JP MORGAN SERIES TRUST
N-30D, 2000-12-29
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[front cover]
                                  J.P. MORGAN
                                  BOND FUND -
                                ADVISOR SERIES
                                [jp morgan logo]
                                Annual Report
                              October 31, 2000
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Table of Contents                                                          1
Fund Performance                                                           2
Portfolio Manager Q&A                                                      3
Fund Facts & Highlights                                                    5
Financial Statements                                                       6


                                                                              1


FUND PERFORMANCE
--------------------------------------------------------------------------------

EXAMINING PERFORMANCE

    There are several ways to evaluate a mutual  fund's historical performance.
One way is to look  at the growth of a hypothetical investment. The  chart at
right shows that $10,000 invested on October 31, 1990, would have increased to
$19,905 on October 31, 2000.

    Another way is to review a fund's average annual total return. This
calculation takes the Fund's actual 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, and ten years (or since
inception).

[data from line chart]

GROWTH OF $10,000 OVER 10 YEARS*
October 31, 1990-October 31, 2000
<TABLE>
<S>                                                           <C>
Salomon Smith Barney Broad Investment Grade Bond Index**      $21,631
Lipper Intermediate Investment Grade Debt Funds Average       $20.758
J.P. Morgan Bond Fund-Advisor Series                          $19,905
</TABLE>
PERFORMANCE
<TABLE>
<CAPTION>
                                         TOTAL                   AVERAGE ANNUAL
                                       RETURNS*                  TOTAL RETURNS*
                                      -----------   ---------------------------------------
                                         ONE           THREE          FIVE            TEN
                                         YEAR          YEARS          YEARS          YEARS
---------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>               <C>            <C>
AS OF OCTOBER 31, 2000
J.P. Morgan Bond Fund-Advisor Series     6.61%          4.75%         5.58%          7.13%
Salomon Smith Barney Broad
    Investment Grade Bond Index**        7.28%          5.65%         6.33%          8.02%
Lipper Intermediate Investment
    Grade Debt Funds Average             5.84%          4.51%         5.34%          7.55%
---------------------------------------------------------------------------------------------------
AS OF SEPTEMBER 30, 2000
J.P. Morgan Bond Fund-Advisor Series     6.77%          4.96%         5.78%          7.20%
Salomon Smith Barney Broad
    Investment Grade Bond Index**        6.92%          5.93%         6.48%          8.09%
Lipper Intermediate Investment
    Grade Debt Funds Average             5.75%          4.85%         5.54%          7.58%
</TABLE>
   *   The fund commenced operations on September 15, 2000. The Fund's returns
include historical returns of the J.P. Morgan Bond Fund-Advisor Series, which
had a lower expense ratio, from October 31, 1990, through September 15, 2000
(the inception date of the Fund). The J.P. Morgan Bond Fund's-Advisor Series
annualized return from September 15, 2000 through October 31, 2000 was (1.17)%.
For purposes of comparison, the "Ten years" returns are calculated from
October 31, 1990.

**  The Salomon Smith Barney Broad Investment Grade Bond Index is an unmanaged,
market-weighted index that contains approximately 4,700 individually priced
investment-grade bonds.

     Past performance is no guarantee of future results. Fund returns are net of
fees, assume the reinvestment of distributions, and reflect reimbursements  of
certain fund and portfolio expenses as described in the prospectus. Had expenses
not been subsidized, returns would have been lower. Lipper Analytical Services,
Inc. is a leading source of mutual fund data.


2
<PAGE>

PORTFOLIO MANAGER Q&A
--------------------------------------------------------------------------------

[photo of Jay A. Gladieux]

    The following is an interview with JAY A. GLADIEUX, vice  president, and a
portfolio manager in the U.S. Fixed Income group. As a J.P. Morgan Investment
Management employee for the past three years, Jay has concentrated on broad
market strategies. Previously, Jay spent 15 years at Morgan Stanley & Co. He
graduated from Allegheny College with a major in economics, and received his
M.B.A. from the University of California, Berkeley, with a specialization in
both finance and accounting. This interview was conducted on November 15, 2000,
and reflects Jay's views on that day.

WHAT DEVELOPMENTS DROVE YOUR INVESTMENT  STRATEGIES DURING THE PAST YEAR?

    There were several key factors that impacted the fixed income markets and
our portfolio strategy. Among the most significant were the growth path  of the
U.S. economy, progressive Federal Reserve tightening of monetary policy, and the
federal government using part of its fiscal surplus to buy back outstanding U.S.
Treasuries. Other factors included increased stress in the credit sectors and
Y2K-related technicals.

HOW DID THESE DEVELOPMENTS IMPACT YOUR DURATION DECISIONS FOR THE PORTFOLIO?

    Let me preface my answer by saying that, while  we actively manage duration,
it is only one source of returns for the portfolio. We are careful to ensure
that duration decisions do not overpower other sources  of return.

    Looking at the latter part of 1999, we felt that the U.S. economy was
growing much stronger, and that the Fed would be more aggressive in tightening
monetary policy. As a result, in 4Q99, our duration position  was shorter than
the benchmark, with a yield curve flattening bias.

    As we moved into 1Q00, it became clear that the fiscal surplus was going to
increase the paydowns of outstanding U.S. Treasuries. So, we shifted to a long
duration position concentrated at the long end of the yield curve. Paydowns and
progressive Fed tightening produced positive results from this position through
2Q00.

    As signs of a slowdown appeared in the economy, we neutralized our yield
curve bias. And, as statements by the two major presidential candidates pointed
to either tax cuts, or greater spending (and hence  a declining fiscal surplus),
we moved our long position into the five year area of the yield curve, which is
where we closed 3Q00.

HOW DID SECTOR ALLOCATION CONTRIBUTE  TO PERFORMANCE?

    At the beginning of 4Q99, yield spreads in most sectors were exceptionally
wide. Our evaluation of Y2K-related risk, at least in the United States, was
that it was likely to be a non-event. Based on this analysis, we moved the
portfolio to a significant overweight position in the high quality, liquid
sectors of mortgages, asset-backed securities, and agencies. We also increased
our exposure to high yield and emerging markets debt. As Y2K approached, there
was little new issuance, and these sectors significantly outperformed through
the end of the year.

WHAT HAPPENED THEN?

    With Y2K behind us, new issue activity resumed strongly, driven by the
financing needs of a red-hot economy. This occurred, coincidentally, just as
Treasuries became scarcer. There were also increasing signs of deteriorating
credit quality from stressed  corporate balance sheets and persistent
illiquidity in  the corporate and high-yield sectors. During this time, the
broker/dealer community sought to maintain a low-risk profile. As a result, we
liquidated many of our holdings in mortgages, agencies, asset-backed securities,
corporates and high-yield bonds, and moved to  an overweight position in
Treasuries, relative to the benchmark.

    In 2Q00 and 3Q00, we repositioned to an overweight in mortgages. Here, we
wanted to add some yield to the portfolio and expected that higher rates would
slow prepayments and new supply. We also  initiated a position in $US hedged
non-dollar bonds, concentrated in German and French government issues. The
thinking here was that, with a slowdown  in the global economy, European rates
had farther  to fall than U.S. rates. Neither of these positions  worked out,
and resulted in a modest amount  of underperformance.


                                                                              3
<PAGE>

PORTFOLIO MANAGER Q&A
--------------------------------------------------------------------------------
                                                                    (Continued)

WHAT ELSE IMPACTED PERFORMANCE?

    One of the key developments impacting bond  market performance over the past
year was a dramatic deterioration of credit quality in the high-yield and
investment-grade corporate sectors. Moreover, the  market severely punished any
bad news, causing  precipitous drops in the value of any outstanding bonds of an
affected issuer. Many of the issuers impacted were household names, like Xerox
and AT&T.

    Fortunately, we avoided most of these problems  by relying on strong credit
research. Still, there was one issue--Laidlaw--that had a significant negative
impact. Laidlaw is a Canadian company that most people know from the yellow
school buses that they operate. Laidlaw held a significant investment in Safty
Kleen, a company that was subsequently revealed to have engaged in accounting
irregularities. The market's reaction to this news was severely negative. Over
the last year, we had significantly reduced our exposure to Laidlaw, but,
nonetheless, the bonds we continued to hold suffered  a significant decline in
value. We fully exited our Laidlaw position shortly thereafter.

WHAT ARE SOME CHANGING DYNAMICS AFFECTING  THE MARKETPLACE?

    In terms of market-moving developments, I would reiterate the point that
high yield and corporate sectors have become increasingly illiquid, threatening
to some extent the ability of marginal companies to access the capital markets.

    This illiquidity is the result of several developments. One is a significant
decline over the past several years  in the number of broker dealers
participating in the market. A flat yield curve exacerbates the problem. High
short-term rates make it expensive for dealers  to finance inventory, so they
are inclined to minimize their positions. The traditional portfolio buyers--
insurance companies for example--also have become less willing to step in.

    In all, these developments--fewer dealers, high  carrying costs, and a
pullback by traditional buyers--helped to chill the market for corporate and
high- yield debt.

IF COMPANIES HAVE A TOUGH TIME TAPPING CAPITAL  MARKETS, HOW MIGHT THAT IMPACT
THEIR PROSPECTS  GOING FORWARD?

    It's starting to have an impact, but perhaps less than you might otherwise
expect. During the last few years, spreads have widened broadly and interest
rates have fallen, so the borrowing costs for corporations have remained viable.
When you consider a corporate return on capital in the area of 15%, compared to
borrowing costs of, say, 7.5% to 8%, it's still a good deal to borrow and
invest, even if the spreads to Treasuries are wide.

    That said, recent credit problems in the corporate sector have made
investors cautious, and banks have been less willing to lend to marginal
credits. The  market, as well, has not provided financing to smaller, more
marginal credits. This is clearly impacting the  performance of such companies,
as evidenced by the recent increase in default statistics and distress ratios.

LOOKING TOWARD THE COMING MONTHS, WHAT DO YOU  SEE DEVELOPING IN FIXED INCOME
MARKETS, AND HOW  ARE YOU POSITIONING THE PORTFOLIO?

    In regard to the economy, the most likely scenario  is that there is going
to be a soft landing, although chances are increasing that the slowdown may be
sharper than anticipated. This is particularly evident  in regard to the
slowdown in industrial sector activity.  We also see signs of a slowdown in
capital expenditures, and declining consumer confidence.

    As far as interest rates are concerned, we think  that rates will either
remain stable, or trend modestly lower. For rates to move significantly lower,
however, the Fed will have to ease credit conditions. We don't think the Fed
will do anything in this regard until  there is either a real crisis in the
equity market, or the measures of inflation move into a clear downtrend.

    Credit sectors will likely remain volatile and illiquid. If we elect to
increase our holdings in the spread  sector, we're inclined to do it in the
high-quality,  liquid sectors, such as mortgages, agencies and asset-backed
securities.

    At present, the Fund has a modest long-duration position. We are overweight
in the non-call and  residential mortgage sectors, and are underweight
corporates. In all, we are very conservatively positioned and are awaiting more
positive news before we enter the credit sectors in any meaningful way. This
will probably be when the Fed commits to an easing mode, but we're not there
yet.


4
<PAGE>

FUND FACTS
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

    J.P. Morgan Bond Fund - Advisor Series seeks to provide a high total return
consistent with moderate risk of capital. It is designed for investors who seek
a total return that is higher than that generated from short-term obligations
while recognizing the greater price fluctuation of longer-term instruments.

--------------------------------------------------------------------------------
    Inception Date:  9/15/2000
--------------------------------------------------------------------------------
    Fund Net Assets as of 10/31/2000:  $499,092
--------------------------------------------------------------------------------
    Portfolio Net Assets as of 10/31/2000:
      $1,622,408,286
--------------------------------------------------------------------------------
    Dividend Payable Dates:  MONTHLY
--------------------------------------------------------------------------------
    Capital Gain Payable Dates:  12/13/2000

EXPENSE RATIO

    The Fund's current annualized expense ratio  of 0.95% 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, 2000

PORTFOLIO ALLOCATION
(As a percentage of total investment securities)

[data from pie chart]
<TABLE>
<S>                                       <C>
Mortgage Pass Thru                        25.2%
Short-Term Investments                    20.5%
Collateralized Mortgage Obligations       13.9%
U.S. Treasury Securities                  11.8%
Corporate Bonds                           10.5%
U.S. Government Agency Securities          7.7%
Asset-Backed Securities                    6.7%
Foreign Corporate Bonds                    2.4%
Private Placement                          0.9%
Preferred Stocks                           0.2%
Soveriegn Governments and Agencies         0.2%
</TABLE>
--------------------------------------------------------------------------------
    Duration:  9.34 YEARS
--------------------------------------------------------------------------------
    30 Day SEC Yield:  6.36%*

*  Yields reflect the reimbursement of certain fund expenses as described in the
prospectus. Had expenses not been subsidized, yields would have  been lower.

DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS INVESTMENT ADVISOR. SHARES  OF THE FUND ARE NOT INSURED BY THE FDIC,
ARE NOT BANK DEPOSITS OR OTHER OBLIGATIONS OF THE FINANCIAL INSTITUTION AND  ARE
NOT GUARANTEED BY THE FINANCIAL INSTITUTION. SHARES OF THE FUND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING POSSIBLE  LOSS OF THE PRINCIPAL INVESTED. RETURN AND
SHARE PRICE WILL FLUCTUATE AND REDEMPTION VALUE MAY BE MORE OR LESS THAN
ORIGINAL COST.

Opinions expressed herein are based on current market conditions and are subject
to change without notice. The Fund invests through  a master portfolio (another
fund with the same objective).

CALL J.P. MORGAN FUNDS SERVICES AT (800) 766-7722 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.


The Accompanying Notes are an Integral Part of the Financial Statements.
  5
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<S>                                                                <C>
ASSETS
Investment in The U.S. Fixed Income Portfolio
   ("Portfolio"), at value                                            $499,109
Receivable for Expense Reimbursements                                   17,316
                                                                   -------------
TOTAL ASSETS                                                           516,425
                                                                   -------------
LIABILITIES
Accrued Expenses and Other Liabilities                                  17,333
                                                                   -------------
TOTAL LIABILITIES                                                       17,333
                                                                   -------------
NET ASSETS
Applicable to 49,725 Shares of Beneficial Interest Outstanding
      (par value $0.001, unlimited shares authorized)                 $499,092
                                                                   =============
Net Asset Value, Offering and Redemption Price Per Share                $10.04
                                                                   =============
ANALYSIS OF NET ASSETS
Paid-in Capital                                                       $500,544
Distribution in Excess of Net Investment Income                          (506)
Accumulated Net Realized Gain on Investment                                164
Net Unrealized Depreciation on Investment                              (1,110)
                                                                   -------------
NET ASSETS                                                            $499,092
                                                                   =============
</TABLE>

    The Accompanying Notes are an Integral Part of the Financial Statements.
6
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------

FOR THE PERIOD SEPTEMBER 15, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 2000
<TABLE>
<S>                                                                                 <C>
INVESTMENT INCOME
INCOME
Allocated Interest Income from Portfolio                                              $     553
Allocated Portfolio Expenses                                                                (28)
                                                                                    ------------
   Net Investment Income Allocated from Portfolio                                           525
                                                                                    ------------
FUND EXPENSES
Printing Expenses                                                                          7,200
Financial and Fund Accounting Services Fee                                                 5,972
Professional Fees                                                                          2,500
Registration Fees                                                                          1,232
Transfer Agent Fees                                                                          390
Miscellaneous                                                                                 40
                                                                                    ---------------
   Total Fund Expenses                                                                    17,334
Less: Reimbursement of Expenses                                                         (17,316)
                                                                                    ---------------
   Net Fund Expenses                                                                          18
                                                                                    ---------------
NET INVESTMENT INCOME                                                                        507
                                                                                    ===============
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED LOSS ON INVESTMENT ALLOCATED FROM PORTFOLIO                                   (530)
                                                                                    ---------------
NET CHANGE IN UNREALIZED DEPRECIATION ON INVESTMENT ALLOCATED FROM PORTFOLIO             (1,110)
                                                                                    ---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                                   $ (1,133)
                                                                                    ===============
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.
 7
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

FOR THE PERIOD SEPTEMBER 15,2000 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 2000
<TABLE>
<S>                                                                <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income                                               $      507
Net Realized Loss on Investment Allocated from Portfolio                  (530)
Net Change in Unrealized Depreciation of Investment
   Allocated from Portfolio                                             (1,110)
                                                                   -------------
     Net Decrease in Net Assets Resulting from Operations              (1,133)
                                                                   -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income                                                    (506)
                                                                   -------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold                       500,225
Reinvestment of Distributions                                              506
                                                                   -------------
     Net Increase from Transactions in Shares of
        Beneficial Interest                                            500,731
                                                                   -------------
     Total Increase in Net Assets                                      499,092
                                                                   -------------
NET ASSETS
Beginning of Period                                                          -
                                                                   -------------
End of Period                                                         $499,092
                                                                   =============
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Shares of Beneficial Interest Sold                                      49,675
Shares of Beneficial Interest Reinvested                                    50
                                                                   -------------
      Net Increase in Shares of Beneficial Interest                     49,725
                                                                   =============
</TABLE>

    The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD ARE AS FOLLOWS:
<TABLE>
<CAPTION>
                                                               FOR THE PERIOD
                                                              SEPTEMBER 15, 2000
                                                              (COMMENCEMENT OF
                                                              OPERATIONS) THROUGH
                                                               OCTOBER 31, 2000
                                                                ----------------
<S>                                                             <C>
NET ASSET VALUE, BEGINNING OF PERIOD                                 $10.00
                                                                ----------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income                                                  0.08
Net Realized and Unrealized Gain (Loss) on Investments                 0.04
                                                                ----------------
Total From Investment Operations                                       0.12
                                                                ----------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income                                                (0.08)
                                                                ----------------
NET ASSET VALUE, END OF PERIOD                                       $10.04
                                                                ================
RATIOS AND SUPPLEMENTAL DATA
Total Return                                                        1.17%(b)
Net Assets, End of Year (in thousands)                                $499
Ratios to Average Net Assets
    Net Expenses                                                    0.95%(a)
    Net Investment Income                                           7.16%(a)
    Expenses without Reimbursement                                  1.08%(a)
</TABLE>
(a)  Annualized
(b)  Not annualized


The Accompanying Notes are an Integral Part of the Financial Statements.
 9
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    ORGANIZATION--J.P. Morgan Bond Fund-Advisor Series (the "Fund") is a
separate series of J.P. Morgan Institutional Funds, a Massachusetts business
trust (the "Trust") which was organized on November 4, 1992.  The Trust is
registered under the Investment Company  Act of 1940, as amended, as an open-end
management investment company. The Fund commenced operations  on September 15,
2000.

    The Fund invests all of its investable assets in The U.S. Fixed Income
Portfolio (the "Portfolio"), a diversified  open-end management investment
company having the same investment objective as the Fund. The value of such
investment included in the Statement of Assets and Liabilities reflects the
Fund's proportionate interest in the net assets of the Portfolio (approximately
1% at October 31, 2000). The performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including the Schedule of Investments, are included elsewhere in this report and
should be read in  conjunction with the Fund's financial statements.

    The preparation of financial statements in accordance with accounting
principles generally accepted in the  United States of America 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:

    SECURITY VALUATION--Valuation of securities by the Portfolio is discussed in
Note 1 of the Portfolio's Notes  to Financial Statements that are included
elsewhere in  this report.

    SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

    INVESTMENT INCOME--The Fund earns income,  net of expenses, daily on its
investment in the Portfolio.  All net investment income, realized and unrealized
gains  and losses of the Portfolio is allocated pro-rata among the Fund and
other investors in the Portfolio at the time  of such determination.

    EXPENSES--Expenses incurred by the Trust with respect to any two or more
Funds in the Trust are allocated in proportion to the net assets of each Fund in
the Trust, except where allocations of direct expenses to each Fund can
otherwise be made fairly.

    INCOME TAX STATUS--It is the Fund's policy to  distribute all net investment
income and net realized gains to shareholders and to otherwise qualify as a
regulated investment company under the provisions of the Internal Revenue Code.
Accordingly, no provision has been made for federal or state income taxes.

    DISTRIBUTIONS TO SHAREHOLDERS--Distributions  to a shareholder are recorded
on the ex-dividend date. Distributions from net investment income are declared
and paid quarterly. Distributions from net realized gains,  if any, are paid
annually.

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES

    ADMINISTRATIVE SERVICES--The Trust has an Administrative Services Agreement
(the "Services Agreement") with Morgan Guaranty Trust Company  of New York
("Morgan") under which Morgan is responsible for 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 J.P. Morgan Investment Management Inc. ("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 Funds Distributor, Inc. 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.

    ADMINISTRATION--The Trust 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, 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 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 FDI provides similar services.


10
<PAGE>

J.P. MORGAN BOND FUND - ADVISOR SERIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES (CONTINUED)

    SHAREHOLDER SERVICING--The Trust has a Shareholder Servicing Agreement with
Morgan under which Morgan provides account administration and  personal account
maintenance service to Fund shareholders. The agreement provides for the Fund to
pay Morgan a fee for these services that is computed daily and paid monthly at
an annual rate of 0.05% of the average daily net assets  of the Fund.

    FUND SERVICES--The Trust has a Fund Services Agreement with Pierpont Group,
Inc. ("PGI") to assist the Trustees in exercising their overall supervisory
responsibilities for the Trust's affairs. The Trustees of the Trust represent
all the existing shareholders of PGI.

    Each Trustee receives an aggregate annual fee of $75,000 for serving on the
boards 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 represent the Fund's
allocated portion of the total Trustees' fees and expenses. The Trust's Chairman
and Chief Executive Officer also serves as Chairman  of PGI and receives
compensation and employee benefits from PGI.

    DISTRIBUTION--The Fund has adopted a plan under Rule 12b-1 that allows the
Fund to pay distribution fees up to 0.25% of the Fund's average net assets for
the sale  and distribution of its shares.

--------------------------------------------------------------------------------
3. FEDERAL INCOME TAXES

    Income distributions and capital gain distributions, if any, are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to the
differing treatment of net operating losses, foreign currency and tax
allocation. Accordingly, these permanent differences in the character of income
and distributions between financials statements and tax basis have been
reclassified to paid-in-capital. During the year ended October 31, 2000, the
following reclassifications were made: increase Distributions  in Excess of Net
Investment Income by $507, decrease Paid-in-Capital by $187 and decrease
Accumulated Net Realized Loss on Investment by $694. The adjustments  are
primarily attributable to foreign currency reclasses.  Net investment income,
net realized gains and net assets were not affected by this change.

--------------------------------------------------------------------------------
4. BANK LOANS

    The Fund may borrow money for temporary or emergency purposes, such as
funding shareholder redemptions.  Effective May 23, 2000, the Fund, along with
certain other Funds managed by JPMIM, entered into a $150,000,000  bank line of
credit agreement with DeutscheBank. Borrowings under the agreement will bear
interest  at approximate market rates and a commitment fee  is charged at an
annual rate of 0.085% on the unused  portion of the committed amount.

--------------------------------------------------------------------------------
5. Concentrations of Risk

    From time to time, the Fund may have a concentration of several
shareholders which may include affiliates of Morgan holding a significant
percentage of shares outstanding. Investment activities of these shareholders
could have a material impact on the Fund.

--------------------------------------------------------------------------------
6. SUBSEQUENT EVENTS

    On September 13, 2000, J.P. Morgan & Co. Incorporated and The Chase
Manhattan Corporation announced that they have entered into an agreement and
plan of merger. The transaction is expected to close in December 2000 and is
subject to approval by shareholders of both companies.


                                                                             11
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

To the Trustees and Shareholders of
J.P. Morgan Bond Fund-Advisor Series

In our opinion, the accompanying statement of assets and liabilities 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 Bond Fund-Advisor Series (one of the series constituting part of the
J.P. Morgan Institutional Funds, hereafter referred to as the "Fund") at October
31, 2000, the results of its operations,  the changes in its net assets and the
financial highlights for the period September 18, 2000 (commencement  of
operations) through October 31, 2000, in conformity with accounting principles
generally accepted in  the United States of America. 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 auditing standards
generally accepted in the United States of America, 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 provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
December 21, 2000


12
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO
Annual Report October 31, 2000

(The following pages should be read in conjunction with J.P. Morgan Bond
Fund-Advisor Series Annual Financial Statements)


                                                                           13
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------

OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------
<C>             <S>                                              <C>
ASSET BACKED SECURITIES-6.7%
FINANCIAL SERVICES - 6.7%
   $10,000,000  Citibank Credit Card Master Trust I,
                    Series 1998-9, Class A, 5.30%, 1/9/06        $  9,609,300
    15,000,000  Conseco Finance Securitizations Corp.,
                    Series 2000-5, Class A3 SEQ, 7.21%, 2/1/32     15,000,000
     6,600,000  Daimler Chrysler Auto Trust, Series 2000
                    C, Class A2 SEQ, 6.81%, 7/6/03                  6,605,940
    21,000,000  Daimler-Benz Vehicle Trust, Series 1998 A,
                    Class A4 SEQ, 5.22%, 12/22/03                  20,625,780
    12,000,000  Discover Card Master Trust I,
                    Series 1998-4, Class A, 5.75%, 10/16/03        11,925,000
     5,000,000  First USA Credit Card Master Trust, Series
                    1999-1, Class C, 6.42%, 10/19/06                4,846,875
     5,000,000  Ford Credit Auto Owner Trust, Series 1998
                    C, Class D, 7.70%, 1/15/04                      5,013,280
     5,000,000  Ford Credit Auto Owner Trust, Series 1999
                    A, Class D, 8.00%, 6/15/04                      5,035,940
    11,000,000  Ford Credit Auto Owner Trust, Series 2000
                    D, Class A2 SEQ, 7.06%, 4/15/03                11,013,750
    15,486,192  Green Tree Financial Corporation,
                    Series 1993-3, Class B, 6.85%, 10/15/18        13,168,064
    10,000,000  Green Tree Financial Corporation,
                    Series 1999-5, Class B1, 9.20%, 4/1/31          9,437,500
    19,855,000  Sears Credit Account Master Trust,
                    Series 1999-2, Class A, 6.35%, 2/16/07         19,712,243
                                                                 ------------
TOTAL ASSET BACKED SECURITIES                                     131,993,672
                                                                 ------------
  (Cost $132,976,489)

COLLATERALIZED MORTGAGE OBLIGATIONS - 13.9%
FINANCIAL SERVICES - 13.9%
    26,549,732  Chase Commercial Mortgage Securities
                    Corp., Series 1998-2, Class A2 SEQ,
                    6.39%, 11/18/08                                25,500,195
    20,000,000  Chase Manhattan Bank-First Union
                    National Bank, Series 1999-1, Class A2 SEQ,
                    7.44%, 7/15/09                                 20,362,500
     4,900,000  COMM, Series 2000 FL2A, Class H-NW,
                    Floater, 7.97%, 11/15/00, resets monthly
                    off the 1-month LIBOR plus 1.35% with
                    no caps                                         4,900,000
    10,000,000  Commercial Mortgage Acceptance Corp.,
                    Series 1998-C2, Class D, 6.75%, 11/15/09        9,400,000
    42,660,000  DLJ Commercial Mortgage Corporation,
                    Series 2000-CF1, Class A1B SEQ,
                    7.62%, 5/10/10                                 43,673,175
       529,704  FHLMC, Series 1980, Class C SEQ,
                    6.85%, 10/15/21                                   527,717
    28,873,164  First Nationwide Trust, Series 1999-4,
                    Class 3PA1 SEQ, 6.50%, 10/19/29                27,122,584
    20,000,000  First Union Commercial Mortgage Trust,
                    Series 1999-C1, Class A2 SEQ,
                    6.07%, 10/15/08                                18,812,500

PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------

   $  8,895,000  GMAC Commercial Mortgage Securities
                    Inc., Series 1997-C1, Class A3 SEQ,
                    6.87%, 8/15/07                               $  8,786,597
      5,000,000  GS Mortgage, Series 2000 F, Floater,
                    8.37%, 11/15/00                                 5,000,000
      6,950,000  Heller Financial Commercial Mortgage
                    Asset, Series 1999-PH1, Class A2 SEQ,
                    6.85%, 5/15/31                                  6,829,459
     42,943,000  LB-UBS Commerical Mortgage Trust,
                    Series 2000-C3, Class A2 SEQ,
                    7.95%, 1/15/10                                 44,593,643
      7,830,000  Morgan Stanley Capital I,
                    Series 1998-XL2, Class A2 SEQ,
                    6.17%, 10/3/08                                  7,393,235
     30,000,000  Mortgage Capital Funding, Inc.,
                    Series 1998-MC2, Class A2 SEQ,
                    6.42%, 5/18/08                                 28,800,000
     12,500,000  PNC Mortgage Acceptance Corp.,
                    Series 2000-C1, Class A2 SEQ,
                    7.61%, 2/15/10                                 12,828,125
      6,245,000  PNC Mortgage Acceptance Corp.,
                    Series 2000-C2, Class A2 SEQ,
                    7.30%, 9/12/10                                  6,269,393
      2,253,150  SACO I Inc. Series 1997-2,
                    Class 1A5 SEQ, 7.00%, 8/25/36                   2,083,812
        801,712  Vendee Mortgage Trust, Series 1997-1,
                    Class 2C SEQ, 7.50%, 9/15/17                      800,959
                                                                 ------------
 TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS                        273,683,894
                                                                 ------------
  (Cost $271,173,312)

CORPORATE BONDS-10.5%
BANKS - 1.1%
      2,010,000  Bank One Capital III, 8.75%, 9/1/30                 1,954,524
      8,500,000  Capital One Bank, 8.25%, 6/15/05                    8,545,985
      9,975,000  First Union National Bank, 7.80%, 8/18/10           9,939,689
                                                                 -------------
                                                                    20,440,198
                                                                 -------------
CHEMICALS - 0.3%
      1,000,000  Cytec Industries, Inc., 6.85%, 5/11/05                931,120
      5,110,000  Rohm & Haas Co., 7.85%, 7/15/29                     4,986,338
                                                                 -------------
                                                                     5,917,458
                                                                 -------------
 DEFENSE/AEROSPACE - 0.5%
      8,530,000  Lockheed Martin Corp., 8.20%, 12/1/09               8,878,621
                                                                 -------------
ELECTRICAL UTILITY - 0.6%
        506,000  Cogentrix Energy Inc., 8.75%, 10/15/08                507,265
      4,025,000  Dominion Resources Inc., Series 2010-A,
                    8.13%, 6/15/10                                   4,150,017
      7,940,000  Dominion Resources Inc./VA, Series 2000 B,
                    7.63%, 7/15/05                                   8,027,236
                                                                 -------------
                                                                    12,684,518
                                                                 -------------
 ENERGY RESERVES & PRODUCTION(z)
        500,000  Lasmo (USA) Inc., 6.75%, 12/15/07                     476,620
                                                                 -------------
</TABLE>

15
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------
<C>              <S>                                             <C>
FINANCIAL SERVICES - 3.6%
   $  5,493,316  500 Grant St. Association, 144A,
                    Series 1999 A, 6.46%, 12/1/08                 $  5,256,554
      3,400,000  CitiFinancial, 8.70%, 6/15/10                       3,681,010
      3,490,000  Comdisco, Inc., 6.38%, 11/30/01                     2,928,110
      4,205,000  Comdisco Inc., 9.50%, 8/15/03                       3,153,750
      5,000,000  ERAC USA Finance Co., 144A, 6.38%, 5/15/03          4,794,900
        135,000  Ford Motor Credit Co., 7.25%, 1/15/03                 135,342
      1,010,000  Ford Motor Credit Co., 7.38%, 10/28/09                980,660
      6,500,000  Household Finance Corp., 8.00%, 5/9/05              6,647,095
      2,200,000  Keycorp Institutional Capital, Series 1996 B,
                    8.25%, 12/15/26                                  2,000,944
      4,475,000  McKesson Financial of Canada, 144A,
                    6.55%, 11/1/02                                   4,291,659
      6,000,000  Newcourt Credit Group Inc., 6.88%, 2/16/05          5,796,480
      8,835,000  NGC Corp. Capital Trust, Series 1997 B,
                    8.32%, 6/1/27                                    7,775,772
      1,834,912  Oil Purchase Company, 144A, 7.10%, 4/30/02          1,752,341
      1,765,000  Provident Financing Trust I, 7.41%, 3/15/38         1,303,523
     17,500,000  Washington Mutual Financial Corp.,
                    8.25%, 6/15/05                                  18,058,600
                                                                 -------------
                                                                    68,556,740
                                                                 -------------
FOOD & BEVERAGE - 0.1%
      1,410,000  Smithfield Foods Inc., 7.63%, 2/15/08               1,279,575
                                                                 -------------
FOREST PRODUCTS & PAPER - 0.2%
      5,000,000  Champion International Corp., 7.10%, 9/1/05         4,899,250
                                                                 -------------
GAS & WATER UTILITIES - 0.3%
      6,970,000  United Utilities Plc, 6.88%, 8/15/28                5,544,077
                                                                 -------------
MEDIA - 0.6%
      3,125,000  Adelphia Communications Corp.,
                          9.38%, 11/15/09                            2,664,063
      5,540,000  Clear Channel Communications, 7.88%, 6/15/05        5,583,433
      2,500,000  Fox Sports Networks LLC, 8.88%, 8/15/07             2,512,500
      1,900,000  Lamar Media Corp., 8.63%, 9/15/07                   1,852,500
                                                                 -------------
                                                                    12,612,496
                                                                 -------------
MEDICAL PROVIDERS & SERVICES(Z)
     2,000,000  Mariner Post-Acute Network Inc., Series B,
                  9.50%, 4/1/06(d)(+)                                   10,000
                                                                 -------------
MOTOR VEHICLES & PARTS - 0.1%
     2,500,000  DaimlerChrysler NA Holding Corp.,
                    6.90%, 9/1/04                                    2,466,600
                                                                 -------------
MULTI-INDUSTRY - 0.2%
     5,000,000  Cendant Corporation, 7.75%, 12/1/03                  4,893,300
                                                                 -------------
   OIL SERVICES -
1.2%
    15,000,000  Enron Corp., 144A, 7.11%,
12/12/00,
                   resets quarterly off the 3-month LIBOR
plus
                   0.45% with no caps                               14,992,500
     1,497,000  Express Pipeline LP, 144A, Series 1998
B,
                   7.39%, 12/31/17                                   1,278,064

PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------

 $  4,000,000  Phillips Petroleum Co., 8.75%, 5/25/10            $  4,362,560
      350,000  Williams Cos. Inc., 6.20%, 8/1/02                      344,442
                                                                 ------------
                                                                   20,977,566
                                                                 ------------
RAILROADS - 0.3%
   1,601,413  Burlington Northern Railroad Co.,
                 7.33%, 6/23/10                                    1,605,240
   5,350,000  Canadian National Railway Co.,
                 7.00%, 3/15/04                                    5,286,710
                                                                 -----------
                                                                   6,891,950
                                                                 -----------
 REAL ESTATE INVESTMENT TRUST(z)
     830,000  Felcor Lodging LP, 144A, 9.50%, 9/15/08                820,131
                                                                 -----------
SEMICONDUCTOR - 0.1%
   3,125,000  Charter Communications Holdings,
                 LLC/ Charter Communications Holdings
                 Capital Corp., 8.25%, 4/1/07                      2,796,875
                                                                 -----------
TELEPHONE - 1.0%
   4,125,000  Global Crossing Holding Limited,
                 9.13%, 11/15/06                                   3,939,375
   3,000,000  McLeodUSA Inc., 9.25%, 7/15/07                       2,790,000
   1,000,000  XO Communications Inc., 9.63%, 10/1/07                 835,000
     700,000  Qwest Capital Funding Inc., 6.88%, 7/15/28             614,936
  10,000,000  Sprint Capital Corp., 5.88%, 5/1/04                  9,518,100
   2,000,000  Williams Communications Group,
                 10.70%, 10/1/07                                   1,720,000
     500,000  WorldCom, Inc., 6.40%, 8/15/05                         482,035
                                                                  ----------
                                                                  19,899,446
                                                                  ----------
 TRUCKING & SHIPPING & AIR FREIGHT - 0.3%
   1,900,000  Atlantic Express, 10.75%, 2/1/04                     1,634,000
   4,681,987  FedEx Corp., Series 1999-1, Class C,
                 8.25%, 1/15/19                                    4,729,369
                                                                 -----------
TOTAL CORPORATE BONDS                                            206,408,790
                                                                 -----------
  (Cost $216,432,996)

PREFERRED STOCKS - 0.2%
ENTERTAINMENT - 0.2%
     150,000  AT&T Corp., 10.00%, 5/31/45                          3,796,875
                                                                 -----------
       (Cost $4,087,500)

FOREIGN CORPORATE BONDS - 2.4%
BANKS - 0.2%
   4,000,000  Barclays Bank Plc, 144A, 8.55%, 9/29/49              4,026,800
                                                                 -----------
ELECTRICAL EQUIPMENT - 0.1%
   1,785,000  Legrand S.A., 8.50%, 2/15/25                        1,864,450
                                                                 ----------
</TABLE>
    The Accompanying Notes are an Integral Part of the Financial Statements.
15
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------
<C>            <S>                                               <C>
FINANCIAL SERVICES - 0.5%
 $  7,220,000  HSBC Capital Funding LP, 144A,
                 10.18%, 12/29/49, resets quarterly off the
                 3-month LIBOR plus 4.98% with no caps           $  7,901,207
    2,250,000  Montell Finance Co. B.V., 144A,
                 8.10%, 3/15/27                                     2,022,885
                                                                 ------------
                                                                    9,924,092
                                                                 ------------
INFORMATION SERVICES - 0.4%
    8,760,000  Marconi Corporation Plc, 8.38%, 9/15/30              8,353,799
                                                                 ------------
TELEPHONE - 1.2%
  10,000,000  Deutsche Telekom International Finance,
                 8.25%, 6/15/30                                    10,205,200
     300,000  Microcell Telecommunications Inc.,
                 Series B, 11.99%, 6/1/06(y)                          288,000
  12,150,000  Telefonica Europe B.V., 8.25%, 9/15/30               12,441,357
                                                                 ------------
                                                                   22,934,557
                                                                 ------------
TOTAL FOREIGN CORPORATE BONDS                                      47,103,698
                                                                 ------------
  (Cost $48,063,160)

MORTGAGE PASS THRU - 25.2%
   1,032,790  FHLMC, 6.00%, 3/1/11 to 4/1/11                        1,000,680
         337  FHLMC, 12.50%, 8/1/14                                       379
  58,465,854  FNMA, 6.00%, 12/1/28 to 2/1/29                       54,836,488
  11,406,862  FNMA, 6.50%, 1/1/28 to 9/1/29                        10,966,121
   3,178,859  FNMA, 7.00%, 7/1/28 to 10/1/29                        3,115,249
     166,863  FNMA, 7.50%, 5/1/30                                     166,659
   1,899,247  FNMA, 8.00%, 8/1/22 to 6/1/27                         1,924,476
   8,010,000  FNMA, TBA, 6.50%, 11/1/30                             7,697,129
  71,310,000  FNMA, TBA, 7.00%, 11/1/15                            70,864,314
 107,234,000  FNMA, TBA, 7.00%, 9/1/29                            105,056,078
 157,605,000  FNMA, TBA, 7.50%, 12/1/30                           157,210,989
  51,325,080  GNMA, 6.50%, 6/15/28 to 12/15/28                     49,554,364
     193,732  GNMA, 7.00%, 12/15/08                                   194,521
   8,479,978  GNMA, 7.50%, 1/15/27 to 2/15/27                       8,516,441
     218,242  GNMA, 8.50%, 5/15/27                                    223,955
      62,710  GNMA, 9.00%, 12/15/19                                    65,512
  28,460,000  GNMA, TBA, 7.00%, 11/1/30                            28,051,030
                                                                 ------------
TOTAL MORTGAGE PASS THRU                                          499,444,385
                                                                 ------------
  (Cost $497,587,636)

PRIVATE PLACEMENTS - 0.9%
CO-OP APARTMENTS - 0.9%
   4,414,909  180 East End Avenue Note, secured by
                  first mortgage and agreement on co-op
                  apartment building in
                  New York City,
                  6.88%, 1/1/29(f)                                 4,175,577
  10,900,383  200 East 57th Street, secured by first
                  mortgage and agreement on co-op
                  apartment building in New
                  York City,
                  6.50%, 1/1/14(f)                                10,110,105

PRINCIPAL AMOUNT                                                   VALUE
--------------------------------------------------------------------------------

  $ 3,239,184  81 Irving Place Note, secured by first mortgage
                  and agreement on co-op apartment building
                  in New York City, 6.95%, 1/1/29(f)             $  3,070,974
                                                                  -----------
 TOTAL PRIVATE PLACEMENTS                                          17,356,656
                                                                  -----------
  (Cost $18,554,476)

SOVEREIGN GOVERNMENTS AND AGENCIES - 0.2%
   4,700,000  Province of Quebec, 6.50%, 1/17/06                    4,610,465
                                                                  -----------
   (Cost $4,751,612)

U.S. GOVERNMENT AGENCY SECURITIES - 7.7%
   61,175,000  FHLMC, 6.88%, 9/15/10(s)                            61,958,652
   59,297,000  FNMA, 7.00%, 7/15/05(s)                             60,418,306
   29,271,000  FNMA, 7.13%, 6/15/10(s)                             30,153,813
                                                                  -----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES                           152,530,771
                                                                  -----------
  (Cost $151,845,810)

U.S. TREASURY SECURITIES - 11.8%
   38,155,000  U.S. Treasury STRIPS, PO, 6.47%, 11/15/15           15,604,250
   70,195,000  U.S. Treasury Bonds, 8.88%, 2/15/19                 92,251,673
    4,150,000  U.S. Treasury Bonds, 8.00%, 11/15/21                 5,129,151
   40,743,000  U.S. Treasury Bonds, 6.75%, 8/15/26                 44,855,598
    7,005,000  U.S. Treasury Bonds, 5.25%, 2/15/29                  6,375,671
      330,000  U.S. Treasury Notes, 6.75%, 5/15/05(s)                 342,118
   14,950,000  U.S. Treasury Notes, 6.88%, 5/15/06(s)              15,664,760
   50,965,000  U.S. Treasury Notes, 5.75%, 8/15/10(s)              50,917,093
                                                                  -----------
TOTAL U.S. TREASURY SECURITIES                                    231,140,314
                                                                  -----------
  (Cost $223,074,002)

SHORT-TERM INVESTMENTS - 20.5%
COMMERCIAL PAPER - 4.1%
   50,000,000  Morgan Stanley, 6.58%, 11/1/00(s)                   49,990,861
   30,719,000  Salomon Smith Barney 6.60%, 11/1/00(s)              30,713,368
                                                                  ------------
                                                                   80,704,229
                                                                  ------------
 INVESTMENT COMPANIES - 16.3%
 320,833,615  J.P. Morgan Institutional Prime
                 Money Market Fund(s)*                            320,833,615
                                                                  -----------
U.S. TREASURY SECURITIES - 0.1%
 $ 2,700,000  U.S. Treasury Notes, 5.63%, 11/30/00(s)              2,698,552
                                                                 ------------
 TOTAL SHORT-TERM INVESTMENTS                                     404,236,396
                                                                 ------------
  (Cost $404,252,425)
TOTAL INVESTMENT SECURITIES - 100.0%                            $1,972,305,916
                                                                ==============
  (Cost $1,972,799,418)
</TABLE>

    The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000

FUTURES CONTRACTS
<TABLE>
<CAPTION>
                                                                                         NET
                                                                                      UNREALIZED
                                             EXPIRATION       UNDERLYING FACE        APPRECIATION
PURCHASED                                       DATE           AMOUNT AT VALUE      (DEPRECIATION)
-------------------------------------------------------------------------------------------------
<S>       <C>                               <C>              <C>                    <C>
     420  U.S. Two-Year Treasury Note       December 2000       $84,052,500           $(160,122)
     353  U.S. Five-Year Treasury Note      December 2000        35,542,688             334,510
                                                            --------------------------------------
                                                               $119,595,188            $174,388
                                                            ======================================

                                                                                          NET
                                                                                      UNREALIZED
                                             EXPIRATION       UNDERLYING FACE        APPRECIATION
SOLD                                            DATE           AMOUNT AT VALUE      (DEPRECIATION)
-------------------------------------------------------------------------------------------------
    1,115 U.S. Ten-Year Treasury Note       December 2000       $112,283,990          $(746,864)
     133  U.S. Five-Year Treasury Note      December 2000         13,279,219
25,956
                                                            --------------------------------------
                                                                $125,563,209          $(720,908)
                                                            ======================================
</TABLE>
<TABLE>
<S>                                 <C>
PERCENT OF FOREIGN BONDS
CANADA                              0.2%
FRANCE                              0.1%
GERMANY                             0.5%
NETHERLANDS                         0.8%
UNITED KINGDOM                      1.0%
</TABLE>
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
LIBOR - London Interbank Offered Rate
PO - Principal only
resets - The frequency with which a security's coupon changes, based  on current
market conditions or an underlying index.
SEQ - Sequential Payor
STRIPS - Separate Trading of Registered Interest and Principal of Securities.
TBA - Securities purchased (sold) on a forward commitment basis with an
approximate principal amount and no definite maturity date. The actual
principal amount and maturity will be determined upon settlement.
144A - Securities restricted for resale to Qualified Institutional Buyers
(d)  Defaulted security
(f) Illiquid and fair valued security. Approximately $17,356,656 or 0.9% of the
market value of the securities have been valued at fair value.
(s)  Security is fully or partially segregated with custodian as collateral for
futures  or with brokers as initial margin for futures contracts.
(y)  Yield to maturity
(z) Category is less than 0.05% of total investment securities.
 *  Money Market Mutual Fund registered under the Investment Act of 1940,
as amended, and advised by J.P. Morgan Investment Management, Inc.
 (+)   Non-income producing security


The Accompanying Notes are an Integral Part of the Financial Statements.
 17
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------

OCTOBER 31, 2000
<TABLE>
<S>                                                           <C>
ASSETS
Investments at  Value (Cost $1,972,799,418)                     $1,972,305,916
Receivable for Investments Sold                                    215,449,468
Dividend and Interest Receivable                                    16,802,427
Variation Margin Receivable                                            297,047
Prepaid Trustees' Fees and Expenses                                      5,633
Prepaid and Other Assets                                                56,659
                                                              ----------------
TOTAL ASSETS                                                       2,204,917,1
                                                              ----------------
LIABILITIES
Payable for Investments Purchased                                  581,887,694
Advisory Fee Payable                                                   411,029
Due to Custodian                                                        52,420
Administration Service Fee Payable                                      32,785
Fund Services Fee Payable                                                1,108
Accrued Expenses and Other Liabilities                                 123,828
                                                              ----------------
TOTAL LIABILITIES                                                  582,508,864
                                                              ----------------
NET ASSETS
Applicable to Investors' Beneficial Interests
                                                                $1,622,408,286
                                                              ================
</TABLE>

18
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS

FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S>                                                                <C>
INVESTMENT INCOME
INCOME
Interest Income                                                      $84,404,35
Dividend Income (Net of Foreign Withholding Tax of $2,250)             856,607
Dividend Income from Affiliated Investments
  (includes reimbursement from
  affiliate of $719,202)                                             20,927,976
                                                                   -------------
   Investment Income                                                106,188,939
                                                                   -------------
EXPENSES
Advisory Fee                                                          4,648,013
Administrative Services Fee                                             377,452
Custodian Fees and Expenses                                             265,117
Professional Fee                                                         62,299
Fund Services Fee                                                        24,445
Trustees' Fees and Expenses                                              17,961
Administration Fee                                                       11,454
Printing Expenses                                                        10,427
Insurance Expenses                                                        3,710
                                                                   -------------
   Total Expenses                                                     5,420,878
                                                                   -------------
NET INVESTMENT INCOME                                               100,768,061
                                                                   -------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON
   Investment Transactions                                          (33,777,183
   Futures Contracts                                                 3,485,899
   Foreign Currency Contracts and Transactions                       9,635,475
                                                                   -------------
   Net Realized Loss                                               (20,655,809)
                                                                   -------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
   Investment Transactions                                          24,016,731
   Futures Contracts                                                   109,831
   Foreign Currency Contracts and Translations                       (876,484)
                                                                   -------------
   Net Change in Unrealized Appreciation                            23,250,078
                                                                   -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS               $103,362,330
                                                                   =============
</TABLE>

                                                                             19
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

FOR THE YEARS ENDED OCTOBER 31
<TABLE>
<S>                                                                        <C>                   <C>
INCREASE IN NET ASSETS                                                             2000                1999
FROM OPERATIONS

Net Investment Income                                                      $   100,768,061       $     90,985,15
Net Realized Loss on Investments, Futures,
and Foreign Currency Contracts and Transactions                                (20,655,809)           (40,014,602)
Net Change in Unrealized Appreciation (Depreciation) of
Investments, Futures, and Foreign Currency Contracts and Translations           23,250,078            (48,217,908)
                                                                           ------------------         -------------------
     Net Increase in Net Assets Resulting from Operations                      103,362,330              2,752,645
                                                                           ------------------         -------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions                                                                  528,079,947                936,203,363
Withdrawals                                                                   (607,155,670)              (688,024,126)
                                                                           ------------------         -------------------
     Net Increase (Decrease) from Transactions in
       Investors' Beneficial Interest                                          (79,075,723)               248,179,237
                                                                           ------------------         -------------------
     Total Increase in Net Assets                                               24,286,607                250,931,882
                                                                           ------------------         -------------------
NET
ASSETS
Beginning of Year                                                            1,598,121,679              1,347,189,797
                                                                           ------------------         -------------------
End of Year                                                                 $1,622,408,286             $1,598,121,679
                                                                           ==================         ===================
</TABLE>
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
                                                FOR THE YEARS ENDED OCTOBER 31
                                     2000         1999       1998        1997       1996
                                  --------------------------------------------------------
<S>                               <C>            <C>         <C>         <C>        <C>
RATIOS TO AVERAGE NET ASSETS
    Net Expenses                     0.35%       0.36%       0.36%       0.37%      0.37%
    Net Investment Income            6.50%       6.05%       6.42%       6.70%      6.38%
Portfolio Turnover                    531%        465%        115%         93%       186%
</TABLE>

20
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO  NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

OCTOBER 31, 2000

--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    ORGANIZATION--The U.S. Fixed Income Portfolio  (the "Portfolio") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a no load, diversified, open-end management investment company which was
organized as a trust under the laws of the State of New York on January 29,
1993. The Portfolio's investment objective is to provide a high total return
consistent with moderate risk of capital. The Declaration  of Trust permits the
trustees to issue an unlimited number of beneficial interests in the Portfolio.
The Portfolio  commenced operations on July 12, 1993.

    The preparation of financial statements in accordance with accounting
principles generally accepted in the  United States of America 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 Portfolio.

   SECURITY VALUATIONS--Fixed Income Securities, (other than convertible bonds),
with a maturity of 60 days or more held by Portfolio's other than money market
funds will be valued each day based on readily available market quotations
received from independent or affiliated commercial pricing services. Such
pricing services will generally provide bidside quotations. Convertible bonds
are valued at the last sale price on the primary exchange on which the bond is
principally traded. When valuations are not readily available, securities are
valued at fair value as determined in accordance with procedures adopted by the
Trustees. All short-term securities with a remaining maturity of sixty  days or
less are valued using 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 Portfolio'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 Portfolio's Trustees.

    REPURCHASE AGREEMENTS--The Portfolio's  custodian (or designated
subcustodians, as the case may  be under tri-party repurchase agreements) takes
possession of the collateral pledged for investments in repurchase agreements on
behalf of the Portfolio. It is the policy  of the Portfolio to mark-to-market
the collateral on a daily 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 Portfolio has the
right to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event  of default or bankruptcy by the seller of the
agreement,  realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.

    SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

    INVESTMENT INCOME--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date or as of the time that the relevant
ex-dividend and amount becomes known. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization  of premiums.

    FUTURES CONTRACTS--The Portfolio may enter  into futures contracts in order
to hedge existing portfolio securities, or securities the Portfolio intends to
purchase, against fluctuations in value caused by changes in prevailing market
interest rates or securities movements and to manage exposure to changing
interest rates and securities prices. The risks of entering into futures
contracts include the possibility that the change in value of the contract may
not correlate with the changes in value of the underlying securities.  Upon
entering into a futures contract, the Portfolio is required to deposit either
cash or securities in an amount equal to a certain percentage of the contract
value (initial margin). Subsequent payments (variation margin) are made or
received daily, in cash, by the Portfolio. The variation margin is equal to the
daily change in the contract value and is recorded as unrealized gain or loss.
The Portfolio  will recognize a gain or loss when the contract is closed  or
expires.

    FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Portfolio may enter into
forward foreign currency exchange contracts to facilitate transactions of
securities denominated in a foreign currency or to manage the Portfolio's
exposure to foreign currency exchange  fluctuations. The net U.S. dollar value
of foreign currency underlying all contractual commitments held by the Portfolio
and the resulting unrealized appreciation or  depreciation are determined daily
using prevailing exchange rates. The Portfolio bears the risk of an unfavorable
change  in the foreign currency exchange rate underlying the  forward contract.
Additionally, losses may arise if the  counterparties do not perform under the
contract terms.

    COMMITMENTS--The Portfolio may enter into  commitments to buy and sell
investments to settle on future dates as part of their normal investment
activities. These commitments are reported at market value in the financial
statements. Credit risk exists on these commitments to the extent of any
unrealized gains on the underlying securities purchased and any unrealized
losses on the underlying  securities sold. Market risk exists on these
commitments  to the same extent as if the securities were owned on a  settled
basis and gains and losses are recorded and reported


                                                                           21
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

in the same manner. However, during the commitment period, these investments
earn no interest or dividends.

    RESTRICTED AND ILLIQUID SECURITIES--The Portfolio is permitted to invest in
securities that are subject to legal or contractual restrictions on resale or
are illiquid. Restricted securities generally may be resold in transactions
exempt from registration. A security may be considered illiquid if it lacks a
readily available market or if its valuation has not changed for a certain
period of time. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at the current valuation may be
difficult. At the end of the period, the Portfolio had  no investments in
restricted securities and investments  of $17,356,656, which represent 1.1% of
the Portfolio's  net assets in illiquid securities.

    INCOME TAX STATUS--The Portfolio intends to  be treated as a partnership for
federal income tax purposes.  As such, each investor in the Portfolio will be
taxed on  its share of the Portfolio's ordinary income and capital gains. It is
intended that the Portfolio's assets will be  managed in such a way that an
investor in the Portfolio  will be able to satisfy the provisions of the
Internal Revenue Code.

    FOREIGN TAXES--The Portfolio may be subject to foreign taxes on income,
gains on investments or currency repatriation, a portion of which may be
recoverable. The Portfolio will accrue such taxes and recoveries as applicable,
based upon their current interpretation of tax rules and regulations that exist
in the markets in which they invest.

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES

    ADVISORY--The Portfolio has an Investment Advisory Agreement with J.P.
Morgan Investment Management  Inc. ("JPMIM"), an affiliate of Morgan Guaranty
Trust Company of New York ("Morgan") and a wholly  owned subsidiary of J.P.
Morgan & Co. Incorporated  ("J.P. Morgan"). Under the terms of the agreement,
the Portfolio pays JPMIM at an annual rate of 0.30% of the Portfolio's average
daily net assets.

    The Portfolio may invest in one or more affiliated money market funds: J.P.
Morgan Institutional Prime Money Market Fund, J.P. Morgan Institutional Tax
Exempt Money Market Fund, J.P. Morgan Institutional Federal Money Market Fund,
and J.P. Morgan Institutional Treasury Money Market Fund. The Advisor has agreed
to reimburse its advisory fee from the Portfolio in an amount to offset any
investment advisory, administrative fee and shareholder servicing fees related
to a Portfolio investment in an  affiliated money market fund.

    ADMINISTRATIVE SERVICES--The Portfolio has  an Administrative Services
Agreement (the "Services Agreement") with Morgan under which Morgan is
responsible for certain aspects of the administration and operation of the
Portfolio. Under the Services Agreement, the Portfolio 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 Portfolio
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 Funds Distributor, Inc. The portion of this charge
payable by the Portfolio 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.

    ADMINISTRATION--The Portfolio has retained Funds Distributor, Inc. ("FDI"),
a registered broker-dealer, to serve as the co-administrator and distributor for
the Portfolio. Under a Co-Administration Agreement between FDI and the
Portfolio, FDI provides administrative services necessary  for the operations of
the Portfolio, furnishes office space and facilities required for conducting the
business of the Portfolio and pays the compensation of the Portfolio's  officers
affiliated with FDI. The Portfolio 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 portion of this charge payable by the Portfolio is
determined by the proportionate share that  its net assets bear to the net
assets of the Portfolio and  certain other investment companies for which FDI
provides similar services.

    FUND SERVICES--The Portfolio has a Fund Service Agreement with Pierpont
Group, Inc. ("PGI") to assist the Trustees in exercising their overall
supervisory responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of PGI.

    Each Trustee receives an aggregate annual fee of $75,000 for serving on the
boards 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 represent the Fund's
allocated portion of the total Trustees' fees and expenses. The Trust's Chairman
and Chief Executive Officer also serves as Chairman of PGI and


22
<PAGE>

THE U.S. FIXED INCOME PORTFOLIO  NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
                                                                    (Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES (CONTINUED)

receives compensation and employee benefits from PGI. The allocated portion
of such compensation and benefits included in the Fund Services Fee shown on the
Statement of Operations was $4,600.

--------------------------------------------------------------------------------
3. FEDERAL INCOME TAXES

    As of October 31, 2000, accumulated net unrealized depreciation was
$1,490,129, based on the aggregate cost  of investments for federal income tax
purposes of $1,973,796,045, which consisted of unrealized appreciation of
$15,895,128 and unrealized depreciation of $17,385,257.

--------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS

    During the year ended October 31, 2000, the Portfolio purchased
$5,775,778,315 of U.S. Government securities and sold $5,537,371,197 of U.S.
Government securities. Purchases and sales of investment securities other than
U.S. Government securities and short-term investments were $2,607,572,782 and
$2,378,729,859 respectively.

--------------------------------------------------------------------------------
5. CONCENTRATION OF CREDIT RISK

    The Portfolio may have elements of risk not typically associated with
investments in the United States due to concentrated investments in a limited
number of countries or regions which may vary throughout the year. Such
concentrations may subject the Portfolio to additional risks resulting from
political or economic conditions in such countries or regions and the possible
imposition of adverse governmental laws or currency exchange restrictions could
cause the securities and their markets to be less liquid  and their prices more
volatile than those of comparable U.S. securities.

    The ability of the issuers of debt, asset-backed and  mortgage-backed
securities to meet their obligations may be affected by the economic and
political developments  in a specific industry or region. The value of
asset-backed and mortgage-backed securities can be significantly affected by
changes in interest rates or rapid principal payments including prepayments.

    As to illiquid investments, a Portfolio is subject to the risk that should
the Portfolio decide to sell them when a ready buyer is not available at a price
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected.

--------------------------------------------------------------------------------
6. CREDIT AGREEMENT

    The Portfolio is party to a revolving line of credit agreement (the
"Agreement") as discussed more fully in Note 4 of the Fund's Notes to the
Financial Statements which  are included elsewhere in this report.

--------------------------------------------------------------------------------
7. SUBSEQUENT EVENTS

    On September 13, 2000, J.P. Morgan & Co. Incorporated and The Chase
Manhattan Corporation announced that they have entered into an agreement and
plan of merger. The transaction is expected to close in December 2000 and is
subject to approval by shareholders of both companies.


                                                                             23
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Trustees and Investors of
The U.S. Fixed Income Portfolio

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 supplementary data present fairly, in all material
respects, the financial position of The U.S. Fixed Income Portfolio (the
"Portfolio") at October 31, 2000, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the supplementary data for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and supplementary
data (hereafter referred to as "financial statements") are the responsibility of
the Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, 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 audits, which included  confirmation of securities at October
31, 2000 by correspondence with the custodian and brokers,  provide a reasonable
basis for our opinion.

  PricewaterhouseCoopers LLP
  New York, New York
  December 21, 2000


24
<PAGE>

NOTES
--------------------------------------------------------------------------------


                                                                             25


[back cover]

J.P. MORGAN FUNDS - ADVISOR SERIES
       Disciplined Equity Fund
           ---------------------------------------------------------------------
       International Equity Fund
           ---------------------------------------------------------------------
       International Opportunities Fund
           ---------------------------------------------------------------------
       U.S. Small Company Fund
           ---------------------------------------------------------------------
       U.S. Small Company Opportunities Fund
           ---------------------------------------------------------------------
       U.S. Equity Fund
           ---------------------------------------------------------------------
       Diversified Fund
           ---------------------------------------------------------------------
       Bond Fund
           ---------------------------------------------------------------------
       For more information on the J.P. Morgan  Funds - Advisor Series, call
           J.P. Morgan  Funds Services at (800) 766-7722.
           ---------------------------------------------------------------------

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IN-ANN-23748  1000



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