<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
--------------------- ---------------------------------------- --------------------- ----------- ---------------
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- DOMESTIC (1.9%)
$216,000 Bank America Corp....................... 06/20/00-08/17/00 6.180-6.750% $ 216,000,000
133,000 SunTrust Bank Atlanta................... 06/22/00-04/18/01 6.520-6.770 133,011,891
---------------
349,011,891
---------------
CERTIFICATE OF DEPOSIT -- FOREIGN (14.0%)
300,000 Abbey National PLC, (MTN, Series 1A).... 01/08/01 6.450 299,913,639
452,000 Bayerische Landesbank................... 08/04/00-10/02/00 5.875-5.930 451,815,672
170,000 Credit Communal De Belgique............. 02/22/01-05/03/01 6.760-7.055 169,943,817
350,000 Deutsche Bank........................... 12/01/00-02/22/01 6.190-6.755 349,881,810
205,000 Landesbank Hessen-Thueringen............ 05/08/01 7.143 204,986,428
381,000 Rabobank Nederland...................... 02/15/01-05/02/01 6.660-7.050 380,888,169
526,500 Union Bank of Switzerland............... 07/03/00-04/30/01 5.760-6.880 526,408,902
149,000 Westdeutsche Landesbank Girozentra...... 06/06/00-06/21/00 6.030-6.190 149,000,000
---------------
TOTAL CERTIFICATES OF DEPOSIT --
FOREIGN........................... 2,532,838,437
---------------
COMMERCIAL PAPER -- DOMESTIC (25.1%) (y)
600,714 Alpine Securitization Corp.............. 06/01/00-06/20/00 6.104-6.533 599,524,574
93,000 Asset Securitization Corp............... 06/05/00-06/07/00 5.687-6.510 92,930,875
147,100 Bavaria Trust Corp...................... 06/02/00-06/27/00 5.510-6.161 146,912,417
197,500 BBL North America Funding Corp.......... 06/07/00-08/23/00 6.522-6.624 195,905,286
207,500 Citibank Capital Markets Corp........... 06/01/00-08/22/00 6.184-6.621 205,630,960
85,000 CXC, Inc................................ 08/17/00 6.541 83,789,175
136,763 Enterprise Funding Corp................. 06/07/00-06/30/00 5.535-6.578 139,139,784
100,000 Eureka Securitization Corp.............. 06/08/00-06/27/00 6.226-6.523 99,704,694
155,000 General Electric Capital Corp........... 06/09/00-06/20/00 6.524-6.549 154,710,403
150,000 General Motors Acceptance Corp.......... 06/02/00-06/14/00 6.510-6.530 149,822,979
181,902 HD Real Estate Funding Corp............. 11/21/00 6.831 175,957,847
25,000 Merrill Lynch & Co...................... 06/01/00 6.512 25,000,000
154,409 Monte Rosa Capital Corp................. 06/05/00-08/21/00 6.520-6.621 152,788,782
402,000 Morgan Stanley Dean Witter & Co......... 06/01/00-06/19/00 6.523-6.546 401,499,296
50,000 Newport Funding Corp.................... 06/07/00 6.522 49,950,417
119,687 Parthenon Receivable Funding LLC........ 06/19/00-07/05/00 6.141-6.584 119,181,445
30,000 Private Export Funding Corp............. 06/01/00 6.512 30,000,000
258,097 Receivable Capital Corp................. 06/08/00-06/26/00 5.866-6.523 257,307,181
50,000 SBC Communications, Inc................. 06/16/00-08/21/00 6.001-6.551 123,747,875
160,000 Salomon Smith Barney, Inc............... 06/01/00-06/07/00 6.520-6.667 159,915,278
52,000 Southern California Edison Corp......... 06/02/00 6.510 51,991,406
471,650 Trident Capital, Inc.................... 06/16/00-06/23/00 6.001-6.147 470,118,029
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
--------------------- ---------------------------------------- --------------------- ----------- ---------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER -- DOMESTIC (CONTINUED)
$430,744 Windmill Funding Corp................... 06/05/00-07/05/00 6.184-6.520% $ 429,299,021
230,000 Wisconsin Energy Corp................... 06/01/00-06/29/00 6.102-6.180 229,219,223
---------------
TOTAL COMMERCIAL PAPER-DOMESTIC..... 4,544,046,947
---------------
COMMERCIAL PAPER -- FOREIGN (4.4%) (y)
100,000 Bank of Nova Scotia..................... 06/30/00 6.504 99,470,428
46,500 CDC Commercial Paper Corp............... 06/12/00 5.895 46,407,646
66,500 CS First Boston, Inc.................... 06/16/00-08/21/00 6.521-6.551 66,211,869
335,101 France Telecommunication................ 06/08/00-06/20/00 6.085-6.524 334,231,358
25,000 Halifax Building Society................ 06/06/00 6.521 24,979,410
95,000 Lloyds Bank PLC......................... 06/02/00 6.510 94,984,325
161,000 Province of Quebec...................... 06/01/00-06/16/00 6.512-6.537 70,849,279
52,000 Royal Bank of Scotland Group............ 06/08/00 5.687 51,934,076
---------------
TOTAL COMMERCIAL PAPER -- FOREIGN... 789,068,391
---------------
CORPORATE BOND -- DOMESTIC (0.5%)
85,000 General Electric Capital Corp. (MTN,
Series A)............................. 05/23/01 7.380 85,000,000
---------------
CORPORATE BOND -- FOREIGN (0.5%)
79,389 Inter-American Development Bank......... 02/22/01 5.125 78,572,055
20,625 Ontario Province........................ 06/28/00 6.125 20,623,714
---------------
TOTAL CORPORATE BOND -- FOREIGN..... 99,195,769
---------------
FLOATING RATE NOTES (43.0%) (v)
100,000 American Express Centurion Bank, (due
03/06/01)............................. 06/01/00(a) 6.670 100,000,000
150,000 American Express Centurion Bank, (due
02/09/01)............................. 06/09/00(a) 6.400 149,989,839
25,000 American Express Centurion Bank, (due
04/12/01)............................. 06/12/00(a) 6.455 24,997,837
25,000 American Express Centurion Bank, (due
02/14/01)............................. 06/14/00(a) 6.483 24,996,475
202,500 American Express Centurion Bank......... 06/12/00-07/12/00 6.720-6.750 202,500,241
25,000 AT&T Corp., (due 03/08/01).............. 06/08/00(a) 6.366 24,996,274
25,000 AT&T Capital Corp., (MTN, Series F)..... 06/14/00 7.594 25,012,540
21,500 AT&T Capital Corp., (MTN, Series G, due
12/01/00)............................. 07/07/00(a) 6.971 21,574,065
56,300 AT&T Capital Corp., (MTN, Series G, due
04/09/01)............................. 07/10/00(a) 6.441 56,391,856
470,000 Bank of America NA, (due 04/03/01)...... 06/01/00(a) 6.670 470,000,000
500,000 Bank of Austria, (Series CD, due
02/16/01)............................. 06/16/00(a) 6.450 499,826,952
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
--------------------- ---------------------------------------- --------------------- ----------- ---------------
<C> <S> <C> <C> <C>
FLOATING RATE NOTES (CONTINUED)
$384,500 Bank of Scotland Treasury, (MTN, due
03/05/01) (144A)...................... 06/05/00(a) 6.079% $ 384,484,994
25,000 BankBoston Corp., (MTN, due 03/09/01)... 06/09/00(a) 6.197 25,009,029
139,500 Bayerische Landesbank New York,
(Series CD, due 12/15/00)............. 06/15/00(a) 6.447 139,441,315
270,000 Bayerische Landesbank New York,
(Series CD, due 02/22/01)............. 08/22/00(a) 6.625 269,894,213
142,000 CIT Group, Inc., (MTN, due 01/19/01).... 07/19/00(a) 6.660 141,942,555
200,000 CIT Group, Inc., (MTN, due 02/14/01).... 08/14/00(a) 6.600 199,876,228
175,000 CIT Group, Inc., MTN.................... 08/14/00 6.750 174,965,864
16,590 Caterpillar Financial Services Corp.,
(MTN, Series F, due 10/12/00)......... 06/12/00(a) 6.170 16,595,310
10,000 Caterpillar Financial Services Corp.,
(MTN, Series F, due 09/15/00)......... 06/15/00(a) 6.150 10,001,228
325,000 Chasers-00-1, (due 01/04/01) (144A)..... 07/05/00(a) 6.700 325,000,000
228,000 Citicorp, (MTN, Series F, due
08/02/00)............................. 06/02/00(a) 6.227 228,000,000
8,000 Citicorp, (MTN, Series C, due
02/08/01)............................. 02/08/01(a) 6.923 8,016,616
140,000 Citigroup, Inc., (MTN, Series A, due
04/04/01)............................. 06/05/00(a) 6.315 140,000,000
150,000 Citigroup, Inc., (MTN, Series A, due
06/06/01)............................. 06/10/00(a) 6.431 150,000,000
5,000 Comerica Bank........................... 06/12/00 6.660 4,999,859
53,000 Comerica Bank, (due 02/14/01)........... 06/14/00(a) 6.437 52,979,067
500,000 Commerzbank, (Series CD, due
04/26/01)............................. 06/26/00(a) 6.560 499,911,746
10,000 Commerzbank, (Series CD, due
03/01/01)............................. 06/28/00(a) 6.531 9,996,352
400,000 CS First Boston, Inc. LINCS,
(Series 1998-4, Class 1, due
08/18/00) (144A)...................... 06/19/00(a) 6.584 400,000,000
550,000 CS First Boston, Inc. SPARCS,
(Series 2000, Class 1, due
07/24/00)............................. 07/24/00(a) 6.360 550,000,000
364,000 Deutsche Bank, (Series CD, due
02/16/01)............................. 06/16/00(a) 6.445 363,870,378
20,000 Deutsche Bank........................... 12/13/00(a) 6.452 19,996,286
10,000 First Union National Bank, (due
02/13/01)............................. 08/14/00(a) 6.780 10,006,267
36,500 First Union National Bank, (due
11/13/00)............................. 08/16/00(a) 6.960 36,537,623
81,000 Fleet Financial Group, (MTN, Series P,
due 03/13/01)......................... 06/13/00(a) 6.037 80,922,676
40,000 Fleet Financial Group, (MTN, Series N,
due 10/13/00)......................... 07/13/00(a) 6.343 40,011,220
163,000 Fleet Financial Group, (MTN,
Series N)............................. 07/28/00 6.445 163,025,057
350,000 General Electric Capital Corp., (due
01/02/01)............................. 07/07/00(a) 6.221 350,000,000
6,000 Household Finance Corp., (MTN, due
09/27/00)............................. 06/27/00(a) 6.378 6,004,041
5,000 Household Finance Corp., (due
04/03/01)............................. 07/03/00(a) 6.440 5,005,745
15,000 Household Finance Corp., (due
04/09/01)............................. 07/10/00(a) 6.617 15,022,114
75,000 Key Bank NA, (due 09/07/00)............. 06/07/00(a) 6.150 75,009,016
24,500 Key Bank NA, (due 11/02/00)............. 08/02/00(a) 6.641 24,528,874
220,000 Lehman RACERS 1998-MM-7-1, (due 8/11/00)
(144A)................................ 06/19/00(a) 6.620 220,000,000
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
--------------------- ---------------------------------------- --------------------- ----------- ---------------
<C> <S> <C> <C> <C>
FLOATING RATE NOTES (CONTINUED)
$292,000 Lehman RACERS 1999-25-MM-MBS, (due
09/06/00) (144A)...................... 06/06/00(a) 6.506% $ 292,000,000
165,000 Lehman RACERS 1999-35-MM, (Class A-1,
due 12/15/00) (144A).................. 06/15/00(a) 6.622 165,000,000
34,775 Nationsbank NA, (due 02/26/01).......... 08/29/00(a) 6.870 34,799,973
52,000 Toyota Motor Credit Corp., (MTN, due
01/09/01)............................. 07/10/00(a) 6.181 51,971,967
75,000 US Bank NA Minnesota, (due 04/04/01).... 07/05/00(a) 6.625 74,972,711
100,000 US Bank NA North Dakota, (due
04/04/01)............................. 07/05/00(a) 6.645 99,971,663
342,000 Westdeutsche Landesbank New York,
(Series CD, due 03/23/01)............. 06/23/00(a) 6.530 341,865,213
---------------
TOTAL FLOATING RATE NOTES........... 7,801,921,279
---------------
REPURCHASE AGREEMENT (1.3%)
232,533 Lehman Brothers Repurchase Agreement,
proceeds $232,574,791 (collateralized
by 239,647,908 Federal Home Loan
Mortgage Corp., 6.500%-12.220% due
06/15/06 - 02/15/29, valued at
$87,827,762; $329,486,717 Federal
National Mortgage Association,
6.500%-8.000% due 12/25/04 - 04/25/29
valued at $85,113,896; $135,336,660
Government National Mortgage
Association, 7.500%-8.000% due
02/16/26 - 08/16/29 valued at
$64,244,462).......................... 06/01/00 6.470 232,533,000
---------------
TAXABLE MUNICIPALS (0.3%) (v)
41,145 Sacramento County, (Series A, due
08/15/14), MBIA Insured............... 08/15/00(a) 6.770 41,142,342
6,200 Wake Forest University, (Series 1997,
due 07/01/17), LOC-Wachovia Bank...... 06/07/00(a) 6.640 6,200,000
---------------
TOTAL TAXABLE MUNICIPALS............ 47,342,342
---------------
TIME DEPOSIT -- DOMESTIC (3.2%)
575,000 Suntrust Bank Cayman.................... 06/01/00 6.813-6.875 575,000,000
---------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY/
(IN THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
--------------------- ---------------------------------------- --------------------- ----------- ---------------
<C> <S> <C> <C> <C>
TIME DEPOSIT -- FOREIGN (5.2%)
$100,000 Bank of America Grand Cayman............ 06/01/00 6.813% $ 100,000,000
273,379 Banque Nationale De Paris Georgeto...... 06/01/00 6.813 273,379,000
319,000 Chase Nassau............................ 06/01/00 6.813 319,000,000
250,000 Credit Suisse Grand Cayman.............. 06/01/00 6.781 250,000,000
---------------
TOTAL TIME DEPOSITS -- FOREIGN...... 942,379,000
---------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE (99.4%)........................... 17,998,337,056
OTHERS ASSETS IN EXCESS OF LIABILITIES (0.6%)................................... 107,236,609
---------------
NET ASSETS (100.0%)............................................................. $18,105,573,665
===============
</TABLE>
------------------------------
(a) The date listed under the heading maturity date represents an optional
tender date or the next interest rate reset date. The final maturity date is
indicated in the security description.
(v) Rate shown reflects current rate on variable or floating rate instrument or
instrument with step coupon rate.
(y) Yield to Maturity
144A - Securities restricted for resale to Qualified Institutional Buyers.
LOC - Letter of Credit.
MBIA - Municipal Bond Investors Assurance Corp.
MTN - Medium Term Note.
RACERS - Restructured Asset Certificates.
SPARCS - Structured Product Asset Return.
STEERS - Structured Enhanced Return Trust.
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value $17,998,337,056
Interest Receivable 114,573,578
Prepaid Trustees' Fees 36,579
Prepaid Expenses and Other Assets 34,376
---------------
Total Assets 18,112,981,589
---------------
LIABILITIES
Due to Custodian 5,273,919
Advisory Fee Payable 1,594,099
Administrative Services Fee Payable 355,145
Fund Services Fee Payable 14,558
Accrued Expenses 170,203
---------------
Total Liabilities 7,407,924
---------------
NET ASSETS
Applicable to Investors' Beneficial Interests $18,105,573,665
===============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $519,977,465
EXPENSES
Advisory Fee $9,078,499
Administrative Services Fee 2,010,483
Custodian Fees and Expenses 764,557
Fund Services Fee 139,027
Trustees' Fees and Expenses 67,111
Administration Fee 64,660
Miscellaneous 73,636
----------
Total Expenses 12,197,973
------------
NET INVESTMENT INCOME 507,779,492
NET REALIZED LOSS ON INVESTMENTS (49,875)
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $507,729,617
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE PRIME MONEY MARKET 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>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 507,779,492 $ 620,496,096
Net Realized Loss on Investments (49,875) (502,599)
---------------- -----------------
Net Increase in Net Assets Resulting from
Operations 507,729,617 619,993,497
---------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 55,908,757,325 108,543,399,809
Withdrawals (53,736,623,250) (101,517,907,239)
---------------- -----------------
Net Increase from Investors' Transactions 2,172,134,075 7,025,492,570
---------------- -----------------
Total Increase in Net Assets 2,679,863,692 7,645,486,067
NET ASSETS
Beginning of Period 15,425,709,973 7,780,223,906
---------------- -----------------
End of Period $ 18,105,573,665 $ 15,425,709,973
================ =================
</TABLE>
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED NOVEMBER 30,
MAY 31, 2000 --------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Expenses 0.14%(a) 0.15% 0.17% 0.18% 0.19% 0.19%
Net Investment Income 5.90%(a) 5.07% 5.48% 5.43% 5.29% 5.77%
</TABLE>
------------------------
(a) Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
25
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAY 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Prime Money Market Portfolio (the "portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on November 4, 1992. The portfolio's investment objective
is to maximize current income consistent with the preservation of capital and
same-day liquidity. The portfolio commenced operations on July 12, 1993. The
Declaration of Trust permits the trustees to issue an unlimited number of
beneficial interests in the portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the portfolio:
a) Investments are valued at amortized cost which approximates market value.
The amortized cost method of valuation values a security at its cost at
the time of purchase and thereafter assumes a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instruments.
The portfolio's custodian or designated subcustodians, as the case may be
under the 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.
b) Securities transactions are recorded on a trade date basis. Interest
income, which includes the amortization of premiums and discounts, if any,
is recorded on an accrual basis. For financial and tax reporting purposes,
realized gains and losses are determined on the basis of specific lot
identification.
c) 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 cost of securities is substantially the
same for book and tax purposes.
2. TRANSACTIONS WITH AFFILIATES
a) The portfolio has an Investment Advisory Agreement with J.P. Morgan
Investment Management, Inc. ("JPMIM"), an affiliate of Morgan Guaranty
Trust Company of New York ("Morgan") and a wholly owned subsidiary of
J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Under the terms of the
26
<PAGE>
THE PRIME MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 2000
--------------------------------------------------------------------------------
agreement, the portfolio pays JPMIM at an annual rate of 0.20% of the
portfolio's average daily net assets up to $1 billion and 0.10% on any
excess over $1 billion. For the six months ended May 31, 2000 such fees
amounted to $9,078,499.
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 $64,660.
c) The portfolio has an Administrative Services Agreement (the "Services
Agreement") with Morgan under which Morgan is responsible for certain
aspects of the administration and operation of the portfolio. Under the
Services Agreement, the portfolio has agreed to pay Morgan a fee equal to
its allocable share of an annual complex-wide charge. This charge is
calculated based on the aggregate average daily net assets of the
portfolio and other portfolios for which JPMIM acts as investment advisor
(the "master portfolios") and J.P. Morgan Series Trust in accordance with
the following annual schedule: 0.09% on the first $7 billion of their
aggregate average daily net assets and 0.04% of their aggregate average
daily net assets in excess of $7 billion less the complex-wide fees
payable to FDI. The portion of this charge payable by the portfolio is
determined by the proportionate share that its net assets bear to the net
assets of the master portfolios, other investors in the master portfolios
for which Morgan provides similar services, and J.P. Morgan Series Trust.
For the six months ended May 31, 2000, the fee for these services amounted
to $2,010,483.
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 $139,027 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 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 $26,400.
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