<PAGE>
LETTER TO THE SHAREHOLDERS OF THE JPM INSTITUTIONAL MONEY MARKET FUND
July 15, 1996
Dear Shareholder:
We are pleased to report that the JPM Institutional Money Market Fund produced a
total return of 2.73% for the six month period ended May 31, 1996, outperforming
the 2.44% return of its benchmark*. In a changing interest rate environment,
active management of the Portfolio's average maturity, as well as its security
and sector allocations, were the reasons for the Fund's relative success during
the period. As seen in the accompanying chart, the Fund also produced
competitive returns over the long term, outperforming its benchmark for the
three-, five-, and ten-year periods ended May 31, 1996.
We are also pleased to announce that we have made some enhancements to the
Fund's semi-annual report as part of our ongoing dedication to provide better
service to our shareholders. In addition to making Fund performance easier to
locate, we have added a portfolio manager Q&A with Robert R. ("Skip") Johnson, a
member of our portfolio management team and lead portfolio manager for the Money
Market Portfolio, in which the Fund invests. In this interview, Skip answers
some commonly asked questions about the Fund, discusses portfolio activity over
the six month reporting period and offers an outlook for the months ahead.
As always, we welcome your comments, questions or any suggestions on how we can
further improve your financial reports. Please call J.P. Morgan Funds Services,
toll free, at (800) 766-7722.
Sincerely,
/S/Evelyn E. Guernsey
Evelyn E. Guernsey
J.P. Morgan Funds Services
*IBC/Donoghue Taxable Money Fund Average to November 30, 1995; IBC/Donoghue
First Tier Money Fund Average thereafter.
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS 1 FUND FACTS AND HIGHLIGHTS 6
FUND PERFORMANCE 2 FINANCIAL STATEMENTS 8
PORTFOLIO MANAGER Q&A 3
1
<PAGE>
FUND PERFORMANCE
EXAMINING PERFORMANCE
One way to look at performance is to review a fund's average annual total
return. This figure takes the fund's actual (or cumulative) return and shows 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.
<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
----------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THREE SIX ONE THREE FIVE TEN
AS OF MAY 31, 1996 MONTHS MONTHS YEAR YEARS* YEARS* YEARS*
- -------------------------------------------------------------------------------------------------------
The JPM Institutional Money Market Fund 1.31% 2.73% 5.73% 4.67% 4.43% 5.92%
IBC/Donoghue Taxable Money Fund Avg. 1.19% 2.46% 5.21% 4.28% 4.08% 5.60%
IBC/Donoghue Benchmark** 1.18% 2.44% 5.19% 4.27% 4.08% 5.60%
AS OF MARCH 31, 1996
- -------------------------------------------------------------------------------------------------------
The JPM Institutional Money Market Fund 1.33% 2.82% 5.87% 4.54% 4.46% 5.95%
IBC/Donoghue Taxable Money Fund Avg. 1.22% 2.54% 5.35% 4.16% 4.11% 5.63%
IBC/Donoghue Benchmark** 1.21% 2.53% 5.34% 4.15% 4.11% 5.63%
</TABLE>
* CONSISTENT WITH APPLICABLE REGULATORY GUIDANCE, PERFORMANCE FOR THE PERIOD
PRIOR TO THE JPM INSTITUTIONAL MONEY MARKET FUND'S INCEPTION REFLECTS THE
PERFORMANCE OF THE PIERPONT MONEY MARKET FUND, THE PREDECESSOR ENTITY TO THE
MONEY MARKET 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 MONEY MARKET FUND, WHICH WERE HIGHER
THAN THE EXPENSES FOR THE JPM INSTITUTIONAL MONEY MARKET FUND, AFTER
REIMBURSEMENT.
** IBC/DONOGHUE TAXABLE MONEY FUND AVERAGE TO NOVEMBER 30, 1995; IBC/DONOGHUE
FIRST TIER MONEY FUND AVERAGE THEREAFTER.
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL FUND RETURNS ARE NET
OF FEES, ASSUME THE REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF
CERTAIN FUND AND PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. HAD EXPENSES
NOT BEEN SUBSIDIZED, RETURNS WOULD HAVE BEEN LOWER. THE IBC/DONOGHUE TAXABLE
MONEY FUND AVERAGE IS AN AVERAGE OF ALL TAXABLE MAJOR MONEY MARKET FUND RETURNS.
THIS COMPARATIVE INFORMATION IS AVAILABLE TO THE PUBLIC FROM THE IBC/DONOGHUE
ORGANIZATION, INC. NO REPRESENTATION IS MADE THAT THE INFORMATION GATHERED FROM
THIS SOURCE IS ACCURATE OR COMPLETE. THE FUND INVESTS ALL OF ITS INVESTABLE
ASSETS IN THE MONEY MARKET PORTFOLIO, A SEPARATELY REGISTERED INVESTMENT COMPANY
WHICH IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO OTHER COLLECTIVE INVESTMENT
VEHICLES SUCH AS THE FUND.
2
<PAGE>
PORTFOLIO MANAGER Q&A
Following is an interview with ROBERT R. ("SKIP") JOHNSON, a member of the
portfolio management team for The Money Market Portfolio, in which the Fund
invests. Prior to joining Morgan in 1988, he held senior positions with the Bank
of Montreal and U.S. Steel. This interview was conducted on July 1, 1996 and
reflects Skip's views on that date.
OVER THE PREVIOUS HALF YEAR, THE BOND MARKET HAS EXPERIENCED QUITE A BIT OF
VOLATILITY. FIRST IT RALLIED AS THE FEDERAL RESERVE LOWERED THE FEDERAL FUNDS
RATE TWICE AND POISED ITSELF IN EXPECTATION OF STILL FURTHER EASING. IT THEN
REVERSED ITSELF, AS ECONOMIC INDICATORS SUGGESTED A STRONGER ECONOMY THAN HAD
BEEN GENERALLY BELIEVED, AND ENDED THE SIX MONTH PERIOD SHOWING NEGATIVE RESULTS
OVERALL. THE SALOMON BROTHERS BROAD INVESTMENT GRADE BOND INDEX, FOR EXAMPLE,
RETURNED -1.17% OVER THE PERIOD. NONETHELESS, IN THIS ENVIRONMENT, MONEY MARKET
FUNDS, SUCH AS THE JPM INSTITUTIONAL MONEY MARKET FUND, DELIVERED POSITIVE
RESULTS. WHY HAVE MONEY MARKET FUNDS BEEN SO STABLE COMPARED TO LONGER MATURITY
FUNDS?
RRJ: The high credit quality and short maturities of money market portfolios
and the individual securities they contain, as required by Federal regulation,
enhance the ability of these funds to maintain stable net asset values. While
these regulations don't assure a constant net asset value, the shorter
maturities, higher credit qualities and diversification requirements are
designed to preserve principal.
THE JPM INSTITUTIONAL MONEY MARKET FUND RETURNED 2.73% OVER THE SIX MONTH
PERIOD, OUTPERFORMING THE IBC/DONOGHUE TAXABLE MONEY FUND AVERAGE (AN AVERAGE OF
COMPETITIVE FUNDS), WHICH RETURNED ONLY 2.46%. INDEED, THE FUND HAS SURPASSED
THE DONOGHUE COMPETITIVE AVERAGE OVER ALL STANDARD PERIODS IN THE PREVIOUS TEN
YEARS. HOW ARE WE ABLE TO ACCOMPLISH THIS? IN PARTICULAR, WHAT DID WE DO OVER
THE PREVIOUS HALF YEAR THAT KEPT THE FUND AHEAD OF ITS COMPETITORS?
RRJ: We targeted this fund at its inception to be in the top quartile of money
market mutual funds, as measured by Donoghue's or Lipper, and we have achieved
that goal. We have achieved it through active management of the Portfolio's
average maturity and through judicious selection of high quality, higher
yielding securities. Management of maturities is based on our outlook for
interest rates. Our strategy is to extend the Portfolio's maturity when rates
are falling or stable, due to an expansionary or status quo monetary policy, and
to shorten when Federal Reserve ("Fed") policy is restrictive. This requires
both fundamental economic analysis and analysis of Fed action on a daily basis
- -- its open market activities, for example -- as well as estimates of what it is
likely to do. We make changes in small increments to avoid making large bets on
the direction of interest rates.
3
<PAGE>
Managing a portfolio based entirely on anticipating interest rates is
difficult to do consistently, however, even with short maturity funds such as
The Money Market Portfolio. Therefore, to diversify sources of potential value,
we also make decisions on the sectors and securities that we will buy. We buy
the highest yielding securities inside of one year that are consistent with
maintaining a high level of diversification and quality (that is, having a
first-tier rating of A1/P1), using rigorous credit analysis. At any given time
this may be government agencies, it may be commercial paper, or it may be, as
occurred late last year, Japanese bank instruments, although we only purchase
those issued by the largest "City" banks of Japan. These are banks so
influential that it is generally accepted that the Japanese Ministry of Finance
could not allow them to fail. In periods of rising rates, we also will purchase
floating rate notes, which adjust to the increase in rates as the Fed tightens
monetary policy. Except for U.S. government securities -- Treasuries and
agencies -- holdings of any issuer are limited to a maximum of 5% of the
Portfolio. Industry holdings are also restricted to a maximum of 25% of the
Portfolio, with the exception of U.S. government securities and domestic banks.
YOU STATED THAT THE GOAL FOR THE FUND WAS TO BE IN THE TOP QUARTILE, OR 25%, OF
MONEY MARKET FUNDS. WHY NOT EVEN HIGHER, SAY THE TOP 10%? ISN'T IT ALWAYS BETTER
TO BE CLOSER TO THE TOP?
RRJ: Trying to be the top-performing fund can result in a fund holding
securities with higher yields but not of as high quality. We believe that this
may compromise the safety of principal that investors seek in a money market
fund. Our more conservative approach has still produced strong performance
across all time periods.
WHAT KIND OF MARKET ENVIRONMENT DO WE ANTICIPATE FOR THE NEXT SIX MONTHS? DO WE
EXPECT FED INTERVENTION? WHAT ARE WE DOING NOW TO POSITION THE FUND TO TAKE
ADVANTAGE IN THIS ENVIRONMENT?
RRJ: What we have seen in the past six months is a reversal of sentiment,
moving from a slow economy and Fed easing to economic vigor that may provoke Fed
tightening. The Fed appears poised to tighten unless the economy returns to a
"trend", or average growth, of 2 to 2 1/2% for the second half of 1996. We will
be very interested in the second quarter real GDP figures, scheduled for release
on August 1. Forecasts of growth have been raised significantly. First quarter
growth was just over 2%; predictions of second quarter growth are almost twice
that, at 4%. If that 4% materializes and continues, the Fed will be forced to
tighten policy to slow growth. We think they are poised to act and expect a
tightening sometime in the next three months. Consequently, we expect to shorten
the Portfolio's average maturity from a 55 to 60 day range to around 50 days.
ARE THERE ANY SECTORS THAT YOU THINK ARE MORE LIKELY TO OUTPERFORM OR
UNDERPERFORM IN THE ENVIRONMENT YOU'VE JUST DESCRIBED?
RRJ: At the end of November 1995, the difference in Treasury yields between
three month and one year maturities, at -0.13%, was actually inverted, that is
one year rates were lower than three month rates. By the
4
<PAGE>
end of May, one year maturities were yielding 0.57% more than three month
maturities. In such periods of rising rates, we would probably look to buy
floating rate notes, as I mentioned earlier. We presently have about 8% of
holdings in floating rate notes and might increase this to as high as 12 or 13%.
While we have not recently purchased Japanese bank securities, their spread has
widened to more attractive levels, and we may take advantage of this source of
yield.
DOES CHAIRMAN GREENSPAN'S REAPPOINTMENT SIGNIFY ANYTHING FOR THE MARKET?
RRJ: I think it represents a continuation of a monetary policy that has been
deployed successfully. The Fed right now is a good mix of inflation-fighting
hawks and growth-seeking doves. I feel that the Fed has engineered the "soft
landing" they sought, slower growth without inflationary pressure. It's very
difficult to navigate the battleship of monetary policy, and it seems to me that
they have been very successful in doing that, while keeping politics at bay.
5
<PAGE>
FUND FACTS
INVESTMENT OBJECTIVE
The JPM Institutional Money Market Fund seeks to provide current income,
maintain a high level of liquidity, and preserve capital. It is designed for
investors who seek to preserve capital and earn current income from a
portfolio of high quality money market instruments.
- ------------------------------------------
COMMENCEMENT OF OPERATIONS
7/12/93
- ------------------------------------------
NET ASSETS AS OF 5/31/96
$1,239,517,351
- ------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY
- ------------------------------------------
CAPITAL GAIN PAYABLE DATE (IF APPLICABLE)
12/20/96
EXPENSE RATIO
The Fund's annualized expense ratio of 0.20% 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, 1996
PORTFOLIO ALLOCATION
(PERCENTAGE OF TOTAL INVESTMENTS)
[GRAPH]
- COMMERCIAL PAPER 32.5%
- U.S. GOVERNMENT AGENCIES 23.2%
- CERTIFICATES OF DEPOSIT 17.0%
- FOREIGN TIME DEPOSITS 11.05%
- FLOATING RATE NOTES 8.4%
- U.S. TREASURY OBLIGATIONS 4.0%
- OTHER 3.9%
AVERAGE 7-DAY YIELD
5.15%
AVERAGE MATURITY
56 days
6
<PAGE>
SIGNATURE BROKER-DEALER SERVICES, INC. IS THE DISTRIBUTOR OF THE JPM
INSTITUTIONAL MONEY MARKET FUND (THE "FUND").
EFFECTIVE AUGUST 1, 1996, FUNDS DISTRIBUTOR, INC. WILL BECOME THE FUND'S
DISTRIBUTOR.
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. ALTHOUGH THE FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE, THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO CONTINUE TO DO SO.
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 the reinvestment of distributions and reflect the
reimbursement of certain Fund and Portfolio expenses as described in the
Prospectus. Had expenses not been subsidized, returns would have been lower.
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.
7
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in The Money Market Portfolio ("Portfolio"), at value $1,243,473,944
Receivable for Expense Reimbursements 171,227
Deferred Organization Expenses 21,536
Prepaid Trustees' Fees 1,164
Prepaid Expenses and Other Assets 671
-------------
Total Assets 1,243,668,542
-------------
LIABILITIES
Dividends Payable to Shareholders 4,057,749
Shareholder Servicing Fee Payable 39,469
Administrative Services Fee Payable 19,576
Administration Fee Payable 13,226
Fund Services Fee Payable 1,928
Accrued Expenses 19,243
-------------
Total Liabilities 4,151,191
-------------
NET ASSETS
Applicable to 1,239,469,227 Shares of Beneficial Interest Outstanding
(par value $0.001, unlimited shares authorized) $1,239,517,351
-------------
-------------
Net Asset Value, Offering and Redemption Price Per Share $1.00
-----
-----
ANALYSIS OF NET ASSETS
Paid-in Capital $1,239,469,227
Accumulated Net Realized Gain on Investment 48,124
-------------
Net Assets $1,239,517,351
-------------
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
8
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO
Allocated Interest Income $26,896,559
Allocated Portfolio Expenses (Net of Reimbursements of $2,697) (927,086)
-----------
Net Investment Income Allocated from Portfolio 25,969,473
FUND EXPENSES
Shareholder Servicing Fee $ 286,327
Registration Fees 116,179
Administrative Services Fee 103,242
Administration Fee 72,043
Fund Services Fee 26,221
Transfer Agent Fees 10,041
Trustees' Fees and Expenses 8,543
Professional Fees 7,641
Amortization of Organization Expenses 5,099
Miscellaneous 10,144
---------
Total Fund Expenses 645,480
Less: Reimbursement of Expenses (599,422)
---------
NET FUND EXPENSES (46,058)
-----------
NET INVESTMENT INCOME 25,923,415
NET REALIZED GAIN ON INVESTMENT ALLOCATED FROM PORTFOLIO 50,823
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $25,974,238
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
9
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE SIX FOR THE FISCAL
MONTHS ENDED YEAR ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
------------- --------------
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 25,923,415 $ 36,595,183
Net Realized Gain on Investment Allocated from Portfolio 50,823 336,813
------------- --------------
Net Increase in Net Assets Resulting from Operations 25,974,238 36,931,996
------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (25,923,415) (36,595,183)
Net Realized Gain (336,895) --
------------- --------------
Total Distributions to Shareholders (26,260,310) (36,595,183)
------------- --------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTERESTS (AT A CONSTANT
$1.00 PER SHARE)
Proceeds from Shares of Beneficial Interest Sold 3,695,454,498 3,388,446,485
Reinvestment of Dividends and Distributions 20,417,199 33,356,213
Cost of Shares of Beneficial Interest Redeemed (3,475,814,046) (3,007,260,903)
------------- --------------
Net Increase from Transactions in Shares of Beneficial
Interest 240,057,651 414,541,795
------------- --------------
Total Increase in Net Assets 239,771,579 414,878,608
NET ASSETS
Beginning of Period 999,745,772 584,867,164
------------- --------------
End of Period $1,239,517,351 $999,745,772
------------- --------------
------------- --------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
10
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE PERIOD
JULY 12, 1993
FOR THE (COMMENCEMENT
SIX MONTHS FOR THE FISCAL YEAR OF OPERATIONS)
ENDED ENDED NOVEMBER 30, THROUGH
MAY 31, 1996 -------------------- NOVEMBER 30,
(UNAUDITED) 1995 1994 1993
------------- --------- --------- --------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- --------- --------- --------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0267 0.0577 0.0385 0.0120
Net Realized Gain (Loss) on Investment
Allocated from Portfolio 0.0000(a) 0.0003 (0.0000)(a) 0.0000(a)
------------- --------- --------- --------------
Total from Investment Operations 0.0267 0.0580 0.0385 0.0120
------------- --------- --------- --------------
LESS DISTRIBUTIONS TO SHAREHOLDERS
FROM
Net Investment Income (0.0267) (0.0577) (0.0385) (0.0120)
Net Realized Gain (0.0003) -- -- (0.0000)(a)
------------- --------- --------- --------------
Total Distributions to Shareholders (0.0270) (0.0577) (0.0385) (0.0120)
------------- --------- --------- --------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- --------- --------- --------------
------------- --------- --------- --------------
Total Return 2.73%(b) 5.93% 3.92% 1.21%(b)
------------- --------- --------- --------------
------------- --------- --------- --------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in
thousands) $ 1,239,517 $ 999,746 $ 584,867 $ 27,188
Ratios to Average Net Assets
Expenses 0.20%(c) 0.20% 0.21% 0.30%(c)
Net Investment Income 5.33%(c) 5.77% 4.42% 2.88%(c)
Decrease Reflected in Expense Ratio
due to Expense Reimbursement by
Morgan 0.12%(c) 0.15% 0.31% 1.10%(c)
</TABLE>
- ------------------------
(a)Less than $0.0001
(b)Not annualized
(c)Annualized
The Accompanying Notes are an Integral Part of the Financial Statements.
11
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAY 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The JPM Institutional Money Market 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 an
open-end management investment company. The Fund commenced operations on July
12, 1993.
The Fund invests all of its investable assets in The Money Market Portfolio (the
"Portfolio"), a diversified open-end management investment company having the
same investment objective as the Fund. The value of such investment included in
the Statement of Assets and Liabilities reflects the Fund's proportionate
interest in the net assets of the Portfolio (36% at May 31, 1996). The
performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the schedule of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual amounts could differ from
those estimates. The following is a summary of the significant accounting
policies of the Fund:
a)Valuation of securities by the Portfolio is discussed in Note 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 gain and
loss and adjusts its investment in the Portfolio each day. All the net
investment income and realized 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)All the Fund's net investment income is declared as dividends daily and
paid monthly. 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 $51,045. These
costs were deferred and are being amortized on a straight-line basis over
a five-year period from the commencement of operations.
e)The Fund is treated as a separate entity for federal income tax purposes
and intends to comply with the provisions of the Internal Revenue Code of
1986, as amended, applicable to regulated investment companies and to
distribute substantially all of its income, including net realized capital
gains, if any, within the prescribed time periods. Accordingly, no
provision for federal income or excise tax is necessary.
f)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.
2. TRANSACTIONS WITH AFFILIATES
a)The Trust has retained 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
12
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
compensation of the Fund's officers affiliated with Signature. Until
December 28, 1995, the Administration Agreement provided 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 each day to the net assets of the Fund. For the period
from December 1, 1995, through December 28, 1995 Signature's fee for these
services amounted to $18,304.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged would be equal to the Fund's proportionate share of a
complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios (the "Master Portfolios") in which the
Trust, The Pierpont Funds or The JPM Advisor Funds invest and 0.01% on the
aggregate average daily net assets of the Master Portfolios in excess of
$7 billion. The portion of this charge payable by the Fund is determined
by the proportionate share its net assets bear to the total net assets of
the Trust, The Pierpont Funds, The JPM Advisor Funds and the Master
Portfolios. For the period from December 29, 1995, through May 31, 1996,
Signature's fee for these services amounted to $53,739.
Effective August 1, 1996, administrative functions provided by Signature
will be provided by Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, and by Morgan Guaranty Trust Company of New York
("Morgan"). FDI will also become the Fund's distributor. Under a
Co-Administration Agreement between FDI and the Trust on behalf of the
Fund, FDI's fees are to be paid by the Fund. (see Note 2b).
b)Until August 31, 1995, the Trust, on behalf of the Fund, had a Financial
and Fund Accounting Services Agreement with Morgan under which Morgan may
receive a fee, based on the percentage described below, for overseeing
certain aspects of the administration and operation of the Fund and was
also designed to provide an expense limit for certain expenses of the
Fund. This fee was calculated exclusive of the shareholder servicing fee,
the fund services fee and amortization of organization expenses at 0.05%
of the Fund's average daily net assets. From September 1, 1995, until
December 28, 1995, an interim agreement between the Trust, on behalf of
the Fund, and Morgan provided for the continuation of the oversight
functions that were outlined under the agreement and that Morgan should
bear all of its expenses incurred in connection with these services.
Effective December 29, 1995, the Trust, on behalf of the Fund, entered
into an Administrative Services Agreement (the "Services Agreement") with
Morgan under which Morgan is responsible for certain aspects of the
administration and operation of the Fund. Under the Services Agreement,
the Fund has agreed to pay Morgan a fee equal to its proportionate share
of an annual complex-wide charge. This charge is calculated daily based on
the aggregate net assets of the Master Portfolios in accordance with the
following annual schedule: 0.06% on the first $7 billion of the Master
Portfolios' aggregate average daily net assets and 0.03% of the aggregate
average daily net assets in excess of $7 billion. The portion of this
charge payable by the Fund is determined by the proportionate share that
the Fund's net assets bear
13
<PAGE>
THE JPM INSTITUTIONAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
to the net assets of the Trust, the Master Portfolios and other investors
in the Master Portfolios for which Morgan provides similar services. For
the period from December 29, 1995, through May 31, 1996, Morgan's fee for
these services amounted to $103,242.
Effective August 1, 1996, the Services Agreement will be amended such that
the aggregate complex-wide fees to be paid by the Fund under both the
amended Services Agreement and the Co-Administration Agreement (see Note
2a) will be calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule: 0.09%
on the first $7 billion of the Master Portfolios' aggregate average daily
net assets and 0.04% of the aggregate average daily net assets in excess
of $7 billion.
In addition, Morgan has agreed to reimburse the Fund to the extent
necessary to maintain the total operating expenses of the Fund, including
the expenses allocated to the Fund from the Portfolio at no more than
0.20% of the average daily net assets of the Fund through March 31, 1997.
For the six months ended May 31, 1996, Morgan has agreed to reimburse the
Fund $599,422 for expenses under this agreement.
c)The Trust, on behalf of the Fund, has a Shareholder Servicing Agreement
with Morgan. Until December 28, 1995, the agreement provided for the Fund
to pay Morgan a fee for these services which was computed daily and paid
monthly at an annual rate of 0.11% of the average daily net assets of the
Fund. For the period from December 1, 1995, through December 28, 1995, the
fee for these services amounted to $78,908.
Effective December 29, 1995, the Shareholder Servicing Agreement was
amended such that the annual rate for providing these services was changed
to 0.05% of the average daily net assets of the Fund. For the period from
December 29, 1995, through May 31, 1996, the fee for these services
amounted to $207,419.
d)The Trust, on behalf of the Fund, has a Fund Services Agreement with
Pierpont Group, Inc. ("Group") to assist the Trustees in exercising their
overall supervisory responsibilities for the Trust's affairs. The Trustees
of the Trust represent all the existing shareholders of Group. The Fund's
allocated portion of Group's costs in performing its services amounted to
$26,221 for the six month's ended May 31, 1996.
e)An aggregate annual fee of $65,000 is paid to each Trustee for serving as
a Trustee of the Trust, The Pierpont Funds and the Master Portfolios. The
Trustees' Fees and Expenses shown in the financial statements represents
the Fund's allocated portion of the total fees and expenses. The Trustee
who serves as Chairman and Chief Executive Officer of the Trust 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 $3,400.
14
<PAGE>
The Money Market Portfolio
Semi-Annual Report May 31, 1996
(unaudited)
(The following pages should be read in conjunction
with The JPM Institutional Money Market Fund
Semi-Annual Financial Statements)
15
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ------------------ ------------ ---------------
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT-DOMESTIC (2.6%)
$ 25,000 Bank of America National Trust & Savings
Association............................ 02/12/97 4.900% $ 24,991,537
15,000 Bank of New York........................ 04/01/97 5.550 14,991,296
50,000 National Bank of Detroit................ 01/03/97 5.200 49,971,299
---------------
TOTAL CERTIFICATES OF DEPOSIT --
DOMESTIC............................... 89,954,132
---------------
CERTIFICATES OF DEPOSIT-FOREIGN (12.5%)
100,000 Bank of Tokyo, Ltd...................... 08/07/96 5.480 100,000,000
95,000 Banque Nationale de Paris Ltd........... 07/15/96-04/11/97 5.330-5.750 94,992,584
24,500 Bayerische Vereinsbank, New York........ 07/23/96 5.320 24,500,000
50,000 Canadian Imperial Bank of Commerce...... 07/29/96 5.320 50,000,000
4,000 Commerzbank U.S. Finance Inc............ 09/16/96 5.330 3,998,719
21,000 National Bank, Australia................ 10/02/96 5.750 20,991,199
25,000 Royal Bank of Canada, New York.......... 05/13/97 5.810 24,997,731
114,500 Societe Generale........................ 07/08/96-04/03/97 5.330-5.610 114,495,922
---------------
TOTAL CERTIFICATES OF DEPOSIT --
FOREIGN................................ 433,976,155
---------------
COMMERCIAL PAPER-DOMESTIC (26.8%)
6,200 A I Credit Corp......................... 09/05/96 5.270 6,112,869
63,500 A I G Funding Corp...................... 06/04/96-06/06/96 5.230-5.280 63,469,052
120,000 American Express Credit Corp............ 06/07/96-07/01/96 5.280-5.290 119,823,833
15,000 Chevron Transportation Corp............. 06/26/96 5.300 14,944,792
51,467 Coca Cola Co............................ 06/06/96-06/10/96 5.250-5.280 51,413,639
17,200 Dupont (E.I.) de Nemours & Co., Inc..... 07/24/96 5.500 17,060,728
91,500 Exxon Asset Management.................. 06/05/96 5.260 91,446,523
122,500 Ford Motor Corp......................... 06/06/96-10/01/96 5.090-5.290 121,831,981
101,820 General Electric Capital Corp........... 06/11/96-06/18/96 5.260-5.320 101,633,743
4,000 John Deere Capital Corp................. 06/14/96 5.290 3,992,359
72,813 Koch Industries......................... 06/06/96-06/18/96 5.280-5.380 72,712,237
40,750 Motorola Credit Corp.................... 06/06/96 5.250 40,720,287
45,000 Norwest Corp............................ 06/17/96 5.270 44,894,600
45,000 Pfizer Inc.............................. 07/18/96 5.300 44,688,625
30,700 Procter & Gamble Co..................... 06/05/96 5.280 30,681,989
20,000 Raytheon Co............................. 06/11/96 5.300 19,970,555
49,500 Seagram, Joseph E. & Sons Inc........... 06/19/96-06/26/96 5.270-5.280 49,346,871
37,500 Walt Disney Co.......................... 08/05/96 5.280 37,142,500
---------------
TOTAL COMMERCIAL PAPER -- DOMESTIC...... 931,887,183
---------------
COMMERCIAL PAPER - FOREIGN (5.7%)
43,000 Barclays U.S. Funding, Inc.............. 06/19/96 5.290 42,886,265
39,000 Bayerische Vereinsbank.................. 06/12/96 5.270 38,937,199
3,850 Commerzbank U.S. Finance, Inc........... 06/03/96 5.280 3,848,871
21,000 Export Development Corp................. 06/04/96 5.290 20,990,743
52,000 KFW International Finance, Inc.......... 06/25/96-07/15/96 5.280-5.340 51,735,780
38,312 UBS Finance (Delaware), Inc............. 06/03/96 5.410 38,300,485
---------------
TOTAL COMMERCIAL PAPER-FOREIGN.......... 196,699,343
---------------
CORPORATE BONDS (1.4%)
40,000 General Electric Capital Corp........... 09/09/96-01/31/97 5.080-5.680 40,011,947
9,000 Old Kent Bank & Trust Co................ 01/15/97 5.125 9,000,000
---------------
TOTAL CORPORATE BONDS................... 49,011,947
---------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
16
<PAGE>
THE MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT YIELD TO
(IN MATURITY/
THOUSANDS) SECURITY DESCRIPTION MATURITY DATES RATE VALUE
- ----------- ---------------------------------------- ------------------ ------------ ---------------
EURODOLLAR CERTIFICATES OF DEPOSIT (1.9%)
<C> <S> <C> <C> <C>
$ 66,000 Abbey National, North America........... 07/26/96 5.240% $ 66,002,947
---------------
FLOATING RATE NOTES (8.4%) (A)
11,000 Bayerische Landesbank, (resets monthly
to one month LIBOR Rate -13 basis
points)................................ 01/15/97 5.300 10,995,658
25,000 Boatmens First National Bank, (resets
monthly to one month LIBOR Rate -1
basis point)........................... 06/12/96 5.427 25,000,000
150,000 Federal National Mortgage Association,
(resets daily to one month LIBOR Rate
-19 basis points)...................... 10/11/96 5.247 149,941,068
40,000 Federal National Mortgage Association,
(resets weekly to the Fed Funds Flat
Rate).................................. 11/15/96 5.220 39,984,514
67,000 Student Loan Marketing Association,
(resets monthly to one month LIBOR Rate
-17 basis points)...................... 07/01/96 5.267 66,996,069
---------------
TOTAL FLOATING RATE NOTES............... 292,917,309
---------------
GOVERNMENT OBLIGATIONS -- FOREIGN (2.5%)
88,000 Canadian Treasury Bills................. 06/03/96-06/27/96 5.190-5.250 87,841,500
---------------
TIME DEPOSITS -- FOREIGN (11.1%)
74,686 Chemical Bank, Nassau................... 06/03/96 5.375 74,686,000
160,000 Deutsche Bank, Grand Cayman............. 06/03/96 5.375 160,000,000
150,000 Sumitomo Bank, Grand Cayman............. 06/03/96 5.437 150,000,000
---------------
TOTAL TIME DEPOSITS -- FOREIGN.......... 384,686,000
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (23.3%)
30,000 Federal Farm Credit Bank................ 12/02/96 5.400 29,975,736
158,990 Federal Home Loan Bank.................. 06/03/96-07/16/96 5.000-5.260 158,464,260
305,955 Federal Home Loan Mortgage Corp......... 06/03/96-07/12/96 5.200-5.250 305,236,608
316,725 Federal National Mortgage Association... 06/11/96-12/18/96 5.170-5.620 315,963,182
---------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS............................ 809,639,786
---------------
U.S. TREASURY OBLIGATIONS (4.1%)
2,484 United States Treasury Bills............ 06/20/96-07/25/96 4.920-5.005 2,468,600
136,500 United States Treasury Notes............ 01/31/97-06/30/97 5.625-7.500 138,140,718
---------------
TOTAL U.S. TREASURY OBLIGATIONS......... 140,609,318
---------------
TOTAL INVESTMENTS (AMORTIZED COST $3,483,225,620) (100.3%) 3,483,225,620
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.3%) (11,637,610)
---------------
NET ASSETS (100.0%) $ 3,471,588,010
---------------
---------------
<FN>
(a) The coupon rate shown on floating or adjustable rate securities represents the rate at the end of the reporting
period. The due date on these types of securities reflects the final maturity date.
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
17
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value $3,483,225,620
Interest Receivable 14,510,071
Receivable for Expense Reimbursement 8,847
Prepaid Trustees' Fees 4,551
Prepaid Expenses and Other Assets 3,545
-------------
Total Assets 3,497,752,634
-------------
LIABILITIES
Payable for Investments Purchased 25,533,386
Advisory Fee Payable 350,661
Custody Fee Payable 121,093
Administrative Services Fee Payable 65,485
Administration Fee Payable 34,924
Fund Services Fee Payable 7,121
Accrued Expenses 51,954
-------------
Total Liabilities 26,164,624
-------------
NET ASSETS
Applicable to Investors' Beneficial Interests $3,471,588,010
-------------
-------------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
18
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MAY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest Income $91,846,156
EXPENSES
Advisory Fee $2,163,802
Administrative Services Fee 350,175
Custodian Fees and Expenses 282,117
Administration Fee 198,762
Fund Services Fee 92,706
Trustees' Fees and Expenses 32,224
Professional Fees 30,528
Miscellaneous 22,590
----------
Total Expenses 3,172,904
Less: Reimbursement of Expenses (9,994)
----------
NET EXPENSES (3,162,910)
-----------
NET INVESTMENT INCOME 88,683,246
NET REALIZED GAIN ON INVESTMENTS 165,967
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $88,849,213
-----------
-----------
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements.
19
<PAGE>
THE MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE SIX FOR THE FISCAL
MONTHS ENDED YEAR ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
-------------- --------------
INCREASE IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 88,683,246 $ 168,180,713
Net Realized Gain on Investments 165,967 1,573,477
-------------- --------------
Net Increase in Net Assets Resulting from Operations 88,849,213 169,754,190
-------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS
Contributions 10,348,816,259 17,654,676,133
Withdrawals (10,301,032,878) (17,137,148,786)
-------------- --------------
Net Increase from Investors' Transactions 47,783,381 517,527,347
-------------- --------------
Total Increase in Net Assets 136,632,594 687,281,537
NET ASSETS
Beginning of Period 3,334,955,416 2,647,673,879
-------------- --------------
End of Period $3,471,588,010 $3,334,955,416
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE FOR THE PERIOD
FOR THE FISCAL YEAR ENDED JULY 12, 1993
SIX MONTHS (COMMENCEMENT
ENDED NOVEMBER 30, OF OPERATIONS)
MAY 31, 1996 -------------------- THROUGH
(UNAUDITED) 1995 1994 NOVEMBER 30, 1993
--------------- --------- --------- -----------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.19%(a) 0.19% 0.20% 0.19%(a)
Net Investment Income 5.33%(a) 5.77% 3.90% 2.98%(a)
Decrease Reflected in Expense Ratio due to
Expense Reimbursements 0.00%(a),(b) -- 0.00 (b) --
</TABLE>
- ------------------------
(a)Annualized
(b)Less than 0.01%
The Accompanying Notes are an Integral Part of the Financial Statements.
20
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAY 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Money Market Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended (the "Act"), 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's investment objective is to maximize
current income and maintain a high level of 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 triparty 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. Investment
income consists of interest income, which includes the amortization of
premiums and discounts. 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 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. The cost of
securities is the same for book and tax purposes.
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 agreement,
the Portfolio pays Morgan 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, 1996, this fee amounted to
$2,163,802.
b)The Portfolio has retained Signature Broker-Dealer Services, Inc.
("Signature") to serve as administrator and exclusive placement agent.
Signature provides administrative services necessary for the
21
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
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. Until
December 28, 1995, the Administration Agreement provided for a fee to be
paid to Signature at an annual fee 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
Administration 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 each day to the net assets of the Portfolio. For the
period from December 1, 1995, through December 28, 1995, Signature's fee
for these services amounted to $14,797.
Effective December 29, 1995, the Administration Agreement was amended such
that the fee charged would be equal to the Portfolio's proportionate share
of a complex-wide fee based on the following annual schedule: 0.03% on the
first $7 billion of the aggregate average daily net assets of the
Portfolio and the other portfolios subject to this agreement (the "Master
Portfolios") and 0.01% on the aggregate average daily net assets of the
Master Portfolios in excess of $7 billion. The portion of this charge
payable by the Portfolio is determined by the proportionate share its net
assets bear to the total net assets of The Pierpont Funds, The JPM
Institutional Funds, The JPM Advisor Funds and the Master Portfolios. For
the period from December 29, 1995, through May 31, 1996, Signature's fee
for these services amounted to $183,965.
Effective August 1, 1996, administrative functions provided by Signature
will be provided by Funds Distributor, Inc. ("FDI"), a registered
broker-dealer, and by Morgan. FDI will also become the Portfolio's
exclusive placement agent. Under a Co-Administration Agreement between FDI
and the Portfolio, FDI's fees are to be paid by the Portfolio. (see Note
2c).
c)Until August 31, 1995, the Portfolio had a Financial and Fund Accounting
Services Agreement with Morgan under which Morgan received a fee, based on
the percentage described below, for overseeing certain aspects of the
administration and operation of the Portfolio and was also designed to
provide an expense limit for certain expenses of the Portfolio. This fee
was calculated exclusive of the advisory fee, custody expenses and fund
services fee at 0.03% of the Portfolio's average daily net assets. From
September 1, 1995, until December 28, 1995, an interim agreement between
the Portfolio and Morgan provided for the continuation of the oversight
functions that were outlined under the agreement and that Morgan should
bear all of its expenses incurred in connection with these services.
Effective December 29, 1995, the Portfolio entered into an Administrative
Services Agreement (the "Services Agreement") with Morgan under which
Morgan is responsible for overseeing 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 proportionate share
of an annual complex-wide charge. This charge is calculated daily based on
the aggregate net assets of the Master Portfolios in accordance with the
following annual schedule: 0.06% on the first $7 billion of the Master
Portfolios' aggregate average daily net assets and 0.03% of the aggregate
average daily net assets in excess of $7 billion. The portion of this
charge payable by the Portfolio is determined by the proportionate share
that the Portfolio's net assets bear to the net assets of the Master
Portfolios and other investors in the Master Portfolios for which Morgan
provides similar services. For the period from December 29, 1995, through
May 31, 1996, the fee for these services amounted to $350,175.
22
<PAGE>
THE MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MAY 31, 1996
- --------------------------------------------------------------------------------
Effective August 1, 1996, the Services Agreement will be amended such that
the aggregate complex-wide fees to be paid by the Portfolio under both the
amended Services Agreement and the Co-Administration Agreement (see Note
2b) will be calculated daily based on the aggregate net assets of the
Master Portfolios in accordance with the following annual schedule: 0.09%
on the first $7 billion of the Master Portfolios' aggregate average daily
net assets and 0.04% of the aggregate average daily net assets in excess
of $7 billion.
In addition, Morgan has agreed to reimburse the Portfolio to the extent
necessary to maintain the total operating expenses of the Portfolio at no
more than 0.20% of the average daily net assets of the Portfolio through
March 31, 1997. For the six months ended May 31, 1996, Morgan has agreed
to reimburse the Portfolio $9,994 for expenses under this agreement.
d)The Portfolio has a Fund Services Agreement with Pierpont Group, Inc.
("Group") to assist the Trustees in exercising their overall supervisory
responsibilities for the Portfolio's affairs. The Trustees of the
Portfolio represent all the existing shareholders of Group. The
Portfolio's allocated portion of Group's costs in performing its services
amounted to $92,706 for the six months ended May 31, 1996.
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 and the
Master Portfolios. The Trustees' Fees and Expenses shown in the financial
statements represent the Portfolio's allocated portion of the total fees
and expenses. The Trustee who serves as Chairman and Chief Executive
Officer of the Portfolio 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 $11,900.
23
<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 New York 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 European Equity Fund
JPM Institutional Japan Equity Fund
JPM Institutional Asia Growth 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
Money Market Fund
Semi-annual report
May 31, 1996
