PIERPONT FUNDS, N-30D, 1995-06-21

PIERPONT FUNDS
N-30D, 1995-06-21

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<PAGE>

THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Treasury Money
THE PIERPONT SHORT TERM BOND FUND Market Fund
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND

FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL OCTOBER 31, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT TREASURY MONEY MARKET FUND

December 15, 1994

Dear Shareholder:

We are pleased to present the Annual Report and performance discussion of The
Pierpont Treasury Money Market Fund for the year ended October 31, 1994.

The Pierpont Treasury Money Market Fund seeks to provide current income,
maintain a high level of liquidity and preserve capital. The Fund invests solely
in Treasury bills, notes, and bonds-all of which are backed as to principal and
interest payments by the full faith and credit of the U.S. government-and in
repurchase agreements with respect to those obligations. The Portfolio maintains
a weighted average maturity of not more than 90 days using individual securities
with effective maturities of 13 months or less.

During the period, The Pierpont Treasury Money Market Fund outperformed its
benchmark, Donoghue's U.S. Treasury and Repo Money Market Fund Average. For the
12 months ended October 31, 1994, the Fund had a total return of 3.41%, compared
with 3.16% for its benchmark. In addition, its average 7-day yield on
October 31, 1994, was 4.43% compared with Donoghue's average of 4.17%.

The Fund's net asset value remained constant at $1.00 per share. The Fund's net
assets grew from approximately $83.1 million at the beginning of November 1993,
to $118.6 million at the end of October.

MARKET ENVIRONMENT
After declining to their lowest levels in 25 years during 1993, interest rates
increased dramatically in 1994. To slow the pace of economic growth and keep
inflation low, the Federal Reserve began raising short-term interest rates--
moving first on February 4, 1994, and following with four additional rate
hikes by the end of October.

Concerned that the Federal Reserve was not acting quickly enough to curb
inflation, investors began requiring higher interest rates on bonds. These
higher rates were needed to prevent inflation from eroding the future purchasing
power of their investment returns. Accordingly, yields, including those for
money market instruments, rose across the maturity spectrum. For example, the
yield on the three-month Treasury bill increased by 217 basis points since the
beginning of the year, rising from 2.97% to 5.14%.

- --------------------------------------------------------------------------------
TABLE OF CONTENTS FUND PERFORMANCE . . . . . . . . .4

LETTER TO THE SHAREHOLDERS . . . . 1 SPECIAL FUND-BASED SERVICES. . . .5

FUND FACTS AND HIGHLIGHTS. . . . . 3 FINANCIAL STATEMENTS . . . . . . .7
- --------------------------------------------------------------------------------

1
<PAGE>

ANNUAL REVIEW
Morgan systematically draws upon proprietary economic research to control the
Fund's maturity structure and allocate assets. Our portfolio managers actively
allocate the Fund among Treasury securities to increase the potential for higher
returns.

Given our expectations for continuous rate increases, we positioned the Fund
defensively with a shorter target average life of 25 to 35 days for most of the
period. In general, shorter-maturity securities outperformed longer-term
instruments in the rising rate environment.

At the end of October, over half of the Fund was invested in U.S. Treasuries,
with the remainder invested in repurchase agreements. In addition, the Fund
continued to focus on issues that present minimal, or no, credit risk.

INVESTMENT OUTLOOK
Our forecast calls for further increases in short-term interest rates. In fact,
another Fed rate hike in November brought the Fed Funds rate (the rate banks
charge each other for overnight loans) up to 5.50%. In light of this outlook, we
plan to keep the Fund's target maturity at about 30 days until rates appear to
stabilize.

As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 521-5411.

Sincerely,

/s/ Evelyn E. Guernsey

Evelyn E. Guernsey
J.P. Morgan Funds Services

2
<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
The Pierpont Treasury 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 direct obligations of the U.S. Treasury and repurchase agreements.

- --------------------------------------------------------------------------------
INCEPTION DATE
1/04/93

- --------------------------------------------------------------------------------
NET ASSETS AS OF 10/31/94
$118,630,687

- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/12/94

EXPENSE RATIO
The Fund's current annual expense ratio of 0.40% 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 OCTOBER 31, 1994

DAYS TO MATURITY

[GRAPH]

AVERAGE 7-DAY YIELD
4.43%

AVERAGE MATURITY
30.5 days

3
<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 of the 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
provide a picture of how a fund has performed over the short term.

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF OCTOBER 31, 1994 MONTHS TO DATE YEAR YEARS INCEPTION*
- ---------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C>
The Pierpont Treasury Money Market Fund 1.08% 2.94% 3.41% - 3.02%
Donoghue's U.S. Treasury & Repo
Money Market Fund Average 0.98% 2.74% 3.16% - 2.87%
Micropal Tx. Gov't Bank MM Fund Avg. 1.02% 2.82% 3.03% - 2.91%

AS OF SEPTEMBER 30, 1994
- ---------------------------------------------------------------- ----------------------------------
The Pierpont Treasury Money Market Fund 1.04% 2.56% 3.25% - 2.95%
Donoghue's U.S. Treasury & Repo
Money Market Fund Average 0.94% 2.39% 3.03% - 2.81%
Micropal Tx. Gov't Bank MM Fund Avg. 0.95% 2.44% 2.88% - 2.83%
<FN>

*1/04/93
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE MICROPAL MUTUAL FUND
RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND DATA. MICROPAL CONTAINS
PERFORMANCE INFORMATION AND PORTFOLIO CHARACTERISTICS FOR OVER 20,000 FUNDS
WORLDWIDE, INCLUDING NEARLY 5,000 IN THE U.S. THE PIERPONT TREASURY MONEY
MARKET FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN THE TREASURY 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.
</TABLE>

4
<PAGE>

SPECIAL FUND-BASED SERVICES

PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For many investors, a diversified portfolio - including short-term instruments,
bonds and stocks - can offer an excellent opportunity to achieve one's
investment objectives. The Pierpont Asset Allocation Service (PAAS) provides
investors with a comprehensive management program for their portfolios. Through
this service, investors can:

- - Create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;

- - Make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;

- - Make investments through The Pierpont Funds, a family of diversified mutual
funds for which Morgan serves as investment advisor.

PAAS is available to clients who invest a minimum of $500,000 in The Pierpont
Funds. The fees begin at $5,000 for the first year, followed by $2,500 each
subsequent year.

IRA MANAGEMENT SERVICE
As one of the few remaining investments that can help your assets grow
tax-deferred until retirement, the IRA enables more of your dollars to work for
you longer. Morgan offers an IRA Rollover plan that helps you to build
well-balanced long-term investment portfolios, diversified across a wide array
of mutual funds. From money markets to emerging markets, The Pierpont Funds
provide an excellent way to help you accumulate long-term wealth for retirement.
The IRA Rollover plan is available to clients who invest at least $10,000 in any
given Pierpont Fund.

KEOGH
In early 1995, Morgan will introduce a Keogh program for its clients. Keoghs
provide another excellent vehicle to help individuals who are self-employed or
are employees of unincorporated businesses to accumulate retirement savings. A
Keogh is a tax-deferred pension plan that can allow for you to contribute the
lesser of $30,000 or 25% of your annual earned gross compensation. The Pierpont
Funds can help you build a comprehensive investment program designed to maximize
the retirement dollars in your Keogh account. The Keogh plan also requires a
minimum investment of $10,000 in any given Pierpont Fund.

5
<PAGE>

MORGAN SERVES AS PORTFOLIO INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE
SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. THE FUND'S
DISTRIBUTOR IS SIGNATURE BROKER-DEALER SERVICES, INC. INVESTMENTS IN THE FUND
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK 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 PIERPONT TREASURY
MONEY MARKET 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.
The 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 Fund distributions and
reflect the waiver of certain Fund expenses as described in the Prospectus. The
average 7-day yield is for the 7-day period ended October 31, 1994. Morgan
reimbursed the Fund to the extent necessary to maintain Total Operating Expenses
at 0.40%. Had Morgan not reimbursed the Fund, its yield for the 7-day period
would have been 4.38%. Donoghue's U.S. Treasury and Repo Money Market Fund
Average is an average of all major U.S. Treasury money market fund returns.
This comparative information is available to the public from the IBC/Donoghue
Organization, Inc. No representation is made that information gathered from this
source is accurate or complete. The Pierpont Treasury Money Market Fund invests
all of its investable assets in The Treasury 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.
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 A COPY OF THE PROSPECTUS BY CALLING (800) 521-5411.

6
<PAGE>

THE PIERPONT TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The Treasury Money Market Portfolio ("Portfolio"), at value $119,005,129
Deferred Organization Expense (Note 1d) 46,486
Receivable for Expense Reimbursements 208,311
Prepaid Expenses 1,373
-----------
Total Assets 119,261,299
-----------

LIABILITIES
Dividends Payable to Shareholders (Note 1c) 455,460
Shareholder Servicing Fee Payable (Note 2c) 123,918
Administration Fee Payable (Note 2a) 2,899
Fund Services Fee Payable (Note 2d) 1,250
Trustees' Fees and Expenses Payable (Note 2e) 500
Accrued Expenses 46,585
-----------
Total Liabilities 630,612
-----------

NET ASSETS
Applicable to 118,636,554 Shares of Beneficial Interest Outstanding
(unlimited shares authorized, par value $0.001) $118,630,687
-----------
-----------
Net Asset Value, Offering and Redemption Price Per Share $1.00
-----------
-----------
ANALYSIS OF NET ASSETS
Paid-In Capital $118,636,554
Accumulated Net Realized Loss on Investments (5,867)
-----------
Net Assets $118,630,687
-----------
-----------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1b)

Allocated Interest Income $4,225,886
Allocated Portfolio Expenses (Net of Reimbursements of $61,185) (251,886)
---------
Net Investment Income Allocated from Portfolio 3,974,000

FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $ 200,453
Administration Fee (Note 2a) 32,587
Fund Services Fee (Note 2d) 16,086
Trustees' Fees and Expenses (Note 2e) 3,814
Transfer Agent Fee 24,075
Registration Fees 46,050
Printing 29,223
Amortization of Organization Expense (Note 1d) 14,627
Professional Fees 9,693
Miscellaneous 5,241
---------
Total Fund Expenses 381,849
Less: Reimbursements of Expenses (Note 2b) (188,455)
---------

Net Fund Expenses 193,394
---------

NET INVESTMENT INCOME 3,780,606

NET REALIZED LOSS ON INVESTMENTS ALLOCATED FROM PORTFOLIO (4,893)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,775,713
---------
---------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 4, 1993
FOR THE FISCAL (COMMENCEMENT
YEAR ENDED OF OPERATIONS)
OCTOBER 31, 1994 TO OCTOBER 31, 1993
---------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS
Net Investment Income $ 3,780,606 $ 1,007,540
Net Realized Gain (Loss) on Investments Allocated from Portfolio (4,893) 18,797
---------------- -------------------
Net Increase in Net Assets Resulting from Operations 3,775,713 1,026,337
---------------- -------------------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (3,780,606) (1,007,540)
Net Realized Gain (19,771) 0
---------------- -------------------
Total Distributions to Shareholders (3,800,377) (1,007,540)
---------------- -------------------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (AT A CONSTANT $1.00 PER
SHARE)
Proceeds from Shares of Beneficial Interest Sold 603,400,361 274,108,696
Reinvestment of Dividends and Distributions 3,332,039 794,120
Cost of Shares of Beneficial Interest Redeemed (571,174,262) (191,924,400)
---------------- -------------------
Net Increase from Transactions in Shares of Beneficial Interest 35,558,138 82,978,416
---------------- -------------------
Total Increase in Net Assets 35,533,474 82,997,213
NET ASSETS
Beginning of Year 83,097,213 100,000
---------------- -------------------
End of Year $ 118,630,687 $ 83,097,213
---------------- -------------------
---------------- -------------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 4, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- -------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
-------- -------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.0333 0.0208
Net Realized Gain (Loss) on Investments Allocated from Portfolio (0.0000)(c) 0.0002
-------- -------
Total from Investment Operations 0.0333 0.0210
-------- -------

Less Distributions to Shareholders from
Net Investment Income (0.0333) (0.0208)
Net Realized Gain (0.0002) 0.0000(c)
-------- -------
(0.0335) (0.0208)
-------- -------

NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
-------- -------
-------- -------
Total Return 3.41% 2.10%(b)
RATIOS AND SUPPLEMENTAL DATA
Net Assets at end of Period (in thousands) $ 118,631 $ 83,097
Ratios to Average Net Assets:
Expenses 0.40% 0.48%(a)
Net Investment Income 3.40% 2.53%(a)
Decrease reflected in above Expense
Ratios due to Reimbursements by Morgan 0.22% 0.26%(a)
<FN>

(a) Annualized
(b) Not Annualized
(c) Less than $0.0001
</TABLE>

See Accompanying Notes.

10
<PAGE>
THE PIERPONT TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont Treasury Money Market Fund (the "Fund") is a separate series of The
Pierpont Funds, a Massachusetts business trust (the "Trust") which was organized
on November 4, 1992. The Trust is registered under the Investment Company Act of
1940, as amended, as a diversified open-ended management investment company. The
Fund commenced operations on January 4, 1993.

The Fund invests all of its investable assets in The Treasury Money Market
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 (59.7% at October 31, 1994). 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 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 $73,309. 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)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.

g)For United States Federal income tax purposes the Fund had a capital loss
carryforward at October 31, 1994 of $4,893 which will expire in the year
2002. No capital gains distribution is expected to be paid to shareholders
until future net gains have been realized in excess of such carryforward.

11
<PAGE>
THE PIERPONT TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

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, The JPM Institutional
Funds, and the JPM Institutional Plus Fund, which are 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 October 31, 1994, Signature's fee for
these services amounted to $32,587.

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 0.047% of the Fund's average daily net assets, Morgan
will reimburse the Fund for the excess 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 October 31, 1994,
Morgan agreed to reimburse the Fund $98,377 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 0.40% of the
average daily net assets of the Fund through October 31, 1995. For the
fiscal year ended October 31, 1994, Morgan has agreed to reimburse the
Fund $90,078 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 0.18% of the Fund's average daily net assets up to and
including $1.5 billion and 0.15% of any excess over $1.5 billion. For the
fiscal year ended October 31, 1994, the fee for these services amounted to
$200,453.

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
$16,086 for the fiscal year ended October 31, 1994.

e)An annual aggregate fee of $55,000 is paid to each Trustee for serving as
a Trustee of the Pierpont Funds, the JPM Institutional Funds, the JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees'
Fee Expenses shown in the financial statements represents the Fund's
allocated portion of the total fees and expenses.

12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
The Pierpont Treasury Money Market 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 Pierpont Treasury Money Market Fund (the "Fund") at October 31, 1994, 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
January 4, 1993 (commencement of operations) through October 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
December 27, 1994

13
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
ANNUAL REPORT OCTOBER 31, 1994

(The following pages should be read in conjunction
with The Pierpont Treasury Money Market Fund
Annual Financial Statements)

14
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT MATURITY MATURITY/ VALUE
(IN THOUSANDS) SECURITY DESCRIPTION DATE COUPON (NOTE 1A)
- -------------- --------------------------------------- ---------- ------------ -----------
<C> <S> <C> <C> <C>
U. S. TREASURY OBLIGATIONS (57.6%)
$ 25,000 United States Treasury Bills 01/26/95 5.03% $24,699,299
8,000 United States Treasury Bills 03/23/95 3.40 7,840,648
5,990 United States Treasury Bills 12/22/94 4.80 5,949,014
5,000 United States Treasury Bills 01/05/94 5.06 4,954,861
5,000 United States Treasury Bills 03/02/95 4.40 4,917,162
4,000 United States Treasury Bills 02/02/95 3.40 3,950,925
570 United States Treasury Bills 04/06/95 5.07 557,477
2,000 United States Treasury Strip (Principal
Only) 11/15/94 5.09 1,996,531
50,000 United States Treasury Notes 11/15/94 6.00 50,020,089
10,000 United States Treasury Notes 11/15/94 8.25 10,012,165
-----------
Total U.S. Treasury Obligations (amortized cost $114,898,171) 114,898,171
-----------

<CAPTION>
REPURCHASE AGREEMENTS (41.5%)
<C> <S> <C> <C> <C>
32,622 Goldman Sachs Repurchase Agreement dated 10/31/94
due 11/01/94, proceeds $32,626,304
(collateralized by
$56,812,000 U.S. Treasury Strip 4.75%, due
11/15/01
valued at approximately $33,274,788) 4.75 32,622,000
50,000 Bankers Trust Co. Repurchase Agreement dated
10/31/94 due 11/01/94, proceeds $50,006,597
(collateralized by $50,500,000 U.S. Treasury
Notes
6.00%, due 06/30/96 valued at approximately
$51,005,000, including accrued interest) 4.75 50,000,000
-----------
Total Repurchase Agreements (amortized
cost $82,622,000) 82,622,000
-----------
TOTAL INVESTMENTS (cost $197,520,171) (99.1%)
197,520,171
OTHER ASSETS NET OF LIABILITIES (0.9%)
1,777,350
-----------
NET ASSETS (100.0%) $199,297,521
-----------
-----------
</TABLE>

See Accompanying Notes.

15
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Amortized Cost and Value (Note 1a) $114,898,171
Repurchase Agreements at Cost and Value (Note 1a) 82,622,000
Cash 1,231
Receivable for Expense Reimbursements 92,530
Interest Receivable 1,777,885
Deferred Organization Expenses (Note 1d) 17,602
Prepaid Insurance 436
-----------
Total Assets 199,409,855
-----------

LIABILITIES
Advisory Fee Payable (Note 2a) 53,526
Custody Fee Payable 14,184
Administration Fee Payable (Note 2b) 1,135
Fund Services Fee Payable (Note 2d) 2,102
Trustees' Fees and Expenses Payable (Note 2e) 500
Organization Expenses Payable 3,548
Accrued Expenses 37,339
-----------
Total Liabilities 112,334
-----------

NET ASSETS
Applicable to Investors' Beneficial Interests $199,297,521
-----------
-----------
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)
Interest $6,568,430

EXPENSES
Advisory Fee (Note 2a) $ 339,521
Professional Fees 37,251
Custodian Fees and Expenses 40,632
Fund Services Fee (Note 2d) 17,104
Administration Fee (Note 2b) 11,777
Amortization of Organization Expense (Note 1d) 5,539
Trustees' Fees and Expenses (Note 2e) 6,418
Miscellaneous 9,325
---------
Total Expenses 467,567

Less: Reimbursements of Expenses (Note 2c) (91,379)
---------

Net Expenses 376,188
---------

NET INVESTMENT INCOME 6,192,242

NET REALIZED LOSS ON INVESTMENTS (6,960)
---------

Net Increase in Net Assets Resulting from Operations $6,185,282
---------
---------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 4, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- --------------------
<S> <C> <C>
INCREASE IN NET ASSETS

OPERATIONS
Net Investment Income $ 6,192,242 $ 1,282,956
Net Realized Gain (Loss) on Investments (6,960) 25,024
---------------- --------------------
Net Increase in Net Assets Resulting from Operations 6,185,282 1,307,980
---------------- --------------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 717,721,291 398,440,441
Withdrawals (633,408,231) (291,149,242)
---------------- --------------------
Net Increase from Investors' Transactions 84,313,060 107,291,199
---------------- --------------------
Total Increase in Net Assets 90,498,342 108,599,179
NET ASSETS
Beginning of Period 108,799,179 200,000
---------------- --------------------
End of Period $ 199,297,521 $ 108,799,179
---------------- --------------------
---------------- --------------------
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------

FOR THE PERIOD
JANUARY 4, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1994
---------------- --------------------
<S> <C> <C>
Ratio to Average Net Assets:
Expenses to Average Net Assets 0.22% 0.26%(a)
Net Investment Income 3.65% 2.75%(a)
Decrease Reflected in above Expense Ratio due to Expense
Reimbursements by Morgan 0.05% 0.07%(a)
<FN>
- ------------------------
(a) Annualized
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Treasury 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 on November 4, 1992. The Portfolio
commenced operations on January 4, 1993. 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)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 substantially the same for book and tax purposes

d)Expenses incurred by the Portfolio in connection with the organization of
$27,491 are being amortized by the Portfolio on a straight-line basis over
a five year period from the commencement of operations.

19
<PAGE>
THE TREASURY MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

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 0.20%
of the Portfolio's average daily net assets up to $1 billion, and 0.10% on
such net assets in excess of $1 billion. For the fiscal year ended October
31, 1994, this fee amounted to $339,521.

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 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 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
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 October 31, 1994, the Portfolio's allocated portion of
Signature's fee for these services amounted to $11,777.

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, amortization of organization expenses,
Fund Services Fee, and brokerage costs, exceed the expense limit of 0.03%
of the Portfolio's average daily net assets, 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 October 31, 1994, Morgan has
agreed to reimburse the Portfolio $13,844. In addition to the expenses
that Morgan assumes under the Services Agreement, effective April 6, 1994
Morgan has voluntarily 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. For the
period April 6, 1994 to October 31, 1994 Morgan has agreed to reimburse
the Portfolio $77,535.

d)Effective January 15, 1994 the Portfolio entered into 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 $17,104 for the period January 15,
1994 to October 31, 1994.

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees'
Fees and Expenses shown in the financial statements represents the
Portfolio's allocated portion of the total fees and expenses.

20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Investors of
The Treasury Money Market 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 Treasury Money Market Portfolio (the
"Portfolio") at October 31, 1994, 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 January 4, 1993 (commencement of operations)
through October 31, 1993, 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 October 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
New York, New York
December 27, 1994

21
<PAGE>
THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Short Term
THE PIERPONT SHORT TERM BOND FUND Bond Fund
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND

FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL OCTOBER 31, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT SHORT TERM BOND FUND

December 15, 1994

Dear Shareholder:

We are pleased to present the Annual Report and performance discussion of The
Pierpont Short Term Bond Fund for the year ended October 31, 1994.

The Pierpont Short Term Bond Fund seeks to provide a high total return while
attempting to limit the likelihood of negative quarterly returns by investing
among the broad sectors of the fixed income market, including U.S. government
and agency securities, corporate bonds, private placements, and asset- and
mortgage-backed securities. Under normal conditions, the Fund's duration (a
measure of the Fund's price sensitivity to interest-rate changes) ranges between
one and three years.

During the Fund's fiscal year, The Pierpont Short Term Bond Fund underperformed
its benchmark, but produced positive returns in a rising interest rate
environment. For the 12 months ended October 31, 1994, the Fund had a total
return of 0.61%, compared with 1.19% for its benchmark, the Merrill Lynch 1-3
Year Treasury Index. The Fund's net asset value declined from $9.99 to end at
$9.60 per share after paying dividends totaling $0.45 per share. In addition,
the Fund's net assets were $6.0 million at the end of the reporting period.

MARKET ENVIRONMENT
After declining to their lowest levels in 25 years in 1993, interest rates
increased dramatically during 1994. Investors began to fear that the strong
economic recovery combined with continued loose monetary policy or low rates
would cause inflation to rise.

Even moderate levels of inflation can be detrimental to long-term economic
growth and stability. Much like the environment in the early 1980s, high and
increasing inflation can only be decelerated by extremely high short-term rates
and painful recession. Accordingly, the Fed tried to preempt this scenario by
raising short-term interest rates five times between February and October 1994
(and again in November).

- --------------------------------------------------------------------------------
TABLE OF CONTENTS

LETTER TO THE SHAREHOLDERS.........1 SPECIAL FUND-BASED SERVICES............5

FUND FACTS AND HIGHLIGHTS..........3 FINANCIAL STATEMENTS...................7

FUND PERFORMANCE...................4
- --------------------------------------------------------------------------------

1
<PAGE>

During this time, the market feared that the Fed was not acting quickly enough.
Investors began requiring higher interest rates on their bonds to compensate
them in case inflation caused the future purchasing power of their investment to
erode. As a result, interest rates on fixed income securities of all maturities
rose more than 2.00% for the year ended October 31, 1994.

ANNUAL REVIEW
The Fund's investment process looks at three sources to add value: duration
management, sector allocation, and security selection.

DURATION MANAGEMENT. Morgan correctly forecast a rise in interest rates and
thereby positioned the portfolio defensively with respect to its duration. The
Fund ended the period with a duration of 1.7 years, about 0.2 years shorter than
its benchmark.

SECTOR ALLOCATION. We continued to hold almost half of the Fund in Treasuries,
and the rest in higher-yielding securities such as corporates, mortgages, and
asset-backed securities.

SECURITY SELECTION. The Fund focused on high-quality securities for the period.
Approximately 75% of the Fund's credit quality at the end of the period was AAA.

INVESTMENT OUTLOOK
With 30-year Treasuries at close to 8% and medium-term inflation at 4%, we
believe bonds offer reasonable value. However, cyclical pressures and higher
inflation numbers over the next few quarters may move the bond market slightly
lower before recovering. Thus, we continue to maintain a defensive duration
position.

We also expect that as the impact of higher short-term rates begins to reduce
the pace of economic growth, corporate bonds may underperform. As such, we have
begun to slightly underweight corporates in favor of relatively attractive
mortgage securities. We continue to maintain a high percentage of AAA credit
quality.

As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 521-5411.

Sincerely yours,

/s/ Evelyn E. Guernsey

Evelyn E. Guernsey
J.P. Morgan Funds Services

<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
The Pierpont Short Term Bond Fund seeks to provide high total return while
attempting to limit the likelihood of negative quarterly returns. It is designed
for investors who do not require the stable net asset value typical of a money
market fund, but who seek less price fluctuation than is typical of a long-term
bond fund.

- --------------------------------------------------------------------------------
INCEPTION DATE
7/8/93

- --------------------------------------------------------------------------------
Net assets as of 10/31/94
$6,007,556

DIVIDEND PAYABLE DATES

MONTHLY

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/12/94

EXPENSE RATIO
The Fund's current annual expense ratio of 0.67% 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 OCTOBER 31, 1994

PORTFOLIO ALLOCATION

[PIE CHART]

30-DAY SEC YIELD
5.61%

DURATION
1.7 years

QUALITY BREAKDOWN
AAA* 75%
AA 4%
A 12%
Other 9%

*INCLUDES U.S. GOVERNMENT AGENCY AND TREASURY OBLIGATIONS

3
<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 The Pierpont Short Term Bond Fund's
inception would have grown to $10,156 at October 31, 1994.

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 of the 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
provide a picture of how a fund has performed over the short term.

GROWTH OF $10,000 SINCE INCEPTION*
JULY 8, 1993 - OCTOBER 31, 1994

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 July 8, 1983
(inception) to October 31, 1994; the second line represents the growth of a ten
thousand dollar investment in a portfolio of securities reflecting the
composition of the Merrill Lynch 1-3 Year Treasury 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 Micropal
Corporate Short Bond Fund Average for the same time period. The graph points are
as follows:

Year Fund Merrill 1-3 Micropal
<S> <C> <C> <C>
0 $ 10,000 $ 10,000 $ 10,000
1 10,094 10,140 10,161
2 10,156 10,261 10,409

</TABLE>

<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF OCTOBER 31, 1994 MONTHS TO DATE YEAR YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Pierpont Short Term Bond Fund 0.25% 0.28% 0.61% -- 1.16%
Merrill Lynch 1-3 Year Treasury Index 0.35% 0.79% 1.19% -- 2.84%
Micropal Corporate Short Bond Fund Avg. 0.15% -0.29% -0.46% -- 0.92%
AS OF SEPTEMBER 30, 1994
- ------------------------------------------------------------------------------------------------------------------
The Pierpont Short Term Bond Fund 0.85% 0.12% 0.53% - 1.11%
Merrill Lynch 1-3 Year Treasury Index 0.99% 0.56% 1.16% - 2.61%
Micropal Corporate Short Bond Fund Avg. 0.87% -0.39% -0.34% - 0.89%

<FN>
*7/8/93
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE MICROPAL MUTUAL FUND
RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND DATA. MICROPAL CONTAINS
PERFORMANCE INFORMATION AND PORTFOLIO CHARACTERISTICS FOR OVER 20,000 FUNDS
WORLDWIDE, INCLUDING NEARLY 5,000 IN THE U.S. THE PIERPONT SHORT TERM BOND FUND
INVESTS ALL OF ITS INVESTABLE ASSETS IN THE SHORT TERM BOND PORTFOLIO, A
SEPARATELY REGISTERED INVESTMENT COMPANY WHICH IS NOT AVAILABLE TO THE PUBLIC
BUT ONLY TO OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS THE FUND.
</TABLE>

4
<PAGE>

SPECIAL FUND-BASED SERVICES

PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For many investors, a diversified portfolio -- including short-term instruments,
bonds and stocks -- can offer an excellent opportunity to achieve one's
investment objectives. The Pierpont Asset Allocation Service (PAAS) provides
investors with a comprehensive management program for their portfolios. Through
this service, investors can:

- - Create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;

- - Make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;

- - Make investments through The Pierpont Funds, a family of diversified mutual
funds for which Morgan serves as investment advisor.

PAAS is available to clients who invest a minimum of $500,000 in The Pierpont
Funds. The fees begin at $5,000 for the first year, followed by $2,500 each
subsequent year.

5
<PAGE>

MORGAN SERVES AS PORTFOLIO INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE
SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. THE FUND'S
DISTRIBUTOR IS SIGNATURE BROKER-DEALER SERVICES, INC. INVESTMENTS IN THE FUND
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK 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 PIERPONT SHORT TERM BOND FUND CAN
FLUCTUATE, SO AN INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
The performance data quoted herein represent past performance. Please remember
that past performance is not a guarantee of future performance. All returns
assume the reinvestment of Fund distributions. Had expenses not been subsidized,
returns would have been lower. The Merrill Lynch 1-3 Year Treasury Index
represents an unmanaged portfolio of securities in which investors may not
directly invest. The Pierpont Short Term Bond Fund invests all of its investable
assets in The Short Term Bond Portfolio, a separately registered investment
company which is not available to the public but only to other collective
investment vehicles such as the Fund. The Portfolio may invest in foreign
securities which are subject to special risks; prospective investors should
refer to the Fund's prospectus for a discussion of these risks.
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 A COPY OF THE PROSPECTUS BY CALLING (800) 521-5411.

<PAGE>
THE PIERPONT SHORT TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The Short Term Bond Portfolio ("Portfolio") at value $5,966,025
Receivable for Expense Reimbursements 82,335
Deferred Organization Expense (Note 1d) 23,068
Prepaid Expenses 66
---------
Total Assets 6,071,494
---------

LIABILITIES
Dividend Payable (Note 1c) 892
Shareholder Servicing Fee Payable (Note 2c) 9,009
Administration Fee Payable (Note 2a) 142
Fund Services Fee Payable (Note 2b) 62
Organization Expenses Payable (Note 1d) 19,450
Accrued Expenses 34,383
---------
Total Liabilities 63,938
---------

NET ASSETS
Applicable to 625,855 Shares of Beneficial Interest Outstanding
(unlimited shares authorized, par value $0.001) $6,007,556
---------
---------
Net Asset Value, Offering and Redemption Price Per Share $9.60
---------
---------

ANALYSIS OF NET ASSETS
Paid-in Capital $6,276,509
Undistributed Net Investment Income 311
Accumulated Net Realized Loss on Investments (148,091)
Net Unrealized Depreciation of Investments (121,173)
---------
Net Assets $6,007,556
---------
---------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT SHORT TERM BOND FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1B)
Allocated Interest Income $ 313,406
Allocated Dividend Income 11,106
Allocated Portfolio Expenses (Net of Reimbursements of $3,028) (22,665)
---------
Net Investment Income Allocated from Portfolio 301,847

FUND EXPENSES
Printing $ 30,108
Registration Fees 20,062
Transfer Agent Fees 20,023
Shareholder Servicing Fee (Note 2c) 11,275
Professional Fees 10,086
Amortization of Organization Expense (Note 1d) 7,352
Administration Fee (Note 2a) 1,839
Fund Services Fee (Note 2d) 952
Trustees' Fees and Expenses (Note 2e) 264
Miscellaneous 863
---------
Total Fund Expenses 102,824
Less: Reimbursement of Expenses (Note 2b) (82,335)
---------

NET FUND EXPENSES 20,489
---------

NET INVESTMENT INCOME 281,358

NET REALIZED LOSS ON INVESTMENTS ALLOCATED FROM PORTFOLIO (162,989)

NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS ALLOCATED FROM
PORTFOLIO (108,850)
---------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,519
---------
---------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT SHORT TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 8, 1993
FOR THE (COMMENCEMENT
FISCAL YEAR OF OPERATIONS)
ENDED OCTOBER THROUGH OCTOBER
INCREASE (DECREASE) IN NET ASSETS 31, 1994 31, 1993
------------- ---------------

<S> <C> <C>
FROM OPERATIONS
Net Investment Income $ 281,358 $ 27,595
Net Realized Loss on Investments from Portfolio (162,989) (595)
Net Change in Unrealized Depreciation of Investments
Allocated from Portfolio (108,850) (12,322)
------------- ---------------
Net Increase in Net Assets Resulting from Operations 9,519 14,678
------------- ---------------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (281,047) (27,595)
------------- ---------------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 3)
Proceeds from Shares of Beneficial Interest Sold 7,029,325 6,855,269
Reinvestment of Dividends and Distributions 263,265 27,172
Cost of Shares of Beneficial Interest Redeemed (7,855,963) (27,067)
------------- ---------------
Net Increase (Decrease) from Transactions in Shares of
Beneficial Interest (563,373) 6,855,374
------------- ---------------
Total Increase (Decrease) in Net Assets (834,901) 6,842,457

NET ASSETS
Beginning of Period 6,842,457 0
------------- ---------------
End of Period (Including Undistributed Net Investment
Income of $311 and $0, respectively) $ 6,007,556 $ 6,842,457
------------- ---------------
------------- ---------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT SHORT TERM BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 8, 1993
(COMMENCEMENT OF
FOR THE FISCAL OPERATIONS)
YEAR ENDED THROUGH OCTOBER
OCTOBER 31, 1994 31, 1993
----------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.99 $ 10.00
------ ------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.45 0.10
Net Realized and Unrealized Loss on Investments (0.39) (0.01)
------ ------
Total from Investment Operations 0.06 0.09
------ ------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Dividends from Net Investment Income (0.45) (0.10)
------ ------

NET ASSET VALUE, END OF PERIOD $ 9.60 $ 9.99
------ ------
------ ------
Total Return 0.61% 0.94%+

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in Thousands) $6,008 $ 6,842
Ratios to Average Net Assets:
Expenses* 0.69% 0.67%(a)
Net Investment Income 4.49% 3.44%(a)
Decrease Reflected in above Expense Ratio due to Expense Reimbursements 1.36% 2.80%(a)

<FN>
(+) Not annualized.
(a) Annualized.
* Includes the Fund's proportionate share of the Portfolio's expenses.
</TABLE>

See Accompanying Notes.

<PAGE>
THE PIERPONT SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont Short Term Bond Fund (the "Fund") is a separate series of
The Pierpont Funds, a Massachusetts business trust (the "Trust") which
was organized on November 4, 1992. The Trust is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end
management investment company. The Fund commenced operations on July 8,
1993.

The Fund invests all of its investable assets in The Short Term Bond
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 (11% at October 31, 1994). 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 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 $31,753. 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.

g)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

11
<PAGE>
THE PIERPONT SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
distributions are reclassified to paid-in capital. The Fund reclassified
$15,493 to accumulated net realized loss on investments from paid-in
capital. Net investment income, net realized gain and net assets were not
affected by this change.

h)For United States Federal income tax purposes the Fund had a capital loss
carryforward at October 31, 1994 of $146,463 which will expire in the year
2002. No capital gains distribution is expected to be paid to shareholders
until future net gains have been realized in excess of such carryforward.

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 the net assets
of The JPM Institutional Funds and The JPM Institutional Plus Fund, which
are 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 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 October 31, 1994,
Signature's fee for these services amounted to $1,839.

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 percentages 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 0.12% of the first $100 million of the Fund's average
daily net assets and 0.10% of average daily net assets over $100 million,
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 October
31, 1994 Morgan has agreed to reimburse the fund $75,727 for excess
expenses. Beginning March 31, 1994, in addition to the expenses that
Morgan assumes under the Services Agreement, Morgan had agreed to
reimburse the Fund to the extent necessary to maintain the total operating
expenses of the Fund, including the expenses allocated to the Fund from
the corresponding Portfolio, at 0.67% of the daily net assets of the Fund
through October 31, 1994. Morgan has agreed to reimburse the Fund $6,608
to maintain such expense ratio.

12
<PAGE>
THE PIERPONT SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

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 0.18% of the average daily net assets of the Fund. For the
fiscal year ended October 31, 1994, the fee for these services amounted to
$11,275.

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 October 31, 1994, the Fund's allocated portion of
Group's costs in performing its services amounted to $952.

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees'
Fees and Expenses shown in the financial statements represents the Fund's
allocated portion of the total fees and expenses.

3. 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 8, 1993
(COMMENCEMENT OF
FOR THE FISCAL OPERATIONS)
YEAR ENDED THROUGH
OCTOBER 31, 1994 OCTOBER 31, 1993
---------------- ----------------
<S> <C> <C>
Shares sold 714,366 685,019
Reinvestment of dividends 26,946 2,718
Shares redeemed (800,489) (2,705)
-------- -------
Net Increase/(Decrease) (59,177) 685,032
-------- -------
-------- -------
</TABLE>

13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
The Pierpont Short Term Bond 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 Pierpont Short Term Bond Fund (the "Fund") at October 31, 1994, 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 8, 1993
(commencement of operations) through October 31, 1993, 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
December 27, 1994

14
<PAGE>
The Short Term Bond Portfolio
Annual Report October 31, 1994

(The following pages should be read in conjunction
with The Pierpont Short Term Bond Fund
Annual Financial Statements)

15
<PAGE>
THE SHORT TERM BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- -------------------------------------------- ----------- -----------
<C> <S> <C> <C>
COLLATERALIZED OBLIGATIONS (10.1%)
FINANCE (10.1%)
$ 1,222,221 Equicon Home Equity Loan Trust, Series
1992-7, Class A, 5.900% due 09/18/05...... Aaa/AAA $ 1,143,158
839,730 Fleetwood Credit Corp. Grantor Trust, Series
1994-A, Class A, 4.70% due 7/15/09........ Aaa/AAA 795,644
938,266 Merrill Lynch Mortgage Investors Inc.,
Series 1994-C1, Class A, 8.720% due
01/25/50, callable........................ Aaa/AAA 949,408
1,500,000 Premier Auto Trust, Series 1994-3, Class A6,
6.850% due 03/02/99....................... Aaa/AAA 1,474,688
1,000,000 Queens Center Funding Corp., 7.4375% due
01/01/04.................................. Baa1/BBB+ 998,750
-----------
TOTAL COLLATERALIZED OBLIGATIONS (COST
$5,503,815)............................... 5,361,648
-----------
CORPORATE OBLIGATIONS (16.7%)
BANKING (3.7%)
1,000,000 First USA Bank Wilmington, Delaware, 4.97%
due 11/30/95.............................. Baa3/AAA- 979,280
1,000,000 Society National Bank Cleveland, 6.875% due
10/15/96.................................. Aa3/A 993,260
-----------
1,972,540
-----------
COMMUNICATION (1.0%)
500,000 Bell Telephone of Canada, 13.375% due
10/15/10.................................. A1/A+ 554,875
-----------
FINANCE (8.3%)
1,500,000 Associates Corp., North America, 6.750% due
06/23/97.................................. A1/AA- 1,474,050
1,000,000 Chrysler Financial Corp., 5.170% due
09/20/96.................................. A3/BBB 963,810
1,000,000 Ford Motor Credit Corp., 8.950% due
06/12/96.................................. A2/A 1,027,650
500,000 Ford Motor Credit Corp., 6.125% due
12/11/95.................................. A3/A 497,600
515,000 General Motors Acceptance Corp., 5.625% due
02/01/99.................................. Baa1/BBB+ 469,371
-----------
4,432,481
-----------
UTILITIES -- ELECTRIC (2.0%)
1,000,000 Hydro Quebec 9.750% due 09/29/98............ Aa3/AA 1,058,440
-----------
OIL AND GAS (1.7%)
1,000,000 Occidental Petroleum Corp., 5.760% due
06/15/98.................................. Baa3/BBB 923,790
-----------
TOTAL CORPORATE OBLIGATIONS (COST
$9,113,389)............................... 8,942,126
-----------
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE SHORT TERM BOND BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- -------------------------------------------- ----------- -----------
<S> <S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (20.1%)
Federal Home Loan Mortgage
$ 2,000,000 Remic: PAC-1(11), Series 29, Class C, 6.100%
due 05/25/13.............................. $ 1,868,750
953,526 9.000% due 05/01/97......................... 971,405
747,678 Remic: SCH, LIQ, Series 1580, Class A,
6.500% due 09/15/98....................... 736,930
Federal National Mortgage Association
1,500,000 Remic: PAC-1(11), Series 1994-7, Class PB,
5.600% due 07/25/03....................... 1,424,531
1,500,000 Remic: PAC-1(11), Series 1994-12, Class PC,
5.250% due 04/25/03....................... 1,417,031
1,000,000 Remic: PAC-1(11), Series 1994-33, Class D,
5.500% due 04/25/05....................... 919,570
Remic: PAC(11), Series G93-16, Class A,
5.000% due 06/25/04....................... 656,370
663,000
Government National Mortgage Association
617,150 7.750% due 07/15/98......................... 612,984
307,059 7.750% due 07/15/01......................... 304,916
U.S. Department Veteran Affairs (Vendee
Mortgage Trust),
1,900,000 Remic: Sequential Payer, Series 1994-2,
Class 3B, 6.500% due 02/15/06............. 1,830,531
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $11,114,333)........................ 10,743,018
-----------
U.S. GOVERNMENT TREASURY OBLIGATIONS (46.1%)
U.S. Treasury Notes
15,960,000 5.875% due 05/31/96......................... 15,775,822
5,860,000 4.625% due 02/15/96......................... 5,727,798
2,000,000 8.750% due 10/15/97......................... 2,083,780
1,000,000 3.875% due 10/31/95......................... 977,600
-----------
TOTAL U.S. GOVERNMENT TREASURY OBLIGATIONS
(COST $24,720,785)........................ 24,565,000
-----------
<CAPTION>
SHARES
-----------
<S> <S> <C> <C>
CONVERTIBLE PREFERRED STOCK (3.7%)
FINANCE (3.7%)
99,300 Citicorp, $1.217, Series 15 (cost
$2,004,370)............................... A2/BBB 1,948,762
-----------
SHORT-TERM HOLDINGS (2.1%)
OTHER INVESTMENT COMPANIES (0.0%)
826 Seven Seas Money Market Fund (cost $826).... 826
-----------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE SHORT TERM BOND BOND PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- -------------------------------------------- ----------- -----------
<S> <S> <C> <C>
REPURCHASE AGREEMENT (2.1%)
$ 1,111,000 Goldman Sachs Repurchase Agreement dated
10/31/94 due 11/01/94, proceeds $1,111,147
(collateralized by $1,351,000 U.S.
Treasury Strip, due 05/15/97 valued at
$1,133,421) (cost $1,111,000)............. $ 1,111,000
-----------
TOTAL SHORT-TERM HOLDINGS (COST
$1,111,826)............................... 1,111,826
-----------
TOTAL INVESTMENTS (COST $53,568,518) (98.8%) 52,672,380
OTHER ASSETS LESS LIABILITIES (1.2%) 651,434
-----------
TOTAL NET ASSETS (100.0%) $53,323,814
-----------
-----------
<FN>

Note: Based on the cost of investments of $53,579,099 for Federal income tax
purposes at October 31, 1994, the aggregate gross unrealized appreciation
and depreciation was $2,292 and $909,011, respectively, resulting in net
unrealized depreciation of $906,719.

Abbreviations used in the schedule of investments are as follows: LIQ --
Liquidity Bond; PAC -- Planned Amortization Class; SCH -- Scheduled
Payment Bond.
</TABLE>
See Accompanying Notes.

<PAGE>
THE SHORT TERM BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $53,568,518) (Note 1a) $52,672,380
Receivable for Investments Sold 1,000,291
Interest Receivable 679,251
Deferred Organization Expense (Note 1e) 5,030
Prepaid Expenses 576
Receivable for Expense Reimbursement (Note 2c) 22,054
----------
Total Assets 54,379,582
----------

LIABILITIES
Payable for Securities Purchased 993,538
Payable to Custodian 5,655
Advisory Fee Payable (Note 2a) 17,839
Organization Expense Payable (Note 1e) 1,380
Fund Services Fee Payable (Note 2d) 526
Administration Fee Payable (Note 2b) 287
Trustees' Fees and Expenses Payable (Note 2e) 25
Accrued Expenses 36,518
----------
Total Liabilities 1,055,768
----------

NET ASSETS
Applicable to Investors' Beneficial Interests $53,323,814
----------
----------
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE SHORT TERM BOND PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
Interest Income $2,346,640
Dividend Income 90,636
----------
Total Investment Income 2,437,276

EXPENSES
Advisory Fee (Note 2a) $ 113,379
Professional Fees 38,783
Custodian Fees and Expenses 23,380
Fund Services Fee (Note 2d) 4,545
Administration Fee (Note 2b) 3,149
Amortization of Organization Expenses (Note 1e) 349
Trustees' Fees and Expenses (Note 2e) 1,212
Miscellaneous 2,321
---------
Total Expenses 187,118
Less: Reimbursement of Expenses (Note 2c) (22,054)
---------

NET EXPENSES 165,064
----------

NET INVESTMENT INCOME 2,272,212

NET REALIZED LOSS ON INVESTMENTS (including $111,187 net realized
gains from futures contracts) (1,015,882)

NET CHANGE IN UNREALIZED DEPRECIATION OF INVESTMENTS (804,516)
----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 451,814
----------
----------
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE SHORT TERM BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<S> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 2,272,212 $ 157,305
Net Realized Loss on Investments (1,015,882) (21,208)
Net Change in Unrealized Depreciation of Investments (804,516) (91,621)
------------- ---------------
Net Increase in Net Assets Resulting from Operations 451,814 44,476
------------- ---------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 41,445,030 41,349,838
Withdrawals (23,001,490) (7,065,954)
------------- ---------------
Net Increase from Investors' Transactions 18,443,540 34,283,884
------------- ---------------
Total Increase in Net Assets 18,895,354 34,328,360

NET ASSETS
Beginning of Period 34,428,460 100,100
------------- ---------------
End of Period $53,323,814 $34,428,460
------------- ---------------
------------- ---------------
</TABLE>

- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 8, 1993
FOR THE (COMMENCEMENT
FISCAL YEAR OF OPERATIONS)
ENDED OCTOBER THROUGH OCTOBER
31 1994 31, 1993
-------------- ---------------
<S> <C> <C>
Ratios to Average Net Assets:
Net Investment Income 5.01% 3.99%(a)
Expenses 0.36% 0.37%(a)
Decrease in Expense Ratio due to Expense Reimbursement by Morgan 0.05% 1.00%(a)
Portfolio Turnover 230% 116%

<FN>
- ------------------------

(a) Annualized.
</TABLE>
See Accompanying Notes.

21
<PAGE>
THE SHORT TERM BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Short Term Bond Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company which was organized as a trust
under the laws of the State of New York on November 4, 1992. The
Portfolio commenced operations on July 8, 1993. 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 acounting policies of the
Portfolio:

a)Portfolio securities with a maturity of 60 days or more, including
securities that are listed on an exchange or traded over the counter, are
valued using prices supplied daily by an independent pricing service or
services that (i) are based on the last sale price on a national
securities exchange, or in the absence of recorded sales, at the readily
available bid price on such exchange or at the quoted bid price in the
over-the-counter market, if such exchange or market constitutes the
broadest and most representative market for the security and (ii) in other
cases, take into account various factors affecting market value, including
yields and prices of comparable securities, indication as to value from
dealers and general market conditions. If such prices are not supplied by
the Portfolio's independent pricing services, such securities are priced
in accordance with procedures adopted by the Trustees. All portfolio
securities with a remaining maturity of less than 60 days are valued by
the amortized cost method.

b)Futures -- A futures contract is an agreement between two parties to buy
and sell a security at a set price on a future date. 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 use of futures transactions involves the risk of
imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets, and the possible
inability of counterparties to meet the terms of their contracts. Treasury
futures transactions during the fiscal year ended October 31, 1994 are
summarized as follows:

<TABLE>
<CAPTION>
SALES OF FUTURES CONTRACTS
--------------------------------------------
PRINCIPAL AMOUNT
NUMBER OF CONTRACTS OF CONTRACTS
------------------------- -----------------
<S> <C> <C>
Contracts opened 70 $ 7,000,000
Contracts closed 70 7,000,000
-
-----------------
Open at end of period 0 $ 0
-
-
-----------------
-----------------
</TABLE>

22
<PAGE>
THE SHORT TERM BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

c)Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date. Interest income, which
includes the amortization of premiums and discounts, if any, is recorded
on an accrual basis. For financial and tax reporting purposes, realized
gains and losses are determined on the basis of specific lot
identification.

d)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxed on its
share of the Portfolio's ordinary income and capital gains. It is intended
that the Portfolio's assets will be managed in such a way that an investor
in the Portfolio will be able to satisfy the requirements of Subchapter M
of the Internal Revenue Code.

e)The Portfolio's Service Agent, Morgan Guaranty Trust Company of New York
("Morgan"), paid the organization expenses of the Portfolio in the amount
of $5,492. The Portfolio has agreed to reimburse Morgan for these costs
which are being amortized by the Portfolio on a straight-line basis over a
five-year period from the commencement of operations.

2. TRANSACTIONS WITH AFFILIATES

a)The Portfolio has an investment advisory agreement with Morgan. Under the
terms of the investment advisory agreement, the Portfolio pays Morgan at
an annual rate of 0.25% of the Portfolio's average daily net assets. For
the fiscal year ended October 31, 1994, this fee amounted to $113,379.

b)The Portfolio retains Signature Broker-Dealer Services, Inc. ("Signature")
to serve as Administrator. 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 October 31, 1994, Signature's fee for
these services amounted to $3,149.

23
<PAGE>
THE SHORT TERM BOND PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 October 31, 1994, Morgan agreed to
reimburse the Portfolio $22,054.

d)Effective January 15, 1994, the Portfolio entered into 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 $4,545 for the period January 15,
1994 to October 31, 1994.

e)An aggregate fee of $55,000 is paid to each Trustee for serving as a
Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustee
fee expense shown in the financial statements represents the Portfolio's
allocated portion of the total fees.

3. INVESTMENT TRANSACTIONS

Investment transactions (excluding short-term investments) for the fiscal year
ended October 31, 1994, were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
-------------- -------------
<S> <C> <C>
U.S. Government and Agency Obligations $ 93,311,928 $ 82,066,299
Corporate and Collateralized Obligations 29,308,989 17,659,795
-------------- -------------
$ 122,620,917 $ 99,726,094
-------------- -------------
-------------- -------------
</TABLE>

24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Investors of
The Short Term Bond 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 Short Term Bond Portfolio (the
"Portfolio") at October 31, 1994, 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 8, 1993 (commencement of operations)
through October 31, 1993, 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 October 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
New York, New York
December 27, 1994

25
<PAGE>
THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Bond Fund
THE PIERPONT SHORT TERM BOND FUND
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND

FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL OCTOBER 31, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT BOND FUND

December 15, 1994

Dear Shareholder:

We are pleased to present the Annual Report and performance discussion of The
Pierpont Bond Fund for the year ended October 31, 1994.

The Pierpont Bond Fund seeks to provide a high total return consistent with
moderate risk of capital and maintenance of liquidity. It is designed for
investors who seek a total return over time that is higher than that generally
available from a portfolio of short-term obligations, while recognizing the
greater price fluctuation of longer-term instruments.

During the Fund's fiscal year, The Pierpont Bond Fund performed in line with its
benchmark, but the rising interest rate environment caused overall negative bond
market returns. For the 12 months ended October 31, 1994, the Fund's total
return was -3.50%, compared with a -3.59% return for its benchmark, the Salomon
Brothers Broad Investment Grade Bond Index. The Fund's net asset value also
declined from $11.00 to end at $9.64 per share after paying dividends and
distributions totaling $1.00 per share. In addition, the Fund's net assets grew
to $112.0 million at the end of the reporting period from $103.6 million in
October 1993.

MARKET ENVIRONMENT
After declining to their lowest levels in 25 years during 1993, interest rates
increased dramatically in 1994. To slow the pace of economic growth and keep
inflation low, the Federal Reserve began raising short-term interest
rates-moving first on February 4, 1994, and following with four additional rate
hikes by the end of October.

Concerned that the Federal Reserve was not acting quickly enough to curb
inflation, investors began requiring higher interest rates on bonds. These
higher rates were needed to prevent inflation from eroding the future purchasing
power of their investment returns. Accordingly, interest rates on fixed income
securities of all maturities rose more than 2.00% for the year ended October 31,
1994.

- --------------------------------------------------------------------------------
TABLE OF CONTENTS

LETTER TO THE SHAREHOLDERS . . . . 1 SPECIAL FUND-BASED SERVICES. . . .5

FUND FACTS AND HIGHLIGHTS. . . . . 3 FINANCIAL STATEMENTS . . . . . . .7

FUND PERFORMANCE . . . . . . . . . 4
- --------------------------------------------------------------------------------

1
<PAGE>

ANNUAL REVIEW
The Fund's investment process looks at three sources to add value: duration
management, sector allocation, and security selection.

DURATION MANAGEMENT. We correctly forecast the rise in interest rates during
the year and thereby positioned the portfolio defensively with respect to its
duration (the Fund's price sensitivity to changes in interest rates). The Fund
ended the period with a duration of 4.4 years, about half a year shorter than
its benchmark.

SECTOR ALLOCATION. The Fund was invested selectively in all three major segments
of the bond market: governments, corporates, and mortgages. At the end of
October 1994, the majority of Fund assets were in U.S. Treasuries (42.3%) and
corporate bonds (30.3%).

SECURITY SELECTION. The Fund focused on high-quality securities during the
period. On October 31, 1994, the Fund had approximately 60% in AAA credit
quality.

INVESTMENT OUTLOOK
With 30-year U.S. Treasury rates close to 8% and medium-term inflation at 4%, we
believe bonds offer reasonable value. However, cyclical pressures and higher
inflation numbers over the next few quarters may move the bond market lower
before recovering. Thus, we are maintaining a slightly defensive duration
position.

We also expect that as the impact of higher short-term rates begins to reduce
the pace of economic growth, corporate bonds may underperform. As such, we have
begun to slightly underweight corporates in favor of relatively attractive
mortgage securities. We have continued to maintain AAA credit quality and our
yield advantage relative to the broad market.

As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 521-5411.

Sincerely yours,

/s/ Evelyn E. Guernsey

Evelyn E. Guernsey
J.P. Morgan Funds Services

2
<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
The Pierpont Bond Fund seeks to provide high total return consistent with
moderate risk of capital and maintenance of liquidity. It is designed for
investors who seek a total return that is higher than that generally available
from short-term obligations while recognizing the greater price fluctuation of
longer-term instruments.

- --------------------------------------------------------------------------------
INCEPTION DATE
3/11/88

- --------------------------------------------------------------------------------
NET ASSETS AS OF 10/31/94
$112,049,134

- --------------------------------------------------------------------------------
DIVIDEND PAYABLE DATES
MONTHLY

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/12/94

EXPENSE RATIO
The Fund's current annual expense ratio of 0.81% 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 OCTOBER 31, 1994

PORTFOLIO ALLOCATION

[GRAPH]

30-DAY SEC YIELD
6.29%

DURATION
4.4 years

QUALITY BREAKDOWN
AAA* 63%
AA 2%
A 10%
Other 25%

*INCLUDES U.S. GOVERNMENT AGENCY AND TREASURY OBLIGATIONS

3
<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 The Pierpont Bond Fund's inception would
have grown to $16,007 at October 31, 1994.

GROWTH OF $10,000 SINCE INCEPTION*
MARCH 11, 1988 - OCTOBER 31, 1994

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 March 11, 1988
(inception) to October 31, 1994; the second line represents the growth of a ten
thousand dollar investment in a portfolio of securities reflecting the
composition of the Salomon Brothers Broad Investment Grade Bond Index ("BIG")
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
Micropal Taxable Intermediate Corporate Bond Fund Average for the same time
period. The graph points are as follows:

Year Fund Salomon BIG Micropal
<S> <C> <C> <C>
0 $ 10,000 $ 10,000 $ 10,000
1 10,312 10,399 10,518
2 11,165 11,358 11,760
3 12,145 11,951 12,513
4 13,548 13,602 14,484
5 14,815 14,897 15,945
6 16,588 16,536 17,854
7 16,007 15,764 17,2l3

</TABLE>

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURN
---------------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF OCTOBER 31, 1994 MONTHS TO DATE YEAR YEARS INCEPTION*
- --------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C>
The Pierpont Bond Fund -1.33% -3.12% -3.50% 7.47% 7.34%
Salomon BIG -1.43% -3.32% -3.59% 7.91% 7.87%
Micropal Int. Corporate Bond Fund Avg. -1.04% -3.50% -4.67% 6.78% 7.15%

AS OF SEPTEMBER 30, 1994
- --------------------------------------------------------------- -----------------------------------
The Pierpont Bond Fund 0.57% -2.94% -3.03% 7.89% 7.47%
Salomon BIG 0.54% -3.22% -3.20% 8.46% 9.89%
Micropal Int. Corporate Bond Fund Avg. 0.54% -3.33% -4.10% 7.17% 7.27%
<FN>
*3/11/88
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE MICROPAL MUTUAL FUND
RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND DATA. MICROPAL CONTAINS
PERFORMANCE INFORMATION AND PORTFOLIO CHARACTERISTICS FOR OVER 20,000 FUNDS
WORLDWIDE, INCLUDING NEARLY 5,000 IN THE U.S. THE PIERPONT BOND FUND INVESTS
ALL OF ITS INVESTABLE ASSETS IN THE U.S. FIXED INCOME PORTFOLIO, A SEPARATELY
REGISTERED INVESTMENT COMPANY WHICH IS NOT AVAILABLE TO THE PUBLIC BUT ONLY TO
OTHER COLLECTIVE INVESTMENT VEHICLES SUCH AS THE FUND.
</TABLE>

4
<PAGE>

SPECIAL FUND-BASED SERVICES

- - Create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;

- - Make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;

- - Make investments through The Pierpont Funds, a family of diversified mutual
funds for which Morgan serves as investment advisor.

PAAS is available to clients who invest a minimum of $500,000 in The Pierpont
Funds. The fees begin at $5,000 for the first year, followed by $2,500 each
subsequent year.

5
<PAGE>

MORGAN SERVES AS PORTFOLIO INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE
SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. THE FUND'S
DISTRIBUTOR IS SIGNATURE BROKER-DEALER SERVICES, INC. INVESTMENTS IN THE FUND
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK 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 PIERPONT BOND FUND CAN FLUCTUATE, SO AN
INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
The performance data quoted herein represent past performance. Please remember
that past performance is not a guarantee of future performance. All returns
assume the reinvestment of Fund distributions. Had expenses not been
subsidized, returns would have been lower. The Salomon Broad Investment Grade
Index represents a market-weighted index that contains approximately 4,700
individually priced investment-grade bonds rated BBB or better. The index
includes U.S. Treasury/agency issues, mortgage passthrough securities, and
corporate issues. The Pierpont Bond Fund invests all of its investable assets
in The U.S. Fixed Income Portfolio, a separately registered investment company
which is not available to the public but only to other collective investment
vehicles such as the Fund. The Portfolio may invest in foreign securities which
are subject to special risks; prospective investors should refer to the Fund's
prospectus for a discussion of these risks.
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 A COPY OF THE PROSPECTUS BY CALLING (800) 521-5411.

<PAGE>
THE PIERPONT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investment in The U.S. Fixed Income Portfolio ("Portfolio"), at value $112,077,629
Receivable for Shares of Beneficial Interest Sold 159,725
Prepaid Expenses 1,419
Receivable for Expense Reimbursement 9,177
-----------
Total Assets 112,247,950
-----------

LIABILITIES
Payable for Shares of Beneficial Interest Redeemed 84,104
Dividend Payable to Shareholders (Note 1c) 21,342
Shareholder Servicing Fee Payable (Note 2c) 48,913
Administration Fee Payable (Note 2a) 2,680
Fund Services Fee Payable (Note 2d) 1,198
Accrued Expenses 40,579
-----------
Total Liabilities 198,816
-----------

NET ASSETS
Applicable to 11,626,198 Shares of Beneficial Interest Outstanding
(unlimited shares authorized, par value $0.001) $112,049,134
-----------
-----------
Net Asset Value, Offering and Redemption Price Per Share $9.64
-----------
-----------
Analysis of Net Assets
Paid-in Capital $119,863,440
Distribution in Excess of Net Investment Income (694)
Accumulated Net Realized Loss on Investments (4,423,969)
Net Unrealized Depreciation of Investments (3,389,643)
-----------
Net Assets $112,049,134
-----------
-----------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT BOND FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1B)
Allocated Interest Income $6,550,999
Allocated Dividend Income 2,911
Allocated Portfolio Expenses (493,231)
----------
Net Investment Income Allocated from Portfolio 6,060,679

FUND EXPENSES
Shareholder Servicing Fee (Note 2c) $ 189,959
Printing 33,829
Transfer Agent Fees 31,056
Administration Fee (Note 2a) 30,915
Registration Fees 21,464
Fund Services Fee (Note 2d) 15,491
Professional Fees 10,558
Trustees' Fees and Expenses (Note 2e) 3,230
Insurance 1,623
Miscellaneous 3,521
---------
Total Fund Expenses 341,646
Less: Reimbursement of Expenses (Note 2b) (9,177)
---------

Net Fund Expenses 332,469
----------

NET INVESTMENT INCOME 5,728,210

NET REALIZED LOSS ON INVESTMENTS ALLOCATED FROM PORTFOLIO (4,410,760)

NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS ALLOCATED FROM
PORTFOLIO (5,114,945)
----------

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,797,495)
----------
----------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR
ENDED OCTOBER 31,
------------------------
INCREASE (DECREASE) IN NET ASSETS 1994 1993
----------- -----------

<S> <C> <C>
FROM OPERATIONS
Net Investment Income $ 5,728,210 $ 4,411,114
Net Realized Gain (Loss) on Investments Allocated from
Portfolio (4,410,760) 4,434,388
Net Change in Unrealized Appreciation of Investments
Allocated from Portfolio (5,114,945) 933,661
----------- -----------
Net Increase (Decrease) in Net Assets Resulting from
Operations (3,797,495) 9,779,163
----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS FROM
Net Investment Income (5,728,904) (4,411,114)
Net Realized Gain on Investments (4,444,155) (1,352,214)
----------- -----------
Total Distributions to Shareholders (10,173,059) (5,763,328)
----------- -----------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 3)
Proceeds from Shares of Beneficial Interest Sold 62,734,029 71,317,524
Reinvestment of Dividends and Distributions 9,685,386 5,394,870
Cost of Shares of Beneficial Interest Redeemed (49,971,704) (52,978,556)
----------- -----------
Net Increase from Transactions in Shares of Beneficial
Interest 22,447,711 23,733,838
----------- -----------
Total Increase in Net Assets 8,477,157 27,749,673

NET ASSETS
Beginning of Year 103,571,977 75,822,304
----------- -----------
End of Year $112,049,134 $103,571,977
----------- -----------
----------- -----------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period are as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31,
-------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.00 $ 10.52 $ 10.32 $ 9.93 $ 9.84
---------- ---------- --------- --------- ---------

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.55 0.54 0.66 0.70 0.74
Net Realized and Unrealized Gain (Loss) on Investments (0.91) 0.67 0.28 0.41 0.09
---------- ---------- --------- --------- ---------
Total from Investment Operations (0.36) 1.21 0.94 1.11 0.83
---------- ---------- --------- --------- ---------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM
Dividends from Net Investment Income (0.55) (0.54) (0.66) (0.70) (0.74)
Distributions from Net Realized Gains (0.45) (0.19) (0.08) (0.02) 0.00
---------- ---------- --------- --------- ---------
Total Distributions (1.00) (0.73) (0.74) (0.72) (0.74)
---------- ---------- --------- --------- ---------

NET ASSET VALUE, END OF PERIOD $ 9.64 $ 11.00 $ 10.52 $ 10.32 $ 9.93
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Total Return (3.50)% 11.97% 9.35% 11.55% 8.78%

RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands) $ 112,049 $ 103,572 $ 75,882 $ 41,616 $ 12,306
Ratios to Average Net Assets:
Expenses 0.78% 0.81% 0.81% 0.81% 0.83%
Net Investment Income 5.43% 5.01% 6.26% 6.84% 7.58%
Decrease Reflected in above Expense Ratio due to
Expense Reimbursements and Fee Waivers 0.01% 0.08% 0.20% 0.58% 1.26%
Portfolio Turnover - 236.39%* 267.04% 166.78% 68.55%

<FN>
* 1993 Portfolio Turnover reflects the period November 1, 1992 to July 11, 1993. After July 11, 1993, all the
Fund's investable assets are invested in The U.S. Fixed Income Portfolio.
</TABLE>

See Accompanying Notes.

10
<PAGE>
THE PIERPONT BOND FUND
NOTES TO FINANCIAL STATEMENTS

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

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Pierpont Bond Fund (the "Fund") is a separate series of The Pierpont
Funds, a Massachusetts business trust (the "Trust") which was organized on
November 4, 1992. The Trust is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment
company. The Fund, prior to its tax-free reorganization on July 11, 1993, to
a series of the Trust, operated as a stand-alone mutual fund. Costs related
to the reorganization were borne by Morgan Guaranty Trust Company of New
York ("Morgan"). This report includes periods which preceded the Fund's
reorganization and reflects the operations of the predecessor entity.

The Fund invests all of its investable assets in The U.S. Fixed Income
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 (31% at October 31, 1994). 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.

d)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.

e)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.

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

11
<PAGE>
THE PIERPONT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

- --------------------------------------------------------------------------------
distributions are reclassified to paid-in capital. The Fund reclassified
$88,148 to accumulated net realized loss on investments from paid-in
capital. Net investment income, net realized gains and net assets were not
affected by this change.

g)For United States Federal income tax purposes the Fund had a capital loss
carryforward at October 31, 1994 of $4,388,908 which will expire in the
year 2002. No capital gains distribution is expected to be paid to
shareholders until future net gains have been realized in excess of such
carryforward.

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 the net assets
of The JPM Institutional Funds and The JPM Institutional Plus Fund, which
are 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 October 31,
1994, Signature's fee for these services amounted to $30,915.

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 0.18% of the average daily net assets of the Fund. For the
fiscal year ended October 31, 1994, the fee for these services amounted to
$189,959.

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

12
<PAGE>
THE PIERPONT BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

- --------------------------------------------------------------------------------
Trust's affairs. The Trustees of the Trust are the sole shareholders of
Group. The Fund's allocated portion of Group's costs in performing its
services amounted to $15,491 for the for the fiscal year ended October 31,
1994.

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees'
Fees and Expenses shown in the financial statements represents the Fund's
allocated portion of the total fees and expenses.

3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR
ENDED OCTOBER 31,
------------------------
1994 1993
----------- -----------
<S> <C> <C>
Shares sold 6,213,346 6,665,450
Reinvestment of dividends and distributions 947,768 507,179
Shares redeemed (4,946,923) (4,965,466)
----------- -----------
Net Increase 2,214,191 2,207,163
----------- -----------
</TABLE>

13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
The Pierpont Bond 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 Pierpont Bond Fund (the "Fund") at October 31, 1994, the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for each of the two years in the period then ended, 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. The financial
highlights for each of the three years in the period ended October 31, 1992 were
audited by other independent accountants whose report dated December 4, 1992
expressed an unqualified opinion on those statements.

PRICE WATERHOUSE LLP
New York, New York
December 27, 1994

14
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO

ANNUAL REPORT OCTOBER 31, 1994

(The following pages should be read in conjunction
with The Pierpont Bond Fund
Annual Financial Statements)

15
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- ------------------------------------- ----------- -------------
<C> <S> <C> <C>
COLLATERALIZED OBLIGATIONS (6.6%)
BANKING (0.5%)
$ 1,600,000 Chemical Banking Corp., 10.125% due
11/01/00 A3/A- $ 1,749,584
-------------
FINANCE (6.1%)
103,610 Advanta Home Equity Loan Trust,
Series 92-2, Class A1, 7.15% due
06/25/08........................... Aaa/AAA 102,149
40,000 Case Equipment Loan Trust, Series
94-A, Class A2, 4.65% 08/15/99..... Aaa/AAA 39,340
229,167 Chase Manhattan Credit Card Trust,
Series 91-A, Class A, 8.45% due
11/15/97........................... Aaa/AAA 229,717
3,500,000 Chase Mortgage Finance Corp., Series
94-G, Class A7, 7.00% due
04/25/25........................... Aaa/AAA 3,062,500
1,000,000 Discover Credit Card Trust, Series
92-A, 5.50% due 05/15/98........... Aaa/AAA 984,700
9,356 Fical Home Equity Loan Trust, Series
90-1 Class A, 8.90% due 10/15/15... Aaa/NR 9,367
1,100,000 First Chicago Credit Master Trust II,
Series 90-A, Class A, 9.25% due
12/15/96........................... Aaa/AAA 1,120,240
8,855,000 GE Capital Mortgage Services, Inc.,
Remic: PAC-1(11), Series 94-17,
Class A5, 7.00% due 05/25/24....... Aaa/AAA 8,135,531
4,633,044 GE Capital Mortgage Services, Inc.,
Remic: Sequential Payer, Series
94-21, Class A, 6.50% due
08/25/09........................... Aaa/AAA 4,239,236
467,323 Green Tree Financial Corp., Series
94-A Class A, 6.90% due 02/15/04... Baa3/BBB+ 445,418
254,740 Navistar Financial Grantor Trust,
Series 91-1, Class A, 6.40% due
11/15/96........................... Aaa/AAA 254,342
86,690 Premier Auto Trust, Series 92-3,
Class A, 5.90% due 11/17/97........ Aaa/AAA 86,205
2,005,575 Premier Auto Trust, Series 93-4,
Class A2, 4.650% due 02/02/99...... Aaa/AAA 1,949,795
716,950 Prudential Home Loan Mortgage
Securities, Remic: PAC(11), Series
93-54, Class A2, 6.50% due
01/25/24........................... Aaa/AAA 699,474
271,396 Resolution Trust Corp., Remic: ARM
Determined Interest Rate, Series
91-6, Class A1, 7.028% due
05/25/19........................... Aaa/AAA 261,134
216,736 Resolution Trust Corp., Remic:
Sequential Payer, Series 92-M3,
Class A1, 7.75% due 07/25/30,
callable........................... Aa2/AA+ 204,863
100,000 Standard Credit Card Master Trust,
Series 91-1, Class A, 8.50% due
06/07/96........................... Aaa/AAA 102,280
300,000 Standard Credit Card Master Trust,
Series 92-2, Class A, 5.875% due
07/07/95........................... Aaa/AAA 299,340
149,859 The Money Store Home Equity Trust,
Series 92-A, Class A, 6.95% due
12/15/07........................... Aaa/AAA 147,611
-------------
22,373,242
-------------
TOTAL COLLATERALIZED OBLIGATIONS
(COST $24,901,302)................. 24,122,826
-------------
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- ------------------------------------- ----------- -------------
<S> <S> <C> <C>
CORPORATE OBLIGATIONS (32.1%)
AUTOMOTIVE (0.4%)
$ 400,000 Ford Motor Co., 9.95% due 02/15/32,
callable........................... A2/A $ 447,600
1,000,000 General Motors Corp., 8.375% due
03/15/96........................... Baa1/BBB+ 1,011,550
-------------
1,459,150
-------------
BANKING (7.5%)
4,700,000 Bank of New York, 6.50% due
12/01/03........................... A3/A- 4,115,367
1,400,000 BankAmerica Corp., 9.50% due
04/01/01........................... A3/A- 1,478,414
1,300,000 BankAmerica Corp., 7.5% due
03/15/97........................... A2/A 1,303,406
6,000,000 Central Fidelity Banks, Inc., 8.15%
due 11/15/02....................... Baa2/BBB 5,864,400
1,245,000 First Chicago Corp., 6.875% due
06/15/03........................... A3/A- 1,122,106
1,380,000 First Union Corp., 5.1875% due
06/15/05........................... A2/A 1,376,550
2,000,000 Mellon Bank, N.A., 6.75% due
06/01/03........................... A2/A 1,790,480
200,000 Republic New York Corp., 9.75% due
12/01/00........................... Aa3/A 216,044
10,000,000 Society National Bank, 6.875% due
10/15/96........................... A1/A+ 9,932,600
-------------
27,199,367
-------------
CHEMICALS, OIL & GAS (6.9%)
1,592,000 E. I. Du Pont de Nemours & Co., 8.65%
due 12/01/97....................... Aa2/AA 1,646,574
2,340,000 Nova Gas Transmission Ltd., 8.50% due
12/15/12........................... A3/A- 2,310,399
550,000 Occidental Petroleum Corp., 9.25% due
08/01/19........................... Baa3/BBB 565,922
825,000 Occidental Petroleum Corp., 8.75% due
01/15/23........................... Baa3/BBB 780,846
2,375,000 Occidental Petroleum Corp., 8.50% due
09/15/04........................... Baa3/BBB 2,367,067
5,000,000 Occidental Petroleum Corp., 5.85% due
11/09/98........................... Baa3/BBB 4,612,600
9,950,000 Oxy USA Inc., 7.00% due 04/15/11..... Baa3/BBB 8,421,183
1,125,000 SFP Pipeline Holdings, Inc., 9.67%
due 08/15/10....................... Baa3/NR 1,334,531
2,400,000 Texas Eastern Transmission Corp.,
10.375 due 11/15/00................ Baa2/BBB 2,559,624
500,000 Union Oil of California, 9.25% due
02/01/03........................... Baa2/BBB 519,015
-------------
25,117,761
-------------
DEPARTMENT STORES (0.4%)
1,405,000 Wal Mart Stores, Inc., 10.875% due
08/15/00........................... Aa1/AA 1,486,490
-------------
FINANCE (6.4%)
200,000 Associates Corp., N.A., 8.75% due
02/01/96........................... A1/AA- 204,332
2,000,000 Associates Corp., N.A., 6.75% due
06/23/97........................... A1/A- 1,965,400
3,050,000 Beneficial Corp., 6.47% due
11/17/08........................... A2/A 2,514,389
4,500,000 Chrysler Financial Corp., 5.625% due
01/15/99........................... A3/BBB+ 4,128,255
400,000 Ford Capital BV, 9.125% due
04/08/96........................... A2/A 409,500
3,000,000 Ford Motor Credit Corp., 8.875% due
06/15/99........................... A2/A 3,107,850
800,000 Ford Motor Credit Corp., 8.00% due
10/01/96........................... A2/A 810,488
100,000 Ford Motor Credit Corp., 7.125% due
12/01/97........................... A2/A 98,714
200,000 General Motors Acceptance Corp.,
9.05% due 12/15/94................. Baa1/BBB+ 200,658
4,250,000 General Motors Acceptance Corp.,
8.625% due 07/15/96................ Baa1/BBB+ 4,338,400
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- ------------------------------------- ----------- -------------
<S> <S> <C> <C>
FINANCE (6.4%) (CONTINUED)
$ 1,250,000 General Motors Acceptance Corp.,
8.60% due 05/10/96................. Baa1/BBB+ $ 1,275,637
1,000,000 General Motors Acceptance Corp.,
7.85% due 11/17/97................. Baa1/BBB+ 1,001,550
1,000,000 General Motors Acceptance Corp.,
7.60% due 02/10/97................. Baa1/BBB+ 1,000,590
2,400,000 General Motors Acceptance Corp., 7.3%
due 02/02/98....................... Baa1/BBB+ 2,361,144
-------------
23,416,907
-------------
FOREST PRODUCTS & PAPER (3.5%)
7,000,000 Bowater, Inc., 8.50% due 12/15/01.... Baa1/BBB- 6,749,890
7,000,000 James River Corp, 6.70% due
11/15/03........................... Baa3/BBB- 6,107,500
-------------
12,857,390
-------------
LUMBER & OTHER CONSTRUCTION MATERIALS (2.6%)
7,650,000 Georgia Pacific Corp., 9.625% due
03/15/22........................... Baa3/BBB- 7,654,819
2,000,000 Georgia Pacific Corp., 9.50% due
05/15/22........................... Baa3/BBB- 1,977,560
-------------
9,632,379
-------------
PUBLISHING (0.6%)
2,100,000 Reed Publishing, 9.00% due
07/10/96........................... Aa1/NR 2,151,187
-------------
TRANSPORTATION (0.0%)
200,000 Delta Air Lines, Inc., 3.23% due
06/15/03........................... Ba3/B+ 142,250
-------------
UTILITIES (3.8%)
3,000,000 Commonwealth Edison Co., 7.00% due
02/15/97........................... Baa3/BBB- 2,956,830
3,000,000 Commonwealth Edison Co., 6.50% due
07/15/97........................... Baa3/BBB- 2,913,600
500,000 Commonwealth Edison Co., 6.25% due
10/01/97........................... Baa2/BBB 481,175
2,000,000 Connecticut Light & Power Co., 7.625%
due 04/01/97....................... Baa1/BBB+ 2,005,380
2,400,000 GTE Corp., 8.85% due 03/01/98........ Baa1/BBB+ 2,481,384
3,000,000 Westinghouse Electric Corp., 9.44%
due 06/05/96....................... Baa2/BBB 3,058,380
-------------
13,896,749
-------------
TOTAL CORPORATE OBLIGATIONS (COST
$120,793,906)...................... 117,359,630
-------------
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- ------------------------------------- ----------- -------------
<S> <S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (16.2%)
FHA Insured
$ 3,429,555 7.43% due 03/01/22................................ $ 3,209,849
Federal Home Loan Bank
55,000 8.00% due 07/25/96................................ 56,053
FHLMC Gold 30 Year
24,675,000 8.00% TBA+........................................ 23,711,194
Federal Home Loan Mortgage Corp.
34,565 10.00% due 04/01/09............................... 36,268
200,000 Series 39, Class F, 10.00% due 05/15/20........... 209,654
867,110 Series 17, Class H, 9.70% due 06/15/18............ 883,395
100,000 8.70% due 07/06/95................................ 101,752
4,300 Series 1977, Class A, 8.05% due 03/15/07.......... 4,300
300,000 Series 33, Class D, 8.00% due 04/15/20............ 289,875
10,000,000 Series 1751, Class PK, 8.00% due 09/15/24......... 9,350,000
100,000 Remic: Accretion Directed, Series 1290, Class L,
7.50% due 10/15/09.............................. 92,934
32,000 Remic: PAC-1(11), Series 1168, Class H, 7.50% due
11/15/21........................................ 28,901
150,000 Remic: PAC-1(11), Series 1215, Class F, 6.75% due
05/15/05........................................ 142,080
165,000 Remic: PAC-1(11), Series 1207, Class J, 6.75% due
07/15/19........................................ 147,335
1,871,036 Remic: SCH, LIQ, Series 1580, Class A, 6.50% due
09/15/98........................................ 1,844,140
1,600,000 Remic: SCH(22), Series 1701, Class B, 6.50% due
03/15/09........................................ 1,374,500
Federal National Mortgage Association
907,526 10.00% due 06/01/20............................... 960,726
50,000 8.90% due 06/12/00................................ 52,530
50,000 8.80% due 07/25/97................................ 52,081
50,000 8.45% due 10/21/96................................ 51,450
122,846 8.00% due 01/01/02................................ 122,527
83,385 8.00% due 05/01/02................................ 83,159
559,767 8.00% due 07/01/02................................ 558,190
8,811 8.00% due 11/01/16................................ 8,683
7,141 8.00% due 08/01/22................................ 6,962
3,934,376 7.75% due 11/01/01................................ 3,962,654
5,000,000 discount notes 4.82%++ due 12/14/94............... 4,971,214
2,214,791 Remic: PAC, Series 1991-64, Class Z, 8.50% due
06/25/06........................................ 2,194,725
1,685,629 Remic: PAC, Series 1991-101, Class C, 8.50% due
08/25/18........................................ 1,711,908
1,199,579 Remic: PAC, Series 1990-112, Class E, 8.50% due
07/25/19........................................ 1,213,818
1,843,406 Remic: PAC-2(23), Series 1994-50, Class Z, 6.50%
due 03/25/24.................................... 1,115,836
545,000 Remic: PAC(11), Series 1993-041, Class PE, 5.75%
due 04/25/19.................................... 502,027
Government National Mortgage Association
38,312 11.50% due 07/15/13............................... 42,463
25,215 8.50% due 07/15/08................................ 25,065
40,967 8.50% due 08/15/08................................ 40,738
78,447 7.50% due 07/15/22................................ 72,930
39,699 7.50% due 03/15/23................................ 36,962
224,034 7.50% due 05/15/24................................ 208,123
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
PRINCIPAL RATING VALUE
AMOUNT SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
----------- ------------------------------------- ----------- -------------
<S> <S> <C> <C>
Twelve Federal Loan Banks Notes
$ 25,000 7.950% due 10/21/96............................... $ 25,512
-------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (COST $60,689,593)..... 59,502,513
-------------
U.S. GOVERNMENT TREASURY OBLIGATIONS (44.9%)
U.S. Treasury Bills
7,000,000 4.97% due 12/22/94................................ 6,950,723
U.S. Treasury Bonds
700,000 10.75% due 05/15/03............................... 829,395
7,185,000 8.875% due 02/15/19............................... 7,758,435
U.S. Treasury Notes
50,000 8.875% due 05/15/00............................... 53,059
2,570,000 8.75% due 08/15/00................................ 2,712,841
585,000 8.625% due 08/15/97............................... 607,259
50,000 8.50% due 11/15/95................................ 51,102
100,000 8.50% due 07/15/97................................ 103,448
100,000 8.50% due 02/15/00................................ 104,263
50,000 8.50% due 11/15/00................................ 52,260
160,000 8.00% due 08/15/99................................ 163,618
890,000 7.875% due 02/15/96............................... 905,086
50,000 7.875% due 07/15/96............................... 50,924
100,000 7.75% due 02/15/01................................ 100,808
990,000 6.875% due 03/31/97............................... 987,644
180,000 6.875% due 04/30/97............................... 179,451
2,905,000 6.75% due 06/30/99................................ 2,824,996
13,730,000 6.50% due 09/30/96................................ 13,653,661
255,000 6.50% due 11/30/96................................ 253,228
59,420,000 6.50% due 04/30/99................................ 57,345,648
400,000 6.375% due 01/15/99............................... 385,520
26,310,000 6.25% due 02/15/03................................ 23,938,680
30,000 6.00% due 12/31/97................................ 29,001
110,000 6.00% due 10/15/99................................ 103,373
22,648,000 5.875% due 05/31/96............................... 22,386,642
14,645,000 5.75% due 08/15/03................................ 12,774,687
1,475,000 5.50% due 04/30/96................................ 1,452,211
1,030,000 5.375% due 05/31/98............................... 968,076
3,295,000 5.125% due 11/15/95............................... 3,257,503
2,425,000 5.125% due 12/31/98............................... 2,230,903
875,000 4.25% due 07/31/95................................ 863,861
195,000 4.25% due 11/30/95................................ 190,877
-------------
TOTAL U.S. GOVERNMENT TREASURY
OBLIGATIONS (COST $167,865,262).... 164,269,183
-------------
FOREIGN GOVERNMENT OBLIGATIONS (0.1%)
380,000 Province of Ontario, 7.375% due
01/27/03 (cost $370,508)........... Aa3/AA- 358,975
-------------
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MOODY'S/S&P
RATING VALUE
SHARES SECURITY DESCRIPTION (UNAUDITED) (NOTE 1A)
- -------------- --------------------------------------------------------- ------------- -----------
<S> <S> <C> <C>
CONVERTIBLE PREFERRED STOCKS (0.1%)
AUTOMOTIVE SUPPLIES (0.1%)
2,200 Ford Motor Co., $4.20......................... A3/A- $ 212,850
---------
COMPUTER PERIPHERALS (0.0%)
500 Storage Technology Corp., $3.50............... B3/B 32,500
---------
NATURAL GAS (0.0%)
2,600 Occidental Petroleum Corp., $3.00............. N/A 130,650
---------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST
$375,650)................................... 376,000
---------

PRINCIPAL
AMOUNT
- -----------
REPURCHASE AGREEMENT (6.1%)
22,015,000 Goldman Sachs Repurchase Agreement, dated
10/31/94 due 11/01/94, proceeds $22,017,905
(collateralized by U.S. Treasury Strip, due
08/15/04, valued at $22,455,616) (cost
$22,015,000)................................ P1/A1+ 22,015,000
---------
TOTAL INVESTMENTS (COST $397,011,221) (106.1%) 388,004,127
LIABILITIES NET OF OTHER ASSETS (-6.1%) (22,138,100)
---------
TOTAL NET ASSETS (100.0%) $365,866,027
---------
---------
<FN>

Note: Based on the cost of investments of $397,114,946 for Federal Income Tax
purposes at October 31, 1994, the aggregate gross unrealized appreciation
and depreciation was $415,867 and $9,526,686, respectively, resulting in
net unrealized depreciation of $9,110,819.
(+) TBA securities are purchased (sold) on a forward commitment basis with an
approximate principal amount and no definite maturity date. The actual
principal amount and maturity date will be determined upon settlement.
(++) Bond equivalent yield

Abbreviations used in the schedule of investments are as follows:

LIQ -- Liquidity Bond; PAC-Planned Amortzation Class;

SCH -- Scheduled Payment Bond.
</TABLE>

See Accompanying Notes.

21
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments at Value (Cost $397,011,221) (Note 1a) $388,004,127
Cash 927
Receivable for Investments Sold 19,406,880
Interest Receivable 4,580,535
Dividends Receivable 2,310
-----------
Total Assets 411,994,779
-----------

LIABILITIES
Payable for Securities Purchased 45,744,992
Financial and Fund Accounting Services Fee Payable (Note 2c) 140,493
Advisory Fee Payable (Note 2a) 128,542
Custody Fee Payable 76,832
Fund Services Fee Payable (Note 2d) 3,702
Administration Fee Payable (Note 2b) 2,018
Trustees' Fees and Expenses Payable (Note 2e) 173
Accrued Expenses 32,000
-----------
Total Liabilities 46,128,752
-----------

NET ASSETS:
Applicable to Investors' Beneficial Interests $365,866,027
-----------
-----------
</TABLE>

See Accompanying Notes.

22
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B)
Interest Income $14,780,564
Dividend Income 8,958
-----------
Total Investment Income 14,789,522

EXPENSES
Advisory Fee (Note 2a) $ 699,081
Custodian Fees and Expenses 149,849
Financial and Fund Accounting Services Fees (Note 2c) 140,493
Professional Fees 42,124
Fund Services Fee (Note 2d) 23,028
Administration Fee (Note 2b) 16,107
Trustees' Fees and Expenses (Note 2e) 6,665
Insurance 2,736
Miscellaneous 848
---------
Total Expenses 1,080,931
-----------

NET INVESTMENT INCOME 13,708,591

NET REALIZED LOSS ON INVESTMENTS (8,930,226)

NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS (11,045,898)
-----------

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(6,267,533)
-----------
-----------
</TABLE>

See Accompanying Notes.

23
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 12, 1993
(COMMENCEMENT
FOR THE OF
FISCAL YEAR OPERATIONS)
ENDED THROUGH
OCTOBER 31, OCTOBER 31,
INCREASE (DECREASE) IN NET ASSETS 1994 1993
------------- ---------------

<S> <C> <C>
FROM OPERATIONS
Net Investment Income $13,708,591 $ 1,915,101
Net Realized Gain (Loss) on Investments (8,930,226) 1,515,154
Net Change in Unrealized Appreciation (Depreciation) of
Investments (11,045,898) 307,400
------------- ---------------
Net Increase (Decrease) in Net Assets Resulting from
Operations (6,267,533) 3,737,655
------------- ---------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 298,426,651 152,114,492
Withdrawals (73,416,442) (8,828,896)
------------- ---------------
Net Increase from Investors' Transactions 225,010,209 143,285,596
------------- ---------------
Total Increase in Net Assets 218,742,676 147,023,251

NET ASSETS
Beginning of Period 147,123,351 100,100
------------- ---------------
End of Period $365,866,027 $147,123,351
------------- ---------------
------------- ---------------
- -----------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -----------------------------------------------------------------------------------------

FOR THE PERIOD
JULY 12, 1993
(COMMENCEMENT
FOR THE OF
FISCAL OPERATIONS)
YEAR ENDED THROUGH
OCTOBER 31, OCTOBER 31,
1994 1993
------------- ---------------
<S> <C> <C>
Ratios to Average Net Assets:
Expenses 0.46% 0.48%(a)
Net Investment Income 5.88% 4.91%(a)
Portfolio Turnover 234% 295%+
</TABLE>

(a) Annualized.
(+) Portfolio turnover is for the twelve month period ended October 31, 1993,
and includes the portfolio activity of the Portfolio's predecessor entity,
The Pierpont Bond Fund, for the period November 1, 1992 through July 11,
1993.

See Accompanying Notes.

24
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The U.S. Fixed Income Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company which was organized as a trust under
the laws of the State of New York on November 4, 1992. The Portfolio
commenced operations on July 12, 1993 and received a contribution of certain
assets and liabilities, including securities, with a value of $91,653,371 on
that date from The Pierpont Bond Fund in exchange for a beneficial interest
in the Portfolio. At that date, net unrealized appreciation of $1,731,405
was included in the contributed securities. 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:

b)Securities transactions are recorded on a trade date basis. Interest
income, which includes the amortization of premiums and discounts, if any,
is recorded on an accrual basis. For financial and tax reporting purposes,
realized gains and losses are determined on the basis of specific lot
identification.

c)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxed on its
share of the Portfolio's ordinary income and capital gains. It is intended
that the Portfolio's assets will be managed in such a way that an investor
in the Portfolio will be able to satisfy the requirements of Subchapter M
of the Internal Revenue Code.

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 0.30%
of the Portfolio's average daily net assets. For the fiscal year ended
October 31, 1994, this fee amounted to $699,081.

25
<PAGE>
THE U.S. FIXED INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

b)The Portfolio retains Signature Broker-Dealer Services, Inc. (Signature)
to serve as Administrator and Distributor. 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 Portfolios 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 October
31, 1994, Signatures fee for these services amounted to $16,107.

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 October
31, 1994, this fee amounted to $140,493.

d)Effective January 15, 1994, the Portfolio entered into 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 are the sole shareholders of Group.
The Portfolio's allocated portion of Group's costs in performing its
services amounted to $23,028 for the period January 15, 1994 to October
31, 1994.

e)An aggregate fee of $55,000 is paid to each Trustee for serving as a
Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees
Fees and Expenses shown in the financial statements represents the
Portfolio's allocated portion of the total fees.

3. INVESTMENT TRANSACTIONS

Investment transactions (excluding short-term investments) for the fiscal
year ended October 31, 1994 were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
PURCHASES SALES
-------------- --------------
<S> <C> <C>
U.S. Government and Agency Obligations $ 594,208,005 $ 440,953,175
Corporate and Collateralized Obligations 168,317,433 76,972,533
-------------- --------------
$ 762,525,438 $ 517,925,708
-------------- --------------
</TABLE>

26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Investors of
The U.S. Fixed Income 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 U.S. Fixed Income Portfolio (the
"Portfolio") at October 31, 1994, 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 12, 1993 (commencement of operations)
through October 31, 1993, 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 October 31, 1994 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
December 27, 1994

27
<PAGE>
THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND International
THE PIERPONT SHORT TERM BOND FUND Equity Fund
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND

FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL OCTOBER 31, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT INTERNATIONAL EQUITY FUND

December 15, 1994

Dear Shareholder:

We are pleased to present the Annual Report and performance discussion for The
Pierpont International Equity Fund for the year ended October 31, 1994. The
Fund, which seeks to provide a high total return, invests in equity securities
of foreign corporations. It is designed for investors with a long-term
investment horizon who want to diversify their portfolios by adding
international equities to take advantage of investment opportunities outside of
the United States.

During the year, The Pierpont International Equity Fund slightly underperformed
its benchmark but produced positive returns in a weak market. For the 12 months
ended October 31, 1994, the Fund had a total return of 5.73%. The Fund's net
asset value rose from $11.15 to end the period at $11.50 per share, and paid
$0.27 per share in dividends. In addition, the Fund's net assets grew from
$182.8 million to end the period at $210.4 million.

ECONOMIC ENVIRONMENT
After a strong standing in 1993, worldwide stock and bond markets were weak
throughout much of the year. Despite a brief summer rally overseas, most markets
were affected by the U.S. Federal Reserve's tightening of monetary policy to
control inflation. The resulting decline in U.S. bonds was soon mirrored in the
international fixed income markets and most equity markets as well.

While many equity markets struggled, Japanese stocks gained over 15% during the
first half of the year. Japan's stock market was bolstered by improving economic
data and a pick-up in corporate profitability. This good news was sufficient to
overcome both the weak bond market and fears that the strong yen would hinder
their economic recovery. In the third quarter, however, Japanese stocks suffered
from a heavy burden of new issues and privatizations.

European stock markets experienced a difficult period not only from the U.S.
rate increases but as a result of other factors as well. For example, during the
second quarter, the U.K.'s stock market was hurt by the weakened position of the
Conservative government and the prospect of rising inflation. In France, stocks
were particularly weak-due largely to investor concerns over the government's
economic policy and a heavy supply of newly privatized companies.

- --------------------------------------------------------------------------------
TABLE OF CONTENTS FUND PERFORMANCE . . . . . . . . .4

LETTER TO THE SHAREHOLDERS . . . . 1 SPECIAL FUND-BASED SERVICES. . . .5

FUND FACTS AND HIGHLIGHTS. . . . . 3 FINANCIAL STATEMENTS . . . . . . .7
- --------------------------------------------------------------------------------

1
<PAGE>

ANNUAL REVIEW
The Fund's investment process looks at three sources of value-country
allocation, stock selection, and currency management, thus diversifying the
sources of potential added return.

COUNTRY ALLOCATION. During the period, the Fund's country allocation held back
results slightly. The Fund was underweighted in Europe, which generally proved
beneficial. However, the Fund's 11% allocation in French stocks, which were down
for the year, caused a drag on returns. Despite slightly negative returns for
the U.K. market during 1994, it did not decline as much as other European
markets. As a result, the Fund's underweighting in the U.K. detracted from
performance.

The Fund was overweighted in Japan for most of the period, which had a neutral
effect on overall returns.

STOCK SELECTION. Stock selection was a positive influence on the Fund during its
fiscal year. During this time, the Fund's holdings in Japan, Australia, New
Zealand, Singapore, and Malaysia performed especially well.

CURRENCY MANAGEMENT. During the period, hedges into the U.S. dollar were in
place to protect against an anticipated fall in the value of foreign currencies.
As the yen gained strength against the dollar, the Fund's currency management
strategy detracted from performance.

INVESTMENT OUTLOOK
As the new year approaches, we remain optimistic about non-U.S. equities, which
appear to offer slightly better value than those in the U.S. Given improving
corporate profits in both Japan and Europe, we expect any rally in the bond
markets to lead to a recovery in stock prices. French stocks have performed
poorly and thus represent good value, so the Fund remains overweighted in this
market. In currency, we believe the U.S. dollar is undervalued, particularly
against the yen.

To identify attractively priced stocks of established companies with superior
growth potential, Morgan's experienced research professionals will continue to
perform fundamental proprietary company research. While the level of investment
in any one country may change to take advantage of favorable trends, we will
continue to maintain a well-diversified portfolio in an effort to reduce risk
and enhance growth potential.

As always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 521-5411.

Sincerely yours,

/s/ Evelyn E. Guernsey

Evelyn E. Guernsey
J.P. Morgan Funds Services

2
<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
The Pierpont International Equity Fund seeks to provide a high total return from
a portfolio of equity securities of foreign companies. It is designed for
investors with a long-term investment horizon who want to diversify their
portfolios by adding international equities and take advantage of opportunities
outside the United States. As an international investment, the Fund is subject
to foreign market, political and currency risk.

- --------------------------------------------------------------------------------
INCEPTION DATE
6/1/90

- --------------------------------------------------------------------------------
NET ASSETS AS OF 10/31/94
$210,435,134

- --------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/20/94

EXPENSE RATIO
The Fund's current annual expense ratio of 1.38% 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 OCTOBER 31, 1994

PORTFOLIO ALLOCATION

[GRAPH]

LARGEST HOLDINGS % OF PORTFOLIO
- --------------------------------------------------------------------------------
TOKAI BANK (JAPAN) 1.3
ASAHI BANK (JAPAN) 1.3
HONDA MOTOR CO. (JAPAN) 1.3
BANK OF TOKYO (JAPAN) 1.3
NOMURA SECURITIES CO. (JAPAN) 1.3

3
<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 The Pierpont International Equity Fund's
inception would have grown to $12,135 at October 31, 1994.

GROWTH OF $10,000 SINCE INCEPTION*
JUNE 1, 1990 - OCTOBER 31, 1994

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 1, 1990
(inception) to October 31, 1994; the second line represents the growth of a ten
thousand dollar investment in a portfolio of securities reflecting the
composition of the MSCI EAFE index for the same time period; the third line
represents the growth of a ten thousand dollar investnmnt in a portfolio of
securities reflecting the composition of the Micropal International Growth Fund
Average for the same time period. The graph points are as follows:

Year Fund MSCI EAFE Micropal
<S> <C> <C> <C>
0 $ 10,000 $ 10,000 $ 10,000
1 9,330 9,027 8,855
2 9,880 9,654 9,583
3 8,785 8,378 9,088
4 11,525 11,516 12,088
5 12,135 12,679 13,365

</TABLE>

<TABLE>
<CAPTION>
PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF OCTOBER 31, 1994 MONTHS TO DATE YEAR YEARS INCEPTION*
- --------------------------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
The Pierpont International Equity Fund -0.17% 9.42% 5.73% -- 4.57%
MSCI EAFE 2.44% 12.51% 10.09% -- 5.52%
Micropal International Growth Fund Avg. 1.99% 4.70% 10.57% -- 6.89%
AS OF SEPTEMBER 30, 1994
- --------------------------------------------------------------- ------------------------------------
The Pierpont International Equity Fund -1.40% 6.95% 5.62% -- 4.11%
MSCI EAFE 0.10% 8.89% 9.83% -- 4.84%
Micropal International Growth Fund Avg. 3.43% 3.00% 13.76% -- 6.61%
<FN>
*6/1/90
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. ALL RETURNS ASSUME THE
REINVESTMENT OF DISTRIBUTIONS AND REFLECT REIMBURSEMENT OF CERTAIN FUND AND
PORTFOLIO EXPENSES AS DESCRIBED IN THE PROSPECTUS. THE MICROPAL MUTUAL FUND
RATING SERVICE IS A LEADING RESOURCE FOR MUTUAL FUND DATA. MICROPAL CONTAINS
PERFORMANCE INFORMATION AND PORTFOLIO CHARACTERISTICS FOR OVER 20,000 FUNDS
WORLDWIDE, INCLUDING NEARLY 5,000 IN THE U.S. THE PIERPONT INTERNATIONAL EQUITY
FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN THE NON-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.
</TABLE>

4
<PAGE>

SPECIAL FUND-BASED SERVICES

- - Create and maintain an asset allocation that is specifically targeted at
meeting their most critical investment objectives;

- - Make ongoing tactical adjustments in the actual asset mix of their
portfolios to capitalize on shifting market trends;

- - Make investments through The Pierpont Funds, a family of diversified mutual
funds for which Morgan serves as investment advisor.

PAAS is available to clients who invest a minimum of $500,000 in The Pierpont
Funds. The fees begin at $5,000 for the first year, followed by $2,500 each
subsequent year.

5
<PAGE>

MORGAN SERVES AS PORTFOLIO INVESTMENT ADVISOR AND MAKES THE FUND AVAILABLE
SOLELY IN ITS CAPACITY AS SHAREHOLDER SERVICING AGENT FOR CUSTOMERS. THE FUND'S
DISTRIBUTOR IS SIGNATURE BROKER-DEALER SERVICES, INC. INVESTMENTS IN THE FUND
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK 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 PIERPONT INTERNATIONAL EQUITY FUND CAN
FLUCTUATE, SO AN INVESTOR'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
The 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 Micropal
Mutual Fund Rating Service is a leading resource for mutual fund data. Micropal
contains performance information and portfolio characteristics for over 20,000
funds worldwide, including nearly 5,000 in the U.S. The Pierpont International
Equity Fund invests all of its investable assets in The Non-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.
The Portfolio invests in foreign securities which are subject to special risks;
prospective investors should refer to the Fund's Prospectus for a discussion of
these risks.
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 A COPY OF THE PROSPECTUS BY CALLING (800) 521-5411.

<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Assets
Investment in The Non-U.S. Equity Portfolio ("Portfolio"), at value $210,639,892
Receivable for Shares of Beneficial Interest Sold 136,937
Deferred Organization Expense (Note 1d) 4,177
Prepaid Expenses 3,088
-----------
Total Assets 210,784,094
-----------

Liabilities
Shareholder Servicing Fee Payable (Note 2c) 115,972
Financial and Fund Accounting Services Fee Payable (Note 2b) 84,451
Payable for Shares of Beneficial Interest Redeemed 46,690
Administration Fee Payable (Note 2a) 4,949
Fund Services Fee Payable (Note 2d) 2,189
Accrued Expenses 94,709
-----------
Total Liabilities 348,960
-----------

Net Assets
Applicable to 18,296,718 Shares of Beneficial Interest Outstanding
(par value $0.001, unlimited authorized shares) $210,435,134
-----------
-----------
Net Asset Value, Offering and Redemption Price Per Share $11.50

Analysis of Net Assets
Paid-in Capital $186,787,531
Undistributed Net Investment Income 1,374,899
Accumulated Net Realized Gain on Investment and Foreign Currency Transactions 8,189,150
Net Unrealized Appreciation of Investment and Foreign Currency Translations 14,083,554
-----------
Net Assets $210,435,134
-----------
-----------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment Income Allocated from Portfolio (Note 1b)
Allocated Dividend Income (Net of Withholding Tax of $415,721) $2,786,682
Allocated Interest Income (Net of Withholding Tax of $7,884) 719,523
Allocated Portfolio Expenses (1,809,218)
----------
Net Investment Income Allocated from Portfolio 1,696,987
Fund Expenses
Shareholder Servicing Fee (Note 2c) $ 476,339
Financial and Fund Accounting Services Fee (Note 2b) 223,806
Administration Fee (Note 2a) 55,782
Transfer Agent Fees 42,372
Printing 35,202
Organization Expense 31,828
Fund Services Fee (Note 2d) 27,503
Registration Fees 24,411
Professional Fees 10,236
Trustees' Fees and Expenses (Note 2e) 4,844
Miscellaneous 7,419
---------
Total Fund Expenses 939,742
Less: Reimbursement of Expenses (Note 2b) (125,398)
---------
Net Fund Expenses 814,344
----------
Net Investment Income 882,643
Net Realized Gain (Loss) on Investment and Foreign Currency
Transactions Allocated from Portfolio 9,507,607

Net Change in Unrealized Appreciation of Investment and Foreign
Currency Translations Allocated from Portfolio (879,392)
----------
Net Increase in Net Assets Resulting from Operations $9,510,858
----------
----------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Fiscal Year Ended
October 31,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets
From Operations
Net Investment Income $ 882,643 $ 710,121
Net Realized Gain on Investment and Foreign Currency Transactions
Allocated from Portfolio 9,507,607 3,427,322
Net Change in Unrealized Appreciation of Investment and Foreign
Currency Translations Allocated from Portfolio (879,392) 18,752,513
-------------- --------------
Net Increase in Net Assets Resulting from Operations 9,510,858 22,889,956
-------------- --------------

Distributions to Shareholders from
Net Investment Income (552,097) (507,993)
Net Realized Gain on Investments (3,445,157) -
-------------- --------------
Total Distributions (3,997,254) (507,993)
-------------- --------------
Transactions in Shares of Beneficial Interest (Note 3)
Proceeds from Shares of Beneficial Interest Sold 110,407,632 138,001,180
Reinvestment of Dividends and Distributions 3,815,592 467,302
Cost of Shares of Beneficial Interest Redeemed (92,123,499) (19,512,803)
-------------- --------------
Net Increase from Transactions in Shares of Beneficial Interest 22,099,725 118,955,679
-------------- --------------
Total Increase in Net Assets 27,613,329 141,337,642
Net Assets
Beginning of Year 182,821,805 41,484,163
-------------- --------------
End of Year (including undistributed net investment income of
$1,374,899 and $775,987, respectively) $ 210,435,134 $ 182,821,805
-------------- --------------
-------------- --------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected Data for a share outstanding throughout each period are as follows:

<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31,
-------------------------------------------------------
1994 1993 1992 1991 1990*
---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.15 $ 8.58 $ 9.69 $ 9.33 $ 10.00

Income from Investment Operations
Net Investment Income 0.05 0.01 0.04 0.11 0.05
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Allocated from Portfolio 0.57 2.64 (1.11) 0.42 (0.72)
---------- ---------- --------- --------- ---------
Total from Investment Operations 0.62 2.65 (1.07) 0.53 (0.67)
---------- ---------- --------- --------- ---------

Less Distributions to Shareholders From
Net Investment Income (0.04) (0.08) (0.04) (0.05) -
Net Realized Gain (0.23) - - (0.12) -
---------- ---------- --------- --------- ---------
Total Distributions to Shareholders (0.27) (0.08) (0.04) (0.17) -
---------- ---------- --------- --------- ---------

Net Asset Value, End of Period $ 11.50 $ 11.15 $ 8.58 $ 9.69 $ 9.33
---------- ---------- --------- --------- ---------
---------- ---------- --------- --------- ---------
Total Return 5.73% 31.18% (11.08)% 5.89% (6.70)%
Ratios and Supplemental Data
Net Assets at end of Period (in thousands) $ 210,435 $ 182,822 $ 41,484 $ 27,426 $ 19,358
Ratios to Average Net Assets
Expenses 1.38% 1.38% 1.38% 1.38% 1.36%(a)
Net Investment Income 0.46% 0.79% 1.03% 1.34% 1.49%(a)
Decrease reflected in above Expense Ratio due to
Expense Reimbursement by Morgan 0.07% 0.13% 0.45% 0.66% 1.52%(a)
Portfolio Turnover (b) - 34.15% 30.12% 18.84% 0.00%

<FN>
* Commencement of operations June 1, 1990.
(a) Annualized.
(b) 1993 Portfolio Turnover reflects the period November 1, 1992 to October 3, 1993.
After October 3, 1993, all the Fund's investable assets are invested in The Non-U.S. Equity Portfolio.
</TABLE>

See Accompanying Notes.

<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. Organization and Significant Accounting Policies

The Pierpont International Equity Fund (the "Fund") is a separate series of
The Pierpont Funds, a Massachusetts business trust (the "Trust") which was
organized on November 4, 1992. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management
investment company. The Fund, prior to its tax-free reorganization on
October 3, 1993, to a series of the Trust, operated as a stand-alone mutual
fund. Costs related to the reorganization were borne by Morgan Guaranty
Trust Company of New York ("Morgan"). This report includes periods which
preceded the Fund's reorganization and reflects the operations of the
predecessor entity.

The Fund invests all of its investable assets in The Non-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 (49.7% at October 31, 1994). 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.

c)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

d)The cost incurred by the predecessor entity in connection with its
organization are being amortized over a period not to exceed 60 months
from its commencement of operations.

11
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
shareholder distributions are re-classified to paid-in capital. The Fund
decreased accumulated net realized gain (loss) on investment and foreign
currency transactions by $153,541, increased undistributed net investment
income by $268,366 and decreased paid-in capital by $114,825. The
adjustments are attributable to foreign exchange and net operating losses.
Net investment income, net realized gains and net assets were not affected
by this change.

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 the net assets
of The JPM Institutional Funds and The JPM Institutional Plus Fund, which
are 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 October 31,
1994, Signature's fee for these services amounted to $55,782.

b)The Trust, on behalf of the Fund, 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 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 0.223% of the Fund's
average daily net assets up to and including $100 million and 0.20% of any
excess over $100 million, 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 October 31, 1994, Morgan's fee amounted to $223,806. 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 1.38% of the
average daily net assets of the Fund through at least May 31, 1995. For
the fiscal year ended October 31, 1994, Morgan has agreed to reimburse the
Fund $125,398 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 0.25% of the average daily net assets of the Fund. For the
fiscal year ended October 31, 1994, the fee for these services amounted to
$476,339.

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

12
<PAGE>
THE PIERPONT INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
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 $27,503 for the fiscal year ended
October 31, 1994.

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, The JPM Institutional Funds, The JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustees'
Fees and Expenses shown in the financial statements represents the Fund's
allocated portion of the total fees and expenses.

3. Transactions in Shares of Beneficial Interest

The Declaration of Trust permits the Trustees to issue unlimited 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 Fiscal Year Ended
October 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
Shares sold 9,910,952 13,454,481
Reinvestment of dividends and distributions 363,389 50,486
Shares redeemed (8,371,377) (1,944,936)
------------ ------------
Net Increase 1,902,964 11,560,031
------------ ------------
------------ ------------
</TABLE>

13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
The Pierpont International 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 Pierpont International Equity Fund (the "Fund") at October 31, 1994, the
results of its operations for the year then ended, and the changes in its net
assets and the financial highlights for each of the two years in the period then
ended, 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. The financial highlights for each of the three years in the period ended
October 31, 1992 were audited by other independent accountants whose report
dated December 23, 1992 expressed an unqualified opinion on those statements.

PRICE WATERHOUSE LLP
New York, New York
December 27, 1994

14
<PAGE>
The Non-U.S. Equity Portfolio
Annual Report October 31, 1994

(The following pages should be read in conjunction
with The Pierpont International Equity Fund
Annual Financial Statements)

15
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
COMMON STOCKS (88.02%)
AUSTRALIA (4.08%)
Amcor Ltd. (Packaging)...................................................... 84,000 $ 558,877
Australia and NZ Bank Group (Banking)....................................... 205,700 595,700
Broken Hill Proprietary Co. Ltd. (Energy Sources)........................... 233,000 3,571,040
CSR Ltd. (Multi-Industry)................................................... 217,000 755,721
Hardie (James) Industries (Building Materials).............................. 349,800 584,428
Holyman Ltd. (Materials & Commodities)...................................... 39,200 60,545
Howard Smith (Multi-Industry)............................................... 120,000 552,462
Lend Lease Corp. Ltd. (Real Estate)......................................... 45,200 557,155
National Australia Bank Ltd. (Banking)...................................... 256,500 2,026,554
News Corporation Ltd. (Publishing).......................................... 302,400 1,863,756
North Broken Hill Peko Ltd. (Metals-Non Ferrous)............................ 211,500 592,081
Rothmans Holdings Ltd. (Beverages & Tobacco)................................ 95,000 360,474
Santos Ltd. (Energy Sources)................................................ 164,000 482,245
Southcorp Holdings Ltd. (Food).............................................. 637,000 1,338,613
TNT Ltd. (Transportation) (A)............................................... 511,700 915,717
Western Mining Corp. Holdings Ltd. (Metals & Mining)........................ 396,500 2,470,212
---------------
17,285,580
---------------
AUSTRIA (0.29%)
Oesterreichische El Wirtsch, Class A (Utilities)............................ 6,600 413,686
OMV AG (Energy Sources)..................................................... 4,550 415,137
VA Technologie AG (Materials & Commodities) (A)............................. 4,000 411,329
---------------
1,240,152
---------------
BELGIUM (0.95%)
Electrabel NPV (Utilities).................................................. 1,970 350,420
Fortis AG NPV (Insurance)................................................... 3,270 262,806
Glaverbel (Building Materials).............................................. 3,700 538,486
Groupe Bruxelles Lambert NPV (Multi-Industry)............................... 11,700 1,464,392
Kredietbank SA (Banking).................................................... 907 180,696
Petrofina SA NPV (Energy Sources)........................................... 700 215,071
Tractebel Capital NPV (Multi-Industry)...................................... 3,200 999,741
---------------
4,011,612
---------------
DENMARK (1.68%)
Danisco AS (Food & Household Products)...................................... 44,500 1,580,777
Den Danske Bank (Banking)................................................... 12,700 682,111
Girobank AS (Banking)....................................................... 15,000 509,901
ISS International Service System, Series B (Business & Public Services)..... 17,000 468,089
Novo Nordisk AS, Series B (Health & Personal Care).......................... 9,000 844,395
Sophus Berendsen, Class A (Multi-Industry).................................. 5,000 433,415
Sophus Berendsen, Class B (Multi-Industry).................................. 7,500 656,497
Teledanmark, Series B (Telecommunications).................................. 33,500 1,930,229
---------------
7,105,414
---------------
</TABLE>

See Accompanying Notes.

<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
FRANCE (10.97%)
Air Liquide (Chemicals)..................................................... 6,381 $ 900,234
Alcatel Alsthom (Electrical & Electronics).................................. 22,200 2,036,222
Axa (Multi-Industry) (A).................................................... 11,500 533,434
Cap Gemini Sogeti (Electrical & Electronics)................................ 9,000 327,925
Carrefour Supermarkets (Merchandising)...................................... 4,040 1,782,122
Casino Guichard Perrachon et Cie (Merchandising)............................ 225 7,341
Castorama Dubois Investissments (Merchandising)............................. 4,000 582,977
Chargeurs Reunis SA (Multi-Industry)........................................ 2,200 549,359
Christian Dior SA (Retail).................................................. 9,475 712,558
Compagnie Financiere de Cic Union Europ Certe de Invest (Banking)........... 15,677 1,005,326
Compagnie Financiere de Paribas, Class A (Banking).......................... 36,903 2,456,136
Compagnie Financiere de St. Gobain (Glass & Packaging)...................... 8,708 1,104,999
Compagnie Financiere de Suez (Banking)...................................... 34,839 1,667,479
Docks de France (Merchandising)............................................. 2,875 398,902
Eaux Cie Generale (Utilities)............................................... 28,060 2,570,985
Erid Beghin Say (Insurance)................................................. 6,500 880,393
Group Assurance National (Insurance)........................................ 6,900 382,812
Groupe Danone (Food Processing)............................................. 16,305 2,297,148
Havas (Business & Public Services).......................................... 11,432 952,815
Imetal (Metals Non-Ferous).................................................. 5,281 564,429
L'Oreal Coppe SA (Health & Personal Care)................................... 2,520 547,485
Lafarge Coppe SA (Building Materials)....................................... 15,032 1,192,687
LaGardere Groupe (Leisure & Tourism)........................................ 31,880 752,705
LVMH Moet Hennessy (Beverages).............................................. 9,284 1,497,419
Michelin, Class B (Tire & Rubber)........................................... 14,700 615,595
Pechiney SA (Mining)........................................................ 7,000 533,910
Peugeot SA (Automotive)..................................................... 9,825 1,472,032
Pinault Printemps Redouto (Building Materials).............................. 210 37,911
Poliet (Building Materials & Components).................................... 6,000 460,552
Promodes (Merchandising).................................................... 6,560 1,278,601
Rhone Poulenc SA, Class A (Chemicals)....................................... 66,604 1,643,744
Roussel Uclaf (Pharmaceuticals)............................................. 7,076 790,653
Sanofi (Pharmaceuticals).................................................... 16,800 848,488
Schneider SA (Machinery & Engineering)...................................... 16,800 1,263,428
Seb AG (Household Products)................................................. 5,000 563,545
Societe Generale (Banking).................................................. 16,830 1,900,161
Societe Nationale Elf Aquitaine (Energy Sources)............................ 59,388 4,391,204
Sommer-Allibert (Building Materials)........................................ 2,260 843,218
Sovac-Credit Mobilier Industrie (Financial Services)........................ 1,770 143,946
Synthelabo (Health & Personal Care)......................................... 21,000 848,815
Television Francaise (Broadcasting & Publishing)............................ 8,300 861,290
Total, Class B (Energy Sources)............................................. 20,335 1,319,444
Ugine SA (Iron/Steel)....................................................... 6,500 488,826
Valeo (Industrial Components)............................................... 8,560 464,928
---------------
46,474,183
---------------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
GERMANY (5.94%)
Allianz AG Holdings (Insurance)............................................. 1,010 $ 1,549,764
Ava Allgemeine Handels-Der Verbr (Merchandising)............................ 2,040 770,682
Bayer AG (Chemicals)........................................................ 5,900 1,380,918
Bayer Vereinsbank (Banking)................................................. 800 237,579
Bank Gesellschaft Berlin AG (Banking)....................................... 1,600 383,106
Bilfinger & Berger Bau AG (Construction & Housing).......................... 2,185 1,233,831
Buderus AG (Machinery & Engineering)........................................ 500 247,755
Colonia Konzern AG (Insurance).............................................. 585 496,092
Continental AG (Industrial Components)...................................... 3,330 489,921
Daimler-Benz AG (Automobiles)............................................... 2,245 1,154,230
Deutsche Bank AG (Banking).................................................. 4,670 2,301,610
Deutsche Pfandbrief Und Hypotheken Bank (Banking)........................... 1,600 744,929
Hoechst AG (Chemicals)...................................................... 4,300 941,796
Karstadt AG (Merchandising)................................................. 500 206,518
Lufthansa AG (Transportation)............................................... 4,520 559,175
Man AG (Machinery & Engineering)............................................ 3,000 813,103
Mannesmann AG (Machinery & Engineering)..................................... 2,900 775,391
Munchener Ruckversicherungs (Insurance)..................................... 1,082 1,993,442
Rheinisch Westfalisches Elekt AG (Utilities)................................ 2,700 827,868
Schering AG (Health & Personal Care)........................................ 1,300 868,540
Siemens AG (Electrical & Electronics)....................................... 5,900 2,466,345
Thyssen AG (Metals) (A)..................................................... 6,700 1,280,286
Veba AG (Energy Sources).................................................... 6,360 2,131,985
Volkswagen AG (Automotive).................................................. 4,530 1,330,226
--------------
25,185,092
-------------
HONG KONG (3.17%)
Amoy Properties Ltd. (Real Estate).......................................... 980,000 1,217,470
Citic Pacific Ltd. (Transportation)......................................... 955,000 2,873,342
Dairy Farm International Holdings Ltd. (Merchandising)...................... 857,000 1,114,570
Hong Kong Electric Holdings Ltd. (Utilities)................................ 849,500 2,671,349
Hong Kong Telecommunications Ltd. (Telecommunications)...................... 806,000 1,637,553
HSBC Holdings Ltd. PLC (Financial Services)................................. 239,178 2,832,066
Jardine Matheson Holdings Ltd. (Multi-Industry)............................. 400 3,326
New World Development Co. Ltd. (Real Estate)................................ 336,000 1,071,808
---------------
13,421,484
---------------
JAPAN (42.63%)
Achilles Corp. (Tire & Rubber).............................................. 400,000 1,944,975
Aichi Bank Ltd. (Banking)................................................... 4,000 441,852
Aichi Corp. (Machinery)..................................................... 90,000 1,105,662
Aichi Machine Industry (Auto & Trucks)...................................... 150,000 977,133
Aoki Corp. (Construction & Housing)......................................... 460,000 2,184,483
Asahi Bank Ltd. (Banking)................................................... 500,000 5,523,150
Asahi Kogyosha Co. (Construction & Housing)................................. 150,000 1,175,347
Asics Corp. (Recreation, Other Consumer Goods).............................. 400,000 1,610,489

</TABLE>

See Accompanying Notes.

<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
JAPAN (CONTINUED)
Bank of Nagoya (Banking).................................................... 69,000 $ 535,673
Chichibu Onoda Cement Corp. (Building Materials)............................ 150,000 933,774
Chiyoda Fire & Marine Insurance Ltd. (Insurance)............................ 5,000 33,087
Chou Trust & Banking Co. (Banking).......................................... 40,000 681,361
Dai Dan Co. (Construction & Housing)........................................ 47,000 752,078
Daido Hoxan Corp. (Chemicals)............................................... 90,000 570,485
Daiichi Kangyo Bank Ltd. (Banking).......................................... 200,000 3,654,571
Daiichi Katei Denki Co. (Retail)............................................ 101,000 563,052
Daiichi Pharmaceutical Co. (Health & Personal Care)......................... 200,000 3,035,152
Daikin Industries (Machinery & Engineering)................................. 220,000 2,153,100
Dainichiseika Color & Chemical Manufacturing Co. (Chemicals)................ 140,000 1,117,225
Daiso Co (Chemicals)........................................................ 84,000 455,273
Daito Trust Construction Co. Ltd. (Construction & Housing).................. 95,000 1,294,585
Daiwa Bank (Banking)........................................................ 100,000 1,053,012
East Japan Railway Co. (Transportation)..................................... 550 2,742,477
Fuji Fire & Marine (Insurance).............................................. 230,000 1,602,746
Fuji Photo Film Co. Ltd. (Photography)...................................... 75,000 1,788,572
Gakken Co. Ltd. (Broadcasting & Publishing) (A)............................. 120,000 977,443
Hitachi Ltd. (Electrical & Electronics)..................................... 400,000 4,170,753
Hokkaido Can Co. Ltd. (Materials & Commodities)............................. 90,000 957,002
Hokkaido Electric Power Co. Inc.(Utilities)................................. 85,000 2,123,574
Hokkaido Takushoku Bank (Banking)........................................... 550,000 2,640,272
Honda Motor Co. Ltd. (Automotive)........................................... 310,000 5,408,558
Ishikawajima-Harima Heavy Industries (Machinery & Engineering).............. 500,000 2,405,409
Ishizuka Glass Co. Ltd. (Materials & Commodities)........................... 130,000 1,120,632
Izumiya Co. Ltd. (Merchandising)............................................ 55,000 1,039,075
Japan Energy Corp. (Oil/Gas)................................................ 170,000 751,148
Kagawa Bank (Banking)....................................................... 100,000 1,135,601
Kansai Supermarket (Retail)................................................. 40,000 545,089
Kawasaki Kisen Kaisha Ltd. (Transportation & Shipping) (A).................. 200,000 860,992
Kinki Nippon Tourist Co. Ltd. (Leisure & Tourism)........................... 20,000 210,602
Kirin Brewery Co. Ltd. (Beverages & Tobacco)................................ 125,000 1,496,929
Kitz Corp. (Machinery)...................................................... 291,000 1,742,425
Kokusai Denshin Denwa (Media & Leisure)..................................... 6,000 616,322
Kokuyo Co. Ltd. (Business & Public Services)................................ 15,000 385,588
Konica Corp. (Recreation, Other Consumer Goods)............................. 200,000 1,552,676
Kurabo Industries (Textiles & Apparel)...................................... 248,000 1,175,161
Long Term Credit Bank of Japan (Banking).................................... 277,000 3,317,194
Maruetsu Inc. (Retail)...................................................... 40,000 433,593
Maruha Corp. (Fishery) (A).................................................. 310,000 1,363,341
Marutomi Group Co. (Merchandising).......................................... 60,000 768,079
Maruzen Co. Ltd. (Merchandising)............................................ 60,000 428,018
Matsui Construction Co. Ltd. (Engineering & Construction)................... 35,000 311,826
Matsumoto Yushi Seiyaku Co. (Chemicals)..................................... 42,000 1,560,935
Matsumura Gumi Corp. (Construction & Housing)............................... 150,000 943,065
Matsushita Electric Industries Co. Ltd. (Consumer Electronics).............. 195,000 3,241,109
Mikuni Coca Cola Bottling Co. Ltd. (Beverages).............................. 48,000 693,749
Mitsubishi Chemical Corp. (Chemicals)....................................... 560,000 3,306,870
Mitsubishi Electric Corp. Ltd. (Electrical & Electronics)................... 630,000 4,715,325

</TABLE>

See Accompanying Notes.
19

<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
JAPAN (CONTINUED)
Mitsubishi Motors Corp. (Automotive)........................................ 500,000 $ 4,676,611
Mitsubishi Pencil Co. Ltd. (Business & Public Services)..................... 30,000 331,389
Mitsubishi Trust & Banking Corp. (Banking).................................. 70,000 1,083,983
Mitsukoshi Ltd. (Merchandising)............................................. 120,000 1,230,166
Morinaga Milk Industry Co. Ltd. (Food & Household Products)................. 230,000 1,365,302
Musashino Bank Ltd. (Banking)............................................... 3,200 185,000
Nagasakiya Co. (Merchandising) (A).......................................... 235,000 1,625,458
Naigai Co. (Textile & Apparel).............................................. 93,000 640,386
NEC Corp. (Electrical & Electronics)........................................ 160,000 2,048,211
Nichii Co. Ltd. (Merchandising)............................................. 140,000 1,951,169
Nihon Matai Co. (Wholesale & International Trade)........................... 86,000 679,193
Nippon Credit Bank (Banking)................................................ 113,000 750,106
Nippon Koshuha Steel Co. (Iron/Steel) (A)................................... 250,000 1,032,365
Nippon Road Co. Ltd. (Construction & Housing)............................... 50,000 541,991
Nippon Steel Corp. (Metals)................................................. 923,000 3,811,490
Nissho Iwai Corp. (Wholesale & International Trade)......................... 655,000 3,637,949
Nitto Denko Corp. (Electronic Components)................................... 150,000 2,586,073
Nomura Securities Co. Ltd. (Financial Services)............................. 250,000 5,239,251
North Pacific Bank (Banking)................................................ 210,000 1,214,061
Okamura Corp. (Transportation).............................................. 80,000 738,347
Osaka Gas Co. Ltd. (Utilities).............................................. 390,000 1,674,908
Sacos Corp. (Leisure & Tourism)............................................. 30,000 1,053,012
San-in Godo Bank Ltd. (Banking)............................................. 100,000 949,775
Sagami Co. Ltd. (Retail).................................................... 130,000 952,872
Sakura Bank Ltd. (Banking).................................................. 70,000 961,131
Sanden Corp. (Industrial Components)........................................ 118,000 785,733
Senko Co. Ltd. (Transportation)............................................. 120,000 860,992
Shikoku Electric Power Inc. (Utilities)..................................... 60,000 1,480,411
Shinmaywa Industries Ltd. (Machinery & Engineering)......................... 140,000 1,647,654
Snow Brand Milk Products Co. Ltd. (Food & Household Products)............... 160,000 1,288,391
Sumitomo Bank Ltd. (Banking)................................................ 100,000 1,878,904
Sumitomo Corp. (Trade)...................................................... 420,000 4,335,931
Sumitomo Metal Industries (Metals & Mining)................................. 1,300,000 4,925,411
Sumitomo Realty & Development Co. Ltd. (Real Estate)........................ 200,000 1,280,132
Suruga Bank Ltd. (Banking).................................................. 120,000 920,456
Suzutan Co. (Retail)........................................................ 70,000 729,882
TDK Corp. (Retail).......................................................... 70,000 3,439,839
Tec Corp. (Electronics) (A)................................................. 40,000 238,683
Toho Gas Co. Ltd. (Utilities)............................................... 120,000 499,251
Tohoku Electric Power Co. Inc. (Utilities).................................. 130,000 3,328,343
Tokai Bank Ltd. (Banking)................................................... 450,000 5,574,769
Tokai Rika Denki Co. (Automotive)........................................... 65,000 751,561
Tokio Marine & Fire Insurance Co. Ltd. (The) (Insurance).................... 250,000 2,968,048
Toppan Printing Co. Ltd. (Business & Public Services)....................... 70,000 1,033,397
Toshiba Corp. (Electrical & Electronics).................................... 350,000 2,760,543
Toyo Ink Manufacturing Co. (Chemicals)...................................... 140,000 977,030
Toyo Tire & Rubber Co. (Materials & Commodities) (A)........................ 200,000 997,264
Toyota Motor Corp. (Automotive)............................................. 60,000 1,325,556
Uchida Yoko Co. (Wholesale & International Trade)........................... 121,000 774,480

</TABLE>

See Accompanying Notes.

</TABLE>

See Accompanying Notes.
21
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
Banco Popular Espanol (Banking)............................................. 6,000 $ 752,545
Banco Pastor (Banking)...................................................... 6,600 316,155
Repsol SA (Energy Sources).................................................. 16,700 533,978
Telefonica De Espana, ADR (Telephone & Telecommunications).................. 10,100 409,050
---------------
2,678,895
---------------
SWITZERLAND (1.89%)
BBC AG Brown Boveri & Cie (Machinery & Engineering)......................... 950 816,341
CS Holding (Banking)........................................................ 1,900 831,487
Ciba Geigy AG (Chemicals)................................................... 1,165 679,777
Compagnie Financiere Richemont, Series A (Multi-Industry)................... 160 157,513
Holderbank FN Glarus (Building Materials & Components)...................... 500 386,210
Nestle SA (Food & Household Products)....................................... 1,075 1,006,018
Roche Holdings Genusscheine NPV (Health & Personal Care).................... 275 1,224,292
Sandoz AG (Health & Personal Care).......................................... 2,420 1,207,589
Schweizerischer Bankverein (Banking)........................................ 3,620 1,044,591
Zurich Versicherungs (Insurance)............................................ 710 648,027
--------------
8,001,845
--------------
UNITED KINGDOM (9.48%)
Abbey National PLC (Banking)................................................ 90,000 611,629
Allied Colloids Group PLC (Chemicals)....................................... 170,000 375,368
Associated British Foods PLC (Food & Household Products).................... 34,000 308,080
BAT Industries PLC (Beverages & Tobacco).................................... 131,820 944,343
BICC (Industrial Components)................................................ 100,000 552,829
British Airways PLC (Transportation-Airlines)............................... 129,300 744,416
British Gas PLC (Utilities)................................................. 258,000 1,236,408
British Petroleum Co. Ltd. (Energy Sources)................................. 150,000 1,067,223
British Steel PLC (Metals & Mining)......................................... 254,000 665,742
British Telecommunications PLC (Telecommunications)......................... 334,900 2,158,171
British Tire & Rubber PLC (Multi-Industry).................................. 205,270 1,029,036
Cable & Wireless PLC (Telecommunications)................................... 91,000 625,122
Carlton Communications PLC (Business & Public Services)..................... 50,000 721,295
Electrocomponents (Technology).............................................. 102,897 775,851
General Electric Co. PLC (Electrical & Electronics)......................... 131,100 591,815
Glaxo Holdings PLC (Health & Personal Care)................................. 145,000 1,419,406
Granada Group PLC (Leisure & Tourism)....................................... 78,500 666,364
Grand Metropolitan PLC (Multi-Industry)..................................... 151,000 1,024,943
Guardian Royal Exchange PLC (Insurance)..................................... 336,500 1,062,226
Hanson Trust PLC (Multi-Industry)........................................... 279,800 1,057,144
Hillsdown Holdings PLC (Food & Household Products).......................... 358,000 980,782
HSBC Holdings (Banking)..................................................... 70,520 837,382
Kingfisher (Merchandising).................................................. 155,700 1,207,095
Laporte (Chemicals)......................................................... 69,400 783,219
Lloyds Bank PLC (Banking)................................................... 63,300 593,761
MEPC (Real Estate).......................................................... 110,626 768,990
Marks & Spencer PLC (Merchandising)......................................... 61,300 416,587

</TABLE>

See Accompanying Notes.

<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994

<TABLE>
<CAPTION>
VALUE
SECURITY DESCRIPTION SHARES (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
National Westminster Bank (Banking)......................................... 165,700 $ 1,363,217
NFC PLC (Transportation -- Road & Rail)..................................... 388,600 1,118,639
Pearson PLC (Multi-Industry)................................................ 86,000 891,789
Prudential Corp. PLC (Insurance)............................................ 112,000 584,364
RTZ Corp. PLC (Metals)...................................................... 56,300 791,460
Reckitt & Colman (Health & Personal Care)................................... 47,000 449,706
Redland PLC (Building Materials & Components)............................... 120,000 914,171
Scottish Hydro Electric PLC (Utilities)..................................... 85,450 447,236
Sears Holdings (Merchandising).............................................. 491,000 858,888
Seeboard Electricity PLC (Utilities)........................................ 74,000 521,050
Shell Transport & Trading Co. (Energy Sources).............................. 95,655 1,146,796
Tarmac PLC (Building Materials)............................................. 241,500 481,894
Tesco PLC (Merchandising)................................................... 233,000 895,567
Thorn EMI PLC (Appliances & Household Products)............................. 63,300 1,006,339
Tomkins (Multi-Industry).................................................... 167,000 574,667
Unilever PLC (Food & Household Products).................................... 35,000 651,456
United Biscuits Holdings PLC (Food & Household Products).................... 198,900 995,476
Vickers PLC (Machinery & Engineering)....................................... 328,500 921,455
Wellcome (Health & Personal Care)........................................... 112,000 1,166,896
Yorkshire Water (Business & Public Services)................................ 127,800 1,149,656
---------------
40,155,949
---------------
Total Common Stocks (cost $349,673,537) 372,833,904
---------------
PREFERRED STOCKS (0.35%)
AUSTRIA (0.09%)
Creditanstalt Bankverein, 10.00 ATS (Banking)............................... 6,800 391,573
--------------

FRANCE (0.02%)
Casino Guichard Perrachon, 5.25 FRF (Leisure & Tourism)..................... 4,126 99,261
--------------

JAPAN (0.24%)
Sakura Bank Ltd., 22.50 JPY (Banking)....................................... 50,000 1,006,555
---------------
Total Preferred Stocks (cost $1,475,741) 1,497,389
---------------

PRINCIPAL
AMOUNT
(IN YEN)
----------
CONVERTIBLE BONDS (4.65%)
JAPAN (4.65%)
BOT Cayman Finance 4.25% due 12/31/99 (Banking)............................. 450,000,000 5,319,256
Daiwa International Finance 5.65% due 08/30/96 (Banking).................... 1,750,000 2,777,031
Mitsubishi Bank 3.50% due 03/31/04 (Banking)................................ 2,000,000 2,131,250
Nippon Oil Co. 2.80% due 03/31/00 (Energy Sources).......................... 150,000,000 1,774,634
Sagami Railway 3.80% due 09/30/99 (Transportation).......................... 25,000,000 297,063
</TABLE>

See Accompanying Notes.

23
<PAGE>
THE NON U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SECURITY DESCRIPTION (IN YEN) (NOTE 1A)
- ------------------------------------------------------------------------------ ---------- ---------------
<S> <C> <C>
JAPAN (CONTINUED)
Sakura Bank Ltd. 2.63% due 03/31/03 (Banking)............................... 1,500,000 $ 1,290,000
Sekisui House Ltd. 2.50% due 01/31/02 (Construction & Housing).............. 60,000,000 703,040
Toyota Motor Co. 1.70% due 05/31/96 (Automotive)............................ 75,000,000 1,129,664
Yamanouchi Pharmaceutical 1.25% due 03/31/14 (Health & Personal Care)....... 300,000,000 3,011,922
Yamato Transport 3.90% due 03/30/01 (Transportation)........................ 100,000,000 1,267,743
---------------
Total Convertible Bonds (cost $18,834,008) 19,701,603
---------------
SHARES
----------
RIGHTS(A) (0.02%)
FRANCE (0.02%)
Air Liquide (Chemicals) (Cost $0)........................................... 6,381 88,287
---------------
WARRANTS(A) (0.46%)
FRANCE (0.01%)
LaGardere Groupe, Expiring 12/31/96 (Leisure & Tourism)..................... 16,000 19,432
---------------
GERMANY (0.02%)
Parco Co. Ltd., Expiring 04/26/96 (Retail).................................. 1,000 85,135
---------------
JAPAN (0.43%)
Casio Computer Co. Ltd., Expiring 03/04/97 (Electrical & Electronics)....... 250 606,250
Gunze Ltd., Expiring 04/05/96 (Chemicals)................................... 90 115,875
Kuraray Co. Ltd., Expiring 08/02/96 (Chemicals)............................. 100 191,250
Maeda Corp., Expiring 02/05/97 (Construction & Housing)..................... 370 670,625
Nippon Meat Packers, Expiring 08/11/95 (Food)............................... 650 73,575
Yodogawa Steel Works Ltd., Expiring 12/10/97 (Materials & Commodities)...... 100 167,500
---------------
1,825,075
---------------
UNITED KINGDOM (0.00%)
British Tire & Rubber Expiring 06/11/95 (Multi-Industry).................... 5,000 5,234
---------------
Total Warrants (cost $1,996,508) 1,934,876
---------------

PRINCIPAL
AMOUNT
(IN PESETAS)
----------
TIME DEPOSITS (4.03%)
SPAIN (0.57%)
Spanish Eurotime Deposit (Banking) 7.25% due 11/03/94 (cost $2,411,091)..... 300,000,000 2,395,114
---------------
</TABLE>

See Accompanying Notes.

<PAGE>
THE NON U.S. EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
SECURITY DESCRIPTION (IN US DOLLARS) (NOTE 1A)
- ----------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
UNITED STATES (3.46%)
State Street Bank (Banking) 4.50% due 11/01/94 (cost
$14,662,000).......................................... 14,662,000 $14,662,000
------------
Total Time Deposits (cost $17,073,091) 17,057,114
------------
TOTAL INVESTMENTS (cost $389,052,885) (97.53%) 413,113,173
OTHER ASSETS NET OF LIABILITIES (2.47%) 10,462,648
------------
NET ASSETS (100.00%) $423,575,821
------------
------------
<FN>
(A) Non-Income-Producing Security
The cost of investments for Federal Income Tax purposes at October 31, 1994, was
$389,069,331, the aggregate gross unrealized appreciation and depreciation
of investments was $35,900,158, and $11,856,316, respectively, resulting in
net unrealized appreciation of $24,043,842.
</TABLE>

See Accompanying Notes.

25
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETs
Investments at Value (Cost $389,052,885) (Note 1a) $413,113,173
Foreign Currency at Value (Cost $15,100,423) 15,150,658
Cash 1,039
Receivable for Investments Sold 1,861,402
Dividends and Interest Receivable (Note 1d) 937,916
Foreign Tax Reclaim Receivable 324,063
Prepaid Expenses 5,986
-----------
Total Assets 431,394,237
-----------

LIABILITIES
Payable for Investments Purchased 4,170,421
Unrealized Depreciation on Open Forward Foreign Currency Contracts (Note 1c) 2,668,575
Advisory Fee Payable (Note 2a) 376,831
Financial and Fund Accounting Services Fee Payable (Note 2c) 305,409
Custody Fee Payable 252,281
Fund Services Fee Payable (Note 2d) 4,211
Administration Fee Payable (Note 2b) 2,286
Accrued Expenses 38,402
-----------
Total Liabilities 7,818,416
-----------

NET ASSETS
Applicable to Investors' Beneficial Interests $423,575,821
-----------
-----------
</TABLE>

See Accompanying Notes.

<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1D)
Dividends (Net of $719,242 Foreign Withholding Taxes) $4,809,738
Interest (Net of $13,641 Foreign Withholding Taxes) 1,179,412
----------

Investment Income $5,989,150

EXPENSES
Advisory Fee (Note 2a) 1,911,202
Custodian Fees and Expenses 652,600
Financial and Fund Accounting Services Fees (Note 2c) 327,569
Professional Fees 56,660
Fund Services Fee (Note 2d) 32,512
Administration Fee (Note 2b) 22,024
Trustees' Fees and Expenses (Note 2e) 7,508
Miscellaneous 3,413
----------

Total Expenses 3,013,488
----------

NET INVESTMENT INCOME 2,975,662
Net Realized Gain (Loss) on
Investment Transactions 15,947,877
Foreign Currency Contracts and Foreign Exchange Transactions (4,649,119)
----------
Net Realized Gain 11,298,758

Net Change in Unrealized Appreciation (Depreciation) of
Investments 10,010,353
Foreign Currency Contracts and Translations (3,516,742)
----------
Net Change in Unrealized Appreciation (Depreciation) 6,493,611
----------
Net Increase in Net Assets Resulting from Operations $20,768,031
----------
----------
</TABLE>

See Accompanying Notes.

27
<PAGE>
THE NON-U.S. EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 4, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1993
----------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net Investment Income $ 2,975,662 $ 56,702
Net Realized Gain (Loss) on Investment and Foreign Currency
Transactions 11,298,758 (528,065)
Net Change in Unrealized Appreciation of Investment and Foreign
Currency Translations 6,493,611 3,605,055
----------------- -------------------
Net Increase in Net Assets Resulting from Operations 20,768,031 3,133,692
----------------- -------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 343,552,141 181,887,256
Withdrawals (124,114,838) (1,750,561)
----------------- -------------------
Net Increase from Investors' Transactions 219,437,303 180,136,695
----------------- -------------------
Total Increase in Net Assets 240,205,334 183,270,387
NET ASSETS
Beginning of Period 183,370,487 100,100
----------------- -------------------
End of Period $ 423,575,821 $ 183,370,487
----------------- -------------------
----------------- -------------------
</TABLE>

- ------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 4, 1993
FOR THE FISCAL (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31, 1994 OCTOBER 31, 1993
----------------- -------------------
<S> <C> <C>
Ratios to Average Net Assets
Expenses 0.95% 0.99%*
Net Investment Income 0.93% 0.43%*
Decrease Reflected in Expense Ratio due to Expense Reimbursement
by Morgan - 0.17%*
Portfolio Turnover 56% 54(a)
<FN>
- ------------------------
* Annualized.

(a) Portfolio turnover for the fiscal year ended October 31, 1993, includes the
portfolio activity of The Pierpont International Equity Fund, Inc. for the
period November 1, 1992 through October 3, 1993, prior to conversion when
The Pierpont International Equity Fund, Inc. contributed all of its
investable assets to the Portfolio. Not Annualized.
</TABLE>

See Accompanying Notes.

<PAGE>

THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- -------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

The Non-U.S. Equity 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 commenced
operations on October 4, 1993 and received a contribution of certain assets
and liabilities, including securities, with a value of $160,213,973 on that
date from The Pierpont International Equity Fund, Inc. in exchange for a
beneficial interest in the Portfolio. At that date, net unrealized
appreciation of $11,116,204 was included in the contributed securities. 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 readily
available closing bid price on such exchanges, or at the quoted bid
price in the over-the-counter market. Securities listed on a foreign
exchange are valued at the last quoted sale price available before the
time when net assets are valued. Unlisted securities are valued at the
average of the quoted bid and asked prices in the over-the-counter
market. Securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with
procedures established by the Portfolio's Trustees. Such procedures
include the use of independent pricing services, which use prices based
upon yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general
market conditions. All portfolio securities with a remaining maturity
of less than 60 days are valued by the amortized cost method.

Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market
and may also take place on days on which the domestic market is closed.
If events materially affecting the value of foreign securities occur
between the time when the exchange on which they are traded closes and
the time when the Portfolio's net asset value is calculated, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Portfolio's
Trustees.

b) The books and records of the Portfolio are maintained in U.S.
dollars. The market values of investment securities, other assets and
liabilities and forward contracts stated in foreign currencies are
translated at the prevailing exchange rates at the end of the period.
Purchases, sales, income and expense are translated at the exchange
rate prevailing on the respective dates of such transactions.
Translation gains and losses resulting from changes in the exchange
rate during the reporting period and gains and losses realized upon
settlement of foreign currency transactions are reported in the
Statement of Operations.

<PAGE>

THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- -------------------------------------------------------------------------
Since the net assets of the Portfolio are presented at the exchange
rates and market values prevailing at the end of the period, the
Portfolio does not isolate the portion of the results of operations
arising as a result of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of securities
during the period.

c) The Portfolio may enter into forward foreign currency contracts to
protect securities and related receivables and payables against
fluctuations in future foreign currency rates. A forward contract is
an agreement to buy or sell currencies of different countries on a
specified future date at a specified rate. Risks associated with such
contracts include the movement in the value of the foreign currency
relative to the U.S. dollar and the ability of the counterparty to
perform.

The market value of the contract will fluctuate with changes in
currency exchange rates. Contracts are valued daily based on procedures
established by and under the general supervision of the Portfolio's
Trustees and the change in the market value is recorded by the
Portfolio as unrealized appreciation or depreciation of foreign
currency translations. At October 31, 1994 the Portfolio had open
forward foreign currency contracts as follows:

SUMMARY OF OPEN CONTRACTS

<TABLE>
<CAPTION>
U.S. DOLLAR
VALUE AT NET UNREALIZED
FOREIGN CURRENCY SALE CONTRACTS PROCEEDS 10/31/94 DEPRECIATION
---------------------------------- ----------- ------------ ---------------
<S> <C> <C> <C>
Japanese Yen 7,256,674,039,
expiring 01/13/95 $72,785,096 $75,453,671 $(2,668,575)
------------
Net Unrealized Depreciation on
Foreign Currency Contracts $(2,668,575)
------------
</TABLE>

d) Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or at 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.

e) The Portfolio intends to be treated as a partnership for federal
income tax purposes. As such, each investor in the Portfolio will be
taxable on its share of the Portfolio's ordinary income and capital
gains and losses. 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 Portfolio earns foreign income which may be subject to
foreign withholding taxes at various rates.

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 0.60% of the Portfolio's average daily net assets. For the year
ended October 31, 1994 such fees amounted to $1,911,202.

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

<PAGE>

THE NON-U.S. EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- -------------------------------------------------------------------------------
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 year ended October 31, 1994
such expenses amounted to $22,024.

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 0.15% of the Portfolio's
average daily net assets up to $200 million, 0.10% on the next $200
million of average daily net assets, 0.05% of the next $200
million of average daily assets and 0.03% of 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 Agreements. For the year
ended October 31, 1994, Morgan's fee amounted to $327,569.

d) Effective January 15, 1994, the Portfolio entered into 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 $32,512 for the
period January 15, 1994 to October 31, 1994.

e) An aggregate annual fee of $55,000 is paid to each Trustee for
serving as a Trustee of The Pierpont Funds, The JPM Institutional
Funds, The JPM Institutional Plus Fund and their corresponding
Portfolios. The Trustees' Fees and Expenses shown in the
financial statements represents the Portfolio's allocated portion
of the total fees and expenses.

3. INVESTMENT TRANSACTIONS:

Investment transactions (excluding short-term investments) for the
year ended October 31, 1994 were as follows:

COST OF PROCEEDS
PURCHASES FROM SALES
------------ ------------
$374,843,119 $168,069,418

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE TRUSTEES AND SHAREHOLDERS OF
THE NON-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 Non-U.S. Equity
Portfolio (the "Portfolio") at October 31, 1994, the results of its operations
for the year then ended, and the changes in its net assets and the
supplementary data for the year then ended and for the period October 4, 1993
(commencement of operations) to October 31, 1993, 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 October 31, 1994
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.

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP
New York, New York
December 27, 1994

<PAGE>

THE PIERPONT MONEY MARKET FUND The
THE PIERPONT TAX EXEMPT MONEY MARKET FUND Pierpont
THE PIERPONT TREASURY MONEY MARKET FUND Emerging Markets
THE PIERPONT SHORT TERM BOND FUND Equity Fund
THE PIERPONT BOND FUND
THE PIERPONT TAX EXEMPT BOND FUND
THE PIERPONT NEW YORK TOTAL RETURN BOND FUND
THE PIERPONT DIVERSIFIED FUND
THE PIERPONT EQUITY FUND
THE PIERPONT CAPITAL APPRECIATION FUND
THE PIERPONT INTERNATIONAL EQUITY FUND
THE PIERPONT EMERGING MARKETS EQUITY FUND

FOR MORE INFORMATION ON HOW THE PIERPONT FAMILY ANNUAL REPORT
OF FUNDS CAN HELP YOU PLAN FOR YOUR FUTURE, CALL OCTOBER 31, 1994
J.P. MORGAN FUNDS SERVICES AT (800) 521-5411.

<PAGE>

LETTER TO THE SHAREHOLDERS OF THE PIERPONT EMERGING MARKETS EQUITY FUND

DECEMBER 15, 1994

Dear Shareholder:

We are pleased to present the first Annual Report for The Pierpont Emerging
Markets Equity Fund, which covers the period from its inception on November 15,
1993, to October 31, 1994.

The Fund is designed for long-term investors who want to diversify by investing
in the rapidly growing emerging markets. The Fund generally invests in a
portfolio of securities of companies primarily located in the non-industrialized
nations in Asia, Latin America, Southern and Eastern Europe, and Africa.

During the Fund's fiscal year, The Pierpont Emerging Markets Equity Fund
slightly outperformed its benchmark, the IFC Investable Index. From its
inception through October 31, 1994, the Fund had a total return of 24.30%,
compared with 19.91% for the IFC Investable Index*, an emerging market index
designed as a benchmark for international funds. Over the same time, the Fund's
net asset value rose from $10.00 to $12.43 per share. In addition, the Fund's
net assets grew to $53.4 million by the end of October.

MARKET REVIEW
Emerging markets as a whole were mixed for the period. After posting exceptional
returns at the end of 1993, the first half of 1994 was generally disappointing.
Most market returns then rebounded in the third quarter of 1994, offsetting some
of the year's losses. Led by Brazil, the Latin American market, which was up
46%, was the best-performing region for the year ended October 31, 1994. During
this time, emerging Asian and European markets returned 39% and -11%,
respectively.

Politics played a big role in the Latin American markets. In Brazil, the victory
of Fernando Henrique Cardoso, the favored candidate, caused optimism that fiscal
reforms designed to lower inflation and stimulate growth would continue. After a
great deal of political uncertainty and two political assassinations in Mexico,
a pre-election market rally bolstered stock market performance. Later in the
year, however, U.S. interest rate increases appeared to dampen some of the
returns in these markets.

*RETURN CALCULATED FROM NOVEMBER 15, 1993.

- -------------------------------------------------------------------------------
TABLE OF CONTENTS FUND PERFORMANCE. . . . . . . . . . .5

LETTER TO THE SHAREHOLDERS. . . . . .1 SPECIAL FUND-BASED SERVICES . . . . .6

FUND FACTS AND HIGHLIGHTS . . . . . .4 FINANCIAL STATEMENTS. . . . . . . . .7

<PAGE>

Most emerging European markets had positive returns during the period. Turkey
was the exception with its market down as much as 55% while it remained in
fiscal crisis in the first quarter of 1994. Turkey later rebounded somewhat as
its economy began to recover--but not enough to produce positive returns for the
year. In contrast, Portugal rose 22%, as its lower costs attracted more
industrial production from Europe. In addition, Portugal managed to lower
interest rates while avoiding a run on its currency, the Escudo. New
investments also kept flowing into the Czech Republic and Hungary, where prices
rose.

In Asia, the weakness of the U.S. dollar against the yen and the strong U.S.
economy were generally positive for the region. Returns in Malaysia were flat
until investment conditions (i.e., low interest rates and attractive
price/earnings ratios) became favorable in the third quarter. Thailand
underperformed for part of the period but managed to rise 29% for the year ended
October 31, 1994.

PORTFOLIO REVIEW
The Fund's investment process seeks to add value in two different ways. The
first step is country allocation where the objective is to select undervalued
markets. The Fund allocates among countries by overweighting (or
underweighting) those countries that we believe to be the most attractive (or
unattractive) relative to the benchmark. The second major decision is stock
selection, which is expected to contribute the majority of excess return. Using
our in-house proprietary research and information from on-site visits, we select
"blue-chip" companies in each market based on our confidence in management,
expectation of strong earnings, and adequate liquidity.

COUNTRY ALLOCATION. Malaysia remained underweighted relative to its benchmark
allocation. Malaysia performed well for the period, but with high market
valuations and interest rates at their lowest levels since 1989, there does not
appear to be much room for additional stock market performance.

The Fund's overweighting in Portugal proved beneficial as it outperformed most
European markets. However, our general overweighting in Europe for the period
dampened returns.

In Latin America, we underweighted Mexico and Brazil. While these markets had
positive returns, post-election concerns may cause the markets to fluctuate
dramatically.

A small position in South Africa was initiated during the period, which we plan
to increase as political conditions improve. Finally, the Fund's cash position,
which hurt returns when the markets were up, provided a defensive cushion when
the markets declined in the first part of 1994.

STOCK SELECTION. Our stock selection was generally neutral for the Fund's
fiscal year. In Brazil and Turkey our stock selection was particularly
successful. While the Turkish market was volatile during the period, the Fund's
purchases in this country paid early dividends as the market bottomed in June.

<PAGE>

INVESTMENT OUTLOOK
Going forward, we expect Latin American returns to be disappointing as the
performance of newly elected politicians is measured against their campaign
promises. U.S. interest rates can also be expected to play a determining role
in the future performance of neighboring southern markets.

Viewed overall, Asian markets are on a better economic footing than their Latin
American counterparts, although their valuations are not quite as attractive.
In contrast, small European markets now appear to be undervalued.

In light of these expectations, we are currently overweighted, or expect to be
overweighted, in the following markets: Thailand, Indonesia, Hungary, Portugal,
Turkey, Greece, Peru, China, and Korea.

To identify attractively priced stocks of established companies with superior
growth potential, Morgan's experienced research professionals will continue to
perform fundamental proprietary company research. While the level of investment
in some countries may change to take advantage of favorable trends, we will
continue to maintain a well-diversified portfolio in an effort to reduce risk
and enhance growth potential.

Al always, we welcome your comments or questions. Please call J.P. Morgan Funds
Services toll free at (800) 521-5411.

Sincerely,

/s/ Evelyn E. Guernsey

Evelyn E. Guernsey
J.P. Morgan Funds Services

Morgan serves as Portfolio Investment Advisor, and makes the Fund available
solely in its capacity as shareholder servicing agent for customers. The Fund's
Distributor is Signature Broker-Dealer Services, Inc. Investments in the Fund
are not deposits or obligations of, or guaranteed or endorsed by, Morgan
Guaranty Trust Company of New York 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 Pierpont Emerging Markets Equity Fund
can fluctuate, so an Investor's shares when redeemed may be worth more or less
than their original cost.
The performance data contained 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 Fund
distributions and reflect the reimbursement of certain Fund expenses as
described in the Prospectus. Had expenses not been subsidized, returns would
have been lower. The IFC Investable Index is a market capitalization weighted
index that includes stocks from emerging markets in the following regions: Latin
America, East Asia, South Asia, and Europe/Mideast/Africa. The Pierpont
Emerging Markets Equity Fund invest all of its investable assets in The Emerging
Markets 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. The Portfolio invests in foreign securities which are subject
to special risks; prospective investors should refer to the Fund's Prospectus
for a discussion of these risks.
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 a copy of the Prospectus by calling (800) 531-5411.

<PAGE>

FUND FACTS

INVESTMENT OBJECTIVE
The Pierpont Emerging Markets Equity Fund seeks to provide a high total return
from a portfolio of equity securities of companies in emerging markets. It is
designed for long-term investors who want to diversify their investments by
adding exposure to the rapidly growing emerging markets.

As an international investment, the Fund is subject to foreign market, political
and currency risk.

- -------------------------------------------------------------------------------
INCEPTION DATE
11/15/93

- -------------------------------------------------------------------------------
NET ASSETS AS OF 10/31/94
$53,431,221

- -------------------------------------------------------------------------------
CAPITAL GAIN PAYABLE DATES (IF APPLICABLE)
12/30/94

EXPENSE RATIO
The Fund's current annual expense ratio of 1.84% 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 OCTOBER 31, 1994

COUNTRY ALLOCATION

* ASIA 39.2%
* LATIN AMERICA 37.8%
* EUROPE 11.2%
* AFRICA 5.0%
* OTHER 6.8%

LARGEST HOLDINGS % OF PORTFOLIO

COMPANIA VALE DE RIO DORE (BRAZIL) 2.4

CEMEX (MEXICO) 2.2

TELEFONOS DE MEXICO (MEXICO) 1.9

SIAM COMMERCIAL BANK (THAILAND) 1.8

PETROLEO BRASILEIRO (BRAZIL) 1.7

1994 U.S. TAX INFORMATION

The Fund intends to make an election under Internal Revenue Code Section 853 to
pass through foreign taxes paid by the Fund to its shareholders. The total
amount of foreign taxes that will be passed through to the shareholders for the
fiscal year ended October 31, 1994 is $58,554. The foreign source income for
information reporting purposes is $135,509.

This information is given to meet certain requirements of the Internal Revenue
Code. Shareholders should refer to their Form 1099-DIV to determine the amounts
includable on their respective tax returns for 1994.

<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 The Pierpont Emerging Markets Equity Fund's
inception would have grown to $12,430 at October 31, 1994.

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 of the 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
provide a picture of how a fund has performed over the short term.

GROWTH OF $10,000 SINCE INCEPTION NOVEMBER 15, 1993 - OCTOBER 31, 1994

Line graph with two-axes: the X-axis represents years of operations; the Y-axis
represents dollar value. The graph plots two lines: the first line represents
the growth of a ten thousand dollar investment in the Fund from November 15,
1993 (inception) to October 31, 1994; the second line represents the growth of a
ten thousand dollar investment in a portfolio of securities reflecting the
composition of the IFC Investable index for the same time period. The graph
points are as follows:

Year Fund IFC Investable
<S> <C> <C>
0 $ 10,000 $ 10,000
1 12,430 11,991

</TABLE>

PERFORMANCE TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURN
---------------------------------------------------
THREE YEAR ONE FIVE SINCE
AS OF OCTOBER 31, 1994 MONTHS TO DATE YEAR YEARS INCEPTION*
- ------------------------------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C>
The Pierpont Emerging Markets
Equity Fund 9.61% 5.52% -- -- 24.30%
IFC Investable 11.80% 2.29% -- -- 19.91%

AS OF SEPTEMBER 30, 1994
- ------------------------------------------------------ ----------------------------
The Pierpont Emerging Markets
Equity Fund 17.02% 7.39% -- -- 26.50%
IFC Investable 23.94% 5.79% -- -- 24.00%
<FN>
*11/15/93
</TABLE>
Past performance is not a guarantee of future results. All returns assume
the reinvestment of distributions and reflect reimbursement of certain Fund and
Portfolio expenses as described in the Prospectus. The IFC Investable Index is
a market capitalization weighted index that includes stocks from emerging
markets in the following areas: Latin America, East Asia, South Asia, and
Europe/Mideast/Africa. The Pierpont Emerging Markets Equity Fund invests all of
its investable assets in The Emerging Markets 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.

<PAGE>

SPECIAL FUND-BASED SERVICES

PIERPONT ASSET ALLOCATION SERVICE (PAAS)
For most investors, a diversified portfolio -- including short-term instruments,
bonds and stocks -- offers the best opportunity to achieve one's investment
objectives. Through the Pierpont Asset Allocation Service (PAAS), a client can
work with Morgan investment professionals in order to determine the client's
investment goals. Our investment professionals will then:

- - Create an asset allocation strategy that is specifically targeted at meeting
the client's investment objectives

- - Make strategic investments in one or more Pierpont Funds

- - Make ongoing tactical adjustments in the actual asset mix of the client's
portfolio to capitalize on shifting market trends

The Pierpont Asset Allocation Service thus provides the investor with a
comprehensive asset allocation and investment management program for his or her
portfolio. PAAS is available to clients who invest a minimum of $500,000 in The
Pierpont Funds.

IRA MANAGEMENT SERVICE
As one of the few remaining investments that can help your assets grow tax-
deferred until retirement, the IRA enables more of your dollars to work for you
longer. Morgan offers an IRA Rollover plan that helps you to build well-
balanced long-term investment portfolios, diversified across a wide array of
mutual funds. From money markets to emerging markets, The Pierpont Funds
provide an excellent way to help you accumulate long-term wealth for retirement.
The IRA Rollover plan is available to clients who invest at least $10,000 in any
given Pierpont Fund.

KEOGH
In early 1995, Morgan will introduce a Keogh program for its clients. Keoghs
provide another excellent vehicle to help individuals who are self-employed or
are employees of unincorporated businesses to accumulate retirement savings.
A Keogh is a tax-deferred pension plan which allows you to contribute the lesser
of $30,000 or 24% of your annual gross compensation. The Pierpont Funds can
help you build a comprehensive investment program designed to maximize the
retirement dollars in your Keogh account. The Keogh plan also requires a
minimum investment of $10,000 in a given Pierpont Fund.

<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investment in The Emerging Markets Equity Portfolio ("Portfolio"), at value $53,356,004
Receivable for Shares of Beneficial Interest Sold 404,432
Receivable for Expense Reimbursements 45,279
Deferred Organization Expense (Note 1d) 35,410
Other Assets 808
----------
Total Assets 53,841,933
----------

LIABILITIES:
Payable for Shares of Beneficial Interest Redeemed 248,421
Shareholder Servicing Fee Payable (Note 2c) 92,084
Organization Expense Payable 21,141
Administration Fee Payable (Note 2a) 1,270
Transfer Agent Fee Payable 6,500
Fund Services Fee Payable (Note 2d) 558
Other Accrued Expenses 40,738
----------
Total Liabilities 410,712
----------

NET ASSETS:
Applicable to 4,298,981 Shares of Beneficial Interest Outstanding (par value $53,431,221
$0.001, unlimited number of authorized shares)
----------
----------
Net Asset Value, Offering and Redemption Price Per Share $12.43
----------
----------

ANALYSIS OF NET ASSETS:
Paid-in Capital $50,715,848
Undistributed Net Investment Income 76,955
Accumulated Net Realized Gain on Investments and Foreign Currency Transactions 594,004
Net Unrealized Appreciation of Investments and Foreign Currency Translations 2,044,414
----------
Net Assets $53,431,221
----------
----------
</TABLE>

See Accompanying Notes.

7
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 15, 1993 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER
31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO (NOTE 1B):
Dividend Income (Net of $56,542 Foreign Withholding Tax) $ 587,525
Interest Income (Net of $2,012 Withholding Tax) 180,190
Portfolio Expenses (496,668)
---------
Net Investment Income Allocated from Portfolio 271,047

EXPENSES:
Shareholder Servicing Fee (Note 2c) $ 92,084
Amortization of Organization Expense 8,427
Administration Fee (Note 2a) 11,373
Fund Services Fee (Note 2d) 4,331
Transfer Agent Fees 29,535
Printing 27,964
Trustees' Fees and Expenses (Note 2e) 1,885
Registration Fees 32,847
Professional Fees 12,780
Miscellaneous 3,656
---------
Total Fund Expenses 224,882
Less: Reimbursement of Expenses (Note 2b) (45,279)
---------

Net Fund Expenses 179,603
---------

NET INVESTMENT INCOME 91,444

NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS ALLOCATED FROM PORTFOLIO 342,192

NET CHANGE IN UNREALIZED APPRECIATION OF INVESTMENTS AND FOREIGN
CURRENCY TRANSLATIONS ALLOCATED FROM PORTFOLIO 2,044,414
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,478,050
---------
---------
</TABLE>

See Accompanying Notes.

8
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 15,
1993
(COMMENCEMENT
OF OPERATIONS)
THROUGH OCTOBER
31, 1994
---------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:

FROM OPERATIONS:
Net Investment Income $ 91,444
Net Realized Gain (Loss) on Investments and Foreign Currency Transactions
Allocated from Portfolio 342,192
Net Change in Unrealized Appreciation of Investments and Foreign Currency
Translations Allocated from Portfolio 2,044,414
---------------
Net Increase in Net Assets Resulting from Operations 2,478,050
---------------

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST (NOTE 3):
Proceeds from Shares of Beneficial Interest Sold 68,416,519
Cost of Shares of Beneficial Interest Redeemed (17,463,448)
---------------
Net Increase from Transactions in Shares of Beneficial Interest 50,953,071
---------------
Total Increase in Net Assets 53,431,121

NET ASSETS:
Beginning of Period 100
---------------
End of Period (including undistributed net investment income of $76,955) $53,431,221
---------------
---------------
</TABLE>

See Accompanying Notes.

9
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share outstanding throughout the period are as follows:

<TABLE>
<CAPTION>
For the Period
November 15, 1993
(commencement of
operations) through
October 31, 1994
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00

INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.02
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Translations
Allocated from Portfolio 2.41
-------
Total from Investment Operations 2.43
-------

NET ASSET VALUE, END OF PERIOD $ 12.43
-------
-------
Total Return 24.30%(a)

RATIOS AND SUPPLEMENTAL DATA:
Net Assets at end of Period (in thousands) $ 53,431
Ratios to Average Net Assets (annualized):
Expenses 1.84%
Net Investment Income 0.25%
Decrease reflected in above Expense Ratio due to Expense Reimbursement by Morgan 0.12%
<FN>

(a) Not annualized
</TABLE>

See Accompanying Notes.

10
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

The Pierpont Emerging Markets Equity Fund (the "Fund") is a separate series of
The Pierpont Funds, a Massachusetts business trust (the "Trust"), which was
organized on November 4, 1992. The Trust is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company. The Fund commenced operations on November 15, 1993.

The Fund invests all of its investable assets in The Emerging Markets 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 (9.7% at October 31, 1994). 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.

c)Distributions to shareholders of net investment income and net realized
capital gain, if any, are declared and paid annually.

d)The Fund incurred organization expenses in the amount of $43,837. 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.

g)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

11
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
Investment Companies. Accordingly, permanent book and tax differences
relating to shareholder distributions are reclassified to paid-in capital.
The Fund increased accumulated net realized gain on investments by
$251,812, decreased undistributed net investment income by $14,489 and
decreased paid-in capital by $237,323. The adjustments are attributable to
foreign exchange losses. Net investment income, net realized gains and net
assets were not affected by this change.

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, The JPM Institutional
Funds, and The JPM Institutional Plus Fund, which are 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 period November 15, 1993 (commencement of operations)
through October 31, 1994, Signature's fee for these services amounted to
$11,373.

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 percentages 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 0.223% of the Fund's average daily net assets up to and
including $100 million and 0.20% of any excess over $100 million, 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 period November 15, 1993
(commencement of operations) through October 31, 1994, Morgan agreed to
reimburse the Fund $37,902 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
daily operating expenses of the Fund, including the expenses allocated to
the Fund from the Portfolio, at no more than 1.88% of the average daily
net assets of the Fund through October 31, 1994. For the period November
15, 1993 (commencement of operations) through October 31, 1994, Morgan has
agreed to reimburse the Fund $7,377 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

12
<PAGE>
THE PIERPONT EMERGING MARKETS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
and may be paid monthly at an annual rate of 0.25% of the Fund's average
daily net assets. For the period November 15, 1993 (commencement of
operations) through October 31, 1994, the fee for these services amounted
to $92,084.

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 are the sole shareholders of Group. The Fund's allocated
portion of Group's costs in performing its services amounted to $4,331 for
the period November 15, 1993 (commencement of operations) through October
31, 1994.

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of the Pierpont Funds, the JPM Institutional Funds, the JPM
Institutional Plus Fund and their corresponding Portfolios. The Trustee
Fees' and Expenses shown in the financial statements represent the Fund's
allocated portion of the total fees and expenses.

3. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST

<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 15, 1993
(COMMENCEMENT
OF OPERATIONS)
THROUGH
OCTOBER 31, 1994
------------------
<S> <C>
Shares sold 5,813,065
Shares redeemed (1,514,094)
----------
Net Increase 4,298,971
----------
----------
</TABLE>

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
The Pierpont Emerging Markets 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 Pierpont Emerging Markets Equity Fund (the "Fund") at October 31, 1994, and
the results of its operations, the changes in its net assets and the financial
highlights for the period November 15, 1993 (commencement of operations) through
October 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 audit. We conducted our audit 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 audit provides a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
New York, New York
December 30, 1994

14
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
ANNUAL REPORT OCTOBER 31, 1994

(The following pages should be read in conjunction
with The Pierpont Emerging Markets Equity Fund
Annual Financial Statements)

<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
COMMON STOCKS (77.59%)
ARGENTINA (3.43%)
Banco Frances Del Rio Plata (Banking &
Finance)....................................... 90,000 $ 2,306,250
Cia Naviera Perez Companc (Multi-Industry)...... 74,446 402,089
Compania Naviera Perez S.A. (Spon ADR)
(Multi-Industry)............................... 10,000 107,500
Corp Cementera ARG (Building & Contractors)..... 296,869 2,464,506
Dalmine Siderca S.A. (Metal, Materials &
Paper)......................................... 3,500,000 2,653,529
Molinos Rio De La Plata (Metal & Mining)........ 405,335 3,539,282
Nobleza Piccardo (Multi-Industry)............... 175,901 853,290
Quilmes Industrials (Quinsa) (Registered)
(Food)......................................... 246,700 6,475,875
-------------
18,802,321
-------------
BOLIVIA (0.27%)
Compania Boliviana De Energia Electrica
(Utilities & Telecom).......................... 61,600 1,493,800
-------------
1,493,800
-------------
BRAZIL (3.36%)
Acos Villares S.A. (Metal, Materials & Paper)... 3,472,000 17,183
Aracruz Celulose S.A. (ADR) (Metal, Materials &
Paper)*........................................ 278,100 3,545,775
Compania Energetica De Minas Geraia (Spon ADR
Rep Vtg P) (Utilities & Telecom)............... 119,200 3,156,166
Electrobras Centrale Electricidad (Utilities &
Telecom)....................................... 11,382 4,431,572
Industrias De Papel Simao (Spon ADR) (Metal,
Materials & Paper)............................. 278,500 7,008,007
Telebras (Voting Shares) (Utilities &
Telecom)....................................... 2,906,539 117,979
Telecommunicacoes Brasilerias (Spon ADR)
(Utilities & Telecom).......................... 3,500 168,684
-------------
18,445,366
-------------
CANADA (0.20%)
Minera Rayrock, Inc. (Multiple Voting Shares)
(Energy)....................................... 12,800 23,847
Minera Rayrock, Inc. (Subsidiary Voting Shares)
(Energy)....................................... 533,000 1,044,248
-------------
1,068,095
-------------
CHILE (2.10%)
Antofagasta Holdings (Energy)................... 640,000 3,559,044
Chilectra Metropolitana Distribuidora (Spon ADR)
(Utilities & Telecom) (144A)................... 18,500 968,023
Compania Cervecerias Unidas SA (Spon ADR)
(Food)......................................... 158,000 4,206,750
Compania De Telefonos de Chile SA (Spon ADR)
(Utilities & Telecom).......................... 8,000 753,000
Sociedad Quimica Y Minera De Chile (Spon ADR)
(Chemicals)*................................... 59,500 2,015,562
-------------
11,502,379
-------------
CHINA (1.83%)
Dongfang Elec Mac (Energy)...................... 3,200,000 1,759,946
Shanghai Shangling Electric Appliances
(Consumer)..................................... 100,000 81,600
Shanghai Textile Machine Factory (Capital
Goods)......................................... 1,700,000 595,000
</TABLE>

See Accompanying Notes.

16
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
CHINA (CONTINUED)
Tsingtao Brewery (Food)......................... 6,720,000 $ 5,043,804
Yizheng Chem Fibre (Chemicals).................. 6,330,000 2,518,890
-------------
9,999,240
-------------
COLUMBIA (0.25%)
Banco Ganadero Sa (Spon ADR) (Banking & Finance)
(144A)......................................... 3,000 82,500
Banco Ganadero Sa (GDS) (Banking & Finance)..... 50,000 1,262,500
-------------
1,345,000
-------------
CZECHOSLOVAKIA (0.48%)
Ceska Pojistovna (Insurance).................... 4,940 1,333,979
Cokoladovny Praha (Food)........................ 10,000 1,270,371
-------------
2,604,350
-------------
ECUADOR (0.51%)
LA Cemento Nacional CA (Building & Contractors)
(144A)......................................... 8,000 2,800,000
-------------
2,800,000
-------------
GHANA (0.38%)
Ashanti Goldfields Co (GDR) (Metal & Mining)
(144A)......................................... 100,000 2,090,000
-------------
2,090,000
-------------
GREECE (1.62%)
Athens Medical Centre (Registered) (Transport &
Trade Services)................................ 190,000 708,808
Boutaris Wine Co (Food)......................... 14,400 90,777
Credit Bank (Banking & Finance)................. 14,166 604,012
Delta Dairy (Food).............................. 366 10,272
Ergo Bank (Registered) (Banking & Finance)...... 18,100 664,292
Hellenic Bottling Co SA, (Food)*................ 55,735 1,730,288
Hellenic Sugar Industry S.A. (Food)............. 183,500 2,796,870
Michaniki SA (Building & Contractors)........... 126,720 1,832,953
Titan Cement Co (Building & Contractors)........ 13,000 413,688
-------------
8,851,960
-------------
HONG KONG (2.14%)
M. C. Packaging, (Metal, Materials & Paper)*.... 2,850,000 1,060,334
Pacific Concord Holding (Transportation & Trade
Services)...................................... 6,200,000 1,725,007
Tian An China Invest. Co. Ltd. (Building &
Contractors)................................... 12,188,750 3,091,542
World Houseware Holdings (Food)................. 8,700,000 3,180,520
Yue Yuen Indus. Holdings (Consumer)............. 12,440,000 2,672,324
-------------
11,729,727
-------------
</TABLE>

See Accompanying Notes.

17
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
HUNGARY (1.89%)
Fotex (Consumer)................................ 565,000 $ 1,943,776
Hungarian Foreign Trade Bank Ltd (Banking &
Finance)....................................... 17,000 1,922,805
Julius Meinl Internationall (GDR) (Food)........ 68,300 2,407,672
Pick Szeged Rights (Spon GDR) (Food) (144A)..... 38,200 2,693,100
Skala Coop (Munich Exchange) (Retail)........... 25,000 614,906
Skala Coop (Vienna Exchange) (Retail)........... 5,000 121,716
Zalakeramia (Building & Contractors)............ 29,333 652,491
-------------
10,356,466
-------------
INDIA (1.82%)
Shriram Industrial Enterprise (GDR) 144A
(Multi-Industry)............................... 86,000 3,590,500
Southern Petrochemicals Industrial, (GDS)
(Energy)*...................................... 170,000 2,805,000
Videocon International (GDS) (Media &
Leisure)....................................... 650,000 3,575,000
-------------
9,970,500
-------------
INDONESIA (3.37%)
Bakrie & Bros. (Metal, Materials & Paper)....... 87,500 288,157
Goodyear Indonesia (Motors)..................... 100,000 271,749
Indorama Synthetic (Metal, Materials & Paper)... 120,000 480,857
Inti Indorayon Utama (Metal, Materials &
Paper)......................................... 642,000 1,744,625
Intl Nickel Indonesia (Metal, Materials &
Paper)......................................... 1,772,200 5,224,056
Mayatexdian Industry (Consumer)................. 240,000 77,379
Modern Photo Film Co. (Consumer)................ 90,000 493,293
Multi Bintang Indonesia (Multi-Industry)........ 200,000 1,658,126
Niaga Bank (Banking & Finance).................. 116,300 482,100
Pt Pan Brothers Textiles (Metal, Materials &
Paper)......................................... 165,000 85,497
Putra Surya Perkasa (Building & Contractors).... 810,000 1,203,178
Semen Gresik, (Building & Contractors)*......... 800,000 4,311,129
Unilever Indonesia (Metal, Materials & Paper)... 47,605 855,130
United Tractors (Capital Goods)................. 500,000 1,289,653
-------------
18,464,929
-------------
MALAYSIA (12.07%)
AMMB Holdings Berhad (Banking & Finance)........ 461,000 5,052,055
Antah Holdings (Multi-Industry)................. 67,200 63,649
Antah Holdings Berhad (Multi-Industry).......... 168,000 163,068
Aokam Perdana Berhad (Metal, Materials &
Paper)......................................... 23,200 181,605
Aokam Perdana Berhad (Metal, Materials &
Paper)......................................... 158,000 1,304,814
Carlsberg Brewery Malaysia Berhad (Food)........ 565,416 2,721,964
Edaran Otomobil Nasional Berhad (Motors)........ 592,000 4,216,986
Golden Hope Plantations Berhad (Metal, Materials
& Paper)....................................... 1,389,166 2,555,413
Hong Leong Industries Berhad (Multi-Industry)... 904,000 4,847,280
Island & Peninsular Berhad (Building &
Contractors)................................... 230,500 640,528
Kian Joo Can Factory Berhad (Consumer).......... 532,000 2,977,534
Kuala Lumpur Kepong Berhad (Building &
Contractors)................................... 1,367,000 3,317,181
Malayan Banking (Banking & Finance)............. 216,000 1,470,998
Malaysia Mining Corp. Berhad (Metal, Materials &
Paper)......................................... 1,586,000 3,320,978
</TABLE>

See Accompanying Notes.

18
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
MALAYSIA (CONTINUED)
Malaysian Intl Shipping Corp Berhad (Transport &
Trade Services)................................ 450,333 $ 1,410,044
Matsushita Electric Co. Malaysia Berhad
(Consumer)..................................... 204,000 2,115,851
Nestle Malaysia Berhad (Food)................... 980,000 6,597,260
Public Bank Berhad (Bank & Financials).......... 2,848,000 6,465,125
Putera Capital Berhad (Consumer)................ 180,000 422,700
Resorts World Berhad (Media & Leisure).......... 739,000 4,685,635
Shell Refinery Malaysia (Energy)................ 945,500 3,015,978
Sime U.E.P. Properties (Building &
Contractors)................................... 1,434,000 3,311,388
Sistem Televisyen Malaysian (Media & Leisure)... 1,150,000 2,700,587
Southern Bank Berhad (Banking & Finance)........ 150,000 437,378
UMW Holdings Berhad, (Capital Goods)*........... 804,000 2,108,337
-------------
66,104,336
-------------
MEXICO (15.88%)
Banamex Accival Financial (Class L) (Banking &
Finance)....................................... 280,000 1,857,434
Banamex Accival Financial (Class B) (Banking &
Finance)....................................... 563,000 3,439,918
Banpais (Spon ADR) (Class L) (Banking &
Finance)....................................... 220,000 1,512,500
Cementos Mexicanos S.A. (Class B) (Building &
Contractors)................................... 1,298,200 12,049,049
Cifra Sa De Cv (B Shares) (Retail).............. 2,400,000 6,829,210
Consorcio Grupo Dina SA (Spon ADR) (Capital
Goods)......................................... 150,000 1,931,250
Cydsa SA (A Shares) (Chemicals)................. 313,000 1,502,618
Desc Soc Fomento Ind SA (Class A) (Metal,
Materials & Paper)............................. 268,000 1,910,387
Desc Soc Fomento SA (Class B) (Metal, Materials
& Paper)....................................... 214,000 1,581,495
Empresa Sociedad Controladora (Spon ADR)
(Building & Contractors)....................... 90,000 2,666,250
Fomento Economico Mexicana SA (Class B)
(Food)......................................... 350,000 1,537,678
Groupo Casa Autrey SA De Cv (Spon ADR) (Food)... 90,000 2,745,000
Grupo Embotellador De Mexico SA (Class BCP)
(Food)......................................... 420,000 1,918,534
Grupo Carso SA (Class A) (Capital Goods)........ 470,000 4,998,109
Grupo Financiero Bancomer SA De Cv (Class B)
(Banking & Finance)*........................... 1,250,000 1,200,174
Grupo Financiero Bancomer SA De Cv (Class C)
(Banking & Finance)............................ 752,700 871,616
Grupo Financiero Bancomer SA De Cv (Class L)
(Banking & Finance)............................ 270,810 299,412
Grupo Financiero Del Notre (Class B) (Banking &
Finance)....................................... 340,000 1,414,606
Grupo Financiero Probursa SA (Class B) (Banking
& Finance)..................................... 1,820,300 1,059,236
Grupo Industrial Bimbo SA (Class A) (Food)*..... 167,737 1,361,612
Grupo Industrial Maseca SA De Cv (Class B)
(Food)......................................... 5 8
Grupo Industrial SA De Cv (Spon ADR New)
(Food)......................................... 103,333 2,557,492
Grupo Situr SA De Cv (Class B) (Media &
Leisure)*...................................... 1,668,489 5,048,671
Grupo Tribasa SA De Cv (Spon ADR) (Building &
Contractors)*.................................. 100,990 3,168,561
Industrias Penoles CP (Metal, Materials &
Paper)......................................... 700,000 2,443,991
Kimberley Clark De Mexico SA (Class A) (Metal,
Materials & Paper)............................. 248,000 4,921,036
Nacional Financiera (Utilities & Telecom)....... 25,000 1,450,000
Telefonos De Mexico SA (ADR) (Utilities &
Telecom)....................................... 200,000 553,125
Telefonos De Mexico SA (Spon ADR) (Utilities &
Telecom)....................................... 179,500 9,894,938
Transportacion Maritima Mexicana (ADR L Shares)
(Transport & Trade Services)................... 204,000 1,632,000
Vitro Sociadad Anonima (ADR) (Metal, Materials &
Paper)......................................... 125,500 2,588,435
-------------
86,944,345
-------------
</TABLE>

See Accompanying Notes.

19
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
MOROCCO (0.68%)
Banque Commerciale Du Maroc (Banking &
Finance)....................................... 30,073 $ 1,360,473
Wafa Bank (Banking & Finance)................... 57,500 2,389,472
-------------
3,749,945
-------------
PERU (0.39%)
Banco Wiese (Spon ADR) (Banking & Finance)...... 100,000 2,125,000
-------------
2,125,000
-------------
PHILIPPINES (2.41%)
JG Summit (Cayman) Ltd (Multi-Industry)
(144A)......................................... 350,000 274,750
Manila Electric Co. (Class B) (Utilities &
Telecom)....................................... 141,120 1,978,119
Philippine National Bank (Banking & Finance).... 174,190 2,721,719
Philippines Long Distance Telephone Co
(Utilities & Telecom).......................... 12,800 729,600
RFM Corp. (Food)................................ 1,912,500 2,555,892
San Miguel Corp. (Class B) (Food)............... 912,000 4,930,224
-------------
13,190,304
-------------
POLAND (1.04%)
Okocim SA (Food)................................ 40,700 1,128,596
Zywiec (Food)................................... 50,400 4,585,790
-------------
5,714,386
-------------
PORTUGAL (1.89%)
Banco Commercial Portuguese SA (Registered)
(Banking & Finance)............................ 135,499 1,851,320
Banco Totta E Acores SA (Registered) (Banking &
Finance)....................................... 14,300 297,723
Cel Cat Fabricas (Technology)................... 30,000 556,278
Cin Corp Ind. Morte (Building & Contractors).... 30,000 780,742
Corticeira Amorim (Metal, Materials & Paper).... 30,000 554,716
Empresa Fabril De Maquinas Electricas (Capital
Goods)......................................... 1,000 14,997
Empresa Fabril De Maquinas Electricas (New)
(Capital Goods)................................ 81,000 1,172,576
Engil Soc De Construcao Civil SA (Building &
Contractors)................................... 59,520 941,012
Mague-Gestao E Participacoes (Building &
Contractors)................................... 16,576 420,601
Modelo Continente Sgps SA, (Retail)*............ 20,000 1,945,349
Unicer (New) (Food)............................. 60,000 905,660
Unicer (Registered) (Food)...................... 60,000 905,660
-------------
10,346,634
-------------
SOUTH AFRICA (3.58%)
Amal Bank of South Africa (Banking & Finance)... 661,000 1,683,291
Anglovaal Ltd (Multi-Industry).................. 165,000 4,970,625
Omni Media Corp Ltd (Media & Leisure)........... 23,570 199,101
Pepkor Ltd (ADR) (Retail)....................... 450,000 5,242,500
Premier Group (Food)............................ 1,015,000 1,286,086
South African Breweries (South Africa) (Food)... 51,000 1,191,056
</TABLE>

See Accompanying Notes.

20
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
SOUTH AFRICA (CONTINUED)
South African Breweries (United Kingdom)
(Food)......................................... 214,673 $ 5,059,597
-------------
19,632,256
-------------
SOUTH KOREA (3.03%)
China Steel Corp (GDS) (Metal, Materials &
Paper)......................................... 37,000 647,500
Dong Ah Construction Industrias (EDR) (Building
& Contractors)................................. 98,778 2,469,450
Hansol Paper Co (GDS) (Metal, Materials &
Paper)......................................... 113,429 3,232,727
Kia Motors Corp (Registered) (Motors)........... 422 8,335
Kia Motors Corp (Spon GDR) (Motors) (144A)...... 60,881 1,202,400
Korea Elec Power Corp (Spon ADR) (Utilities &
Telecom)....................................... 133,000 2,593,500
Pohang Iron & Steel Co. Ltd (Metal, Materials &
Paper)......................................... 60,000 1,972,500
President Enterprises Corp (GDR) (Food)
(144A)......................................... 116,400 2,182,500
Samsung Electronics Co. (GDR) (Technology)...... 455 27,528
Samsung Electronics Co. (GDS) (Technology)...... 38,000 2,279,999
-------------
16,616,439
-------------
SRI LANKA (0.02%)
Ceylon Distiller (Food)......................... 500,000 102,166
-------------
102,166
-------------
TAIWAN (0.59%)
Asia Cement (GDS) (Building & Contractors)...... 33,365 600,570
Hocheng Group Corp. (Building & Contractors)
(144A)......................................... 92,400 2,656,500
-------------
3,257,070
-------------
THAILAND (7.35%)
Advanced Info Service Public Co. (Utilities &
Telecom)....................................... 159,000 2,807,045
American Std Sanitaryware Pub. Co (Building &
Contractors)................................... 31,000 577,138
Bangkok Rubber (Metal, Materials & Paper)....... 1,530,000 2,332,785
Bank of Ayudhya Public Co. Ltd (Banking &
Finance)....................................... 883,330 3,455,630
Bumrungrad Hospital Pub Co. (Healthcare)........ 448,750 1,098,333
Charoen Pokphand Feedmill Public Co. (Capital
Goods)......................................... 259,500 1,884,584
Dhana Siam Fin. & Sec. Pub. Co. (Banking &
Finance)....................................... 67,692 1,803,454
Hana Microelectronics Co. (Technology).......... 180,000 1,235,004
International Cosmetics (Retail)................ 34,020 764,402
National Publishing Grp. Pub. Co. Ltd (Media &
Leisure)....................................... 400,000 1,203,707
Oriental Hotel Public Co. Ltd (Media &
Leisure)....................................... 337,000 1,210,127
Pranda Jewelry (Capital Goods).................. 175,000 940,898
Saha Union (Consumer)........................... 900,000 1,011,114
Siam Cement Public Co. (Building &
Contractors)................................... 79,000 4,558,119
Siam Commercial Bank (Banking & Finance)........ 975,000 10,093,086
Thai Farmers Bank Public Co. (Banking &
Finance)....................................... 145,710 1,286,209
Thai Military Bank Public Co. (Banking &
Finance)....................................... 855,720 3,982,808
-------------
40,244,443
-------------
</TABLE>

See Accompanying Notes.

21
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
TURKEY (3.67%)
Akbank (Banking & Finance)...................... 998,000 $ 284,745
Akbank TAS (Banking & Finance).................. 8,700,956 2,482,522
Akcimento Ticaret AS (Building & Contractors)... 1,402,000 2,263,493
Cukurova Elektrik AS (Utilities & Telecom)...... 6,280,000 1,223,658
Eczacibasi Ilac (Healthcare).................... 13,975,000 1,128,104
Ege Biracilik Ve Malt Sanay (Food).............. 2,431,000 1,725,553
Eregli Demir Ve Celik Fabrikalari (Metal,
Materials & Paper)............................. 8,575,000 811,547
Eregli Demir Ve Celik Fabrikalari (S/R 22 Nov
94)(Metal, Materials & Paper).................. 4,900,000 327,345
Finans Bank AS (Banking & Finance).............. 2,481,600 345,384
Guney Biracilik Ve Malt Sanay (Food)............ 5,121,400 2,031,449
Kepez Elektrik (Utilities & Telecom)............ 10,628,000 2,277,952
Mardin Cimento (Building & Contractors)......... 5,400,000 1,803,757
Ottoman Bank (Banking & Finance)................ 500 17,991
Sabah Yayincilik (Media & Leisure).............. 28,104,850 919,225
Teletas Telekomunikasvon Endustri Ticaret AS
(Utilities & Telecom)*......................... 2,840,000 751,007
Turk Siemens (Technology)....................... 1,151,000 616,750
Usak Sanaye A.S. (Media & Leisure).............. 73,000 589,283
Yapi Ve Kredi Bankasi (Banking & Finance)....... 4,669,000 311,913
Yapi Ve Kredi Bankasi (Prommissory Note)
(Banking & Finance)............................ 2,567,950 173,338
-------------
20,085,016
-------------
VENEZUELA (1.03%)
CA Venepal (GDS) (Class B) (Metal, Materials &
Paper)* (144A)................................. 614,147 1,995,978
Ceramicas Carabobo C.A. (Spon ADR) (Building &
Contractors)*.................................. 1,066,667 1,066,667
Ceramicas Carabobo C.A. (Spon ADR) (B Shares)
(Building & Contractors)....................... 266,666 333,333
Mavesa S.A. (Spon ADR) (Food) (144A)............ 360,000 2,246,473
-------------
5,642,451
-------------
ZIMBABWE (0.31%)
Trans Zambezi Industries Ltd (Food)............. 1,300,000 1,690,000
-------------
1,690,000
-------------
Total Common Stocks (cost $401,109,925)....... 424,968,924
-------------
PREFERRED STOCKS (10.47%)
BRAZIL (9.51%)
Banco Do Estado De Sao Paulo S.A. (Banking &
Finance)....................................... 215,300 2,267,657
Cemig (Utilities & Telecom)..................... 78,780,000 8,017,835
Ceval Alimentos S.A. (Food)..................... 190,000 3,035,503
Compania Hering (Consumer)...................... 71,300 1,350,059
Compania Vale Do Rio Doce (Spon ADR) (Energy)... 242,000 13,110,519
Copene Petroquimica do Nordeote S.A. (Spon ADR
Class A) (Chemicals)........................... 138,500 6,478,268
Petroleo Brasileiro (Chemicals)................. 59,733,333 9,189,734
Refrigeracao Parana S.A. (Consumer)............. 1,258,857 3,798,917
Telebras (Utilities & Telecom).................. 92,563 4,458,360
</TABLE>

See Accompanying Notes.

22
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
-------------------------------------------------- ----------- -------------
<S> <C> <C>
BRAZIL (CONTINUED)
Varig S.A. (Transportation & Trade Services).... 1,300,000 $ 353,846
-------------
52,060,698
-------------
GREECE (0.66%)
Aluminium Co of Greece (Metal, Materials &
Paper)......................................... 15,180 1,310,881
Boutaris Wine Co (Food)......................... 32,280 156,104
Delta Dairy (Food).............................. 19,225 389,315
Michaniki SA (Building & Contractors)........... 11,520 136,539
Nat Invest Bank for Industrial Development
(Banking & Finance)............................ 10,000 192,142
Nat Invest Bank for Industrial Development
(Banking & Finance)............................ 60,000 1,450,775
-------------
3,635,756
-------------
PHILIPPINES (0.30%)
Philippines Long Distance Telephone Co
(Utilities & Telecom).......................... 51,000 1,657,500
-------------
1,657,500
-------------
Total Preferred Stock (cost $31,381,384)...... 57,353,954
-------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
BONDS/CONVERTIBLE BONDS (2.35%)
INDONESIA (0.06%)
Pt Inti Indorayon Utama (7% Cnv Bds 2May06) (Metal,
Materials & Paper)................................ 300,000 299,250
------------
299,250
------------
SOUTH KOREA (1.32%)
Daewoo Heavy Ind.Ltd ( 3% Cnv Bds 31Dec 01)
(Capital Goods)................................... 200,000 450,000
Daewoo Corp (.25 Conv Bds 31 Dec 08) (Metal,
Materials & Paper)................................ 800,000 864,000
Ssangyong Cement Co.(3% Cnv Bds 31 Dec 05)
(Building & Contractors)..........................2,500,000 3,276,625
Ssangyong Oil Refinery Co. (3.75%Cnv Bds31Dec 08)
(Energy)..........................................2,000,000 2,625,000
------------
7,215,625
------------
TAIWAN (0.36%)
Pacific Elect Wire & Cable (3.75%Cnv Bds 31Oct01)
(Technology)...................................... 300,000 357,000
Yieh Loong Co. (2% Bds 12/31/2000) Fixed Income
(Metals, Materials & Paper).......................2,500,000 1,614,189
------------
1,971,189
------------
THAILAND (0.61%)
Land & Houses Co. (3% Cnv Bds 29Apr03) (Building &
Contractors)......................................1,200,000 1,896,000
MDX Public Co. Ltd (4.75% Bds 17Sep03) (Building &
Contractors)......................................1,809,000 1,469,813
------------
3,365,813
------------
Total Bonds/Convertible Bonds (cost $12,644,476). 12,851,877
------------
</TABLE>

See Accompanying Notes.

23
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 1A)
------------------------------------------------------------ ----------- -------------
<S> <C> <C>
WARRANTS (0.91%)
BRAZIL (0.90%)
Santa Elina Gold Corp Inc. (Metal & Mining)+*............... 3,300,000 $4,950,000
------------
4,950,000
------------
HONG KONG (0.01%)
World Houseware Holding (Exp 12/8/95) (Food)................ 80,000 6,522
Tian An China Inv. Co. Ltd (Exp 1/25/96) (Building &
Contractors)............................................... 888,150 32,181
------------
38,703
------------
Total Warrants (cost $4,956,441).......................... 4,988,703
------------
<CAPTION>

UNITS
---------
<S> <C> <C>
UNIT TRUSTS (2.11%)
CHILE (0.15%)
Chile Fund Inc............................................. 16,500 820,875
------------
820,875
-------------
RUSSIA (1.44%)
New Century Holdings Ltd (Partnership III); Group B+....... 1,800 4,858,200
New Century Holdings Ltd (Partnership IV); Group I+........ 2,000 3,004,000
-------------
7,862,200
-------------
TAIWAN (0.52%)
Formosa Fund............................................... 130 1,241,500
R.O.C. Taiwan Fund......................................... 140,000 1,592,500
-------------
2,834,000
-------------
Total Unit Trusts (cost $6,811,500)...................... 11,517,075
-------------
Total Investments (cost $456,903,726) (93.43%)............. 511,680,533
<CAPTION>

PRINCIPAL
AMOUNT
----------
<S> <C> <C>
REPURCHASE AGREEMENT (5.77%)
State Street Bank and Trust 4.40% dated 10/31/94
due 11/1/94, proceeds $31,622,865 (collaterized
by U.S. Treasury Bill, due 5/4/95, valued at
$32,255,513 (cost $31,619,000)............................ $31,619,000 31,619,000
Other assets net of liabilities (0.80%).................... 4,357,827
-------------
Total Net Assets (100.00%)................................. $547,657,360
-------------
-------------
<FN>

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

+ - Restricted securities. See Note 4.

* - Non-income producing securities.

ADR - American Depositary Receipt.

GDR - Global Depositary Receipt.

GDS - Global Depositary Shares.

144A - Securities restricted for resale to institutional investors.
</TABLE>

See Accompanying Notes.

<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments, at Value (Cost $456,903,726) (Note 1a) $511,680,533
Repurchase Agreement (Cost $31,619,000) (Note 1g) 31,619,000
Foreign Currency, at Value (Cost $11,244,604) 11,340,489
Cash 814
Receivable for Foreign Currency Sold 19,541,426
Receivable for Investments Sold 19,111,710
Dividends and Interest Receivable (Note 1c) 600,832
Foreign Tax Reclaim Receivable 7,687
Deferred Organization Expense 6,162
Prepaid Expenses 4,107
-----------
Total Assets 593,912,760
-----------

LIABILITIES:
Payable for Investments Purchased 25,326,141
Payable for Foreign Currency Purchased 19,650,762
Advisory Fee Payable (Note 2a) 565,393
Financial and Fund Accounting Services Fee Payable (Note 2c) 347,925
Custody Fee Payable 279,371
Fund Services Fee Payable (Note 2d) 5,629
Administration Fee Payable (Note 2b) 3,029
Trustees' Fees and Expenses Payable (Note 2e) 1,000
Accrued Expenses 76,150
-----------
Total Liabilities 46,255,400
-----------

NET ASSETS:
Applicable to Investors' Beneficial Interests $547,657,360
-----------
-----------
</TABLE>

See Accompanying Notes.

25
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1C)
Dividends (Net of $619,130 Foreign Withholding Taxes) $6,351,652
Interest (Net of $8,670 Foreign Withholding Taxes) 1,965,314
----------
Investment Income $8,316,966
----------

EXPENSES
Advisory Fee (Note 2a) 4,122,465
Custodian Fees and Expenses 953,915
Financial and Fund Accounting Services Fees (Note 2c) 347,925
Professional Fees 87,723
Fund Services Fee (Note 2d) 42,764
Administration Fee (Note 2b) 30,828
Trustees' Fees and Expenses (Note 2e) 12,269
Insurance Expense 3,088
Amortization of Organization Expense (Note 1f) 1,467
Miscellaneous 1,423
----------
Total Expenses 5,603,867
----------
NET INVESTMENT INCOME 2,713,099

NET REALIZED GAIN (LOSS) ON
Investment Transactions 13,276,883
Foreign Currency Transactions (71,446)
----------
Net Realized Gain 13,205,437
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
Investments 54,776,807
Foreign Currency Contracts and Translations (108,226)
----------
Net Change in Unrealized Appreciation 54,668,581
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $70,587,117
----------
----------
</TABLE>

See Accompanying Notes.

26
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 15, 1993
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1994
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS

FROM OPERATIONS:
Net Investment Income $ 2,713,099
Net Realized Gain (Loss) on Investments and Foreign Currency Transactions 13,205,437
Net Change in Unrealized Appreciation (Depreciation) of Investments and Foreign Currency
Contracts and Translations 54,668,581
--------------------
Net Increase in Net Assets Resulting from Operations 70,587,117
--------------------

TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 631,086,772
Withdrawals (154,116,729)
--------------------
Net Increase from Investors' Transactions 476,970,043
--------------------
Total Increase in Net Assets 547,557,160
NET ASSETS
Beginning of Period 100,200
--------------------
End of Period $ 547,657,360
--------------------
--------------------
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------

FOR THE PERIOD
NOVEMBER 15, 1993
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1994
--------------------
<S> <C>
Ratios to Average Net Assets (annualized):
Expenses 1.36%
Net Investment Income 0.66%

Portfolio Turnover (Not Annualized) 27.48%
</TABLE>

See Accompanying Notes.

27
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Emerging Markets Equity 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 commenced
operations on November 15, 1993 and received a contribution of certain assets
and liabilities, including securities, with a value of $223,722,513 on that date
from the JPM Emerging Markets Equity 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 readily available closing bid price on
such exchanges, or at the quoted bid price in the over-the-counter market.
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 may 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,
operating data and general market conditions. All portfolio securities
with a remaining maturity of less than 60 days are valued by the amortized
cost method.

Trading in securities on most foreign exchanges and over-the-counter
markets is normally completed before the close of the domestic market and
may also take place on days on which the domestic market is closed. If
events materially affecting the value of foreign securities occur between
the time when the exchange on which they are traded closes and the time
when the Portfolio's net assets are calculated, such securities will be
valued at fair value in accordance with procedures established by and
under the general supervision of the Portfolio's Trustees.

b)The books and records of the Portfolio are maintained in U.S. dollars. The
market values of investment securities, other assets and liabilities and
foreign currency contracts are translated at the prevailing exchange rates
at the end of the period. Purchases, sales, income and expense are
translated at the exchange rate prevailing on the respective dates of such
transactions. Translation gains and losses resulting from changes in
foreign exchange rates during the reporting period and gains and losses
realized upon settlement of foreign currency transactions are reported in
the Statement of Operations.

28
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

Since the net assets of the Portfolio are presented at the exchange rates
and market values prevailing at the end of the period, the Portfolio does
not isolate the portion of the results of operations arising as a result
of changes in foreign exchange rates from the fluctuations arising from
changes in the market prices of securities.

c)Securities transactions are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date or at 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 may enter into foreign currency contracts to settle foreign
currency denominated transactions. A foreign currency contract is an
agreement to buy or sell currencies of different countries on a specified
future date at a specified rate. Risks associated with such contracts
include the movement in the value of the foreign currency relative to the
U.S. Dollar and the ability of the counterparty to perform. The market
value of the contract will fluctuate with changes in currency exchange
rates. Contracts are valued daily based on prevailing currency exchange
rates. The change in the market value is recorded by the Portfolio as
unrealized appreciation or depreciation of foreign currency translations.
At October 31, 1994 the Portfolio had open spot foreign currency contracts
as follows:

SUMMARY OF OPEN CONTRACTS
<TABLE>
<CAPTION>
U.S. DOLLAR NET UNREALIZED
VALUE AT APPRECIATION
FOREIGN CURRENCY SALE CONTRACTS PROCEEDS 10/31/94 (DEPRECIATION)
- -------------------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
Mexican Peso, expiring 11/03/94 $ 912,032 $ 912,297 ($265)

Foreign Currency Purchase Contracts Cost
- -------------------------------------------------------- -------------
<S> <C> <C> <C>
Brazilian Real, expiring 11/01/94 $ 18,417,332 $ 18,308,354 ($108,978)
Indonesian Rupiah, expiring 11/03/94 321,133 $ 321,040 ($93)
---------------
Net Unrealized Depreciation on Foreign Currency Contracts ($109,336)
---------------
---------------
</TABLE>

e)The Portfolio intends to be treated as a partnership for federal income
tax purposes. As such, each investor in the Portfolio will be taxable 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.

f)The Portfolio incurred organization expenses in the amount of $7,629.
These costs were deferred and are being amortized on a straight-line basis
over a five year period from the commencement of operations.

g)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

29
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
collateral daily on a market-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.

2. 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 1.00% of the Portfolio's average daily net assets. For the
period November 15, 1993 to October 31, 1994, such fees amounted to
$4,122,465.

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 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 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
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
period November 15, 1993 to October 31, 1994, such expenses amounted to
$30,828.

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 assisting in 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, brokerage costs,
and the amortization of organization expenses exceed the expense limit of
0.15% of the Portfolio's average daily net assets up to $200 million,
0.10% of the next $200 million of average daily net assets, 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 Agreements. For
the period November 15, 1993 to October 31, 1994, this fee amounted to
$347,925.

d)Effective January 15, 1994 the Portfolio entered into 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 outstanding
shareholders of Group. The Portfolio's allocated portion of Group's fee
for its reasonable costs in performing its services amounted to $42,764
for the period January 15, 1994 to October 31, 1994.

30
<PAGE>
THE EMERGING MARKETS EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1994
- --------------------------------------------------------------------------------

e)An aggregate annual fee of $55,000 is paid to each Trustee for serving as
a Trustee of The Pierpont Funds, the JPM Institutional Funds, the JPM
Institutional Plus Fund and their corresponding Portfolios, in the
aggregate. The Trustees' Fees and Expenses represent the Portfolio's
allocated portion of the total fees and expenses.

3. INVESTMENT TRANSACTIONS:

Investment transactions (excluding short-term investments) for the period
November 15, 1993 to October 31, 1994 were as follows:

<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
PURCHASES SALES
- -------------- --------------
<S> <C>
$352,145,735 $102,078,083
- -------------- --------------
</TABLE>

4. RESTRICTED SECURITIES:

<TABLE>
<CAPTION>
SHARES DATE ACQUIRED U.S. $ COST
---------- -------------- ------------
<S> <C> <C> <C>
New Century Holdings, Ltd.:
Partnership III Group B 1,800 4/11/94 $ 1,800,000
Partnership IV Group I 2,000 6/16/94 $ 2,000,000
Santa Elina Gold Corporation Warrants 3,300,000 10/4/94 $ 4,950,000
</TABLE>

The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the procedures described in Note 1a. The
aggregate value of these securities at October 31, 1994 is $12,812,200,
representing 2.3% of net assets.

31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Investors of
The Emerging Markets 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 Emerging Markets Equity Portfolio (the
"Portfolio") at October 31, 1994, and the results of its operations, the changes
in its net assets and its supplementary data for the period November 15, 1993
(commencement of operations) through October 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 audit. We conducted our
audit 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
audit, which included confirmation of securities at October 31, 1994 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provides
a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
New York, New York
December 30, 1994