As filed with the Securities and Exchange Commission on September 16, 1998.
Registration Nos. 033-54632 and 811-07340
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 54
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 55
J.P. MORGAN FUNDS
(formerly The JPM Pierpont Funds)
(Exact Name of Registrant as Specified in Charter)
60 State Street, Suite 1300, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(617) 557-0700
Margaret W. Chambers, c/o Funds Distributor, Inc.
60 State Street, Suite 1300, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to: Stephen K. West, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[X] on October 30, 1998 pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
The Short Term Bond Portfolio, The U.S. Fixed Income Portfolio, Series
Portfolio II, The Series Portfolio, The Tax Exempt Bond Portfolio and The New
York Tax Exempt Bond Portfolio have also executed this registration statement.
<PAGE>
EXPLANATORY NOTE
This post-effective amendment No. 54 to the registration statement of J.P.
Morgan Funds (the "Registrant") on Form N-1A is being filed to update the
Registrant's disclosure in the Prospectuses relating to J.P. Morgan Short Term
Bond, Bond, Global Strategic Income, Emerging Markets Debt, Tax Exempt Bond and
New York Tax Exempt Bond funds (the "Funds"), separate series of shares of the
Registrant, to update information in the registration statement in order to be
in compliance with revised Form N-1A and plain english prospectus disclosure
requirements. As a result, the Amendment does not affect any of the Registrant's
other currently effective prospectuses for each other series of shares of the
Registrant.
<PAGE>
OCTOBER 31, 1998 PROSPECTUS
J.P. MORGAN FIXED INCOME FUNDS
Short Term Bond Fund
Bond Fund
Global Strategic Income Fund
Emerging Markets Debt Fund
Tax Exempt Bond Fund
New York Tax Exempt Bond Fund
California Bond Fund
------------------------------------
Seeking high total return or current
income by investing primarily in
fixed income securities.
This prospectus contains essential information for anyone investing in these
funds. Please read it carefully and keep it for reference.
As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them as an investment or guarantees that the information in this prospectus is
correct or adequate. It is a criminal offense to state or suggest otherwise.
Distributed by Funds Distributor, Inc. JPMORGAN
<PAGE>
<TABLE>
CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
2
- ----
Each fund's goal, investment approach,
risks, expenses, and performance
J.P. MORGAN FIXED INCOME FUNDS
J.P. Morgan Short Term Bond Fund . . . . . . . . . . . . . . . . . . . . . 2
J.P. Morgan Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
J.P. Morgan Global Strategic Income Fund . . . . . . . . . . . . . . . . . 6
J.P. Morgan Emerging Markets Debt Fund . . . . . . . . . . . . . . . . . . 8
J.P. Morgan Tax Exempt Bond Fund . . . . . . . . . . . . . . . . . . . . . 10
J.P. Morgan New York Tax Exempt Bond Fund. . . . . . . . . . . . . . . . . 12
J.P. Morgan California Bond Fund . . . . . . . . . . . . . . . . . . . . . 14
16
- ----
Principles and techniques common
to the funds in this prospectus
FIXED INCOME MANAGEMENT APPROACH
J.P. Morgan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
J.P. Morgan fixed income funds . . . . . . . . . . . . . . . . . . . . . . 16
Who may want to invest . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The spectrum of fixed income funds . . . . . . . . . . . . . . . . . . . . 16
Fixed income investment process. . . . . . . . . . . . . . . . . . . . . . 17
18
- ----
Investing in the J.P. Morgan
Fixed Income funds
YOUR INVESTMENT
Investing through a financial professional . . . . . . . . . . . . . . . . 18
Investing through an employer-sponsored retirement plan. . . . . . . . . . 18
Investing through an IRA or rollover IRA . . . . . . . . . . . . . . . . . 18
Investing directly . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Opening your account . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Adding to your account . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Selling shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Account and transaction policies . . . . . . . . . . . . . . . . . . . . . 19
Dividends and distributions. . . . . . . . . . . . . . . . . . . . . . . . 20
Tax considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21
- ----
More about risk and the funds'
business operations
FUND DETAILS
Business structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Management and administration. . . . . . . . . . . . . . . . . . . . . . . 21
Risk and reward elements . . . . . . . . . . . . . . . . . . . . . . . . . 22
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FOR MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . back cover
</TABLE>
<PAGE>
J.P. MORGAN SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN SHORT TERM BOND FUND)
[GRAPHIC]
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]
INVESTMENT APPROACH
The fund invests primarily in fixed income securities, including U.S. government
and agency securities, domestic and foreign corporate bonds, private placements,
asset-backed and mortgage-related securities, money market instruments, and
others. These securities may be of any maturity, but under normal market
conditions the fund's duration will range between one and three years, similar
to that of the Merrill Lynch 1-3 Year Treasury Index.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. At least
90% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 75% A or better. No more than 10% of assets may be invested
in securities as low as B.
[GRAPHIC]
RISK/RETURN SUMMARY
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 17.
Although any rise in interest rates is likely to cause a fall in the price of
bonds, the fund's comparatively short duration is designed to help keep its
share price within a relatively narrow range. Because it seeks to minimize risk,
the fund will generally offer less income, and during periods of declining
interest rates, may offer lower total returns than bond funds with longer
durations. However, the fund may offer higher total returns than longer duration
funds during periods of rising interest rates. Additionally, because the fund
may invest up to 25% of assets in foreign securities, it takes on additional
risks. The fund's investments and their main risks, as well as fund strategies,
are described in more detail on pages 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $300
billion, including more than $______ billion using the same strategy 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 of 1994 and has been at J.P. Morgan since 1992.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund invests a portion of assets in non-investment-grade bonds ("junk
bonds") , which offer higher potential yields but have a higher risk of
default and are more sensitive to market risk than investment-grade bonds.
- - The fund does not represent a complete investment program.
2 J.P. MORGAN SHORT TERM BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The table and bar chart shown below indicate the risks of investing in J.P.
Morgan Short Term Bond Fund.
The table indicates 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 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 bar chart indicates the risks by showing changes in the performance of the
fund's shares from year to year since the fund's inception date.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN Shows performance over time, for periods ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Life of fund(1)
<S> <C> <C>
J.P. MORGAN SHORT TERM BOND FUND (after expenses) 6.14 5.17
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH 1-3 YEAR TREASURY INDEX (no expenses) 6.66 5.60
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN (%) Shows changes in returns by calendar year(2)
- ------------------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997
<S> <C> <C> <C> <C>
J.P. MORGAN SHORT TERM BOND FUND 0.11 10.58 4.94 6.14
Merrill Lynch 1-3 Year Treasury Index 0.57 11.00 4.98 6.66
</TABLE>
/ / J.P. Morgan Short Term Bond Fund
/ / Merrill Lynch 1-3 Year Treasury Index
For the period covered by this year-by-year total return chart, the fund's
highest quarterly return was _________% (for the quarter ended ____); and the
lowest quarterly return was ________% (for the quarter ended ______).
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before 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.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(3) (%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.25
Marketing (12b-1) fees none
Other expenses(4) 1.28
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES(4) 1.53
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
</TABLE>
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:
$10,000 initial investment, 5% return each year, total operating expenses
(before reimbursement) unchanged, and all shares sold at the end of each time
period. The example is for comparison only; the fund's actual return and your
actual costs may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
YOUR COST($) 156 483 834 1,824
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 7/8/93 and returns reflect performance of
the fund from 7/31/93.
(2) The fund's fiscal year end is 10/31. For the period 1/1/98 through
6/30/98, the total return for the fund was % and the total return for
the index was % .
(3) The fund has a master/feeder structure as described on page 21. This table
is restated to show the fee arrangements to be effective as of 3/1/99, and
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year before reimbursement, expressed as a percentage of the
fund's average net assets.
(4) THE CURRENT FEE ARRANGEMENTS, WHICH WILL EXPIRE 2/28/99, LIMIT OTHER
EXPENSES AND TOTAL OPERATING EXPENSES TO 0.25% AND 0.50%, RESPECTIVELY.
EFFECTIVE 3/1/99, AFTER REIMBURSEMENT, OTHER EXPENSES AND TOTAL OPERATING
EXPENSES WILL BE 0.40% AND 0.65%, RESPECTIVELY. This reimbursement
arrangement can be changed or terminated at any time at the option of J.P.
Morgan.
J.P. MORGAN SHORT TERM BOND FUND 3
<PAGE>
J.P. MORGAN BOND FUND TICKER SYMBOL:PPBDX
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN BOND FUND)
[GRAPHIC]
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.
[GRAPHIC]
INVESTMENT APPROACH
The fund invests primarily in fixed income securities, including U.S. government
and agency securities, corporate bonds, private placements, asset-backed and
mortgage-backed securities, and others. These securities may be of any maturity,
but under normal market conditions the management team will keep the fund's
duration within one year of that of the Salomon Brothers Broad Investment Grade
Bond Index (currently about five years).
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. At least
75% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 65% A or better. No more than 25% of assets may be invested
in securities as low as B.
[GRAPHIC]
RISK/RETURN SUMMARY
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 17.
To the extent that the fund seeks higher returns by investing in
non-investment-grade bonds, it takes on additional risks, because these bonds
are more sensitive to economic news and their issuers are in less secure
financial condition. Additionally, because the fund may invest up to 25% of
assets in foreign securities, it takes on additional risks. The fund has the
potential to produce higher returns than the Short Term Bond Fund along with a
share price that is somewhat more volatile. The fund's investments and their
main risks, as well as fund strategies, are described in more detail on pages
22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $300
billion, including more than $_____ billion using the same strategy as the fund.
The portfolio management team is led by William G. Tennille, vice president, who
has been at J.P. Morgan since 1992, and Connie J. Plaehn, managing director, who
has been at J.P. Morgan since 1984. Both have been on the team since January of
1994.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund invests a portion of assets in non-investment-grade bonds ("junk
bonds") , which offer higher potential yields but have a higher risk of
default and are more sensitive to market risk than investment-grade bonds.
- - The fund does not represent a complete investment program.
4 J.P. MORGAN BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE (UNAUDITED)
The table and bar chart shown below indicate the risks of investing in J.P.
Morgan Bond Fund.
The table indicates the risks by showing how the fund's average annual returns
for the past one and five years and life of the fund compare to those of the
Salomon Brothers 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 bar chart indicates the risks by showing changes in the performance of the
fund's shares from year to year since the fund's inception date.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%) Shows performance over time, for periods ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Life of fund(1)
<S> <C> <C> <C>
J.P. MORGAN BOND FUND (after expenses) 9.13 7.23 8.06
- ------------------------------------------------------------------------------------------------------------------------------------
SALOMON BROTHERS BROAD INVESTMENT GRADE BOND INDEX (no expenses) 9.62 7.53 x.xx
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR-BY-YEAR TOTAL RETURN (%) Shows changes in returns by calendar year(2)
- ------------------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J.P. MORGAN BOND FUND 10.23 10.09 13.45 6.53 9.87 (2.97) 16.17 3.13 9.13
Salomon Brothers Broad Investment
Grade Bond Index 14.24 8.28 15.78 7.59 9.89 (2.85) 18.55 3.62 9.62
</TABLE>
/ / J.P. Morgan Bond Fund
/ / Salomon Brothers Broad Investment Grade Bond Index
For the period covered by this year-by-year total return chart, the fund's
highest quarterly return was _________% (for the quarter ended ____); and
the lowest quarterly return was ________% (for the quarter ended ______).
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund are shown at right. The fund has no sales, redemption,
exchange, or account fees, although some institutions may charge you a fee for
shares you buy through them. The annual fund expenses are deducted from fund
assets prior to performance calculations.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(3) (%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses 0.43
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 0.73
- --------------------------------------------------------------------------------
</TABLE>
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:
$10,000 initial investment, 5% return each year, total operating expenses
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
YOUR COST($) 75 233 406 906
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 7/12/93. Returns for the period 3/31/88
through 7/31/93 reflect performance of The Pierpont Bond Fund, the fund's
predecessor, which commenced operations on 3/11/88.
(2) The fund's fiscal year end is 10/31. For the period 1/1/98 through
6/30/98, the total return for the fund was % and the total return for
the index was % .
(3) The fund has a master/feeder structure as described on page 21. This table
is restated to show the current fee arrangements in effect as of 8/1/98,
and shows the fund's expenses and its share of master portfolio expenses
for the past fiscal year, expressed as a percentage of the fund's average
net assets.
J.P. MORGAN BOND FUND 5
<PAGE>
J.P. MORGAN GLOBAL STRATEGIC
INCOME FUND
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN GLOBAL STRATEGIC INCOME FUND)
[GRAPHIC]
GOAL
The fund's goal is to provide high total return from a portfolio of fixed income
securities of foreign and domestic issuers. This goal can be changed without
shareholder approval.
[GRAPHIC]
INVESTMENT APPROACH
The fund invests in a wide range of debt securities from the U.S. and other
markets, both developed and emerging. Issuers may include governments,
corporations, financial institutions, and supranational organizations (such
as the World Bank). The fund may invest directly in mortgages and in
mortgage-backed securities. The fund's securities may be of any maturity, but
under normal market conditions the fund's duration will generally be similar
to that of the Lehman Brothers Aggregate Bond Index (currently about four and
a half years). At least 40% of assets must be invested in securities that, at
the time of purchase, are rated investment-grade (BBB/Baa or better) or are
the unrated equivalent. No more than 25% of assets may be invested in
non-investment grade or unrated securities. The balance of assets may be
invested in securities as low as B.
The management team uses the process described on page 17, and also makes
country allocations, based primarily on macro-economic factors. With regard to
sector allocation, the team uses the model allocation shown at right as a basis,
although the actual allocations are adjusted periodically within the ranges
indicated. Within each sector, a dedicated team handles securities selection.
The fund typically hedges its non-dollar denominated investments back to the
U.S. dollar.
[GRAPHIC]
RISK/RETURN SUMMARY
The fund's share price and total return will vary in response to changes in
global bond markets, interest rates, and currency exchange rates. How well the
fund's performance compares to that of similar fixed income funds will depend on
the success of the investment process. Because of low credit and foreign and
emerging markets investment risks, the fund's performance is likely to be more
volatile than that of most fixed income funds. The fund's mortgage-backed
investments involve the risk of losses due to default or to prepayments that
occur earlier or later than expected. Some investments, including directly owned
mortgages, may be illiquid. The fund has the potential for long-term total
returns that exceed those of more traditional bond funds, but investors should
also be prepared for risks that exceed those of more traditional bond funds.
The fund's investments and their main risks, as well as fund strategies, are
described in more detail on pages 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
MODEL SECTOR ALLOCATION
[CHART]
<TABLE>
<S> <C>
15% public/private
corporates
(range 5-25%)
23% high yield
corporates
(range 13-33%)
15% emerging
markets
(range 5-25%)
12% international
non-dollar
(range 0-25%)
35% public/private
mortgages
(range 20-45%)
</TABLE>
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over
$300 billion, including more than $______ billion using the same strategy as
the fund.
The portfolio management team is led by Gerard W. Lillis, managing director, who
has been at J.P. Morgan since 1978, and Mark E. Smith, managing director, who
joined J.P. Morgan in 1994 from Allied Signal, Inc. where he managed fixed
income portfolios and oversaw asset allocation activities across asset classes.
Both have been on the team since the fund's inception.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund does not represent a complete investment program.
6 J.P. MORGAN GLOBAL STATEGIC INCOME FUND
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before 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.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(1)(%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees (actual) 0.45
Marketing (12b-1) fees none
Other expenses(2) 0.58
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES(2) 1.03
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses
(before reimbursement) unchanged, and all shares sold at the end of each time
period. The example is for comparison only; the fund's actual return and your
actual costs may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1YR. 3YRS.
<S> <C> <C>
YOUR COST($) 105 328
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's estimated expenses and its estimated share of master
portfolio expenses for the fiscal period 11/5/97 (commencement of
operations) through 10/31/98 before reimbursement, expressed as a
percentage of the fund's average net assets.
(2) AFTER REIMBURSEMENT, OTHER EXPENSES AND TOTAL OPERATING EXPENSES FOR THE
FISCAL PERIOD 11/5/97 (COMMENCEMENT OF OPERATIONS) THROUGH 10/31/98 WILL BE
0.55% AND 1.00%, RESPECTIVELY. This reimbursement arrangement can be
changed or terminated at any time at the option of J.P. Morgan.
J.P. MORGAN GLOBAL STRATEGIC INCOME FUND 7
<PAGE>
J.P. MORGAN EMERGING
MARKETS DEBT FUND
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN EMERGING MARKETS DEBT FUND)
[GRAPHIC]
GOAL
The fund's goal is to provide high total return from a portfolio of fixed income
securities of emerging markets issuers. This goal can be changed without
shareholder approval.
[GRAPHIC]
INVESTMENT APPROACH
The fund invests primarily in debt securities from countries whose economies or
bond markets are less developed. This designation currently includes most
countries in the world except Australia, Canada, Hong Kong, Japan, New Zealand,
the U.S., the United Kingdom, and most Western European countries. Issuers of
portfolio securities may include foreign governments, corporations, and
financial institutions. These securities may be of any maturity and quality, but
under normal market conditions the fund's duration will generally range between
four and six years, similar to that of the Emerging Markets Bond Index Plus. The
fund may invest without limit in non-investment-grade or unrated securities.
In addition to the investment process described on page 17, the management team
makes country allocation decisions, based primarily on financial and economic
forecasts and other macro-economic factors.
[GRAPHIC]
POTENTIAL RISKS AND REWARDS
The fund's share price and total return will vary in response to changes in
emerging 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 the fund is non-diversified and may invest more than 5% of its assets in
a single issuer and its primary securities combine the risks of emerging markets
and low credit quality, its performance is likely to be more volatile than that
of other fixed income investments. Lower rated securities offer higher potential
yields but have a higher risk of default and are more sensitive to market risk
than investment-grade bonds. The fund has the potential to produce high total
return over time, but investors should be prepared to ride out periods of
negative total return. The fund's investments and their main risks, as well as
fund strategies, are described in more detail on page 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $300
billion, including more than $____ billion using the same strategy as the fund.
The portfolio management team is led by Andrew F. Goldberg, vice president, who
has been at J.P. Morgan since 1990, and Dimas Jimenez, associate, who joined
J.P. Morgan in July of 1996 after graduating from Stanford Business School.
Prior to joining the portfolio management team, Mr. Goldberg oversaw the capital
research group's research into fixed income and derivatives markets, and Mr.
Jimenez worked in the emerging markets group at RCM Capital Management and the
fixed income department of Lehman Brothers, concentrating in emerging markets
debt, derivatives and international bonds. Both joined the team in February of
1998.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund does not represent a complete investment program.
8 J.P. MORGAN EMERGING MARKETS DEBT FUND
<PAGE>
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before 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.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(1)(%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.70
Marketing (12b-1) fees none
Other expenses(2) 1.70
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES(2) 2.40
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses
(before reimbursement) unchanged, and all shares sold at the end of each time
period. The example is for comparison only; the fund's actual return and your
actual costs may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs.
<S> <C> <C>
YOUR COST($) 243 748
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund has a master/feeder structure as described on page 21. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal period before reimbursement, expressed as a percentage of
average net assets.
(2) AFTER REIMBURSEMENT, OTHER EXPENSES AND TOTAL OPERATING EXPENSES FOR THE
PAST FISCAL PERIOD WERE 0.55% AND 1.25%, RESPECTIVELY. This reimbursement
arrangement can be changed or terminated at any time at the option of J.P.
Morgan.
J.P. MORGAN EMERGING MARKETS DEBT FUND 9
<PAGE>
J.P. MORGAN TAX EXEMPT
BOND FUND TICKER SYMBOL: PPTBX
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN TAX EXEMPT BOND FUND)
[GRAPHIC]
GOAL
The fund's goal is to provide high current income that is exempt from federal
income tax and consistent with moderate risk of capital. This goal can be
changed without shareholder approval.
[GRAPHIC]
INVESTMENT APPROACH
The fund invests primarily in high quality municipal securities whose income is
free from federal personal income tax. While the fund's goal is high tax-exempt
income, the fund may invest to a limited extent in taxable securities, including
U.S. government, government agency, corporate, or taxable municipal securities.
The fund's securities may be of any maturity, but under normal market conditions
the fund's duration will generally range between four and seven years, similar
to that of the Lehman Brothers 1-16 Year Municipal Bond Index. At least 90% of
assets must be invested in securities that, at the time of purchase, are rated
investment-grade (BBB/Baa or better) or are the unrated equivalent. No more than
10% of assets may be invested in securities as low as B.
[GRAPHIC]
RISK/RETURN SUMMARY
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 17.
Investors should expect the potential for returns that exceed those of a
comparable tax-exempt fund of shorter duration, and should be prepared for
higher share price volatility than such a fund. The fund's performance could
also be affected by market reaction to proposed tax legislation. The fund's
investments and their main risks, as well as fund strategies, are described in
more detail on pages 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over
$300 billion, including more than $_______ billion using the same strategy as
the fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
joined the team in May of 1997 and has been at J.P. Morgan since 1987, and
Elaine B. Young, vice president, who joined the team in January of 1996 and has
been at J.P. Morgan since August of 1994. Prior to joining J.P. Morgan, Ms.
Young was a municipal bond trader and fixed income portfolio manager at Scudder,
Stevens, & Clark, Inc.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund invests a portion of assets in non-investment-grade bonds ("junk
bonds") and emerging markets debt, which offer higher potential yields but
have a higher risk of default and are more sensitive to market risk than
investment-grade bonds.
- - The fund does not represent a complete investment program.
10 J.P. MORGAN TAX EXEMPT BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE (UNAUDITED)
The table and bar chart shown below indicate the risks of investing in J.P.
Morgan Tax Exempt Bond Fund.
The table indicates the risks by showing how the fund's average annual returns
for the past one, five and ten years and 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.(1)
The bar chart indicates the risks by showing changes in the performance of the
fund's shares from year to year since the fund's inception date.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%) Shows performance over time, for periods ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Past 10 yrs. Life of fund(2)
<S> <C> <C> <C> <C>
J.P. MORGAN TAX EXEMPT BOND FUND (after expenses) 7.42 6.10 7.13 x.xx
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS QUALITY INTERMEDIATE MUNICIPAL BOND INDEX (no expenses) x.xx x.xx x.xx x.xx
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS 1-16 YEAR MUNICIPAL BOND INDEX (no expenses) x.xx x.xx x.xx x.xx
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR-BY-YEAR TOTAL RETURN (%) Shows changes in returns by calendar year(3)
- ------------------------------------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J.P. MORGAN TAX EXEMPT BOND FUND 7.38 8.25 6.87 10.92 7.47 9.58 (2.70) 13.40 3.54 7.42
Lehman Brothers Quality
Intermediate Municipal
Bond Index 5.80 9.62 7.48 11.66 8.25 10.71 (2.74) 13.80 4.27 7.80
Lehman Brothers 1-16 Year
Municipal Bond Index
</TABLE>
/ / J.P. Morgan Tax Exempt Bond Fund
/ / Lehman Brothers 1-16 Year Municipal Bond Index
/ / Lehman Brothers Quality Intermediate Municipal Bond Index
For the period covered by this year-by-year total return chart, the fund's
highest quarterly return was _________% (for the quarter ended ____); and the
lowest quarterly return was ________% (for the quarter ended ______).
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund are shown at right. The fund has no sales, redemption,
exchange, or account fees, although some institutions may charge you a fee for
shares you buy through them. The annual fund expenses are deducted from fund
assets prior to performance calculations.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(4) (%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees (actual) 0.30
Marketing (12b-1) fees none
Other expenses 0.39
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES 0.69
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
YOUR COST($) 70 221 384 859
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's benchmark changed from the Lehman Brothers Quality Intermediate
Municipal Bond Index, a widely recognized, unmanaged index of general
obligation and revenue bonds rated A or better with maturities of 2-12
years, to the Lehman Brothers 1-16 Year Municipal Bond Index on 5/1/97
because this index provided a broader mix of municipal securities and
included municipal securities rated below A.
(2) The fund commenced operations on 7/12/93. For the period 1/1/88 through
7/31/93 returns reflect performance of The Pierpont Tax Exempt Bond Fund,
the predecessor of the fund, which commenced operations on 10/3/84.
(3) The fund's fiscal year end is 8/31. For the period 1/1/98 through 6/30/98,
the total return for the fund was % and the total return for the index
was % .
(4) The fund has a master/feeder structure as described on page 21. This table
is restated to show the current fee arrangements in effect as of 8/1/98,
and shows the fund's expenses and its share of master portfolio expenses
for the past fiscal year, expressed as a percentage of the fund's average
net assets.
J.P. MORGAN TAX EXEMPT BOND FUND 11
<PAGE>
J.P. MORGAN NEW YORK
TAX EXEMPT BOND FUND TICKER SYMBOL: PPNYX
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN FUNDS
(J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND)
[GRAPHIC]
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]
INVESTMENT APPROACH
The fund invests primarily in New York municipal securities whose income is free
from federal, state, and New York City personal income taxes for New York
residents. 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. At least 90% of assets must
be invested in securities that, at the time of purchase, are rated
investment-grade (BBB/Baa or better) or are the unrated equivalent. No more than
10% of assets may be invested in securities as low as B.
[GRAPHIC]
RISK/RETURN SUMMARY
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 17. 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, it takes on additional
risks, since these bonds are more sensitive to economic news and their issuers
have a less secure financial condition. The fund's investments and their main
risks, as well as fund strategies, are described in more detail on pages 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[CHART]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $300
billion, including more than $8 billion using the same strategy as the fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
has been at J.P. Morgan since 1987, and Elaine B. Young, vice president, who
joined J.P. Morgan from Scudder, Stevens & Clark, Inc. in 1994 where she was a
municipal bond trader and fixed income portfolio manager. Both have been on the
team since June of 1997.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund invests a portion of assets in non-investment-grade bonds ("junk
bonds"), which offer higher potential yields but have a higher risk of
default and are more sensitive to market risk than investment-grade bonds.
- - The fund does not represent a complete investment program.
12 J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE (UNAUDITED)
The table and bar chart shown below indicate the risks of investing in J.P.
Morgan New York Tax Exempt Bond Fund.
The table indicates 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.(1)
The bar chart indicates the risks by showing changes in the performance of the
fund's shares from year to year since the fund's inception date.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%) Shows performance over time, for periods ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Past 1 yr. LIFE OF FUND(2)
<S> <C> <C>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND (after expenses) 7.41 6.63
LEHMAN BROTHERS NEW YORK 1-15 YEAR MUNICIPAL BOND INDEX (no expenses) 8.73 7.73
LEHMAN BROTHERS 1-16 YEAR MUNICIPAL BOND INDEX (no expenses) 7.97 7.29
<CAPTION>
YEAR-BY-YEAR TOTAL RETURN (%) Shows changes in returns by calendar year(3)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
<S> <C> <C> <C>
J.P. MORGAN NEW YORK TAX EXEMPT 13.03 3.96 7.41
Lehman Brothers New York 1-15 Year Municipal Bond Index 14.69 4.93 8.73
Lehman Brothers 1-16 Year Municipal Bond Index 7.97
</TABLE>
/ / J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
/ / Lehman Brothers New York 1-15 Year Municipal Bond Index
/ / Lehman Brothers 1-16 Year Municipal Bond Index
For the period covered by this year-by-year total return chart, the fund's
highest quarterly return was 4.80% (for the quarter ended 3/31/95) and the
lowest quarterly return was -0.65% (for the quarter ended 3/31/96).
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before 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.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(4) (%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.30
Marketing (12b-1) fees none
Other expenses(5) 0.52
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES(5) 0.82
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses
(before reimbursement) unchanged, and all shares sold at the end of each time
period. The example is for comparison only; the fund's actual return and your
actual costs may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
YOUR COST($) 84 262 455 1,014
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's benchmark changed from the Lehman Brothers New York 1-15 Year
Municipal Bond Index, a widely recognized, unmanaged index of New York
general obligation and revenue bonds with maturities of 1-15 years, to the
Lehman Brothers 1-16 Year Municipal Bond Index on 5/1/97 because this index
provided a broader mix of municipal securities and was not concentrated in
New York City bonds.
(2) The fund commenced operations on 4/11/94, and returns reflect performance
of the fund from 4/30/94.
(3) The fund's fiscal year end is 3/31. For the period 1/1/98 through 6/30/98,
the total return for the fund was 1.91% and the total return for the index
was 2.50%.
(4) The fund has a master/feeder structure as described on page 21. This table
is restated to show the current fee arrangements in effect as of 8/1/98,
and shows the fund's expenses and its share of master portfolio expenses
for the past fiscal year before reimbursement, expressed as a percentage of
the fund's average net assets.
(5) AFTER REIMBURSEMENT, OTHER EXPENSES AND TOTAL OPERATING EXPENSES ARE 0.40%
AND 0.70%, RESPECTIVELY. This reimbursement arrangement can be changed or
terminated at any time at the option of J.P. Morgan.
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND 13
<PAGE>
J.P. MORGAN CALIFORNIA
BOND FUND
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN SERIES TRUST
(J.P. MORGAN CALIFORNIA BOND FUND: SELECT SHARES)
[GRAPHIC]
GOAL
The fund's goal is to provide high after-tax total return for California
residents consistent with moderate risk of capital. This goal can be changed
without shareholder approval.
[GRAPHIC]
INVESTMENT APPROACH
The fund invests primarily in California municipal securities whose income is
free from federal and state personal income taxes for California residents.
Because the fund's goal is high after-tax total return rather than high
tax-exempt income, the fund may invest to a limited extent in securities of
other states or territories. To the extent that the fund invests in municipal
securities of other states, the income from such securities would be free from
federal personal income taxes for California residents but would be subject to
California state personal income taxes. For non-California residents, the income
from California municipal securities is free from federal personal income taxes
only. The fund may also invest in taxable securities. The fund's securities may
be of any maturity, but under normal market conditions the fund's duration will
generally range between three and ten years, similar to that of the Lehman
Brothers 1-16 Year Municipal Bond Index. At least 90% of assets must be invested
in securities that, at the time of purchase, are rated investment-grade (BBB/Baa
or better) or are the unrated equivalent. No more than 10% of assets may be
invested in securities as low as B.
[GRAPHIC]
RISK/RETURN SUMMARY
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 17. Because most of the fund's investments will typically
be from issuers in the State of California, its performance will be affected by
the fiscal and economic health of that state and its municipalities. The fund 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, it takes on additional
risks, because these bonds are more sensitive to economic news and their issuers
are in less secure financial condition. The fund's investments and their main
risks, as well as fund strategies, are described in more detail on pages 22-25.
Shares in the fund are not bank deposits and are not guaranteed or insured by
any bank, government entity, or the FDIC. The value of the fund's shares will
fluctuate over time. You could lose money if you sell when the fund's share
price is lower than when you invested.
POTENTIAL RISK AND RETURN
[GRAPH]
The positions of the funds in this graph reflect long-term performance goals
only, and are relative, not absolute.
* Based on tax-equivalent returns for an investor in the highest income tax
bracket.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan, which currently manages over $300
billion, including more than $8 billion using the same strategy as the fund.
The portfolio management team is led by Robert W. Meiselas, vice president, who
has been at J.P. Morgan since 1987, and Elaine B. Young, vice president, who
joined J.P. Morgan from Scudder, Stevens & Clark, Inc. in 1994 where she was a
municipal bond trader and fixed income portfolio manager. Both have been on the
team since June of 1997.
- --------------------------------------------------------------------------------
BEFORE YOU INVEST
Investors considering the fund should understand that:
- - There is no assurance that the fund will meet its investment goal.
- - The fund invests a portion of assets in non-investment-grade bonds ("junk
bonds"), which offer higher potential yields but have a higher risk of
default and are more sensitive to market risk than investment-grade bonds.
- - The fund does not represent a complete investment program.
14 J.P. MORGAN CALIFORNIA BOND FUND
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE (UNAUDITED)
The table and bar chart shown below indicate the risks of investing in J.P.
Morgan California Bond Fund.(1)
The table indicates the risks by showing how the fund's average annual returns
for the past year 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 bar chart indicates the risks by showing changes in the performance of the
fund's shares from year to year since the fund's inception date.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (%) Shows performance over time, for period ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
PAST 1 YR.
<S> <C>
J.P. MORGAN CALIFORNIA BOND FUND: INSTITUTIONAL SHARES(1) (a separate class of shares) (after expenses) 7.72
- ------------------------------------------------------------------------------------------------------------------------------------
LEHMAN BROTHERS 1-16 YEAR MUNICIPAL BOND INDEX (no expenses) 7.97
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL RETURN (%) Shows changes in returns by calendar year(2)
- ------------------------------------------------------------------------------------------------------------------------------------
[GRAPH]
1997
<S> <C>
J.P. MORGAN CALIFORNIA BOND FUND: INSTITUTIONAL SHARES(1) (a separate class of shares) 7.72
Lehman Brothers 1-16 Year Municipal Bond Index 7.97
</TABLE>
/ / J.P. Morgan California Bond Fund: Institutional Shares1 (a separate class
of shares)
/ / Lehman Brothers 1-16 Year Municipal Bond Index
For the period covered by this total return chart, the J.P. Morgan California
Bond Fund: Institutional Shares highest quarterly return was 3.04%(for the
quarter ended 6/30/97) and the lowest quarterly return was -0.34% (for the
quarter ended 3/31/97).
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before 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.
<TABLE>
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(3) (%)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<S> <C>
Management fees 0.30
Marketing (12b-1) fees none
Other expenses(4) 0.70
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES(4) 1.00
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses
(before reimbursement) unchanged, and all shares sold at the end of each time
period. The example is for comparison only; the fund's actual return and your
actual costs may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
<S> <C> <C> <C> <C>
YOUR COST($) 102 318 552 1,225
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 4/21/97 and returns reflect performance of
J.P. Morgan California Bond Fund: Institutional Shares (a separate class of
shares) from 12/31/96 through 12/31/97. Performance during this period
reflects operating expenses which are 0.20% of net assets lower than those
of the fund. Accordingly, performance returns for the fund would have been
lower if an investment had been made in the fund during the same time
period.
(2) The fund's fiscal year end is 4/30. For the period 1/1/98 through 6/30/98,
the total return for J.P. Morgan California Bond Fund: Institutional Shares
was 1.66% and the total return for the index was 2.50%.
(3) This table shows expenses for the past fiscal year before reimbursement,
expressed as a percentage of average net assets.
(4) AFTER REIMBURSEMENT, OTHER EXPENSES AND TOTAL OPERATING EXPENSES FOR THE
PAST FISCAL YEAR WERE 0.35% AND 0.65%, RESPECTIVELY. This reimbursement
arrangement can be changed or terminated at any time at the option of J.P.
Morgan.
J.P. MORGAN CALIFORNIA BOND FUND 15
<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 over 300 analysts and portfolio managers
around the world and has more than $300 billion in assets under management,
including assets managed by the funds' advisor, J.P. Morgan Investment
Management Inc.
J.P. MORGAN 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:
- - the types of securities they hold
- - the tax status of the income they offer
- - the relative emphasis on current income versus total return
POTENTIAL RISK AND RETURN
[GRAPH]
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.
- --------------------------------------------------------------------------------
WHO MAY WANT TO INVEST
The funds are designed for investors who:
- - want to add an income investment to further diversify a portfolio
- - want an investment whose risk/return potential is higher than that of money
market funds but generally less than that of stock funds
- - want an investment that pays monthly dividends
- - with regard to the Tax Exempt Bond Fund, are seeking income that is exempt
from federal personal income tax
- - with regard to the state-specific funds, are seeking income that is exempt
from federal, state, and local (if applicable) personal income taxes in New
York or California
- - The funds are NOT designed for investors who:
- - are investing for aggressive long-term growth
- - require stability of principal
- - with regard to the Global Strategic Income or Emerging Markets Debt funds,
are not prepared to accept a higher degree of risk than most traditional
bond funds
- - with regard to the federal or state tax-exempt funds, are investing through
a tax-deferred account such as an IRA
16 FIXED INCOME MANAGEMENT APPROACH
<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 ones, helping the
funds to limit exposure to concentrated sources of risk.
In managing the funds described in this prospectus, J.P. Morgan employs a
three-step process that combines sector allocation, fundamental research for
identifying portfolio securities, and duration management.
[GRAPHIC]
The funds invest across a range of
different types of securities
- ----------------------------------
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.
[GRAPHIC]
Each fund makes its portfolio decisions
as described earlier in this prospectus
- ---------------------------------------
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.
[GRAPHIC]
J.P. Morgan uses a disciplined process
to control each fund's sensitivity
to interest rates
- --------------------------------------
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 measure of
average weighted maturity of the securities held by a fund and a common
measurement of sensitivity to interest rate movements), typically remaining
relatively close to the duration of the market as a whole, as represented by the
fund's benchmark. The strategists closely monitor the funds and make tactical
adjustments as necessary.
FIXED INCOME MANAGEMENT APPROACH 17
<PAGE>
YOUR INVESTMENT
- --------------------------------------------------------------------------------
For your convenience, the J.P. Morgan 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:
- - Choose a fund (or funds) and determine the amount you are investing. The
minimum amount for initial investments in a fund is $2,500 and for
additional investments $500, although these minimums may be less for some
investors. For more information on minimum investments, call
1-800-521-5411.
- - 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.
- - 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 1-800-521-5411.
OPENING YOUR ACCOUNT
BY WIRE
- - Mail your completed application to the Shareholder Services Agent.
- - 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.
- - After placing your purchase order, instruct your bank to wire the amount of
your investment to:
State Street Bank & Trust Company
ROUTING NUMBER: 011-000-028
CREDIT: J.P. Morgan Funds
ACCOUNT NUMBER: 9904-226-9
FFC: your account number, name of registered owner(s) and fund name
BY CHECK
- - Make out a check for the investment amount payable to J.P. Morgan Funds.
- - Mail the check with your completed application to the Transfer Agent.
BY EXCHANGE
- - Call the Shareholder Services Agent to effect an exchange.
ADDING TO YOUR ACCOUNT
BY WIRE
- - Call the Shareholder Services Agent to place a purchase order. FUNDS THAT
ARE WIRED WITHOUT A PURCHASE ORDER WILL BE RETURNED UNINVESTED.
- - Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.
BY CHECK
- - Make out a check for the investment amount payable to J.P. Morgan Funds.
- - Mail the check with a completed investment slip to the Transfer 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
- - Call the Shareholder Services Agent to effect an exchange.
18 YOUR INVESTMENT
<PAGE>
- --------------------------------------------------------------------------------
SELLING SHARES
BY PHONE -- WIRE PAYMENT
- - 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.
- - 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
- - 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
- - 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.
- - Indicate whether you want the proceeds sent by check or by wire.
- - Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.
- - Mail the letter to the Shareholder Services Agent.
BY EXCHANGE
- - Call the Shareholder Services Agent to effect an exchange.
ACCOUNT AND TRANSACTION POLICIES
TELEPHONE ORDERS The funds accept telephone orders from all shareholders. To
guard against fraud, the funds require shareholders to use a PIN, and may record
telephone orders or take other reasonable precautions. However, if a fund does
take such steps to ensure the authenticity of an order, you may bear any loss if
the order later proves fraudulent.
EXCHANGES You may exchange shares in these funds for shares in any other J.P.
Morgan or J.P. Morgan Institutional 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, but may
be priced using fair value pricing when these methods are not readily available.
TIMING OF ORDERS Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. A fund has the right to suspend redemption of shares and to
postpone payment of proceeds for up to seven days or as permitted by law.
- --------------------------------------------------------------------------------
TRANSFER AGENT SHAREHOLDER SERVICES AGENT
STATE STREET BANK AND TRUST COMPANY J.P. MORGAN FUNDS SERVICES
P.O. Box 8411 522 Fifth Avenue
Boston, MA 02266-8411 New York, NY 10036
Attention: J.P. Morgan Funds Services 1-800-521-5411
Representatives are available 8:00 a.m. to 5:00 p.m. eastern
time on fund business days.
YOUR INVESTMENT 19
<PAGE>
- --------------------------------------------------------------------------------
TIMING OF SETTLEMENTS When you buy shares, you will become the owner of record
when a fund receives your payment, generally the day following execution. When
you sell shares, proceeds are generally available the day following execution
and will be forwarded according to your instructions.
When you sell shares that you recently purchased by check, your order will be
executed at the next NAV but the proceeds will not be available until your check
clears. This may take up to 15 days.
STATEMENTS AND REPORTS The funds send monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months each fund sends out an annual or semi-annual report containing
information on its holdings and a discussion of recent and anticipated market
conditions and fund performance.
ACCOUNTS WITH BELOW-MINIMUM BALANCES If your account balance falls below the
minimum for 30 days as a result of selling shares (and not because of
performance), each fund reserves the right to request that you buy more shares
or close your account. If your account balance is still below the minimum 60
days after notification, 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 Fund.
TAX CONSIDERATIONS
In general, selling shares, exchanging shares, and receiving distributions
(whether reinvested or taken in cash) are all taxable events. These transactions
typically create the following tax liabilities 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 and state
California Bond Fund personal income taxes for
California residents only
- --------------------------------------------------------------------------------
Income dividends from the Exempt from federal personal
Tax Exempt Bond Fund income taxes
- --------------------------------------------------------------------------------
Income dividends from Ordinary income
all other funds
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income
distributions
- --------------------------------------------------------------------------------
Long-term capital gains Capital gains
distributions
- --------------------------------------------------------------------------------
Sales or exchanges of Capital gains or
shares owned for more losses
than one year
- --------------------------------------------------------------------------------
Sales or exchanges of Gains are treated as ordinary
shares owned for one year income; losses are subject
or less to special rules
- --------------------------------------------------------------------------------
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, New York Tax Exempt Bond
and California 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.
20 YOUR INVESTMENT
<PAGE>
FUND DETAILS
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
As noted earlier, each fund (except the California Bond Fund) is a "feeder" fund
that invests in a master portfolio. (Except where indicated, this prospectus
uses the term "the fund" to mean the feeder fund and its master portfolio taken
together.)
Each master portfolio accepts investments from other feeder funds, and all the
feeders of a given master portfolio bear the portfolio's expenses in proportion
to their assets. However, each feeder can set its own transaction minimums,
fund-specific expenses, and other conditions. This means that one feeder could
offer access to the same master portfolio on more attractive terms, or could
experience better performance, than another feeder. Information about other
feeders is available by calling 1-800-521-5411. 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.
The California Bond Fund is a series of J.P. Morgan Series Trust, a
Massachusetts business trust. Information about other series or classes is
available by calling 1-800-521-5411. In the future, the trustees could create
other series or share classes, which would have different expenses.
MANAGEMENT AND ADMINISTRATION
The feeder funds described in this prospectus, their corresponding master
portfolios, and J.P. Morgan Series Trust are all governed by the same trustees.
The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees. Funds
Distributor, Inc., as co-administrator, along with J.P. Morgan, provides fund
officers. J.P. Morgan, as co-administrator, oversees each fund's other service
providers
J.P. Morgan, subject to the expense reimbursements described earlier in this
prospectus, receives the following fees for investment advisory and other
services:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ADVISORY SERVICES Percentage of the master
portfolio's average net assets
- --------------------------------------------------------------------------------
<S> <C>
Short Term Bond 0.25%
Bond 0.30%
Global Strategic Income 0.45%
Emerging Markets Debt 0.70%
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 0.25% of each fund's average
net assets
- --------------------------------------------------------------------------------
</TABLE>
The California Bond Fund, subject to the expense reimbursements described
earlier in this prospectus, pays J.P. Morgan the following fees for investment
advisory and other services:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
ADVISORY SERVICES 0.30% of each fund's average
net assets
- --------------------------------------------------------------------------------
ADMINISTRATIVE SERVICES Fund's pro-rata portion of
(fee shared with Funds 0.09% of the first $7 billion
Distributor, Inc.) in J.P. Morgan-advised
portfolios, plus 0.04% of
average net assets over $7
billion
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES 0.25% of the fund's average
net assets
- --------------------------------------------------------------------------------
</TABLE>
J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in a fund.
YEAR 2000
Fund operations and shareholders could be adversely affected if the computer
systems used by J.P. Morgan, the funds' other service providers and other
entities with computer systems linked to the funds, do not properly process and
calculate January 1, 2000 and after date-related information. J.P. Morgan is
working to avoid these problems and to obtain assurances from other service
providers that they are taking similar steps. However, it is not certain that
these actions will be sufficient to prevent January 1, 2000 and after
date-related problems from adversely impacting fund operations and shareholders.
In addition, to the extent that operations of issuers of securities held by the
funds are impaired by date-related problems or prices of securities decline as a
result of real or perceived date-related problems of issuers held by the funds
or generally, the net asset value of the funds will decline.
FUND DETAILS 21
<PAGE>
- --------------------------------------------------------------------------------
RISK AND REWARD ELEMENTS
This table discusses the main elements that make up each fund's overall risk and
reward characteristics (described on pages 2-15). It also outlines each fund's
policies toward various securities, including those that are designed to help
certain funds manage risk.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS POTENTIAL REWARDS POLICIES TO BALANCE RISK AND REWARD
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
MARKET CONDITIONS
- - Each fund's share price, - Bonds have generally outperformed - Under normal circumstances the funds
yield, and total return will money market investments over the plan to remain fully invested in
fluctuate in response long term, with less risk than bonds and other fixed income
to bond market movements stocks securities as noted in the table on
pages 24-25
- - The value of most bonds will - Most bonds will rise in value
fall when interest rates rise; when interest rates fall - The funds seek to limit risk and
the longer a bond's maturity enhance total return or yields through
and the lower its credit - Mortgage-backed and asset-backed careful management, sector allocation,
quality, the more its value securities can offer attractive individual securities selection, and
typically falls returns duration management
- - Adverse market conditions may - During severe market downturns, the
from time to time cause a fund funds have the option of investing up
to take temporary defensive to 100% of assets in investment-grade
positions that are inconsistent short-term securities
with its principal investment
strategies and may hinder a - J.P. Morgan monitors interest rate
fund from achieving its trends, as well as geographic and
investment objective demographic information related to
mortgage-backed securities and mortgage
- - Mortgage-backed and asset-backed prepayments; the Tax Exempt Bond Fund
securities (securities is not permitted to invest in
representing an interest in, or asset-backed or mortgage-backed
secured by, a pool of mortgages securities; the New York Tax Exempt Bond
or other assets such as and California Bond funds are not
receivables) could generate permitted to invest in mortgage-backed
capital losses or periods of low securities
yields if they are paid off
substantially earlier or later
than anticipated
- ----------------------------------------------------------------------------------------------------------------------------------
CREDIT QUALITY
- - The default of an issuer would - Investment-grade bonds have a - Each fund maintains its own policies
leave a fund with unpaid interest lower risk of default for balancing credit quality against
or principal potential yields and gains in light
- Junk bonds offer higher yields of its investment goals
- - Junk bonds (those rated BB/Ba or and higher potential gains
lower) have a higher risk of - J.P. Morgan develops its own ratings
default, tend to be less liquid, of unrated securities and makes a
and may be more difficult to credit quality determination for
value unrated securities
- ----------------------------------------------------------------------------------------------------------------------------------
FOREIGN INVESTMENTS
- - A fund could lose money because - Foreign bonds, which represent - Foreign bonds are a primary investment
of foreign government actions, a major portion of the world's only for the Global Strategic Income
political instability, or lack fixed income securities, offer and Emerging Markets Debt funds and may
of adequate and accurate attractive potential performance be a significant investment for the
information and opportunities for Short Term Bond and Bond funds; the Tax
diversification Exempt Bond, New York Tax Exempt Bond
- - Currency exchange rate movements and California Bond funds are not
could reduce gains or create - Favorable exchange rate movements permitted to invest any assets in
losses could generate gains or reduce foreign bonds
losses
- - Currency and investment risks - To the extent that a fund invests in
tend to be higher in emerging - Emerging markets can offer higher foreign bonds, it may manage the
markets returns currency exposure of its foreign
investments relative to its benchmark,
and may hedge back into the U.S.
dollar from time to time (see also
"Derivatives")
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
POTENTIAL RISKS POTENTIAL REWARDS POLICIES TO BALANCE RISK AND REWARD
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
MANAGEMENT CHOICES
- - A fund could underperform its - A fund could outperform its - J.P. Morgan focuses its active
benchmark due to its sector, benchmark due to these same management on those areas where it
securities or duration choices choices believes its commitment to research can
most enhance returns and manage risks in
a consistent way
- ----------------------------------------------------------------------------------------------------------------------------------
DERIVATIVES
- - Derivatives such as futures, - Hedges that correlate well - The funds use derivatives for hedging
options, and forward foreign with underlying positions can and for risk management (i.e., to
currency contracts that are reduce or eliminate losses at adjust duration or to establish or
used for hedging the portfolio low cost adjust exposure to particular
or specific securities may not securities, markets, or currencies);
fully offset the underlying - A fund could make money and risk management may include management
positions(1) protect against losses if of a fund's exposure relative to its
management's analysis proves benchmark; the Tax Exempt Bond, New York
- - Derivatives used for risk correct Tax Exempt Bond and California Bond
management may not have the funds are permitted to enter into
intended effects and may result - Derivatives that involve futures and options transactions,
in losses or missed leverage could generate however, these transactions result in
opportunities substantial gains at low cost taxable gains or losses so it is
expected that these funds will utilize
- - The counterparty to a them infrequently; forward foreign
derivatives contract could currency contracts are not permitted to
default be used by the Tax Exempt Bond, New
York Tax Exempt Bond and California
- - Derivatives that involve Bond funds
leverage could magnify losses
- The funds only establish hedges that
they expect will be highly correlated
with underlying positions
- While the funds may use derivatives that
incidentally involve leverage, they do
not use them for the specific purpose
of leveraging their portfolios
- ----------------------------------------------------------------------------------------------------------------------------------
ILLIQUID HOLDINGS
- - A fund could have difficulty - These holdings may offer more - No fund may invest more than 15% of net
valuing these holdings attractive yields or potential assets in illiquid holdings
precisely growth than comparable widely
traded securities - To maintain adequate liquidity to meet
- - A fund could be unable to sell redemptions, each fund may hold
these holdings at the time or investment-grade short-term securities
price desired (including repurchase agreements) and,
for temporary or extraordinary purposes,
may borrow from banks up to 33 1/3% of
the value of its assets
- ----------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES
- - When a fund buys securities - A fund can take advantage of - Each fund uses segregated accounts to
before issue or for delayed attractive transaction offset leverage risk
delivery, it could be exposed opportunities
to leverage risk if it does
not use segregated accounts
- ----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM TRADING
- - IIncreased trading would raise - A fund could realize gains in a - The expected turnover rate for
a fund's transaction costs short period of time each fund is as follows:
- Tax Exempt Bond 50%
- - IIncreased short-term capital - A fund could protect against - New York Tax Exempt Bond,
gains distributions would losses if a bond is overvalued California Bond 75%
raise shareholders' income tax and its value later falls - Short Term Bond,
liability Bond, Global Strategic
Income 300%
- International Bond 350%
- The funds generally avoid short-term
trading, except to take advantage of
attractive or unexpected opportunities
or to meet demands generated by
shareholder activity
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A futures contract is an agreement to buy or sell a set quantity of an
underlying instrument at a future date, or to make or receive a cash
payment based on 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 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 23
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENTS
- --------------------------------------------------------------------------------
This table discusses the customary types of securities which can be held by each
fund. In each case the principal types of risk are listed on the following page
(see below for definitions).This table reads across two pages.
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 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 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 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 seller of a security agrees to
repurchase the same security from the buyer on a particular date and at a
specific price.
- --------------------------------------------------------------------------------
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 party agrees to exchange periodic
payments with a counterparty. Segregated accounts are used to offset leverage
risk.
- --------------------------------------------------------------------------------
SYNTHETIC VARIABLE RATE INSTRUMENTS Debt instruments whereby the issuer agrees
to exchange one security for another in order to change
the maturity or quality of a security in the fund.
- --------------------------------------------------------------------------------
TAX EXEMPT MUNICIPAL SECURITIES Securities, generally issued as general
obligation and revenue bonds, whose interest is exempt from federal taxation and
state and/or local taxes in the state where the securities were issued.
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES Debt instruments (Treasury bills, notes, and bonds)
guaranteed by the U.S. government for the timely payment of principal and
interest.
- --------------------------------------------------------------------------------
ZERO COUPON, PAY-IN-KIND, AND DEFERRED PAYMENT SECURITIES Domestic and foreign
securities offering non-cash or delayed-cash payment. Their prices are
typically more volatile than those of some other debt instruments and involve
certain special tax considerations.
- --------------------------------------------------------------------------------
RISK RELATED TO CERTAIN SECURITIES HELD BY J.P. MORGAN 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.
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.
LIQUIDITY RISK The risk the holder may not be able to sell the security at the
time or price it desires.
24 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
/-/ Permitted (and if applicable, percentage limitation)
percentage of total assets - BOLD
percentage of net assets - ITALIC
/ / Permitted, but not typically used
- -- Not permitted
PRINCIPAL TYPES OF RISK
GLOBAL
SHORT TERM STRATEGIC
BOND BOND INCOME
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, prepayment /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, liquidity, political /-/ (1) /-/ (1) /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political /-/ /-/ / /
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/25% /-/25% / /
Foreign Foreign
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/25% /-/25% /-/
Foreign Foreign
- ----------------------------------------------------------------------------------------------------------------------------------
credit, extension, interest rate, market, natural event, prepayment, valuation /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, political, /-/ /-/ /-/
prepayment
- ----------------------------------------------------------------------------------------------------------------------------------
currency, extension, interest rate, leverage, liquidity, market, political, /-/ 33 1/3% /-/ 33 1/3% /-/ 33 1/3%
prepayment
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, political, prepayment /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, natural event, prepayment, valuation /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market, political /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity, market -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event, political / / / / --
- ----------------------------------------------------------------------------------------------------------------------------------
interest rate /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/ /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
EMERGING MARKETS TAX EXEMPT
DEBT BOND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, prepayment / / --
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, liquidity, political /-/ / /Domestic
Only
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political / / /-/
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/ --
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/ --
- ----------------------------------------------------------------------------------------------------------------------------
credit, extension, interest rate, market, natural event, prepayment, valuation -- --
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, political, / / --
prepayment
- ----------------------------------------------------------------------------------------------------------------------------
currency, extension, interest rate, leverage, liquidity, market, political, -- --
prepayment
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, political, prepayment /-/ --
- ----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, natural event, prepayment, valuation -- --
- ----------------------------------------------------------------------------------------------------------------------------
credit /-/ / /
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market, political /-/ --
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity, market -- /-/
- ----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event, political -- /-/ (2)
- ----------------------------------------------------------------------------------------------------------------------------
interest rate /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/ /-/
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NEW YORK TAX CALIFORNIA BOND
EXEMPT BOND
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, prepayment / / / /
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, liquidity, political / /Domestic / /Domestic
Only Only
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political /-/ /-/
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, extension, interest rate, market, natural event, prepayment, valuation -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, political, -- --
prepayment
- -----------------------------------------------------------------------------------------------------------------------------
currency, extension, interest rate, leverage, liquidity, market, political, -- --
prepayment
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, political, prepayment -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation /-/ /-/
- -----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, natural event, prepayment, valuation -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit / / / /
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market, political -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political -- --
- -----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity, market /-/ /-/
- -----------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event, political /-/ (2) /-/ (2)
- -----------------------------------------------------------------------------------------------------------------------------
interest rate /-/ /-/
- -----------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation /-/ /-/
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 assets must be in tax exempt securities (for New York Total
Return Bond and California Bond funds, the 65% must be in New York or
California municipal securities, respectively).
FUND DETAILS 25
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each fund's
financial performance for the past one through five fiscal years or 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). This information has been audited by
PricewaterhouseCoopers LLP, whose reports, along with each fund's financial
statements, are included in the respective fund's annual report, which are
available upon request.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
J.P. MORGAN SHORT TERM BOND FUND
PER-SHARE DATA For fiscal periods ended
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/93(1) 10/31/94 10/31/95 10/31/96 10/31/97 4/30/98
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.00 9.99 9.60 9.84 9.86 9.85
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.10 0.45 0.57 0.53 0.58 0.29
Net realized and unrealized gain (loss)
on investment ($) (0.01) (0.39) 0.24 0.02 (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.09 0.06 0.81 0.55 0.57 0.29
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income ($) (0.10) (0.45) (0.57) (0.53) (0.58) (0.29)
NET ASSET VALUE, END OF PERIOD ($) 9.99 9.60 9.84 9.86 9.85 9.85
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 0.94(2) 0.61 8.70 5.77 5.98 2.98(2)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 6,842 6,008 10,330 8,207 14,519 23,220
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 0.67(3) 0.69 0.67 0.62 0.50 0.50(3)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 3.44(3) 4.49 5.88 5.42 5.94 5.91(3)
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE
TO EXPENSE REIMBURSEMENT (%) 1.83(3,4) 1.36 0.81 0.99 0.88 0.51(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 7/8/93.
(2) Not annualized.
(3) Annualized.
(4) After consideration of certain state limitations.
26 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN BOND FUND
PER-SHARE DATA For fiscal periods ended
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/93(1) 10/31/94 10/31/95 10/31/96 10/31/97 4/30/98
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.52 11.00 9.64 10.41 10.30 10.42
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.54 0.55 0.64 0.62 0.66 0.33
Net realized and unrealized gain (loss)
on investment ($) 0.67 (0.91) 0.77 (0.11) 0.18 0.03
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 1.21 (0.36) 1.41 0.51 0.84 0.36
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.54) (0.55) (0.64) (0.62) (0.65) (0.33)
Net realized gain (loss) ($) (0.19) (0.45) -- -- (0.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ($) (0.73) (1.00) (0.64) (0.62) (0.72) (0.33)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ($) 11.00 9.64 10.41 10.30 10.42 10.45
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 11.97 (3.50) 15.10 5.13 8.58 3.54(2)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 103,572 112,049 143,004 149,207 169,233 194,024
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 0.81 0.78 0.69 0.66 0.68 0.66(3)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 5.01 5.43 6.40 6.08 6.41 6.44(3)
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 0.08 0.01 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER (%) 236(1) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 1993 portfolio turnover reflects the period 11/1/92 to 7/11/93. On 7/11/93
the fund's predecessor contributed all of its investable assets to The U.S.
Fixed Income Portfolio.
(2) Not annualized.
(3) Annualized.
(4) Less than 0.01%.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN GLOBAL STRATEGIC INCOME FUND
PER-SHARE DATA For fiscal periods ended
- ------------------------------------------------------------------------------------------------------------------------------------
4/30/98(1)
(unaudited)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.21
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.35
Net realized and unrealized gain
on investment and foreign currency ($) 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.36)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ($) (0.36)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ($) 10.35
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 4.92(2)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 11,320
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 1.00(3)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 6.87(3)
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 1.17(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 11/5/97.
(2) Not annualized.
(3) Annualized.
FUND DETAILS 27
<PAGE>
<TABLE>
<CAPTION>
J.P. MORGAN EMERGING MARKETS DEBT FUND
PER-SHARE DATA For fiscal periods ended
- ---------------------------------------------------------------------------------------------------------------------
12/31/97(1) 6/30/98
(unaudited)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.00 9.76
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.58 0.47
Net realized and unrealized loss
on investment and foreign currency ($) (0.05) (0.64)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.53 (0.17)
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.58) (0.42)
Excess of net investment income ($) (0.02) --
Net realized gain ($) (0.17) --
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ($) (0.77) (0.42)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ($) 9.76 9.17
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.47(2) (1.91)(2)
- ---------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 11,978 12,213
- ---------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 1.25(3) 1.25(3)
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 9.71(3) 9.72(3)
- ---------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 1.15(3) 2.54(3)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 4/17/97.
(2) Not Annualized.
(3) Annualized.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN TAX EXEMPT BOND FUND
PER-SHARE DATA For fiscal periods ended
- ---------------------------------------------------------------------------------------------------------------------------------
8/31/93 8/31/94 8/31/95 8/31/96 8/31/97 2/28/98
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 11.60 12.04 11.45 11.73 11.63 11.85
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.55 0.51 0.55 0.55 0.55 0.27
Net realized and unrealized gain (loss)
on investment ($) 0.56 (0.35) 0.29 (0.08) 0.24 0.22
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 1.11 0.16 0.84 0.47 0.79 0.49
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.55) (0.51) (0.55) (0.55) (0.55) (0.27)
Net realized gain (loss) ($) (0.12) (0.24) (0.01) (0.02) (0.02) (0.00)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ($) (0.67) (0.75) (0.56) (0.57) (0.57) (0.27)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ($) 12.04 11.45 11.73 11.63 11.85 12.07
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 9.88 1.35 7.63 4.01 6.95 4.19(3)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 485,013 392,460 352,005 369,987 401,007 432,327
- ---------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 0.74 0.71 0.71 0.64 0.64 0.64(4)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 4.64 4.39 4.87 4.67 4.67 4.53(4)
- ---------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 0.01 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER (%) 41(1) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 1993 portfolio turnover reflects the period 9/1/92 to 7/11/93 and has not
been annualized. On 7/11/93, the fund's predecessor contributed all of its
investable assets to The Tax Exempt Bond Portfolio.
(2) Less than $0.01 per share.
(3) Not Annualized.
(4) Annualized.
28 FUND DETAILS
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
PER-SHARE DATA For fiscal periods ended March 31
- ------------------------------------------------------------------------------------------------------------------------------------
1995(1) 1996 1997 1998
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.00 10.11 10.34 10.28
Income from investment operations:
Net investment income ($) 0.40 0.46 0.46 0.46
Net realized and unrealized gain (loss)
on investment ($) 0.11 0.26 (0.03) 0.40
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.51 0.72 0.43 0.86
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.40) (0.46) (0.46) (0.46)
Net realized gain ($) -- (0.03) (0.03) (0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ($) (0.40) (0.49) (0.49) (0.52)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ($) 10.11 10.34 10.28 10.62
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 5.26(2) 7.16 4.19 8.49
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 38,137 50,523 56,198 85,161
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 0.75(3) 0.75 0.75 0.71
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 4.31(3) 4.43 4.44 4.33
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 0.22(3) 0.04 0.06 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 4/11/94.
(2) Not Annualized.
(3) Annualized.
FUND DETAILS 29
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. MORGAN CALIFORNIA BOND FUND
PER-SHARE DATA For fiscal periods ended April 30
- ------------------------------------------------------------------------------------------------------------------------------------
1997(1) 1998
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ($) 10.00 10.04
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.01 0.41
Net realized and unrealized gain (loss)
on investment ($) 0.04 0.31
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS ($) 0.05 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net Investment income ($) (0.01) (0.41)
NET ASSET VALUE, END OF PERIOD ($) 10.04 10.35
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) 0.51(2) 7.20
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($ thousands) 302 5,811
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET ASSETS:
EXPENSES (%) 0.62(3) 0.65
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (%) 4.52(3) 3.94
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE REFLECTED IN EXPENSE RATIO DUE TO
EXPENSE REIMBURSEMENT (%) 0.55(3) 0.35
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER (%) 40(2) 44
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund commenced operations on 4/21/97.
(2) Not Annualized.
(3) Annualized.
30 FUND DETAILS
<PAGE>
- -------------------------------------------------------------------------------
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
31
<PAGE>
- -------------------------------------------------------------------------------
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
32
<PAGE>
- -------------------------------------------------------------------------------
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
33
<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 FUNDS
J.P. Morgan Funds Services
522 Fifth Avenue
New York, NY 10036
TELEPHONE: 1-800-521-5411
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. (1-800-SEC-0330) and may be viewed
on-screen or downloaded from the SEC's Internet site at http://www.sec.gov. The
funds' investment company and 1933 Act registration numbers are:
J.P. Morgan Short Term Bond Fund . . . . . . . . . . 811-07340 and 033-54632
J.P. Morgan Bond Fund. . . . . . . . . . . . . . . . . 811-07340 and 033-54632
J.P. Morgan Global Strategic Income Fund . . . . . . . 811-07340 and 033-54632
J.P. Morgan Emerging Markets Debt Fund . . . . . . . . 811-07340 and 033-54632
J.P. Morgan Tax Exempt Bond Fund . . . . . . . . . . 811-07340 and 033-54632
J.P. Morgan New York Tax Exempt Bond Fund. . . . . . . 811-07340 and 033-54632
J.P. Morgan California Bond Fund . . . . . . . . . . . 811-07795 and 333-11125
J.P. MORGAN FUNDS AND THE MORGAN TRADITION
The J.P. Morgan 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 Funds offer a broad array of distinctive opportunities for mutual fund
investors.
J.P. MORGAN
- --------------------------------------------------------------------------------
J.P. MORGAN FUNDS
ADVISOR DISTRIBUTOR
J.P. Morgan Investment Mangagement Inc. Funds Distributor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-521-5411 1-800-221-7930
<PAGE>
The Statement of Additional Information for:
J.P. Morgan Short Term Bond Fund, J.P. Morgan Bond Fund, J.P. Morgan Global
Strategic Income Fund dated March 2, 1998; J.P. Morgan Tax Exempt Bond Fund
dated March 2, 1998; and J.P. Morgan Emerging Markets Debt Fund dated March 2,
1998 are incorporated herein by reference from the 497 filing to the
Registration Statement of the Registrant submitted on March 13, 1998 (accession
no. 0001042058-98-000042);and
J.P. Morgan New York Total Return Bond Fund dated August 3, 1998 is
incorporated herein by reference to Post-Effective Amendment no. 52/ Amendment
no. 53 to the Registration Statement of the Registrant filed on July 28, 1998
(accession no. 0001041455-98-000038).
<PAGE>
PART C
ITEM 23. EXHIBITS.
(a) Declaration of Trust, as amended, was filed as Exhibit No. 1 to
Post-Effective Amendment No. 26 to the Registration Statement filed on September
27, 1996 (Accession Number 0000912057-96-021331).
(a)1 Amendment No. 5 to Declaration of Trust; Amendment and Fifth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest.*
(a)2 Amendment No. 6 to Declaration of Trust; Amendment and Sixth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(b) to Post-Effective Amendment No. 32 to the
Registration Statement on February 28, 1997 (Accession Number
0001016964-97-000038).
(a)3 Amendment No. 7 to Declaration of Trust; Amendment and Seventh Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(c) to Post-Effective Amendment No. 34 to the
Registration Statement on April 30, 1997 (Accession Number
0001019694-97-000063).
(a)4 Amendment No. 8 to Declaration of Trust; Amendment and Eighth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(d) to Post-Effective Amendment No. 41 to the
Registration Statement on October 21, 1997 (Accession Number
0001042058-97-000006).
(a)5 Amendment No. 9 to Declaration of Trust; Amendment and Ninth Amended
and Restated Establishment and Designation of Series of Shares of Beneficial
Interest was filed as Exhibit No. 1(e) to Post-Effective Amendment No. 45 to the
Registration Statement on December 29, 1997 (Accession Number
0001041455-97-000013).
(a)6 Form of Amendment No. 10 to Declaration of Trust; Amendment to provide
dollar based voting rights filed as Exhibit (a)6 to Post-Effective Amendment No.
53 to the Registration Statement on August 25, 1998 (Accession No.
0001041455-98-000052).
(b) Restated By-Laws of Registrant.*
(e) Distribution Agreement between Registrant and Funds Distributor, Inc.
("FDI").*
(g) Custodian Contract between Registrant and State Street Bank and Trust
Company ("State Street").*
(h)1 Co-Administration Agreement between Registrant and FDI.*
(h)2 Restated Shareholder Servicing Agreement between Registrant and Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") Filed as Exhibit (h)2 to
Post-Effective Amendment No. 53 to the Registration Statement on August 25, 1998
(Accession No. 0001041455-98-000052).
<PAGE>
(h)3 Transfer Agency and Service Agreement between Registrant and State
Street.*
(h)4 Restated Administrative Services Agreement between Registrant and
Morgan Guaranty.*
(h)5 Fund Services Agreement, as amended, between Registrant and Pierpont
Group, Inc.*
(i) Opinion and consent of Sullivan & Cromwell.*
(j) Consent of independent accountants (to be filed by amendment).
(l) Purchase agreements with respect to Registrant's initial shares.*
(n) Financial Data Schedules (to be filed by amendment).
- ------------------------
* Incorporated herein by reference to Post-Effective Amendment No. 30 to
the Registration Statement filed on December 27, 1996 (Accession Number
0001016964-96-000066).
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
Not applicable.
ITEM 25. INDEMNIFICATION.
Reference is made to Section 5.3 of Registrant's Declaration of Trust and
Section 5 of Registrant's Distribution Agreement.
Registrant, its Trustees and officers are insured against certain expenses in
connection with the defense of claims, demands, actions, suits, or proceedings,
and certain liabilities that might be imposed as a result of such actions, suits
or proceedings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "1933 Act"), may be permitted to directors, trustees,
officers and controlling persons of the Registrant and the principal underwriter
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, trustee, officer, or controlling person of the Registrant
and the principal underwriter in connection with the successful defense of any
action, suite or proceeding) is asserted against the Registrant by such
director, trustee, officer or controlling person or principal underwriter in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
Not Applicable.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Funds Distributor, Inc. (the "Distributor") is the principal
underwriter of the Registrant's shares.
Funds Distributor, Inc. acts as principal underwriter for the following
investment companies other than
the Registrant:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Series Trust
J.P. Morgan Series Trust II
LaSalle Partners Funds, Inc.
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
Funds Distributor, Inc. does not act as depositor or investment adviser to
any of the investment companies.
Funds Distributor, Inc. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor, Inc. is located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. Funds Distributor, Inc. is an indirect
wholly-owned subsidiary of Boston Institutional Group, Inc., a holding company
all of whose outstanding shares are owned by key employees.
<PAGE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.:
Director, President and Chief Executive Officer: Marie E. Connolly
Executive Vice President: George Rio
Executive Vice President: Donald R. Roberson
Executive Vice President: William S. Nichols
Senior Vice President: Michael S. Petrucelli
Director, Senior Vice President, Treasurer and
Chief Financial Officer: Joseph F. Tower, III
Senior Vice President: Paula R. David
Senior Vice President: Allen B. Closser
Senior Vice President: Bernard A. Whalen
Director: William J. Nutt
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
PIERPONT GROUP, INC.: 461 Fifth Avenue, New York, New York 10017 (records
relating to its assisting the Trustees in carrying out their duties in
supervising the Registrant's affairs).
MORGAN GUARANTY TRUST COMPANY OF NEW YORK: 60 Wall Street, New York, New York
10260-0060, 522 Fifth Avenue, New York, New York 10036 or 9 West 57th Street,
New York, New York 10019 (records relating to its functions as shareholder
servicing agent, and administrative services agent).
STATE STREET BANK AND TRUST COMPANY: 1776 Heritage Drive, North Quincy,
Massachusetts 02171 and 40 King Street West, Toronto, Ontario, Canada M5H 3Y8
(records relating to its functions as fund accountant, custodian, transfer agent
and dividend disbursing agent).
FUNDS DISTRIBUTOR, INC.: 60 State Street, Suite 1300, Boston, Massachusetts
02109 (records relating to its functions as distributor and co-administrator).
ITEM 29. MANAGEMENT SERVICES.
Not Applicable.
ITEM 30. UNDERTAKINGS.
(a) If the information called for by Item 5A of Form N-1A is contained in
the latest annual report to shareholders, the Registrant shall
furnish each person to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to shareholders upon request
and without charge.
(b) The Registrant undertakes to comply with Section 16(c) of the 1940
Act as though such provisions of the 1940 Act were applicable to the
Registrant, except that the request referred to in the third full
paragraph thereof may only be made by shareholders who hold in the
aggregate at least 10% of the outstanding shares of the Registrant,
regardless of the net asset value of shares held by such requesting
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of New York and State of New York on the 15th day of September, 1998.
J.P. MORGAN FUNDS
By /s/ Michael S. Petrucelli
-----------------------------
Michael S. Petrucelli
Vice President and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on September 15, 1998.
/s/ Michael S. Petrucelli
- ------------------------------
Michael S. Petrucelli
Vice President and Assistant Secretary
Matthew Healey*
- -----------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer)
Frederick S. Addy*
- ------------------------------
Frederick S. Addy
Trustee
William G. Burns*
- ------------------------------
William G. Burns
Trustee
Arthur C. Eschenlauer*
- ------------------------------
Arthur C. Eschenlauer
Trustee
Michael P. Mallardi*
- ------------------------------
Michael P. Mallardi
Trustee
*By /s/ Michael S. Petrucelli
----------------------------
Michael S. Petrucelli
as attorney-in-fact pursuant to a power of attorney.
<PAGE>
SIGNATURES
Each Portfolio has duly caused this registration statement on Form N-1A
("Registration Statement") of J.P. Morgan Funds (the "Trust") (File No.
033-54632) to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York and State of New York, on the 15th day of
September, 1998.
THE TAX EXEMPT BOND PORTFOLIO, THE NEW YORK TAX EXEMPT BOND PORTFOLIO AND SERIES
PORTFOLIO II
/s/ Michael S. Petrucelli
By -------------------------------
Michael S. Petrucelli
Vice President and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, the Trust's
Registration Statement has been signed below by the following persons in the
capacities indicated on September 15, 1998.
/s/ Michael S. Petrucelli
- ----------------------------
Michael S. Petrucelli
Vice President and Assistant Secretary of the Portfolio
Matthew Healey*
- ----------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer) of
the Portfolio
Frederick S. Addy*
- ----------------------------
Frederick S. Addy
Trustee of the Portfolio
William G. Burns*
- ----------------------------
William G. Burns
Trustee of the Portfolio
Arthur C. Eschenlauer*
- ----------------------------
Arthur C. Eschenlauer
Trustee of the Portfolio
Michael P. Mallardi*
- ----------------------------
Michael P. Mallardi
Trustee of the Portfolio
/s/ Michael S. Petrucelli
*By ---------------------------
Michael S. Petrucelli
as attorney-in-fact pursuant to a power of attorney.
<PAGE>
SIGNATURES
Each Portfolio has duly caused this registration statement on Form N-1A
("Registration Statement") of the J.P. Morgan Funds (the "Trust") (File No.
033-54632) to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of George Town, Grand Cayman, BWI, on the 15th day of
September, 1998.
THE SHORT TERM BOND PORTFOLIO, THE U.S. FIXED INCOME PORTFOLIO AND THE SERIES
PORTFOLIO
/s/ Jacqueline Henning
By -------------------------
Jacqueline Henning
Assistant Secretary and Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, the Trust's
Registration Statement has been signed below by the following persons in the
capacities indicated on September 15, 1998.
Michael S. Petrucelli*
- ----------------------------
Michael S. Petrucelli
Vice President and Assistant Secretary of the Portfolios
Matthew Healey*
- ----------------------------
Matthew Healey
Trustee, Chairman and Chief Executive Officer (Principal Executive Officer) of
the Portfolios
Frederick S. Addy*
- ----------------------------
Frederick S. Addy
Trustee of the Portfolios
William G. Burns*
- ----------------------------
William G. Burns
Trustee of the Portfolios
Arthur C. Eschenlauer*
- ----------------------------
Arthur C. Eschenlauer
Trustee of the Portfolios
Michael P. Mallardi*
- ----------------------------
Michael P. Mallardi
Trustee of the Portfolios
/s/ Jacqueline Henning
*By ------------------------
Jacqueline Henning
as attorney-in-fact pursuant to a power of attorney previously filed.