THE JPM INSTITUTIONAL FUNDS
Supplement dated April 30, 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 New York Total Return Bond Fund, dated 8/1/96
The JPM Institutional International Bond Fund, dated 12/27/96
The JPM Institutional Global Strategic Income Fund, dated 2/28/97
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 dated prior to April 30, 1997)
FUND/PORTFOLIO NAME CHANGES:
1. Effective May 12, 1997 the following Funds will change their
respective names:
FROM TO
The JPM Institutional The JPM Institutional
Money Market Fund Prime Money Market Fund
The JPM Institutional The JPM Institutional U.S.
Selected U.S. Equity Fund Equity Fund
The names of the Portfolios corresponding to these Funds will
change accordingly.
Effective May 12, 1997 the Portfolio corresponding to the
INTERNATIONAL EQUITY FUND will change its name to The International Equity
Portfolio.
<PAGE>
INVESTMENT POLICY REVISIONS (EFFECTIVE MAY 5, 1997):
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:
During normal market conditions, the Portfolio 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 it may temporarily invest in such securities when the Advisor believes
that market conditions dictate a defensive posture.
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 Prospectuses 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
Money Market Portfolio may temporarily invest in such taxable securities when
the Advisor believes that current market conditions dictate a defensive posture.
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 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 Tax Exempt Bond Fund's investment
objective may not be purchased, its corresponding Portfolio may, for defensive
purposes only, temporarily invest more than 20% of its net assets in debt
securities 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 Morgan'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 under the heading "Additional Investment
Information and Risk Factors" in the individual Prospectus for the TAX EXEMPT
BOND, DIVERSIFIED AND NEW YORK TOTAL RETURN BOND 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 sub-section "Below Investment Grade Debt" in the
combined Prospectus are applicable to the TAX EXEMPT BOND AND DIVERSIFIED FUNDS.
9. The sub-section entitled "Quality Information" in the Prospectus for the
NEW YORK TOTAL RETURN 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 Morgan'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. See Additional Investment
Information and Risk Factors.
10. 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.
11. 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.
12. The third and fourth sentences of the sub-section entitled "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, 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.
13. The second to last sentence under the above sub-section in the
Prospectuses for the FEDERAL MONEY MARKET Fund is revised as follows:
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 third sentence under the heading "Repurchase Agreements" in the
Prospectus for the FEDERAL MONEY MARKET FUND is revised as follows:
The Portfolio will only enter into repurchase agreements involving
Treasury Securities and Permitted Agency Securities.
<PAGE>
MONEY MARKET FUNDS: CUT-OFF TIMES FOR PURCHASES AND REDEMPTIONS (EFFECTIVE
MAY 15, 1997):
15. The third sentence in the second paragraph of the sub-section entitled
"Purchase Price and Settlement" in the Prospectuses for the 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 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.
MONEY MARKET FUNDS: SHORT-TERM GAINS (EFFECTIVE JUNE 1, 1997):
16. The second paragraph of the sub-section entitled "Method of Redemption"
in the Prospectuses for the 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 MONEY MARKET FUND.
17. The second paragraph under the caption "Dividends and Distributions" in the
Prospectuses for the 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:
18. 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 NEW YORK TOTAL RETURN BOND, DIVERSIFIED,
SELECTED U.S. EQUITY AND U.S. SMALL COMPANY FUNDS:
*Certain Eligible Institutions (defined below) may impose fees in connection
with the purchase of the Fund's shares through such institutions.
19. 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:
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
20. 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:
<PAGE>
<TABLE>
<CAPTION>
SELECTED 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 (UNAUDITED) November 30, 1996 (UNAUDITED) December 30, 1996
------------ ------------
<S> <C> <C> <C>
(UNAUDITED)
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>
21. 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.
22. The last sentence of the second paragraph under "Investment Objective and
Policies" in the 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.
23. 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.
24. The fourth sentence under the heading "Advisor" in the individual Prospectus
for the FEDERAL MONEY MARKET, MONEY MARKET, TAX EXEMPT MONEY MARKET, SHORT TERM
BOND, BOND, TAX EXEMPT BOND, NEW YORK TOTAL RETURN BOND, DIVERSIFIED,
INTERNATIONAL BOND, SELECTED 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.
25. Portfolio manager biographies as applicable in Prospectus(es) of the
Funds described below are revised as follows:
THE TAX EXEMPT MONEY MARKET FUND: Daniel B. Mulvey, Vice President (since
August, 1995, employed by Morgan since September 1992); Elizabeth A. Augustin,
Vice President (since January, 1992, employed by Morgan since prior to 1992);
and Richard W. Oswald, Vice President (since October, 1996, employed by Morgan
since 1996 and by CBS prior to October, 1996).
THE 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).
THE 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).
26. The following is added under the first paragraph below the heading
"Shareholder Servicing" in the individual Prospectus for the NEW YORK TOTAL
RETURN BOND, DIVERSIFIED, SELECTED 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.
27. 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 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.
<PAGE>
The Fund requires the minimum initial investment shown below and a minimum
subsequent investment of $25,000:
<PAGE>
FUND INITIAL INVESTMENT
THE JPM INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND $ 5,000,000
THE JPM INSTITUTIONAL SELECTED 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.
28. 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 NEW YORK TOTAL RETURN BOND, DIVERSIFIED,
SELECTED U. S. EQUITY AND U.S. SMALL COMPANY FUNDS.
29. The following is inserted at the end of the sub-section entitled
"Eligible Institutions" in the individual Prospectus for the NEW YORK TOTAL
RETURN BOND, DIVERSIFIED, SELECTED 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.
30. Any reference to control persons under the caption "Organization" in
the individual Prospectus for the NEW YORK TOTAL RETURN BOND, DIVERSIFIED,
SELECTED U.S. EQUITY, U.S. SMALL COMPANY AND FEDERAL MONEY MARKET FUNDS is
deleted.
31. The third sentence under the caption "Organization" is restated in the
individual Prospectus for the NEW YORK TOTAL RETURN BOND, DIVERSIFIED, SELECTED
U.S. EQUITY AND U.S. SMALL COMPANY FUNDS as follows:
To date, shares of nineteen series have been authorized and are available for
sale to the public.
32. The following is added under the caption "Taxes" in the individual
Prospectus for the NEW YORK TOTAL RETURN BOND, DIVERSIFIED, SELECTED U.S. EQUITY
AND U.S. SMALL COMPANY FUNDS:
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.
GLOBAL STRATEGIC INCOME FUND DIVIDENDS:
33. THE GLOBAL STRATEGIC INCOME FUND accrues dividends daily and distributes
income dividends monthly. The following changes to the Prospectus for the Fund
implement this dividend policy.
PURCHASE PRICE AND SETTLEMENT
The following replaces the last sentence under the caption Method of Purchase:
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. 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.
REDEMPTION OF SHARES
The following replaces the last sentence of the second paragraph under the
caption Method of Redemption:
Proceeds of an effective redemption are deposited on the settlement date in
immediately available funds to the shareholder's account at Morgan or at his
Eligible Institution or, in the case of certain Morgan customers, are mailed by
check or wire transferred in accordance with the customer's instructions. The
redeemer will continue to receive dividends on these shares through the day
before the settlement date. The settlement date is generally the next business
day after a redemption is effective and, subject to "Further Redemption
Information," in any event is within seven days. See Dividends and
Distributions.
DIVIDENDS AND DISTRIBUTIONS
The following replaces the first two sentences of the above section:
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, 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.
