<PAGE>
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MARCH 13, 1998 | PROSPECTUS
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J.P. MORGAN INSTITUTIONAL
FIXED INCOME FUNDS
Short Term Bond Fund
Bond Fund
International Bond Fund
Global Strategic Income Fund
Tax Exempt Bond Fund
New York Total Return Bond Fund
California Bond Fund
========================================
Seeking high total return or current
income by investing primarily in
fixed income securities.
This prospectus contains essential information for anyone investing in these
funds. Please read it carefully and keep it for reference.
Shares in these funds are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC.
As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them as an investment or guarantees that the information in this prospectus is
correct or adequate. It is a criminal offense to state or suggest otherwise.
Distributed by Funds Distributor, Inc. JP Morgan
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
===============================================================================================================================
<S> <C>
2 FIXED INCOME MANAGEMENT APPROACH
Fixed income investment process .............................................. 2
Principles and techniques common
to the funds in this prospectus The spectrum of fixed income funds ........................................... 3
4 J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
J.P. Morgan Institutional Short Term Bond Fund ............................... 4
Each fund's goal, investment approach,
risks, expenses, performance, and J.P. Morgan Institutional Bond Fund .......................................... 6
financial highlights
J.P. Morgan Institutional International Bond Fund ............................ 8
J.P. Morgan Institutional Global Strategic Income Fund ....................... 10
J.P. Morgan Institutional Tax Exempt Bond Fund ............................... 12
J.P. Morgan Institutional New York Total Return Bond Fund .................... 14
J.P. Morgan Institutional California Bond Fund ............................... 16
18 YOUR INVESTMENT
Investing through a financial professional ................................... 18
Investing in the J.P. Morgan
Institutional Fixed Income funds Investing through an employer-sponsored retirement plan ...................... 18
Investing through an IRA or rollover IRA ..................................... 18
Investing directly ........................................................... 18
Opening your account ......................................................... 18
Adding to your account ....................................................... 18
Selling shares ............................................................... 19
Account and transaction policies ............................................. 19
Dividends and distributions .................................................. 20
Tax considerations ........................................................... 20
21 FUND DETAILS
Business structure ........................................................... 21
More about risk and the funds'
business operations Management and administration ................................................ 21
Risk and reward elements ..................................................... 22
Investments .................................................................. 24
FOR MORE INFORMATION ................................................... back cover
</TABLE>
<PAGE>
INTRODUCTION
================================================================================
J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
These funds invest primarily in bonds and other fixed income securities, either
directly or through another fund. The funds seek high total return or high
current income.
WHO MAY WANT TO INVEST
The funds are designed for investors who:
o want to add an income investment to further diversify a portfolio
o want an investment whose risk/return potential is higher than that of money
market funds but generally less than that of stock funds
o want an investment that pays monthly dividends
o with regard to the Tax Exempt Bond Fund, are seeking income that is exempt
from federal personal income tax
o with regard to the state-specific funds, are seeking income that is exempt
from federal, state, and local (if applicable) personal income taxes in New
York or California
The funds are not designed for investors who:
o are investing for aggressive long-term growth
o require stability of principal
o with regard to the Global Strategic Income Fund, are not prepared to accept
a higher degree of risk than most traditional bond funds
o with regard to the federal or state tax-exempt funds, are investing through
a tax-deferred account such as an IRA
J.P. MORGAN
Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan is the asset management choice for many of the world's
most respected corporations, financial institutions, governments, and
individuals. Today, J.P. Morgan employs over 300 analysts and portfolio managers
around the world and has more than $250 billion in assets under management,
including assets managed by the funds' advisor, Morgan Guaranty Trust Company of
New York.
========================================
Before you invest
Investors considering these funds should
understand that:
o The value of each fund's shares
will fluctuate over time. You could
lose money if you sell when a
fund's share price is lower than
when you invested.
o There is no assurance that these
funds will meet their investment
goals.
o Future returns will not necessarily
resemble past performance.
o These funds (except for the
California Bond Fund) invest in
another fund with an identical goal
-- the master portfolio. The
California Bond Fund invests
directly in bonds and other
individual fixed income securities.
o Some of these funds invest a
portion of assets in
non-investment-grade bonds ("junk
bonds") or emerging markets debt,
which offer higher potential yields
but have a higher risk of default
and are more sensitive to market
risk than investment-grade bonds.
o These funds do not represent a
complete investment program.
========================================
1
<PAGE>
FIXED INCOME MANAGEMENT APPROACH
================================================================================
The J.P. Morgan Institutional fixed
income funds invest primarily in bonds
and other fixed income securities.
While each fund follows its own
strategy, the funds as a group share a
single investment philosophy. This
philosophy, developed by the funds'
advisor, emphasizes the potential for
consistently enhancing performance while
managing risk.
FIXED INCOME INVESTMENT PROCESS
J.P. Morgan seeks to generate an
information advantage through the depth
of its global fixed-income research and
the sophistication of its analytical
systems. Using a team-oriented approach,
J.P. Morgan seeks to gain insights in a
broad range of distinct areas and takes
positions in many different ones,
helping the funds to limit exposure to
concentrated sources of risk.
In managing the funds described in this
prospectus, J.P. Morgan employs a
three-step process that combines sector
allocation, fundamental research for
identifying portfolio securities, and
duration management.
[GRAPHIC] Sector allocation The sector allocation
team meets monthly, analyzing the
The funds invest across a range fundamentals of a broad range of sectors
of different types of securities in which a fund may invest. The team
seeks to enhance performance and manage
risk by underweighting or overweighting
sectors.
[GRAPHIC] Security selection Relying on the
insights of different specialists,
Each fund makes its portfolio including credit analysts, quantitative
decisions as described later researchers, and dedicated fixed income
in this prospectus traders, the portfolio managers make buy
and sell decisions according to each
fund's goal and strategy.
[GRAPHIC] Duration management Forecasting teams
use fundamental economic factors to
J.P. Morgan uses a disciplined develop strategic forecasts of the
process to control each fund's direction of interest rates. Based on
sensitivity to interest rates these forecasts, strategists establish
each fund's target duration (a measure
of average weighted maturity of the
securities held by a fund and a common
measurement of sensitivity to interest
rate movements), typically remaining
relatively close to the duration of the
market as a whole, as represented by the
fund's benchmark. The strategists
closely monitor the funds and make
tactical adjustments as necessary.
2 FIXED INCOME MANAGEMENT APPROACH
<PAGE>
THE SPECTRUM OF FIXED INCOME FUNDS
The funds described in this prospectus pursue different goals and offer varying
degrees of risk and potential reward. The table below shows degrees of the
relative risk and return that these funds potentially offer. These and other
distinguishing features of each fixed income fund are described on the following
pages. Differences among these funds include:
o the types of securities they hold
o the tax status of the income they offer
o the relative emphasis on current income versus total return
=============================
Potential risk and return
=============================
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 New York Total Return Bond Fund*
California Bond Fund*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
FIXED INCOME MANAGEMENT APPROACH 3
<PAGE>
J.P. MORGAN INSTITUTIONAL
SHORT TERM BOND FUND TICKER SYMBOL: JMSBX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high total return while attempting to limit
the likelihood of negative quarterly returns.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in fixed income securities, including U.S.
government and agency securities, domestic and foreign corporate bonds, private
placements, asset-backed and mortgage-related securities, money market
instruments, and others. These securities may be of any maturity, but under
normal market conditions the fund's duration will range between one and three
years, similar to that of the Merrill Lynch 1-3 Year Treasury Index.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. At least
90% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 75% A or better. No more than 10% of assets may be invested
in securities as low as B.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
duration fixed income funds will depend on the success of the investment
process, which is described on page 2.
Although any rise in interest rates is likely to cause a fall in the price of
bonds, the fund's comparatively short duration is designed to help keep its
share price within a relatively narrow range. Because it seeks to minimize risk,
the fund will generally offer less income, and during periods of declining
interest rates, may offer lower total returns than bond funds with longer
durations. However, the fund may offer higher total returns than longer duration
funds during periods of rising interest rates. Additionally, because the fund
may invest up to 25% of assets in foreign securities, it takes on additional
risks.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 New York Total Return Bond Fund*
California Bond Fund*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 SHORT TERM BOND FUND
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $2 billion using the same strategy as this fund.
The portfolio management team is led by Connie J. Plaehn, managing director, who
has been on the team since the fund's inception and has been at J.P. Morgan
since 1984, and by William G. Tennille, vice president, who joined the team in
January of 1994 and has been at J.P. Morgan since 1992.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.25
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.00
================================================================================
Total operating expenses(2)
(after reimbursement) 0.25
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 3 8 14 32
- --------------------------------------------------------------------------------
</TABLE>
4 J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================================================
PERFORMANCE (unaudited)
==================================
Average annual total return Shows performance over time, for periods ended December 31, 1997
==================================-----------------------------------------------------------------------------------------
1 yr. 3 yrs. Since inception(3)
<S> <C> <C> <C>
J.P. Morgan Institutional Short Term Bond Fund (after expenses) 6.40 7.41 5.37
- ---------------------------------------------------------------------------------------------------------------------------
Merrill Lynch 1-3 Year Treasury Index(4) (no expenses) 6.66 7.52 5.60
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year-by-year total return Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL]
J.P. Morgan Merrill Lynch
Institutional Short Term 1-3 Year Treasury
Bond Fund Index(4)
<S> <C> <C>
1994 0.36% 0.57%
1995 10.80% 11.00%
1996 5.10% 4.98%
1997 6.40% 6.66%
</TABLE>
<TABLE>
<CAPTION>
================================================================================================================================
FINANCIAL HIGHLIGHTS
==================================
Per-share data For fiscal periods ended October 31
==================================----------------------------------------------------------------------------------------------
1993(3) 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 9.99 9.60 9.83 9.85
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.11 0.47 0.58 0.55 0.61
Net realized and unrealized gain (loss)
on investment ($) (0.01) (0.39) 0.24 0.02 (0.01)
================================================================================================================================
Total from investment operations ($) 0.10 0.08 0.82 0.57 0.60
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.11) (0.47) (0.59) (0.55) (0.61)
Net asset value, end of period ($) 9.99 9.60 9.83 9.85 9.84
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.01(5) 0.87 8.81 6.01 6.27
- --------------------------------------------------------------------------------------------------------------------------------
==================================
Ratios and supplemental data
==================================----------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 27,605 47,679 18,916 17,810 27,375
- --------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.46(6) 0.45 0.45 0.37 0.25
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 3.92(6) 4.96 6.09 5.69 6.19
- --------------------------------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due
to expense reimbursement (%) 0.84(6) 0.33 0.22 1.00 0.71
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above have been audited by Price Waterhouse LLP, the
fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of the fund's average net
assets and reflecting reimbursement for ordinary expenses over 0.25%.
(2) Without reimbursement other expenses and total operating expenses would
have been 0.71% and 0.96%, respectively. There is no guarantee that
reimbursement will continue beyond 2/28/99.
(3) The fund commenced operations on 7/8/93. Except in the Financial
Highlights, returns reflect performance of the fund from 7/31/93.
(4) The Merrill Lynch 1-3 Year Treasury Index, consisting of U.S. Treasury
notes and bonds with maturities of 1-3 years, is an unmanaged index that
measures short-term bond performance.
(5) Not annualized.
(6) Annualized.
J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND 5
<PAGE>
J.P. MORGAN INSTITUTIONAL BOND FUND TICKER SYMBOL: JMIBX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL BOND FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high total return consistent with moderate risk of
capital and maintenance of liquidity.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in fixed income securities, including U.S. government
and agency securities, corporate bonds, private placements, asset-backed and
mortgage-backed securities, and others. These securities may be of any maturity,
but under normal market conditions the management team will keep the fund's
duration within one year of that of the Salomon Brothers Broad Investment Grade
Bond Index (currently about five years).
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. At least
75% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 65% A or better. No more than 25% of assets may be invested
in securities as low as B.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 2.
To the extent that the fund seeks higher returns by investing in
non-investment-grade bonds, it takes on additional risks, because these bonds
are more sensitive to economic news and their issuers are in less secure
financial condition. Additionally, because the fund may invest up to 25% of
assets in foreign securities, it takes on additional risks. The fund has the
potential to produce higher returns than the Short Term Bond Fund along with a
share price that is somewhat more volatile.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 New York Total Return Bond Fund*
California Bond Fund*
4 Tax Exempt Bond Fund*
5 BOND FUND
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $31 billion using the same strategy as this fund.
The portfolio management team is led by William G. Tennille, vice president, who
has been at J.P. Morgan since 1992, and by Connie J. Plaehn, managing director,
who has been at J.P. Morgan since 1984. Both have been on the team since January
of 1994.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.20
================================================================================
Total operating expenses(2)
(after reimbursement) 0.50
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 5 16 28 63
- --------------------------------------------------------------------------------
</TABLE>
6 J.P. MORGAN INSTITUTIONAL BOND FUND
<PAGE>
<TABLE>
<CAPTION>
================================================================================
PERFORMANCE (unaudited)
==================================
Average annual total return(%) Shows performance over time, for periods ended December 31, 1997
==================================----------------------------------------------------------------------------------------------
1 yr 3 yrs. 5 yrs.(3) Since inception(3)
<S> <C> <C> <C> <C>
J.P. Morgan Institutional Bond Fund (after expenses) 9.29 10.16 7.41 8.16
- --------------------------------------------------------------------------------------------------------------------------------
Bond Index(4) (no expenses) 9.62 10.43 7.53 8.91
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year-by-year total return(%) Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
J.P. Morgan
Institutional Bond
Bond Fund Index(4)
<S> <C> <C>
1989 10.23% 14.24%
1990 10.09% 8.28%
1991 13.45% 15.78%
1992 6.53% 7.59%
1993 9.88% 9.89%
1994 (2.68)% (2.85)%
1995 18.42% 18.55%
1996 3.30% 3.62%
1997 9.29% 9.62%
</TABLE>
<TABLE>
<CAPTION>
================================================================================================================================
FINANCIAL HIGHLIGHTS
==================================
Per-share data For fiscal periods ended October 31
==================================----------------------------------------------------------------------------------------------
1993(5) 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 10.14 9.23 9.98 9.84
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.15 0.55 0.63 0.61 0.65
Net realized and unrealized gain (loss)
on investment ($) 0.14 (0.88) 0.75 (0.11) 0.18
================================================================================================================================
Total from investment operations ($) 0.29 (0.33) 1.38 0.50 0.83
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.15) (0.55) (0.63) (0.61) (0.64)
Net realized gain ($) -- (0.03) -- (0.03) (0.02)
================================================================================================================================
Total distributions ($) (0.15) (0.58) (0.63) (0.64) (0.66)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.14 9.23 9.98 9.84 10.01
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) 2.90(6) (3.33) 15.50 5.21 8.78
- --------------------------------------------------------------------------------------------------------------------------------
==================================
Ratios and supplemental data
===================================---------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 43,711 253,174 438,610 838,066 912,054
- --------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.50(7) 0.50 0.47 0.50 0.50
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 4.83(7) 6.00 6.62 6.28 6.59
- --------------------------------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due
to expense reimbursement (%) 0.39(7) 0.19 0.05 0.03 0.00(8)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above have been audited by Price Waterhouse LLP, the
fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of the fund's average net
assets and reflecting reimbursement for ordinary expenses over 0.50%.
(2) There is no guarantee that reimbursement will continue beyond 2/28/99.
(3) The inception date of The Pierpont Bond Fund, the predecessor of the fund,
was 3/11/88. Returns for the period 3/31/88 through 7/31/93 reflect
performance of The Pierpont Bond Fund.
(4) The Bond Index is composed of the Lehman Brothers Government/Corporate
Intermediate Bond Index, consisting of all investment-grade bonds with
maturities between 1 and 9.99 years, from 3/11/88 through 9/30/91, and the
Salomon Brothers Broad Investment Grade Bond Index, consisting of U.S.
Treasury and agency securities and investment-grade mortgage and corporate
bonds, from 10/1/91 forward. Both are unmanaged indices that measure bond
market performance.
(5) The fund commenced operations on 7/12/93.
(6) Not annualized.
(7) Annualized.
(8) Less than 0.01%.
J.P. MORGAN INSTITUTIONAL BOND FUND 7
<PAGE>
J.P. MORGAN INSTITUTIONAL
INTERNATIONAL BOND FUND
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL INTERNATIONAL BOND FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high total return, consistent with moderate risk
of capital, by investing in a portfolio of international fixed income
securities.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in fixed income securities from developed countries
outside the U.S., including those issued by foreign governments, corporations,
financial institutions, and supranational organizations (such as the World
Bank). These securities may be of any maturity, but under normal market
conditions the management team will keep the fund's duration within one year of
that of the Salomon Brothers Non-U.S. World Government Bond Index (currency
hedged) (currently about five years). All of the fund's assets must be invested
in securities that, at the time of purchase, are rated investment-grade (BBB/Baa
or better) or are the unrated equivalent, including at least 65% A or better.
In addition to the investment process described on page 2, the management team
makes country allocation decisions, based primarily on financial and economic
forecasts and other macro-economic factors. The fund generally seeks to reduce
currency risk by hedging its investments back to the U.S. dollar.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
international bond markets and interest rates. How well the fund's performance
compares to that of similar fixed income funds will depend on the success of the
investment process.
Because the fund may invest more than 5% of total assets in a single issuer and
its primary securities are foreign securities, it takes on additional risks. Its
performance may vary more widely than that of comparable funds. The fund has the
potential to produce high total return over time, but investors should be
prepared to ride out periods of negative total return.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 INTERNATIONAL BOND FUND
3 New York Total Return Bond Fund*
California Bond Fund*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $1.5 billion using the same strategy as this fund.
The portfolio management team is led by Dominic J. Pegler, vice president, who
has been on the team since joining J.P. Morgan from the Bank of England in April
of 1996, where he was an economist and later managed UK foreign exchange
reserves, and by Maria Ryan, associate, who joined the team in January of 1997
and has been at J.P. Morgan since 1990.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.35
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.30
================================================================================
Total operating expenses(2)
(after reimbursement) 0.65
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 7 21 36 81
- --------------------------------------------------------------------------------
</TABLE>
8 J.P. MORGAN INSTITUTIONAL INTERNATIONAL BOND FUND
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
PERFORMANCE (unaudited)
==================================
Average annual total return Shows performance over time, for periods ended December 31, 1997
==================================-------------------------------------------------------------------------------------------------
1 yr. 3 yrs. Since inception(3)
<S> <C> <C> <C>
J.P. Morgan Institutional International Bond Fund (after expenses) 10.78 13.07 12.85
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Non-U.S. World Government Bond Index(4) (currency hedged) (no expenses) 11.07 13.57 13.17
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year-by-year total return(%) Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL]
Salomon Brothers
J.P. Morgan Non-U.S.
Institutional International World Government
Bond Fund Bond Index(4)
<S> <C> <C>
1995 17.40% 17.94%
1996 11.15% 11.82%
1997 10.78% 11.07%
</TABLE>
<TABLE>
<CAPTION>
================================================================================================================
FINANCIAL HIGHLIGHTS
==================================
Per-share data For fiscal periods ended September 30
==================================------------------------------------------------------------------------------
1995(3) 1996 1997
<S> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 11.12 11.30
- ----------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.49 0.31 2.21
Net realized and unrealized gain
on investment and foreign currency
(loss) allocated from portfolio ($) 0.78 0.95 (1.11)
================================================================================================================
Total from investment operations ($) 1.27 1.26 1.10
- ----------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.15) -- (2.78)
Net realized gain ($) -- (1.08) (0.97)
================================================================================================================
Total distributions ($) (0.15) (1.08) (3.75)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 11.12 11.30 8.65
- ----------------------------------------------------------------------------------------------------------------
Total return (%) 12.83(5) 12.09 12.52
- ----------------------------------------------------------------------------------------------------------------
==================================
Ratios and supplemental data
==================================------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 4,233 13,310 7,126
- ----------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.60(6) 0.65 0.50
- ----------------------------------------------------------------------------------------------------------------
Net investment income (%) 5.82(6) 5.28 4.88
- ----------------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due
to expense reimbursement (%) 1.90(6)(7) 1.02 1.91
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above have been audited by Price Waterhouse LLP, the
fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of the fund's average net
assets and reflecting reimbursement for ordinary expenses over 0.65%.
(2) Without reimbursement, other expenses and total operating expenses would
have been 2.06%, and 2.41%, respectively. There is no guarantee that
reimbursement will continue beyond 1/31/99.
(3) The fund commenced operations on 12/1/94.
(4) The Salomon Brothers Non-U.S. World Government Bond Index (currency
hedged), consisting of government bonds of developed countries, is an
unmanaged index that measures foreign bond market performance.
(5) Not annualized.
(6) Annualized.
(7) After consideration of certain state limitations.
J.P. MORGAN INSTITUTIONAL INTERNATIONAL BOND FUND 9
<PAGE>
J.P. MORGAN INSTITUTIONAL
GLOBAL STRATEGIC INCOME FUND TICKER SYMBOL: JPGSX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL GLOBAL
STRATEGIC INCOME FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high total return from a portfolio of fixed income
securities of foreign and domestic issuers.
[GRAPHIC] INVESTMENT APPROACH
The fund invests in a wide range of debt securities from the U.S. and other
markets, both developed and emerging. Issuers may include governments,
corporations, financial institutions, and supranational organizations (such as
the World Bank). The fund may invest directly in mortgages and in
mortgage-backed securities. The fund's securities may be of any maturity, but
under normal market conditions the fund's duration will generally be similar to
that of the Lehman Brothers Aggregate Bond Index (currently about four and a
half years). At least 40% of assets must be invested in securities that, at the
time of purchase, are rated investment-grade (BBB/Baa or better) or are the
unrated equivalent. The balance of assets may be invested in securities as low
as B.
The management team uses the process described on page 2, and also makes country
allocations, based primarily on macro-economic factors. With regard to sector
allocation, the team uses the model allocation shown at right as a basis,
although the actual allocations are adjusted periodically within the ranges
indicated. Within each sector, a dedicated team handles securities selection.
The fund typically hedges its non-dollar denominated investments back to the
U.S. dollar.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
global bond markets, interest rates, and currency exchange rates. How well the
fund's performance compares to that of similar fixed income funds will depend on
the success of the investment process. Because of low credit and foreign and
emerging markets investment risks, the fund's performance is likely to be more
volatile than that of most fixed income funds. The fund's mortgage-backed
investments involve the risk of losses due to default or to prepayments that
occur earlier or later than expected. Some investments, including directly owned
mortgages, may be illiquid. The fund has the potential for long-term total
returns that exceed those of more traditional bond funds, but investors should
also be prepared for risks that exceed those of more traditional bond funds.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 GLOBAL STRATEGIC INCOME FUND
2 International Bond Fund
3 New York Total Return Bond Fund*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
MODEL SECTOR ALLOCATION
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
% of
Total
-----
<S> <C>
Public/private mortgages (range 20-45%) 35%
High yield corporates (range 13-33%) 23%
Public/private corporates (range 5-25%) 15%
Emerging markets (range 5-25%) 15%
International non-dollar (range 0-25%) 12%
</TABLE>
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $3 billion using the same strategy as this fund.
The portfolio management team is led by Gerard W. Lillis, managing director, who
has been at J.P. Morgan since 1978, and by Mark E. Smith, managing director, who
joined J.P. Morgan in 1994 from Allied Signal, Inc. where he managed fixed
income portfolios and oversaw asset allocation activities across asset classes.
Both have been on the team since the fund's inception.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.45
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.20
================================================================================
Total operating expenses(2)
(after reimbursement) 0.65
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 7 21 36 81
- --------------------------------------------------------------------------------
</TABLE>
10 J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
================================================================================
PERFORMANCE (unaudited)
==================================
Average annual total return (%) Shows performance over time, for period ended December 31, 1997
==================================-----------------------------------------------------------------------------------------
Since inception(3)
<S> <C>
J.P. Morgan Institutional Global Strategic Income Fund (after expenses) 9.76
- ---------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index4 (no expenses) 10.30
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total return(%) Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
J.P. Morgan
Institutional Lehman Brothers
Global Strategic Aggregate
Income Fund Bond Index(4)
<S> <C> <C>
1997(3) 9.76% 10.30%
</TABLE>
<TABLE>
<CAPTION>
================================================================================
FINANCIAL HIGHLIGHTS
=============================
Per-share data For fiscal periods ended September 30
=============================---------------------------------------------------
1997(3)
<S> <C>
Net asset value, beginning of period ($) 10.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.46
Net realized and unrealized gain
on investment and foreign currency ($) 0.15
- --------------------------------------------------------------------------------
Total from investment operations ($) 0.61
- --------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.45)
- --------------------------------------------------------------------------------
Net asset value, end of period ($) 10.16
- --------------------------------------------------------------------------------
Total return (%) 6.15(5)
- --------------------------------------------------------------------------------
=============================
Ratios and supplemental data
=============================---------------------------------------------------
Net assets, end of period ($ thousands) 105,051
- --------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.65(6)
- --------------------------------------------------------------------------------
Net investment income (%) 7.12(6)
- --------------------------------------------------------------------------------
Decrease reflected in expense ratio due to
expense reimbursement (%) 0.53(6)
- --------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above have been audited by Price Waterhouse LLP, the
fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of the fund's average net
assets and reflecting reimbursement for ordinary expenses over 0.65%.
(2) Without reimbursement other expenses and total operating expenses would
have been 0.73% and 1.18%, respectively, on an annualized basis. There is
no guarantee that reimbursement will continue beyond 2/28/99.
(3) The fund commenced operations on 3/17/97. Except in the Financial
Highlights, returns reflect performance of the fund from 3/31/97.
(4) The Lehman Brothers Aggregate Bond Index, consisting of U.S. Treasury,
agency, corporate and mortgage-backed securities, is an unmanaged index
that measures overall bond market performance.
(5) Not annualized.
(6) Annualized.
J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND 11
<PAGE>
J.P. MORGAN INSTITUTIONAL
TAX EXEMPT BOND FUND TICKER SYMBOL: JITBX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high current income that is exempt from federal
income tax, consistent with moderate risk of capital and maintenance of
liquidity.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in high quality municipal securities whose income is
free from federal personal income tax. While the fund's goal is high tax-exempt
income, the fund may invest to a limited extent in taxable securities, including
U.S. government, government agency, corporate, or taxable municipal securities.
The fund's securities may be of any maturity, but under normal market conditions
the fund's duration will generally range between four and seven years, similar
to that of the Lehman Brothers 1-16 Year Municipal Bond Index. At least 90% of
assets must be invested in securities that, at the time of purchase, are rated
investment-grade (BBB/Baa or better) or are the unrated equivalent. No more than
10% of assets may be invested in securities as low as B.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
tax-exempt funds will depend on the success of the investment process, which is
described on page 2.
Investors should expect the potential for returns that exceed those of a
comparable tax-exempt fund of shorter duration, and should be prepared for
higher share price volatility than such a fund. The fund's performance could
also be affected by market reaction to proposed tax legislation. A portion of
the fund's returns may be subject to federal, state, or local tax, or the
alternative minimum tax.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 New York Total Return Bond Fund*
California Bond Fund*
4 TAX EXEMPT BOND FUND*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $8 billion using the same strategy as this fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
joined the team in May of 1997 and has been at J.P. Morgan since 1987, and by
Elaine B. Young, vice president, who joined the team in January of 1996 and has
been at J.P. Morgan since August of 1994. Prior to joining J.P. Morgan, Ms.
Young was a municipal bond trader and fixed income portfolio manager at Scudder,
Stevens, & Clark, Inc.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.20
================================================================================
Total operating expenses(2)
(after reimbursement) 0.50
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 5 16 28 63
- --------------------------------------------------------------------------------
</TABLE>
12 J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================================
PERFORMANCE (unaudited)
==================================
Average annual total return(%) Shows performance over time, for periods ended December 31, 1997
==================================----------------------------------------------------------------------------------------------
1 yr 3 yrs. 5 yrs.(3) 10 yrs.(3)
<S> <C> <C> <C> <C>
J.P. Morgan Institutional Tax Exempt Bond Fund (after expenses) 7.58 8.19 6.23 7.19
- --------------------------------------------------------------------------------------------------------------------------------
Municipal Bond Index(4) (no expenses) 7.80 8.55 6.61 7.57
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year-by-year total return(%) Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
J.P. Morgan
Institutional Municipal
Tax Exempt Bond
Bond Fund Index(4)
<S> <C> <C>
1988 7.38% 5.80%
1989 8.25% 9.62%
1990 6.87% 7.48%
1991 10.92% 11.66%
1992 7.47% 8.25%
1993 9.58% 10.71%
1994 (2.53)% (2.74)%
1995 13.50% 13.80%
1996 3.71% 4.27%
1997 7.58% 7.80%
</TABLE>
<TABLE>
<CAPTION>
================================================================================================================================
FINANCIAL HIGHLIGHTS
==================================
Per-share data For fiscal periods ended August 31
==================================----------------------------------------------------------------------------------------------
1993(5) 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 10.07 9.75 10.01 9.92
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.06 0.48 0.49 0.48 0.48
Net realized and unrealized gain (loss)
on investment ($) 0.07 (0.32) 0.26 (0.07) 0.20
================================================================================================================================
Total from investment operations ($) 0.13 0.16 0.75 0.41 0.68
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.06) (0.48) (0.49) (0.48) (0.48)
Net realized gain ($) -- -- -- (0.02) (0.00)(6)
================================================================================================================================
Total distributions ($) (0.06) (0.48) (0.49) (0.50) (0.48)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.07 9.75 10.01 9.92 10.12
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) 1.39(7) 1.61 8.00 4.13 7.06
- --------------------------------------------------------------------------------------------------------------------------------
==================================
Ratios and supplemental data
==================================----------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) --(9) 16,415 59,867 121,131 201,614
- --------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) -- 0.50 0.50 0.50 0.50
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 3.56(8) 4.70 5.09 4.82 4.83
- --------------------------------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due
to expense reimbursement (%) 2.50(8) 1.48 0.21 0.10 0.06
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above have been audited by Price Waterhouse LLP, the
fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of the fund's average net
assets and reflecting reimbursement for ordinary expenses over 0.50%.
(2) Without reimbursement, other expenses and total operating expenses would
have been 0.26% and 0.56%, respectively. There is no guarantee that
reimbursement will continue beyond 12/31/98.
(3) Returns for the period 12/31/87 through 7/31/93 reflect performance of The
Pierpont Tax Exempt Bond Fund, the predecessor of the fund.
(4) The Municipal Bond Index is composed of the Lehman Brothers Quality
Intermediate Municipal Bond Index, consisting of general obligation and
revenue bonds rated A or better with maturities of 2-12 years, from
12/31/87 through 4/30/97, and the Lehman Brothers 1-16 Year Municipal Bond
Index, consisting of general obligation and revenue bonds with maturities
of 1-16 years, from 5/1/97 forward. Both are unmanaged indices that measure
municipal bond market performance.
(5) The fund commenced operations on 7/12/93.
(6) Less than $0.01 per share.
(7) Not annualized.
(8) Annualized.
(9) Net assets at 8/31/93 were $202.
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND 13
<PAGE>
J.P. MORGAN INSTITUTIONAL NEW YORK
TOTAL RETURN BOND FUND TICKER SYMBOL: JPNTX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL NEW YORK TOTAL RETURN
BOND FUND)
[GRAPHIC] GOAL
The fund's goal is to provide high after-tax total return for New York residents
consistent with moderate risk of capital.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in New York municipal securities whose income is free
from federal, state, and New York City personal income taxes for New York
residents. Because the fund's goal is high after-tax total return rather than
high tax-exempt income, the fund may invest to a limited extent in securities of
other states or territories. To the extent that the fund invests in municipal
securities of other states, the income from such securities would be free from
federal personal income taxes for New York residents but would be subject to New
York state and New York City personal income taxes. For non-New York residents,
the income from New York municipal securities is free from federal personal
income taxes only. The fund may also invest in taxable securities. The fund's
securities may be of any maturity, but under normal market conditions the fund's
duration will generally range between three and seven years, similar to that of
the Lehman Brothers 1-16 Year Municipal Bond Index. At least 90% of assets must
be invested in securities that, at the time of purchase, are rated
investment-grade (BBB/Baa or better) or are the unrated equivalent. No more than
10% of assets may be invested in securities as low as B.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 2. Because most of the fund's investments will typically be
from issuers in the State of New York, its performance will be affected by the
fiscal and economic health of that state and its municipalities. The fund may
invest more than 5% of assets in a single issuer, which could further
concentrate its risks. To the extent that the fund seeks higher returns by
investing in non-investment-grade bonds, it takes on additional risks, since
these bonds are more sensitive to economic news and their issuers have a less
secure financial condition. A portion of the fund's returns may be subject to
federal, state, or local tax, or the alternative minimum tax.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 NEW YORK TOTAL RETURN BOND FUND*
California Bond Fund*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $8 billion using the same strategy as this fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
has been at J.P. Morgan since 1987, and by Elaine B. Young, vice president, who
joined J.P. Morgan from Scudder, Stevens & Clark, Inc. in 1994 where she was a
municipal bond trader and fixed income portfolio manager. Both have been on the
team since June of 1997.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.20
================================================================================
Total operating expenses(2)
(after reimbursement) 0.50
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 5 16 28 63
- --------------------------------------------------------------------------------
</TABLE>
14 J.P. MORGAN INSTITUTIONAL NEW YORK TOTAL RETURN BOND FUND
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
PERFORMANCE (unaudited)
===================================
Average annual total return (%) Shows performance over time, for periods ended December 31, 1997
===================================-------------------------------------------------------------------------------------------------
1 yr. 3 yrs. Since inception(3)
<S> <C> <C> <C>
J.P. Morgan Institutional New York Total Return Bond Fund (after expenses) 7.68 8.32 6.90
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal Bond Index(4) (no expenses) 8.16 9.19 7.55
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
===================================
Year-by-year total return(%) Shows changes in returns by calendar year
===================================---------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
J.P. Morgan
Institutional Municipal
Tax Exempt Bond
Bond Fund Index(4)
<S> <C> <C>
1995 13.28 14.69
1996 4.21 4.93
1997 7.68 8.16
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
FINANCIAL HIGHLIGHTS
========================
Per-share data For fiscal periods ended
========================------------------------------------------------------------------------------------------------------------
3/31/95(3) 3/31/96 3/31/97 9/30/97
(unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period ($) 10.00 10.11 10.34 10.31
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.42 0.49 0.48 0.24
Net realized and unrealized gain (loss)
on investment ($) 0.11 0.25 (0.02) 0.33
====================================================================================================================================
Total from investment operations ($) 0.53 0.74 0.46 0.57
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.42) (0.49) (0.48) (0.24)
Net realized gain ($) -- (0.02) (0.01) --
====================================================================================================================================
Total distributions ($) (0.42) (0.51) (0.49) (0.24)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.11 10.34 10.31 10.64
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 5.49(5) 7.40 4.54 5.62(5)
- ------------------------------------------------------------------------------------------------------------------------------------
===============================
Ratios and supplemental data
===============================-----------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 20,621 47,926 90,792 101,693
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.50(6) 0.50 0.50 0.50(6)
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 4.65(6) 4.67 4.70 4.64(6)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due to
expense reimbursement (%) 0.55(6) 0.17 0.14 0.07(6)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above, except for the six months ended 9/30/97, have
been audited by Price Waterhouse LLP, the fund's independent accountants.
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the fiscal year ended 3/31/97, expressed as a percentage of the fund's
average net assets and reflecting reimbursement for ordinary expenses over
0.50%.
(2) Without reimbursement, other expenses and total operating expenses for the
fiscal year ended 3/31/97 would have been 0.34% and 0.64%, respectively.
There is no guarantee that reimbursement will continue beyond 7/31/98.
(3) The fund commenced operations on 4/11/94. Except in the Financial
Highlights, returns reflect performance of the fund from 4/30/94.
(4) The Municipal Bond Index is composed of the Lehman Brothers New York 1-15
Year Municipal Bond Index, consisting of New York general obligation and
revenue bonds with maturities of 1-15 years, from 4/11/94 through 4/30/97,
and the Lehman Brothers 1-16 Year Municipal Bond Index, consisting of
general obligation and revenue bonds with maturities of 1-16 years, from
5/1/97 forward. Both are unmanaged indices that measure municipal bond
market performance.
(5) Not annualized.
(6) Annualized.
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND 15
<PAGE>
J.P. MORGAN INSTITUTIONAL
CALIFORNIA BOND FUND TICKER SYMBOL: JPMICX
================================================================================
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN CALIFORNIA BOND FUND:INSTITUTIONAL
SHARES)
[GRAPHIC] GOAL
The fund's goal is to provide high after-tax total return for California
residents consistent with moderate risk of capital.
[GRAPHIC] INVESTMENT APPROACH
The fund invests primarily in California municipal securities whose income is
free from federal and state personal income taxes for California residents.
Because the fund's goal is high after-tax total return rather than high
tax-exempt income, the fund may invest to a limited extent in securities of
other states or territories. To the extent that the fund invests in municipal
securities of other states, the income from such securities would be free from
federal personal income taxes for California residents but would be subject to
California state personal income taxes. For non-California residents, the income
from California municipal securities is free from federal personal income taxes
only. The fund may also invest in taxable securities. The fund's securities may
be of any maturity, but under normal market conditions the fund's duration will
generally range between three and ten years, similar to that of the Lehman
Brothers 1-16 Year Municipal Bond Index. At least 90% of assets must be invested
in securities that, at the time of purchase, are rated investment-grade (BBB/Baa
or better) or are the unrated equivalent. No more than 10% of assets may be
invested in securities as low as B.
[GRAPHIC] POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 2. Because most of the fund's investments will typically be
from issuers in the State of California, its performance will be affected by the
fiscal and economic health of that state and its municipalities. The fund may
invest more than 5% of assets in a single issuer, which could further
concentrate its risks. To the extent that the fund seeks higher returns by
investing in non-investment-grade bonds, it takes on additional risks, because
these bonds are more sensitive to economic news and their issuers are in less
secure financial condition. A portion of the fund's returns may be subject to
federal, state, or local tax, or the alternative minimum tax.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
POTENTIAL RISK AND RETURN
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Fixed Income Funds Ranked by Degrees of Potential Risk and After Tax Return
Ranking
(1 = Highest) Fund
- ------------- ----
<S> <C>
1 Global Strategic Income Fund
2 International Bond Fund
3 New York Total Return Bond Fund*
CALIFORNIA BOND FUND*
4 Tax Exempt Bond Fund*
5 Bond Fund
6 Short Term Bond Fund
</TABLE>
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $250
billion, including more than $8 billion using the same strategy as this fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
has been at J.P. Morgan since 1987, and by Elaine B. Young, vice president, who
joined J.P. Morgan from Scudder, Stevens & Clark, Inc. in 1994 where she was a
municipal bond trader and fixed income portfolio manager. Both have been on the
team since June of 1997.
================================================================================
INVESTOR EXPENSES
The current expenses you should expect to pay as an investor in the fund are
shown at right. The fund has no sales, redemption, exchange, or account fees,
although some institutions may charge you a fee for shares you buy through them.
The annual fund expenses shown are deducted from fund assets prior to
performance calculations.
Footnotes for this section are shown on next page.
<TABLE>
<CAPTION>
================================================================================
Annual fund operating expenses(1) (%)
================================================================================
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses(2)
(after reimbursement) 0.15
================================================================================
Total operating expenses(2)
(after reimbursement) 0.45
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
Expense example
================================================================================
The example below uses the same assumptions as other fund prospectuses: $1,000
initial investment, 5% annual total return, expenses unchanged, all shares sold
at the end of each time period. The example is for comparison only; the fund's
actual return and expenses will be different.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
Your cost($) 5 14 25 57
- --------------------------------------------------------------------------------
</TABLE>
16 J.P. MORGAN INSTITUTIONAL CALIFORNIA BOND FUND
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================
PERFORMANCE (unaudited)
=================================
Average annual total return (%) Shows performance over time, for periods ended December 31, 1997
=================================-----------------------------------------------------------------
Since inception(3)
<S> <C>
J.P. Morgan Institutional California Bond Fund (after expenses) 7.72
- --------------------------------------------------------------------------------------------------
Lehman Brothers 1-16 Year Municipal Bond Index(4) (no expenses) 7.96
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total return (%) Shows changes in returns by calendar year
- --------------------------------------------------------------------------------
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL]
J.P. Morgan
Institutional Municipal
Tax Exempt Bond
Bond Fund Index(4)
<S> <C> <C>
1997 7.72 7.96
</TABLE>
<TABLE>
<CAPTION>
===========================================================================================================
FINANCIAL HIGHLIGHTS
====================
Per-share data For fiscal periods ended
====================---------------------------------------------------------------------------------------
4/30/97(3) 10/31/97
(unaudited)
<S> <C> <C>
Net asset value, beginning of period ($) 10.00 9.90
- -----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.16 0.21
Net realized and unrealized gain (loss)
on investment ($) (0.10) 0.32
===========================================================================================================
Total from investment operations ($) 0.06 0.53
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.16) (0.21)
Net asset value, end of period ($) 9.90 10.22
- -----------------------------------------------------------------------------------------------------------
Total return (%) 0.56(5) 5.38(5)
- -----------------------------------------------------------------------------------------------------------
===============================
Ratios and supplemental data
================================---------------------------------------------------------------------------
Net assets, end of period ($ thousands) 14,793 48,013
- -----------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Expenses (%) 0.45(6) 0.45(6)
- -----------------------------------------------------------------------------------------------------------
Net investment income (%) 4.43(6) 4.12(6)
- -----------------------------------------------------------------------------------------------------------
Decrease reflected in expense ratio due to
expense reimbursement (%) 3.01(6) 0.35(6)
Portfolio turnover (%) 40 15
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The Financial Highlights above, except for the six months ended 10/31/97, have
been audited by Price Waterhouse LLP, the fund's independent accountants.
(1) This table shows expenses for the fiscal period ended 4/30/97, expressed as
a percentage of average net assets and reflecting reimbursement of ordinary
expenses over 0.45%.
(2) Without reimbursement, other expenses and total operating expenses for the
fiscal period ended 4/30/97 would have been 3.16% and 3.46%, respectively,
on an annualized basis. There is no guarantee that reimbursement will
continue beyond 8/31/98.
(3) The fund commenced operations on 12/23/96. Except in the Financial
Highlights, returns reflect performance of the fund from 12/31/96.
(4) The Lehman Brothers 1-16 Year Municipal Bond Index, consisting of general
obligation and revenue bonds with maturities of 1-16 years, is an unmanaged
index that measures municipal bond market performance.
(5) Not annualized.
(6) Annualized.
J.P. MORGAN INSTITUTIONAL CALIFORNIA BOND FUND 17
<PAGE>
YOUR INVESTMENT
================================================================================
For your convenience, the J.P. Morgan Institutional Funds offer several ways to
start and add to fund investments.
INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions, and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.
INVESTING THROUGH AN EMPLOYER-SPONSORED RETIREMENT PLAN
Your fund investments are handled through your plan. Refer to your plan
materials or contact your benefits office for information on buying, selling, or
exchanging fund shares.
INVESTING THROUGH AN IRA OR ROLLOVER IRA
Please contact a J.P. Morgan Retirement Services Specialist at 1-888-576-4472
for information on J.P. Morgan's comprehensive IRA services, including lower
minimum investments.
INVESTING DIRECTLY
Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:
o Choose a fund (or funds) and determine the amount you are investing. The
minimum amount for initial investments is $5,000,000 for the Short Term
Bond, Bond, Tax Exempt Bond, New York Total Return Bond and California Bond
funds and $1,000,000 for the Global Strategic Income and International Bond
funds and for additional investments $25,000, although these minimums may
be less for some investors. For more information on minimum investments,
call 1-800-766-7722.
o Complete the application, indicating how much of your investment you want
to allocate to which fund(s). Please apply now for any account privileges
you may want to use in the future, in order to avoid the delays associated
with adding them later on.
o Mail in your application, making your initial investment as shown at right.
For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-766-7722.
OPENING YOUR ACCOUNT
By wire
o Mail your completed application to the Shareholder Services Agent.
o Call the Shareholder Services Agent to obtain an account number and to
place a purchase order. Funds that are wired without a purchase order will
be returned uninvested.
o After placing your purchase order, instruct your bank to wire the amount of
your investment to:
Morgan Guaranty Trust Company of New York
Routing number: 021-000-238
Credit: J.P. Morgan Institutional Funds
Account number: 001-57-689
FFC: your account number, name of registered owner(s) and fund name
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with your completed application to the Shareholder Services
Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
ADDING TO YOUR ACCOUNT
By wire
o Call the Shareholder Services Agent to place a purchase order. Funds that
are wired without a purchase order will be returned uninvested.
o Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with a completed investment slip to the Shareholder Services
Agent. If you do not have an investment slip, attach a note indicating your
account number and how much you wish to invest in which fund(s).
By exchange
o Call the Shareholder Services Agent to effect an exchange.
18 YOUR INVESTMENT
<PAGE>
SELLING SHARES
By phone -- wire payment
o Call the Shareholder Services Agent to verify that the wire redemption
privilege is in place on your account. If it is not, a representative can
help you add it.
o Place your wire request. If you are transferring money to a non-Morgan
account, you will need to provide the representative with the personal
identification number (PIN) that was provided to you when you opened your
fund account.
By phone -- check payment
o Call the Shareholder Services Agent and place your request. Once your
request has been verified, a check for the net amount, payable to the
registered owner(s), will be mailed to the address of record. For checks
payable to any other party or mailed to any other address, please make your
request in writing (see below).
In writing
o Write a letter of instruction that includes the following information: The
name of the registered owner(s) of the account; the account number; the
fund name; the amount you want to sell; and the recipient's name and
address or wire information, if different from those of the account
registration.
o Indicate whether you want the proceeds sent by check or by wire.
o Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.
o Mail the letter to the Shareholder Services Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
ACCOUNT AND TRANSACTION POLICIES
Telephone orders The funds accept telephone orders from all shareholders. To
guard against fraud, the funds require shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if a fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.
Exchanges You may exchange shares in these funds for shares in any other J.P.
Morgan Institutional or J.P. Morgan mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.
A fund may alter, limit, or suspend its exchange policy at any time.
Business hours and NAV calculations The funds' regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). Each fund
calculates its net asset value per share (NAV) every business day as of the
close of trading on the NYSE (normally 4:00 p.m. eastern time).
Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. A fund has the right to suspend redemption of shares and to
postpone payment of proceeds for up to seven days or as permitted by law.
================================================================================
Shareholder Services Agent
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
1-800-766-7722
Representatives are available 8:00 a.m. to 5:00 p.m. eastern
time on fund business days.
YOUR INVESTMENT 19
<PAGE>
================================================================================
Timing of settlements When you buy shares, you will become the owner of record
when a fund receives your payment, generally the day following execution. When
you sell shares, proceeds are generally available the day following execution
and will be forwarded according to your instructions.
When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.
Statements and reports The funds send monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months each fund sends out an annual or semi-annual report, containing
information on its holdings and a discussion of recent and anticipated market
conditions and fund performance.
Accounts with below-minimum balances If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), each fund reserves the right to request that you buy more shares
or close your account. If your account balance is still below the minimum 60
days after notification, a fund may close out your account and send the proceeds
to the address of record.
DIVIDENDS AND DISTRIBUTIONS
Income dividends are typically declared daily and paid monthly. If an investor's
shares are redeemed during the month, accrued but unpaid dividends are paid with
the redemption proceeds. Shares of a fund earn dividends on the business day the
purchase is effective, but not on the business day the redemption is effective.
Each fund distributes capital gains, if any, once a year. However, a fund may
make more or fewer payments in a given year, depending on its investment results
and its tax compliance situation. Each fund's dividends and distributions
consist of most or all of its net investment income and net realized capital
gains.
Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional or J.P. Morgan Funds
Services to have them sent to you by check, credited to a separate account, or
invested in another J.P. Morgan Institutional Fund.
TAX CONSIDERATIONS
In general, selling shares, exchanging shares, and receiving distributions
(whether reinvested or taken in cash) are all taxable events. These transactions
typically create the following tax liabilities:
<TABLE>
<CAPTION>
================================================================================
Transaction Tax status
- --------------------------------------------------------------------------------
<S> <C>
Income dividends from the Exempt from federal, state,
New York Total Return Bond and New York City personal
Fund income taxes for New York
residents only
- --------------------------------------------------------------------------------
Income dividends from the Exempt from federal and state
California Bond Fund personal income taxes for
California residents only
- --------------------------------------------------------------------------------
Income dividends from the Exempt from federal personal
Tax Exempt Bond Fund income taxes
- --------------------------------------------------------------------------------
Income dividends from Ordinary income
all other funds
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income
distributions
- --------------------------------------------------------------------------------
Long-term capital gains Capital gains
distributions
- --------------------------------------------------------------------------------
Sales or exchanges of Capital gains or
shares owned for more losses
than one year
- --------------------------------------------------------------------------------
Sales or exchanges of Gains are treated as ordinary
shares owned for one year income; losses are subject
or less to special rules
- --------------------------------------------------------------------------------
</TABLE>
Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when a fund is about to declare a long-term capital
gains distribution.
Every January, each fund issues tax information on its distributions for the
previous year.
Any investor for whom a fund does not have a valid
taxpayer identification number will be subject to backup withholding for taxes.
The tax considerations described in this section do not apply to tax-deferred
accounts or other non-taxable entities.
Because each investor's tax circumstances are unique, please consult your tax
professional about your fund investment.
20 YOUR INVESTMENT
<PAGE>
FUND DETAILS
================================================================================
BUSINESS STRUCTURE
As noted earlier, each fund (except the California Bond Fund) is a "feeder" fund
that invests in a master portfolio. (Except where indicated, this prospectus
uses the term "the fund" to mean the feeder fund and its master portfolio taken
together.)
Each master portfolio accepts investments from other feeder funds, and all the
feeders of a given master portfolio bear the portfolio's expenses in proportion
to their assets. However, each feeder can set its own transaction minimums,
fund-specific expenses, and other conditions. This means that one feeder could
offer access to the same master portfolio on more attractive terms, or could
experience better performance, than another feeder. Information about other
feeders is available by calling 1-800-766-7722. Generally, when a master
portfolio seeks a vote, each of its feeder funds will hold a shareholder meeting
and cast its vote proportionately, as instructed by its shareholders. Fund
shareholders (except California Bond Fund shareholders) are entitled to one vote
per fund share. California Bond Fund shareholders are entitled to one full or
fractional vote for each dollar or fraction of a dollar invested.
Each feeder fund and its master portfolio expect to maintain consistent goals,
but if they do not, the feeder fund will withdraw from the master portfolio,
receiving its assets either in cash or securities. Each feeder fund's trustees
would then consider whether it should hire its own investment adviser, invest in
a different master portfolio, or take other action.
The California Bond Fund is a series of J.P. Morgan Series Trust, a
Massachusetts business trust. The California Bond Fund is one of three series of
shares currently offered by the trust. Information about other series or classes
is available by calling 1-800-766-7722. In the future, the trustees could create
other series or share classes, which would have different expenses.
MANAGEMENT AND ADMINISTRATION
The feeder funds described in this prospectus, their corresponding master
portfolios, and J.P. Morgan Series Trust are all governed by the same trustees.
The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees. Funds
Distributor, Inc., as co-administrator, along with J.P. Morgan, provides fund
officers. J.P. Morgan, as co-administrator, oversees each fund's other service
providers.
J.P. Morgan, subject to the expense reimbursements described earlier in this
prospectus, receives the following fees for investment advisory and other
services:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Advisory services Percentage of the master
portfolio's average net assets
- --------------------------------------------------------------------------------
<S> <C>
Short Term Bond 0.25%
- --------------------------------------------------------------------------------
Bond 0.30%
- --------------------------------------------------------------------------------
International Bond 0.35%
- --------------------------------------------------------------------------------
Global Strategic Income 0.45%
- --------------------------------------------------------------------------------
Tax Exempt Bond 0.30%
- --------------------------------------------------------------------------------
New York Total Return Bond 0.30%
- --------------------------------------------------------------------------------
Administrative services Master portfolio's and fund's pro-
(fee shared with Funds rata portions of 0.09% of the first
Distributor, Inc.) $7 billion in J.P. Morgan- advised
portfolios, plus 0.04% of average net
assets over $7 billion
- --------------------------------------------------------------------------------
Shareholder services Percentage of the fund's average
net assets
- --------------------------------------------------------------------------------
Short Term Bond 0.075%
- --------------------------------------------------------------------------------
Bond 0.075%
- --------------------------------------------------------------------------------
International Bond 0.10%
- --------------------------------------------------------------------------------
Global Strategic Income 0.10%
- --------------------------------------------------------------------------------
Tax Exempt Bond 0.075%
- --------------------------------------------------------------------------------
New York Total Return Bond 0.075%
- --------------------------------------------------------------------------------
</TABLE>
The California Bond Fund, subject to the expense reimbursements described
earlier in this prospectus, pays J.P. Morgan the following fees for investment
advisory and other services:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
Advisory services 0.30% of the fund's average net
assets
- --------------------------------------------------------------------------------
Administrative services Fund's pro-rata portion of 0.09% of
(fee shared with Funds the first $7 billion in J.P.
Distributor, Inc.) Morgan-advised portfolios, plus 0.04%
of average net assets over $7 billion
- --------------------------------------------------------------------------------
Shareholder services 0.05% of the fund's average net
assets
- --------------------------------------------------------------------------------
</TABLE>
J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in a fund.
FUND DETAILS 21
<PAGE>
================================================================================
RISK AND REWARD ELEMENTS
This table discusses the main elements that make up each fund's overall risk and
reward characteristics (described on pages 4-17). It also outlines each fund's
policies toward various securities, including those that are designed to help
certain funds manage risk.
<TABLE>
<CAPTION>
====================================================================================================================================
Potential risks Potential rewards Policies to balance risk and reward
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Market conditions
o Each fund's share price, o Bonds have generally o Under normal circumstances the fund plans to
yield, and total return outperformed money market remain fully invested in bonds and other
will fluctuate in investments over the long fixed income securities as noted in the table
response to bond market term, with less risk than on pages 24-25
movements stocks
o The fund seeks to limit risk and enhance total
o The value of most bonds o Most bonds will rise in return or yields through careful management,
will fall when interest value when interest rates sector allocation, individual securities
rates rise; the longer a fall selection, and duration management
bond's maturity and the
lower its credit quality, o Mortgage-backed and o During severe market downturns, the fund has
the more its value asset-backed securities the option of investing up to 100% of assets
typically falls can offer attractive in investment-grade short-term securities
returns
o Mortgage-backed and o J.P. Morgan monitors interest rate trends, as
asset-backed securities well as geographic and demographic
(securities representing information related to mortgage-backed
an interest in, or securities and mortgage prepayments; the Tax
secured by, a pool of Exempt Bond Fund is not permitted to invest in
mortgages or other assets asset-backed or mortgage-backed securities; the
such as receivables) New York Total Return Bond and California Bond
could generate capital funds are not permitted to invest in mortgage-
losses or periods of low backed securities
yields if they are paid
off substantially earlier
or later than anticipated
- ------------------------------------------------------------------------------------------------------------------------------------
Management choices
o A fund could o A fund could outperform o J.P. Morgan focuses its active management on
underperform its its benchmark due to those areas where it believes its commitment
benchmark due to its these same choices to research can most enhance returns and
sector, securities, or manage risks in a consistent way
duration choices
- ------------------------------------------------------------------------------------------------------------------------------------
Credit quality
o The default of an issuer o Investment-grade bonds o Each fund maintains its own policies for
would leave the fund with have a lower risk of balancing credit quality against potential
unpaid interest or default yields and gains in light of its investment
principal goals
o Junk bonds offer higher
o Junk bonds (those rated yields and higher o J.P. Morgan develops its own ratings of
BB/Ba or lower) have a potential gains unrated securities and makes a credit quality
higher risk of default, determination for unrated securities
tend to be less liquid,
and may be more difficult
to value
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign investments
o A fund could lose money o Foreign bonds, which o Foreign bonds are a primary investment only for
because of foreign represent a major portion the International Bond and Global Strategic
government actions, of the world's fixed Income funds and may be a significant
political instability, or income securities, offer investment for the Short Term Bond and Bond
lack of adequate and attractive potential funds; the Tax Exempt Bond, New York Total
accurate information performance and Return Bond and California Bond funds are not
opportunities for permitted to invest any assets in foreign bonds
o Currency exchange rate diversification
movements could reduce o To the extent that the fund invests in
gains or create losses o Favorable exchange rate foreign bonds, it may manage the currency
movements could generate exposure of its foreign investments relative
o Currency and investment gains or reduce losses to its benchmark, and may hedge back into the
risks tend to be higher in U.S. dollar from time to time (see also
emerging markets o Emerging markets can offer "Derivatives")
higher returns
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Potential risks Potential rewards Policies to balance risk and reward
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Derivatives
o Derivatives such as futures, o Hedges that correlate o The funds use derivatives for hedging and for
options, and foreign currency well with underlying risk management (i.e., to adjust duration or to
forward contracts that are positions can reduce or establish or adjust exposure to particular
used for hedging the portfolio eliminate losses at low securities, markets, or currencies); risk
or specific securities may not cost management may include management of a fund's
fully offset the underlying exposure relative to its benchmark (risk
positions(1) o A fund could make money management techniques that involve derivatives
and protect against are not permitted to be used by the Short Term
o Derivatives used for risk losses if management's Bond, Bond and Tax Exempt Bond funds); the Tax
management may not have the analysis proves correct Exempt Bond, New York Total Return Bond and
intended effects and may California Bond funds are permitted to enter
result in losses or missed o Derivatives that involve into futures and options transactions, however,
opportunities leverage could generate these transactions result in taxable gains or
substantial gains at low losses so it is expected that these funds will
o The counterparty to a cost utilize them infrequently; foreign currency
derivatives contract could forward contracts are not permitted to be used
default by the Tax Exempt Bond, New York Total Return
Bond and California Bond funds
o Derivatives that involve
leverage could magnify losses o The funds only establish hedges that they
expect will be highly correlated with
underlying positions
o While the funds may use derivatives that
incidentally involve leverage, they do not
use them for the specific purpose of
leveraging the portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Illiquid holdings
o A fund could have o These holdings may offer o No fund may invest more than 15% of net
difficulty valuing these more attractive yields or assets in illiquid holdings
holdings precisely potential growth than
comparable widely traded o To maintain adequate liquidity to meet
o A fund could be unable securities redemptions, each fund may hold
to sell these holdings at investment-grade short-term securities
the time or price desired (including repurchase agreements) and, for
temporary or extraordinary purposes, may
borrow from banks up to 33 1/3% (with respect
to the International Bond, Global Strategic
Income, New York Total Return Bond and
California Bond funds), 30% (with respect to
the Short Term Bond and Bond funds) or 10%
(with respect to the Tax Exempt Bond Fund) of
the value of its assets
- ------------------------------------------------------------------------------------------------------------------------------------
When-issued and delayed delivery
securities
o When a fund buys o A fund can take o Each fund uses segregated accounts to offset
securities before issue advantage of attractive leverage risk
or for delayed delivery, transaction opportunities
it could be exposed to
leverage risk if it does
not use segregated
accounts
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term trading
o Increased trading would o A fund could realize o The expected turnover rate for each fund is as
raise a fund's gains in a short period follows:
transaction costs of time
o Tax Exempt Bond 50%
o Increased short-term o A fund could protect
capital gains against losses if a bond o New York Total Return
distributions would raise is overvalued and its Bond, California Bond 75%
shareholders' income tax value later falls
liability o Short Term Bond, Bond,
Global Strategic Income 300%
o International Bond 350%
o The funds generally avoid short-term trading,
except to take advantage of attractive or
unexpected opportunities or to meet demands
generated by shareholder activity
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A futures contract is an agreement to buy or sell a set quantity of an
underlying instrument at a future date, or to make or receive a cash
payment based on the value of a securities index. An option is the right to
buy or sell securities that is granted in exchange for an agreed-upon sum.
A foreign currency forward contract is an obligation to buy or sell a given
currency on a future date and at a set price.
FUND DETAILS 23
<PAGE>
================================================================================
This table discusses the customary types of securities which can be held by each
fund. In each case the principal types of risk are listed on the following page
(see below for definitions).This table reads across two pages.
- --------------------------------------------------------------------------------
Asset-backed securities Bonds or notes backed by unsecured debt, such as credit
card receivables; these securities are often guaranteed or over-collateralized
to enhance their credit quality.
- --------------------------------------------------------------------------------
Bank obligations Negotiable certificates of deposit, time deposits and bankers'
acceptances of domestic and foreign issuers.
- --------------------------------------------------------------------------------
Commercial paper Unsecured short term debt issued by domestic and foreign banks
or corporations. These securities are usually discounted and are rated by S&P or
Moody's.
- --------------------------------------------------------------------------------
Convertible securities Domestic and foreign debt securities that can be
converted into equity securities at a future time and price.
- --------------------------------------------------------------------------------
Corporate bonds Debt securities of domestic and foreign industrial, utility,
banking, and other financial institutions.
- --------------------------------------------------------------------------------
Mortgages (directly held) Domestic debt instrument which gives the lender a lien
on property as security for the loan repayment.
- --------------------------------------------------------------------------------
Mortgage dollar rolls The sale of domestic mortgage-backed securities with the
commitment to buy back similar securities at a future date and at an agreed upon
price. Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Mortgage-backed securities Domestic and foreign securities backed by pools of
mortgages (such as Ginnie Maes, Fannie Maes and Freddie Macs), including pass
through certificates, and other senior classes of collateralized mortgage
obligations (CMOs) or stripped mortgage-backed securities.
- --------------------------------------------------------------------------------
Participation interests Securities representing an interest in another security
or in bank loans.
- --------------------------------------------------------------------------------
Private placements Bonds or other investments that are sold directly to an
institutional investor.
- --------------------------------------------------------------------------------
REITs and other real-estate related instruments Securities of issuers that
invest in real estate or are secured by real estate.
- --------------------------------------------------------------------------------
Repurchase agreements Agreements between a seller and a buyer whereby the seller
agrees to repurchase the securities at an agreed upon price and at a stated
time.
- --------------------------------------------------------------------------------
Sovereign debt, Brady bonds, and debt of supranational organizations Dollar- and
non-dollar-denominated securities issued to refinance foreign government bank
loans and other debt.
- --------------------------------------------------------------------------------
Swaps Contractual agreement whereby a party agrees to exchange periodic payments
with a counterparty. Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Synthetic variable rate instruments Debt instruments whereby the issuer agrees
to exchange one security for another in order to change the maturity or quality
of a security in the fund.
- --------------------------------------------------------------------------------
Tax exempt municipal securities Securities, generally issued as general
obligation and revenue bonds, whose interest is exempt from federal taxation and
state and/or local taxes in the state where the securities were issued.
- --------------------------------------------------------------------------------
U.S. government securities Debt instruments (Treasury bills, notes, and bonds)
guaranteed by the U.S. government for the timely payment of principal and
interest.
- --------------------------------------------------------------------------------
Zero coupon, pay-in-kind, and deferred payment securities Domestic and foreign
securities offering non-cash or delayed-cash payment. Their prices are typically
more volatile than those of some other debt instruments and involve certain
special tax considerations.
- --------------------------------------------------------------------------------
Risk related to certain securities held by J.P. Morgan Institutional fixed
income funds:
Credit risk The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.
Currency risk The risk that fluctuations in the exchange rates between the U.S.
dollar and foreign currencies may negatively affect an investment. Adverse
changes in exchange rates may erode or reverse any gains produced by foreign
currency-denominated investments, and may widen any losses.
Extension risk The risk that an unexpected rise in interest rates will extend
the life of a mortgage-backed security beyond the expected prepayment time,
typically reducing the security's value.
Interest rate risk The risk of market losses attributable to changes in interest
rates. With fixed-rate securities, a rise in interest rates typically causes a
fall in values, while a fall in rates typically causes a rise in values.
Leverage risk The risk the costs associated with a liability are more than the
obligation of the fund with regard to the underlying instrument.
Liquidity risk The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like. The seller may
have to lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund management or
performance.
24 FUND DETAILS
<PAGE>
================================================================================
================================================================================
* Permitted (and if applicable, percentage limitation)
percentage of total assets - bold
percentage of net assets - italic
o Permitted, but not typically used
- -- Not permitted
<TABLE>
<CAPTION>
Short Inter- Global Tax New York
Term national Strategic Exempt Total California
Principal Types of Risk Bond Bond Bond Income Bond Return Bond Bond
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
credit, interest rate, market, prepayment * * * * -- o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, liquidity, political *(1) *(1) * * o o o
Domestic Domestic Domestic
Only Only Only
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity,
market, political * * * o * * *
Tax Tax Tax
Exempt Exempt Exempt
o o o
Taxable Taxable Taxable
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity,
market, political, valuation * * * o -- -- --
25% 25%
Foreign Foreign
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity,
market, political, valuation * * * * -- -- --
25% 25%
Foreign Foreign
- ------------------------------------------------------------------------------------------------------------------------------------
credit, extension, interest rate, market,
natural event, prepayment, valuation -- -- -- * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
extension, interest rate, leverage, liquidity,
market, prepayment *30% *30% -- *33 1/3% -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate,
leverage, market, political, prepayment * * o * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate,
liquidity, political, prepayment * * * * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market,
valuation * * o * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market,
natural event, prepayment, valuation * * -- * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit * * o * o o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market,
political * * * * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage,
market, political o o o * -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity,
market -- -- -- -- * * *
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event,
political o o -- -- *2 *2 *2
- ------------------------------------------------------------------------------------------------------------------------------------
interest rate * * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity,
market, political, valuation * * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Market risk The risk that the market value of an investment may move up or down,
sometimes rapidly and unpredictably. Market risk may affect a single issuer, an
industry, a sector of the bond market or the market as a whole. Common to all
investments and the mutual funds that invest in them.
Natural event risk The risk of losses attributable to natural disasters, crop
failures and similar events.
Political risk The risk of losses attributable to government or political
actions, from changes in tax or trade statutes to governmental collapse and war.
Prepayment risk The risk that unanticipated prepayments may occur, reducing the
value asset-backed, mortgages, mortgage-related securities, and participation
interests.
Valuation risk The risk that a fund has valued certain of its securities at a
higher price than it can sell them for.
(1) For each of the Short Term Bond and Bond funds, all foreign securities in
the aggregate may not exceed 25% of such fund's assets.
(2) At least 65% of assets must be in tax exempt securities (for New York Total
Return Bond and California Bond funds, the 65% must be in New York or
California municipal securities, respectively).
FUND DETAILS 25
<PAGE>
FOR MORE INFORMATION
================================================================================
For investors who want more information on these funds, the following documents
are available free upon request:
Annual/Semi-annual Reports Contain financial statements, performance data,
information on portfolio holdings, and a written analysis of market conditions
and fund performance for a fund's most recently completed fiscal year or
half-year.
Statement of Additional Information (SAI) Provides a fuller technical and legal
description of a fund's policies, investment restrictions, and business
structure. This prospectus incorporates each fund's SAI by reference.
Copies of the current versions of these documents may be obtained by contacting:
J.P. Morgan Institutional Funds
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
Telephone: 1-800-766-7722
Hearing impaired: 1-888-468-4015
Email: [email protected]
Text-only versions of these documents and this prospectus are available from the
Public Reference Room of the Securities and Exchange Commission in Washington,
D.C. (1-800-SEC-0330) and may be viewed on-screen or downloaded from the SEC's
Internet site at http://www.sec.gov. The funds' investment company and 1933 Act
registration numbers are:
J.P. Morgan Institutional Short Term Bond Fund ................ 811-07342 and
033-54642
J.P. Morgan Institutional Bond Fund ........................... 811-07342 and
033-54642
J.P. Morgan Institutional Global Strategic Income Fund ........ 811-07342 and
033-54642
J.P. Morgan Institutional International Bond Fund ............. 811-07342 and
033-54642
J.P. Morgan Institutional Tax Exempt Bond Fund ................ 811-07342 and
033-54642
J.P. Morgan Institutional New York Total Return Bond Fund ..... 811-07342 and
033-54642
J.P. Morgan Institutional California Bond Fund ................ 811-07795 and
333-11125
J.P. MORGAN INSTITUTIONAL FUNDS AND THE MORGAN TRADITION
The J.P. Morgan Institutional Funds combine a heritage of integrity and
financial leadership with comprehensive, sophisticated analysis and management
techniques. Drawing on J.P. Morgan's extensive experience and depth as an
investment manager, the J.P. Morgan Institutional Funds offer a broad array of
distinctive opportunities for mutual fund investors.
JP Morgan
- --------------------------------------------------------------------------------
J.P. Morgan Institutional Funds
Advisor Distributor
Morgan Guaranty Trust Company of New York Funds Distributor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-766-7722 1-800-221-7930
PROSIFI-983
