<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN GLOBAL 50 FUND
December 1, 1998
Dear Shareholder:
We are pleased to provide you with the first annual report for the J.P. Morgan
Global 50 Fund.
Since its May 29, 1998 inception date, the J.P. Morgan Global 50 Fund has
experienced its share of peaks and troughs. While the first two months posted
solid returns, the global economic turmoil of the third quarter proved difficult
for the fund. Total returns since inception equaled -10.93%, compared with
- -8.68% for the market index, the Lipper Global Funds Average. After an
impressive October, however, the fund appears to be well-positioned for a
rebound. The fund posted total returns of 13.22% in October, nearly doubling the
Lipper Global Funds Average (at 6.77%), and was rated the number-one performing
global equity fund by Lipper Analytical Services, Inc. for the month. The fund's
net asset value was $13.36 per share on October 31, 1998. The fund's net assets
totaled $76.5 million on October 31, 1998.
Included in this report is an interview with Shawn Lytle, a member of the fund's
portfolio management team. This interview is designed to answer commonly asked
questions about the fund, elaborate on what happened during the reporting
period, and provide an outlook for the months ahead. We hope you find it
informative.
As chairman and president of Asset Management Services, we appreciate your
investment in the fund. If you have any comments or questions, please call
your Morgan representative or J.P. Morgan Funds Services at (800) 521-5411.
Sincerely yours,
/s/ Ramon de Oliveira /s/ Keith M Schappert
Ramon de Oliveira Keith M Schappert
Chairman of Asset Management Services President of Asset Management Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<S> <C> <C> <C>
LETTER TO THE SHAREHOLDERS . . . . . . .1 FUND FACTS AND HIGHLIGHTS . . . .6
FUND PERFORMANCE . . . . . . . . . . . .2 FINANCIAL STATEMENTS. . . . . . .8
PORTFOLIO MANAGER Q&A. . . . . . . . . .3
- --------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
There are several ways to evaluate a mutual fund's historical performance
record. One approach is to look at the growth of a hypothetical investment of
$10,000. The chart at right shows that $10,000 invested on May 31, 1998,* would
have declined to $8,907 on October 31, 1998.
Another way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
GROWTH OF $10,000 SINCE FUND INCEPTION*
MAY 31, 1998 - OCTOBER 31, 1998
[CHART]
<TABLE>
<CAPTION>
J.P. Morgan Lipper Global
Global 50 Fund MSCI World Index Funds Average
<S> <C> <C> <C>
Apr-98 $10,000 $10,000 $10,000
May-98 $9,953 $10,017 $10,236
Jun-98 $10,047 $9,979 $10,218
Jul-98 $8,260 $8,479 $8,854
Aug-98 $7,867 $8,564 $9,009
Sep-98 $8,907 $9,144 $9,822
</TABLE>
LIPPER PERFORMANCE AVERAGES ARE CALCULATED BY TAKING AN ARITHMETIC AVERAGE OF
THE RETURNS OF THE FUNDS IN THE GROUP. THE AVERAGE CUMULATIVE RETURNS WHICH
RESULT FROM THIS METHODOLOGY WILL DIFFER FROM ANNUALIZING THE GROWTH OF THE
MINIMUM INITIAL INVESTMENT.
PERFORMANCE
<TABLE>
<CAPTION>
TOTAL RETURNS
----------------------------------------
ONE THREE SINCE
AS OF OCTOBER 31, 1998 MONTH MONTHS INCEPTION*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
J.P. Morgan Global 50 Fund 13.22% -11.35% -10.93%
MSCI World Index 9.02% -3.88% -1.78%
Lipper Global Funds Average 6.77% -8.41% -8.68%
<CAPTION>
AS OF SEPTEMBER 30, 1998
- ------------------------------------------------------------------------------------
J.P. Morgan Global 50 Fund -4.76% -20.96% -21.33%
MSCI World Index 1.75% -11.99% -9.91%
Lipper Global Funds Average 0.79% -14.65% -14.46%
</TABLE>
*5/29/98 -- COMMENCEMENT OF OPERATIONS (TOTAL RETURNS BASED ON MONTH END
FOLLOWING INCEPTION). THE FUND'S TOTAL RETURN SINCE ITS COMMENCEMENT OF
OPERATIONS ON 5/29/98 IS -10.93%.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE NET OF FEES AND
REFLECT THE REIMBURSEMENT OF CERTAIN FUND EXPENSES AS DESCRIBED IN THE
PROSPECTUS. HAD EXPENSES NOT BEEN SUBSIDIZED RETURNS WOULD HAVE BEEN LOWER.
LIPPER ANALYTICAL SERVICES, INC. IS A LEADING SOURCE FOR MUTUAL FUND DATA.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
SHAWN LYTLE, VICE PRESIDENT, joined J.P. Morgan in 1992. After participating
in the analyst training program, Shawn worked for the J.P. Morgan Private
Client Group in San Francisco. Prior to joining the portfolio management
team, Shawn was a client advisor responsible for marketing and new business
development for financial advisors. Shawn is a graduate of Georgetown
University.
GLOBAL 50 PERFORMANCE HAS HAD ITS UPS AND DOWNS SINCE ITS MAY 29 INCEPTION DATE.
COULD YOU ELABORATE ON THE PERFORMANCE AND THE CONTRIBUTING FACTORS THUS FAR?
SL: During the first two months of operation, the fund achieved solid
performance relative to the competition and relative to the market. In August,
however, the global economic crises and the fear of pressure on corporate
profits began to affect U.S. and European investors' perceptions of earnings
stability. Against that backdrop, investors' time horizons became very
short-term-oriented. They fled to larger and more liquid securities where there
was more certainty of earnings in the near-term quarters. While most global
investors were hurt by the economic malaise of the third quarter, our strategy
in particular was negatively impacted because this portfolio assumes a more
value-oriented, longer-term approach. We focus on undervalued companies with
compelling stories and fundamentals that will likely outperform the market in
roughly a 12- to 18-month time period. When the market began to settle down in
October and investors resumed a longer-term focus in their financial
decision-making, our performance rebounded strongly.
HOW ARE YOU HANDLING INVESTING IN THE CRISIS MARKETS OF THE WORLD RIGHT NOW? YOU
HAVE RETAINED A FEW HOLDINGS IN JAPAN, FOR EXAMPLE.
SL: In order to seek high return for investors, our primary focus is on stock
selection. We select what we deem are the best global opportunities in specific
industries. In the case of a Japan or a Latin America, we are choosing the best
opportunities we could find in an industry, regardless of country. For example,
the reason why we decided to invest in YPF Sociedad Anonima in Argentina was
because it was one of the most attractive oil companies globally, not because it
was a holding in Argentina. And that's a very important distinction: We look at
YPF As an oil company which, compared to other global oil companies, sells at a
significant discount and has excellent fundamentals.
3
<PAGE>
In Japan, the pharmaceuticals company Yamanouchi is an example of a good value,
even in the midst of an overall market or overall economy that seems to be in
poor shape. The company has the patent rights to Gaster, an anti-ulcer
medication marketed as Pepcid AC in the United States. They will also obtain the
rights, in a year or two, to distribute a very successful cholesterol drug in
Japan for a U.S. pharmaceuticals company. We believe this company can clearly
compete on a global scale.
HOW DO YOU EXPECT EMU INTEGRATION TO AFFECT THE GLOBAL 50 FUND?
SL: We have already seen opportunities present themselves with the EMU
integration. A number of companies in the European Community are restructuring
to compete in the European Union and the global marketplace. In addition, EMU
will help companies merge cross-border a lot more easily than they could before.
Finally, EMU integration will result in more price transparency across borders
in Europe. The amount a consumer would pay for a car in Spain will be easily
compared to the amount he would pay in Germany. Those companies which we think
have a competitive advantage with a better manufacturing platform, like a
Volkswagen, will likely benefit from this price transparency.
PLEASE COMMENT ON A FEW OF THE STOCKS THAT HAVE PERFORMED WELL SINCE INCEPTION.
SL: EMC Corp., a leading United States supplier of database storage software,
has had very persistent and impressive earnings growth over the last year and a
half. We believe that this earnings growth is sustainable in 1999. With the year
2000 computer issue quickly approaching, the need for companies to safely store
data is becoming even more important. A company like EMC that can store those
companies' information efficiently will likely thrive.
Vivendi, a French utility company that is the second largest water provider in
the world, looks especially promising going forward. It also has a very solid
core electricity business and waste management business. In addition, the
company is developing a telecommunications business that is now competing
directly with other top companies for both mobile phone business and the
fixed-wire business. So in Vivendi, we see the stability of their utilities
businesses coupled with tremendous growth potential of their telecommunications
business.
WHICH STOCKS HAVE DISAPPOINTED THUS FAR?
SL: One company that has been disappointing, but that we would like to stick
with for its long-term growth potential, is French technology company
STMicroelectronics NV. STMicro was up 31% in October as the firm surprised the
markets with a rise in third quarter profits. In addition, microchip producers
began to regain favor on news that monthly industry sales had not only
stabilized, but actually improved. STMicro is still selling at a discount to
U.S. peers such as Motorola, AMD, National Semiconductor, and Texas Instruments.
The company should continue to do well as the market anticipates a full
turnaround in the chip market in mid- to late 1999.
4
<PAGE>
WHAT IS THE OUTLOOK FOR THE GLOBAL 50 FUND IN THE COMING MONTHS?
SL: The Global 50 Fund is a very aggressive fund that seeks to provide a high
total return for investors. Given this strategy, there will be volatile months,
as global market volatility is likely to continue. In the United States, there
is a lot of pressure on U.S. corporate earnings right now. We do not believe
U.S. companies will be able to sustain the high growth rates they've enjoyed in
the last few years. Conversely, we see more opportunities to invest and more
undervalued companies in Europe and other regions, both in the developed and the
emerging markets. Therefore the portfolio will be more heavily weighted toward
Europe while we continue to seek opportunities in the Far East and select
opportunities in the United States.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan Global 50 Fund seeks to provide a high total return from a
concentrated portfolio of global equity securities.
- --------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
5/29/98
- --------------------------------------------------------------------------------
FUND NET ASSETS AS OF 10/31/98
$76,485,974
- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATE
12/18/98
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/18/98
EXPENSE RATIO
The fund's current annual expense ratio of 1.50% covers shareholders' expenses
for custody, tax reporting, investment advisory and shareholder services after
reimbursement. The fund is no-load and does not charge any sales, redemption, or
exchange fees. There are no additional charges for buying, selling, or
safekeeping fund shares, or for wiring redemption proceeds from the fund.
FUND HIGHLIGHTS
ALL DATA AS OF OCTOBER 31, 1998
COUNTRY ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
<TABLE>
<S> <C>
EUROPE/AFRICA 58.6%
UNITED STATES 20.5%
JAPAN 8.0%
ASIA PACIFIC EX-JAPAN 6.5%
LATIN AMERICA 4.7%
OTHER 1.7%
</TABLE>
<TABLE>
<CAPTION>
LARGEST EQUITY HOLDINGS % OF TOTAL INVESTMENTS
- -----------------------------------------------------------------------
<S> <C>
AUTOLIV, INC. (SDR) (SWEDEN) 3.0%
STMICROELECTRONICS NV (FRANCE) 2.9%
MCI WORLDCOM, INC.(UNITED STATES) 2.8%
YPF SOCIEDAD ANONIMA (SPON. ADR)
(ARGENTINA) 2.7%
AMBAC FINANCIAL GROUP, INC. (UNITED STATES) 2.6%
WASTE MANAGEMENT, INC. (UNITED STATES) 2.5%
DDI CORP. (JAPAN) 2.5%
NESTLE SA (SWITZERLAND) 2.5%
ACS, ACTIVIDADES DE CONSTRUCCION Y SERVICIOS SA
(SPAIN) 2.5%
VIVENDI (FRANCE) 2.4%
</TABLE>
6
<PAGE>
DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS INVESTMENT ADVISOR. SHARES OF THE FUND ARE NOT BANK DEPOSITS AND ARE
NOT GUARANTEED BY ANY BANK, GOVERNMENT ENTITY, OR THE FDIC. RETURN AND SHARE
PRICE WILL FLUCTUATE AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL
COST.
Reference to specific securities are not intended to be or should be interpreted
as recommendations to buy or sell the securities. Opinions expressed are based
on current market conditions are are subject to change without notice. The fund
invests in foreign securities which are subject to special risks such as
economic and political instability and currency fluctuation.
CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
7
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
COMMON STOCK (91.7%)
ARGENTINA (2.6%)
YPF Sociedad Anonima (Spon. ADR)
(Oil-Production)(s)............................ 70,000 $ 2,025,625
------------
AUSTRALIA (2.4%)
News Corp. Ltd. (Broadcasting & Publishing)(s)... 267,000 1,815,960
------------
AUSTRIA (1.8%)
Bank Austria AG (Banking)(s)..................... 28,000 1,340,872
------------
DENMARK (2.9%)
GN Store Nord A/S (Telecommunications-
Equipment)(s).................................. 54,500 1,800,527
Olicom A/S (Technology)(s)+...................... 68,500 391,137
------------
2,191,664
------------
FINLAND (2.0%)
Rautaruukki OYJ, K Shares (Metals & Mining)(s)... 263,000 1,560,755
------------
FRANCE (12.4%)
Christian Dior SA (Retail)(s).................... 14,500 1,531,706
Compagnie Financiere de Paribas (Financial
Services)(s)................................... 20,628 1,516,045
Rhodia SA (Chemicals)(s)+........................ 65,067 1,083,108
STMicroelectronics NV (Electronics)(s)+.......... 35,732 2,186,279
Total SA, B Shares (Oil-Services)(s)............. 11,380 1,312,712
Vivendi (Utilities)(s)........................... 8,100 1,849,762
------------
9,479,612
------------
GERMANY (2.2%)
Muenchener Rueckversicherungs-Gesellschaft AG
(Insurance)(s)................................. 5,274 1,611,328
Muenchener Rueckversicherungs-Gesellschaft AG
(New Shares) (Insurance)(s)+................... 143 65,103
------------
1,676,431
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
HONG KONG (4.0%)
Dao Heng Bank Group Ltd. (Banking)(s)............ 679,000 $ 1,415,715
New World Development Co. Ltd. (Real
Estate)(s)..................................... 712,000 1,654,573
------------
3,070,288
------------
ITALY (2.3%)
Telecom Italia SPA - RNC (Telecommunication
Services)(s)................................... 356,500 1,797,514
------------
JAPAN (8.0%)
DDI Corp. (Telecommunications)(s)................ 655 1,911,153
Honda Motor Co. Ltd. (Automotive)(s)............. 42,000 1,261,515
Sony Corp. (Electronics)(s)...................... 22,100 1,403,457
Yamanouchi Pharmaceutical Co. Ltd.
(Pharmaceuticals)(s)........................... 53,000 1,519,139
------------
6,095,264
------------
NETHERLANDS (7.3%)
ASM Lithography Holding NV
(Semiconductors)(s)+........................... 64,300 1,631,877
KPN NV (Telecommunication Services)(s)........... 575 22,351
Laurus NV (Retail)............................... 24,920 627,110
Philips Electronics NV (Electronics)(s).......... 29,615 1,576,145
TNT Post Group NV (Transport & Services)(s)...... 29,583 791,973
Vendex NV (Retail)(s)............................ 35,600 905,402
------------
5,554,858
------------
SOUTH AFRICA (4.1%)
AngloGold Ltd. (Metals & Mining)(s).............. 25,426 1,291,732
South Africa Breweries Ltd. (Food, Beverages &
Tobacco)(s).................................... 93,900 1,821,143
------------
3,112,875
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
SPAIN (4.1%)
ACS, Actividades de Construccion y Servicios SA
(Construction & Housing)(s).................... 58,900 $ 1,876,158
Iberdrola SA (Electric)(s)....................... 80,300 1,294,558
------------
3,170,716
------------
SWEDEN (4.7%)
Autoliv, Inc. (SDR) (Automotive Supplies)(s)..... 68,000 2,261,777
Stora Kopparbergs Bergslags Aktiebolag, A Shares
(Forest Products & Paper)(s)................... 122,400 1,346,627
------------
3,608,404
------------
SWITZERLAND (5.0%)
Nestle SA (Food, Beverages & Tobacco)(s)......... 890 1,892,928
Swisscom AG (Telecommunication Services)(s)+..... 5,200 1,762,656
Zurich Allied AG (Insurance)(s).................. 300 182,336
------------
3,837,920
------------
UNITED KINGDOM (5.7%)
Allied Zurich PLC (Insurance)(s)+................ 90,000 1,076,162
Royal & Sun Alliance Insurance Group PLC
(Insurance)(s)................................. 184,000 1,685,552
Schroders PLC (Banking)(s)....................... 102,000 1,592,036
------------
4,353,750
------------
UNITED STATES (20.2%)
Ambac Financial Group, Inc. (Insurance)(s)....... 33,400 1,943,462
BankAmerica Corp. (Banking)(s)................... 27,300 1,568,044
Bristol-Myers Squibb Co. (Pharmaceuticals)....... 15,300 1,691,606
EMC Corp. (Computer Peripherals)(s)+............. 27,200 1,751,000
MCI WorldCom, Inc. (Telecommunication
Services)(s)+.................................. 38,100 2,106,216
Monsanto Co. (Chemicals)(s)...................... 36,200 1,470,625
Temple-Inland, Inc. (Forest Products &
Paper)(s)...................................... 29,900 1,452,019
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Union Pacific Corp. (Railroads)(s)............... 33,000 $ 1,571,625
Waste Management, Inc. (Pollution Control)(s).... 42,500 1,917,812
------------
15,472,409
------------
TOTAL COMMON STOCK (COST $73,895,672).......... 70,164,917
------------
</TABLE>
<TABLE>
<S> <C> <C>
PREFERRED STOCK (3.6%)
BRAZIL (2.0%)
Telecomunicacoes Brasileiras SA (ADR)
(Telecommunications)(s)........................ 20,602 1,564,464
------------
GERMANY (1.6%)
Volkswagen AG (Automotive)(s).................... 25,800 1,211,972
------------
TOTAL PREFERRED STOCK (COST $3,188,930)........ 2,776,436
------------
</TABLE>
<TABLE>
<S> <C> <C>
WARRANTS (0.0%)
GERMANY (0.0%)
Muenchener Rueckversicherungs-Gesellschaft AG,
Expiring 06/03/02 (Insurance) (cost $0)(s)+.... 143 6,217
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT{::}
------------
<S> <C> <C>
CONVERTIBLE BONDS (1.9%)
SWITZERLAND (1.9%)
Zurich Insurance, 1.00% due 04/15/03 (Insurance)
(cost $1,445,415).............................. 1,038,000 1,427,250
------------
</TABLE>
<TABLE>
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.7%)
REPURCHASE AGREEMENT (1.5%)
State Street Bank and Trust Repurchase Agreement,
4.25% due 11/02/98, dated 10/30/98, proceeds
$1,148,407 (collateralized by U.S. Treasury
Note, 7.25% due 05/15/04, valued at $1,175,850)
(Banking)...................................... 1,148,000 1,148,000
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ----------- ------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (0.2%)
United States Treasury Bills, 4.41% (y) due
02/04/99 (Government Obligations)(s)........... $ 130,000 $ 128,533
------------
TOTAL SHORT-TERM INVESTMENTS (COST
$1,276,562)................................... 1,276,533
------------
TOTAL INVESTMENTS (COST $79,806,579)
(98.9%)..................................................... 75,651,353
OTHER ASSETS IN EXCESS OF
LIABILITIES (1.1%).......................................... 834,621
------------
NET ASSETS (100.0%)........................................... $ 76,485,974
------------
------------
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $80,520,784 for federal income tax
purposes at October 31, 1998, the aggregate gross unrealized appreciation and
depreciation was $4,885,985 and $9,755,416, respectively, resulting in net
unrealized depreciation of $4,869,431.
+ - Non-income producing security.
(s) - Security is fully or partially segregated with custodian as collateral for
futures contracts or with broker as initial margin for futures contracts.
$28,055,320 of the market value has been segregated.
(y) - Yield to maturity.
ADR - American Depositary Receipt
SDR - Swedish Depositary Receipt
Spon. ADR - Sponsored ADR
{::} - Denominated in USD unless otherwise indicated.
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
TOTAL INVESTMENTS
-----------------
<S> <C>
Insurance......................................... 10.6%
Banking........................................... 9.3%
Telecommunication Services........................ 7.5%
Electronics....................................... 6.8%
Food, Beverages & Tobacco......................... 4.9%
Telecommunications................................ 4.6%
Pharmaceuticals................................... 4.2%
Retail............................................ 4.1%
Metals & Mining................................... 3.8%
Forest Products & Paper........................... 3.7%
Chemicals......................................... 3.4%
Automotive........................................ 3.3%
Automotive Supplies............................... 3.0%
Oil - Production.................................. 2.7%
Construction & Housing............................ 2.5%
Pollution Control................................. 2.5%
Broadcasting & Publishing......................... 2.4%
Telecommunications - Equipment.................... 2.4%
Utilities......................................... 2.4%
Computer Peripherals.............................. 2.3%
Real Estate....................................... 2.2%
Semiconductors.................................... 2.2%
Railroads......................................... 2.1%
Financial Services................................ 2.0%
Electric.......................................... 1.7%
Oil - Services.................................... 1.7%
Transport & Services.............................. 1.0%
Technology........................................ 0.5%
Government Obligations............................ 0.2%
-----------------
100.0%
-----------------
-----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $79,806,579) $75,651,353
Cash 492
Foreign Currency at Value (Cost $3,231,865 ) 3,227,371
Receivable for Investments Sold 822,986
Receivable for Fund Shares Sold 5,000
Unrealized Appreciation of Forward Foreign
Currency Contracts 2,073,586
Dividends and Interest Receivable 141,625
Receivable for Expense Reimbursements 92,136
Deferred Organization Expenses 18,324
Variation Margin Receivable 13,601
Prepaid Trustees' Fees 276
-----------
Total Assets 82,046,750
-----------
LIABILITIES
Payable for Investments Purchased 1,559,040
Payable for Fund Shares Redeemed 36,073
Unrealized Depreciation of Forward Foreign
Currency Contracts 3,766,402
Advisory Fee Payable 76,225
Organization Expenses Payable 16,250
Shareholder Servicing Fee Payable 15,247
Administrative Services Fee Payable 3,436
Transfer Agent Fee Payable 2,194
Administration Fee Payable 438
Custody Fee Payable 250
Fund Services Fee Payable 60
Accrued Expenses 85,161
-----------
Total Liabilities 5,560,776
-----------
NET ASSETS
Applicable to 5,726,155 shares outstanding
(par value $0.001, unlimited shares authorized) $76,485,974
-----------
-----------
Net Asset Value, Offering and Redemption Price
per Share $13.36
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $87,248,457
Undistributed Net Investment Income 1,276,161
Accumulated Net Realized Loss on Investments,
Futures and Foreign Currency Contracts and
Transactions (6,208,342)
Net Unrealized Depreciation of Investments,
Futures and Foreign Currency Contracts and
Translations (5,830,302)
-----------
Net Assets $76,485,974
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 29, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31,
1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $54,856 ) $ 433,515
Interest Income 234,327
------------
Investment Income 667,842
EXPENSES
Advisory Fee $ 432,723
Shareholder Servicing Fee 86,545
Custodian Fees and Expenses 50,387
Professional Fees and Expenses 50,137
Registration Fees 42,075
Administrative Services Fee 19,674
Transfer Agent Fee 16,873
Printing Expenses 13,500
Amortization of Organization Expenses 1,676
Fund Services Fee 780
Administration Fee 438
Trustees' Fees and Expenses 304
Miscellaneous 1,406
----------
Total Expenses 716,518
Less: Reimbursement of Expenses (197,250)
----------
NET EXPENSES 519,268
------------
NET INVESTMENT INCOME 148,574
NET REALIZED GAIN (LOSS) ON
Investment Transactions (5,326,731)
Futures Contracts (881,611)
Foreign Currency Contracts and Transactions 740,799
----------
Net Realized Loss (5,467,543)
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF
Investments (4,155,226)
Futures Contracts 22,333
Foreign Currency Contracts and Translations (1,697,409)
----------
Net Change in Unrealized Depreciation (5,830,302)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(11,149,271)
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 29, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 148,574
Net Realized Loss on Investments, Futures and
Foreign Currency Contracts and Transactions (5,467,543)
Net Change in Unrealized Depreciation of
Investments, Futures and Foreign Currency
Contracts and Translations (5,830,302)
-------------------
Net Decrease in Net Assets Resulting from
Operations (11,149,271)
-------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 101,633,355
Cost of Shares of Beneficial Interest Redeemed (13,998,110)
-------------------
Net Increase from Shareholder Transactions 87,635,245
-------------------
Total Increase in Net Assets 76,485,974
NET ASSETS
Beginning of Period --
-------------------
End of Period (including undistributed net
investment income of $1,276,161) $ 76,485,974
-------------------
-------------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
14
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the period is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 29, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.00
-------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.22
Net Realized and Unrealized Loss on Investments,
Futures and Foreign Currency Contracts and
Transactions (1.86)
-------------------
Total from Investment Operations (1.64)
-------------------
NET ASSET VALUE, END OF PERIOD $ 13.36
-------------------
-------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return (10.93)%(a)
Net Assets, End of Period (in thousands) $ 76,486
Ratios to Average Net Assets
Expenses 1.50%(b)
Net Investment Income 0.43%(b)
Expenses without Reimbursement 2.07%(b)
Portfolio Turnover 54%
</TABLE>
- ------------------------
(a) Not Annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
15
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
J.P. Morgan Global 50 Fund (the "fund") is a series of J.P. Morgan Series Trust,
a Massachusetts business trust (the "trust"). The trust, which was organized on
August 15, 1996, is registered under the Investment Company Act of 1940, as
amended, as a no-load, diversified, open-end management investment company. The
fund's investment objective is to provide high total return from a concentrated
portfolio of global equity securities. The trustees of the trust have divided
the beneficial interests in the fund into two classes of shares, Institutional
Shares and Select Shares. Currently, the fund only offers Select Shares. The
fund commenced operations on May 29, 1998. The Declaration of Trust permits the
trustees to issue an unlimited number of shares in the fund.
Investments in international markets may involve certain considerations and
risks not typically associated with investments in the United States. Future
economic and political developments in foreign countries could adversely affect
the liquidity or value, or both, of such securities in which the fund is
invested. The ability of the issuers of the debt securities held by the fund to
meet their obligations may be affected by economic and political developments in
a specific industry or region.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the fund:
a) The value of each security for which readily available market quotations
exist is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange, or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. Securities listed on a foreign
exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures
established by the fund's trustees. Such procedures include the use of
independent pricing services, which use prices based upon yields or prices
of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
short-term portfolio securities with a remaining maturity of less than 60
days are valued by the amortized cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the fund's net assets are calculated, such securities will be valued
at fair value in accordance with procedures established by and under the
general supervision of the fund's trustees.
The fund's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the fund. It is the
policy of the fund to value the underlying collateral daily on a mark-to-
market basis to determine that the value, including accrued interest, is
at least equal to the repurchase price plus accrued interest. In the event
of default of the obligation to repurchase, the fund has the right
16
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or
bankruptcy by the other party to the agreement, realization and/or
retention of the collateral or proceeds may be subject to legal
proceedings.
b) The books and records of the fund are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing exchange rates
at the end of the period. Purchases, sales, income and expenses are
translated at the exchange rates prevailing on the respective dates of
such transactions. Translation gains and losses resulting from changes in
exchange rates during the reporting period and gains and losses realized
upon settlement of foreign currency transactions are reported in the
Statement of Operations.
Although the net assets of the fund are presented at the exchange rates
and market values prevailing at the end of the period, the fund does not
isolate the portion of the results of operations arising as a result of
changes in foreign exchange rates from the fluctuations arising from
changes in the market prices of securities during the period.
c) Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount becomes known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d) Distributions to shareholders of net investment income and net realized
capital gains, if any, are declared and paid annually.
e) The fund incurred organization expenses in the amount of $20,000. Morgan
Guaranty Trust Company of New York ("Morgan"), a wholly owned subsidiary
of J.P. Morgan & Co. Incorporated ("J.P. Morgan"), has paid the
organization expenses of the fund. The fund has agreed to reimburse Morgan
for these costs which are being deferred and amortized on a straight-line
basis over a period not to exceed five years beginning with the
commencement of operations of the fund.
f) The fund may enter into forward and spot foreign currency contracts to
protect securities and related receivables and payables against
fluctuations in future foreign currency rates. A forward contract is an
agreement to buy or sell currencies of different countries on a specified
future date at a specified rate. Risks associated with such contracts
include the movement in the value of the foreign currency relative to the
U.S. dollar and the ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily at the current foreign exchange
rates, and the change in the market value is recorded by the fund as
unrealized appreciation or depreciation of forward foreign currency
contract translations. At October 31, 1998, the fund had open forward
foreign currency contracts as follows:
17
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
CONTRACTUAL VALUE AT APPRECIATION/
PURCHASE CONTRACTS VALUE 10/31/98 (DEPRECIATION)
- ------------------------------------------------- ----------- ----------- --------------
<S> <C> <C> <C>
Australian Dollar 2,149,900, expiring
11/27/98........................................ $ 1,343,043 $ 1,345,131 $ 2,088
Austrian Schilling 14,543,569, expiring
11/27/98........................................ 1,156,914 1,249,778 92,864
Bristish Pound 5,712,062, expiring 11/27/98...... 9,355,568 9,545,908 190,340
British Pound 168,969 for JPY 38,408,343,
expiring 11/27/98............................... 330,734 282,378 (48,356)
Danish Krone 1,690,074, expiring 11/27/98........ 273,457 268,491 (4,966)
Finnish Markka 6,400,000, expiring 11/27/98...... 1,177,748 1,271,930 94,182
French Franc 15,648,274, expiring 11/27/98....... 2,755,749 2,820,229 64,480
French Franc 1,563,606 for GBP 163,528, expiring
11/27/98........................................ 273,285 281,803 8,518
German Mark 13,967,461, expiring 11/27/98........ 8,206,849 8,443,054 236,205
German Mark 814,442 for GBP 280,000, expiring
11/27/98........................................ 467,932 492,314 24,382
German Mark 1,363,758 for NOK 6,211,540, expiring
11/27/98........................................ 841,803 824,365 (17,438)
Japanese Yen 1,170,581,342, expiring 11/27/98.... 9,166,478 10,079,866 913,388
Netherlands Guilder 3,637,912, expiring
11/27/98........................................ 1,878,913 1,949,982 71,069
Norwegian Krone 3,135,827, expiring 11/27/98..... 417,124 424,975 7,851
South African Rand 3,397,897, expiring
11/27/98........................................ 531,825 601,170 69,345
Swiss Franc 4,082,335, expiring 11/27/98......... 2,989,629 3,021,461 31,832
Swiss Franc 1,010,000 for DEM 1,232,068, expiring
11/27/98........................................ 744,761 747,532 2,771
</TABLE>
<TABLE>
<CAPTION>
SETTLEMENT
SALES CONTRACTS VALUE
- ------------------------------------------------- -----------
<S> <C> <C> <C>
Australian Dollar 3,132,555, expiring
11/27/98........................................ 1,859,954 1,959,950 (99,996)
Australian Dollar 562,970 for NLG 662,278,
expiring 11/27/98............................... 354,992 352,234 2,758
Austrian Schilling 14,543,569, expiring
11/27/98........................................ 1,157,927 1,249,778 (91,851)
British Pound 2,143,295, expiring 11/27/98....... 3,513,162 3,581,841 (68,679)
</TABLE>
18
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
SETTLEMENT VALUE AT APPRECIATION/
SALES CONTRACTS VALUE 10/31/98 (DEPRECIATION)
- ------------------------------------------------- ----------- ----------- --------------
<S> <C> <C> <C>
British Pound 681,505 for HKD 8,852,407, expiring
11/27/98........................................ $ 1,142,171 $ 1,138,920 $ 3,251
British Pound 260,000 for JPY 60,617,440,
expiring 11/27/98............................... 521,976 434,508 87,468
British Pound 146,127 for NLG 479,282, expiring
11/27/98........................................ 256,903 244,205 12,698
British Pound 43,876 for NOK 552,535, expiring
11/27/98........................................ 74,881 73,325 1,556
Danish Krone 12,924,681, expiring 11/27/98....... 1,897,897 2,053,263 (155,366)
Finnish Markka 6,400,000, expiring 11/27/98...... 1,178,637 1,271,930 (93,293)
French Franc 72,173,838, expiring 11/27/98....... 12,067,408 13,007,616 (940,208)
German Mark 12,095,746, expiring 11/27/98........ 7,037,007 7,311,638 (274,631)
German Mark 3,502,365 for FRF 11,743,796,
expiring 11/27/98............................... 2,116,540 2,117,110 (570)
Hong Kong Dollar 17,775,781, expiring 11/27/98... 2,280,845 2,293,499 (12,654)
Japanese Yen 1,002,032,449, expiring 11/27/98.... 7,859,098 8,628,493 (769,395)
Japanese Yen 41,592,854 for NLG 586,600, expiring
11/27/98........................................ 314,428 358,156 (43,728)
Netherlands Guilder 7,392,137, expiring
11/27/98........................................ 3,702,567 3,962,310 (259,743)
Norwegian Krone 1,275,180, expiring 11/27/98..... 165,210 172,815 (7,605)
South African Rand 19,403,729, expiring
11/27/98........................................ 2,948,895 3,432,985 (484,090)
Swedish Krona 12,393,661, expiring 11/27/98...... 1,531,973 1,589,116 (57,143)
Swiss Franc 2,579,181, expiring 11/27/98......... 1,730,994 1,908,931 (177,937)
Swiss Franc 455,014 for FRF 1,857,366, expiring
11/27/98........................................ 334,746 336,770 (2,024)
Swiss Franc 2,420,128 for NLG 3,317,430, expiring
11/27/98........................................ 1,778,198 1,791,211 (13,013)
Swiss Franc 815,813 for NOK 4,550,036, expiring
11/27/98........................................ 616,632 603,808 12,824
--------------
NET UNREALIZED DEPRECIATION ON FORWARD FOREIGN
CURRENCY CONTRACTS.............................. $ (1,692,816)
--------------
--------------
</TABLE>
19
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
g) Futures -- A futures contract is an agreement to purchase/sell a specified
quantity of an underlying instrument at a specified future date or to
make/receive a cash payment based on the value of a securities index. The
price at which the purchase and sale will take place is fixed when the
fund enters into the contract. Upon entering into such a contract, the
fund is required to pledge to the broker an amount of cash and/or liquid
securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the fund agrees to receive from, or
pay to, the broker an amount of cash equal to the daily fluctuation in the
value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized gains or losses. When
the contract is closed, the fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened
and the value at the time when it was closed. The fund invests in futures
contracts for the purpose of hedging its existing fund securities, or
securities the fund intends to purchase, against fluctuations in value
caused by changes in prevailing market interest rates or securities
movements. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates
and the underlying hedged assets, and the possible inability of
counterparties to meet the terms of their contracts. At October 31, 1998,
the fund had open futures contracts as follows:
SUMMARY OF OPEN CONTRACTS AT OCTOBER 31, 1998
<TABLE>
<CAPTION>
NET UNREALIZED PRINCIPAL AMOUNT
CONTRACTS LONG APPRECIATION OF CONTRACTS
-------------- -------------- ----------------
<S> <C> <C> <C>
S&P 500, expiring December 1998.................. 5 $ 22,333 $ 1,359,155
</TABLE>
h) The fund intends to comply with the provisions of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and
to distribute substantially all of its income, including net realized
capital gains, if any, within the prescribed time periods. Accordingly, no
provision for federal income or excise tax is necessary. The fund earns
foreign income which may be subject to foreign withholding taxes at
various rates.
i) For federal income tax purposes, the fund had a capital loss carryforward
at October 31, 1998 of $5,471,804, all of which expires in the year 2006.
To the extent that this capital loss is used to offset future capital
gains, it is probable that gains so offset will not be distributed to
shareholders.
j) The fund accounts for and reports distributions to shareholders in
accordance with Statement of Position 93-2 "Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies." The effect of applying
this statement was to increase Undistributed Net Income by $1,127,587,
increase Accumulated Net Realized Loss on Investments by $740,799 and
decrease Paid-in Capital by $386,788. The adjustments are primarily
attributable to foreign currency gains. Net investment income, net
realized losses and net assets were not affected by this change.
2. TRANSACTIONS WITH AFFILIATES
a) The fund has an Investment Advisory Agreement with J.P. Morgan Investment
Management Inc. ("JPMIM"), an affiliate of Morgan and a wholly owned
subsidiary of J.P. Morgan. Under the terms of the agreement, the fund pays
JPMIM at an annual rate of 1.25% of the fund's average daily net assets.
For the period from May 29, 1998 (commencement of operations) to October
31, 1998, such fees amounted to $432,723.
20
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
b) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as the co-administrator and
distributor for the fund. Under a Co-Administration Agreement between FDI
and the trust on behalf of the fund, FDI provides administrative services
necessary for the operations of the fund, furnishes office space and
facilities required for conducting the business of the fund and pays the
compensation of the fund's officers affiliated with FDI. The fund has
agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The
amount allocable to the fund is based on the ratio of the fund's net
assets to the aggregate net assets of the trust and certain other
investment companies subject to similar agreements with FDI. For the
period from May 29, 1998 (commencement of operations) to October 31, 1998,
the fee for these services amounted to $438.
c) The trust, on behalf of the fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan under which Morgan is responsible
for overseeing certain aspects of the administration and operation of the
fund. Under the Services Agreement, the fund has agreed to pay Morgan a
fee equal to its allocable share of an annual complex-wide charge. This
charge is calculated based on the aggregate average daily net assets of
the trust and certain other registered investment companies for which
JPMIM acts as investment advisor in accordance with the following annual
schedule: 0.09% on the first $7 billion of their aggregate average daily
net assets and 0.04% of their aggregate average daily net assets in excess
of $7 billion less the complex-wide fees payable to FDI. The portion of
this charge payable by the fund is determined by the proportionate share
that its net assets bear to the net assets of the trust and certain other
investment companies for which Morgan provides similar services. For the
period from May 29, 1998 (commencement of operations) to October 31, 1998,
the fee for these services amounted to $19,674.
In addition, J.P. Morgan has agreed to reimburse the fund to the extent
necessary to maintain the total operating expenses of the fund at no more
than 1.50% of the average daily net assets of the fund through February
28, 1999. This reimbursement arrangement can be changed or terminated at
any time after February 28, 1999 at the option of J.P. Morgan. For the
period from May 29, 1998 (commencement of operations) to October 31, 1998,
J.P. Morgan has agreed to reimburse the fund $197,250 for expenses under
this agreement.
d) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal account
maintenance service to fund shareholders. The agreement provides for the
fund to pay Morgan a fee for these services which is computed daily and
paid monthly at an annual rate of 0.25% of the average daily net assets of
the fund. For the period from May 29, 1998 (commencement of operations) to
October 31, 1998, the fee for these services amounted to $86,545.
Morgan, Charles Schwab & Co. ("Schwab") and the trust are parties to
separate services and operating agreements (the "Schwab Agreements")
whereby Schwab makes fund shares available to customers of investment
advisors and other financial intermediaries who are Schwab's clients. The
fund is not responsible for payments to Schwab under the Schwab
Agreements; however, in the event the services agreement with Schwab is
terminated for reasons other than a breach by Schwab and the relationship
between the trust and Morgan is terminated, the fund would be responsible
for the ongoing payments to Schwab with respect to pre-termination shares.
e) The trust, on behalf of the fund, has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the trustees in exercising their
overall supervisory responsibilities for the trust's affairs. The
21
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
trustees of the trust represent all the existing shareholders of Group.
The fund's allocated portion of Group's costs in performing its services
amounted to $780 for the period from May 29, 1998 (commencement of
operations) to October 31, 1998.
f) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the trust, the J.P. Morgan Funds, the J.P. Morgan
Institutional Funds, and other registered investment companies in which
they invest. The Trustees' Fees and Expenses shown in the financial
statements represents the fund's allocated portion of the total fees and
expenses. The trust's Chairman and Chief Executive Officer also serves as
Chairman of Group and receives compensation and employee benefits from
Group in his role as Group's Chairman. The allocated portion of such
compensation and benefits included in the Fund Services Fee shown in the
financial statements was $200.
3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the fund were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 29, 1998
(COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1998
----------------------------
<S> <C>
Shares sold...................................... 6,808,830
Shares redeemed.................................. (1,082,675)
----------------------------
Net Increase..................................... 5,726,155
----------------------------
----------------------------
</TABLE>
4. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the period from
May 29, 1998 (commencement of operations) to October 31, 1998 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- ----------------- -----------
<S> <C>
$ 126,023,916 $42,166,182
</TABLE>
5. CREDIT AGREEMENT
The trust, on behalf of the fund, together with other affiliated investment
companies (the "funds"), entered into a revolving line of credit agreement (the
"Agreement") on May 27, 1998, with unaffiliated lenders. The maximum borrowing
under the Agreement is $150,000,000. The Agreement expires on May 26, 1999,
however, the fund as party to the Agreement will have the ability to extend the
Agreement and continue their participation therein for an additional 364 days.
The purpose of the Agreement is to provide another alternative for settling
large fund shareholder redemptions. Interest on any such borrowings outstanding
will approximate market rates. The funds pay a commitment fee at an annual rate
of 0.065% on the unused portion of the committed amount which is allocated to
the funds in accordance with procedures established by their respective trustees
or directors. The fund has not borrowed pursuant to the Agreement as of October
31, 1998.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
J.P. Morgan Global 50 Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of J.P. Morgan Global 50 Fund (one of
the funds comprising J.P. Morgan Series Trust, hereafter referred to as the
"fund") at October 31, 1998, and the results of its operations, the changes in
its net assets and the financial highlights for the period May 29, 1998
(commencement of operations) through October 31, 1998, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
December 17, 1998
23
<PAGE>
J.P. MORGAN FUNDS
PRIME MONEY MARKET FUND
FEDERAL MONEY MARKET FUND
TAX EXEMPT MONEY MARKET FUND
SHORT TERM BOND FUND
BOND FUND
GLOBAL STRATEGIC INCOME FUND
EMERGING MARKETS DEBT FUND
TAX EXEMPT BOND FUND
NEW YORK TAX EXEMPT BOND FUND
CALIFORNIA BOND FUND: SELECT SHARES
DIVERSIFIED FUND
DISCIPLINED EQUITY FUND
U.S. EQUITY FUND
U.S. SMALL COMPANY FUND
U.S. SMALL COMPANY OPPORTUNITIES FUND
TAX AWARE U.S. EQUITY FUND: SELECT SHARES
INTERNATIONAL EQUITY FUND
EUROPEAN EQUITY FUND
INTERNATIONAL OPPORTUNITIES FUND
EMERGING MARKETS EQUITY FUND
GLOBAL 50 FUND: SELECT SHARES
J.P. MORGAN GLOBAL 50 FUND
FOR MORE INFORMATION ON THE J.P. MORGAN FUNDS, CALL J.P. MORGAN FUNDS SERVICES
AT (800) 521-5411.
ANNUAL REPORT
OCTOBER 31, 1998
