The JPM Pierpont Funds
Supplement dated May 20, 1997, as applicable to the following Prospectuses:
The JPM Pierpont Money Market Fund, dated 2/28/97
The JPM Pierpont Bond Fund, dated 2/28/97
The JPM Pierpont Diversified Fund, dated 9/27/96
The JPM Pierpont Equity Fund, dated 9/27/96
The JPM Pierpont Capital Appreciation Fund, dated 9/27/96
The JPM Pierpont International Equity Fund, dated 2/28/97
The JPM Pierpont Emerging Markets Equity Fund, dated 2/28/97
(Supersedes any supplements with respect to the above Funds dated prior to May
20, 1997)
FUND/PORTFOLIO NAME CHANGES:
1. The following Funds changed their respective names effective May 12, 1997:
FROM TO
The JPM Pierpont Money Market Fund The JPM Pierpont Prime Money Market Fund
The JPM Pierpont Equity Fund The JPM Pierpont U.S. Equity Fund
The JPM Pierpont Capital The JPM Pierpont U.S. Small Company Fund
Appreciation Fund
The names of the Portfolios corresponding to the PRIME MONEY MARKET AND U.S.
EQUITY FUNDS changed accordingly. The Portfolio corresponding to the
INTERNATIONAL EQUITY FUND changed its name to The International Equity
Portfolio.
INVESTMENT POLICY REVISIONS:
2. The following is inserted under the heading "Additional Investment
Information and Risk Factors" in the Prospectus for the DIVERSIFIED FUND:
BELOW INVESTMENT GRADE DEBT. Certain lower rated securities purchased by the
Portfolio, such as those rated Ba or B by Moody's or BB or B by Standard &
Poor's (commonly known as junk bonds), may be subject to certain risks with
respect to the issuing entity's ability to make scheduled payments of principal
and interest and to greater market fluctuations. While generally providing
higher coupons or interest rates than investments in higher quality securities,
lower quality fixed income securities involve greater risk of loss of principal
and income, including the possibility of default or bankruptcy of the issuers of
such securities, and have greater price volatility, especially during periods of
economic uncertainty or change. These lower quality fixed income securities tend
to be affected by economic changes and short-term corporate and industry
developments to a greater extent than higher quality securities, which react
primarily to fluctuations in the general level of interest rates. To the extent
that the Portfolio invests in such lower
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uality securities, the achievement of
its investment objective may be more dependent on the Advisor's own credit
analysis.
Lower quality fixed income securities are affected by the market's
perception of their credit quality, especially during times of adverse
publicity, and the outlook for economic growth. Economic downturns or an
increase in interest rates may cause a higher incidence of default by the
issuers of these securities, especially issuers that are highly leveraged. The
market for these lower quality fixed income securities is generally less liquid
than the market for investment grade fixed income securities. It may be more
difficult to sell these lower rated securities to meet redemption requests, to
respond to changes in the market, or to value accurately the Portfolio's
portfolio securities for purposes of determining the Fund's net asset value. See
Appendix A in the Statement of Additional Information for more detailed
information on these ratings.
3. The sub-section entitled "Quality Information" in the Prospectus for the
DIVERSIFIED FUND is replaced with the following:
QUALITY INFORMATION. It is a current policy of the Portfolio
that under normal circumstances at least 75% of that portion of the Portfolio
invested in fixed income securities will consist of securities that at the time
of purchase are rated Baa or better by Moody's Investors Service, Inc.
("Moody's") or BBB or better by Standard & Poor's Ratings Group ("Standard &
Poor's"), of which at least 65% of the Portfolio's fixed income investments will
be rated A or better. The remaining 25% of the Portfolio's fixed income
investments may be invested in securities that are rated B or better by Moody's
or Standard & Poor's. In each case, the Portfolio may invest in securities which
are unrated if in the Advisor's opinion such securities are of comparable
quality. Securities rated Baa by Moody's or BBB by Standard & Poor's are
considered investment grade, but have some speculative characteristics.
Securities rated Ba or B by Moody's or BB or B by Standard & Poor's are below
investment grade and considered to be speculative with regard to payment of
interest and principal. These standards must be satisfied at the time an
investment is made. If the quality of the investment later declines, the
Portfolio may continue to hold the investment. See Appendix A in the Statement
of Additional Information for more information on these ratings.
PRIME MONEY MARKET FUND: CUT-OFF TIMES FOR PURCHASES AND REDEMPTIONS:
4. The third sentence in the second paragraph of the sub-section entitled
"Purchase Price and Settlement" in the Prospectus for the PRIME MONEY MARKET
FUND is revised as follows:
Purchase orders must be received by 4:00 p.m. for the Fund and immediately
available funds must be received by 4:00 p.m. New York time on a business day
for the purchase to be effective and dividends to be earned on the same day.
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The fifth sentence in the same paragraph is revised to change the
reference to the cut-off time for purchases to 4:00 p.m.
5. The second paragraph of the sub-section entitled "Method of Redemption"
in the Prospectus for the PRIME MONEY MARKET FUND is revised accordingly to
change the cut-off time for redemptions to 4:00 p.m. for the Fund.
PRIME MONEY MARKET FUND: SHORT-TERM GAINS (EFFECTIVE JUNE 1, 1997):
6. The second paragraph under the caption "Dividends and Distributions" in
the Prospectus for the PRIME MONEY MARKET FUND is replaced with the following:
Net short-term capital gains, if any, will be distributed in accordance with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), and
may be reflected in the Fund's daily dividends. Substantially all the realized
net long-term capital gains, if any, of the Fund are declared and paid on an
annual basis, except that an additional capital gains distribution may be made
in a given year to the extent necessary to avoid the imposition of federal
excise tax on the Fund.
COMPREHENSIVE CHANGES:
7. Effective October 10, 1996, the name of the Trust changed to "The JPM
Pierpont Funds," and each Fund's name changed accordingly.
8. The following footnote is inserted directly beneath the Shareholder
Transaction Expense table with reference to Sales Load Imposed on Purchases in
the Prospectus for the DIVERSIFIED, U.S. EQUITY AND U.S. SMALL COMPANY FUNDS:
*Certain Eligible Institutions (defined below) may impose fees in connection
with the purchase of the Fund's shares through such institutions.
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9. The following is inserted as the first column in the "Financial Highlights"
table in the Prospectus for each Fund listed below as applicable to the Fund
described therein:
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<TABLE>
<CAPTION>
U.S. EQUITY FUND U.S. SMALL COMPANY FUND DIVERSIFIED FUND
For the Six Months Ended For the Six Months Ended For the Six Months Ended
November 30, 1996 November 30, 1996 December 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $22.15 $26.20 $12.22
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income 0.11 0.09 0.18
Net Realized Gain (Loss) on
Investment 2.20 0.26 0.76
---- ---- ----
Total from Investment
Operations 2.31 0.35 0.94
---- ---- ----
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net Investment Income (0.09) (0.11) (0.32)
Net Realized Gain (1.45) (1.35) (0.40)
------ ------ ------
Total Distributions to
Shareholders (1.54) (1.46) (0.72)
------ ------ ------
NET ASSET VALUE, END OF
PERIOD $22.92 $25.09 $12.44
====== ====== ======
Total Return 11.46% (a) 1.88% (a) 7.94% (a)
RATIOS AND SUPPLEMENTAL
DATA:
Net Assets, End of Period (in
thousands) $362,242 $216,639 $60,505
Ratios to Average Net Assets
Expenses 0.82% (b) 0.90% (b) 0.98% (b)
Net Investment Income 1.16% (b) 0.74% (b) 2.98% (b)
Decrease Reflected in Expense
Ratio due to Expense ___ 0.12% (b) 0.23% (b)
Reimbursement
(a) Not Annualized. (b) Annualized.
</TABLE>
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10. The following is added after the first sentence of the third paragraph under
the caption "Investment Objective and Policies" in the Prospectus for the PRIME
MONEY MARKET FUND:
The market value of obligations in which the Portfolio invests is not guaranteed
and may rise and fall in response to changes in interest rates.
11. The last sentence of the second paragraph under the caption "Investment
Objective and Policies" in the Prospectus for the U.S. SMALL COMPANY FUND is
replaced with the following:
The small company holdings of the Portfolio are primarily companies included in
the market capitalization size range of the Russell 2500 Index.
12. The fourth sentence under the heading "Advisor" in the Prospectus for
the PRIME MONEY MARKET, DIVERSIFIED, U.S. EQUITY, U.S. SMALL COMPANY,
INTERNATIONAL EQUITY AND EMERGING MARKETS EQUITY FUNDS is revised as follows:
Through offices in New York City and abroad, J.P. Morgan, through the Advisor
and other subsidiaries, offers a wide range of services to governmental,
institutional, corporate and individual customers and acts as investment adviser
to individual and institutional clients with combined assets under management of
over $208 billion.
13. Portfolio manager biographies as applicable in Prospectus of the U.S.
SMALL COMPANY FUND are revised as follows:
U.S. SMALL COMPANY FUND: James B. Otness, Managing Director (since February,
1993, employed by Morgan since prior to 1992 as a portfolio manager of equity
securities of small and medium sized U.S. companies); Michael J. Kelly, Vice
President (since May, 1996, employed by Morgan since prior to 1992 as a
portfolio manager of small and medium sized U.S. companies and an equity
research analyst); and Candice Eggerss, Vice President (since May, 1996,
employed by Morgan since May, 1996 previously employed by Weiss, Peck and Greer
from June 1993 to May 1996 and Equitable Capital Management prior to June 1993).
14. The following is added under the first paragraph below the heading
"Shareholder Servicing" in the Prospectus for the DIVERSIFIED, U.S. EQUITY AND
U.S. SMALL COMPANY FUNDS:
The Fund may be sold to or through Eligible Institutions, including financial
institutions and broker-dealers, that may be paid fees by Morgan or its
affiliates for services provided to their clients that invest in the Fund.
Organizations that provide recordkeeping or other services to certain employee
benefit or retirement plans that include the Fund as an investment alternative
may also be paid a fee.
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15. The following section under "Purchase of Shares" is amended in its
entirety as applicable to the Fund described in each Prospectus referenced
below:
METHOD OF PURCHASE. Investors may open accounts with the Fund only through the
Distributor. All purchase transactions in Fund accounts are processed by Morgan
as shareholder servicing agent and the Fund is authorized to accept any
instructions relating to a Fund account from Morgan as shareholder servicing
agent for the customer. All purchase orders must be accepted by the Distributor.
Investors must be either customers of Morgan or of an Eligible Institution or
employer-sponsored retirement plans that have designated the Fund as an
investment option for the plans. Prospective investors who are not already
customers of Morgan may apply to become customers of Morgan for the sole purpose
of Fund transactions. There are no charges associated with becoming a Morgan
customer for this purpose. Morgan reserves the right to determine the customers
that it will accept, and the Trust reserves the right to determine the purchase
orders that it will accept.
The Fund requires the minimum initial investment shown below and a minimum
subsequent investment of $5,000.
FUND INITIAL INVESTMENT
THE JPM PIERPONT U.S. EQUITY FUND $100,000
THE JPM PIERPONT U.S. SMALL COMPANY FUND $100,000
THE JPM PIERPONT DIVERSIFIED FUND $100,000
For investors who were shareholders of a JPM Pierpont Fund as of September 29,
1995, the minimum initial investment in any other JPM Pierpont Fund is $10,000.
These minimum investment requirements may be waived for certain investors,
including investors for whom the Advisor is a fiduciary, who are employees of
the Advisor, who maintain related accounts with the Funds or the Advisor, who
make investments for a group of clients, such as financial advisors, trust
companies and investment advisors, or who maintain retirement accounts with the
Funds.
16. The following is inserted at the end of the sub-section entitled
"Eligible Institutions" in the Prospectus for the DIVERSIFIED, U.S. EQUITY AND
U.S. SMALL COMPANY FUNDS:
Although there is no sales charge levied directly by the Fund, Eligible
Institutions may establish their own terms and conditions for providing their
services and may charge investors a transaction-based or other fee for their
services. Such charges may vary among Eligible Institutions but in all cases
will be retained by the Eligible Institution and not remitted to the Fund or
Morgan.
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17. Any reference to control persons under the caption "Organization" in
the Prospectus for the DIVERSIFIED, U.S. EQUITY AND U.S. SMALL COMPANY FUNDS is
deleted.
18. The third sentence under the caption "Organization" is restated in the
Prospectus for the DIVERSIFIED, U.S. EQUITY AND U.S. SMALL COMPANY FUNDS as
follows:
To date, shares of seventeen series have been authorized and are available for
sale to the public.
19. The following is added under the caption "Taxes" in the Prospectus for
the U.S. EQUITY AND U.S. SMALL COMPANY FUNDS:
In addition, no loss will be allowed on the redemption or exchange of shares of
the Fund if, within a period beginning 30 days before the date of such
redemption or exchange and ending 30 days after such date, the shareholder
acquires (such as through dividend reinvestment) securities that are
substantially identical to shares of the Fund.
