<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN
INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
January 3, 2000
Dear Shareholder:
We are pleased to report that the J.P. Morgan Institutional International
Opportunities Fund delivered a return of 31.87% for the 12 months ended November
30, 1999, exceeding both its benchmark, the MSCI All-Country World Index Free
ex-U.S. and the Lipper International Equity Funds Average.
The fund's net asset value as of November 30 was $12.92 per share, up from
$10.11 per share after paying current income dividends of approximately $0.32
over the 12-month period.
Included in this report is an interview with Nigel F. Emmett, 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
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<S> <C> <C> <C>
LETTER TO THE SHAREHOLDERS ........ 1 FUND FACTS AND HIGHLIGHTS ......... 5
FUND PERFORMANCE .................. 2 FINANCIAL STATEMENTS .............. 8
PORTFOLIO MANAGER Q&A ............. 3
- --------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
There are several ways to evaluate a mutual fund's historical performance
record. One approach is to look at the growth of a hypothetical investment of
$1,000,000 (the minimum investment in the fund). The chart at right shows that
$1,000,000 invested on February 28, 1997,* would have grown to $1,351,477 on
November 30, 1999.
Another way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
GROWTH OF $1,000,000 SINCE INCEPTION*
FEBRUARY 28, 1997 - NOVEMBER 30, 1999
EDGAR REPRESENTATION OF POINTS USED IN PRINTED GRAPHIC
[GRAPH]
<TABLE>
<CAPTION>
J.P. Morgan
Institutional Lipper MSCI All
International International Country
Opportunities Equity Funds World Index
Fund Average Free ex-U.S.
<S> <C> <C>
1000000 1000000 1000000
1005020 1002300 997888
1012050 1005110 1006340
1051200 1064610 1068470
1099400 1114330 1127440
1129520 1146200 1150250
1050200 1063560 1059760
1109440 1130030 1117090
1007030 1043920 1021960
997992 1034840 1009190
1021530 1043430 1020800
1034680 1067630 1051370
1092330 1138520 1121480
1140870 1196820 1160230
1153010 1213090 1168570
1121660 1214430 1147340
1104460 1204960 1143070
1108510 1222670 1153910
911306 1048320 991184
868732 1011000 970246
978210 1086010 1071880
1024840 1142160 1129480
1060620 1177340 1168390
1069990 1187110 1167140
1037700 1156010 1141010
1102290 1196580 1196120
1158550 1251740 1255920
11111351480 11111467350 11111396320
</TABLE>
LIPPER PERFORMANCE AVERAGES ARE CALCULATED BY TAKING AN ARITHMETIC AVERAGE OF
THE RETURNS OF THE FUNDS IN THE GROUP. THE AVERAGE ANNUALIZED RETURNS WHICH
RESULT FROM THIS METHODOLOGY WILL DIFFER FROM ANNUALIZING THE GROWTH OF THE
MINIMUM INITIAL INVESTMENT.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
--------------------- -----------------------------------
THREE SIX ONE SINCE
AS OF NOVEMBER 30, 1999 MONTHS MONTHS YEAR INCEPTION*
- ------------------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
J.P. Morgan Inst. International Opportunities Fund 8.75% 20.11% 31.87% 11.57%
MSCI All Country World Index Free ex-U.S.** 8.60% 16.66% 23.63% 12.91%
Lipper International Equity Funds Average 12.46% 22.69% 29.01% 14.90%
AS OF SEPTEMBER 30, 1999
- ------------------------------------------------------------------------- -----------------------------------
J.P. Morgan Inst. International Opportunities Fund 5.41% 13.88% 44.49% 9.20%
MSCI All Country World Index Free ex-U.S.** 3.40% 8.22% 33.41% 10.51%
Lipper International Equity Funds Average 3.91% 9.71% 29.80% 10.91%
</TABLE>
*2/26/97 -- COMMENCEMENT OF OPERATIONS (AVERAGE ANNUAL TOTAL RETURNS BASED ON
MONTH END FOLLOWING INCEPTION, 2/28/97). THE FUND'S AVERAGE ANNUAL TOTAL RETURN
SINCE ITS COMMENCEMENT OF OPERATIONS ON 2/26/97 IS 11.37%.
** THE MSCI ALL COUNTRY WORLD INDEX FREE EX-U.S. IS AN UNMANAGED INDEX THAT
MEASURES DEVELOPED AND EMERGING FOREIGN STOCK MARKET PERFORMANCE. IT DOES NOT
INCLUDE FEES OR EXPENSES AND IS NOT AVAILABLE FOR ACTUAL INVESTMENT.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT THE REIMBURSEMENT
OF CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. HAD
EXPENSES NOT BEEN SUBSIDIZED, RETURNS WOULD HAVE BEEN LOWER. LIPPER
ANALYTICAL SERVICES, INC. IS A LEADING SOURCE FOR MUTUAL FUND DATA.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
Following is an interview with NIGEL F. EMMETT, vice president, and a member of
the team that manages the master portfolio in which the fund invests. Nigel
joined J.P. Morgan in 1997. Previously, he was employed by Brown Brothers
Harriman & Co. in New York and Gartmore Investment Management in London. Nigel
earned a B.A. degree in economics from Manchester University. He is a Chartered
Financial Analyst. This interview was conducted on December 10, 1999, and
reflects his views on that date.
THE FUND HAS HAD AN OUTSTANDING YEAR, OUTPERFORMING ITS COMPETITION AND ITS
INDEX. HOW DID YOU DO IT?
NE: Stock selection has been the largest source of added value. We use our
internal research capabilities to identify the most attractive shares in each
sector/industry, and this commitment to research has paid off in the last 12
months.
WHAT HAS DRIVEN THE INTERNATIONAL MARKETS HIGHER OVER THE PAST 12 MONTHS?
NE: Global economic growth has been strong over the last 12 months. The U.S.
economy continued to surprise to the upside, Asia experienced a bounceback, the
Japanese economy started to grow again, continental Europe benefited from the
global trend, and the United Kingdom improved after a difficult 1998. This
economic backdrop was particularly beneficial for equity markets.
GIVEN THIS STRONGER ECONOMIC GROWTH, HOW DO YOU FIND STRONG STOCKS?
NE: This portfolio invests in both developed and emerging markets outside the
U.S. It is structured to capture upside potential in markets outside the United
States, wherever they are. We construct this portfolio from the bottom up, so we
seek to broadly represent all the sectors, using our extensive in-house research
to identify the cheapest stocks within each sector. While we may overweight or
underweight a particular country or region, it reflects our views on individual
stocks, and not a top down view.
TELL US ABOUT SOME OF YOUR SUCCESSES.
NE: One of our best performers was ST Microelectronics, the French semiconductor
maker. The semiconductor industry was at the bottom of its cycle last September.
It rebounded sharply in the fourth quarter of 1998 and has continued to perform
well to date in 1999. We liked ST Microelectronics because it was selling at an
attractive price/earnings multiple, it offered exposure to the semiconductor
industry, it made very good chips used in the popular Nokia cellular telephones,
and it had good capacity management, a big issue in this industry.
3
<PAGE>
Another European technology stock we liked was Philips (Netherlands), a consumer
electronics company with interests in electronics and semiconductors. It has
done very well by restructuring, and it has been able to drive its cost-cutting
gains through to earnings.
JAPAN WAS THE LEADING INDUSTRIALIZED STOCK MARKET IN THE WORLD DURING THE
PERIOD. WHAT DID THE FUND OWN THERE?
NE: Softbank, one of the world's largest investors in the Internet, has produced
strong returns. Softbank most recently announced a number of new ventures,
including a joint venture with News Corp. and Vivendi to set up a new European
exchange backed by NASDAQ. It also has announced an intention to buy the
nationalized Nippon Credit Bank in a venture with Ito Yokado.
The Japanese electronics company, Fujitsu, also did well. It has been one of the
Internet boom beneficiaries as a result of its strong software development
capability.
Also, in the early part of the year, we benefited from owning DDI, the Japanese
mobile telecommunications provider, which generated strong subscription growth
in its cellular telephone business.
Outside of technology, another Japanese stock that worked well for us was
Mitsubishi Chemical, where management has been increasingly proactive in
managing costs and profitability has improved. Also, we believe the market is
beginning to realize it has a fairly significant and successful pharmaceutical
business which has never been priced into its stock before.
WHAT HAS WORKED IN EUROPE?
NE: Most recently, telecommunications stocks have risen strongly, inspired by
merger and acquisition activity. For example, Mannesmann, Germany's engineering
and telecommunications giant, received a hostile takeover bid from Vodafone of
the United Kingdom. Both companies are now attempting to convince investors on
their strategies.
WHAT IS YOUR OUTLOOK?
NE: We anticipate continued strong economic growth outside the United States,
particularly in continental Europe. There are signs of change in Japan, and
continuing upside in some of the Latin and Asian equity markets. All of this
suggests that the outlook for international markets is good.
4
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan Institutional International Opportunities Fund seeks to provide a
high total return from a portfolio of equity securities of foreign companies in
developed and, to a lesser extent, developing markets. It is designed for
investors with a long-term investment horizon who want to diversify their
portfolios by investing in an actively managed portfolio of non-U.S.equity
securities that seeks to outperform the MSCI All Country World Index Free
ex-U.S. As an international investment, the fund is subject to foreign market,
political, and currency risks.
- --------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
2/26/97
- --------------------------------------------------------------------------------
FUND NET ASSETS AS OF 11/30/99
$370,267,806
- --------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 11/30/99
$438,392,368
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/99
EXPENSE RATIO
The fund's current annual expense ratio of 0.94% 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 NOVEMBER 30, 1999
PORTFOLIO ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
EUROPE/AFRICA 58.6%
JAPAN 21.7%
ASIA PACIFIC
(EX-JAPAN) 12.1%
LATIN AMERICA 3.7%
CANADA 0.5%
SHORT-TERM INVESTMENTS 3.4%
<TABLE>
<CAPTION>
LARGEST PORTFOLIO % OF TOTAL
HOLDINGS (EXCLUDING SHORT-TERM INVESTMENTS) INVESTMENTS
- --------------------------------------------------------------------------------
<S> <C>
TOTAL FINA SA, B SHARES (FRANCE) 3.2%
SOFTBANK CORP. (JAPAN) 2.6%
KONINKLIJKE (ROYAL) PHILIPS ELECTRONICS NV
(NETHERLANDS) 2.5%
FUJITSU LTD. (JAPAN) 2.4%
NEWS CORP. LTD. (AUSTRALIA) 2.2%
ROHM CO. LTD. (JAPAN) 2.1%
BANQUE NATIONALE DE PARIS (FRANCE) 2.0%
IBERDROLA SA (SPAIN) 1.9%
SCHERING AG (GERMANY) 1.8%
SONY CORP. (JAPAN) 1.7%
</TABLE>
5
<PAGE>
DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS INVESTMENT ADVISOR. SHARES OF THE FUND ARE NOT BANK DEPOSITS AND ARE
NOT GUARANTEED BY ANY BANK, GOVERNMENT ENTITY, OR THE FDIC. RETURN AND SHARE
PRICE WILL FLUCTUATE AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL
COST.
Opinions expressed herein are based on current market conditions and are subject
to change without notice. The fund invests in foreign securities which are
subject to special risks including economic and political uncertainty and
currency fluctuations; prospective investors should refer to the fund's
prospectus for a discussion of these risks. The fund invests through a master
portfolio (another fund with the same objective).
CALL J.P. MORGAN FUNDS SERVICES AT (800) 766-7722 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
6
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The International Opportunities
Portfolio ("Portfolio"), at value $370,257,776
Receivable for Shares of Beneficial Interest Sold 629,700
Deferred Organization Expenses 6,615
Prepaid Expenses and Other Assets 1,865
------------
Total Assets 370,895,956
------------
LIABILITIES
Payable for Shares of Beneficial Interest
Redeemed 550,000
Shareholder Servicing Fee Payable 29,864
Administrative Services Fee Payable 7,456
Accrued Trustees' Fees and Expenses 522
Administration Fee Payable 381
Fund Services Fee Payable 198
Accrued Expenses 39,729
------------
Total Liabilities 628,150
------------
NET ASSETS
Applicable to 28,667,490 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $370,267,806
============
Net Asset Value, Offering and Redemption Price
Per Share $12.92
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $312,484,295
Undistributed Net Investment Income 4,171,574
Accumulated Net Realized Loss on Investment (9,229,088)
Net Unrealized Appreciation of Investment 62,841,025
------------
Net Assets $370,267,806
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income (Net of Foreign
Withholding Tax of $782,996) $ 4,569,296
Allocated Interest Income (Net of Foreign
Withholding Tax of $1,272) 541,987
Allocated Portfolio Expenses (2,358,374)
-----------
Net Investment Income Allocated from
Portfolio 2,752,909
FUND EXPENSES
Shareholder Servicing Fee $299,841
Administrative Services Fee 77,070
Transfer Agent Fees 22,359
Interest Expense 21,325
Registration Fees 13,101
Professional Fees 11,961
Printing Expenses 9,365
Line of Credit Expenses 9,296
Fund Services Fee 5,885
Administration Fee 4,351
Amortization of Organization Expenses 3,914
Trustees' Fees and Expenses 2,620
Miscellaneous 10,734
--------
Total Fund Expenses 491,822
Less: Reimbursement of Expenses (22,513)
--------
NET FUND EXPENSES 469,309
-----------
NET INVESTMENT INCOME 2,283,600
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 28,828,501
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO 52,971,916
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $84,084,017
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 2,283,600 $ 4,221,849
Net Realized Gain (Loss) on Investment Allocated
from Portfolio 28,828,501 (26,883,314)
Net Change in Unrealized Appreciation of
Investment Allocated from Portfolio 52,971,916 17,183,894
---------------- ----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 84,084,017 (5,477,571)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (8,982,091) (2,837,563)
---------------- ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 137,481,093 282,037,575
Reinvestment of Dividends 2,948,397 896,069
Cost of Shares of Beneficial Interest Redeemed (169,181,904) (161,929,534)
---------------- ----------------
Net Increase (Decrease) from Transactions in
Shares of Beneficial Interest (28,752,414) 121,004,110
---------------- ----------------
Total Increase in Net Assets 46,349,512 112,688,976
NET ASSETS
Beginning of Fiscal Year 323,918,294 211,229,318
---------------- ----------------
End of Fiscal Year (including undistributed net
investment income of $4,171,574 and $6,789,524,
respectively) $ 370,267,806 $ 323,918,294
================ ================
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 26, 1997
FOR THE FISCAL FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) THROUGH
NOVEMBER 30, 1999 NOVEMBER 30, 1998 NOVEMBER 30, 1997
----------------- ----------------- --------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.11 $ 9.94 $ 10.00
---------------- ---------------- ------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.22 0.07
Net Realized and Unrealized Gain (Loss) on
Investment 2.88 0.05 (0.13)
---------------- ---------------- ------------------
Total from Investment Operations 3.13 0.27 (0.06)
---------------- ---------------- ------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.32) (0.10) --
---------------- ---------------- ------------------
NET ASSET VALUE, END OF PERIOD $ 12.92 $ 10.11 $ 9.94
================ ================ ==================
RATIOS AND SUPPLEMENTAL DATA
Total Return 31.87% 2.69% (0.60)%(a)
Net Assets, End of Period (in thousands) $ 370,268 $ 323,918 $ 211,229
Ratio to Average Net Assets
Net Expenses (excluding Interest Expense) 0.94% 0.99% 0.99%(b)
Net Investment Income 0.76% 1.13% 1.35%(b)
Expenses without Reimbursement and including
Interest Expense 0.95% 1.02% 1.17%(b)
Interest Expense 0.01% -- --
</TABLE>
- ------------------------
(a) Not Annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
J.P. Morgan Institutional International Opportunities Fund (the "fund") is a
separate series of J.P. Morgan Institutional Funds, a Massachusetts business
trust (the "trust") which was organized on November 4, 1992. The trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The fund commenced operations on February 26,
1997.
The fund invests all of its investable assets in The International Opportunities
Portfolio (the "portfolio"), a diversified open-end management investment
company having the same investment objective as the fund. The value of such
investment included in the Statement of Assets and Liabilities reflects the
fund's proportionate interest in the net assets of the portfolio (approximately
84% at November 30, 1999). The performance of the fund is directly affected by
the performance of the portfolio. The financial statements of the portfolio,
including the Schedule of Investments, are included elsewhere in this report and
should be read in conjunction with the fund's financial statements.
The preparation of financial statements in accordance with 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) 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) Distributions to shareholders of net investment income and net realized
capital gain, if any, are declared and paid annually.
d) The fund incurred organization expenses in the amount of $12,000. These
costs were deferred and are being amortized on a straight-line basis over
a period not to exceed five-year period from the commencement of
operations.
e) 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.
f) The fund is treated as a separate entity for federal income tax purposes
and 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.
g) The fund accounts for and reports distributions to shareholders in
accordance with Statements of Position 93-2 "Determination, Disclosure,
and Financial Statement Presentation of Income, Capital
12
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
Gain, and Return of Capital Distribution by Investments Companies." The
effect of applying this statement was to increase Undistributed Net
Investment Income by $4,080,541, increase Accumulated Net Realized Loss on
Investment by $4,100,722, and increase Paid-in Capital by $20,181. The
adjustment are primarily attributable to foreign currency reclasses. Net
investment income, net realized gains and net assets were not affected by
this change.
h) For federal income tax purposes, the fund had a capital loss carryforward
of $8,953,137 at November 30, 1999, which will expire in the year 2006.
The fund utilized $22,839,528 of its capital loss carryforward in the
current year. To the extent that this capital loss is used to offset
future capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
2. TRANSACTIONS WITH AFFILIATES
a) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as 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
fiscal year ended November 30, 1999, the fee for these services amounted
to $4,351.
b) The trust, on behalf of the fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan Guaranty Trust Company of New York
("Morgan"), a wholly owned subsidiary of J.P.Morgan & Co. Incorporated
("J.P.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 portfolio and the other
portfolios in which the trust and the J.P. Morgan Funds invest (the
"master portfolios") and J.P. Morgan Series Trust 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, the master portfolios, other investors in the master
portfolios for which Morgan provides similar services, and J.P. Morgan
Series Trust. For the fiscal year ended November 30, 1999, the fee for
these services amounted to $77,070.
In addition, J.P. 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
1.00% of the average daily net assets of the fund until further
notification. For the fiscal year ended November 30, 1999, J.P. Morgan has
agreed to reimburse the fund $22,513 for expenses under this agreement.
13
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
c) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal account
maintenance services 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 fiscal year ended November 30, 1999, the fee for these
services amounted to $299,841.
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 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
$5,885 for the fiscal year ended November 30, 1999.
e) 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 master portfolios and
J.P. Morgan Series Trust. 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 $1,100.
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 FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1999 1998
-------------- -------------------------------------------------
<S> <C> <C>
Shares sold...................................... 11,952,452 27,279,005
Reinvestment of dividends and distributions...... 296,229 90,629
Shares redeemed.................................. (15,635,430) (16,572,045)
------------ ------------------------------------------------
Net Increase (Decrease).......................... (3,386,749) 10,797,589
============ ================================================
</TABLE>
From time to time, the fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the fund.
4. 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. Additionally, since all
of the investable assets of the fund are in the portfolio, the portfolio is
party to certain covenants of the Agreement. The Agreement expired on May 26,
1999, however, the fund as party to the Agreement has renewed 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
14
<PAGE>
J.P. MORGAN INSTITUTIONAL INTERNATIONAL OPPORTUNITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
to provide another alternative for settling large fund shareholder redemptions.
Interest on any such borrowing outstanding will approximate market rates. The
funds pay a commitment fee at an annual rate of 0.085% (0.065% prior to May 26,
1999) on the unused portion of the committed amount. This is allocated to the
funds in accordance with procedures established by their respective trustees.
There were no outstanding borrowings pursuant to the Agreement at November 30,
1999. The average daily balance outstanding for the fiscal year ended
November 30, 1999 was $406,849 at a weighted average rate of 5.34%.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
J.P. Morgan Institutional International Opportunities Fund
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
J.P. Morgan Institutional International Opportunities Fund (one of the series
constituting part of J.P. Morgan Institutional Funds, hereafter referred to as
the "fund") at November 30, 1999, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the two years in the
period then ended and for the period February 26, 1997 (commencement of
operations) through November 30, 1997, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that out audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
January 14, 2000
16
<PAGE>
The International Opportunities Portfolio
Annual Report November 30, 1999
(The following pages should be read in conjunction
with the J.P. Morgan Institutional International Opportunities Fund
Annual Financial Statements)
17
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCK (85.2%)
AUSTRALIA (0.5%)
North Ltd. (Metals & Mining)(s).................. 1,052,500 $ 2,067,379
------------
AUSTRIA (0.5%)
Bank Austria AG (Banking)(s)+.................... 42,732 2,259,320
------------
CANADA (0.5%)
Royal Bank of Canada (Banking)(s)................ 47,900 2,162,351
------------
CHILE (0.5%)
Enersis SA (Spon. ADR) (Electric)(s)............. 88,300 2,041,938
------------
CHINA (0.5%)
Huaneng Power International, Inc. (Spon. ADR)
(Energy Source)(s)............................. 135,000 1,434,375
Huaneng Power International, Inc., H Shares
(Energy Source)(s)............................. 3,000,000 791,869
------------
2,226,244
------------
FINLAND (1.3%)
Sampo Insurance Co. Ltd., A Shares
(Insurance)(s)................................. 56,000 1,832,542
Stora Enso OYJ, R Shares (Forest Products &
Paper)(s)...................................... 276,664 3,986,731
------------
5,819,273
------------
FRANCE (12.3%)
Axa (Insurance)(s)............................... 8,400 1,132,511
Banque Nationale de Paris (Financial
Services)(s)................................... 92,310 8,458,097
Carrefour SA (Retail)(s)......................... 25,370 4,419,255
Christian Dior SA (Retail)(s).................... 23,100 4,151,765
Coflexip SA (Oil-Services)(s)+................... 36,700 3,030,138
Compagnie de Saint-Gobain SA (Building
Materials)(s).................................. 8,935 1,520,421
Groupe Danone (Food, Beverages & Tobacco)(s)..... 8,009 1,857,183
Rhodia SA (Chemicals)(s)......................... 198,800 3,623,076
Sanofi-Synthelabo SA (Pharmaceuticals)(s)+....... 29,452 1,212,888
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
FRANCE (CONTINUED)
STMicroelectronics NV (Electronics)(s)........... 45,718 $ 6,214,462
Total Fina SA (Oil-Services)(s)+................. 13,050 131
Total Fina SA, B Shares (Oil-Services)(s)+....... 101,246 13,466,763
Total Fina SA, B Shares (Oil-Services)(s)........ 13,050 1,747,611
Vivendi (Utilities)(s)........................... 38,979 3,120,185
------------
53,954,486
------------
GERMANY (6.1%)
BASF AG (Chemicals)(s)........................... 26,700 1,235,320
Celanese AG (Chemicals)(s)+...................... 10,170 156,673
Entrium Direct Bankers AG (Banking)(s)+.......... 25,136 368,249
Hoechst AG (Holding Companies)(s)................ 110,700 5,038,121
Mannesmann AG (Diversified Manufacturing)(s)..... 25,000 5,195,558
Merck KGaA (Pharmaceuticals)(s).................. 36,900 1,077,474
Schering AG (Pharmaceuticals)(s)................. 62,580 7,403,822
Stinnes AG (Transport & Services)(s)+............ 38,100 740,397
VEBA AG (Utilities)(s)........................... 63,800 3,115,623
Volkswagen AG (Automotive)(s).................... 34,520 1,619,717
WWL Internet AG (Computer Software)(s)+.......... 37,647 940,080
------------
26,891,034
------------
HONG KONG (2.0%)
Guoco Group Ltd. (Financial Services)(s)......... 380,000 1,144,927
Hongkong Electric Holdings Ltd. (Electric)(s).... 1,597,100 5,038,213
I-CABLE Communications Ltd. (Telecommunication
Services)(s)+.................................. 2,000 3,077
The Wharf (Holdings) Ltd. (Real Estate)(s)....... 960,000 2,435,094
------------
8,621,311
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
INDIA (0.8%)
ICICI Ltd. (GDR) (Financial Services)(s)......... 94,569 $ 1,146,649
ICICI Ltd. (Spon. ADR) (Financial
Services)(s)+.................................. 28,431 316,295
Reliance Industries (GDR) (Diversified
Manufacturing)(s).............................. 139,700 1,882,458
------------
3,345,402
------------
IRELAND (0.3%)
Eircom PLC (Telecommunication Services)(s)....... 171,200 682,624
Greencore Group PLC (Food, Beverages &
Tobacco)(s).................................... 277,000 753,054
------------
1,435,678
------------
ITALY (2.6%)
Bayerische Vita SPA (Insurance)(s)............... 139,300 904,677
Mediaset SPA (Broadcasting & Publishing)(s)...... 198,000 2,252,818
Telecom Italia SPA - RNC (Telecommunication
Services)(s)................................... 1,040,000 5,602,342
UniCredito Italiano SPA (Financial
Services)(s)................................... 550,000 2,564,048
------------
11,323,885
------------
JAPAN (20.7%)
Asahi Breweries Ltd. (Food, Beverages &
Tobacco)(s).................................... 119,000 1,403,288
Daicel Chemical Industries Ltd. (Chemicals)(s)... 844,000 2,494,377
Fujitsu Ltd. (Computer Systems)(s)............... 280,000 9,919,261
Honda Motor Co. Ltd. (Automotive)(s)............. 37,000 1,520,771
Ito - Yokado Co. Ltd. (Retail)(s)................ 42,000 4,521,210
Mitsubishi Chemical Corp. (Chemicals)(s)......... 1,310,000 5,409,990
Mitsubishi Corp. (Wholesale & International
Trade)(s)...................................... 697,000 6,077,475
Mitsui Trust & Banking Co. Ltd. (Banking)(s)..... 1,062,000 3,273,767
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Yusen Kabushiki Kaisha
(Transportation)(s)............................ 295,000 $ 1,192,298
Rohm Co. Ltd. (Electronics)(s)................... 33,000 8,939,078
Softbank Corp. (Computer Software)(s)............ 14,900 10,746,486
Sony Corp. (Electronics)(s)...................... 39,300 7,268,873
Suzuki Motor Corp. (Automotive)(s)............... 124,000 1,819,014
Taiheiyo Cement Corp. (Building Materials)(s).... 724,000 1,424,122
Takeda Chemical Industries (Chemicals)(s)........ 86,100 5,072,387
The Fuji Bank Ltd. (Banking)(s).................. 542,000 6,481,615
Toppan Forms Co., Ltd. (Broadcasting &
Publishing)(s)................................. 46,000 1,267,211
Tostem Corp. (Construction & Housing)(s)......... 173,000 3,106,668
West Japan Railway Co. (Railroads)(s)............ 709 2,865,557
Yamanouchi Pharmaceutical Co. Ltd.
(Pharmaceuticals)(s)........................... 136,000 5,922,590
------------
90,726,038
------------
MEXICO (1.4%)
Consorcio Ara SA de CV (Construction &
Housing)(s)+................................... 1,350,000 1,802,481
Grupo Televisa SA de CV (Spon. GDR) (Broadcasting
& Publishing)(s)+.............................. 85,100 4,153,944
------------
5,956,425
------------
NETHERLANDS (6.5%)
Akzo Nobel NV (Chemicals)(s)..................... 53,100 2,272,302
ING Groep NV (Financial Services)(s)............. 79,572 4,474,721
Koninklijke (Royal) Philips Electronics NV
(Electronics)(s)............................... 86,248 10,494,898
Laurus NV (Retail)(s)............................ 158,764 2,965,367
Unilever NV (Food, Beverages & Tobacco)(s)....... 4,375 240,962
Vedior NV (Business & Public Services)(s)........ 72,207 796,115
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
Vendex NV (Retail)(s)............................ 85,442 $ 2,254,007
Wolters Kluwer NV (Broadcasting &
Publishing)(s)................................. 161,116 4,858,677
------------
28,357,049
------------
NEW ZEALAND (0.1%)
Fletcher Challenge Paper (Forest Products &
Paper)(s)...................................... 1,080,000 644,053
------------
NORWAY (0.8%)
Sparebanken NOR (Banking)(s)+.................... 99,760 2,314,091
Stolt - Nielsen SA (Spon. ADR)
(Transportation)(s)............................ 81,910 1,233,769
------------
3,547,860
------------
PHILIPPINES (0.7%)
ABS- CBN Broadcasting Corporation (Broadcasting &
Publishing)(s)+................................ 1,700,000 1,845,119
First Philippine Holdings Corp., Class B (Multi -
Industry)(s)................................... 1,491,920 1,219,006
------------
3,064,125
------------
PORTUGAL (1.0%)
Banco Pinto & Sotto Mayor SA (Banking)(s)........ 117,519 2,520,404
Portugal Telecom SA (Telecommunication
Services)(s)................................... 219,450 2,110,190
------------
4,630,594
------------
RUSSIA (1.0%)
Surgutneftegaz (Spon. ADR) (Oil-Production)(s)... 464,500 4,296,625
------------
SINGAPORE (2.6%)
Chartered Semiconductor Manufacturing Ltd.
(Semiconductors)(s)+........................... 30,500 1,633,656
DBS Group Holdings Ltd. (Financial
Services)(s)................................... 355,414 4,611,983
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
SINGAPORE (CONTINUED)
Neptune Orient Lines Ltd. (Transport &
Services)(s)+.................................. 1,427,000 $ 2,123,541
Overseas Union Bank Ltd. (Banking)(s)............ 638,378 2,963,938
------------
11,333,118
------------
SOUTH AFRICA (0.5%)
South African Breweries PLC (Food, Beverages &
Tobacco)(s).................................... 216,308 2,031,723
------------
SOUTH KOREA (0.4%)
Housing & Commercial Bank (GDR) (Banking)(s)+.... 54,700 1,515,190
Samsung Electronics (GDR) (144A)
(Electronics)(s)............................... 454 47,420
------------
1,562,610
------------
SPAIN (4.5%)
Acerinox SA (Metals & Mining)(s)................. 46,500 1,430,364
Actividades de Construccion y Servicios SA
(Construction & Housing)(s).................... 97,800 2,362,390
Banco Bilbao Vizcaya SA (Banking)(s)............. 159,000 2,217,325
Banco Santander Central Hispano SA
(Banking)(s)+.................................. 400,000 4,394,073
Iberdrola SA (Electric)(s)....................... 566,600 7,895,783
Indra Sistemas SA (Electronics)(s)+.............. 116,364 1,570,023
------------
19,869,958
------------
SWEDEN (0.4%)
ForeningsSparbanken AB (Banking)(s).............. 120,000 1,849,186
------------
SWITZERLAND (7.1%)
ABB Ltd. (Electrical Equipment)(s)+.............. 36,633 3,602,524
Barry Callebaut AG (Food, Beverages &
Tobacco)(s).................................... 3,200 478,225
Nestle SA (Food, Beverages & Tobacco)(s)......... 2,980 5,361,023
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Roche Holding AG (Pharmaceuticals)(s)............ 467 $ 5,636,115
Schweizerische Rueckversicherungs-Gesellschaft
(Insurance)(s)................................. 2,930 5,976,461
Swisscom AG (Telecommunication Services)(s)...... 16,300 5,532,776
UBS AG (Banking)(s).............................. 16,575 4,532,153
------------
31,119,277
------------
UNITED KINGDOM (9.3%)
Allied Zurich PLC (Insurance)(s)................. 494,700 5,988,103
Anglian Water PLC (Pollution Control)(s)......... 145,000 1,532,296
British Airways PLC (Airlines)(s)................ 460,000 2,734,585
British American Tobacco PLC (Food, Beverages &
Tobacco)(s).................................... 222,000 1,394,870
Cable & Wireless PLC (Telecommunications)(s)..... 404,700 5,133,963
Glaxo Wellcome PLC (Pharmaceuticals)(s).......... 141,100 4,215,932
Lloyds TSB Group PLC (Banking)(s)................ 107,400 1,375,289
National Power PLC (Electric)(s)................. 176,000 1,128,969
Norwich Union PLC (Insurance)(s)................. 280,000 1,988,963
PIC International Group PLC (Food, Beverages &
Tobacco)(s)+................................... 1,103,600 492,157
Railtrack Group PLC (Transportation)(s).......... 132,700 2,039,539
Royal & Sun Alliance Insurance Group PLC
(Insurance)(s)................................. 271,818 1,658,100
Shell Transport & Trading Co.
(Oil-Services)(s).............................. 562,700 4,328,703
Tate & Lyle PLC (Food, Beverages & Tobacco)(s)... 227,300 1,534,062
Tesco PLC (Retail)(s)............................ 806,200 2,182,858
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Unilever PLC (Food, Beverages & Tobacco)(s)...... 242,857 $ 1,783,139
Woolwich PLC (Financial Services)(s)............. 188,374 1,091,334
------------
40,602,862
------------
VENEZUELA (0.3%)
Compania Anonima Nacional Telefonos de Venezuela
(ADR) (Telecommunication Services)(s).......... 63,600 1,522,425
------------
TOTAL COMMON STOCK
(COST $304,316,369)........................... 373,262,229
------------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCKS (1.0%)
<S> <C> <C>
AUSTRALIA (1.0%)
National Australia Bank (Banking) (COST
$4,823,074).................................... 170,000 4,547,500
------------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK (3.7%)
<S> <C> <C>
AUSTRALIA (2.1%)
News Corp. Ltd. (Broadcasting & Publishing)(s)... 1,209,800 9,397,759
------------
BRAZIL (1.4%)
Embratel Participacoes SA (ADR)
(Telecommunication Services)(s)................ 274,331 5,109,415
Tele Norte Leste Participacoes SA (ADR)
(Telecommunication Services)(s)................ 45,716 814,317
------------
5,923,732
------------
GERMANY (0.2%)
ProSieben Media AG (Broadcasting &
Publishing)(s)................................. 95 4,421
Volkswagen AG (Automotive)(s).................... 31,300 819,408
------------
823,829
------------
TOTAL PREFERRED STOCK (COST $13,238,186)....... 16,145,320
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
CONVERTIBLE BONDS (2.3%)
CHINA (0.9%)
Huaneng Power International, 1.75% due 05/21/04
(Energy Source)................................ $ 3,800,000 $ 3,857,000
------------
NETHERLANDS (1.4%)
Telefonica Europe BV, 2.00% due 07/15/02
(Telecommunications Services).................. 2,938,000 6,243,250
------------
TOTAL CONVERTIBLE BONDS (COST $8,387,481)...... 10,100,250
------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (3.2%)
<S> <C> <C>
REPURCHASE AGREEMENT (2.8%)
State Street Bank and Trust Co. Repurchase
Agreement, 4.50% dated 11/30/99 due 12/01/99,
proceeds $12,520,565 (collateralized by
$12,725,000, U.S. Treasury Note, 5.75% due
10/31/00, valued at $12,772,719)............... 12,519,000 12,519,000
------------
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS (0.4%)
United States Treasury Bills, 5.30%(y) due
03/02/00(s).................................... $ 1,580,000 $ 1,559,246
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $14,079,801)............................ 14,078,246
------------
TOTAL INVESTMENTS
(COST $344,844,911) (95.4%).................................. 418,133,545
OTHER ASSETS IN EXCESS OF
LIABILITIES (4.6%)........................................... 20,258,823
------------
NET ASSETS (100.0%)............................................ $438,392,368
============
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $346,219,497 for federal income tax
purposes at November 30, 1999, the aggregate gross unrealized appreciation and
depreciation was $89,466,610 and $17,552,562, respectively, resulting in net
unrealized appreciation of $71,914,048.
+ - Non-income producing security.
(s) Security is fully or partially segregated with custodian as collateral for
futures contracts or with broker as initial margin for futures contracts.
$155,437,924 of the market value has been segregated.
(y) Yield to maturity.
144A - Securities restricted for resale to Qualified Institutional Buyers.
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
Spon. ADR - Sponsored ADR.
Spon. GDR - Sponsored GDR.
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
TOTAL INVESTMENT
----------------
<S> <C>
Banking........................................... 10.2%
Electronics....................................... 8.2%
Telecommunication Services........................ 6.6%
Pharmaceuticals................................... 6.1%
Financial Services................................ 5.7%
Broadcasting & Publishing......................... 5.6%
Oil Services...................................... 5.4%
Retail............................................ 4.9%
Chemicals......................................... 4.8%
Insurance......................................... 4.7%
Food, Beverages and Tobacco....................... 4.1%
Electric.......................................... 3.9%
Short Term Investments............................ 3.0%
Computer Software................................. 2.8%
Computer Systems.................................. 2.4%
Construction & Housing............................ 1.7%
Diversified Manufacturing......................... 1.7%
Utilities......................................... 1.5%
Energy Source..................................... 1.5%
Wholesale & International Trade................... 1.4%
Automotive........................................ 1.4%
Telecommunications................................ 1.2%
Holding Companies................................. 1.2%
Forest Products & Paper........................... 1.1%
Transportation.................................... 1.1%
Oil Production.................................... 1.0%
Electrical Equipment.............................. 0.9%
Metals & Mining................................... 0.8%
Building Materials................................ 0.7%
Railroads......................................... 0.7%
Transport & Services.............................. 0.7%
Airlines.......................................... 0.7%
Real Estate....................................... 0.6%
Semiconductors.................................... 0.4%
Government Obligations............................ 0.4%
Pollution Control................................. 0.4%
Multi-Industry.................................... 0.3%
Business & Public Services........................ 0.2%
-----
100.0%
=====
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $344,844,911) $418,133,545
Cash 4,588,989
Foreign Currency at Value (Cost $16,922,459) 16,793,825
Receivable for Investments Sold 3,291,277
Unrealized Appreciation of Forward Foreign
Currency Contracts 1,255,249
Foreign Tax Reclaim Receivable 1,072,112
Dividends Receivable 465,031
Interest Receivable 25,603
Deferred Organization Expenses 5,750
Prepaid Expenses and Other Assets 2,208
------------
Total Assets 445,633,589
------------
LIABILITIES
Payable for Investments Purchased 5,918,539
Unrealized Depreciation of Forward Foreign
Currency Contracts 642,156
Variation Margin Payable 259,739
Advisory Fee Payable 212,807
Custody Fee Payable 93,275
Foreign Withholding Tax Payable 48,992
Administrative Services Fee Payable 8,855
Administration Fee Payable 378
Fund Services Fee Payable 235
Accrued Trustees' Fees and Expenses 99
Accrued Expenses 56,146
------------
Total Liabilities 7,241,221
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $438,392,368
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $930,345) $ 6,636,197
Interest Income (Net of Foreign Withholding Tax
of $1,504) 643,427
------------
Investment Income 7,279,624
EXPENSES
Advisory Fee $ 2,133,208
Custodian Fees and Expenses 494,799
Administrative Services Fee 91,386
Professional Fees and Expenses 51,752
Fund Services Fee 6,949
Administration Fee 4,338
Trustees' Fees and Expenses 3,088
Amortization of Organization Expenses 2,147
Miscellaneous 9,795
-----------
Total Expenses 2,797,462
------------
NET INVESTMENT INCOME 4,482,162
NET REALIZED GAIN ON
Investment Transactions 27,460,443
Futures Contracts 2,846,712
Foreign Currency Contracts and Transactions 4,037,689
-----------
Net Realized Gain 34,344,844
NET CHANGE IN UNREALIZED APPRECIATION OF
Investments 60,321,714
Futures Contracts 507,940
Foreign Currency Contracts and Translations 2,335,280
-----------
Net Change in Unrealized Appreciation 63,164,934
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $101,991,940
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1999 NOVEMBER 30, 1998
----------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 4,482,162 $ 4,784,491
Net Realized Gain (Loss) on Investments, Futures
and Foreign Currency Contracts and Transactions 34,344,844 (31,808,619)
Net Change in Unrealized Appreciation of
Investments, Futures and Foreign Currency
Contracts and Translations 63,164,934 21,154,264
---------------- ----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 101,991,940 (5,869,864)
---------------- ----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 252,736,681 358,018,439
Withdrawals (296,593,455) (245,865,781)
---------------- ----------------
Net Increase (Decrease) from Investors'
Transactions (43,856,774) 112,152,658
---------------- ----------------
Total Increase in Net Assets 58,135,166 106,282,794
NET ASSETS
Beginning of Fiscal Year 380,257,202 273,974,408
---------------- ----------------
End of Fiscal Year $ 438,392,368 $ 380,257,202
================ ================
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR FOR THE PERIOD
ENDED FEBRUARY 26, 1997
NOVEMBER 30, (COMMENCEMENT OF
-------------------- OPERATIONS) THROUGH
1999 1998 NOVEMBER 30, 1997
--------- --------- -------------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 0.79% 0.85% 0.89%(a)
Net Investment Income 1.26% 1.07% 1.26%(a)
Expenses without Reimbursement 0.79% 0.85% 0.92%(a)
Portfolio Turnover 80% 143% 72%(b)
</TABLE>
- ------------------------
(a) Annualized.
(b) Not Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
26
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The International Opportunities Portfolio (the "portfolio") is one of five
subtrusts (portfolios) comprising The Series Portfolio (the "series portfolio").
The series 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 on June 24, 1994. The
portfolio's investment objective is to provide a high total return from a
portfolio of equity securities of foreign companies in developed and, to a
lesser extent, developing markets. The portfolio commenced operations on
February 26, 1997. The Declaration of Trust permits the trustees to issue an
unlimited number of beneficial interests in the portfolio.
The portfolio may have elements of risk not typically associated with
investments in the United States due to concentrated investments in a limited
number of countries or regions which may vary throughout the year. Such
concentrations may subject the portfolio to additional risks resulting from
political or economic conditions in such countries or regions and the possible
imposition of adverse governmental laws or currency exchange restrictions
affecting such countries or regions which could cause the securities and their
markets to be less liquid and prices more volatile than those comparable to the
United States. The ability of the issuers of debt securities held by the
portfolio to meet their obligations may be affected by economic and political
developments in a specific industry or region.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the portfolio:
a) The portfolio values securities that are listed on an exchange using
prices supplied daily by an independent pricing service that are based on
the last traded price on a national securities exchange or in the absence
of recorded trades, at the readily available mean of the bid and asked
prices on such exchange, if such exchange or market constitutes the
broadest and most representative market for the security. Securities
listed on a foreign exchange are valued at the last traded price or, in
the absence of recorded trades, at the readily available mean of the bid
and asked prices on such exchange available before the time when net
assets are valued. Independent pricing service procedures may also include
the use of prices based on yields or prices of securities of comparable
quality, coupon, maturity and type, indications as to values from dealers,
operating data, and general market conditions. Unlisted securities are
valued at the average of the quoted bid and asked prices in the
over-the-counter market provided by a principal market maker or dealer. If
prices are not supplied by the portfolio's independent pricing service or
principal market maker or dealer, such securities are priced using fair
values in accordance with procedures adopted by the portfolio's Trustees.
All short-term securities with a remaining maturity of sixty days or less
are valued using the amortized cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the
27
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
exchange on which they are traded closes and the time when the portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the portfolio's trustees.
The portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the portfolio. It is the
policy of the portfolio to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the portfolio has
the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event
of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral or proceeds may be subject to legal
proceedings.
b) The books and records of the portfolio are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing exchange rates
at the end of the period. Purchases, sales, income and expense are
translated at the exchange rates prevailing on the respective dates of
such transactions. Translation gains and losses resulting from changes in
exchange rates during the reporting period and gains and losses realized
upon settlement of foreign currency transactions are reported in the
Statement of Operations. Although the net assets of the 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. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount become known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d) The portfolio incurred organization expenses in the amount of $12,800.
These costs were deferred and are being amortized on a straight-line basis
over a five-year period from the commencement of operations.
e) Expenses incurred by the Series Portfolio with respect to any two or more
portfolios in the series portfolio are allocated in proportion to the net
assets of each portfolio in the Series Portfolio, except where allocations
of direct expenses to each portfolio can otherwise be made fairly.
Expenses directly attributable to a portfolio are charged to that
portfolio.
f) The portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables and payables against
fluctuations in future foreign currency rates and to enhance returns. 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.
28
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily at the current foreign exchange
rates, and the change in the market value is recorded by the portfolio as
unrealized appreciation or depreciation of forward foreign currency
contract translations.
g) A futures contract is an agreement to purchase/sell a specified quantity
of an underlying instrument at a specified future date or to make/receive
a cash payment based on the value of a securities index. The price at
which the purchase and sale will take place is fixed when the portfolio
enters into the contract. Upon entering into such a contract, the
portfolio is required to pledge to the broker an amount of cash and/or
liquid securities equal to the minimum "initial margin" requirements of
the exchange. Pursuant to the contract, the portfolio agrees to receive
from, or pay to, the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are
known as "variation margin" and are recorded by the portfolio as
unrealized gains or losses. When the contract is closed, the portfolio
records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time when
it was closed. The portfolio invests in futures contracts for the purpose
of hedging its existing portfolio securities, or securities the portfolio
intends to purchase, against fluctuations in value caused by changes in
prevailing market interest rates or securities movements. The use of
futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the
underlying hedged assets, and the possible inability of counterparties to
meet the terms of their contracts.
h) 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. The portfolio earns foreign income which may
be subject to foreign withholding taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains
earned. Taxes are accrued and applied to net investment income, net
realized capital gains and unrealized appreciation, as applicable, as the
income and/or capital gains are earned.
2. TRANSACTIONS WITH AFFILIATES
a) The portfolio has an Investment Advisory Agreement with J.P. Morgan
Investment Management Inc. ("JPMIM"), an affiliate of Morgan Guaranty
Trust Company of New York ("Morgan"),a wholly-owned subsidiary of J.P.
Morgan & Co. Incorporated ("J.P. Morgan"). Under the terms of the
agreement, the portfolio pays JPMIM at an annual rate of 0.60% of the
portfolio's average daily net assets. For the fiscal year ended November
30, 1999, such fees amounted to $2,133,208.
b) The trust, on behalf of the portfolio, has retained Funds Distributor,
Inc. ("FDI"), a registered broker-dealer, to serve as the co-administrator
and exclusive placement agent. Under a Co-Administration Agreement between
FDI and the portfolio, FDI provides administrative services necessary for
the operations of the portfolio, furnishes office space and facilities
required for conducting the business of the portfolio and pays the
compensation of the portfolio's officers affiliated with FDI. The
portfolio has agreed to pay FDI fees equal to its allocable share of an
annual complex-wide charge of $425,000 plus FDI's out-of-pocket expenses.
The amount allocable to the portfolio is based on the ratio of the
29
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
portfolio's net assets to the aggregate net assets of the portfolio and
certain other investment companies subject to similar agreements with FDI.
For the fiscal year ended November 30, 1999, the fee for these services
amounted to $4,338.
c) The trust, on behalf of the portfolio, has an Administrative Services
Agreement (the "Services Agreement") with Morgan under which Morgan is
responsible for certain aspects of the administration and operation of the
portfolio. Under the Services Agreement, the portfolio has agreed to pay
Morgan a fee equal to its allocable share of an annual complex-wide
charge. This charge is calculated based on the aggregate average daily net
assets of the portfolio and certain other portfolios for which JPMIM acts
as Investment Advisor (the "master portfolios") and J.P. Morgan Series
Trust 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 portfolio is determined by the proportionate share that its net assets
bear to the net assets of the portfolio, the master portfolios, other
investors in the master portfolios for which Morgan provides similar
services, and J.P. Morgan Series Trust. For the fiscal year ended November
30, 1999, the fee for these services amounted to $91,386.
In addition, J.P. Morgan has agreed to reimburse the portfolio to the
extent necessary to maintain the total operating expenses of the portfolio
at no more than 1.00% of the average daily net assets of the portfolio
through March 30, 1999. This reimbursement arrangement was terminated on
March 30, 1999 at the option of J.P. Morgan. For the fiscal year ended
November 30, 1999, there was no reimbursement to the portfolio.
d) The trust, on behalf of 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 represent all the existing shareholders of
Group. The portfolio's allocated portion of Group's costs in performing
its services amounted to $6,949 for the fiscal year ended November 30,
1999.
e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the J.P. Morgan Funds, the J.P. Morgan Institutional Funds,
the master portfolios and J.P. Morgan Series Trust. The Trustees' Fees and
Expenses shown in the financial statements represents the portfolio's
allocated portion of the total fees and expenses. The portfolio'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 $1,300.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the fiscal year
ended November 30, 1999 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- --------- ------------
<S> <C>
$ 269,889,490 $316,981,039
</TABLE>
30
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
Open futures contracts at November 30, 1999 are summazed as follows:
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION/ CURRENT MARKET VALUE
CONTRACTS LONG (DEPRECIATION) OF CONTRACTS
-------------- -------------- --------------------
<S> <C> <C> <C>
Australian All Ordinary Index, expiring December
1999............................................ 9 $ (2,607) $ 433,723
CAC 40 Index, expiring December 1999............. 60 (12,805) 3,249,874
DAX Index, expiring December 1999................ 27 156,668 4,010,739
FTSE 100 Index, expiring December 1999........... 95 643,093 10,040,213
Hang Seng Index, expiring December 1999.......... 5 1,170 495,608
IBEX 35 Index, expiring December 1999............ 19 62,717 2,099,817
TOPIX Index, expring December
1999............................................ 57 202,626 9,146,695
------------- ------------- -------------------
Totals........................................... 272 $ 1,050,862 $ 29,476,669
============= ============= ===================
</TABLE>
At November 30, 1999, the portfolio had open forward currency contracts as
follows:
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
CONTRACTUAL VALUE AT APPRECIATION/
VALUE 11/30/99 (DEPRECIATION)
----------- ----------- --------------
<S> <C> <C> <C>
PURCHASE CONTRACTS
Canadian Dollar 19,573,957, expiring 12/17/99.... $13,388,479 $13,298,284 $ (90,195)
British Pound 18,526,035, expiring 12/17/99...... 30,016,809 29,515,566 (501,243)
British Pound 2,241,125 for EUR 3,543,000,
expiring 12/17/99............................... 3,572,599 3,570,546 (2,053)
Japanese Yen 1,907,280,837, expiring 12/17/99.... 18,044,284 18,721,287 677,003
Swedish Krona 22,860,991, expiring 12/17/99...... 2,737,843 2,692,727 (45,116)
</TABLE>
31
<PAGE>
THE INTERNATIONAL OPPORTUNITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
SETTLEMENT VALUE AT APPRECIATION/
VALUE 11/30/99 (DEPRECIATION)
----------- ----------- --------------
<S> <C> <C> <C>
SALES CONTRACTS
Australian Dollar 2,240,344, expiring 12/17/99... $ 1,428,668 $ 1,425,049 $ 3,619
Euro 15,194,771, expiring 12/17/99............... 15,696,350 15,321,711 374,639
Hong Kong Dollar 25,000,000, expiring 12/17/99... 3,216,427 3,218,867 (2,440)
Norwegian Krone 21,032,974, expiring 12/17/99.... 2,648,832 2,609,694 39,138
Singapore Dollar 8,503,000, expiring 12/17/99.... 5,094,667 5,070,648 24,019
Swiss Franc 8,916,031, expiring 12/17/99......... 5,752,291 5,616,569 135,722
-------------
NET UNREALIZED APPRECIATION ON FORWARD FOREIGN
CURRENCY CONTRACTS.............................. $ 613,093
=============
</TABLE>
4. CREDIT AGREEMENT
The portfolio is party to a revolving line of credit agreement as discussed more
fully in Note 4 of the fund's Notes to the Financial Statements which are
included elsewhere in this report.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The International Opportunities Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of The International Opportunities Portfolio
(one of the portfolios comprising part of The Series Portfolio, hereafter
referred to as the "portfolio") at November 30, 1999, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the supplementary data for each of
the two years in the period then ended and for the period February 26, 1997
(commencement of operations) through November 30, 1997, in conformity with
accounting principles generally accepted in the United States. These financial
statements and supplementary data (hereafter referred to as "financial
statements") are the responsibility of the portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at November 30, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
January 14, 2000
33
<PAGE>
J.P. MORGAN INSTITUTIONAL FUNDS
FEDERAL MONEY MARKET FUND
PRIME MONEY MARKET FUND
TREASURY MONEY MARKET FUND
TAX AWARE ENHANCED INCOME FUND:
INSTITUTIONAL SHARES
TAX EXEMPT MONEY MARKET FUND
SHORT TERM BOND FUND
BOND FUND
GLOBAL STRATEGIC INCOME FUND
TAX EXEMPT BOND FUND
CALIFORNIA BOND FUND: INSTITUTIONAL SHARES
NEW YORK TAX EXEMPT BOND FUND
DIVERSIFIED FUND
DISCIPLINED EQUITY FUND
LARGE CAP GROWTH FUND: INSTITUTIONAL SHARES
TAX AWARE DISCIPLINED EQUITY FUND:
U.S. EQUITY FUND
U.S. SMALL COMPANY FUND
INSTITUTIONAL SHARES
EMERGING MARKETS EQUITY FUND
EUROPEAN EQUITY FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL OPPORTUNITIES FUND
SMARTINDEX FUND
FOR MORE INFORMATION ON THE J.P. MORGAN INSTITUTIONAL
FUNDS, CALL J.P. MORGAN FUNDS SERVICES AT
(800)766-7722.
IM0863-I
J.P. MORGAN INSTITUTIONAL
INTERNATIONAL
OPPORTUNITIES FUND
ANNUAL REPORT
NOVEMBER 30, 1999
