MORGAN J P & CO INC, 424B2, 1996-05-24

MORGAN J P & CO INC
424B2, 1996-05-24
STATE COMMERCIAL BANKS

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<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration Statement No. 333-01121

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 21, 1996

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 16, 1996)
[ ]
COMMODITY-INDEXED PREFERRED SECURITIES (ComPS(SM)), SERIES UNL1

J.P. MORGAN INDEX FUNDING COMPANY, LLC
[ ]% SERIES UNL1 PREFERRED SECURITIES
INDEXED TO THE JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

J.P. MORGAN & CO. INCORPORATED
------------------------

The [ ]% Series UNL1 Preferred Securities (each, a "Preferred Security", and
collectively, the "ComPS") offered hereby are being issued by J.P. Morgan Index
Funding Company, LLC, a limited liability company formed under the laws of the
State of Delaware (the "Company"). The ComPS represent preferred limited
liability company interests in the Company. Each Preferred Security will have an
initial principal amount of [$40] (the "Face Amount"), and thereafter, the
change in value of the principal amount per Preferred Security will be indexed
to the change in value of the JPMCI Unleaded Gasoline Excess Return Index (the
"Applicable Index"), which is calculated based on the change in value of certain
unleaded gasoline futures contracts included from time to time in the JPM
Indices (such contracts, from time to time, the "Benchmark Gasoline Contracts").
J.P. Morgan & Co. Incorporated, a Delaware corporation ("J.P. Morgan"), will
directly or indirectly own all the common securities (the "Common Securities")
representing voting limited liability company interests in the Company (the
ComPS and the Common Securities, collectively, the "Securities"). The Company
exists for the sole purpose of issuing the ComPS and investing the proceeds
thereof in a [ ]% Related Note Due [ ], 20[ ] (the "Related Note") of Morgan
Guaranty Trust Company of New York, a trust company with full banking powers
organized under the laws of the State of New York and a wholly-owned subsidiary
of J.P. Morgan ("Morgan Guaranty"), and issuing similar securities and investing
the proceeds thereof in similar notes in the future.

SEE "RISK FACTORS" ON PAGE S-10 FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES. THE ComPS ARE NOT FUTURES CONTRACTS AND
DO NOT REPRESENT AN ACTUAL INVESTMENT IN FUTURES CONTRACTS. THE REDEMPTION VALUE
(AS DEFINED BELOW) OF THE ComPS IS DIRECTLY LINKED TO THE PERFORMANCE OF THE
JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX. AS A RESULT, THE REDEMPTION VALUE
PER PREFERRED SECURITY MAY BE MORE OR LESS THAN THE FACE AMOUNT AND MAY BE MORE
OR LESS THAN THE RETURN FROM AN ACTUAL INVESTMENT IN THE BENCHMARK GASOLINE
CONTRACTS. SEE "DESCRIPTION OF THE ComPS".

"ComPS", "JPMCI" and the "J.P. Morgan Commodity Index" are service marks of J.P.
Morgan & Co. Incorporated.

The ComPS have been authorized for listing on the [ (the " ")] under the
symbol " ", subject to official notice of issuance. Trading of the ComPS on
the [ ] is expected to commence within a 30-day period after the date of this
Prospectus Supplement. See "Underwriting".

THE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL
AGENCY.

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

Price $[40] per Preferred Security plus accrued dividends, if any.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSIONS(2) THE COMPANY(3)(4)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security..................... $ (3) $
- ----------------------------------------------------------------------------------------------------------------
Total...................................... $ (3) $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Plus accrued dividends, if any, from the Issue Date (as defined herein).

(2) The Company and J.P. Morgan have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".

(3) Because the proceeds of the sale of the ComPS will be invested in the
Related Note, Morgan Guaranty has agreed to pay to the Underwriters a
commission of $ per Preferred Security (or $ in the
aggregate). See "Underwriting".

(4) Expenses of the offering which are payable by the Company and J.P. Morgan
are estimated to be $ .
------------------------

The ComPS offered hereby are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the ComPS
will be made on or about , 1996, through the book-entry facilities of
The Depository Trust Company, against payment therefor in same-day funds.

J.P. MORGAN & CO.

The date of this Prospectus Supplement is , 1996.
<PAGE> 2

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE [APPLICABLE STOCK EXCHANGE(S)],
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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STRUCTURAL OVERVIEW

[GRAPH OMITTED]

1. THE COMPANY. The issuer of the ComPS is a Delaware limited liability company
formed by J.P. Morgan for the sole purpose of issuing the ComPS and other
Preferred Securities and lending the proceeds thereof to Morgan Guaranty. J.P.
Morgan will own, directly or indirectly, 100% of the common limited liability
company interests in the Company. It is intended that the Company not be taxed
as a corporation (and instead be treated as a partnership) for federal income
tax purposes.

2. THE ComPS. The ComPS issued by the Company are preferred limited liability
company interests. For tax purposes, holders of ComPS are deemed to receive
interest income to the extent of interest accrued and paid on the Related Note,
and dividends on ComPS are not eligible for the dividends received deduction for
United States Federal income tax purposes. The ComPS Redemption Price and the
ComPS Early Redemption Price are indexed to the JPMCI Unleaded Gasoline Excess
Return Index. The ComPS Early Redemption Price or the ComPS Redemption Price may
be more or less than the Face Amount of the ComPS. The Company intends to issue
more than one series of Preferred Securities.

3. ComPS PROCEEDS LOANED TO MORGAN GUARANTY. Proceeds of ComPS and related
Common Securities will be used by the Company to purchase from Morgan Guaranty
the Related Note with a maturity of [ ] and having the same economic terms
as the ComPS.

4. REPAYMENT OF RELATED NOTE. Morgan Guaranty will repay the Related Note in
whole or part to the extent required upon any Early Redemption Date and in whole
at the Stated Maturity (subject to extension in case of a Market Disruption
Event).

5. RELATED NOTE GUARANTEE. J.P. Morgan will guarantee to the Company, on a
subordinated basis, the payment of any distributions on and principal of the
Related Note as provided pursuant to the terms of the Related Note, at such
times and in such amounts as provided therein.

6. GUARANTEE. J.P. Morgan will guarantee to the holders of ComPS, on a
subordinated basis, the payment of (i) the ComPS Early Redemption Price or the
ComPS Redemption Price, as applicable, but if and only if and to the extent
that, in each case, Morgan Guaranty has made payment of interest or principal on
the Related Note, as the case may be, and (ii) upon liquidation, the lesser of
(a) the sum of the Early Redemption Value and the amount of accrued and unpaid
dividends on the ComPS and (b) the amount of assets of the Company available for
distribution to holders of ComPS.

7. MORGAN GUARANTY. Morgan Guaranty, a trust company with full banking powers
organized under the laws of the State of New York, is a wholly-owned subsidiary
of J.P. Morgan.

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SUMMARY OF THE OFFERING

SECURITIES OFFERED......... [2,500,000] [ ]% Series A Preferred Securities
("ComPS") Indexed to the JPMCI Unleaded Gasoline
Excess Return Index.
ISSUER..................... J.P. Morgan Index Funding Company, LLC (the
"Company"), a Delaware limited liability company
and a subsidiary of J.P. Morgan & Co. Incorporated
("J.P. Morgan").
GUARANTOR.................. J.P. Morgan, on a subordinated basis, (i) of
payments to holders of ComPS of amounts received on
the Related Note by the Company and (ii) of
payments to the Company on the Related Note by
Morgan Guaranty, a wholly-owned subsidiary of J.P.
Morgan.
INITIAL OFFERING PRICE PER
PREFERRED SECURITY ("FACE
AMOUNT")................... [$40].

AGGREGATE FACE AMOUNT...... [$100,000,000].

ComPS REDEMPTION PRICE..... Redemption Value at Stated Maturity plus accrued
and unpaid dividends.
STATED MATURITY............ [ ], 20[ ], subject to extension in the case of a
Market Disruption Event.

REDEMPTION VALUE PER
PREFERRED SECURITY......... Face Amount X Applicable Index Settlement Value
---------------------------------
Applicable Index
Commencement Value
APPLICABLE INDEX........... JPMCI Unleaded Gasoline Excess Return Index.

APPLICABLE INDEX
COMMENCEMENT VALUE......... [Set on date of pricing].

APPLICABLE INDEX
SETTLEMENT VALUE........... The average of the Applicable Index over the 10
consecutive Trading Days meeting certain conditions
immediately following the 20th scheduled Business
Day prior to redemption (as described herein),
unless such value has been permanently fixed prior
to such time as described under "Description of
ComPS--Early Determination of Applicable Index
Settlement Value and Redemption Value".
CALCULATION AGENT.......... Morgan Guaranty.

DIVIDENDS.................. Cumulative cash dividends of % per annum on the
Face Amount (calculated on the basis of a 360 day
year of twelve 30-day months) accruing from the
Issue Date and payable monthly in arrears on the
last calendar day of each month.
CASH REDEMPTION PRIOR TO
STATED MATURITY

OPTIONAL REDEMPTION...... At the holders' option, on each [ ] prior to the
Stated Maturity, for the ComPS Early Redemption
Price.
SPECIAL EVENT
REDEMPTION................. Under certain circumstances, upon the occurrence of
a Tax Event or an Investment Company Event, for the
ComPS Early Redemption Price.
EARLY DETERMINATION OF
APPLICABLE INDEX
SETTLEMENT VALUE........... Upon the occurrence of certain events affecting the
liquidity or increasing the cost of holding or
trading the Benchmark Gasoline Contracts and the
inability to find a suitable replacement Benchmark
Gasoline Contract, the Applicable Index Settlement
Value may be fixed, and such fixed value will be
used upon any subsequent Early Redemption and at
Stated Maturity.
ComPS EARLY REDEMPTION
PRICE...................... The Early Redemption Value (as defined in the
Prospectus), which represents the payment of the
discounted present value of dividends and Principal
Amount on the applicable Early Redemption Date. See
"Description of the ComPS--Optional Redemption" and
"--Special Event Redemption".
VOTING RIGHTS.............. Holders of ComPS will have limited voting rights
and will not be entitled to vote to appoint, remove
or replace the Managing Members of the Company (as
defined in the LLC Agreement). See "Description of
the ComPS--Voting Rights".

USE OF PROCEEDS............ The proceeds to the Company from the sale of ComPS
and related Common Securities will be used to
purchase a note of Morgan Guaranty (the "Related
Note"), and Morgan Guaranty will use such proceeds
for general corporate purposes and for hedging its
obligations under the Related Note. See "Use of
Proceeds".

S-4
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THE OFFERING

The information in this Prospectus Supplement concerning J.P. Morgan, Morgan
Guaranty, the Company, the ComPS, the Guarantee, the Related Note Guarantee and
the Related Note supplements, and should be read in conjunction with, the
information contained in the accompanying Prospectus. The following summary of
provisions relating to the ComPS is qualified in its entirety by the more
detailed information contained elsewhere or incorporated by reference in this
Prospectus Supplement and the Prospectus of which this Prospectus Supplement
constitutes a part. Prospective purchasers of ComPS should carefully review such
information. Certain capitalized terms used in this Prospectus Supplement have
the meanings ascribed to them under the "Glossary of Terms" in Annex I hereto.

GENERAL

Subject to the more specific discussion of each item elsewhere in this
Prospectus Supplement or in the accompanying Prospectus (including the effect of
a Market Disruption Event, as defined herein), following is a general summary of
the ComPS:

ComPS are principal-at-risk securities linked directly to the performance of the
Applicable Index. As described below, the Applicable Index will change based on
the daily percentage change in value of the Benchmark Gasoline Contracts. If the
index rises from the starting value (which is set on the day of pricing), the
Redemption Value of such ComPS will be greater than the original issue price. If
the Applicable Index declines from the starting value, the Redemption Value of
such ComPS will be less than the original issue price. In no circumstances will
the Redemption Value of the ComPS be less than zero, but the Redemption Value
could be more or less than the issue price. Because an investor's principal
redemption is linked to the performance of an Applicable Index calculation, it
is important to understand on what the Applicable Index calculation is based.

The ComPS pay a fixed dividend rate on the Face Amount (which equals the initial
price) and the Redemption Value of the ComPS is linked to the performance of the
JPMCI Unleaded Gasoline Excess Return Index. At maturity, an investor will
receive a principal amount determined by the following formula: Face Amount x
the 10-day average of the Applicable Index/the Applicable Index set on the day
of pricing. Thus, the Redemption Value is linked directly to the performance of
the JPMCI Unleaded Gasoline Excess Return Index (e.g., if the average ending
value of the JPMCI Unleaded Gasoline Excess Return Index is twice the beginning
value, the Redemption Value will be twice the initial price).

The Applicable Index for the ComPS is the JPMCI Unleaded Gasoline Excess Return
Index, which is an Excess Return Index. An Excess Return Index, which is
described more fully in the attached Prospectus under "The JPM Indices--Excess
Return Methodology", represents the cumulative return of holding an unlevered
position in the designated nearby commodity futures contracts underlying such
Applicable Index. Generally, since the Excess Return Index is linked directly
(i.e., on a one-to-one basis) to the underlying futures contracts, a 1% change
on any day in the value of the specific underlying designated futures contract
will create a 1% change in the value of the Applicable Index for such day.
Because the designated futures contracts underlying the Excess Return Indices
have maturities (generally less than three months) which are shorter than the
maturity of the ComPS, the index calculation methodology replaces the underlying
contract used to determine the daily change in the value of the Applicable Index
with the next designated contract of the same commodity on a periodic basis.
This process of replacement is called "rolling", and the 5-day period during
which the replacement occurs is called the "Rollover Period". For any month
during which a roll occurs, the daily change in value of an Excess Return Index
for all days prior to the Rollover Period is calculated as 100% of the daily
change of the existing ("old") underlying designated contract. Beginning with
the first day after the beginning of the Rollover Period, the daily change in an
Excess Return Index is calculated based 80% on the percentage change of the old
contract and 20% on the percentage change in the replacement ("new") designated
contract. Similar 20% adjustments are made in the weights attributable to each
contract's change for each of the next four days of the Rollover Period such
that, by the day after the Rollover Period ends and for all subsequent days
until the next Rollover Period, 100% of the daily index change is attributable
to the percentage change of the newly-designated contract.

S-5
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Therefore, the ComPS pay dividends at a fixed rate and amount and pay a
principal amount upon redemption or at maturity which varies directly with the
performance of the JPMCI Unleaded Gasoline Excess Return Index. The change in
the JPMCI Unleaded Gasoline Excess Return Index is linked directly to the
percentage change in the designated contracts underlying such index. Thus, any
events which affect the designated contracts underlying the JPMCI Unleaded
Gasoline Excess Return Index may affect the Redemption Value of such ComPS.

The Principal Amount of each of the ComPS, which is initially equal to the Face
Amount, will vary over the life of the ComPS in relation to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"). The Principal Amount
repayable on any Early Redemption Date, upon the occurrence of any Special Event
Redemption or at Stated Maturity will be determined, pursuant to the terms
described herein (including, without limitation, the averaging of the Applicable
Index over the Early Determination Period or Determination Period, as
applicable, and the present-valuing of the dividends and Principal Amount in
connection with early redemptions), by comparing the level of the JPMCI Unleaded
Gasoline Excess Return Index set on the date of issuance of the ComPS with the
level determined pursuant to the terms hereof for any such date of redemption.
The ComPS represent preferred limited liability company interests in the
Company, the assets of which will consist of the Related Note and other notes
issued by Morgan Guaranty in connection with other issuances of Preferred
Securities. The Related Note, in which the proceeds of the ComPS and the related
Common Securities will be invested, matures on [ ], 20[ ] (which is
the "Stated Maturity"), subject to extension in the case of a Market Disruption
Event, and is redeemable at certain times, from time to time, at the option of
the Company upon an optional redemption by one or more holders of ComPS in an
amount sufficient to fund such redemption and the redemption of the related
Common Securities and at any time by Morgan Guaranty in whole or in part upon
the occurrence of a Special Event. The ComPS will be redeemed at Stated Maturity
at the ComPS Redemption Price, which is equal to the sum of (a) the Redemption
Value (as defined below) per Preferred Security plus (b) accrued and unpaid
dividends thereon to but excluding the date of redemption. In addition, if, as a
result of a Special Event, Morgan Guaranty redeems the Related Note in whole or
in part prior to Stated Maturity, the Company must redeem ComPS and related
Common Securities having an aggregate Principal Amount equal to the Principal
Amount of the Related Note so redeemed at the ComPS Redemption Price. See
"Description of the ComPS--Redemption at Stated Maturity";--Special Event
Redemption". For purposes of this Prospectus Supplement, "Principal Amount"
means (i) in the case of any Preferred Security, the Early Redemption Value
thereof or the Redemption Value thereof (as if determined as of such time), as
applicable, and (ii) in the case of the Related Note, the principal amount
thereof at such time determined pursuant to the terms thereof.

DIVIDENDS

The holders of ComPS are entitled to receive cumulative cash dividends at the
rate of [ ]% per annum on the Face Amount per Preferred Security, accruing from
the Issue Date, and payable monthly in arrears on the last calendar day of each
month, commencing [ ], 1996, or, if any such date is not a Business
Day (as defined herein), the next succeeding Business Day when, as and if
available for payment by the Company (as described herein), except as otherwise
described herein. The first dividend payment will be for the period from and
including the Issue Date to but excluding [ ], 1996. Dividends (or
amounts equal to accrued and unpaid dividends) payable on the ComPS for any
period shorter than a monthly dividend period will be computed on the basis of a
360-day year of twelve 30-day months and on the basis of the actual number of
days elapsed in any such 30-day month. See "Description of the
ComPS--Dividends".

REDEMPTION AT STATED MATURITY

Unless previously redeemed pursuant to the optional or special redemption
provisions described below, each of the outstanding ComPS will be redeemed by
the Company, in cash, on [ ], 20[ ], which is the Stated Maturity of
the Related Note, subject to extension in the case of a Market Disruption Event
(as defined herein), at the ComPS Redemption Price, which is equal to (a) the
Redemption Value

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per Preferred Security plus (b) accrued and unpaid dividends thereon to but
excluding the date of redemption. See "Description of the ComPS--Redemption at
Stated Maturity"; "Risk Factors--Extension of Settlement Date or Stated
Maturity".

CALCULATION OF REDEMPTION VALUE

The Principal Amount of each Preferred Security is indexed to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"), which is calculated based
on the change in value of certain unleaded gasoline futures contracts included
from time to time in the JPM Indices (such contracts, from time to time, the
"Benchmark Gasoline Contracts"). On the date of this Prospectus Supplement, the
Benchmark Gasoline Contract is the New York Harbor unleaded gasoline futures
contract traded on the New York Mercantile Exchange ("NYMEX"). In summary, and
subject to the complete definitions and formulae contained herein and in the
Prospectus, the Principal Amount of each Preferred Security at Stated Maturity,
subject to extension in the case of a Market Disruption Event (the "Redemption
Value"), shall be determined by multiplying the Face Amount of each Preferred
Security by a fraction, the numerator of which is the Applicable Index
Settlement Value and the denominator of which is the Applicable Index
Commencement Value. Subject to the more complete definitions contained herein
and in the accompanying Prospectus, "Applicable Index Settlement Value" means
the arithmetic average of the values of the Applicable Index during the
Determination Period (as defined below), and "Applicable Index Commencement
Value" means [value set on date of issuance]. See "Description of
ComPS--Calculation of Redemption Value" herein and "Description of
ComPS--Determination Period and Settlement Date" in the accompanying Prospectus.

EARLY DETERMINATION OF APPLICABLE INDEX SETTLEMENT VALUE AND REDEMPTION VALUE

Upon the occurrence of certain events affecting the liquidity or increasing the
cost of holding or trading the Benchmark Gasoline Contracts and the inability to
find a suitable replacement Benchmark Gasoline Contract, Morgan Guaranty has the
right to cause the Applicable Index Settlement Value (as defined in the
preceding paragraph) to be fixed. Following such an event, the Applicable Index
Settlement Value will remain fixed and will be used as the Applicable Index
Early Settlement Value for the computation of any Early Redemption Value and as
the Applicable Index Settlement Value at Stated Maturity. See "Description of
the ComPS--Early Determination of Applicable Index Settlement Value and
Redemption Value".

OPTIONAL REDEMPTION

Each holder of ComPS may, by giving notice as specified herein before the [ ] of
each year prior to Stated Maturity (each, an "Optional Redemption Date"), cause
the Company to redeem some or all of such holder's ComPS at the ComPS Early
Redemption Price, which is equal to (a) the Early Redemption Value (as defined
in the Prospectus) per Preferred Security as determined at such time plus (b)
accrued and unpaid dividends thereon to but excluding the date of redemption.
See "Description of the ComPS--Optional Redemption".

SPECIAL EVENT REDEMPTION

Upon the occurrence and during the continuation of a Tax Event or an Investment
Company Event (each as defined herein), Morgan Guaranty will have the right to
redeem the Related Note in whole or, if redemption of less than all the ComPS
will result in the discontinuance of such Special Event, in part in an amount
sufficient to cause such discontinuance, in each case for cash, with the result
that the Company will redeem a Principal Amount of ComPS and related Common
Securities equal to the Principal Amount of the Related Note so redeemed for
cash at the ComPS Early Redemption Price. However, in the case of a Tax Event,
Morgan Guaranty may allow the Related Note and the Company may allow the ComPS
and related Common Securities to remain outstanding upon the receipt of
indemnification by J.P. Morgan of the Company for all taxes payable by it as a
result of such Tax Event. See "Description of the ComPS--Special Event
Redemption".

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UNCONDITIONAL GUARANTEE BY J.P. MORGAN

J.P. Morgan, through its obligations under the Guarantee, the Related Note
Guarantee, the LLC Agreement and the Expense Agreement, taken together, will
provide a full and unconditional guarantee, on a subordinated basis, of payments
due on the ComPS. See "Risk Factors--Limitations on Rights Under the Guarantee,
the Related Note Guarantee and the Related Note", "Description of the Related
Note Guarantee" and "Effect of Obligations Under the Guarantee, the Related Note
Guarantee and the Related Note".

THE GUARANTEE

The Guarantee by J.P. Morgan guarantees to the holders of the ComPS the payment
of (i) the ComPS Early Redemption Price or the ComPS Redemption Price, as
applicable, but if and only if and to the extent that, in each case, Morgan
Guaranty has made payment of interest or principal on the Related Note, as the
case may be, and (ii) upon a Liquidation Event (as defined herein) (other than
in connection with the redemption of all the ComPS upon maturity or redemption
of Related Note), the lesser of (A) the sum of (I) the Early Redemption Value of
such ComPS and (II) the amount of accrued and unpaid dividends on such ComPS to
but excluding the date of payment (the "Liquidation Distribution"), to the
extent the Company has funds available therefor and (B) the amount of assets of
the Company remaining available for distribution to holders of the ComPS upon
such Liquidation Event. J.P. Morgan's obligations under the Guarantee will be
subordinated and junior in right of payment to all liabilities of J.P. Morgan,
pari passu with the most senior preferred stock outstanding as of the date
hereof of J.P. Morgan and senior to the common stock of J.P. Morgan.

THE RELATED NOTE GUARANTEE

The Related Note Guarantee by J.P. Morgan guarantees to the Company the payment
of any dividends on and principal of the Related Note as provided pursuant to
the terms of the Related Note, at such times and in such amounts as provided
therein. J.P. Morgan's obligations under the Related Note Guarantee will be
subordinated and junior in right of payment to all liabilities of J.P. Morgan,
pari passu with the most senior preferred stock outstanding as of the date
hereof of J.P. Morgan and senior to the common stock of J.P. Morgan.

RELATED NOTE

The Related Note will be issued as an unsecured obligation of Morgan Guaranty,
limited in initial principal amount to approximately $[ ], such amount being
the aggregate Face Amount of the ComPS and the related Common Securities. The
Related Note will mature on the Stated Maturity (subject to extension in the
case of a Market Disruption Event), and will bear interest at an annual rate of
[ ]% on the Face Amount (which is equivalent to the annual dividend rate
with respect to the ComPS), payable monthly in arrears on the last day of each
calendar month, commencing on [ ], 1996. The Principal Amount of the Related
Note at any time will be the aggregate Principal Amount of the outstanding ComPS
and related Common Securities at such time. The amount payable upon maturity for
the Related Note will be the Related Note Redemption Price. The timing and
amount of payments on the Related Note mirror the aggregate financial terms of
the ComPS.

The obligations of Morgan Guaranty under the Related Note will be pari passu
with all present and future Senior Indebtedness of Morgan Guaranty. Morgan
Guaranty's obligations under the Related Note are effectively subordinated to
all liabilities (including indebtedness) of its consolidated and unconsolidated
subsidiaries.

VOTING RIGHTS

Holders of ComPS will have limited voting rights and will not be entitled to
vote to appoint, remove or replace the Managing Members of the Company (as
defined below). See "Description of the ComPS--Voting Rights".

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USE OF PROCEEDS

The Company will invest the proceeds from the sale of the ComPS offered hereby
and the related Common Securities in the Related Note, the proceeds of which
will be used by Morgan Guaranty for general corporate purposes and for hedging
its obligations under the Related Note. See "Use of Proceeds".

LISTING

[The ComPS have been authorized for listing on the [ ] under the symbol " ,
subject to official notice of issuance. Trading of the ComPS on the [ ] is
expected to commence within a 30-day period after the date of this Prospectus
Supplement.] [Prior to this offering, there has been no market for the ComPS. In
order to meet one of the requirements for listing the ComPS on the [ ], the
Underwriters will undertake to sell ComPS to a minimum of 400 beneficial
holders.]

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RISK FACTORS

INDEXATION OF PRINCIPAL AMOUNT

The Principal Amount of each of the ComPS, which is initially equal to the Face
Amount, will vary until Stated Maturity of the ComPS in relation to the JPMCI
Unleaded Gasoline Excess Return Index (the "Applicable Index"). The Principal
Amount repayable on any Optional Redemption Date, upon the occurrence of any
Special Event Redemption or in connection with any Liquidation Distribution
(each such redemption date, an "Early Redemption Date") or at Stated Maturity
will be determined, pursuant to the terms described herein (including, without
limitation, the averaging of the Applicable Index over the Early Determination
Period or Determination Period, as applicable, and the present-valuing of the
dividends and Principal Amount in connection with early redemptions), by
comparing the level of the JPMCI Unleaded Gasoline Excess Return Index set on
the date of issuance of the ComPS with the level determined pursuant to the
terms hereof for any such date of redemption. Accordingly, the Principal Amount
to be received upon any date of redemption will fluctuate based on the
Applicable Index and may be lower than the Face Amount.

LIMITATIONS ON RIGHTS UNDER THE GUARANTEE, THE RELATED NOTE GUARANTEE AND THE
RELATED NOTE

The Guarantee will be effective with respect to the ComPS from the time of
issuance of such ComPS but will not apply to any payment of dividends or other
amounts due in respect of the ComPS to the extent Morgan Guaranty has failed to
make a payment of principal or interest on the Related Note. To the extent
Morgan Guaranty were to default on its obligation to pay amounts payable on the
Related Note, the Company would lack available funds for the payment of
distributions on or amounts payable on redemption of the ComPS and, in such
event, holders of the ComPS would not be able to rely on the Guarantee for
payment of such amounts. Instead, holders of the ComPS would rely on the
enforcement by the Company of its rights as holder of the Related Note against
Morgan Guaranty and as holder of the Related Note Guarantee against J.P. Morgan.
J.P. Morgan, through its obligations under the Guarantee, the Related Note
Guarantee, the LLC Agreement and the Expense Agreement, taken together, will
provide a full and unconditional guarantee, on a subordinated basis, of payments
due on the ComPS. See "Description of the Guarantee" and "Description of the
Related Note Guarantee".

SPECIAL EVENT REDEMPTION

Upon the occurrence of a Special Event, unless waived by Morgan Guaranty or
subject to cure as specified herein, Morgan Guaranty shall have the right to
redeem the Related Note, in whole or in part, in which event the Company will
redeem the ComPS and related Common Securities on a pro rata basis to the same
extent as the Principal Amount of the Related Note is redeemed by Morgan
Guaranty.

As described in more detail below, a Special Event is either (i) a Tax Event or
(ii) an Investment Company Event. A Special Event may occur at any time. See
"Description of the ComPS--Special Event Redemption".

It is possible that the occurrence of a Special Event will cause the market
price of the ComPS in any existing secondary market to decline.

LIMITED VOTING RIGHTS

Holders of ComPS will have limited voting rights relating to a payment default
on or adverse change to the ComPS, and will not be entitled to vote to appoint,
remove or replace the Managing Members of the Company (J.P. Morgan and JPM
Ventures), which voting rights are vested exclusively in the holders of the
Common Securities. See "Description of the ComPS--Voting Rights".

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<PAGE> 11

TRADING PRICE MAY NOT REFLECT ACTUAL ECONOMIC VALUE

[The ComPS have been authorized for listing on the [ ] under the symbol
"[ ] ", subject to official notice of issuance. Trading of the ComPS on the
[ ] is expected to commence within a 30-day period after the date of this
Prospectus Supplement. [Prior to this offering there has been no market for the
ComPS. In order to meet one of the requirements for listing the ComPS on the
[ ], the Underwriters will undertake to sell ComPS to a minimum of 400
beneficial holders.] However, it is not possible to predict whether the
necessary number of holders will purchase and, for the remaining term of the
ComPS, continue to hold ComPS in order that any secondary market which does
develop continues to exist. The Underwriters are not obligated to make a market
for the ComPS, and although JPMSI, as lead Underwriter, intends to use its
reasonable efforts to do so, it is possible that no active secondary market for
the ComPS will develop and remain in existence.

There can be no assurance as to the market prices for the ComPS in any secondary
market which does develop. Accordingly, the ComPS that an investor may purchase,
whether pursuant to the offer made hereby or in the secondary market, may trade
at a discount to the price that the investor paid to purchase the ComPS offered
hereby.

VALUE OF THE COMPS

The value of the ComPS at any time will depend upon the interaction of at least
three key factors: (i) the level of the Applicable Index, (ii) the credit
quality of Morgan Guaranty and J.P. Morgan and (iii) the interest rate
environment. As discussed under "Description of the ComPS", adverse changes in
the Applicable Index will directly correlate to adverse changes in the value of
the ComPS. A decline in the credit quality of Morgan Guaranty and J.P. Morgan
could cause the trading price of any ComPS in any secondary market then existing
to decline. Also, an increase in the prevailing interest rates could cause the
trading price of the ComPS in any secondary market then existing to decline.

NO RIGHT TO INTEREST ON RELATED NOTE

Because holders of ComPS are essentially investing in a pro rata share of the
Related Note, prospective purchasers of ComPS are also making an investment
decision with regard to the Related Note and should carefully review all the
information regarding the Related Note contained herein and in the accompanying
Prospectus. However, investors in ComPS have no right to direct interest
distributions on the Related Note. See "Description of the Related Note".

IMPOSITION OF BANK REGULATORY RESTRICTIONS

The Company's ability to make distributions and other payments on the ComPS is
dependent upon Morgan Guaranty's making interest and other payments on the
Related Note as and when required or collection by the Company under the Related
Note Guarantee. As noted in the accompanying Prospectus under "J.P. Morgan & Co.
Incorporated--Regulation", Morgan Guaranty is subject to examination and
regulation by U.S. federal and state banking authorities, and although there is
no current restriction on Morgan Guaranty's ability to make payments under the
Related Note, certain transactions with affiliates, including the Company, are
or may become subject to restrictions imposed in the future by bank regulatory
authorities.

EFFECT OF TRADING IN THE BENCHMARK GASOLINE CONTRACTS AND RELATED COMMODITIES
AND INSTRUMENTS

Morgan Guaranty and other affiliates of J.P. Morgan are and will be actively
involved in the trading of the Benchmark Gasoline Contracts and other
instruments and derivative products based thereon. Morgan Guaranty, in
particular, is an active participant in various commodity markets including the
physical petroleum, precious and base metals and related derivatives markets.
JPMSI and other affiliates may also issue or underwrite, or authorize
unaffiliated entities to issue or underwrite, other securities or financial
instruments with returns indexed to the Applicable Index, one or more of the JPM
Indices or to another commodity. Morgan Guaranty has licensed, and may in the
future license, the Applicable Index, the JPM

S-11
<PAGE> 12

Indices, and related indices and sub-indices for use by affiliated and
unaffiliated parties, for publication in newspapers and periodicals, for
distribution by information and data dissemination services and for other
purposes. Morgan Guaranty currently intends to publish individual commodity
sub-indices for each of the commodities included in the JPMCI using the same
calculation methodology as that described in the accompanying Prospectus. The
Applicable Index on the date hereof is identical to the sub-index having the
same underlying commodity.

Trading in the foregoing contracts and commodities by Morgan Guaranty, its
affiliates (including JPMSI) and unaffiliated third parties could adversely
affect the value of the Applicable Index, which would in turn adversely affect
the return on and the value of the ComPS. See "Description of the ComPS".
Furthermore, additional issuances of securities linked or referenced to the
Benchmark Gasoline Contracts, similar gasoline futures contracts or gasoline
could adversely affect the value of the ComPS.

POTENTIAL FOR ADVERSE INTERESTS

As noted above, Morgan Guaranty, JPMSI and their affiliates expect to engage in
trading activities related to the Benchmark Gasoline Contracts and other
instruments or derivatives products on or related to the Applicable Index, for
their accounts where permitted or for other accounts under their management.
Morgan Guaranty, JPMSI and their affiliates, as well as unaffiliated third
parties, may also engage in other activities related to the Applicable Index, as
discussed above. Because Morgan Guaranty will issue the Related Note issued to
the Company, all such activities could create interests of Morgan Guaranty
adverse to those of the holders of ComPS. For example, the issuance of other
securities indexed to the Applicable Index, i.e., the introduction of competing
products into the marketplace, could adversely affect the value of the ComPS. To
the extent that J.P. Morgan or one of its affiliates serves as issuer, or JPMSI
or one of its affiliates serves as agent or underwriter, for such securities or
other instruments, their interests with respect to such products may be adverse
to those of the holders of the ComPS. Morgan Guaranty will serve as Calculation
Agent with respect to the ComPS and, accordingly, will in good faith calculate
the Applicable Index, which could also raise certain adverse interests (for
example, in instances where Morgan Guaranty as the Calculation Agent is required
to exercise discretion).

RISK OF CARRYING AND ROLLING BENCHMARK GASOLINE CONTRACTS

As discussed below, the Early Redemption Value and the Redemption Value of the
ComPS will be calculated with reference to the Applicable Index, the value of
which is designed to replicate to the extent provided herein the cumulative
return of holding a continuous investment in the Benchmark Gasoline Contracts.
At any given time, the Applicable Index will be calculated based on the change
in value of certain Benchmark Gasoline Contracts for delivery in the near term
(the "shorter-dated contracts"). The Applicable Index will continue to be
calculated based on the change in value of such shorter-dated contracts until
they approach maturity, at which time the Applicable Index will, as described
below, cease to be calculated based on the change in value of such shorter-dated
contracts and begin to be calculated based on the change in value of the
subsequent Benchmark Gasoline Contracts (the "longer-dated contracts") on a
regular periodic basis so as to be continuously indexed to the change in value
of Benchmark Gasoline Contracts. The period during which each such replacement
of shorter-dated contracts with longer-dated contracts as the basis for the
calculation of the change in value of the Applicable Index occurs is referred to
herein as the "Rollover Period", as further defined below. If the market for
Benchmark Gasoline Contracts is in "contango" (i.e., the prices of longer-dated
contracts are above the prices of shorter-dated contracts), the return on the
Applicable Index may be adversely affected. The Applicable Index would decline
if (i) the price of the longer-dated Benchmark Gasoline Contracts during the
Rollover Period were more than the price of the shorter-dated contracts which
they will replace and (ii) the price of the longer-dated contracts were to
decline as such contracts approach maturity (i.e., the price of the longer-dated
contracts were to converge toward the price of the replaced shorter-dated
contracts). While many of the commodities included in the JPM Indices have
historically exhibited periods of both "backwardation" (i.e., the prices of
longer-dated contracts are below the prices of shorter-dated contracts) and
contango, there can be no assurance that backwardation will exist at any or all
times. The

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<PAGE> 13

absence of backwardation in the market for Benchmark Gasoline Contracts could
adversely affect the Applicable Index and, correspondingly, could adversely
affect the value of the ComPS. Additionally, the issuance and/or the trading of
the ComPS could adversely affect the market for Benchmark Gasoline Contracts and
the extent to which such markets are in backwardation or contango and,
correspondingly, could adversely affect the value of the Applicable Index and
the value of the ComPS. See "Description of ComPS--Calculation of Redemption
Value".

The following table sets forth the simulated month-end level of the JPMCI
Unleaded Gasoline Excess Return Index (the Applicable Index) for all months from
January, 1986 through January, 1996, and the actual level of the JPMCI Unleaded
Gasoline Excess Return Index thereafter. Because Morgan Guaranty did not
commence actual calculation and publication of the JPMCI Unleaded Gasoline
Excess Return Index using the rules described herein until February 1, 1996, the
levels prior to such date are simulated levels only, derived by applying the
rules of the JPMCI Unleaded Gasoline Excess Return Index as described herein to
historical NYMEX futures contract settlement values and using as a given the
level of the previous JPMCI Unleaded Gasoline Excess Return Index on January 31,
1996, as the basis for calculation:

LEVEL OF APPLICABLE INDEX AS OF THE END OF:
<TABLE>
<CAPTION>
YEAR JAN. FEB. MAR. APR. MAY JUN.
- ----- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1986 121.81 85.98 76.15 104.95 102.64 87.57
1987 114.86 102.94 116.16 111.29 115.83 118.84
1988 102.76 101.71 107.38 113.39 114.91 109.43
1989 156.23 164.44 203.01 225.35 213.07 198.87
1990 239.32 220.22 224.73 207.99 228.23 214.12
1991 297.98 298.89 329.14 345.18 346.51 331.47
1992 339.62 334.12 329.71 343.24 352.99 323.72
1993 313.17 299.71 304.80 305.12 290.78 270.66
1994 199.89 198.51 204.62 214.06 226.86 227.09
1995 223.39 225.56 224.49 249.52 244.31 234.14
1996 266.56 289.09 312.65 349.47

Additionally, the level of the Applicable Index as of the close of business on
the [date of pricing] was [ ]. The following is a graph of such
simulated and actual month-end values:

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<PAGE> 14

LEVELS OF JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX,
1986-1996

[GRAPH OMITTED]

Source: Morgan Guaranty

Using the simulated month-end levels noted above as hypothetical Applicable
Index Settlement Values, the hypothetical Redemption Value of a ComPS as if
maturing at the end of each of the past ten years for a ComPS priced on December
31, 1986, with a hypothetical Face Amount of $40.00 and an Applicable Index
Commencement Value of 111.66 would be as follows:

<TABLE>
<CAPTION>
HYPOTHETICAL APPLICABLE INDEX
YEAR SETTLEMENT VALUE HYPOTHETICAL REDEMPTION VALUE
------------------------ ----------------------------- -----------------------------
<S> <C> <C>
1986.................... 111.66 $ 40.00
1987.................... 99.56 $ 35.66
1988.................... 153.42 $ 54.96
1989.................... 233.47 $ 83.63
1990.................... 341.89 $122.47
1991.................... 332.48 $119.10
1992.................... 305.13 $109.30
1993.................... 188.58 $ 67.55
1994.................... 208.81 $ 74.80
1995.................... 283.92 $101.70
</TABLE>

The preceding simulated and actual Applicable Index values have been included
for informational purposes only. Such values may not be indicative of the future
performance of the Applicable Index.

VOLATILITY OF GASOLINE AND GASOLINE FUTURES PRICES

Gasoline prices are highly correlated with crude oil prices and are subject to
similar, and often greater, volatility. Like crude, they are affected not only
by economic factors, but also by weather, political events, labor-related
issues, government intervention and supply disruptions such as refinery and
pipeline outages. Also, since gasoline is traded internationally, these factors
extend beyond the domestic market.

Gasoline prices and volatility are also highly seasonal. Gasoline prices
typically increase in spring and summer when demand rises toward its seasonal
peak. Since gasoline is by far the largest component of total U.S. oil demand,
refinery outages pose especially important risks to prices during this period.

Gasoline prices are also subject to regulatory risks. The introduction, mandated
by the Environmental Protection Agency, of reformulated gasoline ("RFG") in
early 1995, for example, contributed to price

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<PAGE> 15

volatility as demand was segregated regionally. Shifts in state-level adherence
to the RFG program, moreover, led to considerable changes in demand between the
new grade and conventional grades. This caused a temporary drop in liquidity for
the Benchmark Gasoline Contract, which is for delivery of RFG-grade gasoline.

Petroleum product prices differ from crude oil prices in one more important
respect. Since the early 1970's, crude oil prices have been well above the
average cost of production and the marginal suppliers have generally been the
large, low-cost producers of the Middle East. By contrast, petroleum product
prices are often close to--and in some cases, below--the average cost of
refinery production and the marginal suppliers are more typically the high-cost
refinery units. Thus, while relatively low crude prices rarely lead to a
corresponding drop in supply, low petroleum product prices often do lead to a
drop in refinery output. Such adjustments can limit price fluctuations in some
instances.

EFFECT OF ADVERSE CHANGES IN COMMODITY PRICES

The Applicable Index is designed to replicate to the extent provided herein the
cumulative return of holding a continuous investment in the Benchmark Gasoline
Contracts over time. In the event of sudden disruptions in the supplies of
unleaded gasoline, such as those caused by war, accidents, weather, or acts of
terrorism, prices of Benchmark Gasoline Contracts, and, consequently, the value
of the Applicable Index, could become extremely volatile and unpredictable.
Also, sudden and dramatic declines in Benchmark Gasoline Contract prices as may
occur, for example, upon a cessation of hostilities that may exist in countries
producing crude oil or unleaded gasoline or upon the discovery of significant
additional sources or reserves of crude oil or unleaded gasoline, the
introduction of new or previously withheld supplies into the market or the
introduction of substitute products or commodities, could have a significant
adverse effect on the value of the Applicable Index and on the value of the
ComPS. In addition, the price of unleaded gasoline has on occasion been subject
to very rapid short-term changes due to speculative activities which, if such
activities result in a price decrease, may cause the value of the ComPS to
decrease. See "Description of the ComPS--Calculation of Redemption Value".

SUSPENSION OR MATERIAL DISRUPTION OF FUTURES OR COMMODITIES TRADING; TEMPORARY
DISTORTIONS

The futures markets and the markets for gasoline are subject to temporary
distortions or other disruptions due to conditions of illiquidity in the
markets, the participation of speculators, government regulation and
intervention and the other factors referred to in the preceding paragraph. In
addition, U.S. futures exchanges (including the NYMEX) and certain foreign
exchanges on which replacement Benchmark Gasoline Contracts, if any, may trade
(which exchanges must have information-sharing arrangements with the Securities
and Exchange Commission and be regulated exchanges located in the United States,
Canada, the United Kingdom, Japan, Singapore or a country that at such time is a
member of the Organization of Economic Cooperation and Development) have
regulations which limit the amount of fluctuation of futures contract prices
which may occur during a single trading day. Such limits are generally referred
to as "daily price fluctuation limits" or, more commonly, "daily limits", and
the maximum or minimum price of a contract on any given day, as a result of the
effect of such limits, is referred to as a "limit price", as discussed below. In
a particular futures contract, once the limit price has been reached in such a
contract, no trades may be made on that day at a price above or below the limit
price, as the case may be. Limit prices may have the effect of precluding
trading in a particular contract for all or a portion of a trading day or
forcing the liquidation of contracts at disadvantageous times or prices. Such
circumstances, particularly if they occur during the Rollover Period for the
Applicable Index or during an Early Determination Period or the Determination
Period (each as defined herein) for the Applicable Index, could adversely affect
the value of the Applicable Index and/or could constitute a Market Disruption
Event (as defined below) and, therefore, could adversely affect the value of the
ComPS.

Depending on the period of time over which a Market Disruption Event continues,
the correlation between changes in the value of the Applicable Index and changes
in the general level of prices of unleaded gasoline may be adversely affected.
Under such circumstances, the value of the Applicable Index, and the value of
the ComPS, may be adversely affected.

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<PAGE> 16

Additionally, because application has been made to list the ComPS on the NYSE
and, if listed, the ComPS will trade as equity securities on the NYSE, trading
in the ComPS may be subject to interruption or delay due to extreme volatility
in the trading prices of equity securities generally on the NYSE (the so-called
"circuit breaker" rules), notwithstanding the specific price movements of the
ComPS.

MARKET DISRUPTION EVENTS

In the event of a Market Disruption Event during the Determination Period, the
Early Redemption Value or Redemption Value, as applicable, payable in respect of
the ComPS will be calculated using the Applicable Index on the day or days on
which open-outcry trading on either the NYMEX or the London Metal Exchange (the
"LME") is scheduled to occur or occurs (each, a "Trading Day") immediately
following the termination of such Market Disruption Event. However, if such
Market Disruption Event remains in effect for longer than 20 consecutive Trading
Days and, in the reasonable judgment of Morgan Guaranty, such Market Disruption
Event is likely to remain in effect, then the Applicable Index Settlement Value
for each Trading Day subject to a Market Disruption Event may be determined in
good faith by Morgan Guaranty based on alternative pricing sources reasonably
believed by it to be indicative of then-prevailing prices for notional
transactions in futures contracts or commodities equal in size to the implied
number of Benchmark Gasoline Contracts underlying the aggregate Applicable Index
Settlement Value, although Morgan Guaranty has no obligation to do so, and such
value will be utilized in the calculation of the Redemption Value for such days.
Because Morgan Guaranty's obligations under the Related Note will also be based
on the Applicable Index Settlement Value, Morgan Guaranty may have an adverse
interest with respect to such determination.

HISTORICAL CORRELATIONS MAY NOT PREVAIL IN THE FUTURE

Although historically the JPMCI Unleaded Gasoline Excess Return Index and the
spot prices of unleaded gasoline have shown some positive correlation with
inflation and some negative correlation with stock and bond returns (in each
case in the United States), there can be no assurance that such correlations
will prevail in the future. As a result, investors who invest in ComPS in
reliance on these correlations should individually assess the likelihood of such
correlations continuing.

CHANGES IN LAWS OR REGULATIONS OR INTERPRETATIONS THEREOF

Prices of commodities and commodity futures contracts may be adversely affected
by the promulgation of new laws or regulations or by the reinterpretation of
existing laws or regulations (including, without limitation, those relating to
taxes and duties on commodities or commodity components) by one or more
governments, governmental agencies or instrumentalities, courts or other
official bodies. Any such event could adversely affect the value of the
Applicable Index and, correspondingly, could adversely affect the value of the
ComPS. Additionally, the occurrence of certain events increasing the cost of
holding or trading the Benchmark Gasoline Contracts and the inability to find a
suitable replacement Benchmark Gasoline Contract could lead Morgan Guaranty to
cause the Applicable Index Settlement Value to be fixed, in which event the
Redemption Value of the ComPS would not vary through Stated Maturity.

EXTENSION OF SETTLEMENT DATE OR STATED MATURITY

If any Benchmark Gasoline Contract were to be affected by a Market Disruption
Event during any Early Determination Period or the Determination Period, the
applicable Settlement Date would be postponed until that later of (i) the
applicable Early Redemption Date or Stated Maturity and (ii) the fifth Business
Day after the last day of the applicable Early Determination Period or the
Determination Period. Such delay could be of indefinite duration, during which
time a holder of ComPS will not receive the Early Redemption Value or Redemption
Value thereof, as applicable. In the event that payment of the Redemption Value
is postponed beyond the Stated Maturity, interest will accrue on the Face Amount
in the manner described under the caption "Description of the ComPS--Calculation
of Redemption Value", but no dividends will be payable after Stated Maturity. In
the event payment of the Early Redemption Value is postponed beyond the
applicable Early Redemption Date, no dividends will be payable, and no interest
will accrue and be payable, with respect to ComPS redeemed on such Early
Redemption Date.

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<PAGE> 17

DISCONTINUANCE OF PUBLISHING OF THE JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX

In the event that Morgan Guaranty discontinues publication of the JPM Indices or
the relevant sub-index, the Calculation Agent will continue to calculate in good
faith the Applicable Index during the remaining term of the ComPS, based on the
methodology described in the accompanying Prospectus under "Description of the
ComPS". However, such good-faith calculation may result in a ComPS Redemption
Price or ComPS Early Redemption Price for the ComPS which is less than the ComPS
Redemption Price or ComPS Early Redemption Price, as applicable, for such ComPS
had it been calculated on the basis of the JPM Indices or the relevant
sub-index.

POTENTIAL MODIFICATIONS TO THE JPM INDICES AND/OR THE APPLICABLE INDEX

Morgan Guaranty reserves the right at its discretion to make any modifications
to the JPM Indices based on the recommendations of the JPMCI Policy Committee.
As described under "Description of the ComPS--Early Determination of Applicable
Index Settlement Value and Redemption Value", if any Benchmark Gasoline Contract
becomes less liquid or representative, the JPMCI Policy Committee could
recommend a replacement Benchmark Gasoline Contract. Such a change from a less
liquid to a more liquid contract may result in a lower Early Redemption Value or
Redemption Value for the ComPS than would have been the case if the less liquid
contract had remained the benchmark.

If at any time no replacement contracts can be found to serve as a Benchmark
Gasoline Contract, the Applicable Index Settlement Value of the ComPS will be
determined at such time as described under "Description of the ComPS--Early
Determination of Applicable Index Settlement Value and Redemption Value". Such
an early determination of the Applicable Index Settlement Value may result in
the holders of the ComPS receiving an amount that is less than what indicative
commodity and futures prices prevailing on any Early Redemption Date or at the
Stated Maturity would otherwise imply. Because Morgan Guaranty will be the
Calculation Agent, such early determination may raise adverse interests.

Additionally, if at any time any Benchmark Gasoline Contract, or the trading
thereof, becomes subject to any increased cost or additional tax, Morgan
Guaranty reserves the right to designate a replacement Benchmark Gasoline
Contract or, if no such contract is designated, to cause, at its option, the
Applicable Index Settlement Value of the ComPS to be determined at such time as
described under "Description of the ComPS--Early Determination of Applicable
Index Settlement Value and Redemption Value". Because Morgan Guaranty will, at
the time any Benchmark Gasoline Contract becomes subject to such increased cost
or additional tax, in its discretion decide whether or not to cause an early
determination of the Applicable Index Settlement Value of the ComPS, exercise of
such option may raise an adverse interest. Such a change in contracts due to the
imposition of any increased cost or additional tax may result in a lower
Redemption Value for the ComPS than would have been the case if the contract on
which such increased cost or additional tax were imposed had remained a
Benchmark Gasoline Contract.

Any early determination of the Applicable Index Settlement Value may cause the
market price of ComPS in any existing secondary market to decline.

EARLY REDEMPTION

The ComPS may be redeemed prior to their Stated Maturity upon the occurrence of
a Special Event or redeemed at the option of the holders thereof on each
Optional Redemption Date. In the case of a redemption upon the occurrence of a
Special Event, the Early Redemption Value paid by the Company at such time may
be significantly less than the Redemption Value that would otherwise have been
payable had the ComPS not been redeemed prior to their Stated Maturity and the
occurrence of such Special Event may cause the market price of ComPS in any
existing secondary market to decline. In the case of an optional redemption by
holders, it is likely, under usually-prevailing market conditions, that the
Early Redemption Value paid by the Company will be less than the amount such
holder could have realized by selling such ComPS in an existing secondary
market, if any, ratably during the Early Determination Period. Delay in payment
of the ComPS Early Redemption Price (as a result of a Market Disruption Event or
a delay in the provision by DTC to the Company of the Applicable Notice (as
defined below)) will not entitle

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<PAGE> 18

holders of ComPS to additional dividends on the ComPS or the accrual of any
interest on such ComPS Early Redemption Price.

CERTAIN CONSIDERATIONS REGARDING HEDGING

Prospective purchasers of the ComPS who intend to hedge against the risks
associated with the market for unleaded gasoline should recognize the
complexities of utilizing the ComPS in this manner. The formula under which the
Principal Amount is calculated is not guaranteed to produce distributions to
holders having readily definable relationships with other unleaded gasoline
market instruments and products. As described below, because the Applicable
Index is an Excess Return Index, the value of the ComPS will reflect not only
the price of the Benchmark Gasoline Contracts but also the state of the futures
market for Benchmark Gasoline Contracts (i.e., whether such market is in
"backwardation" or "contango" over time, as discussed above). Also, under
certain circumstances, amounts payable on the ComPS may be based on the good
faith determination of Morgan Guaranty and not on the Applicable Index. For
these reasons, investors should be cautious in using the ComPS in a hedging
program. The risks associated with utilizing the ComPS in a hedging program may
be magnified in periods of substantial unleaded gasoline price volatility, since
properly correlating the ComPS either as a hedge of other assets or correlating
the ComPS to a hedge thereof may become more difficult. Also, investing in ComPS
should not be considered a complete investment program.

UNCERTAIN UNITED STATES FEDERAL INCOME TAX CHARACTERIZATION OF COMPS

As discussed below, assuming that the Company will be classified for U.S.
Federal income tax purposes as a partnership, each holder of ComPS will be
required to include in its gross income its distributive share of any item of
income or gain realized by the Company. Morgan Guaranty and the Company
initially intend to treat the Related Note as a contingent debt instrument, but
in light of the absence of direct authority on the proper characterization of
the Related Note and the proper consequences of contingent debt instruments, the
Internal Revenue Service may apply, and may require Morgan Guaranty, the Company
and/or holders of ComPS to apply, a different characterization or consequences.
Such alternate characterization or consequences may be materially less favorable
for holders of ComPS for United States federal income tax purposes than the
characterization and consequences to be applied initially by Morgan Guaranty and
the Company. See "United States Federal Income Taxation" below.

J.P. MORGAN & CO. INCORPORATED

J.P. Morgan, whose origins date to a merchant banking firm founded in London in
1838, is the holding company for a group of global subsidiaries that provide a
wide range of financial services to corporations, governments, financial
institutions, institutional investors, professional firms, privately held
companies, nonprofit organizations, and financially sophisticated individuals.
J.P. Morgan's activities are summarized in the accompanying Prospectus.

J.P. MORGAN INDEX FUNDING COMPANY, LLC

J.P. Morgan Index Funding Company, LLC, is a Delaware limited liability company
formed pursuant to (i) the filing of a certificate of formation with the
Secretary of State of the State of Delaware on November 21, 1995 and (ii) the
amended and restated limited liability company agreement, dated May 15, 1996,
and effective as of November 21, 1995 (the "LLC Agreement"), filed as an exhibit
to the Registration Statement relating to this Prospectus Supplement and the
accompanying Prospectus. J.P. Morgan will directly or indirectly acquire all
Common Securities of the Company. The Company exists for the exclusive purposes
of (i) issuing the ComPS and Common Securities, and from time to time issuing
additional series of preferred and common securities, (ii) investing the gross
proceeds of the ComPS and Common Securities in the Related Note, and investing
the proceeds of such additional issuances of

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preferred and common securities in other debt obligations of Morgan Guaranty,
and (iii) engaging in only those other activities necessary or incidental
thereto.

Pursuant to the LLC Agreement, the Common Securities will initially be owned by
J.P. Morgan and by J.P. Morgan Ventures Corporation, a Delaware corporation and
a wholly-owned subsidiary of J.P. Morgan ("JPM Ventures"). J.P. Morgan and JPM
Ventures will be the Managing Members of the Company (as defined in the LLC
Agreement).

The LLC Agreement and the Agreement as to Expenses and Liabilities, dated as of
[ ], 1996, between J. P. Morgan and the Company (the Expense Agreement"),
provide that J.P. Morgan will pay for all debts and obligations (other than with
respect to the ComPS to the extent set forth herein) and all costs and expenses
of the Company, including any taxes and all costs and expenses with respect
thereto, to which the Company may become subject. The Company and J.P. Morgan
have agreed that any person to whom such debts, obligations, costs and expenses
are owed will have the right to enforce J.P. Morgan's obligations in respect of
such debts, obligations, costs and expenses directly against J.P. Morgan without
first proceeding against the Company.

The rights of the holders of the ComPS, including economic rights, rights to
information and voting rights, are set forth in the LLC Agreement. See
"Description of the ComPS".

USE OF PROCEEDS

The Company will invest the proceeds from the sale of the ComPS offered hereby
and the related Common Securities in a Related Note of Morgan Guaranty, the
proceeds of which will be used by Morgan Guaranty for general corporate purposes
and for hedging its obligations under the Related Note.

At the time of the pricing of the ComPS, Morgan Guaranty hedged its anticipated
exposure under the Related Note and, subject to market conditions, Morgan
Guaranty expects that it will continue to hedge its exposure under the Related
Note from time to time following this offering of ComPS by taking long or short
positions in the Benchmark Gasoline Contracts or in listed or over-the-counter
options contracts in, or other derivative or synthetic instruments related to,
several or all of the Benchmark Gasoline Contracts. There can be no assurance
that Morgan Guaranty's initial hedging did not, and that its continued hedging
will not, affect the price of the Benchmark Gasoline Contracts (and, as a
result, the Initial Price and the subsequent value of the ComPS). In addition,
J.P. Morgan and its affiliates may from time to time purchase or otherwise
acquire a long or short position in the ComPS and may, in their sole discretion,
hold or resell such ComPS. Morgan Guaranty may also take positions in other
types of appropriate financial instruments that may become available in the
future. To the extent Morgan Guaranty has a long hedge position in several or
all of the Benchmark Gasoline Contracts or options contracts in, or other
derivative or synthetic instruments related to, several or all of the Benchmark
Gasoline Contracts, Morgan Guaranty may liquidate a portion or all of its
holdings, as applicable, at or about the time of any Early Redemption Date or
the Stated Maturity of the Related Note (which correspond to the Early
Redemption Dates and the Stated Maturity of the ComPS). Depending on, among
other things, future market conditions, the aggregate amount and the composition
of those positions are likely to vary over time. Profits or losses from any such
position cannot be ascertained until that position is closed out and any
offsetting position or positions are taken into account. However, none of the
contracts or securities acquired in connection with any hedging activity will be
held for the benefit of holders of ComPS.

DESCRIPTION OF THE COMPS

The ComPS will be issued pursuant to the LLC Agreement. The following summary of
the principal terms and provisions of the ComPS does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Prospectus
of which this Prospectus Supplement constitutes a part and the LLC Agreement, a
copy of which is filed as an exhibit to the Registration Statement relating to
this Prospectus Supplement and the accompanying Prospectus.

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GENERAL

The Principal Amount of each of the ComPS, which is initially equal to the Face
Amount, will vary over the life of the ComPS in relation to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"). As described herein, the
Applicable Index will change based on the daily percentage change in value of
the Benchmark Gasoline Contracts. The Principal Amount repayable on any Early
Redemption Date, upon the occurrence of any Special Event Redemption or at
Stated Maturity will be determined, pursuant to the terms described herein
(including, without limitation, the averaging of the Applicable Index over the
Early Determination Period or the Determination Period, as applicable, and the
present-valuing of the dividends and Principal Amount in connection with
redemptions prior to Stated Maturity), by comparing the level of the JPMCI
Unleaded Gasoline Excess Return Index set on the date of issuance of the ComPS
with the level determined pursuant to the terms hereof for any such date of
redemption.

The LLC Agreement authorizes the Company to issue Preferred and Common
Securities. All of the Common Securities will be owned, directly or indirectly,
by J.P. Morgan. Payments of interest on and redemptions of principal of the
ComPS and the related Common Securities will be made on a pro rata basis among
the ComPS and the related Common Securities, except that upon the occurrence of
a liquidation, termination or winding up of the Company, the rights of the
holders of the Common Securities to receive payment of periodic dividends and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of all Preferred Securities of the Company. The Guarantee
does not permit the incurrence of any indebtedness by the Company (other than
any preferred securities thereof) while any Preferred Securities are
outstanding. The payment of distributions out of money held by the Company, and
payments upon liquidation, termination or winding-up of the Company, are
guaranteed by J.P. Morgan to the extent described under "Description of the
Guarantee". The Guarantee does not cover payment of distributions when Morgan
Guaranty has not made payment of principal or interest, as applicable, on the
Related Note. In such event, the remedy of a holder of ComPS is to direct the
Company to enforce its rights under the Related Note and the Related Note
Guarantee with respect to such Related Note. See "--Voting Rights" and "Effect
of Obligations Under the Guarantee, the Related Note Guarantee and the Related
Note".

DIVIDENDS

Dividends on the ComPS will be fixed at a rate per annum of [ ]% of the Face
Amount of $[40] per Preferred Security. The amount of dividends payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months
(and actual days elapsed, in the case of periods of less than a month) and will
include the first day but exclude the last day of such period.

Dividends on the ComPS will be cumulative, will accrue from and including the
Issue Date and will be payable monthly in arrears on the last calendar day of
each month, commencing [ ], 1996, when, as and if available for payment.

Dividends on the ComPS will be payable to the holders thereof as they appear on
the books and records of the Company on the relevant record dates, which, as
long as the ComPS remain in book-entry only form, will be one Business Day prior
to the relevant payment dates. Subject to any applicable laws and regulations
and the provisions of the LLC Agreement, each such payment will be made as
described under "--Book-Entry Only Issuance--The Depository Trust Company".

In the event that the ComPS do not continue to remain in book-entry only form,
the Company shall have the right to select relevant record dates, which shall be
at least one Business Day prior to the relevant payment dates. In the event that
any date on which dividends are to be made on the ComPS is not a Business Day,
then payment of the dividends payable on such date will be made on the next
succeeding Business Day with the same force and effect as if made on such date
and no interest on such distributions will accrue from and after such date,
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. A "Business Day" shall
mean any day other than Saturday,

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Sunday or any other day on which banking institutions in The City of New York,
New York are permitted or required by any applicable law to close.

The payment of dividends on the ComPS out of moneys held by the Company is
guaranteed by J.P. Morgan on a subordinated basis as and to the extent set forth
under "Description of the Guarantee". The Guarantee is effective from the time
of issuance of the ComPS, but the Guarantee covers dividends and other payments
on the ComPS only if and to the extent that Morgan Guaranty has made a payment
to the Company of interest or principal on the Related Note, as the case may be.

REDEMPTION AT STATED MATURITY

Unless previously redeemed pursuant to the optional or special redemption
provisions and subject to extension in the case of a Market Disruption Event (as
defined below), each of the outstanding ComPS will be redeemed by the Company,
in cash, on the Stated Maturity, at the ComPS Redemption Price. The ComPS
Redemption Price is the sum of (a) the Redemption Value per Preferred Security
plus (b) accrued but unpaid dividends on such ComPS to but excluding the date of
redemption.

CALCULATION OF REDEMPTION VALUE

The Principal Amount of each Preferred Security is indexed to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"), which is calculated based
on the change in value of certain unleaded gasoline futures contracts included
from time to time in the JPM Indices (such contracts, from time to time, the
"Benchmark Gasoline Contracts"). On the date of this Prospectus Supplement, the
Benchmark Gasoline Contract is the NYMEX New York Harbor unleaded gasoline
futures contract. Subject to the more complete definitions and formulae
contained in the accompanying Prospectus, the Principal Amount of each Preferred
Security payable at Stated Maturity, subject to extension in the case of a
Market Disruption Event (the "Redemption Value"), shall be determined by
multiplying the Face Amount of each Preferred Security by a fraction, the
numerator of which is the Applicable Index Settlement Value and the denominator
of which is the Applicable Index Commencement Value. For purposes of this
Prospectus Supplement, the "Applicable Index Settlement Value" means the
arithmetic average of the daily values of the Applicable Index for each day of
the Determination Period (the period of ten consecutive Trading Days on which no
Market Disruption Event occurs commencing immediately following the twentieth
scheduled Business Day prior to Stated Maturity), and the "Applicable Index
Commencement Value" means [ ].

For a complete description and definition of an Excess Return Index, see
"Description of ComPS--Calculation of Redemption Value" and "The JPM
Indices--Excess Return Methodology" in the accompanying Prospectus. As defined
in the accompanying Prospectus under "Description of ComPS--Market Disruption
Events", a Market Disruption Event, as determined by Morgan Guaranty, is the
occurrence of one or more of the following on any Trading Day with respect to
any Benchmark Gasoline Contract underlying the Applicable Index, or an exchange
on which any Benchmark Gasoline Contract is traded (a "Relevant Exchange"): (a)
a day on which the fluctuation of the price of any Benchmark Gasoline Contract
underlying the Applicable Index is materially limited by the rules of a Relevant
Exchange setting the maximum or minimum price for such day (a "Limit Price");
(b) a day on which the official settlement price on the Relevant Exchange (the
"Settlement Price") is the Limit Price; (c) the failure of a Relevant Exchange
to determine, announce or publish the Settlement Price with respect to a
Benchmark Gasoline Contract underlying the Applicable Index; (d) the material
suspension of trading in any Benchmark Gasoline Contract underlying the
Applicable Index on a Relevant Exchange; (e) the failure of trading to commence,
or the permanent discontinuation of trading, in any Benchmark Gasoline Contract
underlying the Applicable Index on any Relevant Exchange and (f) the imposition
of any material limitation on trading in any Benchmark Gasoline Contract
underlying the Applicable Index on any Relevant Exchange.

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EARLY DETERMINATION OF APPLICABLE INDEX SETTLEMENT VALUE AND REDEMPTION VALUE

Morgan Guaranty reserves the right at its discretion to make any modifications
to the JPM Indices based on the recommendations of the JPMCI Policy Committee.
As discussed in the accompanying Prospectus, the JPMCI Policy Committee advises
Morgan Guaranty with respect to, among other things, the composition of the JPM
Indices, the price sources upon which the JPM Indices are based (i.e., the
underlying futures contracts, including the Benchmark Gasoline Contracts), and
the weightings and calculation methodology of the JPM Indices, with a view
toward maintaining the JPM Indices as appropriate commodity investment
benchmarks that serve as a measure of performance of the commodity markets. The
inclusion requirements for the futures contracts underlying the JPM Indices
require that such futures contracts be sufficiently liquid and representative
price sources. It is possible, however, that any such underlying contract could
become less liquid or representative and, as a result, the JPMCI Policy
Committee may recommend a modification in the calculation methodology or the
contracts underlying the JPM Indices and, therefore, the Applicable Index. Any
such replacement contract (i) will be required to satisfy the JPMCI Inclusion
Criteria, as described in the accompanying Prospectus under the caption "The
JPMCI Policy Committee", (ii) must be traded in a market or with a
self-regulator which has established either (a) a comprehensive information
sharing agreement with the exchange, if any, on which the ComPS are then traded
or (b) suitable alternative arrangements with the Commission and (iii) will be
with respect to the same general commodity type as the contract being replaced
(e.g., assuming the JPMCI Policy Committee recommends a modification and
assuming the requirements of clauses (i) and (ii) are satisfied, a NYMEX crude
oil futures contract may be replaced by an International Petroleum Exchange
crude oil futures contract). Under no circumstances will the general commodity
type underlying the futures contract be changed (e.g., a gasoline futures
contract may not be replaced by a gold futures contract).

If at any time no contract satisfying both clauses (i) and (ii) of the previous
paragraph can be found to serve as a Benchmark Gasoline Contract, the Applicable
Index Settlement Value of the ComPS will be determined at such time (in
accordance with the methodology set forth above under the caption "Description
of the ComPS--Calculation of Redemption Value") as if the last date of the
inclusion of the final Benchmark Gasoline Contract in the JPM Indices were the
Stated Maturity. However, the ComPS will not be redeemed on such date; rather,
the ComPS will remain outstanding to Stated Maturity, will continue to be
entitled to dividends and will be redeemed at Stated Maturity for a Redemption
Value calculated using the Applicable Index Settlement Value determined at such
time as no contract satisfying clauses (i) and (ii) of the previous paragraph
was able to be found. Such ComPS will also be subject to redemption upon the
occurrence of a Special Event and optional redemption on each Optional
Redemption Date (treating the Applicable Index Settlement Value determined
pursuant to the terms of this paragraph as the Applicable Index Early Settlement
Value for any Early Redemption Date).

Additionally, if at any time any Benchmark Gasoline Contract, or the trading
thereof, becomes subject to any increased cost or additional tax, whether
imposed by any exchange or otherwise, Morgan Guaranty reserves the right to (x)
designate a replacement Benchmark Gasoline Contract, satisfying both clauses (i)
and (ii) of the second preceding paragraph, which contract is subject to an
amount of cost or tax less than or equal to such increased amount or (y) if no
contract satisfying clause (x) of this paragraph is designated by Morgan
Guaranty, to cause, at its option, the Applicable Index Settlement Value of the
ComPS to be determined at such time (in accordance with the methodology set
forth above) as if the date of such increase in cost or tax (or, in Morgan
Guaranty's discretion, the last calendar day of the month in which the
determination of the Applicable Index Settlement Value is completed) were the
Stated Maturity. However, the ComPS will not be redeemed at such time; rather,
the ComPS will remain outstanding to Stated Maturity, will continue to be
entitled to dividends and will be redeemed at Stated Maturity for a Redemption
Value calculated using the Applicable Index Settlement Value determined pursuant
to the terms of this paragraph. Such ComPS will also be subject to redemption
upon the occurrence of a Special Event and optional redemption on each Optional
Redemption Date (treating the Applicable Index Settlement Value determined
pursuant to the terms of this paragraph as the Applicable Index Early Settlement
Value for any Early Redemption Date) and will be redeemed at Stated Maturity

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for a Redemption Value calculated using the Applicable Index Settlement Value
determined pursuant to the terms of this paragraph. See "Risk Factors--Potential
Modification to the JPM Indices and/or the Applicable Index".

OPTIONAL REDEMPTION

The ComPS will be subject to redemption prior to their Stated Maturity at the
election of the holders thereof on each [ ] prior to the Stated Maturity,
beginning [ ], 1997 (each, an "Optional Redemption Date"). In order to
effect an Optional Redemption, any such redeeming holder will be required to
provide notice of the number of ComPS shares to be redeemed on such Early
Redemption Date to a Participant or Direct Participant in DTC, and such
Participant or Direct Participant must communicate such notice to DTC no earlier
than 32 scheduled Business Days prior to but no later than 22 scheduled Business
Days prior to the applicable Early Redemption Date. The DTC will then provide
notice to the Company or its Transfer Agent of the total number of ComPS shares
to be redeemed on the Optional Redemption Date (the "Applicable Notice"). Each
Applicable Notice will be provided by DTC to the Company by 12:30 p.m. New York
time on the Business Day next succeeding the last day of the applicable notice
period. Each Applicable Notice will be irrevocable upon receipt by the Company
or its Transfer Agent, and may not be withdrawn or modified after such receipt.
Additionally, the Early Determination Period will not commence until the Company
has received the Applicable Notice and the applicable Optional Redemption Date
will be subject to extension in the case of a Market Disruption Event. The
redeeming holders will be entitled to the ComPS Early Redemption Price for each
Preferred Security redeemed, which is equal to (a) the Early Redemption Value
for such ComPS plus (b) accrued and unpaid dividends thereon to but excluding
the scheduled Optional Redemption Date. The Early Redemption Value of such ComPS
shall be determined in accordance with the formula specified in the Prospectus;
provided that, for the purposes of this Prospectus Supplement, "unused costs"
shall equal [ ]. See "--Book Entry Issuance--The Depository Trust Company"
herein and "Description of ComPS--Early Redemption Upon the Occurrence of a
Special Event or at the Election of the Holders of the ComPS" in the Prospectus
of which this Prospectus Supplement constitutes a part.

SPECIAL EVENT REDEMPTION

The ComPS will be subject to redemption by the Company prior to Stated Maturity,
at its option, upon the occurrence of a Tax Event or an Investment Company Event
(each, a "Special Event"), as discussed herein.

"Tax Event" means that the Company shall have obtained an opinion of nationally
recognized independent tax counsel experienced in such matters (a "Tax Opinion")
to the effect that, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application of
any such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that at such time or within
90 days of the date thereof (i) the Company is or would be subject to United
States Federal income tax with respect to income accrued or received on the
Related Note, (ii) the interest payable on the Related Note is not, or would not
be, deductible by Morgan Guaranty for United States Federal income tax purposes,
(iii) the contingent principal in excess of the Face Amount, if any, payable on
the Related Note is not, or would not be, deductible by Morgan Guaranty for
United States Federal income tax purposes or (iv) the Company is or would be
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges.

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"Investment Company Event" means that the Company shall have received an opinion
of a nationally recognized independent counsel experienced in such matters to
the effect that, as a result of the occurrence of a change in law or regulation,
a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority or the
expiration or revocation of any exemption from any provisions of the Investment
Company Act of 1940, as amended (the "1940 Act"), obtained by the Company (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Company is or will be considered an "investment company" that is required to be
registered as such under the 1940 Act, which Change in 1940 Act Law becomes
effective on or after the date of this Prospectus Supplement.

If at any time a Tax Event or an Investment Company Event shall occur and be
continuing, J.P. Morgan shall elect to either:

(a) direct Morgan Guaranty to redeem the Related Note in whole or in
part, upon not less than 22 scheduled Business Days' notice to DTC, within
90 days following the occurrence of such Special Event, in which case the
Company shall redeem in cash on a pro rata basis ComPS and related Common
Securities having an aggregate Principal Amount equal to the Principal
Amount of the Related Note so redeemed, at a price per Preferred Security
of the Early Redemption Value, plus an amount equal to all accrued and
unpaid dividends on such ComPS to but excluding such Early Redemption Date;
provided, that Morgan Guaranty shall only be entitled to redeem the Related
Note in part if such partial redemption is sufficient to cause such Special
Event to cease; or

(b) in the case of a Tax Event, allow the Related Note and the ComPS to
remain outstanding and indemnify the Company for all taxes payable by it as
a result of such Tax Event (if any);

provided that, if at the time there is available to the Company the opportunity
to eliminate, within such 90-day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, that has no adverse effect on the
Company, J.P. Morgan, Morgan Guaranty or the holders of ComPS, the Company will
pursue such measure in lieu of redemption; provided further that Morgan Guaranty
shall have no right to redeem the Related Note and J.P. Morgan shall have no
right to direct the Company to redeem the ComPS while the Company is pursuing
any such ministerial action or reasonable measure unless the Special Event shall
not have been so eliminated by the 85th day following the occurrence thereof, in
which case J.P. Morgan shall be permitted to direct Morgan Guaranty to provide
notice to the Company of the redemption of the Related Note.

Under current United States Federal income tax law, upon the occurrence of a
Special Event, a redemption of ComPS, whether or not upon dissolution of the
Company, would be a taxable event to such holders. See "United States Federal
Income Taxation".

REDEMPTION PROCEDURES

In the case of a redemption by a holder of ComPS on an Optional Redemption Date,
any such redeeming holder will be required to provide notice of the number of
ComPS shares to be redeemed on such Optional Redemption Date to a Participant or
Direct Participant in DTC, and such Participant or Direct Participant must
communicate such notice to DTC no earlier than 32 scheduled Business Days prior
to but no later than 22 scheduled Business Days prior to the applicable Optional
Redemption Date. Following receipt by DTC of such notice, DTC will assign a new
CUSIP number to ComPS with respect to which such notice has been given, and such
ComPS will no longer be usable for settling trades with other DTC book-entry
securities.

In the case of a redemption of ComPS upon the occurrence of a Special Event, the
Company will provide notice of such redemption to the Transfer Agent and to DTC
on a date not less than 22 scheduled Business Days prior to such Early
Redemption Date stating, among other things, the date of such redemption.

The related Common Securities will be redeemed on a pro rata basis with the
ComPS except that, in the case of any dissolution or liquidation in which the
assets of the Company are insufficient to repay in full the Principal Amount of
all Preferred Securities then outstanding, all Preferred Securities will be

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redeemed prior to the redemption of any Common Securities. ComPS registered in
the name of and held by DTC (as defined herein) or its nominee will be redeemed
in accordance with DTC's standard procedures. See "--Book-Entry Only
Issuance--The Depository Trust Company".

Payment of the ComPS Redemption Price or the ComPS Early Redemption Price, as
applicable, of the ComPS is conditioned upon delivery or book-entry transfer of
such ComPS (together with necessary endorsements) to the Company at any time
(whether prior to, on or after the relevant Redemption Date) after the required
notice is given (to the extent such notice is required). See "--Book-Entry Only
Issuance--The Depository Trust Company". Payment of the ComPS Redemption Price
or the ComPS Early Redemption Price, as applicable, for such ComPS will be made
by the delivery of cash no later than the applicable Settlement Date with
respect to such ComPS (subject to delay in the case of a Market Disruption
Event) or, if later, the time of delivery or book-entry transfer of such ComPS.
If the Company holds money sufficient to pay the ComPS Redemption Price or the
ComPS Early Redemption Price, as applicable, of the ComPS on the applicable
Settlement Date, then immediately at the close of business on such Settlement
Date, such ComPS will cease to be outstanding and dividends with respect to such
ComPS will cease to accrue, whether or not such ComPS are delivered to the
Company, and all rights of the holder of such ComPS shall terminate and lapse,
other than the right to receive the ComPS Redemption Price or the ComPS Early
Redemption Price, as applicable, upon delivery of the ComPS.

Provided that Morgan Guaranty has paid to the Company the required amount of
cash due upon any redemption or at the maturity of the Related Note, the Company
will irrevocably deposit with DTC no later than the close of business on the
applicable Settlement Date funds sufficient to pay the ComPS Redemption Price or
the ComPS Early Redemption Price, as applicable, payable with respect to ComPS
on such date and will give the Depositary irrevocable instructions and authority
to pay such amount to the holders of ComPS entitled thereto. See "--Book-Entry
Only Issuance--The Depository Trust Company". In the event that any Settlement
Date is not a Business Day, then payment of the ComPS Redemption Price or the
ComPS Early Redemption Price, as applicable, payable on such date will be made
on the next succeeding Business Day with the same force and effect as if made on
such date and no interest on such distributions will accrue from and after such
date, except that, if such Business Day falls in the next calendar year such
payment will be made on the immediately preceding Business Day. In the event
that payment of the ComPS Redemption Price or the ComPS Early Redemption Price,
as applicable, is improperly withheld or refused and not paid by the Company or
by J.P. Morgan pursuant to the Guarantee, dividends on such ComPS will continue
to accrue from the original Redemption Date to the actual date of payment by the
Company to DTC.

The Company may not redeem fewer than all of the outstanding ComPS on any
Redemption Date unless all accrued and unpaid dividends have been or are
concurrently being paid on all ComPS for all monthly dividend periods
terminating on or prior to the applicable Redemption Date. If a partial
redemption as a result of a Special Event Redemption by Morgan Guaranty of a
part or all of the Related Note would result in the delisting of the ComPS by
any national securities exchange (or automated inter-dealer quotation system,
including The Nasdaq Stock Market ("Nasdaq")) on which the ComPS are then
listed, Morgan Guaranty may only redeem the Related Note in whole and, as a
result, the Company may only redeem the ComPS in whole.

Subject to the foregoing and to applicable law (including, without limitation,
United States Federal securities laws), J.P. Morgan or its affiliates may, at
any time and from time to time, purchase outstanding ComPS by tender, in the
open market or by private agreement.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

In the event of any liquidation, dissolution, winding-up or termination of the
Company (each, a "Liquidation Event"), whether voluntary or involuntary, the
holders of ComPS on the date of such Liquidation Event will be entitled to be
paid out of the assets of the Company the Liquidation Distribution. The
"Liquidation Distribution" will be equal to (a) the Early Redemption Value with
respect to such ComPS (treating the date of such distribution as the Early
Redemption Date) plus (b) the amount of

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accrued and unpaid dividends on such ComPS to but excluding the date of payment.
To the extent the assets of the Company are insufficient to repay all amounts
due to holders of all Preferred Securities of the Company, holders of all
Preferred Securities then outstanding (including the ComPS) will be entitled to
a pro rata share of the assets of the Company, based upon the relative Principal
Amounts of all Preferred Securities outstanding. In addition, in the event that
the assets of the Company exceed the amount necessary to pay to all holders of
ComPS the full amount of the Liquidation Distribution, such excess will be paid
to the holders of Common Securities.

Pursuant to the LLC Agreement, the legal existence of the Company shall
terminate on November 21, 2105.

VOTING RIGHTS

Except as described herein and under "--Modification of the LLC Agreement", and
as otherwise required by law and the LLC Agreement, the holders of the ComPS
will have no voting rights.

Pursuant to the provisions of the Guarantee, certain amendments to or
modifications of the Guarantee may only be effected with the approval of a
majority in aggregate Principal Amount at such time of the ComPS and all other
affected Preferred Securities. See "Description of the Guarantee--Modification
of the Guarantee".

Pursuant to the provisions of the Related Note and the LLC Agreement, certain
amendments to or modifications of the Related Note may only be effected with the
approval of a majority in aggregate Principal Amount at such time of the ComPS.
See "Description of the Related Note--Modification of the Related Note".

Notwithstanding that holders of ComPS are entitled to vote or consent under any
of the circumstances described above, any of the ComPS that are owned at such
time by J.P. Morgan or any entity directly or indirectly controlling or
controlled by, or under direct or indirect common control with, J.P. Morgan,
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if such ComPS were not outstanding.

The procedures by which holders of ComPS may exercise their voting rights are
described below under "--Book-Entry Only Issuance--The Depository Trust Company"
and in the LLC Agreement.

MODIFICATION OF THE LLC AGREEMENT

The LLC Agreement may be amended or modified if approved by a written instrument
executed by a majority in interest of the holders of Common Securities; provided
that, if any proposed amendment provides for (i) any action that would adversely
affect the powers, preferences or special rights of the ComPS or (ii) the
dissolution, winding up or termination of the Company other than pursuant to the
terms of the LLC Agreement, then the holders of all affected outstanding
Preferred Securities (or, in the case of an event described in clause (ii), all
Preferred Securities) of the Company voting together as a single class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of holders of not less than a
majority in aggregate Principal Amount of all affected outstanding Preferred
Securities (or, in the case of an event described in clause (ii), all Preferred
Securities) of the Company affected thereby.

The LLC Agreement further provides that it may be amended without the consent of
the holders of the ComPS to (i) cure any ambiguity, (ii) correct or supplement
any provision in the LLC Agreement that may be defective or inconsistent with
any other provision of the LLC Agreement, (iii) add to the covenants,
restrictions or obligations of J.P. Morgan, (iv) conform to changes in, or a
change in interpretation or application of, certain requirements of the 1940 Act
by the Commission and (v) conform to certain requirements of the Code with
respect to the characterization of the Company as a partnership for U.S. Federal
income tax purposes (including, without limitation, an alteration of the
capitalization of the Company or the events causing dissolution of the Company)
upon any such change, which amendment does not adversely affect the rights,
preferences or privileges of the holders of the ComPS.

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LISTING

ACCOUNTING TREATMENT

The financial statements of the Company will be included in the consolidated
financial statements of J.P. Morgan, with the ComPS included on the balance
sheet as "Long-term debt not qualifying as risk-based capital", with a footnote
disclosing (1) that the Company is a wholly-owned subsidiary of J.P. Morgan, (2)
that the sole assets of the Company are the Related Note and other similar
notes, specifying the principal amount, interest rate and maturity of each and
(3) that considered together, the Guarantee and the Related Note Guarantee and
J.P. Morgan's obligations under the LLC Agreement and the Expense Agreement
constitute a full and unconditional guarantee by J.P. Morgan with respect to the
ComPS.

MERGERS, CONSOLIDATIONS OR AMALGAMATIONS

The Company may not consolidate, amalgamate, merge with or into or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other entity, except upon satisfaction of the
conditions set forth in Section 2.8 of the LLC Agreement, which includes in
certain circumstances approval of 2/3 of the outstanding Principal Amount of all
Preferred Securities. In addition, so long as any ComPS are outstanding and are
not held directly or indirectly entirely by J.P. Morgan, the Company may not
voluntarily liquidate, dissolve, wind-up or terminate on or prior to the Stated
Maturity.

BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY

The Depository Trust Company ("DTC") will act as securities depositary for the
ComPS. The ComPS will be issued only as fully-registered securities registered
in the name of Cede & Co. (DTC's nominee). One or more fully-registered global
ComPS certificates, representing the total aggregate number of ComPS, will be
issued and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a Direct Participant either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.

Purchases of ComPS within the DTC system must be made by or through Direct
Participants, which will receive a credit for the ComPS on DTC's records. The
ownership interest of each actual purchaser of each Preferred Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the

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Beneficial Owners purchased ComPS. Transfers of ownership interests in the ComPS
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the ComPS, except in the event that
use of the book-entry system for the ComPS is discontinued.

To facilitate subsequent transfers, all the ComPS deposited by Participants with
DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of ComPS
with DTC and their registration in the name of Cede & Co. effect no change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the ComPS. DTC's records reflect only the identity of the Direct Participants to
whose accounts such ComPS are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants and by Direct and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.

In the case of a Special Event Redemption, redemption notices shall be sent to
Cede & Co. If less than all of the ComPS are being redeemed, DTC will reduce the
amount of the interest of each Direct Participant in such ComPS in accordance
with its procedures. In the case of an Optional Redemption, redemption notices
shall be provided by Beneficial Owners and Participants to DTC in accordance
with its procedures. DTC will then provide the Applicable Notice to the Company
or its Transfer Agent of the number of ComPS to be redeemed on the applicable
Optional Redemption Date. The Applicable Notice will be irrevocable upon receipt
by the Company or its Transfer Agent, and may not be withdrawn or modified after
such receipt.

Although voting with respect to the ComPS is limited, in those cases where a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to ComPS. Under its usual procedures, DTC would mail an Omnibus Proxy to
the Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co. consenting or voting rights to those Direct Participants to whose
accounts the ComPS are credited on the record date (identified in a listing
attached to the Omnibus Proxy). J.P. Morgan and the Company believe that the
arrangements among DTC, Direct and Indirect Participants and Beneficial Owners
will enable the Beneficial Owners to exercise rights equivalent in substance to
the rights that can be directly exercised by a holder of a limited liability
company interest in the Company.

Dividend payments on the ComPS will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name", and such payments will
be the responsibility of such Participant and not of DTC, the Company or J.P.
Morgan, subject to any statutory or regulatory requirements to the contrary that
may be in effect from time to time. Payment of dividends to DTC is the
responsibility of the Company, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as securities depositary with respect
to the ComPS at any time by giving reasonable notice to the Company. Under such
circumstances, in the event that a successor securities depositary is not
obtained, ComPS certificates are required to be printed and delivered.
Additionally, the Company may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the ComPS. In that event, certificates for the ComPS will be printed and
delivered.

The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that J.P. Morgan believes to be reliable, but neither
J.P. Morgan nor the Company takes responsibility for the accuracy thereof.

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GOVERNING LAW

The LLC Agreement and the ComPS will be governed by and interpreted in
accordance with the laws of the State of Delaware.

DESCRIPTION OF THE RELATED NOTE

Set forth below is a summary of the terms of the Related Note in which the
Company will invest the proceeds from the issuance and sale of the ComPS and the
related Common Securities. The following description does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Prospectus of which this Prospectus Supplement is a part and the Related
Note, the form of which is filed as an exhibit to the Registration Statement
relating to this Prospectus Supplement and the accompanying Prospectus. Certain
capitalized terms are used herein as defined in the Related Note.

GENERAL

The Related Note will be issued as an unsecured, unsubordinated obligation of
Morgan Guaranty, limited in initial principal amount to approximately $[ ],
such amount being the sum of the aggregate Initial Public Offering Price shown
on the cover page hereof for the ComPS and the related Common Securities issued
in connection therewith.

The Related Note is not subject to a sinking fund provision. The entire
Principal Amount of the Related Note will mature and become due and payable,
together with any accrued and unpaid interest thereon, if any, on the Stated
Maturity (subject to extension in the case of a Market Disruption Event),
subject to the prior redemption of the Related Note in whole or in part at the
option of the holders of ComPS or in certain circumstances upon the occurrence
of a Special Event. If Morgan Guaranty redeems the Related Note in whole or in
part, the Company must redeem on a pro rata basis ComPS and related Common
Securities having an aggregate Principal Amount equal to the Principal Amount of
the Related Note so redeemed at the ComPS Early Redemption Price. See
"Description of the ComPS--Redemption at Stated Maturity; --Special Event
Redemption".

RELATED NOTE REDEMPTION PRICE

The amount payable under the Related Note by Morgan Guaranty to the Company at
any time shall equal (a) the Principal Amount of the Related Note at such time
plus (b) any accrued but unpaid distributions due to the Company (the "Related
Note Redemption Price"). The Principal Amount of the Related Note at any time
shall equal the aggregate Principal Amount of outstanding ComPS and the related
Common Securities at such time. The timing and amount of payments on the Related
Note mirror the aggregate financial terms of the ComPS.

SUBORDINATION

Morgan Guaranty's obligations under the Related Note are effectively
subordinated to all liabilities (including indebtedness) of its consolidated and
unconsolidated subsidiaries. Moreover, Morgan Guaranty's subsidiaries may incur
indebtedness and other liabilities and have obligations to third parties.
Generally, the claims of such third parties to the assets of Morgan Guaranty's
subsidiaries will be superior to those of Morgan Guaranty as a stockholder, and,
therefore, the Related Note may be deemed to be effectively subordinated to the
claims of such third parties.

Upon any payment or distribution of all or substantially all of the assets of
Morgan Guaranty or in the event of any insolvency, bankruptcy, receivership,
liquidation, dissolution, reorganization or other similar proceeding, whether
voluntary or involuntary, relative to Morgan Guaranty or its creditors, the
holders of all Senior Indebtedness of Morgan Guaranty will be entitled to
receive payment pari passu and pro rata with the Company. However, depositors in
Morgan Guaranty will have a preference over holders of Senior Indebtedness of
Morgan Guaranty upon any such event.

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As used in the Related Note, the term "Senior Indebtedness" means the principal
of, premium, if any, and interest on (a) all indebtedness of Morgan Guaranty for
money borrowed, whether outstanding as of the date hereof or hereafter created,
issued or incurred (other than Morgan Guaranty's obligations to its depositors),
except any indebtedness expressly subordinated to such Senior Indebtedness, and
(b) any deferrals, renewals or extensions of any such Senior Indebtedness. The
Related Note does not limit the amount of Senior Indebtedness which Morgan
Guaranty may incur.

INTEREST

The Related Note shall bear interest at the rate of [ ]% per annum on the Face
Amount from the original date of issuance, payable monthly in arrears on the
last calendar day of each month (each, an "Interest Payment Date"), commencing
[ ], 1996, to the Company, subject to certain exceptions, at the
close of business on the Business Day next preceding the relevant Interest
Payment Date.

The amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. The amount of interest payable for any
period shorter than a full monthly period for which interest is computed will be
computed on the basis of the actual number of days elapsed per 30-day month. In
the event that any date on which interest is payable on the Related Note is not
a Business Day, payment of the interest payable on such date will be made on the
next succeeding Business Day with the same force and effect as if made on such
date and no interest on such distributions will accrue from and after such date,
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.

OPTIONAL REDEMPTION

The Company shall have the right to call for redemption prior to each Optional
Redemption Date a Principal Amount of the Related Note sufficient to allow it to
pay the ComPS Early Redemption Price to any holders of ComPS who exercise their
right to redeem any or all of such holders' ComPS and a pro rata portion of the
related Common Securities. See "Description of the ComPS--Optional Redemption".

SPECIAL EVENT REDEMPTION

Upon the occurrence of a Special Event, Morgan Guaranty will have the right to
elect to, under certain circumstances, (a) redeem the Related Note at the
Related Note Redemption Price or (b) in the case of a Tax Event, allow the
Related Note to remain outstanding and indemnify the Company for any taxes
payable by it as a result of such Tax Event. See "Description of the
ComPS--Special Event Redemption".

EVENTS OF DEFAULT

The Related Note Events of Default are described in "Description of the Related
Notes--Related Note Events of Default" in the Prospectus of which this
Prospectus Supplement constitutes a part. A default or event of default under
any Senior Indebtedness would not constitute a default or event of default under
the Related Note.

MODIFICATION OF THE RELATED NOTE

The Related Note contains provisions permitting Morgan Guaranty and the Company,
with the consent of the holders of not less than a majority in Principal Amount
of the outstanding ComPS, to modify the Related Note, subject to certain
exceptions. See "Description of the Related Notes --Modification of the Related
Notes" in the Prospectus of which this Prospectus Supplement constitutes a part.

CONSOLIDATION, MERGER AND SALE

The Related Note provides that Morgan Guaranty may, without the consent of the
Company or the holders of the ComPS, consolidate or merge with or into, or sell
or transfer all or substantially all of its property or

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assets to, any corporation or association; provided that (i) the corporation (if
other than Morgan Guaranty) or association formed by or resulting from any such
consolidation or merger or which shall have received such property or assets
shall have assumed Morgan Guaranty's obligations under the Related Note and (ii)
immediately after giving effect to such transaction, Morgan Guaranty or such
successor corporation shall not be in default under the terms of the Related
Note.

GOVERNING LAW

The Related Note will be governed by, and construed in accordance with, the laws
of the State of New York.

MISCELLANEOUS

Morgan Guaranty will have the right at all times to assign any of its rights or
obligations under the Related Note to J.P. Morgan or to a direct or indirect
wholly-owned subsidiary of Morgan Guaranty; provided that, in the event of any
such assignment, Morgan Guaranty will remain jointly and severally liable for
all such obligations. Subject to the foregoing, the Related Note will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Related Note is not a deposit or other obligation of
a bank and is not insured by the Federal Deposit Insurance Corporation or any
other federal agency. The obligations of Morgan Guaranty under the Related Note
are pari passu with all present and future Senior Indebtedness of Morgan
Guaranty (as defined herein) and are junior to Morgan Guaranty's obligations to
its depositors in the event of a receivership. In addition, J.P. Morgan's
obligations under the Guarantee and the Related Note Guarantee and Morgan
Guaranty's obligations under the Related Note are effectively subordinated to
all liabilities (including indebtedness) of the consolidated and unconsolidated
subsidiaries of each.

DESCRIPTION OF THE GUARANTEE

Set forth below is a summary of information concerning the Guarantee that will
be delivered by J.P. Morgan for the benefit of the holders of ComPS. The terms
of the Guarantee will be those set forth in the Guarantee Agreement. The
following summary does not purport to be complete and is subject in all respects
to the provisions of, and is qualified in its entirety by reference to, the
Prospectus of which this Prospectus Supplement is a part and the form of
Guarantee, which is filed as an exhibit to the Registration Statement relating
to this Prospectus Supplement and the accompanying Prospectus.

GENERAL

Pursuant to the Guarantee, J.P. Morgan irrevocably and unconditionally agrees,
on a subordinated basis, to pay in full to the holders of the ComPS the
Guarantee Payments (as defined herein) (except to the extent paid by the
Company), as and when due, regardless of any defense, right of set-off or
counterclaim that the Company may have or assert. The following payments with
respect to ComPS issued by the Company (the "Guarantee Payments"), to the extent
not paid by the Company, will be subject to the Guarantee (without duplication):
(i)(A) any accrued and unpaid dividends that are required to be paid on the
ComPS and (B) the ComPS Early Redemption Price or the ComPS Redemption Price, as
applicable, but if and only if to the extent that, in each case, Morgan Guaranty
has made payment of interest or principal on the Related Note, as the case may
be, and (ii) upon a Liquidation Event (other than in connection with the
redemption of all of the ComPS at Stated Maturity or redemption of the Related
Note) the lesser of (A) the Liquidation Distribution to the extent the Company
has funds available therefor and (B) the amount of assets of the Company
remaining available for distribution to holders of the ComPS upon such
Liquidation Event. J.P. Morgan's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by J.P. Morgan to the
holders of ComPS or by causing the Company to pay such amounts to such holders.
The Guarantee will be effective with respect to the ComPS from the time of
issuance of the ComPS to the extent Morgan Guaranty has made payments under the
Related Note. If Morgan Guaranty does not make payments on the Related Note, the
Company may not pay

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distributions on the ComPS issued and may not have funds available therefor. See
"Description of the Related Note".

MODIFICATION OF THE GUARANTEE; ASSIGNMENT

Except with respect to any changes that do not adversely affect the rights of
holders of all Preferred Securities (in which case no vote will be required),
the Guarantee may be amended only with the prior approval of the holders of not
less than a majority in aggregate Principal Amount of the outstanding ComPS and
all other Preferred Securities entitled to vote thereon, voting as a single
class. All guarantees and agreements contained in the Guarantee shall bind the
successors, assignees, receivers, trustees and representatives of J.P. Morgan
and shall inure to the benefit of the holders of the ComPS.

REMEDIES OF HOLDERS

If J.P. Morgan fails to perform any of its payment or other obligations with
respect to the ComPS under the Guarantee, any holder of ComPS may institute a
legal proceeding directly against J.P. Morgan to enforce such holder's rights
under the Guarantee without first instituting a legal proceeding against the
Company or any other person or entity. Subject to the award by a court of
competent jurisdiction of legal fees in connection with any such legal
proceeding, each holder will be required to bear its own costs in connection
with instituting a legal proceeding directly against J.P. Morgan, which cost may
be significant.

TERMINATION OF THE GUARANTEE

The Guarantee will terminate with respect to the ComPS upon full payment of the
aggregate ComPS Early Redemption Price or ComPS Redemption Price, as applicable,
or upon full payment of the amounts payable in accordance with the LLC Agreement
upon liquidation of the Company. The Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of ComPS must
restore payment of any sums paid under such ComPS or the Guarantee (e.g., upon a
subsequent bankruptcy of Morgan Guaranty or J.P. Morgan).

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of J.P. Morgan and will
rank (i) subordinate and junior in right of payment to all other liabilities of
J.P. Morgan, (ii) pari passu with the most senior preferred or preference stock
outstanding as of the date hereof of J.P. Morgan and (iii) senior to J.P.
Morgan's common stock. The terms of the ComPS provide that each holder of ComPS
by acceptance thereof agrees to the subordination provisions and other terms of
the Guarantee.

The Guarantee will constitute a guarantee of payment and not of collection (that
is, the guaranteed party may institute a legal proceeding directly against the
guarantor to enforce its rights under the Guarantee without instituting a legal
proceeding against any other person or entity).

GOVERNING LAW

The Guarantee will be governed by and construed and interpreted in accordance
with the laws of the State of New York.

DESCRIPTION OF THE RELATED NOTE GUARANTEE

Set forth below is a summary of information concerning the Related Note
Guarantee that will be delivered by J.P. Morgan for the benefit of the Company.
The terms of the Related Note Guarantee will be those set forth in the Related
Note Guarantee Agreement. The following summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Prospectus of which this Prospectus Supplement is
a part and the form of Related Note Guarantee, which is filed as an exhibit to
the Registration Statement relating to this Prospectus Supplement and the

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accompanying Prospectus. The Related Note Guarantee will be held by the Company,
as the holder of the Related Note.

GENERAL

Pursuant to the Related Note Guarantee, J.P. Morgan irrevocably and
unconditionally agrees, on a subordinated basis, to pay in full to the Company
the Related Note Guarantee Payments (as defined herein), as and when due,
regardless of any defense, right of set-off or counterclaim that Morgan Guaranty
may have or assert with respect to its obligation to make such Related Note
Guarantee Payments. The following payments with respect to the Related Note
issued by Morgan Guaranty (the "Related Note Guarantee Payments") will be
subject to the Related Note Guarantee (without duplication): (i) any accrued and
unpaid distributions that are required to be paid by Morgan Guaranty on the
Related Note and (ii) any principal payable by Morgan Guaranty under the Related
Note, as and when payable by Morgan Guaranty. J.P. Morgan's obligation to make a
Related Note Guarantee Payment may be satisfied by direct payment of the
required amounts by J.P. Morgan to the Company or by causing Morgan Guaranty to
pay such amounts to the Company. The Related Note Guarantee will be a full and
unconditional guarantee with respect to the Related Note from the time of
issuance of the Related Note.

MODIFICATION OF THE RELATED NOTE GUARANTEE; ASSIGNMENT

The Related Note Guarantee may be amended only with the prior approval of the
Company. All guarantees and agreements contained in the Related Note Guarantee
shall bind the successors, assignees, receivers, trustees and representatives of
J.P. Morgan and shall inure to the benefit of the Company as the holder of the
Related Note.

REMEDIES OF THE COMPANY

The Company has the sole right to direct the time, method and place of
conducting any proceeding for any remedy available to it in respect of the
Related Note Guarantee.

TERMINATION OF THE RELATED NOTE GUARANTEE

The Related Note Guarantee will terminate with respect to the Related Note upon
full payment of the Related Note Redemption Price (as defined below) of the
Related Note. The Related Note Guarantee will continue to be effective or will
be reinstated with respect to the Related Note, as the case may be, if at any
time the Company must restore payment of any sums paid under the Related Note or
the Related Note Guarantee (e.g. upon a subsequent bankruptcy of J.P. Morgan).

STATUS OF THE RELATED NOTE GUARANTEE

The Related Note Guarantee will constitute an unsecured obligation of J.P.
Morgan and will rank (i) subordinate and junior in right of payment to all other
liabilities of J.P. Morgan, (ii) pari passu with the most senior preferred or
preference stock outstanding as of the date hereof of J.P. Morgan and (iii)
senior to J.P. Morgan's common stock. The terms of the ComPS provide that each
holder of ComPS by acceptance thereof agrees to the subordination provisions and
other terms of the Related Note Guarantee.

The Related Note Guarantee will constitute a guarantee of payment and not of
collection (that is, the Company may institute a legal proceeding directly
against J.P. Morgan to enforce its rights under the Related Note Guarantee
without instituting a legal proceeding against Morgan Guaranty).

GOVERNING LAW

The Related Note Guarantee will be governed by and construed and interpreted in
accordance with the laws of the State of New York.

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EFFECT OF OBLIGATIONS UNDER THE GUARANTEE,
THE RELATED NOTE GUARANTEE AND THE RELATED NOTE

As set forth in the LLC Agreement, the sole purpose of the Company is to issue
the Securities and other Preferred and Common Securities, and to invest the
proceeds from such issuances in the Related Note and other debt obligations of
Morgan Guaranty.

As long as payments of interest and other payments are made when due on the
Related Note, such payments will be sufficient to cover dividends and payments
due on the ComPS because of the following factors: (i) the Principal Amount of
the Related Note will be equal to the sum of the aggregate Principal Amount of
the ComPS and the related Common Securities; (ii) the interest rate and the
interest and other payment dates on the Related Note will match the dividend
rate and dividend and other payment dates for the ComPS; (iii) J.P. Morgan shall
pay all, and the Company shall not be obligated to pay, directly or indirectly,
any, costs and expenses of the Company other than principal of and dividends on
the ComPS and the related Common Securities; and (iv) the LLC Agreement further
provides that the J.P. Morgan shall not cause the Company to, among other
things, engage in any activity that is not consistent with the purposes of the
Company.

Payments of dividends (to the extent Morgan Guaranty has made payments of
interest on the Related Note) and other payments due on the ComPS (to the extent
Morgan Guaranty has made payment of principal and other amounts on the Related
Note) are guaranteed by J.P. Morgan as and to the extent set forth under
"Description of the Guarantee" herein and in the accompanying Prospectus. If
Morgan Guaranty does not make interest payments on the Related Note, it is
expected that the Company will not have sufficient funds to pay dividends on the
ComPS. The Guarantee is effective from the time of its issuance but does not
apply to any dividends or other payments unless and until Morgan Guaranty has
made payment of interest or other payments on the Related Note.

If Morgan Guaranty fails to make interest or other payments on the Related Note
when due, the LLC Agreement provides a mechanism whereby the holders of the
ComPS, using the procedures described in the LLC Agreement, may direct the
Company to enforce its rights under the Related Note and the Related Note
Guarantee. If J.P. Morgan fails to perform any of its payment or other
obligations with respect to the ComPS under the Guarantee, any holder of ComPS
may institute a legal proceeding directly against J.P. Morgan to enforce such
holder's rights under the Guarantee without first instituting a legal proceeding
against the Company or any other person or entity.

The Related Note Guarantee by J.P. Morgan guarantees to the Company the payment
of any distributions on and principal of the Related Note as provided pursuant
to the terms of the Related Note, at such times and in such amounts as provided
therein. J.P. Morgan's obligations under the Related Note Guarantee will be
subordinated and junior in right of payment to all liabilities of J.P. Morgan,
pari passu with the most senior preferred stock outstanding as of the date
hereof of J.P. Morgan and senior to the common stock of J.P. Morgan.

The LLC Agreement and the Expense Agreement provide that J.P. Morgan will pay,
or cause to be paid, all debts and obligations (other than with respect to the
ComPS) and all costs and expenses of the Company, including any taxes and all
costs and expenses with respect thereto, to which the Company may become
subject. The LLC Agreement and the Expense Agreement provide that any person to
whom such debts, obligations, costs and expenses are owed will have the right to
enforce J.P. Morgan's obligations in respect of such debts, obligations, costs
and expenses directly against J.P. Morgan without first proceeding against the
Company.

J.P. Morgan, through its obligations under the Guarantee, the Related Note
Guarantee, the LLC Agreement and the Expense Agreement, taken together, will
provide a full and unconditional guarantee, on a subordinated basis, of payments
due on the ComPS. See "Description of the Guarantee--General" and "Description
of the Related Note Guarantee--General" herein and in the accompanying
Prospectus.

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Upon any voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Company, the holders of Securities will be entitled to
receive the Liquidation Distribution. Holders of ComPS will be entitled to the
benefits of the Guarantee with respect to the Liquidation Distribution. See
"Description of the ComPS--Liquidation Distribution Upon Dissolution". Upon any
voluntary or involuntary liquidation or bankruptcy of Morgan Guaranty, the
Company as holder of the Related Note would be pari passu with creditors of
Morgan Guaranty (other than any depositors therein), equal in right of payment
with all Senior Indebtedness and entitled to receive payment in full of
principal, premium, if any, and interest, before any stockholders of Morgan
Guaranty receive payments of distributions.

UNITED STATES FEDERAL INCOME TAXATION

GENERAL

The following is a summary of the material United States Federal income tax
consequences of the purchase, ownership and disposition of ComPS by U.S. Holders
(as defined herein). Unless otherwise stated, this summary deals only with ComPS
held as capital assets by holders who purchase the ComPS upon original issuance
("Initial Holders").

This summary does not address tax considerations applicable to investors that
may be subject to special U.S. Federal income tax treatment, such as dealers in
securities or persons that will hold the ComPS as a position in a "straddle"
(within the meaning of Section 1092 of the Internal Revenue Code of 1986, as
amended (the "Code")), or as part of a "conversion transaction" (within the
meaning of Section 1258 of the Code) or "synthetic security" or other integrated
investment comprised of ComPS and one or more other investments. This summary
also does not address the tax consequences to persons that have a functional
currency other than the U.S. Dollar or the tax consequences to shareholders,
partners or beneficiaries of a holder of ComPS. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the ComPS.

This summary is based on the Code, Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis. In the opinion
of Cravath, Swaine & Moore, special tax counsel to J.P. Morgan and the Company
("Tax Counsel"), the statements contained in the following summary, to the
extent they constitute matters of law, accurately describe the material U.S.
Federal income tax consequences to holders of the acquisition, ownership and
disposition of ComPS. For purposes of this summary, a "U.S. Holder" shall mean a
holder who is (i) a citizen or a resident of the United States (or any state
thereof), (ii) a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
(iii) an estate or trust, the income of which is subject to U.S. Federal income
tax regardless of its source, and (iv) any other person subject to U.S. Federal
income tax on net income.

CLASSIFICATION OF THE RELATED NOTE

No statutory, judicial or administrative authority directly addresses the
characterization of the Related Note or instruments similar to the Related Note
for U.S. Federal income tax purposes. As a result, significant aspects of the
U.S. Federal income tax consequences of investment in ComPS are not certain. No
ruling is being requested from the Internal Revenue Service (the "IRS") with
respect to the Related Note and no assurance can be given that the IRS will
agree with the conclusions expressed herein. In the absence of clear authority
and based on the advice of Tax Counsel, it is the intention of the Company to
treat the Related Note as a contingent debt instrument with interest accruing
(and currently taxable to holders) at the stated coupon rate. By purchasing the
ComPS, the holders will agree to treat the Related Note in the same manner.

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CLASSIFICATION OF THE COMPANY

In connection with the issuance of the ComPS, it is Tax Counsel's opinion that,
under current law and assuming full compliance with the terms of the LLC
Agreement and the Related Note, and based on certain facts and assumptions
contained in the opinion of Tax Counsel, the Company will be classified for U.S.
Federal income tax purposes as a partnership and not as an association taxable
as a corporation. Accordingly, for U.S. Federal income tax purposes, each holder
of ComPS will be required to include in its gross income its distributive share
of any item of income or gain realized by the Company including any interest
accrued with respect to the Related Note. No portion of the income accrued by
the Company will be eligible for the dividends received deduction. By acquiring
one or more ComPS, each holder thereof agrees to treat such ComPS as an interest
in a partnership holding the Related Note.

The Company will have a calendar year tax year and will use the accrual method
of accounting. Accordingly, calendar year holders will be required to include
their distributive share of the income accrued by Company in their taxable year
that corresponds to the year in which the Company accrued such income. Holders
with a different taxable year will include such income in their taxable year
that includes the December 31 of the Company's taxable year in which the Company
accrued the income.

U.S. HOLDERS

TAXATION OF INCOME ACCRUED BY THE COMPANY

Assuming the Related Notes are treated as contingent debt instruments for U.S.
Federal income tax purposes, the following rules are believed to apply, subject
to the discussion below:

(1) a U.S. Holder would be required to include its distributive share of
the stated interest on the Related Note in income as it is accrued by the
Company, and would not be entitled to the dividends received deduction with
respect thereto;

(2) upon the redemption of the ComPS (whether optional or Special Event
redemption or at Stated Maturity) or liquidation of the Company, it is
expected that a U.S. Holder will have gain or loss equal to the difference
between the amount realized by the U.S. Holder and such Holder's tax basis
in the ComPS; any loss would be capital loss, but the tax characterization
of gain is not clear and may be ordinary income rather than capital gain;

(3) for the purpose of computing gain or loss, a U.S. Holder's tax basis
in the ComPS would equal the cost of the ComPS increased by such Holder's
distributive share of income accrued with respect to the income of the
Company and decreased by the amount of dividends received by such Holder;
and

(4) any capital gain or loss on the redemption of the ComPS will be
characterized as a long-term capital gain or loss if at the time of
redemption or liquidation the holding period in the ComPS is in excess of
one year.

However, even assuming the Related Note is properly treated as a contingent debt
instrument, in the absence of authority concerning the proper tax treatment of
such instruments, no assurance can be given that the above tax consequences
would be accepted by the IRS or upheld by a court. Moreover, a variety of
different tax characterizations can apply to the Related Note. For example the
Related Note can be viewed as a "notional principal contract" (as defined in
Treasury Regulations 1.446-3), a non-contingent debt instrument coupled with a
cash-settled forward purchase contract or some other contractual arrangement.

Accordingly, the tax consequences of investment in ComPS may not be as described
above. For example, (i) gain on redemption of the ComPS or on liquidation of the
Company may be ordinary income rather than capital gain, (ii) a U.S. Holder
might be required to accrue income at a rate greater than the stated rate on the
Related Note, and have less income or gain (or a greater loss) upon disposition
or redemption of ComPS, or (iii) all or part of the stated interest on the
Related Note might be treated as a nontaxable

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<PAGE> 37

return of capital, increasing the amount of income or gain (or decreasing the
loss) upon disposition or redemption of ComPS.

In connection with clause (ii) of the preceding paragraph, recently proposed
Treasury Regulations with respect to contingent debt instruments would require
the accrual of interest income on the Related Note based on the projected yield
to maturity of the Related Note. The projected yield would take into account the
projected Related Note Redemption Price (based upon forward pricing for the
Applicable Index). This method might result in an annual inclusion of income at
a rate in excess of the stated rate of interest on the Related Note. An
adjustment would be made at maturity to reflect the actual Related Note
Redemption Price as compared to the projected amount. Moreover, any gain on
redemption of ComPS or upon liquidation of the Company would be ordinary income
and any loss would be ordinary loss to the extent of the amount of prior
interest accrual. These proposed regulations by their terms only apply to debt
issued at least 60 days after publication of final regulations, and therefore
would not apply to the Related Note. However, no assurance can be given that the
IRS or the courts would not apply the principles of the regulations to the
Related Note.

MONTHLY ALLOCATIONS OF INCOME

In general, the Company's taxable income from the Related Note for each month
will be allocated, pursuant to a monthly convention, to holders who hold ComPS
on the record date for the payment of dividends for that month. Thus, taxable
income is allocated when paid and not on an accrual basis. As a result, the
taxable income allocated to a holder who sells (or buys) ComPS between record
dates will not accurately reflect the accrued interest on the Related Note for
the holder's actual holding period for ComPS during the month of sale (or
purchase), which may affect such holder's tax liability and tax basis in the
ComPS.

However, the IRS may determine that the use of this monthly convention is not
permitted. If this monthly convention is not allowed, taxable income of the
Company from the Related Note in the month of sale might be reallocated among
the sellers and buyers of ComPS. The LLC Agreement permits the Company to revise
its method of allocation between sellers and buyers to conform to a method
permitted by future regulations.

SALE OR OTHER DISPOSITION OF COMPS

Upon the sale or other disposition of ComPS (other than redemption of ComPS by
the Company), a U.S. Holder would have gain or loss equal to the difference
between the amount realized by the U.S. Holder and such Holder's tax basis in
the ComPS disposed of. Generally, it is believed that such gain or loss will be
capital gain or loss, although such gain might be ordinary income. Any such
capital gain or loss will be a long-term capital gain or loss if upon
disposition the ComPS will have been held for more than one year.

SECONDARY MARKET PURCHASERS

The Company will not make an election under Section 754 of the Code to adjust
the Company's tax basis of the Related Note to reflect the price paid for ComPS
by a secondary market purchaser. This could result in adverse tax consequences
to such a purchaser which holds such ComPS until Stated Maturity or early
redemption, such as taxable ordinary income in excess of the economic profit on
the ComPS, offset by a capital loss that might result in no tax benefit.
Secondary market purchasers should consult their tax advisors concerning the
consequences of acquiring ComPS and holding such ComPS until Stated Maturity or
early redemption.

NON-UNITED STATES HOLDERS

In the case of a holder of ComPS that is not a U.S. Holder, although no
assurance can be given it is believed that payments made with respect to ComPS
will not be subject to U.S. withholding tax; provided that such holder complies
with applicable certification requirements. The Company may withhold on such
payments, in which case the holder will be entitled to file a claim with the IRS
claiming a refund of such

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withholding tax. No assurance can be given whether such a claim would be
successful. Any capital gain realized upon the redemption, sale or other
disposition of ComPS by a holder that is not a U.S. Holder will generally not be
subject to U.S. Federal income tax if (i) such gain is not effectively connected
with a U.S. trade or business of such holder and (ii) in the case of an
individual, such individual is not present in the United States for 183 days or
more in the taxable year of the redemption, sale or other disposition or the
gain is not attributable to a fixed place of business maintained by such
individual in the United States.

INFORMATION REPORTING TO HOLDERS

The Company will annually report each holder's distributive share of the
Company's income, gains, expenses and losses to the holders and the IRS on
Schedule K-1. The Company currently intends to report such information by late
February following each calendar year even though the Company is not legally
required to report to record holders until April 15 following each calendar
year. The Company will provide the Schedule K-1 information to nominees (other
than certain clearing agencies) that fail to provide the information statements
described below and such nominees will be required to forward such information
to the beneficial owners of the ComPS.

Under section 6031 of the Code, any person (other than certain clearing
agencies) that holds ComPS as a nominee at any time during a calendar year is
required to furnish the Company with a statement containing certain information
on the nominee, the beneficial holders and the ComPS so held. Such information
includes (i) the name, address and taxpayer identification number of the nominee
and each beneficial owner and (ii) as to each beneficial owner (x) whether such
person is a United States person, a tax-exempt entity, a foreign government, an
international organization or any wholly-owned agency or instrumentality of the
either of the foregoing and (y) certain information on ComPS that were held,
bought or sold on behalf of such person throughout the year. In addition,
brokers and financial institutions that hold ComPS for their own account through
a clearing agency are required to furnish the Company additional information as
to themselves and their ownership of ComPS. The information referred to above
for any calendar year must be furnished to the Company on or before the
following January 31. Nominees, brokers and financial institutions that fail to
provide the Company with such information may be subject to penalties.

BACKUP WITHHOLDING

Payments made on, and proceeds from the sale of, the ComPS may be subject to a
"backup" withholding tax of 31% unless the holder complies with certain
identification requirements. Any withheld amounts will be allowed as a credit
against the holder's United States Federal income tax, provided that the
required information is provided to the IRS.

THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE
APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE COMPS, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

ERISA CONSIDERATIONS

Generally, employee benefit plans that are subject to the Employee Retirement
Income Security Act of 1974 ("ERISA") or Section 4975 of the Code ("Plans"), may
purchase ComPS, subject to the investing fiduciary's determination that the
investment in ComPS satisfies ERISA's fiduciary standards and other requirements
applicable to investments by the Plans.

In any case, J.P. Morgan, Morgan Guaranty and/or any affiliates of either may be
considered a "party in interest" (within the meaning of ERISA) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to certain Plans. The acquisition and ownership of ComPS by a Plan (or
by an

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individual retirement arrangement or other plans described in Section 4975(e)(i)
of the Code) with respect to which J.P. Morgan, Morgan Guaranty or any of its
affiliates of either is considered a party in interest or a disqualified person
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless such ComPS are acquired pursuant to and in accordance with
an applicable exemption.

As a result, Plans with respect to which J.P. Morgan, Morgan Guaranty or any
affiliates of either is a party in interest or a disqualified person should not
acquire ComPS. Any other Plans or other entities whose assets include plan
assets subject to ERISA proposing to acquire ComPS should consult with their own
ERISA counsel.

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement (the
"Underwriting Agreement"), the Company has agreed to sell to the Underwriters,
and the Underwriters have agreed, severally and not jointly, to purchase, the
ComPS. In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the ComPS offered
hereby if any of the ComPS are purchased. In the event of default by any
Underwriter and failure by the other Underwriters to purchase such defaulting
Underwriter's portion of the ComPS, the Underwriting Agreement provides that, in
certain circumstances, the Underwriting Agreement may be terminated.

The Underwriters propose to offer the ComPS, in part, directly to the public at
the initial public offering price set forth on the cover page of this Prospectus
Supplement, and, in part, to certain securities dealers at such price less a
concession of $[ ] per Preferred Security. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $[ ] per Preferred
Security to certain brokers and dealers. After the ComPS are released for sale
to the public, the offering price and other selling terms may from time to time
be varied by the Representatives.

In view of the fact that the proceeds of the sale of the ComPS will ultimately
be used to purchase the Related Note of Morgan Guaranty, the Underwriting
Agreement provides that Morgan Guaranty will pay as compensation ("Underwriters'
Compensation") to the Underwriters $[ ] per Preferred Security (or $[ ]
in the aggregate) for the accounts of the several Underwriters.

The Company and J.P. Morgan have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.

This Prospectus Supplement and related the Prospectus may be used by direct or
indirect wholly-owned subsidiaries of J.P. Morgan in connection with offers and
sales related to secondary market transactions in the ComPS. Such subsidiaries
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of a sale.

The Underwriters, certain agents and their associates may be customers of,
engage in transactions with, and perform services for, J.P. Morgan in the
ordinary course of business.

The lead Underwriter is an indirect, wholly-owned subsidiary of J.P. Morgan. The
participation of the lead Underwriter in the offer and sale of the ComPS
complies with the requirements of Schedule E of the By-laws of the National
Association of Securities Dealers, Inc. (the "NASD") regarding underwriting of
securities of an affiliate and complies with any restrictions imposed on such
Underwriters by the Board of Governors of the Federal Reserve System.

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LEGAL MATTERS

The validity of the Securities offered hereby will be passed upon by Margaret M.
Foran, Vice President, Assistant General Counsel and Assistant Secretary of J.P.
Morgan, and by Cravath, Swaine & Moore, New York, New York, counsel for the
Underwriter. Ms. Foran owns or has the right to acquire a number of shares of
Common Stock of J.P. Morgan equal to or less than 0.01% of the outstanding
Common Stock of J.P. Morgan.

EXPERTS

The audited financial statements contained in J.P. Morgan's Annual Report on
Form 10-K for the year ended December 31, 1995 (included in J.P. Morgan's Annual
Report to Stockholders), are incorporated by reference in this Prospectus
Supplement in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

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ANNEX I

GLOSSARY OF TERMS

The following are abbreviated definitions of certain capitalized terms used in
the Prospectus Supplement. The LLC Agreement, the Guarantee, the Related Note
Guarantee and the Related Note may contain more complete definitions of certain
of the terms defined herein, as well as definitions of certain other terms not
defined herein, and reference should be made to the LLC Agreement, the
Guarantee, the Related Note Guarantee and the Related Note, as applicable, for
complete definitions of such terms.

APPLICABLE INDEX........the JPMCI Unleaded Gasoline Excess Return Index.

APPLICABLE INDEX
COMMENCEMENT VALUE......[ ].

APPLICABLE INDEX
SETTLEMENT VALUE........the arithmetic average of the values of the Applicable
Index during the Determination Period; provided,
however, that if the Applicable Index Settlement Value
has been permanently determined prior to such time, the
Applicable Index Settlement Value shall equal the value
so determined.

APPLICABLE INDEX EARLY
SETTLEMENT VALUE........For each day of the Early Determination Period, the
value of the Applicable Index for such day of the Early
Determination Period; provided, however, that if the
Applicable Index Settlement Value has been permanently
determined prior to such time, the Applicable Index
Early Settlement Value shall equal the value so
determined.

BENCHMARK GASOLINE
CONTRACTS...............the unleaded gasoline futures contracts included from
time to time in the JPM Indices, which shall initially
be the NYMEX New York Harbor unleaded gasoline futures
contract.

BUSINESS DAY............any day other than a Saturday, Sunday or any other day
on which banking institutions in The City of New York,
New York, are permitted or required by any applicable
law to close.

CODE....................the Internal Revenue Code of 1986, as amended.

COMMISSION..............the Securities and Exchange Commission.

COMMON SECURITIES.......the common securities of the Company representing voting
limited liability company interests in the Company, to
be directly or indirectly owned by J.P. Morgan.

ComPS EARLY REDEMPTION
PRICE...................On any Early Redemption Date, an amount equal to (i) the
Early Redemption Value per Preferred Security plus (ii)
accrued and unpaid dividends to but excluding the date
of redemption.

ComPS REDEMPTION
PRICE...................at Stated Maturity, an amount equal to (i) the
Redemption Value per Preferred Security plus (ii)
accrued and unpaid dividends to but excluding Stated
Maturity.

DETERMINATION PERIOD....the 10 consecutive Trading Days on which no Market
Disruption Event occurs immediately following the 20th
scheduled Business Day prior to Stated Maturity.

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DIVIDENDS...............cumulative cash dividends of [ ]% per annum on the Face
Amount (calculated on the basis of a 360 day year of
twelve 30-day months) accruing from the Issue Date and
payable monthly in arrears.

DTC.....................The Depository Trust Company.

EARLY REDEMPTION
VALUE...................The average for the 10 days of the Early Determination
Period of the discounted present value of the future
dividends and the indexed Principal Amount of the ComPS,
as set forth in the accompanying Prospectus under
"Description of ComPS--Early Redemption Upon the
Occurrence of a Special Event or at the Election of the
Holders of the ComPS".

ERISA...................the Employee Retirement Income Security Act of 1974.

EARLY DETERMINATION
PERIOD..................the 10 consecutive Trading Days which are Business Days
on which U.S. Treasury Bond markets are open and on
which no Market Disruption Event occurs immediately
following the 20th scheduled Business Day prior to the
applicable Early Redemption Date.

EARLY REDEMPTION
DATE....................each Optional Redemption Date and the date of any
Special Event Redemption or Liquidation Distribution.

EXCHANGE ACT............the Securities Exchange Act of 1934, as amended.

FACE AMOUNT.............[$40].

GUARANTEE...............the Guarantee Agreement executed by J.P. Morgan on
behalf of the holders of each series of Preferred
Securities.

GUARANTEE PAYMENTS......without duplication, (i)(A) any accrued and unpaid
dividends that are required to be paid on the ComPS and
(B) the ComPS Early Redemption Price or the ComPS
Redemption Price, as applicable, but if and only to the
extent that, in each of case, Morgan Guaranty has made a
payment of interest or principal, as the case may be, on
the Related Note and (ii) upon a Liquidation Event
(other than in connection with the redemption of all the
ComPS upon the maturity or redemption of the Related
Note), the lesser of (A) the Liquidation Distribution to
the extent the Company has funds available therefor, and
(B) the amount of assets of the Company remaining
available for distribution to holders of all Preferred
Securities upon such Liquidation Event.

INITIAL HOLDERS.........holders who purchase any ComPS upon original issuance.

INTEREST PAYMENT DATE...with respect to the Related Note, the last calendar day
of each month, beginning [ ], 1996.

INVESTMENT COMPANY
EVENT...................the receipt by the Company of an opinion of a nationally
recognized independent counsel experienced in such
matters to the effect that, as a result of the
occurrence of a change in law or regulation, a written
change in interpretation or application of law or
regulation by any legislative body, court, governmental
agency or regulatory authority or the expiration or
revocation of any applicable exemption obtained by the
Company (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Company is or will be
considered an "investment company" that is

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required to be registered under the 1940 Act, which
Change in 1940 Act Law becomes effective on or after the
date of this Prospectus.

IRS.....................Internal Revenue Service.

ISSUE DATE..............[ ], 1996.

JPMCI...................The J.P. Morgan Commodity Index.

LIQUIDATION
DISTRIBUTION............in respect of any Liquidation Event, the sum of (a) the
Early Redemption Value (treating the date of such
distribution as the Early Redemption Date), plus (b) the
amount of accrued and unpaid dividends on such Preferred
Security to but excluding the date of payment.

LIQUIDATION EVENT.......any liquidation, dissolution, winding-up or termination
of the Company, whether voluntary or involuntary.

LLC AGREEMENT...........the amended and restated limited liability company
agreement among J.P. Morgan, JPM Ventures and holders of
Preferred Securities subsequently becoming members
thereof dated May 15, 1996, and effective as of November
21, 1995.

MARKET DISRUPTION
EVENT...................the occurrence of one or more of the following on any
Trading Day with respect to any Benchmark Gasoline
Contract underlying the Applicable Index, or an exchange
on which any Benchmark Gasoline Contract is traded (a
"Relevant Exchange"): (a) a day on which the fluctuation
of the price of any Benchmark Gasoline Contract
underlying the Applicable Index is materially limited by
the rules of a Relevant Exchange setting the maximum or
minimum price for such day (a "Limit Price"); (b) a day
on which the Settlement Price is the Limit Price; (c)
the failure of a Relevant Exchange to determine,
announce or publish the Settlement Price with respect to
a Benchmark Gasoline Contract underlying the Applicable
Index; (d) the material suspension of trading in any
Benchmark Gasoline Contract underlying the Applicable
Index on a Relevant Exchange; (e) the failure of trading
to commence, or the permanent discontinuation of
trading, in any Benchmark Gasoline Contract underlying
the Applicable Index on any Relevant Exchange; and (f)
the imposition of any material limitation on trading in
any Benchmark Gasoline Contract underlying the
Applicable Index on any Relevant Exchange.

NASDAQ..................The Nasdaq Stock Market.

1940 ACT................the Investment Company Act of 1940, as amended.

NYMEX...................the New York Mercantile Exchange.

OPTIONAL REDEMPTION.....the redemption of ComPS by the holders thereof on any
Optional Redemption Date for the ComPS Early Redemption
Price.

OPTIONAL REDEMPTION
DATE....................each [ ] prior to Stated Maturity, subject to
extension in the case of (i) delay in the provision by
DTC of the Applicable Notice or (ii) the occurrence and
continuance of a Market Disruption Event.

PRINCIPAL AMOUNT........at any time, (i) in the case of ComPS, the Redemption
Value or Early Redemption Value, as applicable, as if
determined as of such time, and

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(ii) in the case of the Related Note, the principal
amount thereof at such time determined pursuant to the
terms thereof.

REDEMPTION DATE.........either the Stated Maturity or an Early Redemption Date,
as applicable.

REDEMPTION VALUE........at Stated Maturity, the Face Amount per Preferred
Security multiplied by a fraction, the numerator of
which is the Applicable Index Settlement Value and the
denominator of which is the Applicable Index
Commencement Value.

RELATED NOTE............the [ ]% unsecured, unsubordinated debt obligation of
Morgan Guaranty due 20[ ].

RELATED NOTE EVENT OF
DEFAULT.................(i) default for 30 days in the payment of interest on
the Related Note; (ii) default in payment of principal
amount at the Stated Maturity or any amount payable upon
any redemption of the Related Note; (iii) failure by
Morgan Guaranty for 90 days after receipt of notice to
it to comply with any of its covenants or agreements
contained in the Related Note; and (iv) certain events
of bankruptcy, insolvency, receivership or
reorganization involving Morgan Guaranty or certain
affiliates.

ROLLOVER PERIOD.........the period during which each replacement of
shorter-dated Benchmark Gasoline Contracts with
longer-dated Benchmark Gasoline Contracts as the basis
for the change in value of the Applicable Index occurs.

SECURITIES..............the ComPS and the Common Securities.

SECURITIES ACT..........the Securities Act of 1933.

SENIOR INDEBTEDNESS.....with respect to Morgan Guaranty, the principal of,
premium, if any, and interest on (a) all indebtedness of
Morgan Guaranty for money borrowed, whether outstanding
as of the date hereof or hereafter created, issued or
incurred (other than Morgan Guaranty's obligations to
its depositors), except any indebtedness expressly
subordinated to such Senior Indebtedness, and (b) any
deferrals, renewals or extensions of any such Senior
Indebtedness.

SPECIAL EVENT...........either a Tax Event or an Investment Company Event.

SPECIAL REDEMPTION......upon the occurrence and during the continuation of a
Special Event, Morgan Guaranty will have the right to
redeem the Related Note in whole or in part for cash at
the Related Note Redemption Price, with the result that
the Company will redeem on a pro rata basis ComPS and
related Common Securities in an equal Principal Amount
for cash at the ComPS Early Redemption Price.

SPECIAL REDEMPTION
DATE....................any date in respect of which upon the occurrence and
continuation of a Tax Event or an Investment Company
Event Morgan Guaranty shall have called for redemption
in whole or in part the Related Note, and the Company
shall have called for redemption on a pro rata basis an
equal Principal Amount of the ComPS and related Common
Securities.

STATED MATURITY.........[ ]. 20[ ].

TAX COUNSEL.............Cravath, Swaine & Moore, special tax counsel to J.P.
Morgan and the Company.

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TAX EVENT...............the receipt by the Company of an opinion of nationally
recognized independent tax counsel experienced in such
matters (a "Tax Opinion") to the effect that, as a
result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an
interpretation or application of such laws or
regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment
of any legislation and the publication of any judicial
decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a
position with respect to such laws or regulations that
differs from the theretofore generally accepted position
or (d) any action taken by any governmental agency or
regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced
or which action is taken, in each case on or after the
date of this Prospectus Supplement, that there is more
than an insubstantial risk that at such time or within
90 days of the date thereof (i) the Company is or would
be subject to United States Federal income tax with
respect to income accrued or received on any Related
Note, (ii) the interest payable on any Related Note is
not or would not be deductible by Morgan Guaranty for
United States Federal income tax purposes, (iii) the
contingent principal in excess of the Face Amount of any
series of Preferred Securities (if any) payable on any
Related Note is not or would not be deductible by Morgan
Guaranty for United States Federal income tax purposes
or (iv) the Company is or would be subject to more than
a de minimis amount of other taxes, duties or other
governmental charges.

TRADING DAY.............any day on which open-outcry trading on either the NYMEX
or the London Metal Exchange (the "LME") is scheduled to
occur or occurs.

A-5
<PAGE> 46

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

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY J.P. MORGAN, THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF J.P. MORGAN, OR THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Summary of the Offering......................... S-4
The Offering.................................... S-5
Risk Factors.................................... S-10
J.P. Morgan & Co. Incorporated.................. S-18
J.P. Morgan Index Funding Company, LLC.......... S-18
Use of Proceeds................................. S-19
Description of the ComPS........................ S-19
Description of the Related Note................. S-29
Description of the Guarantee.................... S-31
Description of the Related Note Guarantee....... S-32
Effect of Obligations Under the Guarantee, the
Related Note Guarantee and the Related Note... S-34
United States Federal Income Taxation........... S-35
ERISA Considerations............................ S-38
Underwriting.................................... S-39
Legal Matters................................... S-40
Experts......................................... S-40
</TABLE>

ANNEX I

<TABLE>
<S> <C>
Glossary of Terms............................... A-1
</TABLE>

PROSPECTUS

<TABLE>
<S> <C>
Available Information........................... 2
Incorporation of Certain Documents by
Reference..................................... 2
J.P. Morgan & Co. Incorporated.................. 3
J.P. Morgan Index Funding Company, LLC.......... 5
Use of Proceeds................................. 6
Consolidated Ratios of J.P. Morgan.............. 6
Description of All Preferred Securities......... 7
Description of the ComPS........................ 7
Risk Factors with Respect to All Preferred
Securities.................................... 17
Risk Factors with Respect to ComPS.............. 18
The Underlying Markets.......................... 24
The JPM Indices................................. 27
Description of the Related Notes................ 34
Description of the Guarantee.................... 35
Description of the Related Note Guarantee....... 37
Plan of Distribution............................ 38
Legal Matters................................... 39
Experts......................................... 40
</TABLE>

ANNEX I

<TABLE>
<S> <C>
Glossary of Terms............................... A-1
</TABLE>

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

SERIES UNL1
PREFERRED SECURITIES
INDEXED TO THE
JPMCI ALUMINUM
EXCESS RETURN INDEX

J.P. MORGAN INDEX
FUNDING COMPANY, LLC

PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY

J.P. MORGAN & CO.
INCORPORATED

PROSPECTUS SUPPLEMENT

[ ]

, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 47
Filed pursuant to Rule 424(b)(2)
Registration Statement No. 333-01121

SUBJECT TO COMPLETION, DATED MAY 21, 1996

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 16, 1996)
[ ]
COMMODITY-INDEXED PREFERRED SECURITIES (ComPS(SM)), SERIES UNL1

J.P. MORGAN INDEX FUNDING COMPANY, LLC
[ ]% SERIES UNL1 PREFERRED SECURITIES
INDEXED TO THE JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

J.P. MORGAN & CO. INCORPORATED
------------------------

"ComPS", "JPMCI" and the "J.P. Morgan Commodity Index" are service marks of J.P.
Morgan & Co. Incorporated.

THE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL
AGENCY.

(1) Plus accrued dividends, if any, from the Issue Date (as defined herein).

(2) The Company and J.P. Morgan have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".

(4) Expenses of the offering which are payable by the Company and J.P. Morgan
are estimated to be $ .
------------------------

J.P. MORGAN SECURITIES LTD.

The date of this Prospectus Supplement is , 1996.
<PAGE> 48

S-2
<PAGE> 49

STRUCTURAL OVERVIEW

[GRAPH OMITTED]

7. MORGAN GUARANTY. Morgan Guaranty, a trust company with full banking powers
organized under the laws of the State of New York, is a wholly-owned subsidiary
of J.P. Morgan.

S-3
<PAGE> 50

SUMMARY OF THE OFFERING

AGGREGATE FACE AMOUNT...... [$100,000,000].

APPLICABLE INDEX
COMMENCEMENT VALUE......... [Set on date of pricing].

S-4
<PAGE> 51

THE OFFERING

GENERAL

S-5
<PAGE> 52

DIVIDENDS

REDEMPTION AT STATED MATURITY

S-6
<PAGE> 53

CALCULATION OF REDEMPTION VALUE

EARLY DETERMINATION OF APPLICABLE INDEX SETTLEMENT VALUE AND REDEMPTION VALUE

OPTIONAL REDEMPTION

SPECIAL EVENT REDEMPTION

S-7
<PAGE> 54

UNCONDITIONAL GUARANTEE BY J.P. MORGAN

THE GUARANTEE

THE RELATED NOTE GUARANTEE

RELATED NOTE

VOTING RIGHTS

S-8
<PAGE> 55

USE OF PROCEEDS

LISTING

S-9
<PAGE> 56

RISK FACTORS

INDEXATION OF PRINCIPAL AMOUNT

LIMITATIONS ON RIGHTS UNDER THE GUARANTEE, THE RELATED NOTE GUARANTEE AND THE
RELATED NOTE

SPECIAL EVENT REDEMPTION

It is possible that the occurrence of a Special Event will cause the market
price of the ComPS in any existing secondary market to decline.

LIMITED VOTING RIGHTS

S-10
<PAGE> 57

TRADING PRICE MAY NOT REFLECT ACTUAL ECONOMIC VALUE

VALUE OF THE COMPS

NO RIGHT TO INTEREST ON RELATED NOTE

IMPOSITION OF BANK REGULATORY RESTRICTIONS

EFFECT OF TRADING IN THE BENCHMARK GASOLINE CONTRACTS AND RELATED COMMODITIES
AND INSTRUMENTS

S-11
<PAGE> 58

POTENTIAL FOR ADVERSE INTERESTS

RISK OF CARRYING AND ROLLING BENCHMARK GASOLINE CONTRACTS

S-12
<PAGE> 59

Additionally, the level of the Applicable Index as of the close of business on
the [date of pricing] was [ ]. The following is a graph of such
simulated and actual month-end values:

S-13
<PAGE> 60

LEVELS OF JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX,
1986-1996

[GRAPH OMITTED]

Source: Morgan Guaranty

The preceding simulated and actual Applicable Index values have been included
for informational purposes only. Such values may not be indicative of the future
performance of the Applicable Index.

VOLATILITY OF GASOLINE AND GASOLINE FUTURES PRICES

S-14
<PAGE> 61

EFFECT OF ADVERSE CHANGES IN COMMODITY PRICES

SUSPENSION OR MATERIAL DISRUPTION OF FUTURES OR COMMODITIES TRADING; TEMPORARY
DISTORTIONS

S-15
<PAGE> 62

MARKET DISRUPTION EVENTS

HISTORICAL CORRELATIONS MAY NOT PREVAIL IN THE FUTURE

CHANGES IN LAWS OR REGULATIONS OR INTERPRETATIONS THEREOF

EXTENSION OF SETTLEMENT DATE OR STATED MATURITY

S-16
<PAGE> 63

DISCONTINUANCE OF PUBLISHING OF THE JPMCI UNLEADED GASOLINE EXCESS RETURN INDEX

POTENTIAL MODIFICATIONS TO THE JPM INDICES AND/OR THE APPLICABLE INDEX

Any early determination of the Applicable Index Settlement Value may cause the
market price of ComPS in any existing secondary market to decline.

EARLY REDEMPTION

S-17
<PAGE> 64

holders of ComPS to additional dividends on the ComPS or the accrual of any
interest on such ComPS Early Redemption Price.

CERTAIN CONSIDERATIONS REGARDING HEDGING

UNCERTAIN UNITED STATES FEDERAL INCOME TAX CHARACTERIZATION OF COMPS

J.P. MORGAN & CO. INCORPORATED

J.P. MORGAN INDEX FUNDING COMPANY, LLC

S-18
<PAGE> 65

preferred and common securities in other debt obligations of Morgan Guaranty,
and (iii) engaging in only those other activities necessary or incidental
thereto.

The rights of the holders of the ComPS, including economic rights, rights to
information and voting rights, are set forth in the LLC Agreement. See
"Description of the ComPS".

USE OF PROCEEDS

DESCRIPTION OF THE COMPS

S-19
<PAGE> 66

GENERAL

The Principal Amount of each of the ComPS, which is initially equal to the Face
Amount, will vary over the life of the ComPS in relation to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"). As described herein, the
Applicable Index will change based on the daily percentage change in value of
the Benchmark Gasoline Contracts. The Principal Amount repayable on any Early
Redemption Date, upon the occurrence of any Special Event Redemption or at
Stated Maturity will be determined, pursuant to the terms described herein
(including, without limitation, the averaging of the Applicable Index over the
Early Determination Period or the Determination Period, as applicable, and the
present-valuing of the dividends and Principal Amount in connection with
redemptions prior to Stated Maturity), by comparing the level of the JPMCI
Unleaded Gasoline Excess Return Index set on the date of issuance of the ComPS
with the level determined pursuant to the terms hereof for any such date of
redemption.

DIVIDENDS

S-20
<PAGE> 67

Sunday or any other day on which banking institutions in The City of New York,
New York are permitted or required by any applicable law to close.

REDEMPTION AT STATED MATURITY

CALCULATION OF REDEMPTION VALUE

The Principal Amount of each Preferred Security is indexed to the JPMCI Unleaded
Gasoline Excess Return Index (the "Applicable Index"), which is calculated based
on the change in value of certain unleaded gasoline futures contracts included
from time to time in the JPM Indices (such contracts, from time to time, the
"Benchmark Gasoline Contracts"). On the date of this Prospectus Supplement, the
Benchmark Gasoline Contract is the NYMEX New York Harbor unleaded gasoline
futures contract. Subject to the more complete definitions and formulae
contained in the accompanying Prospectus, the Principal Amount of each Preferred
Security payable at Stated Maturity, subject to extension in the case of a
Market Disruption Event (the "Redemption Value"), shall be determined by
multiplying the Face Amount of each Preferred Security by a fraction, the
numerator of which is the Applicable Index Settlement Value and the denominator
of which is the Applicable Index Commencement Value. For purposes of this
Prospectus Supplement, the "Applicable Index Settlement Value" means the
arithmetic average of the daily values of the Applicable Index for each day of
the Determination Period (the period of ten consecutive Trading Days on which no
Market Disruption Event occurs commencing immediately following the twentieth
scheduled Business Day prior to Stated Maturity), and the "Applicable Index
Commencement Value" means [ ].

S-21
<PAGE> 68

EARLY DETERMINATION OF APPLICABLE INDEX SETTLEMENT VALUE AND REDEMPTION VALUE

S-22
<PAGE> 69

OPTIONAL REDEMPTION

SPECIAL EVENT REDEMPTION

S-23
<PAGE> 70

If at any time a Tax Event or an Investment Company Event shall occur and be
continuing, J.P. Morgan shall elect to either:

(b) in the case of a Tax Event, allow the Related Note and the ComPS to
remain outstanding and indemnify the Company for all taxes payable by it as
a result of such Tax Event (if any);

REDEMPTION PROCEDURES

S-24
<PAGE> 71

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

S-25
<PAGE> 72

Pursuant to the LLC Agreement, the legal existence of the Company shall
terminate on November 21, 2105.

VOTING RIGHTS

Except as described herein and under "--Modification of the LLC Agreement", and
as otherwise required by law and the LLC Agreement, the holders of the ComPS
will have no voting rights.

The procedures by which holders of ComPS may exercise their voting rights are
described below under "--Book-Entry Only Issuance--The Depository Trust Company"
and in the LLC Agreement.

MODIFICATION OF THE LLC AGREEMENT

S-26
<PAGE> 73

LISTING

ACCOUNTING TREATMENT

MERGERS, CONSOLIDATIONS OR AMALGAMATIONS

BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY

S-27
<PAGE> 74

S-28
<PAGE> 75

GOVERNING LAW

The LLC Agreement and the ComPS will be governed by and interpreted in
accordance with the laws of the State of Delaware.

DESCRIPTION OF THE RELATED NOTE

GENERAL

RELATED NOTE REDEMPTION PRICE

SUBORDINATION

S-29
<PAGE> 76

INTEREST

OPTIONAL REDEMPTION

SPECIAL EVENT REDEMPTION

EVENTS OF DEFAULT

MODIFICATION OF THE RELATED NOTE

CONSOLIDATION, MERGER AND SALE

S-30
<PAGE> 77

GOVERNING LAW

The Related Note will be governed by, and construed in accordance with, the laws
of the State of New York.

MISCELLANEOUS

DESCRIPTION OF THE GUARANTEE

GENERAL

S-31
<PAGE> 78

distributions on the ComPS issued and may not have funds available therefor. See
"Description of the Related Note".

MODIFICATION OF THE GUARANTEE; ASSIGNMENT

REMEDIES OF HOLDERS

TERMINATION OF THE GUARANTEE

STATUS OF THE GUARANTEE

GOVERNING LAW

The Guarantee will be governed by and construed and interpreted in accordance
with the laws of the State of New York.

DESCRIPTION OF THE RELATED NOTE GUARANTEE

S-32
<PAGE> 79

accompanying Prospectus. The Related Note Guarantee will be held by the Company,
as the holder of the Related Note.

GENERAL

MODIFICATION OF THE RELATED NOTE GUARANTEE; ASSIGNMENT

REMEDIES OF THE COMPANY

The Company has the sole right to direct the time, method and place of
conducting any proceeding for any remedy available to it in respect of the
Related Note Guarantee.

TERMINATION OF THE RELATED NOTE GUARANTEE

STATUS OF THE RELATED NOTE GUARANTEE

GOVERNING LAW

The Related Note Guarantee will be governed by and construed and interpreted in
accordance with the laws of the State of New York.

S-33
<PAGE> 80

EFFECT OF OBLIGATIONS UNDER THE GUARANTEE,
THE RELATED NOTE GUARANTEE AND THE RELATED NOTE

J.P. Morgan, through its obligations under the Guarantee, the Related Note
Guarantee, the LLC Agreement and the Expense Agreement, taken together, will
provide a full and unconditional guarantee, on a subordinated basis, of payments
due on the ComPS. See "Description of the Guarantee--General" and "Description
of the Related Note Guarantee--General" herein and in the accompanying
Prospectus.

S-34
<PAGE> 81

UNITED STATES FEDERAL INCOME TAXATION

GENERAL

CLASSIFICATION OF THE RELATED NOTE

S-35
<PAGE> 82

CLASSIFICATION OF THE COMPANY

U.S. HOLDERS

TAXATION OF INCOME ACCRUED BY THE COMPANY

Assuming the Related Notes are treated as contingent debt instruments for U.S.
Federal income tax purposes, the following rules are believed to apply, subject
to the discussion below:

S-36
<PAGE> 83

return of capital, increasing the amount of income or gain (or decreasing the
loss) upon disposition or redemption of ComPS.

MONTHLY ALLOCATIONS OF INCOME

SALE OR OTHER DISPOSITION OF COMPS

SECONDARY MARKET PURCHASERS

NON-UNITED STATES HOLDERS

S-37
<PAGE> 84

INFORMATION REPORTING TO HOLDERS

BACKUP WITHHOLDING

ERISA CONSIDERATIONS

S-38
<PAGE> 85

UNDERWRITING

The Company and J.P. Morgan have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.

The Underwriters, certain agents and their associates may be customers of,
engage in transactions with, and perform services for, J.P. Morgan in the
ordinary course of business.

S-39
<PAGE> 86

LEGAL MATTERS

EXPERTS

S-40
<PAGE> 87

ANNEX I

GLOSSARY OF TERMS

APPLICABLE INDEX........the JPMCI Unleaded Gasoline Excess Return Index.

APPLICABLE INDEX
COMMENCEMENT VALUE......[ ].

CODE....................the Internal Revenue Code of 1986, as amended.

COMMISSION..............the Securities and Exchange Commission.

COMMON SECURITIES.......the common securities of the Company representing voting
limited liability company interests in the Company, to
be directly or indirectly owned by J.P. Morgan.

DETERMINATION PERIOD....the 10 consecutive Trading Days on which no Market
Disruption Event occurs immediately following the 20th
scheduled Business Day prior to Stated Maturity.

A-1
<PAGE> 88

DTC.....................The Depository Trust Company.

ERISA...................the Employee Retirement Income Security Act of 1974.

EARLY REDEMPTION
DATE....................each Optional Redemption Date and the date of any
Special Event Redemption or Liquidation Distribution.

EXCHANGE ACT............the Securities Exchange Act of 1934, as amended.

FACE AMOUNT.............[$40].

GUARANTEE...............the Guarantee Agreement executed by J.P. Morgan on
behalf of the holders of each series of Preferred
Securities.

INITIAL HOLDERS.........holders who purchase any ComPS upon original issuance.

INTEREST PAYMENT DATE...with respect to the Related Note, the last calendar day
of each month, beginning [ ], 1996.

A-2
<PAGE> 89

required to be registered under the 1940 Act, which
Change in 1940 Act Law becomes effective on or after the
date of this Prospectus.

IRS.....................Internal Revenue Service.

ISSUE DATE..............[ ], 1996.

JPMCI...................The J.P. Morgan Commodity Index.

LIQUIDATION EVENT.......any liquidation, dissolution, winding-up or termination
of the Company, whether voluntary or involuntary.

NASDAQ..................The Nasdaq Stock Market.

1940 ACT................the Investment Company Act of 1940, as amended.

NYMEX...................the New York Mercantile Exchange.

OPTIONAL REDEMPTION.....the redemption of ComPS by the holders thereof on any
Optional Redemption Date for the ComPS Early Redemption
Price.

PRINCIPAL AMOUNT........at any time, (i) in the case of ComPS, the Redemption
Value or Early Redemption Value, as applicable, as if
determined as of such time, and

A-3
<PAGE> 90

(ii) in the case of the Related Note, the principal
amount thereof at such time determined pursuant to the
terms thereof.

REDEMPTION DATE.........either the Stated Maturity or an Early Redemption Date,
as applicable.

RELATED NOTE............the [ ]% unsecured, unsubordinated debt obligation of
Morgan Guaranty due 20[ ].

SECURITIES..............the ComPS and the Common Securities.

SECURITIES ACT..........the Securities Act of 1933.

SPECIAL EVENT...........either a Tax Event or an Investment Company Event.

STATED MATURITY.........[ ]. 20[ ].

TAX COUNSEL.............Cravath, Swaine & Moore, special tax counsel to J.P.
Morgan and the Company.

A-4
<PAGE> 91

TRADING DAY.............any day on which open-outcry trading on either the NYMEX
or the London Metal Exchange (the "LME") is scheduled to
occur or occurs.

A-5
<PAGE> 92

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

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

ANNEX I

<TABLE>
<S> <C>
Glossary of Terms............................... A-1
</TABLE>

PROSPECTUS

ANNEX I

<TABLE>
<S> <C>
Glossary of Terms............................... A-1
</TABLE>

SERIES UNL1
PREFERRED SECURITIES
INDEXED TO THE
JPMCI ALUMINUM
EXCESS RETURN INDEX

J.P. MORGAN INDEX
FUNDING COMPANY, LLC

PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY

J.P. MORGAN & CO.
INCORPORATED

PROSPECTUS SUPPLEMENT

[ ]

, 1996
- ------------------------------------------------------
- ------------------------------------------------------