<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN U.S. EQUITY FUND
July 1, 2000
Dear Shareholder,
For the 12 months ended May 31, 2000, the J.P. Morgan U.S. Equity Fund posted a
2.20% return, underperforming both the 10.47% return of the S&P 500 and the
13.69% return of the Lipper Multi-Cap Core Fund Average.
The fund's net asset value declined to $21.71 on May 31, 2000, from $25.09 on
May 31, 1999. During the year, the fund made distributions of approximately
$0.16 per share from ordinary income, approximately $1.22 per share from
short-term capital gains, and approximately $2.56 per share from long-term
capital gains. On May 31, 2000, the net assets of the fund were approximately
$386.7 million, while the assets of The U.S. Equity Portfolio, in which the fund
invests, amounted to approximately $628.2 million.
This report includes a discussion with Henry D. Cavanna, the portfolio manager
primarily responsible for The U.S. Equity Portfolio. In this interview, Henry
talks about the events of the previous year that had the greatest effect on the
portfolio and discusses his investment strategy.
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 OF CONTENTS
LETTER TO THE SHAREHOLDERS...........1 FUND FACTS AND HIGHLIGHTS.........8
FUND PERFORMANCE.....................2 FINANCIAL STATEMENTS.............10
PORTFOLIO MANAGER Q&A................3
--------------------------------------------------------------------------------
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
There are several ways to evaluate a mutual fund's historical performance
record. One approach is to look at the growth of a hypothetical investment of
$10,000. The chart at right shows that $10,000 invested on May 31, 1990, would
have grown to $43,934 on May 31, 2000.
Another way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
GROWTH OF $10,000 OVER 10 YEARS
MAY 31, 1990 - MAY 31, 2000
[EDGAR REPRESENTAION OF PLOT POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
LIPPER MULTI-CAP CORE
JPM US EQUITY FUNDS AVERAGE S&P 500
<S> <C> <C> <C>
5/31/90 10,000 10,000 10,000
6/30/90 10,042 9,868 9,933
7/31/90 10,129 9,002 9,901
8/31/90 9,345 8,510 9,006
9/30/90 8,855 8,313 8,567
10/31/90 8,842 8,851 8,531
11/30/90 9,352 9,131 9,082
12/31/90 9,614 9,648 9,335
1/31/91 9,946 10,338 9,742
2/28/91 10,624 10,645 10,439
3/31/91 10,913 10,671 10,691
4/30/91 10,919 11,123 10,717
5/31/91 11,481 10,607 11,179
6/30/91 11,002 11,102 10,667
7/31/91 11,540 11,436 11,164
8/31/91 11,832 11,297 11,429
9/30/91 11,618 11,504 11,238
10/31/91 11,931 11,056 11,389
11/30/91 11,487 12,254 10,930
12/31/91 12,894 12,311 12,180
1/31/92 12,866 12,498 11,953
2/29/92 13,149 12,209 12,108
3/31/92 12,866 12,242 11,872
4/30/92 12,984 12,325 12,221
5/31/92 13,157 12,000 12,281
6/30/92 12,831 12,431 12,098
7/31/92 13,200 12,196 12,592
8/31/92 12,957 12,359 12,334
9/30/92 13,081 12,559 12,479
10/31/92 13,155 13,161 12,522
11/30/92 13,764 13,394 12,949
12/31/92 14,019 13,549 13,108
1/31/93 14,251 13,487 13,217
2/28/93 14,131 13,843 13,397
3/31/93 14,438 13,500 13,680
4/30/93 14,063 13,932 13,349
5/31/93 14,475 13,955 13,706
6/30/93 14,499 13,918 13,747
7/31/93 14,514 14,530 13,691
8/31/93 15,039 14,642 14,211
9/30/93 14,854 14,863 14,102
10/31/93 15,242 14,633 14,393
11/30/93 15,257 15,047 14,256
12/31/93 15,564 15,531 14,429
1/31/94 16,228 15,303 14,919
2/28/94 15,880 14,608 14,514
3/31/94 15,226 14,690 13,881
4/30/94 15,574 14,772 14,059
5/31/94 15,712 14,347 14,290
6/30/94 15,242 14,738 13,940
7/31/94 15,750 15,380 14,398
8/31/94 16,307 15,089 14,988
9/30/94 15,921 15,262 14,621
10/31/94 16,067 14,681 14,950
11/30/94 15,313 14,825 14,405
12/31/94 15,469 14,979 14,619
1/31/95 15,814 15,557 14,998
2/28/95 16,484 15,999 15,583
3/31/95 17,080 16,321 16,043
4/30/95 17,453 16,810 16,515
5/31/95 18,086 17,405 17,175
6/30/95 18,365 18,145 17,574
7/31/95 18,924 18,312 18,157
8/31/95 19,065 18,856 18,202
9/30/95 19,585 18,594 18,971
10/31/95 19,075 19,375 18,903
11/30/95 20,134 19,561 19,733
12/31/95 20,494 20,005 20,113
1/31/96 21,036 20,431 20,797
2/29/96 21,475 20,645 20,990
3/31/96 21,874 21,211 21,192
4/30/96 22,334 21,654 21,505
5/31/96 22,640 21,433 22,059
6/30/96 22,375 20,360 22,143
7/31/96 21,189 21,064 21,165
8/31/96 21,932 22,134 21,611
9/30/96 22,923 22,431 22,828
10/31/96 23,264 23,844 23,457
11/30/96 25,235 23,617 25,230
12/31/96 24,811 24,687 24,731
1/31/97 26,235 24,539 26,276
2/28/97 26,338 23,570 26,482
3/31/97 25,442 24,416 25,394
4/30/97 26,499 26,176 26,910
5/31/97 28,291 27,216 28,548
6/30/97 29,164 29,406 29,827
7/31/97 31,691 28,509 32,200
8/31/97 30,580 30,097 30,396
9/30/97 31,945 29,023 32,061
10/31/97 30,669 29,580 30,990
11/30/97 31,371 29,982 32,425
12/31/97 31,859 30,012 32,981
1/31/98 32,043 32,299 33,346
2/28/98 34,417 33,708 35,751
3/31/98 35,915 33,994 37,582
4/30/98 36,651 33,066 37,960
5/31/98 36,311 33,827 37,308
6/30/98 36,793 32,920 38,823
7/31/98 35,985 27,653 38,409
8/31/98 30,239 29,113 32,856
9/30/98 32,680 31,372 34,961
10/31/98 35,121 33,123 37,805
11/30/98 37,831 35,103 40,096
12/31/98 39,649 36,009 42,406
1/31/99 40,866 34,662 44,180
2/28/99 39,238 35,820 42,807
3/31/99 40,969 37,407 44,519
4/30/99 43,453 36,969 46,244
5/31/99 42,991 38,906 45,152
6/30/99 45,460 37,984 47,658
7/31/99 43,727 37,270 46,170
8/31/99 42,629 36,413 45,939
9/30/99 40,860 38,121 44,680
10/31/99 42,629 39,470 47,507
11/30/99 43,676 42,474 48,473
12/31/99 45,472 40,890 51,328
1/31/00 43,570 42,063 48,749
2/29/00 42,457 44,881 47,827
3/31/00 47,091 43,293 52,505
4/30/00 44,906 42,167 50,926
5/31/00 43,934 41,623 49,881
</TABLE>
LIPPER PERFORMANCE AVERAGES ARE CALCULATED BY TAKING AN ARITHMETIC AVERAGE OF
THE RETURNS OF THE FUNDS IN THE GROUP. THE AVERAGE ANNUALIZED RETURNS THAT
RESULT FROM THIS METHODOLOGY WILL DIFFER FROM ANNUALIZING THE GROWTH OF THE
MINIMUM INITIAL INVESTMENT.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------------------------------------
THREE SIX ONE THREE FIVE TEN
AS OF MAY 31, 2000 MONTHS MONTHS YEAR YEARS YEARS YEARS
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.P. Morgan U.S. Equity Fund 3.48% 0.59% 2.20% 15.80% 19.42% 15.95%
S&P 500 Index* 4.29% 2.90% 10.47% 20.44% 23.77% 17.43%
Lipper Multi-Cap Core Fund Average** 0.53% 6.43% 13.69% 16.65% 19.53% 15.24%
AS OF MARCH 31, 2000
--------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Equity Fund 3.56% 15.25% 14.94% 22.78% 22.49% 17.65%
S&P 500 Index* 2.29% 17.51% 17.94% 27.40% 26.76% 18.84%
Lipper Multi-Cap Core Fund Average** 5.39% 23.41% 25.51% 23.13% 21.96% 16.36%
</TABLE>
*S&P 500 INDEX IS AN UNMANAGED INDEX USED TO PORTRAY THE PATTERN OF COMMON STOCK
MOVEMENT BASED ON THE AVERAGE PERFORMANCE OF 500 WIDELY HELD COMMON STOCKS. IT
DOES NOT INCLUDE FEES OR OPERATING EXPENSES AND IS NOT AVAILABLE FOR ACTUAL
INVESTMENT.
**DESCRIBES THE AVERAGE TOTAL RETURN FOR ALL FUNDS IN THE INDICATED
LIPPER CATEGORY, AS DEFINED BY LIPPER INC., AND DOES NOT TAKE INTO ACCOUNT
APPLICABLE SALES CHARGES. LIPPER ANALYTICAL SERVICES, INC. IS A LEADING SOURCE
FOR MUTUAL FUND DATA. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND
RETURNS ARE NET OF FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
The following is an interview with HENRY D. CAVANNA, managing director and
member of the portfolio management team for The U.S. Equity Portfolio. Henry
joined Morgan in 1971 and is a senior U.S. equity portfolio manager in the U.S.
Equity and Balanced Accounts Group. Prior to joining Morgan, Henry was with
Harris Upham & Co. He received his B.A. from Boston College and his L.L.B. from
the University of Pennsylvania. This interview took place on June 11, 2000, and
reflects Henry's views on that date.
THE U.S. ECONOMY HAS BEEN QUITE VOLATILE OVER THE PAST 12 MONTHS. WHAT WOULD YOU
SAY WERE THE MAJOR HIGHLIGHTS DURING THIS PERIOD?
HDC: It's been an unusually volatile year, to be sure, one driven by several
significant occurrences. First, there was the exceptional strength of the U.S.
economy, which grew at an annual rate of over 7% in the fourth quarter of 1999
and over 5% during the first quarter of this year - all with virtually no signs
of inflationary growth. This rapid growth rate combined with a still very strong
stock market and unrelenting consumer consumption prompted the Federal Reserve
Board to begin raising rates last June. Since then, we've experienced five
consecutive quarter-point rate increases capped, at least thus far, with a
half-point increase in May of this year. The first couple of moves in this
regard were designed to take away the stimulus that the Fed had provided to the
global economy following the Asian currency crises of 1997 and the Russian debt
crisis of 1998. Lately, it has shifted into a more aggressive tightening mode,
with the distinct promise of further increases yet to come, at least until there
are unambiguous indications that our economy is slowing.
Late in this reporting period, we began to see signs of creeping inflationary
growth for the first time in the present economic cycle. All along there have
been signs of labor shortages and associated upward pressure on wages, but
lately we've seen the prices of goods and raw materials come under pressure as
well. Much higher energy prices have led the way, but we've also seen price
pressures on a broad basket of basic materials, like paper, resin, and other
commodities. Should these signs of inflation translate into actual inflationary
growth, the Fed may have no choice but to tighten even further.
Another major event of the last year was a sharp division in the stock market,
one that pitted so-called old economy stocks against their new economy
counterparts. In the latter case, the telecommunications-media-technology stocks
that investors defined as the new economy equities were driven to extremes of
valuation that have only recently begun to relent. They were driven so largely
by investors who recognized the Internet as a transforming global event and
wanted to get their share of the companies that were perceived to be on the
cutting edge of its development. Their virtually unrestrained affection for such
stocks was such that they abandoned more basic industries in pursuit of them,
along the way helping to drive down the prices of old economy companies to
levels that were, and in some cases still are, well below what we believe to be
any reasonable measure of their true valuation.
This unusual period of time ended, at least for the moment, in the middle of
March 2000 when the tech-heavy NASDAQ peaked and subsequently corrected, with
many of the names that had previously driven the
3
<PAGE>
market falling by the wayside in what was just short of a wholesale rout. The
market is now waffling as investors try to come to grips with Fed policy and
their own sometimes radically altered fortunes.
In capsule form, these were among the more significant events of the past twelve
months. There were others, to be sure.
WHAT IS YOUR TAKE ON THE NEW ECONOMY?
HDC: I think it's for real. Broadly speaking, on a secular basis, there is
legitimacy to the concept of our being in the midst of a new economy, one that
is able to grow on a sustainable basis for a longer period and at somewhat
higher rates than in the past, all without triggering underlying inflation. This
is very good for capital markets, the stock market, P/Es, corporate profits, and
so on.
There are basically two reasons why this new economy developed and is possibly
here to stay. One is that corporate America has become much more competitive and
leaner over the past decade, the result of downsizing, cost reductions and a
strong focus on becoming globally competitive. Second is the impact of
technology on the way that everyone, particularly corporate America, does
business. Technology has led to major improvements in productivity, which in
turn has led to virtually unprecedented price stability and very low inflation
over the past several years.
I think it's fair to say that U.S. companies as a group have been on the
forefront of embracing technology a little faster than the rest of the world,
both on the telecommunications side and the data processing side. This is for
real and is sustainable and long term in nature. It's a good development that
underpins valuations in the U.S. market longer term.
But, at the same time, and at this point in time, we have peaked from an
economic perspective. As noted, we're seeing a little inflation creep into the
system and the economy has begun to slow. Whether this is due to the weight of
its own excess, or the Fed's actions, or a combination of the two is anyone's
guess. I, for one, side with the Fed and its virtually unimpeachable record in
managing the economy over the aggressive expansionary period of the last 9-10
years. I would stress that when I say the economy is slowing, I don't mean
slowing down and entering a recession, as has been the case in certain years
past. Rather, I mean slowing from the unsustainable levels of growth in the
5%-7% range, to growth in the 3% range, which is still quite good. We're hopeful
that this moderation of growth will relieve some of the pressures on labor and
material prices and cut inflation off before it gets a head start. This isn't
disturbing to us. It's what we need right now.
YOU SAID THAT INVESTORS HAD DEFINED NEW ECONOMY STOCKS AS THE TRI-SECTORS:
TELECOMMUNICATIONS, MEDIA, AND TECHNOLOGY. HOW DO YOU DIFFERENTIATE BETWEEN OLD
AND NEW ECONOMY STOCKS, AND HOW HAS THE MARKETPLACE TREATED THEM LATELY?
HDC: For the most part, I'd have to agree with the market's definition of new
economy equities as being all technology-related enterprises, including
Internet-focused companies, telecommunications, and some media. However, I'd say
we're talking principally about technology and the Internet offshoots of it. The
old economy is everything else.
Technology as a group has risen to comprise some 30% of the S&P 500 and was
selling at something like 60X 2000 earnings on average at its peak. By
extension, the market continued to include in its valuation
4
<PAGE>
glow some pretty well-established, high quality growth companies that were not
technology driven, such as GE, Wal-Mart, and other companies like them. These
companies traded at around 40X 2000 earnings, so they weren't being penalized,
but were being treated somewhat like new economy companies.
The rest of the market, including drug companies, utilities, banks, consumer
durable and non-durable companies, and other perceived old economy stocks were
being priced as a group in a range of 8X-25X 2000 earnings. Even the drug
companies, which traditionally are classified as growth companies, were selling
at multiples that were cheap in terms of their earnings potential. These did
very poorly last year when there was enormous enthusiasm for technology and
technology alone.
If you looked just at the 1999 calendar year, the S&P 500 was up 21%. But, you
wouldn't have found this increase across the board. It was really driven by the
technology sector, which was up 75%. In fact, among S&P 500 companies, only half
were up last year, while the rest declined. So, the big returns came in a very
concentrated form, with 25 stocks in the S&P 500 accounting for over 90% of its
return for the year. This unusually narrow market carried over into the first
quarter of 2000, got carried away with itself, became unsustainable, and has
since adjusted to more realistic valuations, with technology correcting 30% from
its peak. It is now coming back.
The NASDAQ is still off year-to-date through May, and the rest of the market is
more or less flat as it continues to adjust to the valuation bubble created late
last year through the first quarter of this one. A number of Internet stocks
have been marked down to reality. The good ones still command premium values,
but the peripheral ones have taken it on the chin, the victims of unrealistic
business models. And, of course, the market is reacting to a slowing economy,
one that will negatively impact quite a few companies as well, like those in the
auto, finance and retail sectors, which tend to suffer when interest rates rise.
So, it's been a swirling market, one lacking direction in the face of these and
other issues. It's truly been an amazing time for U.S. equities, old or new
economy.
NOT TOO LONG AGO, ALL ANYONE COULD TALK ABOUT WAS THE DOMINANCE OF LARGE- AND
SUPER LARGE-CAP GROWTH STOCKS OVER ALL OTHER INVESTMENTS. WHAT HAPPENED TO THIS
INVESTMENT THEME?
HDC: This major trend morphed into the new economy/technology theme. The
dominance of big caps was true for the last couple of years, when we called the
small group of standout large-cap growth stocks the "Nifty 50." At that time, it
appeared that they could do no wrong. Lately, however, a number of the Nifty 50
companies haven't proven to be so nifty, after all. These companies, like the
P&Gs of the world, have had real difficulty growing their top line revenues at a
level that will produce double-digit earnings growth on a consistent basis. A
number of these more traditional companies are fortunate to achieve even 4%-8%
revenue growth.
By comparison, look on the other side of the ledger and see how the new economy
companies compare with their old economy counterparts. I could list the Ciscos,
EMCs, Sun Microsystems on one side, and you would see top line revenue growth of
25%-50%. And this is for very large companies, with $10-$20 billion in annual
revenues. On the other side, I could list more traditional consumer products
companies, like Coca Cola and Pepsico, and solid financial companies, like
BankAmerica, where you might see annual revenue growth of 4%-6%.
So, the market has gotten part of this investment argument very right. There IS
a revolution in technology, and there are a number of companies that are
benefiting from producing and using it to enhance revenues. Their revenues are
exploding, and not just for a quarter or two. We think this is a longer-term
phenomenon
5
<PAGE>
that is poised to accelerate as U.S. businesses increasingly incorporate the
Internet into their day-to-day operations. While consumers have been buying over
the Internet for a couple of years, the business community has just begun to use
it as a way of doing business with their customers and suppliers. This means
that they will have to make major ongoing investments in better computer
equipment, faster memory, more bandwidth and so on. You don't see the Duponts
and the General Motors slowing their investments in telecommunications
equipment, wireless infrastructure, wireless equipment, and other essential
tools of the Internet Age. They're accelerating such investments. As a
consequence, those new economy companies that can provide these capabilities are
all but certain to continue to enjoy stellar revenue growth. There is a limit,
of course, but I see this trend continuing for many years to come.
GIVEN THAT BACKDROP, HOW DID YOUR PORTFOLIO DO OVER THE PAST YEAR?
HDC: We underperformed the benchmark as well as the competition. The main reason
was that the narrow, tech-driven market of the early part of this period was not
one that favored stock picking, or broadly diversified portfolios. Active
management is not going to outperform a market that is dominated by 25 stocks,
or one sector. It's just not going to happen.
Our investment process stresses internal, proprietary research, and valuation
methodologies that capture this research in our stock selection. Our focus is
long term, and we don't tend to do well in markets that are driven by momentum,
rather than underlying fundamentals.
WHAT WERE SOME OF YOUR STANDOUT STOCKS OVER THE PAST 12 MONTHS ENDING MAY 31?
HDC: Holdings in a variety of sectors helped performance. Tyco International, a
very large holding and a diversified industrial company with good earnings
growth, did very well over the 12 months, a period in which the overall market
was flat. Another good performer was Pharmacia Corp., a large drug company that
merged with Monsanto and, by doing so, acquired an excellent drug business with
substantial growth potential. Both benefited from expected synergies between the
two. We also made some good choices in the energy sector over the last year,
including holding Anadarko Petroleum, which was up strongly during the period.
Seagram's has also been a winner for us over this period of time and has
benefited lately from speculation that it will be acquired by French
conglomerate Vivendi.
Within technology, Texas Instruments has been a winner, owing largely to its
dominance in the development and production of digital signal processing (DSP)
chips, which are essential to cell phones. Another is Sun Microsystems, which
has grown with increasing use of the Internet. Almost all major Internet
companies use Sun servers and software for their most mission critical
applications, and that's been a phenomenal growth business for the company.
WHICH WERE YOUR DISAPPOINTMENTS?
HDC: Motorola has been a disappointment. It's really a very good company, and
getting better, but it hasn't delivered the earnings growth and the earnings
profit margins we would like to see on the cell phone and cellular
infrastructure sides of its business. We also own Smurfit-Stone Container, a
paper company in the linerboard area, which has been very disappointing. It's a
cyclical stock that trades on expectations about the economy. Even though
earnings have been quite good, it has traded off a great deal as the market has
rotated out of this sector. We think it's a cheap stock that is well managed and
improving, but so far the market hasn't agreed with us. We also own some Global
Crossing, a telecom company that has been building a global
6
<PAGE>
high speed telecom network. Its cash flow growth has been good, but it really
hurt us when it fell victim to the second-quarter backlash against new economy
companies. Microsoft hurt us, as well. We've been adding to it during the
Department of Justice proceedings, but the stock has really underperformed the
technology sector and the market quite a bit during this period of time. We
think it's unusually attractive from an investment/valuation standpoint, but
it's going through a difficult period. Even so, we are still comfortable with
these and other companies from a valuation standpoint and look for them to
improve as investors come down to earth and begin to value fundamentals over
price momentum.
WHAT DO YOU SEE HAPPENING OVER THE NEXT FEW MONTHS?
HDC: Our best guess is that we're in a period where the market marks time,
moving in a range of plus or minus 5%, as two events play out. One, the economy
settles into a period of moderate growth and the Fed begins to back off. Two,
the valuation bubble of the past year or so continues to correct, along the way
creating enormous volatility. I think the message of the valuation bubble is
that price does matter, that a lot of stocks continue to carry very big prices
and that investors are trying to deal with a technology sector that is still
priced at around 50X 2000 earnings.
Hopefully, what supports the market over the near term will be reasonable
economic growth, reasonable profit growth and dissipating inflationary
expectations. Going forward over the next year, we are positive on the market,
but shorter term it will be difficult for it to march forward until the Fed
signals that it's finished with interest rates for the time being and the
aforementioned valuation bubble is deflated.
7
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan U.S. Equity Fund seeks to provide a high total return from a
portfolio of selected equity securities. It is designed for investors who want
an actively managed portfolio of selected equity securities that seeks to
outperform the S&P 500 Index.
--------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
6/27/85
--------------------------------------------------------------------------------
FUND NET ASSETS AS OF 5/31/00
$386,688,937
--------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 5/31/00
$628,219,383
--------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
7/28/00, 10/27/00, 12/20/00
--------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/00
EXPENSE RATIO
The fund's current annualized expense ratio of 0.78% covers shareholders'
expenses for custody, tax reporting, investment advisory, and shareholder
services. 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 MAY 31, 2000
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
TECHNOLOGY 30.0%
CONSUMER GOODS & SERVICES 17.7%
FINANCE 15.0%
HEALTHCARE 9.7%
INDUSTRIAL PRODUCTS & SERVICES 9.4%
ENERGY 6.7%
UTILITIES 5.3%
BASIC INDUSTRIES 4.4%
SHORT-TERM AND OTHER INVESTMENTS 1.1%
TRANSPORTATION 0.7%
<TABLE>
<CAPTION>
LARGEST EQUITY HOLDINGS % OF TOTAL INVESTMENTS
-------------------------------------------------------------------------
<S> <C>
Cisco Systems, Inc.(Technology) 3.9%
Intel Corp. (Technology) 3.8%
General Electric Co.
(Industrial products & services) 3.6%
Exxon Mobil Corp. (Energy) 3.5%
Tyco International Ltd.
(Industrial products & services) 3.2%
Microsoft Corp. (Technology) 3.0%
Sun Microsystems Inc. (Technology) 2.5%
U.S. Bancorp (Finance) 2.1%
Wal-Mart Stores, Inc.
(Consumer goods & services) 2.0%
Pharmacia Corp. (Healthcare) 1.9%
</TABLE>
8
<PAGE>
DISTRIBUTED BY FUNDS DISTRIBUTOR, INC. J.P. MORGAN INVESTMENT MANAGEMENT INC.
SERVES AS AN 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 securities. Opinions expressed herein and
other fund data presented are based on current market conditions and are subject
to change without notice. The fund invests through 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.
9
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The U.S. Equity Portfolio
("Portfolio"), at value $386,739,730
Receivable for Shares of Beneficial Interest Sold 225,962
Prepaid Trustees' Fees 3,544
Prepaid Expenses and Other Assets 2,337
------------
Total Assets 386,971,573
------------
LIABILITIES
Payable for Shares of Beneficial Interest
Redeemed 132,601
Shareholder Servicing Fee Payable 82,341
Administrative Services Fee Payable 8,030
Administration Fee Payable 335
Fund Services Fee Payable 334
Accrued Expenses 58,995
------------
Total Liabilities 282,636
------------
NET ASSETS
Applicable to 17,809,326 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $386,688,937
============
Net Asset Value, Offering and Redemption Price
Per Share $21.71
======
ANALYSIS OF NET ASSETS
Paid-in Capital $316,132,233
Undistributed Net Investment Income 282,245
Accumulated Net Realized Gain on Investment 6,206,581
Net Unrealized Appreciation of Investment 64,067,878
------------
Net Assets $386,688,937
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income (Net of Foreign
Withholding Tax of $13,910) $ 5,251,548
Allocated Interest Income 530,500
Allocated Portfolio Expenses (1,952,858)
------------
Net Investment Income Allocated from
Portfolio 3,829,190
FUND EXPENSES
Shareholder Servicing Fee $1,060,020
Administrative Services Fee 105,687
Transfer Agent Fees 79,909
Registration Fees 23,683
Professional Fees 13,298
Printing Expenses 10,669
Fund Services Fee 7,362
Trustees' Fees and Expenses 5,655
Administration Fee 5,449
Insurance Expense 1,212
Miscellaneous 38,675
----------
Total Fund Expenses 1,351,619
------------
NET INVESTMENT INCOME 2,477,571
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 22,541,364
NET CHANGE IN UNREALIZED DEPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO (14,614,735)
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 10,404,200
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
MAY 31, 2000 MAY 31, 1999
-------------- --------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 2,477,571 $ 2,935,400
Net Realized Gain on Investment Allocated from
Portfolio 22,541,364 67,273,559
Net Change in Unrealized Depreciation of
Investment Allocated from Portfolio (14,614,735) (3,547,045)
------------- -------------
Net Increase in Net Assets Resulting from
Operations 10,404,200 66,661,914
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (2,633,134) (3,075,198)
Net Realized Gain (63,328,227) (69,795,494)
------------- -------------
Total Distributions to Shareholders (65,961,361) (72,870,692)
------------- -------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 56,123,622 78,806,635
Reinvestment of Dividends and Distributions 60,760,972 66,771,512
Cost of Shares of Beneficial Interest Redeemed (115,603,942) (146,547,755)
------------- -------------
Net Increase (Decrease) from Transactions in
Shares of Beneficial Interest 1,280,652 (969,608)
------------- -------------
Total Decrease in Net Assets (54,276,509) (7,178,386)
NET ASSETS
Beginning of Fiscal Year 440,965,446 448,143,832
------------- -------------
End of Fiscal Year (including undistributed net
investment
income of $282,245 and $437,808, respectively) $ 386,688,937 $ 440,965,446
============= =============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
12
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share outstanding throughout each year is as follows:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31,
------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 25.09 $ 25.66 $ 24.63 $ 22.15 $ 19.42
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.15 0.18 0.18 0.25 0.38
Net Realized and Unrealized Gain on Investments 0.41 3.91 5.92 4.72 4.23
-------- -------- -------- -------- --------
Total from Investment Operations 0.56 4.09 6.10 4.97 4.61
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.16) (0.19) (0.23) (0.36) (0.29)
Net Realized Gain (3.78) (4.47) (4.84) (2.13) (1.59)
-------- -------- -------- -------- --------
Total Distributions to Shareholders (3.94) (4.66) (5.07) (2.49) (1.88)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 21.71 $ 25.09 $ 25.66 $ 24.63 $ 22.15
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Total Return 2.20% 18.39% 28.35% 25.00% 25.18%
Net Assets, End of Year (in thousands) $386,689 $440,965 $448,144 $362,603 $330,014
Ratios to Average Net Assets
Net Expenses 0.78% 0.79% 0.78% 0.80% 0.81%
Net Investment Income 0.59% 0.70% 0.71% 1.13% 1.87%
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
13
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The J.P. Morgan U.S. Equity Fund (the "fund") is a separate series of the
J.P. Morgan Funds, a Massachusetts business trust (the "trust"). The trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The fund, prior to its tax-free reorganization on
July 18, 1993, to a series of the trust, operated as a stand-alone mutual fund.
The fund invests all of its investable assets in The U.S. 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 (62% at May 31, 2000). 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) Distributions to shareholders of net investment income are declared as
dividends and paid quarterly. Distributions to shareholders of net
realized capital gain, if any, are declared and paid annually.
d) 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.
f) The fund accounts for and reports distributions to shareholders in
accordance with Statement of Position 93-2 "Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies." The effect of applying
this statement as of May 31, 2000 was to decrease accumulated net realized
gain on investment by $140,334
14
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
and increase paid-in-capital by $140,334. The adjustments are primarily
attributable to the application of tax allocation rules and a basis
adjustment as a result of asset migration at the portfolio level. Net
investment income, net realized gains and net assets were not affected by
this change.
2. TRANSACTIONS WITH AFFILIATES
a) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as co-administrator and
distributor for the fund. Under a Co-Administration Agreement between FDI
and the trust on behalf of the fund, FDI provides administrative services
necessary for the operations of the fund, furnishes office space and
facilities required for conducting the business of the fund and pays the
compensation of the fund's officers affiliated with FDI. The fund has
agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The
amount allocable to the fund is based on the ratio of the fund's net
assets to the aggregate net assets of the trust and certain other
investment companies subject to similar agreements with FDI. For the
fiscal year ended May 31, 2000, the fee for these services amounted to
$5,449.
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 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 May 31,
2000, the fee for these services amounted to $105,687.
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 fiscal year ended May 31, 2000, the fee for these
services amounted to $1,060,020.
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 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.
15
<PAGE>
J.P. MORGAN U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
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
$7,362 for the fiscal year ended May 31, 2000.
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 $1,400.
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
MAY 31, 2000 MAY 31, 1999
-------------- --------------
<S> <C> <C>
Shares of Beneficial Interest Sold............... 2,355,341 3,225,938
Reinvestment of Dividends and Distributions...... 2,789,586 3,009,630
Shares of Beneficial Interest Redeemed........... (4,911,936) (6,126,724)
------------- -------------
Net Increase..................................... 232,991 108,844
============= =============
</TABLE>
From time to time, the fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the fund.
4. CREDIT AGREEMENT
The trust, on behalf of the fund, together with other affiliated investment
companies (the "funds"), entered into a revolving line of credit agreement (the
"Agreement") on May 26, 1999, with unaffiliated lenders. The maximum borrowing
under the Agreement was $150,000,000. The Agreement expired on May 23, 2000,
however, the fund as party to the Agreement has extended the Agreement and
continues its participation therein for an additional 364 days until May 21,
2001. 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. Under the Agreement, the commitment fee is at an
annual rate of 0.085% on the unused portion of the committed amount. The
commitment fee is allocated to the funds in accordance with the procedures
established by their respective trustees or directors. There were no outstanding
borrowings pursuant to the Agreement at May 31, 2000.
* * * *
5. TAX INFORMATION NOTICE (UNAUDITED)
For corporate taxpayers 50.59% of the ordinary income distributions paid during
the fiscal year ended May 31, 2000 qualify for the corporate dividends received
deductions.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
J.P. Morgan U.S. Equity 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 U.S. Equity Fund (one of the series constituting part of the
J.P. Morgan Funds, hereafter referred to as the "fund") at May 31, 2000, 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 five years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
July 14, 2000
17
<PAGE>
The U.S. Equity Portfolio
Annual Report May 31, 2000
(The following pages should be read in conjunction
with J.P. Morgan U.S. Equity Fund
Annual Financial Statements)
18
<PAGE>
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
COMMON STOCKS (98.5%)
BASIC INDUSTRIES (4.4%)
CHEMICALS (2.6%)
Air Products and Chemicals, Inc.................. 225,600 $ 7,811,400
Rohm & Haas Co................................... 242,200 8,265,075
------------
16,076,475
------------
FOREST PRODUCTS & PAPER (0.9%)
Smurfit-Stone Container Corp.+................... 414,700 5,883,556
------------
METALS & MINING (0.9%)
Alcoa, Inc....................................... 34,132 1,994,589
Allegheny Technologies, Inc...................... 121,086 2,732,003
Phelps Dodge Corp................................ 17,900 803,262
------------
5,529,854
------------
TOTAL BASIC INDUSTRIES......................... 27,489,885
------------
CONSUMER GOODS & SERVICES (17.5%)
AUTOMOTIVE (1.4%)
Dana Corp........................................ 73,000 1,884,312
Ford Motor Co.................................... 72,600 3,525,637
Lear Corp.+...................................... 138,400 3,243,750
------------
8,653,699
------------
BROADCASTING & PUBLISHING (1.8%)
AT&T Corp. - Liberty Media Group, Class A+....... 112,600 4,989,587
Comcast Corp., Class A+.......................... 103,100 3,904,912
MediaOne Group, Inc.+............................ 41,000 2,739,312
------------
11,633,811
------------
ENTERTAINMENT, LEISURE & MEDIA (4.1%)
America Online, Inc.+............................ 173,100 9,174,300
News Corp. Ltd. (Spons. ADR)(i).................. 175,400 7,991,662
Seagram Company Ltd.(i).......................... 73,200 3,490,725
Time Warner, Inc................................. 62,300 4,917,806
------------
25,574,493
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
FOOD, BEVERAGES & TOBACCO (2.9%)
Coca-Cola Co..................................... 104,400 $ 5,572,350
Philip Morris Companies, Inc..................... 357,200 9,331,850
Quaker Oats Co................................... 47,400 3,486,862
------------
18,391,062
------------
HOUSEHOLD PRODUCTS (1.2%)
Clorox Co........................................ 58,300 2,310,137
Procter & Gamble Co.............................. 79,660 5,297,390
------------
7,607,527
------------
PERSONAL CARE (1.0%)
Estee Lauder Companies, Inc., Class A............ 43,100 1,931,419
Gillette Co...................................... 140,000 4,672,500
------------
6,603,919
------------
RETAIL (5.1%)
Abercrombie & Fitch Co., Class A+................ 177,500 1,741,719
Circuit City Stores-Circuit City Group........... 80,800 4,024,850
Gap, Inc......................................... 72,400 2,538,525
Home Depot, Inc.................................. 61,700 3,011,731
Target Corp...................................... 80,500 5,046,344
TJX Companies, Inc............................... 159,200 3,442,700
Wal-Mart Stores, Inc............................. 211,300 12,176,162
------------
31,982,031
------------
TOTAL CONSUMER GOODS & SERVICES................ 110,446,542
------------
ENERGY (6.6%)
GAS-PIPELINES (0.7%)
Dynegy, Inc., Class A............................ 56,100 4,326,712
------------
OIL-PRODUCTION (5.4%)
Anadarko Petroleum Corp.......................... 94,400 5,009,100
Baker Hughes, Inc................................ 120,800 4,379,000
Chevron Corp..................................... 31,200 2,884,050
Exxon Mobil Corp................................. 263,248 21,931,849
------------
34,203,999
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
OIL-SERVICES (0.5%)
Global Marine, Inc.+............................. 119,400 $ 3,380,512
------------
TOTAL ENERGY................................... 41,911,223
------------
FINANCE (15.0%)
BANKING (5.5%)
Astoria Financial Corp........................... 107,730 2,935,642
Bank One Corp.................................... 110,200 3,643,487
Citigroup, Inc................................... 105,600 6,567,000
First Union Corp................................. 147,900 5,204,231
KeyCorp.......................................... 148,500 3,118,500
U.S. Bancorp..................................... 492,000 12,792,000
------------
34,260,860
------------
FINANCIAL SERVICES (5.3%)
Capital One Financial Corp....................... 173,100 8,178,975
CIT Group, Inc., Class A......................... 139,700 2,558,256
E*TRADE Group, Inc.+............................. 417,900 6,503,569
Freddie Mac...................................... 133,600 5,945,200
Goldman Sachs Group, Inc......................... 136,600 10,048,638
------------
33,234,638
------------
INSURANCE (4.2%)
Ambac Financial Group, Inc....................... 193,500 9,747,563
American International Group, Inc................ 30,700 3,455,669
CIGNA Corp....................................... 50,000 4,440,625
MetLife, Inc.+................................... 218,400 4,477,200
XL Capital Ltd., Class A(i)...................... 70,500 4,194,750
------------
26,315,807
------------
TOTAL FINANCE.................................. 93,811,305
------------
HEALTH CARE (9.7%)
MEDICAL SUPPLIES (0.5%)
PE Corp. - PE Biosystems Group................... 53,300 2,958,150
------------
PHARMACEUTICALS (9.2%)
ALZA Corp.+...................................... 221,300 11,244,806
American Home Products Corp...................... 68,900 3,711,988
Bristol-Myers Squibb Co.......................... 116,300 6,403,769
Eli Lilly & Co................................... 118,500 9,020,813
Merck & Co., Inc................................. 44,400 3,313,350
Pharmacia Corp................................... 224,475 11,658,670
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
PHARMACEUTICALS (CONTINUED)
Schering-Plough Corp............................. 133,300 $ 6,448,388
Warner-Lambert Co................................ 46,800 5,715,450
------------
57,517,234
------------
TOTAL HEALTH CARE.............................. 60,475,384
------------
INDUSTRIAL PRODUCTS & SERVICES (9.4%)
COMMERCIAL SERVICES (0.4%)
Cendant Corp.+................................... 204,100 2,704,325
------------
DIVERSIFIED MANUFACTURING (8.5%)
Cooper Industries, Inc........................... 78,600 2,633,100
General Electric Co.............................. 427,200 22,481,400
Honeywell International, Inc..................... 144,500 7,902,344
Tyco International Ltd.(i)....................... 428,992 20,189,436
------------
53,206,280
------------
POLLUTION CONTROL (0.5%)
Waste Management, Inc............................ 153,457 3,126,686
------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 59,037,291
------------
TECHNOLOGY (29.9%)
COMPUTER PERIPHERALS (2.4%)
EMC Corp.+....................................... 57,400 6,676,338
Quantum Corp.- DLT & Storage Systems+............ 222,400 2,307,400
Seagate Technology, Inc.+........................ 101,000 5,858,000
------------
14,841,738
------------
COMPUTER SOFTWARE (6.5%)
Citrix Systems, Inc.+............................ 73,600 3,873,200
Computer Associates International, Inc........... 151,900 7,822,850
Microsoft Corp.+................................. 313,000 19,582,063
Oracle Corp.+.................................... 77,600 5,577,500
Parametric Technology Corp.+..................... 148,600 1,578,875
Siebel Systems, Inc.+............................ 20,900 2,445,300
------------
40,879,788
------------
COMPUTER SYSTEMS (5.6%)
Compaq Computer Corp............................. 198,200 5,202,750
Dell Computer Corp.+............................. 113,400 4,890,375
Hewlett-Packard Co............................... 48,600 5,838,075
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
COMPUTER SYSTEMS (CONTINUED)
International Business Machines Corp............. 31,800 $ 3,412,538
Sun Microsystems, Inc.+.......................... 205,300 15,731,113
------------
35,074,851
------------
ELECTRONICS (4.2%)
Cisco Systems, Inc.+............................. 425,900 24,249,681
Micron Technology, Inc.+......................... 32,600 2,279,963
------------
26,529,644
------------
SEMICONDUCTORS (5.2%)
Intel Corp....................................... 189,700 23,653,219
Texas Instruments, Inc........................... 127,000 9,175,750
------------
32,828,969
------------
TELECOMMUNICATION SERVICES (2.8%)
Allegiance Telecom, Inc.+........................ 24,500 1,295,438
Global Crossing Ltd.+(i)......................... 140,500 3,521,281
Sprint Corp. (PCS Group)+........................ 71,500 3,968,250
WorldCom, Inc.+.................................. 234,750 8,832,469
------------
17,617,438
------------
TELECOMMUNICATIONS-EQUIPMENT (3.2%)
Lucent Technologies, Inc......................... 102,400 5,875,200
Motorola, Inc.................................... 67,900 6,365,625
Nortel Networks Corp............................. 71,000 3,856,188
QUALCOMM, Inc.+.................................. 20,700 1,373,963
Tellabs, Inc.+................................... 41,800 2,714,388
------------
20,185,364
------------
TOTAL TECHNOLOGY............................... 187,957,792
------------
TRANSPORTATION (0.7%)
RAILROADS (0.7%)
Union Pacific Corp............................... 97,800 4,138,163
------------
UTILITIES (5.3%)
ELECTRIC (0.8%)
Allegheny Energy, Inc............................ 71,100 2,199,656
PG&E Corp........................................ 99,000 2,567,813
------------
4,767,469
------------
PIPELINES (0.5%)
Columbia Energy Group............................ 48,550 3,140,578
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- ------------- -------------
<S> <C> <C>
TELEPHONE (4.0%)
AT&T Corp........................................ 161,100 $ 5,588,156
Bell Atlantic Corp............................... 45,600 2,411,100
GTE Corp......................................... 90,000 5,692,500
Level 3 Communications, Inc.+.................... 53,900 4,113,244
SBC Communications, Inc.......................... 172,300 7,527,356
------------
25,332,356
------------
TOTAL UTILITIES................................ 33,240,403
------------
TOTAL COMMON STOCKS
(COST $510,143,799)........................... 618,507,988
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
FIXED INCOME SECURITIES (0.2%)
U.S. TREASURY OBLIGATIONS (0.2%)
Notes, 5.625% due 02/28/01(s)
(cost $1,143,644).............................. $ 1,150,000 1,141,019
------------
SHORT-TERM INVESTMENTS (0.9%)
OTHER INVESTMENT COMPANIES (0.9%)
J.P. Morgan Institutional Prime Money Market
Fund*
(cost $5,750,959).............................. $ 5,750,959 5,750,959
------------
TOTAL INVESTMENTS
(COST $517,038,402) (99.6%)................................... 625,399,966
OTHER ASSETS IN EXCESS OF LIABILITIES (0.4%)....................
2,819,417
------------
NET ASSETS (100.0%)............................................. $628,219,383
============
</TABLE>
------------------------------
Note: Based on the cost of investments of $520,910,192 for federal income tax
purposes at May 31, 2000 the aggregate gross unrealized appreciation and
depreciation was $140,958,375 and $36,468,601, respectively, resulting in net
unrealized appreciation of $104,489,774.
+ Non-income producing security.
(i) Foreign security.
(s) Security is partially segregated with custodian as collateral for futures
contracts or with broker as initial margin for futures contracts.
Spon. ADR - Sponsored American Depositary Receipt.
* Money market mutual fund registered under the Investment Company Act of 1940,
as amended, and advised by J.P. Morgan Investment Management, Inc.
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $517,038,402) $625,399,966
Cash 1,144,405
Receivable for Investments Sold 4,349,045
Dividends Receivable 820,859
Interest Receivable 63,807
Variation Margin Receivable 7,981
Receivable for Expense Reimbursement 1,469
Prepaid Trustees' Fees 5,064
Prepaid Expenses and Other Assets 3,391
------------
Total Assets 631,795,987
------------
LIABILITIES
Payable for Investments Purchased 3,254,641
Advisory Fee Payable 214,636
Custody Fee Payable 65,141
Administrative Services Fee Payable 13,082
Administration Fee Payable 891
Fund Services Fee Payable 544
Accrued Expenses 27,669
------------
Total Liabilities 3,576,604
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $628,219,383
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax
of $22,818) $ 8,561,065
Interest Income 865,011
-----------
Investment Income 9,426,076
EXPENSES
Advisory Fee $ 2,748,787
Custodian Fees and Expenses 180,628
Administrative Services Fee 172,419
Professional Fees and Expenses 45,426
Fund Services Fee 12,016
Trustees' Fees and Expenses 7,171
Administration Fee 6,803
Miscellaneous 9,587
-----------
Total Expenses 3,182,837
-----------
NET INVESTMENT INCOME 6,243,239
NET REALIZED GAIN ON
Investments 37,972,209
Futures Contracts 166,859
-----------
Net Realized Gain 38,139,068
NET CHANGE IN UNREALIZED DEPRECIATION OF
Investments (24,714,604)
Futures Contracts (66,221)
-----------
Net Change in Unrealized Depreciation (24,780,825)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $19,601,482
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
YEAR ENDED YEAR ENDED
MAY 31, 2000 MAY 31, 1999
-------------- --------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 6,243,239 $ 7,489,950
Net Realized Gain on Investments and Futures
Contracts 38,139,068 124,444,147
Net Change in Unrealized Depreciation of
Investments and Futures Contracts (24,780,825) (20,064,046)
------------- -------------
Net Increase in Net Assets Resulting from
Operations 19,601,482 111,870,051
------------- -------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 207,425,150 137,233,705
Withdrawals (318,237,694) (356,977,035)
------------- -------------
Net Decrease from Investors' Transactions (110,812,544) (219,743,330)
------------- -------------
Total Decrease in Net Assets (91,211,062) (107,873,279)
NET ASSETS
Beginning of Fiscal Year 719,430,445 827,303,724
------------- -------------
End of Fiscal Year $ 628,219,383 $ 719,430,445
============= =============
</TABLE>
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31,
---------------------------------
2000 1999 1998 1997 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.46% 0.47% 0.47% 0.47% 0.46%
Net Investment Income 0.90% 1.03% 1.01% 1.44% 2.20%
Portfolio Turnover 89% 84% 106% 99% 85%
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The U.S. Equity Portfolio (the "portfolio") is registered under the Investment
Company Act of 1940, as amended, as a no-load, diversified, open-end management
investment company which was organized as a trust under the laws of the State of
New York. The portfolio commenced operations on July 19, 1993. The portfolio's
investment objective is to provide a high total return from a portfolio of
selected equity securities. 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 accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts and disclosures. Actual amounts
could differ from those estimates. The following is a summary of the significant
accounting policies of the portfolio:
a) The portfolio values securities that are listed on an exchange using
prices supplied daily by an independent pricing service that are based on
the last traded price on a national securities exchange or in the absence
of recorded trades, at the readily available mean of the bid and asked
prices on such exchange, if such exchange or market constitutes the
broadest and most representative market for the security. Securities
listed on a foreign exchange are valued at the last traded price or in the
absence of recorded trades, at the readily available mean of the bid and
asked prices on such exchange available before the time when net assets
are valued. Independent pricing service procedures may also include the
use of prices based on yields or prices of securities of comparable
quality, coupon, maturity and type, indications as to the values from
dealers, operating data, and general market conditions. Unlisted
securities are valued at the average of the quoted bid and asked prices in
the over-the-counter market provided by a principal market maker or
dealer. If prices are not supplied by the portfolio's independent pricing
service or principal market maker or dealer, such securities are priced
using fair values in accordance with procedures adopted by the portfolio's
trustees. All short-term securities with a remaining maturity of sixty
days or less are valued using the amortized cost method.
b) The portfolio's custodian (or designated subcustodians, as the case may be
under tri-party repurchase agreements) 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.
c) Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount becomes known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d) 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
25
<PAGE>
THE U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
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 movement. The use of
futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the
underlying hedged assets, and the possible inability of counterparties to
meet the terms of their contracts.
e) The portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the portfolio will be taxed on its
share of the portfolio's ordinary income and capital gains. It is intended
that the portfolio's assets will be managed in such a way that an investor
in the portfolio will be able to satisfy the requirements of Subchapter M
of the Internal Revenue Code. The portfolio earns foreign income which may
be subject to foreign withholding taxes at various rates.
2. TRANSACTIONS WITH AFFILIATES
a) The portfolio has an Investment Advisory Agreement with J.P. Morgan
Investment Management Inc. ("JPMIM"), an affiliate of Morgan Guaranty
Trust Company of New York ("Morgan") and a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Under the terms of the
agreement, the portfolio pays Morgan at an annual rate of 0.40% of the
portfolio's average daily net assets. For the fiscal year ended May 31,
2000, such fees amounted to $2,767,011.
The fund may invest in one or more affiliated money market funds:
J.P. Morgan Institutional Prime Money Market Fund, J.P. Morgan
Institutional Tax Exempt Money Market Fund, J.P. Morgan Institutional
Federal Money Market Fund and J.P. Morgan Institutional Treasury Money
Market Fund. The Advisor has agreed to reimburse its advisory fee from the
fund in an amount to offset any doubling of investment advisory and
shareholder servicing fees. For the fiscal year ended May 31, 2000,
J.P. Morgan has agreed to reimburse the fund $18,224 under this agreement.
Interest income included in the Statement of Operations for the year ended
May 31, 2000 includes $460,527 of interest income from investments in
affiliated Money Market Funds.
b) The trust, on behalf of the portfolio, has retained Funds Distributor,
Inc. ("FDI"), a registered broker-dealer, to serve as the co-administrator
and exclusive placement agent. Under a Co-Administration Agreement between
FDI and the portfolio, FDI provides administrative services necessary for
the operations of the portfolio, furnishes office space and facilities
required for conducting the business of the portfolio and pays the
compensation of the portfolio's officers affiliated with FDI. The
portfolio has agreed to pay FDI fees equal to its allocable share of an
annual complex-wide charge of $425,000 plus FDI's out-of-pocket expenses.
The amount allocable to the portfolio is based on the ratio of the
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 May 31, 2000, the fee for these services
amounted to $6,803.
26
<PAGE>
THE U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
c) The trust, on behalf of the portfolio, has an Administrative Services
Agreement (the "Services Agreement") with Morgan, under which Morgan is
responsible for certain aspects of the administration and operation of the
portfolio. Under the Services Agreement, the portfolio has agreed to pay
Morgan a fee equal to its allocable share of an annual complex-wide
charge. This charge is calculated based on the aggregate average daily net
assets of the portfolio and certain other portfolios for which the Morgan
acts as advisor (the "master portfolios") and J.P. Morgan Series Trust in
accordance with the following annual schedule: 0.09% on the first
$7 billion of their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion, less the
complex-wide fees payable to FDI. The portion of this charge payable by
the portfolio is determined by the proportionate share that its net assets
bear to the net assets of the portfolio, other investors in the master
portfolios for which Morgan provides similar services, and J.P. Morgan
Series Trust. For the fiscal year ended May 31, 2000, the fee for these
services amounted to $172,419.
d) The trust, on behalf of the portfolio, has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the trustees in exercising their
overall supervisory responsibilities for the portfolio's affairs. The
trustees of the portfolio represent all the existing shareholders of
Group. The portfolio's allocated portion of Group's costs in performing
its services amounted to $12,016 for the fiscal year ended May 31, 2000.
e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the J.P. Morgan Funds, the J.P. Morgan Institutional Funds,
the master portfolios and J.P. Morgan Series Trust. The Trustees' Fees and
Expenses shown in the financial statements represents the portfolio's
allocated portion of the total fees and expenses. The portfolio's Chairman
and Chief Executive Officer also serves as Chairman of Group and 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 $2,300.
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the fiscal year
ended May 31, 2000 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
--------- ------------
<S> <C>
$601,219,097 $694,056,543
</TABLE>
Futures transactions as of May 31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
NET UNREALIZED CURRENT MARKET
CONTRACTS LONG APPRECIATION VALUE OF CONTRACTS
-------------- -------------- ------------------
<S> <C> <C> <C>
S&P 500, expiring June 2000...................... 8 $7,981 $2,844,400
============= ============= =================
</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 this report.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The U.S. Equity 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 U.S. Equity Portfolio (the "portfolio")
at May 31, 2000, 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
its supplementary data for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States.
These financial statements and supplementary data (hereafter referred to as
"financial statements") are the responsibility of the portfolio's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 2000 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
July 14, 2000
28
<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.
IMAR295
J.P. MORGAN U.S. EQUITY FUND
ANNUAL REPORT
May 31, 2000
