JP MORGAN FUNDS, N-30D, 1999-02-10

JP MORGAN FUNDS
N-30D, 1999-02-10

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<PAGE>

LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN DISCIPLINED EQUITY FUND

January 4, 1999

Dear Shareholder:

We are pleased to report that the J.P. Morgan Disciplined Equity Fund performed
well for the six months ended November 30, 1998, providing a return of 8.04%.
This performance surpassed the 7.47% return of the S&P 500 Index over the same
period, and was well ahead of the 0.30% return provided by fund competitors as
measured by the Lipper Growth & Income Fund Average.

The fund's net asset value increased from $14.95 per share at May 31, 1998,to
$16.13 at November 30, 1998, after making distributions of $0.02 from ordinary
income. The fund's net assets stood at $45.4 million at the end of the period
under review. The net assets of The Disciplined Equity Portfolio, in which the
fund invests, totaled approximately $503.2 million at November 30, 1998.

The report that follows includes an interview with Timothy J. Devlin, a member
of the portfolio management team for The Disciplined Equity Portfolio. 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 coming months.

As chairman and president of Asset Management Services, we appreciate your
investment in the fund. 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 Services President of Asset Management Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<S> <C> <C> <C>
LETTER TO THE SHAREHOLDERS . . . .1 FUND FACTS AND HIGHLIGHTS. . . . . . .6

FUND PERFORMANCE . . . . . . . . .2 FINANCIAL STATEMENTS . . . . . . . . .8

PORTFOLIO MANAGER Q&A. . . . . . .3
- --------------------------------------------------------------------------------
</TABLE>

1
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FUND PERFORMANCE

EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------- ----------------------------
THREE SIX ONE SINCE
AS OF NOVEMBER 30, 1998 MONTHS MONTHS YEAR INCEPTION
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J.P. Morgan Disciplined Equity Fund* 23.60% 8.04% 26.32% 27.78%
S&P 500 Index 22.03% 7.47% 23.66% 25.93%
Lipper Growth & Income Fund Average 18.68% 0.30% 12.35% 17.40%

AS OF SEPTEMBER 30, 1998
- ---------------------------------------------------------------------------------------------
J.P. Morgan Disciplined Equity Fund* -9.96% -6.52% 10.04% 19.81%
S&P 500 Index -9.95% -6.97% 9.05% 18.69%
Lipper Growth & Income Fund Average -12.47% -12.20% -1.08% 11.12%

</TABLE>

*THE J.P. MORGAN DISCIPLINED EQUITY FUND'S RETURNS INCLUDE HISTORICAL RETURNS OF
THE J.P. MORGAN INSTITUTIONAL DISCIPLINED EQUITY FUND, WHICH HAD A LOWER EXPENSE
RATIO, FROM JANUARY 3, 1997, (THE INCEPTION DATE OF THE J.P. MORGAN
INSTITUTIONAL DISCIPLINED EQUITY FUND) THROUGH DECEMBER 31, 1997 (THE INCEPTION
DATE OF THE J.P. MORGAN DISCIPLINED EQUITY FUND). FOR THE PURPOSES OF
COMPARISON, THE "SINCE INCEPTION" RETURNS ARE CALCULATED FROM JANUARY 31, 1997,
THE FIRST DATE WHEN DATA FOR THE FUND'S BENCHMARK AND ITS LIPPER CATEGORY WERE
AVAILABLE. THE J.P. MORGAN DISCIPLINED EQUITY FUND'S TOTAL RETURN SINCE ITS
COMMENCEMENT OF OPERATIONS ON 12/31/97 IS 24.60%.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME THE REINVESTMENT OF FUND DISTRIBUTIONS, AND REFLECT THE
REIMBURSEMENT OF FUND EXPENSES AS DESCRIBED IN THE PROSPECTUS. HAD EXPENSES NOT
BEEN SUBSIDIZED, RETURNS WOULD HAVE BEEN LOWER. LIPPER ANALYTICAL SERVICES, INC.
IS A LEADING SOURCE FOR MUTUAL FUND DATA.

2
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PORTFOLIO MANAGER Q&A

[PHOTO]

Following is an interview with TIMOTHY J. DEVLIN, a member of the portfolio
management team for The Disciplined Equity Portfolio since its inception. Tim
joined J.P. Morgan in 1996 after spending nine years at Mitchell Hutchins Asset
Management Inc., where he managed quantitatively driven equity portfolios for
institutional and retail investors. Tim was educated at Union College, where he
received a B.A. in Economics. This interview was conducted on December 18, 1998,
and reflects Tim's views on that date.

HOW DID THE U.S. EQUITY MARKET PERFORM DURING THE SIX MONTHS ENDED NOVEMBER 30,
1998?

TJD: The S&P 500 Index returned 7.47% for the six months, but that number
belies the volatility the market experienced during the period. Through June,
the U.S. stock market was performing well, buoyed by a solid U.S. economy and
strong consumer spending. However, July and August saw a global economic and
credit crisis that took the market down almost 20% from its highs.

Among the problems that rocked the world markets were Russia's default on its
bonds, the bailout of high-profile hedge funds Long-Term Capital and D.E. Shaw,
and continuing weakness in Asia, particularly Japan. The summer downturn led to
a dramatic flight to quality in fixed income and equity markets. Risk was
repriced in the markets, and investors avidly sought securities they considered
"stable."

In early autumn, the Federal Reserve lowered interest rates in an attempt to
settle world markets and address the financial shocks. With two additional Fed
easings, as well as rate cuts around the world, U.S. stocks rallied back to new
highs and interest rate spreads began to narrow.

HOW DID THE J.P. MORGAN DISCIPLINED EQUITY FUND PERFORM DURING THE PERIOD?

TJD: Quite well. The fund returned 8.04% for the six months ended November 30,
1998, outpacing the S&P 500 Index, which returned 7.47%. The fund significantly
outperformed its peers, as measured by the Lipper Growth & Income Fund Average,
which returned 0.30%.

Our objective is to add value through stock selection, and that is precisely
what was behind the fund's superior performance. The volatility of the six-month
period, and the resulting disparity of returns among U.S. stocks, provided ample
opportunity to identify misvaluation within sectors.

3
<PAGE>

While the flight to quality presented some unique challenges, recently the
market has shown signs of broadening. The Fed's rate cuts have taken investors'
attention off the global credit crisis. The largest stocks are still performing
well, but more moderately valued companies are starting to participate in the
gains. Our focus on risk management has helped our performance recently, but our
attention to valuation should serve us well as the market broadens.

WHICH STOCKS CONTRIBUTED TO THE PORTFOLIO'S PERFORMANCE?

TJD: I'll mention a couple of stocks that helped us outperform, but I will
preface it by saying that with 300-plus stocks in the portfolio, it is never
just a couple of stocks that drive performance. It is many small relative
"positions" that in the aggregate add value and consistency. That said, an
above-market weight in Philip Morris Companies, Inc. contributed to the fund's
outperformance as did a below-market position in Hewlett Packard.

In recent years, Philip Morris Companies, Inc. has traded at a significant
discount to the market due to the financial uncertainty surrounding ongoing
tobacco litigation. On November 23, the company announced an agreement with the
attorneys general of some 46 states to settle state Medicaid suits. The
settlement was an important hurdle in resolving the litigation challenges of the
tobacco industry that limited the company's ability to exercise financial
flexibility. The company also announced its intention to resume share
repurchases.

Hewlett Packard suffers from a high cost structure in addition to a relatively
unattractive business focus - PCs and printers. With the trend toward low-cost
PCs and the related shift of computing power to servers and networks, we find
companies like IBM, Sun and Cisco currently more attractive than Hewlett
Packard.

WHICH STOCKS HINDERED THE PORTFOLIO'S PERFORMANCE?

TJD: An above-market weight in Monsanto Co. and below-market weight in Wal Mart
Stores, Inc. negatively impacted performance over the past six months.

When Monsanto Co. and American Home Products Corp. announced their intention to
merge, we viewed the deal very positively. We believed the two companies' highly
complementary strengths and product lines would enhance future earnings growth.
In October, the deal fell apart, primarily due to the challenges inherent in the
co-CEO arrangement, as well as the difficulties in meshing two organizations
that have cultures as different as any companies in the industry. We remain
conservative on the two stocks, though the failure of the merger clearly puts in
focus the weaknesses of the companies.

Wal Mart Stores, Inc. continues to outpace its peers, rising 37.0% compared to
15.3% for the retail sector over the past six months. Wal Mart Stores, Inc. is
one of the "Nifty Fifty" stocks that have fetched a premium as investors search
for stability and liquidity.

4
<PAGE>

WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?

TJD: We have a balanced outlook for the months ahead. We think 1999 will see
U.S. economic growth moderating. Manufacturing is starting to slow, and we
believe corporate profit growth will slow as well. The market is vulnerable to
future shocks, such as further trouble in Russia and Asia or the possible
removal of Clinton from office.

Despite these concerns, we believe the stock market is presently at robust
levels. Inflation does not seem to be on the horizon, and interest rates remain
low. The U.S. economy is still doing very well relative to the rest of the
world. As always, we remain focused on the long term and we seek to capitalize
on the misvaluation of U.S. stocks.

5
<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
J.P. Morgan Disciplined Equity Fund seeks to provide a high total return from a
broadly diversified portfolio of equity securities. It is designed for investors
who want the potential to outperform the S&P 500 Index without assuming a level
of risk substantially greater than that of the Index.

- --------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
12/31/97

- --------------------------------------------------------------------------------
FUND NET ASSETS AS OF 11/30/98
$45,435,770

- --------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 11/30/98
$503,218,857

- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATE
12/18/98

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/18/98

EXPENSE RATIO
The fund's current annualized expense ratio of 0.75% 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 dividend or redemption
proceeds from the fund.

FUND HIGHLIGHTS
ALL DATA AS OF NOVEMBER 30, 1998

PORTFOLIO ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)

[CHART]
<TABLE>
<S> <C>
CONSUMER GOODS & SERVICES 21.4%

TECHNOLOGY 18.3%

FINANCE 15.6%

HEALTH CARE 11.2%

INDUSTRIAL PRODUCTS & SERVICES 10.0%

UTILITIES 8.1%

ENERGY 6.6%

BASIC INDUSTRIES 4.5%

TRANSPORTATION 0.8%

SHORT-TERM AND OTHER INVESTMENTS 3.5%

</TABLE>

LARGEST EQUITY HOLDINGS % OF TOTAL INVESTMENTS
- ---------------------------------------------------------------
<S> <C>
INTEL CORP. (TECHNOLOGY) 2.8%
INTERNATIONAL BUSINESS MACHINES CORP. 2.5%
(TECHNOLOGY)
BRISTOL-MYERS SQUIBB CO. (HEALTH CARE) 2.3%
PHILIP MORRIS COMPANIES, INC. 2.2%
(CONSUMER GOODS & SERVICES)
MCI WORLDCOM, INC. (TECHNOLOGY) 2.1%
GENERAL ELECTRIC CO. 2.0%
(INDUSTRIAL PRODUCTS & SERVICES)
MICROSOFT CORP. (TECHNOLOGY) 2.0%
CISCO SYSTEMS, INC. (TECHNOLOGY) 1.9%
AMERICAN HOME PRODUCTS CORP. 1.7%
(PHARMACEUTICALS)
AT&T CORPORATION (TECHNOLOGY) 1.7%
</TABLE>

6
<PAGE>

DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS INVESTMENT ADVISOR. SHARES OF THE FUND ARE NOT BANK DEPOSITS AND ARE
NOT GUARANTEED BY ANY BANK, GOVERNMENT ENTITY, OR THE FDIC. RETURN AND SHARE
PRICE WILL FLUCTUATE AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL
COST.

References to specific securities and their issuers are for illustrative
purposes only and are not intended to be, and should not be interpreted as,
recommendations to purchase or sell such securities. Opinions expressed herein
are based on current market conditions and are subject to change without notice.
The fund invests in a master portfolio (another fund with the same objective).

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.

<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The Disciplined Equity Portfolio
("Portfolio"), at value $45,165,100
Receivable for Shares of Beneficial Interest Sold 301,919
Receivable for Expense Reimbursements 16,796
Deferred Organization Expenses 8,176
Prepaid Expenses and Other Assets 212
-----------
Total Assets 45,492,203
-----------
LIABILITIES
Shareholder Servicing Fee Payable 8,713
Organization Expenses Payable 2,202
Administrative Services Fee Payable 969
Administration Fee Payable 124
Fund Services Fee Payable 39
Accrued Trustees' Fees and Expenses 21
Accrued Expenses 44,365
-----------
Total Liabilities 56,433
-----------
NET ASSETS
Applicable to 2,816,648 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $45,435,770
-----------
-----------
Net Asset Value, Offering and Redemption Price
Per Share $16.13
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $42,162,384
Undistributed Net Investment Income 118,855
Accumulated Net Realized Loss on Investment (1,301,292)
Net Unrealized Appreciation of Investment 4,455,823
-----------
Net Assets $45,435,770
-----------
-----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

8
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income (Net of Foreign
Withholding Tax of $1,302) $ 225,449
Allocated Interest Income 30,774
Allocated Portfolio Expenses (69,450)
----------
Net Investment Income Allocated from
Portfolio 186,773
FUND EXPENSES
Shareholder Servicing Fee $39,381
Registration Fees 11,514
Transfer Agent Fees 10,645
Printing Expenses 8,171
Professional Fees 5,793
Administrative Services Fee 4,455
Amortization of Organization Expenses 1,004
Fund Services Fee 406
Administration Fee 312
Trustees' Fees and Expenses 144
Miscellaneous 1,943
-------
Total Fund Expenses 83,768
Less: Reimbursement of Expenses (35,044)
-------
NET FUND EXPENSES 48,724
----------
NET INVESTMENT INCOME 138,049
NET REALIZED LOSS ON INVESTMENT ALLOCATED FROM
PORTFOLIO (1,374,741)
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO 4,109,834
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,873,142
----------
----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

9
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX DECEMBER 31, 1997
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1998 OPERATIONS) THROUGH
(UNAUDITED) MAY 31, 1998
----------------- --------------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 138,049 $ 21,411
Net Realized Gain (Loss) on Investment Allocated
from Portfolio (1,374,741) 73,449
Net Change in Unrealized Appreciation of
Investment Allocated from Portfolio 4,109,834 345,989
----------------- --------------------
Net Increase in Net Assets Resulting from
Operations 2,873,142 440,849
----------------- --------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (33,341) (7,264)
----------------- --------------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 29,501,345 17,984,065
Reinvestment of Dividends 32,369 6,420
Cost of Shares of Beneficial Interest Redeemed (4,974,674) (387,141)
----------------- --------------------
Net Increase from Transactions in Shares of
Beneficial Interest 24,559,040 17,603,344
----------------- --------------------
Total Increase in Net Assets 27,398,841 18,036,929
NET ASSETS
Beginning of Period 18,036,929 --
----------------- --------------------
End of Period (including undistributed net
investment income of $118,855 and $14,147,
respectively) $ 45,435,770 $ 18,036,929
----------------- --------------------
----------------- --------------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

10
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.03
Net Realized and Unrealized Gain on Investment 1.15 1.96
----------------- -------------------
Total from Investment Operations 1.20 1.99
----------------- -------------------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.02) (0.02)
----------------- -------------------
Total Distributions to Shareholders (0.02) (0.02)
----------------- -------------------

NET ASSET VALUE, END OF PERIOD $ 16.13 $ 14.95
----------------- -------------------
----------------- -------------------

RATIOS AND SUPPLEMENTAL DATA
Total Return 8.04%(b) 15.33%(b)
Net Assets, End of Period (in thousands) $ 45,436 $ 18,037
Ratios to Average Net Assets
Net Expenses 0.75%(a) 0.75%(a)
Net Investment Income 0.88%(a) 1.00%(a)
Expenses without Reimbursement 0.97%(a) 3.28%(a)
</TABLE>

- ------------------------
(a) Annualized.

(b) Not annualized.

The Accompanying Notes are an Integral Part of the Financial Statements.

11
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1998
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1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

J.P. Morgan Disciplined Equity Fund (the "fund") is a separate series of 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 December 31, 1997.

The fund invests all of its investable assets in The Disciplined Equity
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 (9% at November
30, 1998). 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 and paid quarterly. Distributions to shareholders of net
realized capital gain, if any, are declared and paid annually.

d) The fund incurred organization expenses in the amount of $10,000. Morgan
Guaranty Trust Company of New York ("Morgan"), a wholly owned subsidiary
of J.P. Morgan & Co. Incorporated ("J.P. Morgan"), has paid the
organization expenses of the fund. The fund has agreed to reimburse Morgan
for these costs which are being deferred and amortized on a straight-line
basis over a period not to exceed five years beginning with the
commencement of operations.

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.

e) The fund is treated as a separate entity for federal income tax purposes
and intends to comply with the provisions of the Internal Revenue Code of
1986, as amended, applicable to regulated investment companies and to
distribute substantially all of its income, including net realized capital
gains, if any, within the prescribed time periods. Accordingly, no
provision for federal income or excise tax is necessary.

12
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

2. TRANSACTIONS WITH AFFILIATES

a) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as co-administrator and
distributor for the fund. Under a Co-Administration Agreement between FDI
and the trust on behalf of the fund, FDI provides administrative services
necessary for the operations of the fund, furnishes office space and
facilities required for conducting the business of the fund and pays the
compensation of the fund's officers affiliated with FDI. The fund has
agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The
amount allocable to the fund is based on the ratio of the fund's net
assets to the aggregate net assets of the trust, and certain other
investment companies subject to similar agreements with FDI. For the six
months ended November 30, 1998, the fee for these services amounted to
$312.

b) The trust, on behalf of the fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan, under which Morgan is responsible
for certain aspects of the administration and operation of the fund. Under
the Services Agreement, the fund has agreed to pay Morgan a fee equal to
its allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the
portfolio and 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 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 J.P.
Morgan Series Trust. For the six months ended November 30, 1998, the fee
for these services amounted to $4,455.

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
0.75% of the average daily net assets of the fund. This reimbursement
arrangement can be changed or terminated at any time after February 28,
1999, at the option of J.P. Morgan. For the six months ended November 30,
1998, Morgan has agreed to reimburse the fund $35,044 for expenses that
exceeded this limit.

c) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal account
maintenance service to fund shareholders. The agreement provides for the
fund to pay Morgan a fee for these services which is computed daily and
paid monthly at an annual rate of 0.25% of the average daily net assets of
the fund. For the six months ended November 30, 1998, the fee for these
services amounted to $39,381.

Morgan, Charles Schwab & Co. ("Schwab") and the trust are parties to
separate services and operating agreements (the "Schwab Agreement")
whereby Schwab makes the fund shares available to customers of 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

13
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
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
$406 for the six months ended November 30, 1998.

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 the total fees and expenses. The trust's Chairman and Chief Executive
Officer also serves as Chairman of Group and receives compensation and
employee benefits from Group in his role as Group's Chairman. The
allocated portion of such compensation and benefits included in the Fund
Services Fee shown in the financial statements was $100.

3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the trustees to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
Transactions in shares of beneficial interest of the fund were as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX DECEMBER 31, 1997
MONTHS ENDED (COMMENCEMENT OF
NOVEMBER 30, 1998 OPERATIONS) THROUGH
(UNAUDITED) MAY 31, 1998
----------------- -------------------
<S> <C> <C>
Shares sold...................................... 1,945,553 1,232,470
Reinvestment of dividends and distributions...... 2,168 431
Shares redeemed.................................. (337,949) (26,025)
----------------- -------------------
Net Increase..................................... 1,609,772 1,206,876
----------------- -------------------
----------------- -------------------
</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. 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 extend 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.
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
purpose of the Agreement is to provide another alternative for settling large
fund shareholder redemptions. Interest on 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 the procedures established by their respective trustees
or directors. The fund has not borrowed pursuant to the Agreement as of November
30, 1998.

14
<PAGE>
J.P. MORGAN DISCIPLINED EQUITY FUND
SUPPLEMENTAL PROXY INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------

A Joint Special Meeting of Shareholders of the J.P. Morgan Family of Funds was
held on August 20, 1998. Each of the applicable funds voted in favor of adopting
the following proposals, therefore, the results are aggregated for the trust
unless otherwise specified. The meeting was held for the following purposes:

<TABLE>
<S> <C>
1. To elect a slate of five trustees to hold office for a term of unlimited duration
subject to the current retirement age of 70.

2a. To approve the amendment of the fund's investment restriction relating to
diversification of assets.
2b. To approve the amendment of the fund's investment restriction relating to
concentration of assets in a particular industry.

2c. To approve the amendment of the fund's investment restriction relating to the issuance
of senior securities.

2d. To standardize the borrowing ability of the fund to the extent permitted by applicable
law.

2e. To approve the amendment of the fund's investment restriction relating to
underwriting.

2f. To approve the amendment of the fund's investment restriction relating to investment
in real estate.
2g. To approve the amendment of the fund's investment restriction relating to commodities.

2h. To approve the amendment of the fund's investment restriction relating to lending.

2i. To approve the reclassification of the fund's other fundamental restrictions as
nonfundamental.

3. To approve the reclassification of the fund's investment objective from fundamental to
nonfundamental.

4. To approve a new investment advisory agreement of the fund.
5. To amend the Declaration of Trust to provide dollar-based voting rights.

6. To ratify the selection of independent accountants, PricewaterhouseCoopers LLP.
</TABLE>

The results of the proxy solicitation on the above matters were as follows:

<TABLE>
<CAPTION>
VOTES
DIRECTORS/MATTER VOTES FOR AGAINST ABSTENTIONS
- ----------------------------------------------------------- --------------- ------------ ------------
<C> <S> <C> <C> <C> <C>
1. Frederick S. Addy..................................... 2,692,335,831 18,884,648 --
William G. Burns...................................... 2,692,395,937 18,824,542 --
Arthur C. Eschenlauer................................. 2,691,798,990 19,421,489 --
Matthew Healey........................................ 2,692,393,425 18,827,054 --
Michael P. Mallardi................................... 2,692,488,290 18,732,189 --
2. Amending of Investment Restrictions:
a. Relating to diversification of assets............ 230,072 -- 14
b. Relating to concentration of assets.............. 230,072 2 12
c. Relating to issuance of senior securities........ 230,074 -- 12
d. Relating to borrowing............................ 230,072 -- 14
e. Relating to underwriting......................... 230,072 2 12
f. Relating to investment in real estate............ 226,627 3,447 12
g. Relating to commodities.......................... 230,074 -- 12
h. Relating to lending.............................. 230,074 -- 12
i. Reclassification of other restrictions as
nonfundamental................................. 229,953 119 14
3. Reclassification of investment objectives............. N/A N/A N/A
4. Investment advisory agreement......................... 301,652 -- 12
5. Dollar-based voting rights............................ 2,645,059,081 16,807,551 47,376,755
6. Independent accountants, PricewaterhouseCoopers LLP... 2,682,031,391 4,303,418 24,885,671
</TABLE>

15
<PAGE>
The Disciplined Equity Portfolio
Semi-Annual Report November 30, 1998
(Unaudited)
(The following pages should be read in conjunction
with the J.P. Morgan Disciplined Equity Fund
Semi-Annual Financial Statements)

16
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCK (96.6%)
BASIC INDUSTRIES (4.5%)
CHEMICALS (3.0%)
Crompton & Knowles Corp.......................... 7,000 $ 135,625
Cytec Industries, Inc.+.......................... 2,600 58,662
Dow Chemical Co.................................. 16,000 1,558,000
E.I. Du Pont de Nemours & Co.(s)................. 77,100 4,529,625
Georgia Gulf Corp................................ 100 1,875
Lyondell Chemical Co............................. 12,900 240,262
Monsanto Co...................................... 147,900 6,701,719
Praxair, Inc..................................... 11,100 423,881
Rohm & Haas Co................................... 27,900 974,756
Solutia, Inc..................................... 100 2,237
Union Carbide Corp............................... 9,200 411,700
-------------
15,038,342
-------------

FOREST PRODUCTS & PAPER (0.5%)
Boise Cascade Corp............................... 6,100 193,294
Bowater Inc...................................... 5,200 205,400
Champion International Corp...................... 3,100 128,844
Georgia-Pacific Group............................ 11,200 635,600
Louisiana Pacific Corp........................... 9,300 158,100
Temple-Inland, Inc............................... 6,700 359,706
Union Camp Corp.................................. 10,000 646,875
-------------
2,327,819
-------------
METALS & MINING (1.0%)
Alcan Aluminum Ltd............................... 45,300 1,206,112
Allegheny Teledyne, Inc.......................... 35,100 721,744
Aluminum Company of America (ALCOA).............. 17,900 1,326,837
Fort James Corp.................................. 21,400 837,275
Freeport - McMoran Cooper & Gold, Inc., Class
A.............................................. 9,700 122,462
Freeport - McMoRan Copper & Gold, Inc., Class
B.............................................. 1,500 19,594
Reynolds Metals Co............................... 7,400 406,075
USEC, Inc........................................ 13,000 176,312
-------------
4,816,411
-------------
TOTAL BASIC INDUSTRIES......................... 22,182,572
-------------

<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

CONSUMER GOODS & SERVICES (21.3%)
APPARELS & TEXTILES (0.0%)
Reebok International Ltd. (ADR)+................. 6,900 $ 109,969
-------------

AUTOMOTIVE (1.1%)
Cooper Tire & Rubber Co.......................... 12,600 246,487
Dana Corp........................................ 31,800 1,240,200
Ford Motor Co.................................... 23,500 1,298,375
General Motors Corp.............................. 5,200 364,000
General Motors Corp., Class H.................... 6,500 247,000
Goodyear Tire and Rubber Co...................... 29,600 1,679,800
Lear Corp........................................ 12,800 494,400
-------------
5,570,262
-------------

BROADCASTING & PUBLISHING (2.3%)
Comcast Corp., Class A........................... 68,000 3,300,125
Gannett Co., Inc................................. 27,200 1,756,100
Knight - Ridder, Inc............................. 13,000 668,687
New York Times Company, Inc., Class A............ 38,900 1,208,331
R.R. Donnelley & Sons Co......................... 29,100 1,234,931
Tele-Communications TCI Ventures Group........... 78,900 1,560,741
Times Mirror Co., Class A........................ 1,600 93,800
Tribune Co....................................... 13,500 865,687
Washington Post Co., Class B..................... 1,800 957,937
-------------
11,646,339
-------------

ENTERTAINMENT, LEISURE & MEDIA (2.0%)
Circus Circus Enterprises, Inc.+................. 10,200 117,937
Hasbro, Inc...................................... 25,200 883,575
Hilton Hotels Corp............................... 29,400 639,450
International Game Technology.................... 25,400 585,787
Mattel, Inc...................................... 63,000 2,177,437
MGM Grand, Inc.+................................. 2,800 71,925
Mirage Resorts, Inc.+............................ 42,800 636,650
Seagram Company Ltd.............................. 80,700 2,769,019
Time Warner, Inc................................. 19,100 2,019,825
-------------
9,901,605
-------------

FOOD, BEVERAGES & TOBACCO (6.9%)
Anheuser Busch Companies, Inc.................... 20,300 1,230,687
Bestfoods........................................ 1,900 110,437
Campbell Soup Co................................. 35,100 2,005,087
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

17
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
FOOD, BEVERAGES & TOBACCO (CONTINUED)
Coca-Cola Co.(s)................................. 91,800 $ 6,431,737
General Mills, Inc............................... 12,100 913,550
Hershey Foods Corp............................... 11,300 759,925
Kellogg Co....................................... 10,300 377,237
Nabisco Holdings Corp., Class A.................. 3,500 139,562
PepsiCo, Inc.(s)................................. 119,500 4,623,156
Philip Morris Companies, Inc.(s)................. 200,000 11,187,500
Ralston-Ralston Purina Group..................... 29,000 1,009,562
Sara Lee Corp.................................... 30,600 1,786,275
Unilever NV (ADR)(s)............................. 52,000 4,020,250
-------------
34,594,965
-------------

HOUSEHOLD APPLIANCES & FURNISHINGS (0.4%)
Furniture Brands International, Inc.............. 5,000 127,187
Leggett & Platt, Inc............................. 37,800 857,587
Whirlpool Corp................................... 14,600 817,600
-------------
1,802,374
-------------

HOUSEHOLD PRODUCTS (1.5%)
Procter & Gamble Co.(s).......................... 85,700 7,509,462
-------------
MISCELLANEOUS (0.4%)
Service Corp. International...................... 53,200 1,988,350
-------------
PERSONAL CARE (0.4%)
Gillette Co...................................... 48,300 2,218,781
-------------

RESTAURANTS & HOTELS (0.2%)
Extended Stay America, Inc....................... 3,800 38,000
McDonald's Corp.................................. 11,500 805,719
-------------
843,719
-------------

RETAIL (6.1%)
American Stores Co............................... 46,400 1,557,300
AutoZone, Inc.................................... 27,500 828,437
Circuit City Stores, Inc......................... 14,800 535,575
CompUSA, Inc..................................... 13,400 198,487
Corporate Express, Inc........................... 8,700 50,569
Costco Companies, Inc............................ 32,300 2,027,834
Dayton Hudson Corp............................... 72,500 3,262,500
Dillard's, Inc., Class A......................... 14,400 495,000
Federated Department Stores, Inc.+............... 30,300 1,263,131
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
RETAIL (CONTINUED)
Footstar, Inc.+.................................. 100 $ 2,437
Gap, Inc......................................... 17,300 1,272,631
General Nutrition Companies, Inc................. 10,600 188,481
Hannaford Brothers Co............................ 6,300 294,525
Home Depot, Inc.................................. 22,200 1,104,450
J.C. Penney Company, Inc......................... 27,600 1,518,000
Kmart Corp....................................... 73,900 1,126,975
Kroger Co........................................ 17,700 939,206
Lowe's Companies, Inc............................ 16,900 714,025
May Department Stores Co......................... 17,500 1,055,469
Nine West Group, Inc.+........................... 1,000 12,500
Safeway, Inc..................................... 30,100 1,589,656
Sears, Roebuck & Co.............................. 57,300 2,718,169
TJX Companies, Inc............................... 46,500 1,191,562
Toys 'R' Us, Inc.+............................... 38,600 762,350
Wal-Mart Stores, Inc.(s)......................... 79,300 5,972,281
-------------
30,681,550
-------------

TEXTILES (0.0%)
Fruit of the Loom, Inc., Class A................. 9,200 135,700
Unifi, Inc....................................... 6,500 125,125
-------------
260,825
-------------
TOTAL CONSUMER GOODS & SERVICES................ 107,128,201
-------------

ENERGY (6.6%)
GAS EXPLORATION (0.1%)
Union Pacific Resources Group, Inc............... 38,200 427,362
-------------

OIL-PRODUCTION (6.3%)
Amoco Corp....................................... 52,600 3,100,112
Atlantic Richfield Co............................ 48,800 3,245,200
Chevron Corp..................................... 22,000 1,839,750
Exxon Corp.(s)................................... 62,600 4,698,912
Mobil Corp....................................... 76,900 6,627,819
Occidental Petroleum Corp........................ 16,200 328,050
Phillips Petroleum Co............................ 39,400 1,654,800
Royal Dutch Petroleum Co. (ADR)(s)............... 176,300 8,286,100
Texaco, Inc...................................... 3,400 195,712
Tosco Corp....................................... 25,800 674,025
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

18
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
OIL-PRODUCTION (CONTINUED)
Unocal Corp...................................... 28,000 $ 948,500
Valero Energy Corp............................... 4,500 94,500
-------------
31,693,480
-------------

OIL-SERVICES (0.2%)
Cooper Cameron Corp.+............................ 500 12,187
Diamond Offshore Drilling, Inc................... 10,600 237,175
ENSCO International Inc.......................... 21,600 206,550
Global Marine, Inc.+............................. 16,800 157,500
Input/Output, Inc.+.............................. 1,000 8,187
R&B Falcon Corp.................................. 25,100 230,606
Smith International, Inc.+....................... 4,500 108,562
-------------
960,767
-------------
TOTAL ENERGY................................... 33,081,609
-------------

FINANCE (15.6%)
BANKING (8.7%)
Associated Banc - Corp........................... 4,200 143,850
Astoria Financial Corp........................... 5,500 247,672
Bancwest Corp.................................... 200 8,650
Bank One Corp.................................... 77,900 3,997,244
BankAmerica Corp.(s)............................. 124,002 8,083,380
BankBoston Corp.................................. 12,100 503,662
Bankers Trust Corp............................... 6,600 574,200
Charter One Financial, Inc....................... 9,200 273,412
Chase Manhattan Corp............................. 27,200 1,725,500
Citigroup, Inc................................... 163,200 8,190,600
Colonial BancGroup, Inc.......................... 3,600 44,550
Compass Bancshares, Inc.......................... 4,700 175,662
Crestar Financial Corp........................... 21,400 1,420,425
Dime Bancorp, Inc................................ 17,800 472,812
First American Corp.............................. 3,500 151,594
First Union Corp................................. 68,700 4,173,525
Golden West Financial Corp....................... 4,000 378,750
GreenPoint Financial Corp........................ 6,500 247,406
Hibernia Corp., Class A.......................... 10,300 173,812
Huntington Bancshares, Inc....................... 6,400 189,800
KeyCorp.......................................... 36,000 1,104,750
Marshall & Ilsley Corp........................... 12,800 653,200
MBNA Corp........................................ 22,900 519,544
Mellon Bank Corp................................. 20,900 1,315,394
Mercantile Bancorporation, Inc................... 10,800 475,875
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
BANKING (CONTINUED)
Mercantile Bankshares Corp....................... 4,800 $ 168,750
National Commerce Bancorporation................. 6,600 119,625
North Fork Bancorporation, Inc................... 9,900 208,519
Pacific Century Financial Corp................... 5,700 121,838
Peoples Heritage Financial Group, Inc............ 5,900 121,503
Provident Financial Group, Inc................... 2,900 117,813
Republic New York Corp........................... 7,300 341,275
Southtrust Corp.................................. 20,200 743,613
Sovereign Bancorp, Inc........................... 16,800 215,775
Summit Bancorp................................... 400 16,725
TCF Financial Corp............................... 6,000 145,125
Union Planters Corp.............................. 13,400 638,175
Washington Federal, Inc.......................... 1,700 43,456
Washington Mutual, Inc........................... 43,700 1,694,741
Wells Fargo & Co.(s)............................. 112,900 4,064,400
Westamerica Bancorporation....................... 1,200 43,200
-------------
44,049,802
-------------

FINANCIAL SERVICES (3.4%)
American Express Co.............................. 32,600 3,262,038
Associates First Capital Corp., Class A.......... 24,700 1,923,513
Bear Stearns Companies, Inc...................... 11,000 462,000
Capital One Financial Corp....................... 3,500 385,000
CIT Group, Inc., Class A......................... 5,500 154,344
Equifax, Inc..................................... 37,000 1,535,500
Federal Home Loan Mortgage Corp.................. 17,200 1,040,600
Federal National Mortgage Association............ 46,500 3,382,875
Finova Group, Inc................................ 3,800 200,688
Household International, Inc..................... 35,200 1,377,200
Lehman Brothers Holdings, Inc.................... 8,100 404,494
Morgan Stanley, Dean Witter, Discover & Co....... 41,200 2,873,700
Ocwen Financial Corp............................. 2,300 29,900
Paine Webber Group Inc........................... 2,000 81,750
Waddell & Reed Financial, Inc., Class A.......... 1,100 26,263
-------------
17,139,865
-------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

19
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
INSURANCE (3.5%)
Allstate Corp.................................... 91,200 $ 3,716,400
Ambac Financial Group, Inc....................... 8,800 536,800
American International Group, Inc................ 34,700 3,261,800
Aon Corp......................................... 16,400 945,050
Chubb Corp....................................... 14,200 994,888
Equitable Companies, Inc......................... 9,700 535,925
Financial Security Assurance Holdings Ltd........ 3,100 170,113
Fremont General Corp............................. 3,600 181,350
Lincoln National Corp............................ 3,400 284,538
Marsh & McLennan Companies, Inc.................. 30,900 1,797,994
MBIA, Inc........................................ 10,900 705,775
Mercury General Corp............................. 6,100 255,438
Ohio Casualty Corp............................... 1,300 52,813
PMI Group, Inc................................... 2,300 125,781
SAFECO Corp...................................... 14,500 623,047
St. Paul Companies, Inc.......................... 25,900 912,975
Torchmark Corp................................... 13,100 497,800
Transamerica Corp................................ 6,500 690,625
Travelers Property Casualty Corp., Class A....... 12,500 430,469
UNUM Corp........................................ 17,900 964,363
-------------
17,683,944
-------------
TOTAL FINANCE.................................. 78,873,611
-------------
HEALTHCARE (11.3%)
BIOTECHNOLOGY (1.0%)
Amgen, Inc....................................... 21,300 1,601,494
Genzyme Corp..................................... 36,200 1,521,531
Genzyme Molecular Oncology....................... 3,911 13,566
Immunex Corp..................................... 19,000 1,749,781
-------------
4,886,372
-------------
HEALTH SERVICES (1.2%)
Aetna, Inc....................................... 16,400 1,267,925
Columbia / HCA Healthcare Corp.(s)............... 74,300 1,829,638
HCR Manor Care, Inc.............................. 12,700 403,225
Humana, Inc.+.................................... 28,600 566,638
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
HEALTH SERVICES (CONTINUED)
Tenet Healthcare Corp............................ 37,000 $ 1,093,813
United Healthcare Corp........................... 22,600 1,019,825
-------------
6,181,064
-------------

MEDICAL SUPPLIES (0.8%)
Bausch & Lomb, Inc............................... 7,500 416,250
Biogen, Inc...................................... 3,100 235,406
Boston Scientific Corp........................... 23,300 1,153,350
Chiron Corp...................................... 51,800 1,173,594
Medtronic, Inc................................... 4,700 318,131
Perkin-Elmer Corp................................ 5,700 531,525
Stryker Corp..................................... 9,100 384,475
-------------
4,212,731
-------------

PHARMACEUTICALS (8.3%)
Alza Corp.+...................................... 97,500 5,094,375
American Home Products Corp...................... 158,800 8,456,100
Bristol-Myers Squibb Co.(s)...................... 92,900 11,386,056
Eli Lilly & Co................................... 2,000 179,375
Forest Laboratories, Inc.+....................... 57,100 2,662,288
Johnson & Johnson................................ 12,900 1,048,125
MedImmune, Inc................................... 16,400 1,097,775
Merck & Co., Inc................................. 29,100 4,506,863
Pfizer, Inc...................................... 22,300 2,489,238
Warner-Lambert Co................................ 50,900 3,842,950
Watson Pharmaceuticals, Inc.+.................... 14,500 781,188
-------------
41,544,333
-------------
TOTAL HEALTHCARE............................... 56,824,500
-------------

INDUSTRIAL PRODUCTS & SERVICES (10.1%)
AEROSPACE (0.2%)
Boeing Co........................................ 22,100 897,813
-------------

AUTOMOTIVE SUPPLIES (0.1%)
Genuine Parts Co................................. 21,500 708,156
-------------

BUILDING MATERIALS (0.3%)
Owens Corning.................................... 10,300 384,319
Sherwin-Williams Co.............................. 34,500 978,938
-------------
1,363,257
-------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

20
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
CAPITAL GOODS (0.1%)
Eaton Corp....................................... 9,000 $ 614,813
Foster Wheeler Corp.............................. 2,100 35,963
-------------
650,776
-------------

COMMERCIAL SERVICES (0.6%)
Cendant Corp.+................................... 155,000 2,945,000
-------------

DIVERSIFIED MANUFACTURING (6.7%)
AlliedSignal, Inc................................ 100,700 4,430,800
Coltec Industries, Inc.+......................... 8,000 154,500
Cooper Industries, Inc........................... 14,700 722,138
Deere & Co....................................... 30,200 1,055,113
Eastman Kodak Co................................. 42,400 3,076,650
General Electric Co.(s).......................... 113,500 10,271,750
Harris Corp...................................... 14,600 553,888
Illinois Tool Works, Inc......................... 7,100 451,294
ITT Industries, Inc.............................. 20,300 730,800
Johnson Controls, Inc............................ 14,800 856,550
Minnesota Mining & Manufacturing Co.............. 1,500 120,469
Parker - Hannifin Corp........................... 13,400 465,650
Raytheon Co., Class A............................ 39,500 2,160,156
Tenneco, Inc..................................... 29,700 1,058,063
Tyco International Ltd........................... 108,600 7,147,238
Xerox Corp....................................... 4,700 505,250
-------------
33,760,309
-------------

ELECTRICAL EQUIPMENT (0.4%)
Caterpillar, Inc................................. 17,600 870,100
Emerson Electric Co.............................. 10,300 669,500
National Service Industries, Inc................. 4,600 177,675
W.W. Grainger, Inc............................... 12,000 507,000
-------------
2,224,275
-------------

MACHINERY (0.0%)
Ingersoll-Rand Co................................ 1,500 70,219
-------------
PACKAGING & CONTAINERS (0.6%)
Kimberly-Clark Corp.............................. 47,900 2,520,738
Smurfit-Stone Container Corp..................... 42,700 604,472
-------------
3,125,210
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

POLLUTION CONTROL (1.1%)
Browning-Ferris Industries, Inc.................. 31,700 $ 935,150
Waste Management, Inc............................ 104,800 4,493,300
-------------
5,428,450
-------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 51,173,465
-------------

TECHNOLOGY (18.3%)
COMPUTER PERIPHERALS (0.6%)
EMC Corp.(s)..................................... 40,800 2,958,000
-------------

COMPUTER SOFTWARE (3.2%)
Autodesk, Inc.................................... 2,600 94,738
BMC Software, Inc................................ 1,100 56,134
Computer Associates International, Inc........... 40,400 1,787,700
Electronic Arts, Inc.+........................... 3,500 147,547
Microsoft Corp.(s)............................... 83,800 10,226,219
Network Associates, Inc.......................... 9,300 473,428
Oracle Corp.+.................................... 75,400 2,584,806
Parametric Technology Co.+....................... 22,200 378,094
PeopleSoft, Inc.................................. 16,500 339,797
Symantec Corp.................................... 3,200 63,900
-------------
16,152,363
-------------

COMPUTER SYSTEMS (4.0%)
3Com Corp.+...................................... 28,800 1,115,100
Compaq Computer Corp............................. 112,500 3,656,250
International Business Machines Corp.(s)......... 74,900 12,358,500
Seagate Technology, Inc.......................... 16,200 477,900
Sun Microsystems, Inc.+.......................... 31,100 2,301,400
-------------
19,909,150
-------------

ELECTRONICS (2.1%)
Cisco Systems, Inc.+............................. 127,900 9,644,459
Rockwell International Corp...................... 23,900 1,169,606
Sensormatic Electronics Corp.+................... 1,800 14,625
-------------
10,828,690
-------------

INFORMATION PROCESSING (0.2%)
First Data Corp.................................. 31,600 843,325
-------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

21
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
SEMICONDUCTORS (4.0%)
Applied Materials, Inc.+......................... 10,000 $ 387,813
Intel Corp.(s)................................... 131,500 14,148,578
Motorola, Inc.................................... 42,800 2,653,600
Texas Instruments, Inc.(s)....................... 32,000 2,444,000
Xilinx, Inc.+.................................... 5,800 294,531
-------------
19,928,522
-------------

TELECOMMUNICATION SERVICES (2.1%)
MCI WorldCom, Inc.+.............................. 177,400 10,461,056
-------------

TELECOMMUNICATIONS (0.2%)
AirTouch Communications, Inc..................... 14,800 846,375
-------------

TELECOMMUNICATIONS-EQUIPMENT (1.9%)
Lucent Technologies, Inc......................... 85,200 7,332,525
Northern Telecom Ltd.(i)......................... 49,100 2,292,356
-------------
9,624,881
-------------
TOTAL TECHNOLOGY............................... 91,552,362
-------------

TRANSPORTATION (0.8%)
AIRLINES (0.0%)
AMR Corp.+....................................... 3,300 217,594
-------------
RAILROADS (0.6%)
Burlington Northern Railroad Co.................. 18,900 642,600
CSX Corp......................................... 17,300 721,194
Norfolk Southern Corp............................ 26,600 807,975
Union Pacific Corp............................... 20,100 977,363
Wisconsin Central Transportation Corp.+.......... 1,800 32,569
-------------
3,181,701
-------------
TRUCK & FREIGHT CARRIERS (0.2%)
CNF Transportation, Inc.......................... 6,600 235,538
Consolidated Freightways Corp.+.................. 100 1,256
FDX Corp......................................... 11,600 752,550
Ryder System, Inc................................ 5,600 159,950
-------------
1,149,294
-------------
TOTAL TRANSPORTATION........................... 4,548,589
-------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

UTILITIES (8.1%)
ELECTRIC (2.2%)
Allegheny Energy, Inc............................ 12,700 $ 428,625
Ameren Corp...................................... 14,000 576,625
Baltimore Gas & Electric Co...................... 15,000 460,313
Central & South West Corp........................ 57,900 1,592,250
Cinergy Corp..................................... 16,200 559,913
CMS Energy Corp.................................. 11,000 536,250
Edison International............................. 37,600 1,034,000
Entergy Corp..................................... 25,500 747,469
GPU, Inc......................................... 12,300 538,894
Illinova Corp.................................... 7,600 205,675
New England Electric System...................... 6,500 271,375
Niagara Mohawk Power Corp.+...................... 1,900 29,213
Northeast Utilities.............................. 13,700 215,775
Northern States Power Co......................... 15,500 421,406
PG&E Corp........................................ 10,400 321,750
Pinnacle West Capital Corp....................... 8,700 396,394
PP&L Resources, Inc.............................. 17,200 469,775
Teco Energy, Inc................................. 13,700 368,188
Texas Utilities Co............................... 29,300 1,305,681
Western Resources, Inc.(s)....................... 6,800 237,575
Wisconsin Energy Corp............................ 11,900 368,156
-------------
11,085,302
-------------

GAS-PIPELINES (0.5%)
Columbia Energy Group............................ 8,600 488,050
Enron Corp....................................... 34,500 1,813,406
K N Energy, Inc.................................. 4,400 192,500
-------------
2,493,956
-------------

NATURAL GAS (0.2%)
Consolidated Natural Gas Company................. 9,900 537,694
El Paso Energy Corp.............................. 12,400 423,150
-------------
960,844
-------------

TELEPHONE (5.2%)
Ameritech Corp................................... 55,900 3,025,588
AT & T Corp...................................... 134,600 8,387,263
Bell Atlantic Corp............................... 79,400 4,416,625
Cincinnati Bell, Inc............................. 11,500 362,250
Frontier Corp.................................... 24,000 723,000
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

22
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TELEPHONE (CONTINUED)
GTE Corp......................................... 125,900 $ 7,805,800
SBC Communications, Inc.......................... 30,000 1,438,125
-------------
26,158,651
-------------
TOTAL UTILITIES................................ 40,698,753
-------------
TOTAL COMMON STOCK (COST $423,174,066)......... 486,063,662
-------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
FIXED INCOME SECURITIES (0.2%)
U.S. TREASURY OBLIGATIONS (0.2%)
U.S. TREASURY NOTES (0.2%)
United States Treasury Notes, 6.00% due
06/30/99(s)
(cost $1,132,798).............................. $ 1,125,000 1,133,629
-------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ------------ -------------
SHORT-TERM INVESTMENTS (3.4%)
<S> <C> <C>
REPURCHASE AGREEMENT (3.4%)
State Street Repurchase Agreement, dated 11/30/98
due 12/01/98, 4.00%, proceeds $17,059,895
(collateralized by U.S. Treasury Note, 8.125%,
due 8/15/21, valued at $17,400,136)
(cost $17,058,000)............................. $ 17,058,000 $ 17,058,000
-------------
TOTAL INVESTMENTS (COST $441,364,864) (100.2%).................
504,255,291
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.2%)..................
(1,036,434)
-------------
NET ASSETS (100.0%)............................................ $ 503,218,857
-------------
-------------
</TABLE>

- ------------------------------
Note: The cost of investments for federal income tax purposes at November 30,
1998 was $441,899,613; the aggregate gross unrealized appreciation and
depreciation was $74,368,047 and $12,012,369 respectively, resulting in net
unrealized appreciation of $62,355,678.

+ - Non - income producing security.

(i) - Foreign security.

(ADR) - American Depositary Receipt.

(s) - Security is fully or partially segregated with custodian as collateral for
futures contracts or with brokers as initial margin for futures contracts. Total
market value of securities segregated is $20,613,398.

The Accompanying Notes are an Integral Part of the Financial Statements.

23
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $441,364,864 ) $504,255,291
Cash 2
Receivable for Investments Sold 1,670,223
Dividends Receivable 703,328
Interest Receivable 30,142
Deferred Organization Expenses 5,227
Prepaid Expenses and Other Assets 4,911
------------
Total Assets 506,669,124
------------
LIABILITIES
Payable for Investments Purchased 2,791,710
Variation Margin Payable 459,650
Advisory Fee Payable 139,517
Custody Fee Payable 35,069
Administrative Services Fee Payable 11,089
Administration Fee Payable 718
Fund Services Fee Payable 444
Accrued Trustees' Fees and Expenses 866
Accrued Expenses 11,204
------------
Total Liabilities 3,450,267
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $503,218,857
------------
------------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

24
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $15,166 ) $ 2,819,683
Interest Income 388,497
-----------
Investment Income 3,208,180
EXPENSES
Advisory Fee $ 703,700
Custodian Fees and Expenses 83,357
Administrative Services Fee 56,899
Professional Fees and Expenses 22,549
Fund Services Fee 5,301
Printing Expenses 4,631
Administration Fee 3,500
Trustees' Fees and Expenses 3,137
Amortization of Organization Expense 993
Insurance Expense 570
-----------
Total Expenses 884,637
-----------
NET INVESTMENT INCOME 2,323,543
NET REALIZED GAIN (LOSS) ON INVESTMENTS
Investment Transactions 8,127,946
Futures Contracts (1,434,722)
-----------
Net Realized Gain 6,693,224
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS
Investments 27,764,059
Futures Contracts 1,433,834
-----------
Net Change in Unrealized Appreciation 29,197,893
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $38,214,660
-----------
-----------
</TABLE>

The Accompanying Notes are an Integral Part of the Financial Statements.

25
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
NOVEMBER 30, 1998 YEAR ENDED
(UNAUDITED) MAY 31, 1998
----------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 2,323,543 $ 2,279,909
Net Realized Gain on Investments and Futures
Contracts 6,693,224 14,779,999
Net Change in Unrealized Appreciation of
Investments and Futures Contracts 29,197,893 29,521,206
----------------- --------------
Net Increase in Net Assets Resulting from
Operations 38,214,660 46,581,114
----------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 185,874,466 235,373,755
Withdrawals (35,006,206) (44,366,828)
----------------- --------------
Net Increase from Investors' Transactions 150,868,260 191,006,927
----------------- --------------
Total Increase in Net Assets 189,082,920 237,588,041
NET ASSETS
Beginning of Period 314,135,937 76,547,896
----------------- --------------
End of Period $ 503,218,857 $ 314,135,937
----------------- --------------
----------------- --------------
</TABLE>

- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX DECEMBER 30, 1996
MONTHS ENDED FOR THE FISCAL (COMMENCEMENT OF
NOVEMBER 30, 1998 YEAR ENDED OPERATIONS) THROUGH
(UNAUDITED) MAY 31, 1998 MAY 31, 1997
----------------- -------------- -------------------
<S> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 0.44%(a) 0.45% 0.45%(a)
Net Investment Income 1.16%(a) 1.27% 1.54%(a)
Expenses without Reimbursement 0.44%(a) 0.51% 0.78%(a)
Portfolio Turnover 28.10%(b) 60.59% 20.47%(b)
</TABLE>

- ------------------------
(a) Annualized.

(b) Not Annualized.

The Accompanying Notes are an Integral Part of the Financial Statements.

26
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Disciplined Equity Portfolio (the "portfolio") is one of seven 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 commenced operations on December 30, 1996. The portfolio's investment
objective is to provide a high total return from a broadly diversified portfolio
of equity securities. The Declaration of Trust permits the trustees to issue an
unlimited number of beneficial interests in 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. 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
short-term portfolio securities with a remaining maturity of less than 60
days are valued by the amortized cost method.

The portfolio's custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the portfolio. It is the
policy of the portfolio to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the portfolio has
the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event
of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral or proceeds may be subject to legal
proceedings.

b) Securities transactions are recorded on a trade-date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount become known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.

c) The portfolio incurred organization expenses in the amount of $9,049.
Morgan Guaranty Trust Company of New York ("Morgan"), a wholly owned
subsidiary of J.P.Morgan & Co. Incorporated ("J.P.Morgan"), has agreed to
pay the organization expenses of the portfolio. The portfolio has agreed

27
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
to reimburse Morgan for these costs which are being deferred and amortized
on a straight-line basis over a period not to exceed five years beginning
with the commencement of operations of the portfolio.

d) 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.

e) Futures -- A futures contract is an agreement to purchase/sell a specified
quantity of an underlying instrument at a specified future date or to
make/receive a cash payment based on the value of a securities index. The
price at which the purchase and sale will take place is fixed when the
portfolio enters into the contract. Upon entering into such a contract,
the portfolio is required to pledge to the broker an amount of cash and/or
liquid securities equal to the minimum "initial margin" requirements of
the exchange. Pursuant to the contract, the portfolio agrees to receive
from, or pay to, the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as "variation margin" and are recorded by the portfolio as unrealized
gains or losses. When the contract is closed, the portfolio records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time when it was
closed. The portfolio invests in futures contracts for the purpose of
hedging its existing portfolio securities, or securities the portfolio
intends to purchase, against fluctuations in value caused by changes in
prevailing market interest rates or securities movements. The use of
futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the
underlying hedged assets. At November 30, 1998, the portfolio had open
futures contracts as follows:

SUMMARY OF OPEN CONTRACTS AT NOVEMBER 30, 1998

<TABLE>
<CAPTION>
NET UNREALIZED PRINCIPAL AMOUNT
CONTRACTS LONG APPRECIATION OF CONTRACTS
-------------- -------------- ----------------
<S> <C> <C> <C>
S & P 500, expiring December 1998................ 58 $ 1,520,252 $ 15,335,998
-------------- -------------- ----------------
Totals........................................... 58 $ 1,520,252 $ 15,335,998
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>

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 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.

2. TRANSACTIONS WITH AFFILIATES

a) Prior to October 1, 1998, the portfolio had an Investment Advisory
Agreement with Morgan. Under the terms of the agreement, the portfolio
paid Morgan at an annual rate of 0.35% of the portfolio's

28
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
average daily net assets. Effective October 1, 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 will remain the same. For the six months ended
November 30, 1998, such fees amounted to $703,700.

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 six months ended November 30, 1998, the fee
for these services amounted to $3,500.

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 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 the 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 six months ended November 30, 1998, the fee for these services
amounted to $56,899.

In addition, J.P.Morgan has agreed to reimburse the portfolio to the
extent necessary to maintain the total operating expenses of the portfolio
at no more than 0.45% of the average daily net assets of the portfolio
through February 28, 1999. This arrangement can be changed or terminated
at any time at the option of J.P. Morgan. For the six months ended
November 30, 1998, J.P. Morgan did not have to reimburse for expenses
under this agreement.

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 $5,301 for the six months ended November 30, 1998.

e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the J.P. Morgan Funds, the J.P. Morgan Institutional Funds,
the master portfolios and J.P. Morgan Series Trust. The Trustees' Fees and
Expenses shown in the financial statements represents the portfolio's
allocated portion of the total fees and expenses. The portfolio's Chairman
and Chief Executive Officer also serves

29
<PAGE>
THE DISCIPLINED EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1998
- --------------------------------------------------------------------------------
as Chairman of Group and received compensation and employee benefits from
Group in his role as Group's Chairman. The allocated portion of such
compensation and benefits included in the Fund Services Fee shown in the
financial statements was $1,100.

3. INVESTMENT TRANSACTIONS

Investment transactions (excluding short-term investments) for the six months
ended November 30, 1998 were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
------------ ------------
<S> <C> <C>
$250,918,025 $108,389,199
</TABLE>

4. CREDIT AGREEMENT

The portfolio is party to a revolving line of credit agreement (the "Agreement")
as discussed more fully in Note 4 of the fund's Notes to the Financial
Statements which are included elsewhere in the report.

30
<PAGE>

J.P. MORGAN FUNDS

PRIME MONEY MARKET FUND

FEDERAL MONEY MARKET FUND

TAX EXEMPT MONEY MARKET FUND

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
DISCIPLINED EQUITY FUND

SEMIANNUAL REPORT
NOVEMBER 30, 1998

RDEFR-9811