<PAGE>
LETTER TO THE SHAREHOLDERS OF THE J.P. MORGAN EUROPEAN EQUITY FUND
July 1, 2000
Dear Shareholder:
The J.P. Morgan European Equity Fund delivered a return of 1.55% for the six
months ended May 31, 2000, underperforming both its benchmark, the MSCI Europe
Index, and the Lipper European Region Funds Average, which returned 4.61% and
10.88%, respectively.
The fund's net asset value on May 31, 2000 was $17.12 per share, increasing from
$17.06 per share on November 30, 1999, after paying dividends totaling $0.21 per
share, including $0.10 in current income and $0.11 in long-term capital gains.
The fund's net assets were $12.9 million on May 31 while the total net assets of
The European Equity Portfolio, in which the fund invests, totaled $23.2 million.
Included in this report is an interview with Nigel F. Emmett, a member of the
portfolio management team. This interview is designed to reflect what happened
during the reporting period, as well as provide an outlook for the months ahead.
As chairman and president of Asset Management Services, we thank you for
investing with J.P. Morgan. Should you have any comments or questions, please
telephone your Morgan representative or J.P. Morgan Funds Services at
800-521-5411.
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............6
FUND PERFORMANCE.....................2 FINANCIAL STATEMENTS.................8
PORTFOLIO MANAGER Q&A................3
--------------------------------------------------------------------------------
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows
what would have happened if the fund had achieved that return by performing at a
constant rate each year. Average annual total returns represent the average
yearly change of a fund's value over various time periods, typically one, five,
or ten years (or since inception). Total returns for periods of less than one
year are not annualized and provide a picture of how a fund has performed over
the short term.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------------ ----------------------------------------------
THREE SIX ONE THREE SINCE
AS OF MAY 31, 2000 MONTHS MONTHS YEAR YEARS INCEPTION*
---------------------------------------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C>
J.P. Morgan European Equity Fund -8.84% 1.55% 12.71% 14.36% 16.29%
MSCI Europe Index** -2.91% 4.61% 14.58% 17.16% 18.63%
Lipper European Region Funds Average*** -7.35% 10.88% 30.61% 16.81% 18.27%
AS OF MARCH 31, 2000
---------------------------------------------------------------------------- ----------------------------------------------
J.P. Morgan European Equity Fund -0.27% 18.29% 21.10% 18.86% 19.42%
MSCI Europe Index** 0.08% 17.48% 18.49% 20.73% 21.04%
Lipper European Region Funds Average*** 5.89% 33.17% 33.83% 20.74% 21.39%
</TABLE>
*THE FUND COMMENCED OPERATIONS ON MAY 10, 1996. PERFORMANCE PRIOR TO THAT DATE
REFLECTS THE HISTORICAL RETURNS OF THE J.P. MORGAN INSTITUTIONAL EQUITY FUND
(COMMENCED OPERATIONS ON FEBRUARY 29, 1996), A SEPARATE FEEDER FUND INVESTING IN
THE SAME MASTER PORTFOLIO WHICH HAD A LOWER EXPENSE RATIO. THEREFORE, THE FUND'S
RETURNS WOULD HAVE BEEN LOWER HAD IT EXISTED DURING THE SAME PERIOD.
**THE MSCI EUROPE INDEX IS AN UNMANAGED INDEX WHICH MEASURES EUROPEAN STOCK
MARKET PERFORMANCE. 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 RESOURCE FOR MUTUAL
FUND DATA.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES, ASSUME REINVESTMENT OF DIVIDENDS AND REFLECT THE REIMBURSEMENT OF EXPENSES
AS DESCRIBED IN THE PROSPECTUS. HAD EXPENSES NOT BEEN SUBSIDIZED, RETURNS WOULD
HAVE BEEN LOWER.
2
<PAGE>
PORTFOLIO MANAGER Q&A
[PHOTO]
The following is an interview with NIGEL F. EMMETT, vice president, and a member
of the portfolio management team of the master portfolio in which the fund
invests. Nigel joined J.P. Morgan in 1997. Previously, he was employed by Brown
Brothers Harriman & Co. in New York and Gartmore Investment Management in
London. Nigel earned a B.A. degree in Economics from Manchester University and
is an Associate Member of the Institute of Investment Management and Research
(AIIMR), and is a holder of the Chartered Financial Analyst designation. This
interview was conducted on June 23, 2000, and reflects his views on that date.
HOW IS THE PORTFOLIO MANAGED?
NFE: The portfolio employs what we call a "core" strategy, one where investment
decisions are based on fundamental research that stresses three sources of added
value: 1) active regional allocation; 2) active stock selection within each
region; and 3) active currency management.
The starting point for the portfolio is the allocation of capital between two
regions, continental Europe, excluding the U.K., and the U.K. itself. The U.K.
represents roughly one-third of the portfolio, which is much the same as its
representation in the benchmark.
The U.K. is different from continental Europe in that it has its own currency,
whereas most of Europe has converted to the euro. In addition, the U.K. economic
cycle is at a different stage than that of continental Europe.
Within each region, we operate a broadly sector neutral policy, seeking to add
most of the value by identifying the most attractive stocks within each sector.
HOW DID THE PORTFOLIO PERFORM OVER THE PAST SIX MONTHS?
NFE: We underperformed the benchmark over this reporting period. Stock selection
and country allocation negatively impacted the portfolio, whereas currency
allocation was a positive contributor.
On a regional level, the portfolio overweighted the U.K., reflecting what we
feel is a good value; however, the U.K. continued to underperform continental
Europe. With currency, we had some euro exposure hedged back into the U.S.
dollar, which proved to be a good decision over this time period.
WHICH COMPANIES HELPED PERFORMANCE?
NFE: Philips was a good performer over the six-month period. It was helped by a
broad range of profitable product lines, from semi-conductors to consumer
electronics. These businesses performed very well in calendar 1999, and
continued to do well in the first five months of this year, helping the company
outperform many of its peers. Back in April, for example, Philips reported
quarterly profits that were nearly double those
3
<PAGE>
of the comparable quarter of 1999. It has already achieved a 25% return on net
assets, which exceeds the company's 24% target for this year.
In recent years, the management of Philips has achieved better returns by
directing capital to high growth businesses and away from non-core businesses.
Lately, the company has benefited from a strong dollar and yen, which in
conjunction with a weak euro, helps European producers. Overall, we've seen
relatively good top line sales growth, and Philips continues to be one of our
favorite stocks in Europe.
Another stock that did well over the period was the German telecom company
Mannesman. During the period, Vodafone's bid for the company was successful, so
Mannesman was a very strong performer over the six months. Even before Vodafone
bought the company, we had identified it as a potentially strong performer in
its own right. So, the Vodafone deal was more or less icing on the cake, serving
to realize value even more quickly than we had anticipated.
In the U.K., Cable & Wireless was a standout. At the start of this period, its
stock performed strongly on speculation that it was going to spin off its Hong
Kong Telecom subsidiary. In fact, it later announced that it would merge or sell
off the business, resulting in a significant appreciation of the company's stock
price. Even so, we continue to like and own the stock, in part due to our faith
in the company's capabilities in the high-growth global data transmission
business, an industry that continues to expand by some 30% a year.
HOW ABOUT THOSE THAT HURT PERFORMANCE?
NFE: Wolters Kluwer, a Dutch media company, was a stock that we had favored but
revised our outlook on the negative news flow. It was very strong in November of
last year, as speculators bid it up on the hopes that it would be able to
implement a successful Internet strategy. However, as we entered this six-month
period, these hopes were dashed by an indecisive management team that proved to
be divisive on the issue of how this strategy should be implemented. Investors
also feared that the company would continue to focus on its traditional
publishing businesses, rather than Internet-related ventures.
When we bought the stock, we believed that the company would transition from its
core content publishing business into Internet-related work flow tools and
transaction services. We also hoped that it would open up its operations to
consultancy services, such as e-commerce, training, and other services. In
March, we changed our opinion when the company announced a major investment
program designed to accelerate its move from print to the Internet. This was a
shock in that it had said previously that it would require little additional
spending to implement this strategy. As a consequence of these and other
factors, we liquidated our holdings in the company.
Another stock that hurt performance was Swisscom, the recently privatized Swiss
national telephone company. While still a favored portfolio holding, Swisscom
has been largely ignored by a market that is focused on the larger players in
the sector, which have higher profile wireless and Internet strategies. Despite
this, we continue to feel that the stock represents an attractive investment
within its sector. Among the positives is its announcement of a joint venture
with Commerce One to provide a business-to-business marketplace for central
Europe. It also announced its first Wireless Application Portal, which enables
it to offer the mobile
4
<PAGE>
phone market a basket of high demand services, such as e-mail, data application,
stock price quotes, ticket booking and others.
In the U.K. market, a banking stock that didn't do particularly well was Lloyds
TSB. It was not alone, as U.K. banks in general didn't perform well over this
period. Lloyds suffered, if you will, from too much success in generating
capital. Investors feared that it would have to find a home for this capital by
making an expensive acquisition. Investors were also frightened by speculation
that on-line banks, with their lower operating costs, might be successful in
taking market share from their brick and mortar counterparts, in particular,
Lloyds.
For our part, we liked and continue to like the stock, because Lloyds is one of
the better managed U.K. banks, one with a strong balance sheet and among the
best operating margins of any major U.K. bank. Its management is strong with a
good track record in the long-term, value-added management of the company's
capital. While we too think that banking margins are coming under pressure from
on-line rivals, we believe that the better managed banks with ready access to
capital, like Lloyds, should do well in a rapidly changing competitive
environment.
WHAT IS YOUR OUTLOOK FOR THE TWO REGIONS OVER THE MONTHS AHEAD?
NFE: On the economic front, the question is whether growth in continental Europe
can meet or exceed the market's rather generous expectations. On the positive
side, there is the continued weakness of the euro, which should help to drive
export growth. On the less positive side, some of the markets that consumed
large quantities of European exports in 1999, particularly Asian markets, are
beginning to slow. Last year, these markets were recovering rapidly from the
implosions of confidence resulting from various Asian currency crises in 1997
and Russia's debt default in 1998. Now, more normal growth patterns are
returning, meaning European exporters will find them to be good customers, but
with the growth not as strong as it was in 1999. Elsewhere, unproven companies
in the technology-media-telecommunications (TMT) sector - which helped to drive
the global equity marketplace in the last quarter of 1999 and the first quarter
of 2000 - will likely find it increasingly difficult to secure funding.
Beyond this, growth in continental Europe GDP should be respectable this year.
For the whole of the eleven-country euro region, we are looking for about 3% GDP
growth.
As for the U.K., the story is a little different. Its currency has been strong
against the euro. This has proven detrimental to exporters, particularly the
manufacturing sector. We expect to see some relative weakness in the currency,
which would help the export-intensive sectors. Further good news could be
provided should U.K. interest rates peak, and perhaps decline a bit. Should
these two events play out, we should see the U.K. rebound from its recent slow
growth relative to continental Europe.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
J.P. Morgan European Equity Fund seeks to provide a high total return from a
portfolio of equity securities of European companies. It is designed for
investors who want an actively managed portfolio of European equity securities
that seeks to outperform the MSCI Europe Index, which is comprised of more than
500 companies in 14 European countries. As an international investment, the fund
is subject to foreign market, political and currency risks.
--------------------------------------------------------------------------------
COMMENCEMENT OF OPERATIONS
5/13/96
--------------------------------------------------------------------------------
FUND NET ASSETS AS OF 5/31/00
$12,865,555
--------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 5/31/00
$23,232,815
--------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/00
EXPENSE RATIO
The fund's current annualized expense ratio of 1.50% covers shareholders'
expenses for custody, tax reporting, investment advisory and shareholder
services, after reimbursement. The fund is no-load and does not charge any
sales, redemption, or exchange fees. There are no additional charges for buying,
selling, or safekeeping fund shares, or for wiring redemption proceeds from the
fund.
FUND HIGHLIGHTS
ALL DATA AS OF MAY 31, 2000
COUNTRY ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[CHART]
UNITED KINGDOM 29.0%
FRANCE 15.8%
GERMANY 11.6%
SWITZERLAND 10.1%
NETHERLANDS 8.9%
ITALY 5.4%
SWEDEN 5.3%
SPAIN 5.2%
FINLAND 4.6%
SHORT-TERM AND OTHER INVESTMENTS 4.1%
<TABLE>
<CAPTION>
% OF TOTAL
LARGEST HOLDINGS INVESTMENTS
--------------------------------------------------------------------------------
<S> <C>
VODAFONE GROUP PLC (UNITED KINGDOM) 4.5%
NOKIA OYJ (FINLAND) 3.6%
BP AMOCO PLC (UNITED KINGDOM) 3.1%
ERICSSON LM, B SHARES (SWEDEN) 2.7%
VIVENDI (FRANCE) 2.3%
KONINKLIJKE (ROYAL) PHILIPS ELECTRONICS NV 2.3%
(NETHERLANDS)
TOTAL FINA ELF SA, B SHARES (FRANCE) 2.2%
DEUTSCHE TELEKOM (GERMANY) 1.9%
GLAXO WELLCOME PLC(UNITED KINGDOM) 1.9%
NESTLE SA (SWITZERLAND) 1.7%
</TABLE>
6
<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 in foreign securities which are
subject to special risks including economic and political uncertainty and
currency fluctuations; investors should refer to the fund's prospectus for a
discussion of these risks. The fund invests through a master portfolio (another
fund with the same objective).
CALL J.P. MORGAN FUNDS SERVICES AT (800) 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.
7
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The European Equity Portfolio
("Portfolio"), at value $13,125,183
Tax Reclaim Receivable 57,977
Receivable for Expense Reimbursements 15,420
Receivable for Shares of Beneficial Interest Sold 1,000
Deferred Organization Expenses 78
Prepaid Trustees' Fees 16
Prepaid Expenses and Other Assets 79
-----------
Total Assets 13,199,753
-----------
LIABILITIES
Payable for Shares of Beneficial Interest
Redeemed 294,942
Shareholder Servicing Fee Payable 2,904
Administrative Services Fee Payable 283
Administration Fee Payable 15
Fund Services Fee Payable 13
Accrued Expenses 36,041
-----------
Total Liabilities 334,198
-----------
NET ASSETS
Applicable to 751,358 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $12,865,555
===========
Net Asset Value, Offering and Redemption Price
Per Share $17.12
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $11,001,521
Undistributed Net Investment Income 38,975
Accumulated Net Realized Gain on Investment 112,026
Net Unrealized Appreciation of Investment 1,713,033
-----------
Net Assets $12,865,555
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income (Net of Foreign
Withholding Tax of $20,360) $144,701
Allocated Interest Income 11,782
Allocated Portfolio Expenses (Net of
Reimbursement of $20,353) (72,578)
--------
Net Investment Income Allocated from
Portfolio 83,905
FUND EXPENSES
Shareholder Servicing Fee $ 18,080
Financial and Fund Accounting Services Fee 17,511
Transfer Agent Fees 12,506
Registration Fees 9,069
Professional Fees 6,081
Printing Expenses 5,528
Administrative Services Fee 1,771
Interest Expense 355
Fund Services Fee 125
Administration Fee 82
Trustees' Fees and Expenses 53
Amortization of Organization Expenses 42
Miscellaneous 2,392
--------
Total Fund Expenses 73,595
Less: Reimbursement of Expenses (37,167)
--------
NET FUND EXPENSES 36,428
--------
NET INVESTMENT INCOME 47,477
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 249,152
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO 41,185
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $337,814
========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
MAY 31, 2000 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1999
------------ -----------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 47,477 $ 77,031
Net Realized Gain on Investment Allocated from
Portfolio 249,152 267,376
Net Change in Unrealized Appreciation of
Investment Allocated from Portfolio 41,185 1,265,048
------------ ----------------
Net Increase in Net Assets Resulting from
Operations 337,814 1,609,455
------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (76,970) (192,325)
Net Realized Gain (87,783) (9,673)
In Excess of Net Realized Gain -- (58,137)
------------ ----------------
Total Distributions to Shareholders (164,753) (260,135)
------------ ----------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 22,617,573 7,234,203
Reinvestment of Dividends and Distributions 146,850 223,008
Cost of Shares of Beneficial Interest Redeemed (23,333,447) (10,446,563)
------------ ----------------
Net Decrease from Transactions in Shares of
Beneficial Interest (569,024) (2,989,352)
------------ ----------------
Total Decrease in Net Assets (395,963) (1,640,032)
NET ASSETS
Beginning of Period 13,261,518 14,901,550
------------ ----------------
End of Period (including undistributed net
investment income of $38,975 and $68,468,
respectively) $ 12,865,555 $ 13,261,518
============ ================
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 13, 1996
FOR THE PERIOD (COMMENCEMENT
SIX MONTHS ENDED FOR THE FISCAL FOR THE ELEVEN FOR THE FISCAL OF OPERATIONS)
MAY 31, 2000 YEAR ENDED MONTHS ENDED YEAR ENDED THROUGH
(UNAUDITED) NOVEMBER 30, 1999 NOVEMBER 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
---------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.06 $ 15.42 $ 13.35 $11.61 $10.00
------- ------- ------- ------ ------
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment Income 0.07 0.17 0.12 0.10 0.01
Net Realized and
Unrealized Gain on
Investments 0.20 1.74 1.95 2.45 1.60
------- ------- ------- ------ ------
Total from Investment
Operations 0.27 1.91 2.07 2.55 1.61
------- ------- ------- ------ ------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net Investment Income (0.10) (0.20) -- (0.07) --
Net Realized Gain (0.11) (0.01) -- (0.74) (0.00)(d)
In Excess of Net
Realized Gain -- (0.06) -- -- --
------- ------- ------- ------ ------
Total Distributions
to Shareholders (0.21) (0.27) -- (0.81) (0.00)(d)
------- ------- ------- ------ ------
NET ASSET VALUE, END
OF PERIOD $ 17.12 $ 17.06 $ 15.42 $13.35 $11.61
======= ======= ======= ====== ======
RATIOS AND
SUPPLEMENTAL DATA
Total Return 1.55%(a) 12.61% 15.51%(a) 22.10% 16.10%(a)
Net Assets, End of
Period (in
thousands) $12,866 $13,262 $14,902 $4,832 $2,072
Ratio to Average Net
Assets
Net Expenses
(excluding
Interest Expense) 1.50%(b) 1.48% 1.42%(b) 1.42% 1.42%(b)
Net Investment
Income 0.66%(b) 0.57% 0.91%(b) 0.91% 0.29%(b)
Expenses without
Reimbursement and
including
Interest Expense 2.30%(b) 2.38% 2.03%(b) 3.78% 2.50%(c)
Interest Expense 0.00%(e) -- -- -- --
</TABLE>
------------------------
(a) Not Annualized.
(b) Annualized.
(c) After consideration of certain state limitations.
(d) Less than $0.01.
(e) Less than 0.01%.
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
J.P. Morgan European Equity Fund (the "fund") is a separate series of the J.P.
Morgan Funds, a Massachusetts business trust (the "Trust") which was organized
on November 4, 1992. The trust is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. The fund
commenced operations on May 13, 1996.
The fund invests all of its investable assets in The European 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 (approximately 56% 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 and net realized
capital gains, if any, are declared and paid annually.
d) The fund incurred organization expenses in the amount of $5,800 which have
been deferred and are being amortized on a straight-line basis over a
period not to exceed five years beginning with the commencement of
operations of the fund.
e) Expenses incurred by the trust with respect to any two or more funds in
the trust are allocated in proportion to the net assets of each fund in
the trust, except where allocations of direct expenses to each fund can
otherwise be made fairly. Expenses directly attributable to a fund are
charged to that fund.
f) The fund is treated as a separate entity for federal income tax purposes
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 EUROPEAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a) The trust, on behalf of the fund, has retained Fund 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 May 31, 2000, the fee for these services amounted to $82.
b) The trust, on behalf of the fund, has an Administrative Services Agreement
(the "Services Agreement") with Morgan Guaranty Trust Company of New York
("Morgan") under which Morgan is responsible for overseeing certain
aspects of the administration and operation of the fund. Under the
Services Agreement, the fund has agreed to pay Morgan a fee equal to its
allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the
portfolio and the other portfolios (the "master portfolios") in which the
trust and the J.P. Morgan Institutional Funds invest 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 six months ended May 31,
2000, the fee for these services amounted to $1,771.
In addition, Morgan has agreed to reimburse the fund to the extent
necessary to maintain the total operating expenses of the fund, including
the expenses allocated to the fund from the portfolio, at no more than
1.50% of the average daily net assets of the fund until February 28, 2001.
For the six months ended May 31, 2000, Morgan has agreed to reimburse the
fund $57,520 for the expenses under this agreement.
c) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal and account
maintenance services to fund shareholders. The agreement provides for the
fund to pay Morgan a fee for these services which is computed daily and
paid monthly at an annual rate of 0.25% of the average daily net assets of
the fund. For the six months ended May 31, 2000, the fee for these
services amounted to $18,080.
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 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.
13
<PAGE>
J.P. MORGAN EUROPEAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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
$125 for the six months 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 represents the fund's allocated portion
of the total fees and expenses. The trust's Chairman and Chief Executive
Officer also serves as Chairman of Group and receives compensation and
employee benefits from Group in his role as Group's Chairman. The
allocated portion of such compensation and benefits included in the Fund
Services Fee shown in the financial statements was $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 SIX FOR THE FISCAL
MONTHS ENDED YEAR ENDED
MAY 31, 2000 NOVEMBER 30, 1999
------------ -----------------
<S> <C> <C>
Shares sold...................................... 1,277,356 446,971
Reinvestment of dividends and distributions...... 8,259 14,808
Shares redeemed.................................. (1,311,676) (650,449)
----------- ----------------
Net Decrease..................................... (26,061) (188,670)
=========== ================
</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 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 as of May 31, 2000. The average daily
balance outstanding for the six months ended May 31, 2000 was $5,479 at a
weighted average interest rate of 6.40%.
14
<PAGE>
The European Equity Portfolio
Semi-annual Report May 31, 2000
(The following pages should be read in conjunction
with the J.P. Morgan European Equity Fund
Semi-annual Financial Statements)
15
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
COMMON STOCK (95.3%)
BELGIUM (0.2%)
Real Software (Computer Software)+(s)............ 203 $ 13,743
Ubizen (Computer Software)+(s)................... 268 39,518
-----------
53,261
-----------
DENMARK (0.7%)
ISS A/S (Commercial Services)+(s)................ 801 57,708
Novo Nordisk A/S (Pharmaceuticals)(s)............ 597 98,258
-----------
155,966
-----------
FINLAND (4.4%)
Helsingin Puhelin OYJ (Telecommunication
Services)(s)................................... 400 28,193
Nokia OYJ (Telecommunications-Equipment)(s)...... 15,599 807,219
Sampo Insurance Co. Ltd., A Shares
(Insurance)(s)................................. 1,342 56,005
Sonera OYJ (Telecommunication Services)(s)....... 299 15,057
Stora Enso OYJ, R Shares (Forest Products &
Paper)(s)...................................... 8,724 83,726
Tietoenator OYJ (Computer Software)(s)........... 906 35,205
-----------
1,025,405
-----------
FRANCE (15.3%)
Alcatel (Telecommunications-Equipment)(s)........ 6,822 375,169
Alstom (Machinery)(s)............................ 2,933 77,793
Aventis SA (Pharmaceuticals)(s).................. 1,585 102,452
Axa (Insurance)(s)............................... 1,775 260,085
Banque Nationale de Paris (Financial
Services)(s)................................... 2,106 188,960
Carrefour SA (Retail)(s)......................... 1,209 85,044
Castorama Dubois Investissement SA (Retail)(s)... 239 60,066
Christian Dior SA (Retail)(s).................... 270 61,347
Coface (Financial Services)(s)................... 291 26,987
Fimatex (Financial Services)+(s)................. 2,391 40,401
France Telecom SA (Telecommunication
Services)(s)................................... 1,096 159,069
Genset SA (Biotechnology)+(s).................... 412 30,490
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
FRANCE (CONTINUED)
Groupe Danone (Food, Beverages & Tobacco)(s)..... 657 $ 152,993
Lafarge SA (Building Materials)(s)............... 1,141 87,826
Lagardere S.C.A. (Multi - Industry)(s)........... 1,230 85,551
Louis Vuitton Moet Hennessy (Food, Beverages &
Tobacco)(s).................................... 242 98,120
Renault SA (Automotive)(s)....................... 2,736 128,135
Sanofi-Synthelabo SA (Pharmaceuticals)(s)........ 2,234 96,856
Societe Generale (Banking)(s).................... 1,980 113,570
STMicroelectronics NV (Electronics)(s)........... 1,243 73,660
Suez Lyonnaise des Eaux SA (Utilities)(s)........ 835 139,386
Total Fina Elf, B Shares (Oil-Services)+(s)...... 3,107 486,666
Usinor SA (Metals & Mining)(s)................... 3,266 39,072
Vinci (Construction & Housing)................... 1,380 60,393
Vivendi SA (Utilities)(s)........................ 4,806 512,557
-----------
3,542,648
-----------
GERMANY (11.2%)
Allianz AG (Insurance)(s)........................ 345 122,732
BASF AG (Chemicals)(s)........................... 3,852 156,645
Bayer AG (Chemicals)(s).......................... 4,092 157,107
Brokat Infosystems AG (Computer Software)+(s).... 300 32,813
Consors Discount Broker AG (Financial
Services)+(s).................................. 700 65,014
DaimlerChrysler AG (Automotive)(s)............... 1,956 105,754
Deutsche Bank AG (Banking)(s).................... 3,169 242,899
Deutsche Telekom AG (Telecommunication
Services)(s)................................... 7,016 432,685
Dresdner Bank AG (Banking)(s).................... 1,950 79,570
Heidelberger Druckmaschinen AG (Machinery)(s).... 1,000 65,102
Intershop Communications AG (Computer
Software)+(s).................................. 100 40,249
Marschollek, Lautenschlaeger und Partner AG
(Financial Services)(s)........................ 186 87,713
Metro AG (Retail)(s)............................. 860 27,914
MG Technologies AG (Diversified
Manufacturing)(s).............................. 4,600 68,256
Muenchener Rueckversicherungs-Gesellschaft AG
(Insurance)(s)................................. 436 125,794
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
GERMANY (CONTINUED)
PrimaCom AG (Broadcasting & Publishing)+(s)...... 934 $ 40,658
Schering AG (Pharmaceuticals)(s)................. 1,284 191,356
Siemens AG (Diversified Manufacturing)(s)........ 1,979 288,527
ThyssenKrupp AG (Diversified Manufacturing)(s)... 2,000 33,942
Veba AG (Diversified Manufacturing)(s)........... 3,732 187,586
Volkswagen AG (Automotive)(s).................... 1,170 46,711
-----------
2,599,027
-----------
IRELAND (1.2%)
CRH PLC (Building Materials)(s).................. 3,665 63,219
Fyffes PLC (Food, Beverages & Tobacco)(s)........ 1,000 1,391
Irish Life & Permanent PLC (Financial
Services)(s)................................... 10,808 84,696
Jefferson Smurfit Group PLC (Forest Products &
Paper)(s)...................................... 40,992 79,832
Trintech Group PLC (Computer Software)+(s)....... 2,202 44,722
-----------
273,860
-----------
ITALY (5.2%)
Banca Fideuram SPA (Financial Services)(s)....... 5,400 81,228
Banca Popolare di Milano (Banking)(s)............ 6,350 41,105
Bayerische Vita SPA (Insurance)(s)............... 8,400 73,071
Bipop-Carire SPA (Banking)(s).................... 9,000 81,211
Credito Emiliano SPA (Banking)(s)................ 8,480 24,300
ENI SPA (Oil-Services)(s)........................ 39,984 214,326
Fiat SPA (Automotive)(s)......................... 4,000 101,011
Mediolanum SPA (Insurance)(s).................... 3,000 45,627
Saipem SPA (Oil-Services)(s)..................... 13,700 68,100
San Paolo - IMI SPA (Banking)(s)................. 4,900 71,344
Telecom Italia Mobile SPA (Telecommunication
Services)(s)................................... 21,530 223,027
Telecom Italia SPA (Telecommunication
Services)(s)................................... 8,182 112,300
UniCredito Italiano SPA (Financial
Services)(s)................................... 13,734 60,372
-----------
1,197,022
-----------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
NETHERLANDS (8.4%)
Buhrmann NV (Wholesale & International
Trade)(s)...................................... 1,736 $ 52,565
Equant NV (Computer Systems)+(s)................. 1,626 70,662
Getronics NV (Computer Systems)(s)............... 2,391 39,802
Heineken NV (Food, Beverages & Tobacco)(s)....... 1,172 59,834
ING Groep NV (Financial Services)(s)............. 4,138 246,024
Koninklijke KPN NV (Telecommunication
Services)(s)................................... 2,207 198,124
Koninklijke Numico NV (Food, Beverages &
Tobacco)(s).................................... 2,074 88,784
Koninklijke Philips Electronics NV
(Electronics)(s)............................... 11,356 504,032
Lycos Europe NV (Computer Systems)+(s)........... 3,200 40,805
Randstad Holding NV (Commercial Services)(s)..... 1,300 52,444
Royal Dutch Petroleum Co. (Oil-Production)(s).... 5,664 346,837
United Pan-Europe Communications NV
(Telecommunication Services)+(s)............... 2,821 72,651
Vendex KBB NV (Retail)(s)........................ 2,303 40,793
Versatel Telecom International NV
(Telecommunication Services)+(s)............... 1,700 61,013
VNU NV (Broadcasting & Publishing)(s)............ 1,613 81,824
-----------
1,956,194
-----------
NORWAY (0.1%)
Schibsted ASA (Broadcasting & Publishing)(s)..... 1,319 25,609
-----------
PORTUGAL (0.7%)
Portugal Telecom SA (Telecommunication
Services)(s)................................... 3,440 37,325
PT Multimedia - Servicos de Telecomunicacoes
(Telecommunication Services)+(s)............... 1,100 54,934
Sonae SGPS SA (Retail)(s)........................ 600 26,097
Telecel-Communicacoes Pessoais SA
(Telecommunication Services)+(s)............... 3,300 53,250
-----------
171,606
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
SPAIN (5.0%)
Amadeus Global Travel Distribution SA (Transport
& Services)+(s)................................ 4,200 $ 38,833
Banco Bilbao Vizcaya Argentaria SA
(Banking)(s)................................... 7,322 101,855
Banco Santander Central Hispano SA
(Banking)(s)................................... 13,178 128,444
Endesa SA (Electric)(s).......................... 11,279 232,421
Iberdrola SA (Electric)(s)....................... 4,000 50,821
Repsol YPF SA (Oil-Production)(s)................ 6,814 144,520
Telefonica SA (Telecommunication Services)+(s)... 16,696 340,640
TelePizza SA (Food, Beverages & Tobacco)+(s)..... 5,600 31,939
Union Electrica Fenosa SA (Electric)(s).......... 4,266 88,422
-----------
1,157,895
-----------
SWEDEN (5.1%)
Autoliv, Inc. (SDR) (Automotive Supplies)(s)..... 2,191 60,166
Electrolux AB, Series B (Appliances & Household
Durables)(s)................................... 2,773 46,765
ForeningsSparbanken AB (Banking)(s).............. 6,300 93,665
Hennes & Mauritz AB, B Shares (Retail)(s)........ 1,835 46,216
Modern Times Group MTG AB, B Shares (Broadcasting
& Publishing)+(s).............................. 900 40,192
OM Gruppen AB (Financial Services)(s)............ 1,400 56,385
Skandia Forsakrings AB (Insurance)(s)............ 6,004 153,214
Skandinaviska Ensklida Banken (Banking)(s)....... 5,049 54,899
Tele1 Europe Holding AB (Telecommunication
Services)+(s).................................. 2,124 25,569
Telefonaktiebolaget LM Ericsson AB, B Shares
(Telecommunications-Equipment)(s).............. 30,019 607,841
-----------
1,184,912
-----------
SWITZERLAND (9.9%)
ABB Ltd. (Holding Companies)(s).................. 1,164 143,869
Carrier 1 International SA (Telecommunication
Services)+(s).................................. 577 45,751
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Compagnie Financiere Richemont AG (Food,
Beverages & Tobacco)(s)........................ 34 $ 84,248
Credit Suisse Group (Financial Services)(s)...... 839 155,920
Fantastic Corp (Computer Software)+(s)........... 1,341 17,597
Nestle SA (Food, Beverages & Tobacco)(s)......... 203 385,640
Novartis AG (Pharmaceuticals)(s)................. 219 321,717
Roche Holding AG (Pharmaceuticals)(s)............ 35 367,552
Schweizerische Lebensversicherungs-und
Rentenanstalt (Insurance)(s)................... 100 57,227
SGS Societe Generale de Surveillance Holding SA
(Commercial Services)(s)....................... 48 87,788
Swisscom AG (Telecommunication Services)(s)...... 494 172,827
The Swatch Group AG (Consumer Goods &
Services)(s)................................... 260 65,038
UBS AG (Banking)(s).............................. 1,834 246,427
Zurich Allied AG (Insurance)(s).................. 300 146,903
-----------
2,298,504
-----------
UNITED KINGDOM (27.9%)
3i Group PLC (Financial Services)(s)............. 5,400 102,188
ARM Holdings PLC (Electronics)+(s)............... 9,000 79,641
AstraZeneca Group PLC (Pharmaceuticals)(s)....... 1,604 67,565
BAE Systems PLC (Aerospace)(s)................... 14,544 91,199
Bank of Scotland (Banking)(s).................... 6,000 56,502
BG Group PLC (Gas Exploration)(s)................ 15,422 92,440
Billiton PLC (Metals & Mining)(s)................ 19,600 66,505
Bookham Technology PLC (Electronics)+(s)......... 300 14,798
BP Amoco PLC (Oil-Production)(s)................. 75,603 687,660
British Airways PLC (Airlines)(s)................ 4,000 21,644
British American Tobacco PLC (Food, Beverages &
Tobacco)(s).................................... 6,546 38,258
British Sky Broadcasting Group PLC (Broadcasting
& Publishing)+(s).............................. 6,300 115,359
British Telecommunications PLC
(Telecommunications)(s)........................ 15,845 229,504
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Cable & Wireless PLC (Telecommunications)(s)..... 4,632 $ 77,200
Cadbury Schweppes PLC (Food, Beverages &
Tobacco)(s).................................... 18,268 121,514
Carlton Communications PLC (Entertainment,
Leisure & Media)(s)............................ 3,000 35,605
Celltech Group PLC (Pharmaceuticals)+(s)......... 3,000 43,587
CMG PLC (Computer Systems)(s).................... 2,400 33,686
Compass Group PLC (Food, Beverages &
Tobacco)(s).................................... 5,100 57,099
Dixons Group PLC (Retail)(s)..................... 12,981 61,412
Enterprise Oil PLC (Oil-Production)(s)........... 3,000 21,390
Glaxo Wellcome PLC (Pharmaceuticals)(s).......... 14,726 416,026
Glynwed International PLC (Diversified
Manufacturing)(s).............................. 10,921 38,199
Granada Group PLC (Consumer Goods &
Services)(s)................................... 4,000 35,456
Great Universal Stores PLC (Retail)(s)........... 9,200 57,139
Hanson PLC (Building Materials)(s)............... 11,400 80,856
Hays PLC (Commercial Services)(s)................ 9,400 52,691
Hilton Group PLC (Restaurants & Hotels)(s)....... 13,000 47,997
HSBC Holdings PLC (Financial Services)(s)........ 21,157 233,391
Imperial Chemical Industries PLC
(Chemicals)(s)................................. 4,800 38,457
Jazztel PLC (Telecommunication Services)+(s)..... 570 21,752
Kingfisher PLC (Retail)(s)....................... 6,600 60,969
Lloyds TSB Group PLC (Banking)(s)................ 29,508 319,339
Marconi PLC (Telecommunications-Equipment)(s).... 11,930 143,552
MEPC PLC (Real Estate)(s)........................ 8,451 55,582
MFI Furniture Group PLC (Household
Products)(s)................................... 27,470 25,047
National Power PLC (Electric)(s)................. 8,790 48,286
Northern Foods PLC (Food, Beverages &
Tobacco)(s).................................... 15,400 26,587
Nycomed Amersham PLC (Medical Supplies)(s)....... 7,704 66,388
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
------------------------------------------------- --------- ------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Ocean Group PLC (Transport & Services)(s)........ 3,400 $ 61,749
Pearson PLC (Broadcasting & Publishing)(s)....... 3,100 93,417
Prudential PLC (Insurance)(s).................... 8,668 131,057
Reckitt Benckiser PLC (Household Products)(s).... 8,300 90,940
Reuters Group PLC (Broadcasting &
Publishing)(s)................................. 8,388 124,880
Royal & Sun Alliance Insurance Group PLC
(Insurance)(s)................................. 17,027 101,297
Royal Bank of Scotland Group PLC (Banking)(s).... 6,617 108,800
Sage Group PLC (Computer Software)(s)............ 7,700 74,641
ScottishPower PLC (Electric)(s).................. 11,300 89,522
Smith & Nephew PLC (Medical Supplies)(s)......... 12,300 32,726
SmithKline Beecham PLC (Pharmaceuticals)(s)...... 24,606 314,103
Standard Chartered PLC (Banking)(s).............. 5,800 74,646
Tesco PLC (Retail)(s)............................ 31,800 96,018
TI Group PLC (Diversified Manufacturing)(s)...... 7,300 40,374
Trinity Mirror PLC (Broadcasting &
Publishing)(s)................................. 3,000 23,856
Vodafone AirTouch PLC (Telecommunications)(s).... 219,152 999,123
Williams PLC (Diversified Manufacturing)(s)...... 7,000 39,761
Woolwich PLC (Financial Services)(s)............. 10,800 49,722
WPP Group PLC (Business & Public Services)(s).... 4,400 53,471
-----------
6,482,573
-----------
TOTAL COMMON STOCK (COST $17,748,587).......... 22,124,482
-----------
RIGHTS (0.1%)
NETHERLANDS (0.1%)
Koninklijke Numico NV (Food, Beverages &
Tobacco)+(s)................................... 2,074 962
Via Net.Works, Inc. (Computer Software)+(s)...... 2,078 29,388
-----------
TOTAL RIGHTS (COST $67,915).................... 30,350
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN USD) VALUE
--------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (0.9%)
U.S. TREASURY OBLIGATIONS (0.9%)
United States Treasury Bill, 5.98%(y)
due 10/12/00 (cost $215,222)(s)................ $220,000 $ 215,246
-----------
TOTAL INVESTMENTS (COST $18,031,724) (96.3%)................
22,370,078
OTHER ASSETS IN EXCESS OF LIABILITIES (3.7%)................
862,737
-----------
NET ASSETS (100.0%)......................................... $23,232,815
===========
</TABLE>
------------------------------
+ -Non-income producing security.
(s)Security is fully or partially segregated with custodian as collateral for
futures contracts or with broker as initial margin for futures contracts.
$8,579,049 of the market value has been segregated.
(y) Yield to maturity.
SDR -Swedish Depository Receipt
Note: Based on the cost of investments of $18,031,724 for federal income tax
purposes at May 31, 2000, the aggregated gross unrealized appreciation and
depreciation was $5,512,948 and $1,174,594, respectively, resulting in net
unrealized appreciation of $4,338,354.
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
PERCENT OF
TOTAL INVESTMENT
----------------
<S> <C>
Telecommunication Services........................ 9.3%
Pharmaceuticals................................... 9.1%
Telecommunications-Equipment...................... 8.7%
Banking........................................... 8.3%
Financial Services................................ 6.7%
Telecommunications................................ 5.9%
Insurance......................................... 5.8%
Oil - Production.................................. 5.4%
Food, Beverages & Tobacco......................... 5.2%
Oil - Services.................................... 3.5%
Diversified Manufacturing......................... 3.1%
Electronics....................................... 3.0%
Utilities......................................... 2.9%
Retail............................................ 2.8%
Broadcasting & Publishing......................... 2.5%
Electric.......................................... 2.3%
Automotive........................................ 1.7%
Chemicals......................................... 1.6%
Computer Software................................. 1.5%
Commerical Services............................... 1.1%
Building Materials................................ 1.0%
Computer Systems.................................. 0.8%
Forest Products & Paper........................... 0.7%
Machinery......................................... 0.7%
Holding Companies................................. 0.6%
Consumer Goods & Services......................... 0.5%
Household Products................................ 0.5%
Medical Supplies.................................. 0.5%
Metals & Mining................................... 0.5%
Transport & Services.............................. 0.5%
Aerospace......................................... 0.4%
Gas Exploration................................... 0.4%
Multi-Industry.................................... 0.4%
Automotive Supplies............................... 0.3%
Construction & Housing............................ 0.3%
Real Estate....................................... 0.3%
Appliances & Household Durables................... 0.2%
Business & Public Services........................ 0.2%
Entertainment, Leisure & Media.................... 0.2%
Restaurants & Hotels.............................. 0.2%
Wholesale & International Trade................... 0.2%
Airlines.......................................... 0.1%
Biotechnology..................................... 0.1%
-----
100.0%
=====
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $18,031,724 ) $22,370,078
Foreign Currency at Value (Cost $1,201,017 ) 1,199,177
Receivable for Investments Sold 52,850
Unrealized Appreciation of Forward Foreign Currency
Contracts 87,794
Variation Margin Receivable 37,271
Dividends Receivable 33,704
Foreign Tax Reclaim Receivable 18,365
Receivable for Expense Reimbursement 7,964
Interest Receivable 2,768
Prepaid Trustees' Fees 31
Prepaid Expenses and Other Assets 281
-----------
Total Assets 23,810,283
-----------
LIABILITIES
Payable to Custodian 350,003
Payable for Investments Purchased 87,267
Unrealized Depreciation of Forward Foreign Currency
Contracts 77,483
Advisory Fee Payable 13,299
Administrative Services Fee Payable 499
Administration Fee Payable 22
Fund Services Fee Payable 21
Accrued Expenses 48,874
-----------
Total Liabilities 577,468
-----------
NET ASSETS
Applicable to Investors' Beneficial Interests $23,232,815
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax of $37,154) $245,714
Interest Income 21,330
--------
Investment Income 267,044
EXPENSES
Advisory Fee $ 86,177
Custodian Fees and Expenses 50,199
Professional Fees and Expenses 25,033
Administrative Services Fee 3,246
Amortization of Organization Expense 1,394
Fund Services Fee 224
Trustees' Fees and Expenses 120
Administration Fee 104
Miscellaneous 4,623
---------
Total Expenses 171,120
Less: Reimbursement of Expenses (37,683)
---------
NET EXPENSES 133,437
--------
NET INVESTMENT INCOME 133,607
NET REALIZED GAIN (LOSS) ON
Investments 702,102
Futures Contracts (127,976)
Foreign Currency Transactions (113,535)
---------
Net Realized Gain 460,591
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Investments (4,265)
Futures Contracts 38,969
Foreign Currency Contracts and Translations 43,982
---------
Net Change in Unrealized Appreciation 78,686
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $672,884
========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
MAY 31, 2000 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1999
------------ -----------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 133,607 $ 222,515
Net Realized Gain on Investments 460,591 440,485
Net Change in Unrealized Appreciation of Investments 78,686 2,408,676
------------ ------------
Net Increase in Net Assets Resulting from Operations 672,884 3,071,676
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 22,872,546 14,558,410
Withdrawals (25,742,472) (19,480,002)
------------ ------------
Net Decrease from Investors' Transactions (2,869,926) (4,921,592)
------------ ------------
Total Decrease in Net Assets (2,197,042) (1,849,916)
NET ASSETS
Beginning of Period 25,429,857 27,279,773
------------ ------------
End of Period $ 23,232,815 $ 25,429,857
============ ============
</TABLE>
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD
FOR THE YEAR ENDED MARCH 28, 1995
SIX MONTHS ENDED FOR THE FISCAL FOR THE ELEVEN DECEMBER 31, (COMMENCEMENT OF
MAY 31, 2000 YEAR ENDED MONTHS ENDED -------------------- OPERATIONS) THROUGH
(UNAUDITED) NOVEMBER 30, 1999 NOVEMBER 30, 1998 1997 1996 DECEMBER 31, 1995
---------------- ----------------- ----------------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET
ASSETS
Net Expenses 1.00%(a) 1.00% 0.87%(a) 0.88% 0.84% 0.90%(a)
Net Investment
Income 1.01%(a) 0.89% 1.17%(a) 1.47% 1.65% 1.67%(a)
Expenses without
Reimbursement 1.28%(a) 1.59% 1.11%(a) 0.89% 0.84% 0.90%(a)
Portfolio Turnover 47%(b) 68% 99%(b) 65% 57% 36%(b)
</TABLE>
------------------------
(a) Annualized.
(b) Not Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The European Equity Portfolio (the "portfolio") is one of five subtrusts
(portfolios) comprising The Series Portfolio (the "series portfolio"). The
series portfolio is registered under the Investment Company Act of 1940, as
amended, as a no-load open-end management investment company which was organized
as a trust under the laws of the State of New York on June 24, 1994. The
portfolio's investment objective is to provide a high total return from a
portfolio of equity securities of European companies. The portfolio commenced
operations on March 28, 1995. The Declaration of the Trust permits the trustees
to issue an unlimited number of beneficial interests in the portfolio.
The portfolio may have elements of risk not typically associated with
investments in the United States due to concentrated investments in a limited
number of countries or regions which may vary throughout the year. Such
concentrations may subject the portfolio to additional risks resulting from
political or economic conditions in such countries or regions and the possible
imposition of adverse governmental laws or currency exchange restrictions
affecting such countries or regions which could cause the securities and their
markets to be less liquid and prices more volatile than those comparable to the
United States. The ability of the issuers of debt securities held by the
portfolio to meet their obligations may be affected by economic and political
developments in a specific industry or region.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the portfolio:
a) The portfolio values securities that are listed on an exchange using
prices supplied daily by an independent pricing service that are based on
the last traded price on a national securities exchange or in the absence
of recorded trades, at the readily available mean of the bid and asked
prices on such exchange, if such exchange or market constitutes the
broadest and most representative market for the security. Securities
listed on a foreign exchange are valued at the last traded price or, in
the absence of recorded trades, at the readily available mean of the bid
and asked prices on such exchange available before the time when net
assets are valued. Independent pricing service procedures may also include
the use of prices based on yields or prices of securities of comparable
quality, coupon, maturity and type, indications as to values from dealers,
operating data, and general market conditions. Unlisted securities are
valued at the average of the quoted bid and asked prices in the
over-the-counter market provided by a principal market maker or dealer. If
prices are not supplied by the portfolio's/fund's independent pricing
service or principal market maker or dealer, such securities are priced
using fair values in accordance with procedures adopted by the portfolio's
Trustees. All short-term securities with a remaining maturity of sixty
days or less are valued using the amortized cost method.
Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the
25
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
exchange on which they are traded closes and the time when the portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the portfolio's trustees.
b) The books and records of the portfolio are maintained in U.S. dollars. The
market value of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing exchange rates
at the end of the period. Purchases, sales, income and expenses are
translated at the exchange rates prevailing on the respective dates of
such transactions. Translation gains and losses resulting from changes in
exchange rates during the reporting period and gains and losses realized
upon settlement of foreign currency transactions are reported in the
Statement of Operations. Although the net assets of the portfolio are
presented at the exchange rates and market values prevailing at the end of
the period, the portfolio does not isolate the portion of the results of
operations arising as a result of changes in foreign exchange rates from
the fluctuations arising from changes in the market prices of securities
during the period.
c) Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or as of the time that the
relevant ex-dividend date and amount become known. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.
d) 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) The portfolio may enter into forward and spot foreign currency contracts
to protect securities and related receivables and payables against
fluctuations in future foreign currency rates and to enhance returns. A
forward contract is an agreement to buy or sell currencies of different
countries on a specified future date at a specified rate. Risks associated
with such contracts include the movement in the value of the foreign
currency relative to the U.S. dollar and the ability of the counterparty
to perform.
The market value of the contract will fluctuate with changes in currency
exchange rates. Contracts are valued daily at the current foreign exchange
rates and the change in the market value is recorded by the portfolio as
unrealized appreciation or depreciation of forward and spot foreign
currency translations.
f) A futures contract is an agreement to purchase/sell a specified quantity
of an underlying instrument at a specified future date or to make/receive
a cash payment based on the value of a securities index. The price at
which the purchase and sale will take place is fixed when the portfolio
enters into the contract. Upon entering into such a contract, the
portfolio is required to pledge to the broker an amount of cash and/or
liquid securities equal to the minimum "initial margin" requirements of
the exchange. Pursuant to the contract, the portfolio agrees to receive
from, or pay to, the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are
known as "variation margin" and are recorded by the portfolio as
unrealized gains or losses. When the contract is closed, the portfolio
records a realized gain or loss equal to the difference between the value
of the contract at the
26
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
time it was opened and the value at the time when it was closed. The
portfolio invests in futures contracts for the purpose of hedging its
existing portfolio securities, or securities the portfolio intends to
purchase, against fluctuations in value caused by changes in prevailing
market interest rates or securities movements. The use of futures
transactions involves the risk of imperfect correlation in movements in
the price of futures contracts, interest rates and the underlying hedged
assets, and the possible inability of counterparties to meet the terms of
their contracts.
g) 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 wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Under the terms of the
agreement, the portfolio pays JPMIM at an annual rate of 0.65% of the
portfolio's average daily net assets. For the six months ended May 31,
2000 such fees amounted to $86,177.
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 May 31, 2000, the fee for
these services amounted to $104.
c) The portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for certain
aspects of the administration and operation of the portfolio. Under the
Services Agreement, the portfolio has agreed to pay Morgan a fee equal to
its allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the
portfolio and certain other portfolios for which JPMIM acts as investment
advisor (the "master portfolios") and J.P. Morgan Series Trust in
accordance with the following annual schedule: 0.09% on the first
$7 billion of their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The portion of this charge payable by
the portfolio is determined by the proportionate share 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 May 31, 2000, the fee for these
services amounted to $3,246.
27
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
In addition, Morgan has agreed to reimburse the portfolio to the extent
necessary to maintain the total operating expenses of the portfolio at no
more than 1.00% of the average daily net assets of the portfolio through
February 28, 2001. For the six months ended May 31, 2000, Morgan has
agreed to reimburse the portfolio $35,224 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 $224 for the six months 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 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. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended May 31, 2000 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
--------- -----------
<S> <C>
$11,514,687 $13,878,737
</TABLE>
Open futures contracts at May 31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
NET UNREALIZED CURRENT MARKET VALUE
CONTRACTS LONG APPRECIATION OF CONTRACTS
-------------- -------------- --------------------
<S> <C> <C> <C>
DJ Euro Stoxx 50, expiring June 2000............. 10 $ 17,559 $ 482,612
FTSE 100 Index, expiring June 2000............... 10 28,376 951,794
------------- ------------- -------------------
Totals........................................... 20 $ 45,935 $ 1,434,406
============= ============= ===================
</TABLE>
28
<PAGE>
THE EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
At May 31, 2000 the portfolio had open forward currency contracts as follows:
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
CONTRACTUAL VALUE AT APPRECIATION/
VALUE 5/31/00 (DEPRECIATION)
----------- ----------- --------------
<S> <C> <C> <C>
PURCHASE CONTRACTS
Danish Krone 1,929,685, expiring 8/24/2000....... $ 233,618 $ 240,883 $ 7,265
Euro 2,682,845, expiring 8/24/2000............... 2,435,197 2,502,652 67,455
Euro 233,000 for CHF 362,187..................... 215,559 217,351 1,792
Norwegian Krone 765,027, expiring 8/24/2000...... 84,069 85,447 1,378
Pound Sterling 684,158, expiring 8/24/2000....... 1,018,082 1,024,348 6,266
</TABLE>
<TABLE>
<CAPTION>
SETTLEMENT
VALUE
----------
<S> <C> <C> <C>
SALES CONTRACTS
Danish Krone 1,929,685, expiring 8/24/2000....... 234,413 240,883 (6,470)
Euro 2,375,644, expiring 8/24/2000............... 2,161,069 2,216,084 (55,015)
Pound Sterling 684,158, expiring 8/24/2000....... 1,018,487 1,024,349 (5,862)
Swedish Krona 847,341, expiring 8/24/2000........ 92,890 94,664 (1,774)
Swiss Franc 451,696, expiring 8/24/2000.......... 264,108 268,832 (4,724)
-------------
Net Unrealized Appreciation on Forward Foreign
Currency Contracts.............................. $ 10,311
=============
</TABLE>
4. CREDIT AGREEMENT
The portfolio is party to a revolving line of credit agreement as discussed more
fully in Note 4 of the fund's Notes to the Financial Statements which are
included elsewhere in this report.
29
<PAGE>
J.P. MORGAN FUNDS
PRIME MONEY MARKET FUND
TREASURY 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
TAX EXEMPT BOND FUND
CALIFORNIA BOND FUND: SELECT SHARES
NEW YORK TAX EXEMPT BOND FUND
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
EMERGING MARKETS EQUITY FUND
EUROPEAN EQUITY FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL OPPORTUNITIES 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.
IMSAR232
J.P. Morgan European Equity Fund
SEMIANNUAL REPORT
MAY 31, 2000
