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MARCH 1, 2001 | PROSPECTUS
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J.P. MORGAN PRIME CASH MANAGEMENT FUND
--------------------------------------
Seeking to provide high current income
consistent with the preservation of
capital and same-day liquidity
This prospectus contains essential information for anyone investing in the fund.
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. JP Morgan
CONTENTS
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2 | J.P. MORGAN PRIME CASH MANAGEMENT FUND
The fund's goal, principal strategies,
principal risks, performance and expenses
Fund description ............................................2
Investor expenses ...........................................3
4 | MONEY MARKET MANAGEMENT APPROACH
J.P. Morgan .................................................4
J.P. Morgan Prime Cash Management Fund ......................4
Who may want to invest ......................................4
Money market investment process .............................5
6 | YOUR INVESTMENT
Investing in the J.P. Morgan Prime
Cash Management Fund
Investing through a service organization ....................6
Account and transaction policies ............................6
Dividends and distributions .................................6
Tax considerations ..........................................7
8 | FUND DETAILS
More about the fund's
business operations
Master/feeder structure .....................................8
Management and administration ...............................8
Financial highlights ........................................9
For more information .............................. back cover
1
J.P. MORGAN PRIME CASH MANAGEMENT FUND
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REGISTRANT: J.P. MORGAN
INSTITUTIONAL FUNDS
(J.P. MORGAN PRIME CASH MANAGEMENT FUND)
[GRAPHIC] GOAL
The fund's goal is to maximize current income consistent with the
preservation of capital and same-day liquidity. This goal can be changed without
shareholder approval.
[GRAPHIC] INVESTMENT APPROACH
Principal Strategies
The fund looks for investments across a broad spectrum of U.S.
dollar-denominated money market securities, typically emphasizing different
types of securities at different times in order to take advantage of changing
yield differentials. The fund's investments may include obligations issued by
the U.S. Treasury, government agencies, domestic and foreign banks and
corporations, foreign governments, repurchase agreements, reverse repurchase
agreements, as well as asset-backed securities, taxable municipal obligations,
and other money market instruments. Some of these investments may be illiquid or
purchased on a when-issued or delayed delivery basis.
The fund's yield will vary in response to changes in interest rates. How well
the fund's yield compares to the yields of similar money market funds will
depend on the success of the investment process described on page 5.
Principal Risks
As with all money market funds, the fund's investments are subject to various
risks, which, while generally considered to be minimal, could cause its share
price to fall below $1. For example, the issuer or guarantor of a portfolio
security or the counterparty to a contract could default on its obligation. An
unexpected rise in interest rates could also lead to a loss in share price if
the fund is near the maximum allowable dollar weighted average maturity
(currently not to exceed 90 days) at the time. To the extent that the fund
invests in foreign securities, the fund could lose money because of foreign
government actions, political instability, or lack of adequate and accurate
information. Also, the fund may have difficulty valuing its illiquid holdings
and may be unable to sell them at the time or price it desires. While these
possibilities exist, the fund's investment process and management policies are
designed to minimize the likelihood and impact of these risks.
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. Although the fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in the fund.
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 advisor uses a team of portfolio managers and traders to manage the fund.
The portfolio management team is led by 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 Mark
Settles, vice president, who has been on the team since November 1999 and has
been at J.P. Morgan since 1994. Prior to managing this fund, Mr. Settles was a
fixed income trader on J.P. Morgan's New York and London trading desks. The
traders on the team are Donald Clemmenson, vice president, who has been on the
team since its inception; Gunter Heiland, vice president, who has been on the
team since joining J.P. Morgan in June of 1997 from Salomon Brothers, where he
was a sales assistant; and Kimberly Weil, associate, who has been on the team
since its inception.
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Before you invest
Investors considering this fund should understand that:
o The fund seeks to achieve its goal by investing its assets in a master
portfolio with the same investment objective as the fund
o There is no assurance that this fund will meet its investment goals
o This fund does not represent a complete investment program
2 | J.P. MORGAN PRIME CASH MANAGEMENT FUND
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PERFORMANCE (unaudited)(1)
The fund commenced operations on 8/21/00. The bar chart and table shown below
provide some indication, however, of the risks of investing in the fund by
showing performance of the J.P. Morgan Prime Money Market Fund, a related fund
investing in the same master portfolio prior to the fund's commencement.
The bar chart indicates some of the risks by showing changes in the performance
of the J.P. Morgan Prime Money Market Fund's shares from year to year for each
of the last ten calendar years.
The table indicates some of the risks by showing the J.P. Morgan Prime Money
Market Fund's average annual returns for the past one year, five years and ten
years.
The J.P. Morgan Prime Money Market 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
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
6.07 3.67 2.83 3.95 5.79 5.21 5.41 5.35 4.93 6.18
o J.P. Morgan Prime Money Market Fund(1)
For the period covered by this year-by-year total return chart, the J.P. Morgan
Prime Money Market Fund's highest quarterly return was 1.72% (for the quarter
ended 3/31/91); and the lowest quarterly return was 0.69% (for the quarter ended
6/30/93).
PERFORMANCE (unaudited)
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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 Prime Money Market Fund
(after expenses) 6.18 5.41 4.93
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INVESTOR EXPENSES
The expenses of the fund before and after reimbursement are shown at right. The
fund has no 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 0.11
Distribution (Rule 12b-1) fees(4) 0.50
Service fees(5) 0.25
Other expenses 0.22
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Total operating expenses 1.08
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Fee waiver and
expense reimbursement(4) 0.10
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Net expenses(6) 0.98
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Expense example(6)
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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:
$10,000 initial investment, 5% return each year, net expenses for the period
5/17/00 through 2/28/02 and total operating expenses thereafter, and all shares
sold at the end of each time period. The example is for comparison only; the
fund's actual return and your actual costs may be higher or lower.
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1 yr. 3 yrs.
Your cost($) 100 334
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(1) The fund commenced operations on 8/21/00. Returns reflect performance of
the J.P. Morgan Prime Money Market Fund, a separate feeder fund investing
in the same master portfolio. The J.P. Morgan Prime Money Market Fund
commenced operations on 7/12/93 and returns for periods prior to 7/31/93
reflect performance of The Pierpont Money Market Fund, the predecessor of
the J.P. Morgan Prime Money Market Fund. The net expenses of the J.P.
Morgan Prime Money Market Fund as of 11/30/00 were 0.20%. These returns
reflect lower operating expenses than those of the fund. The actual
expense of the J.P. Morgan Prime Money Market Fund as of the year end
11/30/00 are 0.44%. Therefore, the fund's returns would have been lower
had it existed during the same period.
(2) The fund's fiscal year end is 11/30.
(3) The fund has a master/feeder structure as described on page 8. This table
shows the fund's estimated expenses and its estimated share of master
portfolio expenses for the current year expressed as a percentage of the
fund's estimated average net assets.
(4) The plan under Rule 12b-1 (described on page 8) allows such fees to be
paid out of the fund's assets on an ongoing basis. Over time, these fees
will increase the cost of your investment and may cost you more than
paying other types of sales charges.
(5) Service organizations (described on page 6) may charge other fees to their
customers who are the beneficial owners of shares in connection with their
customers' accounts. Such fees, if any, may affect the return such
customers realize with respect to their investments.
(6) Reflects an agreement 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 0.98% of the fund's average daily net assets through 2/28/02.
J.P. MORGAN PRIME CASH MANAGEMENT FUND | 3
MONEY MARKET MANAGEMENT APPROACH
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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 fund's advisor, J.P. Morgan Investment Management.
J.P. MORGAN PRIME CASH MANAGEMENT FUND
The fund invests in high-quality short-term debt securities by investing through
a master portfolio (another fund with the same goal). The fund accrues dividends
daily, pays them to shareholders monthly, and seeks to maintain a stable $1
share price.
- -------------------
Primary investments
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Prime Cash
Management
Fund
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U.S. Treasuries* o
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U.S. government
agency
instruments o
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Domestic &
foreign bank
obligations o
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Domestic &
foreign
short-term
corporate
obligations o
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Foreign
governments o
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Illiquid holdings o
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Repurchase
agreements and
reverse repurchase
agreements o
* Income is generally exempt from state and local income taxes
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WHO MAY WANT TO INVEST
The fund is designed for investors who:
o want an investment that strives to preserve capital
o want regular income from a high quality
o want a highly liquid investment
o are looking for an interim investment
o are pursuing a short-term goal
The fund is not designed for investors who:
o are investing for long-term growth
o are investing for high income
o require the added security of the FDIC insurance
MONEY MARKET FUNDS AND STABILITY
Money market funds are subject to a range of federal regulations designed to
promote stability. For example, money market funds must maintain a weighted
average maturity of no more than 90 days, and generally may not invest in any
securities with a remaining maturity of more than 13 months. Keeping the
weighted average maturity this short helps funds in their pursuit of a stable $1
share price.
4 | MONEY MARKET MANAGEMENT APPROACH
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MONEY MARKET INVESTMENT PROCESS
The fund's philosophy, developed by the fund's advisor, emphasizes investment
quality through in-depth research of short-term securities and their issuers.
This allows the fund to focus on providing current income without compromising
share price stability.
In researching short-term securities, J.P. Morgan's credit analysts enhance the
data furnished by rating agencies by drawing on the insights of J.P. Morgan's
fixed income trading specialists and equity analysts. Only securities highly
rated by independent rating agencies as well as J.P. Morgan's proprietary
ratings system are considered for investment.
In managing the fund, J.P. Morgan employs a three-step process that combines
maturity determination, sector allocation and fundamental research for
identifying portfolio securities:
[GRAPHIC] J.P. Morgan uses a disciplined process to
control the fund's sensitivity
to interest rates
Maturity determination Based on analysis of a range of factors, including
current yields, economic forecasts, and anticipated fiscal and monetary
policies, J.P. Morgan establishes the desired dollar weighted average maturity
for the fund within the permissible 90-day range. Controlling weighted average
maturity allows the fund to manage risk, since securities with shorter
maturities are typically less sensitive to interest rate shifts than those with
longer maturities.
[GRAPHIC] The fund invests across different
sectors for diversification and to
take advantage of yield spreads
Sector allocation Analysis of the yields available in different sectors of the
short-term debt market allows J.P. Morgan to adjust the fund's sector
allocation, with the goal of enhancing current income while also maintaining
diversification across permissible sectors.
[GRAPHIC] The fund selects its securities as
described earlier in this prospectus
Security selection Based on the results of the firm's credit research and the
fund's maturity determination and sector allocation, the portfolio managers and
dedicated fixed-income traders make buy and sell decisions according to the
fund's goal and strategy.
MONEY MARKET MANAGEMENT APPROACH | 5
YOUR INVESTMENT
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INVESTING THROUGH A SERVICE ORGANIZATION
Prospective investors may only purchase shares of the fund with the assistance
of a service organization. Your service organization is paid by the fund to
assist you in establishing your fund account, executing transactions, and
monitoring your investment. The minimum amount for initial investments in the
fund by a service organization is $10,000,000 and for additional investments
$25,000, although these minimums may be less for some investors. Service
organizations may provide the following services in connection with their
customers' investments in the fund:
o Acting, directly or through an agent, as the sole shareholder of record
o Maintaining account records for customers
o Processing orders to purchase, redeem or exchange shares for customers
o Responding to inquiries from shareholders
o Assisting customers with investment procedures
ACCOUNT AND TRANSACTION POLICIES
Business days and NAV calculations The fund's regular business days are the same
as those of the New York Stock Exchange. The fund calculates its NAV every
business day at 5:00 p.m. eastern time.
Timing of orders Orders to buy or sell shares are executed at the next NAV
calculated after the order has been accepted. Purchase and redemption orders for
the fund must be received by 5:00 p.m.
For the purchase to be effective and dividends to be earned on the same day,
immediately available funds must be received by the fund by its close of
business on that day. Service organizations will be responsible for transmitting
accepted orders and payments to the fund by 5:00 p.m. The fund has the right to
suspend redemption of shares as permitted by law and to postpone payment of
proceeds for up to seven days.
Timing of settlements When you buy shares, you will become the owner of record
when the fund receives your payment.
Redemption orders for the fund received by 5:00 p.m. will be paid in immediately
available funds, normally on the same day, according to instructions on file.
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.
Redemption in kind The fund reserves the right to make redemptions of over
$250,000 in securities rather than in cash.
Statements and reports The fund sends monthly account statements as well as
confirmations after each purchase or sale of shares (except reinvestments).
Every six months, the 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), the 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, the fund reserves the right to close out your account and
send the proceeds to the address of record.
DIVIDENDS AND DISTRIBUTIONS
Substantially all income dividends are declared daily and paid monthly. If all
of an investor's shares are redeemed during the month, accrued but unpaid
dividends are paid with the redemption proceeds. Shares of the fund earn
dividends on the business day their purchase is effective, but not on the
business day their redemption is effective.
6 | YOUR INVESTMENT
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Dividends and distributions are reinvested in additional fund shares.
Alternatively, you may instruct your financial professional to have them sent to
you by check, 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. Income dividends
from the fund typically creates ordinary income.
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Transaction Tax status
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Income dividends Ordinary income
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Short-term capital gains Ordinary income
distributions
Every January, the fund issues tax information on its distributions for the
previous year.
Any investor for whom the 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.
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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 | 7
FUND DETAILS
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MASTER/FEEDER STRUCTURE
As noted earlier, the fund is a "feeder" fund that invests in a master
portfolio. (Except where indicated, this prospectus uses the term "the fund" to
mean the feeder fund and its master portfolio taken together.)
The 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, its feeder fund 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.
The 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. The feeder fund's trustees
would then consider whether the feeder fund should hire its own investment
adviser, invest in a different master portfolio, or take other action.
MANAGEMENT AND ADMINISTRATION
The feeder fund described in this prospectus and its corresponding master
portfolio 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 0.20% of the first $1 billion of
the master portfolio's average
net assets plus 0.10% over $1
billion
Administrative services Master portfolio's and fund's
(fee shared with Funds pro- rata portions of 0.09% of
Distributor, Inc.) the first $7 billion of average
net assets in J.P. Morgan-
advised portfolios, plus 0.04%
over $7 billion
The fund has a service plan which allows it to pay service organizations up to
0.25% of the average net assets of the shares held in the name of the service
organization.
The fund has adopted a distribution plan under Rule 12b-1 that allows the fund
to pay distribution fees up to 0.50% of the fund's average net assets for the
sale and distribution of its shares.
J.P. Morgan may also pay fees to certain firms and professionals for providing
recordkeeping or other services in connection with investments in a fund.
FUND DETAILS | 8
FINANCIAL HIGHLIGHTS
The financial table is intended to help you understand the fund's financial
performance for the period indicated. Certain information reflects financial
results for a single fund share. The total return in the table represents the
rate that an investor would have earned on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the fund's
financial statement, is included in the fund's annual report, which is available
upon request.
================================================================================
J.P. MORGAN PRIME CASH MANAGEMENT FUND
- --------------
Per-share data For the life of the fund 11/30/00(1)
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Net asset value, beginning of period ($) 1.00
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Income from investment operations:
Net investment income ($) 0.02
Net realized gain (loss) on investment ($) 0.00(2)
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Total from investment operations ($) 0.02
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Less distributions to shareholders from:
Net investment income ($) (0.02)
Net realized gain ($)
- --------------------------------------------------------------------------------
Total distributions to shareholders ($) (0.02)
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Net asset value, end of period ($) 1.00
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Total return (%) 1.61(3)
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- ----------------------------
Ratios and supplemental data
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Net assets, end of period ($ thousands) 403,290
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Ratio to average net assets:
Net expenses (%) 0.98(4)
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Net investment income (%) 5.73(4)
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Expenses without
reimbursement (%) 1.08(4)
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(1) The fund commenced operations on 8/21/00.
(2) Less than $0.005
(3) Not annualized
(4) Annualized
FUND DETAILS | 9
FOR MORE INFORMATION
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For investors who want more information on the fund, 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 the fund's most recently completed fiscal year or
half-year.
Statement of Additional Information (SAI) Provides a fuller technical and legal
description of the 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 funds, 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 fund's investment company and
1933 Act registration numbers are:
J.P. Morgan Prime Cash Management 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
JP MORGAN
- --------------------------------------------------------------------------------
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