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MARCH 1, 2001 | PROSPECTUS
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J.P. MORGAN INSTITUTIONAL
FIXED INCOME FUNDS
Short Term Bond Fund
Bond Fund
Global Strategic Income Fund
Tax Exempt Bond Fund
New York Tax Exempt Bond Fund
------------------------------------
Seeking high total return or current
income by investing primarily in
fixed income securities.
This prospectus contains essential information for anyone investing in these
funds. Please read it carefully and keep it for reference.
As with all mutual funds, the fact that these shares are registered with the
Securities and Exchange Commission does not mean that the commission approves
them or guarantees that the information in this prospectus is correct or
adequate. It is a criminal offense to state or suggest otherwise.
Distributed by Funds Distributor, Inc. JPMorgan
CONTENTS
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2 | J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
Each fund's goal, principal strategies,
principal risks, performance and
expenses
J.P. Morgan Institutional Short Term Bond Fund ......................2
J.P. Morgan Institutional Bond Fund .................................4
J.P. Morgan Institutional Global Strategic Income Fund ..............6
J.P. Morgan Institutional Tax Exempt Bond Fund ......................8
J.P. Morgan Institutional New York Tax Exempt Bond Fund ............10
12 | FIXED INCOME MANAGEMENT APPROACH
Principles and techniques common
to the funds in this prospectus
J.P. Morgan ........................................................12
J.P. Morgan Institutional Fixed Income Funds .......................12
The spectrum of fixed income funds .................................12
Who may want to invest .............................................12
Fixed income investment process ....................................13
14 | YOUR INVESTMENT
Investing in the J.P. Morgan
Institutional Fixed Income Funds
Investing through a financial professional .........................14
Investing through an employer-sponsored retirement plan ............14
Investing through an IRA or rollover IRA ...........................14
Investing directly .................................................14
Opening your account ...............................................14
Adding to your account .............................................14
Selling shares .....................................................15
Account and transaction policies ...................................15
Dividends and distributions ........................................16
Tax considerations .................................................16
17 | FUND DETAILS
More about risk and the funds'
business operations
Business structure .................................................17
Management and administration ......................................17
Risk and reward elements ...........................................18
Investments ........................................................20
Financial highlights ...............................................22
FOR MORE INFORMATION .......................................back cover
J.P. MORGAN INSTITUTIONAL
SHORT TERM BOND FUND | TICKER SYMBOL: JMSBX
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REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND)
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 18-21.
[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
Principal Strategies
The fund invests primarily in fixed income securities, including U.S. government
and agency securities, domestic and foreign corporate bonds, private placements,
asset-backed and mortgage-related securities, and money market instruments, that
it believes have the potential to provide a high total return over time. These
securities may be of any maturity, but under normal market conditions the fund's
duration will range between one and three years, similar to that of the Merrill
Lynch 1-3 Year Treasury Index. For a description of duration, please see "Fixed
Income Investment Process" on page 13.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. The fund
typically hedges its non-dollar investments back to the U.S. dollar. At least
90% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 75% A or better. No more than 10% of assets may be invested
in securities rated B or BB.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
duration fixed income funds will depend on the success of the investment
process, which is described on page 13.
Although any rise in interest rates is likely to cause a fall in the price of
bonds, the fund's comparatively short duration is designed to help keep its
share price within a relatively narrow range. Because it seeks to minimize risk,
the fund will generally offer less income, and during periods of declining
interest rates, may offer lower total returns than bond funds with longer
durations. Because of the sensitivity of the fund's mortgage related securities
to changes in interest rates, the performance and duration of the fund may be
more volatile than if it did not hold these securities. The fund uses futures
contracts and other derivatives to help manage duration, yield curve exposure,
and credit and spread volatility. To the extent that the fund seeks higher
returns by investing in non-investment-grade bonds, often called junk bonds, it
takes on additional risks, since these bonds are more sensitive to economic news
and their issuers have a less secure financial position. To the extent the fund
invests in foreign securities, it could lose money because of foreign government
actions, political instability, currency fluctuation or lack of adequate and
accurate information. The fund may engage in active and frequent trading,
leading to increased portfolio turnover and the possibility of increased capital
gains. See page 16 for further discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan Investment Management Inc., a
subsidiary of J.P. Morgan Chase & Co. J.P. Morgan Chase currently manages
more than $700 billion, including more than ___ billion using similar
strategies as the fund.
The portfolio management team is led by Connie J. Plaehn, managing director, who
has been on the team since the fund's inception and has been at J.P. Morgan
since 1984, John Donohue, vice president, who has been on the team since joining
J.P. Morgan in June of 1997 from Goldman Sachs & Co., where he was an
institutional money market portfolio manager, and Abigail J. Feder, vice
president, who joined J.P. Morgan in April of 2000 from Morgan Stanley Dean
Witter Investment Management, where she managed short term fixed income
portfolios.
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Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing its assets in a master
portfolio, which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
2 | J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND
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PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Short Term Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last seven calendar
years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one year, five years and life of the fund compared to those
of the Merrill Lynch 1-3 Year Treasury Index. This is a widely recognized,
unmanaged index of U.S. Treasury notes and bonds with maturities of 1-3 years
used as a measure of overall short-term bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
[The following table was depicted as a bar chart in the printed material.]
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Year-by-year total return (%) Shows changes in returns by calendar year(1),(2)
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1994 1995 1996 1997 1998 1999 2000
0.36 10.80 5.10 6.40 7.04 3.21 7.23
o J.P. Morgan Institutional Short Term Bond Fund
The fund's year-to-date total return as of 12/31/00 was 7.23%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 3.36% (for the quarter ended 6/30/95); and the lowest quarterly
return was -0.47% (for the quarter ended 3/31/94).
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Average annual total return (%) Shows performance over time, for periods ended December 31, 2000(1)
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Past 1 yr. Past 5 yrs. Life of fund
J.P. Morgan Institutional Short Term Bond Fund (after expenses) 7.23 5.79 5.55
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Merrill Lynch 1-3 Year Treasury Index (no expenses) 8.00 5.92 5.76
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INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no sales, redemption, exchange, or account fees, although some
institutions may charge you a fee for shares you buy through them. The annual
fund expenses after reimbursement are deducted from fund assets prior to
performance calculations.
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Annual fund operating expenses(3)(%)
(expenses that are deducted from fund assets)
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Management fees 0.25
Distribution (Rule 12b-1) fees none
Other expenses 0.22
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Total operating expenses 0.47
Fee waiver and expense
reimbursement(4) 0.17
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Net expenses(4) 0.30
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Expense example(4)
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The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/01 through 2/28/02 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
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1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 31 134 246 575
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(1) The fund commenced operations on 9/13/93. For the period 7/31/93 through
9/30/93, life of fund returns reflect performance of the Pierpont Short
Term Bond Fund, the fund's predecessor.
(2) The fund's fiscal year end is 10/31.
(3) The fund has a master/feeder structure as described on page 17. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 3/1/01 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
total operating expenses (excluding interest, taxes and extraordinary
expenses) exceed 0.30% of the fund's average daily net assets through
2/28/02.
J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND | 3
J.P. MORGAN INSTITUTIONAL BOND FUND | TICKER SYMBOL: JMIBX
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REGISTRANT: J.P. MORGAN
INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL BOND FUND)
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 18-21.
[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
Principal Strategies
The fund invests primarily in fixed income securities, including U.S. government
and agency securities, corporate bonds, private placements, asset-backed and
mortgage-backed securities, that it believes have the potential to provide a
high total return over time. These securities may be of any maturity, but under
normal market conditions the management team will keep the fund's duration
within one year of that of the Salomon Smith Barney Broad Investment Grade Bond
Index (currently about five years). For a description of duration, please see
"Fixed Income Investment Process" on page 13.
Up to 25% of assets may be invested in foreign securities, including 20% in debt
securities denominated in foreign currencies of developed countries. The fund
typically hedges its non-dollar investments back to the U.S. dollar. At least
75% of assets must be invested in securities that, at the time of purchase, are
rated investment-grade (BBB/Baa or better) or are the unrated equivalent,
including at least 65% A or better. No more than 25% of assets may be invested
in securities rated B or BB.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 13.
To the extent that the fund seeks higher returns by investing in
non-investment-grade bonds, often called junk bonds, it takes on additional
risks, since these bonds are more sensitive to economic news and their issuers
have a less secure financial position. The fund may use futures contracts and
other derivatives to help manage duration, yield curve exposure, and credit and
spread volatility. To the extent the fund invests in foreign securities, it
could lose money because of foreign government actions, political instability,
currency fluctuation or lack of adequate and accurate information. The fund's
mortgage-backed investments involve risk of losses due to prepayments that occur
earlier or later than expected, like any bond, due to default. The fund may
engage in active and frequent trading, leading to increased portfolio turnover
and the possibility of increased capital gains. See page 16 for further
discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan Investment Management Inc., a
subsidiary of J.P. Morgan Chase & Co. J.P. Morgan Chase currently manages
approximately more than $700 billion, including more than ___ billion using
similar strategies as the fund.
The portfolio management team is led by Connie Plaehn, managing director, who
has been at J.P. Morgan since 1984, Paul Zemsky, managing director, who has been
at J.P. Morgan since 1985 and Jay Gladieux, vice president, who has been at J.P.
Morgan since 1997. Mr. Zemsky has been on the team since 1988 and Ms. Plaehn has
been on the team since 1994. Mr. Gladieux joined the team in September of 2000.
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Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio,
which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
4 | J.P. MORGAN INSTITUTIONAL BOND FUND
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PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last ten calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one, five and ten years compared to those of the Salomon
Smith Barney Broad Investment Grade Bond Index. This is a widely recognized,
unmanaged index of U.S. Treasury and agency securities and investment-grade
mortgage and corporate bonds used as a measure of overall bond market
performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
[The following table was depicted as a bar chart in the printed material.]
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Year-by-year total return (%) shows changes in returns by calendar year(1),(2)
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1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
13.45 6.53 9.29 (2.68) 18.42 3.30 9.29 7.54 (0.55) 10.93
o J.P. Morgan Institutional Bond Fund
For the period covered by this year-by-year total return chart, the fund's
highest quarterly return was 6.30% (for the quarter ended 6/30/95); and the
lowest quarterly return was -2.38% (for the quarter ended 3/31/94).
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Average annual total return (%) Shows performance over time, for periods ended December 31, 2000(1)
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Past 1 yr. Past 5 yrs. Past 10 yrs.
J.P. Morgan Institutional Bond Fund (after expenses) 10.93 6.02 7.45
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Salomon Smith Barney Broad Investment Grade Bond Index (no expenses) 11.59 6.45 8.00
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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.
- --------------------------------------------------------------------------------
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Management fees 0.30
Distribution (Rule 12b-1) fees none
Other expenses 0.19
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Total operating expenses 0.49
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Expense example(4)
- --------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, total expenses remain
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 50 157 274 616
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(1) The fund commenced operations on 7/26/93. Returns for the period 1/1/90
through 7/31/93 reflect performance of The Pierpont Bond Fund, the fund's
predecessor.
(2) The fund's fiscal year end is 10/31.
(3) The fund has a master/feeder structure as described on page 17. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
J.P. MORGAN INSTITUTIONAL BOND FUND | 5
J.P. MORGAN INSTITUTIONAL
GLOBAL STRATEGIC INCOME FUND | TICKER SYMBOL: JPIGX
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REGISTRANT: J.P. MORGAN
INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC
INCOME FUND)
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 18-21.
[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
Principal Strategies
The fund invests in a wide range of debt securities from the U.S. and other
markets, both developed and emerging. Issuers may include governments,
corporations, financial institutions, and supranational organizations (such as
the World Bank), that the fund believes have the potential to provide a high
total return over time. The fund may invest directly in mortgages and in
mortgage-backed securities. The fund's securities may be of any maturity, but
under normal market conditions its duration will generally be similar to that of
the Lehman Brothers Aggregate Bond Index (currently about four and a half
years). For a description of duration, please see "Fixed Income Investment
Process" on page 13. At least 40% of assets must be invested in securities that,
at the time of purchase, are rated investment-grade (BBB/Baa or better) or are
the unrated equivalent. The balance of assets must be invested in securities
rated B or higher at the time of purchase (or the unrated equivalent), except
that the fund's emerging market component has no minimum quality rating and may
invest without limit in securities that are in the lowest rating categories (or
are the unrated equivalent).
The management team uses the process described on page 13, and also makes
country allocations, based primarily on macro-economic factors. The team uses
the model allocation shown at right as a basis for its sector allocation,
although the actual allocations are adjusted periodically within the indicated
ranges. Within each sector, a dedicated team handles securities selection. The
fund typically hedges its non-dollar investments in developed countries back to
the U.S. dollar.
Principal Risks
The fund's share price and total return vary in response to changes in global
bond markets, interest rates, and currency exchange rates. How well the fund's
performance compares to that of similar fixed income funds will depend on the
success of the investment process. Because of credit and foreign and emerging
markets investment risks, the fund's performance is likely to be more volatile
than that of most fixed income funds. Foreign and emerging market investment
risks include foreign government actions, political instability, currency
fluctuations and lack of adequate and accurate information. To the extent that
the fund seeks higher returns by investing in non-investment-grade bonds, often
called junk bonds, it takes on additional risks, since these bonds are more
sensitive to economic news and their issuers have a less secure financial
position. The fund's mortgage-backed investments involve the risk of losses due
to default or to prepayments that occur earlier or later than expected. Some
investments, including directly owned mortgages, may be illiquid. The fund has
the potential for long-term total returns that exceed those of more traditional
bond funds, but investors should also be prepared for risks that exceed those of
more traditional bond funds. The fund may engage in active and frequent trading,
leading to increased portfolio turnover and the possibility of increased capital
gains. See page 16 for further discussion on the tax treatment of capital gains.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
MODEL SECTOR ALLOCATION
[The following table was depicted as a pie chart in the printed material.]
international non-dollar (range 0-25%) 9%
public/private mortgages (range 20-45%) 35%
public/private corporates (range 5-25%) 13%
emerging markets (range 0-25%) 16%
high yield corporates (range 17-37%) 27%
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan Investment Management Inc., a
subsidiary of J.P. Morgan Chase & Co. J.P. Morgan Chase currently manages
approximately more than $700 billion, including more than ____ billion using
similar strategies as the fund.
The portfolio management team is led by Mark E. Smith, managing director, who
joined J.P. Morgan in 1994 and has been on the team since the Fund's inception,
and Robert J. Morena, vice president, who joined J.P. Morgan in 2000. Prior to
joining J.P. Morgan, Mr. Morena served as a managing director at Forest
Investment Management where he managed fixed income portfolios. Prior to that,
he served as the Department Head of The Bank of New York's Institutional Fixed
Income Division.
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Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio,
which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
6 | J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND
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PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Global Strategic Income Fund.
The bar chart indicates some of the risks by showing the performance of the
fund's shares from year to year for each of the last three calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one year and life of the fund compared to those of the
Lehman Brothers Aggregate Bond Index. This is a widely recognized, unmanaged
index used as a measure of overall bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
[The following table was depicted as a bar chart in the printed material.]
- ----------------------------
Total return (%) Shows changes in returns by calendar year(1),(2)
- --------------------------------------------------------------------------------
1998 1999 2000
2.59 2.51 7.98
o J.P. Morgan Institutional Global Strategic Income Fund
The fund's year-to-date total return as of 12/31/00 was 7.98%. For the period
covered by this total return chart, the fund's highest quarterly return was
3.13% (for the quarter ended 3/31/98); and the lowest quarterly return was -
- -1.45% (for the quarter ended 9/30/98).
- -------------------------------
Average annual total return (%) Shows performance over time, for periods ended December 31, 2000(1)(1)
- -----------------------------------------------------------------------------------------------------------
Past 1 yr. Life of fund
J.P. Morgan Institutional Global Strategic Income Fund (after expenses) 7.98 6.05
- -----------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index (no expenses) 11.63 7.84
- -----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no sales, redemption, exchange, or account fees, although some
institutions may charge you a fee for shares you buy through them. The annual
fund expenses after reimbursement are deducted from fund assets prior to
performance calculations.
- --------------------------------------------------------------------------------
Annual fund operating expenses(3) (%)
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Management fees 0.45
Distribution (Rule 12b-1) fees none
Other expenses 0.35
- --------------------------------------------------------------------------------
Total operating expenses 0.80
Fee waiver and expense
reimbursement(4) 0.15
- --------------------------------------------------------------------------------
Net expenses(4) 0.65
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Expense example(4)
- --------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
3/1/01 through 2/28/02 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 66 240 429 976
- --------------------------------------------------------------------------------
(1) The fund commenced operations on 3/17/97 and performance is calculated as
of 3/31/97.
(2) The fund's fiscal year end is 10/31.
(3) The fund has a master/feeder structure as described on page 17. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
(4) Reflects an agreement dated 3/1/01 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
total operating expenses (excluding interest, taxes and extraordinary
expenses) exceed 0.65% of the fund's average daily net assets through
2/28/02.
J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND | 7
J.P. MORGAN INSTITUTIONAL
TAX EXEMPT BOND FUND | TICKER SYMBOL: JITBX
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REGISTRANT: J.P. MORGAN INSTITUTIONAL FUNDS
(J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND)
RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 18-21.
[GRAPHIC] Goal
The fund's goal is to provide a high level of current income that is exempt from
federal income tax consistent with moderate risk of capital. This goal can be
changed without shareholder approval.
[GRAPHIC] INVESTMENT APPROACH
Principal Strategies
The fund invests primarily in high quality municipal securities that it believes
have the potential to provide current income that is free from federal personal
income tax. While the fund's goal is high tax-exempt income, the fund may invest
to a limited extent in taxable securities, including U.S. government, government
agency, corporate, or taxable municipal securities. The fund's securities may be
of any maturity, but under normal market conditions the fund's duration will
generally range between four and seven years, similar to that of the Lehman
Brothers Intermediate Competitive Municipal Bond Index (1-17 Year Maturity)
(currently 5.4 years). For a description of duration, please see "Fixed Income
Investment Process" on page 13. At least 90% of assets must be invested in
securities that, at the time of purchase, are rated investment-grade (BBB/Baa or
better) or are the unrated equivalent. No more than 10% of assets may be
invested in securities rated B or BB.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
tax-exempt funds will depend on the success of the investment process, which is
described on page 13.
Investors should be prepared for higher share price volatility than from a tax
exempt fund of shorter duration. The fund's performance could also be affected
by market reaction to proposed tax legislation. To the extent that the fund
seeks higher returns by investing in non-investment-grade bonds, often called
junk bonds, it takes on additional risks, since these bonds are more sensitive
to economic news and their issuers have a less secure financial position.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan Investment Management Inc., a
subsidiary of J.P. Morgan Chase & Co. J.P. Morgan Chase currently manages
more than $700 billion, including more than ___ billion using similar
strategies as the fund.
The portfolio management team is led by Benjamin Thompson, vice president, who
joined the team in June of 1999, Robert W. Meiselas, vice president, who joined
the team in May 1997 and has been at J.P. Morgan since 1987, and Kingsley Wood,
Jr., vice president, who has been with the team since January 2000. Prior to
joining J.P. Morgan, Mr. Thompson was a senior fixed income portfolio manager at
Goldman Sachs, and Mr. Wood was a senior fixed income portfolio manager at
Mercantile Bank & Trust. Prior to joining Mercantile in July of 1998, Mr. Wood
was an institutional tax-exempt trader at ABN-AMRO and Kemper Securities.
- --------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio,
which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
8 | J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional Tax Exempt Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the fund's last ten calendar
years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one, five and ten years compared to those of the Lehman
Brothers 1-16 Year Municipal Bond Index and the Lehman Brothers Intermediate
Competitive Municipal Bond Index (1-17 Year Maturity), the fund's current
benchmark. Both are unmanaged indices that measure municipal bond market
performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
[The following table was depicted as a bar chart in the printed material.]
- -----------------------------
Year-by-year total return (%) Shows changes in returns by calendar year(1),(2)
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
10.92 7.47 9.58 (2.53) 13.50 3.71 7.58 5.65 (0.75) 8.56
o J.P. Morgan Institutional Tax Exempt Bond Fund
The fund's year-to-date total return as of 12/31/00 was 8.56%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 5.16% (for the quarter ended 3/31/95); and the lowest quarterly
return was -3.05% (for the quarter ended 3/31/94).
- -------------------------------
Average annual total return (%) Shows performance over time, for periods ended December 31, 2000(1)
- ----------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Past 10 yrs.
J.P. Morgan Institutional Tax Exempt Bond Fund (after expenses) 8.56 4.89 6.26
- ----------------------------------------------------------------------------------------------------------
Lehman Brothers Intermediate Competitive Municipal Bond Index
(1-17 Year Maturity)(3) (no expenses) 9.59 5.59 N/A
- ----------------------------------------------------------------------------------------------------------
Lehman Brothers 1-16 Year Municipal Bond Index (no expenses) 9.32 5.53 N/A
- ----------------------------------------------------------------------------------------------------------
Lehman Brothers/J.P. Morgan Hybrid Index(4) 9.48 4.73 N/A
- ----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Annual fund operating expenses(5) (%)
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Management fees 0.30
Distribution (Rule 12b-1) fees none
Other expenses 0.21
- --------------------------------------------------------------------------------
Total operating expenses 0.51
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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:
$10,000 initial investment, 5% return each year, total operating expenses remain
unchanged, and all shares sold at the end of each time period. The example is
for comparison only; the fund's actual return and your actual costs may be
higher or lower.
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 52 164 285 640
- --------------------------------------------------------------------------------
(1) The fund commenced operations on 7/12/93. For the period 1/1/90 through
7/31/93 returns reflect performance of The Pierpont Tax Exempt Bond Fund,
the predecessor of the fund.
(2) The fund's fiscal year end is 7/31. Prior to 1999, the fiscal year end was
8/31.
(3) Previously the fund had used the Lehman Brothers 1-16 Year Municipal Bond
Index as a comparative broad-based securities market index. The fund has
chosen to use the Lehman Brothers Intermediate Competitive Municipal Bond
Index (1-17 Year Maturity) because it is more widely disseminated.
(4) The Lehman Brothers/J.P. Morgan Hybrid Index consists of Lehman Brothers
1-16 Year Municipal Bond Index from 9/30/93 to 9/1/00, then Lehman
Brothers Intermediate Competitive Municipal Bond Index (1-17 Maturity),
thereafter.
(5) The fund has a master/feeder structure as described on page 17. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year, expressed as a percentage of average net assets.
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND | 9
J.P. MORGAN INSTITUTIONAL NEW YORK
TAX EXEMPT BOND FUND | TICKER SYMBOL: JPNTX
- --------------------------------------------------------------------------------
REGISTRANT: J.P. MORGAN INSTITUTIONAL
FUNDS (J.P. MORGAN INSTITUTIONAL NEW
YORK TAX EXEMPT BOND FUND)
[GRAPHIC] RISK/RETURN SUMMARY
For a more detailed discussion of the fund's investments and their main risks,
as well as fund strategies, please see pages 18-21.
[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
Principal Strategies
The fund invests primarily in New York municipal securities that it believes
have the potential to provide high current income which is free from federal,
state, and New York City personal income taxes for New York residents. The fund
may also invest to a limited extent in securities of other states or
territories. To the extent that the fund invests in municipal securities of
other states, the income from such securities would be free from federal
personal income taxes for New York residents but would be subject to New York
State and New York City personal income taxes. For non-New York residents, the
income from New York municipal securities is free from federal personal income
taxes only. The fund may also invest in taxable securities. The fund's
securities may be of any maturity, but under normal market conditions the fund's
duration will generally range between three and seven years, similar to that of
the Lehman Brothers New York 1 to 17 Years Municipal Bond Index (currently 5.4
years). For a description of duration, please see "Fixed Income Investment
Process" on page 13. At least 90% of assets must be invested in securities that,
at the time of purchase, are rated investment-grade (BBB/Baa or better) or are
the unrated equivalent. No more than 10% of assets may be invested in securities
rated B or BB.
Principal Risks
The fund's share price and total return will vary in response to changes in
interest rates. How well the fund's performance compares to that of similar
fixed income funds will depend on the success of the investment process, which
is described on page 13. Because most of the fund's investments will typically
be from issuers in the State of New York, its performance will be affected by
the fiscal and economic health of that state and its municipalities. The fund is
non-diversified and may invest more than 5% of assets in a single issuer, which
could further concentrate its risks. To the extent that the fund seeks higher
returns by investing in non-investment-grade bonds, often called junk bonds, it
takes on additional risks, since these bonds are more sensitive to economic news
and their issuers have a less secure financial condition.
An investment in the fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. You could lose money if you sell when the fund's share price is lower
than when you invested.
PORTFOLIO MANAGEMENT
The fund's assets are managed by J.P. Morgan Investment Management Inc., a
subsidiary of J.P. Morgan Chase & Co. J.P. Morgan Chase currently manages
more than $700 billion, including more than ____ billion using similar
strategies as the fund.
The portfolio management team is led by Benjamin Thompson, vice president, who
joined the team in June of 1999, Robert W. Meiselas, vice president, who joined
the team in May 1997 and has been at J.P. Morgan since 1987, and Kingsley Wood,
Jr., vice president, who has been with the team since January of 2000. Prior to
joining J.P. Morgan, Mr. Thompson was a senior fixed income portfolio manager at
Goldman Sachs, and Mr. Wood was a senior fixed income portfolio manager at
Mercantile Bank & Trust. Prior to joining Mercantile in July of 1998, Mr. Wood
was an institutional tax-exempt trader at ABN-AMRO and Kemper Securities.
- --------------------------------------------------------------------------------
Before you invest
Investors considering the fund should understand that:
o The fund seeks to achieve its goal by investing in a master portfolio,
which is another fund with the same goal.
o There is no assurance that the fund will meet its investment goal.
o The fund does not represent a complete investment program.
10 | J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND
- --------------------------------------------------------------------------------
PERFORMANCE (unaudited)
The bar chart and table shown below provide some indication of the risks of
investing in J.P. Morgan Institutional New York Tax Exempt Bond Fund.
The bar chart indicates some of the risks by showing changes in the performance
of the fund's shares from year to year for each of the last six calendar years.
The table indicates some of the risks by showing how the fund's average annual
returns for the past one and five years and the life of the fund compared to
those of the Lehman Brothers 1-16 Year Municipal Bond Index and the Lehman
Brothers New York 1 to 17 Years Municipal Bond Index, the fund's current
benchmark. Both are widely recognized, unmanaged indices that measure municipal
bond market performance.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
[The following table was depicted as a bar chart in the printed material.]
- ----------------------------
Year-by-year total return (%) Shows changes in returns by calendar year(1),(2)
- --------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
13.28 4.21 7.68 5.61 (0.73) 9.26
o J.P. Morgan Institutional New York Tax Exempt Bond Fund
The fund's year-to-date total return as of 12/31/00 was 9.26%. For the period
covered by this year-by-year total return chart, the fund's highest quarterly
return was 4.86% (for the quarter ended 3/31/95) and the lowest quarterly return
was -1.78% (for the quarter ended 6/30/99).
- -------------------------------
Average annual total return (%) Shows performance over time, for periods ended December 31, 2000(1)
- -------------------------------------------------------------------------------------------------------------------
Past 1 yr. Past 5 yrs. Life of fund
J.P. Morgan Institutional New York Tax Exempt Bond Fund (after expenses) 9.26 5.15 5.85
- -------------------------------------------------------------------------------------------------------------------
Lehman Brothers New York 1 to 17 Years Municipal Bond Index3 (no expenses) 9.67 5.90 6.62
Lehman Brothers 1-16 Year Municipal Bond Index (no expenses) 9.32 5.53 6.30
- -------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no sales, redemption, exchange, or account fees, although some
institutions may charge you a fee for shares you buy through them. The annual
fund expenses after reimbursement are deducted from fund assets prior to
performance calculations.
- --------------------------------------------------------------------------------
Annual fund operating expenses(4) (%)
(expenses that are deducted from fund assets)
- --------------------------------------------------------------------------------
Management fees 0.30
Distribution (Rule 12b-1) fees none
Other expenses 0.26
- --------------------------------------------------------------------------------
Total operating expenses 0.56
Fee waiver and expense
reimbursement(5) 0.06
- --------------------------------------------------------------------------------
Net expenses(5) 0.50
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Expense example
- --------------------------------------------------------------------------------
The example below is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes:
$10,000 initial investment, 5% return each year, net expenses for the period
12/1/00 through 11/30/01 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
- --------------------------------------------------------------------------------
1 yr. 3 yrs. 5 yrs. 10 yrs.
Your cost($) 51 173 307 696
- --------------------------------------------------------------------------------
(1) The fund commenced operations on 4/11/94, and returns reflect performance
of the fund from 4/30/94.
(2) The fund's fiscal year end is 7/31. Prior to 1999 the fiscal year end was
3/31.
(3) Previously the fund had used the Lehman Brothers 1-16 Year Municipal Bond
Index, which is composed of tax-exempt securities of various states and
measures overall tax-exempt bond market performance, as a comparative
broad-based securities market index. The fund has chosen the Lehman
Brothers New York 1 to 17 Years Municipal Bond Index, because it measures
New York tax-exempt bond market performance and reflects the universe of
securities in which the fund invests.
(4) The fund has a master/feeder structure as described on page 17. This table
shows the fund's expenses and its share of master portfolio expenses for
the past fiscal year expressed as a percentage of average net assets.
(5) Reflects an agreement dated 3/1/01 by Morgan Guaranty Trust Company of New
York, an affiliate of J.P. Morgan, to reimburse the fund to the extent
total operating expenses (excluding interest, taxes and extraordinary
expenses) exceed 0.50% of the fund's average daily net assets through
11/30/01.
J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND | 11
FIXED INCOME MANAGEMENT APPROACH
J.P. MORGAN
Known for its commitment to proprietary research and its disciplined investment
strategies, J.P. Morgan Chase is the asset management choice for many of the
world's most respected corporations, financial institutions, governments, and
individuals. Today, J.P. Morgan Chase employs approximately ___ research
analysts, capital market researchers, portfolio managers and traders around the
world and has more than $700 billion in assets under management including assets
managed by the funds' advisor, J.P. Morgan Investment Management Inc.
J.P. MORGAN INSTITUTIONAL FIXED INCOME FUNDS
These funds invest primarily in bonds and other fixed income securities, either
directly or through a master portfolio (another fund with the same goal). The
funds seek high total return or high current income.
While each fund follows its own strategy, the funds as a group share a single
investment philosophy. This philosophy, developed by the funds' advisor,
emphasizes the potential for consistently enhancing performance while managing
risk.
THE SPECTRUM OF FIXED INCOME FUNDS
The funds described in this prospectus pursue different goals and offer varying
degrees of risk and potential reward. The table below shows degrees of the
relative risk and return that these funds potentially offer. These and other
distinguishing features of each fixed income fund were described on the
preceding pages. Differences among these funds include:
o the types of securities they hold
o the tax status of the income they offer
o the relative emphasis on current income versus total return
- --------------------------------------------------------------------------------
Potential risk and return
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
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:
o want to add an income investment to further diversify a portfolio
o want an investment whose risk/return potential is higher than that of
money market funds but generally less than that of stock funds
o want an investment that pays monthly dividends
o with regard to the Tax Exempt Bond Fund, are seeking income that is exempt
from federal personal income tax
o with regard to the New York Tax Exempt Bond Fund, are seeking income that
is exempt from federal, state, and local (if applicable) personal income
taxes in New York
The funds are not designed for investors who:
o are investing for aggressive long-term growth
o require stability of principal
o with regard to the Global Strategic Income Fund, are not prepared to
accept a higher degree of risk than most traditional bond funds
o with regard to the federal or state tax-exempt funds, are investing
through a tax-deferred account such as an IRA
12 | FIXED INCOME MANAGEMENT APPROACH
- --------------------------------------------------------------------------------
FIXED INCOME INVESTMENT PROCESS
J.P. Morgan seeks to generate an information advantage through the depth of its
global fixed-income research and the sophistication of its analytical systems.
Using a team-oriented approach, J.P. Morgan seeks to gain insights in a broad
range of distinct areas and takes positions in many different areas, helping the
funds to limit exposure to concentrated sources of risk.
In managing the funds described in this prospectus, J.P. Morgan employs a
three-step process that combines sector allocation, fundamental research for
identifying portfolio securities, and duration management.
[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 common
measurement of a security's sensitivity to interest rate movements. For
securities owned by a fund, duration measures the average time needed to receive
the present value of all principal and interest payments by analyzing cash flows
and interest rate movements. A fund's duration is generally shorter than a
fund's average maturity because the maturity of a security only measures the
time until final payment is due. Each fund's target duration typically remains
relatively close to the duration of the market as a whole, as represented by the
fund's benchmark. The strategists closely monitor the funds and make tactical
adjustments as necessary.
FIXED INCOME MANAGEMENT APPROACH | 13
YOUR INVESTMENT
- --------------------------------------------------------------------------------
For your convenience, the J.P. Morgan Institutional Funds offer several ways to
start and add to fund investments.
INVESTING THROUGH A FINANCIAL PROFESSIONAL
If you work with a financial professional, either at J.P. Morgan or elsewhere,
he or she is prepared to handle your planning and transaction needs. Your
financial professional will be able to assist you in establishing your fund
account, executing transactions, and monitoring your investment. If your fund
investment is not held in the name of your financial professional and you prefer
to place a transaction order yourself, please use the instructions for investing
directly.
INVESTING THROUGH AN EMPLOYER-SPONSORED RETIREMENT PLAN
Your fund investments are handled through your plan. Refer to your plan
materials or contact your benefits office for information on buying, selling, or
exchanging fund shares.
INVESTING THROUGH AN IRA OR ROLLOVER IRA
Please contact a J.P. Morgan Retirement Services Specialist at 1-888-576-4472
for information on J.P. Morgan's comprehensive IRA services, including lower
minimum investments.
INVESTING DIRECTLY
Investors may establish accounts without the help of an intermediary by using
the instructions below and at right:
o Choose a fund (or funds) and determine the amount you are investing. The
minimum amount for initial investments is $5,000,000 for the Short Term
Bond, Bond, Tax Exempt Bond and New York Tax Exempt Bond funds and
$1,000,000 for the Global Strategic Income Fund and for additional
investments $25,000, although these minimums may be less for some
investors.
For more information on minimum investments, call 1-800-766-7722.
o Complete the application, indicating how much of your investment you want
to allocate to which fund(s). Please apply now for any account privileges
you may want to use in the future, in order to avoid the delays associated
with adding them later on.
o Mail in your application, making your initial investment as shown at
right.
For answers to any questions, please speak with a J.P. Morgan Funds Services
Representative at 1-800-766-7722.
OPENING YOUR ACCOUNT
By wire
o Mail your completed application to the Shareholder Services Agent.
o Call the Shareholder Services Agent to obtain an account number and to
place a purchase order. Funds that are wired without a purchase order will
be returned uninvested.
o After placing your purchase order, instruct your bank to wire the amount
of your investment to:
Morgan Guaranty Trust Company of New York-Delaware
Routing number: 031-100-238
Credit: J.P.M. Institutional Shareholder Services
Account number: 001-57-689
FFC: your account number, name of registered owner(s) and fund name
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with your completed application to the Shareholder Services
Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
ADDING TO YOUR ACCOUNT
By wire
o Call the Shareholder Services Agent to place a purchase order. Funds that
are wired without a purchase order will be returned uninvested.
o Once you have placed your purchase order, instruct your bank to wire the
amount of your investment as described above.
By check
o Make out a check for the investment amount payable to J.P. Morgan
Institutional Funds.
o Mail the check with a completed investment slip to the Shareholder
Services Agent. If you do not have an investment slip, attach a note
indicating your account number and how much you wish to invest in which
fund(s).
By exchange
o Call the Shareholder Services Agent to effect an exchange.
14 | YOUR INVESTMENT
- --------------------------------------------------------------------------------
SELLING SHARES
By phone -- wire payment
o Call the Shareholder Services Agent to verify that the wire redemption
privilege is in place on your account. If it is not, a representative can
help you add it.
o Place your wire request. If you are transferring money to a non-Morgan
account, you will need to provide the representative with the personal
identification number (PIN) that was provided to you when you opened your
fund account.
By phone -- check payment
o Call the Shareholder Services Agent and place your request. Once your
request has been verified, a check for the net amount, payable to the
registered owner(s), will be mailed to the address of record. For checks
payable to any other party or mailed to any other address, please make
your request in writing (see below).
In writing
o Write a letter of instruction that includes the following information: The
name of the registered owner(s) of the account; the account number; the
fund name; the amount you want to sell; and the recipient's name and
address or wire information, if different from those of the account
registration.
o Indicate whether you want the proceeds sent by check or by wire.
o Make sure the letter is signed by an authorized party. The Shareholder
Services Agent may require additional information, such as a signature
guarantee.
o Mail the letter to the Shareholder Services Agent.
By exchange
o Call the Shareholder Services Agent to effect an exchange.
Redemption In Kind
o Each fund reserves the right to make redemptions of over $250,000 in
securities rather than in cash.
ACCOUNT AND TRANSACTION POLICIES
Telephone orders The funds accept telephone orders from all shareholders. The
funds will tape record telephone orders or take other reasonable precautions.
However, if a fund does take such steps to ensure the authenticity of an order,
you may bear any loss if the order later proves fraudulent.
Exchanges You may exchange shares in these funds for shares in any other J.P.
Morgan Institutional or J.P. Morgan mutual fund at no charge (subject to the
securities laws of your state). When making exchanges, it is important to
observe any applicable minimums. Keep in mind that for tax purposes an exchange
is considered a sale.
A fund may alter, limit, or suspend its exchange policy at any time.
Business hours and NAV calculations The funds' regular business days and hours
are the same as those of the New York Stock Exchange (NYSE). Each fund
calculates its net asset value per share (NAV) every business day as of the
close of trading on the NYSE (normally 4:00 p.m. eastern time). Each fund's
securities are typically priced using pricing services or market quotes. When
these methods are not available or do not represent a security's value at the
time of pricing (e.g., when an event occurs after the close of trading on a
foreign exchange that would materially impact a security's value at the time
each fund calculates its NAV), the security is valued in accordance with the
fund's fair valuation procedures.
Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Orders are accepted until the
close of trading on the NYSE every business day and are executed the same day,
at that day's NAV. A fund has the right to suspend redemption of shares as
permitted by law and to postpone payment of proceeds for up to seven days.
- --------------------------------------------------------------------------------
Shareholder Services Agent
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713
1-800-766-7722
Representatives are available 8:00
a.m. to 6:00 p.m. eastern time on
fund business days.
YOUR INVESTMENT | 15
- --------------------------------------------------------------------------------
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, via fed wire, credited to a separate
account, or invested in another J.P. Morgan Institutional Fund.
TAX CONSIDERATIONS
In general, selling shares, exchanging shares, and receiving distributions
(whether reinvested or taken in cash) are all taxable events. These transactions
typically create the following tax liabilities 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 Generally 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 and New York Tax Exempt
Bond funds' returns may be subject to federal, state, or local tax, or the
alternative minimum tax. Every January, each fund issues tax information on its
distributions for the previous year. Any investor for whom a fund does not have
a valid taxpayer identification number will be subject to backup withholding for
taxes. The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult your tax professional about your fund
investment.
16 | YOUR INVESTMENT
FUND DETAILS
- --------------------------------------------------------------------------------
BUSINESS STRUCTURE
As noted earlier, each fund is a series of J.P. Morgan Institutional Funds, a
Massachusetts business trust, and is a "feeder" fund that invests in a master
portfolio. (Except where indicated, this prospectus uses the term "the fund" to
mean the feeder fund and its master portfolio taken together.)
Each master portfolio accepts investments from other feeder funds, and all the
feeders of a given master portfolio bear the portfolio's expenses in proportion
to their assets. However, each feeder can set its own transaction minimums,
fund-specific expenses and other conditions. This means that one feeder could
offer access to the same master portfolio on more attractive terms, or could
experience better performance, than another feeder. Information about other
feeders is available by calling 1-800-766-7722. Generally, when a master
portfolio seeks a vote, each of its feeder funds will hold a shareholder meeting
and cast its vote proportionately, as instructed by its shareholders. Fund
shareholders are entitled to one full or fractional vote for each dollar or
fraction of a dollar invested.
Each feeder fund and its master portfolio expect to maintain consistent goals,
but if they do not, the feeder fund will withdraw from the master portfolio,
receiving its assets either in cash or securities. Each feeder fund's trustees
would then consider whether it should hire its own investment adviser, invest in
a different master portfolio, or take other action.
MANAGEMENT AND ADMINISTRATION
The feeder funds described in this prospectus, their corresponding master
portfolios, and J.P. Morgan Series Trust are all governed by the same trustees.
The trustees are responsible for overseeing all business activities. The
trustees are assisted by Pierpont Group, Inc., which they own and operate on a
cost basis; costs are shared by all funds governed by these trustees. Funds
Distributor, Inc., as co-administrator, along with J.P. Morgan, provides fund
officers. J.P. Morgan, as co-administrator, oversees each fund's other service
providers.
J.P. Morgan, subject to the expense reimbursements described earlier in this
prospectus, receives the following fees for investment advisory and other
services:
Advisory services Percentage of the master
portfolio's average net assets
Short Term Bond 0.25%
Bond 0.30%
Global Strategic Income 0.45%
Tax Exempt Bond 0.30%
New York Tax Exempt Bond 0.30%
Administrative services Master portfolio's and fund's
(fee shared with Funds pro-rata portions of 0.09% of the
Distributor, Inc.) first $7 billion in J.P. Morgan
advised portfolios, plus 0.04% of
average net assets over $7 billion
Shareholder services 0.10% of each fund's average net
assets
J.P. Morgan may pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in a fund.
FUND DETAILS | 17
- --------------------------------------------------------------------------------
RISK AND REWARD ELEMENTS
This table discusses the main elements that make up each fund's overall risk and
reward characteristics. It also outlines each fund's policies toward various
investments, including those that are designed to help certain funds manage
risk.
- ------------------------------------------------------------------------------------------------------------------------------------
Potential risks Potential rewards Policies to balance risk and reward
- ------------------------------------------------------------------------------------------------------------------------------------
Market conditions
o Each fund's share price, o Bonds have generally o Under normal circumstances the funds plan to
yield, and total return will outperformed money market remain fully invested in bonds and other fixed
fluctuate in response to investments over the long income securities as noted in the table on pages
bond market movements term, with less risk than 20-21
stocks
o The value of most bonds will o The funds seek to limit risk and enhance total
fall when interest rates o Most bonds will rise in return or yields through careful management,
rise; the longer a bond's value when interest rates sector allocation, individual securities
maturity and the lower its fall selection, and duration management
credit quality, the more its
value typically falls o Mortgage-backed and o During severe market downturns, the funds have
asset-backed securities can the option of investing up to 100% of assets in
o Adverse market conditions offer attractive returns investment-grade short-term securities
may from time to time cause
a fund to take temporary o J.P. Morgan monitors interest rate trends, as
defensive positions that are well as geographic and demographic information
inconsistent with its related to mortgage-backed securities and
principal investment mortgage prepayments
strategies and may hinder a
fund from achieving its
investment objective
o Mortgage-backed and
asset-backed securities
(securities representing an
interest in, or secured by,
a pool of mortgages or other
assets such as receivables)
could generate capital
losses or periods of low
yields if they are paid off
substantially earlier or
later than anticipated
Credit quality
o The default of an issuer o Investment-grade bonds have o Each fund maintains its own policies for
would leave a fund with a lower risk of default balancing credit quality against potential
unpaid interest or principal yields and gains in light of its investment
o Junk bonds offer higher goals
o Junk bonds (those rated yields and higher potential
BB/Ba or lower) have a gains o J.P. Morgan develops its own ratings of unrated
higher risk of default, tend securities and makes a credit quality
to be less liquid, and may determination for unrated securities
be more difficult to value
Foreign investments
o A fund could lose money o Foreign bonds, which o Foreign bonds are a primary investment only for
because of foreign represent a major portion of the Global Strategic Income fund and may be a
government actions, the world's fixed income significant investment for the Short Term Bond
political instability, or securities, offer attractive and Bond funds; the Tax Exempt Bond and New York
lack of adequate and potential performance and Tax Exempt Bond funds are not permitted to
accurate information opportunities for invest any assets in foreign bonds
diversification
o Currency exchange rate o To the extent that a fund invests in foreign
movements could reduce gains o Favorable exchange rate bonds, it may manage the currency exposure of
or create losses movements could generate its foreign investments relative to its
gains or reduce losses benchmark, and may hedge a portion of its
o Currency and investment risks tend foreign currency exposure into the U.S. dollar
to be higher in emerging markets o Emerging markets can offer from time to time (see also "Derivatives");
higher returns these currency management techniques may not be
available for certain emerging markets
When-issued and delayed investments
delivery securities
o When a fund buys securities o A fund can take advantage of o Each fund uses segregated accounts to offset
before issue or for delayed attractive transaction leverage risk
delivery, it could be opportunities
exposed to leverage risk if
it does not use segregated
accounts
18 | FUND DETAILS
- ----------------------------------------------------------------------------------------------------------------------------------
Potential risks Potential rewards Policies to balance risk and reward
- ----------------------------------------------------------------------------------------------------------------------------------
Management choices
o A fund could underperform o A fund could outperform its o J.P. Morgan focuses its active management on
its benchmark due to its benchmark due to these same those areas where it believes its commitment to
sector, securities or choices research can most enhance returns and manage
duration choices risks in a consistent way
Derivatives o The funds use derivatives, such as futures,
options, swaps and forward foreign currency
o Derivatives such as futures, o Hedges that correlate well contracts for hedging and for risk management
options, swaps and forward with underlying positions (i.e., to adjust duration or yield curve
foreign currency contracts can reduce or eliminate exposure, or to establish or adjust exposure to
that are used for hedging losses at low cost particular securities, markets, or currencies);
the portfolio or specific risk management may include management of a
securities may not fully o A fund could make money and fund's exposure relative to its benchmark; the
offset the underlying protect against losses if Tax Exempt Bond and New York Tax Exempt Bond
positions1 and this could management's analysis proves funds are permitted to enter into futures,
result in losses to the fund correct options, and swap transactions, however, these
that would not have transactions result in taxable gains or losses
otherwise occurred o Derivatives that involve so it is expected that these funds will utilize
leverage could generate them infrequently; forward foreign currency
o Derivatives used for risk substantial gains at low contracts are not permitted to be used by the
management may not have the cost Tax Exempt Bond and New York Tax Exempt Bond
intended effects and may funds
result in losses or missed
opportunities o The funds only establish hedges that they expect
will be highly correlated with underlying
o The counterparty to a positions
derivatives contract could
default o While the funds may use derivatives that
incidentally involve leverage, they do not use
o Certain types of derivatives them for the specific purpose of leveraging
involve costs to the funds their portfolios
which can reduce returns
o Derivatives that involve
leverage could magnify
losses
Securities lending
o When a fund lends a o A fund may enhance income o J.P. Morgan maintains a list of approved
security, there is a risk through the investment of borrowers
that the loaned securities the collateral received from
may not be returned if the the borrower o The fund receives collateral equal to at least
borrower defaults 100% of the current value of securities loaned
o The collateral will be o The lending agents indemnify a fund against
subject to the risks of the borrower default
securities in which it is
invested o J.P. Morgan's collateral investment guidelines
limit the quality and duration of collateral
investment to minimize losses
o Upon recall, the borrower must return the
securities loaned within the normal settlement
period
Illiquid holdings
o A fund could have difficulty o These holdings may offer o No fund may invest more than 15% of net assets
valuing these holdings more attractive yields or in illiquid holdings
precisely potential growth than
comparable widely traded o To maintain adequate liquidity to meet
o A fund could be unable to securities redemptions, each fund may hold investment-grade
sell these holdings at the short-term securities (including repurchase
time or price desired agreements and reverse repurchase agreements)
and, for temporary or extraordinary purposes,
may borrow from banks up to 33 1/3% of the value
of its total assets
Short-term trading
o Increased trading would o A fund could realize gains o The funds may use short-term trading to take
raise a fund's transaction in a short period of time advantage of attractive or unexpected
costs opportunities or to meet demands generated by
o A fund could protect against shareholder activity. The turnover rates for
o Increased short-term capital losses if a bond is each portfolio for its most recent fiscal year
gains distributions would overvalued and its value were: Short Term Bond (271%), Bond (531%),
raise shareholders' income later falls Global Strategic Income (266%), Tax Exempt Bond
tax liability (84%), and New York Tax Exempt Bond (86%)
(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
predetermined price. A swap is a privately negotiated agreement to
exchange one stream of payments for another. A forward foreign currency
contract is an obligation to buy or sell a given currency on a future date
and at a set price.
FUND DETAILS | 19
- --------------------------------------------------------------------------------
Investments
- --------------------------------------------------------------------------------
This table discusses the customary types of investments which can be held by
each fund. In each case the related types of risk are listed on the following
page (see below for definitions).This table reads across two pages.
- --------------------------------------------------------------------------------
Asset-backed securities Interests in a stream of payments from specific assets,
such as auto or credit card receivables.
- --------------------------------------------------------------------------------
Bank obligations Negotiable certificates of deposit, time deposits and bankers'
acceptances of domestic and foreign issuers.
- --------------------------------------------------------------------------------
Commercial paper Unsecured short term debt issued by domestic and foreign banks
or corporations. These securities are usually discounted and are rated by S&P or
Moody's.
- --------------------------------------------------------------------------------
Convertible securities Domestic and foreign debt securities that can be
converted into equity securities at a future time and price.
- --------------------------------------------------------------------------------
Corporate bonds Debt securities of domestic and foreign industrial, utility,
banking, and other financial institutions.
- --------------------------------------------------------------------------------
Mortgages (directly held) Domestic debt instrument which gives the lender a lien
on property as security for the loan payment.
- --------------------------------------------------------------------------------
Mortgage-backed securities Domestic and foreign securities (such as Ginnie Maes,
Freddie Macs, Fannie Maes) which represent interests in pools of mortgages,
whereby the principal and interest paid every month is passed through to the
holder of the securities.
- --------------------------------------------------------------------------------
Mortgage dollar rolls The purchase of domestic or foreign mortgage-backed
securities with the promise to purchase similar securities upon the maturity of
the original security. Segregated accounts are used to offset leverage risk.
- --------------------------------------------------------------------------------
Participation interests Interests that represent a share of domestic or foreign
bank debt or similar securities or obligations.
- --------------------------------------------------------------------------------
Private placements Bonds or other investments that are sold directly to an
institutional investor.
- --------------------------------------------------------------------------------
REITs and other real-estate related instruments Securities of issuers that
invest in real estate or are secured by real estate.
- --------------------------------------------------------------------------------
Repurchase agreements Contracts whereby the fund agrees to purchase a security
and resell it to the seller on a particular date and at a specific price.
- --------------------------------------------------------------------------------
Reverse repurchase agreements Contracts whereby the fund sells a security and
agrees to repurchase it from the buyer on a particular date and at a specific
price. Considered a form of borrowing.
- --------------------------------------------------------------------------------
Sovereign debt, Brady bonds, and debt of supranational organizations Dollar- or
non-dollar-denominated securities issued by foreign governments or supranational
organizations. Brady bonds are issued in connection with debt restructurings.
- --------------------------------------------------------------------------------
Swaps Contractual agreement whereby a domestic or foreign party agrees to
exchange periodic payments with a counterparty. Segregated accounts are used to
offset leverage risk.
- --------------------------------------------------------------------------------
Synthetic variable rate instruments Debt instruments whereby the issuer agrees
to exchange one security for another in order to change the maturity or quality
of a security in the fund.
- --------------------------------------------------------------------------------
Tax exempt municipal securities Securities, generally issued as general
obligation and revenue bonds, whose interest is exempt from federal taxation and
state and/or local taxes in the state where the securities were issued.
- --------------------------------------------------------------------------------
U.S. government securities Debt instruments (Treasury bills, notes, and bonds)
guaranteed by the U.S. government for the timely payment of principal and
interest.
- --------------------------------------------------------------------------------
Zero coupon, pay-in-kind, and deferred payment securities Domestic and foreign
securities offering non-cash or delayed-cash payment. Their prices are typically
more volatile than those of some other debt instruments and involve certain
special tax considerations.
- --------------------------------------------------------------------------------
Risk related to certain investments held by J.P. Morgan Institutional fixed
income funds:
Credit risk The risk a financial obligation will not be met by the issuer of a
security or the counterparty to a contract, resulting in a loss to the
purchaser.
Currency risk The risk currency exchange rate fluctuations may reduce gains or
increase losses on foreign investments.
Environmental risk The risk that an owner or operator of real estate may be
liable for the costs associated with hazardous or toxic substances located on
the property.
Extension risk The risk a rise in interest rates will extend the life of a
mortgage-backed security to a date later than the anticipated prepayment date,
causing the value of the investment to fall.
Interest rate risk The risk a change in interest rates will adversely affect the
value of an investment. The value of fixed income securities generally moves in
the opposite direction of interest rates (decreases when interest rates rise and
increases when interest rates fall).
Leverage risk The risk of gains or losses disproportionately higher than the
amount invested.
20 | FUND DETAILS
o Permitted (and if applicable, percentage limitation)
percentage of total assets - bold
percentage of net assets - italic
* Permitted, but not typically used
+ Permitted, but no current intention of use
- -- Not permitted
Short Global Tax New York
Term Strategic Exempt Exempt
Related Types of Risk Bond Bond Income Bond Bond
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, prepayment o o o * *
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Domestic
Only Only
credit, currency, liquidity, political o(1) o(1) o * *
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political o(1) o(1) * o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation o(1) o(1) * -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation o(1) o(1) o -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, environmental, extension, interest rate, liquidity, market, o o o + +
natural event, political, prepayment, valuation
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, leverage, market, political, o(1) o(1) o -- --
prepayment
- ------------------------------------------------------------------------------------------------------------------------------------
currency, extension, interest rate, leverage, liquidity, market, political, o(1),(3) o(1),(3) o(3) -- --
prepayment
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, extension, interest rate, liquidity, political, prepayment o(1) o(1) o -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, valuation o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, liquidity, market, natural event, prepayment, valuation o o o o -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit o o o * *
- ------------------------------------------------------------------------------------------------------------------------------------
credit o(3) o(3) o(3) *(3) *(3)
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, market, political o(1) o(1) o -- --
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, leverage, market, political o(1) o(1) o o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, leverage, liquidity, market -- -- -- o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, interest rate, market, natural event, political * * -- o(2) o(2)
- ------------------------------------------------------------------------------------------------------------------------------------
interest rate o o o o o
- ------------------------------------------------------------------------------------------------------------------------------------
credit, currency, interest rate, liquidity, market, political, valuation o(1) o(1) o o o
- ------------------------------------------------------------------------------------------------------------------------------------
Liquidity risk The risk the holder may not be able to sell the security at the
time or price it desires.
Market risk The risk that when the market as a whole declines, the value of a
specific investment will decline proportionately. This systematic risk is common
to all investments and the mutual funds that purchase them.
Natural event risk The risk a natural disaster, such as a hurricane or similar
event, will cause severe economic losses and default in payments by the issuer
of the security.
Political risk The risk governmental policies or other political actions will
negatively impact the value of the investment.
Prepayment risk The risk declining interest rates will result in unexpected
prepayments, causing the value of the investment to fall.
Valuation risk The risk the estimated value of a security does not match the
actual amount that can be realized if the security is sold.
(1) For each of the Short Term Bond and Bond funds, all foreign securities in
the aggregate may not exceed 25% of such fund's assets.
(2) At least 65% of the New York Tax Exempt Bond Fund's assets must be in New
York municipal securities, and at least 80% of the New York Tax Exempt and
Tax Exempt Bond Funds' assets must be in tax exempt securities.
(3) All forms of borrowing (including securities lending, mortgage dollar
rolls and reverse repurchase agreements) in the aggregate may not exceed
33 1/3% of the fund's total assets.
FUND DETAILS | 21
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each fund's
financial performance for the past five fiscal years or periods, as applicable,
or the life of the fund if shorter. 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 fund's annual report, which are
available upon request.
================================================================================
J.P. MORGAN INSTITUTIONAL SHORT TERM BOND FUND
- ----------------------------
Per-share data For fiscal years ended
- ----------------------------------------------------------------------------------------------------------------------------
10/31/96 10/31/97 10/31/98 10/31/99 10/31/00
Net asset value, beginning of year ($) 9.83 9.85 9.84 9.96 9.67
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.55 0.61 0.59 0.58 0.60
Net realized and unrealized gain (loss)
on investment ($) 0.02 (0.01) 0.12 (0.29) (0.08)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.57 0.60 0.71 0.29 0.52
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.55) (0.61) (0.59) (0.54) (0.61)
Net realized gain ($) -- -- -- (0.04) --
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.55) (0.61) (0.59) (0.58) (0.61)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 9.85 9.84 9.96 9.67 9.58
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Total return (%) 6.01 6.27 7.40 3.03 5.49
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 17,810 27,375 232,986 354,267 415,417
- ----------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.37 0.25 0.25 0.29 0.30
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 5.69 6.19 5.84 5.51 6.30
- ----------------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 1.37 0.96 0.62 0.51 0.47
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)(1) 191 219 381 398 271
- ----------------------------------------------------------------------------------------------------------------------------
(1) Represents the turnover of The Short Term Bond Portfolio.
22 | FUND DETAILS
- --------------------------------------------------------------------------------
================================================================================
J.P. MORGAN INSTITUTIONAL BOND FUND
- ----------------------------
Per-share data For fiscal years ended
- ------------------------------------------------------------------------------------------------------------------------------------
10/31/96 10/31/97 10/31/98 10/31/99 10/31/00
Net asset value, beginning of year ($) 9.98 9.84 10.01 10.10 9.41
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.61 0.65 0.64 0.57 0.60
Net realized and unrealized gain (loss)
on investment ($) (0.11) 0.18 0.15 (0.57) 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.50 0.83 0.79 -- 0.62
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.61) (0.64) (0.63) (0.57) (0.60)
In excess of net investment income -- -- -- -- (0.00)(1)
Net realized gain ($) (0.03) (0.02) (0.07) (0.12) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.64) (0.66) (0.70) (0.69) (0.60)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 9.84 10.01 10.10 9.41 9.43
- ----------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 5.21 8.78 8.18 0.03 6.83
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 836,066 912,054 1,001,411 1,041,330 907,411
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.50 0.50 0.49 0.50 0.49
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 6.28 6.59 6.32 5.92 6.37
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 0.53 0.50 0.50 0.51 0.49
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)(2) 186 93 115 465 531
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Less than $0.005.
(2) Represents the turnover of The U.S. Fixed Income Portfolio.
================================================================================
J.P. MORGAN INSTITUTIONAL GLOBAL STRATEGIC INCOME FUND
- ----------------------------
Per-share data For fiscal periods ended
- -----------------------------------------------------------------------------------------------------------------------
10/31/97(1) 10/31/98 10/31/99 10/31/00
Net asset value, beginning of year ($) 10.00 10.16 9.72 9.35
- -----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.46 0.75 0.62 0.88
Net realized and unrealized gain (loss)
on investment ($) 0.15 (0.45) (0.37) (0.25)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.61 0.30 0.25 0.63
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.45) (0.70) (0.62) (0.69)
Net realized gain ($) -- (0.02) -- --
Return of capital -- (0.02) -- --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.45) (0.74) (0.62) (0.69)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year ($) 10.16 9.72 9.35 9.29
- -----------------------------------------------------------------------------------------------------------------------
- ----------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------
Total return (%) 6.15(2) 2.91 2.62 6.93
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of year ($ thousands) 105,051 223,700 183,085 163,454
- -----------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.65(3) 0.65 0.65 0.65
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (%) 7.12(3) 6.59 6.70 7.36
- -----------------------------------------------------------------------------------------------------------------------
Expenses without
reimbursement (%) 1.18(3) 0.83 0.78 0.80
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)(4) 212 368 318 266
- -----------------------------------------------------------------------------------------------------------------------
(1) The fund commenced operations on 3/17/97.
(2) Not annualized.
(3) Annualized.
(4) Represents the turnover of The Global Strategic Income Portfolio.
FUND DETAILS | 23
- --------------------------------------------------------------------------------
================================================================================
J.P. MORGAN INSTITUTIONAL TAX EXEMPT BOND FUND
For the 11
- ---------------------------- months
Per-share data For fiscal periods ended ended
- --------------------------------------------------------------------------------------------------------------------------------
8/31/95 8/31/96 8/31/97 8/31/98 7/31/99(1) 7/31/00
Net asset value, beginning of period ($) 9.75 10.01 9.92 10.12 10.38 10.07
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.49 0.48 0.48 0.47 0.41 0.46
Net realized and unrealized gain (loss)
on investment ($) 0.26 (0.07) 0.20 0.26 (0.30) (0.08)
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.75 0.41 0.68 0.73 0.11 0.38
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.49) (0.48) (0.48) (0.47) (0.41) (0.46)
Net realized gain ($) -- (0.02) (0.00)(2) -- (0.01) (0.01)
In excess of net investment income -- -- -- -- -- (0.00)(2)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.49) (0.50) (0.48) (0.47) (0.42) (0.47)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.01 9.92 10.12 10.38 10.07 9.98
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return (%) 8.00 4.13 7.06 7.37 1.01(3) 3.90
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 59,867 121,131 201,614 316,594 388,933 447,858
- --------------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.50 0.50 0.50 0.50 0.50(4) 0.50
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 5.09 4.82 4.83 4.58 4.37(4) 4.67
- --------------------------------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 0.71 0.60 0.56 0.53 0.53(4) 0.51
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)(5) 47 25 25 16 29(3) 84
- --------------------------------------------------------------------------------------------------------------------------------
(1) In 1999, the fund changed the fiscal year end from 8/31 to 7/31.
(2) Less than $0.01 per share.
(3) Not annualized.
(4) Annualized.
(5) Represents the turnover of the Tax Exempt Bond Portfolio.
================================================================================
J.P. MORGAN INSTITUTIONAL NEW YORK TAX EXEMPT BOND FUND
For the four
- ---------------------------- months
Per-share data For fiscal periods ended ended
- --------------------------------------------------------------------------------------------------------------------------
3/31/96 3/31/97 3/31/98 3/31/99 7/31/99(1) 7/31/00
Net asset value, beginning of period ($) 10.11 10.34 10.31 10.67 10.72 10.42
- --------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income ($) 0.49 0.48 0.48 0.45 0.14 0.45
Net realized and unrealized gain (loss)
on investment ($) 0.25 (0.02) 0.40 0.13 (0.28) (0.02)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations ($) 0.74 0.46 0.88 0.58 (0.14) 0.43
- --------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($) (0.49) (0.48) (0.48) (0.45) (0.14) (0.45)
Net realized gain ($) (0.02) (0.01) (0.04) (0.08) (0.02) --
In excess of net investment income -- -- -- -- -- (0.00)(4)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.51) (0.49) (0.52) (0.53) (0.16) (0.45)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period ($) 10.34 10.31 10.67 10.72 10.42 10.40
- --------------------------------------------------------------------------------------------------------------------------
- ----------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return (%) 7.40 4.54 8.64 5.51 (1.25)(2) 4.32
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period ($ thousands) 47,926 90,792 111,418 204,986 161,373 173,315
- --------------------------------------------------------------------------------------------------------------------------
Ratio to average net assets:
Net expenses (%) 0.50 0.50 0.50 0.50 0.50(3) 0.50
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (%) 4.67 4.70 4.54 4.15 4.01(3) 4.39
- --------------------------------------------------------------------------------------------------------------------------
Expenses without reimbursement (%) 0.67 0.64 0.59 0.57 0.59(3) 0.56
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%)(5) 41 35 51 44 8(2) 86
- --------------------------------------------------------------------------------------------------------------------------
(1) In 1999, the fund changed the fiscal year end from 3/31 to 7/31.
(2) Not annualized.
(3) Annualized.
(4) Less than $0.01 per share.
(5) Represents the turnover of the New York Tax Exempt Bond Portfolio
24 | FUND DETAILS
(THIS PAGE IS INTENTIONALLY LEFT BLANK)
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
For investors who want more information on these funds, the following documents
are available free upon request:
Annual/Semi-annual Reports Contain financial statements, performance data,
information on portfolio holdings, and a written analysis of market conditions
and fund performance for a fund's most recently completed fiscal year or
half-year.
Statement of Additional Information (SAI) Provides a fuller technical and legal
description of a fund's policies, investment restrictions, and business
structure. This prospectus incorporates each fund's SAI by reference.
Copies of the current versions of these documents, along with other information
about the fund, may be obtained by contacting:
J.P. Morgan Institutional Funds
Morgan Christiana Center
J.P. Morgan Funds Services - 2/OPS3
500 Stanton Christiana Road
Newark, DE 19713
Telephone: 1-800-766-7722
Hearing impaired: 1-888-468-4015
Email: JPM_Mutual_Funds@JPMorgan.com
Text-only versions of these documents and this prospectus are available, upon
payment of a duplicating fee, from the Public Reference Room of the Securities
and Exchange Commission in Washington, D.C. (1-202-942-8090)
(publicinfo@sec.gov), or by writing the Public Reference Section of the SEC,
Washington, DC 20549-0102 and may be viewed on-screen or downloaded from the
SEC's Internet site at http://www.sec.gov. The funds' investment company and
1933 Act registration numbers are:
J.P. Morgan Institutional Short Term Bond Fund .............811-07342 and 033-54642
J.P. Morgan Institutional Bond Fund ........................811-07342 and 033-54642
J.P. Morgan Institutional Global Strategic Income Fund .....811-07342 and 033-54642
J.P. Morgan Institutional Tax Exempt Bond Fund .............811-07342 and 033-54642
J.P. Morgan Institutional New York Tax Exempt Bond Fund ....811-07342 and 033-54642
J.P. MORGAN INSTITUTIONAL FUNDS AND THE MORGAN TRADITION
The J.P. Morgan Institutional Funds combine a heritage of integrity and
financial leadership with comprehensive, sophisticated analysis and management
techniques. Drawing on J.P. Morgan's extensive experience and depth as an
investment manager, the J.P. Morgan Institutional Funds offer a broad array of
distinctive opportunities for mutual fund investors.
JPMorgan
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J.P. Morgan Funds
Advisor Distributor
J.P. Morgan Investment Management Inc. Funds Distributor, Inc.
522 Fifth Avenue 60 State Street
New York, NY 10036 Boston, MA 02109
1-800-766-7722 1-800-221-7930