OFFERING AND REDEMPTION OF SHARES

The Trust offers shares of each Portfolio only for purchase by separate
accounts established by Participating Insurance Companies or by Eligible Plans.
It thus will serve as an investment medium for the Policies offered by
Participating Insurance Companies and for participants in Eligible Plans. The
offering is without a sales charge and is made at each Portfolio's net asset
value per share, which is determined in the manner set forth below under
"DETERMINATION OF NET ASSET VALUE."

The Trust redeems all full and fractional shares of the Trust at the net
asset value per share applicable to each Portfolio. See "DETERMINATION OF NET
ASSET VALUE" below.

Redemptions ordinarily are made in cash, but the Trust has authority, at
its discretion, to make full or partial payment by assignment to the separate
account of Portfolio securities at their value used in determining the
redemption price. The Trust, nevertheless, pursuant to Rule 18f-1 under the 1940
Act, has filed a notification of election on Form N-18f-1, by which the Trust
has committed itself to pay to the separate account in cash, all such separate
account's requests for redemption made during any 90-day period, up to the
lesser of $250,000 or 1% of the applicable Portfolio's net asset value at the
beginning of such period. The securities, if any, to be paid in-kind to the
separate account will be selected in such manner as the Board deems fair and
equitable. In such cases, the separate account or Eligible Plan might incur
brokerage costs should it wish to liquidate these portfolio securities.

The right to redeem shares or to receive payment with respect to any
redemption of shares of any Portfolio may only be suspended (1) for any period
during which trading on the New York Stock Exchange is restricted or such
Exchange is closed, other than customary weekend and holiday closings, (2) for
any period during which an emergency exists as a result of which disposal of
securities or determination of the net asset value of that Portfolio is not
reasonably practicable, or (3) for such other periods as the SEC may by order
permit for the protection of shareholders of the Portfolio.

<PAGE>

DETERMINATION OF NET ASSET VALUE

The net asset value of the shares of each Portfolio of the Trust is
normally determined as of 4:15 p.m (Eastern Standard Time), on each day during
which the New York Stock Exchange is open for trading. The New York Stock
Exchange is open from Monday through Friday except on the following national
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. In the event
that any of the above holidays falls on a Saturday or Sunday, it is regularly
observed on the preceding Friday or following Monday, respectively. The net
asset value per share of each Portfolio is computed by dividing the sum of the
value of the securities held by that Portfolio, plus any cash or other assets
and minus all liabilities by the total number of outstanding shares of the
Portfolio at such time. Any expenses borne by the Trust, including the
investment advisory fee payable to the Adviser, are accrued daily except for
extraordinary or non-recurring expenses. See "INVESTMENT ADVISORY AND OTHER
SERVICES" above.

The value of investments listed on a domestic securities exchange, other
than options on stock indexes, generally is based on the last sale prices on the
New York Stock Exchange at 4:00 p.m. or, in the absence of recorded sales, at
the average of readily available closing bid and asked prices on such exchange.
Securities listed on a foreign exchange are valued at the last quoted sale price
available before the time when net assets are valued. Unlisted securities are
valued at the average of the quoted bid and asked prices in the over-the-counter
market. The value of each security for which readily available market quotations
exist is based on a decision as to the broadest and most representative market
for such security. For purposes of calculating net asset value per share, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the prevailing market rates available at
the time of valuation.

Options on stock indexes traded on national securities exchanges are valued
at the close of options trading on such exchanges which is currently 4:10 p.m.,
New York time. Stock index futures and related options, which are traded on
commodities exchanges, are valued at their last sales price as of the close of
such commodities exchanges which is currently 4:15 p.m., New York time.

Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures established by
and under the general supervision and responsibility of the Trustees. Such
procedures include the use of independent pricing services which use prices
based upon yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions.

Short-term investments which mature in 60 days or less are valued at
amortized cost, if their original maturity was 60 days or less, or by amortizing
their value on the 61st day prior to maturity, if their original maturity when
acquired by the Portfolio was more than 60 days, unless this is determined not
to represent fair value by the Trustees.

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

<PAGE>

TAXES

In order for each Portfolio of the Trust to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income, i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities. In addition, in general, gains realized on the sale or other
disposition of securities held for less than three months must be limited to
less than 30% of each Portfolio's annual gross income. It is the Trust's policy
to comply with the provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), regarding distribution of investment income and capital gains so
that each Portfolio will not be subject to federal income tax on amounts
distributed and undistributed or an excise tax on certain undistributed income
or capital gains. For these purposes, if a regulated investment company declares
a dividend in December to shareholders of record in December and pays such
dividends before the end of January they will be treated as paid in the
preceding calendar year and to have been received by such shareholder in
December.

Federal Tax Matters. A Policy owner's interest in earnings on assets held
in a separate account and invested in the Trust are not includable in the Policy
owner's gross income because the Policies presently qualify as life insurance
contracts for federal income tax purposes.

The Trust intends that each Portfolio comply with Section 817(h) of the
Code and the regulations thereunder. Pursuant to that Section, the only
shareholders of the Trust and its Portfolios will be separate accounts funding
variable annuities and variable life insurance policies established by one or
more insurance companies and, pursuant to Treasury Regulation ss.1.817-
5(f)(3)(iii), qualified pension and retirement plans.

The Internal Revenue Service defines the term "qualified pension or
retirement plan" for the purposes of such Regulation ss.1.817-5(f)(3)(iii). It
provides in pertinent part, as follows:

1. A plan described in Section 401(a) that includes a trust exempt
from tax under Section 501(a);

2. An annuity plan described in Section 403(a);

3. An annuity contract described in Section 403(b), including a
custodial account described in Section 403(b)(7);

4. An individual retirement account described in Section 408(a);

5. An individual retirement annuity described in Section 408(b);

6. A governmental plan within the meaning of Section 414(d) or an
eligible deferred compensation plan within the meaning of Section 457(b);

<PAGE>

7. A simplified employee pension of an employer that satisfies the
requirements of Section 408(k);

8. A plan described in Section 501(c)(18); and

9. Any other trust, plan, account, contract or annuity that the
Internal Revenue Service has determined in a letter ruling to be within
the scope of such Regulation.

In addition, Section 817(h) of the Code and the regulations thereunder
impose diversification requirements on the separate accounts and on the
Portfolios. These diversification requirements are in addition to the
diversification requirements imposed by the Code for the Portfolios to be
treated as regulated investment companies. Failure to meet the requirements of
Section 817(h) could result in taxation to the Participating Insurance Companies
and the immediate taxation of the owners of the Policies funded by the Trust.

PERFORMANCE AND YIELD INFORMATION

MONEY MARKET PORTFOLIO

JPM Treasury Money Market Portfolio's yield is its investment income, less
expenses, expressed as a percentage of assets on an annualized basis for a
seven-day period. The yield does not reflect the fees and charges imposed on the
assets of separate account.

The simple annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
seven-day period, dividing the net change in account value by the value of the
account at the beginning of the period, and annualizing the resulting quotient
(base period return) on a 365-day basis. The net change in account value
reflects the value of additional shares purchased with dividends from the
original shares in the account during the seven-day period, dividends declared
on such additional shares during the period, and expenses accrued during the
period.

The compounded effective yield is computed by determining the unannualized
base period return, adding one to the base period return, raising the sum to a
power equal to 365 divided by seven and subtracting one from the result.

NON-MONEY MARKET PORTFOLIOS

This yield figure represents the net annualized yield based on specified
30-day (or one month) period assuming a reinvestment semiannual compounding of
income. Yield is calculated by dividing the average daily net investment income
per share earned during the specified period by the maximum offering price,
which is net asset value per share on the last day of the period, and
annualizing the result according to the following formula:

Yield = 2 [(A-B + 1)6 - 1]
CD

where A equals dividends and interest earned during the period, B equals
expenses accrued for the period (net of waiver and reimbursements), C equals the
average daily number of shares outstanding during the period that were entitled
to receive dividends, and D equals the maximum offering price per share on the
last day of the period.

The average annual total return figures represent the average annual
compounded rate of return for the stated period. Average annual total return
quotations reflect the percentage change between the beginning value of a static
account in the Portfolio and the ending value of that account measured by the
then current net asset value of that Portfolio assuming that all dividends and
capital gains distributions during the stated period were reinvested in shares
of the Portfolio when paid. Total return is calculated by finding the average
annual compounded rates of return of a hypothetical investment that would
compare the initial amount to the ending redeemable value of such investment
according to the following formula:

P (1 + T)n = ERV

where T equals average annual total return, where ERV, the ending
redeemable value, is the value, at the end of the applicable period, of a
hypothetical $10,000 payment made at the beginning of the applicable period,
where P equals a hypothetical initial payment of $10,000, and where N equals the
number of years.

From time to time, in reports and sales literature: (1) each Portfolio's
performance or P/E ratio may be compared to, as applicable: (i) the S&P 500
Index and Dow Jones Industrial Average so that, as applicable, an investor may
compare that Portfolio's results with those of a group of unmanaged securities
widely regarded by investors as representative of the U.S. stock marketing
general; (ii) other groups of mutual funds tracked by: (A) Lipper Analytical
Services, a widely-used independent research firm which ranks mutual funds by
overall performance, investment objectives, and asset size; (B) Forbes
Magazine's Annual Mutual Funds Survey and Mutual Fund Honor Roll; or (C) other
financial or business publications, such as the Wall Street Journal, Business
Week, Money Magazine, and Barron's, which provide similar information; (iii)
indexes of stocks comparable to those in which the particular Portfolio invests;
(2) the Consumer Price Index; (3) other U.S. government statistics such as GNP,
and net import and export figures derived from governmental publications, e.g.,
The Survey of Current Business, may be used to illustrate investment attributes
of each Portfolio or the general economic, business, investment, or financial
environment in which each Portfolio operates; and (4) the effect of tax-deferred
compounding on the particular Portfolio's investment returns, or on returns in
general, may be illustrated by graphs, charts, etc. where such graphs or charts
would compare, at various points in time, the return from an investment in the
particular Portfolio (or returns in general) on a tax-deferred basis (assuming
reinvestment of capital gains and dividends and assuming one or more tax rates)
with the return on a taxable basis. Each Portfolio's performance may also be
compared to the performance of other mutual funds by Morningstar, Inc. which
ranks mutual funds on the basis of historical risk and total return. Morningstar
rankings are calculated using the mutual fund's performance relative to
three-month Treasury bill monthly returns. Morningstar's rankings range from
five stars (highest) to one star (lowest) and represent Morningstar's assessment
of the historical risk level and total return of a mutual fund as a weighted
average for 1, 3, 5, and 10-year periods. In each category, Morningstar limits
its five star rankings to 10% of the funds it follows and its four star rankings
to 22.5% of the funds it follows. Rankings are not absolute or necessarily
predictive of future performance.

<PAGE>

The performance of the Portfolios may be compared, for example, to the
record of the Salomon Investment Grade Bond Index, IDC/Donoghue, S&P 500 Index,
the Russell 2000(R), the Russell 2500(TM), the NASDAQ Composite Index, the
Morgan Stanley Capital International and the Europe, Australia, Far Eastern
(EAFE) Index. The S&P 500 Index is a well known measure of the price performance
of 500 leading larger domestic stocks which represent approximately 80% of the
market capitalization of the U.S. Equity market. The Russell 2000(R) Small Stock
Index is designed to be a comprehensive representation of the U.S. small cap
equity market. It is composed of 2,000 issues of smaller domestic stocks which
represent nearly 7% of U.S. market capitalization. The Russell 2500(TM) Index is
comprised of the Russell 2000(R) small cap companies plus the next 500 largest
companies in the Russell 3000(R) universe. The NASDAQ Composite Index is
comprised of all stocks on NASDAQ's National Market Systems, as well as other
NASDAQ domestic equity securities. The NASDAQ Composite Index has typically
included smaller, less mature companies representing 10% to 15% of the
capitalization of the entire domestic equity market. The EAFE Index is comprised
of more than 900 companies in Europe, Australia and the Far East. All of these
indices are unmanaged and capitalization weighted. In general, the securities
comprising the Russell 2000(R), the Russell 2500(TM) and NASDAQ Composite Index
are more growth oriented and have a somewhat higher volatility than those in the
S&P 500 Index.

The total returns of all of these indices will show the changes in prices
for the stocks in each index. All indices include the reinvestment of all
capital gains distributions and dividends paid by the stocks in each data base.
Tax consequences will not be included in such illustration, nor will brokerage
or other fees or expenses of investing be reflected in the NASDAQ Composite, S&P
500, EAFE Index, Russell 2000(R) and Russell 2500(TM).

DELAWARE BUSINESS TRUST

The Trust is a business organization of the type commonly known as a
"Delaware Business Trust" of which each Portfolio is a series. The Trust has
filed a certificate of trust with the office of the Secretary of State of
Delaware. Except to the extent otherwise provided in the governing instrument of
the business trust, the beneficial owners shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the State
of Delaware.

The Trust provides for the establishment of designated series of beneficial
interests (the Portfolios) having separate rights, powers or duties with respect
to specified property or obligations of the Trust or profits and losses
associated with specified property or obligations, and, to the extent provided
in the Declaration of Trust, any such series may have a separate business
purpose or investment objective.

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

FINANCIAL STATEMENTS

The audited financial statements contained in the Trust's December 31, 1995
Annual Report to Shareholders and the unaudited financial statements contained
in the Trust's June 30, 1996 Semi-Annual Report to Shareholders are incorporated
herein by reference.

ADDITIONAL INFORMATION

Annual and semi-annual reports containing financial statements of the
Trust, as well as voting instruction soliciting material for the Trust, will be
sent to all Trust shareholders.

<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.

B Debt rated B is regarded as having a greater vulnerability
to default but presently as having the capacity to meet
interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.

CCC Debt rated CCC is regarded as having a current identifiable
vulnerability to default, and is dependent upon favorable
business, financial and economic conditions to meet
timely payments of principal. In the event of adverse
business, financial or economic conditions, it is not likely
to have the capacity to pay interest and repay principal.

CC The rating CC is typically applied to debt subordinated
to senior debt which is assigned an actual or implied CCC
rating.

C The rating C is typically applied to debt subordinated
to senior debt which is assigned an actual or implied
CCC- debt rating.

<PAGE>

D Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.

Commercial Paper

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

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.

MOODY'S

Corporate and Municipal Bonds

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

Aa Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated
lower than the best bond 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.

<PAGE>

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

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

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

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

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

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
categories below B. The modifier 1 indicates a ranking for the security in the
higher end of a rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the lower end of a rating category.

Commercial Paper

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.