<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN
INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
June 1, 1999
Dear Shareholder:
We are pleased to report that the J.P. Morgan Institutional Tax Aware
Disciplined Equity Fund delivered a strong total return of 24.31% for the six
months ended April 30, 1999, beating the S&P 500 Index by nearly 200 basis
points and the Lipper Growth and Income Funds Average by almost 600 basis
points.
The fund's net asset value on April 30 was $18.21 per share, increasing from
$14.71 per share on October 31, 1998, after distributions of nearly $0.07 per
share in ordinary income. There were no distributions from short- or long-term
capital gains. The fund's net assets rose to almost $222 million on April 30.
Included in this report is an interview with Robin B. Chance, a member of the
portfolio management team. This interview is designed to reflect what happened
during the reporting period, as well as provide an outlook for the months ahead.
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
telephone your Morgan representative or J.P. Morgan Funds Services at
800-766-7722.
Sincerely yours,
/s/ Ramon de Oliveira /s/ Keith M .Schappert
Ramon de Oliveira Keith M. Schappert
Chairman of Asset Management Services President of Asset Management Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated
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TABLE OF CONTENTS
<S> <C> <C> <C>
LETTER TO THE SHAREHOLDERS. . . .1 FUND FACTS AND HIGHLIGHTS . . . .6
FUND PERFORMANCE. . . . . . . . .2 FINANCIAL STATEMENTS. . . . . . .8
PORTFOLIO MANAGER Q & A . . . . .3
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</TABLE>
1
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FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
<TABLE>
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PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
-------------------------------- -------------------------------------
THREE SIX ONE SINCE
AS OF APRIL 30, 1999 MONTHS MONTHS YEAR INCEPTION*
- ----------------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C>
J.P. Morgan Institutional Tax Aware
Disciplined Equity Fund 6.05% 24.31% 24.38% 31.30%
S&P 500 Index 4.67% 22.32% 21.82% 28.56%
Lipper Growth & Income Fund Average 5.99% 18.39% 10.73% 19.99%
AS OF MARCH 31, 1999
- ----------------------------------------------------------------------------- -------------------------------------
J.P. Morgan Institutional Tax Aware
Disciplined Equity Fund 4.21% 28.15% 20.18% 29.65%
S&P 500 Index 4.98% 27.34% 18.46% 27.55%
Lipper Growth & Income Fund Average 1.75% 20.06% 5.46% 17.72%
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*THE FUND COMMENCED OPERATIONS ON JANUARY 30, 1997, AND HAS PROVIDED AN AVERAGE
ANNUAL TOTAL RETURN OF 31.53% FROM THAT DATE THROUGH APRIL 30, 1999. FOR THE
PURPOSE OF COMPARISON, THE "SINCE INCEPTION" RETURNS ARE CALCULATED FROM JANUARY
31, 1997, THE FIRST DATE WHEN DATA FOR THE FUND'S BENCHMARK AND ITS LIPPER
CATEGORY AVERAGE WERE AVAILABLE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME THE REINVESTMENT OF FUND DISTRIBUTIONS, AND REFLECT THE
REIMBURSEMENT OF FUND EXPENSES AS DESCRIBED IN THE PROSPECTUS. HAD EXPENSES NOT
BEEN SUBSIDIZED, RETURNS WOULD HAVE BEEN LOWER. LIPPER ANALYTICAL SERVICES, INC.
IS A LEADING SOURCE FOR MUTUAL FUND DATA.
2
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PORTFOLIO MANAGER Q&A
Following is an interview with ROBIN B. CHANCE, vice president, a member of the
portfolio management team of the J.P. Morgan Institutional Tax Aware Disciplined
Equity Fund. She is a member of the Structured Equity Group, with responsibility
for tax aware structured equity strategies. Joining Morgan in 1987, Robin
developed the computer programs used to rebalance the structured equity
portfolios. She is a Chartered Financial Analyst (CFA) and a graduate of the
University of Pennsylvania's Management and Technology Program. Robin earned her
MBA from New York University's Stern School of Business. This interview was
conducted on May 17, 1999, and reflects her views on that date.
[PHOTO]
THE FUND HAS PERFORMED EXCEPTIONALLY WELL OVER THE PAST SIX MONTHS. HOW DID YOU
DO IT?
RBC: We have a process that we believe works and we exercise discipline in
sticking with it. Our analysts at Morgan do the fundamental stock research -
forecasting earnings, growth and dividends - and then, using a systematic
valuation model, we rank the stocks within sectors as being undervalued or
overvalued. To build our portfolio, we use a proprietary portfolio optimization
model which maximizes the after-tax expected return of the portfolio while
maintaining sector and style neutrality relative to our benchmark, the S&P 500.
We attempt to deviate from the index only in areas where we have a competitive
advantage and we believe our team of research analysts is the best in the
business. Our portfolio construction process is designed to make the best use of
their insights and information.
HOW DO YOU MANAGE TO KEEP THE TAX CONSEQUENCES LOW?
RBC: By trading smart. Before trading, you need to ask yourself two questions:
First, will the higher expected return from a new holding offset the tax cost of
selling an existing holding? If not, are there any stocks in the portfolio with
losses that you can realize to offset the gain? By trading smarter and
triggering fewer capital gains tax obligations, you have more capital to invest,
so your investment grows faster because it compounds on a larger base.
For example, it pays to sell an outstanding performer only when you can find a
stock that will perform even better after you pay the tax bill incurred on the
sale. For example, you might own a stock priced at $110. Perhaps you paid only
$10 for it. If you want to sell because you think another stock will rise
faster, you must pay tax on that $100 profit. Even if you pay tax at a 20% rate,
that means you only have $90 to reinvest. In effect, your next investment must
earn over 20% just to recover the capital you lost by paying taxes.
AND YOU CAN IDENTIFY STOCKS THAT MEET THAT TEST?
RBC: Yes, because of our research. But there are still two other important
techniques we use to keep taxes down, once we agree to sell a stock: 1) We use
tax loss accounting to identify the high cost lots, which we
3
<PAGE>
sell first, because these sales would incur a lower tax obligation and 2) If a
stock has not performed as expected, we're quick to take capital losses because
we can use them to offset capital gains.
TELL US ABOUT THE STOCKS THAT WORKED WELL FOR YOU OVER THE LAST SIX MONTHS.
RBC: The greatest contribution came from the technology sector where names like
Sun Microsystems and Cisco outperformed their peers. Other outstanding holdings
were Browning-Ferris, Seagram and MCI WorldCom.
INTERNET-RELATED STOCKS WERE THE TECHNOLOGY STOCKS TO OWN, RIGHT?
RBC: Yes. Investors have been losing interest in personal computer makers
because of falling prices, but the stock prices of companies that supply the
hardware to keep the Internet growing have continued to rise. We were interested
in these companies because we believed that Internet capabilities would win out
over personal computer upgrades. A recent government report confirmed our
suspicions - purchases of personal computers for business purposes slowed
substantially in the first quarter, while communications equipment spending
accelerated.
Strong earnings have been fueled largely by the continued build-out of the
Internet, which stimulated demand for networking equipment and servers. In
addition, the question of whether computers will be Year 2000 compliant has
increased demand as older equipment is replaced to ensure compliance. European
technology purchases were a major contributor to the strong revenues and
earnings.
Sun Microsystems produces servers that are crucial for high-end uses such as the
Internet. It is the leading vendor of Unix-based computer systems. It has
successfully made the transition from technical workstations to enterprise
servers. In addition, its Java - write once, run anywhere - language has
fortified the company's position as the leading player in networked-based
computing.
Cisco Systems is the leading supplier of Internet infrastructure to service
suppliers and corporations. Throughout its history, it has invested in the key
pieces of Internet technology - most importantly the TCPIP software protocol
that governs the Internet.
WHAT DISTINGUISHED BROWNING-FERRIS, SEAGRAM AND MCI WORLDCOM?
RBC: A variety of things. Browning-Ferris, the third largest company in the
solid waste industry, agreed to be acquired by Allied Waste, the second largest.
Seagram benefited from enthusiasm for the company's expansion in the music
industry through its purchase of Polygram NV, the world's largest music company.
Seagram announced in April that it is forming an online music alliance with
Germany's Bertelsmann AG, the world's third largest music company. MCI WorldCom
has performed well on strong growth in Internet services, data services and
international sales.
4
<PAGE>
WERE THERE ANY DISAPPOINTMENTS?
RBC: Just a couple. Funeral service provider Service Corp. International and
Philip Morris both hurt us. Service Corp. has rebounded off its lows by
reporting stronger than expected first quarter earnings, but has not fully
recovered from earlier earnings disappointments. Philip Morris has had
continuing difficulties with litigation.
WHAT IS YOUR MARKET OUTLOOK?
RBC: We're pleased to see the market broaden as more and more stocks participate
in the market's gains. We expect the market leadership will continue to expand
for the rest of the year, moving away from MegaCap growth stocks. The nifty 50,
the largest 50 stocks in the S&P 500 by market capitalization, are still very
expensive when compared with the next 450 stocks in the index. The nifty 50
currently trade at 33 times earnings while the next 450 trade at only 27 times.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan Institutional Tax Aware Disciplined Equity Fund seeks to provide
high after-tax total return from a portfolio of selected equity securities. The
fund is designed for long-term taxable investors who are interested in
minimizing taxable distributions. The fund invests primarily in common stocks
and other equity securities of large and medium-sized U.S. companies.
- --------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
1/30/97
- --------------------------------------------------------------------------------
FUND NET ASSETS AS OF 4/30/99
$221,633,338
- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
7/30/99, 10/29/99
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/99
EXPENSE RATIO
The fund's current annual expense ratio of 0.55% covers shareholders' expenses
for custody, tax reporting, and investment advisory and shareholder services,
after reimbursement. The fund is no-load and does not charge any sales or
exchange fees; however, shares held less than one year may be subject to
redemption fees. There are no additional charges for buying, selling, or
safekeeping fund shares, or for wiring redemption proceeds from the fund. Fund
redemption fees are waived when shares worth over $500,000 are redeemed in kind
from the fund. Shareholders owning more than 5% of the fund's outstanding shares
should consult "Redemption of Shares" in the Statement of Additional
Information.
FUND HIGHLIGHTS
ALL DATA AS OF APRIL 30, 1999
PORTFOLIO ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)
[PIE CHART]
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<S> <C>
Technology 22.2%
Consumer goods & services 18.6%
Finance 16.2%
Health care 11.8%
Industrial products & service 10.8%
Utilities 8.5%
Energy 6.2%
Basic industries 3.3%
Transportation 1.2%
Short-term & other investments 1.2%
</TABLE>
<TABLE>
<CAPTION>
LARGEST EQUITY HOLDINGS % OF TOTAL INVESTMENTS
- --------------------------------------------------------------------------------
<S> <C>
MICROSOFT CORP. (TECHNOLOGY) 3.8%
GENERAL ELECTRIC CO.
(INDUSTRIAL PRODUCTS & SERVICES) 2.6%
INTERNATIONAL BUSINESS MACHINES CORP.
(TECHNOLOGY) 2.5%
MCI WORLDCOM, INC. (TECHNOLOGY) 2.3%
INTEL CORP. (TECHNOLOGY) 2.3%
CISCO SYSTEMS, INC. (TECHNOLOGY) 2.1%
MOBIL CORP. (ENERGY) 2.0%
PHILIP MORRIS COMPANIES, INC.
(CONSUMER GOODS & SERVICES) 1.7%
COCA-COLA CO. (CONSUMER GOODS & SERVICES) 1.7%
WAL-MART STORES, INC.
(CONSUMER GOODS & SERVICES) 1.5%
</TABLE>
6
<PAGE>
DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS INVESTMENT ADVISOR. SHARES OF THE FUND ARE NOT BANK DEPOSITS AND ARE
NOT GUARANTEED BY ANY BANK, GOVERNMENT ENTITY, OR THE FDIC. RETURN AND SHARE
PRICE WILL FLUCTUATE AND REDEMPTION VALUE MAY BE WORTH MORE OR LESS THAN
ORIGINAL COST.
References to specific securities and their issuers are for illustrative
purposes only and are not intended to be, and should not be interpreted as,
recommendations to purchase or sell such securities. Opinions expressed herein
are based on current market conditions and are subject to change without notice.
CALL J.P. MORGAN FUNDS SERVICES AT (800) 766-7722 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
7
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
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<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCKS (99.6%)
BASIC INDUSTRIES (3.3%)
AGRICULTURE (0.0%)
Agribrands International, Inc.+.................. 100 $ 3,500
-------------
CHEMICALS (1.8%)
Dow Chemical Co.................................. 17,500 2,295,781
Lyondell Chemical Co............................. 24,200 471,900
Rohm & Haas Co................................... 27,700 1,241,306
-------------
4,008,987
-------------
FOREST PRODUCTS & PAPER (0.6%)
Fort James Corp.................................. 1,100 41,800
Georgia-Pacific Group............................ 4,900 453,250
International Paper Co........................... 3,700 197,256
Temple-Inland, Inc............................... 5,900 407,100
Union Camp Corp.................................. 2,100 166,687
-------------
1,266,093
-------------
METALS & MINING (0.9%)
Alcan Aluminum Ltd.(i)........................... 14,900 473,075
Allegheny Teledyne, Inc.......................... 54,700 1,223,912
Reynolds Metals Co............................... 1,400 87,325
USEC, Inc.+...................................... 24,400 303,475
-------------
2,087,787
-------------
TOTAL BASIC INDUSTRIES......................... 7,366,367
-------------
CONSUMER GOODS & SERVICES (18.7%)
APPARELS & TEXTILES (0.3%)
Fruit of the Loom, Inc., Class A+................ 5,700 60,919
Jones Apparel Group, Inc.+....................... 19,400 640,200
-------------
701,119
-------------
AUTOMOTIVE (1.2%)
DaimlerChrysler AG+.............................. 2,600 255,287
Dana Corp........................................ 14,457 681,286
Ford Motor Co.................................... 14,100 901,519
General Motors Corp.............................. 4,600 409,112
Goodyear Tire and Rubber Co...................... 2,000 114,375
Lear Corp.+...................................... 4,400 201,850
-------------
2,563,429
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
AUTOMOTIVE SUPPLIES (0.0%)
Delphi Automotive Systems Corp.+................. 4,800 $ 93,300
-------------
BROADCASTING & PUBLISHING (0.9%)
AT&T Corp. - Liberty Media Group, Class A........ 6,230 397,941
Comcast Corp., Class A........................... 14,300 939,331
Gannett Co., Inc................................. 4,300 304,494
New York Times Co., Class A...................... 7,800 269,100
-------------
1,910,866
-------------
ENTERTAINMENT, LEISURE & MEDIA (2.4%)
Hilton Hotels Corp............................... 2,200 34,375
International Game Technology.................... 8,500 150,875
Mattel, Inc...................................... 25,100 649,462
Mirage Resorts, Inc.+............................ 49,900 1,119,631
Seagram Company Ltd.(i).......................... 28,200 1,617,975
Time Warner, Inc................................. 16,600 1,162,000
Viacom, Inc., Class B+........................... 1,400 57,225
Walt Disney Co................................... 18,600 590,550
-------------
5,382,093
-------------
FOOD, BEVERAGES & TOBACCO (5.3%)
Anheuser Busch Companies, Inc.................... 1,300 95,062
Bestfoods........................................ 6,800 341,275
Campbell Soup Co................................. 5,400 221,400
Coca-Cola Co..................................... 56,300 3,828,400
Corn Products International, Inc.+............... 50 1,444
H.J. Heinz Co.................................... 7,100 331,481
PepsiCo, Inc..................................... 30,000 1,108,125
Philip Morris Companies, Inc..................... 111,100 3,895,444
Ralston-Ralston Purina Group..................... 2,500 76,250
Sara Lee Corp.+.................................. 8,500 189,125
Unilever NV (ADR)(i)............................. 25,500 1,655,906
-------------
11,743,912
-------------
HOUSEHOLD APPLIANCES & FURNISHINGS (0.3%)
Furniture Brands International, Inc.+............ 2,200 55,137
Leggett & Platt, Inc............................. 22,900 528,131
-------------
583,268
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
HOUSEHOLD PRODUCTS (1.5%)
Colgate-Palmolive Co............................. 3,300 $ 338,044
Procter & Gamble Co.............................. 32,800 3,077,050
-------------
3,415,094
-------------
PERSONAL CARE (0.1%)
Gillette Co...................................... 6,100 318,344
-------------
RESTAURANTS & HOTELS (0.5%)
Extended Stay America, Inc.+..................... 300 3,150
McDonald's Corp.................................. 8,900 377,137
Starwood Hotels & Resorts Worldwide, Inc......... 17,000 623,687
-------------
1,003,974
-------------
RETAIL (6.2%)
Albertson's, Inc................................. 1,200 61,800
American Stores Co............................... 28,000 883,750
AutoZone, Inc.+.................................. 18,000 540,000
Best Buy Co., Inc.+.............................. 1,000 47,750
Circuit City Stores-Circuit City Group........... 6,800 418,200
CompUSA, Inc.+................................... 200 1,400
Corporate Express, Inc.+......................... 1,800 8,944
Dayton Hudson Corp............................... 8,400 565,425
Dillard's, Inc., Class A......................... 20,300 562,056
Federated Department Stores, Inc.+............... 15,800 737,662
Gap, Inc......................................... 8,750 582,422
General Nutrition Companies, Inc.+............... 900 14,934
Hannaford Brothers Co............................ 8,700 379,537
Home Depot, Inc.................................. 19,700 1,180,769
J.C. Penney, Inc................................. 15,800 720,875
Kmart Corp.+..................................... 28,800 428,400
Kroger Co.+...................................... 3,000 162,937
May Department Stores Co......................... 14,050 559,366
Safeway, Inc.+................................... 7,900 426,106
Sears, Roebuck & Co.............................. 18,700 860,200
TJX Companies, Inc............................... 17,900 596,294
Toys 'R' Us, Inc.+............................... 26,700 580,725
Wal-Mart Stores, Inc............................. 74,500 3,427,000
-------------
13,746,552
-------------
TOTAL CONSUMER GOODS & SERVICES................ 41,461,951
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
ENERGY (6.2%)
OIL-PRODUCTION (5.7%)
Atlantic Richfield Co............................ 900 $ 75,566
BP Amoco Plc (Spon. ADR)......................... 6,394 723,721
Chevron Corp..................................... 7,200 718,200
Exxon Corp....................................... 39,500 3,280,969
Mobil Corp....................................... 43,500 4,556,625
Royal Dutch Petroleum Co. (ADR).................. 52,700 3,092,831
Tosco Corp....................................... 5,800 155,150
Valero Energy Corp............................... 4,200 93,712
-------------
12,696,774
-------------
OIL-SERVICES (0.5%)
ENSCO International, Inc......................... 1,600 29,700
Global Marine, Inc.+............................. 40,300 599,462
R&B Falcon Corp.+................................ 25,600 256,000
Smith International, Inc.+....................... 3,900 175,012
-------------
1,060,174
-------------
TOTAL ENERGY................................... 13,756,948
-------------
FINANCE (16.5%)
BANKING (9.9%)
Associated Banc - Corp........................... 12,900 466,819
Astoria Financial Corp........................... 13,740 687,859
Bank of America Corp............................. 37,373 2,690,856
Bankers Trust Corp............................... 4,000 360,250
Charter One Financial, Inc....................... 10,671 333,802
Citigroup, Inc................................... 41,200 3,100,300
Commercial Federal Corp.......................... 1,500 36,375
Compass Bancshares, Inc.......................... 21,450 586,523
Dime Bancorp, Inc................................ 12,400 285,975
First American Corp.............................. 7,500 291,094
First Union Corp................................. 38,880 2,152,980
Franklin Resources, Inc.......................... 9,200 368,000
GreenPoint Financial Corp........................ 5,100 178,500
Hibernia Corp., Class A.......................... 10,700 142,444
KeyCorp.......................................... 57,400 1,775,812
Peoples Heritage Financial Group, Inc.+.......... 56,100 1,090,444
PNC Bank Corp.................................... 9,200 532,450
Provident Financial Group, Inc................... 19,200 804,600
Republic New York Corp........................... 12,900 757,875
Sovereign Bancorp, Inc........................... 50,200 685,544
TCF Financial Corp............................... 22,900 664,100
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
BANKING (CONTINUED)
U.S. Bancorp..................................... 4,700 $ 174,194
Union Planters Corp.............................. 34,100 1,459,906
Washington Mutual, Inc........................... 24,655 1,013,937
Wells Fargo Co................................... 27,800 1,200,612
-------------
21,841,251
-------------
FINANCIAL SERVICES (3.5%)
American Express Co.+............................ 9,100 1,189,256
Associates First Capital Corp., Class A.......... 13,996 620,198
CIT Group, Inc., Class A......................... 37,200 1,209,000
Equifax, Inc..................................... 24,100 866,094
Federal National Mortgage Association............ 14,600 1,035,687
FINOVA Group, Inc................................ 24,700 1,193,319
Household International, Inc..................... 9,946 500,408
Merrill Lynch & Company, Inc..................... 500 41,969
Morgan Stanley Dean Witter & Co.................. 9,400 932,362
Ocwen Financial Corp.+........................... 8,600 72,562
-------------
7,660,855
-------------
INSURANCE (3.1%)
Allstate Corp.................................... 26,500 963,937
Ambac Financial Group, Inc....................... 10,700 646,012
American International Group, Inc................ 10,050 1,180,247
Aon Corp......................................... 5,300 363,050
CIGNA Corp....................................... 2,700 235,406
Equitable Companies, Inc......................... 1,400 94,238
Fremont General Corp............................. 1,600 32,000
Marsh & McLennan Companies, Inc.................. 13,650 1,045,078
MBIA, Inc........................................ 13,200 887,700
UNUM Corp........................................ 27,100 1,480,338
-------------
6,928,006
-------------
TOTAL FINANCE.................................. 36,430,112
-------------
HEALTHCARE (11.9%)
BIOTECHNOLOGY (0.8%)
Amgen, Inc.+..................................... 11,900 730,734
Genzyme Corp.+................................... 27,200 1,025,100
-------------
1,755,834
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
HEALTH SERVICES (2.2%)
Abbott Laboratories.............................. 14,800 $ 716,875
Aetna, Inc....................................... 7,500 657,656
Boston Scientific Corp.+......................... 3,700 157,481
Columbia / HCA Healthcare Corp................... 23,100 570,281
HCR Manor Care, Inc.+............................ 20,500 568,875
Health Management Associates, Inc., Class A+..... 28,000 437,500
HEALTHSOUTH Corp.+............................... 52,300 702,781
Humana, Inc.+.................................... 2,100 28,613
Perkin-Elmer Corp.+.............................. 1,000 108,125
Tenet Healthcare Corp.+.......................... 24,100 569,363
United Healthcare Corp........................... 2,200 123,475
Wellpoint Health Networks, Inc.+................. 4,100 288,025
-------------
4,929,050
-------------
MEDICAL SUPPLIES (0.3%)
Medtronic, Inc................................... 4,500 323,719
Provident Companies, Inc......................... 7,200 283,500
-------------
607,219
-------------
PHARMACEUTICALS (8.6%)
Agouron Pharmaceuticals, Inc.+................... 1,200 70,838
ALZA Corp.+...................................... 55,100 1,849,294
American Home Products Corp...................... 36,200 2,208,200
Bristol-Myers Squibb Co.......................... 48,600 3,089,138
Eli Lilly & Co................................... 28,400 2,090,950
Forest Laboratories, Inc.+....................... 8,900 396,050
Johnson & Johnson................................ 14,700 1,433,250
MedImmune, Inc.+................................. 1,600 88,250
Merck & Co., Inc................................. 33,900 2,381,475
Monsanto Co...................................... 33,400 1,511,350
Pfizer, Inc...................................... 14,000 1,610,875
Schering-Plough Corp............................. 11,200 541,100
Warner-Lambert Co................................ 22,200 1,508,213
Watson Pharmaceuticals, Inc.+.................... 6,700 271,350
-------------
19,050,333
-------------
TOTAL HEALTHCARE............................... 26,342,436
-------------
INDUSTRIAL PRODUCTS & SERVICES (10.8%)
AEROSPACE (0.1%)
Boeing Co........................................ 8,000 325,000
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
AUTOMOTIVE SUPPLIES (0.2%)
Genuine Parts Co................................. 11,700 $ 351,000
-------------
BUILDING MATERIALS (0.1%)
Owens Corning.................................... 6,000 213,750
-------------
CAPITAL GOODS (0.1%)
Eaton Corp....................................... 2,800 256,725
-------------
COMMERCIAL SERVICES (1.0%)
Cendant Corp.+................................... 35,700 642,600
Coltec Industries, Inc.+......................... 10,000 216,250
Service Corp. International...................... 66,400 1,377,800
-------------
2,236,650
-------------
DIVERSIFIED MANUFACTURING (6.6%)
AlliedSignal, Inc................................ 26,600 1,562,750
Cooper Industries, Inc........................... 11,900 575,663
Deere & Co....................................... 2,400 103,200
Eastman Kodak Co................................. 21,500 1,604,438
General Electric Co.............................. 54,900 5,791,950
Harris Corp...................................... 35,900 1,240,794
ITT Industries, Inc.............................. 700 25,200
Johnson Controls, Inc............................ 5,400 393,863
Tenneco, Inc..................................... 42,300 1,142,100
Tyco International Ltd.(i)....................... 28,252 2,295,475
-------------
14,735,433
-------------
ELECTRICAL EQUIPMENT (0.9%)
Emerson Electric Co.............................. 28,900 1,864,050
W.W. Grainger, Inc............................... 2,500 125,469
-------------
1,989,519
-------------
PACKAGING & CONTAINERS (0.7%)
Kimberly-Clark Corp.............................. 23,600 1,446,975
Smurfit-Stone Container Corp..................... 5,800 135,031
-------------
1,582,006
-------------
POLLUTION CONTROL (1.1%)
Browning-Ferris Industries, Inc.................. 18,600 741,675
Waste Management, Inc............................ 28,407 1,604,996
-------------
2,346,671
-------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 24,036,754
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TECHNOLOGY (22.4%)
AEROSPACE (0.1%)
Lockheed Martin Corp............................. 4,600 $ 198,088
-------------
COMPUTER SOFTWARE (4.8%)
BMC Software, Inc.+.............................. 2,800 120,488
Computer Associates International, Inc........... 450 19,209
Microsoft Corp.+................................. 104,400 8,485,763
Network Associates, Inc.+........................ 1,400 18,506
Oracle Corp.+.................................... 73,150 1,979,622
-------------
10,623,588
-------------
COMPUTER SYSTEMS (5.2%)
Compaq Computer Corp............................. 13,600 303,450
Dell Computer Corp.+............................. 55,100 2,267,709
EMC Corp.+....................................... 15,600 1,699,425
Gateway 2000, Inc.+.............................. 700 46,331
International Business Machines Corp............. 26,200 5,480,713
Sun Microsystems, Inc.+.......................... 28,500 1,705,547
-------------
11,503,175
-------------
ELECTRONICS (2.1%)
Cisco Systems, Inc.+............................. 40,975 4,674,991
-------------
INFORMATION PROCESSING (0.4%)
Automatic Data Processing, Inc................... 17,400 774,300
First Data Corp.................................. 3,500 148,531
-------------
922,831
-------------
SEMICONDUCTORS (3.5%)
Applied Materials, Inc.+......................... 14,100 755,672
Intel Corp....................................... 82,000 5,014,813
Motorola, Inc.................................... 10,100 809,263
Texas Instruments, Inc........................... 11,700 1,194,863
-------------
7,774,611
-------------
TELECOMMUNICATION SERVICES (3.9%)
America Online, Inc.+............................ 22,300 3,183,325
Level 3 Communications, Inc.+.................... 2,800 252,088
MCI WorldCom, Inc.+.............................. 62,439 5,129,754
US WEST, Inc..................................... 26 1,360
-------------
8,566,527
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TELECOMMUNICATIONS (0.9%)
Airtouch Communications, Inc.+................... 3,400 $ 317,475
MediaOne Group, Inc.+............................ 15,800 1,288,688
Northern Telecom Ltd.(i)......................... 5,620 383,214
-------------
1,989,377
-------------
TELECOMMUNICATIONS-EQUIPMENT (1.5%)
Lucent Technologies, Inc......................... 55,700 3,348,963
-------------
TOTAL TECHNOLOGY............................... 49,602,151
-------------
TRANSPORTATION (1.3%)
RAILROADS (1.2%)
CSX Corp......................................... 25,300 1,246,025
Union Pacific Corp............................... 22,100 1,326,000
-------------
2,572,025
-------------
TRUCK & FREIGHT CARRIERS (0.1%)
CNF Transportation, Inc.......................... 3,400 148,538
Ryder System, Inc................................ 2,000 52,750
-------------
201,288
-------------
TOTAL TRANSPORTATION........................... 2,773,313
-------------
UTILITIES (8.5%)
ELECTRIC (1.9%)
Allegheny Energy, Inc............................ 12,500 425,781
Central & South West Corp........................ 8,700 215,869
Cinergy Corp..................................... 3,600 107,325
Edison International............................. 38,600 945,700
Entergy Corp..................................... 5,300 165,625
Northern States Power Co......................... 16,400 395,650
PG&E Corp........................................ 1 31
PP&L Resources, Inc.............................. 23,700 662,119
TECO Energy, Inc................................. 6,500 138,531
Wisconsin Energy Corp............................ 38,900 1,045,438
-------------
4,102,069
-------------
GAS-PIPELINES (0.7%)
Columbia Energy Group............................ 28,600 1,374,588
K N Energy, Inc.................................. 12,600 259,875
-------------
1,634,463
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TELEPHONE (5.9%)
Ameritech Corp................................... 300 $ 20,531
AT & T Corp...................................... 51,756 2,613,678
Bell Atlantic Corp............................... 52,960 3,051,820
BellSouth Corp................................... 11,500 514,625
GTE Corp......................................... 50,000 3,346,875
SBC Communications, Inc.......................... 58,600 3,281,600
Sprint Corp...................................... 2,800 287,175
-------------
13,116,304
-------------
TOTAL UTILITIES................................ 18,852,836
-------------
TOTAL COMMON STOCKS (COST $186,782,730)........ 220,622,868
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.2%)
OTHER INVESTMENT COMPANIES (1.2%)
Seven Seas Money Market Fund (cost $2,715,142)... $ 2,715,142 $ 2,715,142
-------------
TOTAL INVESTMENTS
(COST $189,497,872) (100.8%)................................. 223,338,010
LIABILITIES IN EXCESS OF OTHER
ASSETS (-0.8%)............................................... (1,704,672)
-------------
NET ASSETS (100.0%)............................................ $ 221,633,338
-------------
-------------
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $189,506,633 for federal income tax
purposes at April 30, 1999, the aggregate gross unrealized appreciation and
depreciation was $37,537,653 and $3,706,276, respectively, resulting in net
unrealized appreciation of $33,831,377.
+ - Non-income producing security.
(i) - Foreign security.
ADR - American Depositary Receipt.
Spon. ADR - Sponsored ADR.
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $189,497,872 ) $223,338,010
Receivable for Fund Shares Sold 2,055,425
Dividends Receivable 148,283
Deferred Organization Expenses 26,206
Interest Receivable 15,843
Receivable for Expense Reimbursements 3,486
Prepaid Trustees' Fees 273
Prepaid Expenses and Other Assets 361
------------
Total Assets 225,587,887
------------
LIABILITIES
Payable for Investments Purchased 3,795,696
Advisory Fee Payable 59,604
Shareholder Servicing Fee Payable 16,600
Custody Fee Payable 14,732
Organization Expenses Payable 12,060
Administrative Services Fee Payable 8,772
Transfer Agent Fees Payable 435
Administration Fee Payable 149
Fund Services Fee Payable 77
Accrued Expenses 46,424
------------
Total Liabilities 3,954,549
------------
NET ASSETS
Applicable to 12,173,921 shares outstanding
(par value $0.001, unlimited shares authorized) $221,633,338
------------
------------
Net Asset Value, Offering and Redemption Price
per Share $18.21
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $188,560,208
Undistributed Net Investment Income 102,723
Accumulated Net Realized Loss on Investments (869,731)
Net Unrealized Appreciation of Investments 33,840,138
------------
Net Assets $221,633,338
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $3,048 ) $ 949,624
Interest Income 64,444
-----------
Investment Income 1,014,068
EXPENSES
Advisory Fee $255,074
Shareholder Servicing Fee 72,878
Custodian Fees and Expenses 46,861
Administrative Services Fee 38,309
Professional Fees and Expenses 19,307
Transfer Agent Fee 18,447
Registration Fees 15,617
Printing Expenses 9,423
Amortization of Organization Expenses 4,715
Fund Services Fee 1,443
Administration Fee 698
Trustees' Fees and Expenses 442
Miscellaneous 2,336
--------
Total Expenses 485,550
Less: Reimbursement of Expenses (84,573)
--------
NET EXPENSES 400,977
-----------
NET INVESTMENT INCOME 613,091
NET REALIZED GAIN ON INVESTMENTS 3,982,639
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS 25,175,434
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $29,771,164
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
14
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, FOR THE FISCAL
1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
------------ ----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 613,091 $ 539,773
Net Realized Gain (Loss) on Investments 3,982,639 (954,939)
Net Change in Unrealized Appreciation of
Investments 25,175,434 7,810,015
------------ ----------------
Net Increase in Net Assets Resulting from
Operations 29,771,164 7,394,849
------------ ----------------
DIVIDENDS TO SHAREHOLDERS FROM
Net Investment Income (583,039) (523,408)
------------ ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 111,199,494 74,412,898
Reinvestment of Dividends 562,724 517,796
Cost of Shares of Beneficial Interest Redeemed (9,407,754) (3,775,057)
Service Charge 11,583 26,209
------------ ----------------
Net Increase from Shareholder Transactions 102,366,047 71,181,846
------------ ----------------
Total Increase in Net Assets 131,554,172 78,053,287
NET ASSETS
Beginning of Period 90,079,166 12,025,879
------------ ----------------
End of Period (including undistributed net
investment income of $102,723 and $72,671,
respectively) $221,633,338 $ 90,079,166
------------ ----------------
------------ ----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
15
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED JANUARY 30, 1997
APRIL 30, FOR THE FISCAL (COMMENCEMENT OF
1999 YEAR ENDED OPERATIONS) THROUGH
(UNAUDITED) OCTOBER 31, 1998 OCTOBER 31, 1997
------------ ---------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.71 $ 12.08 $ 10.00
------------ ---------------- -------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.07 0.11 0.06
Net Realized and Unrealized Gain on Investments 3.50 2.68 2.02
------------ ---------------- -------------------
Total from Investment Operations 3.57 2.79 2.08
------------ ---------------- -------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.07) (0.16) --
------------ ---------------- -------------------
NET ASSET VALUE, END OF PERIOD $ 18.21 $ 14.71 $ 12.08
------------ ---------------- -------------------
------------ ---------------- -------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return 24.31%(a) 23.26% 20.80%(a)
Net Assets, End of Period (in thousands) $ 221,633 $ 90,079 $ 12,026
Ratios to Average Net Assets
Net Expenses 0.55%(b) 0.55% 0.55%(b)
Net Investment Income 0.84%(b) 0.97% 1.19%(b)
Expenses without Reimbursement 0.67%(b) 1.02% 4.59%(b)
Portfolio Turnover 19% 57% 35%
</TABLE>
- ------------------------
(a) Not annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
J.P. Morgan Tax Aware Disciplined Equity 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. The fund is a no-load and diversified, open-end
management investment company. The fund's investment objective is to provide
high after tax total return from a portfolio of selected 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 Institutional Shares. The fund commenced operations on January 30,
1997. 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 generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the fund:
a) The value of each security for which readily available market quotations
exist is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. Securities listed on a foreign
exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures
established by the fund's trustees. Such procedures include the use of
independent pricing services, which use prices based upon yields or prices
of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
short-term portfolio securities with a remaining maturity of less than 60
days are valued by the amortized cost method.
b) Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount becomes known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
c) Substantially all the fund's net investment income is declared as
dividends and paid quarterly. Distributions to shareholders of net
realized capital gains, if any, are declared and paid annually.
d) The fund incurred organization expenses in the amount of $47,567. Morgan
Guaranty Trust Company of New York ("Morgan"), a wholly owned subsidiary
of J.P.Morgan & Co. Incorporated ("J.P.Morgan"), has paid the organization
expenses of the fund. The fund has agreed to reimburse Morgan for these
costs which are being deferred and amortized on a straight-line basis over
a period not to exceed five years beginning with the commencement of
operations of the fund.
17
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
e) 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) The fund accounts for and reports distributions to shareholders in
accordance with Statement of Position 93-2 "Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investments Companies." The effect of applying
this statement was to increase Paid-in Capital by $3,877,758 and decrease
Accumulated Net Realized Gain on Investment by $3,877,758. Net investment
income, net realized gains and net assets were not affected by this
change. This reclassification is the result of gains on securities
redeemed in-kind that were treated as realized gains for financial
statement purposes but which are not recognized for tax purposes.
2. TRANSACTIONS WITH AFFILIATES
a) The fund has an Investment Advisory Agreement with J.P. Morgan Investment
Management Inc. ("JPMIM"), an affiliate of Morgan and a wholly owned
subsidiary of J.P. Morgan. Under the terms of the agreement, the fund pays
JPMIM at an annual rate of 0.35% of the fund's average daily net assets.
For the six months ended April 30,1999, such fees amounted to $255,074.
b) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as the co-administrator and
distributor for the fund. Under a Co-Administration Agreement between FDI
and the trust on behalf of the fund, FDI provides administrative services
necessary for the operations of the fund, furnishes office space and
facilities required for conducting the business of the fund and pays the
compensation of the fund's officers affiliated with FDI. The fund has
agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The
amount allocable to the fund is based on the ratio of the fund's net
assets to the aggregate net assets of the trust and certain other
investment companies subject to similar agreements with FDI. For the six
months ended April 30, 1999, the fee for these services amounted to $698.
c) The trust, on behalf of the fund, 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 fund has agreed to pay Morgan a fee equal to
its allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the trust
and certain other registered investment companies for which JPMIM acts as
investment advisor in accordance with the following annual schedule: 0.09%
on the first $7 billion of their aggregate average daily net assets and
0.04% of their aggregate average daily net assets in excess of $7 billion
less the complex-wide fees payable to FDI. The portion of this charge
payable by the fund is determined by the proportionate share that its net
assets bear to the net assets of the trust and certain other investment
companies for which Morgan provides administrative services. For the six
months ended April 30, 1999, the fee for these services amounted to
$38,309.
18
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
In addition, J.P. Morgan has agreed to reimburse the fund to the extent
necessary to maintain the total operating expenses of the fund at no more
than 0.55% of the average daily net assets of the fund. This reimbursement
arrangement can be changed or terminated at any time at the option of J.P.
Morgan. For the six months ended April 30, 1999, J.P. Morgan has agreed
to reimburse the fund $84,573 for expenses under this agreement.
d) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal account
maintenance service to fund shareholders. The agreement provides for the
fund to pay Morgan a fee for these services which is computed daily and
paid monthly at an annual rate of 0.10% of the average daily net assets of
the fund. For the six months ended April 30, 1999, the fee for these
services amounted to $72,878.
e) The trust, on behalf of the fund, has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the trustees in exercising their
overall supervisory responsibilities for the trust's affairs. The trustees
of the trust represent all the existing shareholders of Group. The fund's
allocated portion of Group's costs in performing its services amounted to
$1,443 for the six months ended April 30, 1999.
f ) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the trust, the J.P. Morgan Funds, the J.P. Morgan
Institutional Funds, and other registered investment companies in which
they invest. The Trustees' Fees and Expenses shown in the financial
statements represents the fund's allocated portion of the total fees and
expenses. The trust's Chairman and Chief Executive Officer also serves as
Chairman of Group and receives compensation and employee benefits from
Group in his role as Group's Chairman. The allocated portion of such
compensation and benefits included in the Fund Services Fee shown in the
financial statements was $300.
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 SIX
MONTHS ENDED
APRIL 30, FOR THE FISCAL
1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
------------ ----------------
<S> <C> <C>
Shares of beneficial interest sold............... 6,560,932 5,366,501
Reinvestment of dividends........................ 33,498 36,061
Shares of beneficial interest redeemed........... (543,581) (274,645)
------------ ----------------
NET INCREASE..................................... 6,050,849 5,127,917
------------ ----------------
------------ ----------------
</TABLE>
Redemptions may be subject to service charges, retained by the fund, in
accordance with the following schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF
YEAR SINCE PURCHASE CASH PROCEEDS
- ------------------------------------------------- -------------
<S> <C>
Shares held for less than one year............... 1%
Shares held one year or longer................... None
</TABLE>
19
<PAGE>
J.P. MORGAN INSTITUTIONAL TAX AWARE DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 1999
- --------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended April 30, 1999 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- ----------------- -----------
<S> <C>
$ 130,061,399 $28,370,372
</TABLE>
5. CREDIT AGREEMENT
The trust, on behalf of the fund, together with other affiliated investment
companies (the "funds"), entered into a revolving line of credit agreement (the
"Agreement") on May 27, 1998, with unaffiliated lenders. The maximum borrowing
under the Agreement was $150,000,000. The Agreement expired on May 26, 1999,
however, the fund as party to the Agreement has extended the Agreement and will
continue its participation therein for an additional 364 days until May 23,
2000. The maximum borrowing under the new agreement is $150,000,000. The purpose
of the Agreement is to provide another alternative for settling large fund
shareholder redemptions. Interest on any such borrowings outstanding will
approximate market rates. Prior to May 26, 1999 the funds paid a commitment fee
at an annual rate of 0.065% on the unused portion of the committed amount; under
the current Agreement, the commitment fee has increased to an annual rate of
0.085% on the unused portion of the committed amount. The commitment fee is
allocated to the funds in accordance with procedures established by their
respective trustees or directors. There were no outstanding borrowings pursuant
to the Agreement as of April 30, 1999.
20
<PAGE>
J.P. MORGAN INSTITUTIONAL FUNDS
PRIME MONEY MARKET FUND
TREASURY MONEY MARKET FUND
FEDERAL MONEY MARKET FUND
TAX EXEMPT MONEY MARKET FUND
TAX AWARE ENHANCED INCOME FUND:
INSTITUTIONAL SHARES
SHORT TERM BOND FUND
BOND FUND
GLOBAL STRATEGIC INCOME FUND
TAX EXEMPT BOND FUND
NEW YORK TAX EXEMPT BOND FUND
CALIFORNIA BOND FUND: INSTITUTIONAL SHARES
DIVERSIFIED FUND
DISCIPLINED EQUITY FUND
U.S. EQUITY FUND
U.S. SMALL COMPANY FUND
TAX AWARE DISCIPLINED EQUITY FUND:
INSTITUTIONAL SHARES
INTERNATIONAL EQUITY FUND
EUROPEAN EQUITY FUND
INTERNATIONAL OPPORTUNITIES FUND
EMERGING MARKETS EQUITY FUND
SMARTINDEX-TM- FUND: INSTITUTIONAL SHARES
FOR MORE INFORMATION ON THE J.P. MORGAN INSTITUTIONAL FUNDS, CALL J.P. MORGAN
FUNDS SERVICES AT
(800) 766-7722.
IM0408-I
J.P. MORGAN
INSTITUTIONAL
TAX AWARE DISCIPLINED
EQUITY FUND
SEMIANNUAL REPORT
APRIL 30, 1999