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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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 [AU1]
J.P. MORGAN INDEX FUNDING COMPANY, LLC
[ ]% SERIES AU1 PREFERRED SECURITIES INDEXED TO GOLD
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
J.P. MORGAN & CO. INCORPORATED
------------------------

The % Series [AU1] 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. The issuance price of each Preferred
Security is [$40], the approximate value of one-tenth of the London gold price
for one ounce of gold in the London bullion market at the time of pricing on
[ ], 1996. After issuance, the principal amount of each Preferred Security (the
"Principal Amount") will be indexed to the U.S. dollar value at such time (the
"Dollar Equivalent Value") of one-tenth of the London P.M. gold fixing price for
one ounce of gold in the London bullion market (such index, the "Applicable
Index"). 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-8 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, AND ARE NOT AND DO NOT
REPRESENT AN ACTUAL INVESTMENT IN GOLD. THE REDEMPTION VALUE (AS DEFINED BELOW)
AND EACH DIVIDEND IS DIRECTLY LINKED TO THE PRICE OF ONE OUNCE OF GOLD IN THE
LONDON BULLION MARKET. THUS, THE REDEMPTION VALUE PER PREFERRED SECURITY MAY BE
MORE OR LESS THAN THE FACE AMOUNT AND THE DOLLAR EQUIVALENT VALUE OF EACH
DIVIDEND WILL VARY. 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 is indexed
to the Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price
of one ounce of gold in the London bullion market. 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 AU1 Preferred Securities
("ComPS") Indexed to the Dollar Equivalent Value of
one-tenth of the London P.M. gold fixing price for one
ounce of gold in the London bullion market.

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................[$40] (i.e., the approximate value of one-tenth of the
London gold price for one ounce of gold in the London
bullion market at the time of pricing on [ ],
1996.

PRINCIPAL AMOUNT PER
PREFERRED SECURITY......The Dollar Equivalent Value of one tenth of the London
P.M. gold fixing price on such day for one ounce of gold
in the London bullion market.

AGGREGATE INITIAL
PRINCIPAL 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......The average of the Principal Amount over the 10
consecutive Trading Days meeting certain conditions
immediately following the 20th scheduled Business Day
prior to redemption (as described herein).

APPLICABLE INDEX........The Dollar Equivalent Value of one-tenth of the London
P.M. gold fixing price for one ounce of gold in the
London bullion market.

CALCULATION AGENT.......Morgan Guaranty.

DIVIDENDS...............Cumulative cash dividends of [ %] per annum on the
Principal Amount determined five London Business Days
prior to the applicable payment date, subject to
extension in the case of a Market Disruption Event
(calculated on the basis of a 360 day year of twelve
30-day months), accruing from the Issue Date and payable
monthly; provided, however, that upon the occurrence of
a Market Disruption Event, such dividend will be payable
on the later of such calendar day and the day two
Business Days following the determination of the amount
thereof.

SPECIAL EVENT
REDEMPTION..............Under certain circumstances, upon the occurrence of a
Tax Event or an Investment Company Event, for the ComPS
Early Redemption Price. The ComPS will not be subject to
optional redemption by the holders thereof prior to
Stated Maturity.

ComPS EARLY REDEMPTION
PRICE...................The Early Redemption Value (as defined in the
Prospectus), which represents the payments of the
discounted present value of dividends and Principal
Amount on the applicable Early Redemption Date. See
"Description of the ComPS -- 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

The issuance price of each security is [$40], the approximate value of one-tenth
of the London gold price for one ounce of gold in the London bullion market at
the time of pricing on [ ], 1996. After issuance, the Principal Amount of each
Preferred Security will be indexed to the Dollar Equivalent Value of one-tenth
of the London P.M. gold fixing price for one ounce of gold in the London bullion
market (such index, the "Applicable Index"). The Principal Amount repayable 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 redemptions prior to Stated
Maturity), based on the Dollar Equivalent Value of one-tenth of the London P.M.
gold fixing price for one ounce of gold in the London bullion market for each
day during the Determination Period (as defined herein). The ComPS are Bullion
ComPS, as defined in the accompanying Prospectus. 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 Preferred Securities offered hereby 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 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 Early Redemption Price. See
"Description of the ComPS--Redemption at Stated Maturity"; --Special Event
Redemption".

DIVIDENDS

Dividends on the ComPS will be fixed at a rate per annum of [ ]% of the
Principal Amount per Preferred Security. Dividends on the ComPS will be
cumulative and will be payable monthly on the last calendar day of each month
(calculated on the basis of a 360-day year of twelve 30-day months) based on the
Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price for
one ounce of gold on the London bullion market on the fifth London Business Day
prior to such calendar day, commencing [ ], 1996, when, as and if available for
payment; provided, however, that upon the occurrence of a Market Disruption
Event, such dividend will be payable on the later of such calendar day and the
day two Business Days following the determination of the amount thereof. If such
Market Disruption Event remains in effect for longer than 5 London Business Days
and, in the reasonable judgment of Morgan Guaranty, such Market Disruption is
likely to remain in effect, then the Dollar Equivalent Value of one-tenth of the
London P.M. gold fixing price for one ounce of gold on the London bullion market
for such day 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 gold equal in size to the
aggregate dividend payment of the ComPS, although Morgan Guaranty has no
obligation to do so, and such Dollar

S-5
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Equivalent Value will be utilized in the calculation of the dividend payable for
such month. The first dividend payment will be for the period from and including
the Issue Date to but excluding [ ], 1996. 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. However, in no event will the amount
of days for which dividends are paid be greater than 30 days. See "Description
of the ComPS--Dividends".

REDEMPTION AT STATED MATURITY

Unless previously redeemed pursuant to the 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 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 at any time is equal to
one-tenth of the Dollar Equivalent Value of the price of one ounce of gold on
the London bullion market. 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 the arithmetic
average of the Dollar Equivalent Value of one-tenth of the London P.M. gold
fixing price of one ounce of gold in the London Bullion market for each day of
the Determination Period (as defined below). See "Description of
ComPS--Calculation of Redemption Value" herein and "Description of
ComPS--Determination Period and Settlement Date" in the accompanying Prospectus.

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
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".

The ComPs will not be subject to optional redemption by the holders thereof
prior to Stated Maturity.

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--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

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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 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.

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 initial aggregate Principal 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 Principal 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".

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 the
hedging of 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 AND DIVIDENDS

The Principal Amount of, and the Dollar Equivalent Value of each dividend on,
the ComPS will vary over the life of the ComPS in relation to the Dollar
Equivalent Value of one-tenth of the London P.M. gold fixing price of one ounce
of gold on the London bullion market (the "Applicable Index"). The Principal
Amount repayable upon the occurrence of any Special Event Redemption or at
Stated Maturity will be determined, pursuant to the terms and calculations
described herein (including, without limitation, the averaging of gold prices
over the Early Determination Period or the Determination Period, as applicable,
and the present-valuing of the indexed dividends and Principal Amount in the
case of early redemptions), based the Dollar Equivalent Value of one-tenth of
the London P.M. fixing price of one ounce of gold on the London bullion market.
Accordingly, the Dollar Equivalent Value of each dividend will vary and the
Principal Amount to be received upon any date of redemption will fluctuate based
on the Applicable Index and may be lower than the initial Principal 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
dividends 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".

TRADING PRICE MAY NOT REFLECT ACTUAL ECONOMIC VALUE

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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 Underwriter 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 (i.e., one-tenth of the
Dollar Equivalent Value of the price of one ounce of gold on the London bullion
market), (ii) the credit quality of Morgan Guaranty and J.P. Morgan and (iii)
the lease rate environment for borrowing and lending gold. Adverse changes in
any of these three factors will adversely affect the value of the ComPS at such
time. As discussed under "Description of the ComPS", adverse changes in the
Applicable Index (the Dollar Equivalent Value of the London P.M. fixing price
for one ounce of gold) 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 ComPS in any secondary market then existing to
decline. Also, an increase in the prevailing gold lease rates could cause the
trading price of 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 dividends 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 Senior
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
Senior 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 RELATED COMMODITIES AND INSTRUMENTS

Morgan Guaranty and other affiliates of J.P. Morgan are and will be actively
involved in the trading of gold 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 or one or more of the JPM Indices.

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<PAGE> 10

Trading in the foregoing commodities by Morgan Guaranty, its affiliates
(including JPMSI) and unaffiliated third parties could adversely affect the
value of the Applicable Index, which could in turn adversely affect the return
on and the value of the ComPS. Furthermore, additional issuances of securities
linked or referenced to the London P.M. gold fixing price of one ounce of gold
or similar gold price sources 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 gold 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 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 the
Calculation Agent is required to exercise discretion).

VOLATILITY OF GOLD PRICES

Prices of commodities are extremely volatile and can be affected by a variety of
factors, including weather, governmental programs and policies, national and
international political and economic events, changes in interest and exchange
rates and trading activity in such commodities. Volatility in gold prices will
correlate directly with volatility in the Applicable Index. Such volatility
could lead some investors in gold to withdraw from the market, which could
adversely affect the liquidity of such market and could adversely affect the
value of the Applicable Index and, correspondingly, the value of the ComPS.

As discussed below, the Redemption Value of the ComPS will be based on the
Principal Amount, which will vary directly with the Dollar Equivalent Value of
one-tenth of the London P.M. gold fixing price of one ounce of gold on the
London bullion market. The month-end London P.M. gold fixing prices of one ounce
of gold on the London bullion market from 1986-1996 are set forth in the table
below:

U.S. DOLLAR EQUIVALENT VALUE OF LONDON P.M. GOLD FIXING PRICE
OF ONE OUNCE OF GOLD AS OF THE END OF:

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The following graph sets forth such month-end values:

LONDON P.M. GOLD FIXING PRICE, 1986-1996

[GRAPHIC OMITTED]

Using the month-end prices noted above as hypothetical Dollar Equivalent Values
of the London P.M. gold fixing price of one ounce of gold over the Determination
Period, 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 $38.88 and an initial London P.M. gold fixing price
for one ounce of gold of $388.75 would be as follows:

<TABLE>
<CAPTION>
HYPOTHETICAL DOLLAR EQUIVALENT VALUE
OF THE LONDON P.M. FIXING PRICE OF
LAST TRADING DAY ONE OUNCE OF GOLD OVER THE
OF: DETERMINATION PERIOD HYPOTHETICAL REDEMPTION VALUE
------------------- ------------------------------------ -----------------------------
<S> <C> <C>
1986............... $ 388.75 $ 38.88
1987............... $ 484.10 $ 48.41
1988............... $ 410.25 $ 41.03
1989............... $ 398.60 $ 39.86
1990............... $ 386.20 $ 38.62
1991............... $ 353.15 $ 35.32
1992............... $ 332.90 $ 33.29
1993............... $ 391.75 $ 39.18
1994............... $ 383.25 $ 38.33
1995............... $ 387.00 $ 38.70
</TABLE>

EFFECT OF ADVERSE CHANGES IN COMMODITY PRICES

The Applicable Index is designed to replicate, to the extent provided herein,
the Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price of
one ounce of gold on the London bullion market. Market gold prices can fluctuate
widely and are affected by numerous factors beyond the Company's control,

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<PAGE> 12

including industrial and jewelry demand, expectations with respect to the rate
of inflation, the strength of the U.S. dollar (the currency in which the price
of gold is generally quoted) and of other currencies, interest rates, central
bank sales, forward sales by producers, global or regional political or economic
events, and production costs and disruptions in major gold producing regions
such as South Africa and the former Soviet Union. The demand for and supply of
gold affect gold prices, but not necessarily in the same manner as supply and
demand affect the prices of other commodities. The supply of gold consists of a
combination of new mine production and existing stock of bullion and fabricated
gold held by governments, public and private financial institutions, industrial
organizations and private individuals. As the amounts produced in any single
year constitute a very small portion of the total potential supply of gold,
normal variations in production do not necessarily have a significant impact on
the supply of gold or on its price. In addition, the price of gold 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 COMMODITIES TRADING; TEMPORARY DISTORTIONS

The markets for gold 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 other factors. Certain
events could cause there to be no London P.M. gold fixing price on any
particular day. Such circumstances, particularly if they occur during the
Determination Period (as defined herein) for the Applicable Index, could
adversely affect the value of the Applicable Index and, therefore, the value of
the ComPS.

In the event that no official London P.M. fixing price as reported by the
relevant fixing association (the "Fixing Price") is available with respect to
the price of one ounce of gold on the London bullion market for any given day,
no Applicable Index Value will be available for such day. If such London P.M.
fixing price shall have ceased as of such date to be available for an indefinite
period of time, the Applicable Index will thereafter be calculated based on the
London A.M. fixing price (or such other successor London fixing price) until the
London P.M. fixing price again becomes available.

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 any Early Determination Period
or the Determination Period, the Early Redemption Value or Redemption Value, as
applicable, payable in respect of the ComPS will be calculated using the Dollar
Equivalent Value of one-tenth of the London P.M. gold fixing price for one ounce
of gold on the day or days on which open-outcry trading on either the New York
Mercantile Exchange (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 Principal Amount 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 gold equal in size to the
aggregate Early Redemption Value or Redemption Value, as applicable, of the
ComPS, 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
aggregate Early Redemption Value and Redemption Value of the ComPS, Morgan
Guaranty may have an adverse interest with respect to such determination.

In the event of a Market Disruption Event on the fifth London Business Day prior
to the last calendar day of any month, the dividend otherwise payable on such
calendar day will be payable on the later of such

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<PAGE> 13

calendar day and the day two Business Days following the determination of the
amount thereof. If such Market Disruption Event remains in effect for longer
than 5 London Business Days and, in the reasonable judgment of Morgan Guaranty,
such Market Disruption is likely to remain in effect, then the Dollar Equivalent
Value of one-tenth of the London P.M. gold fixing price for one ounce of gold on
the London bullion market for such day 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 gold equal in
size to the aggregate dividend payment of the ComPS, although Morgan Guaranty
has no obligation to do so, and such Dollar Equivalent Value will be utilized in
the calculation of the dividend payable for such month.

HISTORICAL CORRELATIONS MAY NOT PREVAIL IN THE FUTURE

Although historically the price of gold has 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 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.

EXTENSION OF SETTLEMENT DATE OR STATED MATURITY

If the market for one ounce of gold on the London bullion market 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 the 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 Principal 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 or be payable, with
respect to ComPS redeemed on such Early Redemption Date.

EXTENSION OF DIVIDEND PAYMENT DATE

If the market for one ounce of gold on the London bullion market were to be
affected by a Market Disruption Event on the fifth London Business Day prior to
the last calendar day of any month, the applicable dividend payment date would
be postponed until the later of (i) the applicable calendar month end and (ii)
the second Business Day after the determination of the amount thereof. See
"Description of the ComPS--Dividends". Such delay could be of indefinite
duration, during which time a holder of ComPS will not receive such dividend
payment. In the event payment of any dividend is postponed beyond the applicable
calendar month end, no interest will accrue or be payable with respect to such
delayed dividend payment.

EARLY REDEMPTION

The ComPS may be redeemed prior to their Stated Maturity upon the occurrence of
a Special Event. In such case, the Redemption Value paid by the Company at such
time may be significantly less than the

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<PAGE> 14

Redemption Value that would otherwise have been payable had the ComPS not been
redeemed prior to their Stated Maturity, and it is possible that the occurrence
of such Special Event may cause the market price of the ComPS in any existing
secondary market to decline.

CERTAIN CONSIDERATIONS REGARDING HEDGING

Prospective purchasers of the ComPS who intend to hedge against the risks
associated with the market for gold should recognize the complexities of
utilizing the ComPS in this manner. The formulae by which the Early Redemption
Value and Redemption Value are calculated provide for the averaging of gold
prices over the Early Determination Period or the Determination Period, as
applicable. 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 this reason, investors should be cautious in using the
ComPS in a hedging program. The risks associated with utilizing the ComPS for in
a hedging program may be magnified in periods of substantial gold 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, investment 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
limited liability company agreement, dated February 16, 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 preferred and common securities in
other debt obligations of Morgan Guaranty, and (iii) engaging in only those
other activities necessary or incidental thereto.

S-14
<PAGE> 15

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 gold or gold futures contracts or in listed or over-the-counter
options contracts in, or other derivative or synthetic instruments related to,
gold or gold futures contracts. There can be no assurance that Morgan Guaranty's
initial hedging did not, and that its continued hedging will not, affect the
spot price of gold (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 gold or gold futures contracts or options contracts in, or other derivative
or synthetic instruments related to, gold or gold futures 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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<PAGE> 16

GENERAL

The ComPS pay both dividends and principal based on the price of gold. The
Principal Amount of a ComPS is the U.S. Dollar Equivalent Value of one-tenth of
an ounce of gold. Each dividend is calculated as a percentage rate of the
Principal Amount (which will fluctuate) and is paid monthly. Each full monthly
dividend will be equal to one-twelfth of the annual dividend rate multiplied by
the U.S. Dollar Equivalent Value of one-tenth of the spot price of one ounce of
gold at such time in the London bullion market. Thus, the amount of each
dividend will vary. Upon redemption, the Redemption Value will be equal to the
U.S. Dollar Equivalent Value of the 10-day average of one-tenth of the spot
price of one ounce of gold in the London bullion market. Therefore, both the
dividend payments and the Redemption Value will fluctuate based on the spot
price of gold determined in the London bullion markets and as a result, the
Redemption Value could be more or less than the Face Amount and the Dollar
Equivalent Value of each dividend will vary. Any events which adversely affect
the spot price of gold will adversely affect both the dividend payments on and
the Redemption Value of the ComPS.

The Principal Amount of each of the ComPS will vary over the life of the ComPS
in relation to the Dollar Equivalent Value of one-tenth of the London P.M. gold
fixing price of one ounce of gold on the London bullion market (the "Applicable
Index"). The Principal Amount repayable upon the occurrence of any Special Event
Redemption or at Stated Maturity will be determined, pursuant to the terms and
calculations described herein (including, without limitation, the average of
gold prices during any early Determination Period and the Determination Period
and the present-valuing of the indexed dividends and Principal Amount), based on
the Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price of
one ounce of gold on the London bullion market.

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
Principal Amount per Preferred Security. Dividends on the ComPS will be
cumulative and will be payable monthly on the last calendar day of each month
(calculated on the basis of a 360-day year of twelve 30-day months) based on the
Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price for
one ounce of gold on the London bullion market on the fifth London Business Day
prior to such calendar day, commencing [ ], 1996, when, as and if
available for payment; provided, however, that upon the occurrence of a Market
Disruption Event, such dividend will be payable on the later of such calendar
day and the day two Business Days following the determination of the amount
thereof. If such Market Disruption Event remains in effect for longer than 5
London Business Days and, in the reasonable judgment of Morgan Guaranty, such
Market Disruption is likely to remain in effect, then the Dollar Equivalent
Value of one-tenth of the London P.M. gold fixing price for one ounce of gold on
the London bullion market for such day may be determined in good faith by Morgan
Guaranty based on alternative pricing sources

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<PAGE> 17

reasonably believed by it to be indicative of then-prevailing prices for
notional transactions in gold equal in size to the aggregate dividend payment of
the ComPS, although Morgan Guaranty has no obligation to do so, and such Dollar
Equivalent Value will be utilized in the calculation of the dividend payable for
such month. The first dividend payment will be for the period from and including
the Issue Date to but excluding [ ], 1996. 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. However, in no event
will the amount of days for which dividends are paid be greater than 30 days.

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. Subject to the
occurrence of a Market Disruption Event, 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
dividends 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, 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 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 at any time is equal to
one-tenth of the Dollar Equivalent Value of the London P.M. gold fixing price of
one ounce of gold on the London bullion market. 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 the arithmetic average of the Dollar Equivalent Value of one-tenth of
the London P.M. gold fixing price of one ounce of gold in the London Bullion
market for each day of the Determination Period. The "Determination Period" is
the period of 10 consecutive Trading Days not subject to a Market Disruption
Event commencing immediately following the 20th Scheduled Business Day prior to
Stated Maturity. The ComPS Redemption Price will first be payable on the later
of the Stated Maturity and the fifth Business Day after the completion of the
Determination Period.

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

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following on any Trading Day with respect to the London P.M. gold fixing price
of one ounce of gold on the LMBA London bullion market (the "Relevant Fixing
Association"): (a) a day on which the fluctuation of the price of one ounce of
gold is materially limited by the rules of the Relevant Fixing Association (a
"Limit Price"); (b) a day on which the London P.M. gold fixing price is the
Limit Price; (c) the failure of the Relevant Fixing Association to determine,
announce or publish the London P.M. gold fixing price of one ounce of gold;
provided that if such London P.M. fixing price shall have ceased as of such date
to be available for an indefinite period of time, the Applicable Index will
thereafter be calculated based on the London A.M. fixing price (or such other
successor London fixing price) until the London P.M. fixing price again becomes
available and the absence of such price will not constitute a Market Disruption
Event; (d) the material suspension of trading of ounces of gold or any other
amount of gold on the Relevant Fixing Association affecting the price of one
ounce of gold; (e) the failure of trading to commence, or the permanent
discontinuation of trading, in ounces of gold on the Relevant Fixing Association
and (f) the imposition of any material limitation on trading in ounces of gold
or any other amount of gold on the Relevant Fixing Association affecting the
price of one ounce of gold.

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.

"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.

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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 the ComPS Early Redemption Price
per Preferred Security which is equal to the sum of the Early Redemption
Value plus an amount equal to all accrued and unpaid dividends on such
ComPS to but excluding the date of such redemption (the "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 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
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 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

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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 (and without any interest or other payment
in respect of any such delay), 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 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

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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 any Preferred Securities 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.

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.

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.]

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

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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 include in
certain circumstances the 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 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

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<PAGE> 23

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.

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.

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

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Initial Public Offering Price shown on the cover page hereof for the ComPS and
the Common Securities issued in connection therewith. The financial terms of the
Related Note, including, among other things, the maturity and principal of and
interest and any premium on the Related Note, will mirror the aggregate
financial terms of the ComPS.

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 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 or
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 upon
any such event.

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
Principal Amount from the original date of issuance, payable monthly 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

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<PAGE> 25

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 day that is a Business Day (without any interest or
other payment in respect of any such delay), 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.

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 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.

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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 Redemption Price, 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 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

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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
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.

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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 (e.g., upon a subsequent bankruptcy of
J.P. Morgan).

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.

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

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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 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.

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

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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 payable
(and currently taxable to holders) at the stated rate. By purchasing the ComPS,
the holders will agree to treat the Related Note in the same manner.

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.

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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 becomes fixed and
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 a 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 series of prepaid cash-settled forward purchase
contracts to buy gold, a series of loans combined with cash-settled forward
purchase contracts to buy gold 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, possibly at the market rate for a fixed debt instrument, 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 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 interest payments and project Principal Amount at Stated Maturity
(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 the end of each
taxable year of the Company and at maturity to reflect the actual interest
payments and the payment at Stated Maturity 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.

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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 tax. No assurance can be given whether such 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.

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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 whollyowned 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 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.

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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 to purchase, severally but not jointly, 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;
provided that such compensation for sales of ComPS to certain institutions will
be $[ ] per Preferred Security.

[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.]

The Company and J.P. Morgan have agreed to indemnify the Underwriter 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
Underwriter by the Board of Governors of the Federal Reserve System.

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
Underwriters. 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.

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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 Dollar Equivalent Value of one-tenth of the London
P.M. gold fixing price for one ounce of gold in the
London bullion market.

BULLION ComPS...........as defined in the accompanying Prospectus, ComPS for
which the Applicable Index is a Price Reference Index in
which all distributions and the Bullion (ComPS Principal
Amount are indexed to the Dollar Equivalent Value at
such time of the specified bullion (i.e., gold, silver,
platinum or palladium).

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

DIVIDENDS...............cumulative cash dividends of [ ]% per annum on the
Principal Amount determined five London Business Days
prior to the relevant payment date (calculated on the
basis of a 360 day year of twelve 30-day months),
accruing from the Issue Date and payable monthly;
provided, however, that upon the occurrence of a Market
Disruption Event, such dividend will be payable on the
later of such calendar day and the day two Business Days
following the determination of the amount thereof. If
such Market Disruption Event remains in effect for
longer than 5 London Business Days and, in the
reasonable judgment of Morgan Guaranty, such Market
Disruption is likely to remain in effect, then the
Dollar Equivalent Value of one-tenth of the London P.M.
gold fixing price for one ounce of gold on the London
bullion market for such day 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

A-1
<PAGE> 37

gold equal in size to the aggregate dividend payment of
the ComPS, although Morgan Guaranty has no obligation to
do so, and such Dollar Equivalent Value will be utilized
in the calculation of the dividend payable for such
month.

DOLLAR EQUIVALENT
VALUE...................with respect to the price of an amount of gold at any
time, the U.S. dollar value at such time of such price.

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

EARLY REDEMPTION
VALUE...................the arithmetic average for each day of the Early
Determination Period of the present value of the future
dividend payments and indexed Principal Amount of the
ComPS, subject to adjustment as specified in the
accompanying Prospectus under "Description of
ComPS--Early Redemption Upon the Occurrence of a Special
Event or at the Option of the Holders".

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

EARLY DETERMINATION
PERIOD..................the 10 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....................the date of any Special Event Redemption or Liquidation
Distribution.

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

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.

A-2
<PAGE> 38

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 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.

LBMA....................the London Bullion Market Association.

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 limited liability company agreement among J.P.
Morgan, JPM Ventures and holders of Preferred Securities
subsequently becoming members thereof dated February 16,
1996, and effective as of November 21, 1995.

LONDON BUSINESS DAY.....any day other than a Saturday, Sunday or any other day
on which banking institutions in London are permitted or
required by any applicable law to close.

LME.....................The London Metal Exchange

MARKET DISRUPTION
EVENT...................the occurrence of one or more of the following on any
Trading Day with respect to the London P.M. gold fixing
price of one ounce of gold on the LBMA London bullion
market (the "Relevant Fixing Association"): (a) a day on
which the fluctuation of the price of one ounce of gold
is materially limited by the rules of the Relevant
Fixing Association setting the maximum or minimum price
for such day (a "Limit Price"); (b) a day on which the
London P.M. gold fixing price is the Limit Price; (c)
the failure of the Relevant Fixing Association to
determine, announce or publish the London P.M. gold
fixing price of one ounce of gold; provided that if such
London P.M. fixing price shall have ceased as of such
date to be available for an indefinite period of time,
the Applicable Index will thereafter be calculated based
on the London A.M. fixing price (or such successor
London fixing price) until the London P.M. fixing price
again becomes available, and the absence of such price
will not thereafter constitute a Market Disruption
Event; (d) the material suspension of trading of ounces
of gold or any other amount of gold on the Relevant
Fixing Association affecting the price of one ounce of
gold; (e) the failure of trading to commence, or the
permanent discontinuation of trading, in ounces of gold
on the Relevant Fixing Association; and (f) the
imposition of any material limitation on

A-3
<PAGE> 39

trading in ounces of gold or any other amount of gold on
the Relevant Fixing Association affecting the price of
one ounce of gold.

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

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

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

PRINCIPAL AMOUNT........at any time, (i) in the case of ComPS, the Dollar
Equivalent Value of one-tenth of the London P.M. gold
fixing price on such day for one ounce of gold in the
London bullion market, and (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 average of the Principal Amount
over the 10 consecutive Trading Days meeting certain
conditions immediately following the 20th scheduled
Business Day prior to redemption (as described herein).

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.

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 for cash at the Related Note
Redemption Price, with the result that the Company will
redeem ComPS 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 an equal Principal
Amount of the ComPS.

A-4
<PAGE> 40

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

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

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> 41

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

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-8
J.P. Morgan & Co. Incorporated............ S-14
J.P. Morgan Index Funding Company, LLC.... S-14
Use of Proceeds........................... S-15
Description of the ComPS.................. S-15
Description of the Related Note........... S-23
Description of the Guarantee.............. S-26
Description of the Related Note
Guarantee............................... S-27
Effect of Obligations Under the Guarantee,
the Related Note Guarantee and the
Related Note............................ S-28
United States Federal Income Taxation..... S-29
ERISA Considerations...................... S-33
Underwriting.............................. S-34
Legal Matters............................. S-34
Experts................................... S-35
ANNEX I
Glossary of Terms......................... A-1
PROSPECTUS
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
ANNEX I
Glossary of Terms......................... A-1
- ------------------------------------------------
- ------------------------------------------------
</TABLE>

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

SERIES AU1
PREFERRED SECURITIES
INDEXED TO GOLD

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> 42
Filed pursuant to Rule 424(b)(2)
Registration Statement No. 333-01121

SUBJECT TO COMPLETION, DATED MAY 21, 1996

"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.

Price $[40] per Preferred Security plus accrued dividends, if any.

J.P. MORGAN SECURITIES LTD.

The date of this Prospectus Supplement is [ ], 1996.
<PAGE> 43

S-2
<PAGE> 44

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> 45

SUMMARY OF THE OFFERING

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").

PRINCIPAL AMOUNT PER
PREFERRED SECURITY......The Dollar Equivalent Value of one tenth of the London
P.M. gold fixing price on such day for one ounce of gold
in the London bullion market.

AGGREGATE INITIAL
PRINCIPAL 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.

APPLICABLE INDEX........The Dollar Equivalent Value of one-tenth of the London
P.M. gold fixing price for one ounce of gold in the
London bullion market.

CALCULATION AGENT.......Morgan Guaranty.

S-4
<PAGE> 46

THE OFFERING

GENERAL

DIVIDENDS

S-5
<PAGE> 47

REDEMPTION AT STATED MATURITY

CALCULATION OF REDEMPTION VALUE

SPECIAL EVENT REDEMPTION

The ComPs will not be subject to optional redemption by the holders thereof
prior to Stated Maturity.

UNCONDITIONAL GUARANTEE BY J.P. MORGAN

THE GUARANTEE

S-6
<PAGE> 48

THE RELATED NOTE GUARANTEE

RELATED NOTE

VOTING RIGHTS

USE OF PROCEEDS

LISTING

S-7
<PAGE> 49

RISK FACTORS

INDEXATION OF PRINCIPAL AMOUNT AND DIVIDENDS

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

TRADING PRICE MAY NOT REFLECT ACTUAL ECONOMIC VALUE

S-8
<PAGE> 50

VALUE OF THE COMPS

NO RIGHT TO INTEREST ON RELATED NOTE

IMPOSITION OF BANK REGULATORY RESTRICTIONS

EFFECT OF TRADING IN RELATED COMMODITIES AND INSTRUMENTS

S-9
<PAGE> 51

POTENTIAL FOR ADVERSE INTERESTS

VOLATILITY OF GOLD PRICES

U.S. DOLLAR EQUIVALENT VALUE OF LONDON P.M. GOLD FIXING PRICE
OF ONE OUNCE OF GOLD AS OF THE END OF:

S-10
<PAGE> 52

The following graph sets forth such month-end values:

LONDON P.M. GOLD FIXING PRICE, 1986-1996

[GRAPHIC OMITTED]

EFFECT OF ADVERSE CHANGES IN COMMODITY PRICES

S-11
<PAGE> 53

SUSPENSION OR MATERIAL DISRUPTION OF COMMODITIES TRADING; TEMPORARY DISTORTIONS

MARKET DISRUPTION EVENTS

S-12
<PAGE> 54

HISTORICAL CORRELATIONS MAY NOT PREVAIL IN THE FUTURE

CHANGES IN LAWS OR REGULATIONS OR INTERPRETATIONS THEREOF

EXTENSION OF SETTLEMENT DATE OR STATED MATURITY

EXTENSION OF DIVIDEND PAYMENT DATE

EARLY REDEMPTION

The ComPS may be redeemed prior to their Stated Maturity upon the occurrence of
a Special Event. In such case, the Redemption Value paid by the Company at such
time may be significantly less than the

S-13
<PAGE> 55

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-14
<PAGE> 56

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-15
<PAGE> 57

GENERAL

DIVIDENDS

Dividends on the ComPS will be fixed at a rate per annum of [ ]% of the
Principal Amount per Preferred Security. Dividends on the ComPS will be
cumulative and will be payable monthly on the last calendar day of each month
(calculated on the basis of a 360-day year of twelve 30-day months) based on the
Dollar Equivalent Value of one-tenth of the London P.M. gold fixing price for
one ounce of gold on the London bullion market on the fifth London Business Day
prior to such calendar day, commencing [ ], 1996, when, as and if
available for payment; provided, however, that upon the occurrence of a Market
Disruption Event, such dividend will be payable on the later of such calendar
day and the day two Business Days following the determination of the amount
thereof. If such Market Disruption Event remains in effect for longer than 5
London Business Days and, in the reasonable judgment of Morgan Guaranty, such
Market Disruption is likely to remain in effect, then the Dollar Equivalent
Value of one-tenth of the London P.M. gold fixing price for one ounce of gold on
the London bullion market for such day may be determined in good faith by Morgan
Guaranty based on alternative pricing sources

S-16
<PAGE> 58

REDEMPTION AT STATED MATURITY

CALCULATION OF REDEMPTION VALUE

S-17
<PAGE> 59

SPECIAL EVENT REDEMPTION

S-18
<PAGE> 60

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-19
<PAGE> 61

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.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

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.

S-20
<PAGE> 62

and all other affected Preferred Securities. See "Description of the
Guarantee--Modification of the Guarantee".

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

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.]

ACCOUNTING TREATMENT

S-21
<PAGE> 63

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

BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

S-22
<PAGE> 64

arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.

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

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

S-23
<PAGE> 65

RELATED NOTE REDEMPTION PRICE

SUBORDINATION

INTEREST

S-24
<PAGE> 66

SPECIAL EVENT REDEMPTION

EVENTS OF DEFAULT

MODIFICATION OF THE RELATED NOTE

CONSOLIDATION, MERGER AND SALE

GOVERNING LAW

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

MISCELLANEOUS

S-25
<PAGE> 67

DESCRIPTION OF THE GUARANTEE

GENERAL

MODIFICATION OF THE GUARANTEE; ASSIGNMENT

REMEDIES OF HOLDERS

TERMINATION OF THE GUARANTEE

S-26
<PAGE> 68

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

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

GENERAL

MODIFICATION OF THE RELATED NOTE GUARANTEE; ASSIGNMENT

S-27
<PAGE> 69

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.

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

S-28
<PAGE> 70

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.

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.

UNITED STATES FEDERAL INCOME TAXATION

GENERAL

S-29
<PAGE> 71

CLASSIFICATION OF THE RELATED NOTE

CLASSIFICATION OF THE COMPANY

S-30
<PAGE> 72

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-31
<PAGE> 73

MONTHLY ALLOCATIONS OF INCOME

SALE OR OTHER DISPOSITION OF COMPS

SECONDARY MARKET PURCHASERS

NON-UNITED STATES HOLDERS

INFORMATION REPORTING TO HOLDERS

S-32
<PAGE> 74

BACKUP WITHHOLDING

ERISA CONSIDERATIONS

S-33
<PAGE> 75

UNDERWRITING

[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.]

The Company and J.P. Morgan have agreed to indemnify the Underwriter 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.

LEGAL MATTERS

S-34
<PAGE> 76

EXPERTS

S-35
<PAGE> 77

ANNEX I

GLOSSARY OF TERMS

APPLICABLE INDEX........the Dollar Equivalent Value of one-tenth of the London
P.M. gold fixing price for one ounce of gold in the
London bullion market.

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

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DOLLAR EQUIVALENT
VALUE...................with respect to the price of an amount of gold at any
time, the U.S. dollar value at such time of such price.

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

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

EARLY REDEMPTION
DATE....................the date of any Special Event Redemption or Liquidation
Distribution.

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

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.

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

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

LBMA....................the London Bullion Market Association.

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

LONDON BUSINESS DAY.....any day other than a Saturday, Sunday or any other day
on which banking institutions in London are permitted or
required by any applicable law to close.

LME.....................The London Metal Exchange

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trading in ounces of gold or any other amount of gold on
the Relevant Fixing Association affecting the price of
one ounce of gold.

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

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

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

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.

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

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

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.

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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

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SERIES AU1
PREFERRED SECURITIES
INDEXED TO GOLD

J.P. MORGAN INDEX
FUNDING COMPANY, LLC

PREFERRED SECURITIES
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY

J.P. MORGAN & CO.
INCORPORATED

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PROSPECTUS SUPPLEMENT
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[ ]
, 1996

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