<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
July 15, 1995
Dear Shareholder:
The investment objective of The JPM Institutional Selected U.S. Equity Fund is
to provide its shareholders with a high level of total returns from a portfolio
of selected equity securities. Using Morgan's in-depth proprietary research and
disciplined investment process to help steer a steady course through U.S. stock
market volatility, the Fund's return of 15.40% has outperformed the Morningstar
Growth & Income Fund Average of 14.66% for the 12 months ended May 31, 1995. In
addition, the Fund has outperformed this average since its 1985 inception, as
well as during the past three- and five-year periods ended May 31, 1995.
The uncertain economic environment that prevailed during much of the Fund's
fiscal year caused many investors to focus on short-term events. Typifying this
viewpoint, inflationary fears during the second half of 1994 caused many market
participants to downplay a company's long-term growth potential in favor of its
latest quarterly earnings. Similarly, during 1995's second quarter, market
buying was concentrated on two types of issues that seemed to provide near-term
confidence: the largest multinationals (which were expected to benefit from the
declining dollar) and technology stocks (which were expected to experience
continued growth). The Portfolio's diversified holdings and reliance on
long-term valuations in its stock selection caused the Fund to underperform the
S&P 500's return of 20.19% for its fiscal year.
At the end of the current reporting period, the Fund's net asset value was
$12.10, compared with $10.92 on May 31, 1994, after making distributions during
the year of $0.06 in long-term capital gains, $0.22 in short-term capital gains,
and $0.14 in ordinary income. In addition, the Fund's net assets grew from $47.5
million to end the period at $172.5 million. The net assets of The Selected
U.S. Equity Portfolio, in which the Fund invests, totaled approximately $602.8
million at May 31, 1995.
MARKET ENVIRONMENT
U.S. stock market performance was mixed for the period as dramatic stock market
declines in the second half of 1994 were more than offset by record highs during
the first half of 1995. This environment provided a good case for remaining in
the market through periods of short-term volatility because this year's market
turnaround more than offset losses from the second half of 1994.
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS. . . . .1 FUND PERFORMANCE. . . . .5
FUND FACTS AND HIGHLIGHTS . . . . .4 FINANCIAL STATEMENTS. . .7
1
<PAGE>
The Federal Reserve continued its program of interest rate increases during
1994's second half, which caused a broad sell-off in the stock market by year
end. This selling, however, was countered with vigorous buying in the beginning
of 1995 on growing conviction that the economy was experiencing a Federal
Reserve engineered "soft landing." Battered by six short-term rate increases in
1994, investors regained confidence in the outlook for corporate earnings, as
most concluded that the seventh rate increase in February would be the last for
some time. As mentioned previously, in this environment, investors favored
stocks of the largest multinational companies, believing that they would benefit
the most from low inflation and the weak dollar, making their exports more
attractive to foreign buyers.
As the Fund's fiscal year drew to a close, newly released government data fueled
fears about recession. This, in turn, increased market volatility, and raised
hopes that the Federal Reserve would reduce its official rates in order to help
stimulate economic growth.
From a sector perspective, technology stocks experienced unprecedented growth
for most of the Fund's fiscal year. In particular, semiconductor stocks rose the
most as investors believed that these companies' sales would continue to
increase despite the uncertain economic environment. As rates increased in 1994,
interest rate sensitive stocks such as retail, basic industry, and telephones
were weak. When the economy began to show signs of slowing in early 1995,
investors then began to favor more stable, reliable opportunities. As a result,
economically sensitive sectors, consumer cyclicals, and autos weakened. These
sectors began to rebound in May, however, as it appeared the Federal Reserve
might lower interest rates to stimulate economic growth.
PORTFOLIO REVIEW
The Fund seeks to reward its shareholders by pursuing a value-oriented approach
to stock selection. Morgan's team of research professionals analyzes stocks on a
sector-by-sector basis, in an attempt to identify high-quality companies that
are currently undervalued relative to their long-term earnings forecasts and
dividend paying capabilities. The Portfolio's sector weightings are determined
by what is referred to as "bottom-up" stock selection. Rather than make a
macroeconomic judgment regarding a sector's inherent attractiveness, sector
weightings are kept close to those in the S&P 500 and are slightly overweighted
or underweighted as a result of the number of attractively valued stocks we pick
in each sector.
Given the very different market sentiments in place in 1994 versus 1995, a
variety of stocks and sectors have led overall performance for the period. Three
of the top contributors to performance were LIMITED, INCORPORATED, a retailer,
whose stock rose 29% over the period, CIRCUS CIRCUS ENTERPRISES, a gaming
company, whose stock increased by 44% and READ-RITE CORPORATION, a disk-drive
manufacturer, up 79%.
At the same time, three of the stocks that detracted most from performance
during the Fund's fiscal year were ALZA CORPORATION, a health care concern,
which was down -16%, BAUSCH & LOMB, another health care company, was down -16%,
and COLTEC INDUSTRIES, the former Colt Industries, a diversified manufacturer,
declined -8%.
2
<PAGE>
While they were on opposite sides of the return spectrum, LIMITED, INCORPORATED
and BAUSCH & LOMB are two good examples of our stock selection process. LIMITED
saw its stock go through many ups and downs with the retail sector last year.
When we evaluated LIMITED by its individual businesses, which include lingerie,
personal care, and women's apparel, we believed its more diversified earnings
base would make it more resilient than a typical retailer. Its stock price was
low based on weakness in the retail sector. In March, however, the company
announced it was reorganizing into two separate entities, causing its stock to
rise. We continue to hold LIMITED as we expect its reorganization should be
profitable going forward.
Like LIMITED, BAUSCH & LOMB relies on a diversified set of products and
businesses to generate earnings. However, its stock fell in the fourth quarter
of last year and into the beginning of this year due to a significant inventory
surplus in its sunglasses business. In addition, BAUSCH & LOMB had a sport
optics business, which proved a drag on earnings. In reaction, it sold the sport
optics business and put a business plan in place to address the inventory
issues. As a result, the stock has recently begun to recover.
INVESTMENT OUTLOOK
While talk of recession increases, we believe this scenario is unlikely given
that interest rates have declined as the economy has weakened. After sustaining
record highs since the beginning of the year, the stock market may experience
renewed volatility. During roughly the first half of 1995, the stock market was
driven by higher-than-expected corporate earnings, declining bond yields, and
the expected benefits of a weaker dollar. However, we expect fewer positive
earnings surprises for companies in the months ahead. In addition, investors may
conclude that the largest multinationals, and those technology stocks that have
experienced a lengthy buying binge, have become overly expensive relative to
their price appreciation potential. If this happens, the Portfolio's diversified
holdings should benefit as investors seek more attractively valued issues.
Our view is that the market is fairly valued at current levels, but
opportunities to invest remain. For the first time in many years, many of the
world's leading economies are expanding. Inflationary pressures exist, but are
currently benign. Corporate restructurings have left many companies with
stronger balance sheets and the ability to withstand increasing competition and
rising rates. Our approach to stock selection is designed to help us seek out
those companies that are positioned to take advantage of the current economic
cycle. We continue to hold stocks that we believe have long-term prospects for
growth, despite the market's short-term fluctuations. Moreover, we are fully
invested in the markets, believing our approach to seeking value in individual
stocks should provide more consistent returns than betting on the broad market's
direction.
As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 766-7722.
Sincerely yours,
/s/ Evelyn E. Guernsey
Evelyn E. Guernsey
J.P. Morgan Funds Services
3
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Institutional Selected U.S. Equity Fund seeks to provide a high total
return from a portfolio of selected equity securities. It is designed for
investors who want an actively managed portfolio of selected equity securities
that seeks to outperform the S&P 500 Index.
---------------------------------------------
COMMENCEMENT OF OPERATIONS
7/19/93
---------------------------------------------
NET ASSETS AS OF 5/31/95
$172,497,221
---------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/26/95
EXPENSE RATIO
The Fund's annualized expense ratio of 0.60% covers shareholders' expenses for
custody, tax reporting, investment advisory, and shareholder services, after
reimbursement. The Fund is no-load and does not charge any sales, redemption, or
exchange fees. There are no additional charges for buying, selling, or
safekeeping Fund shares, or for wiring redemption proceeds from the Fund.
FUND HIGHLIGHTS
ALL DATA AS OF MAY 31, 1995
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
Pie chart depicting the allocation of the Fund's investment securities held at
May 31, 1995 by industry classification. The pie is broken in pieces
representing industries in the following percentages:
CONSUMER GOODS & SERVICES 24.9%
INDUSTRIAL PRODUCTS & SERVICES 16.4%
FINANCE 10.9%
ENERGY 10.4%
UTILITIES 8.7%
HEALTH CARE 7.9%
SHORT TERM AND OTHER 7.8%
BASIC INDUSTRIES 5.8%
TECHNOLOGY 5.0%
TRANSPORTATION 2.2%
LARGEST EQUITY HOLDINGS % OF PORTFOLIO
GENERAL MOTORS CORP. 2.4
BAUSCH & LOMB INC. 2.3
BANKAMERICA CORP. 2.0
PROVIDIAN CORP. 1.9
NATIONSBANK CORP. 1.9
4
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
There are several ways to evaluate a mutual fund's performance. One approach is
to look at the growth of a hypothetical investment of $10,000. The chart at
right shows that $10,000 invested at inception of the Fund's predecessor fund
would have grown to $37,726 at May 31, 1995.
Another way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows you
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 in a fund's value over various time periods, typically 1, 5, or 10
years (or since inception). Total returns for periods of less than one year are
not annualized and provide a picture of how a fund has performed over the
short term.
GROWTH OF $10,000 SINCE INCEPTION*
JUNE 27, 1985 - MAY 31, 1995
Line graph with two axes: the X-axis represents years of operations; the
Y-axis represents dollar value. The graph plots three lines: the first line
represents the growth of a ten thousand dollar investment in the Fund from
June 27, 1985 (inception) to May 31, 1995; the second line represents the
growth of a ten thousand dollar investment in a portfolio of securities
reflecting the composition of the S&P 500 Index for the same time period; the
third line represents the growth of a ten thousand dollar investment in a
portfolio of securities reflecting the composition of the Morningstar Growth &
Income Fund Average for the same time period. The graph points are as follows:
<TABLE>
<CAPTION>
Year Fund S&P 500
<S> <C> <C>
0 $ 10,000 $ 10,000
1 13,096 13,361
2 15,196 16,187
3 13,968 15,133
4 17,476 19,188
5 20,756 22,376
6 23,830 25,015
7 27,308 27,479
8 30,046 30,670
9 32,691 31,976
10 37,726 38,432
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
---------------- ----------------------------------------
THREE SIX ONE THREE FIVE SINCE
AS OF MAY 31, 1995 MONTHS MONTHS YEAR YEARS* YEARS* INCEPTION*
------------------------------------------------------------------ ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JPM Institutional Selected U.S. Equity Fund 9.80% 18.18% 15.40% 11.37% 12.69% 14.32%
S&P 500 10.22% 19.23% 20.19% 11.83% 11.42% 14.54%
Morningstar Growth & Income Fund Average 8.59% 15.67% 14.66% 10.06% 10.13% 12.10%
AS OF MARCH 31, 1995
------------------------------------------------------------------ ----------------------------------------
JPM Institutional Selected U.S. Equity Fund 10.44% 7.35% 12.42% 10.06% 13.11% 13.90%
S&P 500 9.74% 9.72% 15.57% 10.56% 11.41% 14.01%
Morningstar Growth & Income Fund Average 8.08% 6.39% 10.44% 8.78% 9.98% 11.66%
<FN>
*REFLECTS PERFORMANCE OF THE PIERPONT EQUITY FUND, THE PREDECESSOR ENTITY TO THE
SELECTED U.S. EQUITY PORTFOLIO, FROM 6/27/85 THROUGH 7/19/93 (COMMENCEMENT
OF OPERATIONS).
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL FUND RETURNS ARE NET
OF FEES AND ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT
OF CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE
MORNINGSTAR MUTUAL FUND RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND
DATA. ALTHOUGH GATHERED FROM RELIABLE SOURCES, DATA ACCURACY AND COMPLETENESS
CANNOT BE GUARANTEED. THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND INVESTS
ALL OF ITS INVESTABLE ASSETS IN THE SELECTED U.S. EQUITY PORTFOLIO, A SEPARATELY
REGISTERED INVESTMENT COMPANY THAT IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO
OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS THE FUND. CONSISTENT WITH
APPLICABLE REGULATORY GUIDANCE, PERFORMANCE FOR THE PERIOD PRIOR TO THE JPM
INSTITUTIONAL SELECTED U.S. EQUITY FUND'S INCEPTION REFLECTS THE PERFORMANCE OF
THE PIERPONT EQUITY FUND, THE PREDECESSOR ENTITY TO THE SELECTED U.S. EQUITY
PORTFOLIO, WHICH HAD A SIMILAR INVESTMENT OBJECTIVE AND RESTRICTIONS AS THE
PORTFOLIO. THE PERFORMANCE FOR SUCH PERIOD REFLECTS DEDUCTION OF THE EXPENSES OF
THE PIERPONT EQUITY FUND, WHICH WERE HIGHER THAN THE EXPENSES FOR THE JPM
INSTITUTIONAL SELECTED U.S. EQUITY FUND, AFTER REIMBURSEMENT.
5
<PAGE>
SIGNATURE BROKER-DEALER SERVICES, INC. IS THE DISTRIBUTOR OF THE JPM
INSTITUTIONAL SELECTED U.S. EQUITY FUND (THE "FUND").
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MORGAN") SERVES AS PORTFOLIO
INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE SOLELY IN ITS CAPACITY AS
SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. INVESTMENTS IN THE FUND ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN OR ANY OTHER
BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND CAN
FLUCTUATE, SO AN INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
Performance data quoted herein represent past performance. Please remember that
past performance is not a guarantee of future performance. Fund returns are net
of fees. All returns assume reinvestment of income and reflect the reimbursement
of certain Fund expenses as described in the Prospectus. Had expenses not been
subsidized, returns would have been lower. The Fund invests all of its
investable assets in The Selected U.S. Equity Portfolio, a separately registered
investment company which is not available to the public but only to other
collective investment vehicles such as the Fund.
MORE COMPLETE INFORMATION ABOUT THE FUND, INCLUDING MANAGEMENT FEES AND OTHER
EXPENSES, IS PROVIDED IN THE PROSPECTUS, WHICH SHOULD BE READ CAREFULLY BEFORE
INVESTING. YOU MAY OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS BY CALLING J.P.
MORGAN FUNDS SERVICES AT (800) 766-7722.
6
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Selected U.S. Equity Portfolio
("Portfolio"), at value $172,476,780
Receivable for Expense Reimbursements 53,572
Deferred Organization Expenses (Note 1d) 31,190
Other Assets 9,278
------------
Total Assets 172,570,820
------------
LIABILITIES
Payable for Shares of Beneficial Interest Redeemed 2,361
Shareholder Servicing Fee Payable (Note 2c) 7,114
Administration Fee Payable (Note 2a) 3,807
Fund Services Fee Payable (Note 2d) 830
Accrued Expenses 59,487
------------
Total Liabilities 73,599
------------
NET ASSETS
Applicable to 14,250,601 Shares of Beneficial Interest
Outstanding
(par value $0.001, unlimited shares authorized) $172,497,221
------------
------------
Net Asset Value, Offering and Redemption Price Per Share $12.10
------------
------------
ANALYSIS OF NET ASSETS
Paid-In Capital $155,238,185
Undistributed Net Investment Income 1,132,505
Accumulated Undistributed Net Realized Gain on Investment 3,420,179
Net Unrealized Appreciation of Investment 12,706,352
------------
Net Assets $172,497,221
------------
------------
</TABLE>
See Accompanying Notes.
7
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE
1b)
Allocated Dividend Income (Net of Foreign
Withholding Tax of $41,057) $ 2,607,377
Allocated Interest Income 331,471
Allocated Portfolio Expenses (559,958)
-----------
Net Investment Income Allocated from Portfolio 2,378,890
FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $ 55,090
Registration Fees 54,624
Printing Expense 32,658
Administration Fee (Note 2a) 30,529
Transfer Agent Fees 14,606
Fund Services Fee (Note 2d) 11,003
Professional Fees 10,353
Amortization of Organization Expenses (Note 1d) 9,961
Trustees' Fees and Expenses (Note 2e) 3,064
Insurance 940
Miscellaneous 3,526
---------
Total Fund Expenses 226,354
Less: Reimbursement of Expenses (Note 2b) (125,250)
---------
NET FUND EXPENSES 101,104
-----------
NET INVESTMENT INCOME 2,277,786
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM
PORTFOLIO 5,173,235
NET CHANGE IN UNREALIZED APPRECIATION OF
INVESTMENT ALLOCATED FROM PORTFOLIO 12,440,290
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $19,891,311
-----------
-----------
</TABLE>
See Accompanying Notes.
8
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 19, 1993
(COMMENCEMENT
FOR THE FISCAL OF OPERATIONS)
YEAR ENDED TO
INCREASE (DECREASE) IN NET ASSETS MAY 31, 1995 MAY 31, 1994
-------------- ---------------
<S> <C> <C>
FROM OPERATIONS
Net Investment Income $ 2,277,786 $ 284,689
Net Realized Gain on Investment Allocated
from Portfolio 5,173,235 651,698
Net Change in Unrealized Appreciation of
Investment Allocated from Portfolio 12,440,290 266,062
-------------- ---------------
Net Increase in Net Assets Resulting from
Operations 19,891,311 1,202,449
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (1,331,578) (98,392)
Net Realized Gain (2,364,553) --
-------------- ---------------
Total Distributions to Shareholders (3,696,131) (98,392)
-------------- ---------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
(NOTE 3)
Proceeds from Shares of Beneficial Interest
Sold 118,652,323 48,560,304
Reinvestment of Dividends and Distributions 3,312,414 90,835
Cost of Shares of Beneficial Interest
Redeemed (13,135,656) (2,282,336)
-------------- ---------------
Net Increase from Transactions in Shares
of Beneficial Interest 108,829,081 46,368,803
-------------- ---------------
Total Increase in Net Assets 125,024,261 47,472,860
NET ASSETS
Beginning of Period 47,472,960 100
-------------- ---------------
End of Period (including undistributed net
investment income of $1,132,505 and
$186,297, respectively) $ 172,497,221 $47,472,960
-------------- ---------------
-------------- ---------------
</TABLE>
See Accompanying Notes.
9
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 19, 1993
(COMMENCEMENT
FOR THE FISCAL OF OPERATIONS)
YEAR ENDED TO
MAY 31, 1995 MARCH 31, 1994
-------------- ---------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.92 $ 10.00
-------------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.18 0.08
Net Realized and Unrealized Gain on
Investment 1.42 0.88
-------------- -------
Total from Investment Operations 1.60 0.96
-------------- -------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (0.14) (0.04)
Net Realized Gain (0.28) --
-------------- -------
Total Distributions (0.42) (0.04)
-------------- -------
NET ASSET VALUE, END OF PERIOD $ 12.10 $ 10.92
-------------- -------
-------------- -------
Total Return 15.40% 9.61%+
-------------- -------
-------------- -------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in Thousands) $172,497 $47,473
Ratios to Average Net Assets:
Expenses 0.60% 0.60%(a)
Net Investment Income 2.07% 1.74%(a)
Decrease Reflected in above Expense Ratio
due to Expense Reimbursements from
Morgan 0.11% 0.43%(a)
<FN>
-------------------
+ Not annualized.
(a) Annualized.
</TABLE>
See Accompanying Notes.
10
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Institutional Selected U.S. Equity Fund (the "Fund") is a separate
series of The JPM Institutional Funds, a Massachusetts business trust (the
"Trust"). The Trust is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The Fund
commenced operations on July 19, 1993.
The Fund invests all of its investable assets in The Selected U.S. Equity
Portfolio (the "Portfolio"), a diversified open-end management investment
company having the same investment objectives as the Fund. The value of such
investment reflects the Fund's proportionate interest in the net assets of the
Portfolio (29% at May 31, 1995). 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 following is a summary of the significant accounting policies of the Fund:
a)Valuation of securities by the Portfolio is discussed in Note 1 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)Substantially all the Fund's net investment income is declared as
dividends and paid semi-annually. Distributions to shareholders of net
realized capital gain, if any, are declared and paid annually.
d)The Fund incurred organization expenses in the amount of $49,795. These
costs were deferred and are being amortized by the Fund on a straight-line
basis over a five-year period from the commencement of operations.
e)Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund intends to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income,
including net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income or excise tax is
necessary.
f)The Fund has adopted Statement of Position 93-2 Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain, and Return
of Capital Distributions by Investment Companies. Accordingly, permanent
book and tax differences relating to shareholder distributions are
reclassified to and from paid-in capital. The Fund reclassified $40,201 to
paid-in capital from accumulated undistributed net realized gain on
investment. Net investment income, net realized gains and net assets were
not affected by this change.
g)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.
11
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Trust retains Signature Broker-Dealer Services, Inc. ("Signature") to
serve as Administrator and Distributor. Signature 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 Signature. The
agreement provides for a fee to be paid to Signature at an annual rate
determined by the following schedule: 0.04% of the first $1 billion of the
aggregate average daily net assets of the Trust, as well as two other
affiliated fund families for which Signature acts as administrator, 0.032%
of the next $2 billion of such net assets, 0.024% of the next $2 billion
of such net assets, and 0.016% of such net assets in excess of $5 billion.
The daily equivalent of the fee rate is applied daily to the net assets of
the Fund. For the fiscal year ended May 31, 1995, Signature's fee for
these services amounted to $30,529.
b)The Trust, on behalf of the Fund, has a Financial and Fund Accounting
Services Agreement ("Services Agreement") with Morgan Guaranty Trust
Company of New York ("Morgan") under which Morgan receives a fee, based on
the percentage described below, for overseeing certain aspects of the
administration and operation of the Fund. The Services Agreement is also
designed to provide an expense limit for certain expenses of the Fund. If
total expenses of the Fund, excluding the shareholder servicing fee, the
fund services fee and amortization of organization expenses, exceed the
expense limit of 0.05% of the Fund's average daily net assets, Morgan will
reimburse the Fund for the excess expense amount and receive no fee.
Should such expenses be less than the expense limit, Morgan's fee would be
limited to the difference between such expenses and the fee calculated
under the Services Agreement. For the fiscal year ended May 31, 1995,
Morgan agreed to reimburse the Fund $95,210 for excess expenses. In
addition to the expenses that Morgan assumes under the Services Agreement,
Morgan has agreed to reimburse the Fund to the extent necessary to
maintain the total operating expenses of the Fund, including the expenses
allocated to the Fund from the Portfolio, at no more than 0.60% of the
average daily net assets of the Fund through November 30, 1995. For the
fiscal year ended May 31, 1995, Morgan has agreed to reimburse the Fund
$30,040 for expenses which exceeded this limit.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. The Agreement provides for the Fund to pay Morgan a fee for
these services which is computed daily and may be paid monthly at an
annual rate of 0.05% of the average daily net assets of the Fund. For the
fiscal year ended May 31, 1995, the fee for these services amounted to
$55,090.
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. For the
fiscal year ended May 31, 1995, the Fund's allocated portion of Group's
costs in performing its services amounted to $11,003.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds, their
corresponding Portfolios and The Series Portfolio. The Trustees' Fees and
Expenses shown in the financial statements represents the Fund's allocated
portion of the total fees and expenses. Prior to April 1, 1995, the
aggregate annual Trustee Fee was $55,000. The Trustee who serves as
Chairman and Chief Executive Officer of these Funds and Portfolios also
serves
12
<PAGE>
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
as Chairman of Group and received compensation and employee benefits from
the 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 $1,300.
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
JULY 19, 1993
FOR THE FISCAL (COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
MAY 31, 1995 MAY 31, 1994
-------------- -----------------
<S> <C> <C>
Shares sold 10,793,249 4,549,461
Reinvestments of dividends 320,206 8,480
Shares redeemed (1,208,967) (211,828)
-------------- --------
Net increase 9,904,488 4,346,113
-------------- --------
-------------- --------
</TABLE>
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The JPM Institutional Selected U.S. Equity Fund
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The JPM Institutional Selected U.S. Equity Fund (one of the series constituting
part of the JPM Institutional Funds, hereafter referred to as the "Fund") at May
31, 1995, the results of its operations for the year then ended, and the changes
in its net assets and the financial highlights for the year then ended and for
the period July 19, 1993 (commencement of operations) through May 31, 1994, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
July 26, 1995
14
<PAGE>
The Selected U.S. Equity Portfolio
Annual Report May 31, 1995
(The following pages should be read in conjunction
with The JPM Institutional Selected U.S. Equity Fund
Annual Financial Statements)
15
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1a)
------------------ -----------
COMMON STOCKS (91.2%)
<S> <C> <C>
BASIC INDUSTRIES (5.7%)
CHEMICALS (2.8%)
Du Pont (E.I.) de Nemours & Co., Inc.... 46,055 $ 3,125,983
Monsanto Co............................. 29,800 2,480,850
Union Carbide Corp...................... 172,000 5,031,000
Wellman Inc............................. 254,400 6,391,800
-----------
17,029,633
-----------
METALS & MINING (2.9%)
Crown Cork & Seal Co., Inc. (a)......... 59,500 2,796,500
Freeport McMoRan Inc. (a)............... 200,000 3,450,000
Freeport McMoRan Copper & Gold Inc., Cl.
A..................................... 184,762 3,787,621
Reynolds Metals Co...................... 153,000 7,554,375
-----------
17,588,496
-----------
TOTAL BASIC INDUSTRIES................ 34,618,129
-----------
CONSUMER GOODS & SERVICES (24.9%)
AUTOMOTIVE (2.3%)
General Motors Corp..................... 295,000 14,160,000
-----------
BEVERAGES, FOOD, SOAP & TOBACCO (6.1%)
Archer-Daniels-Midland Co............... 252,700 4,674,950
CPC International, Inc.................. 69,800 4,240,350
Darden Restaurants Inc. (a)............. 109,500 1,204,500
General Mills Inc....................... 109,500 5,680,313
PepsiCo., Inc........................... 201,100 9,853,900
Philip Morris Cos., Inc................. 155,000 11,295,625
-----------
36,949,638
-----------
ENTERTAINMENT, LEISURE & MEDIA (5.5%)
Circus Circus Enterprises Inc. (a)...... 300,000 10,012,500
CBS Inc................................. 126,410 8,469,470
International Game Technology........... 349,800 5,640,525
Tele-Communications Inc., Cl. A (a)..... 426,300 8,978,944
-----------
33,101,439
-----------
FOOTWEAR APPAREL (0.1%)
Converse Inc. (a)....................... 87,633 591,523
Florsheim Shoe Co. (a).................. 43,816 205,387
-----------
796,910
-----------
HOUSEHOLD PRODUCTS (1.9%)
First Brands Corp....................... 110,500 4,558,125
Interco Inc. (a)........................ 392,200 2,402,225
Procter & Gamble Co..................... 59,760 4,295,250
-----------
11,255,600
-----------
MERCHANDISING (5.8%)
Charming Shoppes, Inc................... 123,900 538,191
<CAPTION>
VALUE
SHARES (NOTE 1a)
------------------ -----------
<S> <C> <C>
MERCHANDISING (5.8%) (CONTINUED)
Hechinger Co., Cl. A.................... 130,000 $ 983,125
Limited Inc............................. 354,700 7,892,075
Melville Corp........................... 273,900 10,887,525
Price Costco Inc. (a)................... 312,900 4,400,156
Wal Mart Stores, Inc.................... 398,000 9,950,000
-----------
34,651,072
-----------
PERSONAL CARE (0.9%)
Avon Products Inc....................... 82,400 5,551,700
-----------
PERSONAL SERVICES (1.4%)
Service Corp. International............. 286,600 8,203,925
-----------
TEXTILE MANUFACTURING (0.9%)
Fruit of the Loom Inc., Cl. A (a)....... 209,000 5,564,625
-----------
TOTAL CONSUMER GOODS & SERVICES....... 150,234,909
-----------
ENERGY (10.4%)
OIL-PRODUCTION (9.0%)
Diamond Shamrock Inc.................... 164,900 4,472,913
Exxon Corp.............................. 58,200 4,154,025
Mobil Corp.............................. 27,000 2,710,125
Occidental Petroleum Corp............... 349,300 8,033,900
Oryx Energy Co. (a)..................... 483,600 6,951,750
Repsol S.A. (ADR)....................... 131,900 4,303,237
Royal Dutch Petroleum Co. (ADR)......... 58,320 7,392,060
Sun Inc................................. 181,800 5,726,700
Texaco Inc.............................. 152,000 10,412,000
-----------
54,156,710
-----------
OIL-SERVICES (1.4%)
Schlumberger Ltd........................ 133,000 8,645,000
-----------
TOTAL ENERGY.......................... 62,801,710
-----------
FINANCE (10.9%)
BANKING (6.4%)
BankAmerica Corp........................ 235,115 12,284,759
Citicorp................................ 65,100 3,482,850
Firstar Corp............................ 46,500 1,470,563
Fleet Financial Group Inc............... 208,000 7,254,000
Great Western Financial Corp............ 138,000 3,018,750
NationsBank Corp........................ 200,572 11,357,389
-----------
38,868,311
-----------
INSURANCE (3.8%)
AMBAC Inc............................... 206,300 8,252,000
First Colony Corp....................... 53,300 1,259,212
Providian Corp.......................... 316,500 11,512,687
USLIFE Corp............................. 43,600 1,754,900
-----------
22,778,799
-----------
</TABLE>
See Accompanying Notes.
16
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1a)
------------------ -----------
FINANCIAL SERVICES (0.7%)
<S> <C> <C>
Dean Witter Discover & Co............... 84,600 $ 4,029,075
-----------
TOTAL FINANCE......................... 65,676,185
-----------
HEALTH CARE (7.9%)
HOSPITAL SERVICES & SUPPLIES (1.8%)
Columbia/HCA Healthcare Corp............ 263,700 10,778,738
-----------
PHARMACEUTICALS (6.1%)
Alza Corp. Cl. A (a).................... 239,800 5,005,825
American Home Products Corp............. 32,300 2,378,087
Bausch & Lomb Inc....................... 336,200 13,658,125
Eli Lilly & Co.......................... 132,500 9,887,812
Warner - Lambert Co..................... 70,000 5,801,250
-----------
36,731,099
-----------
TOTAL HEALTHCARE...................... 47,509,837
-----------
INDUSTRIAL PRODUCTS & SERVICES (16.0%)
COMMERCIAL PRINTING (1.0%)
R.R. Donnelley & Sons Co................ 169,600 6,190,400
-----------
DIVERSIFIED MANUFACTURING (11.5%)
Allied Signal, Inc...................... 210,700 8,507,013
Coltec Industries Inc. (a).............. 431,500 7,659,125
Cooper Industries, Inc.................. 289,500 10,711,500
Cooper Tire & Rubber Co................. 197,000 4,777,250
General Electric Co..................... 120,000 6,960,000
ITT Corp................................ 99,100 11,086,813
Johnson Controls Inc.................... 75,200 4,305,200
Manville Corp. (a)...................... 577,700 7,221,250
Tyco International Ltd.................. 150,000 8,118,750
-----------
69,346,901
-----------
ELECTRONICS (2.7%)
Grainger (W.W.) Inc..................... 70,000 4,191,250
Harris Corp............................. 176,400 9,371,250
Magnetek Inc. (a)....................... 171,300 2,590,913
-----------
16,153,413
-----------
ENVIRONMENTAL CONTROL (0.7%)
Wheelabrator Technologies Inc........... 268,000 4,087,000
-----------
MACHINERY (0.1%)
General Signal Corp..................... 11,800 436,600
-----------
TOTAL INDUSTRIAL PRODUCTS &
SERVICES............................ 96,214,314
-----------
<CAPTION>
VALUE
SHARES (NOTE 1a)
------------------ -----------
<S> <C> <C>
TECHNOLOGY (4.8%)
COMPUTERS-PERIPHERALS (1.8%)
Conner Peripherals Inc. (a)............. 305,700 $ 3,935,887
International Business Machines......... 34,500 3,217,125
Read Rite Corp. (a)..................... 153,300 3,458,831
-----------
10,611,843
-----------
INFORMATION PROCESSING (1.5%)
Novell, Inc. (a)........................ 455,900 8,804,569
-----------
TELECOMMUNICATIONS-EQUIPMENT (1.5%)
Bay Networks Inc........................ 254,600 9,276,988
-----------
TOTAL TECHNOLOGY...................... 28,693,400
-----------
TRANSPORTATION (1.9%)
RAILROADS (1.9%)
Canadian Pacific Limited................ 350,000 5,993,750
Union Pacific Corp...................... 94,700 5,244,012
-----------
TOTAL TRANSPORTATION.................. 11,237,762
-----------
UTILITIES (8.7%)
ELECTRIC (2.7%)
Allegheny Power System Inc.............. 110,000 2,736,250
Dominion Resources Inc.................. 73,000 2,710,125
Entergy Corp............................ 231,500 5,729,625
Scecorp................................. 280,000 4,865,000
-----------
16,041,000
-----------
TELEPHONE (6.0%)
AT&T.................................... 172,700 8,764,525
BellSouth Corp.......................... 111,000 6,812,625
MCI Communications Corp................. 387,300 7,818,619
Pacific Telesis Group................... 191,100 5,111,925
Telefonos de Mexico, Cl. L (ADR)........ 95,000 2,671,875
U.S. West, Inc.......................... 126,500 5,218,125
-----------
36,397,694
-----------
TOTAL UTILITIES....................... 52,438,694
-----------
TOTAL COMMON STOCKS
(COST $504,468,266)................. 549,424,940
-----------
</TABLE>
See Accompanying Notes.
17
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1a)
------------------ -----------
CONVERTIBLE PREFERRED STOCK (0.0%+)
<S> <C> <C>
HEALTHCARE (0.0%+)
PHARMACEUTICALS (0.0%+)
Gensia Inc., $3.75 (144A)............... 20,000 $ 160,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCK
(COST $1,000,000)................... 160,000
-----------
<CAPTION>
PRINCIPAL
AMOUNT
------------------
<S> <C> <C>
CONVERTIBLE BONDS (1.0%)
BASIC INDUSTRIES (0.1)
PAPER & FOREST PRODUCTS (0.1%)
Champion International Corp. 6.50%
Subordinated Debentures due
04/15/11.............................. $ 350,000 454,562
-----------
INDUSTRIAL PRODUCTS & SERVICES (0.4%)
ENVIRONMENTAL CONTROL (0.4%)
WMX Technologies Inc. 2.00% Subordinated
Debentures due 01/24/05............... 2,836,000 2,336,155
-----------
TECHNOLOGY (0.2%)
COMPUTERS-PERIPHERALS (0.2%)
Conner Peripherals Inc. 6.50% Debentures
due 03/01/02.......................... 1,750,000 1,452,500
-----------
TRANSPORTATION (0.3%)
AIRLINES (0.3%)
AMR Corp. 6.125% Subordinated Debentures
due 11/01/24 (144A)................... 1,900,000 1,814,500
-----------
TOTAL CONVERTIBLE BONDS
(COST $5,575,943)................... 6,057,717
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1a)
------------------ -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (7.6%)
U.S. TREASURY OBLIGATIONS (7.6%)
U.S. Treasury Bills 5.75%
due 6/22/95(b)........................ $ 22,283,000 $22,208,649
U.S. Treasury Bills 5.72%
due 6/22/95(b)........................ 15,000,000 14,949,994
U.S. Treasury Bills 5.61%
due 6/01/95........................... 8,798,000 8,798,000
U.S. Treasury Bills 5.60%
due 6/01/95........................... 207,000 207,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $46,163,643).................. 46,163,643
-----------
TOTAL INVESTMENTS
(COST $557,207,852) (99.8%)......... 601,806,300
-----------
OTHER ASSETS
NET OF LIABILITIES (0.2%)........... 947,484
-----------
NET ASSETS (100.0%)................... $602,753,784
-----------
-----------
<FN>
Note: The cost of investments for Federal Income Tax purposes at May 31, 1995,
was $557,451,085, the aggregate gross unrealized appreciation and
depreciation was $57,749,363 and $13,394,148, respectively, resulting in
net unrealized appreciation of $44,355,215.
(a) Non-income-producing security.
(b) Segregated as collateral for futures contracts.
+ -- less than 0.1%.
(ADR) -- Securities whose value is determined or significantly influenced by
trading on exchanges not located in the United States or Canada. ADR
after the name of a foreign holdings stands for American Depository
Receipt, representing ownership of foreign securities on deposit with a
domestic custodian bank.
144A -- Securities restricted for resale to Qualified Institutional Buyers.
</TABLE>
See Accompanying Notes.
18
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $557,207,852)
(Note 1a) $ 601,806,300
Cash 1,416
Receivable for Investments Sold 22,688,022
Dividends Receivable 1,815,580
Interest Receivable 61,203
Prepaid Insurance 3,792
--------------
Total Assets 626,376,313
--------------
LIABILITIES
Payable for Investments Purchased 22,385,564
Advisory Fee Payable (Note 2a) 625,009
Financial and Fund Accounting Services Fee
Payable (Note 2c) 391,885
Custody Fee Payable 178,609
Fund Services Fee Payable (Note 2d) 5,006
Administration Fee Payable (Note 2b) 3,012
Accrued Expenses 33,444
--------------
Total Liabilities 23,622,529
--------------
NET ASSETS
Applicable to Investors' Beneficial Interests $ 602,753,784
--------------
--------------
</TABLE>
See Accompanying Notes.
19
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MAY 31, 1995
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividend Income (Net of Foreign Withholding Tax of $176,403) $11,915,899
Interest Income 1,411,831
-----------
Investment Income 13,327,730
EXPENSES
Advisory Fee (Note 2a) $2,025,936
Financial and Fund Accounting Services Fees (Note 2c) 236,537
Custodian Fees and Expenses 160,253
Fund Services Fee (Note 2d) 52,948
Professional Fees 37,910
Administration Fee (Note 2b) 32,670
Insurance 12,659
Trustees' Fees and Expenses (Note 2e) 12,169
----------
Total Expenses 2,571,082
-----------
NET INVESTMENT INCOME 10,756,648
NET REALIZED GAIN ON INVESTMENTS (including $391,381
net realized gains from futures contracts) 31,481,163
NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS (including
$478,918 net unrealized appreciation from futures contracts) 35,361,393
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $77,599,204
-----------
-----------
</TABLE>
See Accompanying Notes.
20
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 19, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED MAY OPERATIONS) TO
INCREASE (DECREASE) IN NET ASSETS 31, 1995 MAY 31, 1994
---------------- -----------------
<S> <C> <C>
FROM OPERATIONS
Net Investment Income $ 10,756,648 $ 5,655,363
Net Realized Gain on Investments 31,481,163 26,272,769
Net Change in Unrealized Appreciation (Depreciation) of
Investments 35,361,393 (2,323,580)
---------------- -----------------
Net Increase in Net Assets Resulting from Operations 77,599,204 29,604,552
---------------- -----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 266,876,529 585,309,492
Withdrawals (179,469,109) (177,266,984)
---------------- -----------------
Net Increase from Investors' Transactions 87,407,420 408,042,508
---------------- -----------------
Total Increase in Net Assets 165,006,624 437,647,060
NET ASSETS
Beginning of Period 437,747,160 100,100
---------------- -----------------
End of Period $ 602,753,784 $ 437,747,160
---------------- -----------------
---------------- -----------------
</TABLE>
--------------------------------------------------------------------------------
SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE JULY 19, 1993
FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
MAY 31, 1995 MAY 31, 1994
------------- -----------------
<S> <C> <C>
Ratios to Average Net Assets:
Net Investment Income 2.12% 1.79%(a)
Expenses 0.51% 0.53%(a)
Portfolio Turnover 71% 76%+
<FN>
------------------------
(a) Annualized.
(+) Portfolio turnover is for the twelve month period ended May 31, 1994, and
includes the portfolio activity of the Portfolio's predecessor entity, The
Pierpont Equity Fund, for the period June 1, 1993 to July 18, 1993.
</TABLE>
See Accompanying Notes.
21
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
--------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Selected U.S. Equity Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Portfolio commenced operations on July 19, 1993 and
received a contribution of certain assets and liabilities, including securities,
with a value of $209,477,219 on that date from The Pierpont Equity Fund in
exchange for a beneficial interest in the Portfolio. At that date, net
unrealized appreciation of $12,039,552 was included in the contributed
securities. On October 31, 1993, the Portfolio received a contribution of
securities and certain assets and liabilities, with a market value and cost of
$128,337,342 from the JPM North America Fund, Ltd., in exchange for a beneficial
interest in the Portfolio. The Declaration of Trust permits the Trustees to
issue an unlimited number of beneficial interests in the Portfolio.
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
exists 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 at amortized cost.
b)Futures - A futures contract is an agreement to purchase/sell a specified
quantity of an underlying instrument at a specified future date or to
make/receive a cash payment based on the value of a securities index. The
price at which the purchase and sale will take place is fixed when the
Portfolio enters into the contract. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash and/or
securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, the Portfolio agrees to receive from
or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the Portfolio as unrealized gains or losses.
When the contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time when it was closed. The Portfolio
invests in futures contracts solely for the purpose of hedging its
existing portfolio securities, or securities the Portfolio intends to
purchase, against fluctuations in value caused by changes in prevailing
market interest rates. The use of futures transactions involves the risk
of imperfect correlation in movements in the price of futures
22
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
contracts, interest rates and the underlying hedged assets, and the
possible inability of counterparties to meet the terms of their contracts.
S&P 500 futures transactions during the fiscal year ended May 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACTS
----------------------------------------------------------
PRINCIPAL AMOUNT
NUMBER OF OF
CONTRACTS CONTRACTS
---------------- ----------------
<S> <C> <C>
Contracts opened 192 $49,222,100
Contracts closed (75) (18,520,850)
---------------- ----------------
Open at end of period 117 $30,701,250
---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF OPEN CONTRACTS AT MAY 31, 1995
---------------------------------------------------------
NET
UNREALIZED
CONTRACTS APPRECIATION
LONG (DEPRECIATION)
--------------- ------------
<S> <C> <C>
S&P 500, due June 1995 83 $540,448
S&P 500, due September 1995 34 (61,530)
------------
Net Unrealized Appreciation on Futures
Contracts $478,918
------------
</TABLE>
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 subject to
taxation 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.
e)The Portfolio's custodian 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.
23
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES
a)The Portfolio has an investment advisory agreement with Morgan Guaranty
Trust Company of New York ("Morgan"). Under the terms of the investment
advisory agreement, the Portfolio pays Morgan at an annual rate of 0.40%
of the Portfolio's average daily net assets. For the fiscal year ended May
31, 1995, this fee amounted to $2,025,936.
b)The Portfolio retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator and exclusive placement agent. Signature
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 Signature. The agreement provides for a fee to be
paid to Signature at an annual rate determined by the following schedule:
0.01% of the first $1 billion of the aggregate average daily net assets of
the Portfolio and the other portfolios subject to the Administrative
Services Agreement, 0.008% of the next $2 billion of such net assets,
0.006% of the next $2 billion of such net assets, and 0.004% of such net
assets in excess of $5 billion. The daily equivalent of the fee rate is
applied to the daily net assets of the Portfolio. For the fiscal year
ended May 31, 1995, Signature's fee for these services amounted to
$32,670.
c)The Portfolio has a Financial and Fund Accounting Services Agreement
("Services Agreement") with Morgan under which Morgan receives a fee,
based on the percentages described below, for overseeing certain aspects
of the administration and operation of the Portfolio. The Services
Agreement is also designed to provide an expense limit for certain
expenses of the Portfolio. If total expenses of the Portfolio, excluding
the advisory fee, custody expenses, fund services fee, and brokerage
costs, exceed the expense limit of 0.10% of the Portfolio's average daily
net assets up to $200 million, 0.05% of the next $200 million of average
daily net assets, and 0.03% of average daily net assets thereafter, Morgan
will reimburse the Portfolio for the excess expense amount and receive no
fee. Should such expenses be less than the expense limit, Morgan's fee
would be limited to the difference between such expenses and the fee
calculated under the Services Agreement. For the fiscal year ended May 31,
1995, this fee amounted to $236,537.
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 $52,948 for the fiscal year ended May 31, 1995.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of the Pierpont Funds, the JPM Institutional Funds, their
corresponding Portfolios and The Series Portfolio. The Trustees' Fees and
Expenses shown in the financial statements represents the Portfolio's
allocated portion of the total fees and expenses. Prior to April 1, 1995,
the aggregate annual Trustee Fee was $55,000. The Trustee who serves as
Chairman and Chief Executive Officer of these Funds and Portfolios also
serves as Chairman of Group and received compensation and employee
benefits from Group in his role as Group's Chairman. The allocated portion
of such compensation and benefits included in the Fund Services Fee shown
in the financial statements was $6,200.
24
<PAGE>
THE SELECTED U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1995
--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the fiscal year
ended May 31, 1995 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
-------------- --------------
<S> <C> <C>
$ 410,494,813 $ 345,261,473
</TABLE>
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
The Selected U.S. Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the supplementary data present fairly, in all material
respects, the financial position of The Selected U.S. Equity Portfolio (the
"Portfolio") at May 31, 1995, the results of its operations for the year then
ended, and the changes in its net assets and its supplementary data for the year
then ended and for the period July 19, 1993 (commencement of operations) through
May 31, 1994, in conformity with generally accepted accounting principles. These
financial statements and supplementary data (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1995 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
July 26, 1995
26
<PAGE>
JPM INSTITUTIONAL MONEY MARKET FUND
JPM INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
JPM INSTITUTIONAL TREASURY MONEY MARKET FUND
JPM INSTITUTIONAL SHORT TERM BOND FUND
JPM INSTITUTIONAL BOND FUND
JPM INSTITUTIONAL TAX EXEMPT BOND FUND
JPM INSTITUTIONAL NY TOTAL RETURN BOND FUND
JPM INSTITUTIONAL INTERNATIONAL BOND FUND
JPM INSTITUTIONAL DIVERSIFIED FUND
JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
JPM INSTITUTIONAL U.S. SMALL COMPANY FUND
JPM INSTITUTIONAL INTERNATIONAL EQUITY FUND
JPM INSTITUTIONAL EMERGING MARKETS EQUITY FUND
FOR MORE INFORMATION ON THE JPM INSTITUTIONAL FAMILY OF FUNDS, CALL J.P. MORGAN
FUNDS SERVICES AT (800)766-7722.
THE JPM INSTITUTIONAL SELECTED U.S. EQUITY FUND
ANNUAL REPORT
MAY 31, 1995
