J.P. MORGAN FUNDS
J.P. Morgan Tax Exempt Money Market Fund
Supplement dated July 28, 1998 to the Statement of Additional Information dated
February 2, 1998
1. The third paragraph under "Investment Objective and Policies" is replaced
with the following:
The Portfolio attempts to achieve its investment objective by maintaining a
dollar-weighted average portfolio maturity of not more than 90 days and by
investing in U.S. dollar-denominated securities described in this Statement of
Additional Information that meet certain rating criteria, present minimal credit
risks, have effective maturities of not more than thirteen months and earn
interest wholly exempt from federal income tax in the opinion of bond counsel
for the issuer. If attractive municipal obligations are not available, the Fund
may hold cash rather than invest in taxable money market instruments. The
Portfolio, however, may temporarily invest up to 20% of total assets in taxable
securities in abnormal market conditions, for defensive purposes only. For
purposes of this calculation, obligations that generate income that may be
treated as a preference item for purposes of the alternative minimum tax shall
not be considered taxable securities. See "Quality and Diversification
Requirements." Interest on these securities may be subject to state and local
taxes. For more detailed information regarding tax matters, including the
applicability of the alternative minimum tax, see "Taxes."
2. The "Taxable Investments" section is amended in its entirety as follows:
The Portfolio attempts to invest its assets in tax exempt municipal
securities and when these investments are not available, may hold cash
or may invest to a limited extent in taxable securities. While the Fund
does not currently intend to invest in taxable securities, in abnormal
market conditions for defensive purposes only, it may invest up to 20%
of the value of its total assets in securities, the interest income on
which may be subject to federal, state or local income taxes. The
taxable investments permitted for the Portfolio include obligations of
the U.S. Government and its agencies and instrumentalities, bank
obligations, commercial paper and repurchase agreements.
The Fund may make investments in other debt securities with remaining
effective maturities of not more than thirteen months, including
without limitation corporate bonds, and other obligations described in
the Prospectus or this Statement of Additional Information.
3. Effective August 1, 1998, the second paragraph under "Shareholder Servicing"
is replaced with the following:
Under the Shareholder Servicing Agreement, the Fund has agreed to pay
Morgan for these services a fee at an annual rate of 0.25% (expressed
as a percentage of the average daily net asset value of Fund shares
owned by or for shareholders for whom Morgan is acting as shareholder
servicing agent). Morgan acts as shareholder servicing agent for all
shareholders.
