THE JPM INSTITUTIONAL FUNDS
Supplement dated July 29, 1997, as applicable to the following Prospectuses:
The JPM Institutional Funds, dated 2/28/97
The JPM Institutional Money Market Fund, dated 2/28/97
The JPM Institutional Federal Money Market Fund, dated 2/28/97
The JPM Institutional Tax Exempt Money Market Fund, dated 12/27/96
The JPM Institutional Short Term Bond Fund, dated 2/28/97
The JPM Institutional Bond Fund, dated 2/28/97
The JPM Institutional Tax Exempt Bond Fund, dated 12/27/96
The JPM Institutional International Bond Fund, dated 12/27/96
The JPM Institutional Diversified Fund, dated 9/27/96
The JPM Institutional Selected U.S. Equity Fund, dated 9/27/96
The JPM Institutional U.S. Small Company Fund, dated 9/27/96
The JPM Institutional International Equity Fund, dated 2/28/97
The JPM Institutional Emerging Markets Equity Fund, dated 2/28/97
(Supersedes all supplements with respect to the above Funds dated prior to July
29, 1997)
FUND/PORTFOLIO NAME CHANGES:
1. The following Funds changed their respective names effective May 12, 1997:
FROM
The JPM Institutional Money Market Fund
The JPM Institutional Selected U.S. Equity Fund
TO
The JPM Institutional Prime Money Market Fund
The JPM Institutional U.S. Equity Fund
The names of the Portfolios corresponding to these Funds
changed accordingly.
The Portfolio corresponding to the INTERNATIONAL EQUITY FUND
changed its name to The International Equity Portfolio.
INVESTMENT POLICY REVISIONS:
2. The second sentence in the paragraph above the heading "Municipal Bonds"
under "Investment Objective(s) and Policies" in the Prospectuses for the TAX
EXEMPT MONEY MARKET FUND is replaced with the following:
The market value of obligations in which the Portfolio invests is not
guaranteed and may rise and fall in response to changes in interest rates.
During normal market conditions, the Portfolio
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will invest substantially all, and not less than 80%, of its net assets in tax
exempt obligations. The Portfolio generally will not invest in taxable
securities, although in abnormal market conditions, if, in the judgment of the
Advisor, tax exempt securities satisfying the Portfolio's investment objective
may not be purchased, the Portfolio may, for defensive purposes only,
temporarily invest up to 20% of its total assets in such securities.
3. The first sentence of the second paragraph under the caption "Quality
Information" in the Prospectuses for the TAX EXEMPT MONEY MARKET FUND is
replaced with the following:
The Portfolio may purchase municipal obligations together with puts.
4. The sub-section entitled "Taxable Investments for the Tax Exempt Funds" in
the combined Prospectus is replaced with the following:
TAXABLE INVESTMENTS FOR THE TAX EXEMPT FUNDS. Each of the Portfolios
for the TAX EXEMPT MONEY MARKET AND TAX EXEMPT BOND FUNDS attempts to invest its
assets in tax exempt municipal securities; however, under certain circumstances
the Portfolios are permitted to invest in securities the interest income on
which may be subject to federal, state or local income taxes. The Tax Exempt
Bond Portfolio may invest up to 20% of the value of its total assets in taxable
investments pending investment of proceeds from sales of its interests or
portfolio securities, pending settlement of purchases of portfolio securities,
to maintain liquidity or, in the case of either Portfolio, when it is advisable
in the Advisor's opinion because of adverse market conditions. The Tax Exempt
Bond Portfolio will invest in taxable
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securities only if there are no tax exempt securities available for purchase or
if the expected return from an investment in taxable securities exceeds the
expected return on available tax exempt securities. In abnormal market
conditions, if, in the judgment of the Advisor, tax exempt securities satisfying
the investment objective of the Tax Exempt Money Market Fund or the Tax Exempt
Bond may not be purchased, its corresponding Portfolio may, for defensive
purposes only, temporarily invest up to 20% of its total assets in money market
securities, in the case of the Tax Exempt Money Market Fund, and more than 20%
of its net assets in debt securities in the case of the Tax Exempt Bond Fund,
the interest on which is subject to federal, state or local income taxes. The
taxable investments permitted for these Portfolios include obligations of the
U.S. Government and its agencies and instrumentalities, bank obligations,
commercial paper and repurchase agreements and, in the case of the Tax Exempt
Bond Portfolio, other debt securities which meet the Portfolio's quality
requirements. See Taxes.
5. The sub-section entitled "Taxable Investments" in the individual Prospectus
for the TAX EXEMPT MONEY MARKET FUND is revised accordingly.
6. The first paragraph of the sub-section entitled "Quality Information" in
the Prospectuses for the TAX EXEMPT BOND FUND is replaced with the following:
QUALITY INFORMATION. It is the current policy of the Portfolio that under normal
circumstances at least 90% of total assets will consist of securities that at
the time of purchase are rated Baa or better by Moody's Investors Service, Inc.
("Moody's") or BBB or better by Standard & Poor's Ratings Group ("Standard &
Poor's"). The remaining 10% of total assets may be invested in securities that
are rated B or better by Moody's or Standard & Poor's. In each case, the
Portfolio may invest in securities which are unrated if in the Advisor's opinion
such securities are of comparable quality. Securities rated Baa by Moody's or
BBB by Standard & Poor's are considered investment grade, but have some
speculative characteristics. Securities rated Ba or B by Moody's and BB or B by
Standard & Poor's are below investment grade and considered to be speculative
with regard to payment of interest and principal. These standards must be
satisfied at the time an investment is made. If the quality of the investment
later declines, the Portfolio may continue to hold the investment.
7. The following is inserted directly under the heading "Additional Investment
Information and Risk Factors" in the individual Prospectus for the TAX EXEMPT
BOND AND DIVERSIFIED FUNDS:
BELOW INVESTMENT GRADE DEBT. Certain lower rated securities purchased by the
Portfolio, such as those rated Ba or B by Moody's or BB or B by Standard &
Poor's (commonly known as junk bonds), may be subject to certain risks with
respect to the issuing entity's ability to make scheduled payments of principal
and interest and to greater market fluctuations. While generally providing
higher coupons or interest rates than investments in higher quality securities,
lower quality fixed income securities involve greater risk of loss of principal
and income, including the possibility of default or bankruptcy of the issuers of
such securities, and have greater price volatility, especially during periods of
economic uncertainty or change. These lower quality fixed income securities tend
to be affected by economic changes and short-term corporate and industry
developments to a greater extent than higher quality securities, which react
primarily to fluctuations in the general level of interest rates. To the extent
that the Portfolio invests in such lower quality securities, the achievement of
its investment objective may be more dependent on the Advisor's own credit
analysis.
Lower quality fixed income securities are affected by the market's perception of
their credit quality, especially during times of adverse publicity, and the
outlook for economic growth. Economic downturns or an increase in interest rates
may cause a higher incidence of default by the issuers of these securities,
especially issuers that are highly leveraged. The market for these lower quality
fixed income securities is generally less liquid than the market for investment
grade fixed income securities. It may be more difficult to sell these lower
rated securities to meet redemption requests, to respond to changes in the
market, or to value accurately the Portfolio's portfolio securities for purposes
of determining the Fund's net asset value. See Appendix A in the Statement of
Additional Information for more detailed information on these ratings.
8. The paragraphs under the heading "Below Investment Grade Debt" in the
combined Prospectus are applicable to the TAX EXEMPT BOND AND DIVERSIFIED FUNDS.
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9. The sub-section entitled "Quality Information" in the Prospectuses for the
DIVERSIFIED FUND is replaced with the following:
QUALITY INFORMATION. It is a current policy of the Portfolio that under normal
circumstances at least 75% of that portion of the Portfolio invested in fixed
income securities will consist of securities that at the time of purchase are
rated Baa or better by Moody's Investors Service, Inc. ("Moody's") or BBB or
better by Standard & Poor's Ratings Group ("Standard & Poor's"), of which at
least 65% of the Portfolio's fixed income investments will be rated A or better.
The remaining 25% of the Portfolio's fixed income investments may be invested in
securities that are rated B or better by Moody's or Standard & Poor's. In each
case, the Portfolio may invest in securities which are unrated if in the
Advisor's opinion such securities are of comparable quality. Securities rated
Baa by Moody's or BBB by Standard & Poor's are considered investment grade, but
have some speculative characteristics. Securities rated Ba or B by Moody's or BB
or B by Standard & Poor's are below investment grade and considered to be
speculative with regard to payment of interest and principal. These standards
must be satisfied at the time an investment is made. If the quality of the
investment later declines, the Portfolio may continue to hold the investment.
See Appendix A in the Statement of Additional Information for more information
on these ratings.
10. The first sentence in the paragraph above the heading "Treasury Securities;
Certain U.S. Government Agency Obligations" under "Investment Objective(s) and
Policies" in the Prospectuses for the FEDERAL MONEY MARKET FUND is revised as
follows:
The Portfolio seeks to achieve its investment objective by investing in
direct obligations of the U.S. Treasury and in obligations of certain U.S.
Government agencies described below.
11. The third, fourth and fifth sentences under the heading "Treasury
Securities; Certain U.S. Government Agency Obligations" in the Prospectuses for
the FEDERAL MONEY MARKET FUND are revised as follows:
During ordinary market conditions substantially all of the Portfolio's
net assets will be invested in Treasury Securities and obligations issued by
U.S. Government agencies, that are generally exempt from state and local income
taxes, where the Portfolio must look to the issuing agency for ultimate
repayment, including the Federal Farm Credit System, the Federal Home Loan
Banks, the Tennessee Valley Authority and the Student Loan Marketing Association
("Permitted Agency Securities"). Each such obligation must have a remaining
maturity of 397 days or less at the time of purchase by the Portfolio.
12. The last two sentences under the heading "Treasury Securities; Certain U.S.
Government Agency Obligations" in the combined Prospectus and the similar
paragraph in the individual Prospectus for the FEDERAL MONEY MARKET FUND are
deleted.
13. The second to last sentence under the heading "Treasury Securities; Certain
U.S. Government Agency Obligations" in the Prospectuses for the FEDERAL MONEY
MARKET FUND is revised as follows:
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<PAGE>
The Portfolio also may purchase Treasury Securities and Permitted
Agency Securities on a when-issued or delayed delivery basis and, although it
has no current intention to do so, may engage in repurchase and reverse
repurchase agreement transactions involving such securities.
14. The first sentence under the heading "Repurchase Agreements" in the
individual Prospectus for the FEDERAL MONEY MARKET FUND is revised as follows:
The Portfolio may, although it has no current intention to do so, engage in
repurchase agreements with brokers, dealers or banks that meet the credit
guidelines established by the Portfolio's Trustees.
15. The third sentence under the heading "Repurchase Agreements" in the
individual Prospectus for the FEDERAL MONEY MARKET FUND is revised as follows:
The Portfolio may only enter into repurchase agreements involving
Treasury Securities and Permitted Agency Securities.
16. The third sentence under the heading "Repurchase Agreements" in the combined
Prospectus is revised as follows:
Although it has no current intention to do so, the Portfolio for the
FEDERAL MONEY MARKET FUND may engage in repurchase agreements and may only enter
into repurchase agreements involving Treasury Securities and Permitted Agency
Securities.
17. The second sentence of the seventh paragraph under the heading "Investment
Objective and Policies" in the individual Prospectus for the INTERNATIONAL
EQUITY FUND is replaced with the following:
Through the use of forward foreign currency exchange contracts, the
Advisor will adjust the Portfolio's foreign currency weightings relative to the
EAFE Index. In addition, from time to time, the Advisor may reduce the
Portfolio's foreign currency exposure by entering into forward foreign currency
exchange contracts to sell a foreign currency in exchange for the U.S. dollar.
18. The similar sentence on page 29 in the combined Prospectus is revised
accordingly.
19. The seventh sentence under the heading "Equity Investments" in the
individual Prospectus for the DIVERSIFIED FUND is replaced with the following:
Through the use of forward foreign currency exchange contracts, the
Advisor will adjust the Portfolio's foreign currency weightings relative to the
EAFE Index. From time to time, the Advisor may reduce the Portfolio's foreign
currency exposure by entering into forward foreign currency exchange contracts
to sell a foreign currency in exchange for the U.S. dollar.
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<PAGE>
20. The similar sentence on page 32 in the combined Prospectus is revised
accordingly.
21. The following is added after the second sentence of the second paragraph
under the heading "Foreign Currency Exchange Transactions" in the individual
Prospectus for the INTERNATIONAL EQUITY AND EMERGING MARKETS EQUITY FUNDS:
These contracts are derivative instruments, as their value derives from
the spot exchange rates of the currencies underlying the contracts.
22. The sentence "The Portfolio(s) will not enter into forward contracts for
speculative purposes." in the above paragraph is deleted in the Prospectuses for
the BOND, SHORT TERM BOND, INTERNATIONAL BOND, U.S. EQUITY, U.S. SMALL COMPANY,
INTERNATIONAL EQUITY, EMERGING MARKETS EQUITY AND DIVERSIFIED FUNDS.
23. The third paragraph under the heading "Foreign Currency Exchange
Transactions" in the Prospectus for the INTERNATIONAL EQUITY FUND is replaced
with the following:
The Portfolio may enter into forward foreign currency exchange
contracts to adjust its currency exposure relative to its benchmark, the EAFE
Index. The Portfolio may also enter into forward foreign currency exchange
contracts in connection with settlements of securities transactions and other
anticipated payments or receipts. In addition, from time to time, the Advisor
may reduce the Portfolio's foreign currency exposure by entering into forward
foreign currency exchange contracts to sell a foreign currency in exchange for
the U.S. dollar. Forward foreign currency exchange contracts may involve the
purchase or sale of a foreign currency in exchange for U.S. dollars or may
involve two foreign currencies.
24. The third paragraph under the heading "Foreign Currency Exchange
Transactions" in the Prospectus for the EMERGING MARKETS EQUITY FUND is replaced
with the following:
The Portfolio may enter into forward foreign currency exchange contracts in
connection with settlements of securities transactions and other anticipated
payments or receipts. In addition, from time to time, the Advisor may reduce the
Portfolio's foreign currency exposure by entering into forward foreign currency
exchange contracts to sell a foreign currency in exchange for the U.S. dollar.
The Portfolio may also enter into forward foreign currency exchange contracts to
adjust its currency exposure relative to its benchmark, the MSCI Emerging
Markets Free Index. Forward foreign currency exchange contracts may involve the
purchase or sale of a foreign currency in exchange for U.S. dollars or may
involve two foreign currencies.
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<PAGE>
25. The third paragraph under the heading "Foreign Currency Exchange
Transactions" in the Prospectus for the DIVERSIFIED FUND is replaced with the
following:
The Portfolio may enter into forward foreign currency exchange contracts to
adjust its currency exposure relative to the EAFE Index, the benchmark for its
international equity investments. The Portfolio may also enter into forward
foreign currency exchange contracts in connection with settlements of securities
transactions and other anticipated payments or receipts. In addition, from time
to time, the Advisor may reduce the Portfolio's foreign currency exposure by
entering into forward foreign currency exchange contracts to sell a foreign
currency in exchange for the U.S. dollar. Forward foreign currency exchange
contracts may involve the purchase or sale of a foreign currency in exchange for
U.S. dollars or may involve two foreign currencies.
26. The third paragraph under the heading "Foreign Currency Exchange
Transactions" in the combined Prospectus is replaced with the following:
Each of these Portfolios may enter into forward foreign currency
exchange contracts in connection with settlements of securities transactions and
other anticipated payments or receipts. The Advisor may reduce the foreign
currency exposure of these Portfolios by entering into forward foreign currency
exchange contracts to sell a foreign currency in exchange for the U.S. dollar.
In addition, the Portfolios for the INTERNATIONAL EQUITY AND DIVERSIFIED FUNDS
may enter into forward foreign currency exchange contracts to adjust their
foreign currency exposures relative to the EAFE Index. The Portfolio for the
EMERGING MARKETS EQUITY FUND may enter into such transactions to adjust its
foreign currency exposure relative to the MSCI Emerging Markets Free Index.
Forward foreign currency exchange contracts may involve the purchase or sale of
a foreign currency in exchange for U.S. dollars or may involve two foreign
currencies.
MONEY MARKET FUNDS: CUT-OFF TIMES FOR PURCHASES AND REDEMPTIONS:
27. The third sentence in the second paragraph of the sub-section entitled
"Purchase Price and Settlement" in the Prospectuses for the PRIME MONEY MARKET,
FEDERAL MONEY MARKET AND TAX EXEMPT MONEY MARKET FUNDS is revised as applicable
to the Fund(s) described therein:
Purchase orders must be received by 12:00 noon for the TAX EXEMPT MONEY MARKET
FUND, 1:00 p.m. for the FEDERAL MONEY MARKET FUND and 4:00 p.m. for the PRIME
MONEY MARKET FUND and immediately available funds must be received by 4:00 p.m.
New York time on a business day for the purchase to be effective and dividends
to be earned on the same day.
The fifth sentence in the same paragraph is revised to change the
reference to the cut-off time for purchases to 4:00 p.m.
28. The second paragraph of the sub-section entitled "Method of Redemption" in
the Prospectuses for the PRIME MONEY MARKET, FEDERAL MONEY MARKET AND TAX EXEMPT
MONEY MARKET FUNDS is revised accordingly to change the cut-off time for
redemptions to 12:00 noon for the TAX EXEMPT MONEY MARKET FUND, 1:00 p.m. for
the FEDERAL MONEY MARKET FUND and 4:00 p.m. for the PRIME MONEY MARKET FUND.
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<PAGE>
MONEY MARKET FUNDS: SHORT-TERM GAINS:
29. The second paragraph under the caption "Dividends and Distributions" in the
Prospectuses for the PRIME MONEY MARKET, FEDERAL MONEY MARKET AND TAX EXEMPT
MONEY MARKET FUNDS is replaced with the following:
Net short-term capital gains, if any, will be distributed in accordance with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), and
may be reflected in the Fund's daily dividends. Substantially all the realized
net long-term capital gains, if any, of the Fund are declared and paid on an
annual basis, except that an additional capital gains distribution may be made
in a given year to the extent necessary to avoid the imposition of federal
excise tax on the Fund.
COMPREHENSIVE CHANGES:
30. The following footnote is inserted directly beneath the Shareholder
Transaction Expense table with reference to Sales Load Imposed on Purchases in
the individual Prospectus for the DIVERSIFIED, U.S. EQUITY AND U.S. SMALL
COMPANY FUNDS:
*Certain Eligible Institutions (defined below) may impose fees in connection
with the purchase of the FundOs shares through such institutions.
31. Effective February 10, 1997, Morgan has agreed to waive its shareholder
servicing fees and reimburse the TAX EXEMPT MONEY MARKET FUND for the remainder
of the Fund's expenses (excluding extraordinary expenses and expenses allocated
to the Fund from the Fund's corresponding Portfolio), thereby reducing current
total operating expenses of the Fund. This waiver and reimbursement arrangement
is in effect until December 31, 1997 in addition to the reimbursement described
under Expenses in the Prospectus. There is no assurance that Morgan will
continue this arrangement beyond that date. The Expense Table and Example in the
Prospectus is revised as follows:
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THE JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
EXPENSE TABLE
ANNUAL OPERATING EXPENSES
Advisory fees............................................................ 0.18%
Rule 12b-1 fees.......................................................... None
Other Expenses (after waiver and expense reimbursements) ................ 0.07%
----
Total Operating Expenses (after waiver and expense reimbursements) ...... 0.25%
====
The information in the expense table has been restated to reflect contractual
fees and other expenses described in the Prospectus after the current waiver and
reimbursement arrangements described above. Fees and expenses in the table are
expressed as a percentage of the Fund's estimated average daily net assets for
its current fiscal year and assume the current arrangements were in effect
throughout the year. If actual assets are lower than estimated, Total Operating
Expenses may, because of the Portfolio's expenses allocable to the Fund, exceed
0.25% but, in any event, will not exceed 0.35% of the Fund's average daily net
assets through December 31, 1997. If the table reflected expenses without
current arrangements, Other Expenses would be 0.22% and Total Operating Expenses
would be 0.40% of estimated assets. Historical Total Operating Expenses
expressed as a ratio to historical average daily net assets for the fiscal year
ended August 31, 1996 were 0.42%, assuming no expense reimbursements. See
Management of the Trust and the Portfolio.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 year ............................................................... $ 3
3 years .............................................................. $ 8
5 years .............................................................. $14
10 years ............................................................. $32
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32. The following is inserted as the first column in the "Financial Highlights"
table in the Prospectus(es) for each Fund listed below as applicable to the Fund
described therein:
<TABLE>
<CAPTION>
U.S. EQUITY FUND U.S. SMALL COMPANY FUND DIVERSIFIED FUND
For the Six Months Ended For the Six Months Ended For the Six Months Ended
November 30, 1996 November 30, 1996 December 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $14.00 $13.97 $12.02
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income 0.07 0.04 0.17
Net Realized and Unrealized
Gain (Loss) on Investment 1.41 0.16 0.76
---- ---- ----
Total from Investment
Operations 1.48 0.20 0.93
---- ---- ----
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net Investment Income (0.07) (0.05) (0.37)
Net Realized Gain (0.87) (0.66) (0.60)
------- ------ ------
Total Distributions to
Shareholders (0.94) (0.71) (0.97)
------
NET ASSET VALUE, END OF
PERIOD: $14.54 $13.46 $11.98
====== ====== ======
Total Return 11.56% (a) 1.92% (a) 8.01% (a)
RATIOS AND SUPPLEMENTAL
DATA:
Net Assets, End of Period (in
thousands) $268,502 $333,568 $198,071
Ratios to Average Net Assets
Expenses 0.60% (b) 0.80% (b) 0.65% (b)
Net Investment Income 1.40% (b) 0.84% (b) 3.33% (b)
Decrease Reflected in
Expense Ratio due to
Expense Reimbursement 0.07% (b) 0.10% (b) 0.27% (b)
(a) Not Annualized. (b) Annualized.
</TABLE>
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33. The first sentence of the third paragraph on the front page of the
individual Prospectus for the FEDERAL MONEY MARKET FUND is revised as follows:
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIO OF SECURITIES, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN THE FEDERAL MONEY MARKET PORTFOLIO
(FORMERLY THE TREASURY MONEY MARKET PORTFOLIO (THE "PORTFOLIO")), A
CORRESPONDING DIVERSIFIED OPEN-END MANAGEMENT INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND.
34. The last sentence of the second paragraph under "Investment Objective and
Policies" in the individual Prospectus for the FEDERAL MONEY MARKET FUND is
revised as follows:
The Fund attempts to achieve its investment objective by investing all
of its investable assets in The Federal Money Market Portfolio, a diversified
open-end management investment company having the same investment objective as
the Fund.
35. The following is added after the first sentence of the third paragraph
under the caption "Investment Objective and Policies" in the individual
Prospectus and to the appropriate paragraphs on pages 19 and 20 in the combined
Prospectus for the PRIME MONEY MARKET AND FEDERAL MONEY MARKET FUNDS: The market
value of obligations in which the Portfolio invests is not guaranteed and may
rise and fall in response to changes in interest rates.
36. The last sentence of the second paragraph under the caption "Investment
Objective and Policies" in the individual Prospectus for the U.S. SMALL COMPANY
FUND is replaced with the following:
The small company holdings of the Portfolio are primarily companies included in
the market capitalization size range of the Russell 2500 Index.
37. The fifth sentence under the heading OAdvisorO in the individual Prospectus
for the FEDERAL MONEY MARKET, PRIME MONEY MARKET, TAX EXEMPT MONEY MARKET, SHORT
TERM BOND, BOND, TAX EXEMPT BOND, DIVERSIFIED, INTERNATIONAL BOND, U.S. EQUITY,
U.S. SMALL COMPANY, INTERNATIONAL EQUITY AND EMERGING MARKETS EQUITY FUNDS is
revised as follows:
Through offices in New York City and abroad, J.P. Morgan, through the
Advisor and other subsidiaries, offers a wide range of services to governmental,
institutional, corporate and individual customers and acts as investment adviser
to individual and institutional clients with combined assets under management of
over $208 billion.
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<PAGE>
38. Portfolio manager biographies as applicable in Prospectus(es) of the Funds
described below are revised as follows:
TAX EXEMPT MONEY MARKET FUND: Daniel B. Mulvey, Vice President (since August,
1995, employed by Morgan since September 1992), and Richard W. Oswald, Vice
President (since October, 1996, employed by Morgan since 1996 and by CBS prior
to October, 1996).
U.S. SMALL COMPANY FUND: James B. Otness, Managing Director (since February,
1993, employed by Morgan since prior to 1992 as a portfolio manager of equity
securities of small and medium sized U.S. companies); Michael J. Kelly, Vice
President (since May, 1996, employed by Morgan since prior to 1992 as a
portfolio manager of small and medium sized U.S. companies and an equity
research analyst); and Candice Eggerss, Vice President (since May, 1996,
employed by Morgan since May, 1996 previously employed by Weiss, Peck and Greer
from June 1993 to May 1996 and Equitable Capital Management prior to June 1993).
INTERNATIONAL BOND FUND: Dominic J. Pegler, Vice President (since April, 1996,
employed by Morgan since April, 1996, previously an economist at Bank of
England) and Maria Ryan, Associate (since January, 1997, employed by Morgan
since prior to 1992).
39. The following is added after the first paragraph below the heading
"Shareholder Servicing" in the individual Prospectus for the DIVERSIFIED, U.S.
EQUITY AND U.S. SMALL COMPANY FUNDS:
The Fund may be sold to or through Eligible Institutions, including financial
institutions and broker-dealers, that may be paid fees by Morgan or its
affiliates for services provided to their clients that invest in the Fund.
Organizations that provide recordkeeping or other services to certain employee
benefit or retirement plans that include the Fund as an investment alternative
may also be paid a fee.
40. The following section under "Purchase of Shares" is amended in its entirety
as applicable to the Fund described in each individual Prospectus referenced
below:
METHOD OF PURCHASE. Investors may open accounts with the Fund only through the
Distributor. All purchase transactions in Fund accounts are processed by Morgan
as shareholder servicing agent and the Fund is authorized to accept any
instructions relating to a Fund account from Morgan as shareholder servicing
agent for the customer. All purchase orders must be accepted by the Distributor.
Investors must be either customers of Morgan or of an Eligible Institution or
employer-sponsored retirement plans that have designated the Fund as an
investment option for the plans. Prospective investors who are not already
customers of Morgan may apply to become customers of Morgan for the sole purpose
of Fund transactions. There are no charges associated with becoming a Morgan
customer for this purpose. Morgan reserves the right to determine the customers
that it will accept, and the Trust reserves the right to determine the purchase
orders that it will accept.
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The Fund requires the minimum initial investment shown below and a minimum
subsequent investment of $25,000:
FUND INITIAL INVESTMENT
THE JPM INSTITUTIONAL U.S. EQUITY FUND $ 3,000,000
THE JPM INSTITUTIONAL U.S. SMALL COMPANY FUND $ 1,000,000
THE JPM INSTITUTIONAL DIVERSIFIED FUND $ 3,000,000
These minimum investment requirements may be waived for certain investors,
including investors for whom the Advisor is a fiduciary, who maintain related
accounts with the Funds or the Advisor, who make investments for a group of
clients, such as financial advisors, trust companies and investment advisors, or
who maintain retirement accounts with the Funds.
41. All references to The Pierpont Funds and a Pierpont Fund under the captions
"Management of the Trust and the Portfolio" and "Exchange of Shares" are changed
to "The JPM Pierpont Funds" and "JPM Pierpont Fund," respectively, in the
individual Prospectus for the DIVERSIFIED, SELECTED U. S. EQUITY AND U.S. SMALL
COMPANY FUNDS.
42. The following is inserted as the last paragraph under the heading OEligible
InstitutionsO in the individual Prospectus for the DIVERSIFIED, U.S. EQUITY AND
U.S. SMALL COMPANY FUNDS:
Although there is no sales charge levied directly by the Fund, Eligible
Institutions may establish their own terms and conditions for providing their
services and may charge investors a transaction-based or other fee for their
services. Such charges may vary among Eligible Institutions but in all cases
will be retained by the Eligible Institution and not remitted to the Fund or
Morgan.
43. Any reference to control persons under the caption OOrganizationO in the
individual Prospectus for the DIVERSIFIED, U.S. EQUITY, U.S. SMALL COMPANY AND
FEDERAL MONEY MARKET FUNDS is deleted.
44. The third sentence of the first paragraph under the heading "Organization"
is restated in the Prospectuses for the MONEY MARKET, TAX EXEMPT MONEY MARKET,
FEDERAL MONEY MARKET, BOND, SHORT TERM BOND, TAX EXEMPT BOND, INTERNATIONAL
BOND, DIVERSIFIED, U.S. EQUITY AND U.S. SMALL COMPANY, INTERNATIONAL EQUITY AND
EMERGING MARKETS EQUITY FUNDS as follows:
To date, shares of 24 series have been authorized and are available for sale to
the public.
45. The following is added under the heading "Taxes" in the individual
Prospectus for the DIVERSIFIED, U.S. EQUITY AND U.S. SMALL COMPANY FUNDS:
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In addition, no loss will be allowed on the redemption or exchange of shares of
the Fund if, within a period beginning 30 days before the date of such
redemption or exchange and ending 30 days after such date, the shareholder
acquires (such as through dividend reinvestment) securities that are
substantially identical to shares of the Fund.
DIVIDEND POLICY REVISIONS (EFFECTIVE AUGUST 1, 1997)
46. The last sentence of the sub-section "The Short Term Bond, Bond, Tax Exempt
Bond and International Bond Funds" under the heading "Purchase of Shares" in the
combined Prospectus is replaced with the following:
The purchaser will begin to receive the daily dividends on the
settlement date.
47. The fourth sentence of the sub-section "The Short Term Bond, Bond, Tax
Exempt Bond and International Bond Funds" under the heading "Redemption of
Shares" in the combined Prospectus is replaced with the following:
The redeemer will continue to receive dividends on these shares through
the day before the settlement date.
48. The sub-section "The Short Term Bond, Bond and Tax Exempt Bond Funds" under
the heading "Dividends and Distributions" in the combined Prospectus is
applicable to the INTERNATIONAL BOND FUND.
49. The sub-section caption and first sentence of the fifth paragraph under the
heading "Dividends and Distributions" in the combined Prospectus are replaced
with the following:
THE U.S. EQUITY, U.S. SMALL COMPANY, INTERNATIONAL EQUITY, EMERGING
MARKETS EQUITY AND DIVERSIFIED FUNDS. Dividends consisting of substantially all
the Fund's net investment income, if any, are declared and paid at least four
times a year for the U.S. EQUITY FUND, at least twice a year for the U.S. SMALL
COMPANY FUND, annually for the INTERNATIONAL EQUITY AND EMERGING MARKETS EQUITY
FUNDS and quarterly for the DIVERSIFIED FUND.
50. The INTERNATIONAL BOND FUND accrues dividends daily and distributes income
dividends monthly.
The second paragraph under the heading "Purchase Price and Settlement" in
the individual Prospectus for the INTERNATIONAL BOND FUND is replaced with the
following:
To purchase shares in the Fund, investors should request their Morgan
representative (or a representative of their Eligible Institution) to assist
them in placing a purchase order with the Fund's Distributor. Any shareholder
may also call J.P. Morgan Funds Services at (800) 766-7722 for assistance in
placing an order for Fund shares. If the Fund or its agent receives a purchase
order prior to 4:00 P.M. New York time on any business day, the purchase of Fund
shares is effective and is made at the net asset value determined that day. If
the Fund or its agent receives a purchase order after 4:00 P.M. New York time,
the purchase is effective and is made at the net asset value determined on the
next business day. All purchase orders for Fund shares must be accompanied by
instructions to Morgan (or an Eligible Institution) to transfer immediately
available funds to the Fund's Distributor on settlement date. The settlement
date is generally the business day after the purchase is effective. The
purchaser will begin to receive the daily dividends on the settlement date. See
Dividends and Distributions.
The following is added after the third sentence of the second paragraph
under the heading "Method of Redemption" in the individual Prospectus for the
INTERNATIONAL BOND FUND:
The redeemer will continue to receive dividends on these shares through the day
before the settlement date.
The following replaces the first paragraph under the heading "Dividends
and Distributions" in the individual Prospectus for the INTERNATIONAL BOND FUND:
The Fund intends to distribute substantially all of its net investment income.
The net investment income of the Fund is declared as a dividend daily
immediately prior to the determination of the net asset value of the Fund on
that day and paid monthly. If an investor's shares are redeemed during a month,
accrued but unpaid dividends are paid with the redemption proceeds. The net
investment income for the Fund for dividend purposes consists of its pro rata
share of the net income of the Portfolio less the Fund's expenses. Expenses of
the Fund and the Portfolio, including the fees payable to Morgan, are accrued
daily. Shares will accrue dividends as long as they are issued and outstanding.
Shares are issued and outstanding as of the settlement date of a purchase order
through the day before the settlement date of a redemption order.
Substantially all the realized net capital gains of the Fund are declared and
paid on an annual basis, except that an additional capital gains distribution
may be made in a given year to the extent necessary to avoid the imposition of
federal excise tax on the Fund.
51. The first sentence under the heading "Dividends and Distributions" in the
individual Prospectus for the U.S. EQUITY FUND is replaced with the following:
Dividends consisting of substantially all the Fund's net investment
income, if any, are declared and paid at least four times a year.
52. The first sentence under the heading "Dividends and Distributions" in the
individual Prospectus for the DIVERSIFIED FUND is replaced with the following:
Dividends consisting of substantially all the Fund's net investment
income, if any, are declared and paid quarterly.
INSTSUPP-977
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