--------------------------------------------------------------------------------
MARCH 1, 2000
AS REVISED | PROSPECTUS
SEPTEMBER 1, 2000
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL
FIXED INCOME FUNDS
Short Term Bond Fund
Bond Fund
Global Strategic Income Fund
Tax Exempt Bond Fund
New York Tax Exempt 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.
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 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. JPMorgan
<PAGE>
CONTENTS
--------------------------------------------------------------------------------
1 | Each fund's goal, principal strategies, principal risks, performance and
expenses
J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
J.P. Morgan Institutional Short Term Bond Fund ................................1
J.P. Morgan Institutional Bond Fund ...........................................3
J.P. Morgan Institutional Global Strategic Income Fund ........................5
J.P. Morgan Institutional Tax Exempt Bond Fund ................................7
J.P. Morgan Institutional New York Tax Exempt Bond Fund .......................9
13 | Principles and techniques common to the funds in this prospectus
FIXED INCOME MANAGEMENT APPROACH
J.P. Morgan ..................................................................13
J.P. Morgan Institutional Fixed Income Funds .................................13
The spectrum of fixed income funds ...........................................13
Who may want to invest .......................................................13
Fixed income investment process ..............................................14
15 | Investing in the J.P. Morgan Institutional Fixed Income Funds
YOUR INVESTMENT
Investing through a financial professional ...................................15
Investing through an employer-sponsored retirement plan ......................15
Investing through an IRA or rollover IRA .....................................15
Investing directly ...........................................................15
Opening your account .........................................................15
Adding to your account .......................................................15
Selling shares ...............................................................16
Account and transaction policies .............................................16
Dividends and distributions ..................................................17
Tax considerations ...........................................................17
18 | More about risk and the funds' business operations
FUND DETAILS
Business structure ...........................................................18
Management and administration ................................................18
Risk and reward elements .....................................................19
Investments ..................................................................21
Financial highlights .........................................................23
FOR MORE INFORMATION .................................................back cover
<PAGE>
J.P. MORGAN INSTITUTIONAL
SHORT TERM BOND FUND
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 17-20.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high total return, consistent with low volatility
of principal. This goal can be changed without shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
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, and money market instruments, that
it believes have the potential to provide a high total return over time. 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. For a description of duration, please see "Fixed
Income Investment Process" on page 12.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. The fund
typically hedges its non-dollar investments back to the U.S. dollar. 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 rated B or BB.
Principal Risks
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 12.
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. Because of the sensitivity of the fund's mortgage related securities
to changes in interest rates, the performance and duration of the fund may be
more volatile than if it did not hold these securities. The fund uses futures
contracts and other derivatives to help manage duration, yield curve exposure,
and credit and spread volatility. To the extent that the fund seeks higher
returns by investing in non-investment-grade bonds, often called junk bonds, it
takes on additional risks, since these bonds are more sensitive to economic news
and their issuers have a less secure financial position. To the extent the fund
invests in foreign securities, it could lose money because of foreign government
actions, political instability, currency fluctuation or lack of adequate and
accurate information. The fund may engage in active and frequent trading,
leading to increased portfolio turnover and the possibility of increased capital
gains. See page 15 for further discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: JMSBX
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $55 billion using similar
strategies as the 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 William G. Tennille, vice president, who joined the team in
January 1994 and has been at J.P. Morgan since 1992.
--------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing its assets in a master
portfolio, which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
1 | J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Short Term Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last 6 calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one year, five years and life of the fund compare to those
of the Merrill Lynch 1-3 Year Treasury Index. This is a widely recognized,
unmanaged index of U.S. Treasury notes and bonds with maturities of 1-3 years
used as a measure of overall short-term bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
Year-by-year total return (%) Shows changes in returns by calendar year(1,2)
-------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
20%
10.80
10%
7.04
6.40
5.10
3.21
0.36
0%
-------------------------------------------------------------------------------------------------------
</TABLE>
[ ] J.P. Morgan Institutional Short Term Bond Fund
The fund's year-to-date total return as of 6/30/00 was 2.32%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 3.36% (for the quarter ended 6/30/95); and the lowest quarterly
return was -0.47% (for the quarter ended 3/31/94).
<TABLE>
<CAPTION>
Average annual total return Shows performance over time, for periods ended December 31, 1999(1)
------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Life
of fund
<S> <C> <C>
<C>
J.P. Morgan Institutional Short Term Bond Fund (after expenses) 3.21 6.48
5.30
------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch 1-3 Year Treasury Index (no expenses) 3.06 6.51
5.42
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement 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 after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.25
Marketing (12b-1) fees none
Other expenses 0.26
--------------------------------------------------------------------------------
Total operating expenses 0.51
Fee waiver and expense
reimbursement(4) 0.21
--------------------------------------------------------------------------------
Net expenses(4) 0.30
--------------------------------------------------------------------------------
Expense example(4)
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/00 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 31 142 264 620
--------------------------------------------------------------------------------
(1) The fund commenced operations on 9/13/93. For the period 7/31/93 through
9/30/93, life of fund returns reflect performance of the Pierpont Short
Term Bond Fund.
(2) The fund's fiscal year end is 10/31.
(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 7/30/99 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
operating expenses (which exclude interest, taxes and extraordinary
expenses) exceed 0.30% of the fund's average daily net assets through
2/28/01. Actual net expenses for the fiscal year ended 10/31/99 were 0.29%
of the fund's average daily net assets.
J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND | 2
<PAGE>
J.P. MORGAN INSTITUTIONAL BOND FUND
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 17-20.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high total return consistent with moderate risk of
capital and maintenance of liquidity. This goal can be changed without
shareholder approval.
INVESTMENT APPROACH
Principal Strategies
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, that it believes have the potential to provide a
high total return over time. 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 Smith Barney Broad Investment Grade Bond
Index (currently about five years). For a description of duration, please see
fixed income investment process on page 12.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. The fund
typically hedges its non-dollar investments back to the U.S. dollar. 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 rated B or BB.
Principal Risks
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 12.
To the extent that the fund seeks higher returns by investing in
non-investment-grade bonds, often called junk bonds, it takes on additional
risks, since these bonds are more sensitive to economic news and their issuers
have a less secure financial position. The fund may use futures contracts and
other derivatives to help manage duration, yield curve exposure, and credit and
spread volatility. To the extent the fund invests in foreign securities, it
could lose money because of foreign government actions, political instability,
currency fluctuation or lack of adequate and accurate information. The fund's
mortgage-backed investments involve risk of losses due to prepayments that occur
earlier or later than expected, like any bond, due to default. The fund may
engage in active and frequent trading, leading to increased portfolio turnover
and the possibility of increased capital gains. See page 15 for further
discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: JMIBX
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL BOND FUND)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $31 billion using similar
strategies as the fund.
The portfolio management team is led by William G. Tennille, vice president, who
has been at J.P. Morgan since 1992, Connie J. Plaehn, managing director, who has
been at J.P. Morgan since 1984, and John Snyder, vice president, who has been at
J.P. Morgan since 1993. Mr. Tennille and Ms. Plaehn have been on the team since
January 1994. Mr. Snyder has been a fixed income portfolio manager since joining
J.P. Morgan.
--------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio, which
is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
3 | J.P. MORGAN INSTITUTIONAL BOND FUND
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last 10 calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one, five and ten years compare to those of the Salomon
Smith Barney Broad Investment Grade Bond Index. This is a widely recognized,
unmanaged index of U.S. Treasury and agency securities and investment-grade
mortgage and corporate bonds used as a measure of overall bond market
performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
Year-by-year total return (%) Shows changes in returns by
calendar year(1,2)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
1990 1991 1992 1993 1994 1995 1996 1997
1998 1999
20%
18.42
13.45
10.09
10%
9.98
9.29
7.54
6.53
3.30
0%
------------------------------------------------------------------------------------------------------------------------------------
(0.55)
(2.68)
(10%)
</TABLE>
[ ] J.P. Morgan Institutional Bond Fund
The fund's year-to-date total return as of 6/30/00 was 3.02%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 6.30% (for the quarter ended 6/30/95); and the lowest quarterly
return was -2.38% (for the quarter ended 3/31/94).
<TABLE>
<CAPTION>
Average annual total return (%) Shows performance over time, for periods ended
December 31, 1999(1)
------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Past
10 yrs.
<S> <C> <C> <C>
J.P. Morgan Institutional Bond Fund (after expenses) (0.55) 7.41 7.37
------------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney Investment Grade Bond Index (no expenses) (0.83) 7.74 7.05
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement 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 after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.30
Marketing (12b-1) fees none
Other expenses 0.21
--------------------------------------------------------------------------------
Total operating expenses 0.51
Fee waiver and expense
reimbursement(4) 0.01
--------------------------------------------------------------------------------
Net expenses(4) 0.50
--------------------------------------------------------------------------------
Expense example(4)
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
7/30/99 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
1 yr. 3 yrs. 5 yrs. 10 yrs.
--------------------------------------------------------------------------------
Your cost($) 51 163 284 640
--------------------------------------------------------------------------------
(1) The fund commenced operations on 7/26/93. Returns for the period 1/1/90
through 7/31/93 reflect performance of The Pierpont Bond Fund, the fund's
predecessor.
(2) The fund's fiscal year end is 10/31.
(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 7/30/99 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
operating expenses (which exclude interest, taxes and extraordinary
expenses) exceed 0.50% of the fund's average daily net assets through
2/28/01.
J.P. MORGAN INSTITUTIONAL BOND FUND | 4
<PAGE>
J.P. MORGAN INSTITUTIONAL
GLOBAL STRATEGIC INCOME FUND
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 17-20.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide high total return from a portfolio of fixed income
securities of foreign and domestic issuers. This goal can be changed without
shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
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), that the fund believes have the potential to provide a high
total return over time. 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 its duration will generally be similar to that of
the Lehman Brothers Aggregate Bond Index (currently about four and a half
years). For a description of duration, please see fixed income investment
process on page 12. 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 must be invested in securities
rated B or higher at the time of purchase (or the unrated equivalent), except
that the fund's emerging market component has no minimum quality rating and may
invest without limit in securities that are in the lowest rating categories (or
are the unrated equivalent).
The management team uses the process described on page 12, and also makes
country allocations, based primarily on macro-economic factors. The team uses
the model allocation shown at right as a basis for its sector allocation,
although the actual allocations are adjusted periodically within the indicated
ranges. Within each sector, a dedicated team handles securities selection. The
fund typically hedges its non-dollar investments in developed countries back to
the U.S. dollar.
Principal Risks
The fund's share price and total return 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 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. Foreign and emerging market investment
risks include foreign government actions, political instability, currency
fluctuations and lack of adequate and accurate information. To the extent that
the fund seeks higher returns by investing in non-investment-grade bonds, often
called junk bonds, it takes on additional risks, since these bonds are more
sensitive to economic news and their issuers have a less secure financial
position. 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 may engage in active and frequent trading,
leading to increased portfolio turnover and the possibility of increased capital
gains. See page 15 for further discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: JPIGX
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND)
MODEL SECTOR ALLOCATION
9% international
non-dollar
(range 0-25%)
35% public/private
mortgages
(range 20-45%)
13% public/private
corporates
(range 5-25%)
16% emerging
markets
(range 0-25%)
27% high yield
corporates
(range 17-37%)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $3 billion using similar
strategies as the fund.
The portfolio management team is led by Mark E. Smith, managing director,
who joined J.P. Morgan in 1994 and Robert J. Morena, vice president, who joined
J.P. Morgan in 2000. Prior to joining J.P. Morgan, Mr. Smith managed fixed
income portfolios and oversaw asset allocation activities at Allied Signal, Inc.
He has been on the team since the fund's inception. Prior to joining J.P.
Morgan, Mr. Morena served as a managing director at Forest Investment Management
where he managed fixed income portfolios. Prior to that, he served as the
Department Head of The Bank of New York's Institutional Fixed Income Division.
--------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio, which
is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
5 | J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Global Strategic Income Fund.
The bar chart indicates some of the risks by showing the performance of the
fund's shares from year to year for each of the last 2 calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one year and life of the fund compare to those of the
Lehman Brothers Aggregate Bond Index. This is a widely recognized, unmanaged
index used as a measure of overall bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
Total return (%) Shows changes in returns by calendar year(1,2)
--------------------------------------------------------------------------------
1998 1999
10%
5%
2.59
2.51
0%
--------------------------------------------------------------------------------
[ ] J.P. Morgan Institutional Global Strategic Income Fund
The fund's year-to-date total return as of 6/30/00 was 2.27%. For the period
covered by this total return chart, the fund's highest quarterly return was
3.13% (for the quarter ended 3/31/98); and the lowest quarterly return was
-1.45% (for the quarter ended 9/30/98).
<TABLE>
<CAPTION>
Average annual total return Shows performance over time, for periods ended
December 31, 1999(1)
------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Life
of fund
<S> <C>
<C>
J.P. Morgan Institutional Global Strategic Income Fund (after expenses) 2.51
5.35
------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index (no expenses) (0.83)
6.49
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement 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 after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.45
Marketing (12b-1) fees none
Other expenses 0.33
--------------------------------------------------------------------------------
Total operating expenses 0.78
Fee waiver and expense
reimbursement(4) 0.13
--------------------------------------------------------------------------------
Net expenses(4) 0.65
--------------------------------------------------------------------------------
Expense example(4)
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
7/30/99 through 2/28/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 66 236 420 954
--------------------------------------------------------------------------------
(1) The fund commenced operations on 3/14/97 and performance is calculated as
of 3/31/97.
(2) The fund's fiscal year is 10/31.
(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 7/30/99 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
operating expenses (which exclude interest, taxes and extraordinary
expenses) exceed 0.65% of the fund's average daily net assets through
2/28/01.
J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND | 6
<PAGE>
J.P. MORGAN INSTITUTIONAL
TAX EXEMPT BOND FUND
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 17-20.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide a high level of current income that is exempt from
federal income tax consistent with moderate risk of capital. This goal can be
changed without shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in high quality municipal securities that it believes
have the potential to provide current income that 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 (currently 5.4 years). For a description
of duration, please see fixed income investment process on page 12. 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 rated B or BB.
Principal Risks
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 12.
Investors should be prepared for higher share price volatility than from a tax
exempt fund of shorter duration. The fund's performance could also be affected
by market reaction to proposed tax legislation. To the extent that the fund
seeks higher returns by investing in non-investment-grade bonds, often called
junk bonds, it takes on additional risks, since these bonds are more sensitive
to economic news and their issuers have a less secure financial position.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: JITBX
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $10 billion using similar
strategies as the fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
joined the team in May 1997 and has been at J.P. Morgan since 1987, Benjamin
Thompson, vice president, who joined the team in June of 1999, and Kingsley
Wood, Jr., vice president, who has been with the team since January 2000. Prior
to joining J.P. Morgan, Mr. Thompson was a senior fixed income portfolio manager
at Goldman Sachs, and Mr. Wood was a senior fixed income portfolio manager at
Mercantile Bank & Trust. Prior to joining Mercantile in July of 1998, Mr. Wood
was an institutional tax-exempt trader at ABN-AMRO and Kemper Securities.
--------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio, which
is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
7 | J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Tax Exempt Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the fund's last 10 calendar
years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one, five and ten years compare to those of the Lehman
Brothers 1-16 Year Municipal Bond Index, the fund's current benchmark. Since
this index has not been in existence during all of the past ten years, the table
also shows the performance of the Lehman Quality Intermediate Municipal Bond
Index, the fund's previous benchmark. Both are unmanaged indices that measure
municipal bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
Year-by-year total return (%) Shows changes in returns by
calendar year(1,2)
------------------------------------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997
1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
20%
13.50
10.92
10%
9.58
7.58
7.47
6.87
5.65
3.71
0%
------------------------------------------------------------------------------------------------------------------------------------
(0.75)
(2.53)
(10%)
</TABLE>
[ ] J.P. Morgan Institutional Tax Exempt Bond Fund
The fund's year-to-date total return as of 6/30/00 was 2.83%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 5.16% (for the quarter ended 3/31/95); and the lowest quarterly
return was 3.05% (for the quarter ended 3/31/94).
<TABLE>
<CAPTION>
Average annual total return (%) Shows performance over time, for periods ended
December 31, 1999(1)
------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5
yrs. Past 10 yrs.
<S> <C>
<C> <C>
J.P. Morgan Institutional Tax Exempt Bond Fund (after expenses) (0.75)
5.83 6.09
------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers 1-16 Year Municipal Bond Index (no expenses) (0.06)
6.32 6.63
------------------------------------------------------------------------------------------------------------------------------------
Lehman Quality Intermediate Municipal Bond Index (no expenses) 0.30
6.25 7.79
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement 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 after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.30
Marketing (12b-1) fees none
Other expenses 0.23
--------------------------------------------------------------------------------
Total operating expenses 0.53
Fee waiver and expense
reimbursement(4) 0.03
--------------------------------------------------------------------------------
Net expenses(4) 0.50
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Expense example(4)
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
8/1/99 through 11/28/00 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 51 167 293 662
--------------------------------------------------------------------------------
(1) The fund commenced operations on 7/12/93. For the period 1/1/90 through
7/31/93 returns reflect performance of The Pierpont Tax Exempt Bond Fund,
the predecessor of the fund.
(2) The fund's fiscal year end is 7/31. Prior to 1999, the fiscal year end was
8/31.
(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 7/30/99 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
operating expenses (which exclude interest, taxes and extraordinary
expenses) exceed 0.50% of the fund's average daily net assets through
11/28/00.
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND | 8
<PAGE>
J.P. MORGAN INSTITUTIONAL NEW YORK
TAX EXEMPT BOND FUND
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 17-20.
[GRAPHIC OMITTED]
GOAL
The fund's goal is to provide a high level of tax exempt income for New York
residents consistent with moderate risk of capital. This goal can be changed
without shareholder approval.
[GRAPHIC OMITTED]
INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in New York municipal securities that it believes
have the potential to provide high current income which is free from federal,
state, and New York City personal income taxes for New York residents. The fund
may also 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 (currently 5.4 years). For a
description of duration, please see fixed income investment process on page 12.
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 rated B or
BB.
Principal Risks
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 12. 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 is
non-diversified and 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, often called junk bonds, it
takes on additional risks, since these bonds are more sensitive to economic news
and their issuers have a less secure financial condition.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
<PAGE>
TICKER SYMBOL: JPNTX
REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND)
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages
approximately $369 billion, including more than $1.4 billion using similar
strategies as the fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
joined the team in May 1997 and has been at J.P. Morgan since 1987, Benjamin
Thompson, vice president, who joined the team in June of 1999, and Kingsley
Wood, Jr., vice president, who has been with the team since January of 2000.
Prior to joining J.P. Morgan, Mr. Thompson was a senior fixed income portfolio
manager at Goldman Sachs, and Mr. Wood was a senior fixed income portfolio
manager at Mercantile Bank & Trust. Prior to joining Mercantile in July of 1998,
Mr. Wood was an institutional tax-exempt trader at ABN-AMRO and Kemper
Securities.
--------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio, which
is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
9 | J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional New York Tax Exempt Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last 5 calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past year and the life of the fund compare to those of the
Lehman Brothers 1-16 Year Municipal Bond Index. This is a widely recognized,
unmanaged index of general obligation and revenue bonds with maturities of 1-16
years used as a measure of overall tax-exempt bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
Year-by-year total return (%) Shows changes in returns by
calendar year(1,2)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C> <C>
1995 1996 1997
1998 1999
20%
13.28
10%
7.68
5.61
4.21
0%
------------------------------------------------------------------------------------------------------------------------------------
(0.73)
(10%)
</TABLE>
[ ] J.P. Morgan Institutional New York Tax Exempt Bond Fund
The fund's year-to-date total return as of 6/30/00 was 3.11%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 4.86% (for the quarter ended 3/31/95) and the lowest quarterly return
was -1.78% (for the quarter ended 6/30/99).
<TABLE>
<CAPTION>
Average annual total return (%) Shows performance over time, for periods ended
December 31, 1999(1)
------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Life
of fund
<S> <C>
<C>
J.P. Morgan Institutional New York Tax Exempt Bond Fund (after expenses) (0.73)
5.30
------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers 1-16 Year Municipal Bond Index (no expenses) (0.06)
5.95
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement 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 after reimbursement are deducted from fund assets prior to
performance calculations.
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
--------------------------------------------------------------------------------
Management fees 0.30
Marketing (12b-1) fees none
Other expenses 0.29
--------------------------------------------------------------------------------
Total operating expenses 0.59
Fee waiver and expense
reimbursement(4) 0.09
--------------------------------------------------------------------------------
Net expenses(4) 0.50
--------------------------------------------------------------------------------
Expense example
--------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
8/1/99 through 11/28/00 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
--------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 51 180 320 729
--------------------------------------------------------------------------------
(1) The fund commenced operations on 4/11/94, and returns reflect performance
of the fund from 4/30/94.
(2) The fund's fiscal year end is 7/31. Prior to 1999 the fiscal year end was
3/31.
(3) The fund has a master/feeder structure as described on page 16. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year expressed as a percentage of average net assets.
(4) Reflects an agreement dated 7/30/99 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
operating expenses (which exclude interest, taxes and extraordinary
expenses) exceed 0.50% of the fund's average daily net assets through
11/28/00.
J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND | 10
<PAGE>
FIXED INCOME MANAGEMENT APPROACH
--------------------------------------------------------------------------------
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 approximately 420 analysts and portfolio
managers around the world and has approximately $369 billion in assets under
management, including assets managed by the funds' advisor, J.P. Morgan
Investment Management Inc.
J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
These funds invest primarily in bonds and other fixed income securities, either
directly or through a master portfolio (another fund with the same goal). The
funds seek high total return or high current income.
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.
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 were described on the
preceding 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
Return (after taxes)
--------------------------------------------------------------------------------
Global Strategic Income Fund o
o New York Tax Exempt Bond Fund*
o Tax Exempt Bond Fund*
o Bond Fund
o Short Term Bond Fund
--------------------------------------------------------------------------------
Risk
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.
<PAGE>
--------------------------------------------------------------------------------
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 New York Tax Exempt Bond Fund, are seeking income that is
exempt from federal, state, and local (if applicable) personal income taxes in
New York
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
11 | FIXED INCOME MANAGEMENT APPROACH
<PAGE>
[GRAPHIC OMITTED]
The funds invest across a range of
different types of securities
[GRAPHIC OMITTED]
Each fund makes its portfolio decisions
as described earlier in this prospectus
[GRAPHIC OMITTED]
J.P. Morgan uses a disciplined process
to control each fund's sensitivity
to interest rates
<PAGE>
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 areas, 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.
Sector allocation The sector allocation team meets monthly, analyzing the
fundamentals of a broad range of sectors in which a fund may invest. The team
seeks to enhance performance and manage risk by underweighting or overweighting
sectors.
Security selection Relying on the insights of different specialists, including
credit analysts, quantitative researchers, and dedicated fixed income traders,
the portfolio managers make buy and sell decisions according to each fund's goal
and strategy.
Duration management Forecasting teams use fundamental economic factors to
develop strategic forecasts of the direction of interest rates. Based on these
forecasts, strategists establish each fund's target duration, a common
measurement of a security's sensitivity to interest rate movements. For
securities owned by a fund, duration measures the average time needed to receive
the present value of all principal and interest payments by analyzing cash flows
and interest rate movements. A fund's duration is generally shorter than a
fund's average maturity because the maturity of a security only measures the
time until final payment is due. Each fund's target duration typically remains
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.
FIXED INCOME MANAGEMENT APPROACH | 12
<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 and New York Tax Exempt Bond funds and $1,000,000 for
the Global Strategic Income Fund 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.
<PAGE>
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-Delaware
Routing number: 031-100-238
Credit: J.P.M. Institutional Shareholder Services
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.
13 | 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.
Redemption In Kind
o Each fund reserves the right to make redemptions of over $250,000 in
securities rather than in cash.
<PAGE>
--------------------------------------------------------------------------------
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). Each fund's
securities are typically priced using pricing services or market quotes. When
these methods are not available or do not represent a security's value at the
time of pricing (e.g., when an event occurs on a foreign exchange, after the
close of trading on that exchange, that would materially impact a security's
value at the time each fund calculates its NAV), the security is valued in
accordance with the fund's fair valuation procedures.
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 as
permitted by law and to postpone payment of proceeds for up to seven days.
--------------------------------------------------------------------------------
Shareholder Services Agent
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713
1-800-766-7722
Representatives are available 8:00 a.m. to 6:00 p.m. eastern time on fund
business days.
YOUR INVESTMENT | 14
<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, each fund reserves the right to 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.
<PAGE>
--------------------------------------------------------------------------------
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 for taxable accounts:
--------------------------------------------------------------------------------
Transaction Tax status
--------------------------------------------------------------------------------
Income dividends from the Exempt from federal, state,
New York Tax Exempt Bond and New York City personal
Fund income taxes for New York
residents only
--------------------------------------------------------------------------------
Income dividends from the Exempt from federal
Tax Exempt Bond Fund personal 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 losses
shares owned for more
than one year
--------------------------------------------------------------------------------
Sales or exchanges of Gains are treated as
shares owned for one year ordinary income; losses are
or less subject to special rules
--------------------------------------------------------------------------------
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. A portion of the Tax Exempt Bond and New York Tax Exempt
Bond funds' returns may be subject to federal, state, or local tax, or the
alternative minimum tax. 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.
15 | YOUR INVESTMENT
<PAGE>
FUND DETAILS
--------------------------------------------------------------------------------
BUSINESS STRUCTURE
As noted earlier, each fund is a series of J.P. Morgan Institutional Funds, a
Massachusetts business trust, and 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 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.
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:
<PAGE>
--------------------------------------------------------------------------------
Advisory services Percentage of the master
portfolio's average net assets
--------------------------------------------------------------------------------
Short Term Bond 0.25%
--------------------------------------------------------------------------------
Bond 0.30%
--------------------------------------------------------------------------------
Global Strategic Income 0.45%
--------------------------------------------------------------------------------
Tax Exempt Bond 0.30%
--------------------------------------------------------------------------------
New York Tax Exempt Bond 0.30%
--------------------------------------------------------------------------------
Administrative services Master portfolio's and fund's pro-
(fee shared with Funds rata portions of 0.09% of the
Distributor, Inc.) first $7 billion in J.P. Morgan-
advised portfolios, plus 0.04% of
average net assets over $7 billion
--------------------------------------------------------------------------------
Shareholder services 0.10% of each fund's average
net assets
--------------------------------------------------------------------------------
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 | 16
<PAGE>
--------------------------------------------------------------------------------
RISK AND REWARD ELEMENTS
This table discusses the main elements that make up each fund's overall risk and
reward characteristics. It also outlines each fund's policies toward various
investments, 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, yield, and o Bonds have generally outperformed o Under normal circumstances the funds
total return will fluctuate in money market investments over the long plan to remain fully invested in bonds
response to bond market movements term, with less risk than stocks and other fixed income securities as
noted in the table on pages 19-20
o The value of most bonds will fall when o Most bonds will rise in value when
interest rates rise; the longer a interest rates fall o The funds seek to limit risk and
bond's maturity and the lower its enhance total return or yields through
credit quality, the more its value o Mortgage-backed and asset-backed careful management, sector allocation,
typically falls securities can offer attractive individual securities selection, and
returns duration management
o Adverse market conditions may from
time to time cause a fund to take o During severe market downturns, the
temporary defensive positions that are funds have the option of investing up
inconsistent with its principal to 100% of assets in investment-grade
investment strategies and may hinder a short-term securities
fund from achieving its investment
objective o J.P. Morgan monitors interest rate
trends, as well as geographic and
o Mortgage-backed and asset-backed demographic information related to
securities (securities representing an mortgage-backed securities and
interest in, or secured by, a pool of mortgage prepayments
mortgages or other assets such as receivables) could generate capital losses
or periods of low yields if they are paid off substantially earlier or later
than anticipated
------------------------------------------------------------------------------------------------------------------------------------
Credit quality
o The default of an issuer would leave a o Investment-grade bonds have a lower o Each fund maintains its own policies
fund with unpaid interest or principal risk of default for balancing credit quality against
potential yields and gains in light of
o Junk bonds (those rated BB/Ba or o Junk bonds offer higher yields and its investment goals
lower) have a higher risk of default, higher potential gains
tend to be less liquid, and may be o J.P. Morgan develops its own ratings
more difficult to value of unrated securities and makes a
credit quality determination for
unrated securities
------------------------------------------------------------------------------------------------------------------------------------
Foreign investments
o A fund could lose money because of o Foreign bonds, which represent a major o Foreign bonds are a primary investment
foreign government actions, political portion of the world's fixed income only for the Global Strategic Income
instability, or lack of adequate and securities, offer attractive potential fund and may be a significant
accurate information performance and opportunities for investment for the Short Term Bond and
diversification Bond funds; the Tax Exempt Bond and
o Currency exchange rate movements could New York Tax Exempt Bond funds are not
reduce gains or create losses o Favorable exchange rate movements permitted to invest any assets in
could generate gains or reduce losses foreign bonds
o Currency and investment risks tend to
be higher in emerging markets o Emerging markets can offer higher o To the extent that a fund invests in
returns foreign bonds, it may manage the
currency exposure of its foreign
investments relative to its benchmark,
and may hedge a portion of its foreign
currency exposure into the U.S. dollar
from time to time (see also
"Derivatives"); these currency
management techniques may not be
available for certain emerging markets
investments
------------------------------------------------------------------------------------------------------------------------------------
When-issued and delayed
delivery securities
o When a fund buys securities before o A fund can take advantage of o Each fund uses segregated accounts to
issue or for delayed delivery, it attractive transaction opportunities offset leverage risk
could be exposed to leverage risk if
it does not use segregated accounts
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17 | FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Potential risks Potential rewards Policies to balance risk
and reward
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Management choices
o A fund could underperform its o A fund could outperform its benchmark o J.P. Morgan focuses its active
benchmark due to its sector, due to these same choices management on those areas where it
securities or duration choices believes its commitment to research
can most enhance returns and manage
risks in a consistent way
------------------------------------------------------------------------------------------------------------------------------------
Derivatives
o Derivatives such as futures, options, o Hedges that correlate well with o The funds use derivatives, such as
swaps and forward foreign currency underlying positions can reduce or futures, options, swaps and forward
contracts that are used for hedging eliminate losses at low cost foreign currency contracts for hedging
the portfolio or specific securities and for risk management (i.e., to
may not fully offset the underlying o A fund could make money and protect adjust duration or yield curve
positions1 and this could result in against losses if management's exposure, or to establish or adjust
losses to the fund that would not have analysis proves correct exposure to particular securities,
otherwise occurred markets, or currencies); risk
o Derivatives that involve leverage management may include management of a
o Derivatives used for risk management could generate substantial gains at fund's exposure relative to its
may not have the intended effects and low cost benchmark; the Tax Exempt Bond and New
may result in losses or missed York Tax Exempt Bond funds are
opportunities permitted to enter into futures and
options transactions, however, these
o The counterparty to a derivatives transactions result in taxable gains
contract could default or losses so it is expected that these
funds will utilize them infrequently;
o Certain types of derivatives involve forward foreign currency contracts are
costs to the funds which can reduce not permitted to be used by the Tax
returns Exempt Bond and New York Tax Exempt
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 their portfolios
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Securities lending
o When a fund lends a security, there is o A fund may enhance income through the o J.P. Morgan maintains a list of
a risk that the loaned securities may investment of the collateral received approved borrowers
not be returned if the borrower from the borrower
defaults o The fund receives collateral equal to
at least 100% of the current value of
o The collateral will be subject to the securities loaned
risks of the securities in which it is
invested o The lending agents indemnify a fund
against borrower default
o J.P. Morgan's collateral investment
guidelines limit the quality and
duration of collateral investment to
minimize losses
o Upon recall, the borrower must return
the securities loaned within the
normal settlement period
------------------------------------------------------------------------------------------------------------------------------------
Illiquid holdings
o A fund could have difficulty valuing o These holdings may offer more o No fund may invest more than 15% of
these holdings precisely attractive yields or potential growth net assets in illiquid holdings
than comparable widely traded
o A fund could be unable to sell these securities o To maintain adequate liquidity to meet
holdings at the time or price desired redemptions, each fund may hold
investment-grade short-term securities
(including repurchase agreements and
reverse repurchase agreements) and,
for temporary or extraordinary
purposes, may borrow from banks up to
331/3% of the value of its total assets
------------------------------------------------------------------------------------------------------------------------------------
Short-term trading
o Increased trading would raise a fund's o A fund could realize gains in a short o The funds may use short-term trading
transaction costs period of time to take advantage of attractive or
unexpected opportunities or to meet
o Increased short-term capital gains o A fund could protect against losses if demands generated by shareholder
distributions would raise a bond is overvalued and its value activity. The turnover rates for each
shareholders' income tax liability later falls fund for its most recent fiscal year
were: Short Term Bond (398%), Bond
(465%), Global Strategic Income
(318%), Tax Exempt Bond, for the
eleven months ended 7/31/99 (29%) and
New York Tax Exempt Bond, for the four
months ended 7/31/99 (8%)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(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 changes in the value of a securities index. An option is
the right to buy or sell a set quantity of an underlying instrument at a
pre-determined price. A swap is a privately negotiated agreement to
exchange one stream of payments for another. A forward foreign currency
contract is an obligation to buy or sell a given currency on a future date
and at a set price.
FUND DETAILS | 18
<PAGE>
--------------------------------------------------------------------------------
Investments
This table discusses the customary types of investments which can be held by
each fund. In each case the related types of risk are listed on the following
page (see below for definitions).This table reads across two pages.
<TABLE>
<CAPTION>
<S>
<C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Asset-backed securities Interests in a stream of payments from specific assets,
such as auto or credit card receivables.
------------------------------------------------------------------------------------------------------------------------------------
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 payment.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities Domestic and foreign securities (such as Ginnie Maes,
Freddie Macs, Fannie Maes) which represent interests in pools of mortgages,
whereby the principal and interest paid every month is passed through to the
holder of the
securities.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage dollar rolls The purchase of domestic or foreign mortgage-backed
securities with the promise to purchase similar securities upon the maturity of
the original security. Segregated accounts are used to offset leverage risk.
------------------------------------------------------------------------------------------------------------------------------------
Participation interests Interests that represent a share of domestic or foreign
bank debt or similar securities or obligations.
------------------------------------------------------------------------------------------------------------------------------------
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 Contracts whereby the fund agrees to purchase a security and resell it to the seller on a
particular date and
at a specific price.
------------------------------------------------------------------------------------------------------------------------------------
Reverse repurchase agreements Contracts whereby the fund sells a security and
agrees to repurchase it from the buyer
on a particular
date and at a specific price. Considered a form of borrowing.
------------------------------------------------------------------------------------------------------------------------------------
Sovereign debt, Brady bonds, and debt of supranational organizations Dollar- or
non-dollar-denominated securities issued by foreign governments or supranational
organizations. Brady bonds are issued in connection with debt restructurings.
------------------------------------------------------------------------------------------------------------------------------------
Swaps Contractual agreement whereby a domestic or foreign 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.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Risk related to certain investments held by J.P. Morgan Institutional fixed
income funds:
Credit risk The risk a financial obligation will not be met by the issuer of a
security or the counterparty to a contract, resulting in a loss to the
purchaser.
Currency risk The risk currency exchange rate fluctuations may reduce gains or
increase losses on foreign investments.
Environmental risk The risk that an owner or operator of real estate may be
liable for the costs associated with hazardous or toxic substances located on
the property.
Extension risk The risk a rise in interest rates will extend the life of a
mortgage-backed security to a date later than the anticipated prepayment date,
causing the value of the investment to fall.
Interest rate risk The risk a change in interest rates will adversely affect the
value of an investment. The value of fixed income securities generally moves in
the opposite direction of interest rates (decreases when interest rates rise and
increases when interest rates fall).
Leverage risk The risk of gains or losses disproportionately higher than the
amount invested.
19 | FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C> <C>
O Permitted (and if applicable, percentage limitation)
percentage of total assets - bold
percentage of net assets - italic
o Permitted, but not typically used
+ Permitted, but no current intention of use
-- Not permitted
Related Types of Risk
Global
Tax New York
Short Term Strategic
Exempt Tax
Bond Bond Income
Bond Exempt Bond
------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, prepayment O O O
o o
------------------------------------------------------------------------------------------------------------------------------------
Domestic Domestic
credit, currency, liquidity, political O(1) O(1) O
oOnly oOnly
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political O(1) O(1) o
O O
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation O(1) O(1) o
-- --
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation O(1) O(1) O
-- --
------------------------------------------------------------------------------------------------------------------------------------
credit, environmental, extension, interest rate, liquidity, market, O O O
+ +
natural event, political, prepayment, valuation
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, political, O(1) O(1) O
-- --
prepayment
------------------------------------------------------------------------------------------------------------------------------------
currency, extension, interest rate, leverage, liquidity, market, political, O(1,3) O(1,3) O(3)
-- --
prepayment
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, political, prepayment O(1) O(1) O
-- --
------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation O O O
O O
------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, natural event, prepayment, valuation O O O
-- --
------------------------------------------------------------------------------------------------------------------------------------
credit O O O
o o
------------------------------------------------------------------------------------------------------------------------------------
credit O(3) O(3) O(3)
o(3) o(3)
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market, political O(1) O(1) O
-- --
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political O(1) O(1) O
O --
------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity, market -- -- --
O O
------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event, political o o --
O(2) O(2)
------------------------------------------------------------------------------------------------------------------------------------
interest rate O O O
O O
------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation O(1) O(1) O
O O
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Liquidity risk The risk the holder may not be able to sell the security at the
time or price it desires.
Market risk The risk that when the market as a whole declines, the value of a
specific investment will decline proportionately. This systematic risk is common
to all investments and the mutual funds that purchase them.
Natural event risk The risk a natural disaster, such as a hurricane or similar
event, will cause severe economic losses and default in payments by the issuer
of the security.
Political risk The risk governmental policies or other political actions will
negatively impact the value of the investment.
Prepayment risk The risk declining interest rates will result in unexpected
prepayments, causing the value of the investment to fall.
Valuation risk The risk the estimated value of a security does not match the
actual amount that can be realized if the security is sold.
(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 the New York Tax Exempt Bond Fund's assets must be in New
York municipal securities, and at least 80% of the New York Tax Exempt and
Tax Exempt Bond Funds' assets must be in tax exempt securities.
(3) All forms of borrowing (including securities lending and reverse repurchase
agreements) in the aggregate may not exceed 331/3% of the fund's total
assets.
FUND DETAILS | 20
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each fund's
financial performance for the past one through five fiscal periods, as
applicable. Certain information reflects financial results for a single fund
share. The total returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in a fund (assuming reinvestment of all
dividends and distributions). Except where noted, this information has been
audited by Pricewaterhouse- Coopers LLP, whose reports, along with each fund's
financial statements, are included in the respective fund's annual report, which
are available upon request.
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND
<TABLE>
<CAPTION>
Per-share data For fiscal years ended
------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998
1999
<S> <C> <C> <C> <C> <C>
<C>
Net asset value, beginning of year ($) 9.60 9.83 9.85 9.84
9.96
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.58 0.55 0.61 0.59
0.58
Net realized and unrealized gain (loss)
on investment ($) 0.24 0.02 (0.01) 0.12
(0.29)
------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.82 0.57 0.60 0.71
(0.29)
------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.59) (0.55) (0.61) (0.59)
(0.54)
Net realized gain ($) -- -- -- --
(0.04)
------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.59) (0.55) (0.61) (0.59)
(0.58)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 9.83 9.85 9.84 9.96
9.67
------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------------
Total return (%) 8.81 6.01 6.27 7.40
3.03
------------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 18,916 17,810 27,375 232,986
354,267
------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.45 0.37 0.25 0.25
0.29
------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 6.09 5.69 6.19 5.84
5.51
------------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 0.67 1.37 0.96 0.62
0.51
------------------------------------------------------------------------------------------------------------------------
</TABLE>
21 | FUND DETAILS
<PAGE>
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL BOND FUND
<TABLE>
<CAPTION>
Per-share data For fiscal years ended
----------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
1998 1999
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of year ($) 9.23 9.98 9.84
10.01 10.10
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.63 0.61 0.65
0.64 0.57
Net realized and unrealized gain (loss)
on investment ($) 0.75 (0.11) 0.18
0.15 (0.57)
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 1.38 0.50 0.83
0.79 --
----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.63) (0.61) (0.64)
(0.63) (0.57)
Net realized gain ($) -- (0.03) (0.02)
(0.07) (0.12)
----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.63) (0.64) (0.66)
(0.70) (0.69)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 9.98 9.84 10.01
10.10 9.41
----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------------------------------------------------------------------
Total return (%) 15.50 5.21 8.78
8.18 0.03
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 438,610 836,066 912,054
1,001,411 1,041,330
----------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.47 0.50 0.50
0.49 0.50
----------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 6.62 6.28 6.59
6.32 5.92
----------------------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 0.52 0.53 0.50
0.50 0.51
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Per-share data For fiscal years ended
----------------------------------------------------------------------------------------------------------------------------------
1997(1)
1998 1999
<S> <C> <C>
<C> <C>
Net asset value, beginning of year ($) 10.00
10.16 9.72
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.46
0.75 0.62
Net realized and unrealized gain (loss)
on investment ($) 0.15
(0.45) (0.37)
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.61
0.30 0.25
----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.45)
(0.70) (0.62)
Net realized gain ($) --
(0.02) --
Return of capital --
(0.02) --
----------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.45)
(0.74) (0.62)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 10.16
9.72 9.35
----------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------------------------------------------------------------------
Total return (%) 6.15(2)
2.91 2.62
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 105,051
223,700 183,085
----------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.65(3)
0.65 0.65
----------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 7.12(3)
6.59 6.70
----------------------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 1.18(3)
0.83 0.78
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 3/17/97. (2) Not annualized.
(3) Annualized.
FUND DETAILS | 22
<PAGE>
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND
<TABLE>
<CAPTION>
For the 11
months
Per-share data For fiscal periods
ended ended
------------------------------------------------------------------------------------------------------------------------------------
8/31/95 8/31/96 8/31/97 8/31/98
7/31/99 1/31/00
(unaudited)
<S> <C> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of period ($) 9.75 10.01 9.92 10.12
10.38 10.07
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.49 0.48 0.48 0.47
0.41 0.22
Net realized and unrealized gain (loss)
on investment ($) 0.26 (0.07) 0.20 0.26
(0.30) (0.25)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.75 0.41 0.68 0.73
0.11 (0.03)
------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.49) (0.48) (0.48) (0.47)
(0.41) (0.22)
Net realized gain ($) -- (0.02) (0.00)(1) --
(0.01) (0.00)(1)
Distributions in excess of net investment income -- -- -- --
-- (0.01)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.49) (0.50) (0.48) (0.47)
(0.42) (0.23)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.01 9.92 10.12 10.38
10.07 9.81
------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 8.00 4.13 7.06 7.37
1.01(2) (0.28)(2)
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 59,867 121,131 201,614 316,594
388,933 394,243
------------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.50 0.50 0.50 0.50
0.503 0.503
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 5.09 4.82 4.83 4.58
4.373 4.453
------------------------------------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 0.71 0.60 0.56 0.53
0.533 0.513
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Less than $0.01 per share.
(2) Not annualized.
(3) Annualized.
<PAGE>
--------------------------------------------------------------------------------
J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND
<TABLE>
<CAPTION>
For the four
months
Per-share data For fiscal periods
ended ended
------------------------------------------------------------------------------------------------------------------------------------
3/31/95(1) 3/31/96 3/31/97 3/31/98 3/31/99
7/31/99 1/31/00
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of period ($) 10.00 10.11 10.34 10.31 10.67
10.72 10.42
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.42 0.49 0.48 0.48 0.45
0.14 0.22
Net realized and unrealized gain
(loss)
on investment ($) 0.11 0.25 (0.02) 0.40 0.13
(0.28) (0.25)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.53 0.74 0.46 0.88 0.58
(0.14) (0.03)
------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.42) (0.49) (0.48) (0.48) (0.45)
(0.14) (0.22)
Net realized gain ($) -- (0.02) (0.01) (0.04) (0.08)
(0.02) --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.42) (0.51) (0.49) (0.52) (0.53)
(0.16) (0.22)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.11 10.34 10.31 10.67 10.72
10.42 10.17
------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 5.492 7.40 4.54 8.64 5.51
(1.25)(2) (0.31)(2)
------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 20,621 47,926 90,792 111,418 204,986
161,373 148,665
------------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.50(3) 0.50 0.50 0.50 0.50
0.50(3) 0.50(3)
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 4.65(3) 4.67 4.70 4.54 4.15
4.01(3) 4.19(3)
------------------------------------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 1.05(3) 0.67 0.64 0.59 0.57
0.59(3) 0.55(3)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 4/11/94.
(2) Not annualized.
(3) Annualized.
23 | FUND DETAILS
<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, along with other information
about the fund, may be obtained by contacting:
J.P. Morgan Institutional Funds
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713
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, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-202-942-8090) 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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 Tax Exempt Bond Fund ..................................... 811-07342 and 033-54642
J.P. Morgan Institutional New York Tax Exempt Bond Fund ............................ 811-07342 and 033-54642
</TABLE>
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.
JPMorgan
--------------------------------------------------------------------------------
J.P. Morgan Institutional Funds
Advisor Distributor
J.P. Morgan Investment Management Inc. Funds Distriburor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-766-7722 1-800-221-7930
