JP MORGAN FUNDS, N-30D, 2000-02-03

JP MORGAN FUNDS
N-30D, 2000-02-03

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<PAGE>

LETTER TO THE SHAREHOLDERS OF THE
J.P. MORGAN U.S. SMALL COMPANY FUND

January 3, 2000

Dear Shareholder:

The six months ended November 30, 1999, were a volatile time for
small-company stocks. That said, the J.P. Morgan U.S. Small Company Fund
returned 27.54% for the period, significantly outperforming the 4.18% return
of the Russell 2000 Index and the 11.62% return of the Lipper Small Company
Fund Average.

The fund's net asset value rose from $21.54 per share on May 31, 1999, to
$27.46 per share on November 30, 1999, after making distributions of
approximately $0.01 per share from ordinary income. There were no
distributions from short- and long-term capital gains. The fund's net assets
increased from approximately $186.9 million on May 31, 1999, to approximately
$253.0 million at the end of the reporting period. The net assets of the
master portfolio, in which the fund invests, totaled approximately $643.9
million on November 30, 1999.

This report includes an interview with Marian U. Pardo, the portfolio manager
primarily responsible for the master portfolio. In this interview, Marian
discusses events in the small cap markets, portfolio performance, and her
outlook for the coming months.

As chairman and president of Asset Management Services, we appreciate your
investment in the fund. If you have any comments or questions, please call
your Morgan representative or J.P. Morgan Funds Services at (800) 521-5411.

Sincerely yours,

/s/ Ramon de Oliveira /s/ Keith M. Schappert

Ramon de Oliveira Keith M. Schappert
Chairman of Asset Management Services President of Asset Management Services
J.P. Morgan & Co. Incorporated J.P. Morgan & Co. Incorporated

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

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

PORTFOLIO MANAGER Q&A .............. 3
- ---------------------------------------------------------------------------------
</TABLE>
1
<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.

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
----------------- -------------------------------------------------
THREE SIX ONE THREE FIVE TEN
AS OF NOVEMBER 30, 1999 MONTHS MONTHS YEAR YEARS YEARS YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J.P. Morgan U.S. Small Company Fund 21.08% 27.54% 35.05% 14.62% 18.91% 13.20%
Russell 2000 Index* 6.42% 4.18% 15.67% 10.05% 14.82% 13.26%
Lipper Small Company Fund Average 8.96% 11.62% 23.42% 9.74% 15.57% 12.15%

AS OF SEPTEMBER 30, 1999
- ---------------------------------------------------------------------------------------------------------------------------
J.P. Morgan U.S. Small Company Fund 0.78% 12.38% 23.92% 10.06% 14.19% 11.15%
Russell 2000 Index* -6.32% 8.25% 19.07% 8.70% 12.38% 10.93%
Lipper Small Company Fund Average -3.77% 12.57% 24.96% 7.85% 12.76% 10.97%
</TABLE>

*THE RUSSELL 2000 IS AN UNMANAGED INDEX USED TO MEASURE THE AVERAGE STOCK
PERFORMANCE OF U.S. SMALL-CAP STOCKS. IT DOES NOT INCLUDE FEES OR OPERATING
EXPENSES AND IS NOT AVAILABLE FOR ACTUAL INVESTMENT.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FUND RETURNS ARE NET OF
FEES AND ASSUME THE REINVESTMENT OF FUND DISTRIBUTIONS. LIPPER ANALYTICAL
SERVICES, INC. IS A LEADING SOURCE FOR MUTUAL FUND DATA.

<PAGE>

PORTFOLIO MANAGER Q&A

[PHOTO]

Following is an interview with MARIAN U. PARDO, managing director and member
of the portfolio management team for the master portfolio, in which the fund
invests. Marian joined J.P. Morgan in 1968. She currently manages a number of
small-cap portfolios. Previously, she has managed equity and convertible
funds, as well as large-cap equity portfolios. Marian received her B.A. from
Barnard College. This interview took place on December 9, 1999, and reflects
Marian's views on that date.

WHAT WERE THE KEY TRENDS IN THE SMALL CAP MARKET OVER THE PAST SIX MONTHS?

MP: For the U.S. equity market, this six-month period was a highly volatile
one. Small caps started off the year on somewhat shaky footing. However, for
the balance of the year, they have done quite well, outperforming their
larger-cap brethren and offering attractive relative value. Positive earnings
announcements and forecasts for future strong earnings propelled the U.S.
market forward even as market leadership narrowed even further as technology
further strengthened its market-driving position. On the flip side, however,
any company that missed consensus expectations, even by a penny or two, was
severely punished by the market.

What we're seeing is the rise in importance of the "new" economy and the
waning of the old. These new and old classifications have translated roughly
into growth and value, with the growth sectors tech, telecom, biotech, and
drugs driving the market while old economy staples such as basic industry and
utilities fall to the sidelines.

The increasing disparity between growth and value that was a general market
trend was particularly striking in the small cap arena. For the year-to-date
ended November 30, the Russell 2000 Growth returned 21.65% versus a negative
4.42% for the Russell 2000 Value. Put another way, of the sectors in the
Russell 2000 Index, only those several new economy sectors had positive
returns, and the index still posted a 9%-plus return year-to-date! This was
further helped by the June 30 rebalancing of the Russell 2000. The weightings
of new economy sectors increased, the result being an index that is a much
better representation of emerging U.S. companies. The IPO market has
continued to be red hot as well, with a large number of oversubscribed deals
and Internet related issues immediately soaring to dizzying heights. One
advantage of being a major asset management firm is that we have access to
any company; last year we met with over 75% of the companies coming public.

At the same time, mergers and acquisitions have been reshaping the small-cap
landscape, as many of the deals this year have been large companies buying
small. This has driven up the price of the targets as well as bolstering
credibility. We are finding opportunities in traditional value sectors
because of the M&A activity. In retail, for example, Federated bought
Fingerhut, and in utilities, Scana Corporation acquired Public Service of
North Carolina.

<PAGE>

HOW DID THE PORTFOLIO PERFORM IN THIS ENVIRONMENT?

MP: The portfolio did very well over the six months. We are now over 1600
basis points ahead of the index year-to-date. The tech-driven, growth-driven
market has been to our advantage. While remaining broadly diversified across
all sectors, earlier in the year we were overweight tech and telecom while
underweighting REITs and utilities, all of which worked to our advantage. We
have been fully exposed to all opportunities. Our overweights and
underweights have been modest; however, these positions added a lot to
performance because of the disparity between growth and value.

WHICH HOLDINGS ADDED TO PERFORMANCE?

MP: Human Genome Sciences, MicroStrategy, SDL, Inc., and Applied Micro
Circuits were among our top performers over the six months. We've owned Human
Genome Sciences since its IPO several years ago and the company continues to
be at the forefront of pharmaceutical and diagnostic product development.
Human Genome is a very good example of how we invest: we look to identify an
opportunity early, be patient, and add to the position over time.

MicroStrategy was one of our top software stocks. The stocks of enterprise
software providers in general have skyrocketed this year and MicroStrategy
has been among the big winners. In October, the company announced that
revenues were up 102% over the same quarter last year and third-quarter net
income rose 97% from a year ago.

SDL,Inc., a manufacturer of products that power the transmission of data,
voice, and Internet information over fiber-optic networks, was up following
several consecutive quarters of positive earnings. Its outlook continues to
be bright.

Applied Micro Circuits continues to benefit from strong demand for
high-performance, high-bandwidth silicon solutions for the world's
communication infrastructure. For the period, it was up over 500%.

Outside tech, Mueller Industries (multi-industry) and Georgia Gulf (basic
industry) have had a positive impact on performance.

WHICH ONES DETRACTED FROM PERFORMANCE?

MP: There have, of course, been some disappointments. Cinar Corp., a Canadian
film company, has been caught in the controversy over government
subsidization of the Canadian film industry. It has since recovered.

The health services sector in general had a rough year. Our holding in
Sunrise Assisted Living detracted from performance as the company's earnings
growth slowed in the face of some overbuilding facilities. Health service
companies have been fighting strong headwinds this year, which include
political attitudes, reimbursements, and Y2K concerns. We sold our position
in Sunrise.
4

<PAGE>

A handful of tech and finance companies that had disappointing earnings
underperformed. Included in this group is New Era of Networks (which we sold)
and Willis Lease Finance.

WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?

MP: In an extremely volatile market, with very narrow leadership, we feel we
are properly positioned to take advantage of the opportunities out there. We
expect the volatility to continue across the equity markets into 2000. We
think, however, that the market will spread out somewhat, although the
emphasis will still be on the new economy. Given global growth and continued
U.S. growth, we think there are still opportunities in basic industry,
energy, and some beaten down industrials. We are positioning ourselves to
take advantage of this and have reduced our tech holdings a bit.
5
<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
J.P. Morgan U.S. Small Company Fund seeks to provide a high total return from
a portfolio of equity securities of small companies. The fund seeks to
outperform the Russell 2000 Index. The fund is designed for investors who are
willing to assume the somewhat higher risk of investing in small companies in
order to seek a higher total return over time than might be expected from a
portfolio of stocks of large companies.

- -------------------------------------------------------------------------------
COMMENCEMENT OF INVESTMENT OPERATIONS
6/27/85

- -------------------------------------------------------------------------------
FUND NET ASSETS AS OF 11/30/99
$252,970,591

- -------------------------------------------------------------------------------
PORTFOLIO NET ASSETS AS OF 11/30/99
$643,929,513

- -------------------------------------------------------------------------------
DIVIDEND PAYABLE DATE
12/20/99

- -------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/99

- -------------------------------------------------------------------------------

EXPENSE RATIO
The fund's current annualized expense ratio of 1.00% 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 NOVEMBER 30, 1999

PORTFOLIO ALLOCATION
(AS A PERCENTAGE OF TOTAL INVESTMENTS)

[CHART]

TECHNOLOGY 27.1%

CONSUMER GOODS
& SERVICES 13.2%

FINANCE 13.1%

HEALTHCARE 9.2%

INDUSTRIAL PRODUCTS
& SERVICES 9.0%

BASIC INDUSTRIES 7.1%

SHORT-TERM & OTHER 7.0%

TELECOMMUNICATIONS 6.6%

ENERGY 4.8%

TRANSPORTATION 1.4%

UTILITES 1.2%

CONVERTIBLE BONDS 0.3%

LARGEST EQUITY HOLDINGS % OF TOTAL INVESTMENTS
- ----------------------------------------------------------
<S> <C>
HUMAN GENOME SCIENCES (HEALTHCARE) 2.0%
MICROSTRATEGY, INC. (TECHNOLOGY) 1.5%
CHECKFREE HOLDINGS CORP.
(INDUSTRIAL PRODUCTS & SERVICES) 1.2%
APPLIED MICRO CIRCUITS CORP. (TECHNOLOGY) 1.2%
GEORGIA GULF CORP. (BASIC INDUSTRIES) 1.1%
WIND RIVER SYSTEMS, INC. (TECHNOLOGY) 1.1%
COOPER CAMERON CORP. (ENERGY) 1.1%
KOPIN CORP. (TECHNOLOGY) 1.0%
ANCHOR GAMING (CONSUMER GOODS & SERVICES) 1.0%
GEON CO. (BASIC INDUSTRIES) 1.0%

</TABLE>
6

<PAGE>

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

References to specific securities and their issuers are for illustrative
purposes only and are not intended to be, and should not be interpreted as,
recommendations to purchase or sell such securities. Opinion expressed herein
are based on current market conditions and are subject to change without
notice. The fund invests in a master portfolio (another fund with the same
objective). Historically, small-company stocks have been more volatile than
large-company stocks.

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 U.S. SMALL COMPANY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in the U.S. Small Company Portfolio
("Portfolio"), at value $252,564,550
Receivable for Shares of Beneficial Interest Sold 764,152
Prepaid Expenses and Other Assets 2,532
------------
Total Assets 253,331,234
------------
LIABILITIES
Payable for Shares of Beneficial Interest
Redeemed 262,055
Shareholder Servicing Fee Payable 49,970
Administrative Services Fee Payable 4,987
Fund Services Fee Payable 1,911
Line of Credit Payable 679
Administration Fee Payable 260
Other Payables 490
Accrued Expenses 40,291
------------
Total Liabilities 360,643
------------
NET ASSETS
Applicable to 9,213,226 Shares of Beneficial
Interest Outstanding
(par value $0.001, unlimited shares authorized) $252,970,591
============
Net Asset Value, Offering and Redemption Price
Per Share $27.46
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $202,774,837
Accumulated Net Investment Income 289,759
Accumulated Net Realized Loss on Investment (11,923,459)
Net Unrealized Appreciation of Investment 61,829,454
------------
Net Assets $252,970,591
============
</TABLE>

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

8
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Dividend Income $ 775,136
Allocated Interest Income 498,856
Allocated Portfolio Expenses (698,872)
-----------
Net Investment Income Allocated from
Portfolio 575,120
FUND EXPENSES
Administrative Services Fee $ 26,502
Shareholder Servicing Fee 261,678
Transfer Agent Fees 26,700
Printing Expenses 6,484
Professional Fees 6,158
Line of Credit Expenses 1,997
Fund Services Fee 1,807
Administration Fee 1,472
Trustees' Fees and Expenses 692
Insurance Expense 381
Miscellaneous 12,241
--------
Total Fund Expenses 346,112
-----------
NET INVESTMENT INCOME 229,008
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 11,528,515
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO 42,006,845
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $53,764,368
===========
</TABLE>

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

9
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FISCAL
NOVEMBER 30, 1999 YEAR ENDED
(UNAUDITED) MAY 31, 1999
----------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 229,008 $ 694,518
Net Realized Gain (Loss) on Investment Allocated
from Portfolio 11,528,515 (23,131,194)
Net Change in Unrealized Appreciation
(Depreciation) of Investment Allocated from
Portfolio 42,006,845 (10,598,624)
---------------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 53,764,368 (33,035,300)
---------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (87,694) (678,710)
Net Realized Gain -- (23,789,109)
---------------- -------------
Total Distributions to Shareholders (87,694) (24,467,819)
---------------- -------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Proceeds from Shares of Beneficial Interest Sold 67,470,686 74,694,963
Reinvestment of Dividends and Distributions 68,241 19,317,244
Cost of Shares of Beneficial Interest Redeemed (55,124,197) (111,433,558)
---------------- -------------
Net Increase (Decrease) from Transactions in
Shares of Beneficial Interest 12,414,730 (17,421,351)
---------------- -------------
Total Increase (Decrease) in Net Assets 66,091,404 (74,924,470)
NET ASSETS
Beginning of Period 186,879,187 261,803,657
---------------- -------------
End of Period (including undistributed net
investment income of $289,759 and $148,445,
respectively) $ 252,970,591 $ 186,879,187
================ =============
</TABLE>

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

10
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period is as follows:

<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED MAY 31,
NOVEMBER 30, 1999 -----------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
----------------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE PER UNIT, BEGINNING OF PERIOD $ 21.54 $ 27.68 $ 26.04 $ 26.20 $ 22.02 $ 21.40
---------------- -------- -------- -------- ------- --------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income --(a) 0.08 0.11 0.18 0.26 0.22
Net Realized and Unrealized Gain on Investments
and 5.93 (3.30) 5.58 2.00 6.96 2.13
---------------- -------- -------- -------- ------- --------
Total from Investment Operations 5.93 (3.22) 5.69 2.18 7.22 2.35
---------------- -------- -------- -------- ------- --------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.01) (0.08) (0.14) (0.21) (0.26) (0.21)
Net Realized Gain -- (2.84) (3.91) (2.13) (2.78) (1.52)
---------------- -------- -------- -------- ------- --------
Total distributions to Shareholders (0.01) (2.92) (4.05) (2.34) (3.04) (1.73)
---------------- -------- -------- -------- ------- --------

NET ASSET VALUE PER UNIT, END OF PERIOD $ 27.46 $ 21.54 $ 27.68 $ 26.04 $ 26.20 $ 22.02
================ ======== ======== ======== ======= ========

RATIOS AND SUPPLEMENTAL DATA
Total Return 27.54%(c) (10.95)% 23.37% 9.49% 35.48% 12.28%
Net Assets, End of Period (in thousands) $ 252,971 $$186,879 $261,804 $237,985 $22,917 $179,130
Expenses 1.00%(b) 1.02% 0.97% 0.90% 0.90% 0.90%
Net Investment Income 0.22%(b) 0.34% 0.39% 0.71% 1.10% 1.02%
Expenses without reimbursement 1.00%(b) 1.02% 1.03% 1.03% 1.03% 1.12%
</TABLE>

- ------------------------
(a) Less than 0.01.

(b) Annualized.

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

11
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

J.P. Morgan U.S. Small Company Fund (the "fund"), is a separate series of
J.P. Morgan Funds, a Massachusetts business trust (the "trust") which was
organized on November 4, 1992. The trust is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The fund, prior to its tax-free reorganization on July 18, 1993 to a series of
the trust, operated as a stand-alone mutual fund. Costs related to the
reorganization were borne by Morgan Guaranty Trust Company of New York
("Morgan"), a wholly owned subsidiary of J.P. Morgan & Co., Inc.
("J.P. Morgan"). This report includes periods which preceded the fund's
reorganization and reflects the operations of the predecessor entity.

The fund invests all of its investable assets in The U.S. Small Company
Portfolio (the "portfolio"), a no load, 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 (39% at
November 30, 1999). The performance of the fund is directly affected by the
performance of the portfolio. The financial statements of the portfolio,
including the Schedule of Investments, are included elsewhere in this report and
should be read in conjunction with the fund's financial statements.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the fund:

a) Valuation of securities by the portfolio is discussed in Note 1a of the
portfolio's Notes to Financial Statements which are included elsewhere in
this report.

b) The fund records its share of net investment income, realized and
unrealized gain and loss and adjusts its investment in the portfolio each
day. All the net investment income and realized and unrealized gain and
loss of the portfolio is allocated pro rata among the fund and other
investors in the portfolio at the time of such determination.

c) Distributions to shareholders of net investment income are declared and
paid as dividends semi-annually. Distributions to shareholders of net
realized capital gains, 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.

12
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

2. TRANSACTIONS WITH AFFILIATES

a) The trust, on behalf of the fund, has retained Funds Distributor, Inc.
("FDI"), a registered broker-dealer, to serve as co-administrator and
distributor for the fund. Under a Co-Administration Agreement between FDI
and the trust, on behalf of the fund, FDI provides administrative services
necessary for the operations of the fund, furnishes office space and
facilities required for conducting the business of the fund and pays the
compensation of the fund's officers affiliated with FDI. The fund has
agreed to pay FDI fees equal to its allocable share of an annual
complex-wide charge of $425,000 plus FDI's out-of-pocket expenses. The
amount allocable to the fund is based on the ratio of the fund's net
assets to the aggregate net assets of the trust and certain other
investment companies subject to similar agreements with FDI. For the six
months ended November 30, 1999, the fee for these services amounted to
$1,472.

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 six months ended
November 30, 1999, the fee for these services amounted to $26,502.

In addition, J.P. Morgan had 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
1.01% of the average daily net assets of the fund through June 30, 1998.
Effective July 1, 1998, the expense cap has been removed.

c) The trust, on behalf of the fund, has a Shareholder Servicing Agreement
with Morgan to provide account administration and personal account
maintenance service to fund shareholders. The agreement provides for the
fund to pay Morgan a fee for these services which is computed daily and
paid monthly at an annual rate of 0.25% of the average daily net assets of
the fund. For the six months ended November 30, 1999, the fee for these
services amounted to $261,678.

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.

13
<PAGE>
J.P. MORGAN U.S. SMALL COMPANY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

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
$1,807 for the six months ended November 30, 1999.

e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the trust, the J.P. Morgan Institutional Funds, the master
portfolios and J.P. Morgan Series Trust. The Trustees' Fees and Expenses
shown in the financial statements 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 $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 PERIOD FOR THE FISCAL
ENDED YEAR ENDED
NOVEMBER 30, 1999 MAY 31, 1999
----------------- --------------
<S> <C> <C>
Shares sold...................................... 2,874,038 3,301,060
Reinvestment of dividends and distributions...... 3,060 954,446
Shares redeemed.................................. (2,341,793) (5,037,132)
---------------- -------------
Net Increase (Decrease).......................... 535,305 (781,626)
================ =============
</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 27, 1998, with unaffiliated lenders. The maximum borrowing
under the Agreement was $150,000,000. The Agreement expired on May 26, 1999,
however, the fund as party to the Agreement has extended the Agreement and
continues its participation therein for an additional 364 days until May 23,
2000. The purpose of the Agreement is to provide another alternative for
settling large fund shareholder redemptions. Interest on any such borrowings
outstanding will approximate market rates. The fund pays a commitment fee at an
annual rate of 0.085% (0.065% prior to May 26, 1999) on the unused portion of
the committed amount. This is allocable to the funds in accordance with
procedures established by their respective trustees or directors. There were no
outstanding borrowings pursuant to the Agreement as of November 30, 1999.

14
<PAGE>
The U.S. Small Company Portfolio
Semi-annual Report November 30, 1999
(The following pages should be read in conjunction
with J.P. Morgan U.S. Small Company Fund
Semi-Annual Financial Statements)

15
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMMON STOCKS (93.8%)
BASIC INDUSTRIES (7.2%)
CHEMICALS (4.3%)
Albemarle Corp.+................................. 229,900 $ 4,454,312
Bush Boake Allen, Inc.+.......................... 95,000 2,386,875
General Chemical Group, Inc...................... 207,100 582,469
Geon Co.......................................... 207,700 6,282,925
Georgia Gulf Corp................................ 287,100 7,321,050
Minerals Technologies, Inc....................... 39,900 1,576,050
Wellman, Inc..................................... 305,000 4,860,937
------------
27,464,618
------------
FOREST PRODUCTS & PAPER (1.5%)
Caraustar Industries, Inc........................ 255,900 6,253,556
Universal Forest Products, Inc................... 208,700 3,208,762
------------
9,462,318
------------

METALS & MINING (1.4%)
Commercial Metals Co............................. 55,300 1,769,600
Mueller Industries, Inc.+........................ 157,300 5,662,800
Schnitzer Steel Industries, Inc., Class A........ 106,600 2,012,075
------------
9,444,475
------------
TOTAL BASIC INDUSTRIES......................... 46,371,411
------------

CONSUMER GOODS & SERVICES (13.8%)
AUTOMOTIVE (0.2%)
Sonic Automotive, Inc.+.......................... 101,700 915,300
------------

BROADCASTING & PUBLISHING (2.8%)
Citadel Communications Corp.+.................... 54,000 2,703,375
Entercom Communications Corp.+................... 75,900 4,340,531
Radio One, Inc.+................................. 20,900 1,320,619
Radio Unica Corp.+............................... 17,300 477,912
Spanish Broadcasting Systems, Inc., Class A+..... 109,600 3,479,800
TV Guide, Inc., Class A.......................... 70,800 4,493,587
World Wrestling Federation Entertainment,
Inc.+.......................................... 58,000 1,167,250
------------
17,983,074
------------
COMMERCIAL SERVICES (0.1%)
Official Payments Corp.+......................... 12,500 459,375
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

ENTERTAINMENT, LEISURE & MEDIA (3.4%)
American Classic Voyages Co.+.................... 62,400 $ 1,809,600
Anchor Gaming+................................... 117,300 6,458,831
Aztar Corp.+..................................... 141,200 1,509,075
Cinar Corp., Class B+............................ 202,300 2,768,981
Flowers.com, Inc.+............................... 63,200 995,400
Insight Communications, Inc.+.................... 90,500 2,239,875
Media Metrix, Inc.+.............................. 50,500 1,868,500
Premier Parks, Inc.+............................. 102,500 2,562,500
Steiner Leisure Ltd.+............................ 36,825 609,914
Travel Services International, Inc.+............. 60,900 609,000
Webstakes. com, Inc.+............................ 61,600 546,700
------------
21,978,376
------------

FOOD, BEVERAGES & TOBACCO (1.3%)
American Italian Pasta Co., Class A+............. 92,200 2,771,762
Beringer Wine Estates Holdings, Inc., Class B+... 52,500 2,185,312
Keebler Foods Co.+............................... 131,900 3,635,494
------------
8,592,568
------------

HOUSEHOLD APPLIANCES & FURNISHINGS (0.6%)
Furniture Brands International, Inc.+............ 116,700 2,275,650
Stanley Furniture Co., Inc.+..................... 86,200 1,713,225
------------
3,988,875
------------

MACHINERY (0.3%)
Cnh Global NV(i)................................. 156,400 2,140,725
------------

MANUFACTURING (0.2%)
Jore Corp.+...................................... 43,700 524,400
Meade Instruments, Corp.+........................ 26,200 795,825
------------
1,320,225
------------

RESTAURANTS & HOTELS (1.1%)
Boca Resorts, Inc................................ 158,800 1,389,500
Extended Stay America, Inc.+..................... 135,200 1,039,350
Papa John's International, Inc.+................. 94,200 3,382,369
Sun International Hotels Ltd.+(i)................ 72,400 1,366,550
------------
7,177,769
------------
</TABLE>

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

16
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
RETAIL (3.8%)
Alloy Online, Inc................................ 110,400 $ 2,139,000
AnnTaylor Stores Corp.+.......................... 136,500 5,895,094
barnesandnoble.com, inc.+........................ 37,600 714,400
Cost Plus, Inc................................... 47,300 1,750,100
eToys, Inc.+..................................... 8,400 526,050
Expedia, Inc.+................................... 19,100 1,017,075
Gerald Stevens, Inc.+............................ 107,800 1,185,800
Lithia Motors, Inc., Class A+.................... 100,500 1,903,219
School Specialty, Inc.+.......................... 206,000 3,347,500
Stamps.com, Inc.+................................ 42,400 3,336,350
Webvan Group, Inc.+.............................. 13,500 333,281
Williams-Sonoma, Inc.+........................... 39,700 2,163,650
------------
24,311,519
------------
TOTAL CONSUMER GOODS & SERVICES................ 88,867,806
------------

ENERGY (4.9%)
ELECTRIC (0.9%)
Cleco Corp....................................... 169,200 5,520,150
------------
GAS EXPLORATION (1.1%)
Barrett Resources Corp.+......................... 23,000 610,937
Kinder Morgan, Inc............................... 135,600 2,754,375
Newfield Exploration Co.+........................ 141,900 3,662,794
Spinnaker Exploration Co.+....................... 13,100 193,225
------------
7,221,331
------------

OIL-PRODUCTION (0.9%)
Callon Petroleum Co.+............................ 218,900 2,599,437
Devon Energy Corp................................ 64,600 2,277,150
Unit Corp.+...................................... 128,400 738,300
------------
5,614,887
------------

OIL-SERVICES (2.0%)
Cooper Cameron Corp.+............................ 163,400 7,005,775
ENSCO International, Inc......................... 63,700 1,277,981
National-Oilwell, Inc.+.......................... 145,100 2,067,675
Smith International, Inc.+....................... 64,700 2,579,912
------------
12,931,343
------------
TOTAL ENERGY................................... 31,287,711
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

FINANCE (13.4%)
BANKING (4.8%)
BancorpSouth, Inc................................ 36,400 $ 625,625
Bank United Corp., Class A....................... 158,000 5,628,750
Capital Crossing Bank+........................... 47,900 658,625
City National Corp............................... 86,400 3,115,800
Colonial BancGroup, Inc.......................... 264,700 3,027,506
Commercial Federal Corp.......................... 129,349 2,352,535
Community First Bankshares, Inc.................. 152,500 2,773,594
Hamilton Bancorp, Inc.+.......................... 95,000 1,828,750
National Commerce Bancorporation................. 187,800 4,741,950
Pacific Century Financial Corp................... 91,200 1,789,800
Republic Security Financial Corp................. 134,500 1,080,203
Sterling Bancshares, Inc......................... 12,900 165,281
Summit Bancshares, Inc........................... 33,900 669,525
Sun Bancorp, Inc.+............................... 88,050 1,012,575
Westamerica Bancorporation....................... 41,500 1,304,656
------------
30,775,175
------------

FINANCIAL SERVICES (3.0%)
Allied Capital Corp.............................. 156,900 3,177,225
American Home Mortgage Holdings, Inc.+........... 79,400 468,956
Creditrust Corp.+................................ 63,700 1,114,750
Gabelli Asset Management, Inc., Class A+......... 98,900 1,718,387
Heller Financial, Inc............................ 191,100 4,228,087
Intelligent Life Corp............................ 31,800 139,125
Jones Intercable, Inc.+.......................... 18,600 1,090,425
MicroFinancial, Inc.............................. 46,200 522,637
Ocwen Financial Corp.+........................... 170,000 1,105,000
Rare Medium Group, Inc.+......................... 51,600 1,431,900
TD Waterhouse Group, Inc.+....................... 112,100 1,968,756
Web Street, Inc.+................................ 49,200 747,225
Willis Lease Finance Corp.+...................... 198,200 1,325,462
------------
19,037,935
------------

INSURANCE (2.4%)
Annuity and Life Re (Holdings), Ltd.(i)+......... 159,300 4,540,050
E.W. Blanch Holdings, Inc........................ 21,900 1,270,200
Fremont General Corp............................. 321,500 1,627,594
Miix Group, Inc.................................. 23,700 322,912
</TABLE>

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

17
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
INSURANCE (CONTINUED)
Quotesmith.com, Inc.+............................ 167,400 $ 1,694,925
RenaissanceRe Holdings Ltd.(i)................... 136,600 5,694,512
StanCorp Financial Group, Inc.................... 24,300 671,287
------------
15,821,480
------------

REAL ESTATE (0.2%)
Mission West Properties, Inc..................... 133,300 1,058,069
------------
REAL ESTATE INVESTMENT TRUSTS (3.0%)
Arden Realty, Inc................................ 135,100 2,600,675
CenterPoint Properties Corp...................... 54,900 1,907,775
Cousins Properties, Inc.......................... 103,800 3,581,100
Manufactured Home Communities, Inc............... 105,500 2,499,031
Mills Corp....................................... 90,500 1,527,187
Post Properties, Inc............................. 147,500 5,623,437
The Macerich Co.................................. 86,700 1,723,162
------------
19,462,367
------------
TOTAL FINANCE.................................. 86,155,026
------------

HEALTH CARE (10.2%)
BIOTECHNOLOGY (5.1%)
Affymetrix, Inc.+................................ 49,500 4,851,000
BioCryst Pharmaceuticals, Inc.+.................. 42,900 1,104,675
Human Genome Sciences, Inc.+..................... 118,300 13,249,600
IDEC Pharmaceuticals Corp.+...................... 26,000 3,295,500
Millennium Pharmaceuticals, Inc.+................ 54,000 5,256,562
SangStat Medical Corp.+.......................... 168,700 3,974,994
Trimeris, Inc.+.................................. 61,500 1,306,875
------------
33,039,206
------------
HEALTH SERVICES (2.2%)
Allscripts, Inc.+................................ 113,900 4,114,637
CareInsite, Inc.+................................ 38,500 2,016,437
IDX Systems Corp.+............................... 55,700 1,180,144
MedQuist, Inc.+.................................. 130,300 3,713,550
Oxford Health Plans, Inc.+....................... 164,600 2,412,419
Women First HealthCare, Inc.+.................... 95,500 584,938
------------
14,022,125
------------
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>

MEDICAL SUPPLIES (1.6%)
CONMED Corp.+.................................... 35,300 $ 891,325
Cyberonics Inc.+................................. 83,400 1,454,288
Cytyc Corp.+..................................... 14,100 615,113
I-STAT, Corp.+................................... 103,500 1,390,781
IDEXX Laboratories, Inc.+........................ 114,800 2,123,800
MedImmune, Inc.+................................. 13,095 1,573,855
ResMed, Inc.+.................................... 56,900 2,279,556
------------
10,328,718
------------

PHARMACEUTICALS (1.3%)
ILEX Oncology, Inc.+............................. 34,300 595,963
Ligand Pharmaceuticals, Inc., Class B+........... 338,200 3,889,300
Triangle Pharmaceuticals, Inc.+.................. 81,600 1,601,400
Vertex Pharmaceuticals, Inc.+.................... 80,700 2,143,594
------------
8,230,257
------------
TOTAL HEALTH CARE.............................. 65,620,306
------------

INDUSTRIAL PRODUCTS & SERVICES (9.0%)
BUILDING MATERIALS (0.3%)
Elcor Corp....................................... 58,950 1,908,506
------------

BUSINESS & PUBLIC SERVICES (0.6%)
Modis Professional Services, Inc.+............... 148,000 1,581,750
Obie Media, Corp.+............................... 60,340 629,799
RoweCom, Inc.+................................... 38,400 1,617,600
------------
3,829,149
------------

CAPITAL GOODS (0.8%)
IDEX Corp........................................ 72,900 2,009,306
Shaw Group, Inc.+................................ 127,500 2,661,563
------------
4,670,869
------------

COMMERCIAL SERVICES (3.0%)
Central Parking Corp............................. 166,700 4,313,363
Checkfree Holdings Corp.+........................ 120,900 7,941,619
Costar Group, Inc.+.............................. 52,400 1,205,200
On Assignment, Inc.+............................. 111,000 3,114,938
Source Information Management Co+................ 183,500 2,798,375
------------
19,373,495
------------
</TABLE>

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

18
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
DIVERSIFIED MANUFACTURING (0.9%)
Buckeye Technologies, Inc.+...................... 117,100 $ 1,858,963
Gentek, Inc...................................... 204,300 2,387,756
Symyx Technologies, Inc.+........................ 50,200 1,731,900
------------
5,978,619
------------

MACHINERY (0.6%)
Manitowoc Co., Inc............................... 39,400 1,201,700
Terex Corp.+..................................... 101,800 2,850,400
------------
4,052,100
------------

MANUFACTURING (2.6%)
American National Can Group, Inc................. 94,500 1,222,594
AptarGroup, Inc.................................. 54,000 1,464,750
Mettler-Toledo International, Inc.+.............. 174,300 6,198,544
MKS Instruments, Inc.+........................... 124,300 3,091,963
Monaco Coach Corp.+.............................. 116,700 2,509,050
National R.V. Holdings, Inc.+.................... 94,900 1,767,513
Sycomore Networks, Inc.+......................... 2,400 532,800
------------
16,787,214
------------

PACKAGING & CONTAINERS (0.2%)
Ivex Packaging Corp.+............................ 142,400 1,504,100
------------
TOTAL INDUSTRIAL PRODUCTS & SERVICES........... 58,104,052
------------

TECHNOLOGY (25.4%)
AEROSPACE (0.8%)
L-3 Communications Holdings, Inc.+............... 112,800 4,653,000
------------

COMPUTER SOFTWARE (12.0%)
3DO Co.+......................................... 134,500 1,273,547
Accrue Software, Inc.+........................... 50,400 2,431,800
Agile Software, Corp.+........................... 8,500 905,781
Akamai Technologies, Inc.+....................... 15,900 3,768,300
Alteon Websystems, Inc.+......................... 10,000 965,000
Art Technology Group, Inc.+...................... 42,600 2,705,100
Aspect Development, Inc.+........................ 37,700 1,800,175
Deltathree.com, Inc.+............................ 45,000 1,319,063
Digex, Inc. Del+................................. 28,500 954,750
Digital Impact, Inc.+............................ 18,300 985,913
E. Piphany, Inc.+................................ 11,500 1,948,531
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
COMPUTER SOFTWARE (CONTINUED)

Egain Communications, Corp.+..................... 29,200 $ 1,226,400
Excalibur Technologies Corp.+.................... 121,700 1,620,131
Exchange Applications, Inc.+..................... 40,900 2,484,675
Informatica Corp.+............................... 38,300 2,791,113
Informix Corp.+.................................. 174,600 1,920,600
Interleaf, Inc.+................................. 37,000 1,357,438
Liberate Technologies, Inc....................... 18,700 2,386,588
Liquid Audio, Inc.+.............................. 42,300 1,448,775
Looksmart, Ltd.+................................. 119,400 4,283,475
Mediaplex, Inc.+................................. 27,100 921,400
MicroStrategy, Inc............................... 79,100 9,689,750
National Information Consortium+................. 42,400 1,118,300
OpenTV Corp.+.................................... 14,100 1,089,225
Packeteer, Inc.+................................. 55,600 2,884,250
Peregrine Systems, Inc........................... 29,200 2,044,000
Quintus Corp.+................................... 5,800 321,900
Rainmaker Systems, Inc.+......................... 37,800 845,775
Retek, Inc.+..................................... 38,600 2,617,563
Sanchez Computer Associates, Inc................. 101,400 3,979,950
Software.com, Inc.+.............................. 25,200 2,445,975
Tumbleweed Communications Corp.+................. 64,100 2,499,900
Watchguard Technologies, Inc.+................... 87,700 2,159,613
Wind River Systems, Inc.......................... 210,200 7,251,900
------------
78,446,656
------------

COMPUTER SYSTEMS (0.9%)
Equant NV-NY Registered Shares(i)+............... 43,300 4,081,025
Internet Cap Group, Inc.......................... 730 122,640
Redback Networks, Inc............................ 4,500 629,719
SonicWALL, Inc.+................................. 14,800 505,975
------------
5,339,359
------------

ELECTRONICS (0.3%)
Power-One, Inc.+................................. 82,300 1,954,625
------------

INFORMATION PROCESSING (5.1%)
24 / 7 Media, Inc.+.............................. 88,300 4,481,225
Computer Horizons Corp.+......................... 183,100 2,574,844
Digital Island, Inc.+............................ 46,200 2,159,850
Net Perceptions, Inc.+........................... 91,400 3,450,350
</TABLE>

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

19
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
INFORMATION PROCESSING (CONTINUED)
Profit Recovery Group International, Inc.+....... 66,750 $ 2,472,879
Proxicom, Inc.+.................................. 37,800 2,608,200
Ticketmaster Online-CitySearch, Inc., Class B+... 57,100 1,620,213
Verio, Inc.+..................................... 78,900 2,835,469
Viant Corp.+..................................... 26,400 2,191,200
Visual Networks, Inc.+........................... 43,600 2,572,400
Webtrends Corp.+................................. 30,000 1,726,875
WorldGate Communications, Inc.+.................. 98,100 3,194,381
Xoom.com, Inc.+.................................. 14,700 1,117,200
------------
33,005,086
------------

SEMICONDUCTORS (6.3%)
Act Manufacturing, Inc.+......................... 81,700 2,496,956
Applied Micro Circuits Corp...................... 93,200 7,747,250
Applied Science and Technology, Inc.+............ 53,500 1,263,938
ATMI, Inc.+...................................... 142,000 4,322,125
C-Cube Microsystems, Inc.+....................... 38,800 1,736,906
Exar Corp.+...................................... 93,900 4,565,888
Kopin Corp.+..................................... 100,000 6,500,000
Lam Research Corp.+.............................. 47,600 3,694,950
Maker Communications, Inc.+...................... 23,800 547,400
Rudolph Technologies, Inc.+...................... 11,100 316,350
Sage, Inc.+...................................... 14,500 362,500
SDL, Inc.+....................................... 33,000 5,370,750
Silicon Image, Inc.+............................. 34,700 1,492,100
------------
40,417,113
------------
TOTAL TECHNOLOGY............................... 163,815,839
------------
TELECOMMUNICATIONS (7.3%)
TELECOMMUNICATION SERVICES (4.9%)
Aether Systems, Inc.+............................ 12,900 980,400
Allegiance Telecom, Inc.+........................ 79,400 5,865,675
American Mobile Satellite Corp.+................. 183,000 2,870,813
CapRock Communications Corp.+.................... 57,800 1,408,875
Dycom Industries, Inc............................ 27,300 1,098,825
E Tek Dynamics, Inc.+............................ 42,000 3,150,000
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
TELECOMMUNICATION SERVICES (CONTINUED)

iBasis, Inc.+.................................... 19,400 $ 657,175
ITC DeltaCom, Inc.+.............................. 72,800 1,997,450
Juniper Networks, Inc............................ 15,600 4,323,150
Metasolv Software, Inc.+......................... 16,000 987,000
MIH Ltd.+........................................ 9,900 532,125
Net2phone, Inc.+................................. 29,100 1,691,438
PNV.net, Inc.+................................... 84,700 1,323,438
SeaChange International, Inc..................... 80,200 2,025,050
TeleCorp PCS, Inc.+.............................. 22,100 796,981
Williams Communication Group, Inc.+.............. 41,700 1,243,181
Wink Communications, Inc.+....................... 20,200 878,700
------------
31,830,276
------------

TELECOMMUNICATIONS-EQUIPMENT (2.4%)
Advanced Fibre Communications+................... 191,800 5,334,438
Clarent Corp.+................................... 46,400 3,770,000
Cobalt Networks, Inc.+........................... 13,000 2,194,563
Finisar Corp.+................................... 24,400 2,812,100
Virata Corp.+.................................... 9,200 295,550
World Access, Inc.+.............................. 56,800 862,650
------------
15,269,301
------------
TOTAL TELECOMMUNICATIONS....................... 47,099,577
------------

TRANSPORTATION (1.4%)
RAILROADS (0.1%)
Wisconsin Central Transportation Corp.+.......... 39,000 547,219
------------

TRANSPORT & SERVICES (0.8%)
C.H. Robinson Worldwide, Inc..................... 147,600 5,147,550
------------

TRUCK & FREIGHT CARRIERS (0.5%)
Werner Enterprises, Inc.......................... 229,825 3,447,375
------------
TOTAL TRANSPORTATION........................... 9,142,144
------------

UTILITIES (1.2%)
NATURAL GAS (0.6%)
Atmos Energy Corp................................ 161,800 3,610,163
------------
</TABLE>

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

20
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECURITY DESCRIPTION SHARES VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
WATER (0.6%)
E'Town Corp...................................... 65,000 $ 4,086,875
------------
TOTAL UTILITIES................................ 7,697,038
------------
TOTAL COMMON STOCKS (COST $455,133,375)........ 604,160,910
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
CONVERTIBLE BONDS (0.3%)
HEALTH CARE (0.3%)
Altrenative Living Services, Inc., 5.25% due
12/15/02 (cost $1,973,234)..................... $ 2,665,100 1,882,946
------------
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
- ------------------------------------------------- ------------ -------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (7.1%)
OTHER INVESTMENT COMPANIES (7.1%)
J.P. Morgan Institutional Prime Money Market Fund
(cost $45,481,832)............................. $45,481,832 $ 45,481,832
------------
TOTAL INVESTMENTS (COST
$502,588,441) (101.2%)....................................... 651,525,688
LIABILITIES IN EXCESS OF OTHER
ASSETS (-1.2%)............................................... (7,596,175)
------------
NET ASSETS (100.0%)............................................ $643,929,513
============
</TABLE>

- ------------------------------
Note: Based on the cost of investments of $510,038,187 federal income tax
purposes at November 30, 1999, the aggregate gross unrealized appreciation and
depreciation was $172,869,477 and $31,381,976, respectively, resulting in net
unrealized appreciation of $141,487,501.

+ Non-income producing security.

(i) Foreign security.

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

21
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $502,588,441 ) $651,525,688
Receivable for Investments Sold 8,198,646
Interest Receivable 323,248
Dividends Receivable 255,030
Prepaid Trustees' Fees 3,242
Prepaid Expenses and Other Assets 12,450
------------
Total Assets 660,318,304
------------
LIABILITIES
Payable to Custodian 505,916
Payable for Investments Purchased 15,500,908
Advisory Fee Payable 306,410
Custody Fee Payable 26,349
Administrative Services Fee Payable 12,741
Administration Fee Payable 538
Accrued Expenses 35,929
------------
Total Liabilities 16,388,791
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $643,929,513
============
</TABLE>

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

22
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income $ 2,108,221
Interest Income 1,331,175
------------
Investment Income 3,439,396
EXPENSES
Advisory Fee $ 1,677,213
Custodian Fees and Expenses 95,576
Administrative Services Fee 71,418
Professional Fees and Expenses 21,184
Fund Services Fee 4,933
Printing Expenses 4,333
Administration Fee 3,275
Trustees' Fees and Expenses 1,581
Insurance Expense 997
Miscellaneous 176
-----------
TOTAL EXPENSES 1,880,686
------------
NET INVESTMENT INCOME 1,558,710
NET REALIZED GAIN ON INVESTMENTS 44,708,908
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENTS 96,447,865
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $142,715,483
============
</TABLE>

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

23
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE FOR THE FISCAL YEAR ENDED
SIX MONTHS ENDED MAY 31,
NOVEMBER 30, 1999 --------------------------
(UNAUDITED) 1999 1998 1997 1996
----------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 0.67%(a) 0.68% 0.68% 0.68% 0.67%
Net Investment Income 0.55%(a) 0.67% 0.68% 0.92% 1.33%
Portfolio Turnover 49% 104% 96% 98% 93%
</TABLE>

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

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

24
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30,1999
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The U.S. Small Company Portfolio (the "portfolio") is registered under the
Investment Company Act of 1940, as amended, as a 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 small company stocks. The Declaration of Trust permits the trustees
to issue an unlimited number of beneficial interests in the portfolio.

a) The value of each security for which readily available market quotations
exist is based on a decision as to the broadest and most representative
market for such security. The value of such security will be based either
on the last sale price on a national securities exchange or, in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchanges. Securities listed on a foreign
exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter market.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures
established by the portfolio's trustees. Such procedures include the use
of independent pricing services, which use prices based upon yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
portfolio securities with a remaining maturity of less than 60 days are
valued by the amortized cost method.

b) The portfolio's custodian or designated sub custodians, 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) 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.

25
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30,1999
- --------------------------------------------------------------------------------

2. TRANSACTIONS WITH AFFILIATES

a) Prior to October 1, 1998, the portfolio had an Investment Advisory
Agreement with Morgan Guaranty Trust Company of New York ("Morgan"), a
wholly owned subsidiary of J.P. Morgan & Co. Incorporated ("J.P.
Morgan"). Under the terms of the agreement, the portfolio paid Morgan at
an annual rate of 0.60% of the portfolio's average daily net assets.
Effective October 1, 1998 the portfolio's Investment Advisor is J.P.
Morgan Investment Management Inc.("JPMIM"), an affiliate of Morgan and a
wholly owned subsidiary of J.P. Morgan, and the terms of the agreement
remained the same. For the six months ended November 30, 1999, such fees
amounted to $1,677,213.

The portfolio 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
portfolio in an amount to offset any doubling of investment advisory and
shareholder servicing fees. For the six months ended November 30, 1999,
J.P. Morgan has agreed to reimburse the portfolio $14,558 under this
agreement.

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 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 six months ended November 30, 1999,
the fee for these services amounted to $3,275.

c) The portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan, under which Morgan is responsible for certain
aspects of the administration and operation of the portfolio. Under the
Services Agreement, the portfolio has agreed to pay Morgan a fee equal to
its allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the
portfolio and certain other portfolios for which JPMIM acts as investment
advisor (the "master portfolios") and J.P. Morgan Series Trust in
accordance with the following annual schedule: 0.09% on the first $7
billion of their aggregate average daily net assets and 0.04% of their
aggregate average daily net assets in excess of $7 billion less the
complex-wide fees payable to FDI. The portion of this charge payable by
the portfolio is determined by the proportionate share that its net assets
bear to the net assets of the portfolio, the master portfolios, other
investors in the master portfolios for which Morgan provides similar
services, and J.P. Morgan Series Trust. For the six months ended November
30, 1999, the fee for these services amounted to $71,418.

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

26
<PAGE>
THE U.S. SMALL COMPANY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOVEMBER 30,1999
- --------------------------------------------------------------------------------
the portfolio represent all the existing shareholders of Group. The
portfolio's allocated portion of Group's costs in performing its services
amounted to $4,933 for the six months ended November 30, 1999.

e) An aggregate annual fee of $75,000 is paid to each trustee for serving as
a trustee of the portfolio, 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 $1,100.

3. INVESTMENT TRANSACTIONS

Investment transactions (excluding short-term investments) for the six months
ended November 30, 1999 were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
--------- ------------
<S> <C>
$281,342,280 $333,769,413
</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>

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.
IM0869-M

J.P. MORGAN
U.S. SMALL
COMPANY FUND

SEMIANNUAL REPORT
NOVEMBER 30, 1999