<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM PIERPONT ASIA GROWTH FUND
August 1, 1997
Dear Shareholder:
It has certainly been an exciting six months for Asian equity markets, among
which we've seen vastly different results. The best-performing market was Hong
Kong, as investors drove stock prices to new highs, expressing optimism about
the imminent handover to Chinese sovereignty. The other extreme was Thailand,
where weakness in the financial and real estate sectors and pressures on the
currency sent the market tumbling. Toward the end of the period, currency fears
that began in Thailand started to spread to other Asian countries. Reflecting
the financial turbulence of the region, the Fund produced a return of -3.19% for
the six months ended June 30, 1997. For the same period, the Fund's benchmark
posted a return of -3.81%, while the Lipper Pacific ex Japan Funds Average
posted a return of 6.02%.
The Fund's net asset value per share decreased from $10.02 to $9.70 at the end
of the period. The Fund's net assets increased from $1.2 million on December 31,
1996 to $1.8 million, while the net assets of The Asia Growth Portfolio, in
which the Fund invests, increased from $122.3 million to $128.0 million.
The report that follows includes an interview with Steven Ho, a member of the
portfolio management team. This interview is designed to answer commonly asked
questions about the Fund, elaborate on what happened during the reporting
period, and provide an outlook for the months ahead.
As chairman and president of Asset Management Services, we look forward to
sharing Morgan's insights regarding global markets with you going forward. If
you have any comments or questions, please call your Morgan representative or
J.P. Morgan Funds Services at (800) 521-5411.
Sincerely yours,
/s/ Ramon de Oliveira /s/ Keith M. Schappert
Ramon de Oliveira Keith M. Schappert
Chairman of Asset Management President of Asset Management
Services Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS . . . . . 1 FUND FACTS AND HIGHLIGHTS . . . . 7
FUND PERFORMANCE . . . . . . . . . . 2 SPECIAL FUND-BASED SERVICES. . . .8
PORTFOLIO MANAGER Q&A. . . . . . . . 3 FINANCIAL STATEMENTS . . . . . . 10
- --------------------------------------------------------------------------------
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to evaluate performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows you
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 1, 5, or 10
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>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL RETURNS
--------------------------- ------------------------------
THREE SIX ONE SINCE
AS OF JUNE 30, 1997 MONTHS MONTHS YEAR INCEPTION*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The JPM Pierpont Asia Growth Fund 0.52% (3.19%) (2.33%) (0.87%)
Asia Growth Benchmark** 1.26% (3.81%) (2.96%) (0.74%)
Lipper Pacific ex Japan Funds Average 8.88% 6.02% 8.72 5.50%
</TABLE>
* THE RETURNS SHOWN FOR THE JPM PIERPONT ASIA GROWTH FUND REFLECT THE
HISTORICAL RETURNS OF THE JPM INSTITUTIONAL ASIA GROWTH FUND FROM FEBRUARY
29, 1996 (THE COMMENCEMENT DATE OF THE JPM INSTITUTIONAL ASIA GROWTH FUND)
THROUGH MAY 13, 1996 (THE COMMENCEMENT DATE OF THE JPM PIERPONT ASIA GROWTH
FUND).
** A CUSTOMIZED BENCHMARK CONSISTING OF THE INTERNATIONAL FINANCE CORPORATION
(IFC) INVESTABLE INDEXES FOR CHINA, INDONESIA, PHILIPPINES, S. KOREA, AND
TAIWAN 5% EACH), MALAYSIA (20%), THAILAND (12%), AND THE MSCI INDEXES FOR
HONG KONG (32%), AND SINGAPORE (11%). THE INDICES DO NOT INCLUDE FEES OR
OPERATING EXPENSES AND ARE NOT AVAILABLE FOR ACTUAL INVESTMENT.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME
THE REINVESTMENT OF DISTRIBUTIONS. FUND RETURNS ARE NET OF FEES AND REFLECT
THE REIMBURSEMENT OF CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN
THE PROSPECTUS. HAD EXPENSES NOT BEEN REIMBURSED, RETURNS WOULD HAVE BEEN
LOWER. LIPPER ANALYTICAL SERVICES, INC. IS A LEADING SOURCE FOR MUTUAL FUND
DATA.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
The following is an interview with STEVEN HO, vice president and fund manager
for non-Japanese Pacific Rim equities. Prior to his recent transfer to the
London office, he was head of equity research in the Singapore office and was
responsible for Southeast Asian equity portfolios. Between 1990 and 1993, Mr. Ho
was a member of the London equity research group, with responsibility for the
electronics and property sectors. He joined Morgan in Singapore in 1984. He has
a B.S. in Business Management and is a Chartered Financial Analyst. This
interview was conducted on July 11, 1997 and reflects his views on that date.
IT'S BEEN AN EXCITING YEAR FOR HONG KONG. JUST PRIOR TO THE HANDOVER TO CHINESE
SOVEREIGNTY, THE MARKET WAS DESCRIBED AS EUPHORIC. COULD YOU EXPLAIN THE UNIQUE
DYNAMICS BEHIND THAT MARKET'S STRONG SHOWING? AND WHAT LIES AHEAD FOR THIS
ONE-OF-A-KIND MARKET?
SH: That's a big question. Stepping back a bit, the critical point for Hong Kong
wasn't the actual handover. Rather, it was the appointment of the new chief
executive, Tung Chee Hwa, the son of a shipping magnate and himself a wealthy
entrepreneur. He is a moderate who understands what business needs are and, at
the same time, is well connected with the mainland government. He is perceived
to be the best possible candidate for representing the views of the people of
Hong Kong and finding the middle ground between perpetuating the business
environment that Hong Kong thrives on and appeasing mainland Chinese
authorities, many of whom see Hong Kong as being too democratic and somewhat out
of their control. Tung's election was viewed by the markets as being very
positive.
Another factor was the belief among both investors and Hong Kong's citizens
that China wanted to make the handover a celebration. It's important to remember
that China wants to make a good showing in Hong Kong, because it ultimately has
its eyes on Taiwan -- and Taiwan's $90 billion in foreign exchange reserves. The
reunification of China and Taiwan, which the mainland Chinese consider a
renegade province, is inevitable in the long run. A smooth reunification with
Hong Kong will go a long way towards bringing that about peacefully.
With this in mind, the Chinese were pumping liquidity into Hong Kong in
various ways. First, and most obviously, there were asset injections into "red
chips." Red chips are Hong Kong-listed companies that are owned by mainland
Chinese entities, mainly municipal governments. Second, many Chinese entities
were buying shares in Hong Kong and warehousing them. Third, and less apparent,
was the large amount of property purchased by the Chinese. By one estimate, a
third of all grade A property purchases in Hong Kong for the first half of this
year, which amounted to 37 billion Hong Kong dollars, were generated by the
Chinese. This lifted capital values and depressed yields to record lows. All of
this helped give the impression that there was a great deal of confidence in
Hong Kong.
The housing market also took off, despite the government's announcement
that they would increase the supply of land for housing development by nearly
50% over the next five years. The euphoria in the housing market also added to
the "feel good factor," which, in turn, helped stimulate domestic consumption.
Overall, I guess you'd say the Chinese managed to engineer the lifting of
people's sentiments and the development of
3
<PAGE>
optimistic expectations of the future.
Also helping Hong Kong were the difficult business conditions in the rest
of Asia. Other Asian countries are only just now beginning to come out of the
cyclical downturn, whereas Hong Kong seems to have leaped ahead. That's due in
large part to China's coming out of its cyclical downturn early, after having
gone through several austere years of belt tightening. Being the gateway to
China, Hong Kong has directly benefited from that. Being further ahead in the
economic cycle than its neighbors has given international investors comfort.
What lies ahead for the world's most dynamic economy? While, unfortunately,
we're likely to see a chipping away of individual freedoms and rights, we
believe the Chinese will honor their obligation to uphold the basic laws and
structure of Hong Kong. We think the Chinese will continue to foster a fairly
liberal economic environment that will be conducive for business. As far as the
market is concerned, there will be a continued focus on companies with mainland
ties. We think there is good reason to be optimistic about Hong Kong for the
long term.
Shorter term, there is some cause for concern. After such a banner year,
valuations in the equity market are high. And many investors are already
overweighted in the Hong Kong market, so we're not likely to see much more
non-Chinese money coming in. These investors will be paying close attention to
interest rates in the U.S. The Hong Kong market is very leveraged to the U.S.
market and to U.S. interest rates because its currency is referenced to the U.S.
dollar. A rate rise in the U.S. could be very negative for the Hong Kong market.
Especially since real estate, which is an interest rate-sensitive sector, is
such a large part of the market there. Almost one-third of the market is
directly related to real estate, and nearly another third is indirectly related.
Also within the real estate sector, the Hong Kong and Chinese governments
are taking steps to curb the speculation seen in the housing market. Along with
the increase in the supply of land for development, these steps might include
the enforcement of more conservative lending policies by banks. None of this
should cause a collapse, but it may take the steam out of the market for a
while. All things considered, the Hong Kong stock market has done very well, so
we do not expect the market to keep going up the way it has.
THAILAND HAS BEEN A THORN IN THE SIDE OF ASIAN EQUITY PORTFOLIOS FOR SOME TIME
NOW AND, ACCORDING TO THE FINANCIAL PRESS, THERE IS NO GOOD NEWS ON THE HORIZON.
WHAT HAS HAPPENED THERE, AND IS THERE A SILVER LINING TO BE FOUND?
SH: Thailand chose to have an exchange rate which was essentially fixed to the
U.S. dollar. As a consequence, domestic interest rates were much higher than
offshore interest rates, and Thai corporations borrowed heavily offshore. There
is estimated to be $70 billion of private-sector foreign borrowing,
substantially unhedged, among Thai corporations. Just to put this into context,
that's about the same size as the market capitalization of Thailand today -- and
roughly half of its total GDP. That's a substantial number! Before things
unraveled, corporations could borrow offshore, with no foreign exchange risk and
invest domestically. And one of the biggest targets for investment was real
estate, which we all know is oversupplied. The residential market alone is
currently awash with between 200,000 and 250,000 unoccupied housing units.
Today, there are $20 billion worth of nonperforming loans in the finance
sector. Many of the country's 91 finance and securities houses are in financial
difficulty and, according to the government, 16 of them are actually insolvent.
This predicament is forcing a consolidation in the industry through mergers and
acquisi-
4
<PAGE>
tions. Their recapitalization will require a lot of new equity and it will be a
tremendous drain on liquidity, which will not be good for stocks.
On the currency side, the pressures that had been building were intensified
recently by speculative attack. The Thai government spent a huge sum defending
the currency, but they ultimately threw in the towel on July 2nd, which is just
beyond the Fund's reporting period. Fortunately, in late June, we fully hedged
the Portfolio against a devaluation of the Thai baht. This hedge paid off in
July, but it won't be reflected in the performance numbers in this report, which
covers the Fund's results through June 30th.
So, is there a silver lining? One thing this crisis should do is to force
Thai politicians to make some prudent policy decisions. Thailand has had
numerous coalition governments where the different parties have had great
difficulty working with one another. This has led to many compromises in
decision making. Hopefully, this crisis will serve as a wake-up call.
The other positive thing one could say about this crisis is that there is
value to be found in the domestic market. We believe the market has bottomed and
many of these stocks have fallen so far that they are bargain-priced for local
investors. This is not quite the case in the offshore market, where the premiums
that foreign investors have to pay make valuations less attractive.
More fundamentally, the problem that Thailand faces is structural. Thailand
faces a bottleneck in its lack of skilled labor. That could keep Thailand from
upgrading its industries to encompass more high-tech processes, thereby keeping
it from moving up the ladder of value-added production.
WHAT REGIONAL THEMES HAVE INFLUENCED ASIAN GROWTH MARKETS OVER THE PAST SIX
MONTHS?
SH: There are a few. The fear that currency problems will spread from Thailand
and infect the whole region is on everyone's mind. The Philippine peso also came
under pressure, which resulted in its devaluation in early July as well. With
only $10-$11 billion in foreign exchange reserves, it was an easy target for
speculators to bully. However, we are optimistic about the Philippines. While
there could be more downside in the currency, the Philippine economy is much
more sound, primarily because it is not as leveraged. They haven't borrowed
significantly overseas to fund domestic building or other investment activity.
Also, the Philippine economy is relatively more competitive. They have a lot of
foreign trained graduates that can staff sophisticated factories, which has
recently led to exports growing at 20%-30% for the year to date. The economy
there is in a very good niche.
Another theme is overbuilding in real estate. And nowhere is that more
striking than in Malaysia. Highlighting Malaysia's excesses will be the world's
tallest building, the world's longest building, the new government
administrative center, the high-tech city, and the multi-media super corridor.
We think that occupancy rates could drop as low as 75% for office space and 70%
for retail space in the next two to three years from their current 90%-95%
levels. To add to Malaysia's woes, its current account deficit is deteriorating.
And with domestic demand still quite strong, there is little scope for easing in
monetary policy, which will not help the indebted corporate sector.
On a more positive note, a lot is happening in Asia that should support the
regional economy. For one, Japan continues to see Asia as the preferred
investment location for its offshore production facilities. I think it's also
worth noting that there is an increasing amount of intra-Asian trade. Another
helpful and uniquely Asian phenomenon is the very high savings rate -- about 35%
of the GDP -- which should continue to support domestic growth.
5
<PAGE>
The most encouraging sign, however, is that OEDC growth has picked up, and
historically, there has been a close relationship between OEDC growth and the
export growth of Asian economies. Though there seems to be a bit of a lag in
that relationship this time around, as OEDC economies continue to grow, Asian
economies should start to benefit.
COULD YOU PROVIDE AN EXAMPLE OF A STOCK THAT HELPED PERFORMANCE OVER THE
SIX-MONTH PERIOD ALONG WITH AN EXAMPLE THAT HINDERED PERFORMANCE?
SH: One positive stock story would be HSBC HOLDINGS PLC of Hong Kong. Investors
have started to regard it as a global banking group, deserving of a higher
valuation. P.T. MATAHARI PUTRA PRIMA is another positive stock selection story.
It's an Indonesian retail group which had been expanding aggressively over the
past two or three years. The entry of a new shareholder, the Lippo Group, led to
renewed focus on improving Matahari's operating efficiency and profitability. As
the Lippo Group began to deliver on its promises, Matahari's share price took
off.
On the negative side, performance was hindered by HONG LEONG PROPERTIES
BERHAD, a Malaysian real estate developer and one of five participants in Putra
Jaya, the new government administrative center being built just south of Kuala
Lumpur. Putra Jaya is a 10-to-20-year, multi-billion dollar project that should
provide a consistent income flow over the medium term. The price of Hong Leong
Properties fell in March, however, when the government announced new curbs on
lending in property sector, particularly in the housing sector. This
announcement knocked the wind out of all companies involved in property.
LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE REGION, AND WHICH COUNTRIES SHOW THE
MOST PROMISE FOR THE UPCOMING SIX MONTHS?
SH: In the short term, currency fears are likely to prevent the markets from
running ahead. However, prospects for the medium term remain largely
undiminished and current valuations are attractive in some countries.
We are currently overweighting Indonesia, the Philippines, and Singapore in
the Portfolio, while maintaining a neutral position in Korea. Those are the
countries in which we feel relatively comfortable about both fundamentals and
valuations. Indonesia and Singapore, in particular, have very sound economic
policies, yet their markets have been dragged down along with the rest of the
region. On a relative basis, their equity markets look attractive. Also,
Singapore is the most leveraged to a cyclical upturn, which we think is on its
way.
6
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Pierpont Asia Growth Fund seeks to provide a high total return from a
portfolio of equity securities of companies in Asian growth markets. It is
designed for long-term investors who want to diversify their investments by
adding exposure to the rapidly growing Asian markets. As an international
investment, the Fund is subject to foreign market, political, and currency risk.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
5/13/96
- --------------------------------------------------------------------------------
NET ASSETS AS OF 6/30/97
$1,762,153
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/24/97
EXPENSE RATIO
The Fund's current annualized expense ratio of 1.60% 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 JUNE 30, 1997
COUNTRY ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
HONG KONG 32.1%
MALAYSIA 17.5%
SINGAPORE 10.7%
THAILAND 10.2%
PHILIPPINES 6.8%
INDONESIA 6.1%
SOUTH KOREA 5.3%
TAIWAN 2.5%
CHINA 1.9%
OTHER 6.9%
LARGEST PORTFOLIO HOLDINGS % OF TOTAL
(EXCLUDING SHORT-TERM INVESTMENTS) INVESTMENTS
- ---------------------------------- -----------
HUTCHISON WHAMPOA, LTD. (HONG KONG) 5.2%
SWIRE PACIFIC, LTD. (HONG KONG) 4.7%
CHEUNG KONG HOLDINGS, LTD. (HONG KONG) 4.3%
HENDERSON LAND DEVELOPMENT
COMPANY, LTD. (HONG KONG) 2.5%
SUN HUNG KAI PROPERTIES, LTD. (HONG KONG) 2.3%
HONG KONG & CHINA GAS CO., LTD
(HONG KONG) 2.1%
UNITED OVERSEAS BANK, LTD. (SINGAPORE) 1.8%
HONG KONG ELECTRIC HOLDINGS, LTD.
(HONG KONG) 1.7%
BANGKOK BANK PUBLIC CO., LTD. (THAILAND) 1.6%
ESPRIT HOLDINGS, LTD. (HONG KONG) 1.5%
7
<PAGE>
SPECIAL FUND-BASED SERVICES
PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For many investors, a diversified portfolio -- including short-term instruments,
bonds, and stocks -- can offer an excellent opportunity to achieve one's
investment objectives. PAAS provides investors with a comprehensive management
program for their portfolios. Through this service, investors can:
- - create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;
- - make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;
- - make investments through the JPM Pierpont Funds.
PAAS is available to clients who invest a minimum of $500,000 in the Funds.
IRA MANAGEMENT SERVICE
As one of the few remaining investments that can help your assets grow
tax-deferred until retirement, the IRA enables more of your dollars to work for
you longer. Morgan offers an IRA Rollover plan that helps you to build
well-balanced long-term investment portfolios, diversified across a wide array
of mutual funds. From money markets to emerging markets, The JPM Pierpont Funds
provide an excellent way to help you accumulate long-term wealth for retirement.
KEOGH
Keoghs provide another excellent vehicle to help individuals who are
self-employed or are employees of unincorporated businesses to accumulate
retirement savings. A Keogh is a tax-deferred pension plan that can allow you to
contribute the lesser of $30,000 or 25% of your annual earned gross
compensation. The JPM Pierpont Funds can help you build a comprehensive
investment program designed to maximize the retirement dollars in your Keogh
account.
8
<PAGE>
FUNDS DISTRIBUTOR, INC. IS THE DISTRIBUTOR OF THE JPM INSTITUTIONAL ASIA GROWTH
FUND (THE "FUND").
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN") SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS
SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER
BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND CAN
FLUCTUATE, SO AN INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
Performance data quoted herein represent past performance. Please remember that
past performance is not a guarantee of future performance. Fund returns are net
of fees, assume the reinvestment of Fund distributions and reflect the
reimbursement of certain Fund expenses as described in the Prospectus. Had
expenses not been subsidized, returns would have been lower. The Fund invests
all of its investable assets in The Asia Growth Portfolio (the "Portfolio"), a
separately registered investment company which is not available to the public
but only to other collective investment vehicles such as the Fund. Consistent
with applicable regulatory guidance, performance for the Fund prior to May 13,
1996 reflects the performance of The JPM Institutional Asia Growth Fund, which
also invests its assets in the Portfolio and has a substantially similar
investment objective and restrictions as the Fund. Performance for the period
prior to May 13, 1996 reflects the deduction of the charges and expenses of The
JPM Institutional Asia Growth Fund, which were lower than the charges and
expenses of the Fund. References to specific securities and their issuers are
for illustrative purposes only and should not be interpreted as recommendations
to purchase or sell such securities. Opinions expressed herein on current market
conditions are subject to change without notice. The Portfolio invests in
foreign securities which are subject to special risks; prospective investors
should refer to the Fund's Prospectus for a discussion of these risks.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING J.P.
MORGAN FUNDS SERVICES AT (800) 521-5411.
9
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Asia Growth Portfolio
("Portfolio"), at value $1,828,620
Deferred Organization Expenses 13,148
Receivable for Expense Reimbursements 5,583
Other Assets 89
----------
Total Assets 1,847,440
----------
LIABILITIES
Organization Expenses Payable 17,000
Shareholder Servicing Fee Payable 348
Administrative Services Fee Payable 43
Accrued Trustees' Fees and Expenses 11
Administration Fee Payable 5
Fund Services Fee Payable 1
Accrued Expenses 67,879
----------
Total Liabilities 85,287
----------
NET ASSETS
Applicable to 181,579 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $1,762,153
----------
----------
Net Asset Value, Offering and Redemption Price
Per Share $9.70
----
----
ANALYSIS OF NET ASSETS
Paid-in Capital $1,764,899
Undistributed Net Investment Income 6,981
Accumulated Net Realized Loss on Investment and
Foreign Currency Transactions (28,222)
Net Unrealized Appreciation of Investment and
Foreign Currency Translations 18,495
----------
Net Assets $1,762,153
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income (Net of Foreign
Withholding Tax of $2,145) $ 17,208
Allocated Interest Income 2,103
Allocated Portfolio Expenses (9,074)
--------
Net Investment Income Allocated from
Portfolio 10,237
FUND EXPENSES
Transfer Agent Fees $ 11,544
Registration Fees 8,386
Printing Expenses 6,442
Professional Fees 5,611
Shareholder Servicing Fee 1,848
Amortization of Organization Expenses 1,683
Administrative Services Fee 231
Administration Fee 24
Fund Services Fee 24
Trustees' Fees and Expenses 13
Insurance Expense 5
Miscellaneous 793
--------
Total Fund Expenses 36,604
Less: Reimbursement of Expenses (33,856)
--------
NET FUND EXPENSES 2,748
--------
NET INVESTMENT INCOME 7,489
NET REALIZED LOSS ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS ALLOCATED FROM PORTFOLIO (14,589)
NET CHANGE IN UNREALIZED DEPRECIATION OF
INVESTMENT AND FOREIGN CURRENCY TRANSLATIONS
ALLOCATED FROM PORTFOLIO (40,520)
--------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(47,620)
--------
--------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 13, 1996
FOR THE (COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) TO
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 7,489 $ 1,207
Net Realized Loss on Investment and Foreign
Currency Transactions Allocated from Portfolio (14,589) (13,833)
Net Change in Unrealized Appreciation
(Depreciation) of Investment and Foreign
Currency Translations Allocated from Portfolio (40,520) 59,015
---------------- ----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (47,620) 46,389
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income -- (1,207)
In Excess of Net Investment Income -- (897)
---------------- ----------------
Total Distributions to Shareholders -- (2,104)
---------------- ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 653,957 1,158,263
Reinvestment of Dividends -- 2,052
Cost of Shares of Beneficial Interest Redeemed -- (48,784)
---------------- ----------------
Net Increase from Transactions in Shares of
Beneficial Interest 653,957 1,111,531
---------------- ----------------
Total Increase in Net Assets 606,337 1,155,816
NET ASSETS
Beginning of Period 1,155,816 --
---------------- ----------------
End of Period (including undistributed net
investment income of $6,981 and distributions
in excess of net investment income of $508,
respectively) $ 1,762,153 $ 1,155,816
---------------- ----------------
---------------- ----------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 13, 1996
FOR THE (COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) TO
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
---------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.02 $ 10.00
---------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .04 .01
Net Realized and Unrealized Gain (Loss) on
Investment (.36) .03
---------------- ----------------
Total from Investment Operations (0.32) 0.04
---------------- ----------------
LESS DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income -- (.01)
In Excess of Net Investment Income -- (.01)
---------------- ----------------
Total Distributions to Shareholders -- (.02)
---------------- ----------------
NET ASSET VALUE, END OF PERIOD $ 9.70 $ 10.02
---------------- ----------------
---------------- ----------------
RATIOS AND SUPPLEMENTAL DATA
Total Return (3.19%)(a) 0.38%(a)
Net Assets, End of Period (in thousands) $ 1,762 $ 1,156
Ratios to Average Net Assets
Expenses 1.60%(b) 1.60%(b)
Net Investment Income 1.01%(b) 0.37%(b)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement 4.58%(b) 0.90%(b)(c)
</TABLE>
- ------------------------
(a) Not annualized.
(b) Annualized.
(c) After consideration of certain state limitations.
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Pierpont Asia Growth Fund (the "Fund") is a separate series of The JPM
Pierpont 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 May 13, 1996. Prior to October 10, 1996, the Trust's and
the Fund's names were The Pierpont Funds and The Pierpont Asia Growth Fund,
respectively.
The Fund invests all of its investable assets in The Asia Growth Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objective as the Fund. The value of such investment included in
the Statement of Assets and Liabilities reflects the Fund's proportionate
interest in the net assets of the Portfolio (approximately 1% at June 30, 1997).
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 gains, if any, are declared and paid annually.
d)The Fund incurred organization expenses in the amount of $17,000. Morgan
Guaranty Trust Company of New York ("Morgan") has agreed to pay the
organization expenses of the Fund. The Fund has agreed to reimburse Morgan
for these costs which are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years beginning with
the commencement of operations.
e)The Fund is treated as a separate entity for federal income tax purposes.
The Fund intends to comply with the provisions of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and
to distribute substantially all of its income, including net realized
capital gains, if any, within the prescribed time periods. Accordingly, no
provision for federal income or excise tax is necessary.
14
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
f)Expenses incurred by the Trust with respect to any two or more funds in
the Trust are allocated in proportion to the net assets of each fund in
the Trust, except where allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are
charged to that fund.
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. 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 June 30, 1997, the fee for
these services amounted to $24.
b)The Trust, on behalf of the Fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan under which Morgan is responsible
for overseeing 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 daily based on the aggregate net assets of the
Portfolio and the other portfolios in which the Trust and the JPM
Institutional Funds invest (the "Master Portfolios") and JPM 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 the
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 JPM
Series Trust. For the six months ended June 30, 1997, the fee for these
services amounted to $231.
In addition, 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
1.60% of the average daily net assets of the Fund through April 30, 1998.
For the six months ended June 30, 1997, Morgan has agreed to reimburse the
Fund $33,856 for the expenses under this agreement.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal and 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 0.25% of the average daily net assets of
the Fund. For the six months ended June 30, 1997, the fee for these
services amounted to $1,848.
Morgan, Charles Schwab & Co. ("Schwab") and the Trust are parties to
separate services and operating agreements (the "Schwab Agreements")
whereby Schwab makes fund shares available to customers of
15
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
investment advisors and other financial intermediaries who are Schwab's
clients. The Fund is not responsible for payments to Schwab under the
Schwab Agreements; however, in the event the Services Agreement with
Schwab is terminated for reasons other than a breach by Schwab and the
relationship between the Trust and Morgan is terminated, the Fund would be
responsible for the ongoing payments to Schwab with respect to
pre-termination shares.
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
$24 for the six months ended June 30, 1997.
e)An aggregate annual fee of $75,000 is paid to each Trustee for serving as
a Trustee of The Trust, The JPM Institutional Funds, the Master Portfolios
and JPM Series Trust. The Trustees' Fees and Expenses shown in the
financial statements represents the Fund's allocated portion of the total
fees and expenses. Prior to April 1, 1997, the aggregate annual Trustee
fee was $65,000. The Trust's Chairman and Chief Executive Officer also
serves as Chairman of Group and received compensation and employee
benefits from Group in his role as Group's Chairman. The allocated portion
of such compensation and benefits included in the Fund Services Fee shown
in the financial statements was $5.
3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the Fund were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MAY 13, 1996
MONTHS ENDED (COMMENCEMENT OF
JUNE 30, OPERATIONS) TO
1997 DECEMBER 31,
(UNAUDITED) 1996
------------ ----------------
<S> <C> <C>
Shares sold 66,213 120,225
Reinvestment of dividends and distributions -- 207
Shares redeemed -- (5,066)
------------ ----------------
Net Increase 66,213 115,366
------------ ----------------
------------ ----------------
</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 and Portfolio.
4. 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 28, 1997, with unaffiliated lenders. The maximum commitment
borrowing under the Agreement is $150,000,000. The Agreement expires on May 27,
1998, however, the fund as party to the Agreement will have the ability to
extend the Agreement and continue its participation therein for an additional
364 days. The purpose of the Agreement is to provide another
16
<PAGE>
THE JPM PIERPONT ASIA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
alternative for settling large fund shareholder redemptions. Interest on any
such borrowings outstanding will approximate market rates. The Funds pay a
commitment fee at an annual rate of 0.065% on the unused portion of the
committed amount which is allocated to the Funds in accordance with procedures
established by their respective Trustees or Directors. The Fund has not borrowed
pursuant to the Agreement as of June 30, 1997.
17
<PAGE>
The Asia Growth Portfolio
Semi-annual Report June 30, 1997
(unaudited)
(The following pages should be read in conjunction
with The JPM Pierpont Asia Growth Fund
Semi-annual Financial Statements)
18
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCK (89.5%)
CHINA (1.9%)
Guangdong Electric Power (Series B) (Electric)... 559,200 $ 458,344
Guangdong Province Expressway Development Ltd.
(Series B) (Construction & Housing)+........... 211,500 133,770
Qingling Motors Co. Ltd. (Series H)
(Automotive)................................... 844,000 435,766
Shandong Huaneng Power Ltd. (ADR) (Electric)..... 58,100 624,575
Shanghai Dajiang Group Co. Ltd. (Series B) (Multi
- Industry).................................... 904,310 279,432
Zhenhai Refining & Chemical Co. Ltd. (Series H)
(Chemicals).................................... 1,207,700 436,483
-------------
2,368,370
-------------
HONG KONG (31.6%)
CDL Hotels International Ltd. (Restaurants &
Hotels)........................................ 1,250,000 508,243
Cheung Kong Holdings Ltd. (Real Estate).......... 543,000 5,361,817
Dickson Concepts International Ltd. (Wholesale &
International Trade)........................... 359,000 1,306,755
Esprit Holdings Ltd. (Retail).................... 2,716,000 1,928,160
First Tractor Co Ltd (Machinery)+................ 234,000 154,041
Hang Seng Bank Ltd. (Banking).................... 62,400 890,016
Henderson Land Development Company Ltd. (Real
Estate)........................................ 351,000 3,114,803
Hong Kong & China Gas Co. Ltd. (Natural Gas)..... 1,292,400 2,585,707
Hong Kong Electric Holdings Ltd. (Electric)...... 544,000 2,190,807
HSBC Holdings PLC (Banking)...................... 51,303 1,542,941
Hutchison Whampoa Ltd. (Multi - Industry)........ 752,000 6,503,443
Jiangsu Expressway Company Ltd.
(Transportation)+.............................. 602,000 213,688
New World Infrastructure Ltd. (Construction &
Housing)+...................................... 341,000 963,938
Silver Grant International Industries Ltd. (Real
Estate)........................................ 1,812,000 947,248
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
HONG KONG (CONTINUED)
Smartone Telecommunications (Telecommunication
Services)+..................................... 719,000 $ 1,633,399
Sun Hung Kai Properties Ltd. (Real Estate)....... 242,000 2,912,828
Swire Pacific Ltd. (Multi - Industry)............ 662,000 5,960,091
Tingyi (Cayman Islands) Holding Co. (Food,
Beverages & Tobacco)........................... 6,798,000 1,693,515
-------------
40,411,440
-------------
INDIA (1.0%)
Ashok Leyland Ltd. (GDR) (Automotive)............ 41,600 269,360
Indian Hotels Company Ltd. (GDR)(144A)
(Restaurants & Hotels)......................... 11,900 282,625
Indian Petrochemicals Corp. Ltd. (GDR)
(Chemicals)+................................... 38,100 533,400
Reliance Industrial Infrastructure Ltd. (GDR)
(Chemicals)+................................... 8,200 188,600
-------------
1,273,985
-------------
INDONESIA (6.0%)
P.T. Bank Bira (Banking)......................... 225,000 330,814
P.T. Bank Pan Indonesia (Banking)................ 714,250 469,998
P.T. Hanjaya Mandala Sampoerna (Food, Beverages &
Tobacco)....................................... 238,000 907,855
P.T. Indorama Synthetics (Textiles).............. 724,000 655,069
P.T. Kawasan Industri Jababeka (Real Estate)..... 307,000 410,343
P.T. Matahari Putra Prima (Retail)............... 489,000 985,441
P.T. Pabrik Kertas Tjiwi Kimia (Metals &
Mining)........................................ 326,868 379,766
P.T. Putra Surya Multidana (Banking)............. 190,000 302,797
P.T. Semen Cibinong (Building Materials)......... 194,000 434,834
P.T. Telekomunikasi Indonesia
(Telecommunications)........................... 954,000 1,559,593
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
INDONESIA (CONTINUED)
P.T. Tempo Scan Pacific (Pharmaceuticals)........ 280,000 $ 627,596
P.T. United Tractors (Capital Goods)............. 169,000 625,540
-------------
7,689,646
-------------
MALAYSIA (16.9%)
Berjaya Capital Berhad (Financial Services)...... 234,000 333,755
Boustead Holdings Berhad (Multi - Industry)...... 428,000 932,645
Commerce Asset-Holding Berhad (Banking).......... 576,422 1,518,701
DCB Holdings Berhad (Banking).................... 384,000 1,217,114
Diversified Resources Berhad (Automotive)........ 325,000 688,886
Gamuda Berhad (Construction & Housing)........... 41,000 143,760
Guinness Anchor Berhad (Food, Beverages &
Tobacco)....................................... 489,000 1,084,943
Hong Leong Properties Berhad (Real Estate)....... 341,000 387,745
IJM Corporation Berhad (Building Materials)...... 472,000 991,124
Industrial Oxygen Incorporated Berhad
(Agriculture).................................. 690,000 787,320
Konsortium Perkapalan Berhad (Transport &
Services)...................................... 263,000 1,552,573
Lingkaran Trans Kota Holdings Berhad
(Transportation)+.............................. 302,000 628,169
Malakoff Berhad (Agriculture).................... 280,000 1,220,283
Malayan Cement Berhad (Building Materials)....... 574,500 960,533
Malaysian Pacific Industries Berhad (Multi -
Industry)...................................... 268,000 1,167,986
Malaywata Steel Berhad (Metals & Mining)......... 300,000 463,549
Multi-Purpose Holdings Berhad (Multi -
Industry)...................................... 346,000 485,277
Perusahaan Otomobil Nasional Berhad
(Automotive)................................... 210,000 981,773
Petronas Dagangan Berhad (Oil-Services).......... 205,000 487,321
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
MALAYSIA (CONTINUED)
Road Builder (M) Holdings Berhad (Multi -
Industry)...................................... 273,000 $ 1,287,122
Sime Darby Berhad (Multi - Industry)............. 345,000 1,148,176
Sime U.E.P. Properties Berhad (Real Estate)...... 103,000 222,405
Tanjong Co. Berhad (Entertainment, Leisure &
Media)......................................... 281,000 968,580
Telekom Malaysia Berhard (Telecommunications).... 251,000 1,173,453
United Merchant Group Berhad (Financial
Services)...................................... 604,000 837,558
-------------
21,670,751
-------------
PHILIPPINES (6.1%)
Alaska Milk Corp. (Food, Beverages & Tobacco)+... 8,736,300 844,615
Ayala Corp. (Class B) (Multi - Industry)......... 96,125 69,244
Benpres Holdings Corp (GDR) (Multi -
Industry)+..................................... 155,600 1,089,200
C & P Homes, Inc. (Construction & Housing)....... 1,139,000 427,513
Digital Telecom Phils. Inc.
(Telecommunications)........................... 2,848,000 275,341
Engineering & Equipment Corp. (Industrial)....... 4,001,000 166,860
Fil-Estate Land Inc. (Real Estate)............... 295,800 86,353
Filinvest Land Inc. (Building Materials)+........ 3,542,000 886,305
First Philippine Holdings Corp. (Class B) (Multi
- Industry).................................... 538,625 745,367
Ionics Circuit Inc (Electronics)+................ 1,529,650 840,913
La Tondena Distillers Inc. (Food, Beverages &
Tobacco)....................................... 136,000 327,419
Manila Electric Company (Class B) (Electric)..... 9,771 48,159
Metropolitan Bank & Trust Co. (Banking).......... 13,075 277,601
Petron Corp. (Oil-Services)...................... 194,655 49,446
Philippine Commercial International Bank
(Banking)...................................... 54,600 527,866
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
PHILIPPINES (CONTINUED)
Pryce Properties Corp. (Real Estate)+............ 14,336,775 $ 978,396
Universal Rightfield Property Holdings, Inc.
(Real Estate)+................................. 2,157,000 224,892
-------------
7,865,490
-------------
SINGAPORE (10.4%)
City Developments Ltd. (Real Estate)............. 165,000 1,615,554
DBS Land Ltd. (Real Estate)...................... 102,000 322,439
Development Bank of Singapore Ltd. (Banking)..... 43,000 541,316
Hotel Properties Ltd. (Restaurants & Hotels)..... 428,000 727,377
Kim Eng Holdings Ltd. (Financial Services)....... 757,000 635,311
Osprey Maritime Ltd. (Transport & Services)...... 317,500 415,236
Pacific Century Regional Development (Multi -
Industry)+..................................... 430,000 598,454
Sembawang Maritime Ltd. (Transport & Services)... 365,000 1,143,616
Singapore Airlines Ltd. (Airlines)............... 171,000 1,530,790
Singapore Press Holdings Ltd. (Entertainment,
Leisure & Media)............................... 37,000 745,253
Singapore Telecommunications Ltd.
(Telecommunications)........................... 516,000 952,715
Super Coffeemix Manufacturing Ltd. (Food,
Beverages & Tobacco)........................... 1,078,000 897,171
United Overseas Bank Ltd. (Banking).............. 221,310 2,275,244
Wong's Circuits Holdings Ltd.
(Semiconductors)+.............................. 559,000 939,120
-------------
13,339,596
-------------
SOUTH KOREA (5.2%)
Dae Duck Electronics Co. (Electronics)........... 7,700 485,585
Dong Ah Construction Industrial Co. Ltd.
(Construction & Housing)....................... 7,943 150,273
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
SOUTH KOREA (CONTINUED)
Dongbu Insurance Co. Ltd. (Insurance)+........... 7,310 $ 212,385
Hana Bank (Banking).............................. 21,396 265,040
Hansol Chemical Company Ltd. (Chemicals)......... 20,864 469,910
Hansol Paper Co. Ltd. (GDS) (Forest Products &
Paper)+........................................ 5,037 64,851
Hanwha Chemical Corp. (Chemicals)+............... 43,385 341,999
Hyundai Engineering & Construction Co.
(Construction & Housing)+...................... 81 2,080
Korea Electric Power Corp. (Electric)............ 46,300 1,381,700
Korea Long Term Credit Bank (Banking)............ 22,502 347,159
S.K. Telecom Co. Ltd. (Telecommunications)....... 466 351,339
Korea Zinc Co. Ltd. (Metals & Mining)............ 14,100 325,507
L.G. Information & Communication Ltd.
(Telecommunications-Equipment)................. 2,700 334,459
Pohang Iron & Steel Co. Ltd. (Metals & Mining)... 7,660 779,042
Samsung Electronics Co. Ltd. (GDR represents 1/2
non-voting preferred share) (144A)
(Electronics).................................. 16,610 448,470
Samsung Electronics Co. Ltd. (GDR represents 1/2
voting common share)(144A) (Electronics)+...... 1,442 83,636
Tong Yang Cement Co. (Building Materials)........ 13,000 243,018
Tong Yang Confectionery Co. Ltd. (Food, Beverages
& Tobacco)..................................... 11,800 321,576
-------------
6,608,029
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TAIWAN (1.3%)
Asia Cement Corp. (GDR) (Building Materials)..... 41,751 $ 671,147
Asustek Computer Inc. (Computer Peripherals)..... 22,600 255,945
China Steel Corp. (GDR) (Metals & Mining)........ 887 18,937
Hocheng Group Corp. (GDR) (144A) (Building
Materials)..................................... 1 8
Microelectronics Technology Inc. (GDS)
(Telecommunications)+.......................... 46,000 368,000
President Enterprises Corp. (GDR) (144A) (Food,
Beverages & Tobacco)+.......................... 14,600 284,700
-------------
1,598,737
-------------
THAILAND (9.1%)
Bangkok Bank Public Co. Ltd. (Banking)........... 302,100 2,075,807
Central Pattana Public Co. Ltd. (Real Estate).... 194,500 270,295
Electricity Generating Public Co. Ltd.
(Electric)..................................... 368,400 903,046
K.R. Precision Public Co. Ltd. (Computer
Peripherals)................................... 98,400 706,520
Krung Thai Bank Public Co. Ltd. (Banking)........ 409,700 430,972
Lanna Lignite Public Co. Ltd. (Metals &
Mining)........................................ 100,700 711,372
Regional Container Line Public Co. Ltd.
(Packaging & Containers)....................... 64,800 385,223
Robinson Department Store Public Co. Ltd.
(Retail)....................................... 424,200 155,565
Sermsuk Public Co. Ltd. (Food, Beverages &
Tobacco)....................................... 10,400 224,821
Shinawatra Computer Public Co. Ltd. (Computer
Systems)....................................... 134,600 930,067
Siam Cement Public Co. Ltd. (Building
Materials)..................................... 57,500 994,402
Siam Commercial Bank Public Co. Ltd. (Banking)... 144,200 590,048
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
THAILAND (CONTINUED)
Swedish Motor Public Co. Ltd. (Capital Goods).... 178,000 $ 98,774
TelecomAsia Corporation Public Co. Ltd.
(Telecommunications)+.......................... 876,200 1,056,987
Thai Farmers Bank Public Co. Ltd. (Banking)...... 383,400 1,628,025
United Communication Industry Public Co. Ltd.
(Telecommunications-Equipment)................. 124,900 515,896
-------------
11,677,820
-------------
TOTAL COMMON STOCK (COST $113,382,791)......... 114,503,864
-------------
CONVERTIBLE PREFERRED STOCKS (0.5%)
PHILIPPINES (0.5%)
Philippine Long Distance Telephone Co. (GDS
represtents 1 Series 2 Convertible Preferred
Share (Telecommunications) (COST $683,225)..... 20,000 700,000
-------------
PREFERRED STOCK (0.1%)
SOUTH KOREA (0.1%)
Shin Won Corp. (Apparels & Textiles) (COST
$235,943)...................................... 12,040 75,928
-------------
RIGHTS (0.1%)
INDONESIA (0.0%)*
P.T. Bank Pan Indonesia, Expiring 8/1/97
(Banking)+..................................... 357,125 51,406
-------------
MALAYSIA (0.0%)*
Commerce Asset-Holding Berhad, Expiring 7/21/97
(Banking)+..................................... 115,284 4,111
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
SINGAPORE (0.1%)
Osprey Maritime Ltd. (Preferred), Expiring
7/24/97 (Transportation)+...................... 171,450 $ 0
Osprey Maritime Ltd., Expiring 7/24/97
(Transportation)+.............................. 317,500 93,261
-------------
93,261
-------------
TOTAL RIGHTS (COST $31,531).................... 148,778
-------------
WARRANTS (0.4%)
MALAYSIA (0.4%)
Commerce Asset-Holding Berhad, Expiring 07/21/97
(Banking)+..................................... 72,052 11,133
Petronas Dagangan Berhad, Expiring 2/24/99
(Retail)+...................................... 412,000 479,904
-------------
491,037
-------------
TOTAL WARRANTS (COST $601,132)................. 491,037
-------------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CONVERTIBLE BONDS (2.1%)
TAIWAN (1.2%)
Far Eastern Department Stores Ltd., 3.00% due
07/06/01 (Retail).............................. $ 600,000 649,500
Nan Ya Plastics Corp., 1.75% due 07/19/01
(Chemicals).................................... 380,000 543,400
U-Ming Marine Transport Corp., 1.50% due 02/07/01
(Transport & Services)......................... 370,000 303,400
-------------
1,496,300
-------------
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
THAILAND (0.9%)
Asia Credit Public Co. Ltd., 3.75% due 11/17/03
(Financial Services)........................... $ 1,903,000 $ 1,165,588
-------------
TOTAL CONVERTIBLE BONDS (COST $2,448,585)...... 2,661,888
-------------
SHORT-TERM INVESTMENTS (5.8%)
TIME DEPOSITS--FOREIGN (5.8%)
State Street Bank Cayman Islands, 5.25% due
07/01/97 (cost $7,413,000)..................... 7,413,000 7,413,000
-------------
TOTAL INVESTMENTS (COST $124,796,207) (98.5%)..................
125,994,495
OTHER ASSETS IN EXCESS OF LIABILITIES (1.5%)...................
1,968,278
-------------
NET ASSETS (100.0%)............................................ $ 127,962,773
-------------
-------------
</TABLE>
- ------------------------------
Note: The cost of securities for Federal Income Tax purposes at June 30, 1997,
was $125,766,838, the aggregate gross unrealized appreciation and depreciation
was $14,092,937 and $13,865,280 respectively, resulting in net unrealized
appreciation of $227,657.
+ - Non-income producing security.
ADR - American Depository Receipts.
GDR - Global Depository Receipts.
GDS - Global Depository Shares.
144A - Securities restricted for resale to Qualified Institutional Buyers.
* Less than 0.1%.
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE ASIA GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
PORTFOLIO
------------
<S> <C>
Multi-Industry 16.4%
Real Estate 13.1
Banking 12.1
Telecommunications 7.1
Electronics 5.9
Short-term Investments 5.9
Food, Beverages & Tobacco 5.2
Building 4.1
Transportation 3.4
Retail 3.3
Financial Services 2.4
Metals & Mining 2.1
Natural Gas 2.0
Chemicals 2.0
Automotive 1.9
Agriculture 1.6
Computer Peripherals 1.5
Construction & Housing 1.5
Entertainment, Leisure, Media 1.4
Airlines 1.2
Restaurants & Hotels 1.2
Wholesale & International Trade 1.0
Semiconductors 0.8
Capital Goods 0.6
Textiles 0.5
Pharmaceuticals 0.5
Oil Services 0.4
Packaging & Containers 0.3
Insurance 0.2
Industrials 0.1
Machinery 0.1
Apparels & Textiles 0.1
Forest Products & Paper 0.1
------------
100.0%
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE ASIA GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $124,796,207) $125,994,495
Foreign Currency at Value (Cost $1,026,743) 1,023,653
Cash 173
Receivable for Investments Sold 3,309,601
Unrealized Appreciation of Forward Foreign
Currency Contracts 234,259
Dividends Receivable 139,927
Interest Receivable 71,772
Deferred Organization Expenses 18,448
Prepaid Trustees' Fees 8
Prepaid Expenses and Other Assets 197
------------
Total Assets 130,792,533
------------
LIABILITIES
Payable for Investments Purchased 2,593,495
Custody Fee Payable 100,485
Advisory Fee Payable 82,285
Organization Expenses Payable 5,750
Administrative Services Fee Payable 3,193
Fund Services Fee Payable 107
Administration Fee Payable 319
Accrued Expenses 44,126
------------
Total Liabilities 2,829,760
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $127,962,773
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE ASIA GROWTH PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $173,797) $ 1,306,155
Interest Income 166,236
-----------
Investment Income 1,472,391
EXPENSES
Advisory Fee $ 487,090
Custodian Fees and Expenses 175,546
Professional Fees and Expenses 24,068
Administrative Services Fee 19,066
Printing Expenses 3,864
Amortization of Organization Expenses 3,285
Fund Services Fee 2,056
Administration Fee 1,506
Trustees' Fees and Expenses 1,041
Insurance Expense 233
Miscellaneous 529
-----------
Total Expenses 718,284
-----------
NET INVESTMENT INCOME 754,107
NET REALIZED GAIN (LOSS) ON
Investment Transactions 959,049
Foreign Currency Transactions (40,295)
-----------
Net Realized Gain 918,754
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF
Investments (5,985,942)
Foreign Currency Contracts and Translations 229,684
-----------
Net Change in Unrealized Depreciation (5,756,258)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(4,083,397)
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
26
<PAGE>
THE ASIA GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE FISCAL
1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
------------ -----------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 754,107 $ 1,059,172
Net Realized Gain on Investment and Foreign
Currency Transactions 918,754 4,084,160
Net Change in Unrealized Appreciation
(Depreciation) of Investments and Foreign
Currency Contracts and Translations (5,756,258) 4,768,791
------------ -----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (4,083,397) 9,912,123
------------ -----------------
------------ -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 52,693,591 85,257,294
Withdrawals (42,919,975) (59,878,251)
------------ -----------------
Net Increase from Investors' Transactions 9,773,616 25,379,043
------------ -----------------
Total Increase in Net Assets 5,690,219 35,291,166
NET ASSETS
Beginning of Period 122,272,554 86,981,388
------------ -----------------
End of Period $127,962,773 $ 122,272,554
------------ -----------------
------------ -----------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX APRIL 5, 1995
MONTHS ENDED FOR THE (COMMENCEMENT OF
JUNE 30, FISCAL YEAR OPERATIONS) TO
1997 ENDED DECEMBER 31,
(UNAUDITED) DECEMBER 31, 1996 1995
------------ ----------------- ----------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 1.18%(a) 1.19% 1.40%(a)
Net Investment Income 1.24%(a) 0.94% 1.18%(a)
Decrease Reflected in Expense Ratio due to
Expense Reimbursement -- 0.01% --
Portfolio Turnover 75% 93% 70%
Average Brokerage Commissions $ 0.0064 $ 0.0069 --
</TABLE>
- ------------------------
(a) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
27
<PAGE>
THE ASIA GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Asia Growth Portfolio (the "Portfolio"), is one of eight 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 achieve a high total return from a
portfolio of equity securities of companies in Asian growth markets. The
Portfolio commenced operations on April 5, 1995. The Declaration of Trust
permits the Trustees to issue an unlimited number of beneficial interests in the
Portfolio.
Investments in Asian growth markets may involve certain considerations and risks
not typically associated with investments in the United States. Future economic
and political developments in Asian countries could adversely affect the
liquidity or value, or both, of such securities in which the Portfolio is
invested. 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 value of each security for which readily available market quotations
exists 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 Portfolio'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
portfolio securities with a remaining maturity of less than 60 days are
valued at amortized cost.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the Portfolio's net assets are calculated, such securities will be
valued at fair value in accordance with procedures established by and
under the general supervision of the Portfolio's Trustees.
b)The books and records of the Portfolio are maintained in U.S. dollars. The
market values of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing exchange rates
at the end of the period. Purchases, sales, income and expenses are
translated at the
28
<PAGE>
THE ASIA GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
exchange rate 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 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.
d)The Portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables against fluctuations in
future foreign currency rates. A forward contract is an agreement to buy
or sell currencies of different countries on a specified future date at a
specified rate. Risks associated with such contracts include the movement
in the value of the foreign currency relative to the U.S. dollar and the
ability of the counterparty to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily based on procedures established
by and under the general supervision of the Portfolio's Trustees, and the
change in the market value is recorded by the Portfolio as unrealized
appreciation or depreciation of foreign currency translations. At June 30,
1997, the Portfolio had open forward foreign currency contracts as
follows:
SUMMARY OF OPEN FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR
VALUE AT UNREALIZED
SALES CONTRACTS PROCEEDS 6/30/97 APPRECIATION
- ------------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Thailand Baht 346,515,000, expiring 11/17/97..... $13,000,000 $12,765,741 $ 234,259
</TABLE>
e)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.
f)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
29
<PAGE>
THE ASIA GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
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 at various rates.
g)The Portfolio incurred organization expenses in the amount of $33,000.
Morgan Guaranty Trust Company of New York ("Morgan") has agreed to pay
organization expenses of the Portfolio. The Portfolio has agreed to
reimburse Morgan for these costs which are being deferred and will be
amortized on a straight-line basis over a period not to exceed five years
beginning with the commencement of operations of the Portfolio.
h)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.
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an Investment Advisory Agreement with Morgan. Under the
terms of the agreement, the Portfolio pays Morgan at an annual rate of
0.80% of the Portfolio's average daily net assets. For the six months
ended June 30, 1997, such fees amounted to $487,090.
b)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 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 Portfolio's net assets to the aggregate net assets of The
JPM Pierpont Funds, The JPM Institutional Funds, the Portfolio and the
other portfolios in which The JPM Pierpont Funds and The JPM Institutional
Funds invest (the "Master Portfolios"), JPM Series Trust, JPM Series Trust
II and certain other investment companies subject to similiar agreements
with FDI. For the six months ended June 30, 1997, the fee for these
services amounted to 1,506.
c)The Portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for overseeing
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 daily based on the aggregate net assets of the Master
Portfolios and JPM 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 its net assets
30
<PAGE>
THE ASIA GROWTH PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
bear to the net assets of the Master Portfolios, other investors in the
Master Portfolios for which Morgan provides similiar services and JPM
Series Trust. For the six months ended June 30, 1997, the fee for these
services amounted to $19,066.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $2,056 for the six months ended June 30, 1997.
e)An aggregate annual fee of $75,000 is paid to each Trustee for serving as
a Trustee of The JPM Pierpont Funds, The JPM Institutional Funds, the
Master Portfolios and JPM Series Trust. The Trustees' Fees and Expenses
shown in the financial statements represent the Portfolio's allocated
portion of the total fees and expenses. Prior to April 1, 1997, the
aggregate annual Trustee Fee was $65,000. The Portfolio's Chairman and
Chief Executive Officer also serves as Chairman of Group and received
compensation and employee benefits from Group in his role as Group's
Chairman. The allocated portion of such compensation and benefits included
in the Fund Services Fee shown in the financial statements was $400.
3. INVESTMENT TRANSACTIONS:
Investment transactions (excluding short-term investments) for the six months
ended June 30, 1997 were as follows:
COST OF PROCEEDS
PURCHASES FROM SALES
- ----------- -----------
$98,059,790 $89,075,848
31
<PAGE>
JPM PIERPONT PRIME MONEY MARKET FUND
JPM PIERPONT TAX EXEMPT MONEY MARKET FUND
JPM PIERPONT FEDERAL MONEY MARKET FUND
JPM PIERPONT SHORT TERM BOND FUND
JPM PIERPONT BOND FUND
JPM PIERPONT TAX EXEMPT BOND FUND
JPM PIERPONT NEW YORK TOTAL RETURN BOND FUND
JPM PIERPONT SHARES: CALIFORNIA BOND FUND
JPM PIERPONT EMERGING MARKETS DEBT FUND
JPM PIERPONT DIVERSIFIED FUND
JPM PIERPONT U.S. EQUITY FUND
JPM PIERPONT SHARES: TAX AWARE U.S. EQUITY FUND
JPM PIERPONT SHARES: TAX AWARE DISCIPLINED EQUITY FUND
JPM PIERPONT U.S. SMALL COMPANY FUND
JPM PIERPONT U.S. SMALL COMPANY OPPORTUNITIES FUND
JPM PIERPONT INTERNATIONAL EQUITY FUND
JPM PIERPONT INTERNATIONAL OPPORTUNITIES FUND
JPM PIERPONT EMERGING MARKETS EQUITY FUND
JPM PIERPONT EUROPEAN EQUITY FUND
JPM PIERPONT JAPAN EQUITY FUND
JPM PIERPONT ASIA GROWTH FUND
FOR MORE INFORMATION ON HOW THE JPM PIERPONT FAMILY OF FUNDS CAN HELP YOU PLAN
FOR YOUR FUTURE, CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
THE
JPM PIERPONT
ASIA GROWTH
FUND
SEMI-ANNUAL REPORT
JUNE 30, 1997
