<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MOODY'S/
AMOUNT SECURITY S&P MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE RATING DATE RATE VALUE
- -------------- ---------------------------------------- -------- --------- ----------- ----- ------------
<C> <S> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS (97.1%)
CALIFORNIA (0.3%)
$ 812 Kaweah Delta Hospital District, Tulare
County, (Series F, due 06/01/14)...... PP NR/NR 06/01/00(a) 5.250% $ 808,460
------------
ILLINOIS (1.1%)
3,000 Illinois Development Finance Authority.. PP NR/NR 08/01/28 4.900 2,954,430
------------
MICHIGAN (1.1%)
2,334 City of Detroit Public School........... PP NR/NR 10/15/01 5.485 2,345,631
365 City of Detroit Public School, (Public
Power Revenue)........................ PP NR/NR 10/15/00 4.550 368,713
------------
TOTAL MICHIGAN...................... 2,714,344
------------
NEW YORK (91.9%)
4,200 City University of New York, (John Jay
College, Refunding), MBIA Insured..... RB Aaa/AAA 08/15/05 5.750 4,330,956
4,000 Erie County Water Authority, (Water
Revenue, Refunding, Escrowed to
Maturity, Series A), AMBAC Insured.... RB Aaa/AAA 12/01/04 5.000 4,020,280
5,710 Long Island Power Authority, (Electric
Systems Revenue), FSA Insured......... RB Aaa/AAA 04/01/04 4.000 5,383,731
5,000 Long Island Power Authority, (Electric
Systems Revenue, Series A), AMBAC
Insured............................... RB Aaa/AAA 12/01/08 5.500 5,063,150
3,500 Long Island Power Authority, (New York
Electric Systems, Refunding, Series
A), AMBAC Insured..................... RB Aaa/AAA 12/01/11 5.500 3,492,335
4,000 Metropolitan Transportation Authority,
(Commuter Facilities, Refunding,
Series D), MBIA Insured............... RB Aaa/AAA 07/01/06 6.000 4,196,240
5,500 Metropolitan Transportation Authority,
(Dedicated Tax Fund, Series A), MBIA
Insured............................... RB Aaa/AAA 04/01/11 6.250 5,828,570
3,840 Metropolitan Transportation Authority,
(Service Contract, Transportation
Facilities, Series O), MBIA-IBC
Insured............................... RB Aaa/AAA 07/01/08 5.750 3,948,403
1,065 Monroe County, (Public Improvement,
Escrowed to Maturity, Series 1995),
AMBAC Insured......................... GO Aaa/AAA 06/01/08 5.875 1,113,000
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MOODY'S/
AMOUNT SECURITY S&P MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE RATING DATE RATE VALUE
- -------------- ---------------------------------------- -------- --------- ----------- ----- ------------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 65 Monroe County, (Public Improvement,
Unrefunded Balance, Series 1995),
AMBAC Insured......................... GO Aaa/AAA 06/01/08 5.875% $ 67,930
5,000 Municipal Assistance Corp. for the City
of New York, (Series H)............... RB Aa2/AA 07/01/06 6.250 5,296,150
5,000 Municipal Assistance Corp. for the City
of New York (Series H)................ RB Aa2/AA 07/01/05 6.000 5,220,750
2,150 Municipal Assistance Corp. for the City
of New York, (Refunding, Series G).... RB Aa2/AA 07/01/05 6.000 2,244,922
1,460 New York City Industrial Development
Agency, (Civil Facilities Revenue,
YMCA Greater New York Project)........ RB Baa3/NR 08/01/05 6.000 1,473,330
1,000 New York City Industrial Development
Agency, (IDR, Brooklyn Navy Yard,
Cogen Partners, Refunding)............ RB Baa3/BBB- 10/01/22 6.200 929,790
5,000 New York City Municipal Water Finance
Authority, (Water & Sewer Systems
Revenue, Prerefunded, Series B due
06/15/20)............................. RB Aaa/AAA 06/15/06(a) 6.250 5,356,450
4,000 New York City Transitional Finance
Authority, (Future Tax Secured, Series
B).................................... RB Aa3/AA 11/15/14 6.125 4,118,320
4,500 New York City, (Health & Hospital Corp.
Revenue, Prerefunded, Series A, due
02/15/20)............................. RB Aaa/AAA 02/15/03(a) 6.300 4,766,265
695 New York City, (Prerefunded, Series D,
due 02/15/07)......................... GO A3/A- 02/15/05(a) 5.750 723,036
1,000 New York City, (Refunding, Series G),
MBIA-IBC Insured...................... GO Aaa/AAA 02/01/09 6.750 1,090,210
4,000 New York City, (Series I), MBIA
Insured............................... GO Aaa/AAA 04/15/07 6.250 4,229,440
4,305 New York City, (Unrefunded Balance,
Series D)............................. GO A3/A- 02/15/07 5.750 4,394,286
10,000 New York Convention Center Operating
Corp., (Yale Building Acquisition
Project).............................. PP NR/NR 12/01/04 6.500 9,885,200
7,033 New York Office of Temporary and
Disability Assistance................. PP NR/NR 07/01/04 5.210 7,038,512
6,059 New York Office of Temporary and
Disability Assistance, (General
Obligation)........................... PP NR/NR 03/31/05 4.480 6,050,483
4,375 New York State.......................... GO A2/A+ 03/01/07 6.000 4,545,494
4,485 New York State Dormitory Authority,
(City University, Prerefunded, due
07/01/19), MBIA Insured............... RB Aaa/AAA 07/01/04(a) 6.250 4,729,612
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MOODY'S/
AMOUNT SECURITY S&P MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE RATING DATE RATE VALUE
- -------------- ---------------------------------------- -------- --------- ----------- ----- ------------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,280 New York State Dormitory Authority,
(Columbia University)................. RB Aaa/AAA 07/01/07 5.250% $ 2,304,943
3,745 New York State Dormitory Authority,
(Concord Nursing Home)................ RB A1/NR 07/01/16 6.250 3,732,454
2,000 New York State Dormitory Authority,
(Cornell University).................. RB Aa2/AA 07/01/08 5.300 2,014,960
2,500 New York State Dormitory Authority, (FHA
Hospital New York & Presbyterian,
Refunding), AMBAC-FHA Insured......... RB Aaa/AAA 08/01/13 4.400 2,462,000
280 New York State Dormitory Authority,
(Long Island Jewish Medical Center,
Refunding), MBIA Insured.............. RB Aaa/AAA 07/01/05 5.000 279,244
2,000 New York State Dormitory Authority,
(Memorial Sloan Kettering Cancer,
Series C), MBIA Insured............... RB Aaa/AAA 07/01/19 5.750 1,938,260
5,650 New York State Dormitory Authority,
(Mental Health Services Facilities,
Refunding, Series B).................. RB A3/A- 02/15/06 6.000 5,853,626
2,000 New York State Dormitory Authority, (New
York University, Series A), MBIA
Insured............................... RB Aaa/AAA 07/01/06 5.000 1,989,820
2,530 New York State Dormitory Authority,
(North Shore University Hospital,
Refunding), MBIA Insured.............. RB Aaa/AAA 11/01/10 5.500 2,540,879
3,450 New York State Dormitory Authority,
(Pratt Institute)..................... RB NR/AA 07/01/14 6.250 3,521,691
2,000 New York State Dormitory Authority,
(Secondary Hospital, North General
Hospital, Refunding, Series G)........ RB Baa1/BBB+ 02/15/05 5.500 1,985,320
1,500 New York State Dormitory Authority,
(State University Educational
Facilities, Refunding, Series A)...... RB A3/A- 05/15/04 6.500 1,579,635
3,000 New York State Dormitory Authority,
(State University Educational
Facilities, Refunding, Series A), FGIC
Insured............................... RB Aaa/AAA 05/15/11 5.875 3,102,360
1,210 New York State Dormitory Authority,
(University of Rochester, Series A)... RB A1/A+ 07/01/06 6.500 1,300,750
10,000 New York State Environmental Facilities
Corp., (PCR, State Water, Revolving
Fund, New York City Municipal
Water)................................ RB Aa1/AA- 06/15/10 5.750 10,261,800
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MOODY'S/
AMOUNT SECURITY S&P MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE RATING DATE RATE VALUE
- -------------- ---------------------------------------- -------- --------- ----------- ----- ------------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 5,000 New York State Environmental Facilities
Corp., (PCR, State Water, Revolving
Fund, New York City Municipal Water,
Refunding)............................ RB Aa1/AA- 06/15/11 5.750% $ 5,098,000
1,000 New York State Environmental Facilities
Corp., (State Clean Water & Drinking,
Revolving Funds, Second Resolution,
Series F)............................. RB Aa1/AA- 06/15/07 5.250 1,002,930
8,350 New York State Local Government
Assistance Corp., (Refunding, Series
E).................................... RB A3/A+ 04/01/14 6.000 8,583,633
2,000 New York State Power Authority, (Revenue
& General Purpose, Refunding, Escrowed
to Maturity, Series W)................ RB Aaa/AAA 01/01/03 6.625 2,100,720
5,105 New York State Thruway Authority,
(Highway & Bridge, Series C), FGIC
Insured............................... RB Aaa/AAA 04/01/08 5.500 5,185,455
4,950 New York State Thruway Authority,
(Service Contract Revenue, Local
Highway & Bridge, Prerefunded, due
04/01/05)............................. RB Baa1/NR 04/01/15(a) 6.450 5,346,940
2,000 New York State Thruway Authority,
(Service Contract, Local Highway &
Bridge)............................... RB Baa1/BBB+ 04/01/05 6.000 2,069,860
2,000 New York State Thruway Authority,
(Service Contract, Local Highway &
Bridge, Refunding).................... RB Baa1/BBB+ 04/01/04 5.500 2,027,760
2,470 New York State Urban Development Corp.,
(Center for Industrial Innovation,
Refunding)............................ RB Baa1/BBB+ 01/01/06 6.250 2,585,794
2,000 New York State Urban Development Corp.,
(Correctional Capital Facilities,
Series 6)............................. RB Baa1/A- 01/01/03 6.000 2,052,360
2,635 New York State Urban Development Corp.,
(Sub Lien, Corporate Purpose,
Refunding)............................ RB A2/A 01/01/06 6.000 2,728,174
5,250 New York State, (Refunding,
Series A)............................. GO A2/A 07/15/06 6.500 5,610,255
1,350 New York State, (Refunding,
Series C)............................. GO A2/A 10/01/04 6.000 1,403,149
1,395 Niagra Falls, (City School District,
High School Facility)................. RB Baa3/BBB- 06/15/06 5.625 1,389,099
1,000 Orange County, (Refunding).............. GO Aa2/NR 11/15/04 5.500 1,024,840
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MOODY'S/
AMOUNT SECURITY S&P MATURITY
(IN THOUSANDS) SECURITY DESCRIPTION TYPE RATING DATE RATE VALUE
- -------------- ---------------------------------------- -------- --------- ----------- ----- ------------
<C> <S> <C> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 7,730 Port Authority of New York & New Jersey,
(Special Project, JFK International
Air Terminal, Series 6), MBIA
Insured............................... RB Aaa/AAA 12/01/11 6.250% $ 8,232,682
4,365 Suffolk County, (Southwest Sewer
District, Refunding), MBIA Insured.... GO Aaa/AAA 02/01/08 6.000 4,576,833
3,690 Tobacco Settlement Asset Securitization
Corp., Inc., (Tobacco Flexible
Amortization Bonds, Series 1)......... RB Aa1/A+ 07/15/06 4.800 3,605,093
4,175 Tobacco Settlement Asset Securitization
Corp., Inc., (Tobacco Flexible
Amortization Bonds, Series 1)......... RB Aa1/A+ 07/15/07 4.875 4,073,130
2,690 Tobacco Settlement Asset Securitization
Corp., Inc., (Tobacco Flexible
Amortization Bonds, Series 1)......... RB Aa1/A+ 07/15/08 5.000 2,616,805
1,500 Triborough Bridge & Tunnel Authority,
(General Purpose, Refunding, Series
Y).................................... RB Aa3/A+ 01/01/07 5.900 1,553,955
2,580 Triborough Bridge & Tunnel Authority,
(General Purpose, Series B)........... RB Aa3/A+ 01/01/11 5.750 2,620,558
3,960 Triborough Bridge & Tunnel Authority,
(Special Obligation, Refunding, Series
A), FGIC Insured...................... RB Aaa/AAA 01/01/07 5.500 4,027,676
2,000 Trust for Cultural Resources of the City
of New York, (Public Power Revenue,
Series 1999).......................... PP NR/NR 01/01/08 4.600 1,917,420
3,230 Yonkers, (Series C), AMBAC Insured...... GO Aaa/AAA 08/01/04 5.500 3,295,440
------------
TOTAL NEW YORK...................... 239,133,148
------------
NORTH CAROLINA (2.0%)
5,000 North Carolina Municipal Power Agency,
(Catawba Electric Revenue, Series B).. RB Baa1/BBB+ 01/01/08 6.375 5,107,000
------------
PUERTO RICO (0.7%)
1,838 Commonwealth of Puerto Rico, (General
Obligation)........................... PP NR/NR 12/04/03 7.469 1,914,929
------------
TOTAL LONG TERM INVESTMENTS (COST $256,361,496).............................. 252,632,311
------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/
S&P
SHARES SECURITY DESCRIPTION RATING RATE VALUE
- ------------- ---------------------------------------- --------- --------- ------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (4.8%)
OTHER INVESTMENT COMPANIES (4.8%)
12,572,497 J.P. Morgan Institutional Tax Exempt
Money Market Fund
(cost $12,572,497).................... Aaa/AAA 3.200%(y) $ 12,572,497
------------
TOTAL INVESTMENTS (COST $268,933,993) (101.9%)................ 265,204,808
LIABILITIES IN EXCESS OF OTHER ASSETS (-1.9%)................. (4,847,292)
------------
NET ASSETS (100.0%)........................................... $260,357,516
============
</TABLE>
- ------------------------------
Note: Based on the cost of investments of $268,933,993 for federal income tax
purposes at January 31, 2000, the aggregate gross unrealized appreciation and
depreciation was $463,798 and $4,192,983, respectively, resulting in net
unrealized depreciation of investments of $3,729,185.
(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.
(y)Yield to Maturity.
AMBAC - Ambac Indemnity Corp., FGIC - Financial Guaranty Insurance Company,
FHA - Federal Housing Authority, FSA - Financial Securities Assurance, GO -
General Obligation, IBC - IBC Financial Data, Inc., IDR - Industrial Development
Revenue, MBIA - Municipal Bond Investors Assurance Corp., NR - Not Rated, PCR -
Pollution Control Revenue, PP - Private Placement, RB - Revenue Bond.
Escrowed to Maturity: Bonds for which cash and/or securities have been deposited
with a third party to cover payments of principal and interest at the maturity
which coincides with the first call date of the first bond.
The Accompanying Notes are an Integral Part of the Financial Statements.
21
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $268,933,993) $265,204,808
Interest Receivable 3,184,194
Prepaid Trustees' Fees 193
Prepaid Expenses and Other Assets 1,108
------------
Total Assets 268,390,303
------------
LIABILITIES
Payable for Investments Purchased 7,893,026
Advisory Fee Payable 66,766
Administrative Services Fee Payable 8,839
Administration Fee Payable 161
Fund Services Fee Payable 90
Accrued Expenses 63,905
------------
Total Liabilities 8,032,787
------------
NET ASSETS
Applicable to Investors' Beneficial Interests $260,357,516
============
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
22
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JANUARY 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $ 6,408,497
EXPENSES
Advisory Fee $407,169
Custodian Fees and Expenses 41,325
Administrative Services Fee 34,268
Fund Services Fee 2,303
Trustees' Fees and Expenses 1,286
Administration Fee 1,076
Miscellaneous 26,387
--------
Total Expenses 513,814
-----------
NET INVESTMENT INCOME 5,894,683
NET REALIZED LOSS ON INVESTMENTS (3,352,554)
NET CHANGE IN UNREALIZED DEPRECIATION OF
INVESTMENTS (3,126,182)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (584,053)
===========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
23
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE FOUR
MONTHS ENDED MONTHS ENDED
JANUARY 31, 2000 JULY 31, 1999
---------------- -------------
<S> <C> <C>
DECREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 5,894,683 $ 4,079,089
Net Realized Loss on Investments (3,352,554) (774,564)
Net Change in Unrealized Depreciation of
Investments (3,126,182) (7,106,907)
--------------- ------------
Net Decrease in Net Assets Resulting from
Operations (584,053) (3,802,382)
--------------- ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 31,086,620 30,864,819
Withdrawals (47,143,069) (70,994,351)
--------------- ------------
Net Decrease from Investors' Transactions (16,056,449) (40,129,532)
--------------- ------------
Total Decrease in Net Assets (16,640,502) (43,931,914)
NET ASSETS
Beginning of Period 276,998,018 320,929,932
--------------- ------------
End of Period $ 260,357,516 $276,998,018
=============== ============
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FISCAL YEAR ENDED MARCH 31,
SIX MONTHS ENDED FOUR MONTHS ENDED ------------------------------------
JANUARY 31, 2000 JULY 31, 1999 1999 1998 1997 1996
---------------- ----------------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
RATIOS TO AVERAGE NET ASSETS
Net Expenses 0.38%(a) 0.40%(a) 0.38% 0.40% 0.43% 0.44%
Net Investment Income 4.31%(a) 4.10%(a) 4.26% 4.62% 4.75% 4.72%
Portfolio Turnover 53%(b) 8%(b) 44% 51% 35% 41%
</TABLE>
- ------------------------
(a) Annualized.
(b) Not Annualized.
The Accompanying Notes are an Integral Part of the Financial Statements.
24
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The New York Tax Exempt Bond Portfolio (the "portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, non-diversified,
open-end management investment company which was organized as a trust under the
laws of the State of New York on June 16, 1993. The portfolio commenced
operations on April 11, 1994. The portfolio's investment objective is to provide
a high level of tax exempt income for New York residents consistent with
moderate risk of capital. The portfolio invests a significant amount of its
assets in debt obligations issued by political subdivisions and authorities in
the State of New York. The issuers' ability to meet their obligations may be
affected by economic and political developments within the State of New York.
The Declaration of Trust permits the trustees to issue an unlimited number of
beneficial interests in the portfolio. At a meeting on November 12, 1998, the
trustees elected to change the portfolio's fiscal year end from March 31 to
July 31.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the portfolio:
a) The 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. 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 portfolio's trustees. Such procedures include the use of
independent pricing services, which use prices based upon yields or prices
of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
short-term portfolio securities with a remaining maturity of less than 60
days are valued by the amortized cost method.
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 wholly
25
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
owned subsidiary of J.P. Morgan & Co. Incorporated ("J.P. Morgan"). Under
the terms of the agreement, the portfolio pays Morgan at an annual rate of
0.30% of the portfolio's average daily net assets. For the six months
ended January 31, 2000, such fees amounted to $409,086.
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 January 31, 2000,
J.P. Morgan has agreed to reimburse the portfolio $1,917 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 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 January 31, 2000, the fee
for these services amounted to $1,076.
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 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 January 31, 2000, the fee
for these services amounted to $34,268.
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 $2,303 for the six months ended January 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
26
<PAGE>
THE NEW YORK TAX EXEMPT BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JANUARY 31, 2000
- --------------------------------------------------------------------------------
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. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the six months
ended January 31, 2000 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
- --------- ------------
<S> <C>
$137,080,551 $140,535,501
</TABLE>
4. CREDIT AGREEMENT
The portfolio is party to a revolving line of credit agreement as discussed more
fully in Note 4 of the fund's Notes to the Financial Statements which are
included elsewhere in this report.
27
