<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
May 15, 1995
Dear Shareholder:
We are pleased to report that from its inception on December 1, 1994, to
March 31, 1995, The JPM Institutional International Bond Fund outperformed its
benchmark and produced attractive returns as global bond markets rallied. The
Fund had a total return of 5.71%, outpacing the 4.65% return for the Salomon
Brothers Non-U.S. Government Bond Index (currency hedged). Country allocation
and security selection decisions were the key contributors to the Fund's
relative outperformance for the period.
The Fund's net asset value rose from $10.00 on December 1, 1994, to $10.53 at
the end of March, after paying approximately $0.04 per share in dividends during
the period. The Fund's net assets stood at almost $3.2 million at the end of the
reporting period. The net assets of The Non-U.S. Fixed Income Portfolio in which
the Fund invests totaled $231.6 million on March 31, 1995.
MARKET ENVIRONMENT
World government bonds posted impressive gains for the period, particularly in
March. A faster-than- expected slowdown in the pace of U.S. economic growth was
the main catalyst for the global bond rally, as investors revised their
expectations for further monetary tightening by the Federal Reserve. While the
lowering of expectations for further rate hikes in the U.S. helped propel the
bond rally, it also contributed to the dramatic fall of the U.S. dollar versus
the yen and the significant, yet lesser, decline against the deutsche mark.
Fiscal year-end selling of dollars by Japanese exporters gave the final push to
investors who were already worried about lower U.S. rates and the lack of
improvement in the trade deficit.
As the deutsche mark strengthened and U.S. bonds rallied, most European bonds
also rose in value. The core markets of Germany and the Netherlands were
particularly in demand because of their "safe haven" status, while the
inflation-prone, politically volatile markets of Sweden, Spain, and Italy
underperformed. The European markets took an interesting turn at the end of
March, when the Bundesbank surprised the market with a cut in short-term rates.
This rate cut helped the high-yielding markets of Spain, Italy, and Sweden, and
all European markets closed strongly at month-end, although they still
underperformed for the first quarter of 1995.
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS . . . . . . . . .1
FUND FACTS AND HIGHLIGHTS. . . . . . . . . .4
FUND PERFORMANCE . . . . . . . . . . . . . .5
FINANCIAL STATEMENTS . . . . . . . . . . . .7
1
<PAGE>
The main beneficiary of the faltering U.S. dollar was the Japanese bond market.
Indications of slower-than-expected economic growth were the initial catalyst
for the bond rally, but the continued decline of the Japanese equity market and
the dollar pushed Japanese bonds to new highs.
PORTFOLIO REVIEW
The investment process involves four key decisions, which are expected to
contribute to Fund returns: DURATION MANAGEMENT, COUNTRY ALLOCATION, SECURITY
SELECTION, and CURRENCY MANAGEMENT. During the period, country allocation and
security selection contributed positively to excess return, while duration and
currency management had a neutral influence on performance.
The Portfolio benefited from its positions in the core European markets of
Germany and the Netherlands, which we favored over the the weaker markets of
Spain, Sweden, and Italy. Although the Portfolio remained underweighted relative
to the Index, we added to positions in Sweden and Italy at the end of March, as
their expected underperformance was realized and before they rallied on the cut
in German short-term rates. We also took the Portfolio's underweighted position
in Spain back to neutral but sold the market again after it had rallied strongly
in the wake of the Bundesbank rate cut.
We maintained our underweighted position in Canada, although this market had
done better than expected over the previous two months. The Portfolio's
overweighted position in Australia offset much of this, as Australia
outperformed Canada in March.
The Portfolio began 1995 with a neutral allocation in Japan relative to the
Index. We began decreasing the Portfolio's Japanese position in March, as yields
surpassed our expectations of fair value. However, Japanese bonds continued to
rally, which detracted from the Fund's performance.
PORTFOLIO AND INVESTMENT OUTLOOK
Japan remains underweighted relative to the Index, reflecting our belief that
the market is overvalued. In our view, investors have largely overestimated the
impact that a strong yen will have on the domestic economy. The Japanese
economy, meanwhile, continues to recover.
Since the end of the reporting period, we have again increased our weighting in
Spain to a neutral position as the peseta stabilized and the inflation threat
seemed fully discounted for the time being. European currencies appear to have
stabilized with respect to the deutsche mark, and the possibility of a rise in
rates by the Bundesbank appears more remote. Consequently, we have increased our
duration in Europe by 0.3 years, reflecting our belief that bond markets there
will outperform.
2
<PAGE>
After the Australian market rallied on better-than-expected inflation news, we
reduced the Portfolio's overweighting in this market to a neutral position
relative to the Index. Over the next quarter, we plan on using "range trading"
in Australia, which is a strategy we pursue in markets we expect to remain
relatively stable. Range trading involves establishing a fair value for a
security and a high and low value within which the security is likely to trade.
Purchases are made at the lower end of the range and sales at the upper end,
with the objective of maintaining the average position at the fair value. We
also plan to pursue this strategy in Canada, where the Portfolio is
underweighted.
As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 776-7722.
Sincerely yours,
/S/ EVELYN E. GUERNSEY
Evelyn E. Guernsey
J.P. Morgan Funds Services
3
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Institutional International Bond Fund seeks to provide a high total
return consistent with moderate risk of capital from a portfolio of
international fixed income securities. The Fund is designed for investors who
seek exposure to the international bond markets in their investment portfolios.
- ---------------------------------------------
INCEPTION DATE
12/1/94
- ---------------------------------------------
NET ASSETS AS OF 3/31/95
$3,169,749
- ---------------------------------------------
DIVIDEND PAYABLE DATES
QUARTERLY
- ---------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/18/95
EXPENSE RATIO
The Fund's current annual expense ratio of 0.65% covers shareholders' expenses
for custody, tax reporting, investment advisory and shareholder services, after
reimbursement. The Fund is no-load and does not charge any sales, redemption, or
exchange fees. There are no additional charges for buying, selling, or
safekeeping Fund shares, or for wiring redemption proceeds from the Fund.
FUND HIGHLIGHTS
ALL DATA AS OF MARCH 31, 1995
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
Pie Chart depicting the allocation of the Fund's investment securities held
at March 31, 1995 by country. The pie is broken in pieces representing
countries in the following percentages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
Short-term holdings
(U.S.$) 20.7%
Germany 16.5%
Japan 15.8%
Other countries 14.9%
France 7.1%
Italy 6.1%
Supranational 5.7%
Netherlands 5.2%
United Kingdom 4.5%
Austria 3.5%
</TABLE>
SHORT-TERM HOLDINGS (U.S.$) 20.7%
GERMANY 16.5%
JAPAN 15.8%
OTHER COUNTRIES 14.9%
FRANCE 7.1%
ITALY 6.1%
SUPRANATIONAL 5.7%
NETHERLANDS 5.2%
UNITED KINGDOM 4.5%
AUSTRIA 3.5%
30-DAY SEC YIELD
5.94%
DURATION
4.3 years
4
<PAGE>
<TABLE>
<CAPTION>
FUND PERFORMANCE
PERFORMANCE TOTAL RETURNS
-------------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF MARCH 31, 1995 MONTHS TO DATE YEAR YEARS INCEPTION*
- ------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
JPM Institutional International Bond Fund 5.19% 5.19% -- -- 5.71%
Salomon Brothers Non-U.S. Gov't
Bond Index (currency hedged) 4.61% 4.61% -- -- 4.65%
<FN>
*12/1/94
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE JPM INSTITUTIONAL
INTERNATIONAL BOND FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN THE NON-U.S.
FIXED INCOME PORTFOLIO, A SEPARATELY REGISTERED INVESTMENT COMPANY WHICH IS NOT
AVAILABLE TO THE PUBLIC BUT ONLY TO OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS
THE FUND.
5
<PAGE>
The Fund's Distributor is Signature Broker-Dealer Services, Inc.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN") SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND (THE
"FUND") AVAILABLE SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT FOR
CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER BANK. SHARES OF THE FUND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT IN THE FUND CAN FLUCTUATE, SO AN INVESTOR'S SHARES WHEN
REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
Performance data quoted herein represent past performance. Please remember that
past performance is not a guarantee of future performance. Fund returns are net
of fees, and assume the reinvestment of Fund distributions. Had expenses not
been subsidized, returns would have been lower. The Salomon Brothers Non-U.S.
Government Bond Index represents an unmanaged portfolio of securities in which
investors may not directly invest. The Fund invests all of its investable assets
in The Non-U.S. Fixed Income Portfolio, a separately registered investment
company which is not available to the public but only to other collective
investment vehicles such as the Fund. The Portfolio invests in foreign
securities which are subject to special risks; prospective investors should
refer to the Fund's Prospectus for a discussion of these risks.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING J.P.
MORGAN FUNDS SERVICES AT (800) 766-7722.
6
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Non-U.S. Fixed Income Portfolio ("Portfolio"), at value $3,921,189
Deferred Organization Expense (Note 1d) 65,361
Receivable for Expense Reimbursements 17,782
---------
Total Assets 4,004,332
---------
LIABILITIES
Payable for Shares of Beneficial Interest Redeemed 762,920
Organization Expenses Payable (Note 1d) 55,000
Shareholder Servicing Fee Payable (Note 2c) 377
Administration Fee Payable (Note 2a) 85
Fund Services Fee Payable (Note 2d) 42
Accrued Expenses 16,159
---------
Total Liabilities 834,583
---------
NET ASSETS
Applicable to 300,969 Shares of Beneficial Interest Outstanding (par value $3,169,749
$0.001, unlimited shares authorized)
---------
---------
Net Asset Value, Offering and Redemption Price Per Share $ 10.53
---------
---------
ANALYSIS OF NET ASSETS
Paid-In Capital $2,995,239
Undistributed Net Investment Income 48,660
Accumulated Net Realized Gain (Loss) on Investment (139,757)
Net Unrealized Appreciation (Depreciation) of Investment 265,607
---------
Net Assets $3,169,749
---------
---------
</TABLE>
See Accompanying Notes.
7
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD DECEMBER 1, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH MARCH 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ALLOCATED INVESTMENT INCOME FROM PORTFOLIO (NOTE 1B)
$ 55,473
Allocated Interest Income
(4,900)
Allocated Portfolio Expenses (Net of additional Fund reimbursement
of $99, and Portfolio reimbursements of $6)
---------
50,573
Net Investment Income Allocated from Portfolio
FUND EXPENSES
Printing Expense $ 10,000
Transfer Agent Fees 5,333
Amortization of Organization Expense (Note 1d) 4,639
Professional Fees 4,507
Registration Fees 1,683
Shareholder Servicing Fee (Note 2c) 377
Administration Fee (Note 2a) 206
Fund Services Fee (Note 2d) 60
Trustees' Fees and Expenses (Note 2e) 23
Miscellaneous 194
---------
Total Fund Expenses 27,022
Less: Reimbursement of Expenses (Note 2b) (27,022)
---------
0
Net Fund Expenses
---------
50,573
NET INVESTMENT INCOME
(139,757)
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM PORTFOLIO
265,607
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
AND FOREIGN CURRENCY TRANSLATIONS ALLOCATED FROM PORTFOLIO
---------
$ 176,423
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
---------
---------
</TABLE>
See Accompanying Notes.
8
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 1, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH
MARCH 31, 1995
(UNAUDITED)
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 50,573
Net Realized Gain (Loss) on Investments and Foreign Currency Transactions Allocated from
Portfolio (139,757)
Net Change in Unrealized Appreciation (Depreciation) of Investments and Foreign Currency
Translations Allocated from Portfolio 265,607
----------
Net Increase in Net Assets Resulting from Operations 176,423
----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (1,913)
----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 3)
Proceeds from Shares of Beneficial Interest Sold 3,756,146
Reinvestment of Dividends 1,913
Cost of Shares of Beneficial Interest Redeemed (762,920)
----------
Net Increase from Transactions in Shares of Beneficial Interest 2,995,139
----------
Total Increase in Net Assets 3,169,649
NET ASSETS
Beginning of Period 100
----------
End of Period (Including Undistributed Net Investment Income of $48,660) $ 3,169,749
----------
----------
</TABLE>
See Accompanying Notes.
9
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 1, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH
MARCH 31, 1995
(UNAUDITED)
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.20
Net Realized and Unrealized Gain (Loss) on Investments 0.37
------
Total from Investment Operations 0.57
------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.04)
------
NET ASSET VALUE, END OF PERIOD $ 10.53
------
------
Total Return 5.71%+
RATIOS AND SUPPLEMENTAL DATA
Net Assets at End of Period (in thousands) $ 3,170
Ratios to Average Net Assets:
Net Investment Income 6.71%(a)
Expenses 0.65%(a)
Decrease reflected in above expense ratio due to expense reimbursements 3.59%(a)
<FN>
(+) Not annualized.
(a) Annualized.
</TABLE>
See Accompanying Notes.
10
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Institutional International Bond Fund (the "Fund") is a separate series
of The JPM Institutional Funds, a Massachusetts business trust (the "Trust").
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
December 1, 1994.
The Fund invests all of its investable assets in The Non-U.S. Fixed Income
Portfolio (the "Portfolio"), a non-diversified open-end management investment
company having the same investment objectives as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (2% at March 31, 1995). 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 following is a summary of the significant accounting policies of the
Fund:
a)Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements which are included elsewhere in
this report.
b)The Fund records its share of net investment income, realized and
unrealized gain and loss and adjusts its investment in the Portfolio each
day. All the net investment income and realized and unrealized gain and
loss of the Portfolio is allocated pro rata among the Fund and other
investors in the Portfolio at the time of such determination.
c)The Fund declares income dividends quarterly. Distributions to
shareholders of net realized capital gain, if any, are declared and paid
annually.
d)The Fund incurred organization expenses in the amount of $70,000. These
costs were deferred and are being amortized by the Fund on a straight-line
basis over a five-year period from the commencement of operations.
e)Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income,
including net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income or excise tax is
necessary.
f)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. Expenses directly attributable to a fund are
charged to that fund.
11
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Trust retains Signature Broker-Dealer Services, Inc. ("Signature") to
serve as Administrator and Distributor. Signature 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 Signature. The
agreement provides for a fee to be paid to Signature at an annual rate
determined by the following schedule: 0.04% of the first $1 billion of the
aggregate average daily net assets of the Trust, as well as two other
affiliated fund families for which Signature acts as administrator, 0.032%
of the next $2 billion of such net assets, 0.024% of the next $2 billion
of such net assets, and 0.016% of such net assets in excess of $5 billion.
The daily equivalent of the fee rate is applied daily to the daily net
assets of the Fund. For the period December 1, 1994 (commencement of
operations) through March 31, 1995, Signature's fee for these services
amounted to $206.
b)The Trust, on behalf of the Fund, has a Financial and Fund Accounting
Services Agreement ("Services Agreement") with Morgan Guaranty Trust
Company of New York ("Morgan") under which Morgan receives a fee, based on
the percentage described below, for overseeing certain aspects of the
administration and operation of the Fund. The Services Agreement is also
designed to provide an expense limit for certain expenses of the Fund. If
total expenses of the Fund, excluding the shareholder servicing fee, the
fund services fee and amortization of organization expenses, exceed the
expense limit of 0.05% of the Fund's average daily net assets, Morgan will
reimburse the Fund for the excess expense amount and receive no fee.
Should such expenses be less than the expense limit, Morgan's fee would be
limited to the difference between such expenses and the fee calculated
under the Services Agreement. For the period December 1, 1994
(commencement of operations) through March 31, 1995, Morgan agreed to
reimburse the Fund $21,569 for excess expenses. In addition to the
expenses that Morgan assumes under the Services Agreement, Morgan has
agreed to reimburse the Fund to the extent necessary to maintain the total
operating expenses of the Fund, including the expenses allocated to the
Fund from the Portfolio, at no more than 0.65% of the average daily net
assets of the Fund through September 30, 1995. For the period December 1,
1994 (commencement of operations) through March 31, 1995, Morgan has
agreed to reimburse the Fund $5,453 and an additional $99 for excess
expenses allocated from the Portfolio.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. The Agreement provides for the Fund to pay Morgan a fee for
these services which is computed daily and may be paid monthly at an
annual rate of 0.05% of the average daily net assets of the Fund. For the
period December 1, 1994 (commencement of operations) through March 31,
1995, the fee for these services amounted to $377.
d)The Trust, on behalf of the Fund, has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the Trustees in exercising their
overall supervisory responsibilities for the
12
<PAGE>
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
Trust's affairs. The Trustees of the Trust are the sole shareholders of
Group. The Fund's allocated portion of Group's costs in performing its
services amounted to $60 for the period December 1, 1994 (commencement of
operations) through March 31, 1995.
e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds and their
corresponding Portfolios. The Trustees' Fees and Expenses shown in the
financial statements represents the Fund's allocated portion of the total
fees and expenses. On April 1, 1995, the aggregate annual Trustee Fee was
increased to $65,000. The Trustee who serves as Chairman and Chief
Executive Officer of these Funds and Portfolios also serves as Chairman of
Group and received compensation and employee benefits from Group in his
role as Group's Chairman. The allocated portion of such compensation and
benefits included in the Fund Services Fee shown in the financial
statements was $7.
3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the Fund were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD DECEMBER 1, 1994
(COMMENCEMENT OF OPERATIONS)
THROUGH MARCH 31, 1995
-------------------------------
<S> <C>
Shares of beneficial interest sold 373,220
Reinvestments of dividends 191
Shares of beneficial interest redeemed (72,452)
--------
Net increase 300,959
--------
--------
</TABLE>
13
<PAGE>
The Non-U.S. Fixed Income Portfolio
Semi-Annual Report March 31, 1995
(unaudited)
(The following pages should be read in conjunction
with The JPM Institutional International Bond Fund
Semi-Annual Financial Statements)
14
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(LOCAL CURRENCY(2)
000'S) SECURITY DESCRIPTION VALUE (NOTE 1A)
- -------------------------------------------------------------------- ---------------
<S> <C> <C>
CORPORATE OBLIGATIONS (7.2%)
FRANCE (2.8%)
FRF 30,200 Electricite De France, 8.60% due 04/09/04......... $ 6,505,968
---------------
GERMANY (1.3%)
ITL 5,594,999 Bayerische Landesbank Girozentrele, 10.75% due 3,049,875
03/01/03........................................
---------------
NETHERLANDS (1.7%)
NLG 6,000 Bank Voor Nederlandsche Gemeenten, 7.625% due 3,963,502
12/16/02........................................
---------------
UNITED KINGDOM (1.4%)
GBP 2,400 Halifax Building Society 6.50% due 02/16/04....... 3,278,030
---------------
TOTAL CORPORATE OBLIGATIONS
(COST $15,483,168).............................. 16,797,375
---------------
GOVERNMENT OBLIGATIONS (70.2%)
AUSTRALIA (3.5%)
Government of Australia
AUD 1,900 8.75% due 01/15/01................................ 1,337,367
AUD 8,900 13.00% due 07/15/96............................... 6,853,385
---------------
8,190,752
---------------
AUSTRIA (3.7%)
Republic of Austria
GBP 2,000 9.00% due 07/22/04................................ 3,254,618
DEM 3,800 4.975% due 02/28/05............................... 2,733,295
JPY 244,000 3.75% due 02/03/09................................ 2,632,096
---------------
8,620,009
---------------
BELGIUM (3.6%)
Kingdom of Belgium
BEF 91,000 10.00% due 08/02/00............................... 3,586,604
BEF 138,000 7.75% due 10/15/04................................ 4,810,370
---------------
8,396,974
---------------
CANADA (1.7%)
GBP 2,617 Hydro-Quebec 6.50% due 12/09/98................... 3,911,508
---------------
</TABLE>
See Accompanying Notes.
15
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(LOCAL CURRENCY(2)
000'S) SECURITY DESCRIPTION VALUE (NOTE 1A)
- -------------------------------------------------------------------- ---------------
<S> <C> <C>
DENMARK (2.3%)
Kingdom of Denmark
DKK 8,735 9.00% due 11/15/98................................ $ 1,638,614
DKK 19,000 9.00% due 11/15/00................................ 3,544,016
---------------
5,182,630
---------------
FRANCE (4.7%)
FRF 53,400 Government of France, 7.50% due 04/25/05.......... 10,801,036
---------------
GERMANY (16.0%)
DEM 13,000 Treauhand -- Obligationen 6.375% due 07/01/99..... 9,476,353
Federal Republic of Germany
DEM 2,920 7.375% due 01/03/05............................... 2,149,960
DEM 25,000 8.25% due 09/20/01................................ 19,360,697
DEM 7,609 9.00% due 10/20/00................................ 6,094,386
---------------
37,081,396
---------------
ITALY (6.4%)
Republic of Italy
ITL 13,720,000 9.50% due 01/01/05................................ 6,546,331
JPY 675,000 5.125% due 07/29/03............................... 8,277,202
---------------
14,823,533
---------------
JAPAN (16.6%)
Government of Japan
JPY 405,000 No. 119, 4.80% due 06/21/99....................... 5,049,793
JPY 385,000 No. 123, 4.90% due 09/20/99....................... 4,814,162
JPY 1,420,000 No. 144, 6.00% due 12/20/01....................... 18,763,293
JPY 246,000 No. 164, 4.10% due 12/22/03....................... 2,910,929
JPY 563,000 No. 157, 4.50% due 06/20/03....................... 6,865,553
---------------
38,403,730
---------------
NETHERLANDS (3.7%)
Netherlands Government
NLG 7,766 7.50% due 06/15/99................................ 5,216,533
NLG 4,800 9.00% due 01/15/01................................ 3,418,365
---------------
8,634,898
---------------
PORTUGAL (3.4%)
DEM 10,860 Republic of Portugal 5.125% due 07/15/99.......... 7,878,530
---------------
</TABLE>
See Accompanying Notes.
16
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(LOCAL CURRENCY(2)
000'S) SECURITY DESCRIPTION VALUE (NOTE 1A)
- -------------------------------------------------------------------- ---------------
<S> <C> <C>
SWEDEN (1.2%)
SEK 30,200 Kingdom of Sweden, 6.00% due 02/09/05............. $ 2,805,346
---------------
UNITED KINGDOM (3.4%)
GBP 4,800 Treasury Gilt 8.50% due 12/07/05.................. 7,772,197
---------------
TOTAL GOVERNMENT OBLIGATIONS
(COST $146,686,541)............................. 162,502,539
---------------
SUPRANATIONAL(1) (6.0%)
ITL 2,537,000 European Investment Bank, 12.20% due 02/18/03..... 1,529,059
JPY 1,015,000 International Bank for Rec & Development, 6.00% 12,388,025
due 10/18/96....................................
---------------
TOTAL SUPRANATIONAL OBLIGATIONS
(COST $12,175,587).............................. 13,917,084
---------------
SHORT-TERM HOLDINGS (21.7%)
COMMERCIAL PAPER (4.6%)
USD 6,000 Council of Europe, 5.95% due 04/13/95............. 5,988,161
USD 4,700 Ford Motor Credit Co., 6.05% due 05/04/95......... 4,675,636
---------------
10,663,797
---------------
TIME DEPOSITS (17.1%)
State Street Bank Co. London,
USD 4,663 5.50% due 04/03/95................................ 4,663,000
USD 5,000 5.875% due 04/03/95............................... 5,000,000
USD 10,000 5.938% due 04/04/95............................... 10,000,000
USD 10,000 6.00% due 04/05/95................................ 10,000,000
USD 5,000 6.00% due 04/06/95................................ 5,000,000
USD 5,000 5.875% due 04/07/95............................... 5,000,000
---------------
39,663,000
---------------
TOTAL SHORT-TERM HOLDINGS
(COST $50,326,797).............................. 50,326,797
---------------
TOTAL INVESTMENTS (COST $224,672,093) (105.1%) 243,543,795
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS (-5.1%) (11,926,147)
---------------
TOTAL NET ASSETS (100.0%) $231,617,648
---------------
---------------
<FN>
Note: Based on the cost of investments of $224,674,262 for Federal income tax
purposes at March 31, 1995, the aggregate gross unrealized appreciation and
depreciation was $19,333,711 and $464,178, respectively, resulting in net
unrealized appreciation of $18,869,533.
(1)International Agencies
(2)Principal is in the local currency of the country in which the security is
traded which may not be the country of origin.
</TABLE>
See Accompanying Notes.
17
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $224,672,093) (Note 1a) $243,543,795
Foreign Currency, at Value (Cost $505,136) 501,114
Cash 420
Unrealized Appreciation on Forward Foreign Currency Contracts (Note 1d) 1,610,845
Receivable for Investments Sold 21,484,348
Unrealized Appreciation on Spot Foreign Currency Contracts (Note 1d) 93,890
Interest Receivable 6,149,311
Deferred Organization Expense (Note 1f) 31,703
Receivable for Expense Reimbursements 765
Tax Reclaim Receivable 237
------------
Total Assets 273,416,428
------------
LIABILITIES
Unrealized Depreciation on Forward Foreign Currency Contracts (Note 1d) 5,365,926
Payable for Securities Purchased 36,053,255
Unrealized Depreciation on Spot Foreign Currency Contracts (Note 1d) 24,988
Custody Fee Payable 167,927
Financial and Fund Accounting Services Fee Payable (Note 2c) 88,406
Advisory Fee Payable (Note 2a) 66,396
Accrued Expenses 16,000
Organization Fee Payable (Note 1f) 10,000
Fund Services Fee Payable (Note 2d) 2,899
Administration Fee Payable (Note 2b) 1,209
Trustees' Fees and Expenses Payable (Note 2e) 1,078
Foreign Withholding Taxes Payable 696
------------
Total Liabilities 41,798,780
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $231,617,648
------------
------------
</TABLE>
See Accompanying Notes.
18
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD OCTOBER 11, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH MARCH 31,
1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
$ 6,588,906
Interest Income (Net of $116,108 Foreign Withholding
Tax)
-----------
EXPENSES
Advisory Fee (Note 2a) $ 345,731
Custodian Fees and Expenses 167,927
Financial and Fund Accounting Services Fees (Note 2c) 88,406
Professional Fees 16,628
Fund Services Fee (Note 2d) 9,402
Administration Fee (Note 2b) 6,362
Trustees' Fees and Expenses (Note 2e) 2,416
Amortization of Organization Expense (Note 1f) 3,297
Miscellaneous 1,305
-----------
Total Expenses 641,474
Less: Reimbursement of Expenses (Note 2c) (765)
-----------
640,709
NET EXPENSES
-----------
5,948,197
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) ON
Investment Transactions 1,600,302
Foreign Currency Transactions (9,892,398)
-----------
(8,292,096)
Net Realized Loss
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Investments 18,871,702
Foreign Currency Contracts and Translations (3,254,259)
-----------
15,617,443
Net Change in Unrealized Appreciation
-----------
$13,273,544
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
-----------
-----------
</TABLE>
See Accompanying Notes.
19
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 11, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH
MARCH 31, 1995
(UNAUDITED)
-------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 5,948,197
Net Realized Gain (Loss) on Investments and Foreign Currency Transactions (8,292,096)
Net Change in Unrealized Appreciation (Depreciation) of Investments and Foreign
Currency Contracts and Translations 15,617,443
-------------------
Net Increase in Net Assets Resulting from Operations 13,273,544
-------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 264,512,584
Withdrawals (46,268,580)
-------------------
Net Increase from Investors' Transactions 218,244,004
-------------------
Total Increase in Net Assets 231,517,548
NET ASSETS
Beginning of Period 100,100
-------------------
End of Period $231,617,648
-------------------
-------------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 11, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH
MARCH 31, 1995
(UNAUDITED)
-------------------
<S> <C>
RATIOS TO AVERAGE NET ASSETS
Net Investment Income 6.02%(a)
Expenses 0.65%(a)
Decrease Reflected in above Expense Ratio due to Expense Reimbursement by
Morgan 0.00%(a)(++)
Portfolio Turnover 108%
<FN>
- ------------------------
(a) Annualized.
(++) Less than 0.01%
</TABLE>
See Accompanying Notes.
20
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Non-U.S. Fixed Income Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, open-end management
investment company which was organized as a trust under the laws of the State of
New York. The Portfolio commenced operations on October 11, 1994. The
Declaration of Trust permits the Trustees to issue an unlimited number of
beneficial interests in the Portfolio.
The following is a summary of the significant accounting policies of the
Portfolio:
a)Portfolio securities with a maturity of 60 days or more, including
securities that are listed on an exchange or traded over the counter, are
valued using prices supplied daily by an independent pricing service or
services that (i) are based on the last sale price on a national
securities exchange, or in the absence of recorded sales, at the readily
available bid price on such exchange or at the quoted bid price in the
over-the-counter market, if such exchange or market constitutes the
broadest and most representative market for the security and (ii) in other
cases, take into account various factors affecting market value, including
yields and prices of comparable securities, indication as to value from
dealers and general market conditions. If such prices are not supplied by
the Portfolio's independent pricing services, such securities are priced
in accordance with procedures adopted by the Trustees. All portfolio
securities with a remaining maturity of less than 60 days are valued by
the amortized cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the Portfolio's net asset value is 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.
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market values of investment securities, other assets and liabilities and
forward contracts stated in foreign currencies are translated at the
prevailing exchange rates at the end of the period. Purchases, sales,
income and expenses are translated at the exchange rate prevailing on the
respective dates of such
transactions. Translation gains and losses resulting from changes in the
exchange rate during the reporting period and gains and losses realized
upon settlement of foreign currency transactions are reported in the
Statement of Operations.
Since the net assets of the Portfolio are presented at the exchange rates
and market values prevailing at the end of the period, the Portfolio does
not isolate the portion of the results of operations arising as a result
of changes in foreign exchange rates from the fluctuations arising from
changes in the market prices of securities during the period.
c)Securities transactions are recorded on a trade date basis. Interest
income, which includes the amortization of premiums and discounts, if any,
is recorded on an accrual basis. For financial and tax reporting purposes,
realized gains and losses are determined on the basis of specific lot
identification.
21
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
d)The portfolio may enter into forward foreign currency contracts to protect
securities and related receivables and payables against fluctuations in
future foreign currency rates. A forward contract is an agreement to buy
or sell currencies of different countries on a specified future date at a
specified rate. Risks associated with such contracts include the movement
in the value of the foreign currency relative to the U.S. dollar and the
ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily based on procedures established by
and under the general supervision of the Portfolio's Trustees and the change in
the market value is recorded by the Portfolio as unrealized appreciation or
depreciation of foreign currency translations. At March 31, 1995, the Portfolio
had open forward foreign currency contracts as follows:
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
NET
U.S. DOLLAR UNREALIZED
VALUE AT APPRECIATION/
FORWARD FOREIGN CURRENCY PURCHASE CONTRACTS COST 03/31/95 (DEPRECIATION)
- ------------------------------------------------------------------- ------------- ------------- --------------
<S> <C> <C> <C>
Danish Krone 68,667,940, expiring 05/10/95 $ 12,210,770 $ 12,560,390 $ 349,620
German Deutschmark 10,274,243, expiring 05/10/95 7,267,112 7,464,392 197,280
Italian Lira 1,469,979,805, expiring 05/10/95 891,572 858,108 (33,464)
Japanese Yen 1,497,758,269, expiring 05/10/95 16,761,722 17,333,585 571,863
Spanish Peseta 466,017,507, expiring 05/10/95 3,565,551 3,665,891 100,340
------------- ------------- --------------
$ 40,696,727 $ 41,882,366 $ 1,185,639
------------- ------------- --------------
</TABLE>
<TABLE>
<CAPTION>
NET
U.S. DOLLAR UNREALIZED
VALUE AT APPRECIATION/
FORWARD FOREIGN CURRENCY SALE CONTRACTS PROCEEDS 03/31/95 (DEPRECIATION)
- --------------------------------------------------------------- --------------- --------------- --------------
<S> <C> <C> <C>
Australian Dollar 19,200,860, expiring 05/10/95 $ 14,015,768 $ 14,059,858 $ (44,090)
Belgian Franc 246,103,676, expiring 05/10/95 8,525,285 8,693,765 (168,480)
British Pound 11,719,504, expiring 05/10/95 19,013,525 18,955,838 57,687
Danish Krone 97,717,304, expiring 05/10/95 17,285,920 17,873,951 (588,031)
French Franc 90,055,248, expiring 05/10/95 18,075,756 18,651,767 (576,011)
German Deutschmark 77,885,126, expiring 05/10/95 56,201,755 56,584,715 (382,960)
Italian Lira 20,802,901,274, expiring 05/10/95 12,415,722 12,143,791 271,931
Japanese Yen 6,902,389,376, expiring 05/10/95 76,592,099 79,881,489 (3,289,390)
Netherlands Guilder 20,117,147, expiring 05/10/95 12,904,994 13,053,047 (148,053)
Spanish Peseta 1,022,942,164, expiring 05/10/95 7,911,449 8,046,896 (135,447)
Swedish Krona 21,669,480, expiring 05/10/95 2,981,491 2,919,367 62,124
--------------- --------------- --------------
$ 245,923,764 $ 250,864,484 $ (4,940,720)
--------------- --------------- --------------
NET UNREALIZED DEPRECIATION ON FORWARD FOREIGN CURRENCY CONTRACTS $ (3,755,081)
--------------
--------------
</TABLE>
22
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
SUMMARY OF OPEN SPOT FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
NET
U.S. DOLLAR UNREALIZED
VALUE AT APPRECIATION/
SPOT FOREIGN CURRENCY PURCHASE CONTRACTS COST 03/31/95 (DEPRECIATION)
- ------------------------------------------------------------------- ------------- ------------- --------------
<S> <C> <C> <C>
Australian Dollar 9,090,804, expiring 04/05/95 $ 6,590,833 $ 6,663,347 $ 72,514
German Deutschmark 6,260,613, expiring 04/05/95 4,526,835 4,548,211 21,376
------------- ------------- -------
$ 11,117,668 $ 11,211,558 $ 93,890
------------- ------------- -------
</TABLE>
<TABLE>
<CAPTION>
NET
U.S. DOLLAR UNREALIZED
VALUE AT APPRECIATION/
SPOT FOREIGN CURRENCY SALE CONTRACTS PROCEEDS 03/31/95 (DEPRECIATION)
- ---------------------------------------------------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Japanese Yen 141,787,162, expiring 04/10/95 $ 1,607,564 $ 1,632,552 $ (24,988)
------------ ------------ --------------
NET UNREALIZED APPRECIATION ON SPOT FOREIGN CURRENCY CONTRACTS $ 68,902
--------------
--------------
</TABLE>
e)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 requirements of Subchapter M
of the Internal Revenue Code.
f)The Portfolio's Service Agent, Morgan Guaranty Trust Company of New York
("Morgan"), paid the organization expenses of the Portfolio in the amount
of $35,000. The Portfolio has agreed to reimburse Morgan for these costs
which are being amortized by the Portfolio on a straight-line basis over a
five-year period from the commencement of operations.
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the investment
advisory agreement, the Portfolio pays Morgan at an annual rate of 0.35%
of the Portfolio's average daily net assets. For the period October 11,
1994 (commencement of operations) through March 31, 1995, this fee
amounted to $345,731.
b)The Portfolio retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator and Exclusive Placement Agent. Signature
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 Signature. The agreement provides for a fee to be
paid to Signature at an annual rate determined by the following schedule:
0.01% of the first $1 billion of the aggregate average daily net assets of
the Portfolio and the other portfolios subject to the Administrative
Services Agreement, 0.008% of the next $2 billion of such net assets,
0.006% of the next $2 billion of such net assets, and 0.004%
23
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
of such net assets in excess of $5 billion. The daily equivalent of the
fee rate is applied every day to the daily net assets of the Portfolio.
For the period October 11, 1994 (commencement of operations) through March
31, 1995, Signature's fee for these services amounted to $6,362.
c)The Portfolio has a Financial and Fund Accounting Services Agreement
("Services Agreement") with Morgan under which Morgan receives a fee,
based on the percentages described below, for overseeing certain aspects
of the administration and operation of the Portfolio. The Services
Agreement is also designed to provide an expense limit for certain
expenses of the Portfolio. If total expenses of the Portfolio, excluding
the advisory fee, custody expenses, fund services fee, amortization of
organization expense and brokerage costs, exceed the expense limit of
0.12% of the Portfolio's average daily net assets up to $200 million,
0.08% of the next $200 million of average daily net assets, and 0.04% of
average daily net assets thereafter, Morgan will reimburse the Portfolio
for the excess expense amount and receive no fee. Should such expenses be
less than the expense limit, Morgan's fee would be limited to the
difference between such expenses and the fee calculated under the Services
Agreement. For the period October 11, 1994 (commencement of operations)
through March 31, 1995, this fee amounted to $88,406. In addition to the
expenses that Morgan assumes under the Services Agreement, Morgan has
agreed to reimburse the Portfolio to the extent necessary to maintain the
total operating expenses of the Portfolio at no more that 0.65% of the
average daily net assets of the Portfolio through September 30, 1995. For
the period October 11, 1994 (commencement of operations) through March 31,
1995, Morgan has agreed to reimburse the Portfolio $765 for expenses which
exceeded this limit.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio are the sole shareholders of Group. The Portfolio's allocated
portion of Group's costs in performing its services amounted to $9,402 for
the period October 11, 1994 (commencement of operations) through March 31,
1995.
e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds and their
corresponding Portfolios. The Trustees' Fees and Expenses shown in the
financial statements represents the Portfolio's allocated portion of the
total fees and expenses. On April 1, 1995, the aggregate annual Trustee
Fee was increased to $65,000. The Trustee who serves as Chairman and Chief
Executive Officer of these Funds and Portfolios also serves as Chairman of
Group and received compensation and employee benefits from Group in his
role as Group's Chairman. The allocated portion of such compensation and
benefits included in the Fund Services Fee shown in the financial
statements was $1,100.
24
<PAGE>
THE NON-U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1995
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the period
October 11, 1994 (commencement of operations) to March 31, 1995 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
-------------- --------------
<S> <C> <C>
Government and Agency Obligations $ 332,515,710 $ 200,842,640
Corporate and Collateralized Obligations 58,568,040 18,399,962
-------------- --------------
$ 391,083,750 $ 219,242,602
-------------- --------------
-------------- --------------
</TABLE>
25
<PAGE>
JPM INSTITUTIONAL MONEY MARKET FUND
JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
JPM INSTITUTIONAL TREASURY MONEY MARKET FUND
JPM INSTITUTIONAL SHORT TERM BOND FUND
JPM INSTITUTIONAL BOND FUND
JPM INSTITUTIONAL TAX EXEMPT BOND FUND
JPM INSTITUTIONAL NY TOTAL RETURN BOND FUND
JPM INSTITUTIONAL INTERNATIONAL BOND FUND
JPM INSTITUTIONAL DIVERSIFIED FUND
JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
JPM INSTITUTIONAL U.S. SMALL COMPANY FUND
JPM INSTITUTIONAL INTERNATIONAL EQUITY FUND
JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND
FOR MORE INFORMATION ON THE JPM INSTITUTIONAL FAMILY OF FUNDS, CALL J.P. MORGAN
FUNDS SERVICES AT (800)766-7722.
THE JPM INSTITUTIONAL INTERNATIONAL BOND FUND
SEMI-ANNUAL REPORT
MARCH 31, 1995
