This study develops an electronic annotation system, allowing users to annotate on hypertexts, to build up knowledge structure, and to browse instructions provided by the system administrator or the instructor electronically. The electronic annotation system is a distributed World Wide Web application based on HTTP access and allows annotations on HTML documents. The major functions of the electronic annotation system include highlighting texts, inserting and editing annotations, and organizing and presenting annotations hierarchically. The five interactive components of the electronic annotation system are Main Tool Bar, Hypertext, Annotation Editor, Hierarchy Viewer, and Instruction Viewer. A user test was conducted to investigate the effect of the location of electronic annotating (Annotation Editor) on reading performance in terms of recall and degree of satisfaction.