<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN
NEW YORK TAX EXEMPT BOND FUND
May 3, 1999
Dear Shareholder:
We are pleased to report the J.P. Morgan New York Tax Exempt Bond Fund delivered
a strong return of 5.39% for the fiscal year ended March 31, 1999. The fund
handily outperformed its competition, which gained 5.17%, as measured by the
Lipper New York Intermediate Municipal Debt Funds Average. At the same time, the
fund trailed its benchmark, the Lehman Brothers 1-16 year Municipal Bond Index,
which rose 5.97%. Of course, the index return is exclusive of fees and expenses.
The fund's 30-day SEC yield as of March 31 was 3.68%, which is a tax equivalent
yield of 6.09% at a 39.6% federal income tax rate.
The fund's net asset value as of March 31, 1999 was $10.66, up four cents from
$10.62 on March 31, 1998. Dividends of approximately $0.52 per share were paid
over the 12-month period, including $0.42 in tax-exempt income, $0.08 in
long-term capital gains, and $0.02 in short-term capital gains. The fund's net
assets rose to more than $119 million from $85 million, while the net assets of
The New York Tax Exempt Bond Portfolio, in which the fund invests, were
approximately $321 million.
The report that follows includes an interview with Robert Meiselas, who with
Elaine Young, manages the fund. 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
800-521-5411.
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 GLOSSARY OF TERMS .................6
FUND PERFORMANCE...................2 FUND FACTS AND HIGHLIGHTS..........7
PORTFOLIO MANAGER Q&A..............3 FINANCIAL STATEMENTS..............10
- --------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
GROWTH OF $10,000 SINCE FUND INCEPTION*
[GRAPH]
[PLOT POINTS TO COME]
<TABLE>
<CAPTION>
PERFORMANCE TOTAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------ -------------------------------
THREE SIX ONE THREE SINCE
AS OF MARCH 31, 1999 MONTHS MONTHS YEAR YEARS INCEPTION*
- -------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
J.P. Morgan New York Tax Exempt Bond Fund 0.57% 1.07% 5.39% 6.01% 6.16%
Lehman Brothers 1-16 year Municipal Bond Index** 0.86% 1.63% 5.97% 6.89% 7.09%
Lipper New York Intermediate Municipal Debt
Funds Average 0.49% 1.01% 5.17% 5.92% 5.89%
</TABLE>
* 4/11/94 - COMMENCEMENT OF OPERATIONS (AVERAGE ANNUAL TOTAL RETURNS BASED ON
MONTH END FOLLOWING INCEPTION; AVERAGE ANNUAL RETURN SINCE ACTUAL INCEPTION
IS 6.14%).
** PRIOR TO MAY 1, 1997 THE BENCHMARK WAS THE LEHMAN BROTHERS 1-15 YEAR
MUNICIPAL BOND INDEX. COMMENCING MAY 1, 1997 THE BENCHMARK IS THE LEHMAN
BROTHERS 1-16 YEAR MUNICIPAL BOND INDEX. BOTH ARE UNMANAGED INDICES THAT
MEASURE MUNICIPAL BOND MARKET PERFORMANCE. THEY DO NOT INCLUDE FEES OR
EXPENSES AND ARE NOT AVAILABLE FOR ACTUAL INVESTMENT. LIPPER ANALYTICAL
SERVICES, INC. IS A LEADING RESOURCE FOR MUTUAL FUND DATA.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME THE REINVESTMENT OF DISTRIBUTIONS, AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. HAD EXPENSES
NOT BEEN SUBSIDIZED, RETURNS WOULD HAVE BEEN LOWER.
2
<PAGE>
PORTFOLIO MANAGER Q&A
This interview was conducted with Robert Meiselas, who with Elaine Young,
manages The New York Tax Exempt Bond Portfolio in which the fund invests.
[PHOTO]
ELAINE YOUNG, vice president, is a portfolio manager with the U.S. Fixed
Income Group and is responsible for managing municipal bonds. In Ms. Young's
previous position at Morgan, she traded tax-exempt securities. Elaine joined
Morgan in 1994 after five years of municipal trading experience at Scudder,
Stevens, and Clark. She graduated from New York University with a B.S. degree
and an M.B.A. in Finance. Elaine is also a Chartered Financial Analyst.
[PHOTO]
ROBERT MEISELAS, vice president, is a portfolio manager with the U.S. Fixed
Income Group responsible for managing municipal bonds, including tax-exempt
private placements. Mr. Meiselas is a C.P.A. and joined J.P. Morgan's financial
group in 1982, after having spent 10 years at Coopers & Lybrand. Bob also spent
five years in J.P. Morgan's Private Banking Investment Management Group, and
moved to J.P. Morgan Investment Management in 1997. He is a graduate of St.
John's University and has completed graduate work at Long Island University in
the field of taxation.
This interview was conducted on April 15, 1999 and represents both Bob and
Elaine's views on that date.
THE FUND'S NET ASSET VALUE ROSE AS INTEREST RATES DECLINED OVER THE 12 MONTHS
ENDED MARCH 31. WHAT HAPPENED?
RM: The market has gone through several phases. Last fall, for example, interest
rates fell sharply as investors sought the safety of U.S. Treasuries during the
Asian financial crisis. This spring, bond investors have markedly differing
opinions about the future course of tax-exempt interest rates. The economy
continues to show signs of strength, yet the economic slowdown predicted by many
economists since late last fall has never materialized. Although there have been
some reports of a modest slowing, other data, such as consumer spending and
employment, have not yet weakened noticeably. The economy has tremendous forward
momentum as a result of consumer spending.
WHAT SUPPORTED MUNICIPAL BOND PRICES OVER THE PERIOD?
RM: Favorable yields. On an after-tax basis, their yields typically exceeded
U.S. Treasuries for a taxpayer in the highest federal income tax bracket. For
example, to match a tax-free municipal yield of 4%, an investor paying the
highest federal tax rate would need a taxable yield of 6.6%, more than a full
percentage point higher than the longest Treasury bond available. In addition,
municipal bond prices have been supported by continued inflows into bond mutual
funds and weak supply of the municipal bonds themselves.
3
<PAGE>
HOW HAS ALL OF THIS AFFECTED THE NEW YORK MUNICIPAL BOND MARKET?
RM: Profoundly. First, low inflation has reduced interest rates which stimulated
a strong rally in both the stock and bond markets. This added wealth effect
increased economic growth even further because consumer spending increased, as
did demand for investments. New York municipal bonds offer the highest after-tax
return available for fixed income investors.
In addition, economic growth has increased tax revenues for municipalities and
reduced the need for local governments to borrow money in the bond market.
Consequently, the supply of New York municipals has dwindled and investors
perceive that credit risk is lower for those available. Both factors have pushed
New York bond prices higher.
SO HOW DID YOU MANAGE THE FUND IN THIS RELATIVELY FAVORABLE MARKET?
RM: We were bullish on interest rates last year, and remained that way until
this past February. We had anticipated a lower supply, and expected the
continued absence of inflation as well as pent-up demand for tax-exempt bonds.
THEN SOMETHING CHANGED?
RM: By February, the economy remained so strong that investors started to fear
that interest rates would rise. Also, many of the foreign economic problems that
had earlier stimulated a flight to quality had begun to recede.
WHAT DID YOU DO?
RM: We moved from mildly bullish to a more neutral position. We had held an
average maturity that was slightly longer than our 7-year benchmark, so we moved
back to 7 years. As noted before, the U.S. economy is still very strong. In
addition, the tax-exempt municipal bond market is not technically as favorable
as it was months ago. Tax-exempt bonds are still inexpensive when compared to
U.S. Treasuries, but they are not as inexpensive as they were earlier.
HOW WOULD YOU DESCRIBE YOUR STRATEGY?
RM: We're conservative. We try to provide an efficient and attractive after-tax
performance in a stable fund. In today's market, that means that we are biased
toward premium, non-callable bonds, because they help provide a cushion in
volatile markets. We have been buying them when they are reasonably priced and
structured to meet our investment needs.
We are also interested in bonds that carry somewhat lower credit ratings than
our AA average. Prices for some lower investment grade bonds have cheapened, so
we are looking at them opportunistically. We'll look at bonds rated A or lower,
as we find them. Fewer and fewer bonds are lower-rated because most new bonds
sold in today's market are insured.
4
<PAGE>
HAS THIS STRATEGY WORKED?
RM: Yes, we think our performance was good over the 12 months ended March 31. By
extending duration last fall, we benefited from falling interest rates, and when
rates rose suddenly in February, we shortened maturities. Our structure also
helped. We stayed away from lower quality bonds that suffered as spreads
widened. We have a favorable Sharpe ratio - the measure of the risk we are
willing to accept versus that of riskless assets.
WHAT IS YOUR OUTLOOK?
RM: We expect the U.S. economy will remain strong over the next few months, and
municipal bond supply typically increases during the second quarter. However,
there has been continued cash flow into municipal bond funds and there is
pent-up demand for municipal bonds. While a strong economy and added supply
suggest that municipal bond prices may weaken, continued investor interest in
municipals is apt to stabilize the market. These factors can easily shift in the
months ahead. Consequently, we are neutral about the outlook for the municipal
market and have positioned the portfolio accordingly.
5
<PAGE>
GLOSSARY OF TERMS
BASIS POINT: A measure used in quoting bond yields. One basis point equals 0.01%
of yield. For example, if a bond's yield changed from 10.25% to 11.00%, it would
have moved 75 basis points.
CREDIT RATING: The rating assigned to a bond by independent rating agencies such
as Standard & Poor's or Moody's. In evaluating creditworthiness, these agencies
assess the issuer's present financial condition and future ability and
willingness to make principal and interest payments when due.
DURATION: Duration is used as a measure of the relative sensitivity of the price
of the security to a change in interest rates. The longer the duration, the more
sensitive the bond is to interest rate moves. For example, a bond with a
five-year duration will experience an approximate 5% increase in price if
interest rates drop 100 basis points (1%), while a bond with a 10-year duration
would see its price rise by approximately 10%.
MATURITY: The date on which the life of a financial instrument ends through cash
or physical settlement, or expiration with no value, or the date a security
comes due and fully payable. Average maturity refers to the average time to
maturity of the entire portfolio.
YIELD CURVE: A graph showing the term structure of interest rates at a point in
time, ranging from the shortest to the longest available. The resulting curve
shows if short-term interest rates are higher or lower than long-term rates.
YIELD SPREAD: The difference in yield between different types of securities. For
example, if a Treasury bond is yielding 6.5% and a municipal is yielding 5.5%,
the spread is 1% or 100 basis points.
ZERO COUPON BOND: A debt instrument sold at a discount to its face value. The
bond makes no payment until maturity, at which time it is redeemed at face
value. Effectively, the interest received is the difference between face value
and the price paid for the security.
6
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan New York Tax Exempt Bond Fund seeks to provide a high level of
tax-exempt income for New York residents consistent with moderate risk of
capital. It is designed for investors subject to federal and New York State
income taxes who seek a high level of income which is free from federal, state,
and New York City personal income taxes.
- --------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
4/11/94
- --------------------------------------------------------------------------------
FUND NET ASSETS AS OF 3/31/99
$119,151,551
- --------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 3/31/99
$320,929,932
- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY
- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/13/99
EXPENSE RATIO
The fund's current expense ratio of 0.70% covers shareholders' expenses for
custody, tax reporting, investment advisory and shareholder services, after
reimbursement. The fund is no-load and does not charge any sales, redemption, or
exchange fees. There are no additional charges for buying, selling, or
safekeeping fund shares, or for wiring redemption proceeds from the fund.
FUND HIGHLIGHTS
ALL DATA AS OF MARCH 31, 1999
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
<TABLE>
<S> <C>
REVENUE BONDS 75.4%
GENERAL OBLIGATIONS 16.0%
PRIVATE PLACEMENTS 7.1%
SHORT-TERM & OTHER 1.5%
</TABLE>
30-DAY SEC YIELD
3.73%*
DURATION
5.26 years
QUALITY PROFILE
AAA-A 86.8%
Other 13.2%
*YIELD IS NET OF FEES AND REFLECTS THE REIMBURSEMENT OF CERTAIN EXPENSES AS
DISCUSSED IN THE PROSPECTUS. HAD EXPENSES NOT BEEN SUBSIDIZED, THE 30-DAY SEC
YIELD WOULD HAVE BEEN 3.69%.
7
<PAGE>
DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT
INC., A WHOLLY OWNED SUBSIDIARY OF J.P. MORGAN & CO. INC., IS THE PORTFOLIO'S
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.
The fund invests through a master portfolio (another fund with the same
objective). Opinions expressed herein are based on current market conditions
and are subject to change without notice. Income may be subject to state and
local taxes. Some income may be subject to the federal alternative minimum
tax for certain investors. Capital gains are not exempt from taxes.
CALL J.P. MORGAN FUNDS SERVICES AT (800) 521-5411 FOR A PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION ABOUT THE FUND INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
8
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The New York Tax Exempt Bond
Portfolio ("Portfolio"), at value $119,078,338
Receivable for Shares of Beneficial Interest Sold 459,843
Receivable for Expense Reimbursements 13,203
Prepaid Trustees' Fees 282
Deferred Organization Expenses 24
Prepaid Expenses and Other Assets 574
------------
Total Assets 119,552,264
------------
LIABILITIES
Payable for Shares of Beneficial Interest
Redeemed 251,220
Dividends Payable to Shareholders 68,607
Shareholder Servicing Fee Payable 25,047
Administrative Services Fee Payable 2,585
Administration Fee Payable 108
Fund Services Fee Payable 89
Accrued Expenses 53,057
------------
Total Liabilities 400,713
------------
NET ASSETS
Applicable to 11,180,812 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $119,151,551
------------
------------
Net Asset Value, Offering and Redemption Price
Per Share $10.66
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $116,200,102
Undistributed Net Investment Income 21,047
Accumulated Net Realized Gain on Investment 270,173
Net Unrealized Appreciation of Investment 2,660,229
------------
Net Assets $119,151,551
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Interest Income $4,721,235
Allocated Portfolio Expenses (390,974)
----------
Net Investment Income Allocated from
Portfolio 4,330,261
FUND EXPENSES
Shareholder Servicing Fee $238,894
Administrative Services Fee 28,071
Registration Fees 26,592
Transfer Agent Fees 24,182
Professional Fees 12,839
Amortization of Organization Expenses 2,742
Fund Services Fee 2,559
Administration Fee 1,863
Trustees' Fees and Expenses 1,137
Miscellaneous 22,762
--------
Total Fund Expenses 361,641
Less: Reimbursement of Expenses (41,794)
--------
NET FUND EXPENSES 319,847
----------
NET INVESTMENT INCOME 4,010,414
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 1,133,357
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO (109,003)
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $5,034,768
----------
----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 4,010,414 $ 2,974,540
Net Realized Gain on Investment Allocated from
Portfolio 1,133,357 577,329
Net Change in Unrealized Appreciation of
Investment Allocated from Portfolio (109,003) 1,725,945
-------------- --------------
Net Increase in Net Assets Resulting from
Operations 5,034,768 5,277,814
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (4,010,414) (2,974,540)
Net Realized Gain (1,007,351) (433,162)
-------------- --------------
Total Distributions to Shareholders (5,017,765) (3,407,702)
-------------- --------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 55,749,920 40,909,669
Reinvestment of Dividends and Distributions 3,927,401 2,580,218
Cost of Shares of Beneficial Interest Redeemed (25,703,457) (16,397,235)
-------------- --------------
Net Increase from Transactions in Shares of
Beneficial Interest 33,973,864 27,092,652
-------------- --------------
Total Increase in Net Assets 33,990,867 28,962,764
NET ASSETS
Beginning of Fiscal Year 85,160,684 56,197,920
-------------- --------------
End of Fiscal Year (including undistributed net
investment income of
$21,047 and $21,047, respectively) $ 119,151,551 $ 85,160,684
-------------- --------------
-------------- --------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 11, 1994
FOR THE FISCAL YEAR ENDED MARCH 31, (COMMENCEMENT OF
-------------------------------------- OPERATIONS) THROUGH
1999 1998 1997 1996 MARCH 31, 1995
-------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.62 $ 10.28 $ 10.34 $ 10.11 $ 10.00
-------- ------- ------- ------- -------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.42 0.46 0.46 0.46 0.40
Net Realized and Unrealized Gain (Loss) on
Investment 0.14 0.40 (0.03) 0.26 0.11
-------- ------- ------- ------- -------------------
Total from Investment Operations 0.56 0.86 0.43 0.72 0.51
-------- ------- ------- ------- -------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.42) (0.46) (0.46) (0.46) (0.40)
Net Realized Gain (0.10) (0.06) (0.03) (0.03) --
-------- ------- ------- ------- -------------------
Total Distributions to Shareholders (0.52) (0.52) (0.49) (0.49) (0.40)
-------- ------- ------- ------- -------------------
NET ASSET VALUE, END OF PERIOD $ 10.66 $ 10.62 $ 10.28 $ 10.34 $ 10.11
-------- ------- ------- ------- -------------------
-------- ------- ------- ------- -------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return 5.39% 8.49% 4.19% 7.16% 5.26%(a)
Net Assets, End of Period (in thousands) $119,152 $85,161 $56,198 $50,523 $ 38,137
Ratios to Average Net Assets
Net Expenses 0.70% 0.71% 0.75% 0.75% 0.75%(b)
Net Investment Income 3.95% 4.33% 4.44% 4.43% 4.31%(b)
Expenses without Reimbursement 0.74% 0.77% 0.81% 0.79% 0.97%(b)
</TABLE>
- ------------------------
(a) Not annualized.
(b) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The J.P. Morgan New York Tax Exempt Bond Fund (the "fund") is a separate series
of the J.P. Morgan 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 April 11, 1994. Prior to November 2, 1998, the
fund's name was the J.P. Morgan New York Total Return Bond Fund.
The fund invests all of its investable assets in The New York Tax Exempt Bond
Portfolio (the "portfolio"), a non-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 (37% at March
31, 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 1a 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) Substantially all the fund's net investment income is declared as
dividends daily and paid monthly. Distributions to shareholders of net
realized capital gains, if any, are declared and paid annually.
d) The fund incurred organization expenses in the amount of $13,301, which
were deferred and are being amortized on a straight-line basis over a
period not to exceed five years beginning with the commencement of
operations of the fund.
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.
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>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
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 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 March 31, 1999, the fee for these services amounted to
$1,863.
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 Institutional 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 March 31, 1999, the fee for
these services amounted to $28,071.
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
0.70% of the average daily net assets of the fund. This reimbursement
arrangement can be changed or terminated at any time at the option of J.P.
Morgan. For the fiscal year ended March 31, 1999, J.P. Morgan has agreed
to reimburse the fund $41,794 for 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 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. This rate was 0.20% of the average daily
net assets of the fund from April 1, 1998 through July 31, 1998. Effective
August 1, 1998 the rate was increased to 0.25%. For the fiscal year ended
March 31, 1999, the fee for these services amounted to $238,894.
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 investment
advisors and other financial intermediaries who are Schwab's clients. The
fund is not
15
<PAGE>
J.P. MORGAN NEW YORK TAX EXEMPT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
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
$2,559 for the fiscal year ended March 31, 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 Institutional Funds, the master
portfolios and J.P. Morgan Series Trust. The Trustees' Fees and Expenses
shown in the financial statements represent the fund's allocated portion
of these 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 $500.
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
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
Shares sold...................................... 5,203,659 3,864,109
Reinvestment of dividends and distributions...... 366,522 243,534
Shares redeemed.................................. (2,405,543) (1,556,053)
-------------- --------------
Net Increase..................................... 3,164,638 2,551,590
-------------- --------------
-------------- --------------
</TABLE>
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 28, 1997, 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 maximum borrowing under the
Agreement was $100,000,000. The Agreement expired on May 27, 1998, however, the
fund as party to the Agreement has extended the Agreement and continues its
participation therein for an additional 364 days until May 26, 1999. The maximum
borrowing under the new Agreement is $150,000,000. The purpose of the Agreement
is to provide another alternative for settling large fund shareholder
redemptions. Interest on any such borrowings outstanding will approximate market
rates. The funds pay a commitment fee at an annual rate of 0.065% on the unused
portion of the committed amount which is allocable to the funds in accordance
with procedures established by their respective trustees or directors. There
were no outstanding borrowings to the Agreement at March 31, 1999.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
J.P. Morgan New York Tax Exempt Bond Fund
(Formerly J.P. Morgan New York Total Return Bond 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 New York Tax Exempt Bond Fund (the "fund") at March 31, 1999, 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 financial highlights for
each of the four years in the period then ended and for the period April 11,
1994 (commencement of operations) to March 31, 1995, in conformity with
generally accepted accounting principles. 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 generally accepted
auditing standards 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 provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
May 13, 1999
17
<PAGE>
The New York Tax Exempt Bond Portfolio
Annual Report March 31, 1999
(The following pages should be read in conjunction
with J.P. Morgan New York Tax Exempt Bond Fund
Annual Financial Statements)
18
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS (96.9%)
CALIFORNIA (0.3%)
$ 1,000 Kaweah Delta Hospital District, Tulare
County, (Series F, due 06/01/14)...... PP NR/NR 06/01/00(a) 5.250% $ 1,018,750
-----------
ILLINOIS (1.0%)
3,000 Illinois Development Finance Authority,
(IDR, Riverside Health & Fitness
Center Project, Series 1998-A, due
08/01/28)............................. PP NR/NR 08/01/01(a) 4.350 3,015,000
-----------
MICHIGAN (1.3%)
3,444 City of Detroit Public School........... PP NR/NR 10/15/01 5.485 3,520,305
708 City of Detroit Public School, (Public
Power Revenue)........................ PP NR/NR 10/15/00 4.550 716,065
-----------
TOTAL MICHIGAN...................... 4,236,370
-----------
NEW YORK (93.6%)
4,000 Erie County Water Authority, (Water
Revenue, Refunding, Escrowed to
Maturity, Series A, due 12/01/04),
AMBAC Insured......................... RB Aaa/AAA 12/01/03(a) 5.000 4,209,880
2,195 Erie County, FGIC Insured............... GO Aaa/AAA 11/01/02 5.000 2,289,539
4,025 Hempstead Town, (Callable, Series A, due
08/15/07), MBIA Insured............... GO Aaa/NR 08/15/06(a) 4.750 4,171,591
3,000 Long Island Power Authority, (New York
Electric Systems Revenue)............. RB Baa1/A- 04/01/02 5.000 3,087,900
3,100 Long Island Power Authority, (New York
Electric Systems Revenue, Refunding,
Series A), AMBAC Insured.............. RB Aaa/AAA 12/01/09 5.500 3,383,464
4,950 Long Island Power Authority, (New York
Electric Systems Revenue, Refunding,
Series A), AMBAC insured.............. RB Aaa/AAA 12/01/10 5.500 5,402,678
3,500 Long Island Power Authority, (New York
Electric Systems Revenue, Refunding,
Series A), AMBAC Insured.............. RB Aaa/AAA 12/01/11 5.500 3,812,585
4,000 Metropolitan Transportation Authority,
(Commuter Facilities, Refunding,
Series D), MBIA Insured............... RB Aaa/AAA 07/01/06 6.000 4,453,160
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 5,500 Metropolitan Transportation Authority,
(Dedicated Tax Fund, Series A), MBIA
Insured............................... RB Aaa/AAA 04/01/11 6.250% $ 6,349,585
1,370 Metropolitan Transportation Authority,
(Service Contract, Commuter
Facilities, Refunding, Series N)...... RB Baa1/BBB+ 07/01/02 6.625 1,483,669
3,165 Metropolitan Transportation Authority,
(Transportation Facilities Revenue,
Series 8), MBIA-IBC Insured........... RB Aaa/AAA 07/01/07 5.500 3,433,329
1,065 Monroe County, (Public Improvement,
Prerefunded, Escrowed to Maturity,
Series 1995), AMBAC Insured........... GO Aaa/AAA 06/01/08 5.875 1,196,751
65 Monroe County, (Public Improvement,
Unrefunded Balance, Series 1995),
AMBAC Insured......................... GO Aaa/AAA 06/01/08 5.875 73,041
2,150 Municipal Assistance Corp. for the City
of New York, (Refunding, Series G).... RB Aa2/AA 07/01/05 6.000 2,379,921
4,000 Municipal Assistance Corp. for the City
of New York, (Refunding, Series G).... RB Aa2/AA 07/01/07 6.000 4,485,720
1,500 Municipal Assistance Corp. for the City
of New York, (Refunding, Series J).... RB Aa2/AA 07/01/04 6.000 1,647,405
5,000 Municipal Assistance Corp. for the City
of New York, (Series O)............... RB Aa2/AA 07/01/05 5.000 5,269,800
5,560 Nassau County, (Series Y), FGIC
Insured............................... GO Aaa/AAA 03/01/05 5.000 5,812,813
1,460 New York City Industrial Development
Agency, (Civil Facilities Revenue,
YMCA Greater New York Project)........ RB Baa3/NR 08/01/05 6.000 1,582,231
1,000 New York City Industrial Development
Agency, (IDR, Brooklyn Navy Yard,
Cogen Partners, Refunding, due
10/01/22)............................. RB Baa3/BBB- 10/01/21(a) 6.200 1,123,200
3,075 New York City Municipal Water Finance
Authority, (Callable, Water & Sewer
Systems Revenue, Series C, due
06/15/21), AMBAC Insured.............. RB Aaa/AAA 06/15/02(a) 6.200 3,350,120
3,000 New York City Transitional Finance
Authority, (Future Tax Secured, Series
A).................................... RB Aa3/AA 08/15/07 5.500 3,250,980
2,600 New York City Transitional Finance
Authority, (Future Tax Secured, Series
A).................................... RB Aa3/AA 11/15/02 5.000 2,704,182
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 3,100 New York City Transitional Finance
Authority, (Future Tax Secured, Series
C).................................... RB Aa3/AA 05/01/05 5.000% $ 3,247,994
4,000 New York City Transitional Finance
Authority, (Future Tax Secured, Series
C).................................... RB Aa3/AA 05/01/03 5.000 4,166,640
6,000 New York City, (Callable, Series A, due
08/01/03)............................. GO A3/A- 08/01/02(a) 6.250 6,513,780
4,330 New York City, (Callable, Unrefunded
Balance, Series D, due 02/15/07)...... GO A3/A- 02/15/05(a) 5.750 4,661,505
670 New York City, (Prerefunded, Series D,
due 02/15/07)......................... GO A3/A- 02/15/05(a) 5.750 734,869
4,000 New York City, (Refunding, Series D).... GO A3/A- 11/01/09 6.500 4,636,280
1,000 New York City, (Refunding, Series G),
MBIA Insured.......................... GO Aaa/AAA 02/01/09 6.750 1,179,160
2,000 New York State Dormitory Authority,
(Callable, Cornell University, due
07/01/08)............................. RB Aa2/AA 07/01/06(a) 5.300 2,159,120
2,000 New York State Dormitory Authority,
(City University Systems, Prerefunded,
Series F, due 07/01/20), FGIC
Insured............................... RB Aaa/AAA 07/01/00(a) 7.500 2,136,660
2,280 New York State Dormitory Authority,
(Columbia University)................. RB Aaa/AAA 07/01/07 5.250 2,453,759
2,885 New York State Dormitory Authority, (FHA
Hospital & Nursing Home, Refunding,
Series A), AMBAC Insured.............. RB NR/AAA 08/15/08 5.000 3,024,144
2,500 New York State Dormitory Authority, (FHA
Hospital New York & Presbyterian,
Callable, Refunding, due 08/01/13),
AMBAC Insured......................... RB Aaa/AAA 02/01/08(a) 4.400 2,522,500
2,000 New York State Dormitory Authority, (FHA
Hospital New York & Presbyterian,
Refunding), AMBAC Insured............. RB Aaa/AAA 02/01/04 5.000 2,086,060
2,000 New York State Dormitory Authority,
(Lease Revenue, Municipal Health
Facilities, Series 1), FSA Insured.... RB Aaa/AAA 01/15/07 5.000 2,089,060
5,280 New York State Dormitory Authority,
(Long Island Jewish Medical Center,
Refunding), MBIA Insured.............. RB Aaa/AAA 07/01/05 5.000 5,532,226
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,000 New York State Dormitory Authority,
(Memorial Sloan Kettering Cancer
Center, Series C), MBIA Insured....... RB Aaa/AAA 07/01/19 5.750% $ 2,205,820
3,685 New York State Dormitory Authority,
(Mental Health Services Facilities)... RB Aaa/AAA 08/15/09 5.250 3,910,154
5,650 New York State Dormitory Authority,
(Mental Health Services Facilities,
Refunding, Series B).................. RB A3/A- 02/15/06 6.000 6,214,887
2,000 New York State Dormitory Authority, (New
York University, Series A), MBIA
Insured............................... RB Aaa/AAA 07/01/06 5.000 2,102,700
2,510 New York State Dormitory Authority,
(North Shore University Hospital,
Refunding), MBIA Insured.............. RB Aaa/AAA 11/01/05 5.000 2,635,726
2,530 New York State Dormitory Authority,
(North Shore University Hospital,
Refunding), MBIA Insured.............. RB Aaa/AAA 11/01/10 5.500 2,760,154
2,000 New York State Dormitory Authority,
(Secondary Hospital, North General
Hospital, Refunding, Series G)........ RB Baa1/BBB+ 02/15/05 5.500 2,126,900
3,000 New York State Dormitory Authority,
(State University Educational
Facilities, Refunding)................ RB A3/A- 05/15/01 5.250 3,093,960
1,500 New York State Dormitory Authority,
(State University Educational
Facilities, Refunding, Series A)...... RB A3/A- 05/15/04 6.500 1,668,300
3,000 New York State Dormitory Authority,
(State University Educational
Facilities, Refunding, Series A), FGIC
Insured............................... RB Aaa/AAA 05/15/11 5.875 3,363,030
2,000 New York State Dormitory Authority,
(University of Rochester, Refunding,
Series A), MBIA Insured............... RB Aaa/AAA 07/01/05 5.000 2,101,160
1,210 New York State Dormitory Authority,
(University of Rochester, Series A)... RB A1/A+ 07/01/06 6.500 1,386,188
4,000 New York State Environmental Facilities
Corp., (Callable, PCR, State Water,
Revolving Fund, Series A, due
06/15/01)............................. RB Aa1/AA 06/15/00(a) 7.300 4,251,880
5,000 New York State Environmental Facilities
Corp., (PCR, State Water, Revolving
Fund, New York City Municipal Water,
Refunding)............................ RB Aa1/AA- 06/15/11 5.750 5,574,950
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,000 New York State Environmental Facilities
Corp., (PCR, State Water, Revolving
Fund, Prerefunded, due 06/15/14)...... RB Aaa/AA+ 06/15/01(a) 6.500% $ 2,160,260
5,000 New York State Environmental Facilities
Corp., (Special Obligation, Riverbank
State Park, Prerefunded, due
04/01/22)............................. RB Aaa/AAA 04/01/02(a) 7.375 5,604,550
1,605 New York State Environmental Facilities
Corp., (State Clean Water & Drinking,
Revolving Funds, Second Resolution,
Series F)............................. RB Aa1/AA- 06/15/02 5.000 1,664,738
1,000 New York State Environmental Facilities
Corp., (State Clean Water & Drinking,
Revolving Funds, Second Resolution,
Series F)............................. RB Aa1/AA- 06/15/07 5.250 1,070,110
2,600 New York State Housing Finance Agency,
(Service Contract Obligation,
Refunding, Series C).................. RB Baa1/BBB+ 03/15/05 4.850 2,676,466
3,260 New York State Local Government
Assistance Corp., (Prerefunded, Series
C, due 04/01/18)...................... RB Aaa/A+ 04/01/02(a) 6.250 3,556,236
2,000 New York State Local Government
Assistance Corp., (Refunding, Series
A).................................... RB A3/A+ 04/01/06 6.000 2,214,780
2,525 New York State Local Government
Assistance Corp., (Refunding, Series
B), MBIA Insured...................... RB Aaa/AAA 04/01/04 5.250 2,669,077
3,350 New York State Local Government
Assistance Corp., (Refunding, Series
E).................................... RB A3/A+ 04/01/14 6.000 3,732,537
1,550 New York State Local Government
Assistance Corp., (Series A).......... RB A3/A+ 04/01/05 5.400 1,661,709
2,850 New York State Medical Care Facilities
Finance Agency, (Callable, Hospital &
Nursing Home Services, Series D, due
02/15/32)............................. RB Aa2/NR 02/15/03(a) 6.450 3,167,804
1,500 New York State Medical Care Facilities
Finance Agency, (Mental Health
Services, Refunding, Series F)........ RB A3/A- 02/15/03 6.000 1,606,740
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,620 New York State Municipal Bond Bank
Agency, (Special Program, Refunding,
Series A), AMBAC Insured.............. RB Aaa/AAA 03/15/06 5.000% $ 2,749,795
9,667 New York State Office of Temporary and
Disability Assistance, (General
Obligation)........................... PP NR/NR 03/31/05 4.480 9,721,899
2,000 New York State Power Authority, (Revenue
& General Purpose, Refunding, Escrowed
to Maturity, Series W)................ RB Aaa/AAA 01/01/03 6.625 2,191,260
4,500 New York State Power Authority, (Revenue
& General Purpose, Refunding, Series
A).................................... RB Aa3/AA- 02/15/03 5.000 4,688,595
3,350 New York State Power Authority, (Revenue
& General Purpose, Refunding, Series
A).................................... RB Aa3/AA- 02/15/05 5.500 3,602,121
3,000 New York State Thruway Authority,
(Refunding, Series E)................. RB Aa3/AA- 01/01/07 5.500 3,251,370
2,000 New York State Thruway Authority,
(Service Contract, Local Highway &
Bridge)............................... RB Baa1/BBB+ 04/01/05 6.000 2,187,400
2,000 New York State Thruway Authority,
(Service Contract, Local Highway &
Bridge, Refunding).................... RB Baa1/BBB+ 04/01/04 5.500 2,121,680
9,935 New York State Thruway Authority,
(Service Contract, Local Highway &
Bridge, Series A-2), MBIA Insured..... RB Aaa/AAA 04/01/06 5.250 10,579,377
2,470 New York State Urban Development Corp.,
(Center for Industrial Innovation,
Refunding)............................ RB Baa1/BBB+ 01/01/06 6.250 2,744,294
2,000 New York State Urban Development Corp.,
(Correctional Capital Facilities,
Series 6)............................. RB Baa1/BBB+ 01/01/03 6.000 2,135,960
3,500 New York State Urban Development Corp.,
(Correctional Facilities Service
Contract, Series B)................... RB Baa1/BBB+ 01/01/01 5.000 3,571,505
2,500 New York State Urban Development Corp.,
(Prerefunded, due 04/01/11)........... RB Aaa/BBB+ 04/01/01(a) 7.500 2,734,375
2,635 New York State Urban Development Corp.,
(Sub Lien, Corporate Purpose,
Refunding)............................ RB A2/A 01/01/06 6.000 2,905,667
5,250 New York State, (Refunding, Series A)... GO A2/A 07/15/06 6.500 6,007,365
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 3,100 New York State, (Refunding, Series B)... GO A2/A 08/15/05 6.250% $ 3,476,712
1,350 New York State, (Refunding, Series C)... GO A2/A 10/01/04 6.000 1,484,312
2,415 New York State, (Refunding, Series F)... GO A2/A 09/15/03 5.000 2,531,355
1,000 Orange County, (Refunding).............. GO Aa2/NR 11/15/04 5.500 1,082,270
1,000 Orange County, (Refunding).............. GO Aa2/NR 11/15/05 5.500 1,083,850
7,730 Port Authority of New York & New Jersey,
(Special Project, JFK International
Air Terminal, Series 6), MBIA
Insured............................... RB Aaa/AAA 12/01/11 6.250 8,892,747
2,650 Suffolk County, (Water Authority
Waterworks Revenue, Refunding, Senior
Lien), MBIA Insured................... RB Aaa/AAA 06/01/07 5.100 2,800,388
1,500 Suffolk County, (Water Authority
Waterworks Revenue, Refunding, Senior
Lien), MBIA Insured................... RB Aaa/AAA 06/01/09 5.100 1,589,580
2,945 Triborough Bridge & Tunnel Authority,
(General Purpose, Refunding, Series
SR, due 01/01/07)..................... RB Aa3/A+ 01/01/00(a) 5.000 3,095,372
1,500 Triborough Bridge & Tunnel Authority,
(General Purpose, Refunding, Series
Y).................................... RB Aa3/A+ 01/01/07 5.900 1,664,955
3,960 Triborough Bridge & Tunnel Authority,
(Special Obligation, Refunding, Series
A), FGIC Insured...................... RB Aaa/AAA 01/01/07 5.500 4,278,226
2,000 Trust for Cultural Resources of the City
of New York, (Public Power Revenue,
Series 1999, due 08/01/05)............ PP NR/NR 01/01/08(a) 4.600 2,000,000
4,000 United Nations Development Corp.,
(Senior Lien, Series A, Prerefunded,
due 07/01/26)......................... RB Aaa/NR 07/01/03(a) 6.000 4,417,560
3,230 Yonkers, (Series C), AMBAC Insured...... GO Aaa/AAA 08/01/04 5.500 3,459,039
-----------
TOTAL NEW YORK...................... 300,327,146
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
PUERTO RICO (0.7%)
$ 2,220 Commonwealth of Puerto Rico, (General
Obligation)........................... PP NR/NR 12/04/03 7.469% $ 2,339,062
-----------
TOTAL LONG TERM INVESTMENTS (COST $304,432,424)................................ 310,936,328
-----------
SHORT-TERM INVESTMENTS (1.5%)
ARIZONA (0.0%)
100 Maricopa County, (Callable, PCR,
Refunding, Series D, due 05/01/29),
LOC - Bank of America................. VRDN P-1/A-1+ 04/01/99(b) 3.300 100,000
-----------
GEORGIA (1.1%)
900 Burke County Development Authority,
(Callable, PCR, Georgia Power Co.,
Vogtle Project 1-st Series, due
04/01/32)............................. VRDN VMIG1/A-1 04/01/99(b) 3.300 900,000
2,550 Burke County Development Authority,
(Callable, PCR, Georgia Power Co.,
Vogtle Project-4th Series, Refunding,
due 09/01/25)......................... VRDN VMIG1/A-1 04/01/99(b) 3.300 2,550,000
-----------
3,450,000
-----------
LOUISIANA (0.0%)
80 Louisiana Public Facilities Authority,
(Callable, due 12/01/15), LOC -
Deutsche Bank A.G..................... VRDN P-1/NR 04/01/99(b) 3.300 80,000
-----------
NEW YORK (0.0%)
200 New York City Municipal Water Finance
Authority, (Callable, Water & Sewer
Systems Revenue, Series C, due
06/15/22), FGIC Insured............... VRDN VMIG1/A-1+ 04/01/99(b) 3.300 200,000
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
26
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
PRINCIPAL S&P
AMOUNT SECURITY RATING MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE (UNAUDITED) DATE RATE VALUE
- -------------- ---------------------------------------- -------- -------- ----------- ------ -----------
<C> <S> <C> <C> <C> <C> <C>
OTHER (0.4%)
$ 895 Puttable Floating Options (Tax Exempt
Receipts, Callable, Series SG P-5, due
07/02/27), LIQ FAC-Societe Generale... VRDN NR/A-1+c 04/01/99(b) 3.360% $ 895,000
275 Puttable Floating Options (Tax Exempt
Receipts, Callable, Series SG P-6, due
01/01/28), LIQ FAC-Societe Generale... VRDN NR/A-1+c 04/01/99(b) 3.360 275,000
-----------
1,170,000
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $5,000,000)................................. 5,000,000
-----------
TOTAL INVESTMENTS (COST $309,432,424) (98.4%)...................................... 315,936,328
OTHER ASSETS IN EXCESS OF LIABILITIES (1.6%)....................................... 4,993,604
-----------
NET ASSETS (100.0%)................................................................ $320,929,932
-----------
-----------
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $309,451,545 for federal income tax
purposes at March 31, 1999, the aggregate gross unrealized appreciation and
depreciation was $7,074,669 and $589,886, respectively, resulting in net
unrealized appreciation of investments of $6,484,783.
(a) The date listed under the heading maturity date represents an optional
tender date. The actual maturity date is indicated in the security description.
(b) Variable Rate Demand Notes tender dates and/or interest rates are reset at
specified intervals which coincide with their tender feature. The actual
maturity date is indicated in the security description.
AMBAC - Ambac Indemnity Corporation.
FGIC - Financial Guaranty Insurance Company.
FHA - Federal Housing Authority.
FSA - Financial Security Assurance.
GO - General Obligation.
IDR - Industrial Development Revenue.
LIQ FAC - Liquidity Facility.
LOC - Letter of Credit.
MBIA - Municipal Bond Investors Assurance Corp.
NR - Not Rated.
PCR - Pollution Control Revenue.
PP - Private Placement.
RB - Revenue Bond.
VRDN - Variable Rate Demand Note.
Escrowed to Maturity: Bonds for which cash and/or securities have been deposited
with a third party to cover payments of principal and interest at the maturity
which coincides with the first call date of the first bond.
The Accompanying Notes are an Integral Part of the Financial Statements.
27
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $309,432,424 ) $315,936,328
Cash 30,603
Interest Receivable 5,097,693
Prepaid Trustees' Fees 184
Deferred Organization Expenses 19
Prepaid Expenses and Other Assets 1,566
------------
Total Assets 321,066,393
------------
LIABILITIES
Advisory Fee Payable 80,827
Administrative Services Fee Payable 10,289
Administration Fee Payable 374
Fund Services Fee Payable 234
Accrued Expenses 44,737
------------
Total Liabilities 136,461
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $320,929,932
------------
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
28
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $12,318,506
EXPENSES
Advisory Fee $ 796,521
Custodian Fees and Expenses 85,723
Administrative Services Fee 73,366
Professional Fees and Expenses 44,238
Fund Services Fee 6,630
Trustees' Fees and Expenses 3,306
Administration Fee 3,052
Amortization of Organization Expense 2,304
Miscellaneous 5,476
----------
Total Expenses 1,020,616
-----------
NET INVESTMENT INCOME 11,297,890
NET REALIZED GAIN ON INVESTMENTS 2,712,515
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS 142,962
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $14,153,367
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
29
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 11,297,890 $ 7,914,129
Net Realized Gain on Investments 2,712,515 1,111,960
Net Change in Unrealized Appreciation of
Investments 142,962 4,862,341
-------------- --------------
Net Increase in Net Assets Resulting from
Operations 14,153,367 13,888,430
-------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 162,950,459 87,771,218
Withdrawals (53,185,304) (52,571,222)
-------------- --------------
Net Increase from Investors' Transactions 109,765,155 35,199,996
-------------- --------------
Total Increase in Net Assets 123,918,522 49,088,426
NET ASSETS
Beginning of Fiscal Year 197,011,410 147,922,984
-------------- --------------
End of Fiscal Year $ 320,929,932 $ 197,011,410
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE FISCAL YEAR ENDED APRIL 11, 1994
MARCH 31, (COMMENCEMENT OF
------------------------- OPERATIONS) THROUGH
1999 1998 1997 1996 MARCH 31, 1995
---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 0.38% 0.40% 0.43% 0.44% 0.48%(a)
Net Investment Income 4.26% 4.62% 4.75% 4.72% 4.59%(a)
Expenses without Reimbursement 0.38% 0.40% 0.43% 0.44% 0.51%(a)
Portfolio Turnover 44% 51% 35% 41% 63%(b)
</TABLE>
- ------------------------
(a) Annualized.
(b) Not Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
30
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The New York Tax Exempt Bond Portfolio (the "portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, non-diversified,
open-end management investment company which was organized as a trust under the
laws of the State of New York on June 16, 1993. The portfolio commenced
operations on April 11, 1994. Prior to November 2, 1998, the portfolio's name
was The New York Total Return Bond Portfolio. The portfolio's investment
objective is to provide a high level of current income that is exempt from
federal income tax for New York residents, consistent with moderate risk of
capital. The portfolio invests a significant amount of its assets in debt
obligations issued by political subdivisions and authorities in the State of New
York. The issuers' ability to meet their obligations may be affected by economic
and political developments within the State of New York. The Declaration of
Trust permits the trustees to issue an unlimited number of beneficial interests
in the portfolio.
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
exist is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. 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 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
short-term portfolio securities with a remaining maturity of less than 60
days are valued by the amortized cost method.
b) The portfolio incurred organization expenses in the amount of $11,473.
These costs were deferred and are being amortized on a straight-line basis
over a period not to exceed five years beginning with the commencement of
operations.
c) Securities transactions are recorded on a trade date basis. Interest
income, which includes the amortization of premiums and discounts, if any,
is recorded on an accrual basis. For financial and tax reporting purposes,
realized gains and losses are determined on the basis of specific lot
identification.
d) 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.
31
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a) Prior to October 28, 1998, the portfolio had an Investment Advisory
Agreement with 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 paid Morgan at an annual
rate of 0.30% of the portfolio's average daily net assets. Effective
October 28, 1998, the portfolio's Investment Advisor is J.P. Morgan
Investment Management Inc. ("JPMIM"), an affiliate of Morgan and a wholly
owned subsidiary of J.P. Morgan, and the terms of the Agreement remain the
same. For the fiscal year ended March 31, 1999, such fees amounted to
$796,521.
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
portfolio and certain other investment companies subject to similar
agreements with FDI. For the fiscal year ended March 31, 1999, the fee for
these services amounted to $3,052.
c) 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 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 March 31, 1999, the fee for
these services amounted to $73,366.
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 $6,630 for the fiscal year ended March 31, 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 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
32
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
- --------------------------------------------------------------------------------
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 $1,400.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the fiscal year
ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
COST OF PURCHASES
PROCEEDS FROM SALES
- ---------------- ------------
<S> <C>
$230,648,580..... $113,320,935
</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.
33
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The New York Tax Exempt Bond Portfolio
(Formerly The New York Total Return Bond 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 New York Tax Exempt Bond Portfolio (the
"portfolio") at March 31, 1999, 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 four years in the period
then ended and for the period April 11, 1994 (commencement of operations) to
March 31, 1995, in conformity with generally accepted accounting principles.
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 generally accepted auditing standards 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 March
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
May 13, 1999
34
<PAGE>
J.P. MORGAN FUNDS
PRIME MONEY MARKET FUND
FEDERAL MONEY MARKET FUND
TAX EXEMPT MONEY MARKET FUND
TAX AWARE ENHANCED INCOME FUND: SELECT SHARES
SHORT TERM BOND FUND
BOND FUND
GLOBAL STRATEGIC INCOME FUND
EMERGING MARKETS DEBT FUND
TAX EXEMPT BOND FUND
NEW YORK TAX EXEMPT BOND FUND
CALIFORNIA BOND FUND: SELECT SHARES
DIVERSIFIED FUND
DISCIPLINED EQUITY FUND
U.S. EQUITY FUND
U.S. SMALL COMPANY FUND
U.S. SMALL COMPANY OPPORTUNITIES FUND
TAX AWARE U.S. EQUITY FUND: SELECT SHARES
INTERNATIONAL EQUITY FUND
EUROPEAN EQUITY FUND
INTERNATIONAL OPPORTUNITIES FUND
EMERGING MARKETS EQUITY FUND
GLOBAL 50 FUND: SELECT SHARES
FOR MORE INFORMATION ON THE J.P. MORGAN FUNDS CALL
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.
J.P. MORGAN
NEW YORK
TAX EXEMPT
BOND FUND
ANNUAL REPORT
MARCH 31, 1999
rnybfr-993
