[front cover]
J.P. MORGAN
GLOBAL 50 FUND
[jp morgan logo]
Annual Report
October 31, 2000
<PAGE>
LETTER TO THE SHAREHOLDERS
--------------------------------------------------------------------------------
December 1, 2000
Dear Shareholder,
The J.P. Morgan Global 50 Fund had a total return of 4.64% for the year
ended October 31, 2000. The Fund outperformed its benchmark - the MSCI World
Index--which returned 1.09% for the same time period, but underperformed its
peer group--the Lipper Global Funds Average--which returned 10.26%.
The Fund's net asset value on October 31, 2000 was $18.37 per share,
increasing from $18.06 per share since the start of the year. During the year,
the Fund distributed $0.22 per share from ordinary income, $0.36 per share from
short-term capital gains and $0.0017 from long-term capital gains. The Fund's
net assets were approximately $158 million on October 31, 2000.
This report includes an interview with Shawn Lytle, the lead portfolio
manager of Global 50 Fund. Shawn discusses the global equity markets in detail,
and explains the factors that influenced fund performance during the fiscal
period. Shawn also provides insight in regard to positioning the Fund for the
coming months.
As chairman and president of Asset Management Services, we thank you for
investing with J.P. Morgan. Should you have any comments or questions, please
contact your Morgan representative, or call J.P. Morgan Funds Services at (800)
521-5411.
/signature/ /signature/
Sincerely yours,
Ramon de Oliveira Keith M. Schappert
Chairman of Asset Management Services President of Asset Management Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Letter to the Shareholders 1
Fund Performance 2
Portfolio Q&A 3
Fund Facts & Highlights 5
Financial Statements 6
1
<PAGE>
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 May 31, 1998,* would have increased to
$12,599 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, or ten years (or since
inception).
GROWTH OF $10,000 SINCE FUND INCEPTION
May 31, 1998*-October 31, 2000
[data from line chart]
Lipper Global Funds Average $12,846
J.P. Morgan Global 50 Fund $12,599
MSCI World Index $12,403
PERFORMANCE
<TABLE>
<CAPTION>
TOTAL AVERAGE ANNUAL
RETURNS TOTAL RETURNS
------------ -----------------------
ONE SINCE
YEAR INCEPTION*
AS OF OCTOBER 31, 2000
<S> <C> <C>
J.P. Morgan Global 50 Fund 4.64% 10.03%
MSCI World Index 1.09% 9.32%
Lipper Global Funds Average 10.26% 10.24%
AS OF SEPTEMBER 30, 2000
J.P. Morgan Global 50 Fund 15.74% 12.90%
MSCI World Index 8.16% 10.47%
Lipper Global Funds Average 18.75% 12.15%
</TABLE>
* The Fund commenced operations on May 29, 1998, and has provided an average
annual total return of 10.00% from that date through October 31, 2000. For the
purpose of comparison, the "since inception" returns are calculated from May 31,
1998, the first date when data for the Fund's benchmark and its Lipper category
average were available.
MSCI World Index is an unmanaged, market value-weighted performance average
of 1460 securities listed on the stock exchanges of 23 countries. It does not
include fees or operation expenses and is not available for actual investment.
Past performance is no guarantee of future results. Fund returns are net of
fees, assume the reinvestment of distributions and reflect reimbursement of
certain fund expenses as described in the prospectus. Had expenses not been
subsidized, returns would have been lower. Lipper Analytical Services, Inc. is a
leading source of mutual fund data.
2
<PAGE>
PORTFOLIO MANAGER Q&A
--------------------------------------------------------------------------------
[photo of Shawn Lytle]
The following is an interview with SHAWN LYTLE, vice president and
portfolio manager with J.P. Morgan's Global Micro Group in London. Shawn has
been a J.P. Morgan Investment Management employee since 1992, and was previously
responsible for new business development for independent U.S. money managers.
Since joining Morgan, he has attended the analyst training program and served a
brief tour in J.P. Morgan Investment's San Francisco Private Banking office.
Shawn holds a B.A. in business administration from Georgetown University.
WHAT DETERMINED THE DYNAMICS AND PERFORMANCE OF GLOBAL MARKETS OVER THE PAST
YEAR?
The dynamics of the market can only be described as volatile, which was
either very sweet or very sour depending on how your investments were positioned
throughout the year.
During the first four months of this reporting period, November 1999 through
February 2000, for example, the technology-media-telecommunications (TMT)
sectors were the undisputed heavy weights of the world. Owing largely to
investor enthusiasm for these sectors, the technology-heavy Nasdaq soared,
significantly outperforming just about every other major equity index.
Towards the beginning of March, however, the hammer fell on TMT issues, as
investors finally re-evaluated the valuations and growth potential of these
stocks in what was shaping up to be a slowing U.S. and global economy. Many TMT
issues suffered declines of more than 50%, particularly in the dot.com area, as
investors fled in favor of slower growing, but more stable sectors, such as
pharmaceuticals, consumer non-durables, and utilities. This shift benefited
value investors who had previously taken advantage of depressed prices in what
were perceived as "old economy" sectors.
Since the summer months, we continued to experience extreme volatility
month-to-month, with no clear pattern to it. In some months growth prevailed.
In others, value. In all, it was a very difficult market to get a handle on.
HOW DID THE FUND PERFORM OVER THIS PERIOD?
We did not perform as well as we would have liked, relative to the
competition. This was largely the result of our maintaining a neutral weighting
in the TMT sectors during their period of substantial outperformance. This
limited our exposure to the volatility of these sectors, but it also limited the
gains we were able to achieve during their run-up. Other funds, especially
growth funds, bet heavily on TMT when it was hot in the early stages, and got
out before it cooled completely. This led to their outperformance over the past
12 months.
We felt that was a dangerous game to play. We pursue overweight positions in
sectors when there is an attractive valuation with growth to be captured, but
won't take them just to pursue the latest, greatest momentum play. To do so
would create more volatility than returns in the long run.
WHAT STOCKS NOTABLY HELPED PERFORMANCE?
Pharmacia Corporation was one. It was the beneficiary of a very smart
merger with Monsanto, which we previously held in the portfolio. As a merged
entity, it has very strong margin expansion prospects going forward, and most
observers, including J.P. Morgan, are predicting greater than 20%
earnings-per-share growth over the next three years.
In the global media sector, News Corp. has some of the most valuable global
media assets (Fox, UK newspapers, Asian Satellites), which are more valuable
than those held by Disney, Viacom, or Time-Warner. During 2000, the market
began to realize this value, and the company's stock price appreciated
accordingly.
Elsewhere, in the consumer non-durables area, Nestle performed well as
investors began to see some of the rewards of a multi-year restructuring program
that rationalized and consolidated the company's brands. By improving efficiency
and cutting costs, Nestle is achieving sales growth that is well above industry
averages and a bottom line that is growing even faster. This stock has
outperformed the global sector and the overall market this year.
3
<PAGE>
PORTFOLIO MANAGER Q&A
--------------------------------------------------------------------------------
(Continued)
HOW ABOUT THOSE THAT DID LESS WELL?
WorldCom, the world's top data communications provider, among other things,
was very disappointing. It did not participate in the TMT market run of 1999's
fourth quarter. This resulted in investors not having a cushion to rely on when
slower earnings-per-share growth and a failed merger with Sprint sent its stock
tumbling by more than 50% over the course of the year. This is not to say that
WorldCom is unhealthy, just that it is not growing as fast as in the past. As a
result, we sold our holdings of WorldCom in the third quarter of 2000.
Another disappointment was Level 3 Communications, a provider of fiber
optic broadband networks to communication companies. It is a strong company,
with an excellent business plan and bright prospects, but unfortunately, it fell
victim to the general sell-off in telecoms. Based on our faith in Level 3
Communications' future, we are continuing to buy more, however, it lowered the
Fund's performance during the fiscal period.
In the semiconductor sector, Hyundai Electronics was hit by slowing PC
sales worldwide and concerns about technology companies in general. We think it
was, and is, one of the best values in the sector. But, unfortunately, it
continued to sell at low multiples, relative to its U.S. or European peers,
through much of this reporting period.
WHAT DO YOU THINK WILL MOVE THE MARKETS IN THE MONTHS AHEAD?
Investors have questioned some of the valuations for technology stocks, and
we think they have come closer to appreciating the true worth of their
holdings, rather than the speculative value placed upon them a few quarters'
ago. Hopefully, as expectations moderate, we will not see the wild swings we
have experienced lately.
Unfortunately, we anticipate there will be continued monthly sector rotation
as investors seek their bearings and try to get a better sense of where interest
rates, earnings, and global growth are heading. If investors believe that a
soft landing can be achieved, it will undoubtedly lead to more stable markets.
Until early 2001, sector rotation will be driven by day-to-day news about
earnings and the economy. Therefore, market volatility is likely to remain high
WHAT, IN YOUR OPINION, WOULD BE DEFINITIVE SIGNS OF MARKET STABILITY?
If we were to see an interest rate cut, it would lighten the hearts of even
the most cynical investor. Such a move would strongly indicate that inflation
has been contained, and that growth can continue in a low inflation
environment. Stabilization in forward earnings estimates for companies would
help, as would stabilization in oil prices.
HOW ARE YOU POSITIONING FOR THE QUARTER GOING FORWARD?
In light of our outlook on market volatility, we are becoming more defensive
in the Fund. To achieve the risk/reward profile we desire, we are emphasizing
high quality companies with stable, predictable growth patterns and proven
records in delivering earnings growth over time. Several such companies are to
be found in the pharmaceutical and consumer non-durables sectors. At the same
time, we are generally avoiding commitments to higher growth companies whose
valuations continue to be stretched. Many such companies still reside in the
technology sector, despite the sector's heavy losses this year.
4
<PAGE>
FUND FACTS
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
J.P. Morgan Global 50 Fund seeks to provide a high total return from a
concentrated portfolio of global equity securities.
--------------------------------------------------------------------------------
Inception Date: 5/29/1998
--------------------------------------------------------------------------------
Fund Net Assets as of 10/31/2000: $157,735,780
--------------------------------------------------------------------------------
Income Dividend Payable Dates: 12/20/2000
--------------------------------------------------------------------------------
Capital Gain Dividend Payable Dates
(if applicable): 12/20/2000
EXPENSE RATIO
The Fund's current expense ratio of 1.50% covers shareholders' expenses for
custody, tax reporting, investment advisory, and shareholder services, after
reimbursement.The Fund is no-load and does not charge any sales, redemption, or
exchange fees. There are no additional charges for buying, selling or
safekeeping fund shares, or for wiring redemption proceeds from the Fund.
FUND HIGHLIGHTS
--------------------------------------------------------------------------------
All data as of October 31, 2000
COUNTRY ALLOCATION
(As a percentage of total investment securities)
[data from pie chart]
<TABLE>
<S> <C>
Europe/Africa 41.4%
United States 28.4%
Japan 14.9%
Asia Pacific ex-Japan 10.5%
Latin America 2.6%
Canada 2.2%
</TABLE>
<TABLE>
<S> <C> <C>
LARGEST EQUITY % OF TOTAL
HOLDINGS COUNTRY INVESTMENTS
--------------------------------------------------------------------------------
Ambac Financial Group, Inc. United States 2.8%
Bristol-Myers Squibb Co. United States 2.7%
Royal & Sun Alliance
Insurance Group Plc United Kingdom 2.6%
Philip Morris Co., Inc. United States 2.6%
Vodafone Group Plc United Kingdom 2.5%
Zurich Financial Services AG Switzerland 2.5%
Exxon Mobil Corp. United States 2.5%
Pharmacia Corp. United States 2.4%
Takeda Chemical
Industries Ltd. Japan 2.4%
Nestle SA Switzerland 2.3%
</TABLE>
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 in foreign securities
which are subject to special risks such as economic and political
instability and currency fluctuation.
CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
5
<PAGE>
J.P. MORGAN GLOBAL 50 FUND - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 94.1%
AUSTRALIA - 3.7%
278,300 News Corp. Ltd.(s) $ 2,909,893
182,185 WMC Ltd. ADR(s) 2,778,321
--------------
5,688,214
--------------
BERMUDA - 2.6%
71,500 Asia Global Crossing Ltd.(s)(+) 500,500
63,500 Tyco International Ltd.(s) 3,599,656
--------------
4,100,156
--------------
CANADA - 0.2%
4,100 Seagram Co. Ltd. (The)(s) 234,213
--------------
FINLAND - 2.2%
331,753 Stora Enso OYI, R Shares(s) 3,393,681
--------------
FRANCE - 7.5%
48,631 Alcatel O(+)(s) 2,889,501
35,728 BNP Paribas S.A.(s) 3,076,763
15,500 Suez Lyonnaise des Eaux S.A.(s) 2,362,180
23,250 Total Fina Elf S.A.(s) 3,322,555
--------------
11,650,999
--------------
GERMANY - 2.2%
120,000 Commerzbank AG(s) 3,381,929
--------------
HONG KONG - 2.3%
422,000 China Mobile (Hong Kong) Ltd.(s)(+) 2,718,968
390,000 China Unicom Ltd.(s) 782,590
--------------
3,501,558
--------------
JAPAN - 14.9%
1,166,000 Chuo Mitsui Trust & Banking Co.(s) 3,555,985
275,000 Hitachi, Ltd.(s) 2,946,698
117,000 Matsushita Electric Industrial Co. Ltd.(s) 3,396,740
1,016,000 Mitsubishi Chemical Corp.(s) 3,210,184
635,000 Nippon Yusen Kabushiki Kaisha(s) 2,977,562
13,100 Rohm Co. Ltd.(s) 3,300,495
57,000 Takeda Chemical Industries Ltd.(s) 3,753,366
--------------
23,141,030
--------------
NETHERLANDS - 4.0%
62,800 Heineken N.V.(s) 3,406,679
72,985 Koninklijke (Royal) Philips Electronics N.V.(s) 2,864,838
--------------
6,271,517
--------------
SINGAPORE - 4.4%
293,480 DBS Group Holdings Ltd.(s) 3,460,573
233,000 Singapore Press Holdings Ltd.(s) 3,331,416
--------------
6,791,989
--------------
SOUTH AFRICA - 1.9%
500,465 South African Breweries Plc(s) 2,999,334
--------------
SHARES/PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
SPAIN - 2.0%
237,000 Banco Bilbao Vizcaya Argentaria, S.A.(s) $ 3,153,840
-------------
SWEDEN - 1.9%
172,000 Skandia Forsakrings AB(s) 2,909,581
-------------
SWITZERLAND - 11.1%
1,250 Compagnie Financiere Richemont AG,
A Units(s) 3,475,891
15,600 Credit Suisse Group(s) 2,923,753
1,755 Nestle S.A.(s) 3,635,713
364 Roche Holding AG(s) 3,323,998
7,984 Zurich Financial Services AG(s) 3,862,838
-------------
17,222,193
-------------
UNITED KINGDOM - 8.6%
612,300 British Airways Plc(s) 2,738,324
187,000 Cable & Wireless Plc(s) 2,647,379
562,900 Royal & Sun Alliance Insurance Group Plc(s) 4,009,038
937,537 Vodafone Group Plc(s) 3,903,568
-------------
13,298,309
-------------
UNITED STATES - 24.6%
53,500 Ambac Financial Group, Inc.(s) 4,269,968
67,800 Bristol-Myers Squibb Co.(s) 4,131,562
196,000 E*trade Group, Inc.(s)(+) 2,854,250
42,700 Exxon Mobil Corp.(s) 3,808,306
62,200 Level 3 Communications, Inc.(s)(+) 2,966,162
86,300 Micron Technology, Inc.(s)(+) 2,998,925
50,200 Nortel Networks Corp.(s) 2,284,100
68,500 Pharmacia Corp.(s) 3,767,500
109,000 Philip Morris Co., Inc.(s) 3,992,125
93,000 Sprint Corp. (PCS Group)(s)(+) 3,545,625
44,000 Time Warner Inc.(s) 3,340,039
-------------
37,958,562
-------------
TOTAL COMMON STOCKS 145,697,105
-------------
(Cost $143,539,170)
CONVERTIBLE BONDS - 0.1%
HONG KONG - 0.1%
$171,000 China Mobile (Hong Kong) Ltd., 2.25%,
11/03/05 177,840
-------------
(Cost $171,000)
CONVERTIBLE PREFERRED STOCKS - 2.0%
CANADA - 2.0%
58,900 Seagram Co. Ltd., 7.50% 3,092,250
-------------
(Cost $3,157,372)
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
6
<PAGE>
J.P. MORGAN GLOBAL 50 FUND - SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SHARES/PRINCIPAL AMOUNT VALUE
--------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS - 3.8%
INVESTMENT COMPANIES - 3.6%
5,630,033 Hamilton Money Fund $ 5,630,033
------------
U.S. TREASURY SECURITIES - 0.2%
$ 290,000 U.S. Treasury Bills, 6.31%, 3/22/01(s)(y) 283,084
------------
TOTAL SHORT-TERM INVESTMENTS 5,913,117
------------
(Cost $5,920,032)
TOTAL INVESTMENT SECURITIES - 100.0% $154,880,312
============
(Cost $152,787,574)
</TABLE>
<TABLE>
<CAPTION>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
NET
UNREALIZED
CONTRACTS SETTLEMENT SETTLEMENT APPRECIATION
TO SELL DATE VALUE VALUE (DEPRECIATION)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6,706,821 AUD 12/13/00 $ 3,700,153 $ 3,477,091 $ 223,062
18,493,792 CHF 12/13/00 10,493,659 10,327,950 165,709
15,928,211 EUR 12/13/00 13,369,881 13,527,940 (158,059)
1,188,889,869 JPY 12/13/00 11,143,259 10,973,637 169,622
6,663,148 SEK 12/13/00 690,482 667,355 23,127
19,667,003 SGD 12/13/00 11,368,210 11,255,952 112,258
14,510,405 ZAR 12/13/00 2,009,334 1,911,112 98,222
--------------------------------------------------------
$52,774,978 $52,141,037 $ 633,941
========================================================
</TABLE>
<TABLE>
<CAPTION>
NET
UNREALIZED
CONTRACTS SETTLEMENT SETTLEMENT APPRECIATION
TO BUY DATE VALUE VALUE (DEPRECIATION)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,022,000 AUD 12/13/00 $ 1,068,020 $ 1,048,288 $ (19,732)
3,570,996 CAD 12/13/00 2,406,332 2,340,522 (65,810)
25,860,751 EUR 12/13/00 22,114,313 21,963,715 (150,598)
1,788,793 GBP 12/13/00 2,526,330 2,599,803 73,473
914,109 GBP for
1,567,000 EUR 12/13/00 1,330,864 1,328,552 (2,312)
403,558,110 JPY 12/13/00 3,783,104 3,724,904 (58,200)
283,288,667 JPY for
4,598,842 CHF 12/13/00 2,568,246 2,614,798 46,552
7,703,442 SGD 12/13/00 4,459,000 4,408,886 (50,114)
1,136,869 SGD for
1,206,000 AUD 12/13/00 625,238 650,675 25,437
1,142,323 SGD for
768,000 EUR 12/13/00 652,268 653,782 1,514
--------------------------------------------------------
$41,533,715 $41,333,925 $(199,790)
========================================================
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS
NET
UNREALIZED
EXPIRATION UNDERLYING FACE APPRECIATION
PURCHASED DATE AMOUNT AT VALUE (DEPRECIATION)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
33 DJ Euro Index December 2000 $1,429,590 $10,825
8 FTSE 100 Index December 2000 753,884 1,731
11 S&P 500 Index December 2000 3,960,550 75,739
5 TOPIX Index December 2000 631,468 (1,923)
--------------------------------------------------------
$6,775,492 $86,372
========================================================
</TABLE>
<TABLE>
<S> <C>
MARKET SECTORS % OF TOTAL
(UNAUDITED)
INVESTMENTS
INDUSTRIAL CYCLICAL 17.5%
FINANCE 12.6%
INSURANCE 9.7%
PHARMACEUTICALS 9.7%
TELECOMMUNICATIONS 9.2%
CONSUMER STABLE 9.1%
CONSUMER SERVICES 8.3%
CONSUMER CYCLICAL 5.8%
ENERGY 4.6%
SEMICONDUCTORS 4.1%
SHORT-TERM INVESTMENTS 3.8%
SOFTWARE & SERVICES 3.4%
RETAIL 2.2%
</TABLE>
ADR - American Depositary Receipt
AUD - Australian Dollar
CHF - Swiss Franc
EUR - Euro
GBP - British Pound
JPY - Japanese Yen
SEK - Swedish Krona
SGD - Singapore Dollar
ZAR - South African Rand
(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
(+) Non-income producing security
The Accompanying Notes are an Integral Part of the Financial Statements.
7
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $152,787,574) $154,880,312
Foreign Currency at Value (Cost $857,963) 859,086
Receivable for Investments Sold 4,712,275
Unrealized Appreciation of Forward Foreign Currency Contracts 938,976
Receivable for Shares of Beneficial Interest Sold 1,129,103
Foreign Tax Reclaim Receivable 222,388
Dividend and Interest Receivable 215,790
Variation Margin Receivable 101,408
Receivable for Expense Reimbursement 57,236
Deferred Organizaton Expense 7,566
Prepaid Trustees' Fees and Expenses 360
Prepaid and Other Assets 1,359
------------
TOTAL ASSETS 163,125,859
------------
LIABILITIES
Payable for Investments Purchased 3,395,863
Unrealized Depreciation of Forward Foreign Currency Contracts 504,825
Due to Custodian 620,505
Payable for Shares of Beneficial Interest Redeemed 507,457
Advisory Fee Payable 165,406
Shareholder Servicing Fee Payable 33,081
Administrative Service Fee Payable 6,334
Fund Services Fee Payable 114
Accrued Expenses and Other Liabilities 156,494
------------
TOTAL LIABILITIES 5,390,079
------------
NET ASSETS
Applicable to 8,586,686 shares outstanding
(par value $0.001, unlimited shares authorized) $157,735,780
============
Net Asset Value, Offering and Redemption Price per Share $18.37
============
ANALYSIS OF NET ASSETS
Paid-in Capital $146,128,468
Undistributed Net Investment Income 1,927,962
Accumulated Net Realized Gain on Investments,
Futures Contracts, and Foreign Currency
Contracts and Transactions 7,084,725
Net Unrealized Appreciation on Investments, Futures
Contracts, and Foreign Currency Contracts and Translations 2,594,625
------------
NET ASSETS $157,735,780
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
INCOME
Dividend Income (Net of Foreign Withholding Tax of $248,687) $ 2,735,714
Interest Income 358,867
-----------
Investment Income 3,094,581
-----------
EXPENSES
Advisory Fee 1,869,989
Shareholder Servicing Fee 373,998
Custody Fee 183,197
Administrative Services Fee 72,763
Professional Fees 50,478
Registration Fee 36,593
Printing Expenses 10,920
Fund Services Fee 2,338
Trustees' Fees and Expenses 1,598
Organization Expenses 1,430
Administration Fee 979
Miscellaneous 93,982
-----------
Total Expenses 2,698,265
Less: Reimbursement of Expenses (453,861)
-----------
Net Expenses 2,244,404
-----------
NET INVESTMENT INCOME 850,177
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON
Investment Transactions 8,056,272
Futures Contracts (758,563)
Foreign Currency Contracts and Transactions 743,598
-----------
Net Realized Gain 8,041,307
-----------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
Investment Transactions (9,615,627)
Futures Contracts 69,578
Foreign Currency Contracts and Translations 738,444
-----------
Net Change in Unrealized Appreciation (8,807,605)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 83,879
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE YEARS ENDED OCTOBER 31
<TABLE>
<CAPTION>
INCREASE IN NET ASSETS 2000 1999
FROM OPERATIONS
<S> <C> <C>
Net Investment Income $ 850,177 $ 245,249
Net Realized Gain on Investment, Futures Contracts, and
Foreign Currency Transactions 8,041,307 8,174,687
Net Change in Unrealized Appreciation (Depreciation) on
Investments, Futures Contracts, and Foreign Currency
Contracts and Translations (8,807,605) 17,232,532
----------------- -------------
Net Increase in Net Assets Resulting from Operations 83,879 25,652,468
----------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (1,261,351) -
Net Realized Gain (2,090,348) -
----------------- -------------
Total Distributions to Shareholders (3,351,699) -
----------------- -------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 173,805,658 30,583,982
Reinvestment of Distributions 2,618,994 -
Cost of Shares of Beneficial Interest Redeemed (116,491,492) (31,651,984)
----------------- -------------
Net Increase (Decrease) from Transactions
in Shares of Beneficial Interest 59,933,160 (1,068,002)
----------------- -------------
Total Increase in Net Assets 56,665,340 24,584,466
----------------- -------------
NET ASSETS
Beginning of Year 101,070,440 76,485,974
----------------- -------------
End of Year $157,735,780 $101,070,440
================= =============
Undistributed Net Investment Income $1,927,962 $1,614,387
================= =============
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Shares of Beneficial Interest Sold 8,705,016 1,838,738
Shares of Beneficial Interest Reinvested 134,445 -
Shares of Beneficial Interest Redeemed (5,848,906) (1,968,762)
----------------- -------------
Net Increase (Decrease) in Shares of Beneficial Interest 2,990,555 (130,024)
================= =============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD ARE AS FOLLOWS:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 29, 1998
(COMMENCEMENT OF
FOR THE YEARS ENDED OCTOBER 31 OPERATIONS) THROUGH
2000 1999 OCTOBER 31, 1998
--------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE, BEGINNING OF PERIOD $18.06 $13.36 $15.00
--------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.16 0.06 0.22
Net Realized and Unrealized Gain (Loss) on
Investments, Futures Contracts,
and Foreign Currency Contracts and Translations 0.73 4.64 (1.86)
--------------------------------------------------------------
Total From Investment Operations 0.89 4.70 (1.64)
--------------------------------------------------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.22) - -
Net Realized Gains (0.36) - -
--------------------------------------------------------------
Total Distributions to Shareholders (0.58) - -
--------------------------------------------------------------
NET ASSET VALUE PER SHARE, END OF PERIOD $18.37 $18.06 $13.36
==============================================================
RATIOS AND SUPPLEMENTAL DATA
Total Return 4.64% 35.18% (10.93)%(a)
Net Assets, End of Period (in thousands) $157,736 $101,070 $76,486
Ratios to Average Net Assets
Net Expenses 1.50% 1.50% 1.50%(b)
Net Investment Income 0.57% 0.28% 0.43%(b)
Expenses Without Reimbursement 1.80% 1.97% 2.07%(b)
Portfolio Turnover 101% 84% 54%
</TABLE>
(a) Not Annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--The J.P. Morgan Global 50 Fund (the "Fund") is a series of
J.P. Morgan Series Trust, a Massachusetts business trust (the "Trust"). The
Trust, which was organized on August 15, 1996, is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company. The Fund's investment objective is to provide
high total return from a concentrated portfolio of global equity securities. The
Trustees of the Trust have divided the beneficial interests in the Fund into
two classes of shares, Institutional Shares and Select Shares. Currently, the
Fund only offers Select Shares. The Fund commenced operations on May 29, 1998.
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares in the Fund.
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 VALUATIONS--Securities traded on principal securities exchanges are
valued at the last reported sales price, or mean of the latest bid and asked
prices when no last sales price is available. Securities traded
over-the-counter and certain foreign securities are valued at the quoted bid
price from a market maker or dealer. 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 when the domestic market is closed. If events materially affecting
the value of foreign securities occur between the time when the exchange on
which they are traded closes and the time when the Fund's net assets are
calculated, such securities will be valued at fair value in accordance with
procedures adopted by the Trustees.
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 on the ex-dividend date or at 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. Net investment
income, excluding shareholder servicing fees, and realized and unrealized gains
and losses are allocated daily to each class of shares based upon the relative
proportion of net assets of each class at the beginning of each day.
ORGANIZATION EXPENSES--The Fund incurred organization expenses in the amount
of $20,000, which have been deferred and are being amortized on a straight-line
basis over a period not to exceed five years beginning with the commencement of
operations of the Fund.
FUTURES CONTRACTS--The Fund may enter into futures contracts in order to
hedge existing portfolio securities, or securities the Fund 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 Fund 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 Fund. The variation margin is equal to the daily change in the contract
value and is recorded as unrealized gain or loss. The Fund will recognize a gain
or loss when the contract is closed or expires.
FOREIGN CURRENCY TRANSACTIONS--All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the rates
of exchange prevailing on the respective dates of such transactions. Realized
and unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates and are reported in the Statement of
Operations.
Although the net assets of the Fund are presented at the exchange rates and
market values prevailing at the end of the period, the Fund does not isolate the
portion of the results of operations arising from changes in foreign exchange
rates from the fluctuations arising from changes in the market prices of
securities during the period.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Fund may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to manage the Fund's exposure to foreign
currency exchange fluctuations. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the Fund and the resulting
unrealized appreciation or depreciation are determined daily using prevailing
exchange rates. The Fund bears the risk of an unfavorable change in the
12
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
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.
FOREIGN TAXES--The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The
Fund 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.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions to a shareholder are recorded
on the ex-dividend date. Distributions from net investment income and
distributions from net realized gains, if any, are declared and paid annually.
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
ADVISORY--The Trust, on behalf of the Fund, 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 Fund pays JPMIM at an annual rate of 1.25% of the Fund's
average daily net assets.
ADMINISTRATIVE SERVICES--The Trust 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 Fund. Under the
Services Agreement, the Trust has agreed to pay Morgan a fee equal to its
allocable share of an annual complex-wide charge. This charge is calculated
based on the aggregate average daily net assets of the Trust and certain other
registered investment companies for which JPMIM acts as investment advisor in
accordance with the following annual schedule: 0.09% on the first $7 billion of
their aggregate average daily net assets and 0.04% of their aggregate average
daily net assets in excess of $7 billion less the complex-wide fees payable to
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.
Morgan has agreed to reimburse the Fund to the extent necessary to maintain
the total operating expenses (which excludes interest and dividend expenses,
taxes and extraordinary items) of the Select Shares at no more than 1.50% of the
average daily net assets of the Fund. This reimbursement arrangement can be
changed or terminated at any time after February 28, 2001 at the option of
Morgan.
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.
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 0.25% of the average daily net assets of the Select Shares.
Morgan, Charles Schwab & Co. ("Schwab") and the Trust are parties to
separate services and operating agreements (the "Schwab Agreements") whereby
Schwab makes Select Shares available to customers of investment advisors and
other financial intermediaries who are Schwab's clients. The Fund is not
responsible for payments to Schwab under the Schwab Agreements; however, in the
event the services agreement with Schwab is terminated for reasons other than a
breach by Schwab and the relationship between the Trust and Morgan is
terminated, the Fund would be responsible for the ongoing payments to Schwab
with respect to pre-termination Select Shares.
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 Fund represent
all the existing shareholders of PGI.
13
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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. The allocated portion of such
compensation and benefits included in the Fund Services Fee shown on the
Statement of Operations was $200.
--------------------------------------------------------------------------------
3. FEDERAL INCOME TAXES
As of October 31, 2000, accumulated net unrealized appreciation was
$807,591, based on the aggregate cost of investments for federal income tax
purposes of $154,072,721, which consisted of unrealized appreciation of
$13,668,832 and unrealized depreciation of $12,861,241.
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 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 Undistributed Net Investment Income by $724,749, decrease
Accumulated Net Realized Gain by $743,598 and decrease Paid-in Capital by
$18,849. The adjustments are primarily attributable to foreign currency losses.
Net Investment Income, Net Realized Gains, and Net Assets were not affected by
this change.
--------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS
During the year ended October 31, 2000, the Fund purchased $194,360,196 of
investment securities and sold $140,697,367 of investment securities other than
U.S. government securities and short-term investments.
--------------------------------------------------------------------------------
5. 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 at an annual rate of
0.085% on the unused portion of the committed amount.
14
<PAGE>
J.P. MORGAN GLOBAL 50 FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 2000
--------------------------------------------------------------------------------
6. CONCENTRATIONS OF CREDIT RISK
The Fund may have elements of risk not typically associated with
investments in the United States of America due to concentrated investments in a
limited number of countries or regions which may vary throughout the year. Such
concentrations may subject the Fund 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.
From time to time, the Fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities
of these shareholders could have a material impact on the Fund.
--------------------------------------------------------------------------------
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.
================================================================================
TAX INFORMATION NOTICE (UNAUDITED)
For corporate taxpayers 17.90% of the ordinary income distributions paid
during the fiscal year ended October 31, 2000 qualify for the corporate
dividends received deduction.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Trustees and Shareholders of
J.P. Morgan Global 50 Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of J.P. Morgan Global 50 Fund (one of
the Funds comprising the J.P. Morgan Series Trust, hereafter referred to as the
"Fund") 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 financial highlights for each of the two years in the period
then ended and for the period May 29, 1998 (commencement of operations) through
October 31, 1998, 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 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
16
<PAGE>
[back cover]
J.P. MORGAN FUNDS
Federal Money Market Fund
---------------------------------------------------------------------
Prime Money Market Fund
---------------------------------------------------------------------
Emerging Markets Debt Fund
---------------------------------------------------------------------
Tax Aware Enhanced Income Fund:
Select Shares
---------------------------------------------------------------------
Tax Exempt Money Market Fund
---------------------------------------------------------------------
Short Term Bond Fund
---------------------------------------------------------------------
Bond Fund
---------------------------------------------------------------------
Global Strategic Income Fund
---------------------------------------------------------------------
Tax Exempt Bond Fund
---------------------------------------------------------------------
California Bond Fund:
Select Shares
---------------------------------------------------------------------
New York Tax Exempt Bond Fund
---------------------------------------------------------------------
Diversified Fund
---------------------------------------------------------------------
Disciplined Equity Fund
---------------------------------------------------------------------
Tax Aware U.S. Equity Fund:
Select Shares
---------------------------------------------------------------------
U.S. Equity Fund
---------------------------------------------------------------------
U.S. Small Company Fund
---------------------------------------------------------------------
U.S. Small Company Opportunities Fund
---------------------------------------------------------------------
Emerging Markets Equity Fund
---------------------------------------------------------------------
European Equity Fund
---------------------------------------------------------------------
Global 50 Fund:
Select Shares
---------------------------------------------------------------------
Global Healthcare Fund:
Select Shares
---------------------------------------------------------------------
International Equity Fund
---------------------------------------------------------------------
International Opportunities Fund
---------------------------------------------------------------------
For more information on the J.P. Morgan
Funds, call J.P. Morgan Funds
Services at (800) 521-5411.
---------------------------------------------------------------------
Morgan Guaranty Trust Company MAILING
500 Stanton Christiana Road INFORMATION
Newark, Delaware 19713-2107
IN-ANN-23763 1000
