JPMORGAN FUNDS

STATEMENT OF
ADDITIONAL INFORMATION
FEBRUARY 28, 2001
(REVISED APRIL 11, 2001)

FLEMING EUROPEAN FUND
FLEMING INTERNATIONAL EQUITY FUND
FLEMING JAPAN FUND

1211 AVENUE OF THE AMERICAS, 41ST FLOOR, NEW YORK, NEW YORK 10036

This Statement of Additional Information sets forth information which may be
of interest to investors but which is not necessarily included in the
Prospectuses offering shares of the Funds. This Statement of Additional
Information should be read in conjunction with the Prospectus dated
February 28, 2001, as amended, offering shares of Fleming International Equity
Fund, Fleming European Fund and Fleming Japan Fund. Any references to a
"Prospectus" in this Statement of Additional Information is a reference to the
foregoing Prospectus, as the context requires. Copies of the Prospectus may be
obtained by an investor without charge by contacting J.P. Morgan Fund
Distributors, Inc. ("JPM"), the Funds' distributor (the "Distributor"), at the
above-listed address.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.

For more information about your account, simply call or write the JPMorgan
Funds Service Center at:

1-800-348-4782
JPMorgan Funds Service Center
P.O. Box 219392
Kansas City, MO 64121-9392

INTL-SAI-401

TABLE OF CONTENTS PAGE

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

The Funds......................................... 3
Investment Policies and Restrictions.............. 3
Performance Information........................... 25
Determination of Net Asset Value.................. 30
Purchases, Redemptions and Exchanges.............. 31
Distributions; Tax Matters........................ 35
Management of the Trust and the Funds or
Portfolios...................................... 40
Independent Accountants........................... 51
Certain Regulatory Matters........................ 51
General Information............................... 52
Appendix A--Description of Certain Obligations
Issued or Guaranteed by U.S. Government Agencies
or Instrumentalities............................ A-1
Appendix B--Description of Ratings................ B-1

THE FUNDS

Mutual Fund Group (the "Trust") is an open-end management investment company
which was organized as a business trust under the laws of the Commonwealth of
Massachusetts on May 11, 1987. The Trust presently consists of 18 separate
series (the "Funds"), including the European Fund International Equity Fund and
Japan Fund. Certain of the Funds are diversified and other Funds are non-
diversified, as such term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). The shares of the Funds are collectively referred to
in this Statement of Additional Information as the "Shares."

Effective February 28, 2001, the following Funds were renamed with the
approval of the Board of Trustees of the Trust:

FUND FORMER NAME
- ---- -----------

JPMorgan Fleming European Fund (European Chase Vista European Fund
Fund)
JPMorgan Fleming Japan Fund (Japan Fund) Chase Vista Japan Fund
JPMorgan Fleming International Equity Fund Chase Vista International Equity Fund
(International Equity Fund)

The International Equity Fund seeks to achieve its investment objective by
investing all of its investable assets in an open-end, management investment
company which has the same investment objective as such Fund. The JPMorgan
International Equity Fund invests in the JPMorgan Fleming International Equity
Portfolio (the "Portfolio"). The Portfolio is a New York trust with its
principal office in New York. Certain qualified investors, in addition to the
International Equity Fund, may invest in the Portfolio. For purposes of this
Statement of Additional Information, any information or references to the
Portfolio refer to the operations and activities after implementation of the
master fund/feeder fund structure.

The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. In the case of the Portfolio, a
separate Board of Trustees, with the same members as the Board of Trustees of
the Trust, provides broad supervision. J.P. Morgan Fleming Asset Management
(USA) Inc. (JPMFAM-(USA)) is the investment adviser for the Funds (other than
the International Equity Fund, which does not have its own adviser) and the
Portfolio. Chase also serves as the administrator of the Trust, including the
Funds, and is the administrator of the Portfolio. A majority of the Trustees of
the Trust are not affiliated with the investment adviser or sub-advisers.
Similarly, a majority of the Trustees of the Portfolio are not affiliated with
the investment adviser or sub-advisers.

INVESTMENT POLICIES AND RESTRICTIONS

INVESTMENT POLICIES

The Prospectuses set forth the various investment policies of each Fund and
Portfolio. The following information supplements and should be read in
conjunction with the related sections of each Prospectus. For descriptions of
the securities ratings of Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P") and Fitch Investors Service, Inc.
("Fitch"), see Appendix B.

U.S. GOVERNMENT SECURITIES. Each Fund and Portfolio may invest in U.S.
government securities. U.S. government securities include (1) U.S. Treasury
obligations, which generally differ only in their interest rates, maturities and
times of issuance, including: U.S. Treasury bills (maturities of one year or
less), U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury
bonds (generally maturities of greater than ten years); and (2) obligations
issued or guaranteed by U.S. government agencies and instrumentalities which are
supported by any of the following: (a) the full faith and credit of the U.S.
Treasury, (b) the right of the issuer to borrow any amount listed to a specific
line of credit from the U.S. Treasury, (c) discretionary authority of the U.S.
government to purchase certain obligations of the U.S. government agency or
instrumentality or (d) the credit of the agency or instrumentality. Agencies and
instrumentalities of the U.S. government include but are not limited to: Federal
Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal
Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal National Mortgage

Association, Student Loan Marketing Association, United States Postal Service,
Chrysler Corporate Loan Guarantee Board, Small Business Administration,
Tennessee Valley Authority and any other enterprise established or sponsored by
the U.S. government. Certain U.S. government securities, including U.S. Treasury
bills, notes and bonds, Government National Mortgage Association certificates
and Federal Housing Administration debentures, are supported by the full faith
and credit of the United States. Other U.S. government securities are issued or
guaranteed by federal agencies or government sponsored enterprises and are not
supported by the full faith and credit of the United States. These securities
include obligations that are supported by the right of the issuer to borrow from
the U.S. Treasury, such as obligations of Federal Home Loan Banks, and
obligations that are supported by the creditworthiness of the particular
instrumentality, such as obligations of the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation. For a description of
certain obligations issued or guaranteed by U.S. government agencies and
instrumentalities, see Appendix A.

In addition, certain U.S. government agencies and instrumentalities issue
specialized types of securities, such as guaranteed notes of the Small Business
Administration, Federal Aviation Administration, Department of Defense, Bureau
of Indian Affairs and Private Export Funding Corporation, which often provide
higher yields that are available from the more common types of government-backed
instruments. However, such specialized instruments may only be available from a
few sources in limited amounts, or only in very large denominations; they may
also require specialized capability in portfolio servicing and in legal matters
related to government guarantees. While they may frequently offer attractive
yields, the limited-activity markets of many of these securities means that, if
a Fund or Portfolio were required to liquidate any of them, it might not be able
to do so advantageously; accordingly, each Fund and Portfolio investing in such
securities normally to hold such securities to maturity or pursuant to
repurchase agreements, and would treat such securities (including repurchase
agreements maturing in more than seven days) as illiquid for purposes of its
limitation on investment in illiquid securities.

BANK OBLIGATIONS. Investments in bank obligations are limited to those of
U.S. banks (including their foreign branches) which have total assets at the
time of purchase in excess of $1 billion and the deposits of which are insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation, and foreign banks (including their
U.S. branches) having total assets in excess of $10 billion (or the equivalent
in other currencies), and such other U.S. and foreign commercial banks which are
judged by the advisers to meet comparable credit standing criteria.

Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by
a borrower, usually in connection with an international commercial transaction.
The borrower is liable for payment as is the bank, which unconditionally
guarantees to pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of United States banks or foreign banks
which are payable at a stated maturity date and bear a fixed rate of interest.
Although fixed time deposits do not have a market, there are no contractual
restrictions on the right to transfer a beneficial interest in the deposit to a
third party. Fixed time deposits subject to withdrawal penalties and with
respect to which a Fund or Portfolio cannot realize the proceeds thereon within
seven days are deemed "illiquid" for the purposes of its restriction on
investments in illiquid securities. Deposit notes are notes issued by commercial
banks which generally bear fixed rates of interest and typically have original
maturities ranging from eighteen months to five years.

Banks are subject to extensive governmental regulations that may limit both
the amounts and types of loans and other financial commitments that may be made
and the interest rates and fees that may be charged. The profitability of this
industry is largely dependent upon the availability and cost of capital funds
for the purpose of financing lending operations under prevailing money market
conditions. Also, general economic conditions play an important part in the
operations of this industry and exposure to credit losses arising from possible
financial difficulties of borrowers might affect a bank's ability to meet its
obligations. Bank obligations may be general obligations of the parent bank or
may be limited to the issuing branch by the terms of the specific obligations or
by government regulation. Investors should

also be aware that securities of foreign banks and foreign branches of United
States banks may involve foreign investment risks in addition to those relating
to domestic bank obligations. These investment risks may involve, among other
considerations, risks relating to future political and economic developments,
more limited liquidity of foreign obligations than comparable domestic
obligations, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign assets and the possible
establishment of exchange controls or other restrictions. There also may be less
publicly available information concerning foreign issuers, difficulties in
obtaining or enforcing a judgment against a foreign issuer (including branches)
and differences in accounting, auditing and financial reporting standards and
practices from those applicable to U.S. issuers. In addition, foreign banks are
also not subject to regulations comparable to U.S. banking regulations. Certain
national policies may also impede the investment opportunities of the Funds or
Portfolio in other ways, including restrictions on investing in issuers or
industries deemed sensitive to relevant national interests.

FOREIGN SECURITIES. For purposes of a Fund's or a Portfolio's investment
policies, an issuer of a security may be deemed to be located in a particular
country if (i) the principal trading market for the security is in such country,
(ii) the issuer is organized under the laws of such country or (iii) the issuer
derives at least 50 percent of its revenues or profits from such country or has
at least 50 percent of its assets situated in such country.

DEPOSITARY RECEIPTS. Each Fund and Portfolio may invest its assets in
securities of multinational companies in the form of American Depositary
Receipts or other similar securities representing securities of foreign issuers,
such as European Depositary Receipts, Global Depositary Receipts and other
similar securities representing securities of foreign issuers (collectively,
"Depositary Receipts"). The Funds and the Portfolio treat Depositary Receipts as
interests in the underlying securities for purposes of their investment
policies. Unsponsored Depositary Receipts may not carry comparable voting rights
to sponsored Depositary Receipts, and a purchaser of unsponsored Depositary
Receipts may not receive as much information about the issuer of the underlying
securities as with a sponsored Depositary Receipt.

COMMERCIAL PAPER. Commercial paper consists of short-term (usually from 1
to 270 days) unse-cured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the lender
may determine to invest varying amounts.

SUPRANATIONAL OBLIGATIONS. Each Fund and Portfolio may invest in
supranational obligations. Supranational organizations include organizations
such as The World Bank, which was chartered to finance development projects in
developing member countries; the European Union, which is a fifteen-nation
organization engaged in cooperative economic activities; the European Coal and
Steel Community, which is an economic union of various European nations steel
and coal industries; and the Asian Development Bank, which is an international
development bank established to lend funds, promote investment and provide
technical assistance to member nations of the Asian and Pacific regions.

MONEY MARKET INSTRUMENTS. Each Fund and Portfolio may invest in cash or
high-quality, short-term money market instruments. These may include U.S.
government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.

CORPORATE REORGANIZATIONS. In general securities that are subject to a
tender or exchange offer or proposal sell at a premium to their historic market
price immediately prior to the announcement of the offer or proposal. The
increased market price of these securities may also discount what the stated or
appraised value of the security would be if the contemplated action were
approved or consummated. These investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by

shareholder of the prospective portfolio company as a result of the contemplated
transaction; or fails adequately to recognize the possibility that the offer or
proposal may be replaced or superseded by an offer or proposal of greater value.
The evaluation of these contingencies requires unusually broad knowledge and
experience on the part of the advisers that must apprise not only the value of
the issuer and its component businesses as well as the assets or securities to
be received as a result of the contemplated transaction, but also the financial
resources and business motivation of the offeror as well as the dynamics of the
business climate when the offer or proposal is in progress. Investments in
reorganization securities may tend to increase the turnover ratio of a Fund or
Portfolio and increase its brokerage and other transaction expenses.

LOAN PARTICIPATIONS. The Funds may invest in participations in fixed and
floating rate loans arranged through private negotiations between a borrower and
one or more financial institutions. The Funds may have difficulty disposing of
participations because to do so it will have to assign such securities to a
third party. Because there is no established secondary market for such
securities, the Fund anticipate that such securities could be sold only to a
limited number of institutional investors. The lack of an established secondary
market may have an adverse impact on the value of such securities and the Funds'
ability to dispose of particular assignments or participations when necessary to
meet the Funds' liquidity needs or in response to a specific economic event such
as a deterioration in the creditworthiness of the borrower. When investing in a
participation, the Funds will typically have the right to receive payments only
from the lender, and not from the borrower itself, to the extent the lender
receives payments from the borrower. Accordingly, the Funds may be subject to
the credit risk of both the borrower and the lender. The lack of an established
secondary market for assignments and participations also may make it more
difficult for the Funds to assign a value to these securities for purposes of
valuing the Funds' portfolio and calculating its net asset value. The Funds will
not invest more than 15% of the value of their net assets in participations and
assignments that are illiquid, and in other illiquid securities.

BRADY BONDS. The Funds may invest in Brady Bonds. The Brady Plan framework,
as it has developed, contemplates the exchange of external commercial bank debt
for newly issued bonds, called Brady Bonds. Brady Bonds may also be issued in
respect of new money being advanced by existing lenders in connection with the
debt restructuring. Brady Bonds issued to date generally have maturities of
between 15 and 30 years from the date of issuance. The Funds may invest in Brady
Bonds of countries that have been issued to date, as well as those which may be
issued in the future.

Agreements implemented under the Brady Plan to date are designed to achieve
debt and debt-service reduction through specific options negotiated by a debtor
nation with its creditors. As a result, the financial packages offered by each
country differ. The types of options have included the exchange of outstanding
commercial bank debt for bonds issued at 100% of face value of such debt which
carry a below-market stated rate of interest (generally known as par bonds),
bonds issued at a discount from the face value of such debt (generally known as
discount bonds), bonds bearing an interest rate which increases over time and
bonds issued in exchange for the advancement of new money by existing lenders.
Regardless of the stated face amount and stated interest rate of the various
types of Brady Bonds, the Funds will purchase Brady Bonds in secondary markets,
as described below, in which the price and yield to the investor reflect market
conditions at the time of purchase. Brady Bonds issued to date have traded at a
deep discount from their face value. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts constitute
the "residual risk"). The Funds may purchase Brady Bonds with no or limited
collateralization and will be relying for payment of interest and (except in the
case of principal collateralized Brady Bonds) principal primarily on the
willingness and ability of the foreign government to make payment in accordance
with the terms of the Brady Bonds. Brady Bonds issued to date are purchased and
sold in secondary markets through U.S. securities dealers and other financial
institutions and are generally maintained through European transnational
securities depositories.

REPURCHASE AGREEMENTS. Each Fund and Portfolio may enter into repurchase
agreements. Repurchase agreements are agreements to purchase and resell
securities at an agreed-upon price and

time. A Fund or Portfolio will enter into repurchase agreements only with member
banks of the Federal Reserve System and securities dealers believed
creditworthy, and only if fully collateralized by securities in which such Fund
or Portfolio is permitted to invest. Under the terms of a typical repurchase
agreement, a Fund or Portfolio would acquire an underlying instrument for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase the instrument and the Fund or Portfolio
to resell the instrument at a fixed price and time, thereby determining the
yield during the Fund's or Portfolio's holding period. This procedure results in
a fixed rate of return insulated from market fluctuations during such period. A
repurchase agreement is subject to the risk that the seller may fail to
repurchase the security. Repurchase agreements are considered under the 1940 Act
to be loans collateralized by the underlying securities. All repurchase
agreements entered into by a Fund or Portfolio will be fully collateralized at
all times during the period of the agreement in that the value of the underlying
security will be at least equal to 100% of the amount of the loan, including the
accrued interest thereon, and the Fund or Portfolio or its custodian or
sub-custodian will have possession of the collateral, which the Board of
Trustees believes will give it a valid, perfected security interest in the
collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established. This
might become an issue in the event of the bankruptcy of the other party to the
transaction. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities would not be
owned by the Fund or Portfolio, but would only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, a Fund or Portfolio
may suffer time delays and incur costs in connection with the disposition of the
collateral. The Board of Trustees believes that the collateral underlying
repurchase agreements may be more susceptible to claims of the seller's
creditors than would be the case with securities owned by a Fund or Portfolio.
Repurchase agreements maturing in more than seven days are treated as illiquid
for purposes of the Funds' and Portfolio's restrictions on purchases of illiquid
securities. Repurchase agreements are also subject to the risks described below
with respect to stand-by commitments.

BORROWINGS AND REVERSE REPURCHASE AGREEMENTS. Each Fund may borrow money
from banks for temporary or short-term purposes, but will not borrow to buy
additional securities, known as "leveraging." Each Fund and Portfolio may enter
into reverse repurchase agreements. Reverse repurchase agreements involve the
sale of securities held by a Fund or Portfolio with an agreement to repurchase
the securities at an agreed upon price and date. A Fund or Portfolio may use
this practice to generate cash for shareholder redemptions without selling
securities during unfavorable market conditions. Whenever a Fund or Portfolio
enters into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets on a daily basis in an amount at
least equal to the repurchase price (including accrued interest.) A Fund or
Portfolio would be required to pay interest on amounts obtained through reverse
repurchase agreements, which are considered borrowings under federal securities
laws. The repurchase price is generally equal to the original sales price plus
interest. Reverse repurchase agreements are usually for seven days or less and
cannot be repaid prior to their expiration dates. Reverse repurchase agreements
involve the risk that the market value of the portfolio securities transferred
may decline below the price at which the Fund or Portfolio is obliged to
purchase the securities. Whether a repurchase agreement is the purchase and sale
of a security or a collateralized loan has not been conclusively established.
This might become an issue in the event of the bankruptcy of the other party to
the transaction. In the event of default by the seller under a repurchase
agreement construed to be a collateralized loan, the underlying securities would
not be owned by the Fund, but would only constitute collateral for the seller's
obligation to pay the repurchase price. Therefore, a Fund may suffer time delays
and incur costs in connection with the disposition of the collateral. The Board
of Trustees believes that the collateral underlying repurchase agreements may be
more susceptible to claims of the seller's creditors than would be the case with
securities owned by a Fund. Repurchase agreements maturing in more than seven
days are treated as illiquid for purposes of the Funds' restrictions on
purchases of illiquid securities. Repurchase agreements are also subject to the
risks described below with respect to stand-by commitments.

FORWARD COMMITMENTS. Each Fund and Portfolio may purchase securities on a
forward commitment basis. In order to invest a Fund's assets immediately, while
awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will normally
be purchased. When a commitment to purchase a security on a forward

commitment basis is made, procedures are established consistent with the General
Statement of Policy of the Securities and Exchange Commission concerning such
purchases. Since that policy currently recommends that an amount of the
respective Fund's or Portfolio's assets equal to the amount of the purchase be
held aside or segregated to be used to pay for the commitment, a separate
account of such Fund or Portfolio consisting of cash, cash equivalents or high
quality debt securities equal to the amount of such Fund's or Portfolio's
commitments securities will be established at such Fund's or Portfolio's
custodian bank. For the purpose of determining the adequacy of the securities in
the account, the deposited securities will be valued at market value. If the
market value of such securities declines, additional cash, cash equivalents or
highly liquid securities will be placed in the account daily so that the value
of the account will equal the amount of such commitments by the respective Fund
or Portfolio.

Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the respective Fund's or
Portfolio's portfolio are subject to changes in value based upon the public's
perception of the issuer and changes, real or anticipated, in the level of
interest rates. Purchasing securities on a forward commitment basis can involve
the risk that the yields available in the market when the delivery takes place
may actually be higher or lower than those obtained in the transaction itself.
On the settlement date of the forward commitment transaction, the respective
Fund or Portfolio will meet its obligations from then available cash flow, sale
of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the forward
commitment securities themselves (which may have a value greater or lesser than
such Fund's or Portfolio's payment obligations). The sale of securities to meet
such obligations may result in the realization of capital gains or losses.
Purchasing securities on a forward commitment basis can also involve the risk of
default by the other party on its obligation, delaying or preventing the Fund or
Portfolio from recovering the collateral or completing the transaction.

To the extent a Fund or Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of investment
leverage, and settlement of such transactions will be within 90 days from the
trade date.

INVESTMENT GRADE DEBT SECURITIES. Each Fund and Portfolio may invest in
investment grade debt securities. Investment grade debt securities are
securities that are rated in the category BBB or higher by Standard & Poor's
Corporation ("S&P"), Baa or higher by Moody's Investors Service, Inc.
("Moody's"), rated at an equivalent level by another national rating
organization or, if unrated, determined by the advisers to be of comparable
quality.

STRIPPED OBLIGATIONS. The principal and interest components of United
States Treasury bonds with remaining maturities of longer than ten years are
eligible to be traded independently under the Separate Trading of Registered
Interest and Principal of Securities ("STRIPS") program. Under the STRIPS
program, the principal and interest components are separately issued by the
United States Treasury at the request of depository financial institutions,
which then trade the component parts separately. The interest component of
STRIPS may be more volatile than that of United States Treasury bills with
comparable maturities. The risk is greater when the period to maturity is
longer. Each Fund and Portfolio may invest up to 20 percent of its total assets
in stripped obligations where the underlying obligation is backed by the full
faith and credit of the U.S. government.

INDEXED INVESTMENTS. Each Fund and Portfolio may invest in instruments
which are indexed to certain specific foreign currency exchange rates. The terms
of such instruments may provide that their principal amounts or just their
coupon interest rates are adjusted upwards or downwards (but not below zero) at
maturity or on established coupon payment dates to reflect changes in the
exchange rate between two or more currencies while the obligation is
outstanding. Such indexed investments entail the

risk of loss of principal and/or interest payments from currency movements in
addition to principal risk, but offer the potential for realizing gains as a
result of changes in foreign currency exchange rates.

WARRANTS AND RIGHTS. Warrants basically are options to purchase equity
securities at a specified price for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying securities. Rights
are similar to warrants but normally have a shorter duration and are distributed
directly by the issuer to shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.

ILLIQUID SECURITIES. For purposes of its limitation on investments in
illiquid securities, each Fund and the Portfolio may elect to treat as liquid,
in accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary market
of qualified institutional buyers as contemplated by Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act.
("Section 4(2) paper") Rule 144A provides an exemption from the registration
requirements of the Securities Act for the resale of certain restricted
securities to qualified institutional buyers. Section 4(2) paper is restricted
as to disposition under the federal securities laws, and generally is sold to
institutional investors such as a Fund or Portfolio who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale of Section 4(2) paper by the purchaser must be in an exempt
transaction.

One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained.
The Trustees have adopted policies and procedures for the purpose of determining
whether securities that are eligible for resale under Rule 144A and
Section 4(2) paper are liquid or illiquid for purposes of the limitation on
investment in illiquid securities. Pursuant to those policies and procedures,
the Trustees have delegated to the advisers the determination as to whether a
particular instrument is liquid or illiquid, requiring that consideration be
given to, among other things, the frequency of trades and quotes for the
security, the number of dealers willing to sell and security and the number of
potential purchasers, dealer undertakings to make a market in the security, the
nature of the security and the time needed to dispose of the security. The
Trustees will periodically review the Funds' and Portfolio's purchases and sales
of Rule 144A securities and Section 4(2) paper.

STAND-BY COMMITMENTS. Each Fund and Portfolio may utilize stand-by
commitments in securities sales transactions. In a put transaction, a Fund or
Portfolio acquires the right to sell a security at an agreed upon price within a
specified period prior to its maturity date, and a stand-by commitment entitles
a Fund or Portfolio to same-day settlement and to receive an exercise price
equal to the amortized cost of the underlying security plus accrued interest, if
any, at the time of exercise. Stand-by commitments are subject to certain risks,
which include the inability of the issuer of the commitment to pay for the
securities at the time the commitment is exercised, the fact that the commitment
is not marketable by a Fund or Portfolio, and that the maturity of the
underlying security will generally be different from that of the commitment. A
put transaction will increase the cost of the underlying security and
consequently reduce the available yield.

SECURITIES LOANS. To the extent specified in the Prospectus, each Fund and
Portfolio is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
portfolio securities may not exceed 30% of the value of a Fund's or Portfolio's
total assets. In connection with such loans, a Fund or Portfolio will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 100% of the
current market value plus accrued interest of the securities loaned. A Fund or
Portfolio can increase its income through the investment of such collateral. A
Fund or Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Fund or Portfolio on a loaned security from
the borrower will not qualify for the dividends-received deduction. Such loans
will be terminable at any time upon specified notice. A Fund or Portfolio might
experience risk of loss if

the institutions with which it has engaged in portfolio loan transactions breach
their agreements with such Fund or Portfolio. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower experience
financial difficulty. Loans will be made only to firms deemed by the advisers to
be of good standing and will not be made unless, in the judgment of the
advisers, the consideration to be earned from such loans justifies the risk.

OTHER INVESTMENT COMPANIES. Apart from being able to invest all of their
investable assets in another investment company having substantially the same
investment objectives and policies, each Fund may invest up to 10% of its total
assets in shares of other investment companies when consistent with its
investment objective and policies, subject to applicable regulatory limitations.
For purposes of this restriction, a Mauritius Company will not be considered an
investment company. Additional fees may be charged by other investment
companies.

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE. Unlike other mutual
funds which directly acquire and manage their own portfolio securities, the
International Equity Fund invests all of its investable assets in the Portfolio,
a separate registered investment company. Therefore, a shareholder's interest in
the Portfolio's securities is indirect. In addition to selling a beneficial
interest to the Fund, the Portfolio may sell beneficial interests to other
mutual funds or institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, other investors investing in the Portfolio
are not be required to sell their shares at the same public offering prices as
the Fund, and may bear different levels of ongoing expenses than the Fund.
Shareholders of the Fund should be aware that these differences may result in
differences in returns experienced in the different funds that invest in the
Portfolio. Such differences in return are also present in other mutual fund
structures.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
were to withdraw from the Portfolio, the remaining funds might experience higher
pro rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
However, the possibility also exists for traditionally structured funds which
have large or institutional investors. Funds with a greater pro rata ownership
in the Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of the Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions have
been received. Certain changes in the Portfolio's objective, policies or
restrictions may require the Trust to withdraw the Fund's interest in such the
Portfolio. Any withdrawal could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution from the Portfolio). The Fund
could incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind may result in a less
diversified portfolio of investments or adversely affect the liquidity of the
Fund.

The same individuals who are disinterested Trustees of the Trust serve as
Trustees of the Portfolio. The Trustees of the Trust, including a majority of
the disinterested Trustees, have adopted procedures they believe are reasonably
appropriate to deal with any conflict of interest up to and including creating a
separate Board of Trustees.

Investors in the Fund may obtain information about whether an investment in
the Portfolio may be available through other funds by calling the JPMorgan Funds
Service Center at 1-800-348-4782.

ADDITIONAL POLICIES REGARDING DERIVATIVE AND RELATED TRANSACTIONS

INTRODUCTION. As explained more fully below, the Funds and the Portfolio
may employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be considered a
security or other instrument which derives its value from the value or
performance of other instruments or assets, interest or currency exchange rates,
or indexes. For instance, derivatives include futures, options, forward
contracts, structured notes and various over-the-counter instruments.

Like other investment tools or techniques, the impact of using derivatives
strategies or similar instruments depends to a great extent on how they are
used. Derivatives are generally used by portfolio managers in three ways: First,
to reduce risk by hedging (offsetting) an investment position. Second, to
substitute for another security particularly where it is quicker, easier and
less expensive to invest in derivatives. Lastly, to speculate or enhance
portfolio performance. When used prudently, derivatives can offer several
benefits, including easier and more effective hedging, lower transaction costs,
quicker investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks, thereby
leading to potentially greater losses for a Fund or Portfolio.

Each Fund and Portfolio may invest its assets in derivative and related
instruments subject only to the Fund's or Portfolio's investment objective and
policies and the requirement that the Fund or Portfolio maintain segregated
accounts consisting of liquid assets, such as cash, U.S. government securities,
or other high-grade debt obligations (or, as permitted by applicable regulation,
enter into certain offsetting positions) to cover its obligations under such
instruments with respect to positions where there is no underlying portfolio
asset so as to avoid leveraging the Fund or Portfolio.

The value of some derivative or similar instruments in which the Funds and
the Portfolio may invest may be particularly sensitive to changes in prevailing
interest rates or other economic factors, and--like other investments of the
Funds and the Portfolio--the ability of a Fund or Portfolio to successfully
utilize these instruments may depend in part upon the ability of the advisers to
forecast interest rates and other economic factors correctly. If the advisers
inaccurately forecast such factors and have taken positions in derivative or
similar instruments contrary to prevailing market trends, the Funds and the
Portfolio could be exposed to the risk of a loss. The Funds and/or the Portfolio
may not employ any or all of the strategies described herein, and no assurance
can be given that any strategy used will succeed.

Set forth below is an explanation of the various derivatives strategies and
related instruments the Funds and the Portfolio may employ along with risks or
special attributes associated with them. This discussion is intended to
supplement the Funds' current prospectuses as well as to provide useful
information to prospective investors.

RISK FACTORS. As explained more fully below and in the discussions of
particular strategies or instruments, there are a number of risks associated
with the use of derivatives and related instruments: There can be no guarantee
that there will be a correlation between price movements in a hedging vehicle
and in the portfolio assets being hedged. An incorrect correlation could result
in a loss on both the hedged assets in a Fund or Portfolio and the hedging
vehicle so that the portfolio return might have been greater had hedging not
been attempted. This risk is particularly acute in the case of "cross-hedges"
between currencies. The advisers may inaccurately forecast interest rates,
market values or other economic factors in utilizing a derivatives strategy. In
such a case, a Fund or Portfolio may have been in a better position had it not
entered into such strategy. Hedging strategies, while reducing risk of loss, can
also reduce the opportunity for gain. In other words, hedging usually limits
both potential losses as well as potential gains. The Funds and Portfolio are
not required to use any hedging strategies and strategies not involving hedging
involve leverage and may increase the risk to a Fund or Portfolio. Certain
strategies, such as yield enhancement, can have speculative characteristics and
may result in more risk to a Fund or Portfolio than hedging strategies using the
same instruments.

There can be no assurance that a liquid market will exist at a time when a
Fund or Portfolio seeks to close out an option, futures contract or other
derivative or related position. Many exchanges and boards of trade limit the
amount of fluctuation permitted in option or futures contract prices during a
single day; once the daily limit has been reached on particular contract, no
trades may be made that day at a price beyond that limit. In addition, certain
instruments are relatively new and without a significant trading history. As a
result, there is no assurance that an active secondary market will develop or
continue to exist. Finally, over-the-counter instruments typically do not have a
liquid market. Lack of a liquid market for any reason may prevent a Fund or
Portfolio from liquidating an unfavorable position. Activities of large traders
in the futures and securities markets involving arbitrage, "program trading,"
and other investment strategies may cause price distortions in these markets. In
certain instances, particularly those involving over-the-counter transactions,
forward contracts, foreign exchanges or foreign boards of trade, there is a
greater potential that a counterparty or broker may default or be unable to
perform on its commitments. In the event of such a default, a Fund or Portfolio
may experience a loss. In transactions

involving currencies, the value of the currency underlying an instrument may
fluctuate due to many factors, including economic conditions, interest rates,
governmental policies and market forces.

SPECIFIC USES AND STRATEGIES. Set forth below are explanations of various
strategies involving derivatives and related instruments which may be used by a
Fund or Portfolio.

OPTIONS ON SECURITIES, SECURITIES INDEXES, CURRENCIES AND DEBT
INSTRUMENTS. A Fund or Portfolio may PURCHASE, SELL or EXERCISE call and put
options on: securities; securities indexes; currencies; or debt instruments.
Specifically, each Fund and Portfolio may (i) purchase, write and exercise call
and put options on securities and securities indexes (including using options in
combination with securities, other options or derivative instruments),
(ii) enter into swaps, futures contracts and options on futures contracts,
(iii) employ forward currency and interest rate contracts and (iv) purchase and
sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments.

Although in most cases these options will be exchange-traded, the Funds and
the Portfolio may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller. As such, over-the-counter options generally have much less market
liquidity and carry the risk of default or nonperformance by the other party.

One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities a Fund or Portfolio intends to purchase
pending its ability to invest in such securities in an orderly manner. A Fund or
Portfolio may also use combinations of options to minimize costs, gain exposure
to markets or take advantage of price disparities or market movements. For
example, a Fund or Portfolio may sell put or call options it has previously
purchased or purchase put or call options it has previously sold. These
transactions may result in a net gain or loss depending on whether the amount
realized on the sale is more or less than the premium and other transaction
costs paid on the put or call option which is sold. A Fund or Portfolio may
write a call or put option in order to earn the related premium from such
transactions. Prior to exercise or expiration, an option may be closed out by an
offsetting purchase or sale of a similar option. The Funds will not write
uncovered options.

In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, a
Fund or Portfolio writing a covered call (i.e., where the underlying securities
are held by the Fund or Portfolio) has, in return for the premium on the option,
given up the opportunity to profit from a price increase in the underlying
securities above the exercise price, but has retained the risk of loss should
the price of the underlying securities decline. The writer of an option has no
control over the time when it may be required to fulfill its obligation as a
writer of the option. Once an option writer has received an exercise notice, it
cannot effect a closing purchase transaction in order to terminate its
obligation under the option and must deliver the underlying securities at the
exercise price.

If a put or call option purchased by a Fund or Portfolio is not sold when it
has remaining value, and if the market price of the underlying security, in the
case of a put, remains equal to or greater than the exercise price or, in the
case of a call, remains less than or equal to the exercise price, such Fund or
Portfolio will lose its entire investment in the option. Also, where a put or
call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund or Portfolio seeks to close out an
option position. Furthermore, if trading restrictions or suspensions are imposed
on the options markets, a Fund or Portfolio may be unable to close out a
position.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Fund or Portfolio may
purchase or sell: interest-rate futures contracts; stock index futures
contracts; foreign currency futures contracts; futures contracts on specified
instruments or indices; and options on these futures contracts ("futures
options").

The futures contracts and futures options may be based on various
instruments or indices in which the Funds and the Portfolio may invest such as
foreign currencies, certificates of deposit, Eurodollar time deposits,
securities indices, economic indices (such as the Consumer Price Indices
compiled by the U.S. Department of Labor).

Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
a Fund or Portfolio may sell a futures contract--or buy a futures option--to
protect against a decline in value, or reduce the duration, of portfolio
holdings. Likewise, these instruments may be used where a Fund or Portfolio
intends to acquire an instrument or enter into a position. For example, a Fund
or Portfolio may purchase a futures contract--or buy a futures option--to gain
immediate exposure in a market or otherwise offset increases in the purchase
price of securities or currencies to be acquired in the future. Futures options
may also be written to earn the related premiums.

When writing or purchasing options, the Funds and the Portfolio may
simultaneously enter into other transactions involving futures contracts or
futures options in order to minimize costs, gain exposure to markets, or take
advantage of price disparities or market movements. Such strategies may entail
additional risks in certain instances. The Funds and the Portfolio may engage in
cross-hedging by purchasing or selling futures or options on a security or
currency different from the security or currency position being hedged to take
advantage of relationships between the two securities or currencies.

Investments in futures contracts and options thereon involve risks similar
to those associated with options transactions discussed above. The Funds and the
Portfolio will only enter into futures contracts or options or futures contracts
which are traded on a U.S. or foreign exchange or board of trade, or similar
entity or quoted on an automated quotation system.

FORWARD CONTRACTS. Each Fund and Portfolio may enter into forward
contracts. A Fund or Portfolio may use foreign currency and interest-rate
forward contracts for various purposes as described below.

Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. The Funds and the
Portfolio may invest in securities denominated in foreign currencies and may, in
addition to buying and selling foreign currency futures contracts and options on
foreign currencies and foreign currency futures, enter into forward foreign
currency exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be a fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
By entering into a forward foreign currency contract, a Fund or Portfolio "locks
in" the exchange rate between the currency it will deliver and the currency it
will receive for the duration of the contract. As a result, a Fund or Portfolio
reduces its exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will exchange
into. The effect on the value of a Fund or Portfolio is similar to selling
securities denominated in one currency and purchasing securities denominated in
another. Transactions that use two foreign currencies are sometimes referred to
as "cross-hedges."

A Fund or Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from investments or anticipated
investments in securities denominated in foreign currencies. A Fund or Portfolio
may also enter into these contracts for purposes of increasing exposure to a
foreign currency or to shift exposure to foreign currency fluctuations from one
country to another.

A Fund or Portfolio may also use forward contracts to hedge against changes
in interest-rates, increase exposure to a market or otherwise take advantage of
such changes. An interest-rate forward contract involves the obligation to
purchase or sell a specific debt instrument at a fixed price at a future date.

INTEREST RATE AND CURRENCY TRANSACTIONS. A Fund or Portfolio may employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The aggregate amount of a Fund's or Portfolio's net
currency

exposure will not exceed the total net asset value of its portfolio. However, to
the extent that a Fund or Portfolio is fully invested while also maintaining
currency positions, it may be exposed to greater combined risk.

The Funds and the Portfolio will only enter into interest rate and currency
swaps on a net basis, i.e., the two payment streams are netted out, with the
Fund or Portfolio receiving or paying, as the case may be, only the net amount
of the two payments. Interest rate and currency swaps do not involve the
delivery of securities, the underlying currency, other underlying assets or
principal. Accordingly, the risk of loss with respect to interest rate and
currency swaps is limited to the net amount of interest or currency payments
that a Fund or Portfolio is contractually obligated to make. If the other party
to an interest rate or currency swap defaults, a Fund's or Portfolio's risk of
loss consists of the net amount of interest or currency payments that the Fund
or Portfolio is contractually entitled to receive. Since interest rate and
currency swaps are individually negotiated, the Funds and the Portfolio expect
to achieve an acceptable degree of correlation between their portfolio
investments and their interest rate or currency swap positions.

A Fund or Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert such
currency into U.S. dollars at a later date, based on anticipated changes in the
relevant exchange rate.

A Fund or Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when the
advisers anticipate that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by such Fund or Portfolio. In
addition, a Fund or Portfolio may enter into forward foreign currency exchange
contracts in order to protect against adverse changes in future foreign currency
exchange rates. A Fund or Portfolio may engage in cross-hedging by using forward
contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if its advisers believe that
there is a pattern of correlation between the two currencies. Forward contracts
may reduce the potential gain from a positive change in the relationship between
the U.S. dollar and foreign currencies. Unanticipated changes in currency prices
may result in poorer overall performance for a Fund or Portfolio than if it had
not entered into such contracts. The use of foreign currency forward contracts
will not eliminate fluctuations in the underlying U.S. dollar equivalent value
of the prices of or rates of return on a Fund's or Portfolio's foreign currency
denominated portfolio securities and the use of such techniques will subject the
Fund or Portfolio to certain risks.

The matching of the increase in value of a forward contract and the decline
in the U.S. dollar equivalent value of the foreign currency denominated asset
that is the subject of the hedge generally will not be precise. In addition, a
Fund or Portfolio may not always be able to enter into foreign currency forward
contracts at attractive prices, and this will limit a Fund's or Portfolio's
ability to use such contract to hedge or cross-hedge its assets. Also, with
regard to a Fund's or Portfolio's use of cross-hedges, there can be no assurance
that historical correlations between the movement of certain foreign currencies
relative to the U.S. dollar will continue. Thus, at any time a poor correlation
may exist between movements in the exchange rates of the foreign currencies
underlying a Fund's or Portfolio's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's or Portfolio's
assets that are the subject of such cross-hedges are denominated.

A Fund or Portfolio may enter into interest rate and currency swaps to the
maximum allowed limits under applicable law. A Fund or Portfolio will typically
use interest rate swaps to shorten the effective duration of its portfolio.
Interest rate swaps involve the exchange by a Fund or Portfolio with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of their respective rights to make or receive payments in
specified currencies.

STRUCTURED PRODUCTS. Each Fund and Portfolio may invest in structured
products. Structured products are interests in entities organized and operated
solely for the purpose of restructuring the investment characteristics of
certain other investments. This type of restructuring involves the deposit with
or purchase by an entity, such as a corporation or trust, of specified
instruments (such as commercial bank loans) and the issuance by that entity of
one or more classes of securities ("structured products") backed by, or
representing interests in, the underlying instruments. The cash flow on the
underlying instruments may be apportioned among the newly issued structured
products to create

securities with different investment characteristics such as varying maturities,
payment priorities and interest rate provisions, and the extent of the payments
made with respect to structured products is dependent on the extent of the cash
flow on the underlying instruments. A Fund or Portfolio may invest in structured
products which represent derived investment positions based on relationships
among different markets or asset classes.

A Fund or Portfolio may also invest in other types of structured products,
including, among others, inverse floaters, spread trades and notes linked by a
formula to the price of an underlying instrument. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remarketing agent or by reference to
another security) (the "reference rate"). As an example, inverse floaters may
constitute a class of collateralized mortgage obligations with a coupon rate
that moves inversely to a designated index, such as LIBOR (London Interbank
Offered Rate) or the Cost of Funds Index. Any rise in the reference rate of an
inverse floater (as a consequence of an increase in interest rates) causes a
drop in the coupon rate while any drop in the reference rate of an inverse
floater causes an increase in the coupon rate. A spread trade is an investment
position relating to a difference in the prices or interest rates of two
securities where the value of the investment position is determined by movements
in the difference between the prices or interest rates, as the case may be, of
the respective securities. When a Fund or Portfolio invests in notes linked to
the price of an underlying instrument, the price of the underlying security is
determined by a multiple (based on a formula) of the price of such underlying
security. A structured product may be considered to be leveraged to the extent
its interest rate varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. Because they are linked to their underlying
markets or securities, investments in structured products generally are subject
to greater volatility than an investment directly in the underlying market or
security. Total return on the structured product is derived by linking return to
one or more characteristics of the underlying instrument. Because certain
structured products of the type in which a Fund or Portfolio may invest may
involve no credit enhancement, the credit risk of those structured products
generally would be equivalent to that of the underlying instruments. A Fund or
Portfolio may invest in a class of structured products that is either
subordinated or unsubordinated to the right of payment of another class.
Subordinated structured products typically have higher yields and present
greater risks than unsubordinated structured products. Although a Fund's or
Portfolio's purchase of subordinated structured products would have similar
economic effect to that of borrowing against the underlying securities, the
purchase will not be deemed to be leverage for purposes of a Fund's or
Portfolio's fundamental investment limitation related to borrowing and leverage.

Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, an investment in these
structured products may be limited by the restrictions contained in the 1940
Act. Structured products are typically sold in private placement transactions,
and there currently is no active trading market for structured products. As a
result, certain structured products in which a Fund or Portfolio invests may be
deemed illiquid and subject to its limitation on illiquid investments.

Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security. In
addition, because structured products are typically sold in private placement
transactions, there currently is no active trading market for structured
products.

ADDITIONAL RESTRICTIONS ON THE USE OF FUTURES AND OPTION CONTRACTS. None of
the Funds is a "commodity pool" (i.e., a pooled investment vehicle which trades
in commodity futures contracts and options thereon and the operator of which is
registered with the CFTC) and futures contracts and futures options will be
purchased, sold or entered into only for bona fide hedging purposes, provided
that a Fund may enter into such transactions for purposes other than bona fide
hedging if, immediately thereafter, the sum of the amount of its initial margin
and premiums on open contracts and options would not exceed 5% of the
liquidation value of the Fund's portfolio, provided, further, that, in the case
of an option that is in-the-money, the in-the-money amount may be excluded in
calculating the 5% limitation.

When a Fund or Portfolio purchases a futures contract, an amount of cash or
cash equivalents or high quality debt securities will be deposited in a
segregated account with such Fund's or Portfolio's custodian or sub-custodian so
that the amount so segregated, plus the initial deposit and variation margin
held in the account of its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.

INVESTMENT RESTRICTIONS

The Funds and the Portfolio have adopted the following investment
restrictions which may not be changed without approval by a "majority of the
outstanding shares" of a Fund or Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more of the
shares of a Fund or total beneficial interests of a Portfolio present at a
meeting, if the holders of more than 50% of the outstanding shares of a Fund or
total beneficial interests of the Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of a Fund or total beneficial
interests of the Portfolio.

Whenever the Trust is requested to vote on a fundamental policy of the
Portfolio, the Trust will hold a meeting of shareholders of the International
Equity Fund and will cast its votes as instructed by the shareholders of such
Fund.

With respect to the International Equity Fund, it is a fundamental policy
that when the International Equity Fund holds no portfolio securities except
interests in the Portfolio, the Fund's investment objective and policies shall
be identical to the Portfolio's investment objective and policies, except for
the following: the International Equity Fund (1) may invest more than 10% of its
net assets in the securities of a registered investment company, (2) may hold
more than 10% of the voting securities of a registered investment company, and
(3) will concentrate its investments in the investment company. It is a
fundamental investment policy of the International Equity Fund that when the
International Equity Fund holds only portfolio securities other than interests
in the Portfolio, the International Equity Fund's investment objective and
policies shall be identical to the investment objective and policies of the
Portfolio at the time the assets of the International Equity Fund were withdrawn
from the Portfolio.

Each Fund, including the European Fund and the Japan Fund, and Portfolio may
not:

(1) borrow money, except that each Fund and the Portfolio may borrow
money for temporary or emergency purposes, or by engaging in reverse
repurchase transactions, in an amount not exceeding 33-1/3% of the value of
its total assets at the time when the loan is made and may pledge, mortgage
or hypothecate no more than 1/3 of its net assets to secure such borrowings.
Any borrowings representing more than 5% of total assets must be repaid
before the Fund or Portfolio may make additional investments;

(2) make loans, except that each Fund and the Portfolio may:
(i) purchase and hold debt instruments (including without limitation, bonds,
notes, debentures or other obligations and certificates of deposit, bankers'
acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with respect
to portfolio securities; and (iii) lend portfolio securities with a value
not in excess of one-third of the value of its total assets;

(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's or Portfolio's total assets would be
invested in the securities of companies whose principal business activities
are in the same industry. Notwithstanding the foregoing, with respect to a
Fund's or Portfolio's permissible futures and options transactions in U.S.
government securities, positions in such options and futures shall not be
subject to this restriction;

(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent a
Fund or Portfolio from (i) purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities or (ii) engaging in forward purchases or sales of
foreign currencies or securities;

(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund or Portfolio from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real estate
business). Investments by a Fund or Portfolio in securities backed by
mortgages on real estate or in marketable securities of companies engaged in
such activities are not hereby precluded;

(6) issue any senior security (as defined in the 1940 Act), except
that (a) a Fund or Portfolio may engage in transactions that may result in
the issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order;
(b) a Fund or Portfolio may acquire other securities, the acquisition of
which may result in the issuance of a senior security, to the extent
permitted under applicable regulations or interpretations of the 1940 Act;
and (c) subject to the restrictions set forth above, a Fund or Portfolio may
borrow money as authorized by the 1940 Act. For purposes of this
restriction, collateral arrangements with respect to permissible options and
futures transactions, including deposits of initial and variation margin,
are not considered to be the issuance of a senior security; or

(7) underwrite securities issued by other persons except insofar as a
Fund or Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security.

In addition, as a matter of fundamental policy, each of the Japan Fund and
European Fund may not:

(8) make or guarantee loans to any person or otherwise become liable
for or in connection with any obligation or indebtedness of any person
without the prior written consent of the Trustees, provided that for
purposes of this restriction the acquisition of bonds, debentures, or other
corporate debt securities and investments in government bonds, short-term
commercial paper, certificates of deposit and bankers' acceptances shall not
be deemed to be the making of a loan;

(9) invest in securities which are not traded or have not sought a
listing on a stock exchange, over-the-counter market or other organized
securities market that is open to the international public and on which
securities are regularly traded if, regarding all such securities, more than
10% of its total net assets would be invested in such securities immediately
after and as a result of such transaction;

(10) deal in put options, write or purchase call options, including
warrants, unless such options or warrants are covered and are quoted on a
stock exchange or dealt in on a recognized market, and, at the date of the
relevant transaction: (i) call options written do not involve more than 25%,
calculated at the exercise price, of the market value of the securities
within the Fund's portfolio excluding the value of any outstanding call
options purchased, and (ii) the cost of call options or warrants purchased
does not exceed, in terms of premium, 2% of the value of the net assets of
the Fund; or

(11) purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of such issuer to
be held by the Fund.

In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, each Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as the
Fund. For purposes of investment restriction (2) above, loan participations are
considered to be debt instruments. For purposes of investment restriction
(5) above, real estate includes Real Estate Limited Partnerships.

For purposes of investment restriction (3) above, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry." Investment restriction (3) above, however, is not applicable to
investments by a Fund or Portfolio in municipal obligations where the issuer is
regarded as a state, city, municipality or other public authority since such
entities are not members of an "industry." Supranational organizations are
collectively considered to be members of a single "industry" for purposes of
restriction (3) above.

In addition, each Fund and the Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder approval:

(1) The International Equity Fund and the Portfolio may not, with
respect to 50% of its assets, hold more than 10% of the outstanding voting
securities of an issuer.

(2) Each Fund and the Portfolio may not make short sales of
securities, other than short sales "against the box," or purchase securities
on margin except for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to limit
the use

of options, futures contracts and related options, in the manner otherwise
permitted by the investment restrictions, policies and investment program of
a Fund or Portfolio. No Fund or Portfolio has the current intention of
making short sales against the box.

(3) Each Fund and the Portfolio may not purchase or sell interests in
oil, gas or mineral leases.

(4) Each Fund and the Portfolio may not invest more than 15% of its
net assets in illiquid securities.

(5) Each Fund and the Portfolio may not write, purchase or sell any
put or call option or any combination thereof, provided that this shall not
prevent (i) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities or (ii) with
respect to a Fund's or Portfolio's permissible futures and options
transactions, the writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, calls or combinations thereof with
respect to futures.

(6) Except as specified above, each Fund and the Portfolio may invest
in the securities of other investment companies to the extent permitted by
applicable Federal securities law; provided, however, that a Mauritius
holding company (a "Mauritius Portfolio Company") will not be considered an
investment company for this purpose.

In addition, each of the Fleming Japan Fund and Fleming European Fund is
subject to the following nonfundamental restrictions which may be changed
without shareholder approval:

(7) The value of a Fund's investments in holdings of options and
warrants (other than those held for hedging purposes) may not exceed 15% of
the total net asset value of the Fund.

(8) Each Fund may not make any investment in assets that involve
assumption of any liability that is unlimited, or acquire any investments
that are for the time being nil paid or partly paid, unless according to the
terms of the issue thereof any call to be made thereon could be met in full
out of cash by the Fund's portfolio.

(9) Each Fund may not sell, purchase or loan securities (excluding
shares in the Fund) or grant or receive a loan or loans to or from the
adviser, corporate and domicillary agent, or paying agent, the distributors
and the authorized agents or any of their directors, officers or employees
or any of their major shareholders (meaning a shareholder who holds, in his
own or other name (as well as a nominee's name), more than 10% of the total
issued and outstanding shares of stock of such company) acting as principal,
or for their own account, unless the transaction is made within the other
restrictions set forth above and either (i) at a price determined by current
publicly available quotations, or (ii) at competitive prices or interest
rates prevailing from time to time on internationally recognized securities
markets or internationally recognized money markets.

For purposes of the Funds' and Portfolio's investment restrictions, the
issuer of a tax-exempt security is deemed to be the entity (public or
private) ultimately responsible for the payment of the principal of and
interest on the security.

With respect to each of the Funds, as a matter of nonfundamental policy,
to the extent permitted under applicable law, the above restrictions do not
apply to the following investments ("OECD investments"): (i) any security
issued by or the payment of principal and interest on which is guaranteed by
the government of any member state of the Organization for Economic
Cooperation and Development ("OECD country"); (ii) any fixed income security
issued in any OECD country by any public or local authority or nationalized
industry or undertaking of any OECD country or anywhere in the world by the
International Bank for Reconstruction and Development, European Investment
Bank, Asian Development Bank or any body which is, in the Trustees' opinion,
of similar standing. However, no investment may be made in any OECD
investment of any one issue if that would result in the value of a Fund's
holding of that issue exceeding 30% of the net asset value of the Fund and,
if the Fund's portfolio consists only of OECD investments, those OECD
investments shall be of at least six different issues.

In order to permit the sale of its shares in certain states, a Fund or
Portfolio may make commitments more restrictive than the investment policies
and limitations described above and in

its Prospectus. Should a Fund or Portfolio determine that any such
commitment is no longer in its best interests, it will revoke the commitment
by terminating sales of its shares in the state involved. In order to comply
with certain regulatory policies, as a matter of operating policy, each Fund
and the Portfolio will not: (i) invest more than 5% of its assets in
companies which, including predecessors, have a record of less than three
years' continuous operation; provided that this restriction shall not apply
to investments in a Mauritius Portfolio Company, (ii) invest in warrants,
valued at the lower of cost or market, in excess of 5% of the value of its
net assets, and no more than 2% of such value may be warrants which are not
listed on the New York or American Stock Exchanges, or (iii) purchase or
retain in its portfolio any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee
of the Trust or Portfolio, or is an officer or director of the adviser, if
after the purchase of the securities of such issuer by the Fund or Portfolio
one or more of such persons owns beneficially more than 1/2 of 1% of the
shares or securities, or both, all taken at market value, of such issuer,
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or
both, all taken at market value; provided, however, that this restriction
shall not apply to investments in a Mauritius Portfolio Company.

If a percentage or rating restriction on investment or use of assets set
forth herein or in a Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by a Fund or Portfolio will not be considered a violation. If the
value of a Fund's or Portfolio's holdings of illiquid securities at any time
exceeds the percentage limitation applicable at the time of acquisition due
to subsequent fluctuations in value or other reasons, the Board of Trustees
will consider what actions, if any, are appropriate to maintain adequate
liquidity.

SPECIAL CONSIDERATIONS

INVESTING IN JAPAN. Japan currently has the second largest GDP in the
world. The Japanese economy has grown substantially in the last three decades.
During the last seven years, however, despite small rallies and market gains,
Japan has been plagued with economic sluggishness. Economic conditions have
weakened considerably in Japan since October 1992. The boom in Japan's equity
and property markets during the expansion of the late 1980s supported high rates
of investment and consumer spending on durable goods, but both of these
components of demand have retreated sharply following the decline in asset
prices. It is suffering through its worst recession in two decades. Profits have
fallen sharply, unemployment has reached a historical high of 3.2% and consumer
confidence is low. The banking sector continues to suffer from non-performing
loans. Nine discount rate cuts since its 6% peak in 1991, a succession of fiscal
stimulus packages, support plans for a debt-burdened financial system and
spending for reconstruction following the Kobe earthquake should help contain
the recessionary forces, but substantial uncertainties remain. The general
government position has deteriorated as a result of weakening economic growth,
as well as stimulative measures taken recently to support economic activity and
to restore financial stability.

In addition to a cyclical downturn, Japan is suffering through structural
adjustments. The Japanese have seen a deterioration of their competitiveness due
to high wages, a string currency and structural rigidities. Japan has also
become a mature industrial economy and, as a result, will see its long-term
growth rate slow down over the next ten years. Finally, Japan is reforming its
political process and deregulating its economy. This has brought about turmoil,
uncertainty and a crisis of confidence.

Japan is heavily dependent upon international trade and, accordingly, has
been and may continue to be adversely affected by trade barriers and other
protectionist or retaliatory measures of, as well as economic conditions in, the
U.S. and other countries with which it trades. Industry, the most important
sector of the economy, is heavily dependent on imported raw materials and fuels.
Japan's major industries are in the engineering, electrical, textile, chemical,
automobile, fishing and telecommunication fields. Japan imports iron ore,
copper, and many forest products. Only 19% of its land is suitable for
cultivation. Japan's agricultural economy is subsidized and protected. It is
about 50% self-sufficient in food production. Even though Japan produces a
minute rice surplus, it is dependent upon large imports of wheat, sorghum and
soybeans from other countries. Japan's high volume of exports such as
automobiles, machine tools and semiconductors have caused trade tensions with
other countries,

particularly the United States. Some trading agreements between the countries
have reduced the friction caused by the current trade imbalance.

The relaxing of official and de facto barriers to imports, or hardships
created by any pressure brought by trading partners, could adversely affect
Japan's economy. A substantial rise in world oil or commodity prices could also
have a negative effect on the country's economy. The strength of the yen itself
may prove an impediment to string continued exports, because of the high prices
its means for Japanese goods sold in other countries. Because the Japanese
economy is so dependent on exports, any fall-off in exports may be seen as a
sign of economic weakness, which may adversely affect the market and the Fund.

Japanese securities are normally denominated and traded in the Japanese yen.
Accordingly, changes in the value of the yen, or other the currencies of other
securities in which the Japan Fund has invested, against the U.S. dollar will
result in corresponding changes in the U.S. dollar value of the Fund's assets
denominated in the yen, or such other currency. Historically, over a number of
years, the yen has generally appreciated in relation to the dollar. Nonetheless,
the yen has recently experienced increasing volatility relative to the U.S.
dollar, including periods of devaluation. The Japanese yen may also be adversely
affected by currency difficulties of other countries in the Southeast Asian
region. Devaluations in the yen, and any other currencies in which the Fund's
portfolio securities are denominated, will adversely affect the Fund's net asset
value.

In 1990, the Japanese stock market, as measured by the Tokyo Stock Price
Index (TOPIX), began a spectacular decline which continued through 1992. Since
then, the market has failed to rebound and continues to exhibit substantial
volatility. The decline in the Japanese securities markets has contributed to a
weakness in the Japanese economy, and the impact of a further decline cannot be
ascertained. The common stocks of many Japanese companies continue to trade at
high price-earnings ratios in comparison with those of the United States, even
after recent market decline. Differences in accounting methods make it difficult
to compare the earnings of Japanese companies with those of companies in other
countries, especially the United States.

While the Japanese governmental system seems stable, the country's politics
have been unpredictable in recent years. The economic crisis of 1990-92 brought
the downfall of the conservative Liberal Democratic Party, which had ruled since
1955. Since then, the country has seen a series of unstable multi-party
coalitions and several prime ministers come and go, because of politics as well
as personal scandals. While there appears to be no reason for anticipating civil
unrest, its is impossible to know when the political instability will end and
what trade and fiscal policies might be pursued by the government that emerges.

A seven-year decline of the Tokyo stock market has made the country's banks
and financial institutions vulnerable because of their large share portfolios,
and has left Japanese banks holding large numbers of non-performing loans. In
addition, the Japanese economy labors under a heavy government budget deficit
and historically low interest rates. As a result of these factors, several
high-profile bankruptcies of Japanese banks, brokerage firms and insurance
companies have occurred, and there can be no assurance that the number of such
bankruptcies will not increase. The economic difficulties of other countries in
the Southeast Asian region have adversely affected and may continue to adversely
affect the Japan's economy as many Japanese banks and companies have exposure to
the region and as the region's demand for Japanese exports fluctuates.

Geologically, Japan is located in a volatile area of the world, and has
historically been vulnerable to earthquakes, volcanoes and other natural
disasters. As demonstrated by the Kobe earthquake in January of 1995, in which
5,000 people were killed and billions of dollars of damage was sustained, these
natural disasters can be significant enough to affect the country's economy.

As in the United States and other markets, small company stocks are
typically more volatile than large company stocks, reacting more extremely to
good or bad news. Since Japan's market is dominated by large stocks (the average
company size in Japan is the largest anywhere in the world), the behavior of the
Japanese market in general and of the small-stock segment in particular may be
affected by the trading activity on a relatively small number of large-company
stocks to a much greater degree than is typically seen in the United States.
Further, during periods of economic difficulty, small companies can find it
harder to compete or survive. Since August 1990, the shares of smaller Japanese

companies have underperformed those of larger companies, as they tend to do in
periods of declining industrial production. However, the reverse trend tends to
apply in periods of economic recovery.

INVESTING IN EUROPE. Investment in the securities of European countries may
entail risks relating to restrictions on foreign investment and on repatriation
of capital invested as well as risks relating to economic conditions of the
region.

The securities markets of many European countries are relatively small, with
the majority of market capitalization and trading volume concentrated in a
limited number of companies representing a small number of industries.
Consequently, the Fund's investment portfolio may experience greater price
volatility and significantly lower liquidity than a portfolio invested in equity
securities of U.S. companies. These markets may be subject to a greater
influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the U.S.
Securities settlements may in some instances be subject to delays and related
administrative uncertainties.

Foreign investment in the securities markets of certain European countries
is restricted or controlled to varying degrees. These restrictions or controls
may at times limit or preclude investment in certain securities and may increase
the cost and expenses of the Fund, As illustrations, certain countries require
governmental approval prior to investments by foreign persons, or limit the
amount of investment by foreign persons in a particular company, or limit the
investment by foreign persons to only a specific class of securities of a
company which may have less advantageous terms than securities of the company
available for purchase by nationals. In addition, the repatriation of both
investment income and capital from certain of the countries is controlled under
regulations, including in some case the need for certain advance government
notification or authority. The Fund could be adversely affected by delays in, or
a refusal to grant, any required governmental approval for repatriation.

The economies of individual European countries may differ favorably or
unfavorably from the U.S economy in such respects as growth of gross domestic
product or gross national product, as the case may be, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position. In addition, securities traded in certain emerging European securities
trading markets may be subject to risks due to inexperience of financial
intermediaries, the lack of modern technology, the lack of sufficient capital
base to expand business operations and the possibility of permanent or temporary
termination of trading and greater spreads between bid and asked prices for
securities in such markets.

LOWER RATED SECURITIES. Each Fund and the Portfolio is permitted to invest
in non-investment grade securities. Such securities, though higher yielding, are
characterized by risk. Each Fund may invest in debt securities rated as low as
Baa by Moody's or BBB by S&P or, if not rated, are determined to be of
comparable quality. Lower rated securities are securities such as those rated Ba
by Moody's or BB by S&P or as low as the lowest rating assigned by Moody's or
S&P. They generally are not meant for short-term investing and may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuation than certain lower yielding, higher rated fixed income securities.
Obligations rated Ba by Moody's are judged to have speculative elements; their
future cannot be considered well assured and often the protection of interest
and principal payments may be very moderate. Obligations rated BB by S&P are
regarded as having predominantly speculative characteristics and, while such
obligations have less near-term vulnerability to default than other speculative
grade debt, they face major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. Obligations rated C by
Moody's are regarded as having extremely poor prospects of ever attaining any
real investment standing. Obligations rated D by S&P are in default and the
payment of interest and/or repayments of principal is in arrears. Such
obligations, though high yielding, are characterized by great risk. See
"Appendix B" herein for a general description of Moody's and S&P ratings.

The ratings of Moody's and S&P represent their opinions as to the quality of
the securities which they undertake to rate. The ratings are relative and
subjective and, although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market risk of these
securities. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, the Investment Adviser will also evaluate
these securities and the ability of the issuers of such securities to pay
interest and principal. Each Fund or the Portfolio will rely on the Investment
Adviser's

judgment, analysis and experience in evaluating the creditworthiness of an
issuer. In this evaluation, the Investment Adviser will take into consideration,
among other things, the issuer's financial resources, its sensitivity to
economic conditions and trends, its operating history, the quality of the
issuer's management and regulatory matters. The Fund's or Portfolio's ability to
achieve its investment objective may be more dependent on the Investment
Adviser's credit analysis than might be the case for funds that invested in
higher rated securities. Once the rating of a security in the Fund's or
Portfolio's portfolio has been changed, the Investment Adviser will consider all
circumstances deemed relevant in determining whether the Fund or Portfolio
should continue to hold the security.

The market price and yield of debt securities rated Ba or lower by Moody's
and BB or lower by S&P are more volatile that those of higher rated securities.
Factors adversely affecting the market price and yield of these securities will
adversely affect a Fund's net asset value. It is likely that any economic
recession could disrupt severely the market for such securities and may have an
adverse impact on the value of such securities. In addition, it is likely that
any such economic downturn could adversely affect the ability of the issuers of
such securities to repay principal and pay interest thereon and increase the
incidence for default for such securities.

The market values of certain lower rated debt securities tend to reflect
individual corporate developments to a greater extent than do higher rated
securities, which react primarily to fluctuations in the general level of
interest rates, and tend to be more sensitive to economic conditions than are
higher rated securities. Companies that issue such securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore the risk associated with acquiring the securities of such
issuers generally is greater than is the case with higher rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of these securities may experience financial
stress. During such periods, such issuers may not have sufficient revenues to
meet their interest payment obligations. The issuer's ability to service its
debt obligations also may be affected adversely by specific corporate
developments or the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing. The risk of loss
because of default by the issuer is significantly greater for the holders of
these securities because such securities generally are unsecured and often are
subordinated to other creditors of the issuer.

Because there is no established retail secondary market for many of these
securities, the Investment Adviser anticipates that such securities could be
sold only to a limited number of dealers or institutional investors. To the
extent a secondary trading market for these securities does exist, it generally
is not as liquid as the secondary market for higher rated securities. The lack
of a liquid secondary market may have an adverse impact on market price and
yield and a Fund's ability to dispose of particular issues when necessary to
meet that Fund's liquidity needs or in response to a specific economic event
such as a deterioration in the creditworthiness of the issuer. The lack of a
liquid secondary market for certain securities also may make it more difficult
for a Fund or Portfolio to obtain accurate market quotations for purposes of
valuing that Fund's or Portfolio's portfolio and calculating its net asset
value. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of these securities.
In such cases, judgment may play a greater role in valuation because less
reliable, objective data may be available.

A Fund or Portfolio may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The Funds
and Portfolio have no arrangement with any persons concerning the acquisition of
such securities, and the Investment Adviser will review carefully the credit and
other characteristics pertinent to such new issues.

Each Fund and Portfolio may invest in lower rated zero coupon securities and
pay-in-kind bonds (bonds which pay interest through the issuance of additional
bonds), which involve special considerations. These securities may be subject to
greater fluctuations in value due to changes in interest rates that
interest-bearing securities. These securities carry an additional risk in that,
unlike bonds which may interest throughout the period to maturity, the Funds
will realize no cash until the cash payment date unless a portion of such
securities are sold and, if the issuer defaults, the Funds or Portfolio may
obtain no return at all on their investment. See "Tax Matters."

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

Specific decisions to purchase or sell securities for a Fund or Portfolio
are made by a portfolio manager who is an employee of the adviser or sub-adviser
to such Fund or Portfolio and who is appointed and supervised by senior officers
of such adviser or sub-adviser. Changes in a Fund's or Portfolio's investments
are reviewed by the Board of Trustees of the Trust or Portfolios. The portfolio
managers may serve other clients of the advisers in a similar capacity.

The frequency of a Fund's or Portfolio's portfolio transactions--the
portfolio turnover rate--will vary from year to year depending upon market
conditions. Because a high turnover rate may increase a Fund's or Portfolio's
transaction costs and the possibility of taxable short-term gains, as well as
make it more difficult for the Fund to qualify as a registered investment
company under federal tax law. Therefore, the advisers will weigh the added
costs of short-term investment against anticipated gains. Each Fund or Portfolio
will engage in portfolio trading if its advisers believe a transaction, net of
costs (including custodian charges), will help it achieve its investment
objective.

The Funds' portfolio turnover rates for the three most recent fiscal years
were as follows:

YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1999 OCTOBER 31, 2000
---------------- ---------------- ----------------

Fleming European Fund 183% 149% 161%
Fleming Japan Fund 212% 133% 123%

The International Equity Fund invests all of its investable assets in the
International Equity Portfolio and does not invest directly in a portfolio of
assets and therefore does not have reportable portfolio turnover rates. The
Portfolio's portfolio turnover rates for the three most recent fiscal years were
as follows:

YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1999 2000
----------- ----------- -----------

International Equity Portfolio 182% 153% 149%

Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds and Portfolios. In assessing the
best overall terms available for any transaction, the adviser and sub-advisers
consider all factors they deem relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser or
sub-advisers, and the reasonableness of the commissions, if any, both for the
specific transaction and on a continuing basis. The adviser and sub-advisers are
not required to obtain the lowest commission or the best net price for any Fund
or Portfolio on any particular transaction, and are not required to execute any
order in a fashion either preferential to any Fund or Portfolio relative to
other accounts they manage or otherwise materially adverse to such other
accounts.

Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to a Fund or Portfolio normally seeks to deal directly with the
primary market makers unless, in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
adviser or sub-adviser on the tender of a Fund's or Portfolio's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Funds and Portfolio by the adviser and
sub-advisers. At present, no other recapture arrangements are in effect.

Under the advisory and sub-advisory agreements and as permitted by
Section 28(e) of the Securities Exchange Act of 1934, the adviser or
sub-advisers may cause the Funds and Portfolio to pay a broker-dealer which
provides brokerage and research services to the adviser or sub-advisers, the
Funds

or Portfolio and/or other accounts for which they exercise investment discretion
an amount of commission for effecting a securities transaction for a Fund or
Portfolio in excess of the amount other broker-dealers would have charged for
the transaction if they determine in good faith that the greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or their overall responsibilities to accounts over which they
exercise investment discretion. Not all of such services are useful or of value
in advising the Funds and Portfolio. The adviser and sub-advisers report to the
Board of Trustees regarding overall commissions paid by the Funds and Portfolio
and their reasonableness in relation to the benefits to the Funds and Portfolio.
The term "brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or of purchasers or sellers of securities,
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts,
and effecting securities transactions and performing functions incidental
thereto such as clearance and settlement.

The management fees that the Funds and Portfolio pay to the adviser will not
be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Funds' or Portfolio's
portfolio transactions are used to obtain such services, the brokerage
commissions paid by the Funds or Portfolio will exceed those that might
otherwise be paid by an amount which cannot be presently determined. Such
services generally would be useful and of value to the adviser or sub-advisers
in serving one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients generally would
be useful to the adviser and sub-advisers in carrying out their obligations to
the Funds and Portfolio. While such services are not expected to reduce the
expenses of the adviser or sub-advisers, they would, through use of the
services, avoid the additional expenses which would be incurred if they should
attempt to develop comparable information through their own staffs.

In certain instances, there may be securities that are suitable for one or
more of the Funds and Portfolio as well as one or more of the adviser's or
sub-adviser's, other clients. Investment decisions for the Funds and Portfolio
and for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision is made
for more than one client or that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more Funds or
Portfolio or other clients are simultaneously engaged in the purchase or sale of
the same security, the securities are allocated among clients in a manner
believed to be equitable to each. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Funds or Portfolio are concerned. However, it is believed that the
ability of the Funds and Portfolio to participate in volume transactions will
generally produce better executions for the Funds and Portfolio.

The International Equity Portfolio and the Funds paid brokerage commissions
as detailed below:

YEAR-ENDED YEAR-ENDED YEAR-ENDED
OCTOBER 31, 1998 OCTOBER 31, 1999 OCTOBER 31, 2000
---------------- ---------------- ----------------

Fleming European Fund $315,450 $432,341 $776,639
Fleming International Equity
Portfolio 280,471 204,705 209,281
Fleming Japan Fund 54,469 31,083 34,739

No portfolio transactions are executed with the advisers or a Shareholder
Servicing Agent, or with any affiliate of the advisers or a Shareholder
Servicing Agent, acting either as principal or as broker.

PERFORMANCE INFORMATION

From time to time, a Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Performance is calculated separately for each
class of shares. Because such performance information is based on past
investment results, it should not be considered as an indication or
representation of the performance of any classes of a Fund in the future. From
time to time, the performance and yield of classes of a Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of a Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the performance
and yield of a Fund or its classes. A Fund's performance may be compared with
indices such as the Lehman Brothers Government/Credit Index, the Lehman Brothers
Government Bond Index, the Lehman Government Bond 1-3 Year Index and the Lehman
Aggregate Bond Index; the Morgan Stanley Capital International Europe Index
(Europe Fund); the Tokyo Stock Exchange (TOPIX) First Section Index (Japan
Fund); the Morgan Stanley Capital International (All Countries) Asia Pacific ex
Japan Free Index (Southeast Asian Fund); the Morgan Stanley Capital
International Europe, Australia and Far East Index (International Equity
Portfolio); the S&P 500 Index, the Dow Jones Industrial Average or any other
commonly quoted index of common stock prices; and the Russell 2000 Index and the
NASDAQ Composite Index. Additionally, a Fund may, with proper authorization,
reprint articles written about such Fund and provide them to prospective
shareholders.

A Fund may provide period and average annual "total rates of return." The
"total rate of return" refers to the change in the value of an investment in a
Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
and Class C shares, the average annual total rate of return figures will assume
deduction of the applicable contingent deferred sales charge imposed on a total
redemption of shares held for the period. One-, five-, and ten-year periods will
be shown, unless the class has been in existence for a shorter-period.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the yields and the net asset values of the classes of
shares of a Fund will vary based on market conditions, the current market value
of the securities held by a Fund and changes in the Fund's expenses. The
advisers, Shareholder Servicing Agents, the Administrator, the Distributor and
other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of a
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of a Fund during the period such waivers are
in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of a Fund
to yields and total rates of return published for other investment companies and
other investment vehicles (including different classes of shares). The Trust is
advised that certain Shareholder Servicing Agents may credit to the accounts of
their customers from whom they are already receiving other fees amounts not
exceeding the Shareholder Servicing Agent fees received, which will have the
effect of increasing the net return on the investment of customers of those
Shareholder Servicing Agents. Such customers may be able to obtain through their
Shareholder Servicing Agents quotations reflecting such increased return.

Each Fund presents performance information for each class thereof since the
commencement of operations of that Fund rather than the date such class was
introduced. Performance information for

each class introduced after the commencement of operations of the related Fund
is therefore based on the performance history of a predecessor class.
Performance information is restated to reflect the current maximum front-end
sales charge (in the case of Class A Shares) or the maximum contingent deferred
sales charge (in the case of Class B and Class C Shares ) when presented
inclusive of sales charges. Additional performance information may be presented
which does not reflect the deduction of sales charges. Historical expenses
reflected in performance information are based upon the distribution,
shareholder servicing fees and other expenses actually incurred during the
periods presented and have not been restated, for periods during which the
performance information for a particular class is based upon the performance
history of a predecessor class, to reflect the ongoing expenses currently borne
by the particular class.

Advertising or communications to shareholders may contain the views of the
advisers as to current market, economic, trade and interest rate trends, as well
as legislative, regulatory and monetary developments, and may include investment
strategies and related matters believed to be of relevance to a Fund.

Advertisements for the JPMorgan Funds may include references to the asset
size of other financial products made available by JPMorgan Fleming Asset
Management (USA) Inc., such as the offshore assets of other funds.

TOTAL RATE OF RETURN

A Fund's or class' total rate of return for any period will be calculated by
(a) dividing (i) the sum of the net asset value per share on the last day of the
period and the net asset value per share on the last day of the period of shares
purchasable with dividends and capital gains declared during such period with
respect to a share held at the beginning of such period and with respect to
shares purchased with such dividends and capital gains distributions, by
(ii) the public offering price per share on the first day of such period, and
(b) subtracting 1 from the result. Any annualized total rate of return quotation
will be calculated by (x) adding 1 to the period total rate of return quotation
as calculated above, (y) raising such sum to a power which is equal to 365
divided by the number of days in such period, and (z) subtracting 1 from the
result.

The Funds may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of
the Funds with other measures of investment return.

AVERAGE ANNUAL TOTAL RETURNS*
(EXCLUDING SALES CHARGES)

The average annual total rates of return for the following Funds, reflecting
the initial investment and assuming the reinvestment of all distributions (but
excluding the effects of any applicable sales charges), for the one year and
five year periods ended October 31, 2000 and for the period from commencement of
business operations of each such Fund to October 31, 2000, were as follows:

DATE OF DATE OF
ONE FIVE SINCE FUND CLASS
YEAR YEARS INCEPTION INCEPTION INTRODUCTION
-------- ----- --------- ---------- ------------

Fleming European Fund 11/2/95
A Shares 10.13% N/A 18.53% 11/2/95
B Shares 9.40% N/A 17.69% 11/3/95
C Shares 9.27% N/A 17.68% 11/1/98
Fleming Japan Fund 11/2/95
A Shares (17.48)% N/A (2.59)% 11/2/95
B Shares (17.82)% N/A (3.22)% 11/3/95
Fleming International
Equity Fund 12/31/92
A Shares 1.71% 5.84% 6.30% 12/31/92
B Shares** 1.20% 5.34% 5.83% 11/4/93

* The ongoing fees and expenses borne by Class B and Class C Shares are
greater than those borne by Class A Shares. As indicated above, the
performance information for each class introduced after the commencement of
operations of the related Fund is based on the performance history of a
predecessor class and historical expenses have not been restated, for
periods during which the performance information for a particular class is
based upon the performance history of a predecessor class, to reflect the
ongoing expenses currently borne by the particular class. Accordingly, the
performance information presented in the table above and in each table that
follows may be used in assessing each Fund's performance history but does
not reflect how the distinct classes would have performed on a relative
basis prior to the introduction of those classes, which would require an
adjustment to the ongoing expenses.
The performance quoted reflects fee waivers that subsidize and reduce the
total operating expenses of certain Funds (or classes thereof). Returns on
these Funds (or classes) would have been lower if there were not such
waivers. With respect to certain Funds, Chase and/or other service
providers are obligated to waive certain fees and/or reimburse certain
expenses for a stated period of time. In other instances, there is no
obligation to waive fees or to reimburse expenses. Each Fund's Prospectus
discloses the extent of any agreements to waive fees and/or reimburse
expenses.
** Performance information presented in the table above and in each table that
follows for this class of this Fund prior to the date the class was
introduced does not reflect distribution fees and certain other expenses
borne by this class which, if reflected, would reduce the performance
quoted.

AVERAGE ANNUAL TOTAL RETURNS*
(INCLUDING SALES CHARGES)

With the current maximum respective sales charges of 5.75% for Class A
shares, and the currently applicable CDSC for Class B and Class C shares for
each period length, reflected, the total rates of return would be as follows:

ONE FIVE SINCE
YEAR YEARS INCEPTION
-------- ----- ---------

Fleming European Fund
A Shares 3.78% N/A 17.14%
B Shares 4.40% N/A 17.48%
C Shares 8.27% N/A 17.68%
Fleming Japan Fund
A Shares (22.22)% N/A (3.74)%
B Shares (21.93)% N/A (3.58)%
Fleming International Equity Fund
A Shares (4.14)% 4.59% 5.50%
B Shares (3.61)% 5.01% 5.83%

* See the notes to the preceding table.

YIELD QUOTATIONS

Any current "yield" quotation for a class of shares shall consist of an
annualized historical yield, carried at least to the nearest hundredth of one
percent, based on a thirty calendar day period and shall be calculated by
(a) raising to the sixth power the sum of 1 plus the quotient obtained by
dividing the Fund's net investment income earned during the period by the
product of the average daily number of shares outstanding during the period that
were entitled to receive dividends and the maximum offering price per share on
the last day of the period, (b) subtracting 1 from the result, and
(c) multiplying the result by 2.

The yields of all share classes of the Fleming International Equity Fund,
Fleming European Fund and Fleming Japan Fund for the thirty-day period ended
October 31, 2000 were 0.00%.

NON-STANDARDIZED PERFORMANCE RESULTS*
(EXCLUDING SALES CHARGES)

The table below reflects the net change in the value of an assumed initial
investment of $10,000 in the following Funds (excluding the effects of any
applicable sales charges) for the period from the commencement date of business
for each Fund, with values reflecting an assumption that capital gain
distributions and income dividends, if any, have been invested in additional
shares of the same class. From time to time, the Funds may provide these
performance results in addition to the total rate of return quotations required
by the Securities and Exchange Commission. As discussed more fully in the
Prospectuses, neither these performance results, nor total rate of return
quotations, should be considered as representative of the performance of the
Funds in the future. These factors and the possible differences in the methods
used to calculate performance results and total rates of return should be
considered when comparing such performance results and total rate of return
quotations of the Funds with those published for other investment companies and
other investment vehicles.

DATE OF
TOTAL FUND
VALUE INCEPTION
------- ---------

Fleming International Equity Fund
A Shares $16,135 12/31/92
B Shares 15,582 12/31/92
Fleming European Fund
A Shares 23,398 11/2/95
B Shares 22,579 11/2/95
C Shares 22,565 11/2/95
Fleming Japan Fund
A Shares 8,871 11/2/95
B Shares 8,492 11/2/95

* See the notes to the table captioned "Average Annual Total Return
(excluding sales charges)" above. The table above assumes an initial
investment of $10,000 in a particular class of a Fund for the period from
the Fund's commencement of operations, although the particular class may
have been introduced at a subsequent date. As indicated above, performance
information for each class introduced after the commencement of operations
of the related Fund is based on the performance history of a predecessor
class, and historical expenses have not been restated, for periods during
which the performance information for a particular class is based upon the
peformance history of a predecessor class, to reflect the ongoing expenses
currently borne by the particular class.

NON-STANDARDIZED PERFORMANCE RESULTS*
(INCLUDING SALES CHARGES)

With the current maximum sales charge of 5.75% for Class A Shares and the
currently applicable CDSC for Class B and Class C Shares for each period length,
the total value for the same periods would be as follows:

DATE OF
TOTAL FUND
VALUE INCEPTION
------- ---------

Fleming International Equity Fund
A Shares $15,207 12/31/92
B Shares 15,582 12/31/92
Fleming European Fund
A Shares 22,053 11/2/95
B Shares 22,379 11/2/95
C Shares 22,565 11/2/95
Fleming Japan Fund
A Shares 8,266 11/2/95
B Shares 8,334 11/2/95

DETERMINATION OF NET ASSET VALUE

As of the date of this Statement of Additional Information, the New York
Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Martin Luther King, Jr.'s Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Since the Funds and the Portfolio invest in securities primarily
listed on foreign exchanges which trade on Saturdays or other customary United
States national business holidays on which the Funds and the Portfolio do not
price, the Funds' and the Portfolio's portfolios will trade and the net asset
value of the Funds' shares may be significantly affected on days on which the
investor has no access to the Fund.

Each Fund calculates its NAV once each day at the close of regular trading
on the New York Stock Exchange. Equity securities are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ
National Market System, or at the last quoted bid price for securities in which
there were no sales during the day or for other unlisted (over-the-counter)
securities. Bonds and other fixed income securities (other than short-term
obligations, but including listed issues) are valued on the basis of valuations
furnished by a pricing service, the use of which has been approved by the Board
of Trustees. In making such valuations, the pricing service utilizes both
dealer-supplied valuations and electronic data processing techniques that take
into account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities.
Short-term obligations which mature in 60 days or less are valued at amortized
cost, which constitutes fair value as determined by the Board of Trustees.
Futures and option contracts that are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Portfolio securities (other than short-term obligations) for
which

there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Board of Trustees.

Interest income on long-term obligations is determined on the basis of
interest accrued plus amortization of discount (generally, the difference
between coupon acquisition price and stated redemption price at maturity) and
premiums (generally, the excess of purchase price over stated redemption price
at maturity). Interest income on short-term obligations is determined on the
basis of interest and discount accrued less amortization of premium.

PURCHASES, REDEMPTIONS AND EXCHANGES

The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Funds' Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectuses are not
available until a completed and signed account application has been received by
the Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding.

An investor can buy Fund shares three ways: (i) through an investment
representative; (ii) through the Fund's distributor by calling the JPMorgan
Funds Service Center or (iii) through the Systematic Investment Plan. Upon
receipt of any instructions or inquiries by telephone from a shareholder or, if
held in a joint account, from either party, or from any person claiming to be
the shareholder, a Fund or its agent is authorized, without notifying the
shareholder or joint account parties, to carry out the instructions or to
respond to the inquiries, consistent with the service options chosen by the
shareholder or joint shareholders in his or their latest account application or
other written request for services, including purchasing, exchanging, or
redeeming shares of such Fund and depositing and withdrawing monies from the
bank account specified in the Bank Account Registration section of the
shareholder's latest account application or as otherwise properly specified to
such Fund in writing.

Subject to compliance with applicable regulations, each Fund has reserved
the right to pay the redemption price of its shares, either totally or
partially, by a distribution in kind of readily marketable portfolio securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (approximately $250,000).

With respect to the International Equity Fund, the Trust will redeem Fund
shares in kind only if it has received a redemption in kind from the
corresponding Portfolio and therefore shareholders of the Fund that receive
redemptions in kind will receive portfolio securities of such Portfolio and in
no case will they receive a security issued by the Portfolio. The Portfolio has
advised the Trust that the Portfolio will not redeem in kind except in
circumstances in which the corresponding Fund is permitted to redeem in kind or
unless requested by the corresponding Fund.

Each investor in the Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day that the New York Stock
Exchange is open for business. Once on each such day, based upon prices
determined as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern time, however, options are priced at 4:15 p.m.
Eastern time) the value of each investor's interest in a Portfolio will be
determined by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or reductions which are to be effected on that day will
then be effected. The investor's percentage of the aggregate beneficial
interests in a Portfolio will then be recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of such time on such day plus or minus, as the case may be,
the amount of net additions to or reductions in the investor's investment in the
Portfolio effected on such day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of such time on such day plus or
minus, as

the case may be, the amount of net additions to or reductions in the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of such time on the following day the New York
Stock Exchange is open for trading.

CLASS A SHARES

The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table, except
when the Fund's distributor, in its discretion, allocates the entire amount to
your broker-dealer.

AMOUNT OF
SALES CHARGE AS A SALES CHARGE
PERCENTAGE OF: REALLOWED TO
-------------------- DEALERS AS A
AMOUNT OF TRANSACTION AT OFFERING NET AMOUNT PERCENTAGE OF
OFFERING PRICE ($) PRICE INVESTED OFFERING PRICE
- ------------------ -------- ---------- --------------

Under 100,000 5.75 6.10 5.00
100,000 but under 250,000 3.75 3.90 3.25
250,000 but under 500,000 2.50 2.56 2.25
500,000 but under 1,000,000 2.00 2.04 1.75

There is no initial sales charge on purchases of Class A shares of $1
million or more.

The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million, 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold payments with respect to
short-term investments.

Investors in Class A shares may qualify for reduced initial sales charges by
signing a statement of intention (the "Statement"). This enables the investor to
aggregate purchases of Class A shares in the Fund with purchases of Class A
shares of any other Fund in the Trust (or if a Fund has only one class, shares
of such Fund), excluding shares of any JPMorgan money market fund, during a
13-month period. The sales charge is based on the total amount to be invested in
Class A shares during the 13-month period. All Class A or other qualifying
shares of these Funds currently owned by the investor will be credited as
purchases (at their current offering prices on the date the Statement is signed)
toward completion of the Statement. A 90-day back-dating period can be used to
include earlier purchases at the investor's cost. The 13-month period would then
begin on the date of the first purchase during the 90-day period. No retroactive
adjustment will be made if purchases exceed the amount indicated in the
Statement. A shareholder must notify the Transfer Agent or Distributor whenever
a purchase is being made pursuant to a Statement.

The Statement is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in Class A shares (or if
a Fund has only one class and is subject to an initial sales charge, shares of
such Fund) registered in the shareholder's name in order to assure payment of
the proper sales charge. If total purchases pursuant to the Statement (less any
dispositions and exclusive of any distributions on such shares automatically
reinvested) are less than the amount specified, the investor will be requested
to remit to the Transfer Agent an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Reinvested dividend and
capital gain distributions are not counted toward satisfying the Statement.

Class A shares of a Fund may also be purchased by any person at a reduced
initial sales charge which is determined by (a) aggregating the dollar amount of
the new purchase and the greater of the purchaser's total (i) net asset value or
(ii) cost of any shares acquired and still held in the Fund, or any other
JPMorgan Fund excluding any JPMorgan money market fund, and (b) applying the
initial sales

charge applicable to such aggregate dollar value (the "Cumulative Quantity
Discount"). The privilege of the Cumulative Quality Discount is subject to
modification or discontinuance at any time with respect to all Class A shares
(or if a Fund has only one class and is subject to an initial sales charge,
shares of such Fund) purchased thereafter.

An individual who is a member of a qualified group (as hereinafter defined)
may also purchase Class A shares of a Fund (or if a Fund has only one class and
is subject to an initial sales charge, shares of such Fund) at the reduced sales
charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of Class A shares (or if a Fund
has only one class and is subject to an initial sales charge, shares of such
Fund) previously purchased and still owned by the group plus the securities
currently being purchased and is determined as stated in the preceding
paragraph. In order to obtain such discount, the purchaser or investment dealer
must provide the Transfer Agent with sufficient information, including the
purchaser's total cost, at the time of purchase to permit verification that the
purchaser qualifies for a cumulative quantity discount, and confirmation of the
order is subject to such verification. Information concerning the current
initial sales charge applicable to a group may be obtained by contacting the
Transfer Agent.

A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Class A shares (or if a Fund has
only one class and is subject to an initial sales charge, shares of such Fund)
at a discount and (iii) satisfies uniform criteria which enables the Distributor
to realize economies of scale in its costs of distributing Class A shares (or if
a Fund has only one class and is subject to an initial sales charge, shares of
such Fund). A qualified group must have more than 10 members, must be available
to arrange for group meetings between representatives of the Fund and the
members, must agree to include sales and other materials related to the Fund in
its publications and mailings to members at reduced or no cost to the
Distributor, and must seek to arrange for payroll deduction or other bulk
transmission of investments in the Fund. This privilege is subject to
modification or discontinuance at any time with respect to all Class A shares
(or if a Fund has only one class and is subject to an initial sales charge,
shares of such Fund) purchased thereafter.

Some participant-directed employee benefit plans participate in a
"multi-fund" program which offers both JPMorgan and non-JPMorgan mutual funds.
With Board of Trustee approval, the money that is invested in Chase Vista Funds
may be combined with the other mutual funds in the same program when determining
the plan's eligibility to buy Class A shares without a sales charge. These
investments will also be included for purposes of the discount privileges and
programs described above.

No initial sales charge will apply to the purchase of a Fund's Class A
shares if (i) one is investing proceeds from a qualified retirement plan where a
portion of the plan was invested in the JPMorgan Funds, (ii) one is investing
through any qualified retirement plan with 50 or more participants or (iii) the
investor is a participant in certain qualified retirement plans and is investing
(or reinvesting) the proceeds from the repayment of a plan loan made to him or
her.

The Funds may sell Class A shares at net asset value without an initial
sales charge to the current and retired Trustees (and their immediate families),
current and retired employees (and their immediate families) of Chase, the
Funds' distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Funds' distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Funds' distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of JPMorgan Fund shares), financial institutions trust departments investing an
aggregate of $1 million or more in the JPMorgan Funds and clients of certain
administrators of tax-qualified plans when proceeds from repayments of loans to
participants are invested (or reinvested) in the JPMorgan Funds.

Purchases of a Fund's Class A shares may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee for
its services. Purchases of a Fund's Class A shares may be made with no initial
sales charge (i) by an investment adviser, broker or financial planner, provided
arrangements are pre-approved and purchases are placed through an omnibus
account with the Fund or (ii) by clients of such investment adviser or financial
planner who place trades for their own accounts, if such accounts are linked to
a master account of such investment adviser or financial planner

on the books and records of the broker or agent. Such purchases may also be made
for retirement and deferred compensation plans and trusts used to fund those
plans.

Investors may incur a fee if they effect transactions through a broker or
agent.

Purchases of a Fund's Class A shares may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the JPMorgan Funds
Service Center.

Shareholders of record of any JPMorgan Fund as of November 30, 1990 and
certain immediate family members may purchase a Fund's Class A shares with no
initial sales charge for as long as they continue to own Class A shares of any
JPMorgan Fund, provided there is no change in account registration.

Each Fund may sell Class A shares at net asset value without an initial
sales charge in connection with the acquisition by the Fund of assets of an
investment company or personal holding company.

Shareholders of other JPMorgan Funds may be entitled to exchange their
shares for, or reinvest distributions from their funds in, shares of a Fund at
net asset value.

The Funds reserve the right to change any of these policies at any time and
may reject any request to purchase shares at a reduced sales charge.

REINSTATEMENT PRIVILEGE. Upon written request, Class A shareholders of each
Fund and Portfolio have a one time privilege of reinstating their investment in
the Fund at net asset value next determined subject to written request within 90
calendar days of the redemption. The reinstatement request must be accompanied
by payment for the shares (not in excess of the redemption), and shares will be
purchased at the next determined net asset value. Class B (or C) shareholders
who have redeemed their shares and paid a CDSC with such redemption may purchase
Class A shares with no initial sales charge (in an amount not in excess of their
redemption proceeds) if the purchase occurs within 90 days of the redemption of
the Class B (or C) shares.

Under the Exchange Privilege, shares may be exchanged for shares of another
fund only if shares of the fund exchanged into are registered in the state where
the exchange is to be made. Shares of a Fund may only be exchanged into another
fund if the account registrations are identical. With respect to exchanges from
any JPMorgan money market fund, shareholders must have acquired their shares in
such money market fund by exchange from one of the JPMorgan non-money market
funds or the exchange will be done at relative net asset value plus the
appropriate sales charge. Any such exchange may create a gain or loss to be
recognized for federal income tax purposes. Normally, shares of the fund to be
acquired are purchased on the redemption date, but such purchase may be delayed
by either fund for up to five business days if a fund determines that it would
be disadvantaged by an immediate transfer of the proceeds.

The Funds' distributor pays broker-dealers a commission of 4.00% of the
offering price on sales of Class B shares and a commission of 1.00% of the
offering price on sales of Class C shares. The distributor keeps the entire
amount of any CDSC the investor pays.

The contingent deferred sales charge for Class B and Class C shares will be
waived for certain exchanges and for redemptions in connection with a Fund's
systematic withdrawal plan, subject to the conditions described in the
Prospectuses. In addition, subject to confirmation of a shareholder's status,
the contingent deferred sales charge will be waived for: (i) a total or partial
redemption made within one year of the shareholder's death or initial
qualification for Social Security disability payments; (ii) a redemption in
connection with a Minimum Required Distribution from an IRA, Keogh or custodial
account under section 403(b) of the Internal Revenue Code or a mandatory
distribution from a qualified plan; (iii) redemptions made from an IRA, Keogh or
custodial account under section 403(b) of the Internal Revenue Code through an
established Systematic Redemption Plan; (iv) a redemption resulting from an
over-contribution to an IRA; (v) distributions from a qualified plan upon
retirement; and, (vi) an involuntary redemption of an account balance under
$500. Up to 12% of the value of Class B shares subject to a systematic
withdrawal plan may also be redeemed each year without a CDSC, provided that

the Class B account had a minimum balance of $20,000 at the time the systematic
withdrawal plan was established.

Class B shares automatically convert to Class A shares (and thus are then
subject to the lower expenses borne by Class A shares) after a period of time
specified below has elapsed since the date of purchase (the "CDSC Period"),
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares attributable to the
Class B shares then converting. The conversion of Class B shares purchased on or
after May 1, 1996, will be effected at the relative net asset values per share
of the two classes on the first business day of the month following the eighth
anniversary of the original purchase. The conversion of Class B shares purchased
prior to May 1, 1996, will be effected at the relative net asset values per
share of the two classes on the first business day of the month following the
seventh anniversary of the original purchase. If any exchanges of Class B shares
during the CDSC Period occurred, the holding period for the shares exchanged
will be counted toward the CDSC Period. At the time of the conversion the net
asset value per share of the Class A shares may be higher or lower than the net
asset value per share of the Class B shares; as a result, depending on the
relative net asset values per share, a shareholder may receive fewer or more
Class A shares than the number of Class B shares converted.

A Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain of the circumstances described
in the Prospectuses. A Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.

DISTRIBUTIONS; TAX MATTERS

The following is only a summary of certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the respective Prospectus. No attempt is made to present a detailed explanation
of the tax treatment of each Fund or its shareholders, and the discussion here
and in the Prospectus is not intended as a substitute for careful tax planning.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

Each Fund has elected to be taxed as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
and to meet all other requirements that are necessary for it to be relieved of
federal taxes on income and gains it distributes to shareholders. Net investment
income for each Fund consists of all interest accrued and discounts earned, less
amortization of any market premium on the portfolio assets of the Fund and the
accrued expenses of the Fund. As a regulated investment company, a Fund is not
subject to federal income tax on the portion of its net investment income (i.e.,
its investment company taxable income, as that term is defined in the Code,
without regard to the deduction for dividends paid) and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) that
it distributes to shareholders, provided that it distributes at least 90% of its
net investment income for the taxable year (the "Distribution Requirement"), and
satisfies certain other requirements of the Code that are described below.
Because International Equity Fund invests all of its assets in the Portfolio
which will be classified as a partnership for federal income tax purposes, the
Fund will be deemed to own a proportionate share of the income of the Portfolio
for purposes of determining whether the Fund satisfies the Distribution
Requirement and the other requirements necessary to qualify as a regulated
investment company (e.g., Income Requirement (hereinafter defined), etc.).

In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").

In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.

Each Fund may engage in hedging or derivatives transactions involving
foreign currencies, forward contracts, options and futures contracts (including
options, futures and forward contracts on foreign currencies) and short sales.
See "Additional Policies Regarding Derivative and Related Transactions." Such
transactions will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (that
is, may affect whether gains or losses are ordinary or capital), accelerate
recognition of income of the Fund and defer recognition of certain of the Fund's
losses. These rules could therefore affect the character, amount and timing of
distributions to shareholders. In addition, these provisions (1) will require a
Fund to "mark-to-market" certain types of positions in its portfolio (that is,
treat them as if they were closed out) and (2) may cause a Fund to recognize
income without receiving cash with which to pay dividends or make distributions
in amounts necessary to satisfy the Distribution Requirement and avoid the 4%
excise tax (described below). Each Fund intends to monitor its transactions,
will make the appropriate tax elections and will make the appropriate entries in
its books and records when it acquires any option, futures contract, forward
contract or hedged investment in order to mitigate the effect of these rules.

If a Fund purchases shares in a "passive foreign investment company" (a
"PFIC"), such Fund may be subject to U.S. federal income tax on a portion of any
"excess distribution" or gain from the disposition of such shares even if such
income is distributed as a taxable dividend by the Fund to its shareholders.
Additional charges in the nature of interest may be imposed on the Fund in
respect of deferred taxes arising from such distributions or gains. If a Fund
were to invest in a PFIC and elected to treat the PFIC as a "qualified electing
fund" under the Code (a "QEF"), in lieu of the foregoing requirements, the Fund
would be required to include in income each year a portion of the ordinary
earnings and net capital gain of the qualified electing fund, even if not
distributed to the Fund. Alternatively, under recently enacted legislation, the
Fund can elect to mark-to-market at the end of each taxable year its shares in a
PFIC; in this case, the Fund would recognize as ordinary income any increase in
the value of such shares, and as ordinary loss any decrease in such value to the
extent it did not exceed prior increases included in income. Under either
election, a Fund might be required to recognize in a year income in excess of
its distributions from PFICs and its proceeds from dispositions of PFIC stock
during that year, and such income would nevertheless be subject to the
Distribution Requirement and would be taken into account for purposes of the 4%
excise tax (described below).

If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.

EXCISE TAX ON REGULATED INVESTMENT COMPANIES

A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year

and 98% of capital gain net income for the one-year period ended on October 31
of such calendar year (or, at the election of a regulated investment company
having a taxable year ending November 30 or December 31, for its taxable year (a
"taxable year election")). The balance of such income must be distributed during
the next calendar year. For the foregoing purposes, a regulated investment
company is treated as having distributed any amount on which it is subject to
income tax for any taxable year ending in such calendar year.

Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.

FUND DISTRIBUTIONS

The Funds anticipate distributing substantially all of their net investment
income for each taxable year. An investor can choose from three distribution
options: (1) reinvest all distributions in additional Fund shares without a
sales charge; (2) receive distributions from net investment income in cash or by
ACH to a pre-established bank account while reinvesting capital gains
distributions in additional shares without a sales charge; or, (3) receive all
distributions in cash or by ACH. One can change his or her distribution option
by notifying the JPMorgan service center in writing. If an investor does not
select an option when he or she opens his or her account, all distributions will
be reinvested. All distributions not paid in cash or by ACH will be reinvested
in shares of the same share class. The investor will receive a statement
confirming reinvestment of distributions in additional Fund shares promptly
following the quarter in which the reinvestment occurs.

If a check representing a Fund distribution is not cashed within a specified
period, the JPMorgan Funds Service Center will notify the investor that he or
she has the option of requesting another check or reinvesting the distribution
in the Fund or in an established account of another JPMorgan fund without a
sales charge. If the JPMorgan Funds Service Center does not receive the
investor's election, the distribution will be reinvested in the Fund. Similarly,
if the Fund or the JPMorgan Funds Service Center sends you correspondence
returned as "undeliverable," distributions will automatically be reinvested in
the Fund. Such distributions will be taxable to shareholders as ordinary income
and treated as dividends for federal income tax purposes, but they will not
qualify for the 70% dividends-received deduction for corporate shareholders of
the Funds. Dividends paid on Class A and Class B shares are calculated at the
same time. In general, dividends on Class B shares are expected to be lower than
those on Class A shares due to the higher distribution expenses borne by the
Class B shares. Dividends may also differ between classes as a result of
differences in other class specific expenses.

A Fund may either retain or distribute to shareholders its net capital gain
for each taxable year. The Funds currently intend to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.

Under current legislation, the maximum rate of tax on long-term capital
gains of individuals is 20% (10% for gains otherwise taxed at 15%) for long-term
capital gains realized with respect to capital assets held for more than 12
months. Additionally, beginning after December 31, 2000, the maximum tax rate
for capital assets with a holding period beginning after that date and held for
more than five years will be 18%.

Conversely, if a Fund elects to retain its net capital gain, the Fund will
be taxed thereon (except to the extent of any available capital loss carryovers)
at the 35% corporate tax rate. If a Fund elects to retain its net capital gain,
it is expected that the Fund also will elect to have shareholders of record on
the last day of its taxable year treated as if each received a distribution of
his pro rata share of such gain, with the result that each shareholder will be
required to report his pro rata share of such gain on his tax return as
long-term capital gain, will receive a refundable tax credit for his pro rata
share of tax paid by the Fund on the gain, and will increase the tax basis for
his shares by an amount equal to the deemed distribution less the tax credit.

Investment income that may be received by a Fund from sources within foreign
countries may be subject to foreign taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries which entitle
the Funds to a reduced rate of, or exemption from, taxes on such income.

It is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of the Fund's total assets at the close of its
taxable year consists of the stock or securities of foreign corporations, the
Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by such Fund. If a Fund so elects, each shareholder would be
required to include in gross income, even though not actually received, his pro
rata share of the foreign taxes paid by the Fund, but would be treated as having
paid his pro rata share of such foreign taxes and would therefore be allowed to
either deduct such amount in computing taxable income or use such amount
(subject to various Code limitations) as a foreign tax credit against federal
income tax (but not both). For purposes of the foreign tax credit limitation
rules of the Code, each shareholder would treat as foreign source income his pro
rata share of such foreign taxes plus the portion of dividends received from a
Fund representing income derived from foreign sources. In certain circumstances,
a shareholder that (1) has held shares of a Fund for less than a specified
minimum period during which it is not protected from risk of loss or (2) is
obligated to make payments related to the dividends, will not be allowed a
foreign tax credit for foreign taxes deemed imposed on dividends paid on such
shares. A Fund must also meet this holding period requirement with respect to
its foreign stock and securities in order to flow through "creditable" taxes. No
deduction for foreign taxes could be claimed by an individual shareholder who
does not itemize deductions. Each shareholder should consult his own tax advisor
regarding the potential application of foreign tax credits.

A Fund may make investments that produce income that is not matched by a
corresponding cash distribution to the Fund, such as investments in obligations
such as certain Brady Bonds or zero coupon securities having original issue
discount or market discount if the Fund elects to accrue market discount on a
current basis. In addition, income may continue to accrue for federal income tax
purposes with respect to a non-performing investment. Any of the foregoing
income would be treated as income earned by the Fund and therefore would be
subject to the distribution requirements of the Code. Because such income may
not be matched by a corresponding cash distribution to the Fund, the Fund may be
required to dispose of other securities to be able to make distributions to
its investors.

Distributions by a Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess will
be treated as gain from the sale of his shares, as discussed below.

Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.

Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.

Each Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all,
(2) who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."

SALE OR REDEMPTION OF SHARES

A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted

tax basis in the shares. All or a portion of any loss so recognized may be
disallowed if the shareholder purchases other shares of such Fund within 30 days
before or after the sale or redemption. In general, any gain or loss arising
from (or treated as arising from) the sale or redemption of shares of a Fund
will be considered capital gain or loss and will be long-term capital gain or
loss if the shares were held for longer than one year. However, any capital loss
arising from the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of the amount of capital
gain dividends received on such shares.

FOREIGN SHAREHOLDERS

Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.

If the income from a Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, dividends paid to a foreign
shareholder from net investment income will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Furthermore, such a foreign shareholder may be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) on the gross income resulting from a
Fund's election to treat any foreign taxes paid by it as paid by its
shareholders, but may not be allowed a deduction against this gross income or a
credit against this U.S. withholding tax for the foreign shareholder's pro rata
share of such foreign taxes which it is treated as having paid. Such a foreign
shareholder would generally be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, and capital gain dividends and
amounts retained by the Fund that are designated as undistributed
capital gains.

If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.

In the case of foreign noncorporate shareholders, a Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.

The tax consequences to a foreign shareholder entitled to claim the benefits
of an applicable tax treaty may be different from those described herein.
Foreign shareholders are urged to consult their own tax advisers with respect to
the particular tax consequences to them of an investment in a Fund, including
the applicability of foreign taxes.

STATE AND LOCAL TAX MATTERS

Depending on the residence of the shareholder for tax purposes,
distributions may also be subject to state and local taxes or withholding taxes.
Most states provide that a RIC may pass through (without restriction) to its
shareholders state and local income tax exemptions available to direct owners of
certain types of U.S. government securities (such as U.S. Treasury obligations).
Thus, for residents of these states, distributions derived from a Fund's
investment in certain types of U.S. government securities should be free from
state and local income taxes to the extent that the interest income from such
investments would have been exempt from state and local income taxes if such
securities had been held directly by the respective shareholders themselves.
Certain states, however, do not allow a RIC to pass through to its shareholders
the state and local income tax exemptions available to direct owners of certain
types of U.S. government securities unless the RIC holds at least a required
amount of U.S. government securities. Accordingly, for residents of these
states, distributions derived from a Fund's investment in certain types of U.S.
government securities may not be entitled to the exemptions from state and local
income taxes that would be available if the shareholders had purchased U.S.
government securities directly. Shareholders' dividends attributable to a Fund's
income from repurchase agreements generally are subject to state and local
income taxes, although states and regulations vary in their treatment of such
income. The exemption from state and local income taxes does not preclude states
from asserting other taxes on the ownership of U.S. government securities. To
the extent that a Fund invests to a substantial degree in U.S. government
securities which are subject to favorable state and

local tax treatment, shareholders of such Fund will be notified as to the extent
to which distributions from the Fund are attributable to interest on such
securities. Rules of state and local taxation of ordinary income dividends and
capital gain dividends from RICs may differ from the rules for U.S. federal
income taxation in other respects. Shareholders are urged to consult their tax
advisers as to the consequences of these and other state and local tax rules
affecting investment in a Fund.

EFFECT OF FUTURE LEGISLATION

The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect on
the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.

MANAGEMENT OF THE TRUST AND THE FUNDS OR PORTFOLIOS

TRUSTEES AND OFFICERS

The Trustees and officers of the Trust and their principal occupations for
at least the past five years are set forth below. Their titles may have varied
during that period.

FERGUS REID, III--Chairman of the Trust. Chairman and Chief Executive
Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley
Funds. Age: 68. Address: 202 June Road, Stamford, CT 06903.

*H. RICHARD VARTABEDIAN--Trustee and President of the Trust. Investment
Management Consultant; formerly, Senior Investment Officer, Division Executive
of the Investment Management Division of The Chase Manhattan Bank, N.A.,
1980-1991. Age: 65. Address: P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.

WILLIAM J. ARMSTRONG--Trustee. Retired; formerly Vice President and
Treasurer, Ingersoll-Rand Company. Age: 59. Address: 287 Hampshire Ridge, Park
Ridge, NJ 07656.

JOHN R.H. BLUM--Trustee. Attorney in private practice; formerly, partner in
the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture --
State of Connecticut, 1992-1995. Age: 71. Address: 322 Main Street, Lakeville,
CT 06039.

STUART W. CRAGIN, JR.--Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Age: 67. Address: 108 Valley
Road, Cos Cob, CT 06807.

ROLAND R. EPPLEY, JR.--Trustee. Retired; formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc. (1971-1988);
Director, Janel Hydraulics, Inc.; formerly Director of The Hanover Funds, Inc.
Age: 68. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418.

JOSEPH J. HARKINS--Trustee. Retired; formerly Commercial Sector Executive
and Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He has been employed by Chase in numerous capacities and offices from 1954
through 1989. Director of Blessings Corporation, Jefferson Insurance Company of
New York, Monticello Insurance Company and National. Age: 69. Address: 257
Plantation Circle South, Ponte Vedra Beach, FL 32082.

*SARAH E. JONES--Trustee. President and Chief Operating Officer of Chase
Manhattan Funds Corp.; formerly Managing Director for the Global Asset
Management and Private Banking Division of The Chase Manhattan Bank. Age: 48.
Address: 1211 Avenue of the Americas, 41st Floor, New York, NY 10036.

W.D. MACCALLAN--Trustee. Director of The Adams Express Co. and Petroleum &
Resources Corp. Retired; formerly Chairman of the Board and Chief Executive
Officer of The Adams Express Co. and Petroleum & Resources Corp.; formerly
Director of The Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age:
73. Address: 624 East 45th Street, Savannah, GA 31405.

GEORGE E. MCDAVID--Trustee. Retired; formerly President, Houston Chronicle
Publishing Company. Age: 70. Address: P.O. Box 2558, Houston, TX 77252.

W. PERRY NEFF--Trustee. Independent Financial Consultant; Director of North
America Life Assurance Co., Petroleum & Resources Corp. and The Adams Express
Co.; formerly Director and Chairman of The Hanover Funds, Inc.; formerly
Director, Chairman and President of The Hanover Investment Funds, Inc. Age: 73.
Address: RR 1 Box 102, Weston, VT 05181.

*LEONARD M. SPALDING, JR.--Trustee. Retired; formerly Chief Executive
Officer for Chase Mutual Funds Corp.; formerly President and Chief Executive
Officer of Vista Capital Management and formerly Chief Investment Executive of
The Chase Manhattan Private Bank. Age: 65. Address: 2025 Lincoln Park Road,
Springfield, KY 40069.

RICHARD E. TEN HAKEN--Trustee; Chairman of the Audit Committee. Formerly
District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New York;
Chairman of the Board and President, New York State Teachers' Retirement System.
Age: 66. Address: 4 Barnfield Road, Pittsford, NY 14534.

IRVING L. THODE--Trustee. Retired; formerly Vice President of Quotron
Systems. He has previously served in a number of executive positions with
Control Data Corp., including President of its Latin American Operations and
General Manager of its Data Services business. Age: 69. Address: 80 Perkins
Road, Greenwich, CT 06830.

MARTIN R. DEAN--Treasurer. Vice President, Administration Services, BISYS
Fund Services, Inc.; formerly Senior Manager, KPMG Peat Marwick (1987-1994).
Age: 37. Address: 3435 Stelzer Road, Columbus, OH 43219.

LISA HURLEY--Secretary. Executive Vice President and General Counsel, BISYS
Fund Services, Inc.; formerly Counsel to Moore Capital Management and General
Counsel to Global Asset Management and Northstar Investments Management. Age:
45. Address: 90 Park Avenue, New York, NY 10016.

VICKY M. HAYES--Assistant Secretary. Vice President and Global Marketing
Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President,
Alliance Capital Management and held various positions with J. & W. Seligman &
Co. Age: 37. Address: 1211 Avenue of the Americas, 41st Floor, New York, NY
10036.

ALAINA METZ--Assistant Secretary. Chief Administrative Officer, BISYS Fund
Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management
L.P. Age: 33. Address: 3435 Stelzer Road, Columbus, OH 43219.

* Asterisks indicate those Trustees that are "Interested Persons" (as defined in
the 1940 Act). Mr. Reid is not an interested person of the Trust's investment
advisers or principal underwriter, but may be deemed an interested person of
the Trust solely by reason of being Chairman of the Trust.

The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong,
Eppley, MacCallan and Thode. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters. The Audit
Committee met two times during the fiscal year ended October 31, 2000.

The Trustees and officers of the Trust listed above also serve in the same
capacities with respect to Mutual Fund Trust, Mutual Fund Variable Annuity
Trust, Mutual Fund Select Group, Mutual Fund Select Trust, Mutual Fund
Investment Trust, Mutual Fund Master Investment Trust, Capital Growth Portfolio,
Growth and Income Portfolio and International Equity Portfolio.

REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS:

Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisers is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the advisers. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component.

Set forth below is information regarding compensation paid or accrued during
the fiscal year ended October 31, 2000 for each Trustee of the Trust:

EUROPEAN JAPAN INTERNATIONAL
FUND FUND EQUITY FUND
-------- ------ -------------

Fergus Reid, III, Trustee $ 340.67 $13.87 $77.23
H. Richard Vartabedian, Trustee 230.21 9.37 51.85
William J. Armstrong, Trustee 153.71 6.52 34.94
John R.H. Blum, Trustee 169.76 7.09 37.59
Stuart W. Cragin, Jr., Trustee 151.91 6.47 34.55
Ronald R. Eppley, Jr., Trustee 157.58 6.30 35.51
Joseph J. Harkins, Trustee 151.83 6.21 33.76
Sarah E. Jones, Trustee -- -- --
W.D. MacCallan, Trustee 149.47 6.23 33.96
George E. McDavid, Trustee 96.49 2.47 21.30
W. Perry Neff, Trustee 150.19 6.36 33.53
Leonard M. Spalding, Trustee 151.91 6.47 34.55
Richard E. Ten Haken, Trustee 168.75 7.08 38.19
Irving L. Thode, Trustee 153.59 6.28 34.67

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ACCRUED FROM
BY THE FUND COMPLEX (1) FUND COMPLEX (2)
----------------------- ----------------

Fergus Reid, III, Trustee $110,091 $202,750
H. Richard Vartabedian, Trustee 86,791 134,350
William J. Armstrong, Trustee 41,781 90,000
John R.H. Blum, Trustee 79,307 98,750
Stuart W. Cragin, Jr., Trustee 55,742 89,000
Ronald R. Eppley, Jr., Trustee 58,206 91,000
Joseph J. Harkins, Trustee 75,554 90,500
Sarah E. Jones, Trustee -- --
W.D. MacCallan, Trustee 77,769 88,500
George E. McDavid, Trustee -- 62,250
W. Perry Neff, Trustee 74,269 88,000
Leonard M. Spalding, Jr., Trustee 35,335 89,000
Richard E. Ten Haken, Trustee 60,398 99,500
Irving L. Thode, Trustee 64,503 90,000

(1) Data reflects total benefits accrued by the Trust, Mutual Fund Select
Group, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio for the fiscal year ended October 31, 2000,
and by Mutual Fund Trust, Mutual Fund Select Trust and Mutual Fund Variable
Annuity Trust for the fiscal year ended August 31, 2000.
(2) Data reflects total compensation earned during the period January 1, 2000
to December 31, 2000 for service as a Trustee to the Trust, Mutual Fund
Trust, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group, Mutual
Fund Select Trust, Mutual Fund Investment Trust, Mutual Fund Master
Investment Trust, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio.

As of December 31, 2000, the Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 2000, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$93,000 which amount is then apportioned among the Funds comprising the Trust.

RETIREMENT PLAN FOR ELIGIBLE TRUSTEES

Effective August 21, 1995, the Trustees also instituted a Retirement Plan
for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an
employee of any of the Funds, the advisers, administrator or distributor or any
of their affiliates) may be entitled to certain benefits upon retirement from
the Board of Trustees. Pursuant to the Plan, the normal retirement date is the
date on which the eligible Trustee has attained age 65 and has completed at
least five years of continuous service with one or more of the investment
companies advised by the adviser (collectively, the "Covered Funds"). Each
Eligible Trustee is entitled to receive from the Covered Funds an annual benefit
commencing on the first day of the calendar quarter coincident with or following
his date of retirement equal to the sum of (1) 8% of the highest annual
compensation received from the Covered Funds multiplied by the number of such
Trustee's years of service (not in excess of 10 years) completed with respect to
any of the Covered Funds and (2) 4% of the highest annual compensation received
from the Covered Funds for each year of service in excess of 10 years, provided
that no Trustee's annual benefit will exceed the highest annual compensation
received by that Trustee from the Covered Funds. Such benefit is payable to each
eligible Trustee in monthly installments for the life of the Trustee.

Set forth below in the table are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of October 31, 2000, the estimated credited years of
service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley, Harkins,
MacCallan, McDavid, Neff, Spalding, Ten Haken, Thode and Ms. Jones are 16, 8,
12, 16, 7, 11, 10, 10, 2, 16, 2, 15, 7 and 0, respectively.

HIGHEST ANNUAL COMPENSATION PAID BY ALL VISTA FUNDS
---------------------------------------------------

$80,000 $100,000 $120,000 $140,000 $160,000 $200,000

YEARS OF
SERVICE ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
- ------- ---------------------------------------------------

16 $80,000 $100,000 $120,000 $140,000 $160,000 $200,000
14 76,800 96,000 115,200 134,400 153,600 192,000
12 70,400 88,000 105,600 123,200 140,800 176,000
10 64,000 80,000 96,000 112,000 128,000 160,000
8 51,200 64,000 76,800 89,600 102,400 128,000
6 38,400 48,000 57,600 67,200 76,800 96,000
4 25,600 32,000 38,400 44,800 51,200 64,000

The Trustees have also instituted a Deferred Compensation Plan for Eligible
Trustees (the "Deferred Compensation Plan") pursuant to which each Trustee (who
is not an employee of any of the Covered Funds, the advisers, administrator or
distributor or any of their affiliates) may enter into agreements with the
Covered Funds whereby payment of the Trustee's fees are deferred until the
payment date elected by the Trustee (or the Trustee's termination of service).
The deferred amounts are invested in shares of JP Morgan Funds selected by the
Trustee. The deferred amounts are paid out in a lump sum or over a period of
several years as elected by the Trustee at the time of deferral. If a deferring
Trustee dies prior to the distribution of amounts held in the deferral account,
the balance of the deferral account will be distributed to the Trustee's
designated beneficiary in a single lump sum payment as soon as practicable after
such deferring Trustee's death.

Messrs. Ten Haken, Thode and Vartabedian each executed a deferred
compensation agreement for the 2000 calendar year. Their total contributions for
the calendar year were $39,800, $81,000 and $134,350, respectively.

The Declaration of Trust provides that the Trust will indemnify its Trustees
and officers against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust or its shareholders, it is finally
adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or with
respect to any matter unless it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best interest
of the Trust. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other

body approving the settlement or other disposition, or by a reasonable
determination based upon a review of readily available facts, by vote of a
majority of disinterested Trustees or in a written opinion of independent
counsel, that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.

ADVISER AND SUB-ADVISER

Prior to February 28, 2001, the adviser to the funds was the Chase Manhattan
Bank. The day to day management of the Funds was handled by the sub-adviser,
Chase Fleming Asset Management (USA) Inc. Effective February 28, 2001, JPMorgan
Fleming Asset Management (USA) Inc. (JPMFAM (USA)), acts as investment adviser
to the Funds pursuant to an Investment Advisory Agreement (the "Advisory
Agreement"). Subject to such policies as the Board of Trustees may determine,
JPMFAM (USA) is responsible for investment decisions for the Funds. Pursuant to
the terms of the Advisory Agreement, JPMFAM (USA) provides the Funds with such
investment advice and supervision as it deems necessary for the proper
supervision of the Funds' investments. The advisers continuously provide
investment programs and determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the Funds' assets shall be held
uninvested. The advisers to the Funds furnish, at their own expense, all
services, facilities and personnel necessary in connection with managing the
investments and effecting portfolio transactions for the Funds. The Advisory
Agreement for the Funds will continue in effect from year to year only if such
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of a Funds' outstanding voting securities and by a
majority of the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on such Advisory Agreement.

Under the Advisory Agreement, the adviser may utilize the specialized
portfolio skills of all its various affiliates, thereby providing the Funds with
greater opportunities and flexibility in accessing investment expertise.

Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without penalty
by the Trust on behalf of the Funds on not more than 60 days', nor less than 30
days', written notice when authorized either by a majority vote of a Fund's
shareholders or by a vote of a majority of the Board of Trustees of the Trust,
or by the adviser or sub-adviser on not more than 60 days', nor less than 30
days', written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The advisory agreements provide that
the adviser or sub-adviser under such agreement shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the respective Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties thereunder.

With respect to the Equity Funds, the equity research team of the adviser
looks for two key variables when analyzing stocks for potential investment by
equity portfolios: value and momentum. To uncover these qualities, the team uses
a combination of quantitative analysis, fundamental research and computer
technology to help identify stocks.

In the event the operating expenses of the Funds, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Funds imposed by the securities laws or regulations thereunder
of any state in which the shares of the Funds are qualified for sale, as such
limitations may be raised or lowered from time to time, the adviser shall reduce
its advisory fee (which fee is described below) to the extent of its share of
such excess expenses. The amount of any such reduction to be borne by the
adviser shall be deducted from the monthly advisory fee otherwise payable with
respect to the Funds during such fiscal year; and if such amounts should exceed
the monthly fee, the adviser shall pay to a Fund its share of such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year.

Under the Advisory Agreement, JPMFAM (USA) may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement provides
that JPMFAM (USA) may render services through its own employees or the employees
of one or more affiliated companies that are qualified to act

as an investment adviser of the Fund and are under the common control of JPMFAM
(USA) as long as all such persons are functioning as part of an organized group
of persons, managed by authorized officers of JPMFAM (USA).

JPMFAM (USA), on behalf of the Funds has entered into an investment
sub-advisory agreement with Chase Fleming Asset Management (London) Limited
("CFAM London"). With respect to the day-to-day management of the Funds, under
the sub-advisory agreements, the sub-advisers make decisions concerning, and
place all orders for, purchases and sales of securities and helps maintain the
records relating to such purchases and sales. The sub-advisers may, in their
discretion, provide such services through their own employees or the employees
of one or more affiliated companies that are qualified to act as an investment
adviser to the Company under applicable laws and are under the common control of
JPMFAM (USA).; provided that (i) all persons, when providing services under the
sub-advisory agreement, are functioning as part of an organized group of
persons, and (ii) such organized group of persons is managed at all times by
authorized officers of the sub-advisers. This arrangement will not result in the
payment of additional fees by the Funds.

JPMFAM (USA), a wholly-owned subsidiary of The Chase Manhattan Bank. JPMFAM
(USA) is registered with the Securities and Exchange Commission as an investment
adviser. Also included among JPMFAM (USA) accounts are commingled trust funds
and a broad spectrum of individual trust and investment management portfolios.
These accounts have varying investment objectives. JPMFAM (USA) is located at
1211 Avenue of the Americas, New York, New York 10036.

CFAM London is an wholly-owned subsidiary of the Adviser. CFAM London is
registered with the Securities and Exchange Commission and is regulated by the
Investment Management Regulatory Organization (IMRO) as an investment adviser
and provides discretionary investment advisory services to institutional
clients, and the same individuals who serve as portfolio managers for CFAM
London also serve as portfolio managers for Chase. CFAM London is located at
Colvile House, 32 Curzon Street, London W1Y8AL.

In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from each Fund an
investment advisory fee computed daily and paid monthly based on a rate equal to
a percentage of such Fund's average daily net assets specified in the relevant
Prospectuses. However, the adviser may voluntarily agree to waive a portion of
the fees payable to it on a month-to-month basis. For its services under its
sub-advisory agreement, CFAM London in the case of the Funds will be entitled to
receive, with respect to the Funds, such compensation, payable by the adviser
out of its advisory fee, as is described in the relevant Prospectuses.

For the fiscal years ended October 31, 1998, 1999 and 2000, Chase was paid
or accrued the following investment advisory fees with respect to the following
Funds and Portfolios, and voluntarily waived the amounts in parentheses
following such fees with respect to each such period:

FISCAL YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1998 1999 2000
------------------------ ------------------------ ------------------------
FUND PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED
- ---- ------------ ---------- ------------ ---------- ------------ ----------

Fleming International
Equity Portfolio* $277,625 $(277,625) $264,592 $(264,592) $427,853 $(337,213)
Fleming European Fund 279,521 (166,744) 555,370 (178,633) 933,790 (189,245)
Fleming Japan Fund 41,865 (41,865) 35,137 (35,137) 35,177 (35,177)

* The International Equity Fund does not have an investment adviser because
the Trust seeks to achieve the investment objective of the Fund by
investing all of the investable assets of the Fund in the Portfolio.

ADMINISTRATOR

Pursuant to separate Administration Agreements (the "Administration
Agreements"), Chase is the administrator of the Funds and the administrator of
the Portfolio. Chase provides certain administrative services to the Funds and
Portfolios, including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Funds' and Portfolio's independent contractors and agents;
preparation for signature by an officer of the Trust and Portfolio of all
documents required to be filed for compliance by the Trust and Portfolio with
applicable laws and regulations excluding those of the securities laws of
various states; arranging for the computation of performance data, including net
asset value and yield; responding to shareholder inquiries, and arranging for
the maintenance of books and records of the Funds and Portfolio and providing,
at its own expense, office facilities, equipment and personnel necessary to
carry out its duties. Chase in its capacity as administrator does not have any
responsibility or authority for the management of the Funds or Portfolio, the
determination of investment policy, or for any matter pertaining to the
distribution of Funds shares.

Under the Administration Agreements Chase is permitted to render
administrative services to others. The Administration Agreements will continue
in effect from year to year with respect to each Fund or Portfolio only if such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or Portfolio or by vote of a majority of such Fund's or Portfolio's
outstanding voting securities and, in either case, by a majority of the Trustees
who are not parties to the Administration Agreements or "interested persons" (as
defined in the 1940 Act) of any such party. The Administration Agreements are
terminable without penalty by the Trust on behalf of each Fund or by a Portfolio
on 60 days' written notice when authorized either by a majority vote of such
Fund's or Portfolio's shareholders or by vote of a majority of the Board of
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust or Portfolios, or by Chase on 60 days'
written notice, and will automatically terminate in the event of their
"assignment" (as defined in the 1940 Act). The Administration Agreements also
provide that neither Chase or its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the administration of
the Funds or Portfolio, except for willful misfeasance, bad faith or gross
negligence in the performance of its or their duties or by reason of reckless
disregard of its or their obligations and duties under the Administration
Agreements.

In addition, the Administration Agreements provide that, in the event the
operating expenses of any Fund or Portfolio, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for any
fiscal year exceed the most restrictive expense limitation applicable to that
Fund imposed by the securities laws or regulations thereunder of any state in
which the shares of such Fund are qualified for sale, as such limitations may be
raised or lowered from time to time, Chase shall reduce its administration fee
(which fee is described below) to the extent of its share of such excess
expenses. The amount of any such reduction to be borne by Chase shall be
deducted from the monthly administration fee otherwise payable to Chase during
such fiscal year, and if such amounts should exceed the monthly fee, Chase shall
pay to such Fund or Portfolio its share of such excess expenses no later than
the last day of the first month of the next succeeding fiscal year.

In consideration of the services provided by Chase pursuant to the
Administration Agreements, Chase receives from each Fund a fee computed daily
and paid monthly at an annual rate equal to 0.10% of each of the Fund's average
daily net assets, on an annualized basis for the Fund's then-current fiscal
year, except that with respect to the International Equity Fund, Chase receives
from each of the Fund and the Portfolio a fee computed daily and paid monthly at
an annual rate equal to 0.05% of their respective average daily net assets.
Chase may voluntarily waive a portion of the fees payable to it with respect to
each Fund on a month-to-month basis.

For the fiscal years ended October 31, 1998, 1999 and 2000, Chase was paid
or accrued administration fees and voluntarily waived the amount in parentheses
following such fees:

Fleming International
Equity Fund $13,807 $(13,807) $13,176 $(13,176) $21,338 $ (4,747)
Fleming International
Equity Portfolio 13,881 (13,881) 13,230 (13,230) 21,393 (10,260)
Fleming European Fund 27,109 (6,446) 55,537 -- 93,379 --
Fleming Japan Fund 3,603 (3,603) 3,514 (3,514) 3,518 (3,518)

DISTRIBUTION PLANS

The Trust has adopted separate plans of distribution pursuant to Rule 12b-1
under the 1940 Act (a "Distribution Plan") on behalf of certain classes or
shares of certain Funds as described in the Prospectuses, which provide that
such classes of such Funds shall pay for distribution services a distribution
fee (the "Distribution Fee"), including payments to the Distributor, at annual
rates not to exceed the amounts set forth in their respective Prospectuses. The
Distributor may use all or any portion of such Class A Distribution Fee to pay
for Fund expenses of printing prospectuses and reports used for sales purposes,
expenses of the preparation and printing of sales literature and other such
distribution-related expenses. Promotional activities for the sale of each class
of shares of each Fund will be conducted generally by the JPMorgan Funds, and
activities intended to promote one class of shares of a Fund may also benefit
the Fund's other shares and other JPMorgan Funds.

Class B and Class C shares pay a Distribution Fee of up to 0.75% of average
daily net assets. The Distributor currently expects to pay sales commissions to
a dealer at the time of sale of Class B and Class C shares of up to 4.00% and
1.00% respectively, of the purchase price of the shares sold by such dealer. The
Distributor will use its own funds (which may be borrowed or otherwise financed)
to pay such amounts. Because the Distributor will receive a maximum Distribution
Fee of 0.75% of average daily net assets with respect to Class B shares, it will
take the Distributor several years to recoup the sales commissions paid to
dealers and other sales expenses.

Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset value of Class A shares, or 0.25%
annualized of the average net asset value of the Class B shares, or 0.75%
annualized of the average net asset value of the Class C shares, maintained in a
Fund by such broker-dealers' customers. Trail or maintenance commissions on
Class B and Class C shares will be paid to broker-dealers beginning the 13th
month following the purchase of such Class B and Class C shares. Since the
distribution fees are not directly tied to expenses, the amount of distribution
fees paid by a Fund during any year may be more or less than actual expenses
incurred pursuant to the Distribution Plans. For this reason, this type of
distribution fee arrangement is characterized by the staff of the Securities and
Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses). With respect to Class B and Class C shares, because of
the 0.75% annual limitation on the compensation paid to the Distributor during a
fiscal year, compensation relating to a large portion of the commissions
attributable to sales of Class B and Class C shares in any one year will be
accrued and paid by a Fund to the Distributor in fiscal years subsequent
thereto. In determining whether to purchase Class B and Class C shares,
investors should consider that compensation payments could continue until the
Distributor has been fully reimbursed for the commissions paid on sales of
Class B and Class C shares. However, the shares are not liable for any
distribution expenses incurred in excess of the Distribution Fee paid.

Each class of shares is entitled to exclusive voting rights with respect to
matters concerning its Distribution Plan.

Each Distribution Plan provides that it will continue in effect indefinitely
if such continuance is specifically approved at least annually by a vote of both
a majority of the Trustees and a majority of the

Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the operation of
the Distribution Plans or in any agreement related to such Plan ("Qualified
Trustees"). The continuance of each Distribution Plan was most recently approved
on October 13, 1995. The Distribution Plans require that the Trust shall provide
to the Board of Trustees, and the Board of Trustees shall review, at least
quarterly, a written report of the amounts expended (and the purposes therefor)
under the Distribution Plans. The Distribution Plans further provide that the
selection and nomination of Qualified Trustees shall be committed to the
discretion of the disinterested Trustees (as defined in the 1940 Act) then in
office. The Distribution Plans may be terminated at any time by a vote of a
majority of the Qualified Trustees or, with respect to a particular Fund, by
vote of a majority of the outstanding voting shares of the class of such Fund to
which it applies (as defined in the 1940 Act). The Distribution Plans may not be
amended to increase materially the amount of permitted expenses thereunder
without the approval of shareholders and may not be materially amended in any
case without a vote of the majority of both the Trustees and the Qualified
Trustees. Each of the Funds will preserve copies of any plan, agreement or
report made pursuant to a Distribution Plan for a period of not less than six
years from the date of the Distribution Plan, and for the first two years such
copies will be preserved in an easily accessible place.

For the fiscal years ended October 31, 1998, 1999 and 2000, the Distributor
was paid or accrued distribution fees with respect to the Funds, and voluntarily
waived the amount in parentheses following such fees:

FISCAL YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------
1998 1999 2000
------------------------ ------------------------ -----------------------
FUND PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED
- ---- ------------ ---------- ------------ ---------- ------------ ---------

Fleming International
Equity Fund
A Shares $49,730 $(33,485) $47,950 $(47,950) $ 86,640 $(18,952)
B Shares 58,089 -- 53,785 -- 60,149 --
Fleming European Fund
A Shares 54,193 -- 109,680 -- 182,535 --
B Shares 47,038 -- 81,208 -- 127,726 --
C Shares* N/A N/A 6,279 -- 25,013 --
Fleming Japan Fund
A Shares 8,575 (5,042) 7,418 (7,418) 6,846 (6,846)
B Shares 5,673 -- 4,547 -- 5,845 --

* Distribution fees are from the period November 1, 1998 (commencement of
operations) through October 31, 1999.

Expenses paid by the Distributor related to the distribution of Trust shares
during the year ended October 31, 2000 were as follows:

TOTAL VALUE
-----------

Advertising and sales literature $ 340,447
Printing, production and mailing of prospectuses
and shareholder reports to other than current
Shareholders 137,970
Compensation to dealers 6,122,706
Compensation to sales personnel 5,595,536
B Share financing charges 8,232,922
Equipment, supplies and other indirect
distribution-related expenses 29,628

With respect to the Class B shares of the Funds, the Distribution Fee was
paid to FEP Capital L.P. for acting as a finance agent.

DISTRIBUTION AND SUB-ADMINISTRATION AGREEMENT

The Trust has entered into a Distribution and Sub-Administration Agreement
dated August 24, 1995 (the "Distribution Agreement") with the Distributor,
pursuant to which the Distributor acts as the Funds' exclusive underwriter,
provides certain administration services and promotes and arranges for the sale

of each class of Shares. The Fund's distributor is J.P. Morgan Fund
Distributors, Inc. ("JPM"). JPM is a subsidiary of The BISYS Group, Inc. and is
unaffiliated with Chase. The Distribution Agreement provides that the
Distributor will bear the expenses of printing, distributing and filing
prospectuses and statements of additional information and reports used for sales
purposes, and of preparing and printing sales literature and advertisements not
paid for by the Distribution Plan. The Trust pays for all of the expenses for
qualification of the shares of each Fund for sale in connection with the public
offering of such shares, and all legal expenses in connection therewith. In
addition, pursuant to the Distribution Agreement, the Distributor provides
certain sub-administration services to the Trust, including providing officers,
clerical staff and office space. Payments may also be used to compensate
broker-dealers with trail or maintenance commissions at an annual rate of up to
0.25% of the average daily net asset value of Class A, Class B or Class C shares
invested in the Fund by customers of these broker-dealers. Trail or maintenance
commissions are paid to broker-dealers beginning the 13th month following the
purchase of shares by their customers. Promotional activities for the sale of
Class A, Class B and Class C shares will be conducted generally by the JPMorgan
Funds, and activities intended to promote the Fund's Class A, Class B or
Class C shares may also benefit the Fund's other shares and other JPMorgan
Funds.

JPM may provide promotional incentives to broker-dealers that meet specified
sales targets for one or more JPMorgan Funds. These incentives may include gifts
of up to $100 per person annually; an occasional meal, ticket to a sporting
event or theater for entertainment for broker-dealers and their guests; and
payment or reimbursement for travel expenses, including lodging and meals, in
connection with attendance at training and educational meetings within and
outside the U.S.

JPM may from time to time, pursuant to objective criteria established by it,
pay additional compensation to qualifying authorized broker-dealers for certain
services or activities which are primarily intended to result in the sale of
shares of the Fund. In some instances, such compensation may be offered only to
certain broker-dealers who employ registered representatives who have sold or
may sell significant amounts of shares of the Fund and/or other JPMorgan Funds
during a specified period of time. Such compensation does not represent an
additional expense to the Fund or its shareholders, since it will be paid by JPM
out of compensation retained by it from the Fund or other sources available to
it.

The Distribution Agreement is currently in effect and will continue in
effect thereafter with respect to each Fund only if such continuance is
specifically approved at least annually by the Board of Trustees or by vote of a
majority of such Fund's outstanding voting securities and, in either case, by a
majority of the Trustees who are not parties to the Distribution Agreement or
"interested persons" (as defined in the 1940 Act) of any such party. The
Distribution Agreement is terminable without penalty by the Trust on behalf of
each Fund on 60 days' written notice when authorized either by a majority vote
of such Fund's shareholders or by vote of a majority of the Board of Trustees of
the Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days'
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for wilful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.

In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of such Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the Distributor shall
reduce its sub-administration fee with respect to such Fund (which fee is
described below) to the extent of its share of such excess expenses. The amount
of any such reduction to be borne by the Distributor shall be deducted from the
monthly sub-administration fee otherwise payable with respect to such Fund
during such fiscal year; and if such amounts should exceed the monthly fee, the
Distributor shall pay to such Fund its share of such excess expenses no later
than the last day of the first month of the next succeeding fiscal year.

In consideration of the sub-administration services provided by the
Distributor pursuant to the Distribution Agreement, the Distributor receives an
annual fee, payable monthly, of 0.05% of the net

assets of each Fund. The Distributor may voluntarily waive a portion of the fees
payable to it under the Distribution Agreement with respect to each Fund on a
month-to-month basis. For the fiscal years ended October 31, 1998, 1999 and
2000, the Distributor was paid or accrued sub-administration fees with respect
to the Funds and voluntarily waived the amount in parentheses following such
fees:

FISCAL YEAR ENDED OCTOBER 31,
------------------------------------------------
FUND 1998 1999 2000
- ---- --------------- --------------- --------------

Fleming International
Equity Fund $13,864 $(13,864) $13,176 $(13,176) $21,338 $(4,747)
Fleming European Fund 13,973 (3,223) 27,768 -- 46,690 --
Fleming Japan Fund 1,678 (1,678) 1,756 (1,756) 1,759 (1,759)

SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN

The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent to provide certain services
including but not limited to the following: answer customer inquiries regarding
account status and history, the manner in which purchases and redemptions of
shares may be effected for the Fund as to which the Shareholder Servicing Agent
is so acting and certain other matters pertaining to the Fund; assist
shareholders in designating and changing dividend options, account designations
and addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and receive
funds in connection with customer orders to purchase or redeem shares; verify
and guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts; furnish (either
separately or on an integrated basis with other reports sent to a shareholder by
a Shareholder Servicing Agent) quarterly and year-end statements and
confirmations of purchases and redemptions; transmit, on behalf of the Fund,
proxy statements, annual reports, updated prospectuses and other communications
to shareholders of the Fund; receive, tabulate and transmit to the Fund proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder servicing agents may be required to register pursuant to
state securities law. For performing these services, each shareholder servicing
agent receives an annual fee of up to 0.25% of the average daily net assets of
the shares of the Funds held by investors for whom the shareholder servicing
agent maintains a servicing relationship. Shareholder Servicing Agents may
subcontract with other parties for the provision of shareholder support
services.

Each Shareholder Servicing Agent may voluntarily agree from time to time to
waive a portion of the fees payable to it under its Servicing Agreement with
respect to each Fund on a month-to-month basis. For the fiscal years ended
October 31, 1998, 1999 and 2000, fees payable to the Shareholder Servicing
Agents and the amounts voluntarily waived for each such period (as indicated in
parentheses) were as follows:

FISCAL YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------
1998 1999 2000
----------------------- ------------------------ ------------------------
PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED PAID/ACCRUED WAIVED
------------ --------- ------------ ---------- ------------ ----------

Fleming International
Equity Fund
A Shares $49,814 -- $47,950 $ -- $86,641 $ --
B Shares 19,363 (13,262) 17,928 (17,928) 20,050 (4,784)
Fleming European Fund
A Shares -- -- -- -- -- --
B Shares 15,675 -- 27,069 -- 42,575 --
C Shares * N/A N/A 2,093 -- 8,338 --
Fleming Japan Fund
A Shares -- -- -- -- -- --
B Shares 1,891 (902) 1,618 (1,618) 1,948 (1,948)

* Fees and waivers for 1999 are from the period November 1, 1998
(commencement of operation) through October 31, 1999.

Shareholder Servicing Agents may offer additional services to their
customers, such as pre-authorized or systematic purchase and redemption plans.
Each Shareholder Servicing Agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain Shareholder Servicing Agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees amounts not exceeding such other fees
or the fees for their services as Shareholder Servicing Agents.

For shareholders that bank with The Chase Manhattan Bank, Chase may
aggregate investments in the JPMorgan Funds with balances held in Chase bank
accounts for purposes of determining eligibility for certain bank privileges
that are based on specified minimum balance requirements, such as reduced or no
fees for certain banking services or preferred rates on loans and deposits.
Chase and certain broker-dealers and other Shareholder Servicing Agents may, at
their own expense, provide gifts, such as computer software packages, guides and
books related to investment or additional Fund shares valued up to $250 to their
customers that invest in the JPMorgan Funds.

Chase and/or the Distributor may from time to time, at their own expense out
of compensation retained by them from the Fund or other sources available to
them, make additional payments to certain selected dealers or other Shareholder
Servicing Agents for performing administrative services for their customers.
These services include maintaining account records, processing orders to
purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to an additional 0.10%
annually of the average net assets of the Fund attributable to shares if the
Fund held by customers of such Shareholder Servicing Agents. Such compensation
does not represent an additional expense to the Fund or its shareholders, since
it will be paid by Chase and/or the Distributor.

The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the
Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.

Pursuant to a Custodian Agreement, Chase acts as the custodian of the assets
of each Fund and receives such compensation as is from time to time agreed upon
by the Trust and Chase. As custodian, Chase provides oversight and record
keeping for the assets held in the portfolios of each Fund. Chase also provides
fund accounting services for the income, expenses and shares outstanding for the
Japan Fund and the European Fund. Chase is located at 3 Metro-Tech Center,
Brooklyn, NY 11245. Investors Bank and Trust Co., One First Canadian Place,
Toronto, Canada M5X 1C8, provides fund accounting for the International Equity
Fund and the International Equity Portfolio.

INDEPENDENT ACCOUNTANTS

The financial statements incorporated herein by reference from the Trust's
Annual Reports to Shareholders for the fiscal year ended October 31, 2000, and
the related financial highlights which appear in the Prospectus, have been
incorporated herein and included in the Prospectus in reliance on the reports of
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, independent accountants of the Funds, given on the authority of said firm
as experts in accounting and auditing. PricewaterhouseCoopers LLP provides the
Funds with audit services, tax return preparation and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.

CERTAIN REGULATORY MATTERS

Chase and its affiliates may have deposit, loan and other commercial banking
relationships with the issuers of securities purchased on behalf of any of the
Funds, including outstanding loans to such issuers which may be repaid in whole
or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. government obligations and municipal
obligations. Chase and its affiliates may sell U.S. government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Funds' distributor or affiliates of the distributor. Chase will
not invest any Fund assets in any U.S.

government obligations, municipal obligations or commercial paper purchased from
itself or any affiliate, although under certain circumstances such securities
may be purchased from other members of an underwriting syndicate in which Chase
or an affiliate is a non-principal member. This restriction may limit the amount
or type of U.S. government obligations, municipal obligations or commercial
paper available to be purchased by any Fund. Chase has informed the Funds that
in making its investment decision, it does not obtain or use material inside
information in the possession of any other division or department of Chase,
including the division that performs services for the Trust as custodian, or in
the possession of any affiliate of Chase. Shareholders of the Funds should be
aware that, subject to applicable legal or regulatory restrictions, Chase and
its affiliates may exchange among themselves certain information about the
shareholder and his account. Transactions with affiliated broker-dealers will
only be executed on an agency basis in accordance with applicable federal
regulations.

GENERAL INFORMATION

EXPENSES

Each Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Funds' custodian
for all services to the funds, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust; insurance premiums; and expenses of calculating the net asset value of,
and the net income on, shares of the Funds. Shareholder servicing and
distribution fees are all allocated to specific classes of the Funds. In
addition, the Funds may allocate transfer agency and certain other expenses by
class. Service providers to a Fund may, from time to time, voluntarily waive all
or a portion of any fees to which they are entitled.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

Mutual Fund Group is an open-end, non-diversified management investment
company organized as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. Because the Trust is "non-diversified",
more than 5% of the assets of certain Funds may be invested in the obligations
of any single issuer, which may make the value of the shares in such a Fund more
susceptible to certain risks than shares of a diversified mutual fund.

The Trust currently consists of 18 series of shares of beneficial interest,
par value $.001 per share. With respect to certain Funds, the Trust may offer
more than one class of shares. The Trust has reserved the right to create and
issue additional series or classes. Each share of a series or class represents
an equal proportionate interest in that series or class with each other share of
that series or class. The shares of each series or class participate equally in
the earnings, dividends and assets of the particular series or class. Expenses
of the Trust which are not attributable to a specific series or class are
allocated among all the series in a manner believed by management of the Trust
to be fair and equitable. Shares have no preemptive or conversion rights. Shares
when issued are fully paid and non-assessable, except as set forth below.
Shareholders are entitled to one vote for each whole share held, and each
fractional share shall be entitled to a proportional fractional vote, except
that Trust shares held in the treasury of the Trust shall not be voted. Shares
of each series or class generally vote together except when required under
federal securities laws to vote separately on matters that only affect a
particular class, such as the approval of distribution plans for a particular
class. With respect to shares purchased through a Shareholder Servicing Agent
and, in the event written proxy instructions are not received by a Fund or its
designated agent prior to a shareholder meeting at which a proxy is to be voted
and the shareholder does not attend the meeting in person, the Shareholder
Servicing Agent for such shareholder will be authorized pursuant to an
applicable agreement with the shareholder to vote the shareholder's outstanding
shares in the same proportion as the votes cast by other Fund shareholders
represented at the meeting in person or by proxy.

Certain Funds offer Class A, Class B and Class C shares. The classes of
shares have several different attributes relating to sales charges and expenses,
as described herein and in the Prospectus. In

addition to such differences, expenses borne by each class of a Fund may differ
slightly because of the allocation of other class-specific expenses. For
example, a higher transfer agency fee may be imposed on Class B shares than on
class A shares. The relative impact of initial sales charges, contingent
deferred sales charges, and ongoing annual expenses will depend on the length of
time a share is held.

Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of shares rather than another.

The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees.The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of a series or class when, in the judgment of the Trustees, it
is necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances, the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees. Shareholders also have, in certain
circumstances, the right to remove one or more Trustees without a meeting. No
material amendment may be made to the Trust's Declaration of Trust without the
affirmative vote of the holders of a majority of the outstanding shares of each
series affected by the amendment. The Trust's Declaration of Trust provides
that, at any meeting of shareholders of the Trust or of any series or class, a
Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are not represented in person
or by proxy at the meeting, proportionately in accordance with the votes cast by
holders of all shares of that series or class otherwise represented at the
meeting in person or by proxy as to which such Shareholder Servicing Agent is
the agent of record. Any shares so voted by a Shareholder Servicing Agent will
be deemed represented at the meeting for purposes of quorum requirements. Shares
have no preemptive or conversion rights. Shares, when issued, are fully paid and
non-assessable, except as set forth below. Any series or class may be terminated
(1) upon the merger or consolidation with, or the sale or disposition of all or
substantially all of its assets to, another entity, if approved by the vote of
the holders of two thirds of its outstanding shares, except that if the Board of
Trustees recommends such merger, consolidation or sale or disposition of assets,
the approval by vote of the holders of a majority of the series' or class'
outstanding shares will be sufficient, or (2) by the vote of the holders of a
majority of its outstanding shares, or (3) by the Board of Trustees by written
notice to the series' or class' shareholders. Unless each series and class is so
terminated, the Trust will continue indefinitely.

Stock certificates are issued only upon the written request of a
shareholder, subject to the policies of the investor's Shareholder Servicing
Agent, but the Trust will not issue a stock certificate with respect to shares
that may be redeemed through expedited or automated procedures established by a
Shareholder Servicing Agent. No certificates are issued for Class B shares due
to their conversion feature.

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and provides for
indemnification and reimbursement of expenses out of the Trust property for any
shareholder held personally liable for the obligations of the Trust. The Trust's
Declaration of Trust also provides that the Trust shall maintain appropriate
insurance (for example, fidelity bonding and errors and omissions insurance) for
the protection of the Trust, its shareholders, Trustees, officers, employees and
agents covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the
Trust itself was unable to meet its obligations.

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

The Board of Trustees has adopted a code of ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The code has been designated to address potential conflicts of
interest that can arise in connection with personal trading activities of such

persons. Persons subject to the code are generally permitted to engage in
personal securities transactions, subject to certain prohibitions, pre-clearance
requirements and blackout periods.

PRINCIPAL HOLDERS

As of February 20, 2001 the following persons owned of record 5% or more of
the outstanding shares of the following classes of the following Funds:

FLEMING EUROPEAN FUND A SHARES
Balsa & Co. 22.64%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

Balsa & Co. 12.68%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

Balsa & Co. 10.04%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

MLPF&S for the sole benefit 5.78%
of its customers
Attn: Fund Administration
SEC# 97HT1
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484

FLEMING EUROPEAN FUND B SHARES
MLPF&S for the sole benefit 18.72%
of its customers
Attn: Fund Administration
SEC# 97HT4
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484

FLEMING EUROPEAN FUND C SHARES
MLPF&S for the sole benefit 64.54%
of its customers
Attn: Fund Administration
SEC# 97TR4
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484

FLEMING INTERNATIONAL EQUITY FUND A SHARES
Balsa & Co. 23.76%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

Hamill & Co 9.32%
FBO Buckner Foundation
Mail Sta. 16-HCB-09
PO Box 2558
Houston, TX 77252-2558

Post & Co. A/C 725000 6.26%
c/o The Bank of New York
Mutual Fund/Reorg Dept.
PO Box 1066, Wall St. Station
New York, NY 10268-1066

Balsa & Co. 5.11%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

FLEMING INTERNATIONAL EQUITY FUND B SHARES
MLPF&S for the sole benefit 6.05%
of its customers
Attn: Fund Administration
SEC# 97FC1
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484

FLEMING JAPAN FUND A SHARES
Balsa & Co. 39.45%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

Balsa & Co. 34.65%
Mutual Funds Unit 16 HCB 340
PO Box 2558
Houston, TX 77252-2558

FLEMING JAPAN FUND B SHARES
MLPF&S for the sole benefit 38.34%
of its customers
Attn: Fund Administration
SEC# 97HT6
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484

NFSC FEBO #C1B-347035 5.70%
MTS/People Source Inc. Defined BE
Louis Marcoccia
26 Varsity Boulevard
East Setauket, NY 11733-1040

Investors Trust Co. Cust 5.25%
Ferhat M. Hasan, MD
Profit Sharing Plan
FBO Ferhat M. Hasan
3007 Ecorn Woodway
Houston, TX 77059

FINANCIAL STATEMENTS

The 2000 Annual Report to Shareholders of each Fund, including the reports
of independent accountants, financial highlights and financial statements for
the fiscal year ended October 31, 2000 contained therein, are incorporated
herein by reference.

SPECIMEN COMPUTATIONS OF OFFERING PRICES PER SHARE

FLEMING INTERNATIONAL EQUITY FUND (SPECIMEN COMPUTATIONS)
A SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $13.34
Maximum Offering Price per Share ($13.34 divided
by .9425)
(reduced on purchases of $100,000 or more) $14.15
B SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $13.01

FLEMING EUROPEAN FUND (SPECIMEN COMPUTATIONS)
A SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $17.87
Maximum Offering Price per Share ($17.87 divided
by .9425)
(reduced on purchases of $100,000 or more) $18.96
B SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $17.38
C SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $17.37

FLEMING JAPAN FUND (SPECIMEN COMPUTATIONS)
A SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $8.12
Maximum Offering Price per Share ($8.12 divided by
.9425)
(reduced on purchases of $100,000 or more) $8.62
B SHARES:
Net Asset Value and Redemption Price per
Share of Beneficial Interest at October 31, 2000 $7.93

The Fleming European Fund and Fleming Japan Fund commenced offering of
Shares on November 1, 1995.

APPENDIX A

DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES
OR INSTRUMENTALITIES

FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds issued by a
cooperatively owned nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. government.
These bonds are not guaranteed by the U.S. government.

MARITIME ADMINISTRATION BONDS--are bonds issued and provided by the
Department of Transportation of the U.S. government and are guaranteed by the
U.S. government.

FNMA BONDS--are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. government.

FHA DEBENTURES--are debentures issued by the Federal Housing Administration
of the U.S. government and are guaranteed by the U.S. government.

FHA INSURED NOTES--are bonds issued by the Farmers Home Administration, the
U.S. government and are guaranteed by the U.S. government.

GNMA CERTIFICATES--are mortgage-backed securities which represent a partial
ownership interest in a pool of mortgage loans issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. government. As a consequence of the fees paid to GNMA and
the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or FHA-
insured mortgages underlying the Certificates. The average life of a GNMA
Certificate is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities. Prepayments of principal by mortgagors
and mortgage foreclosures may result in the return of the greater part of
principal invested far in advance of the maturity of the mortgages in the pool.
Foreclosures impose no risk to principal investment because of the GNMA
guarantee. As the prepayment rate of individual mortgage pools will vary widely,
it is not possible to accurately predict the average life of a particular issue
of GNMA Certificates. The yield which will be earned on GNMA Certificates may
vary from their coupon rates for the following reasons: (i) Certificates may be
issued at a premium or discount, rather than at par; (ii) Certificates may trade
in the secondary market at a premium or discount after issuance; (iii) interest
is earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates. Principal which is so prepaid will be reinvested
although possibly at a lower rate. In addition, prepayment of mortgages included
in the mortgage pool underlying a GNMA Certificate purchased at a premium could
result in a loss to a Fund. Due to the large amount of GNMA Certificates
outstanding and active participation in the secondary market by securities
dealers and investors, GNMA Certificates are highly liquid instruments. Prices
of GNMA Certificates are readily available from securities dealers and depend
on, among other things, the level of market rates, the Certificate's coupon rate
and the prepayment experience of the pool of mortgages backing each Certificate.
If agency securities are purchased at a premium above principal, the premium is
not guaranteed by the issuing agency and a decline in the market value to par
may result in a loss of the premium, which may be particularly likely in the
event of a prepayment. When and if available, U.S. government obligations may be
purchased at a discount from face value.

FHLMC CERTIFICATES AND FNMA CERTIFICATES--are mortgage-backed bonds issued
by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association, respectively, and are guaranteed by the U.S. government.

GSA PARTICIPATION CERTIFICATES--are participation certificates issued by the
General Services Administration of the U.S. government and are guaranteed by the
U.S. government.

NEW COMMUNITIES DEBENTURES--are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII

A-1

of the Housing and Urban Development Act of 1970, the payment of which is
guaranteed by the U.S. government.

PUBLIC HOUSING BONDS--are bonds issued by public housing and urban renewal
agencies in connection with programs administered by the Department of Housing
and Urban Development of the U.S. government, the payment of which is secured by
the U.S. government.

PENN CENTRAL TRANSPORTATION CERTIFICATES--are certificates issued by Penn
Central Transportation and guaranteed by the U.S. government.

SBA DEBENTURES--are debentures fully guaranteed as to principal and interest
by the Small Business Administration of the U.S. government.

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS--are bonds issued by
the Washington Metropolitan Area Transit Authority. Some of the bonds issued
prior to 1993 are guaranteed by the U.S. government.

FHLMC BONDS--are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. government.

FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and bonds issued by the
Federal Home Loan Bank System and are not guaranteed by the U.S. government.

STUDENT LOAN MARKETING ASSOCIATION ("SALLIE MAE") NOTES AND BONDS--are notes
and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. government.

D.C. ARMORY BOARD BONDS--are bonds issued by the District of Columbia Armory
Board and are guaranteed by the U.S. government.

EXPORT-IMPORT BANK CERTIFICATES--are certificates of beneficial interest and
participation certificates issued and guaranteed by the Export-Import Bank of
the U.S. and are guaranteed by the U.S. government.

In the case of securities not backed by the "full faith and credit" of the
U.S. government, the investor must look principally to the 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.

Investments may also be made in obligations of U.S. government agencies or
instrumentalities other than those listed above.

A-2

APPENDIX B

DESCRIPTION OF RATINGS

A description of the rating policies of Moody's, S&P and Fitch with respect
to bonds and commercial paper appears below.

MOODY'S INVESTORS SERVICE'S CORPORATE BOND RATINGS

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

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

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

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

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

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

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

CA--Bonds which are rated "Ca" represent obligations which are speculative
in 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 numerical modifiers "1", "2", and "3" to certain of its
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.

STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATINGS

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.

AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and differs from "AAA" issues only
in small degree.

B-1

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

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

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

CI--Bonds rated "CI" are income bonds on which no interest is being paid.

D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

The ratings set forth above may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

MOODY'S INVESTORS SERVICE'S COMMERCIAL PAPER RATINGS

PRIME-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of 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, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

PRIME-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.

PRIME-3--Issuers (or related supporting institutions) rated "Prime-3" have
an acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

NOT PRIME--Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.

STANDARD & POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS

A S&P commercial paper rating is current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Ratings are graded in several categories, ranging from "A-1" for the highest
quality obligations to "D" for the lowest. The four categories are as follows:

A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) sign designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

B-2

A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

B--Issues rated "B" are regarded as having only speculative capacity for
timely payment.

C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D--Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.

FITCH BOND RATINGS

AAA--Bonds rated AAA by Fitch are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA--Bonds rated AA by Fitch are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issues
is generally rated F-1+ by Fitch.

A--Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB--Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.

Plus and minus signs are used by Fitch to indicate the relative position of
a credit within a rating category. Plus and minus signs, however, are not used
in the AAA category.

FITCH SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

FITCH'S SHORT-TERM RATINGS ARE AS FOLLOWS:

F-1+--Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.

F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.

F-3--Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term adverse
changes could cause these securities to be rated below investment grade.

LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

B-3

Like higher rated bonds, bonds rated in the Baa or BBB categories are
considered to have adequate capacity to pay principal and interest. However,
such bonds may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher grade
bonds.

After purchase by a Fund, a security may cease to be rated or its rating may
be reduced below the minimum required for purchase by such Fund. Neither event
will require a sale of such security by a Fund. However, a Fund's investment
manager will consider such event in its determination of whether such Fund
should continue to hold the security. To the extent the ratings given by
Moody's, S&P or Fitch may change as a result of changes in such organizations or
their rating systems, a Fund will attempt to use comparable ratings as standards
for investments in accordance with the investment policies contained in this
Prospectus and in the Statement of Additional Information.

B-4